The Belgian Alro Group is a remarkable player in the automotive industry. Operating from its head office in Dilsen, Limburg, the business group doesn’t manufacture a product or brand of its own and yet occupies a crucial position for the quality-based appearance of luxury cars such as the Audi Q7, BMW 7, Mercedes G-Class, VW Touareg and large trucks such as DAF, Volvo, Scania and Mercedes.
Alro is specialised in coating parts for the automobile and truck industry. “We are unique in how we do this, our level of quality, the amounts we supply and the additional services we offer”, explains Commercial Director, Patrick Bloemen.
The result is a flourishing and expanding business. But, like many other automotive suppliers, Alro also suffered a hard blow during the crisis eight years ago, but managed to pull through. They restructured, invested in further automation and expanded their recently built factory abroad. Today the company has five production companies in Belgium, the Netherlands and Slovakia, and is owned by the founder Mr. Thijs and the management team. Recently, new headquarters became operational in the largest branch in Dilsen-Stokkem. As well, Alro is one of the main employers in Limburg, employing almost 1,000 people in the whole group.
The general public doesn’t know Alro. Tell us what you do.
For trucks, we handle plastic parts such as roof spoilers, side panels, bumpers, etc., in any colour. We are a major supplier for truck manufacturer DAF in Westerlo and Volvo in Ghent. Our trucks arrive there every hour to supply parts just-in sequence. We coat similar parts for Scania, Mercedes and MAN, and we often carry out preassembly for them.
For cars, we specialise in coloured exterior add-on parts, as well as extremely difficult high-gloss black coating of windows frames on many Audis and BMWs. We also handle the silver-coloured coating on the underside of bumpers for Audi Q7 and A3, giving the plastic parts an aluminium look. We are also very proud of coating the window frames of the latest BMW 5 and 7 series. Examples of other cars whose parts we treat are the Mercedes G-class, the VW Touareg and Volvo S60.
All in all we produce more than 100,000 items a day in hundreds of colours. A significant part stays in Belgium, while the rest is mainly supplied across Europe. Currently we’re negotiating to play a major part in the new electric vehicles of Audi Brussels. On the road we constantly see vehicles whose parts we have coated. At least 25% of cars built in Europe and 50% of trucks carry our parts.
Can you develop this activity in Belgium from Dilsen-Stokkem?
The purchasing organisations know us and know that we have the right production machinery and skills. Our competitors are often unable to keep up in terms of quality and quantity. We have also built up a long-term relationship with our clients spanning generations of vehicle models. For component manufacturers, production lines for coating are usually a bigger investment than their own production line, which is why they are happy to outsource it. Car and truck builders concentrate on coating the bodywork, but the rest is provided to them.
For example, our coating line in Genk is one of the largest and most modern in the world, with 20 robots entirely behind glass linked to an automated warehouse. The competition lags far behind, especially in Belgium, but also elsewhere.
However, we can’t coat everything in Belgium due to high wages and the distance between our plants and our clients. For example, a major order for coating windscreen wipers was the reason to start our factory in Slovakia. We currently coat windscreen wiper arms for 15,000 cars a day for the entire VW Group. Our company there is offering now the same coatings as in Belgium, but concentrates on large volumes of smaller products. This market has almost fully moved to Central Europe. We recently signed for example a contract for coating two million metal parts for seat frames for BMW, Audi and Mercedes.
R&D is crucial for Belgian companies. How are you being innovative?
We have our own lab and highly automated production and logistics. Our process technology and coating processes are developed in Belgium and monitored from here.
Just imagine: each truck brand currently offers more than 500 colours. The coloured parts must then be supplied to the client’s production plant in the right construction order, or just-in sequence. With all our developments of as well our IT as production systems, we are able to breath along perfectly with vehicle assembly sequence of our client.
Except for coating parts, we also manage preassembly and logistic tasks for our clients, making us fairly unique. Highly advanced automation ensures that we can work from Belgium. Of course, the logistics position of the manufacturer and end client also play a major role, but due to our capacities and skills, some products travel more than a thousand kilometres to be coated by us.
Quality is Alro’s strength. How specific are the demands in the automotive industry?
In our industry, you are no longer blamed for an error margin in percentage terms, but you do get blamed for how many mistakes you’re allowed to make per million parts, or ‘parts-per-million’. I can tell you that not a lot is allowed to go wrong and that all processes need to be monitored very closely.
This is why a lot of computer technology is involved in our production lines and logistics. Apart from this, still the performance of our employees is also very important, as the final inspection of most products has to be done visually.
What opportunities does Alro have in the rapidly expanding automotive sector?
Demands are always increasing in terms of quality, competitiveness and logistics. At the same time, prices and margins are under pressure. Our clients want ever-decreasing prices, while wages and energy prices are increasing. This is actually insane and the opposite to several other sectors.
Yet, we have proven that it’s possible. By using the right technology and choice of location, we show that we can get orders and fulfil them. Our order book has orders up to 2022 and 2023. Once you supply parts for a specific car, the contract runs to remodelling or until that line of model ends. The condition is that you continue to perform at top level and operate increasingly efficiently in order to always be able to reduce prices.
We’re looking for what suits us on the market, to produce where we can still make a profit. Due to this, we usually end up with top brands and cars automatically. The quality demands for more expensive cars are extremely high and more products are being coated compared to cheaper models.
You went through a very bad patch. What do you consider your greatest threat?
It is a fact that we have been growing again for the last seven years based on our know-how and reputation. We are now heading for a turnover of around €90 million, and intend to reach a turnover of about €100 million by 2018. Some 600 out of about 1,000 employees work in Belgium. Robots mainly do the coating. We have 19 production lines spread over various branches in total.
Our greatest threat comes from our clients who are in fact our greatest competitors. Whenever the sector is not doing well, they try to carry out more activities themselves. They do what suppliers normally do, but back in-house. When production is on the rise, we notice the reverse, which is better for us.
We’re convinced that we are now much better prepared to deal with any serious setback that may arise. We have already made our various industrial processes very flexible to be able to switch quickly if necessary.
Isn’t Alro currently looking for paint sprayers and production workers?
The job of paint sprayer is a shortage occupation. We’re currently looking for about 10 people to do this job and will train them internally. Although we use robots for coating, we still paint some components and low volumes manually, such as a very specific colour for a truck.
Our economic unemployment of a few years ago has now turned into a situation where we want to expand our workforce. Some positions are regularly filled using temporary staff. We can offer them a long-term career within the same company and a complete wage package and attractive perquisites such as corporate events and the possibility of promotion within Alro. Many of our people have gone from working on the production line to team leaders, assistants or quality controllers. I am perhaps an example of these opportunities as my career with Alro has evolved from a young engineer through various management positions to my current position as commercial director and partner.
Your group is active internationally. What ambitions do you have in this respect?
Our aim is to be a first-class coating company in Western and Central Europe expanding in a controlled and healthy manner. We serve Western Europe from Belgium and Central Europe from Slovakia.
We are not considering an additional production location as we still have enough capacity at our disposal. Nevertheless, requests from our clients with regard to expansion, for instance in the BRIC countries, are seriously considered and judged according to economic viability. However, until now we’ve always concluded that we are fine with our current locations, which are in a perfect position to serve the large majority of the European market.
What’s the most important decision you have to take these days?
Our most important decision has already been taken. It was establishing and expanding our plant in Central Europe, Slovakia. In the past, we were more and more unable to make an offer or win an order, as we only worked from Belgium. Some clients began to opt for other companies and regions. But now, with our plant in Slovakia, we suddenly became back an international attractive company. We’re once again very much in demand with our clients, which has a positive effect on all our plants. I see also other Belgian companies doing well, as soon as they partly perform their activities in a low-cost country.
Today Alro is more concerned with where and how to grow without posing any threat to profits. In order to achieve this, we make full use of the assets that Belgium and its employees have to offer: our location, know-how and skills.
Based on our reputation and our expertise, I see Alro developing and expanding further within the automotive market. Our order book for the coming five years is already quite full and we will continue on this path to success.