Grundfos details process market ambitions

Bjerringbro, Denmark — Grundfos has rolled out its strategy to establish itself as a major player in the process sector, starting in the food, beverage and pharmaceutical industries. The strategy is currently centred around Philipp Hilge GmbH — the German-based sanitary pumps maker, acquired in 2004, and now fully integrated into the Danish group.

According to Marco Prola, Grundfos group executive vice president, Grundfos now wants to go “deeper in the process industry” — an area the group has traditionally been weak in. The group, he said, had considered developing sanitary pump products itself, but decided it better to acquire an established player in the market.  “It is not only a question of the product, it is also a question of the competence that you need to develop.”

Bodenheim-based Hilge, which was established back in 1862, specialises in producing stainless steel centrifugal pumps for the brewery, dairy, food and pharmaceutical industries. The 200-employee company produces around 9500 sanitary pumps a year, and includes production sites in Schoetz, Switzerland, and Santeny, France.

Hilge is a relatively small company compared to Grundfos, but is very well known in the German market, noted Prola. “We can help with the fact that we are worldwide and, of course, we have some financial resources to invest.”

At the time of the acquistion, Grundfos forecast that it would double Hilge's turnover of around Euro30 million, within a few years. The Danish group this year invested around Euro2 million in Hilge, which was typically double previous investment levels as an independent entity, according to Hilge officials.

Grundfos estimates the total industrial end user market as comprising: industrial manufacture, Euro 650m; Life Sciences, Euro200m; Food & Beverage, Euro650m; Pulp & Paper, Euro800m; Chemicals, Euro1600m; Oil & Gas field, Euro700m; Automotive Euro300m.

According to Ole Gerlich, regional segment manager, industrial, water service, while the OEM, food, beverage and pharma markets are currently the key targets, the chemical industry “is even newer to us and even more for us to do, but we will move there within the next five years.”

Meanwhile, to grow its presence in the process sector Grundfos needs “to do something different and be a full-line supplier to industrial markets in food & beverage and pharmaceuticals,” said Gerlich.

Rainer Pfeffer, business manager at Hilge, expects to benefit from a range of synergies with the German company's new parent organisation —both in terms of production and marketing.

“We have some synergies in purchasing parts. Grundfos builds motors, we use motors. The other synergy is in the market. We deliver the pumps for the process and Grundfos delivers pumps for the secondary process for water, for treatment and dosing [via Alldos]. So we can offer a complete programme to the customer."

As announced earlier this year at Achema, next January will see the launch of a new industrial division under the umbrella of Grundfos’ German sales company, Grundfos GmbH. The organisation will have a single sales unit for Grundfos, Hilge and Alldos in Germany and will eventually be applied to every country, said Pfeffer. The new industrial division will handle sales of the three business areas:water supply/wastewater; general industrial applications; food, beverage and pharmaceuticals.

Asked about Grundfos’ targets for market share in the process sector, Prola said the market was very fragmented and difficult to evaluate. “Overall, we want at least to double what we have within the next five years,” he said, adding that this could mean gaining 2% market share in some areas and 30-40% in others.

According to Prola, there are many companies in the process market with sales of Euro5-20 million, which Grundfos had never considered as a competitor before but that are important in particular end user markets and geographic regions.

“We have to be flexible and have the applications and the knowhow at the same level. Our people here are the best in the world in terms of knowhow about the product but it is the application that is the key for us. We can't win simply by saying we are big,” Prola stated.