04.03.2021 - Press
At the beginning of the year, Andreas Krengel was appointed to the board of hygiene paper specialist WEPA in Arnsberg. Alongside his father and two other board members, he now continues to run the company founded by his grandfather – after a year that did not go as well economically for a toilet paper manufacturer as one might have assumed.
Mr Krengel, Mr Krengel, your company suddenly became systemically relevant last spring when people began hoarding toilet paper of all things in the first lockdown. What impact has this had on your company?
Martin Krengel: Even before that time, we worked around the clock, seven days a week at our 13 production sites across Europe.
So, there were not many possibilities left to increase production capacity. Still, we worked even more closely with our customers, which are trading companies throughout Europe, to meet the increased demand.
Can you provide an example?
Martin Krengel: For example, we changed products to standardised products together. Our employees have achieved a tremendous amount. The fact that we were able help each other out between our 13 locations in Europe worked to our advantage.
Andreas Krengel: Clear communication and consistent action were vital: the first order of business was to ensure the protection of our staff as a top priority. The second was to ensure security of supply. And the third was to say clearly what we can and cannot do. Our employees were concerned about the strong decline in demand in the summer that we had predicted ...
... as customers were merely hoarding and did not have an increased need for toilet paper.
Andreas Krengel: The peak phase in March and April was followed by a slump in orders over the summer months. Beyond that, the important B2B business of our WEPA Professional division slumped by 30 percent due to the Corona lockdown measures.
Bottom line, was the pandemic good or bad for your business?
Martin Krengel: The pandemic certainly increased hygiene awareness among consumers. Yet, due to the decline in sales, we had a slight growth of less than three percent in 2020.
That is less than expected!
Martin Krengel: That is true, the professional sector now accounts for roughly 20 per cent of our turnover. Restaurants, hotels or schools have hardly needed any toilet paper during the pandemic.
So – was the strategy of focusing on B2B business a mistake?
Martin Krengel: No, it was not. Hygiene awareness will continue to increase when people are once again allowed to go to events or to enter companies and public authorities. And hygiene paper will continue to displace air dryers as it is proven to be the more hygienic solution.
Andreas Krengel, you have been with the company for three years, helped to build up the business in Great Britain, and have arrived on the WEPA board at the age of 32. What did you learn in 2020?
Andreas Krengel: The coronavirus has accelerated digitalisation, but above all it has changed the understanding of leadership. Communication and transparency were and remain at the top of the agenda in these challenging times: We sent video messages, established remote leadership and held our leadership event completely digitally and interactively on a specially developed platform.
Does the coronavirus have an impact on your long-term strategy?
Andreas Krengel: Despite the challenges of the pandemic, we have been able to consistently pursue our 2023 strategy programme and have invested in start-ups, for example, to strengthen our contact with end consumers. We also established our own start-up, Snyce, which sells toilet paper online with a focus on design and sustainability that does without plastic film, among other things. These investments contribute to the expansion of our business model, more hygiene products and solutions.
With your expertise, you could also have gone into mask production...
Martin Krengel: Why, no, so many have entered this market. We decided to leave it to the others and focus on what we are good at.
Brexit is now complete. Did you invest 85 million in Great Britain and hire 75 additional employees despite or because of this?
Martin Krengel: Great Britain is an important market for us, we generate 15 per cent of our sales in the consumer business there. The potential there is great, because currently a quarter of tissue paper products are still being imported ... We will double our production capacity with the new machine and thus establish security of supply. Our clear objective is to produce where our customers are.
You brought an investor into the company in 2010 but disengaged from it again thanks to a state bond. Now you are financing your growth on the bond market. What can family businesses learn from you?
Martin Krengel: My father, the company’s founder, already knew that this bulk market requires growth. Shortly after the turn of the millennium, we decided not to be a purely German company, but a European one. And we went abroad with our trade customers. At that time, we acquired a competitor that was as big as we were. Without this step, we would not be where we are today. Our learning is to deal with appropriate forms of financing at an early stage in order to be able to implement the necessary steps in the best possible way.
But you wouldn’t bring another financial investor into the company at this point, would you?
Martin Krengel: Financing must follow strategy. With our strategy and in our volatile bulk market, we feel more comfortable with financing via the bond market. It is more oriented to the long term, less about increasing the value of the company and more about robust growth, which is in line with our strategy and also facilitates cooperation with the banks that support us.
In what way has the coronavirus-related digitalisation push affected you? WEPA was considered a hidden champion, among other factors because you mainly produce hygiene paper for private labels. Many unknown but high-turnover companies are now emerging from the background. Does that apply to you, too?
Andreas Krengel: In the past, it was an advantage that we could follow our own path without much attention. Today, however, we are positioning our strategic messages, such as our sustainability expertise, more strongly in the market and cooperating with partners in the value chain and, among others, with start-ups such as Goldeimer, which is committed to sanitation projects worldwide.
Martin Krengel: We work closely with our suppliers on the topics of raw materials and packaging, exchange data, and work on joint products and process optimisation. One example is our machine supplier Körber.
Is this also about increasing efficiency through the opportunities of digitalisation?
Martin Krengel: We are developing networks with our machine suppliers, especially to optimise maintenance intervals and enable remote maintenance. This has been implemented in half of our plants at this point.
In what way has the coronavirus-related digitalisation push affected you?
Martin Krengel: In WEPA.digital, we have a unit with ten employees in Düsseldorf that supports the core business in all digitalisation issues. All employees and all managers are intended to understand digitalisation and – where it makes sense – to drive the digitalisation of processes.
What are your next goals?
Andreas Krengel: We aim to become the most sustainable and agile partner for personal and professional hygiene solutions by 2023. We can build on a very good basis in many topics of our strategy programme. For instance, regarding our ecological sustainability goals, we are already the European market leader in the production of hygiene paper from recycled fibre.
And what about your new foundation?
Andreas Krengel: Through the non-profit, company-related WEPA Stiftung, we reinforce what defines us as a the Krengel entrepreneurial family and as the WEPA family business and drives us in our daily activities: assuming responsibility and creating a future together.
Thank you very much for the interview.
This interview was conducted by Anja Müller.
Copyright: Handelsblatt Media Group