Calvin Grieder Interview

by Arvin Donley
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During its 150 years in business, Uzwil, Switzerlandbased Buhler AG has built a reputation as one of the world’s foremost manufacturers of food, grain and feed processing equipment.

While Buhler is also a leader in other businesses, such as chemical process engineering and die casting, it is best known for developing cutting-edge technology that helps flour millers, feed millers, rice millers, pasta manufacturers and others in the food processing industry make products that feed billions of people all over the globe.

Leading the privately-owned company is Calvin Grieder, who in 2001 became the first person outside of the Buhler family to serve as CEO.

During his tenure, annual sales turnover has increased to more than $1.6 billion and a number of acquisitions have taken place, particularly in the field of die casting, to make Buhler a more diverse company. But there have also been important aquisitions in the company’s traditional food and grain business, including the expansion of the company’s extrusion technology through acquisitions of Millbank Technologies Ltd. and Theyson Maschinenbau, and investing in a majority stake of G.W. Barth AG, a system supplier to the confectionary and food industries.

Grieder recently spoke with World Grain about the company’s storied past, current challenges and the goals for its future.

WG: Buhler is celebrating its 150th anniversary this year. How is the company commemorating this impressive milestone?

Grieder: All our anniversary activities are centered on our customers and our employees. The motto of Buhler’s anniversary year is: "150 Years of Buhler — Innovations for a Better World." To be able to follow this motto also in the future and to find new and better solutions for the future, we launched a competition among our employees worldwide to generate new business ideas. A total of 140 teams submitted their ideas. Four teams have gone through to the final, vying for first place.

The official kick-off of the anniversary year took place in Uzwil, Switzerland on Feb. 12, 2010. Together with customers and partners, we celebrated the foundation of the small iron factory 150 years ago. Throughout the year, we will carry out a number of other events for our customers at our sites across the globe. Buhler employees around the world will celebrate the company’s anniversary at all Buhler sites on the same day in May. Just in time for the start of the anniversary year, Buhler will launch a new website and publish a corporate history book in which around 60 employees paint the picture and tell the story of a company which has distinguished itself time and time again over the last 150 years through constantly new and innovative solutions.

WG: Although Buhler is a privately run company, there has been a lot of speculation in recent years that it may become a publicly traded company at some point. How well is Buhler positioned at this time to become a publicly traded company?

Grieder: There is a more legalistic answer and a more emotional side to this. We have prepared the companies reporting through the international standards and can fulfill the requirements of Corporate Governance. But Buhler is a family-operated business, willing to keep its independence and always following a more conservative financing policy. People-orientation, quality and long-term development of the company are more important than maximizing short-term share values. We have kept the company alive and successful for 150 years based on these principles. Therefore, the company would have to change its culture toward a more risktaking and short-term attitude. As long as we are not forced to change, we will remain a family-owned company.

WG: In what regions of the world are you currently seeing the most growth and in what regions do you see the most potential for future growth in your grain processing division?

Grieder: The grain industry shows strong growth in developing economies. In Asia, Africa and South America, there is a large potential that people will change their eating habits and diets and move to a more grain-based and convenience-oriented eating culture. We therefore invested heavily into these regions and have gained a significant base in these growing markets. On the other hand, food safety, convenience and nutrition are driving the grain industry in the established markets. We, therefore, are optimistic that we can develop exciting businesses also in the future.

WG: How has the global economic recession impacted your core business units? What business units have performed well in this difficult environment and what units are seeing the greatest challenges?

Grieder: We are generally in a cyclical business, because investments are always the first thing you can cross out or slow down. Nevertheless, this time things have been somehow different. A lot of our customers have continued to invest, and we saw growth in the established grain, milling, rice and pasta sector. We assume that our customers have looked for new investment possibilities, which they could no longer find in the money market. They therefore have decided to invest into the future of their business! Of course, we had great difficulties in the automotive market where we are heavily involved with our die casting business. In that area we faced a downturn of 30 to 50 percent. But new technologies emerge and businesses will have to start to invest even in difficult markets. Especially "green technologies," but also safe and healthy food will drive our markets during this recession phase.

WG: Within the grain processing division, what important industry trends are impacting the grain milling, grain handling and feed and biomass business units?

Grieder: A growing population needs more to eat; this is a fact of life. But also environmental issues will drive "low-energy concepts." This includes biomass processes but also less energyconsuming systems and machines. The "weather change" and the shift to the growing economies will also mean more and better infrastructure for transportation. A more and more crowded world also will lead to food safety issues, which we have not touched until today. Our aging population, on the other hand, will demand healthy and nutritious food, which will mean a lot of new processing technologies.

WG: Food safety is an important topic right now in the food processing and grain processing industries. What is Buhler doing to help its customers address this issue?

Grieder: Buhler has always put food safety on top of the list. To be honest, I am often surprised to see food processing plants around the world which are not at all capable of dealing with the basic quality requirements. Nevertheless, we have invested a lot in order to design and develop products that make our life safer. Advanced Safe Food Concepts usually cost a lot of money. We therefore try to design our standards for highest efficiency and productivity. We are still concerned what happens in the world and we have put together a specialist team that is working on the art of how to produce safe food for the future.

WG: What nutritional and dietary trends are impacting your business and how has Buhler responded to them?

Grieder: While many consumers in industrialized markets literally "burst at the seams," as unfortunately proven by many statistics about obesity, millions of consumers have a tough life because of malnutrition in developing economies. It seems the more we think we know about nutrition and health, the more our eating habits get out of control. Buhler has invested a lot to develop new grain-based innovations, such as NutriRice — a multi-micronutrient fortified rice kernel — or new technologies that yield nutritionally healthy fractions from byproducts of the wheat milling process, such as LEURON. Buhler strives to create value-added technologies and ingredients that support our customers’ needs for healthy, natural, dietary, age-based or simply personalized ingredients and safe foods.

WG: The biofuels industry has fallen on hard times after soaring to great heights earlier this decade. What is your assessment of the global biofuels market and is Buhler committed to that industry in the long term?

Grieder: In spite of all of the criticism given to biofuels, some fair and some clearly unfair, we believe strongly that biofuels have a place in this world. Mankind has many issues to solve, with climate change and growing demand for food and fuel among them. Buhler believes that the goals of producing both food and fuel from grain are not mutually exclusive. We can do both, in balance with one another. We need to develop processes which can use up all the grain and biomass we grow. We should not waste any of our natural resources. Biofuels can play an important role in this cycle. Buhler is uniquely positioned to bridge this gap and we feel that we can and should help the world solve these important issues.

WG: How much of the milling capacity built recently in Europe and in other areas has been devoted to producing flour for making starch and then alcohol as compared to the share devoted to flour for food production? Is there a difference in the design, operation and cost between mills devoted to producing flour for starch as compared with mills producing for food?

Grieder: In the global market place, the milling capacity devoted to produce flour for the starch and then alcohol industry is insignificant compared to the milling capacity installed for food production. The desired specifications of the flour as well as the variety of finished products define the design and, consequently, the operation cost of a milling plant. Flour for starch is produced mainly on a "short flow" mill whereas flour for food, such as bread, noodles, pastry, pasta, etc., requires other product properties, hence fine-tuned technology.

WG: To what extent does the increase in wheat flour extraction posted in the United States in recent years reflect advances in milling equipment and systems and how much is accounted for by increased production of whole wheat flour? Does Buhler have a goal it aims for in flour extraction in building a new mill, subject, of course, to the quality of wheat being ground?

Grieder: Wheat is a valuable good and the biggest cost stake in the flour production. Consequently, flour extraction has a great impact on the profit-and-loss report of a grain processing business. The increased production of whole-wheat flour might reflect in statistics, but what really counts for the miller is the highest yield of premium flour and standard bread flour. Aiming for highest extraction of premium and straight run flour is a target in all of our research and development projects in new technologies and equipment. This starts with a precise cleaning of wheat, inspecting kernel by kernel with optical sorters, and goes through the milling process with selective grinding and optimal classification of the milling products. The maximum flour extraction, plant efficiency, product quality and consistency, as well as complying with the food legislation, are the main drivers for a new milling plant.

WG: How does Buhler keep in touch with development of new varieties of wheat that might affect the efficiency of flour mill operations? Forecasts are often heard that genetic modification will soon come to wheat in the same huge way it has affected corn and soybeans. Does Buhler have a view on this possibility and are you aware of ways in which modified wheat might require changes in milling?

Grieder: The layout of a plant and the applied milling technology are designed interactively with our customers. It takes into account the variety of wheat that will be processed as well as the finished products demanded. There has been and will always be an evolution in the varieties of wheat. The milling technology is keeping pace with the development of new varieties of wheat. The genetic modification techniques will accelerate this process but not revolutionize it.

WG: Are you looking at other industries that you might expand into either by acquisition or by internal growth?

Grieder: No, we still see enough potential in the three areas Buhler has developed in recent years, especially Grain Processing, Processed Foods and Advanced Materials. Grain Processing for food, feed, energy and materials will remain a strong focus for Buhler. We see that demand has progressed in the past couple of years. Further food processing as the health trend and convenience food goes on and will remain the second pillar of our development. The technologies that we develop in processing and biotech we use to develop advanced materials for the automotive, electronic and consumer industry. We are driving our development with high dedication for innovation and have initiated different programs. Growth therefore is important for Buhler. But we are also ready to strengthen our position by acquiring companies that fit well into our portfolio and into our culture.

WG: Buhler has stated its desire to offer its customers the best possible post-equipment sales service and to be there for the customer through the lifecycle of your products. What does the company do to make sure that promise is kept?

Grieder: This is most important for Buhler and we therefore have initiated a whole program called "In the Markets for the Markets." We want to be close to our customers and have local sales and service offices that are ready to serve our customers in the different markets. Buhler has always pioneered by setting up representations early in history, and we have continued to take this dedication and built up local service stations, training centers and regional production sites. Nevertheless, we were surprised to hear from our customers in our last survey that we do not yet perform to their full expectations. We are carefully analyzing and listening to the voice of our customers and will do what’s necessary to meet our obligations.

WG: What have been the most significant accomplishments that have occurred at Buhler during your tenure? What are the biggest challenges facing the company in the next five years?

Grieder: As I said before, very quickly we developed our service organizations with more than 1,000 people on the road every day in the different markets. Buhler has also reacted early to the need of offering local adapted solutions, especially for the emerging countries. We have built new plants and expertise in China, in India, in South America and in South Africa to engineer and produce solutions adapted to the local needs and requirements. Thirdly, we have understood that performance cannot come at any costs. Buhler must be efficient to compete in the market. We have therefore set up efficiency programs which we have driven now for many years and therefore have strengthened our competitiveness and profitability year by year. We understand that Asia will remain a hot turf and we will have to speed up in order to remain strong in these markets. This I am saying even after Buhler has developed its organizations over the last 50 years and started to produce in China 25 years ago. Buhler will never stand still and developments will go on. Especially after the economic crisis, we expect that the world will be different than it was before. We therefore have strengthened our capabilities to innovate and come up with new solutions for the future markets and customer needs.