„We are revamping the Maschinenfabrik Name completely“

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!