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"Recovery?" Sounding good for now...

Author: Martin Stillger

We are all reading it again and again and feeling it too: Demand on the materials markets has picked up significantly in recent months. It has been driven above all by a re-emergence in the automotive industry. Volumes and prices are rising again. That is good – isn’t it?

At first sight: Definitely! We, the materials segment of thyssenkrupp, were also able to benefit from this sudden tailwind in the market. The figures for the first quarter of our fiscal year confirm this: In total, we sold more goods again in the months October to December 2020 compared to the previous months. In terms of volumes and prices, we were even at the level of the first quarter of 2019 in most regions and product lines. That is definitely positive!

But to rely on the economy alone, on something that we ourselves have no control over? That would be fatal!

There have always been and still are fluctuations in materials trading. That is why forecasts of price developments in this market are so uncertain. That especially applies for steel. And since we cannot change this ourselves, we have to concentrate on what we can change by our own means.

This is exactly what we are doing with our "Materials as a Service" strategy, or MaaS in short. With this strategy we want to be not only the best materials seller but also the best supply chain manager in the future. Why? Because it gives us a double win: We make ourselves significantly less dependent on cyclical and therefore price-driven materials trading, and we strike the chord of our time. Because our customers are operating in an environment of tension of ever more complex supply chains, shorter product life cycles and growing sustainability requirements. They need a strong partner for this who can do more than just supply products. And this partner is us.

thyssenkrupp warehouse forklift

Of course, we are pleased when there are cycles and times when we can sell more and at higher prices. But the fact that our latest figures are better than expected is not only due to this. We are now reaping the first fruits of our comprehensive transformation. Over the past year, for example, we have driven forward a whole load of optimization measures on our "Mission to MaaS”. Both, in terms of our cost structures and our business and organizational setup. The current phase of our transformation is all about focus. The focus on our core markets and our core competencies. And these lie in an area that is more critical to success for the future than ever before: intelligent supply chain management. This is where we are investing sustainably.

In our core market Germany, more precisely in Rotenburg in Lower Saxony, we will be putting the new state-of-the-art logistics center of our subsidiary thyssenkrupp Schulte into operations in a few weeks' time. Around 60 million euros have been invested in this project. The project is a beacon for us. By introducing a new logistics concept for the entire industry, we will set new standards in the smart-efficient handling of highly complex processes in warehousing and processing.

And we are also currently investing more than 20 million euros in our core market North America. This is aimed both at building additional capacities and expanding our service business. In the past fiscal year, we generated around 25 percent of Materials Services’ sales in North America. And demand there is continuing to grow – for our products and above all for our services.

 

In times when there is hardly a day without a supply chain-related headline, it is now clear to everyone that reliable availability of goods can no longer be taken for granted – even in structurally strong regions. Tomorrow's supply chains must become much more resilient. At thyssenkrupp Materials Services we are working on precisely this. We have already launched more than 20 pioneering projects for this purpose.

“Recovery” is certainly a good thing – but we must not and will not rely on it!