A Glimpse into the Future With Balluff's CEO Florian Hermle

Flexible Working Hours, Home Office Arrangements and Flat Hierarchies

Interview with Florian Hermle

In 2022, the Balluff Group achieved a turnover of around 567 million euros. In addition to its central headquarters in Neuhausen auf den Fildern, Germany, the company has sales, production and development locations around the globe. The Swabian company is represented by 38 subsidiaries and other agencies in 61 countries. 3,900 employees work for Balluff worldwide.

With over 40 years of experience in the field of RFID, Balluff is a global leader as a sensor and automation specialist with industry-proven LF, RF and UHF solutions for extremely harsh environments. The product portfolio includes customer-specific complete solutions and robust transponders that are also suitable for use in harsh environments and on metal.

In this interview, Florian Hermle, Managing Director and Head of Technology Marketing and Sales at Balluff, explains his view of the company's successes since 2010 and ventures a look into the future.

Interview powered by: Think WIOT and Balluff

On the left Florian Hermle, Managing Director and Head of Technology Marketing and Sales at Balluf.

1. Mr. Hermle, as the great-grandson of the company founder, you joined the Balluff family business in 2010 at the age of 34. It is said that the timing for this was not easy, as the company was facing a turning point. How would you describe your start at Balluff?

The management team, my sister Katrin Stegmeier-Hermle, Michael Unger and I, had to switch Balluff from standby to full throttle very abruptly in 2010. The economic situation was not easy after the banking and economic crisis in 2008/2009, and the euro crisis in 2012. In 2009, high credit hurdles led to a lack of investment in the industry. The German economy experienced a severe recession.

Political measures, such as reduced working hours, had a positive effect. The German economy then grew again by 3.6 percent in 2010. Suddenly, skyrocketing growth was required. The crisis in 2020/2021 then showed once again that markets are volatile and cannot be accurately predicted. Short-term downturns can occur suddenly and at any time. We have mastered these crises, as Balluff has recorded steady and rapid growth since 2010.

2. In those years, economic crises were the main drivers of developments. How do you assess the crisis landscape today?

We have had several once-in-a-century events in the last four years. These include the turbulence of the COVID-19 pandemic, the temporary collapse of global supply chains, the war in Ukraine and the Middle East, but also the shortage of skilled workers and the rise in energy prices. Balluff must cushion these crises and, in addition to social responsibility, also defend its own values, because this is where our strengths lie.

I count the intention to internationalize and cross-border exchange among our strengths. At the same time, we as a company must demand framework conditions from politicians that protect our international competitiveness. This includes reducing administration and overregulation. If politics establishes the framework conditions, we can concentrate on our core tasks of creating value chains.

3. Germany is suffering from a shortage of skilled workers. How does Balluff protect itself against this?

For me, topics such as flexible working hours, home office arrangements and flat hierarchies are key elements of a modern working culture. In the canteen, I meet employees at eye level in my polo shirt. As a colleague and not as a boss. Throughout the Balluff Group, we cultivate a collegial atmosphere. This is our culture. This includes direct contact with each other, and not just within the management level.

The digitalization of communication also enables flexibility in terms of time and space, which is an advantage. In this context, a smooth return to work after parental leave and early childcare options also play an important role. This is not just theory. I am a father of three myself and recognize the value of flexible working hours, especially in the evenings when my family needs me. This flexibility makes Balluff an attractive company. This applies to Germany just as much as it does to the sites in Hungary, China or Mexico, for example.

We have to offer our colleagues everywhere not only work and a salary, but also a sense of belonging to a team and enjoyment of their work. This is how we retain talent. After all, last but not least, we are an innovative technology company with a focus on engineering.

With this self-image, we attract talented engineers. A precious commodity that is hard fought for in the central Neckar region. Overall, it is precisely these factors that make an employer attractive – including an appropriate salary and additional benefits.

4. How do you personally rate the new philosophy of young people to prioritize work-life balance and to prefer the 30-hour week?

In principle, I am open to this. However, I see this approach as a pursuit of flexibility rather than a clear preference for the 30- hour week. Generations Y and Z show little inclination towards rigid working hours in the classic nine-to-five format.

This flexibility is acceptable to me as long as the work is done by the agreed deadline. It is pleasing to see that such flexible arrangements work well with the younger generations today.

Management trio: (from left to right) Frank Nonnenmann, Katrin Stegmeier-Hermle and Florian Hermle.

BALLUFF International

Balluff opened a new production facility in Aguascalientes, Mexico, on October 27^th, 2023. With an area of 7,000 m², Balluff is regionalizing its supply chain and making a clear commitment to trading in the Americas with this €50 million investment.

5. Together with Rolf Hermle, your father and predecessor on the management board, you opened a new plant in Aguascalientes, Mexico, in October 2023. What was your experience at this opening?

The fact that my father, despite his age, accepted this invitation fills me with great pride. He has led the company for more than 40 years and it was a truly emotional experience to have him present at this opening. My father embodies not only the corporate culture, but also Balluff's deeply rooted value system. Instead of the prepared speech, he spoke spontaneously and from the heart, and his words were imbued with warmth and humanity.

His dedication to entrepreneurship, his relentless drive to grow and his ethical foundation were almost palpable. So for me, it was a great moment and we have already agreed that we should engage him more often as a Value and Brand Ambassador. At the same time, I am proud of what we have built as a team in Aguascalientes. This moment was unique!

The fact that we have constructed a plant of this size in just eight months, from the ground-breaking ceremony to the start of production, is also remarkable. I am really grateful to the team led by Frank Nonnenmann for their first-class work.

6. What significance does international growth have for Balluff?

Internationalization forms the backbone of our success, both in the area of production and on the sales side. The consistent implementation of this strategy is clearly demonstrated by the new or expanded locations in Mexico, Hungary and China.

Our global presence and the distribution of our production capacities not only ensure our internal flexibility, but also offer our customers increased security of supply. Regardless of developments in global politics, customers can rely on Balluff as a dependable supplier. This strategy forms the foundation of our corporate vision and will continue to pave the way for sustainable international growth in the future.

7. In July 2023, Balluff inaugurated a production area in Chengdu, China, which has been expanded by 75 percent. 2023 is therefore the outstanding year of international growth. What plans do you have for 2024?

None of the sort. The capacities that we have created through our locations in all three regions of the world already cover the business in these regions. This puts us in a better position to deal with future crises. This targeted diversification of locations not only improves our resilience to potential future crises, but also gives us greater flexibility. We can decide flexibly what quantities we produce and where.

This approach enables us to respond effectively to challenges, be they political developments or other influences. However, it is important to note that the construction of new sites cannot be carried out on an annual basis, as stability is an equally central factor.

In July 2023, Balluff opened a production area in Chengdu, China, which has been expanded by 75 percent.

Manufacturing X

Manufacturig X: Companies should share data across the entire manufacturing and supply chain. This can generate greater resilience, sustainability and competitive strength.

8. Is Balluff also taking advantage of the free-trade zone in China?

In China, the free trade import and export processes have been considerably simplified. The administration of a bonded warehouse at our production site is a thing of the past – instead, deliveries are made on the basis of an SAP listing, and customs clearance and tax relief are automated. The smooth cooperation with the local authorities is another positive aspect. It should be noted that the "Made-in-China" label is not always viewed with unreserved approval, especially in the American market.

Nevertheless, we are convinced that the combination of our high-volume plants in China, Hungary and Mexico gives us a robust position. This strategic orientation enables us to respond flexibly to the needs of the global markets and at the same time benefit from the advantages of the free-trade zones in China.

9. Keyword 'turnover': How is turnover distributed across the different continents?

We generate more than two thirds of our business outside the DACH region. The Americas currently account for 25 percent of sales, Asia for just under 20 percent and Europe for 55 percent. All three regions are experiencing continuous growth. The main driver of this growth is due to increased investment in Asia and America. For this reason, we are striving for a strong presence in these emerging markets. We want to benefit optimally from the growth potential there.

10. Which new products do you think will be indispensable for Manufacturing X in the future?

We see Manufacturing X as a long-term development that will take time and resources. Many of our products are not yet as rich in information as they should be in the future landscape. Here, we are relying on the integration of additional data through modern IO-Link products in order to be able to offer our customers more comprehensive information than just "on" and "off".

In terms of automation, we expect only a few groundbreaking innovations in the near future, as these are based on the products we already use today. Accessibility to these products has improved in recent years, but we are also already well positioned in this area.

An increasingly important topic for many of our customers in the mechanical and plant engineering sector is digital commissioning. This means that they want to create a fully digitized model of their plant and would naturally need digital components from Balluff for this. In this context, we see future demand for our innovative solutions and products in the area of Manufacturing X.

11. What product developments is Balluff planning in the field of machine vision and robotics?

Our subsidiary Balluff MV, formerly Matrix Vision, is very well positioned in the field of machine vision. For the use of robots, we have products that deliver high-precision images to enable optimal robot performance. In the future, we plan to expand our existing portfolio with additional products that specifically support robotic applications such as pick & place and bin picking. We see real innovation potential in this area.

12. Looking back over the past 13 years, which of Balluff's three growth drivers "internationalization, innovative product development or company acquisitions" do you attribute the greatest importance to?

Our M&A strategy is more technologyoriented. In recent years, we have acquired companies that complement our portfolio and fit our market strategy. Internationalization, on the other hand, remains an important driver for us. The ability to have a global presence is an essential growth factor.

Innovative product development also plays a central role. The focus here is not only on product innovations, but also on standardization and the creation of interfaces for efficient data exchange.

Our efforts to manufacture high-quality products while remaining competitive and attractive for our customers are directly linked to the topic of innovation. For this reason, we have chosen our slogan "Innovating Automation" to emphasize our clear focus on innovation as the driving force behind Balluff's success.

Automation

Florian Hermle, CEO of Balluff.

13. Which growth markets do you think will be the most important for automation in the future?

I believe that the future growth markets for automation will be shaped by two key factors. Firstly, the advancing automation of manufacturing processes will be accompanied by continuous development due to the increasing shortage of skilled workers. The focus here is on increasing efficiency and optimizing resources. Another important topic is autonomous driving, which is strongly driven by software.

This concept requires sensor technology and environmental support in order to be successfully implemented. The resulting networking will shape our world in many ways. In logistics, in particular, we see further potential for automation in order to meet the requirements for faster and more efficient product availability worldwide.

14. What new markets do you see?

The emerging markets in the field of new mobility concepts show a great need for automation and modern equipment. Factors such as urbanization, individualized mobility and the rapid availability of products on a global scale open up numerous opportunities through automation. This development enables us to make processes even more efficient and thus meet the needs of a growing population.

15. So do you see wireless sensing in conjunction with connectivity as the biggest game changers in the coming years?

Yes, definitely. I see significant changes, especially in the context of 5G and IO-Link Wireless. Wireless sensing solutions combined with connectivity have the potential to become the biggest game changers in the coming years. These technologies make it possible to continue using existing equipment in the long term, carry out retrofits and seamlessly integrate additional components or sensors. The growth potential in these areas is enormous.

The wireless transmission of data not only plays a decisive role in the optimization of processes in industrial automation, but also opens up opportunities in the area of smart city applications. In addition, the provision of machine status data is becoming increasingly important in order to detect failures at an early stage and keep equipment availability at a high level. Although none of these topics can be considered completely new, their actual application by customers is only now really gaining momentum.

The strategic use of wireless sensing in conjunction with advanced connectivity is therefore becoming a key driver for innovation and efficiency in the future.