Interview
The time for leaving development to chance is behind us
Michael Pfeifer, CEO of the Pfeifer Group, uses the interview to explain the difference that Pfeifer’s corporate DNA makes in a recession and where he sees development opportunities for the future.
Mr Pfeifer, your sector has had to endure a considerable lean period after years of growth. Can you see light at the end of the tunnel?
Michael Pfeifer: “It’s undisputed that the timber industry has faced major challenges over the last few years. I think that you always have to keep one thing in mind even in a difficult economic phase, in a recession like this one: as a sector we have a promising future ahead of us. No-one is questioning the validity of our products and our business model. On the contrary: our raw materials are the basis for the major transformation processes that society has to go through to achieve a world with lower emissions. Wood grows virtually on our doorstep. It is one of the pillars of building sustainably and without harming the climate. Pfeifer products will be in more demand than ever in the future.”
You were recently confronted with reduced sales and real cost explosions, however.
Michael Pfeifer: “Massive cuts of the kind we recently experienced have to be overcome first of all. Pfeifer’s success was always founded in its ability to produce rationally. We have perfected what we can do and have never spread ourselves too thin with our product range. This characteristic is in our corporate DNA. In a declining economy, this is especially beneficial for us. Although we’ve increased in size over the last ten to twenty years, we’ve remained true to one of Pfeifer’s core values – our traditionally strong efficiency. From a certain size, the challenge lies in preserving manoeuvrability and the ability to adapt to a changing market environment. That is Pfeifer’s constant task. Because of this, we’ve stayed focussed on the essentials and have steered safely through the choppy waters.”
You are now one of the top 3 companies in the european timber industry. Growth often comes at the cost of efficiency and profitability. How do you prevent that happening at Pfeifer?
Michael Pfeifer: “We cannot stand still. At our size, properly managed growth is what’s needed to produce cost-efficiently and remain competitive in the market. The income this generates provides the innovative strength we need to realise permanent change successfully at all levels. In production especially we must ensure efficiency. Thanks to intelligent training and recruiting measures, we’re already exploiting the opportunities of automation and artificial intelligence. That will become even more significant.”
Automation is often equated with the loss of jobs.
Michael Pfeifer: “We want to grow through automation. For a start, growth means creating new jobs. But we do also have to automate as a result, because we’re finding we can no longer get the staff for certain tasks. The innovation thus lies in countering the lack of skilled and unskilled workers with the possibilities of automation and digitalisation. This will make us more efficient in some positions; that’s crucial.”
What does that mean specifically?
Michael Pfeifer: “The patching station at our natural wood panel factory in Imst offers a good example. Knotholes have been fixed by hand here for many years. This is now done automatically at a much lower cost – also using AI. With our Innovation Hub, we’ve established an in-house think-tank, which will continue to come up with development approaches like this in future. The time for leaving development to chance is behind us.”
Logs remain the biggest cost factor in your production, however, and are also subject to severe price fluctuations. How are you tackling this?
Michael Pfeifer: “We’re taking advantage of developments in the field of automation here too; the technology is really very impressive now. Thin-cutting saw blades, scanner technology and advanced networking of the systems within the plants facilitate higher yields. With a cut of more than five million solid cubic metres of logs a year, this makes a clear difference. We’ve been reusing all the sawdust for a long time, but our main goal is to generate added value from the timber product itself. We also rely on a strong network with forest owners and transporters.”
Key phrase climate change: one of the big challenges of the future will be securing access to raw materials. What else do you want to do in this respect?
Michael Pfeifer: “We’re striving for more internationalisation. The step towards Scandinavia with the acquisition and integration of Pölkky was significant for us. It ensures access to a high-quality raw material. We won’t be ignoring North America in future either. There are major resources there. We also see a lot of sales potential in North America. The US imports around 33 million cubic metres of sawn wood. At the moment, only three million cubic metres of that comes from Europe, with 30 million cubic metres coming from Canada. These volumes demonstrate the enormous opportunities.”
Pfeifer is a third-generation family-run company. Do you think that this success model will also work for the complex requirements of the future?
Michael Pfeifer: “Family companies are becoming ever more important, especially in times of crisis. At Pfeifer we think in terms of generations. The boards of listed companies often only think in terms of one contract extension to the next. But today we need a long-term vision if we’re to cope with the challenges to come. A family company like Pfeifer stands for long-term relationships and calculability. For employees and suppliers alike. Moreover, the clichéd image of patriarchal structures in family-owned businesses is an outdated one. This change has already been made. The next is already happening: the digital generation change. We have to exploit this potential and make the company accessible.”