[VIDEO] VOESTALPINE

[TRAVEL LOG] STEEL = STAHL AUF DEUTSCH

Yesterday was all about steel.  What is the biggest reason that Linz is such a prosperous city today? Steel.  To begin, let’s explore some background information…

Before our tour of Rosenbauer on Monday, our bus driver actually took us through a small village just outside of Linz.  He announced to us that we were passing the childhood home of Adolf Hitler.  He then directed our attention to the cemetery that held the graves of his parents.  Hitler was not a native German; he was Austrian (until 1925).  He grew up near Linz, and when he came to power later in life, he still had Linz on his map of cities that would serve a great cause in his Reich.  He established a steel company in Linz going into the Second World War to fuel his armies with steel.  Tanks, airplanes, ships, and artillery all required the precious commodity.  Linz became a major resource for Germany during the war.   

At the end of the war, the plant was destroyed.  The allies had destroyed much of it as a means of cutting off resources to the German army.  After the war, the city was split between the allies just as Berlin was.  One major difference, however, was that the city center was not designated towards any particular country.  Each occupying country took turns occupying this portion of the city.  Eventually, much would be turned over to the Americans.  In the 50s, the Americans helped to restart the Linz economy by reviving the steel plant.  Two blast furnaces were reconstructed and the plant began production again.  For years it would operate as a state owned company.  In 1995, Voestalpine (the name the steel company had been given), made its IPO and went public.  At this time, many investors were able to buy stock to take part ownership of the steel giant.  It is now 54% state owned and 13% employee owned.  As with many company histories in central Europe, it has a long and interesting story.  Sometimes this history contains some darker periods.  Voestalpine does not take pride in the fact that it once fueled the German war machine, but it does do well to acknowledge this very important part of the company’s history and use all past experiences to build on and move the company into the future.

Our group of MBAs traveled to the plant and met with a couple of their representatives at 10am yesterday.  The initial presentation gave an overview of the company’s past, present, and future.  Anita Friedl from Corporate Development gave the initial talk on the global steel market.  Today, the industry is booming because of significant growth in China.  The current top two market leaders in steel manufacturing are actually in China (the market leader) and the USA.  Actual company market leaders are 1) ArcelorMittal, 2) Baosteel, and 3)POSCO.  The US top manufacturer, US Steel, falls in at number 8, while Voestalpine, Austria’s top manufacturer, falls in at number 29 globally.  Voestalpine employs 12,000 employees locally and supports more than 200,000 area jobs.  Over 1300 apprentices work at the plant and 500 employees are dedicated solely to research and development, including research in environment protection initiatives.  Voestalpine prides itself in being the cleanest steel mill in Europe, and possibly even the cleanest in the world.  Due to recent initiatives (and regulations by the E.U.), the mill has managed to reduce its polluting emissions by nearly 95%.  For this reason, Linz has some of the cleanest air of any city in Austria.

Voestalpine has five separate divisions and employees nearly 41,000 employees globally.  Divisions include steel, special steel, profile form, rail systems, and automotive.  In 2010, they brought in nearly 11 billion Euro in revenue. They are spread between five continents and 60 different countries.  Major partners include companies like BMW, Audi, Ford, GM, Daimler, Fiat, Peugeot, and other auto manufacturers.  They hold a number one position in rail technologies specifically.  They are even able to produce steel rails as long as 120 meters!  …and ship them successfully!! 

The next corporate development representative, Rene Killinger, gave an overview of the company’s look into the future.  The motto “One Step Ahead” was very prevalent throughout the company grounds and in all of their branding.  Four focus areas were explained in which the corporate, business, and functional company strategies all converged.  These were 1) a focus on niche and high quality/technology market divisions, 2) continuing to offer a large product variety, 3) avoiding “spot market” exposure, and 4) creating a longer value chain. 

For all you “non-business” types, I apologize for all of the jargon.  One part of this trip is that I give some focus to the “business” side of things out here.  In general, the concept of an “MBA” is more of a new one in Europe than in the US.  We sort of pioneered this idea of a business focus.  It is neat, however, to see how the “talk” is the same in Europe.  Business concepts have become more standard worldwide, and I can see how this is leading towards a more global economy.  Cooperation efforts, plans, and joint strategies become more productive when language and concepts align at a basic level.  It is the nuances of the business structures that make observation of foreign business interesting.  For Austrians, competing at an international level is almost necessary because of their country’s small size.  In American, many companies do not need to extend past our borders because the US alone “supplies” enough “demand” to businesses.  With that small interlude, allow me to continue with Voestalpine…

Just as with any other steel manufacturer, Voestalpine is taking a serious look at what the future of the industry looks like.  With new material development in the auto industry and ever changing means of transportation in the world, the future demand for steel is largely uncertain.  To prepare for such a future, workshops within the company have been assembled to discuss the outlook and make recommendation to the company board.

In terms of other growth, I mentioned its look value adding processes.  This is a downstream growth strategy that would include adding processes to make the steel worth more to a customer.  For example, I could sell you a steel plate OR a steel spoon.  If you are a chef, which is worth more to you?  The steel could weigh more, and therefore have a higher value to a steel maker, but you gain more use out of the spoon- not the amount of material.  Because of this, you would pay more for the spoon than the plate.  The process that made the steel bar into a spoon is a “value adding process”.  Voestalpine is looking at which of these they can add to their company to increase profitability.  One example is that they are now stamping and welding together various grade steels for car body panels for BMW.  This is a process BMW outsources.

One final subject of the morning involved the business-worker relations.  We discussed how the company did not lay anyone off in the recent economic crisis.  Costs were cut heavily and the Chamber of Labor was able to provide funding for special job training in slow periods.  The concern of an elderly working class once again came up, and it was described how these workers were then placed with jobs fit to their physical abilities. Getting younger workers in the door is something Voestalpine is focusing on, and they are doing this through joint work with educational institutions such as JKU.  In Austria, apprenticeships are very common and many students will work and study jointly.  This gives sufficient training and helps more effectively bring youthful employees into the company.  This is all very similar to the co-op program our university utilizes. 

After our morning discussion, we had lunch in the company cafeteria.  We then were lead on a guided tour of Stahlwelt (Steel World), their visitor center, and the plant itself.  Our guide was very informative and took us through each step of the steel manufacturing process.  On the plant tour, we took a bus to each of our stops.  The plant is literally a city of its own.  It has its own police, fire department, and health center.  We stopped first at the larges blast furnace (capable of 800 tons of iron ore production per day) and then we stopped at a portion of the plant where stamped steel panels were being welded together for BMW.

The trip to Voestalpine took up the entire day, but was very educational.  Between the history, engineering, and business information gained, I know my mind was exhausted.  It was, however, a good way to end the Linz experience.  Some of us guys later when to a frequently visited café behind the hotel for dinner.  We mentioned to the waiter that we were from UC, and he promptly handed us a guestbook to sign.  The place was called Johann’s.  We could actually see a few entries in the guestbook where other professors and university affiliates had signed in the past.  Jordan sketched in a giant c-paw in the book and we all signed.  For anyone visiting in the future, we left a tally of how many “beverages” we purchased there.  Our challenge to you is to support this local business by beating our tally.   

For as small as Linz was, there was much to discover.  I’m glad to have been there and experienced the scene.  I now am onboard a Westbus bus (operated by the same company as Westbahn) heading for Prague.  We left at 9:20 am this morning and should arrive in Prague around 2:30 pm.  We’ll be having another welcome dinner later this evening.  I look forward to reporting from there!

[TRAVEL LOG] WIEDER ARBEITEN – ARBEITSKAMMER UND ROSEN BAUER

As the title above claims, we were back to work today as we visited the Chamber of Labor in the morning and the fire truck and equipment manufacturer, Rosenbauer, in the afternoon. 

At 9 am, we traveled to the Arbeitskammer (Chamber of Labor) met with leaders from the Chamber of Commerce, Chamber of Labor, and the Workers’ Council of Voestalpine.  Also in the mix was a representative from an organization representing consumer information of Upper Austria.  The informative session lasted about three hours and proved to be very informative of the government/business/worker relationship in the country of Austria.  In many ways the system varies considerably from that of the United States.  In others, there are similarities.  We learned of how this Social Partnership worked and gained a good overview of what each chamber did regarding businesses in Upper Austria. 

Chamber of Labor

Mr. Martin Seidl began by speaking of the Chamber of Labor.  Basically this chamber works with the workforce and represents them in assessing laws and regulation proposals.  They also administer health insurance and labor market services.  Legal advising and representation may be found for labor and social security cases.  They also offer educational services, cultural programs, and other consumer information.  These roles are a bit more abstract from those of the chamber of commerce.

Mr. Robert Leitner spoke to us of this second body.  The chamber of commerce focuses more on work with the business community.  They support work councils, help determine wage and salary settlements, and have optional membership, unlike the Chamber of Labor.  Because of the country’s small size and its many family owned businesses, the collaborative efforts of this chamber are more functional in Austria.  Today, many of the chamber’s initiatives are centered on youth employment (with many current youth “getting lost” in the education system), the national health system (because of the aging population), old age pension schemes, the labor market, and integration & migration. 

Both of these chambers then work with labor unions and work councils.  Today’s representative from Voestalpine was the elected work council leader for that company.  Many workers will come to him before ever reporting to a manager or foreman about a problem.  He helps decide where wages are set and money from the government is placed in departments.  His chief goal is to ensure the workers have quality working conditions and lifestyles.  Concerns ranging from divorce, marriage, births, and funerals will reach his office on a regular basis.  He described to us a resent presentation he gave to the company on how they should readjust the shift system to reflect America’s.  He spent extensive time in the USA observing our system and found many ways to improve working condition quality through simple changes.

Our fourth speaker, Dr. Georg Rathwallner was very helpful in explaining the office of Konsumenteninformation (Consumer Information) of Upper Austria.  Operated through the Chamber of Labor, this office provides consumers with price calculators (in finding cheap banks and utilities), as well as health testing and other information on consumer products.

They were VERY accommodating and professional in hosting us.  We were provided with plenty of study material, refreshments, a Salzburg malt ball, and a baseball cap!  Not only did they provide refreshments for the morning session, but they also treated us to a three course meal for lunch! 

The restaurant was Austrian and they served three types of Schnitzel.  Chicken, fish, and beet were the three options available for the main course.  For starters, we had a nice tomato soup and bread.  To finish off the meal was my favorite German dessert… Apfel Struedel.  Hmm…  And the best part was that part of the profits from the restaurant went towards worker training and services to the unemployed of Linz.

After the almost 1.5 hour lunch break, we took our bus to Rosenbauer.  Here we visited the world market leader in fire truck and rescue equipment technology and manufacturing.  The tour was very different from that of the BMW plant where consumer products were mass produced.  Here, smaller orders were being made from the public sector all over the world.  The manner in which the trucks are manufactured is much slower and time consuming than for consumer cars.  In some steps of the manufacturing process, such as that for making pumps, a single worker bears the responsibility for every step to ensure quality. 

Before taking our tour of the plant, we met with CEO, Dieter Siegel.  He is the 6^th generation family owner of this company started back in 1866.  He did an excellent job at explaining the company’s background, history, and current status.  In 1866, it was simply a trading company, but began to work on fire fighting pumps in 1906.  Fire vehicles began in 1919 and the company finally went international in 1926, selling trucks to China.  As early as 1976, half of the company’s income came from its exports.  In its most recent history, it opened plants in North America in 1995 to capitalize on western market opportunities.  It is now the world market leader and really the only international fire vehicle manufacturer.  Although it began as a private family corporation, it is now publically traded with a family ownership of 51%.  

CEO of Rosenbauer, Dieter Siegel

As recent as three decades ago, Rosenbauer began to focus on more innovative design and technology as their company’s primary focus.  Unlike some more traditional fire truck and fire equipment manufacturers, Rosenbauer products are constantly developing and adapting in very new and creative ways.  Their products consist of over 70% fire vehicles, of which 20% are being sold to airports across the world.  These trucks need to be capable of hauling as much as 10,000 liters of water to any part of an airport in less than 2 minutes.  That is incredible!  I recommend all readers to check out their website for more information on the truck specs.

In 2010, the company had sites in 15 locations around the world.  Three are in the USA.  Just over 2000 employees worldwide work for Rosenbauer.  The process of making just under 2000 trucks a year involves some more creative thinking.  Making every component in house would be very costly.  Toyota makes more than this many cars in ONE DAY at ONE PLANT.  Motors and chassis are largely outsourced to other companies for manufacturing.  These commercial products greatly reduce the necessary resources needed by Rosenbauer for manufacturing.  Rosenbauer takes these outsourced parts and then completes the most critical machining, assembly, and adjustment processes in house.  In total, it takes nearly 5 weeks for one truck to be completed. 

When Mr. Siegel was asked what sets them apart from competitors, he gave four responses.

1.  They operate on small scale production and utilize 100% pre-engineered parts.
2. They are the biggest and only international brand.
3. They work with firefighting standards from all customer countries.  This means they are flexible and have very high standards overall.
4.  The company is 51% family owned.  This shows investment and longevity.  Sustainability is assured to customers.

Overall, the company was very impressive and showed just how relevant world markets are becoming today.  I was especially intrigued by the notion of really adapting to standards in other countries.  This would be both a challenge and a quality-building incentive.  When Siegel explained their USA operations, he said that they began with American engineers and leadership.  Since American firefighting is so much different than European (for example, we use more water and less foam in fighting fires), Rosenbauer entrusted much of the American plant development to American businessmen and engineers.  Today, this component of the company is very successful.

Although we didn’t get to ride in any trucks today, the visit was very educational.  I know if I were a graduating engineer, this would be a very lucrative place to work!  …building giant trucks, water cannons, and saving lives internationally through technology.

[TRAVEL LOG] SUNDAY IN VIENNA

How many engineers does it take to split a lunch bill?  Apparently it takes eight.  Ten minutes after receiving our check at a pizzeria in Vienna today, we were able to determine that the unaccounted for 10 Euros was due to a “table charge”.  This was that illusive included tax we had always been told about.  Each table that we took up in the outdoor portion of the café cost 2.50 Euros.  Reassured in our ability to count, we realized we needed to work on reading receipts.  Despite the simple task of splitting a single bill, I don’t think any of us would object in saying that we really appreciate American restaurants which are willing to accommodate individual checks in large groups!

So yes… today was a day trip to the capital of Austria… Vienna!  Or Wien, as recited in its true German form.  Most people would know this as the hometown of Sigmund Freud or the originators of the infamous Wiener Schnitzel (Viennese Veal Cutlet).  It is the largest city in Austria and contains almost 25% of its population at just fewer than 1.75 million people.  Throughout history, this city has been a cultural epicenter in Europe, particularly in academics and music.  Today, concerts and operas take place on a regular basis.  It is also known for its large traditional balls (i.e. balls that take place in ballrooms).  The city is sprawling and contains innumerable historic squares and buildings.  Today, this is considered by many the top city when considering culture, markets, and infrastructure.  Urban planners today use Vienna often in their studies.

Our trip to Vienna began this morning at 8:45am when the Westbahn train line took off from Linz station.  This is a new train line in Austria that connects major cities in a single route between Salzburg and Vienna.  The brilliance of this line is its affordability and accommodations.  We purchased no ticket, but rather paid on the train after it set in motion.  The tickets were under half the price of a regular OEBB ticket and the cabins were much nicer.  The trains even had free wi-fi!  This is unheard of in most of Europe.

Vienna Train Station

Walking to the Inner City Ring

 We arrived in Vienna around 10:30am and we stayed until a train later in the day brought us back to Linz at 5:40pm.  Much of the day was simply spent walking.  We walked all over the city.  It contained numerous museums, but the largest and most affordable museum was simply the city itself.  Each street corner contained a new building, statue, fountain, or courtyard.  Horse drawn carriages brought tourists around the inner city and men in fancy outfits advertised for operas and concerts to be held that evening.

One of our first stops was the St. Stephan Cathedral which was built in the 1300’s.  The cathedral was massive, and its roof was of particular interest.  It bore many colored shingles to form the image of the city’s crest.  Amidst the spires and entrances were ornate carvings and figures.  Again, I was shocked at the level of detail that went into such masterpieces back in those medieval days.  We finished our visit with a trip up the old bell tower.  The view was spectacular.  We also learned that the Vienna fire department used to keep watch over the city from this tower chamber.  …a great use of resources!

St. Stephan Cathedral

Former location of the old 20,130 kg bell destroyed in WWII

We had lunch after this, sharing a few pizzas.  In Europe, when someone orders pizza, it is expected that they eat the entire pizza.  Granted, the pizzas are much thinner, but the amount still seems like a lot.  When we told the waiter we wanted to split them, he looked at us as if we had three heads each.  Some American concepts don’t quite fit into other cultures. 

Dan and I demonstrating a proper "Prost"

 We enjoyed the meal and the weather.  It was in the high 60s for most of the day with bright sunshine.  For this reason, we walked through the park and along the river.  I think the entire town of Vienna was out lounging in the lawns or along the river front.  Beers, ice-cream, and lemonade all seemed to be the popular foods and drinks.  Nobody was in a hurry and most folks were just relaxing or reading books.  One of the guys in our group asked a question which prompted some reflection on culture… “People go at a much different pace here, don’t they?”  I couldn’t agree more with this.  After having been in the German/Austrian states for an extended period of time last year, I noticed this clearly.  Nowhere in any American city would one see so many people lounging, reading, and relaxing.  We saw very few people with headphones, iPods, or electronics.  It was simply them, their company, and the sun.  I’ll have to share more on this in one of my future reflections.

All in all, the day was well spent.  It was nice to return a bit earlier so we could relax after a long day of walking in the sun.  Tomorrow we’re up bright and early for a session downtown and another company visit.