Strategy

Inventing success together

Creating added value for our customers and inventing success together in close partnership is our number one goal. That claim is underpinned by the high levels of application and technology-driven expertise of our well-qualified employees. They drive the value engineering process at SFS and enable it to create new solutions for its customers day after day. Our strategy has proved its worth in the face of the ongoing COVID-19 pandemic and the many challenges it has created.

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Our value proposition: creating added value for the customer
The cost of SFS components embedded into a customer’s product often account for less than 1% of the total product cost. But the costs at the customer end arising from procurement, logistics and handling operations can be several times the actual cost of these components. That is why we are not primarily focusing on reducing our direct product costs and differentiating ourselves on price – there would be limited potential. Instead, our main goal is to optimize the overall product-related costs of our customers (see graph below).

This approach generates significantly more cost-savings potential and allows us to create sustainable value for our customers. Our value engineering model focuses on product design, definition of manufacturing processes and on exploiting the power of digitization. The result: custom-tailored products and intelligent solutions that increase the competitiveness of our customers. Hence, the SFS solutions lead to greater differentiation and stronger collaborative partnerships. Our aim of continuous improvement as we seek to create added value for the customer can only be achieved with a strong work ethic: an unwavering commitment to “inventing success together”.

leistungsversprechen_de — SFS value proposition

Global development and production platform continuously expanded

Economic globalization is an important trend for SFS. Thanks to its global development and production platform, SFS is strategically well positioned to participate in this development. Our global footprint allows us to manage and execute projects worldwide as a local partner, in particular for our international customers.

In addition to organic growth, acquisitions are important for the ongoing development of SFS Group. Selective acquisitions give us access to new markets, customers and applications, which in turn lays the groundwork for future organic growth. We focus on enhancing our performance with the takeover of suitable candidates and are attracted to well-positioned, well-managed small to mid-sized companies that do business with blue-chip customers and which have an attractive product portfolio resulting in sustainable profits. SFS continued to methodically implement its “local for local” strategy with the acquisition of Truelove & Maclean (T&M), which added deep drawing to its existing development and production platform in North America. T&M, located in Watertown, Connecticut, is a leading supplier of deep-drawn components primarily for the automotive industry. The company generated sales of USD 36 million in 2019 and employed approximately 110 people. Through this acquisition, SFS will be able to supply deepdrawn components to its customers in North America as a local manufacturer.

Demographic change is leading to changes in consumer behavior in terms of health and wellness. SFS offers OEMs in the medical device and dental industries innovative and forward-looking solutions for a wide range of applications. As a value engineering specialist with many years of experience in the industrialization of products and processes, SFS has proven time and again that it creates substantial value added for its customers.

Sustained strong market demand, SFS Group’s steady growth momentum and customers looking for manufacturing partners with a global reach formed the basis of management’s decision to establish a global manufacturing platform for medical device applications. The advantages of SFS Group’s manufacturing sites worldwide will allow customers across North America, Europe and Asia to be served locally under the Tegra Medical brand.

All SFS Group’s current activities for the medical device industry, which until now have been conducted in the Medical and Industrial divisions, will be organizationally situated within the Medical division under the Tegra Medical brand. As part of this expansion, Walter Kobler, a long-standing member of the Group Executive Board of SFS Group and Head of the Industrial division, has additionally assumed management responsibility for the Medical division, effective 1 January 2021. Jens Breu, CEO of SFS Group, had previously managed the Medical division ad interim after Mark King, the former divisional head, announced his retirement in August 2020.

With the acquisition of Moderne Befestigungselemente GmbH (MBE), SFS expanded its fastening system business and its market reach in central Europe. MBE is a leading supplier of painted fasteners for high-performance façade systems. The company generated about EUR 10 million in sales with just under 70 employees in 2019.

Over the years, SFS has successfully positioned itself as a preferred development partner for customers in the automotive industry. Innovation drivers are the trends towards more comfort, improved safety and increased efficiency, and, from a higher perspective, autonomous driving technology. The associated electrification of vehicles, including vehicle brake systems, is an attractive and growing business area from which SFS is benefiting. The successful acquisition of new projects for assemblies used in electric brake systems has laid the groundwork for further growth. In order to realize these acquired customer projects, SFS is investing in the expansion of its production capacity and building an additional production facility at its Heerbrugg (Switzerland) location. The investment volume for the new building is in the region of CHF 25 million to CHF 30 million. Construction began in early 2021.

Sustainability is a strategic priority
Since last year, SFS is publishing a stand-alone Sustainability Report. The report for the period 2020 will be published end of May 2021. Reporting on sustainability reflects SFS’s long-term goal of a holistic integration of sustainable business practices into its corporate strategy and business model. As a signatory of the UN Global Compact, SFS is committed to the Sustainable Development Goals (SDGs) and currently prioritises four goals: SDG 4 – Quality education, SDG 8 – Decent work and economic growth, SDG 12 – Responsible consumption and production, and SDG 13 – Climate action. This prioritisation reflects the material topics as determined in the materiality assessment conducted in 2019: economic performance, occupational health and safety, training and education, emissions reduction and socioeconomic compliance. SFS reports annually on the goals, measures and progress with respect to these topics within the framework of the “Communication on Progress” report (UN Global Compact) and the GRI Report (“core” option).

Sustainability is an important driver of our value engineering activities and thus for the products and solutions we create for our customers. For example, the general trend towards higher energy efficiency is an important innovation driver for SFS, specifically in automotive and building envelope applications. SFS also makes an important contribution to sustainability by using highly efficient manufacturing processes, such as cold forming in the production of components.

Strategy tested by COVID-19 pandemic
The COVID-19 pandemic put the effectiveness of our business strategy to the test. The strategic alignment has proven to be robust and correct:

For SFS, close customer relationships are essential for the successful realization of its value proposition. In keeping with our “local for local” strategy, we are steadily building up our global development and production platform. SFS and its customers benefit from superior supply reliability thanks to short and robust supply chains.
Thanks to its balanced focus on different end markets, regions and sales channels, SFS successfully cushioned the consequences of the decline in demand.
With its increased focus on the medical device industry – a market that is growing worldwide – SFS is attractively positioned for the future.
Thanks to its good profitability and solid balance sheet, the company has the means and the ability to pursue its long-term strategy and to make the associated investments even in such a crisis.

Based on these findings, SFS is encouraged to pursue the path it has chosen consistently.

Strategic priorities