Does the abrasives industry need reform?

Abstract I have been to China many times. In the past few years, I have visited many abrasive abrasive companies in China and met many Chinese friends. Today I am very happy to see many familiar faces in the audience. To be honest, after I received this invitation, I have been thinking about this forum...

I have been to China many times. In the past few years, I have visited many abrasive abrasive companies in China and met many Chinese friends. Today I am very happy to see many familiar faces in the audience. To be honest, after receiving this invitation, I have been thinking about what I can say at this forum and what should I say? What do you want to see and hear in the hearts of the audience and the audience? In the hundreds of lectures that I have conducted in the past ten years or so, the main focus is on the characteristics of phenolic resin and how it is applied, for example, explaining the best curing process of Berkeley's phenolic resin. Last year at the Hangzhou International Symposium, I talked about some of the craftsmanship and structural aspects of coated abrasives. So I have been thinking about what the audience wants to hear at this forum. I found a book in China, which teaches that "following Chairman Mao and always doing revolution." It inspired me. I should talk about the revolutionary problems of coating abrasives. I am very happy that the first two At the meeting of the association, I heard the idea of ​​“changing” the abrasive tools. One company mentioned that a new kind of adhesive is applied to our coated abrasive industry. This is a kind of “revolution”. In fact, I personally have always been conservative about reforms, but I have been thinking: What is the real change in the application of the abrasive industry? Is it possible to achieve reform? So I "created" a reform myself, a brand new reform, there will be a new abrasive, magical abrasive, called "Abra-Cut-Abra (abrasive replaces abrasive)", everyone heard that there is no ? In essence, it is an abbreviation of "Abrasive-Cut-Abrasive". This term has another special meaning in Europe and in Germany. It is a magical term. In the field of European magic, you can turn a lion into a dog and turn a dragon into a beautiful woman. What is said is that in the previous period, NASA engineers invented a magical abrasive that is ten times harder than diamonds. It is easy to produce and can be directly extracted from water-based solutions without melting it at high temperatures. There is no need for high pressures like synthetic diamonds. If you know the reaction formula, it can be produced in the kitchen, so it will cost less than brown fused alumina, and you can produce products of any shape and size (block, needle, etc.) by controlling the viscosity. The product is used in the field of abrasives, and other traditional abrasives will disappear within ten years. Is this not a reform? But it is actually just a kind of magic and myth. There is absolutely no "Abra-Cut-Abra". I think everyone here is hoping that this will not happen because it is usually under reform. Will make money, and some will lose money, then there is no possibility of reform and change? Through the meetings of the previous few days and the contacts and discussions with you, you may be interested in the development of abrasives in Europe, especially Germany.

The following data are from the Eurostat.


figure 1

Figure 1 shows the development status of the EU countries in the past ten years. The yellow is the total number of Europe, the red is Germany, the blue is France, the dark blue is Turkey, the green is Italy, they are all EU member states, every year. There is data that can be downloaded from the public EU website.

I have drawn the curve from 2005 and observed that it is easy to see that the situation in 2005 and 2006 is still OK, and it will start to decline in 2007 and 2008, until 2009 is simply a collapse. But we can see that Germany is better than other countries and recovers quickly. I will take Germany as an example. Germany has a lot of specific data. Germany is better than other European countries, higher than the European average, and the situation in other countries is even worse.


figure 2

Figure 2 shows the overall development data of German coated abrasives. It shows the output and output value of cloth base, paper base, steel paper base and cloth-paper composite base products. At the bottom is a cloth-paper composite base for multi-joint abrasive belts. After 2011, the amount is too small and replaced by PDS.


image 3

Figure 3 is the development data for the cloth-coated coated abrasives. The case where the cloth base is coated with the abrasive article can be seen from Fig. 3. During the period of 2006-2010, the output and output value of 06-07 were all ok, and then turned sharply. In 2009, the output dropped by 40% and the production capacity decreased by 47%. You can see that the recovery of this industry is very slow, basically climbing slowly in 2012, but the output has dropped somewhat, far below the highest peak, under 2002. This shows that in the past ten years, the entire industry has not grown, or even said to be down.

The situation with bonded abrasives is equally bad. As shown in Figure 4, the development of resin-bonded abrasives is mainly the case after 2012.

In general, when the economic crisis came, the production capacity and output value of European coated abrasives dropped greatly. Many large companies were in trouble. Germany’s Cappronton went bankrupt. The famous Hermes company had financial problems. The factory in the headquarters was sold and the Swiss SIA was sold to Bosch.

In contrast, China is in a fortunate position. I am trying to compare the GDP growth of Europe, Germany and China. Figure 5 is a comparison of the growth rates between them. Red is Germany, blue is Europe, and gray is China. It can be seen that in the past ten years, the GDP of Europe and Germany has been far lower than that of China, and Germany is slightly better than Europe. China’s GDP growth in 2007 was still double-digit. In 2012, Europe was a negative growth. China’s growth rate is a dream for Europe. China has just opened the Third Plenary Session of the 18th Party and is trying to promote economic development. The speed has been growing at 7.5-8%, and I think this speed is not enough to meet the needs of the Chinese employed population.

But in Europe, people are used to facing such difficulties and challenges, and companies still have profits. As you can imagine, if the Chinese government and Chinese companies face a GDP growth rate like Europe, how can they survive? So how do European companies survive and make profits? How do European companies respond to challenges? What is the development strategy they adopted? I can share with you that different companies have chosen different strategies in order to maintain their position in the market. There are three types:

1. Quality leadership: For example, Adidas, the price of the products sold is high, and the profits are also high, so people say that who buys Adidas stocks and who buys them.

2, service leadership: For example, the IBM industry in the computer industry, now many companies use and rely on computer systems, computer systems will cause great difficulties or losses. If IBM products are selected, it guarantees users 24 hours*365 days of service. Although the service price is high, it can avoid problems and losses, thus improving their profits.

3, cost leadership: For example, Germany's two richest and famous families - Abby, Peter, they are the owners of two well-known cheap food stores, customers do not have any services into the store, can be taken directly from the shelf Unpackaged, cheap food made by private companies, they make money by doing so.

What is the significance and significance of these above for the coated abrasive industry?

Quality-leading companies are characterized by the highest quality and unique quality that maintains market leadership. What should we do to become such a company? What strategy is needed? Research and develop high-quality, unique products that can be sold at high prices; the existing products should be continuously updated with quality, manufactured with modern equipment, with the best raw materials, without any compromise on quality issues; Employees with high academic qualifications and high experience will use advanced production equipment to know what to do to ensure the high quality of the final product. Although this leads to high costs, it will sell high prices and achieve high profits. For example, the German VSM lost a quarter of its business and production value during the economic crisis, but it is still making money.

The service-leading enterprise is characterized by the fact that there are several products with very good cost performance, with very timely and very good service, which fully guarantees good product sales. What do we need to do? Production is determined by the marketing department of the company. The marketing department decides what products are needed and ensures that these products can be developed. It is not required to design and develop innovative products that are very novel. In order to lead the service, each product must be in stock, the inventory will be very high, and the product type should not be too much. Such a company can no longer have more than one hundred products, because some products only have several times a year, but they must Take up a large part of the inventory. Therefore, as long as there are several such companies that can compete with the average quality level of the market. In order to reduce costs, sometimes the factory may need to move to an underdeveloped country. In this way, a certain quality of products that can compete with the market; a large amount of inventory; reasonable prices of raw materials to ensure faster service. One such company in Germany is Klingspor.

The cost-oriented enterprise is characterized by the fact that the product uses the lowest production cost to create the most competitive sales price and compete with the market. The procurement of such enterprises has a great say. In order to choose cheap raw materials, they will use their own purchasing advantages to obtain the cheapest material purchasing price, and transfer the production base to the underdeveloped countries. The quality of their products needs to be OK, and the production capacity and output are very high. Big. From the perspective of the Germans, the development of China and Asia is the same, so it is impossible for Europe to fight prices with Chinese companies. Originally, a company told me to become a cost-led enterprise, but in fact it did not succeed. The problem is not only the purchase price. To become a cost-oriented enterprise, not only to maintain the procurement advantage, but also to maintain a compact management, it needs to be cut a lot. Department, this kind of thing is very difficult to operate successfully in Europe. Really cost-leading companies are rarely seen in Europe.

In fact, these three strategies have helped all types of companies to weather the economic crisis. What does this mean? The key is to know where our company should go. For example, if you can't spend a lot of money on updating your equipment, should you pay more attention to the service? After you choose a development model, the company's organizational structure must change in this direction. You can never be a company with both leadership types at the same time – you can't provide high quality products at the same time with very low cost and selling price; you can't have more than 200 products at the same time, and at the same time Guarantee to use high-quality raw materials to deliver homes to customers in the shortest possible time. Therefore, companies that use European raw materials in Europe and Germany cannot become cost-leading companies, and it is impossible to fight prices with Chinese companies.

I don't know the direction of China's coated abrasives companies, I don't know which direction you should work in, I will continue to pay attention to you.

Back to the original topic, does the abrasives industry need reform? Is there really a reform happening? Before I entered VSM, many people felt that zirconium corundum was a revolutionary development in the industry. However, after I entered VSM, I found that although zirconium corundum has many high superior properties, it is impossible to completely replace many traditional abrasives. It is more effective in certain special fields of use; we have also predicted and believed that 100-page and 100-page films should be greatly developed. VSM is worried that the steel paper discs it produces may be replaced, but in fact the annual The sales volume has not decreased but has increased. The original hundred-page wheel and hundred-page sheets did not squeeze out the sales of steel paper sanding discs, but only replaced some products and places of use of some fixed abrasives; when ceramic abrasives were invented It also makes everyone feel panic, confused or threatening. Many manufacturers put pressure on suppliers. Many companies even try to make such abrasives themselves, including VSM. The second generation of ceramic abrasives have better performance and the same result. The ceramic abrasives market is still lower than the conventional coated abrasives and bonded abrasives; thus inventing stacked abrasives, hope it can create more markets Amount, but stacked abrasives also have some limitations, limited to a variety of different application areas, production processes and application processes, such as in wood applications; so to overcome the defects of stacked abrasives, VSM has also proposed the concept of microstructured abrasives, which solves There were a lot of problems with stacked abrasives, and then we panicked, feeling that microstructured abrasives would replace and eat the stacked abrasive market, but later found that VSM's accumulated abrasive sales still climbed, and microstructured abrasives found another market application. .

In this way, we have hope again and again, panic again and again, but in reality there has not been a truly revolutionary change in the industry. This shows that any new product is a long-term, arduous process of R&D and improvement. We have never found out which new product has completely replaced or removed the original product from the market. It is just new. The emergence of abrasive products and the continuous improvement and renewal of the process have not revolutionized. Maybe a truly revolutionary change will happen in the future!

We are very happy to see which coated abrasives companies in China are leaders in quality leadership and service leadership. I saw the China Daily report last week. In 2013, Europe, North America, and Japan accounted for 70% of the world's R&D investment, while China's R&D investment was far behind, only 3.2% of the world. Therefore, I believe that China will have a lot of room for development in the future. Europe and North America have no choice but to fight prices with China. They must continue to maintain their quality leadership status and widen the gap with other countries. They must constantly strive to continue to invest more in research and development in the future.

Finally, I want to use the words of the Chinese wise man Mao Zedong to "learn well, go up every day!" to interpret and summarize the theme of my speech today - innovation is endless, development is endless! I wish all of you, your family and the companies you own, have a bright future! (According to the recording, I have not reviewed it)

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