Now part of Caterpillar, MWM is targeting a period of sustained growth in world markets and domestically, where it is taking advantage of Germany’s nuclear withdrawal. COSPP caught up with the man at the helm of MWM GmbH, managing director Willy Schumacher.
Based in Mannheim, Germany, MWM is a leading global provider of decentralized energy (DE) solutions using natural gas and alternative fuel.
Just over a year ago, Caterpillar bought MWM from 3i in a deal worth €580 million (US$787 million), opening the way for fresh investment in MWM and allowing Caterpillar to expand its customer options.
MWM is now part of Caterpillar’s Electric Power Division, which supplies diesel and natural gas gensets and integrated power systems involved in the generation, control and supply of electricity. COSPP’s Richard Baillie spoke with MWM’s managing director Willy Schumacher.
COSPP: How has the Caterpillar tie-up impinged on MWM’s business strategy and how will the new ownership structure affect product development?
WS: Caterpillar is a global company. And, like MWM, it is known for its high technical competence and for putting quality first for its customers. MWM and its employees feel right at home in this environment.
More and more customers want a gas option for their engines. By combining Caterpillar’s strengths in diesel and gas power generation with the technology and product strength of MWM, we are well positioned to be a lead provider in gas engine solutions for our customers.
|An MWM installation in Melbourne, Australia|
By joining MWM’s leading technology with Caterpillar’s product support, we are uniting two strong companies that ensure we continue to be the leading innovator in our industry and the first choice for our customers. The integration of MWM into Caterpillar is a very positive step for the company’s future development, its employees, clients, distributors and business partners.
Caterpillar provides the best prospects for MWM, given its worldwide network, which will open up new distribution and growth opportunities. Conversely, MWM’s industry- leading products and expertise in decentralized, efficient and sustainable power generation will also represent a major enrichment for Caterpillar.
The previous owners of MWM stayed on the fringes of technology. It was not such a priority for 3i. They were looking shorter term and did not plan to make major investments in technology. Now things have changed big time and we have quadrupled research and development, and we have also tripled expenses.
We are looking at optimizing production processes and we can really do this now because we now have the means to do it. The challenge now is to go ahead and implement it.
COSPP: What will be the impact of the Caterpillar tie-up on MWM?
WS: Fantastic! Caterpillar/MWM is a great thing both by history of growth and innovation but it’s been difficult for MWM to develop a global footprint for service and parts. But with Caterpillar there is now no place on earth where we don’t have a strong presence.
Our footprint is global in North America and in South America. Of course, double digit-growth depends on power ranges and gas types, but over the next three years we expect double-digit growth of 11–12%.
COSPP: Your business is strongly dependent on the decentralized energy market. What sort of market growth forecasts are you looking at for district energy and in which parts of the world?
WS: There are really fantastic growth opportunities in district energy for years to come because more and more gas is becoming available, and gas technology is, of course, green and environmentally friendly. And, at the same time, there is more and more pressure coming on national utilities that are increasingly working at their limits. As a result of all of this, power sources could become more unreliable.
And we can see this trend emerging throughout the whole of Europe and in the United States, where there have been cases that if one station goes down, then the whole region collapses. Because of the danger of this happening, there are now far more incentives for whole regions to build decentralized power.
COSPP: Why is MWM investing so heavily in training and professional development?
WS: For our customers it’s important to be able to buy a first-rate product and get the full spectrum of top-drawer service for this product. If we can instill our high standards from the very beginning of the training process, then we’ll be able to fulfil our promise of top quality to our customers. That’s what distinguishes us from other suppliers. Of course, there’s a whole series of reasons why training has such a high priority at MWM. For example, through our training programme we are positioning ourselves as a major player in our region, so that we can compete for apprentices very effectively with other companies in the area. In recent years we have been able to fill every single trainee position. In the final analysis, we are securing our company’s future by training our own upcoming talent.
With us, apprentices are not just a number or a means to an end. When we invest in them, we are protecting the high level of technical know-how that has been a tradition at MWM. Young people who are excited about technology are really in their element at MWM, and they are quickly given responsibilities. This happens faster with our new training concept because we integrate apprentices from day one in hands-on work processes. Taking on responsibilities also opens up new possibilities. If our apprentices want to get more education after their training programme is finished, then we give them the opportunity to take on responsibilities in the company that will help them advance. And the fact that MWM still has a relatively manageable size gives us a clear advantage. We are closer to our young co-workers, so we can recognize their strengths better and do a better job helping them to build upon these strengths.
COSPP: Are government/regulator support mechanisms more important than market fundamentals in getting DE installations built?
WS: Looking ahead I think the fundamentals for the industry are there by themselves in terms of population growth and standards of living. Having said that, obviously government programmes and incentives are key drivers. For example, feed-in tariffs in Europe have been big drivers and made a big difference.
But then you look at a place like India where incentives have not been in place. In fact, in India the tariff structure does not favour the cheapest technology and it is not cheaper to build power plants that use less clean technology, so obviously that makes a difference too.
At MWM, our main focus for energy development is highest efficiency with the cleanest technology, the highest flexibility in terms of fuels, using mostly natural gas, biogas and other low-energy types and synthetic gases, with our latest programmes targeting between 48% and 50% electrical efficiency.
COSPP: What will be the impact of Germany winding down its nuclear programme?
WS: More customers are looking for alternative fuel engines, and higher energy prices and supply shortages are leading private, public and industrial sectors to search for clean, decentralized ways to produce power.
More and more customers are looking for decentralized power generation as a substitute for older and more risky technology. All the discussions going on in Europe. about the future of nuclear power and countries such as Germany, which has already decided to exit, mean that through this acquisition we will be very well positioned to replace some of that power. No single technology will replace nuclear power, but low energy gas, biogas and coal mine methane that can be used to produce both heat and power will play a major role.
It’s clearly a demand-driven market. Government regulations and fiscal incentives are major reasons for growth in the cogeneration market and new emission-reduction technologies are likely to promote our products. Repowering programmes of old power plants are seen as the driver for us for the next decade and also emissions credits create new opportunities for our business.