ITEQ growth strategy results in much tighter planning and choice for the larger OEMs

Source: Link Magazine

ITEQ has grown considerably in recent years. To keep up with the demand from the larger OEM customers, it has invested heavily in automation hardware and digitization. Partly because of this, the planning is now much sharper, so that the work can be done with just a little more people. It is precisely because of this growth that it fits well with Wilvo Group, which uses the same strategy and took over the company at the end of last year. A conversation with the board members – three in their thirties – in the new building in Nijkerk. “The target is a 15 percent increase in turnover per year,” says Marc Nanninga.

‘Good cooperation requires that customers have the same professionalism’

The three colossal Amada laser cutting machines are lined up in line. The first is a bit older and will be replaced at the end of the year. The third is brand new. Purchased this year after careful consideration, says Martijn Engwerda. ‘Thanks to the digitization effort that we have already started here, we have all the data. So we can see exactly how long a machine takes to complete a workpiece, but also that our people are already struggling to pick everything up at the same pace. We could have bought a 9 kW machine.’ This turned out to be two hours faster per week within the current schedule than the 6 kW version. “But it doesn’t make much difference and it is of no use if the removal of material does not run at the same pace. “So we went for the 6 kW, which is also a lot cheaper. With that difference, we have purchased a sorting unit that will speed up unpacking. Also from Amada. Yes, a handy guy that salesman’, the operations director acknowledges with a grin.

Distinguished with logistics

‘We distinguish ourselves with our internal logistics’, commercial director Menno Bos takes over. “Every production company is able to purchase fast machines. But if you don’t have the logistics around it in order, it doesn’t add much. We have invested heavily in the last five years. In automation hardware: in addition to the cutting machine and the sorting unit, also in a quickly convertible press brake and now also a fifth welding robot. But we mainly invested time and money in digitization.’ He is not referring so much to the Ridder IQ ERP system, but especially to the ‘app’ that ITEQ designed itself, with the support of a few IT freelancers. Engwerda: ‘It turned out to be impossible – at least a few years ago – to read out all ERP data via a tablet on the work floor and to register all your actions in it. So we designed an application for it ourselves. The foundation was established within a week’, he says with pride.

Better calculation and planning

The result is, argues financial director Marc Nanninga, that the preliminary and subsequent calculations are now much better than before. ‘We now know exactly how much time a certain operation takes and can translate that into an accurate quotation.’ As a result, the planning is now much better. This offers peace of mind in the workplace, which is now also set up differently, says Engwerda: ‘Previously, there was work on the floor for three or four days. This gave the operators choice stress. Often, that quick job was taken and the more complex one saved for the next day, while it might just have to be delivered earlier. Now there is only one day in the workplace. The operators know: what is written here must be finished today. And take their responsibility.”

“In the past, several people sometimes spent an hour looking for an order of 250 euros”

What also helped the planning, Bos continues, is the move five years ago from three small buildings (4,600 square meters in total) to the current new building (7,200 square meters). For example, the welding department was spread over three locations. It also makes a difference that investments have been made in a system with location management that can be used to fill and pick quickly and without errors on the basis of QR codes. “In the past, several people sometimes spent an hour looking for an order of 250 euros. That doesn’t happen anymore,” Engwerda assures.

Customer choice

In addition, customer choice has benefited better, tighter planning. “Our focus is now on the larger OEM customers,” says Bos. ‘We work with fewer customers, but
engineering, re-engineering and producing a larger product portfolio for this. High mix, low volume. And these are generally parties that also have their planning well organized and therefore issue a reliable forecast.” “And such a customer suddenly calls with the question whether his order can be brought forward, thanks to the digitization very easy’, says Engwerda: ‘In fact, it takes no more than pushing that order up a few lines in the shop floor management system. They don’t notice it on the shop floor.’ Bos: ‘It did mean that we had to choose which customers suit us. Ultimately it is about the long-term relationship, about a win-win situation for both parties in the long term. So we also had to disappoint customers’, Bos acknowledges. ‘We then put them in touch with one of the metal companies in the area. Partners with whom we regularly work. That way we all benefit from this.”

Growth strategy

All those investments in automation and digitization and the efforts to improve logistics and planning are necessary because of the growth strategy, the three board members of the Nijkerk company make clear in unison. The same strategy that their customers, large companies such as Lely and EVBox, also follow, and that is no coincidence. ‘Being able to work well with customers requires that they have more or less the same vision, the same professionalism of work. In addition, customers who are growing strongly expect us to grow at the same pace,” Engwerda explains. That growth has been successful in recent years. Nanninga: ‘Last year turnover increased by 30 percent; for this year we expect a growth of at least 20 percent. And the EBITDA (profit before deduction of interest costs, taxes, depreciation and write-offs, ed.) has also grown.”

The increase in turnover is substantial and representative of that in ITEQ’s most important markets: agri, automotive and medtech. It is also a growth rate that fits the strategy of the parent company, Wilvo Group. This Bergeijk-based company took over ITEQ at the end of last year from the shareholders Theo Tolboom and Tim Kollen. This acquisition followed shortly after that of GFM and was followed by that of Van Den Broek Precision & Tooling. This eagerness to buy has everything to do with the fact that Wilvo itself was taken over in 2019 by the wealthy investor Borromin Capital. Acquisitions that – just like ITEQ’s growth ambition – are motivated by the need to continue to fit in well with the customer. Wilvo, for example, already had a large ASML customer. The acquisitions of GFM and Van Den Broek – who also supply the Veldhoven chip machine manufacturer – have made ASML even more important. Growing along with ASML, but also having a further focus on other growth markets prompted Wilvo CEO Rob Lemmens to acquire ITEQ.

Doubled

In addition, Wilvo must grow organically and ITEQ must contribute to this. And so it does. Bos: ‘In terms of turnover, we have doubled in the last five years. Thanks to all the investments in digitization and automation, the number of people has risen less sharply, from 65 to 90, mainly direct workers, many of whom can also be deployed flexibly.” The number of indirect employees has barely increased: “We have been working here for twenty years with three work planners’, Engwerda illustrates.

Of course, the current growth rate is difficult to sustain in the longer term. “The target is a 15 percent increase in turnover per year,” explains Nanninga. ‘We have set ourselves that.’ Lemmens visits Nijkerk once a month to discuss the development of the financial figures, investments and plans for the future. “An hour, no more. We have a very flat organization and great cooperation. The targets are jointly determined,’ says the financial director. “These are open conversations in which expectations are freely expressed to each other,” Engwerda explains.

Economic tide?

The three board members realize that it is easy to report to the CEO in a good atmosphere when solid growth can be reported again. They are aware that the economic tide could turn in the next six months due to all the geopolitical tensions. Menno Bos is somewhat concerned about the effects of the unrest in the supply chain: ‘I have the impression that the biggest supply problems are over. Steel prices have already fallen considerably. The fact is that due to the high demand and the supply problems, many companies have invested heavily in capacity and stock. That becomes a problem for those companies if everyone suddenly puts on the brakes.’

“But,” Engwerda adds, “we haven’t hoarded any sheet metal. And our investments in automation were already planned and needed to solve production bottlenecks and keep up with growth. If customers suddenly start to postpone orders, we can easily absorb this thanks to our digitization.” That is also no problem financially, Nanninga assures: “We have a lot of fat on our bones, good liquidity ratios.” If one of the markets nevertheless collapses, we can possibly take over work from the other Wilvo companies, or vice versa.” Bos: “Spreading the risks is also part of the growth strategy.” And that economic crisis could only happen sooner or later. Nanninga: ‘When the corona pandemic broke out, everyone was counting on it. And when the shortages ran high, it seemed inevitable. But in the meantime, the economy has only continued to grow.”

Three acquisitions, 400 people, 100 million turnover

ITEQ is specialized in precision mechanical sheet metal processing and the assembly of (complex) modules. So there are on the floor in Nijkerk various complex welding assemblies for milking robots that are produced by welding robots. The company is also active in the automotive sector, to which it supplies, for example, composite parts for charging stations, and the medtech sector, which it supplies with, for example, assembled drying cabinets for endoscopes. The company has been part of the Wilvo Group since December 17, 2021, to which machining company GFM and precision machining company Van Den Broek Precision & Tooling have recently been added. Wilvo Group now employs 400 people and hopes to reach a turnover of 100 million euros this year. The acquisitions were made possible by German investor Borromin Capital, which Wilvo acquired in 2019. Borromin is, among others, (co-)owner of plastics processor BUK and bicycle manufacturer Little John Bikes in Germany and the German-Dutch Koop Watermanagement.