Festo sets the course for further growth
After the record year 2017, the Festo Group continued to grow in 2018. However, negative currency effects and an increasing slowdown in the global economy had a damping effect on sales, which increased by a total of 3.2% over the previous year’s figure to around €3.2 billion. Major investments in production and logistics capacities, for example in China, the USA and Europe, should now pave the way for the strong growth planned for the next few years. The independent family-owned company will continue on its course of growth and digitalisation under its new Chairman of the Management Board, Dipl.-Ing. Dr. h.c. Oliver D. Jung. The number of employees increased worldwide to around 21,200.
2018: a successful financial year, with growth and a gain in market share
Festo was able to continue on its course of growth in the 2018 financial year. Uncertainties in the global markets increasingly dampened business as of the third quarter. Negative currency effects also hampered the development of sales in euros. As compared with the record year 2017, however, sales increased once more by 3.2% to around €3.2 billion.
2018 was a successful year for us, despite increasing headwind from the global economy and negative currency effects. In terms of local currency and unit sales, we achieved high single-figure or even double-figure growth in 2018 at many national companies. We were therefore able to consolidate our leading position in Germany and Europe, and we even increased our market share in the hard-fought growth markets in the USA and in important Asian markets in 2018,” Oliver Jung explained.
Food and packaging and the electronics industry were important drivers of growth and sales. Process automation likewise registered above-average growth. The otherwise strong automotive sector showed a decline. Festo Didactic expanded its training offer for Industry 4.0 in 2018 too, thereby further extending its key position in this segment worldwide. The core markets of Europe and Germany showed positive development, as did Greater China, India and Southeast Asia, while neither North and South America nor Korea and Japan were able to match the good results of the previous year.
The number of employees rose to 21,200 worldwide (previous year 20,100), comprising around 9,200 in Germany (previous year 8,800) and 12,000 abroad (previous year 11,300). “We have taken on new employees, above all at our production plants, in order to cope with the increased volumes. A further point of emphasis consisted in the areas of digitalisation, software development and AI,” said Oliver Jung.
Artificial intelligence provides new impulses for digitalisation
Festo is actively advancing the use of artificial intelligence for industrial applications. An important step here was the takeover of the software company Resolto in April 2018: Festo can now develop industrial software in the field of artificial intelligence and offer it to its customers as additional value. Machine learning is providing important impulses for industrial applications.
In July 2018, Festo opened its first Experience Center in North America: in Santa Clara, at the heart of Silicon Valley, one of the world’s most dynamic hubs of innovation. The 5,000-square-metre Festo Experience Center (FEC) includes a large hall as a showroom for customers; thanks to augmented reality, visitors have the opportunity here to experience virtual solutions from the fields of semiconductors and electronics, solar and flat screens, assembly and testing, medical technology, laboratory automation, food and packaging, and process automation. A host of concepts and systems in the context of Industry 4.0 will gradually be introduced at the Experience Center. These topics include cyberphysical systems with app-controlled functionality, predictive analytics on the basis of smart sensors and big data concepts connected to the cloud, cloud-based dashboards and data analyses, energy efficiency and superconductors.
Global R&D network extended: close to the customer and to new technologies
In mid-2018, the Product and Technology Management division reorganised its global research and development network in order to develop the best solutions close to the markets and the customers. The central development functions for hardware and software, intellectual property and the technical control of the eight Technical Engineering Centres (TECs) worldwide were bundled under the umbrella of the newly created “Corporate Product Development” function. As in the previous year, the R&D quota was 8%.
In the new area “Corporate Research and Innovation” the existing research activities were united with product predevelopment and the areas of Future Concepts and Corporate Bionic Projects, so that ground-breaking and innovative topics for the future of factory and process automation can be addressed in a holistic manner.
With the takeover of Fabco-Air Inc. based in Gainesville, Florida in August 2018, the company extended its range of pneumatic actuators for the American market. Fabco-Air and Festo will together use the synergies of the sales channels to strengthen their position in North America and to rapidly gain further market shares in this important market area.
Another significant milestone was the official opening of the Technical Engineering Center (TEC) Boston in early October 2018. Festo has thus visibly arrived at one of the world’s most important development locations for Life Science and is therefore in a good position to further develop this promising growth market.
Supply chain greatly expanded worldwide
In 2018, Festo invested more than €300 million in the development of its supply chain in all regions of the world. At the new Chinese plant in Suncun the first phase was completed after only a year of construction, and production started at the beginning of 2019. The production locations in Mason (USA) and Budapest (Hungary) were also extended last year.
“We need a strong supply chain of our own in every region, so that we can rapidly and flexibly supply our customers in the markets. With the expansion in China, Eastern Europe and the USA, but also thanks to ongoing optimisations at all sites, we see ourselves very well prepared for the planned volume growth over the coming years,” said Oliver Jung with confidence.
Outlook for 2019: well set for further growth
Festo intends to continue on its course of growth in 2019. The supply chain will be further expanded. Numerous new products are already in the development pipeline. These include a greatly extended range of products for electrical automation with motors and servo controllers developed in-house. Added to this is an even larger range of attractive standard products, the new portfolio of products for the American market, and an excellently growing core range of products for process automation.
“With automation, we are operating in a highly dynamic, growing market. We see further opportunities for growth despite the continuing slowdown in the global economy. As an independent family-owned company, we will continue our successful strategic orientation of the past few years and incorporate new trends and technologies such as artificial intelligence,” Oliver Jung affirmed.