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Emag Group - a 1990s growth story

The company - originally an iron foundry and engineering works - was founded in 1867 in Saxony. Since its reestablishment in 1952 near today's headquarters at Salach, which is situated between Stuttgart and Ulm, the company has been manufacturing turning machines. Originally these were simple centre lathes, followed, in the 1960s, by turret lathes, then by program-controlled single- and twin-spindle automatics.
These were followed in turn by high-performance single- and multi-spindle automatics of modular design, special machines for the manufacture of car components, and complete production lines for the manufacture of, for instance, drill pipes for the oil industry.
The 80s brought EMAG great success with highly automated CNC turning cells, a number of which could be linked up to form a manufacturing system.
These systems had to be equipped - according to contemporary technological know-how - with expensive and space-consuming gantry loaders for the automatic loading and unloading of workpieces.
These manufacturing systems found worldwide use in many branches of the industry.
EMAG has always offered bespoke, tailor-made solutions based on a well-proven optimised modular principle, with today's designs being even more future-orientated than ever.
The global recession of the early 90s - the worst the industry has experienced within the last five decades - combined with the disintegration of the Eastern European markets, hit the German machine tool manufacturers hard.
In 1989 the worldwide output in machine tools was valued at approx.
DM 80 billion.
During the following years the annual turnover reduced to DM 46 billion.
This downturn hit turning machine manufacturers particularly hard, with their order intake plunging to a third of its previous value.
According to figures issued by its association it fell from over 6,000 machines at a value of DM1.6 billion (GBP533,000m) in 1989 to just 2,300 machines at a value of DM590 (GBP196.5m) million in 1993.
The greatest decline, accompanied by a serious collapse in prices, was experienced in 1991.
The economic slowdown that affected many business sectors in most of the industrialised nations was also experienced at EMAG.
During this horrific time the company had the courage to break new ground with its applied technology, when it was recognised that the products needed to become more efficient at less capital outlay.
In 1992 EMAG was the first in the world to build a revolutionary vertical turning machine with an inverted pick-up work spindle that traverses with the main axes whilst the tools remain stationary.
With this radical design EMAG stood the conventional turning machine concept on its head; that is to say, every VSC machine is a complete manufacturing cell, utilising the pick-up spindle to load the machine in the shortest possible time (and without attracting the customary high costs of previous designs).
This development accommodated the demands of the industry.
The economic downturn at the beginning of the 1990s forced the manufacturing industry, particularly of the Western industrialised nations, to drastically reduce production costs.
This called for high-performance production equipment at a considerably lower capital outlay.
'Lean Manufacturing' became the catchword, typically characterised by machines and manufacturing systems, which remained easy to operate and monitor, whilst still retaining a high level of automation for the complete machining of demanding components and maintaining the highest quality and process integrity, but without the high cost of automation, computers and software formerly associated with the CIM (Computer Integrated Manufacturing) systems of the 80s.
It has always been EMAG's objective to build machines that can be used to fulfil all machining requirements on round and 'not so round' components.
This philosophy applies as much today, as it will tomorrow.
It ensures that the VSC platform represents a state-of-the-art springboard for the future development of machine tools, allied to the philosophy and the strategy adopted by today's automotive industry.
The VSC platform offers all its advantages for the user: standardised operation, maintenance and spare parts supply and the elimination of interface problems; and for EMAG: a high degree of machine system adaptability, which provides the customer with fast and cost-effective solutions to individual manufacturing problems.
The VSC machines - of universal design, equipped with process-specific tooling systems - are more and more frequently used as multi-functional Vertical Production Centers for drilling, milling, grinding, gear cutting, laser machining and related processes.
For example, this concept is suitable for the manufacture of over 60 percent of all round or 'not so round' metal components in a car, an advantage much appreciated not only by the car manufacturers themselves but also by their many sub-suppliers.
The product offered by EMAG is therefore not so much the machine in its conventional sense, but individually the cleverest solution to the question of how to economically produce the customer's workpieces.
EMAG's specific know-how has been complemented by strategic alliances - with LIiebherr (1997) on gear hobbing - and strategic acquisitions, in particular those of the two grinding specialists Karstens (1997) and Reinecker (1999).
In August 2000, Kopp, the leading specialist in milling and grinding machines for the non-round machining of cams, camshafts and crankshafts joined the EMAG Group.
In the spring of 2001 the three grinding specialists merged as Reinecker Karstens Kopp GmbH and, within the EMAG Group, became the innovative center of excellence for all grinding, combined turning / grinding, and cam, camshaft and crankshaft machining processes.
Rapidly growing sales of this new type of machine called for an increase in manufacturing capacity.
Therefore, in mid-1994, WEMA Werkzeugmaschinenfabrik Zerbst in Saxony-Anhalt was acquired and converted into an efficient, central production plant for the EMAG Group, with an intentionally high degree of vertical integration.
This allows for the flexible, just-in-time in-house manufacture of all components, for machine assembly and functionality testing.
On completion, the basic machines are despatched to the marketing companies within the EMAG Group and to co-operation partners.
The marketing companies in, for instance, France, Italy or the USA, then 'customise' the basic machines according to the customers' workpiece-specific machining requirements.
Expansion of the plant in 1999 and 2000 doubled the production area and WEMA became one of the most modern machine tool manufacturers in Europe.
During September 1999 the manufacturing and engineering capacity of the Group was further increased with the acquisition of the Leipzig-based Pittler-Tornos, renamed as EMAG Leipzig Maschinenfabrik.
This acquisition brought with it the additional know-how for the bespoke application of multi-spindle machines for high volume production.
METAV'2000 saw an expansion to the VSC TWIN and VSC DUO series, with the introduction of the VSC TRIO, a non-indexing multi-spindle automatic.
The success of the VSC series brought with it an increased demand for automation equipment, as these machines on principle feature the automatic loading and unloading of workpieces.
In congruence with this demand, March 2001 saw the introduction of yet another level of expertise and competence into the EMAG Group with the corporate acquisition of the workholding specialist Heilig Automation, Heubach near Schwaebisch Gmuend.
Our market exposure has been increased in line with our growth in the areas of technology and production.
In the primary markets subsidiaries were founded, which act as marketing companies and ensure that top local experts maintain close contact with existing and prospective customers.
Our co-operation with Nodier in France began as early as 1970, followed by an even closer partnership as Nodier Emag.
Today, a subsidiary of Nodier Emag in Spain also supplies the Spanish and Portuguese markets.
Since 1980, EMAG Werkzeugmaschinen Vertrieb GmbH in Herford has looked after our customers' interests in northern Germany.
In the same year EMAG opened a sales subsidiary in the USA.
Today EMAG LLC in Michigan is the marketing company with the highest turnover in the EMAG Group.
In 1984 new subsidiaries opened in Great Britain (EMAG UK) and South Africa (EMAG Machining Systems), followed, in 1989, by KP EMAG in Moscow.
Since 1998 the EMAG Group has their own branch office in Bangalore, India.
The newest subsidiary, ZETA EMAG in Italy opened in mid-2001 south of Milan.
Nodier Emag, EMAG USA and Zeta Emag 'customise' our products in close proximity to the clientele, by adapting and equipping the basic machines they receive from the Group's central production plant in Zerbst to suit customer- and workpiece-specific requirements.
In all other markets our customers are looked after by renowned agencies with well trained staff.
The VSC series is presently available in a range of sizes that caters for the machining of workpieces between approximately 20 and 700mm diameter.
The machines are used in companies large and small, for small batch and high volume mass production alike, either as stand-alone machines, small manufacturing systems or, with several machines linked together, as production lines for the complete machining of highly demanding workpieces and of entire component families.
They are very efficient, ultra-precise and considerably reduce component manufacturing costs.
Techniques like high-precision machining using hard turning, hard milling, or grinding, all form part of EMAG's solutions to today's production problems.
More than half of the Group's turnover is achieved abroad.
The largest market abroad is North America, the major customer base being the automotive industry and its sub-suppliers.
In spring 2000 EMAG founded, in co-operation with the well-known American machine tool manufacturer Hardinge, the Joint Venture company Hardinge Emag GmbH in Leipzig.
HARDINGE EMAG manufacture and market worldwide the new series of Standard Vertical turning machines with inverted pick-up spindle.
The VL (Vertical Lean) series - with its design concept allied to the VSC series - is designed for use in smaller enterprises and sub-contractors, the market sector where Hardinge has long been active and successful.
Since its introduction the VL machine has been extremely well received by the market.
Spring 2001 saw the inauguration of the EMAG Forum where EMAG customers, guests and staff can be welcomed and entertained.
But the EMAG Forum does much more than that.
It is intended to serve as a communication center that promotes a sense of partnership and encourages the participants to engage with each other for each other - customers and staff, members of staff amongst themselves, the company and the public - to resolve questions and share ideas on such diverse subjects as the economy, science and politics, the working environment, or art and culture.
EMAG aims to be a public-spirited, open-minded host and partner to local associations, regional educational institutions, trade associations, the press and friends of the house.
This openness is symbolised by the EMAG Forum as a window to the EMAG plant and its state-of-the-art production techniques.
The inauguration of the EMAG Forum also coincided with the first meeting of the EMAG Academy for the advanced training of in-house staff and selected employees of customers and business partners.
When EMAG first introduced a vertical pick-up machine at METAV 1992 many thought of it as an oversized tool cabinet.
At first, even trade experts merely shrugged their shoulders to express their incredulity, especially as EMAG introduced the product at the time as a 'multi-functional' machine tool, a term never heard of before and the significance of which was not understood.
Between 1988 and 1992 the German turning machine manufacturers procured an average annual order intake of approx.
2,800 horizontal and 110 vertical CNC machines, the latter being exclusively vertical turning mills.
In 2000 the German turning machine manufacturers also showed, according to association statistics, an order intake of approx.
2,900 horizontal CNC machines, a figure approximately that of a decade earlier, whereas that for vertical pick-up machines had already reached 900.
In terms of value the order intake for vertical pick-up machines in 2000 amounted to over one half of that for horizontal CNC turning machines, with the trend continuing upward.
Germany is the world's biggest manufacturer of vertical pick-up turning machines.
Between 1993 and the end of 2000 German turning machine manufacturers must have built between 5,000 and 5,500 pick-up machines.
It is estimated - exact international figures are not available - that the German manufacturers are producing about two thirds of all machines of this type manufactured worldwide.
Germany is also the biggest user of these highly productive machines.
No doubt this ensured that production capacities and, consequently, many jobs in the industry were preserved when they would otherwise have gone elsewhere.
The term 'Machine of the decade', invented by the trade press, applies in full, as the facts clearly illustrate.
This machine has, however, the potential to continue to be a success for at least another decade.
The EMAG Group has pioneered this development and profited from it.
It was in early 1993 that the first customer pressed the button on the first of this new generation of machines.
Now there are more than 3,000 machines up and running or on order.
The EMAG Group's turnover in 1993 was just under DM 90million (GBP30m).
By 2000 the group's approx.
1.000 (annual average) employees had achieved a turnover of nearly DM400 million ( Euros 200 million or GBP133m), thus quadrupling it in a few years.
2000 also saw the highest order intake in the group's history: approx.
DM500 million ( Euros 255 million or GBP85m).
Based on this success, the EMAG Group expects with its 1,150 staff, and the 100 trainees at its 7 locations in Germany, to achieve a turnover of approx.
DM500 million ( Euros 250m or GBP167m) in 2001.

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