While the Zeppelin Group is celebrating its 70th anniversary in 2020 all year long, the Chairman of the Management Board Peter Gerstmann is also reflecting on 20 years at the company. With a degree in business administration, he began his career as the commercial manager of Zeppelin Silo und Apparatetechnik GmbH in 2000. He has been on the Group Management Board since 2010, focusing on Group development, IT, digital business management, auditing, corporate communications and the Construction Equipment Eurasia and Plant Engineering strategic business units as well as the Zeppelin Digit strategic management center. All this is reason enough to talk to Peter Gerstmann about his personal memories of his first day at the company, changing customer requirements, managing a foundation company, the future of the construction industry and what it feels like to drive a construction machine.
Mr. Gerstmann, you are celebrating your 20th anniversary at Zeppelin this year. What was the biggest milestone for you personally during this time?
Definitely right at the start, when we managed to establish the then deficient industrial sector as an international plant manufacturer and thus establish a sustainable business model. However, the reorientation of the Group into strategic business units after the financial crisis was also a huge change project, which has now gotten the chance to prove its resilience, especially in the coronavirus crisis. Something very special for me was the acquisition of Caterpillar’s distribution rights for Sweden, Denmark and Greenland. Ultimately, this was the reward for ten years of very hard work by Michael Heidemann and myself as well as a tremendous proof of trust in the performance of all Zeppelin employees.
When you started at Zeppelin 20 years ago, you were initially responsible for plant engineering. Can you remember your first day at work?
It was a wonderful summer’s day at Lake Constance and I thought I had just hit the jackpot. However, the recruiter forgot to mention that the company was facing enormous challenges at that time and it took me a few months to realize the extent of the Herculean task. In this respect, it was a very uncomfortable start, in the course of which I learned a lot – and also got a lot of grey hair in the process.
As Chairman of the Management Board, you have been at the head of the Zeppelin Group since 2010. In your opinion, what has changed most significantly in terms of customer requirements over the last decade?
Zeppelin is a diversified company and we therefore have a very broad spectrum of customers with a wide range of needs. One thing that has remained the same is that we can only survive in the market with an absolute customer orientation, a high solution potential and the best service. What has changed is that today everything is interlinked and connected. This is a development that we have witnessed over the past decade in all areas of life, from communications to cars to espresso machines, and at an increasing pace. Our customers expect integrated and digital solutions to run their business successfully. For a long time, the construction industry has been an area where productivity could hardly be increased or could not be increased, unlike other sectors such as agriculture. Digitization has transformed that. The availability of high quality data can increase productivity and efficiency, even for small or medium-sized enterprises. The customer expects to be able to maintain an overview of their business via their mobile device, including the locations of their machines, operating times, fuel consumption or the utilization of their fleet. We provide them with technology that has a responsive design so that using it on a smartphone, tablet, notebook or PC is similar and intuitive.
The reliability of the machines and systems has also become increasingly important; as projects are often so closely timed that downtime can cause considerable problems for our customers. With the help of data connection and targeted data analysis, we develop service solutions and can recognize expected failures in advance. By intelligently integrating machines and components, we send over spare parts packages and service technicians before maintenance becomes necessary or errors cause damage to the machine. This not only protects construction sites from failure, but also power plants and large ships on the world’s oceans. We monitor site access and container access, optimize energy consumption, coordinate logistics and provide equipment that is digitally monitored. On our platforms our customers rent what they need on the construction site, procure spare parts or configure their machines.We have also observed that sustainability is becoming an increasingly important issue for our customers. They attach great importance to sustainable business policies and socially responsible management. We are seeing increased demand for more environmentally friendly construction machines. Our manufacturing partner Caterpillar has significantly expanded its range of products and services in recent years so that we can successfully meet the demand for low-emission, low-noise but efficient drive systems.
Zeppelin is a foundation-owned company. What distinguishes the work of a CEO of such a company from that of a listed company, for example?
I have gained experience in different ownership structures in my career. I worked in both a listed company and a family-run company. Basically, you must of course make strategic and commercial decisions no matter what the structure is – the goal of every company is to make long-term and sustainable profits. For me, foundation-owned companies are like well-run family businesses. The eternal principle of the foundation-owned companies enables long-term and sustainably oriented corporate management. The quarterly balance sheets are not the main factor, as is the case for many listed companies. Compared to a family-owned company, there is the advantage that there are no disputes or different interest groups within the owner family that influence corporate governance. Thus, there is a clear governance structure. As CEO, this gives me the confidence to respond to and manage crises or market requirements.
2020 is a year of anniversaries: the Zeppelin Group, in its current form, is celebrating its 70th anniversary this year and Germany is celebrating the 30-year anniversary of reunification. To what extent has this historical event influenced the Zeppelin Group?
Reunification was not only a special event in German history, but also for Zeppelin. Our performance had already convinced Caterpillar to entrust us with dealership in the eastern part of Germany. Immediately after reunification, we set up our construction equipment branch network in the new federal states and were also able to attract a lot of skilled employees there. Some of them spoke Russian and were familiar with Eastern European culture – this later enabled us to acquire additional Caterpillar sales and service territories in the Eurasian region. The reunification and upheavals in many Eastern European countries opened up considerable business and growth opportunities for Zeppelin.
Zeppelin has experienced strong growth in recent years and has become more international. Zeppelin recently took over new dealer territories in Northern Europe as a Caterpillar partner in the sales and service of construction machines at year-end 2019/2020. To what extent do customers benefit from this?
By entrusting us with dealer territories in Sweden, Denmark, and Greenland, Caterpillar is placing its trust in a proven Zeppelin network that ensures high standards and service quality across national borders, thereby winning the enthusiasm of its customers. And this enthusiasm makes the difference! We need economic success, but without enthusiasm we will perish. The continuous exchange between Zeppelin and Caterpillar enables us to respond more effectively to the needs of our customers and manage our manufacturing partner’s product development accordingly. In addition, the continuous exchange with different customers produces ideas that lead to product improvements that ultimately benefit everyone involved. In Northern Europe, we will now establish a powerful rental organization, offer financing concepts and build up the trade in used machines. Combined with our service concepts, we offer a service package that only a few providers on the market can match.
Have you ever driven a construction machine yourself? If so, how did that feel?
Sure, several times. I’ve done this at our product training sessions, at our customers and on our test site. It’s always a special feeling. The power of the construction machine – and the possibility to control it – is something I approach with both humility and respect.
For you personally, what makes the Zeppelin Group so special that you enjoy working there even after 20 years?
For me, the driver is our business model. We are significantly different from other companies because we are a sales and service organization – 100 percent for the customer, no compromises, no excuses. To succeed in this business, you need very special people, people who inspire, get involved, find solutions and who always go the extra mile at any time. I found these people at Zeppelin. I am motivated to get up every morning and be enthusiastic about my job, which is to work with these highly committed and qualified people from a wide variety of fields and to get things done. And I learn new things every day, which is great!
What has been the most challenging situation in your career at Zeppelin so far?
The financial crisis in 2008/2009 left deep marks on Zeppelin and we have just managed to achieve a positive result. At the time, we recognized the need to restructure, redefined our corporate culture, as well as to make ourselves less susceptible to crises with the GPS (growth performance stability) strategy and strengthen the growth and profitability of our business models with the structure of the strategic business units. This year, with the coronavirus crisis, the resilience of this strategy has proven itself. Despite a comparable drop in sales, as was the case during the 2009 financial crisis, we will achieve a respectable result this time and thus ensure our future viability with respect to investors and shareholders.
How do you expect the construction industry to develop, particularly in light of the current coronavirus pandemic?
In Germany, we were fortunate that there was no complete lockdown and most construction sites continued to operate. The construction industry is also not as dependent on supply chains as the automotive industry, for example.
I see a three-part development in the construction industry approaching us. We will quickly see a recovery in terms of public infrastructure, as a great deal of investment was already approved before the pandemic and the government will now make further investments, particularly in the wake of the coronavirus economic measures. Municipal allocations will become weaker, as they will be forced to save due to the loss of trade tax revenues. In industrial and commercial construction, I tend to see restraint, as overcapacity is being reduced and office space is less in demand due to remote working. In contrast, I take a critical view of the residential construction market in the medium term. Speculative investments due to high expected rents and sales prices will be difficult to implement due to uncertainty on the job market and gloomy future prospects and will thus put tight financing models in jeopardy.
Where do you see Zeppelin in 20 years?
Over the past 70 years, we have not only survived well in the market, but have grown further thanks to our dedicated employees, who find solutions to our customers’ requirements with a pioneering and innovative spirit. This applies not only to our diversified offering, but also to our geographical expansion. Zeppelin invested in digitalization early on and was often ahead of its time. In this respect, I am sure that we will continue to look forward to a successful, solid and innovative company in 20 years to come.
This interview will be published in German language in the October 2020 edition of baublatt.