62. The CEO Magazine - June 2014 theceomagazine.com

In The OfficeEXECUTIVE INTERVIEW

Better

Under the banner of ‘One Bekaert’, this global company has the history, the resources, and the network to foster emerging markets while creating new and exciting products for its more mature markets.

Images courtesy of Bekaert

After eight years as CEO of Bekaert, Bert De Graeve was appointed chairman of the board to

ensure continuity of direction at board and executive-management level. “The things that are important for the chairman of a group like Bekaert is that you have enough feeling for the global environment in which we are working—the complexity of a global company with manufacturing operations on all the different continents.”

“The second element is knowing the delicacy and the sensitivity of having a reference shareholder, which in this case is the family that started the business more than 130 years ago. Within the context of our stocklisted company, this

reference shareholdership represents a heritage, and I think that is a really important part of the Bekaert equity.”

With eight years’ experience in the company’s top office, Bert was a clear choice for chairman. “I would say that I have the advantage of having worked in the group for about 12 years, eight of which were as CEO, which is clearly an added value, because it gives a kind of continuity with the top leadership.

“It is a whole line of sensitivity that has to be appreciated; it’s the complexity of the business, it’s the new CEO coming from outside, the strong reference shareholdership. What is often considered a dangerous move, putting a CEO as chairman,

I think, in this case, will work very well.”

One of Bekaert’s greatest challenges has been the tremendous growth it has gone through on a global scale. “Over the past 10 years we’ve moved from something like 500 people to 10,000 people in China. To build up an organisation with that growth scope and speed is a huge challenge. It’s something where you have to make sure you can cope with the requirements of your customers, guarantee the quality of your products, and protect your brand. You have to find your people in faraway places because it’s not always in a capital like Shanghai, to name one location.

“We have also moved forward in Latin America—totally different

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region, but again, you have to manage the management capability of the group and make sure that you can handle that. That is a tremendous challenge, making sure that you have the backbone to grow; and grow in totally different cultural environments. It’s not just growing in an environment that you’re familiar with, where you can find people all thinking in the same way, educated in the same culture, and sharing the same values; we have really been challenged on every one of those lines.”

Growth for Bekaert has meant a switch in focus from maturing markets to emerging markets. “We clearly had to adjust to a new business reality, which meant there was a whole lot of restructuring that we had to do, and at the same time making sure to timely invest in the growing markets. That is a clear move that we have had, and you can read it from the company figures as well.

“I think in 2002 about 75 per cent of our business was in mature markets in North America and Western Europe, while today it is the opposite; it’s about 25 per cent in Western Europe and the US, and all the rest is in the emerging markets. We have seen that fundamental switch, even within our existing product portfolio and existing technologies. Customers go global, but customers also move on the globe, moving out of the US and into China, and then moving back now into the US. That immigration path of globalisation—the falling of many walls—we have seen that clearly, and it has absolutely stimulated the economic growth worldwide. Today, we might be seeing those walls coming up again as things are a little bit more difficult.”

The unique aspect of Bekaert is that it’s one of the few truly global players within the industry. “We try to be very close to our global customers, make sure that they can find us anywhere in the world, so we can support them as well in Brazil as in China, or in Russia.

That’s why we’re probably the only one who really could buy Pirelli’s steel cord activities, because we could guarantee that it would work as well in Brazil as in Turkey and China, because we have plants already over there, as well in Romania, or Italy, because we are strong in Europe. Because just like many of our customers, we do have a global ambition; and a global reach and capability to realise that ambition.

“On the supplier side, we try to do exactly the same thing. In 2013 we got an award for our close cooperation with our suppliers in creating added value; not just for us, but for even our customers, as suppliers help co-developing new materials and hence help us in developing added value for our customers. That baseline of Bekaert, ‘better together’, really goes in all directions; internally with our people, externally with our customers and our suppliers, and specifically to Bekaert also, our

partners, because we have a lot of partnerships, especially in emerging markets where we are looking for specific value that they can bring to us.”

Bekaert’s philosophy of ‘better together’ highlights the company’s focus on collaboration, both internally and externally. “The key value that drives our business, in order to make sure that we can absorb those different cultures within the group, as with customers and definitely with partners, is integrity, which allows us to have trust. And another important value is resilience—the ability to act fast in case of opportunities, and to react and come back stronger after a setback. Resilience is a prerequisite to be successful over the long term. Bekaert is really a long-term company. And that’s why our successful partnerships, in Chile and some other Latin American countries, still stand after more than 60 years now. Our

“We have the resilience to stay in difficult times. We don't just run away from a problem, which proves that we are a long-term partner, in good times and in bad times.” - Bert De Graeve

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first partnership in China is more than 20 years old, and is successful and working well.

“It is because we have that intrinsic integrity towards our partners that we create that feeling of trust that we are there

to stay and make it a win–win situation; we are not just attracting value and then running away from it. We have the resilience to stay in difficult times. We don’t just run away from a problem, which proves that we are a long-term partner, in good times and in bad times. This also makes us a preferred supplier and business partner to our global customers. If they go to Russia, if they go to China, if they go to India, we will be there, and we will be there as long as they are there; not just running away after two months or two years because there is some political turmoil, or because there is an earthquake, or whatever. We stay, even in the most difficult circumstances, which we’ve proven already.”

Resilience has helped strengthen and unify Bekaert, particularly in times of crises. “Any CEO will tell you that if you want to make a bold move, you probably need a good crisis. I think that has helped, because after all, this company had

been growing along two different lines: we had the steel-cord organisation and we had the steel-wire structure. But by growing globally as fast as we have, and then having the crisis in 2008–2009, and definitely the crisis in 2011 with the solar industry, then it was very clear that we had to look drastically at our structure, our cost base, and our way of working.

“Then you come back to the basics: how do we really have to be organised, how do we really have to function, and how are we really working? From a certain point of view, it is really simple; there is only one Bekaert that is on the stock exchange. We leverage that name, and that single name, to get our financing with retail bonds into the big public. So we shouldn’t become two or four companies below that internally. If we really leverage the brand equity of Bekaert, it allows us to reduce the cost substantially by being properly

organised in one Bekaert, which can work fantastically.

“Another element that is very important is that ‘One Bekaert’ really allows us to motivate people from totally different cultures in one brand. The Chinese feel at home as well as the Latin Americans, and they see that we are actually working the same way, that we are working with the same rules, and that we are respecting them in the same way. One Bekaert has created a very strong feeling of belonging internally. It was necessary for pure costs reasons, but actually allows us to leverage more of the brand equity that we have been building for more than 130 years.”

With the dynamics of the industry shifting and the new responsibilities as chairman of the organisation, Bert believes the future has great potential for Bekaert. “For my new role as chairman I just hope that we can even further leverage the benefits of having a reference shareholder who is willing to think long term; and on the other hand, being on the stock exchange and having some pressure on the short-term results as well. The chairman has to make sure that we can keep all that very clearly in balance.

“We have to ensure that we deliver enough in the short term so that we can continue to grow, but we have to be resilient enough to go through difficult times to make difficult decisions that may take a couple of quarters before they bear fruit. That connection point between operational management and the shareholders is definitely, in our company, the chairman. I hope that I will be able to do that as successfully as my predecessors have been doing, and maybe adding a little more than that, if possible.

“The real challenge for the company is making sure that we can continue to grow, because I am a fundamental believer that 70 per cent of this world still has growth potential, and even the other 30 per cent in the mature markets, although at lower growth, creates opportunities for the highest

“We need to stay very strong in the mature markets that just love better products, higher added value, newer technology, and are a driving force for innovation.” - Bert De Graeve

value-added products, so we have to manage that portfolio very well.

“Twenty years ago, people might still have discussed whether China was going to go back to communist times and whether India was ever going to grow, or whether Southeast Asia was ever going to be anything, or Latin America something more than just a base for revolution. The reality is that people in those regions have seen that if they work hard, they can improve their standard of living, and that is going to be a continuous source of growth for the next decade, so we just have to

make sure that we are part of that by understanding all of the local requirements.

“At the same time, we need to stay very strong in the mature markets that just love better products, higher added value, newer technology, and are a driving force for innovation. Those are the crossroads that we’ve reached at Bekaert and that is the portfolio that we have to manage. I think small countries can have companies that have huge ambitions on a global scale; and yes, at Bekaert, we have the ambition to continue to grow.”

“We’re delighted to have been associated with Bekaert since April 2011. Our deep understanding of infrastructure services, coupled with our technology solutions, have held us in good stead in our partnership with Bekaert” - Alok Roy, Associate Vice President, Head France and Benelux, HCL Technologies’ Infrastructure Services Division

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