Packaging Technology

Bosch Packaging Technology strengthens leading position in the international market Dipl.-Ing. Friedbert Klefenz,
President of Bosch Packaging Technology,

at the Annual Press Conference, March 11, 2013

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  • March 11, 2013
  • Packaging Technology
  • Presentations

press release

Ladies and gentlemen,
members of the press,

I too would like to welcome you to our annual press conference here at the company headquarters of Bosch Packaging Technology. We are delighted by your interest in a division of the Bosch Group that rarely finds itself the focus of media attention. You may not realize it, but we’re actually much closer to you in everyday life than you might think! Most types of coffee, salt, flour, chocolate bars, cereal bars and gummi bears, as well as a host of pharmaceuticals like insulin or aspirin are packaged by Bosch Packaging Technology machines. Mr. König will shortly offer you a glimpse into this fascinating technology, and later you will have the chance to experience it live for yourselves.

The examples from the pharmaceutical and food industries just mentioned indicate just how exciting and diverse our field of business is. It is expanding dynamically, and its growth is shaping the development of Bosch Packaging Technology. What’s more, our company is developing even better than the packaging machine market as a whole, as I would now like to demonstrate on the basis of our current financial results.

Financial results 2012
In the last fiscal year, our company racked up sales of 914 million euros, up 123 million euros or 16 percent over 2011. After adjusting for currency effects, the growth in sales amounted to 12 percent. Our number of associates worldwide rose from around 4,700 to 5,000 during the same period, an increase of six percent. And let it be known at this point: we not only intend to keep up this pace in coming years, we are determined to do so. This makes us one of the fastest-growing business divisions of the Bosch Group in percentage terms at the moment.

Explanation of special-purpose machinery sector
As you can see, our special-purpose machinery sector is less dependent on broad economic growth than other areas of the mechanical and industrial engineering sector. One of the reasons for this is that our customers have very long planning horizons. The structure of the sales markets also tends not to shift as abruptly as it does for other consumer goods like cars.

This is something you’ll immediately recognize if you think about your own buying habits. Foods like bread, pasta, fruit and vegetables are shopping staples. And if you are a fan of tea or coffee, or need medication, you are not going to want to go without these, even during tough economic periods.

Development of various industries
I would now like to say a few words about the pharmaceutical and food industries. The pharmaceuticals market is set to continue growing strongly in the coming years, too. We anticipate market volume to reach 1.1 trillion euros by 2015. Two years ago, the corresponding figure was just 850 billion euros. Additionally, there has been a significant improvement in distribution channels, above all in the emerging markets, enabling both the pharmaceutical and food industries to offer a broad range of products across a large market area.

Moreover, more and more countries are recognizing that suitable packaging can lengthen the shelf-life of food, thus helping to use resources more efficiently. Packaging is one way of improving the supply of food to millions of people. It is invented for life. Bosch Packaging Technology has been part of the FAO’s global SAVE FOOD initiative since 2011 through its involvement in the packaging activities of VDMA, the German association of mechanical engineers. It also acts as spokesperson for the cooperation between the Federal Ministry for Economic Cooperation and Development (BMZ) and the Bill & Melinda Gates Foundation to combat world hunger.

Regional development
Improving the supply of food to millions of people is a very important issue in Africa in particular. Considerable progress has been made already, and we too are getting more and more involved. Last year, the share of sales made on the content was around six percent. Our goal is to raise that to eight percent in 2013. Africa is becoming a market that merits a lot of attention. With our assembly facility in Midrand near Johannesburg, South Africa, we are already among the biggest packaging machinery manufacturers on the continent. We established a further distribution and service center in Egypt last year. We plan to continue building up our African business in the coming years, especially south of the Sahara. Our focus on Africa is yet another aspect that sets us apart from the majority of other competitors.

The important triad regions (Western Europe, the United States and Japan) are still our traditional markets, although we too find that Asia plays a prominent role in our business, with one quarter of our sales now generated there.

Allow me to demonstrate the dynamics of this particular market using China as an example. We started out twelve years ago in Hangzhou, about two hours’ drive by car from Shanghai, with a dozen associates. Today we employ around 500. The end of the month will see the official inauguration of the third extension to the plant. The amount invested in this new facility, which has a surface area of over 8,000 square meters, totals some 7 million euros. Because this is nowhere near enough, we already commenced operations at our second Chinese location in Chengdu, Sichuan province, at the end of 2011, and plan to hugely enlarge the site in a similar fashion.

Our new factory in Verna, in the Indian state of Goa, came on stream last year. Whilst perhaps not quite at the same level as in China, business in the region is still developing at an impressive rate, with average annual growth rates of over 30 percent. We intend to significantly expand the workforce at our new location over the next three years. Beyond this, the new plant will generate many different indirect jobs. The current production capacity of 200 machines per year is expected to double in the next three years.

This development completely embodies Bosch’s “local for local” strategy. We are closer to our customers, and work with them to develop individual solutions. In China, we have since become the largest local supplier of packaging machines within a highly dynamic market that is increasingly producing to export. We expect to continue to achieve double-digit growth rates there over the next five years.

We have also made good progress in North America, and our performance in Latin America and Europe has been satisfactory. As in Latin America and Africa, Eastern Europe and Russia in particular have definite market potential that will translate into corresponding growth in coming years.

Germany
Our expansion outside Germany secures locations inside Germany and allows additional investments. Last year, we moved into another new building in Crailsheim, where our lead plant for pharmaceutical products is based. Extending the site has created 70 new jobs in the Schwäbisch Hall region, the majority of which are in assembly and development. This will soon take the total number of associates working in the packaging technology division in Crailsheim to around 900. All in all we invested 13 million euros in the extension of this location.

And we continue to count on new talent. We are currently training some 200 young people here in Germany and a further 100 in other countries. As you have probably heard in recent weeks, we send our apprentices abroad, above all to Thailand. A five-week stay at our location there followed by a week of teaching at a school for 120 pupils in need allow them to gather important social and intercultural experiences within a foreign-language environment. All of this will be very useful to them when sent abroad to carry out assembly assignments later on.
A global strategy is fundamental to us because we generate more than 90 percent of our sales outside of Germany. There are already more than 90 percent of 5,000 Bosch Packaging Technology associates working in countries outside Germany. Bosch Packaging Technology is represented at over 30 locations in more than 15 different countries.

Strategic objectives
All in all, the international market in which we operate grew by six percent last year. If you compare this growth to our own sales in 2012, it clearly shows that we have successfully managed to expand our market share. This underscores the consolidation process we already predicted a few years ago. The market is increasingly shifting toward those companies that are in position to offer comprehensive solutions from a single source.

This trend will continue to strongly shape our industry in coming years, and is one that we too are prepared to meet head on. For despite the notably rapid growth our business has enjoyed, this is far from being something we can take for granted. The global expectations of consumers, legislators and international competitors, directed at our customers in the pharmaceutical and food industries, are becoming ever more demanding. Consumers are more critical than ever and invariably expect to buy premium products of impeccable quality at the lowest possible prices. This puts increased pressure on the retail trade.

Pricing pressures in the pharmaceuticals industry call for greater use of high-tech processes. It’s important that we match these developments by offering correspondingly premium-quality packaging and machinery that can be used flexibly.

Furthermore, we are responding to the pricing pressure exerted on our customers by offering them additional services. Even in the development phase of new machinery, we make sure the design allows tool and product changes to be carried out quickly at a later point. And our components are matched to allow customers to configure their own tailored solutions from a single source.

Over the internet we offer our customers much more than the rapid online procurement of replacement or spare parts, helping keep production downtimes to a minimum. Should an interruption occur, our specialists are directly connected online to the location of the machine in question via our Mavus-System, enabling them to offer advice and assistance without having to travel great distances. Connected service and connected consultation are aspects of our approach that are just as important to us as developing new innovative solutions in response to technology trends, as Mr. König will explain in greater detail in just a moment.

Mergers and acquisitions
We want to broaden our range of activities in all fields, using the strengths we already have and through acquisitions. The acquisition of Hüttlin and Manesty in 2011 allowed us to perfectly supplement our process technology solutions, in particular drying and granulation as well as tablet pressing and coating. Last year, we extended our inspections expertise through the acquisition of Eisai Machinery, the machinery arm of the Eisai Co., Ltd., Japan. We make our customers’ products safer by being able to detect incorrect filling levels or particles, and enhance our own expertise for complete systems and production lines at the same time.

In the fall of 2012, we completed the acquisition of Ampack GmbH in Königsbrunn, near Augsburg in Germany. The company's portfolio comprises cup and bottle filling machines as well as dosing systems and peripheral machinery, which are deployed to fill and package highly sensitive food such as milk products, cereals, and food for babies and hospital patients. Here, once again, the same motto: invented for life.

The portfolio also comprises services such as the maintenance and general overhaul of used machinery, the supply of spare parts, the validation of filling lines, and training programs for machine operators. So you can see that this acquisition also perfectly fits our integrated approach, which includes consultation, production and comprehensive service in everyday operation.

Outlook 2013-2015
Ladies and Gentlemen,
I hope we have succeeded in revealing to you the grounds we have for feeling confident about the next few years. For as I stated in my introduction, we want to continue to exhibit stronger growth than our market as a whole. Our objective for this year is to grow sales by a high single-digit percentage figure. Our current incoming orders and orders already booked confirm this prognosis.

We aim to achieve a sales total of 1.5 billion euros by 2015 – 60 percent more than we achieved at the end of 2012. As explained, we will expand all sectors of our business to reach this target. We will be driven by our own strengths, and will make further acquisitions whenever suitable opportunities arise to extend our range of services.

Mr. König will now explain the trends and technologies that will underpin our success. Sit back and allow yourselves to be transported for a few minutes into the fascinating world of packaging technology.

For now, I would like to thank you for the kind attention you have given me, and shall now hand over to Mr. König.

RF00190 - March 11, 2013

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