The Shade Maker

Building Times: Mr Kraler, we are experiencing scorching heat at present. This has an immediate effect on air conditioning suppliers. Is the weather directly impacting your business as well?

Andreas Kraler: It is actually surprising that this is not happening in our case. Based on data, we once tried to understand whether heat waves have a direct impact on the demand for our awnings. The result is that we definitely could not establish any connection. What is having a greater impact at the moment is the general reluctance of customers to purchase.

Construction costs have risen significantly in recent years. Is this why there is increased demand for cheaper sun protection solutions?

I believe there are always customers who buy cheaply. And there are customers who consciously look around for high-quality products - with the clear awareness of buying high quality only once instead of buying cheap, and therefore spending twice. This difference will probably always exist.

But there will probably be some price pressure, right?

Undoubtedly there is pressure on pricing, but this is mainly due to low demand, as there is almost no new construction in some segments. But it’s not all sombre. Banks are signalling to us that lending is becoming easier again for private builders and that the volume of financing is increasing.

How important are the non-profit developers for HELLA?

This is an important market for us, especially at present, because in some regions they are the only ones building. The big question is whether the basic equipment of these non-profit developers also includes sun protection.

The basic equipment of the non-profit developers is not becoming more lavish, I assume?

Yes, that's true. It's a pity, because ultimately it's just as hot in the city, regardless of whether it's a subsidised or privately financed project.

2022 was an exceptional year for many companies, including yours. Could you foresee that things couldn't go on like this?

We all would have liked to have had a crystal ball. The exceptions were 2021, 2022 and also 2023 as an extension, because we were late to arrive on the construction site scene with sun protection. In retrospect, it is clear that those years were definitely exceptions. This was not foreseeable in this form. But on the other hand, somehow it was also clear that things could not only look up. And yet, sometimes one would like to have better indicators so that one can take better, faster, and more efficient countermeasures.

So, you were caught off guard somehow?

We didn't have an early warning system. We have seen signs that the market is weakening. Unfortunately, we have not been able to determine exactly when this will affect us or how we will be affected.

An owner from the windows industry does not expect us to achieve the same figures in new construction as we did a few years ago. His focus is on redevelopment. Do you see it the same way?

Things will look up again. We need housing because we need people to move here. Otherwise the economic system we have currently established will not function. However, it is difficult to predict what the figures will be in the new construction sector. But, we will probably not see the figures from previous years again.

And redevelopment?

I think that redevelopment is necessary and will become increasingly important. However, the large volumes do not come from redevelopment. Actually, they have always come from new construction.

What does that mean exactly?

If the volumes are no longer there, then the factories have to be adapted and companies simply have to adjust to the realities. I have spoken to several banks, especially in the West. They can already see, of course, that the single-family housing business and redevelopment work have picked up again. However, large-volume business is not very common there. That’s because there is just not enough space for it in the narrow valleys.

HELLA acquired 15 companies between 2004 and 2016. They are market leaders in Austria and very well positioned in Germany. You were managing director in Hungary at the time. How are things going for you in Eastern and South-Eastern Europe?

So, through these acquisitions, we have expanded our country portfolios and achieved stability. When one country weakened slightly, this was offset by growth. This balance has essentially worked over recent years. However, our disproportionate share of the German market and the market turbulence there have meant that growth in small markets is not sufficient to cushion this.

Are the markets in Eastern Europe not growing strongly enough?

The countries of Eastern Europe are still growing, Poland for example. In Croatia, there has been enormous backlog demand due to the demand from high-end tourism. Hungary is, let's say, politically difficult, but stable. Slovakia is small but nice, and Czechia is actually quite good too. Switzerland is stable. Italy is also doing well. However, exports generally are always heavily dependent on project business.

Are there any other destinations where you would say, we'll be sending someone over there soon?

We still have growth potential in existing countries and are naturally looking at both countries as well as companies. After the acquisitions of the past, our goal was to restructure ourself in such a way that we could initiate the next steps for growth.

Have you already achieved this?

Integrations need to be digested first. This pertains to corporate culture as well as processes and systems. We have succeeded in doing so in recent years. We can now look ahead, and I see the whole of Europe as a market for sun protection. In order to enter a market, you first need to understand how business is done and what the relationships look like.

You have recently optimised your systems and processes in order to shorten delivery times. Is this a major issue?

We recognise that delivery times can be a decisive factor, especially when every order is fiercely contested.

Is the time between sending the order form and installation getting shorter?

I think there are several issues at play here. First of all, there is the general uncertainty surrounding construction. There are relatively long planning or approval phases, which one would like to compensate for with short implementation times. In addition, there is often the issue of construction coordination. By this I mean that the processes are not clear and we are often one of the last suppliers to be affected.

Is it possible to determine when the typical decision to use sun protection is made?

It always tends to be too late. But you have to differentiate. When building a well-designed house made by an architect, the decision is made relatively early on, because sun protection is part of the architecture and appearance. If the decision is made too late, it is always a compromise between technical feasibility and appearance, and of course commercial considerations. So the earlier you get involved, the better you can plan and design.

With the HELLA CUBE experience world, they have created turnkey, high-end sales tools. Is it already giving results?

We welcome every partner who walks the path with us. On the other hand, we are in the process of equipping our own showrooms with these worlds of experience. It's worth it. The first thing that we notice during the initial sales talks is that customers leave the consultation feeling happier and more satisfied; they feel that they now understand for the first time how sun protection works for them.

And how do your partners react?

Those who have done it so far say they are much more successful than before. There are ongoing discussions based on the feedback, and hence we see that we need to make adjustments here and there. It's a learning process. It would be incorrect to believe that you can launch something on the market and say, That's it now. I see it as an ongoing development process.

Today, sun protection is digitally controlled; this can sometimes be challenging for older people. Is there actually a shortage of young talent in the industry?

It is logical that young partners are open to digitalised solutions. Generally, it's the same here as it is everywhere else in the trade. Succession in small companies is difficult because the younger generation sees how much effort it takes to be successful. We work on a prototype every day, which is not exactly trivial.

In Germany, there is a requirement to have a master craftsman's licence, but not here. Is that a disadvantage?

In Germany, holding the master craftsman's licence is once again compulsory, although it had not existed for a while. This resulted in endless proliferation. Since then, things are settling down again and quality is improving once more. In Austria, there is an apprenticeship programme for sun protection technicians, but no master craftsman's licence. However, in order to practise, one must be qualified to manage a company.

Is that enough?

Sometimes I wish there were more qualifications, because the more poorly installed sun protection products there are, the more damage it does to the industry. The value is generally rather poor, even though our products and services have an enormous impact on the building envelope and the energy efficiency of buildings. On the other hand, one has to fight to ensure that sun protection is even considered in the planning stage. However, we have managed to include it in the OIB Guidelines, but it must first be ratified by each federal state. All this takes a very long time.

HELLA also offers planners a BIM configurator. Is it being used?

There is demand for it, and it is being used. We also actively point out that tender documents can be downloaded there. And, of course, it assists in planning.

Do you see any differences between Germany, Austria and Switzerland when it comes to BIM?

Apart from large offices and general contractors, Austrians are not necessarily pioneers when it comes to BIM. And there are actually relevant differences. In Switzerland, for example, virtually everything is done through an architect, who plans everything and is ultimately also responsible for the execution. This is not the case in Germany and Austria. Here, sun protection often runs along the window, which is not the case at all in Switzerland. The trades are completely separate.

Isn't the Swiss market closed off?

Not really. You have to understand Switzerland; so you have to do your research before you go there. But it is an exciting market. Switzerland is very stable, and there have been hardly any fluctuations there recently. There is also a strong awareness of craftsmanship and quality there. In addition, a property without sun protection would be virtually unsellable in Switzerland.

The recycling economy is a major topic of our time. What about HELLA products?

We have a very high proportion of recyclable components, which is more than 90 per cent - depending on the product. Real recycling would be achieved if a product were removed from one building and reused in the next building. Since we process customised components, this will hardly be possible. That is why we strive to manufacture our products to such a high standard of quality that they function for a long time. That is the greatest contribution we can make to have a lasting impact.

Are your products built more solidly now as compared to 10 years ago?

We are constantly adapting to the conditions, whether this involves a wind-resistant design or plastics that are suitable for higher temperatures. The trend is towards using less plastic, as this can be problematic in combination with the trend towards dark colours.

What else is HELLA doing to keep its carbon footprint as low as possible?

On the one hand, we have our own hydroelectric power station, where we naturally produce our own electricity. In Abfaltersbach, we are self-sufficient in combination with the PV system, which means we sell more than we need. The buildings there are almost passive house standard. And at our Geislingen location, we are not only renovating the roof but also installing a photovoltaic system.

You manufacture in Austria and Germany. Wouldn't Eastern Europe be cheaper?

Due to acquisitions, we had small production facilities in Poland, Czechia, Romania and Serbia. That was too fragmented and very difficult to manage. We had logistical and quality problems, and automation would be impossible at many locations. In addition, labour costs have risen considerably in some countries. Austria's stability and solid legal framework also play a role in such considerations.

How are decisions actually made in the family? Do you all sit down together at the lunch table on Sundays?

We have a supervisory board, which is chaired by my father. When there are major issues to be agreed upon, my father and I discuss them. Sometimes a quick phone call is enough, sometimes an emotional conversation in the morning. So, there are all kinds of conflicts. We are all pretty much cut from the same cloth, and when something is important to us, things can get emotional sometimes.

Your father can't be very young any more. Does he still go to the company?

He is turning 78 and remains the grey eminence and the good soul of the company. I always say, he's the Home Secretary and I'm the Foreign Secretary. I travel more or am outdoors most times, and he's especially present in Abfaltersbach. In any case, I value his decades long experience.

What does succession look like at HELLA?

We have two daughters. The older one has completed her bachelor's degree in business administration and the second daughter is just about to move to Vienna to attend the WU after passing the school leaving examination. We'll see what they make of it and whether they find what we do exciting.

What is exciting from your point of view?

The exciting thing about HELLA is the constellation. We have an interesting environment and an exciting company structure, with many tasks to be accomplished. And there's plenty of space if you want it. We are the only headquarters in the Lienz district and therefore also offer attractive jobs.

My last question: which type of sun protection have you installed in your own home?

I live in the house that my parents built in the 1960s, which has been extended and renovated over the years. There is a wide variety of sun protection available there, some of which is automated. And sometimes I am also a test user when the development department wants to try something out, as my house is very close to the production unit .