Koelner Sees Expanding Growth in Europe

John Wolz

Koelner Group debuted on the Warsaw Stock Exchange in 2004 with annual sales of EUR13.5 million (US$21.2m). Through decisive investment that drove up production capacity to support an expanding branch network, Koelner has grown to 2007 Group sales of EUR160 million. “In general the turnover for the Group was good,” Radoslaw Koelner told Fastener & Fixing Europe editor Phil Matten. Anticipating the inevitable next question he continues, “It was necessary, though, to reduce our forecast for net profit to EUR 4 million, mainly because of the serious losses we incurred in the UK.” A large operational loss was compounded by the shift in currency exchange rates in the last quarter of 2007.
“We saw a big drop in the value of the Pound to the Euro, which impacted the balance sheet because of the Euro loan the business was servicing.”
In January this year a new injection department came on line, with over 100 injection machines, working 24 hours a day with a team of just sixty operators. It is now voraciously consuming copolymer at nearly three times the rate of just a year ago.
The expansion was crucial – just to meet the growth Koelner branches are achieving.
“Our plastics capacity in the factory here was full in the second and third quarters of last year,” says Radoslaw Koelner. “That limited our growth potential. For example in Romania our branch grew by 18% last year, but it should easily have been 30-40%.”
As a result Radoslaw Koelner made the decision to relocate the main elements of anchor production from Glasgow to Srubex, the Polish bolt making factory, which the Group succeeded in acquiring at the beginning of 2008.
“We moved the two boltmakers, including the new Nedschroef 518, and right now we are making the necessary changes to our European Technical Approvals to include production at Srubex.” Assembly of anchors remains in Glasgow to ensure the finished quality of the product, as does research and development and the distribution operation for the UK market. The Glasgow workforce has been reduced by 36 from a total of 81.
Decision and process have clearly proven personally painful to Radoslaw Koelner.
“This has been one of my biggest personal disappointments. I truly believed that I would be able to help Rawlplug with the resources and scale of our group.”
Koelner invested EUR 1.5 million on the new boltmaker and associated equipment. In addition new assembly equipment was installed, the warehouse reequipped office buildings renovated.
“This was a large investment but our losses were simply becoming bigger. It was impossible to keep production alive in an environment that, as we discovered, had been irretrievably damaged by 15 years of previous management. We require modern, high level engineering to support the performance critical products that we supply to a highly competitive market. That is the unavoidable reality and it was not being delivered.”
Radoslaw Koelner is upbeat, though, about performance elsewhere in Western Europe.
“Right now Ireland is our best performing branch,” he told F&FE. “France, too, has shown quite good growth compared with two years ago.”
The powerhouse of the group continues to be Poland, where Koelner expects to achieve sales of around EUR 85 million this year.
Elsewhere, group operations are taking full advantage of vibrant economies.
“The biggest potential for us right now is Russia and the Ukraine,” he noted.
Since acquiring Srubex, Koelner has made significant changes. Grade 5.8 production has ceased entirely. Koelner is also scrapping 1,200 tons of redundant machinery, because the company can buy this product from China for less than the cost of rebar.
“The future lies in utilizing the engineering strengths of the people at Srubex with production technology that delivers a much greater return on fixed costs.”
Nearly 20% of production is already dedicated to automotive parts. A new Can Eng furnace is also in place, increasing the efficiency of heat treatment. And the company is using Nedschroef machines capable of producing 240 parts per minute.
“I need another two years to change everything. Right now it is around 60% complete,” Koelner said.
This is a summary of an article printed in Fastener & Fixing Europe. \ �2008 FastenerNews.com