Megatrend: Globalisation
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Globalisation links countries through trade and cultural exchange. It facilitates the global movement of goods and people and intensifies economic cooperation. At the same time, it also brings challenges such as the offshoring of jobs. Markets and cultures are converging within a complex global network, while processes of decoupling are threatening existing alliances.
To address these changes, Wilo is adapting selected activities at a regional level in order to operate more closely in line with the relevant market requirements. Wilo’s ‘region-for-region’ approach is designed to take greater account of regional market needs in production and organisation. Sites in Germany, the USA and China help reduce response times in the respective regions.
Dimensions of decoupling
Global partnerships are on the wane, alliances are crumbling, and economic bridges between nations are being torn down – decoupling is one of the greatest business challenges of our time. It affects the economy and society on four different levels and requires decisive action from business – geographical, technological, financial, ecological.
Geographical decoupling
Geographical decoupling refers to the politically motivated isolation of countries. This makes it more difficult for businesses to engage in cross-border economic activities. As a result, pressure mounts on supply chains and the design of organisational structures.
Think globally, act locally
To tackle the challenges posed by global trends towards geographical decoupling, Wilo is pursuing a consistent ‘region-for-region’ approach. This approach is intended to support organisational resilience in selected regions and can help to reduce dependencies in certain crisis scenarios.
Major competitors
The world’s most significant geostrategic conflict is the rivalry between China and the US. On the one hand, the world’s largest economies are pursuing policies of isolation and confrontation; on the other, however, they are closely intertwined economically. If decoupling of markets were to go too far, this would lead to a loss of prosperity on both sides.
16 main production sites
Wilo is boosting its in-house manufacturing operations on an ongoing basis, thus increasing value creation. The company currently produces at 16 ‘Green Fabsֹ’ worldwide and plans to expand its production network to include further sites in the coming years. This allows Wilo to reduce its reliance on selected production-related components and can help make supply chains more resilient.
Joining forces
In Cedarburg near Chicago, Wilo has brought its three subsidiaries – Scot Pump, Weil Pump and Wilo USA – together under one roof at a new facility. The Cedarburg Campus spans around 23,000 square metres and is home to a research and development department, a training centre, warehouse and logistics facilities, alongside production and administration.
Infineon case study: Rapid supply of pumps in Dresden
Wilo has supplied seven IL pumps for chip manufacturer Infineon’s new wafer plant in Dresden. They form part of the internal cooling water network required to produce the millimetre-thin discs. One of the reasons Wilo was awarded this important contract was that the company was able to supply the pumps more quickly than originally expected in the project.
Technological decoupling
In a growing number of markets, products, systems and solutions are subject to different standards. This applies in particular to smart and intelligent products that use and exchange data.
Different markets, different standards
Wilo develops selected products, systems and solutions for different regional standards. In addition, Wilo is decentralising its production and administration, as well as its research and development departments. This is intended to help Wilo respond more quickly and flexibly to regional requirements in future, allowing it to cater more effectively to customer needs and better address the challenges posed by technological decoupling.
Clouds on the digital horizon
In the field of data-driven digital technologies, compatible communication standards are necessary to help systems interact across national borders. Isolation resulting from technological decoupling can entail significant follow-on costs for companies operating internationally or prevent them from achieving success in their projects.
Adapting to regional challenges
Wilo adapts selected products, solutions and services to regional conditions. This allows Wilo to respond more effectively to differing technological requirements in individual markets. Selected Wilo pumps are therefore designed for specific regional standards and can be connected to specific cloud-based systems. This applies, for instance, to the Wilo-Live assistant. The digital and mobile service is now in use in over 50 countries.
Financial decoupling
Financial decoupling refers to the separation of networks of global financial and capital markets, as well as currency and operational payment systems. This may lead to a reduction in overall economic growth.
Local partnerships
Wilo is investing in specific markets in order to capitalise on growth opportunities there. In the context of potential financial decoupling, Wilo has a network of global and local financial partners.
Financing solutions with local partners
In line with the ‘region-for-region’ approach, Wilo is increasingly relying on local, experienced partners for financing solutions for local project business – partners who are familiar with the economic, legal and cultural conditions in the relevant country. These investments are backed by a network of international banks and financing partners. This allows the Wilo Group to draw on long-term global financing arrangements. In addition, local financing frameworks, which can take regional circumstances into account, are available locally through subsidiaries.
Ecological decoupling
Ecological decoupling describes the fact that environmental and climate protection regulations vary from one country to another. This distorts competition and may, in the short term, lead to some businesses relocating to countries with less stringent climate policy requirements.
Too dry or too wet?
Climate change has very different consequences depending on where you are in the world – but the causes are the same. Limiting them requires global and cross-border cooperation, as well as local measures. If there are only local, uncoordinated initiatives and climate protection becomes a negative competitive factor in individual markets in the near term, ecological decoupling will make effective measures to limit climate change difficult.
