[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] LINZ TOUR AND POESTLINGBERG

Today was a day of Linz history and exploration.  Since it was Saturday, we did not have any class or company visits.  Our program did, however, manage to arrange a guided tour of the city for us in the morning.  This was a great way to get to know the city even better than one could through a simple Wikipedia search.  We began the tour in the Hauptplatz (Main Square) and eventually made our way through the old city hall, the castle, and finally the new cathedral.  The main   city layout is as follows:

Hauptplatz of Linz

Linz is located between the major cities of Budapest, Vienna, and Passau.  These are cities located on the Danube River.  In the north and south directions, Linz lies directly between Venice and Prague.  Because of its strategic position in the Austrian state, it developed into a major trading hub during the Roman Empire.  Other portions of its development could be attributed to both political and Church powers.  Because of a Jesuit college in the city, it saw much growth in the middle ages.  Even before then, a Catholic presence was a part of the city.  In the 700’s, the first records have been found of what is now St. Martin’s Church (Martin’s Kirche).  We visited this church on our tour.  While at the church, our guide touched on just how influential the Church had been on Linz’s, as well as the entire state of Austria’s, development.  Today, many visitors will note that all Catholic holidays are typically observed and that very few businesses are actually open on Sundays.  For a long time, the Church bishops and town/district rulers shared equal power or were the same person.  In Linz, the Maria-Empfängnis Dom (Maria Conception Cathedral) was constructed in order to exhibit the strength of the Church.  It is the largest cathedral in Austria and was built to seat 20,000 people; Linz only had a population of 29,000.  Another interesting fact about this church was that it faced north and south, unlike traditional churches, whose nave ran east and west.  This was so that the entrance of the state political house faced the cathedral entrance.  This was to show that after the bishop led as head of state, he would go immediately to serve the cathedral and God.

Past this older history, we were instructed on some of Linz’s more modern history.  Much of its economic success goes back to involvement with Hitler.  Hitler actually grew up in Austria, not far from Linz.  He lived in Linz for a large portion of his Childhood.  As an adult and ruler, he had planned on making Linz a major part of his Reich.  Fueling the war machine was a steel mill he implemented there.  Voestalpine, the steel mill we will be visiting on Tuesday, was originally built to supply steel for German war supplies.  After the war, Linz was split between the Allies, but eventually allowed to reunite under a new government.  Today, the steel mill supplies much economic success to the city.

As always, I am a huge history buff, so this tour was especially interesting to me.  I find it fascinating just how different lifestyles have been throughout the ages.  After looking at the closed-in, moat-surrounded city of the older days, it is astounding to think that was the hub of world trade.  International trade literally happened in peddler stands in an open air market in a town square.  Today, this would be unheard of!  BUT back in those days, this allowed people to buy and sell.  This allowed people to specialize and have a higher quality of living.  I’ll stop here, for fear of detracting more from the post…

After the tour, seven of us decided to hike the great Pöstlingberg.  This is a rather large hill with a pilgrimage church located at the top.  We decided to reject the 5.60 Euro cost of taking the tram and walked up the hill.  Around 30 minutes later, we found ourselves at the top of the hill with a spectacular view of the city!  See video post below:

In need of rest and some nourishment, we stopped at the café located at the top and sat down for a nice lunch.  I had a Vienna style pork loin and what I might have to claim as my new favorite beer in Austria- Pöstlingberg Schlössl. 

After lunch we visited the Wallfahrtskirche (pilgrimage church) which was named the “Seven Wounds of Mary”.  The church was gorgeous and certainly made the hike worthwhile.  We marched right back down the hill after visiting the church and immediately indulged in some gelato style ice cream once back in the main square.  Afterwards, the guys headed back to the Hotel while I stayed behind to catch evening mass at the Carmelite Church downtown.  Many churches line the downtown area, and all were quite beautiful.  It never ceases to amaze me just how gorgeous European churches can be.  Sometimes their décor and design can throw a person off as well.  In the Carmelite Church (whose patron saint was St. Joseph), there were tombs of religious in the side chapels.  These were glass tombs through which you could see the bodies of the deceased.  For anyone not used to this in a more contemporary American church, this might be a bit shocking.  Nevertheless, the churches were very beautiful, and attending a German mass again was a treat.

The rest of the evening was rather relaxed.  I met back up with the guys at the hotel.  They watched some of the NCAA tournament and I worked on some school work.  We later hit up Chinese for dinner.  Nothing like Americans having Chinese food from German menus in Austria!  Talk about some cultural mixing!  Tomorrow we head for Vienna early in the morning.  I am looking forward to the day trip.  Bis dann!