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„The revolution continues“

With its “P-System” LEUCO has landed a coup that happens approximately once in 20 years. The material removal process has redefined production processes. Two years after its launch on the market, the interest still remains high, particularly in the furniture industry (key word - laser edging).  “Due to the system concept, the P-System is working its way, step by step, into all sectors” says Frank Diez.

During the interview the LEUCO CEO talks about both the strengths and weaknesses of the system, further innovations, the swabian company’s’ self-image and summarises his first 10 months as CEO.

Mr Diez, you have been CEO at LEUCO since 1st July 2012. What have been your most important projects so far?

My motto is “to become even better, together in the right spirit“. It is important to me that we live the LEUCO maxims, namely to be innovative, trend-setting and reliable. In the first few months, I wanted to revive a culture of trust within the company. In this respect we have developed, together with company and work council representatives as well as external advisors, a new timekeeping system. We are currently working on the intensification of the market development in Asia and a new, modern production control system.

What do you have specifically planned for the Asian market?

We are represented in many countries in Asia by our subsidiaries, the other counties are taken care of directly in Horb by our export department. The whole region has growth potential, our concern is how to market the region more effectively. That’s why we have founded a company and have an “Asia” expert in a leading position.

In your previous position as a member of the directing board, you helped shape the company direction for more than 2 decades. What were your most important milestones during this time?

LEUCO has been committed to its innovative leadership ever since the company was founded, and it has been its secret to success. An important milestone in the 1980’s was the introduction of diamond as a cutting tool material, LEUCO was the first company to introduce it into the woodworking industry. In the 1990’s, process technology, through-feed technology and high performance processing were the key developments. An increase in precision was created with new clamping and sawing technology. At the turn of the century, environmental aspects were gaining importance, themes such as noise and dust reduction and energy efficiency were focused on. Our “Low-Noise” saw-blades are an example of this focus. Our globalisation strategy was constantly in operation in this time. Then the crisis came in 2009, and we were surprised by its intensity. During this time, we had to address cost issues and merge some of our production sites. In retrospect, we can say that the measures taken were necessary and correct, and we have emerged from the crisis stronger than before.

At the moment there are many uncertain factors in terms of economic development. Do you think that a crisis similar to 2009 will repeat itself in the near future?

This is obviously a very difficult question to answer. The causes of the crisis, namely the bank problems, are still unresolved. It is amazing that this issue nearly disappeared out of view entirely in 2010, and only re-surfaced due to the situation in Cyprus.  Looking at the market, I don’t think the 2009 situation will repeat itself, but as I said, the trigger came back then from the financial sector. We are optimistic regarding the market situation, China has stabilised over the last few months and the situation in the USA is looking good, especially for us.

Do you have a concrete picture of the position of LEUCO in a few years’ time?

We continue to strive for a healthy and profitable growth. LEUCO has stakes in the claim to be the market leader in terms of innovation and profit, and delivers the strongest service and technical support. This is the case both nationally and internationally. This is a high standard we are setting for ourselves, which we aim to pursue and expand our company accordingly.

With the “P-System” LEUCO brought an entirely new system onto the market in 2011. What is the customer response nearly two years after the introduction?

The “P-System” was a huge step forward. The system requires a change in the thinking process – in production, in design, in the sales process, and also in the application and design from the customer side. It wasn’t a surprise, that this doesn’t take place overnight, but is a gradual process. In the meantime, many customers know the P-System, its performance and efficiency, so the self-perpetuating effect by way of word-of-mouth is working. Of course, there is always certain scepticism of new systems, but this is a positive thing. It means we have to convince the sceptics – which we manage to do in most cases.

Is this the reason for the practical application display at the Holz Handwerk trade fair in 2012?

The display caused a sensation at the Holz Handwerk. We told people to bring along any material they desire, and to gain practical experience with our “P-System”. That was very courageous on our part, as we didn’t really know what materials the visitors would bring. One visitor, for example, brought along a board covered in wallpaper. This type of board is difficult to process and is liable for edge chipping. On the “P-System”, processing ran flawlessly, as with all other materials, and the reactions were therefore accordingly very positive.

Can the "P-System" be described as a revolution in the woodworking industry?

I believe so. Alone the position and number of cutting edges, give the tool an exotic appearance. LEUCO took a very courageous step introducing such a completely different tool system to the market. It all started with a very simple application, namely jointing, and from there on a whole system developed that changed cutting doctrine enormously.

To what extent?

A teacher at one of the vocational schools said he needs to re-write all his examinations, as results have changed. Not only has the machining process changed, but also the speed at which we are introducing new applications and solutions for the market. Applications, services, cutting quality, tool life and machining processes that never existed before the “P-System” was introduced, are now available. That’s why we can talk about a revolution and this revolution is continuing.

In what way?

Due to the system concept, the “P-System” is working its way into all sectors, whether for simple processes such as working with cabinet or front panels, or for more specialised applications in the flooring industry.

How advanced is the market penetration in the furniture industry?

It takes time for complete market penetration, but we are already at an advanced stage in the furniture industry. The “P-System" is widely known. The system offers great potential in this sector – especially considering laser edging.  In particular in the case of “zero jointing” the best available cutting quality is required. What gain is there to be made, when laser edge banding is perfect, but edge chipping occurs?

Can the success of the “P-System” be described in figures?

2012 saw an increase of 29 per cent compared with 2011. Currently, figures lie 30 per cent above results in 2012.

Are there areas in which the "P-System" can be improved?

Our aim is to constantly improve all our tool systems. This includes all "P-System" tooling. We believe that there is great potential for development, we haven’t yet explored all application possibilities. . Technical limitations also need to be defined more clearly.

One criticism is the initial purchase expense.

This is a point where we need to improve communications. The development of a completely new system is naturally linked with cost implications. Ultimately, it should not just be the purchase costs, but also the cost of the entire process that should be taken into consideration. This is something we have to draw attention to during the sales process. The tool performance can be measured and proved.  "P-System" users will confirm this.  On the other hand, we have to take specific customer situations into consideration. The ”P-System" doesn’t suit every customer requirement. For this reason, we have developed a cost-effectiveness calculation tool, our sales department can calculate for which customer the tool is advisable, and for which customers it isn’t.

For which customers is it not advisable?

Recently, a small carpentry business came to us wanting to purchase the “P-System”. Our sales team calculated that the system is not financially advisable for the customer, as only a few cutting meters would effectively be used.  We could, of course, have sold them the system anyway, but we didn’t want too. The customer selected another tool and was very grateful for the fact that we were honest.

Are there cheap copies available on the market?

There are counterfeits and there are patent violations which we are pursuing. The counterfeits are, however, not achieving the systems high performance levels. Where the system is not technically copied but within the patent boundaries, the photos in the catalogue are edited to look like our "P-System" But that doesn’t help them either – the original is always better than the copy.

Can we expect a new “P-System” innovation at the LIGNA?

Yes, there will be a new “P-System" development, in an unexpected area.

And which area might that be?

Wait and find out (laughing).

What else will LEUCO be presenting in Hanover?

The VDMA (the German machine manufacturer association) has assigned LIGNA the motto “Blue Competence”. LEUCO follows its own constant demand for innovation and therefore also the VDMA motto. We will present new tool system developments in areas such as noise reduction, dust emission and quality improvements. Prior to the fair, we have developed new tools and applications with customers and we will be presenting these in Hanover. One focussed theme will also be the “Low-Noise” tool generation. Furthermore, we will only be present in hall 26.

What is the reasoning behind this decision?

Everything LEUCO has to offer will be on display in hall 26. We used to display a reduced programme in hall 12. It was often the case that a customer was interested in a product that was on display in the other hall, as were our experts on that topic. Now we can present everything at just one booth.

Some time ago, the VDMA moved tool sharpening servicing more to the centre of attention. What position does LEUCO take on this subject?

The tool sharpening service is one of our strongest products worldwide, and differentiates LEUCO from our competitors. A large proportion of our turnover comes from the tool sharpening service, it is vital for customer relations. Tool performance must remain constant throughout the tool life cycle, and the technical service (accompanying documentation, tool data) is becoming increasingly important. These are important issues in the metal-working industry, and the interest is on the rise in the woodworking industry.

For which customers could this be interesting?

This model system has to be of interest for both parties the customer and the tool manufacturer. LEUCO has been offering this model system for more than a decade under the names „LEUCO Leasy”and „TDM Wood“. It is usually the larger customers that take advantage of this. Basically, the larger the capital commitment and the more manageable the product spectrum, the more interesting such models can be.

The interview was led by Markus Schmalz.

[Abstract, complete article was published  in the specilized magazine Wood and Plastics processing HK 02/2013]

Original article  "Die Revolution geht weiter", HK 02/2013 (only available in german)