FLSmidth reinvents itself This is the story about a 129-year-old industrial group which shakes off the dust and successfully tackles new, strong competitors from the Asian growth countries. FLSmidth delivers large projects and has over the past five to seven years completed a radical business development process during which the group has in many respects reinvented itself. The group’s EBIT has today grown from 2-3% to 8-10%, and the honourable industrial group is at the forefront when global players fight for new orders. FLSmidth’s order intake and quarterly report for the second quarter of 2010 do not show much sign of recession or financial crisis. During the first five months of 2010, FLSmidth has received 14 new, large orders. ”We are doing better than our competitors, and there is no doubt that we have won market shares within both the mineral and cement areas during the past period,” says Jørgen Huno Rasmussen, Managing Director, to the Danish financial newspaper, Dagbladet Børsen, on 31 May 2010. He points out that the improved competitiveness is a result of both the development of new technologies, products and increased values for the customers, and extensive reduction in costs which have been implemented during the past five to seven years. ”The key word in our development process has been a focus on value creation – partly for the customer, partly for ourselves”, says Bo Steffensen, CLO (Chief Lean Officer), who has participated in the entire journey. He has held various operations manager positions in FLSmidth since 1989, and the operations of the industrial group do not have many aspects which Bo Steffensen, who is an engineer, is not familiar with. Today, he is in charge of FLSmidth’s global lean programme with direct reference to the Executive Board. The Chinese are coming In 2005, FLSmidth’s Chinese competitors had 1-3% of the world market for equipment and service to the global cement and mineral industry. In 2009, the Chinese players had acquired 32% of the world market outside China. The reason for the Chinese success has been considerably lower prices, in fact as low as 40% of the price for a similar western plant for cement or mineral production. FACTS on FLSMIDTH FLSmidth is a leading supplier of equipment and service to the global cement and mineral industry. FLSmidth delivers anything from individual machines to complete cement and mineral plants, inclusive of services before, during and after construction. FLSmidth is a global *EPC business with presence in more than 40 countries and project and technology centres in Denmark, India and the USA. The group’s internal resources primarily include engineers who develop, project, construct, mount and service the equipment, whereas most of the manufacturing has been outsourced to sub-suppliers. FLSmidth has during the past 129 years developed a business culture based on three basic values: competence, responsibility and cooperation, reflecting the way in which FLSmidth interacts with its stakeholders. In 2009, FLSmidth had a turnover of about 23 billion DKK and just under 11,000 employees. * EPC = Engineering, Procurement and Construction 3
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