Interview with GEA Chair Johannes Giloth
"Connecting the innovative power of the domestic market with the ability to adapt to global markets"Employees18.000
Founding year1881
The GEA Group has achieved a noteworthy turnaround and is improving its international positioning. This means increased networking of all participants, taking leave of traditional patterns of thought, and a clear focus on the customer. Executive board member and COO Johannes Giloth explains in the interview which factors were crucial for the company’s success and why consistent localization along the value chain is becoming ever more important.
Mr. Giloth, GEA has achieved an impressive transformation, and it is very profitable once again. How did the company do this?
In 2019-2020, GEA was in a severe crisis. Seven profit warnings in a row; the capital market had lost trust in the company. In 2020, our executive board started to realign the company under the leadership of Stefan Klebert. Initially, the focus was on increasing profitability and stabilizing the company. An important step was the change from a functional organization to one organized by technologies, with clear responsibilities. With the “Mission 26” strategy designed for five years, we then defined seven strategic levers with which we wanted to advance the company: For example, sales excellence and operational excellence. Our goal was to achieve a certain profitability by 2026 – and we did this by 2024. Building on this experience, we launched “Mission 30” in order to take our performance to another level by 2030.
Why, despite this experience, is it important to keep reinventing the company?
A glance in the rear-view mirror seldom serves to predict the future. It’s more important to think differently, to act differently, to examine yourself. As part of “Mission 26,” we laid the cornerstone and optimized individual functions, for example, we made production more efficient. Now we have to reach higher and work on cross-functional end-to-end processes. This requires a different type of cooperation. An example: In the operations sector, we are no longer concerned just with purchasing, but instead with a close interlocking of purchasing, production, and engineering. This new end-to-end view helps us work together to create added value – that’s the core of “Mission 30.” Only if we leave the functional silos behind can we examine the processes all along the value chain and also incorporate our suppliers and customers.
How do you motivate your employees to break through old patterns of thought?
The world changes and demands that we change with it. You can see in industries such as telecommunications and the automobile industry what happens when young, innovative competitors are ignored. German mechanical engineering in particular would be well-advised to open its mind. At GEA, we are watching emerging markets and competitors very closely and we are positioning ourselves to confront new challenges. A culture change is in progress, one that dictates that you must be quick and understand the market. Localization is the keyword here: We are also addressing customer-specific markets. Approximately 25% of our value creation happens in India and China today. To achieve our growth goals, we must also look to Asia and the USA. And we need new products for this. All of these are ambitious goals, but only ambitious plans set creativity free.
How does GEA combine sustainability and growth?
Sustainability is a pillar of our growth strategy. Our shareholders support this course and have overwhelmingly endorsed our Climate Action Plan 2040 in a landmark vote. With this, GEA is the very first DAX company that has received approval from the capital market for a net-zero transformation. Sustainability is also anchored in our engineering processes. Every engineer has to consider sustainability in his or her daily work. The exact figures are set out in our “M30 Green Sales Commitment”: By 2030, more than 60% of our sales are to be generated by sustainable solutions. Growth and sustainability are two sides of the same coin for us.
How do you incorporate your suppliers into this strategy, especially with regard to sustainability?
Our suppliers play a key role. Each supplier must be certified by EcoVadis and sign our code of conduct for sustainability. In addition, the suppliers themselves must pursue sustainability goals validated by the Science-Based Targets Initiative (SBTi). Co-ideation and co-creation are other central approaches to how we are working on the products of the future in order to achieve our sustainability goals. This closer cooperation with the suppliers is decisive, for only this way can we combine speed and expertise in the right measure.
What role do new technologies such as artificial intelligence and machine learning play?
AI and machine learning are driving both external and internal processes. For example, we are using AI-assisted applications for predictive maintenance in order to optimize maintenance costs for our customers. Looking inward, AI helps us reduce process and administrative costs. Robotic process automation and Big Data increase efficiency – a decisive factor for “Mission 30.”
About the person
Since 2020, Johannes Giloth has shaped the transformation of the GEA Group AG, a global system provider for food, beverages, and the pharmaceutical industry, as its Chief Operating Officer (COO). This industrial engineer, who was born in Worms in 1970, is responsible for a specially created department that brings the areas of purchasing, production, and logistics under a single roof. His career has taken him to some notable companies: as Chief Procurement and Chief Supply Chain Officer at Nokia, he played a key role in the digital transformation of the company’s global purchasing organization. Before that, he gained international management experience at Nokia Siemens Networks. He began his career as a consultant at Siemens Management Consulting and Gemini Consulting.
How can German industry – especially mechanical engineering – assert itself in international competition?
The challenges are indisputable, but growth is possible. With “Mission 30,” we are striving for annual sales growth of 5% on average. However, we will not achieve this growth in our regular markets in Europe, but in other regions of the world. To succeed in growth markets outside of Europe, companies have to give up their Euro-centric view and adapt their products to local requirements – both with respect to costs and functionality. This requires consistent localization along the entire value chain, from purchasing to production to engineering.
Can you name an example of a place where this approach has already been successful?
Thanks to adaptation to the Indian market, we were able to more than double sales with particular products within three years. The keys to this were understanding local market requirements, meeting the cost level, and producing on-site. Other mechanical engineering companies must proceed this way as well. Here the concern is not to lose sight of the core business, but rather to combine the expertise and innovative power of the domestic market with the ability to adapt to global markets. This requires letting go a little and transferring responsibility to teams on-site. This is how German mechanical engineering will be able to reclaim its leading position in the future.
About the GEA Group AG
Since its foundation in 1881, the GEA Group has developed into a globally active technology group for the food and adjacent industries. In figures: One quarter of all packages of spaghetti, every third chicken nugget, and every other liter of beer around the world are manufactured with GEA’s systems and technologies. With more than 18,000 employees in over 150 countries, GEA recently recorded sales of EUR 5.4 billion.
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