Rettig radiates success
Rettig ICC (Indoor Climate Comfort) is the leading European manufacturer of heat emitters and owns major brands for radiators, valves and controls.
The company, which represents the Rettig Group’s industrial operations, has 17 manufacturing plants located across 11 countries and customers situated in over 50 countries. Customers are typically sanitary and heating wholesalers based mainly in Europe but increasingly in the US and Asia. The company’s product range includes towel warmers, convectors, electric radiators, under-floor heating systems, and thermostatic valves for heating and cooling, though its core product are steel panel radiators, of which it sold 8.7 million in 2006.
Rettig ICC is a wholly owned subsidiary of the Rettig Group, a family run company with over 200 years of history currently in the hands of the eighth generation of the von Rettig family. Rettig ICC enjoyed a 7.6 per cent increase in turnover in 2006, bringing the total to 621 million euros. The Group is actively involved in three business areas, as Rettig ICC’s CEO Markus Lengauer explains: “The Rettig Group consists of the shipping business, Bore, the real estate company, Tarkala, and Rettig ICC. The Rettig ICC headquarters are in the Netherlands and the headquarters for the entire group are in Helsinki where the family live. The number of employees we have is about 3300 and our production sites are predominantly located in Europe, with one in China. We sell our products via the professional channels, which is wholesaler to installer.”
In early 2006, Rettig ICC took the major decision to mould its company into two different brand umbrellas in order to accelerate brand definition and differentiation from other competitors operating in the same industrial sector. The Vogel and Noot umbrella which combines Vogel and Noot, Myson, and Finimétal, is technological with a focus on medium to large sized projects and applications, whereas the Purmo Radson brand umbrella, encompassing Purmo, Radson, Thermopanel, Dianorm and LVI has created an emotional quality brand with a focus on smaller applications such as domestic housing.
Markus explains: “We have been implementing several changes in our organisation recently. Rettig became the biggest player in the industry through ten brand acquisitions we made over a number of years but these brands operated independently of each other so we decided to integrate them, firstly by looking at products. We applied a platform concept to our main product, panel radiators, as we decided it wasn’t necessary to produce nine slightly different types. We tried to learn from the automotive industry where exactly the same platforms are used in different cars and applied this thinking to our product range. The second area we changed was branding. Our ten independent brands had ten sales forces and ten marketing budgets but by grouping everything under two umbrellas we could achieve our aim of becoming more effective, efficient and visible in the market. The third element was organisational change. In the past we had ten different organisations around the ten brands, therefore by changing the brands we hanged our organisation totally. Now we’ve grouped our 17 plants into an integrated manufacturing and logistics operation with Rettig panel radiator and special product plants manufacturing for each of our two brand umbrellas. Rettig ICC is basically the parent company to all these activities.”
In April 2007, Rettig ICC created a joint venture company called Sanret with Russian holding company Santo in order to introduce steel panel technology to Santo and improve panel radiator penetration in the Russian market. Having spent the past two years involved in consolidation, Rettig is now concentrating on growth and expansion. “Three years ago we became the biggest in our industry but we had little integration so we have spent the last two years making these synergies happen,” says Markus. “Now integration is established, our plan is to focus on both organic growth and external acquisitions. A good opportunity is appearing in the construction industry in Eastern Europe and, based on our market position, we can take our share of that growth. We have started to push back new frontiers with expansion in countries as far a field as Mongolia and naturally we would like to grow our operation in China. During the last three years we have not made any acquisitions, although we did begin a joint venture with Russia’s biggest producer of cast iron radiators, so we will now look to make acquisitions.”
Markus believes that there are several key factors that have strengthened Rettig’s operations including the consolidation of its products: “Logistics management is very important, as is service, and we support wholesalers and installers in handling our radiators with an excellent logistics system. Innovation is also key and we have a relatively big R&D department, which concentrates on innovation in the field of heat emitters and indoor climate control. Previously we had eight R&D departments that were all quite small and similar but now we have centralised all of our development activities to run product group teams and competence centres where a team prioritises research investments.”
Ensuring that its manufacturing plants are run efficiently has helped the company make the organisational changes happen, says Markus: “We have continuous improvement programmes in our factories and running the plants under one management has improved communication, enabling us to better facilitate knowledge transfer. Cost pressures in our industry are slowly moving production volumes to the East where labour costs are lower and here we’re running two big plants in Poland and one in Hungary to compete.”
Rettig’s flexible responses to industry changes have helped the company to overcome challenges: “One difficulty we have with our suppliers’ side is our dependence on steel and the recent consolidation that has resulted in steel prices growing by 50 per cent,” comments Markus. “A similar consolidation is happening on the buyers’ side amongst our customer base as there are more European competitors gaining bargaining power, so price pressure for our core product is intense. On the technical side, panel radiators are very popular in the growing Eastern market but Western Europe increasingly favours under-floor heating and, although our sales are growing strongly, this is not our main product area.”
In thinking about future plans, Markus believes that by concentrating on growing the business, Rettig will continue to thrive: “Our target is profitable growth. We have made important steps in securing profitability for the future by offering competitive prices and a package based on strong brands and good service, which is certainly very attractive to customers. We will focus on growth and exploit the position we have established in the market.”
Products: Heat emitters
Sites: Europe and China