FREUDENBERG, Germany—Leaders at HF Mixing Group are extremely bullish on the machinery company's prospects for 2013, and seemingly for good reason.
The Freudenberg-based company has heard nothing but optimism from its customers, sees tire labeling as an area of opportunity, has two new business units in operation, just opened a world-class laboratory to serve as a showcase for customers, and is adding capacity and upgrading sites worldwide.
"We had a very good 2011, an excellent 2012 and are looking into a very bright 2013," said Mark Meulbroek, one of the two board members overseeing the HF Mixing Group. "Even though we read newspapers, from our point of view we don't see signs of a slowdown as a group of companies."
The HF Mixing Group includes Harburg-Freudenberger Machinenbau GmbH in Freudenberg; Farrel Corp. and Farrel Ltd., in Ansonia, Conn., and the United Kingdom, respectively; Pomini Rubber & Plastics S.R.L. in Italy; and HF Rubber Machinery Inc. in Topeka, Kan.
Collectively the companies supply a full range of mixing equipment and systems to tire manufacturers, technical rubber goods producers and rubber compounders, along with makers of a variety of other products.
The majority of business is with tire manufacturers, and they all are looking at a strong year ahead, Meulbroek said. "It appears to be growth, and that means 2013 above 2012. That's not only a statement from key accounts, but an overall statement from all of our customers," he said.
Tire labeling drives growth
Tire labeling isn't just regional, impacting one area, but an issue that started in Europe, is picking up steam in North America and will become a bigger topic in Asia, according to Meulbroek. "Tire labeling is driving a lot of customers to upgrade and update their tire production process," he said.
The requirements of the labeling is causing tire manufacturers to make changes in tires and compounds, particularly going to more silica compounds. "To run silica on machines a lot of customers have to upgrade their whole mixing and compounding process," he said. "You can't just do silica on your standard mixers and mills. You have to have a particular technology when it comes to the batch mixer."
It's particularly important to have precise temperature control, because silica is extremely sensitive to any change in temperature. "Our rotors, according to feedback from customers, are the best available technology in the market for temperature controls," Meulbroek said.
HF Mixing has gotten requests from tire makers all over the world, he said, to upgrade existing lines and place orders for new equipment, he added.
Despite weakness in Europe's economy and car market, Meulbroek said it still remains a good market for his firm. "We do see impact in some areas like Spain," he said. "But places like Eastern Europe—where tire makers have locations—and some areas in central Europe are still very strong."
HF Mixing also has seen its business grow in China and Southeast Asia. The group, though, doesn't participate in the entire China marketplace. It focuses its effort on the tire makers aiming for the top end of the market, not the ones "that produce domestic tires for the domestic market with domestic quality," Meulbroek said. "The market for us is the customers that make good quality or premium quality, and that is the relevant market in China that we are producing for."
North America also is picking up, he said, both for tires and technical rubber good. That especially is the case among larger companies that realize that despite the economic uncertainties, they know they must invest in and upgrade their processes to remain competitive.
"Overall the tire industry is driven at the moment by the desire of tire makers to go into the premium market and to have good results when it comes to tire labeling," Meulbroek said.
New business units
HF Mixing has established two stand-alone business units, one for continuous mixing and one to tout systems automation.
The continuous mixing business will concentrate on plastics-related mixing, which is a smaller but important unit for the company, the executive said. Farrel had part of its business in continuous mixing as did Pomini. Now those assets have been put together in a business unit with a stand-alone sales organization.
The activities were centralized at Farrel's location in Ansonia. Meulbroek said it includes dedicated research and development, engineering, manufacturing and laboratory.
"It's not the biggest dollar wise for us, but it widens our product range and our applications," he said. "We see that by having a dedicated focus on the product how successful you can be. Since doing it we have had the highest order intake and highest backlog for more than 10 years."
Effective Oct. 1, HF Mixing also established its Systems Automation business unit. The firm sees a big market trend in customers requesting total systems. So in the new business, Meulbroek said the company consults with customers to work together on systems approach.
HF Mixing then incorporates its products with allied components offered by other companies to present a complete package. "That way the customer doesn't have to deal with multiple suppliers or multiple business partners," he said. "They get everything from us and we make sure that the whole system matches and fits as a total system."
The machinery company formed this unit to address market demand, where customers don't ask for just a mixer, but everything that goes along with it. He said HF Mixing has strategic partners for such components as the feeding wing, gear systems and batch-off unit, among others.
It also offers its engineering expertise to ensure reliability, according to Meulbroek. "We have specialists who know mixing rooms, who know what is needed to make it work," he said. "We have a number of these total systems in our backlog, and we have orders already."
There was some overlap with the various companies within the HF Mixing Group, but the company has tried to address that by employing a "best of the best" approach, the company director said. It analyzed which of the firms had the strongest capabilities for each product category, and then had them focus on that specialty.
Hence, Farrel now concentrates on tangential mixers, or Banburys; HF Freudenberger focuses on intermeshing machines; and Pomini handles twin screw machinery. The customer benefits, he said, because HF Mixing can offer what truly is the best technology for individual needs.
"We don't have to convince them that tangential is better than intermeshing or vice versa, because we have all technologies available within the group," Meulbroek said.
It also is streamlining in other disciplines as well, including having just one overall sales organization for all products. "We don't want to act like a bunch of individual companies," he said. "We have to act like a group, and we are doing that in sales, and we are doing that in R&D and engineering."
The firm also recently inaugurated a new group technical center in Freudenberg that has a complete mixing room featuring all of HF Mixing's capabilities. "For the customer, we try to make an event out of it," Meulbroek said. "We are able to run the customer's trials. We can run intermeshing and tangential at the same time."
HF Mixing also added capacity by acquiring last year the Slovakian company ZTS-LR NaJus. HF Mixing Group had long been a customer of ZTS and said the purchase "secures the future availability of inexpensive assemblies and specialized equipment."
Meulbroek also said the deal gives HF Mixing needed capacity without having to invest at each of its individual sites, adding, however, that it has made capital investments to upgrade processes at all locations.
HF Mixing also benefits by being owned by a Germany-based trust foundation that allows it to follow a long-term strategy. "It's not a typical financial investor," he said. Therefore we can work on our long-term strategy without being in a rush to be driven by annual and quarterly reports."