Interview with Martin Dürr

What do you think the latest trends in the aviation industry are?

The industry’s definitely growing, but there are also cost pressure factors that are creating a certain pressure to consolidate. In fact, a prime example of this can be seen in Airbus’ latest acquisitions related to the Bombardier C Series and Boeing’s acquisition of Embraer as a response to that. Basically put, OEMs are consolidating in order to distribute their cost pressure along a wider base and maximize synergistic effects.

Another trend that I’m seeing is the fact that OEMs are increasingly integrating new business services into what they do, like Airbus has done with Satair and Boeing with Aviall. Aircraft manufacturers are trying to increase revenue, and one way they’re doing that is by increasingly becoming one-stop shops so that they can take advantage of every single market sector revolving around their aircraft. Now, this has always tended to be a cyclical pattern that arises in times of weak sales, but the fact is that the last few years have been different. We’re now seeing OEMs expand their control over the entire lifecycle with a long-term focus rather than as a purely cyclical phenomenon.

If I’m allowed to use a metaphor here, we at HYDRO have been sailing the waters of this OEM strategy for quite a while now. In fact, our tools and equipment for aircraft maintenance and production often interact with these OEMs’ IP.

Customers are increasingly asking for lifecycle solutions. Has this had an impact on HYDRO?

MRO providers need to increasingly align themselves with aircraft and engine manufacturers in order to get concessions from OEMs. And a lot of that can be traced to the fact that aircraft sales are often linked to long-term maintenance agreements, which obviously gives OEMs a strong hand. What that ultimately means, for example, is that MRO providers end up committing themselves to manufacturers with OEM material purchase guarantees.

All you have to do is take a look at the growth of Boeing GoldCare agreements in which Boeing offers full-service lifecycle solutions to realize that customers increasingly want to focus exclusively on their core business: Flying. The OEM is on hand for service and everything else.

Now, having said all that, the market in which we operate is still mostly independent, even though it’s clear that the way in which things are distributed is changing and not something we can simply lose sight of. Partnering with OEMs should enable us to maximize market penetration in the long term, and accordingly is something we can’t neglect.

HYDRO is known for positioning itself as a provider of premium products that have been in use over many aircraft generations. Does that mean that customers base their decisions on something other than price only?

Well, the phenomenon of pricing pressure is certainly nothing new to airlines. And sure, there are customers that couldn’t care less about quality and added value, but to be honest, we find that they’re a minority. Also, being the price leader in our market is not really our overriding goal. What most of our customers actually want is value for their money. In fact, let me share a short anecdote that should serve to illustrate this: A few years ago, we bought one of our axle-jacks back from Helvetic Airways in order to add it to our company museum collection. That might sound a little weird at first, until you realize that the axle-jack had been in use for just under 50 years.

 

And what that shows is that a large part of our customers think in the long term and truly value equipment characterized by quality and extraordinary reliability. That’s exactly what HYDRO stands for and the reason why we are the industry leader with many of our products.

 

Just put yourself in the shoes of an MRO provider: There will always be a specific aircraft model that rarely makes it to your hangar, but you know there will be a day when it comes in. And when that happens, you’ll want to be able to lift it, so you’ll take out the right tripod-jack, and you know what? You’ll be able to rest assured knowing that after months of not being used, that HYDRO jack will still work as though you’d just used it yesterday.

It’s not just OEMs that are increasingly asking for larger comprehensive product packages, but MROs as well. Can we keep up with that as a mid-size company?

You’re absolutely right when you say that they’re asking for larger packages, but it’s important to keep in mind that customers are still splitting their requirements in very logical ways, and that means that HYDRO is still able to put together comprehensive packages with its product portfolio. In addition, I’d also like to point out that lead times are another thing that is becoming increasingly important, and the fact that we have 15 locations throughout the globe, 700 team members, a worldwide supply chain, and production locations in Germany and the USA means we’re perfectly prepared to deliver in that area. If you look at our competition, you’ll notice that we’re one of the biggest players out there. We have 10 service centers worldwide, are still continuing to grow, and have an on-site presence at all airline hubs. I think it goes without saying that customers appreciate that in an international context.

The past few months have seen a growing number of mergers and acquisitions in the market. Does this have any consequences for HYDRO as a privately owned mid-size company?

I don’t actually believe that mergers or acquisitions used as a way to get bigger make it possible for products such as tripod-jacks to be sold on the market at significantly lower prices in order to gain an advantage based on volume. On top of that, the fact that we’re a privately owned company means that we have an advantage in that our focus is not on short-term profit. That’s a huge difference from publicly traded companies, as the venture capital behind them means that they’re always having to deliver better and better results every quarter and send their stock price up. In contrast, we can focus on long-term decisions instead, and customers love that, because they benefit from this as well. Now, having said that, HYDRO will of course continue to grow, since even healthy mid-size companies need to be ready for the future. Accordingly, HYDRO will need to distribute its future investments across the largest base possible.

Where do you think HYDRO will grow the most in the future?

Well, none of our business units have reached their limit. Not even close, in fact, so I see a lot of potential in every single one of them. And it’s precisely in our in-house products, which reflect 50 years of extraordinary know-how and expertise, that I see the potential for enormous exponential growth. To put it simply, the worldwide aircraft market is booming, and we’re benefitting directly from that. You can clearly see that in our Airframe and Engine Tooling business unit, for instance.

Now, in terms of the global market, we currently consider North America to be the place with the biggest growth potential for us. There are new MROs coming to life there, and the demand for new tools and ground support equipment is simply enormous. Asia has also become a large growth market in the last few years, and just the size of the region means that we should expect more growth there.

Percentage-wise, we expect our service business to grow the most in the medium term. And the fact that we have 10 service centers worldwide as we speak means that we have an enormous head start in comparison to our competitors. Just think about it for a second: If you had an axle-jack and it needed to be repaired or undergo its annual re-certification, would you really want to ship it across the entire planet? Of course not! And it’s no surprise that our customers agree, which is why we’ll continue to expand our service network even further in the coming years by establishing a number of partnerships.

Customers like being able to get in touch with direct contacts. How are you taking care of that need?

Well, we have 15 area sales managers who are always there for our customers throughout the world. Naturally, this means that they’re not all located at our headquarters – some are based in a certain region, while others are always on the move. That’s something that is unheard of for a company with 150 million euros in revenue and 700 team members, and our customers obviously appreciate that. Now, it’s important to mention that our area sales managers are not just trying to make a quick buck by selling something fast. They’re there to interact with the customer, find out what their specific needs are, and offer a solution that truly takes care of those needs. Our area sales managers’ mission is to help our customers achieve their goals and to be their central contact point for any questions or doubts they may have.

 

Also, another thing: We know that when a customer has an AOG scenario on the weekend, time is of the essence and every second that aircraft is not up in the air costs a fortune. That’s why our area sales managers are also there personally for our customers in cases such as these, even when it’s the weekend or late at night. And to round out everything, they can always count on the support of our customer support managers at our locations in order to guarantee excellent and comprehensive support at all times.

 

A good day at work starts with…

a cappuccino.

I earned my first money…

delivering the newspaper.

If I could chose my seat neighbor on an aircraft…

I’d either like the seat to stay empty so I can get some time to myself or for the person next to me to have an interesting life story.

I forget about time…

whenever I’m playing with my kids.

The so far most expensive purchase in my life…

was a convertible that I traded in for a Volkswagen Touran as soon as I had a family.

I have always…

believed that the glass is half-full.

I have never…

visited New Zealand, but I’m planning to take care of that in 2019.

Those aiming for a career at HYDRO…

need to be passionate about things and have a vision.

When I was 18…

I wanted to be a pilot.

Home for me means…

being somewhere where I’m surrounded by family or friends.