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Lighting the path to success

Portrait

2016 marks a turning point in SBF’s history. The company finally returned to profitability after veering close to insolvency in 2010. The key instigator of this remarkable turnaround is Managing Director Rudolf Witt, who was invited to take charge of the company’s fortunes in 2015. It was an invitation that he refused at first. “My first instinct was that I did not want to take on a company with such deeply entrenched problems,” says Mr. Witt, who in addition to dictating the corporate strategy also acts as Commercial and Financial Director. “The second time I was asked, I specified a number of conditions before accepting.” One of the most important of these was a rethinking of the company philosophy and its aim of taking the company public. This had been the goal of SBF’s new owners, who came on board in 2010.

“They had pumped a lot of cash into the struggling company and dramatically increased the number of employees in a bid to make it look better to potential investors,” explains Mr. Witt. “While this pushed up overall sales, profitability did not keep pace, and the company was losing money year on year. By 2015 it was clear to the owners that a new strategy was needed – which is probably why they agreed to my conditions.” Key amongst these was to adopt values more appropriate to a solid, medium-sized business rather than one with stock exchange listing ambitions. “We needed to keep our feet on the ground and focus on quality, not just in our products but in the work that we took on,” says Mr. Witt. The message being sent out to clients was that it would no longer accept loss-making contracts.

“This message has now been taken on board and has even strengthened our position,” Mr. Witt adds. Having successfully restructured the company’s internal processes and put it in the black after years of losses, the focus for the remainder of 2016 is on consolidation. By 2017, the Managing Director expects to have completed the process of restructuring and to be navigating far less turbulent waters. “So far, we have done very well in a relatively short period of time, but we still have sustainability issues to address to ensure our continued success in the future,” says Mr. Witt.

SBF has one strength in particular working in its favour. It is one of only a handful of lighting specialists able to offer fully integrated ceilingmounted lighting systems for rail applications. This satisfies a growing desire on the part of customers for turnkey solutions. Moreover, SBF maintains stocks of over 50,000 different components and spare parts, ensuring it can guarantee rapid deliveries of virtually any part. Finally, SBF is fully certified to work on rail applications. This is another hurdle that not every lighting supplier achieves. “Certification has a particular pecking order,” explains Mr.Witt. “First comes the automotive sector, then rail and finally aviation. If you are certified to work on rail applications, then you can also work in automotive but not vice versa. This puts us at an advantage over many of our competitors.”

SBF has always had the in-house expertise and know-how to put it at the top of the pile. Now, it also has the corporate strategy and structure to turn that expertise into profit. However, its narrow specialization still has the potential to trip it up. “We depend on around ten major clients for the majority of our turnover,” says Mr. Witt. “Big names like Bombardier, Stadler and Siemens enhance our reputation but make us vulnerable. My goal for the coming years is to spread the risk more by diversifying our client base. This will be difficult but not impossible.”

One way of doing this is to expand the product range to target companies in the automotive sector. The demands of the bus manufacturing industry are not so far removed from those of the rail sector, providing a strong opportunity for SBF to expand. Possible aviation applications are also being considered. Another way of diversifying would be to expand geographically by setting up a local subsidiary to serve the needs of its major clients. “We are committed to maintaining our headquarters in Leipzig, but we are often asked by our customers whether we could set up a foreign branch office to be closer to them,” says Mr. Witt. “Under the right conditions, this is certainly something that we are considering.”

For the time being, production will remain in Leipzig. Customers value the ‘Made in Germany’ label, and the site is close to several of the company’s biggest clients. SBF also invests heavily in research and development and has a number of fruitful partnerships with universities and research institutes. “We will be attending the Innotrans trade fair as an exhibitor in Berlin in September and will be taking a number of innovations that are sure to have the crowds talking,” says Mr. Witt. “As well as new products, we will also be presenting ourselves as a rejuvenated, profitable and dynamic company.”

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