Interview with Mr Erwin Stoller

In 2007 the Rieter Group set new records for sales (3.9 billion CHF), EBIT (278.7 million CHF), and net profit 211.5 million CHF). During the last two years 2008/2009 the Rieter Group – a leading supplier to the textile and automotive industries – was confronted with a severe global economic downturn, especially in the Textile Systems division. To cope with the steep cyclical downturn, Rieter implemented a comprehensive restructuring and cost-cutting program in order to adapt the production capacities to the decreasing volumes and to lower the break-even point.

Rieter has not only reacted to the cyclical downturn but also to the structural changes in the textile industry by continually expanding both manufacturing facilities and engineering services in India and China and adapting the European facilities accordingly. Following a strategic review of the product portfolio of the Textile Systems Division resulting in focusing on core activities, Rieter has sold its activities in chemical fibers, pelletizing and nonwovens.

Textile Systems also adapted its organization in order to have a fully integrated global network of sales, service, manufacturing and development capacities in which the units in Europe, China and India play an equal role, contributing what they can do best. In spite of the restructuring and cost-cutting program, Rieter continued to expand capacity in Asia and pressed on with the development and market introduction of new machines. This allowed Rieter to successfully exploit the improved market environment in the first half of 2010 to generate organic growth and to return to profit at the operating level. Orders received by Rieter Textile Systems in the first six months of 2010 increased by 290% to 739 million CHF. The largest volume of orders came from Turkey, followed by India and China.

The basic values (see also our Values and Principles brochure on www.rieter.com) governing the Rieter Group‘s business activities are summarized as follows:

• Delight your customers • Enjoy your work • Fight for profits

They address our three most important stakeholders: customers, employees, shareholders. Rieter is successful as a company if it satisfies its customers’ expectations, if its employees are enthusiastic in their commitment, and if it generates long-term added value for its shareholders.

On a different level but connected with our Values and Principles are our four brand values: 'ambitious', 'convincing', 'reliable', 'pioneering'

They signify, in which way we want to achieve the overriding goals. The brand values represent the typical Rieter way of thinking and behaving.

Pricing is always the balance between customers’ benefit and competitors’ prices. Rieter’s supply of innovative high-quality products is a decisive factor in determining the pricing positioning of Rieter. On the other hand, we also want to grow in markets like India and China. Therefore Rieter continues to invest in local production that customers can pay in local currencies without exchange rate risks and duty. This will further improve our performance. Rieter also sees an increasing demand for machines with high productivity, energy savings options, high material yield and automation. In all these fields Rieter is playing a leading role.

Positive consumer sentiments in Europe and North America together with sustained economic growth in the large Asian markets are the main prerequisites for the continuation of the present favorable trend. On the other hand the European textile machinery manufacturers can only grow in the booming markets in Asia, competing with the local competitors. Rieter has made good progress in these markets and will continue to grow with locally manufactured machines and systems without compromising on quality, reliability and profits.

TUFS is an instrument of the Indian government to encourage investments in the textile industry by giving interest discounts and other subsidies to the investors. The Indian government has clear and ambitious goals for the future growth of the textile industry. The TUFS has been used in the past to a great extend by investors in spinning mills. There are signs now, that it will be redirected to further support of the modernization of finishing, weaving and knitting. We have to keep in mind, that India is still exporting large quantities of yarn instead of finished goods. The main reason for this is the lack of good downstream capacities. We think, that this is a good and sustainable move of the Indian government, which will ultimately also help our customers, the spinning industry.

The new ring spinning machine G 32, which we presented for the first time, enjoys high appreciation by our customers. It combines all functions, which guarantee high yarn quality and the most important automation feature such as the reliable ROBOdoff and ROBOload. Also a big success was brought in by our combers E 66 and E 611, the draw frame RSB-D 401 and the semi-automated rotor spinning machine R 923. The G 32 is made in India, the E 611 and the RSB-D 401 are made in China. Thanks to the local production of the RSB-D 401, Rieter is market leader in China in the field of auto-leveled draw frames.

Rieter is convinced to reach the same position with combing and later also with open-end and with carding. In ring spinning, Rieter is concentrating on the upper level of requirements, especially on the compact yarn formation, where Rieter is the world leader with K 44 / K 45 and Elite. A large Chinese company is one of our biggest customers for Elite and also for card wires. Most of the major Chinese textile machinery manufacturers buy technology components from Rieter. This shows the market requirements towards quality and also Rieter’s position in technology components.

Rieter is convinced that acting in a sustainable way is a crucial factor for the long-term business success. Else Rieter would not have been around for 215 years.

Rieter strives for sustainable customer relationships. We want to achieve this with quality, reliability and with products that help the customers to be successful.

Environmentally compatible products and processes as well as the safety of Rieter’s employees and the ones of the customers are priority concerns. Rieter ensures that the environmental impact of Rieter’s products throughout their life cycle is as small as possible.

Rieter reduces the energy consumption of textile machinery by optimizing products and processes. Rieter’s highly productive machines also use less space, which reduces the energy for air-conditioning.

On the other hand, the material yield of Rieter machines has increased with every generation, which reduces waste. This ultimately also reduces water consumption for cotton or viscose and oil consumption for the other man-made fibers.

Employee training is another important aspect of sustainability, especially in our growing markets in Asia. Just one example: In India Rieter offers Indian apprentices a third and fourth year of training in the context of the VET (Vocational Education and Training) initiative launched by the Swiss-Indian Chamber of Commerce. The existing twin-track system of vocational training is now being developed further with appropriate elements taken from Swiss everyday work routines.