With its constant reinvestment in new products and technology, Grundfos Pumps is a leader in the global pumps market, as Exec Digital discovers
By Ellie Duncan
Grundfos Pumps had a ‘very good’ 2008, according to Sales Director for Industry Andy Shearer: “In the UK, it was exceptionally good – it was a record year for us. We saw in the region of 14 percent growth on the previous year.”
This is no mean feat for a company currently operating in a global economic downturn. Where other businesses are struggling to maintain the same profit levels, Grundfos is reporting record figures.
Perhaps the explanation lies with the company’s structure. Established by Poul Due Jensen in 1945, it is now privately owned. In the UK, the company operates from its headquarters in Leighton Buzzard, Bedfordshire and has sales offices in London, Leigh and Livingston, Scotland, as well as a manufacturing and distribution centre in Sunderland.
“Rather than have shareholders, he formed it into a foundation which was established as a self governing institution to consolidate and expand the economic basis of the continued development of the Grundfos Group.,” explains Shearer. “It’s protected from takeover and the mandate is that profit is to be reinvested into new manufacturing facilities, expansion into new markets and developing new products.
“It’s really there to put the company in a strong position going forward. So when customers are looking at assessing potential suppliers, they know that in Grundfos they can find a partner that’s going to be there for the foreseeable future.”
Acquisition, acquisition, acquisition
Today, the business manufactures approximately 16 million pumps a year and is represented by 58 companies in 43 countries worldwide.
Grundfos’ growth has been achieved through both organic growth as well as strategic acquisitions, which is how Shearer himself came to work at the company. “I joined about three and a half years ago but I joined as part of an acquisition,” he says. “I was working at a company called Hilge Pumps, a German manufacturer of hygienic pumps,
which Grundfos acquired.
“We integrated the Hilge UK sales operation into Grundfos.”
Renowned for its forward thinking, the pump manufacturer has its sights set on global expansion. “We’ve also acquired a company called Alldos, which is again a German manufacturer of chemical dosing pumps. More recently, we’ve acquired a company called Peerless in the United States, which is more industrial process type pumps,” Shearer adds.
This latest acquisition is in line with its strategy to corner the market in pumps for industrial purposes – a sector previously untouched by Grundfos.
“I think historically the company has been predominantly involved in pumping water; that would be getting water out of the ground from boreholes,” he says. “Building services applications is currently the biggest area of application for our pumps.
“The division that I’m responsible for is Grundfos Industry, and now we’re moving into pumping chemicals, products for food and beverage and pharmaceutical applications.
“We’re already the market leader in building services application by some way,” he adds.
“Industry is a relatively new market, so there’s the potential for significant growth.”
Investing in R&D
Another successful area of the business is its variable speed pumps, which is at the core of its research and development. Known as the intelligent pump, it automatically slows down when running on less than 100 percent capacity, according to Shearer, reducing its energy consumption.
Around 4.5 percent of global turnover is reinvested in research and development; not only developing new products but improving existing ones. With turnover at 2 billion euros, Shearer explains that’s 1.5 million euros a week is being invested in R&D.
“Because we’ve got this ever-increasing range of products – by developing our own products and acquiring other companies – and the products are getting more sophisticated in terms of electronic control, people need to be trained and updated, to make sure that they can advise the customer correctly,” he explains.
“In the UK, we have a dedicated training facility at Leighton Buzzard where we run courses throughout the year for both employees and customers across all business segments.”
A purpose-built training academy located in Denmark brings together employees from around the globe in order to enhance communication links.
Global presence, local service
Despite its global presence, Grundfos ensures costs remain low by regionalising its production capability, “so we’re not shipping pumps from far flung corners of the world”, Shearer adds. Its strategy has seen Grundfos secure contracts with major international corporations, including Coca-Cola, Pfizer and GlaxoSmithKline.
“People like that have got multiple sites across the world and they want a uniform supply of pumps and services,” he explains. “Having our own company in each of these different countries, we can provide that.”
Not only can the company provide customers with services above and beyond their requirements, but suppliers can also rely on Grundfos as a business partner.
“Stability, peace of mind and knowledge; there isn’t money coming out of the company to go to pay shareholder dividends, it’s all being reinvested,” says Shearer. “So for the long-term perspective, it’s a nice position to be in.”
View Digital Corporate Profile of GrundfosPumps in Food and Drink Digital June 2009