• Miriam Zerbel

Lord of the Marches.

Fackelmann1 neuentrepreneurship. Alexander Fackelmann has been managing the fortunes of the family business for 30 years. During this time, turnover has increased tenfold to almost 400 million euros. Now the 64-year-old is handing over operational responsibility to a non-family CEO. Together with the fourth generation, he is to lead the way towards digitalization and sustainability.

At some point, in the middle of the conversation, Alexander Fackelmann says this sentence, which sums up so well the more than 100-year success story of the family business from Hersbruck so well: "You have to know what you are doing, where you want to march to - and then make the whole thing profitable.

Sounds simple, but it's so difficult. Fackelmann underlines it with his credo, which decorates the walls at the company headquarters. "Enthusiastic customers and dedicated employees are the guarantee for lasting success."

Today, 80 percent of German citizens are familiar with the concise black lettering on red bars. More than 10,000 different products from avocado slicers to lemon squeezers and 15 brands can be found under the umbrella of Fackelmann Brands, which are available worldwide. In addition, bathroom furniture: wall units, base units, midi and tall cabinets, also mirror elements with integrated LED technology and washstands. An almost unmanageable range of products that has become huge over time. Only recently has the company added pots, pans and roasters to its product portfolio.

The success story of the Franconian family business begins in 1919. Shortly after the end of the First World War, the grandfather, Heinrich Fackelmann, leaves his parents' farm near Würzburg. There is no future for the son of a farmer there. So he sets off for Nuremberg, where he founds a commercial agency for iron and household goods.

Sebastian Fackelmann then follows in his father's footsteps in 1948, after the Second World War. But Sebastian wants to be more than just a sales assistant who arranges business for other companies. He wants to get out of the dependence on customers and even produce household goods, because due to his direct contact with customers he believes he knows very well what people want.

In 1958 he decides to take production and sales into his own hands. In Hersbruck in central Franconia, about 30 kilometres from Nuremberg, he finds a cheap industrial site, hires employees and initially manufactures wooden goods such as toothpicks or stirring spoons. His breakfast boards with different Resopal decors are a big hit. To speed up their production, Fackelmann buys his first machine. But after just one day the necessary number of boards is cut. To ensure that the machine doesn't stop, he needs a new idea and discovers bathroom cabinets for himself.

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At first glance, it doesn't seem to fit together: Kitchen gadgets and bathroom cabinets. The fact that Fackelmann will be able to stand on these two pillars in the coming years is mainly due to changes in the sales landscape. In the early 1960s, specialist dealers still had fixed sources of supply and offered hardly any sales opportunities to a new manufacturer. But now the trend towards self-service is emerging. Supermarkets and DIY stores are desperately looking for independent suppliers - and Fackelmann is on hand. Today there is hardly a German DIY store that does not sell Fackelmann furniture. Supermarkets even have specially designed Fackelmann shelving systems. The articles are offered to match the store's range of products.

The company now generates 80 percent of its €395 million turnover in the household sector, with the rest coming from bathroom furniture. Just how well this diversification works is demonstrated by the Corona crisis. "In the spring and summer, for example, the furniture sector did not do well at first. Production was shut down and our employees went into short-time work. But because people had to stay at home, baking and cooking experienced a small boom. We sold more bread baking utensils in particular than before the crisis," reports Alexander Fackelmann.

The path of the now 64-year-old to the company is almost typical for German family entrepreneurs. At first he accompanied his father on his travels. He is going to Japan, Hong Kong and Taiwan. As a high school graduate and then as a student, he is then on the road on behalf of the company to acquire customers. So that he does not take away any work from the employees, his father entrusts him with the most difficult cases. His son works on a commission basis and is surprisingly successful. With his mother's old car he drives across the country to customers who actually did not want to buy. "During my studies I earned 8,000 marks a month. I was already doing well then," says the family entrepreneur.

In 1984, Alexander Fackelmann, a business graduate, joined the company. In addition to sales, he is responsible for marketing, business development and internationalization - and he immediately gets a problem: Production is too expensive. Real wages in Germany have risen two and a half times within three decades. The family principle, "Make your business profitable," is coming under threat. "In fact, it was all about survival," says Alexander Fackelmann looking back.

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The accounting department calculates that he could save a seven-figure sum by relocating the entire production to China. In 1987, Fackelmann was one of the first medium-sized German companies to build a factory in the Chinese free trade zone of Shenzen to manufacture labor-intensive products there.

Soon several thousand Chinese people were working for the company, the majority of the employees now coming from the Far East. His controllers strongly advise him to close the German site. The production of simple plastic kitchen gadgets in Germany would no longer make sense. And China grew, while Germany shrank at the turn of the millennium as the "sick man of Europe". This is a difficult decision for the family entrepreneur - between balance sheet and ethics. "We as a family business, rooted in Middle Franconia, wanted to maintain the location in the city of Hersbruck, with its 12,000 inhabitants. I knew that if we left, we would never come back. You'll lose all your know-how." In retrospect the right decision. "I'm glad that we didn't completely follow controlling back then."

In 1992 the father hands over the company to his sons Alexander and Norbert. Now the two are solely responsible for the further strategy. "You can't live on past successes", says the older son Alexander today. The direction of the third generation: internationalisation and expansion of the product range.

After the fall of the Iron Curtain, the Franconians establish subsidiaries in Eastern Europe - first in the Czech Republic, then in Bulgaria, Hungary, Poland and Slovenia. Acquisitions are made in Western Europe, where the markets for their own products are saturated. Well-known domestic and foreign brands such as Zenker, Dr. Oetker Küchenhelfer, Nirosta, FM Professional or Stanley Rogers are bought.

In the past ten years, the Franconian company has made 18 acquisitions, thus expanding its worldwide presence. Seizing opportunities when they arise is the company's motto. "The essential prerequisite for this is that synergies are created - in purchasing, in sales, in addressing customers," explains Fackelmann. When it comes to financing, one thing is important: equity has priority. Purchases are only made when the cash flow is so good that the company can afford it.

Thanks to this strategy, Fackelmann has been represented on all continents since 2012. According to Alexander Fackelmann, the decentralised group structure, in which local management has a high level of responsibility, enables the company to adapt quickly and flexibly to local market conditions while at the same time benefiting from global networking. Currently, the group consists of 39 independent companies.

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Because the Franconian is convinced that e-commerce is becoming increasingly important, he is currently focusing primarily on online providers. He would prefer not to buy start-ups but functioning companies - they are easier to integrate. It must "fit", explains Fackelmann. The entrepreneur doesn't want to say any more than that, but in view of the current, Corona-related economic situation he is only quoting an old stock market saying: "Buy when the guns thunder".

When brother Norbert leaves the company at his own request in 2007, the older brother bears sole responsibility. And is soon confronted with a new challenge. Chinese workers are becoming more and more expensive, wage increases of 20 percent are causing the advantages of manufacturing in the Far East to dwindle. This is why the company is now increasingly withdrawing from China and investing in India, where wages are two thirds lower.

Even more important: At the same time, automation is enabling more production in Germany again. Robots are moving into German factory halls. Plastic production is returning to Germany. Plastic kitchen gadgets are now manufactured fully automatically at the headquarters in Hersbruck. Supervised by German specialists, machines do the work, producing fly swatters, drain strainers and cucumber slicers.

The automation also allows the production of banal products in the high-wage country Germany, says the company boss. Today, half of the articles are again produced here, the other half in Asia. According to Fackelmann, the investment in the machines has paid for itself after about three years. Despite the higher wages in Germany, this is more efficient thanks to the well-trained skilled workers. "If I can afford it, I prefer to produce here in Franconia, where I have my roots."

In January, shortly before the start of the Corona crisis, Alexander Fackelmann handed over the operational management to Martin Strack, 39, as the new, non-family CEO and managing director for the German-speaking region. Alexander Fackelmann withdrew from direct operational business and began to slowly withdraw from day-to-day business. The company is to become independent of him as a person. However, as chairman of the shareholders' meeting and majority shareholder, he will continue to dictate where it should march to.

"The two biggest current issues are digitalization and sustainability," explains the entrepreneur. "Today we have to get closer to the end customer. Because their purchasing behavior has clearly changed. Because they obtain information on the Internet and then often buy in-store or vice versa, we have to adapt our processes. Omni-Channel is the strategy - a combination of e-commerce and stationary trade.

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Since last year, Hersbruck has also had a flagship store where the range of products for cooking, baking and bathrooms is presented. There are cooking courses and a baking school. Bloggers and influencers strengthened the social media marketing. This combination of online and offline business opens up new, younger target groups with changed demands.

With the younger target group, the topic of sustainability is also moving more and more into focus. Many of the 10000 articles are now not disposable products, but are designed for long-term use. There are breakfast boards made of beech wood with FSC certification for sustainable forestry or kitchen gadgets made of green plastic that are compostable. "By 2025, we also want to convert a large proportion of our products and packaging to sustainable materials that are easier to recycle," says the entrepreneur.

There is also still plenty of growth potential, in India for example. And in the USA. However, it is not only new countries that are to be conquered, but new things are also to be tried out. The medium-sized company is currently focusing on the Australian HoReCa sector - hotels, restaurants and cafés. His company, so the vision, could supply professional requirements to the gastronomy in Australia, which are not sold in retail stores. Perhaps it could even become a further business segment.

The Fackelmann boss has only just begun to make use of his good contacts in Asia, which he had built up by relocating production of his range in the 1980s. They enabled him to import 80 million masks to Germany. And because Fackelmann is convinced that we will have to live with the Covid 19 virus for even longer, he decided to start his own mask production. A subsidiary in France, which produced vacuum cleaner bags, switches over. A new machine and innovative technology is used to produce FFP2 respirators. The entrepreneur is convinced: "There are plenty of opportunities."

While Germany is still struggling with the recession, the glass is half full for the entrepreneur from Franconia. "I see a very good future. Things are going well, probably even better." Alexander Fackelmann knows exactly where things should go. "The new managing director, who has been doing well so far, must now make it profitable. ®

Author: Miriam Zerbel

Photos: torch man // Thomas Fedra // Michael Matejka // stainless steel // FMO // Zenker // Dr. Oetker

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