A German and a Frenchman were standing at the coffee machine … It could be the beginning of a joke. But it’s much better: it is how the Facil success story came about. The Belgian service provider of small parts is now rolling out its global strategy.
Starting from its home base in Limburg, Facil has opened branches in Europe, North and Central America, China, Thailand and Japan. With their approach, they also provide a unique added value to the car and truck manufacturers that are today their main customer sectors.
CEO René Achten (63) is predicting that the company’s turnover will grow from 390 million euros today to 500 million euros by 2020. BeAutomotive asked him how.
Facil is big in small components. How do you explain your company’s business line to family and friends?
René Achten: “In any given car there are approximately 500 different fasteners, provided by 50 to 60 suppliers: bolts, screws, studs, metal or plastic clips, brackets, nuts, pins, plugs, rivets, washers, springs, fittings, rings, and so on. For a truck, there can even be more than 1,500 different components. Follow-up is extremely complex as a result, with tasks such as coordinating, ordering and monitoring adding up to a huge endeavour. And whenever there is a problem with a part, the OEM (Original Equipment Manufacturer) can hardly obtain quality of service, because it is just a small customer for the parts manufacturer.
Facil solves this problem by putting itself between the parts manufacturer and OEM. This is where we play our role as a solution provider. On the one hand, we reduce the number of suppliers. And on the other, we are the OEM’s single point of contact for all fasteners. When problems occur, we immediately look for solutions. We guarantee a never stop the line service, by making sure that all needed parts are delivered just in time at the point of usage, and obtain a 5% cost saving a year on fasteners. Our customers are able to make huge savings as a result.”
How on earth did a chat by a coffee machine in Valencia lead to establishing this company?
René Achten: “In 2000, Ford was looking for a solution to a problem which had troubled the car manufacturer for a long time: having to buy the small fastening parts from many different suppliers. Ford then assembled all these suppliers in Valencia and announced that it wanted a total solution for these small parts. The company that would apply for the contract would have to be able to produce at least 60% of the components in-house.
At the time, the parts suppliers ARaymond and Kamax separately did not meet those requirements. But when two men from those two companies got chatting at the coffee machine, they found the solution: a new joint venture between their companies. I was hired to lead the new company. Before that, I had worked for 15 years as material handling manager at Volvo Car Sint Truiden, and afterwards as material manager at Rieter Automotive.
Six months after we started with just a container as an office, we were already profitable. Today we have a turnover of just under 400 million euros. In the past three years, we’ve grown on average by more than 11% annually.”
You sell more than 10,000 types of components. That’s more than 2 billion units each year. Why do customers choose Facil?
René Achten: “When we started in 2000, there was scepticism at Ford. Three years later, management told us that they had always dreamt of the solution we offered. They were facing problems on a daily basis. Suddenly, these disappeared or were resolved very quickly. In 2007, Volvo Trucks told us that they chose us because our customers were so enthusiastic about what we had done for them. That was the decisive factor for them. Two years ago, our contract with them was extended by 5 years, because they were very satisfied and still are.
And that’s how we keep growing. We now have Ford, Volvo, Daimler Trucks in North America, and BMW as our OEM customers. We also serve other Tiers to OEMs such as Lear, Faurecia and Johnson Control.”
Your customers save 5% on their fasteners each year. How do you achieve that?
René Achten: “We do more than just try to optimize the component itself. We look at the whole process: part manufacturing costs amount to 20%, and 80% of the costs are made up of transportation, packaging, inspection, logistics, services, design and development and assembly costs.
In automotive production, getting urgent shipments of new components to the assembly line on time in case of faulty products is an everyday reality. Sometimes, a small part is rushed to the plant by helicopter. However, we are making these shipments a thing of the past, by working proactively with suppliers and collaborating with them.
We also save customers a lot of time and money because we arrive on site to solve a problem within 5 minutes of getting a call.
To give you an example, in the assembly of door hinges, the bolt often gets damaged. The end customer complained about poor-quality bolts. But when we looked at it, we quickly saw that the parts were not defective; it was the assembly process that was very difficult. The hinge assembly had to be done slanted at an acute angle, which explained why the pins often got damaged. We solved the issue by suggesting self-aligning bolts for the assembly.
Our customers are literally noticing the 5% savings in their figures. At the same time they are probably saving more than 5% in indirect costs, although these are difficult to quantify.”
Is innovation also crucial in your business? Where are you innovative?
René Achten: “In any case, fasteners are seen as a necessary evil. Engineers prefer to work on engines rather than nuts and bolts. Yet, a great deal of innovation is needed in this segment.
Our efforts are deployed in the four processes in which we operate: part engineering, product quality, purchasing and logistics.
We always look for solutions that fit in the big picture. Just a few examples : our SmartRack always shows how many parts can be found at any location in the factory; we look for ways to simplify complex supply lines; we practice block stacking and bulk packaging in logistics and we have our own Facil box which integrates RFID.
Our main goal in this respect is to offer customers added value to bring down their costs.
Our high added value stems from our involvement from the very early production stages of a vehicle. This means that already during development we help determine which fasteners are the best, instead of simply supplying what customers order. We can draw from the innovations created by our shareholders Kamax and ARaymond to also suggest new and innovative fasteners at that stage.”
This year, you are opening a site in Japan because your customer Volvo Trucks is starting production there. Is this the way you like to grow?
René Achten: “Our concept requires us to have a branch close to every customer. There, we employ a team that oversees logistics, quality and engineering. Whenever major issues occur, we can be on site within 5 minutes.
Asia is also a very important continent for us. This is where most of the world’s cars are built.
This global expansion is facilitated by our corporate structure and cooperation with our two shareholders. Kamax and ARaymond have operations across the world. Whenever we launch a new branch, we can rely on the support and infrastructure of these global organisations. They allow us to hit the ground running. In theory even in Iran where ARaymond opened a site.
The hardest aspects to manage in international expansion are the cultural differences. In our branches, we work with local people, and also go through a learning process in this respect, just like all the multinationals before us.”
Which attributes should your employees have?
René Achten: “Of course, they should be competent people, and they should enjoy doing what they do. People who enjoy their work are also willing to look for a win-win, again and again.
That’s why we work with enthusiastic, talented entrepreneurs who are prepared to work in an international environment and have a capacity for problem solving. Within Facil, we’ve even given them a name: the Facil Fasteneers.
We are constantly on the lookout for this type of people. Not to fill up our job vacancies in a rush. No, I prefer to search longer for someone with the perfect profile. Young or old, man or woman, nationality, all these things are of secondary importance.
We give them freedom, a happy team spirit, opportunities to work in other cultures and challenging projects. This attracts entrepreneurial people.”
How important is it to have the headquarters and R&D department in Belgium?
René Achten: “That is a good question. When we started up in 2000, it was vital because we were located so close to Ford Genk. Now that Belgium is losing more and more production sites, this no longer seems the obvious choice.
Actually, the opposite is true! In Genk, we have built a real competence and knowledge centre over the years. Apart from our headquarters, it is our leadplant, and it cannot simply be relocated from one day to the next. Our brains are anchored here.
The entrepreneurship displayed by employees, their creativity and dynamism, is one of the strengths of the workforce in Belgium. This is the spirit we need for our business. Belgium has that in spades, which explains why we will never relocate.
In total, nearly 100 of the overall 400 Facil employees work in our country. The entire staff is here and coordination is done from Belgium. The service to solve local problems is provided locally at customers.”
Which assets should Belgium promote better?
René Achten: “I think it’s very important for Belgium market its strengths better. We want more operations in automotive to take place here in our country. The electric car is an opportunity in this respect. That is why we are actively involved in the development of this car, in China and here.
Focusing on knowledge and innovation is crucial for Belgium, although this could be supported more effectively than in the past. In addition, I can comment mainly on what should have happened. For instance, I am convinced that Ford Genk would still be there if we had a more stable political climate. It is no coincidence if the factory was closed while we had no government.
Compare it to what is happening with online retailing today. Because of our rigid legislation, we are years behind in e-commerce. That is very sad.
In China, they have cities with 20 million inhabitants and one mayor. Here there are so many levels, the fragmentation is so great. This cannot be explained to foreigners, with the consequence that they get to review their decision three to four times before they invest in Belgium.”
Facil has grown strongly in the first 16 years. How do you expect to grow in the future?
René Achten: “16 years ago, nobody would have dared dream that Facil would become what it is today. From nothing, we achieved a turnover of 390 millions euros in 2015. And this growth is set to continue. We are therefore expecting turnover to reach half a billion euros in 2020, when our Plan 2020 comes to completion.
In our 2020 plan, we will be developing our service concept further, and expanding to other regions and sectors. In addition to the automotive sector, we want to expand into the agriculture & construction industry, as well as the rail industry. We believe that they also have similar needs. We are thinking of targeting Belgian players like Bombardier, Van Hool, VDL Bus & Coach, New Holland and Caterpillar. The way Agoria helps us establish contacts is fantastic. The fact that we are all Belgians makes things go smoother.
Expanding our range of products is also crucial. We can extend from our current core focus ‘fasteners’ to all other small components.. All C-parts (small high quality parts produced in high volumes) fit into our little Facil box, in our concept and our logistics networks.
We also have some geographical questions we need to answer. What do we do with regards to Africa? Do we start up a branch in Australia where there now is demand for our services?
These are and will remain very exciting times.”