RESILIENT AND ADAPTABLE

PROGRESSING RESPONSIBLY

The POLYTEC GROUP has repeatedly proven its adaptability and resilience to crisis throughout its history. Whether it was the economic turmoil caused by the financial crisis in 2008 or the effects of the diesel scandal in 2015 – POLYTEC always succeeded in treating crises as an opportunity for transformation. In keeping with this approach, the group is also using the COVID-19 pandemic and all its side effects for restructuring, streamlining and further development. At the same time, the company is also benefitting from steps it took earlier along the way.

Without a doubt, we are going through a time of special challenges. Not only has the automotive industry been marked by a profound transformation due to new, electric mobility concepts over the last several years; COVID-19 has led to unexpected social and economic upheavals and disruptions from 2020 onwards. Once again, the automotive industry was particularly hard hit by these changes, which also made 2020 an extremely difficult financial year for POLYTEC. After a short period of recovery in early 2021, rising raw material and energy prices and the global chip shortage burdened the automotive industry again as the year progressed. On top of all that, February 2022 saw the start of the war in Ukraine, an important procurement market for the automotive industry. While the long-term consequences of this war are difficult to predict at this point, it has already caused major car manufacturers to suspend production in the short term. Due to all of these factors, POLYTEC is faced with a particularly challenging situation as a supplier caught between rising material and production costs and highly volatile volume call-offs by its automotive customers.

Focusing expertise

Nonetheless, POLYTEC focuses on the opportunities that the mobility transformation holds in store for the company. Even before the pandemic broke out, the POLYTEC GROUP had implemented a completely new strategic approach: the POLYTEC SOLUTION FORCE focuses the expertise of the entire group and develops plastic solutions for a variety of applications and industries. The mechanism behind it is driven by close collaboration between Sales, Engineering and Project Management. The sales team uses its market knowledge to develop product ideas for different industries and fields of application. And POLYTEC’s engineering experts combine the material, technology and production competence of the entire group to implement these ideas in practice. Read more about the POLYTEC SOLUTION FORCE, which has completely overhauled the group’s market approach since the beginning of 2020, starting on page 28 of this report. Thanks to this new concept, POLYTEC now acts with much greater agility than many a competitor in the market and is expanding its activities to industries aside from the automotive industry.

Expanding the portfolio

This is also a long-term goal of the POLYTEC GROUP: to gradually grow its business in the non-automotive sector, with a 40-percent increase in sales revenues in this segment by 2025. And the group is also shifting its focus within automotive sales revenues: POLYTEC already supplies complex components for electrically powered vehicles today – and is working intensively to expand its product portfolio for this category of vehicles. Electromobility is also the segment where POLYTEC sees some of its biggest growth potential. Because the establishment of battery-powered vehicles has long been beyond question. And while demand for products for vehicles with combustion engines is slowly declining in the Powertrain segment, the group is continuously expanding its portfolio for electric cars. Currently, POLYTEC is working intensively on the development of high-voltage battery housings, for example. These complex components consisting of different materials could supersede POLYTEC’s products for combustion engines in the Powertrain segment in the long term.

Adapting the organisation

Comprehensive structural and organisational measures have been, and still are, necessary to focus the expertise of the entire group in the POLYTEC SOLUTION FORCE. First and foremost, the technological diversity, and therefore the complexity, of the processes within the group must be made manageable and controllable in the long term. Hardly any other company applies such a wide variety of materials and technologies as the POLYTEC GROUP: from injection moulding and fibre-reinforced plastics to polyurethane processing and numerous technologies for the further processing of the parts. In 2015, POLYTEC launched an ambitious digitalisation programme for the entire group to ensure that this enormous diversity remains manageable and can be efficiently combined for product innovations. All POLYTEC locations and nearly all business areas of the company – from engineering to production and back office processes – are standardised and easier to manage through digital applications by massively enhancing data quality and availability as well as by increasingly automating processes unrelated to production as such. In preparation for this digitalisation offensive, the processes within the company first had to be analysed, optimised and standardised. As a result, the POLYTEC GROUP is significantly more efficient and agile today than only a few years ago. Read more about the current progress and projects of the POLYTEC’s digitalisation roadmap here.

Acting sustainably

It is not least thanks to this new agility that the group also reported acceptable results for 2021, a year marked by instability and crisis. And agility will continue to play a decisive role in the success of the POLYTEC GROUP in the years to come. Because in addition to the current crisis and the long-term mobility transformation, there are several other challenges to face. Climate protection, for example, to which the POLYTEC GROUP aims to make a significant contribution based on its ambitious goals. The formation of a team specifically dedicated to environmental protection and sustainability matters under the responsibility of COO Heiko Gabbert will put additional emphasis on the importance of this topic within the group.

When it comes to sustainability, POLYTEC, whose core business consists of processing plastic, of course has to address the negative image of this material. An image that is, however, only partly justified. Because plastic has considerable advantages over other materials – even in terms of sustainability: used responsibly, its applications are versatile and it is durable and reusable. And of course (lightweight) components made by POLYTEC have contributed to making vehicles lighter, more efficient and consequently more environmentally friendly for many years. Nevertheless, POLYTEC thinks ahead and scrutinises its production processes, precursor materials and supply chains with respect to environmental and climate compatibility. As of the 2022 financial year, the classification system of the Taxonomy Regulation of the European Union will serve as a guideline in assessing measurable sustainability targets. However, the group already has measurable successes to show for itself in terms of sustainability. At its Central European locations, for example, all electricity comes from renewable energy sources; it massively invests in energy efficiency and installs recycling and photovoltaic systems. In addition, POLYTEC defined “Sustainability in the Product Portfolio” as one of three central elements in its engineering strategy in 2021.

Acting sustainably is not just driven by internal motivation at POLYTEC. External stakeholders such as investors and customers, or policies – key word: EU Taxonomy regulation – require a corporate strategy that incorporates the aspects of environmental and climate protection. POLYTEC is willing and prepared to meet these requirements.

Engaging in dialogue

In addition, there is another aspect of sustainability, which is at least equally important to the stakeholders of the POLYTEC GROUP: namely the company’s economic sustainability. Over the past months, economic developments forced POLYTEC into a situation that increasingly limited its scope of action. On the one hand, this was due to rising raw material and energy costs. On the other hand, the volumes called off by customers were highly volatile, making it substantially more difficult to plan and manage capacities. In this situation, POLYTEC fortunately benefits from a relatively broad diversification in the automotive sector and therefore from a good market position. The fact that the group can only partially pass on additional costs to customers in this situation gives rise to the question how business relationships between customers and suppliers can be more sustainably organised in the future. POLYTEC strives to engage in an open dialogue with its customers and supplier in order to develop models that support innovative strength even in times of crisis and safeguard jobs and business locations.

Thinking positively

Taking stock of the effects of the current crises so far, and looking back on the 2021 financial year, it becomes clear that the POLYTEC GROUP was able to maintain its course in choppy waters. At the same time, it continued to transform into a company that does not think in technologies and industries, but exclusively in solutions. And it is making good progress on this path – driven by the success factors that have long taken root in the corporate culture of the POLYTEC GROUP: engineering expertise and innovative strength, technological leadership and efficiency, initiative and customer proximity – and not least the commitment to adaptations in challenging times.

2021: A YEAR OF SEVERE HEADWINDS AND BRIGHT SPOTS

A number of external factors have changed the economic environment of the POLYTEC GROUP over the past years – and made it more difficult. The pandemic has additionally increased the uncertainties for the group since 2020, and in 2021 the headwinds for automotive suppliers like POLYTEC became even stronger. However, the company has long exceled in flexibility and readiness to continuously adapt to new framework conditions, and also uses this approach in current environment.

Increasing material prices

The prices for raw materials, precursor products and energy rose by an average far above 30 percent in 2021, confronting not only the POLYTEC GROUP but the entire industry with enormous challenges.

Chip shortage

Semiconductor supply shortages led to upheavals in industry across the world. The automotive industry was particularly heavily affected. This led to a drop in OEM production figures and consequently to a decline in orders for POLYTEC in this segment. Experts expect the difficulties in the semiconductor market to stabilise in the medium term.

Volatile call-offs

Since the beginning of the corona pandemic, large-volume customer orders have often been called off or cancelled at extremely short notice – with the corresponding effects on the POLYTEC GROUP’s capacity planning.

Declining demand

In the European automotive market the sales figures for passenger cars in 2021 were more than a fifth below the pre-crisis level of 2019. The sharp drop in demand also posed a challenge for POLYTEC, as some developments are difficult to predict. The company responded to this situation with a flexible production mode.

Despite massive additional costs, POLYTEC recorded acceptable results in the 2021 financial year. Following difficult negotiations, the group managed to at least partly pass on obvious price increases and the resulting additional burdens to its customers. Considering that some companies in the industry posted record results in the past years, POLYTEC is encouraging a discussion process: how can savings be achieved on the customer side, on the supplier side and in internal processes? And how could fair dealings along the entire supply chain lead to economic sustainability for all players?