Industry Interview
Markus Fritzsche, Managing director
Is the motivation environmental, health or something else?
We want to comply with the law, that’s number one. Also, as a family owned company, we want to avoid a situation where, in 10-20 years time, we could be accused of manufacturing products with substances that we have known are unhealthy, possibly legal, but unhealthy. If we think we cannot justify the use of certain substances in our products we wouldn’t use them even if they were legal. Not only for the end user but also for our staff here.
Sometimes we don’t understand why certain substances are not policed more strictly. Many paint manufacturers complain about the law and industry legislation. But my view is that if you see that EUC laws work in all businesses, why complain? It’s definitely helped the environment, you cannot live in the past and say, ‘well, we did it like this 20 years ago’.
Do you have an environmental policy? Are there certain things you’ve implemented?
We are very lucky. We moved to this factory in 1995 and after that very few paint factories were built across Europe, so we have one of the most modern on the continent. Inside our factory we don’t just meet the present legislation, we have already looked ahead and fulfilled more than what is required today. We would even be ready for further steps in environmental protection. Where our products are concerned, we meet and exceed EUC laws on environmental protection. For example, we avoid using heavy metals in our car refinishing paints and we avoid other substances that are not banned but are known as being unhealthy.
How effective are you at marketing to the UK?
In Germany, like in the UK and other markets, we have very little mass marketing which means advertising campaigns or sponsoring motorsport teams, for example. We have always valued direct marketing, we like to take part in exhibitions. Mipa is one of the few paint companies still attending AutoMechanika every two years and other exhibitions like EquipAuto and AutoPromotec. This enhances our family business, because my brother and I, as the responsible sales person and owner, are there at exhibitions and every customer – large or small – has a chance to meet us and talk to us. I think this is something which would never happen with a multinational because you don’t know the owners.
With regard to competitors in the UK market, who do you see as your main rivals?
I think there are, in the car refinish business in Europe today, more or less two groups of companies: one group is the multinational famous brands like PPG, Glasurit, Standox, Spies Hecker, DuPont and Sikkens – these are the brands with approvals. I think they dominate 85% of the market anywhere in the world. As they have a major market share we could say ‘this is our major competition’, but I think the second group of brands with medium sized, smaller companies (most do not have approvals) is our daily battle, competition like DeBeer, Lechler and MaxMeyer.
Are you looking into technical and commercial refinish approvals?
Yes, but it is a question of how the market will develop in the future and the finance involved. The costs for these approvals has to be invoiced to all customers. We think that one of the major advantages of our brand is we supply a very high quality of product for a reasonable price and our strategy is that we are selling the product as a product. We are not automatically saying, ‘if you buy the product you get this and that additionally to it’, like many other brands do. It’s dangerous that the customer does not realise what he buys with a litre of paint, so he gets a lot of possible side services which he may not even want but he pays for anyway. Many bodyshops do not need approvals.
Do you have any future or immediate plans for growth in the UK?
We are not taking it as ‘we have to grow by 5% or 10% by next year’ because we value the quality of growth. For us it is not just important to show figures, we are family owned so we do not have to satisfy shareholders. We have to live with our company for decades to come, so the quality of sales and growth is very important. The structure has to be right, partners have to be right and certainly the financial situation has to be sound. We’re installing the training centre at Portsmouth: it is very important in the car refinishing segment to train people and also give them technical back-up. We have started to promote our industrial mixing systems in the UK, which are a big seller in central Europe. We are in talks with a number of distributors and groups.
What would you say accounts for the difference?
The UK market is complicated and has been for many years. We took over a paint manufacturer called Sudwest, a German production company producing car refinishing and decorative paints. Sudwest was sold to a big group that only worked in the field of decorative products and so the car refinishing segment was sold to Mipa. In this deal, Mipa Portsmouth (at the time Sudwest Portsmouth) was included. This is how we sold our first tin in the UK.
The structure of the company when we took it over was not as we expected. They were exporting for the German mother company to the non-German speaking countries: such as Spain and Portugal. They sent the products from Germany to Portsmouth and from Portsmouth there; the staff were not really UK focused, they were internationally focused. For us, we always exported from our factory. Cost-wise, it made sense not to transport products to another country and then send them back from there, so we changed the structure of the company. In the first instance turnover went down significantly, we had to change people and so on. Then we had slight growth, but management were not really promoting it through the market, which was a problem. We decided to change the management five years ago and since then we have had significant growth in the UK and, if this growth continues, the gap between Britain and Germany will quickly close.
Obviously there are significant differences between the German and the UK markets. Do you feel your product is perceived differently in the marketplace or has a different presence?
Germany, first of all, is the biggest market in Europe, I don’t have exact figures but I would guess it is not double, but near double the UK market. Our German turnover is not only car refinishing; we sell our industrial and decorative products. If it was just car refinishing, we still sell triple or four times as much as in the UK, but it’s not 10 times as much.
There are certainly differences in how the product is looked at and perceived, the variations in market structure, but I don’t think these account for the differences in sales.
Germany accounts for 47% of the total company turnover with the rest of the EU accounting for a further 31%. Do you have a number for the UK?
The UK currently accounts for 3.5% of the total company turnover.
How much of your business is refinish products?
Car refinishing is two-thirds of our business here in Mipa AG and maybe half of the group turnover is car refinish: it is a major market for us.