It was to be our second stop that day on a week-long media tour that was winding its way through Germany. We were visiting a long list of German machinery manufacturers, and it was dark when we pulled up to fertilizer spreader manufacturer Rauch’s assembly plant adjacent to the Baden airport.
It was clear the company now occupied some old aircraft hangers, but it was a glimpse of the former Royal Canadian Airforce roundel painted on the side of a Cold War-era concrete hangar that grabbed my attention.
As it turns out, Rauch’s newly built assembly plant and its R&D centre now occupy part of what was once Canadian Forces Base Baden-Soellingen, which closed in 1993. With the end of the Cold War, our military pulled out of Europe, vacating a lot of prime real estate in a country where space is at a premium.
It was the perfect opportunity for Rauch.
“Here we were able to get seven hectares of land without taking the slightest bit away from farmers,” explained Jens Hille, marketing manager at Rauch, speaking in German. “The farmers are our clients, and we have a very close relationship with them. The last thing you want to do is make your clients angry by taking away their land.”
“The factory was built in 2009, in only nine months. We’d already designed a new plant on paper and were looking for the right plot of land. Most companies do it the other way around, they buy the land and then try to somehow build a factory.”
Focusing only on fertilizer spreading and metering technology, Rauch, a fourth-generation, family-owned business, has captured a dominant share of the market in Europe. Now it’s working on developing a more global presence.
“Every second spreader sold in Germany is a Rauch,” said Hille. “We’re represented in 40 countries around the world. It’s our goal to be a global leader in spreading and metering equipment in both agriculture and municipal services. Last year our turnover was 76 million euros. That means 16,000 fertilizer spreaders, with 60 per cent of our production exported to 40 countries.”
But cost-competitive manufacturing in Germany, a country with one of the most expensive labour costs in the world, and meeting the strict — and getting stricter — environmental laws and expectations of the region’s citizens, is no easy task, especially when there are manufacturers operating in parts of the world where the exact opposite business conditions exist.
The only way the company thinks it can remain a market leader is by staying on the cutting edge of the technology curve.
“We’re working on achieving this through an innovation strategy,” Hille said. “We have very high research spending, approximately five million euros last year.”
Outside the assembly plant a fleet of ag tractors, each from a different brand, was parked near the R&D shop.
“We need to have these tractors to test our electronic control systems,” Hille said, pointing in their direction as we all walk past them on our way to the assembly building. “A couple of years ago a fertilizer spreader was a simple machine. Today we have electronics. You need maintenance; you need programming. So we need well-trained service technicians.”
In fact, meeting all of Rauch’s workforce needs is a challenge. Inside the plant the diversity of the workforce is obvious, with more than a few women working on the assembly line.
“Our problem is (finding) a qualified workforce,” Hille explained. “We have a shortage of qualified labour. That is why we try to attract young women and interest them in working in typically male professions. It works quite well.”
In fact, it works even better than the company initially imagined.
“We noticed that since there are ladies in the assembly hall the overall climate, even for men, improved quite a lot,” Hille said. “The number of women working is increasing. And Rauch, as a company, is better for it.”
But even that hasn’t been enough. To help fill the gap, the company has also looked to its neighbouring country and enticed French citizens to drive across the border each day to work in the factory. Economic conditions are a little slower in France so the unemployment rate is a little higher there.
“Today, many workers come to work here and continue to live in France,” Hille said. “The border is just two kilometres away.”
But staying price competitive requires keeping those high German payroll expenses down. For many jobs inside the plant, that has meant a switch to robotics, especially in the welding shop.
“A good thing about a welding robot is it replaces manual labour,” Hille said. “Welders are very expensive in Germany compared to what they earn elsewhere. Where we use a robot, the cost per component becomes competitive. And we combine lower costs with better precision.”
“We now have very highly trained specialists in the welding shop. We no longer need simple basic labourers. This is the secret to manufacturing in Germany. We have high labour costs but we have a lot of automation. To be competitive globally, German companies are constantly being forced to innovate.”
Another of those innovations is the company’s decision not to build a new storage facility for the raw steel waiting to be formed into spreader parts.
“A couple of years ago we had a storage facility here,” Hille explained as we continued to walk through the assembly plant. “But now we have a long-term contract with our supplier and use just-in-time delivery. Because of the long-term contract we can also depend on stable steel prices. For us, the best storage facility is German highways.”
In another area of the plant, Hille pointed out how impurities are removed from the raw steel before powder coating.
“Here the steel is degreased,” he said. “This cleaning process produces waste water, but it’s not simply discharged into the sewer. We have our own sewage plant to purify this water. We’re not a burden to our environment here. For treatment of waste water you need heat. We get that from a nearby farmer who has a biogas facility. We get the waste heat from his power generator.”
That farmer was actually invited to put his biogas plant right on the company’s property to allow for efficient heat transfer.
“This is also an important principle of Rauch as a company,” Hille continued. “We supply the farmer with machinery, but the farmer is also a supplier to us. Farmers like connections like that. They want manufacturers to work with them. As a marketer it’s important for me to have connections like that and to show them.”
That kind of deal may generate brownie points with potential customers when it comes to marketing equipment, but the overall environmental profile may be even more important. Compared to many regions here in Canada, Europeans seem to have a heightened sensitivity for environmental issues.
“We also have 1,700 solar panels on the roof,” Hille said, pointing up as we walked back toward the main office. “It gives us the opportunity to produce 12 per cent of the energy we consume. This is our contribution to the next generation. We want to produce agricultural machinery with low C02 emissions.”
As we walked past the outside of the welding shop, Hille pointed to large ventilation ductwork. “Toxic substances from the air in the welding shop are filtered out, and the air is made clean again before being vented outside,” he said.
But despite all the sophistication built into the new factory, it’s who’s inside that Hille thinks is the most important aspect of the company’s business.
“Every year we take on 35 apprentice trainees,” Hille explained. “We’re very proud that our average employee has 15 years of service with the company. That allows them to accumulate know-how. We have very highly motivated employees.”
“Human capital is the most important kind a company can have.”
Motivation, by Rauch
As Jens Hille, marketing manager for fertilizer spreader manufacturer Rauch, guided a group of international journalists on a tour around the company’s assembly plant, it was hard to miss the various pieces of competitors’ equipment parked near the R&D building.
“Sometimes you’ll see different coloured machines,” said Hille, speaking in German and answering the question before it was asked. “We have all of our competitors’ machines here too. We test them; it’s very important to know how good they are, because we always want to be better. And you can only be better if you know exactly what your competitor is doing.”
Knowing what to build to stay ahead of the competition is one thing. Doing it well is another, so Rauch has incorporated a number of quality control measures into its standard operating procedure inside the assembly plant to ensure it achieves the level of product quality it’s looking for.
“Quality management is important,” Hille said. “Each production group puts a label on a machine, indicating which group assembled a component. If a farmer has a problem with a machine, we can trace back a problem to an individual worker. Those workers who have shown exemplary work will receive a bonus at the end of the quarter. Employees who’ve caused us problems will get additional training.
“Workers like it, they want to be part of our success. And it’s important that they are. Ever since we introduced that system, motivation has risen.”
Rauch also markets its spreaders in France through a co-operative agreement with French manufacturer Kuhn, hence the different name on this machine. French farmers are considered “patriotic buyers” and are more likely to buy from a French company than a German one.
This article first appeared as “Settling up” in the March 1, 2016 issue of Country Guide