Article by Tanja Ponzer, published in the International Aluminium Journal
After its separation from SMS Group, Hertwich Engineering can now pursue its strategy with greater focus. What are the company’s goals and challenges?
In December 2024, Hertwich Engineering and SMS Group have decided to go separate ways. The management of Hertwich stepped in and a management buyout was completed. The company has since then been operating independently. International Aluminium Journal spoke with Gerold Keune, CEO of Hertwich, about the background of this decision, the company’s strategy and goals as well as current challenges.
Why did Hertwich decide to enact a management buyout and separate from SMS Group? What are the benefits of transitioning into a standalone company?
Gerold Keune: Throughout its history with SMS, Hertwich has been fortunate to always have shareholders who placed trust in the aluminium industry and the management team, allowing them to operate independently without interference in day-to-day operations. However, SMS Group is the largest plant engineering company in the metal industry in Germany, with more than 14.000 employees and annual sales exceeding three billion Euro, largely generated from steel industry. With this background already for some years Hertwich has not been considered core activity of SMS Group.
The Hertwich management team has always been fully committed to the company, its customers and its employees. When SMS Group decided to offer Hertwich for sale – to focus on its core activities – the management team, without hesitation, made the decision to submit their own offer. Today, as a stand-alone company, Hertwich’s Capex-plans don’t have to compete with other, larger group activities anymore. This allows us to allocate our funds where they can provide the best benefit to our customers, whether in product development and R&D or in capacity expansions to meet the growing global demand for fully automated, state-of-the-art equipment for aluminium casthouses.
Now that you operate independently, are there any realignments to the company’s strategy?
Gerold Keune: The management buyout is not going to change the strategy of Hertwich Engineering. Instead, it provides us with greater flexibility to accelerate the execution of our existing strategy, which is built on three core elements: providing the best available solutions for aluminium recycling furnaces and homogenizing plants, delivering complete casthouses with fully integrated automation, and providing outstanding casting machines for billet and slab production. One of our key advantages is our clear focus: We exclusively supply equipment for aluminium casthouses. This enables us to act as a one-stop shop, offering complete solutions for both primary and secondary aluminium operations.
What short-term and long-term goals are you pursuing now as an independent company?
Gerold Keune: Our main goals are enhancing our technological leadership and never compromising on quality as every customer deserves a plant that performs exactly as intended at the lowest possible total cost of ownership. We also want to expand our after-sales service setup to upgrade and enhance the performance of existing casthouses to today’s standards. Another goal is transitioning from an equipment supplier to a complete solution provider. To be frank, this is not a fundamental change compared to the times when we were part of the SMS Group. However, it has now become much easier for us to allocate the necessary resources.
How has the aluminium casting industry evolved over the years? What are the current trends that Hertwich is seeing in the aluminium casting industry?
Gerold Keune: As we all know, there is a tendency in our industry to be conservative when it comes to change. A common saying is: 'Seeing is believing.' That is why innovation may take longer to gain traction than in the consumer goods industry – but once adopted, changes tend to be lasting because they have proven their value.
One of the key trends that we observed over the past ten years is that the share of secondary aluminium production has significantly increased, driven by sustainability goals and economic benefits. However, clean scrap suitable for single-chamber melting furnaces is becoming increasingly scarce. Modern recycling furnaces have to be able to handle high levels of impurities, including organic contamination – a challenge addressed by Hertwich’s Ecomelt technology.
As plant sizes increase, even remelt operations may be shifting from Horizontal Direct Chill (HDC) to Vertical Direct Chill (VDC) casting, to achieve higher throughput and improved product quality. Furthermore, there is a strong trend towards decarbonising the aluminium industry, with natural gas being replaced by electricity as the main heat source in casthouse operations.
Where do you currently see the biggest challenges?
Gerold Keune: For several years now, our biggest challenge has been finding the right additions to our team. At Hertwich, the principle is always customer first. This means that whenever a customer faces an issue anywhere in the world, we have to ensure that solutions are found before there is any negative impact on their production schedule or product quality. Such a commitment requires an organisation that is highly flexible and people who are willing to truly live the mission of customer first. Over the past four to five years, we have been quite successful in this regard, expanding the Hertwich team by almost 50 percent.
In addition, we see that more and more of our customers not only expect excellent plants and machinery, but also specialised operation and maintenance support for their facilities. This calls for new skills and qualifications on our side and continuous enhancement.