Maintaining a thriving manufacturing sector remains a priority of the EU economic policy. However, in the past, advances in global logistics along with low trade barriers have seen more and more manufacturing being relocated to lower wage economies. Whether in research, production or logistics, Europe has lost share, while others have gained.
But not every company has followed the silk road and 2021 served as a wake-up call to those who have championed offshoring. One such manufacturer is Pentair, the world-leader in water treatment and filtration.
We spoke to Timo Keski-Mattila, EMEA Director at Pentair, about his passion for European-based operations, what it meant in 2021 and why he feels it is now crucial as the company fine tunes its recognition of key customers’ needs.
“After the year we have just had, we have all seen that operating in Europe actually matters!”
Investing in European manufacturing
“It was some years ago that Europe seemed to lose sight of the importance of local manufacturing,” says Timo. “Companies had increasingly moved away from Europe taking with them production, development, support and other functions, in the belief it would save them money. But, after the year we have just had, we have all seen that operating in Europe actually matters!”
“It is not all about price. We believe, and have always believed, that manufacturing and operating locally gives us more control. More control over quality, supply, customer experience and local compliance. So, while our competitors have been busy importing from outside Europe, we have been investing in our European manufacturing base. We have been investing in quality systems at our factories in Belgium and Italy. We have been investing in our multi-language, multi-functional talent across the continent. And we have been investing in compliance with EU legislation, wherever we trade.”
“And we are still highly competitive in the market,” continues Timo. “In 2016 we confronted some below-par build issues and radically overhauled our quality processes. Today we have created European Centres of Manufacturing Excellence for both valve and tank production, that can be recognised as a benchmark in our industry.”
If there was ever any doubt about the Pentair game-plan, the arrival of Covid19 vindicated its strategy to be ‘Made in Europe for Europe’.
“I firmly believe that, by being based in Europe, we have been stronger in these challenging times than our competitors.”
“Yes, our business has been hit by the pandemic - it is a global problem,” reflects Timo. “We have seen chronic raw materials shortages, spiralling shipping costs and inflationary pressures. But I firmly believe that, thanks to the control we have by being based in Europe, we have been stronger in these challenging times than our competitors.”
Maintaining the manufacturing momentum
Pentair operates four business areas in Europe, all focussed on water:
Commercial Systems – also known as ‘Food Service’
Residential Systems – with a focus on softening
Components Business – manufacturing valves and tanks
Timo explains that they have been impacted by the pandemic in different ways. “The operating environment brought different challenges to each division. Our Pool and Residential businesses saw demand soar as consumers with more time on their hands sought to improve their homes. By contrast our Food Service business saw its market grind to a halt when lockdowns and work from home rules were introduced – only to bounce back when restrictions were eased. I am happy to say that all four businesses ultimately enjoyed a bumper year in 2021.”
“Had demand not outstripped supply, each would have performed even better. The squeeze on the global supply chain and worldwide raw materials shortages have been well documented. It has been hugely frustrating for our customers and ourselves - no one likes to be late with an order. Throughout we have done everything in our power to equally ‘share the pain’, so everyone gets a fair slice of the pie. And we have been learning all the time, working out how we can be more predictive and reactive in the future.”
“Manufacturing in Europe puts us in the driving seat. It gives us more flexibility to find alternatives where we can, and shuffle things around to cope with the shortages we have all seen.”
“I pay tribute to the teams at Pentair Europe who have helped us to weather the storm. From our operators who came into the factories during the pandemic to maintain the manufacturing momentum, to the operational taskforce team who have shown creativity to lessen the burden of delays on our customers.”
“Manufacturing in Europe puts us in the driving seat and gives us more flexibility to find alternatives where we can."
We are sticking to our game plan
Timo is cautious about trading conditions improving for 2022 but remains confident in the Pentair local manufacturing strategy. He also has plans to build and strengthen key account relationships in the coming year.
“I think we all have to be prepared for more uncertainty in the coming months,” he continues. “Materials shortages, global shipping delays, rising energy prices and inflationary pressures aren’t going away any time soon. That said, we will at least try to smooth out any price rises and maintain a fair distribution of stock – no one wants another year like 2021.
“But we won’t let external forces change our broad game plan. Our customers are ‘king’ and we understand that. We have put in place plans to recognise the differing needs of customer groups. The requirement of a small independent installer might be very different to a large distributor wholesaler and we are developing ways to better recognise and respond to those needs. For example, in some key accounts we are looking to foster better ‘functional co-operation’ with our customers; planners talking to planners, warehouse talking to warehouse and so on, so it becomes much more than just a transactional relationship.”
Making this change rests with our account managers – no-one is closer to our customers. Moving forward, our sales teams will continue to have more autonomy to make this work – I am confident our customers, especially those regional key accounts, will notice a positive difference.”
Made in Europe for Europe matters now more than ever
Pentair plans to increase its commitment to its European operations in 2022. Last year saw the successful consolidation of its softener assembly into one site at Herentals. In 2022 the company plans to insource the production of its Wellmate tank range to Europe, currently bought in from a Pentair factory in the US.
“At a time when most of our competitors’ products are sourced from distant shores, we will continue to strengthen our manufacturing capability in Europe,” concludes Timo. “It’s about control of quality, compliance, distribution and supply. And if 2021 has taught us anything, it is that Made in Europe for Europe matters now more than ever.
“If 2021 has taught us anything, it is that Made in Europe for Europe matters now more than ever.”
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