Driving innovation through the pandemic - the Dutch way

The coronavirus pandemic ground much of industry to a halt, be it through supply chain disruptions or the inability for staff to work as normal with a rise of social distancing in the bid to stem the spread of the pandemic. However, despite constant challenges over a long period, some companies saw a veritable boom during the crisis.

Dutch tech firm VMI has been kicking around for a fair bit. Celebrating its 75th anniversary during the height of the pandemic in 2020, the company continued to perform well during the crisis. But what can be attributed to its continued successes?

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"Our two main selling points are our heritage and our brand reputation", VMI CCO Mike Norman to Industry Europe. "Our goal is to always deliver on what we promise, which in practice means that we make a habit of exceeding expectations with our operations".

"Our DNA is innovation. We were the first to bring the level of automation that now sets the standard in the industry that now allows us to make tires, in a hands-off, eyes-off way".

Founded in 1945 in the hamlet of Zuuk, the Netherlands, the company specialises in making machines for the tyre and can industries, and more recently pledged to move into the healthcare sector, making cosmetic pads and medication packaging - currently employing more than 1,600 people worldwide.

Like many manufacturers, the firm has seen myriad supply chain issues attributed to the pandemic, particularly when it comes to sourcing chips for electronics thanks to the ongoing semiconductor shortage.

However, Norman claims the company has been working closely with suppliers and customers along its value chain to add a system of priorities while working with customers to overcome any problems presented. They have also been looking into sourcing parts for the "hearts of the machine" - the most essential components, such as mechanical parts, heat treatment and surface coating - more locally.

There have also been issues associated with implementing client projects, such as the China-backed Linglong Tire plant in Serbia, which Norman affirms "has certainly been affected" by the pandemic, with its biggest challenges being the company delivering equipment on time due to it all being interlinked.

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"Machines require material from upstream equipment and our machines feed downstream equipment. If anything in the value chain is delayed or interrupted then the whole project is interrupted which necessitates rescheduling of engineers or deliveries. This project is no different in that respect", he said.

"The tire industry is very conservative, and for good reason, as there are several safety measures needed and so we have to understand the industry very well to deliver something useful. Safety is very important", he added.

Linglong has been a customer of VMI for many years. This trust with its customers has been essential for the firm to form partnerships and continue its streak of success, Norman suggested, adding that it means a lot when a client says “VMI is producing our tires. We can tick the box and not have to worry about it. They've done it many times before and they can handle it”, which he feels demonstrates his company's brand power.

“At this point in time, the factory is not running at full capacity or anything yet, but the price, the cost per time, and the amount of waste that they reduce from a green point of view is unprecedented. So we've been able to do some real added value.

“This is in part due to evolving clients demands such as Linglong’s requirement for labour-efficient equipment and stronger environmental consciousness. With evolving client demand, we obviously have to adapt as well", he added.

The group's parent company, TKH is starting to define more rigid climate goals for its subsidiaries on board with EU expectations and greater climate goals laid out by unilateral international agreements. VMI admits, however, that it is not a large emitter and so many challenges presented by the energy transition "do not apply to them".

"We have been working on the switch to net-zero for some years", Norman said, but the company have taken several steps to improve their environmental footprint. More sustainable business practices could shield against future disruptions should another event of this magnitude happen again.

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"We make machines and have installed solar panels on office roofs. We have a plan to plant a good number of trees over several years in a bid to try and sequester some carbon and we use electric vehicles in our fleet of company cars.

"On the R&D side, we use more modern production techniques and equipment to reduce the emissions of the machines we make. For the machines that are used in producing tires, we strive to reduce the amount of compressed air that reduces our power consumption, while also looking to ensure the final products contribute to our customer's reducing their emissions.

"It is good to see that industrial action to reduce emissions has shifted from a PR stunt to seeing concrete action in recent years", he added.

The design of VMI's machines has also been privy to the increased electrification of industry in two main respects. The first is the design of the machines themselves, which is seeing a reduction in compressed air use for electrical valves in favour of electronics. The second is both the company's use of electric vehicles in its transport as well as parts the company makes for use in the production of new electric vehicles.

These products are often tailor-made for various industries and all customer specifications must be catered for. Norman revealed this does not cause too much bother as customisations are often relatively small and most aspects of change are within their capabilities.

One thing the pandemic has influenced is market predictability. Constant disruptions, new variants and changing landscapes have ensured that forecasts are far more difficult to make. Across the board, investment needs have been increased.

"There are two reasons for this", Norman claims. "One is a delay in investments because of Covid two years ago and those investments inevitably have to be made so they're continuing together now.

"The other is, what is really noticeable is a kind of de-globalization for the last years or longer we've seen companies spreading their supply chain globally, making use of the low-cost manufacturing in China that's been a defined business over the last 20 years".

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This has led to increases in domestic production of parts that manufacturers would otherwise be dependent on suppliers - often located very far away - to receive parts. This looks to continue into 2022, he said, but trying to make accurate predictions for 2023 and beyond becomes difficult.

"We live in an unpredictable time and cope with things reactively", he added.

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