Alberto Lorenzo Mitxelena joined EUN over three years ago. As Chief Executive Officer, he is ringing the changes in an organisation committed to sustainability across all business areas. His managerial experience in internationalised and innovative organisations and philosophy of ongoing improvement have made the company more effective and efficient at a time when the priority has been EUNdarrak (Team EUN), customers and the environment itself.
Balance 2020
How did 2020 end up for EUN?
Although the two waves of the pandemic reduced sales by around 22% compared to 2019, we still had some very positive takeaways. Holding onto the idea of a liability would be just a superficial analysis.
What were the positives then?
The investment we made during the darkest part of the pandemic when we didn't have anything to bid on, install or transport. The market was flatlining for weeks, even months, but we wanted to provide support, convey confidence and invest in the well-being of EUNdarrak, our customers and society. That was the priority we set following the decree of the state of alarm and full lockdown. 14 March was a Saturday, but on Monday 16 we had to start taking decisions without knowing what we were getting into. As time went on, and seeing how impactful it was, we prioritised EUNdarrak, our customers and the environment around us above all our stakeholders.
What form did that priority take?
What we did during that time when we sadly had no bids to work on or turn into orders, no orders to manufacture and nothing to install was spend it on improving across three areas. First, distributing talent among all the EUNdarrak, particularly in everything regarding customer requirements and expectations around products and solutions. Secondly, supporting customers in all the projects that were likely to come in when there was a lull in the pandemic
Sustainability
And thirdly, making everything we did more economically, environmentally and socially sustainable.
We wanted to improve from the inside out, investing in our teams to achieve a multiplier effect. Or to use a virus analogy, to spread everything we were doing to our closest partners and from them, in turn, to the external environment.
So the fixed costs were maintained even when we weren’t pulling in any revenue. That can’t have been easy.
The income statement weighed heavily on my mind but at the same time we knew the value of every moment invested in lowering our environmental footprint, increasing our contribution to societal well-being and providing our customers with more and more support. All this would make it possible to harness any opportunities that arose and make them work in our favour. And that is exactly how it panned out when there was a lull after the first wave: the September-December results were four times stronger in terms of efficiency than they have been in recent years. So the investment meant we could leverage the opportunity when it arose to save the year and post excellent results despite the two waves reducing sales by around 22%.
Other things were also needed in addition to investment...
That’s true. We were also able to do it because we stayed lean right across the cycle. Lean in terms of detecting customer opportunities, working with customer specifications, turning opportunities into bids, leaning into customer requirements and providing value (and I will go back to that later) and lean around everything regarding manufacturing. In fact, production ratios in October and November were three times higher and even the quality ratios improved. Across the entire cycle, both within EUN and with our stakeholders, we were able to cut through the waste that had negatively impacted returns in the past. And this change, which we were able to implement in a sustainable fashion, is here to stay.
So that explains the positive outcomes...
That’s right. The EUN that emerged from 2020 is much more efficient.
Efficiency
It is an EUN which at a time of sector hiatus continued investing, generating trust and making progress around certifications. We released new products on the market, changed our value proposition and redefined ourselves in terms of marketing...
You will be able to see the work better when the market goes back to something resembling its pre-pandemic status, which will happen at some point. But we are already seeing it at the start of 2021, bidding 10% more than we did in 2020 and winning 24% more orders than the same time last year, when things were still Covid-free in the regions where we operate today (Iberian Peninsula, North Africa, Middle East, Mexico, Central America, Caribbean and South America). And that’s also considering that the first quarter of 2020, before the impact of Covid really took hold, was the best quarter in EUN’s 47-year history. So we closed 2020 with good returns despite the 22% fall in sales and have kicked off 2021 by improving on what had already been the company’s best-ever quarter in terms of bids and order acquisitions. And this was all made possible by the work we put in place last year.
Safety, efficiency and flexibility
EUN Chief Executive Officer Alberto Lorenzo says the company emerged from 2020 “much more efficient”. During the pandemic, the firm has been investing in the future to pivot to a market similarly in flux and where the solutions that EUN offers can be geared to new requirements.
You say the pandemic showed that modern society has been living close to the edge and that this could lead to a change in mindset among customers. In what sense?
In terms of engineering, I would say society has been operating with minimal safety margins. That’s fine when the situation is stable but can be risky when things get thrown out of whack. It is true that right now customers with money are more scared than cashed-up, but I trust the vaccination campaign is going well, albeit slowly, and will pick up speed, allowing us to move past the risk of mass infection and get the economy back on track. That is when cash-rich customers will invest in efficient solutions. That will be a watershed moment.
In what direction?
I mean that in the past price was often the bottom line and led to very tight safety margins. Now customers want security, efficiency and flexibility. These three things have always been cornerstones for us. EUN knows the importance of gaining insights into customer needs and expectations and pivoting the organisation –and the product, and the way we work and manufacture– to provide each customer with the best solution.
What does the “best solution” entail?
We are talking about next-generation products with a strong technological basis where the materials are starting to be well known and where we can apply and certify advanced design tools. In a business like ours where optimizing spaces is key, our work is twofold.
Optimize space
On the one hand, we need insights into the architect, the builder who wants to optimize the space and integrate the equipment in it and who even wants the equipment to enhance the features of the space itself.
EUN Logic D.R.©
But just as important is ensuring the end user can tap these solutions. That is where electronification comes into its own: providing equipment with sensors and actuators, making sure they are perfectly integrated and can optimize the physical space but also enable optimal form and content management and, in short, control over the information or data they house. Customers must be able to tap this storage space and the content kept in it, but at the same time the equipment must be able to drill down on the data it receives and stay ahead of requirements. Any equipment that can keep ahead of the curve gives us time to react if we need to. And that is what predictive software allows.
An area where EUN is a pioneer...
The investment EUN is making in developing specialist equipment from the mechanical and electronic point of view and in software that not only manages form and content but is predictive puts us at the forefront of the industry. But that is not enough.
It’s not?
No. We can’t just give customers tech ‘toys’. We have to help them implement the work method that these tools -our mechatronic products with our software- will allow.
The industrial service, understood in the legacy sense that started with the bid and continued on to manufacture, must be supplemented with consulting.
The industrial service, understood in the legacy sense that started with the bid and continued on to manufacture, must be supplemented with consulting.
EUN's future
What are the main lines of work EUN is planning for the future?
In keeping with what I said before, a key objective for 2021 is to double the budget in R&D. We aim to profoundly boost the multidisciplinary technical knowledge of the entire team, both in the R&D work area at headquarters and in the work of our extended sales network, the area in closest reach with the customer (technical officers, sales staff, engineering). It is essential to provide our customers with technical consulting, leading-edge products, advanced certifications, pioneering materials, breakthrough design methods and a partner ecosystem that we are expanding and which will enable us to onboard the latest research and bring it to market. The same thing can be said regarding software development and the work to store content, ensure its use at all times and showcase the products, solutions and services that EUN provides.
“High value-added products are present across 70% of the bids EUN has tendered in 2021”
High added value products
In this future that you envisage for EUN, where do the factories fit in and what features do they have?
We need to invest in them to deliver a manufacturing capability with almost infinite flexibility so that if we have many customers on the go at the same time we can still meet tight delivery schedules. That is what we were able to do overnight during the pandemic, when we trebled our nominal speed.
The EUN factory must keep ahead of the curve in every way, from lean manufacturing and 4.0 tools to handling mass and unit batches with the same capacity for response.
Investment in advanced machinery, in other words...
....supplemented with advanced talent in the EUNdarrak (Team EUN).
Advanced talent
What do you mean by “advanced talent”?
Talent in line with versatility requirements and which make them capable of handling types of materials other than the current ones, because delivering better environmental and technical outcomes involves moving forwards in materials. And both factories and sales teams need a differentiating factor, which is customisation.
Give each customer the custom solution they need...
Efficient investments are bespoke investments and customers know that; they don’t want a standard product.
We are talking about optimising the space; the space is unique, as are use and management, too.
That is why the ability to customise the mechanical part, the electronic part and the software is key, along with the ability to understand each person's use and management practice. To achieve that, our teams need strong technical know-how across the different areas. That is the only way to get good insight into customers and be able to advise them. We must make customers understand that they are not spending so much as investing in an optimal solution, in high value-added products that combine software, electronics and management.
How has demand for this type of high value-added product evolved?
In 2017 it accounted for around 20% of our sales; by 2020 the figure was 50%. So far this year these products have been present in around 70% of the bids tendered. This means customers are taking up our value proposition on very large projects in top international firms that are pushing the envelope. Customers want the know-how and expertise EUN is able to give them. They want that combination of technical knowledge (embodied in advanced mechatronic products), custom software-development capability and use/management consulting - in short, a market trend towards premiumization.
That combination of technical knowledge, custom software-development capability and consulting is added to lean manufacturing and the 4.0 factory to form the EUN value proposition.
Our goal now is for any EUN conversation partner to be able to explain it to any customer representative.
For each EUNdarrak to be able to act as an EUN sales rep...
Well, EUN is just one big EUN sales network, after all. And any EUNdarrak must be capable of conveying what we are about and the way we work. That is why we are prioritising providing the entire company with tools to bring this value proposition to market.
What tools are they?
We have put in place a revolutionary project that will enable us to convey this value proposition interactively to the end customer and any intermediary alike. It can be done by pivoting the conversation around the requirements of any particular customer at any given time. It is a fully flexible tool that will help us with both the introductory pitch to a company CEO who has three minutes to get to know us, and to drill down on the smallest details of a specific project to be defined.
That does sound like it could be a good support for the sales team...
And it will also help in another of the big challenges ahead: doubling our international presence.
With a new business model we aim to continue expanding the brand across different geographic locations.
