„We are revamping the Maschinenfabrik Name completely“

After 150 years in business, where is there to go next? Managing Directors Dr. Nicolas Maier-Scheubeck and Michael Rohde reveal their ideas for the future.

Will MR still exist in another 150 years?

SCHEUBECK: 150 years is a long way off for making predictions, but I’m certain that we’ll still be here. That said, MR is bound to be a very different company from what it is today. I don’t think we’ll have to wait 150 years for things to change, though – that will happen much sooner than that.

ROHDE: The company has already evolved so much over its lifetime that there’s no doubt it’ll continue doing the same. We used to build woodworking machines and even built a plane at one time, all before getting involved in electrical engineering 90 years ago. So we’ve already undergone several changes in the type of technology we deal with, and that has prepared us for meeting the challenges of the future too.

So you’re saying that your company is very adaptable. But that alone is not really enough to ensure MR’s survival, is it?

ROHDE: You’re absolutely right that it’s about much more than just adaptability. Our strength is that we keep our focus trained on what our customers want. Innovation isn’t about brilliant engineers shutting themselves in rooms and coming up with inventions. It’s about listening to customers, recognizing how they approach products and services, and mak­ing sure that we overcome the ever-changing challenges that we face while keeping our customers happy. Network topologies in Australia are different from the ones in downtown Manhattan, and very different again from the ones in Lesotho. But MR has what it takes to cater to the needs of all these situations and provide solutions that keep delivering over the long term.

“We see ourselves as a mediator between what network operators need and what transformer manufacturers are able to achieve.”Dr. Nicolas Maier-Scheubeck

SCHEUBECK: Our core competence lies in tapping into benefits, particularly at the interfaces between customer systems. We go beyond just equipping transformers with monitoring and control technology – we also focus specifically on what will make networks economical and safe to operate. As an example of that, we are constantly acting as a mediator between the things that network operators and system integrators need, and what transformer man­ufacturers are able to achieve. In the process, we are continuing to write the very DNA of the company.

After all, our desire to move into electrical engineer­ing was sparked more than 90 years ago when a manager at an energy supply company invented a way of regulating transformers under load. When you look at it like that, we have a historic mission to keep cultivating our integrated way of thinking and our stock of expertise. There’s one more reason why MR will continue to exist far into the future, though, and it’s actually the most important one.

What is that?

SCHEUBECK: People need us. There are so many trends at play right now. The energy supply environment is becoming increasingly decentralized while customers’ systems are becoming more complex at the same time. And the more varied the requirements placed on network operation and equipment become, the more important is the role played by the critical nodes that connect sections of the network – which themselves are becoming more and more semi-autonomous. Without intelligent equipment at these interfaces, electricity networks simply won’t be able to function reliably or economically as we move into the future.

ROHDE: Newly industrialized nations are growing at a rapid pace. It won’t be long before the world’s pop­ulation reaches nine billion – all with a need for electricity. At the same time, mature economies are battling the problem of aging infrastructure while making the environmental decision to turn away from the large fossil-fuel-operated power stations that they have been using to keep networks stable, instead opting for several dispersed, renewable generation sources. Things are becoming exponentially more volatile, uncertain, and complex. We want to help transformer manufacturers to equip our common customers – the network operators – with the right tools for ensuring that power supplies remain reliable and economically efficient at all times.

SCHEUBECK: We also need to consider global trends, such as the emergence of megacities, electric mobility, and convenient building engineering that is geared towards an increasingly growing, aging, and more demanding population. Energy networks need to keep pace with these trends too. We need a kind of conductor working in the background and overseeing everything.

Wait a minute, you said “conductor”. But as a supplier to the transformer industry and a service provider for energy suppliers,MR certainly couldn’t play that role, could it?

ROHDE: It wouldn’t appear so at first glance. And yet, in 2015 we worked with other premium suppliers to develop a vision of what the transformer of the future would look like, which attracted a lot of attention from manufacturers and operators. We were asked, however, why it was that we, as suppliers, were trying to dictate to manufacturers what form their products should take in the future. We replied that it would of course be possi­ble to just stick to the same path over the next ten or twenty years, and that would be the easy option, in fact. But we want to join forces with transformer manufacturers so that we can tap into the possibilities that technology opens up, and give network operators – our customers – the best possible support. We want to make it increasingly eas­ier and more rewarding for network operators to overcome the challenges they face.

SCHEUBECK: Building on that, the Cigré 2018 exhibition in Paris was the first time that we appeared without a new electromechanical product to present. Instead, we showcased an operating system for automated transformers as part of a digital primary substation. This marked a real first for us – actuators, sensors, information technology, communication technology, and services all combined. It will provide manufacturers, integrators, and operators of network equipment with automation and digitalization solutions that enable simpler, but at the same time better, power transmission and distribution.

ROHDE: We have made it our mission to integrate every link in our industry’s value chain – from suppliers, to manufacturers, integrators, and network operators all the way to industrial users – into our new operating system in an intelligent way. By doing this, we hope to reduce the costs associated with each customer’s system. We believe that there are opportunities to be seized in the fact that it is still not clear exactly how the market is set to develop, given the many changes that it is facing. Work­ing on the basis of open standards, we hope to use our innovative solutions to help upgrade power supply infrastructures across the world. Steve Jobs did something similar with Apple. Before he came on the scene, nobody had described the phone of the future as a smartphone – but just look at how things have changed!

Do you really see MR as the Apple of the energy industry?

ROHDE: It might not seem like an obvious comparison at first glance, but it’s definitely valid. Both sit­uations involve the background of a very tradition­al industry and new technology opening up differ­ent possibilities. Today’s cars wouldn’t run at all if they didn’t have certain hardware and software driv­ing their engines. Aerodynamically, fighter jets are volatile pieces of equipment – pilots rely on intelligent control assistance to fly them.

The same principle applies to today’s electricity networks, which are increasingly required to keep operating reliably even at the limits of stability. The only way they can achieve this is to use an intelligent system that networks actuators, sensors, information technology, communication technology, and services. With the volatile energy networks that the future is set to bring, operators will need up-to-date status and availability information, and will rely on automation technology and expert systems to help them make decisions quickly. Reliable network operation simply won’t be possible without intelligent equipment – particularly given the highly inconstant conditions that we will see in the future.

Of course, reliable hardware will be indispensable too, and that means expertly crafted transformers equipped with sophisticated tap changers. But just having the right equipment isn’t enough anymore. To cope with changes in oper­ating conditions, companies will need expertise in intelligent network operation management and proactive asset management. MR intends to be right up there with the front-runners in this field.

“We have made it our mission to integrate every link in our industry’s value chain into our new operating system in an intelligent way.”Michael Rohde

SCHEUBECK: We know that this means taking a saw to the branch we’re sitting on, to a certain extent. But we believe that it’s better for us to be heralding progress in the industry rather than leaving it to someone else.

So innovation is something that you’re aggressively pursuing. Doesn’t that also mean breaking away from things the company used to do?

SCHEUBECK: : It does, because those old habits can’t always keep up with progress. The things that are new will always be at odds with our old ways of thinking, so as part of our mission, we have to be fully committed to phasing out antiquated struc­tures. Otherwise, we may end up in exactly the situation that we’re trying to avoid, where the complex­ity of adopting new kinds of technology quickly becomes too much for us and our customers.

Let’s get down to details. Is MR going to carry on building mechanical on-load tap-changers in the future?

SCHEUBECK: Yes, we’ll certainly continue to do so for at least the next 20 years. The “Maschinenfabrik” part of our name refers to mechatronics, so that in itself shows that this is still an important part of our business. That said, we are making rapid strides toward revamping the “Maschinenfabrik” element and becoming “Anwendungsfabrik” – meaning “application works” – instead.

In some ways, that means you’re questioning what is currently your main source of income. That’s a very risky strategy, isn’t it?

ROHDE: Transformers and tap changers will still exist for many years to come, but both of them are set to change significantly. There are new drive concepts that we can use to replace many of the conventional electrical engineering elements in tap changers – and really boost reliability at the same time. We have already demonstrated examples of this at the Cigré exhibition.

Market conditions and technologies are already undergoing a huge shift, however, and that’s making it some what difficult for things as they were to coexist alongside new developments. With the experience of our workforce and our entrepreneurial instinct, though, we know that we can make it work. Paralysis through analysis won’t get us anywhere. Nobody is showing us the path we need to take – we are finding it for ourselves.

Is there any realistic future scenario that could throw your plans for MR totally off course?

ROHDE: If the system costs associated with converter-based networks and the costs of electricity stor­age methods both ended up falling significantly, that would create a difficult environment for conventional transformers – and for tap changers as a result. There would still be the need for highly intelligent network-control solutions – but then the experience of our Power Quality division would be more in demand.

If the use of power electronics became significantly widespread in this kind of scenario, however, there would also be real environmental challenges to deal with: In Africa and Aus­tralia, hundreds of millions of metric tons of earth would need to be moved in order to extract just a few additional kilos of the precious elements that would be required.

SCHEUBECK: There would be huge repercussions for infrastructure. But even if a situation like this did happen, it would develop slowly, so we would have enough time to respond to it. We’re already dealing with scenarios like this today, in fact. What we really believe in, however, is different kinds of technology working together intelligently in customer systems that are changing all the time.

Among all the trends we’ve discussed so far, there’s still one that we haven’t really addressed: globalization. Can a company like MR, the majority of which is family owned, really keep up with the industry giants — many of which are listed on the stock exchange?

SCHEUBECK: We are definitely seeing a growing trend towards larger organizations gobbling up smaller ones. It’s no surprise considering the significant upheavals the world is experiencing at the moment – such as the emergence of a new Silk Road, Africa becoming a major player, digitalization, the renaissance of national industrial policy, and the manipulation of capital-market interest rates. We need to ask ourselves who will set the new standards, and to what end. And where will that leave room for independent operators on the market?

“We know that this means taking a saw to the branch we’re sitting on, to a certain extent.” Dr. Nicolas Maier-Scheubeck

ROHDE: Of course, we want our growth rate to stay above the industry average, even just so that we can stay relevant. We don’t want to become part of that circle of huge industry players, however. That isn’t our style – we’d rather stay in the background and support our customers with critical aspects of technology.

“We have created exactly the right conditions for what is a huge feat: introducing something new to a conservative industry.” Michael Rohde

Why wouldn’t a large-scale operation suit MR?

SCHEUBECK: We need to grow if we want to keep catering to the different expectations that our company is faced with. But we don’t believe that creat­ing a large company is an end in itself, as it would mean a shift away from our business model. Being a family-owned company does have its drawbacks, of course – but it has a number of advantages too, especially for employees and customers. We don’t think in terms of financial quarters. Our way of oper­ating is countercyclical and focuses on creating real progress in the industry, something which grad­ually helps us penetrate the market. We understand our customers and our technology, and we use our independence to fuel both innovation and collaboration. It’s an approach that has served MR well for 150 years now, so why wouldn’t it continue to do so into the future?

What can MR do that others can’t?

ROHDE: We have a huge installed base: 50 percent of the world’s electrical energy flows through our products. We have been a familiar name to power transmission and distribution customers for more than 90 years now, and we have almost 50 international subsidiaries that allow us to be wherever our customers are. The MR brand is also extremely trusted, thanks to outstanding employees and products that have proven themselves over decades and continue to do so every single day. Those are just a few examples of how we’ve created exactly the right conditions for what is a huge feat: introducing some­thing new to a conservative industry.

Nicolas Maier-Scheubeck and Michael Rohde, thank you for your time!
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