ANNUAL REPORT 2019

SYSTEM PARTS SEGMENT

In 2019, business in the System Parts segment responded to the challenging market conditions, albeit with regional variations. Despite a temporary decline in orders and the absence of customer releases, significant progress was made in some areas. Advancements to our new electrolamination stamping technology are very encouraging.

Performance in the different regions varied due to a variety of factors. On a global scale, it is clear that consumers were particularly focused on the SUV segment, cars with automatic transmissions, and all-wheel drives, as well as hybrid and, last but not least, battery electric vehicles, but that new vehicle registrations generally declined or remained stable overall. In the System Parts segment, this led to a sales decline compared with the previous year. Furthermore, the decline in sales had a negative impact on the group’s overall result.

Strong business activity despite difficult market situation

During the reporting year, Feintool received a preproduction order in Germany for in-tool lamination core stacks of rotor and stator components for a leading OEM in the automotive industry. These are core elements of every electric car motor. This preproduction order forms the basis for a later, possible series production. To ensure that we are capable of long-term series production, we modernized and expanded the infrastructure at the plant in the German city of Jessen. This included the installation of new high-performance presses, among other measures. Feintool has also received a series production order in Germany for parts for a new dual-clutch transmission. Starting in 2022, the transmission will be installed in various hybrid vehicles from several European automakers, among other applications.

In addition, the first FB one fineblanking press was handed over for field testing in the fall of 2019. At the plant in Lyss, Switzerland, the latest-generation press was successfully subjected to intensive high-volume parts production tests. The results of the field trials are extremely encouraging and demonstrate the potential of the press in ongoing operation. Among other benefits, the latest generation consumes as much as 30% less energy than other press series with the same capacity.

In the Fineblanking Technology segment, Feintool took advantage of the current market situation particularly to further optimize the quality of production processes and efficiency. For example, the plant in Tokoname, Japan, delivered over 50 million parts in one year without a single defect. This level of performance was achieved thanks to perfectly coordinated processes and comprehensive quality management. In this context, it is essential to actively get all employees involved and regularly train them.

The System Parts segment is doing exceptionally well in China and continues to expand. As a result, we were able to officially inaugurate the expansion of the forming plant in Tianjin in the fall of 2019. This expansion was necessary in order to ensure that the plant has the capacity for the nominations that have been received. In fact, we plan on doubling our production capacity here over the next two years. The plant, with around 100 employees and four press lines, specializes in cold forming. The expansion in China highlights the systematic continuation of our strategy of offering solutions in those markets where demand will increase in the future.

In the United States, we held our traditional customer symposium in Cincinnati in October. Experts from across the industry gathered at the event to discuss the latest trends and challenges facing automakers and Tier 1 suppliers. The event focused on topics such as the increasing demand for trucks (such as the Ford F-150) or the trend towards complex eight-gear and ten-gear transmissions, among others. The plants in the United States are designed to meet automotive companies’ growing demand for ready-to-install components. Capital expenditures by the North American plants in additional processing methods, including the heat-treatment process, machining with CNC systems, double-disc grinding, and fully automatic assembly, are ensuring that this remains the case – and have been a very successful. As an example, Feintool has signed a ten-year contract under which we will be able to supply a customer with the latest generation of transmission components for use in American school buses.

Vertical integration and technology transfer

Through the integration of upstream or downstream production steps, Feintool not only improves its business processes, but also ensures its success over the long term. Known as vertical integration, this optimizes both our value creation and supply chains . One example is our forming plant in Ohrdruf, Germany, where we are establishing and expanding our tempering expertise. As such, the plant not only manufactures formed parts, but can also process them directly on site and deliver them to the customer ready to be installed. Feintool is also pursuing deeper vertical integration at other plants.

The company has also laid the foundation for the global rollout of the electrolamination stamping technology, as strategically planned. Feintool has made corresponding capital expenditures in China so that starting in 2020, we will be capable of manufacturing electrolamination components for the Chinese market locally at an existing plant. During the reporting year, we forged ahead with the transfer of knowledge and employee training necessary to achieve this goal.

Across-the-board efficiency gains

Feintool System Parts took advantage of the challenging market situation to increase efficiency and competitiveness at every plant. In this context, the company initiated measures adapted to the individual regions. As such, Feintool further optimized its manufacturing processes and once again improved its quality management systems. In doing so, Feintool is taking advantage of current market conditions and optimizing its plants to meet the respective challenges, while at the same time driving innovation forward.

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