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Changes at German robotics firm Kuka raise questions over Chinese intentions | Business| Economy and finance news from a German perspective | DW

26. November 2018
in Business
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Changes at German robotics firm Kuka raise questions over Chinese intentions | Business| Economy and finance news from a German perspective | DW
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When the Chinese home appliance maker Midea took over German “Industry 4.0” darling Kuka in 2016, business angst in Europe’s economic powerhouse was palpable. The fox was not just in the henhouse — the door had simply been opened to him, many German opponents of the €4.5 billion ($5.3 billion) takeover suggested.

As a cutting-edge German robotics firm, Kuka was precisely the kind of high-end European manufacturing company that many felt should not be sold off to the Chinese and their growing ambitions in the world of automation.

Teutonic teeth were gnashed all the way to the top of German government, but despite calls to intervene, Chancellor Angela Merkel did not do so and the takeover went through serenely. Kuka is now effectively a Chinese company.

Kuka’s new owners were at pains to point out that they did not want to cut jobs at the company’s Augsburg base, and that they would be hands-off in their management approach.

However, Monday’s news that Kuka CEO Till Reuter is to step down in December 2018, several years earlier than expected, suggests that the pace of change at the company is going to increase significantly in 2019.

One flew out of the Kuka nest

Reuter said in 2017 that Kuka’s biggest goal was to become “number one in China,” an industrial market with arguably the biggest robotics potential.

Having extended his contract as CEO last year to stay until 2022, and with a successful decade in charge already behind him, there were few public indications that Reuter would be going anywhere.

Read more: Exit the Dragon? Chinese investment in Germany

However, Kuka has had its problems over the past two years. Growth has been sluggish and a fall in orders led the company, which employs more than 14,000 people across its multiple divisions, to downgrade its 2018 sales forecast from €3.5 billion to €3.3 billion. The value of Kuka shares has fallen by more than 50 percent in the last year.

While weaker growth in Asia was blamed by the company for the lull, analysts have cited other issues.

One insider from the 2016 takeover told the Handelsblatt newspaper last year that Midea may have overstretched itself with the purchase. Kuka itself has acknowledged “capacity constraints” on certain projects in China and delays on those projects, along with existing struggles to meet high levels of demand quickly enough, have put the company under pressure.

Sky no longer the limit for Reuter

According to a report in the Financial Times, Reuter has increasingly come into conflict with Andy Gu, chairman of the supervisory board from Midea, over Kuka’s strategy in China. Reuter had been keen to stay on, but his departure is a clear reflection of the fact that the company is now firmly in Chinese hands.

Deutschland - Kuka-Chef Till Reuter verlässt überraschend Roboterhersteller (picture alliance/dpa/S. Hoppe)

Till Reuter has headed Kuka since 2009

How Midea handles the succession process will be closely watched in Augsburg, and indeed, in the Chancellery in Berlin. With sensitivities over Kuka already keenly felt after the controversial takeover in 2016, a China-centric appointment to replace Reuter will likely confirm the worst fears that critics of the deal in Germany had.

That was that the sale of such an innovative company to China was effectively a loss of intellectual property and high-tech know-how into Chinese hands and heads, something which would make German ambitions to become a world-leader in so-called Industry 4.0 innovation all the more challenging.

Speaking to Deutsche Welle, Zhang WeiWei, an economist at Shanghai’s Fudan University and an influential voice in Chinese government circles, said European countries should not be concerned by Chinese investment such as that which has taken place at Kuka.

“I don’t know this case but China is a strategic area for European companies. it is the world’s largest consumer market and the sky is the limit,” he said.

No details are yet known on who Reuter’s long-term successor will be, but it is confirmed that Peter Mohnen, the finance chief at the company, will take over as CEO until a long-term replacement is found.

Watching closely in Augsburg

The growth potential for Kuka in China is big. Within a few years, the country is expected to account for more than 40 percent of all industrial robot sales and automation is a big part of the country’s economic strategy. Kuka already holds a considerable slice of the Chinese market and even though his tenure has ended abruptly, Reuter deserves plenty of the credit for that.

Deutschland KUKA Robotics (picture alliance/dpa/Z. Jinqiao)

Kuka is regarded as a world leader in robotics

Long before Midea’s investment, Kuka was targeting China. CEO of Kuka since 2009, Reuter was in charge when the company opened its first Chinese plant in 2013. Last year, he pointed out in an interview that in six years under his watch, Kuka’s Chinese revenue stream had increased tenfold to €500m.

“I am proud to have been part of KUKA for the last ten years and pushed robotics forward together with the team. Robotics and automation are the key topics of the future. I wish you all the best for the future,” he said in a statement.

Read more: From the world’s workshop to the world’s tech hub: China’s economic leap forward

Gu thanked Reuter profusely in his own statement, suggesting that the break was not entirely acrimonious. “Kuka is now well-positioned to re-enter a path of sustainable growth, benefiting from the increasing demand in intelligent robotics and by strengthening the position in the Chinese market,” he said.

Reuter’s departure evidently spells a change of direction for the company, which was founded as a house and street light enterprise in Augsburg in 1898. Its staff in that city, as well as those in Germany and Europe who had reservations about the deal from the start, will be watching the next moves very closely.

  • Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Organized chaos

    The night before opening, the exhibition halls are a blur of activity; saws and hammers are at the ready as the various stands are put together. This is a night for the builders, one of whom is pictured here. Elsewhere, packs of cleaners buzz around, organizing and disposing of the many tons of packaging material and waste.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    And we’re off!

    By Monday morning, everything is ready and the visitors can come in. The organizers are expecting up to 200,000 people. That’s much less than during the fair’s heyday, when up to 500,000 would regularly come. An arguably more important number is the amount of trade fair contacts made between those exhibiting and attending. The organizers reckon there are around 5 million of those.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Robots, as far as the eye can see

    Nobody has counted them all, but it’s clear that many thousands of robots are on hand to help out at what is the biggest industrial fair in the world. They come in all shapes and sizes and they are getting smarter, not to mention more tame and easier to work with.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Our friends and helpers

    When humans and robots work together on something, safety is obviously of paramount importance. The robot pictured here, developed at the Karlsruhe Institute of Technology (KIT), has several sensors which ensure that the robot retreats or is halted when a safety distance is exceeded.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Hi, Robot

    Christian Trapp is an engineer with the automation firm Festo. He and his colleagues have developed a self-learning work-aid robot. Controlled via eye detection, voice control, remote control, VR glasses and sensors on clothes, the machine learns on the job.

  • Angela Merkel and Enrique Pena Nieto at the Hanover Trade Fair 2018 (Getty Images/AFP/T. Schwarz)

    Hanover Fair: Where humans meet machines

    Mexican friends

    Mexico is the first Latin American country to be a partner country of the Hanover Fair. There are 150 Mexican exhibitors there, and the country’s president, Enrique Peña Nieto, opened the industrial show with German Chancellor Angela Merkel. Heard at the exchange of jerseys was the sentiment that the only wall Mexico needs any time soon will be when they play Germany in the forthcoming World Cup.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Where IT meets industry

    The Hanover Trade Fair has long been an important port of call for large IT firms, such as Microsoft. Pictured here is a corn sorting machine from Swiss firm Bühler. Using a cloud-based solution, it can isolate harmful corn kernels contaminated with aflatoxins, a naturally occurring fungal toxin that can be highly dangerous if it enters the food chain.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Charge me up

    If electric cars are to become a common feature of German roads, the country will need a comprehensive network of efficient charging stations. The industrial company ABB already knows electricity; now it is bringing that expertise to the road. The charging station pictured behind the car here puts more power in, with greater range and for less charging time than many current alternatives.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    The ancient craft of e-mobility

    E-mobility is nothing new in some quarters. The electric cart has been around for decades, especially as a means of transport in factories. Jungheinrich, a manufacturer of forklift trucks and other warehouse vehicles, has a lot of experience with battery technology because many of these vehicles are electric. This one can pull as much as 28 tons behind it.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    Robots in the home

    The German robot firm Kuka, now under Chinese ownership, is a world market leader thanks to its increasingly intelligent industrial robots. Now the firm is developing robots for the home. The prototypes, named “I do”, can bring you coffee, operate as a games console and even as an air conditioning machine.

  • The Hanover Trade Fair 2018 (DW/H.Böhme)

    Hanover Fair: Where humans meet machines

    It’s now safe to turn off your computer

    With so many robots, servers, computers and other digital applications in operation, the possibility of errors grows in proportion. So what kind of issues might crop up when things go wrong in the factory of the future? Simply turn it off and on again? Send everyone home? Whatever happens, jobs on the IT 24/7 hotline are unlikely to go away any time soon.

    Author: Henrik Böhme (aos)



Credit: Source link

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