Innovations strengthen future prospects

24 April 2009

Despite the noticeable downturn in the world’s economy, Festo succeeded in posting global sales of EUR 1.7 billion in 2008 (prior year: EUR 1.65 billion). Under adverse conditions in a declining global market, the company was able to grow its share of the automation market both in Germany and in its key foreign markets. Festo also created jobs in Germany and abroad during the first half of 2008.

Innovations strengthen future prospects

The number of employees grew by 5.4 %, due mainly to the further expansion of its new business fields, such as laboratory automation, medical engineering, the solar and flat panel industry and mobile pneumatics, as well as its electric drives, process automation and didactic businesses.

Festo believes it is well-equipped for the future – also in the current adverse economic climate. “We want to use the current situation to raise our innovative strength and sharpen our competitive edge so that we can offer tailored solutions to help our customers handle the crisis,” said Dr. Eberhard Veit, Chairman of the Management Board and Director of Technology and Market Positioning at Festo AG. Customers are increasingly using the time to develop new ideas and concepts together with Festo for their machines and equipment. “Over 200 employees in research and development are currently working on long-term, customer-specific projects. In the past year, we once again expanded our global research, development, production and logistics network. With our world-wide presence in 176 nations and a broad customer base in over 200 sectors, we are excellently placed to gain a head start when the economy begins to pick up again,” stressed Dr. Veit.

Festo is already working hard on targeted innovations and technologies – investing in the post-crisis economy. Over 80 new products exhibited at the Hanover Fair – from energy saving to eco-friendly and efficient technologies, to bionics – will demonstrate to visitors how they can sharpen their competitive edge. In addition to “green” manufacturing, the further development of mechatronic systems opens up completely new opportunities for adaptive and flexible production.

“Our customers are currently testing alternative solutions to save costs and improve machine efficiency. Customers want to work with Festo to tap savings potential with regard to energy saving, condition monitoring and cost-efficient holistic solutions,” explained Dr. Veit. There is also a strong focus on pneumatic safety functions, which make engineering simpler, faster and safer in compliance with machine guidelines.

Festo has already achieved leaps in efficiency with innovative design principles, the use of future technologies such as nano and piezo, alternative materials and miniaturisation. A further focus area in product development is energy efficiency. Customers are not only offered energy-saving products and services, but also innovative new materials and software concepts which minimise the effort of production monitoring.

In the field of biomechatronics, the company is testing approaches to the controlling and regulating of autonomous bionic systems, including smart system integration and the use of cutting-edge communication technologies. New gripper technologies for flexible and adaptive gripping in the handling industry have been developed with the aid of bionic design approaches.

The mechatronic development process is based on a multi-technology platform for the simultaneous development of mechanics, electronics and software for machines and handling solutions.

The company can thus offer technology-spanning automation solutions – pneumatic, electric, servo-pneumatic, electro-mechanical or bionic. “We offer hybrid solutions with a perfect combination of centralised and decentralised systems, in conjunction with technology-neutral advice tailored to the specific needs of our customers,” explained Dr. Veit. Festo also offers excellent training and consultancy expertise as well as innovations targeted to specific regions and industrial segments.

High investments have been made in the company’s German facilities in Esslingen, Scharnhausen and St. Ingbert. In 2007 and 2008 alone, approx. EUR 165 million was invested in the company’s high-tech facilities. The main focus is on the expansion of new business fields, such as laboratory automation, medical engineering, the solar and flat panel industry and mobile pneumatics, as well as the company’s electric drives, process automation and didactic businesses.

In its new business fields, the company’s networked cooperation with customers and suppliers has opened up numerous possibilities to jointly tap available opportunities by cooperating more closely in procurement and development.

In 2008, Festo invested 7.5 % of its sales in research and development. The Solution Engineering Center SEC Europe was also founded. The aim is to further reduce the company’s time-to-market, especially for customer-specific projects.

Festo’s fiscal year 2008 was dominated by extremely dynamic external conditions. The global market for automation technology continued to gather pace in the period up to March 2008. As a global player in the field of automation and didactics, Festo was able to benefit from world-wide economic growth and gain further market share both in Germany and in its key foreign markets. During the course of the year, however, there were growing signs of a slowdown in economic growth. The onset of this cyclical downturn also left its mark on Festo, albeit to a highly varying extent in the different economic regions. Whereas the development in Asia and Western Europe was moderate, there was almost double-digit growth in America. Eastern Europe also made good progress.

Nevertheless, Germany remained Festo’s main growth driver in 2008 with increased sales of 4.6 %. The demand for handling technology, as well as ready-to-install and customer-specific solutions continued to grow. The Didactic division also remained on course for growth. Its training and consultancy services for industrial clients, as well as its business with learning systems, both enjoyed significant growth.

The new business fields also posted stronger than average growth. The electric drives, flat panel and solar segments all reached growth rates of over 50 %. Growth in the medical engineering segment reached double figures.

As a result of the unexpected economic crisis, Festo fell somewhat short of its international expectations in the past year. Despite this development, Festo still succeeded in creating new jobs in the first half of 2008. At the end of December, around 13,500 people were employed by Festo around the world. Headcount in Germany and around the world was up by 5.4 %, compared to the previous year.

The potential for further international growth in automation technology is still regarded as high. “Every crisis conceals the chance of further growth and thus the opportunity to capture further market share,” says Dr. Veit. Manufacturers have to adapt to ever fiercer global competition and are thus forced to optimise their manufacturing processes.

The company will therefore continue to innovate and will raise its R+D ratio to 9 % this year. Key growth fields will be customer-specific, optimised and integrated mechatronic solutions for efficient and “green” manufacturing. “We are currently focussing all our resources and projects on providing optimum support for our customers, always with the aim of being well prepared for when the economy recovers and the market once again calls for fast deliveries,” stressed Dr. Veit.