Asia Pacific Metalworking Equipment News: Could you tell us more about Schaeffler’s key priorities for the Asia Pacific region and your role towards achieving those opportunities including organic/strategic growth?

Mark Gabel (MG): I am in charge of the Schaeffler industrial business in Southeast Asia and this year, we seek to expand our business in Indochina and Brunei. We plan to strengthen our presence with existing and newer product ranges in Cambodia, Laos, Myanmar, and Brunei.

2015 was a challenging year for the industrial sector with global production remaining more or less flat. When it comes to industrial production in Southeast Asia, 60 percent of the GDP here depends on the trade with China. This dependency compounds the overall impact of a slowdown in industrial production as China has driven its growth pattern towards a more consumer driven economy than a trade driven one.

It is vital for companies to produce more in the region if they want to overcome the slowdown and achieve long-term sustainable growth. Over the past three years, the company has also renewed its focus on the Asia Pacific region, particularly Southeast Asia, and today our key priorities are to expand the local manufacturing footprint and engineering competence in order to increase overall value-addedness for customers in the region, for the region. The company has one of the largest product ranges and widest portfolio of solutions for industrial customers.

We see tremendous growth opportunities in Indonesia, which will remain a strategic focus market for the company. What is interesting is that while China is changing from a manufacturing to a more service-oriented economic model, for Indonesia, it looks to be the opposite. The automotive sec tor is an example where there is a growing need for manufacturing machinery and tools. I think they are just get ting started right now and their manufacturing sector has tremendous potential which will be realised over the next decade.

APMEN: Has the infrastructure of a country hindered your business expansion across the region?

MG: Like I mentioned earlier, we are always in touch way before fully investing in countries. Those whom we build contacts with at the start to better provide us with infrastructural information would be the various chamber of commerce people. While part of the business we do ourselves, a large part of it is done through distributors within these countries.

Once we identify mid to long term infrastructure opportunities, whether it is a new port, railway line or anything else, we will evaluate and make a decision. Similarly, the quality of the distributor also matters in terms of their capabilities, reputation, and financial strength since we are placing a large level of trust in them as a partner to take our business in that region to the next level.

APMEN: The economy has not been stable recently with many heavy industries feeling the ripple effects of it (dipping oil prices etc). What is the company’s strategy around this?

MG: One of our oil and gas customers in Singapore incurs significant costs for bearing replacement ever y year. Under current circumstances, an option to refurbish bearings could amount to significant savings. The company recently established a bearing refurbishment cent re to support global and regional aerospace customers. It is one of the most advanced refurbishment facilities in the region and it allows us to extend this service to customers from other sectors. As a result, our customers have an option to reuse certain components which can be refurbished to high standards of performance and reliability. This helps our customers to reduce costs and enables the company to of fer an added value proposition – a facility to extend the life of their bearings.

The company aims to combine its offerings with the added value of best in-class service, maintenance, and refurbishment. We aim to work closely with customers and support them with customised solutions. This investment in time and effort will enable us to gain their trust and become their supplier of choice.

APMEN: What does Industry 4.0 mean to Schaeffler?

MG: Intelligent bearing solutions allow important operating conditions in machines, plant or products to be assessed and controls to be put in place. As a rolling bearing manufacturer, the company’s products therefore have a central role in the Industry 4.0 initiative. As the bearings are responsible for guidance and positioning as well as supporting forces and movement, the many variations in the production process or in the products themselves can be detected immediately in the bearings.

In future, more things will be assessed with sensors because there is a lot of data floating around. So these must be somehow computed and algorithms need to be developed and made into a value added element for the customers according to their needs. In this case, the customer may be interested to say, reduce his fuel consumption and we will work with them in developing the algorithm to achieving that as a service.

One of the devices that we have for condition monitoring is called FAG SmartCheck. Our customers benefit from our online services for the remote monitoring of machines and equipment. Maintenance intervals can be determined based on the relevant loads.

FAG SmartCheck is suitable, for example, for early detection of rolling bearing damage, imbalances , misalignments, looseness in electric and geared motors, vacuum and fluid pumps, ventilators and fans, gearboxes and compressors, spindles and machine tools, and separators and decanters. It has an intuitive user concept designed as a Web interface making it possible to access the system via the Internet using any standard Internet browser. The Web interface can be used to configure the system and view current data. In the long run, this ensures the extended lifespan of the bearings.

Most recently at the Hannover Messe 2016, the company presented a standalone complete solution for monitoring the condition of machines and assemblies – FAG SmartQB. The early warning system FAG SmartQB comprises a FAG SmartQB sensor unit (a variant of the existing FAG SmartCheck), a cubic housing with a touch panel, and a cable for power and data transmission. The system was specially developed for detecting irregularities in electric motors, pumps, fans, and their rolling bearings, and is supplied with a ready-to-use configuration.

APMEN: How much investment is going into adopting Industry 4.0 within Schaeffler?

MG: The company focuses a lot on quality and technological innovations. About five percent of our sales is reinvested into R&D. In 2015, we had €13.2 billion (US$14.73 billion) revenue and roughly about €720 million was put into R&D. Hence this is quite a substantial amount that we put into the whole concept and have now 16 development centres globally with the main centres being in Europe. We are looking to expand on this number even though we have quite a good foothold globally.

APMEN: What have been some of the challenges in adopting Industry 4.0 and what have you learnt along the way?

MG: Typical challenges in adopting Industry 4.0 are similar to those associated with other IoT technologies. These challenges are largely related to security concerns. Implementing holistic IoT solutions often requires integration and access to customers’ IT infrastructures and here there are many potential issues, which have to be addressed individually.

Final thoughts about 2016 and beyond for Schaeffler

MG: For service and consultancy, we still feel that in the emerging markets, the willingness to pay for services like that is limited. It is an important differentiator (to provide consultancy services) but to actually make money from it – that is very difficult. Having said that, we do have some customers in Southeast Asia and the Pacific that are willing to pay for that.

Overall the industry will not grow much and remain extremely competitive. We see that there is a huge growth potential for us especially with the company’s strategic focus on the concept of “in the region, for the region”. We feel that this would also help us to get closer to our customers, help them better and with greater local value addedness. We are quite optimistic in that sense for us and our prospects in the region.