Interview with Thomas Besch
A conversation with Thomas Besch
Thomas Besch, the CFO at the HYDRO Group, is 51 years old. After originally undergoing an apprenticeship to become a trained retail salesman, he came back to school to obtain the required advanced technical college entrance qualification in order to study operations management in Reutlingen, Germany. He then started his career in 1993 as an assistant to the shareholder at Domolux in Munich, and two and a half years later switched to Weru AG, both in Germany, where he was responsible for setting up the subsidiary controlling from scratch. Three years after this, he took over controlling management duties at Lapp Kabel in Stuttgart, Germany, and quickly saw this expand to include responsibility for organization and process development at the company. Seven years later, Besch moved to AWECO as the head of corporate finance for the corporate group and as the managing director of the biggest company in the group. Finally, 2011 saw him join the HYDRO Group as a managing director.
Thomas Besch is married, lives in Reutlingen, and has two children who will soon be starting their university studies.
What kind of changes do you see coming up in the aviation industry and at HYDRO?
Generally speaking, we’re going to be seeing the aviation industry grow at breakneck speed in the next 15 to 20 years, and HYDRO will be able to participate of this growth directly. This also means that the aviation industry is going to be increasingly defined by extremely demanding requirements concerning delivery reliability and quality, and that goes both for “flying equipment” and “non-flying equipment.” Basically put, the high production rates that are becoming the norm mean that OEMs are simply unable to afford the luxury of waiting for any parts from the supply chain. Naturally, tier 1 to tier 3 suppliers need to adjust accordingly.
What do you think about the changes that are currently happening in the world of finance?
In terms of currency and interest rates, the world of finance used to be predictable to a certain extent and followed a certain logic. However, that predictability disappeared when it comes to currencies. Forecasts right now have a spread of 15% for the next 9 to 12 months. As for interest rates, I believe that they’re sure to rise in the eurozone in the foreseeable future – a development driven by the Fed in the USA. However, I also think that the increase will be moderate more than anything, especially given the fact that the inflation rate in the EU is still lower than the target of just under 2%. Viewed in the long term, interest rates will continue to be favorable and have a positive influence on the economic situation in Europe. In contrast, geopolitical conflicts, the imposition of punitive tariffs, and the consequences of Brexit for Europe are not really foreseeable at this point in time yet, and these uncertainties are pulling down financial markets.
What’s the benefit of being a privately held company?
Well, it goes without saying that every single entrepreneur and managing director wants to be independent from banks. But the whole thing is becoming increasingly important, and not just for us, but for our customers as well. To put it simply, customers are focusing more and more on ensuring that their supply-chain includes some sturdy pillars. Owner-managed companies that have already grown beyond a critical size fall under that scope. HYDRO is definitely one of these companies. When you combine that with low debt levels, you’re really talking about a rock-solid supplier that is guaranteed to get excellent ratings. And that’s not just important in terms of banks – customers and suppliers also use ratings as a criterion when selecting business partners.
The position of CFO at HYDRO has been given even more importance now. What’s behind the change?
When we consider the growth that we have in front of us and really take a look at the market’s expectations, it becomes obvious that our realignment with the introduction of a COO is an absolutely indispensable step. As an owner-managed medium-sized company, it’s extremely important for us to have strong revenue streams. That, combined with trimming in this direction, is one of the primary duties of the CFO, who needs to establish the transparency and general conditions that will make growth possible to begin with. Above all, however, they need to ensure that we hit our target returns and are able to continue being independent from banks. These are just some of the many reasons why the role of CFO has become much more important than in the past.
What does 2018 have in store for HYDRO? Will HYDRO continue to grow the way it has in the last 5 years?
We’ve set a revenue target of over 200 million euros by 2022 for ourselves. Naturally, that comes with enormous expectations regarding the changes that the organization will need to undergo, and we all need to be conscious of the fact that the only way to meet this goal is for us to be passionate about our efforts. So what does that mean for us specifically? We need to become more independent from individual OEMs, meaning that we need to widen our OEM business basis. In addition, we need to broaden our “Ground Support Equipment” business unit with innovative products.
In terms of the current wave of digitalization, we need to be able to identify expectations and trends early on. Some of the questions worth asking within this context are: What are the opportunities? How can we use this to provide our customers with added value? What types of business models can we derive for ourselves as a result? We are watching the market changes caused by digitalization very closely and we’ll take actions accordingly.
We know that the coming years will demand a lot from us, and we’re ready for that. Moreover, we’re absolutely certain that all the actions we’re taking at HYDRO will result in strong levels of growth.
„HYDRO plans for two years in the future. Originally, we wanted to reach 150 million euro in sales in 2020. Now it looks like we will achieve this as early as 2018.“
Managing Director
What kind of changes do you see coming up in the aviation industry and at HYDRO?
Generally speaking, we’re going to be seeing the aviation industry grow at breakneck speed in the next 15 to 20 years, and HYDRO will be able to participate of this growth directly. This also means that the aviation industry is going to be increasingly defined by extremely demanding requirements concerning delivery reliability and quality, and that goes both for “flying equipment” and “non-flying equipment.” Basically put, the high production rates that are becoming the norm mean that OEMs are simply unable to afford the luxury of waiting for any parts from the supply chain. Naturally, tier 1 to tier 3 suppliers need to adjust accordingly.
What do you think about the changes that are currently happening in the world of finance?
In terms of currency and interest rates, the world of finance used to be predictable to a certain extent and followed a certain logic. However, that predictability disappeared when it comes to currencies. Forecasts right now have a spread of 15% for the next 9 to 12 months. As for interest rates, I believe that they’re sure to rise in the eurozone in the foreseeable future – a development driven by the Fed in the USA. However, I also think that the increase will be moderate more than anything, especially given the fact that the inflation rate in the EU is still lower than the target of just under 2%. Viewed in the long term, interest rates will continue to be favorable and have a positive influence on the economic situation in Europe. In contrast, geopolitical conflicts, the imposition of punitive tariffs, and the consequences of Brexit for Europe are not really foreseeable at this point in time yet, and these uncertainties are pulling down financial markets.
What’s the benefit of being a privately held company?
Well, it goes without saying that every single entrepreneur and managing director wants to be independent from banks. But the whole thing is becoming increasingly important, and not just for us, but for our customers as well. To put it simply, customers are focusing more and more on ensuring that their supply-chain includes some sturdy pillars. Owner-managed companies that have already grown beyond a critical size fall under that scope. HYDRO is definitely one of these companies. When you combine that with low debt levels, you’re really talking about a rock-solid supplier that is guaranteed to get excellent ratings. And that’s not just important in terms of banks – customers and suppliers also use ratings as a criterion when selecting business partners.
The position of CFO at HYDRO has been given even more importance now. What’s behind the change?
When we consider the growth that we have in front of us and really take a look at the market’s expectations, it becomes obvious that our realignment with the introduction of a COO is an absolutely indispensable step. As an owner-managed medium-sized company, it’s extremely important for us to have strong revenue streams. That, combined with trimming in this direction, is one of the primary duties of the CFO, who needs to establish the transparency and general conditions that will make growth possible to begin with. Above all, however, they need to ensure that we hit our target returns and are able to continue being independent from banks. These are just some of the many reasons why the role of CFO has become much more important than in the past.
What does 2018 have in store for HYDRO? Will HYDRO continue to grow the way it has in the last 5 years?
We’ve set a revenue target of over 200 million euros by 2022 for ourselves. Naturally, that comes with enormous expectations regarding the changes that the organization will need to undergo, and we all need to be conscious of the fact that the only way to meet this goal is for us to be passionate about our efforts. So what does that mean for us specifically? We need to become more independent from individual OEMs, meaning that we need to widen our OEM business basis. In addition, we need to broaden our “Ground Support Equipment” business unit with innovative products.
In terms of the current wave of digitalization, we need to be able to identify expectations and trends early on. Some of the questions worth asking within this context are: What are the opportunities? How can we use this to provide our customers with added value? What types of business models can we derive for ourselves as a result? We are watching the market changes caused by digitalization very closely and we’ll take actions accordingly.
We know that the coming years will demand a lot from us, and we’re ready for that. Moreover, we’re absolutely certain that all the actions we’re taking at HYDRO will result in strong levels of growth.
CLOSE-UP WITH THOMAS BESCH
A good day at work starts with…
a hot cup of coffee
I earned my first money…
as a temp at my father’s store when I was 14
If I could chose my seat neighbor on an aircraft…
I’d choose my wife, of course
I forget about time…
when I listen to music or read a book
The so far most expensive purchase in my life…
a convertible for my wife and me in order to celebrate our 50th birthday
I have always…
tried to maintain a good balance between my private life and the company, even though my private life has often had to take a back seat
I have never…
gone on a mountain climbing
Those aiming for a career at HYDRO…
you need passion and commitment, you must be open to new things, you should have lateral thinking skills, you need to be able to shape things, you must question the status quo, and you always have to strive to optimize things
When I was 18 I wanted…
marry my girlfriend (now my wife), have a successful career, find self-fulfillment, start a family, and study marine biology
Home for me means…
where my family is