Understanding SFS

Learn how the history
of SFS began in 1928

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Just how important is Switzerland as a business location for SFS?

Switzerland is where it all began: SFS Group traces its roots back to a hardware store that was opened in Altstätten, Switzerland, in 1928 under the name Stadler. The establishment of a metal press shop in Heerbrugg in 1960 laid the foundation for the company’s manufacturing activities and subsequent international expansion. Our desire to be close to the customer was the driving force behind the internationalization and global presence of our company.

Switzerland is still very important to SFS Group. The country accounts for nearly 20% of its total sales and a quarter of its employees are based in Switzerland. Besides the Distribution & Logistics segment, whose activities are focused on Switzerland, and the corporate functions, the Automotive and Industrial divisions serve their European customers primarily from their sites in Switzerland. Our Swiss sites have remained competitive on the international stage, even against the backdrop of the sustained strength of the Swiss franc, by focusing on the development and production of know-how-intensive, technologically advanced products and on highly automated, capital-intensive manufacturing processes. The relatively good availability of skilled workers is an important locational advantage and another reason why Switzerland is our innovation and technology hub.

Why isn't there a section on sustainability in this year's annual report?

Sustainable business practices have been part of SFS’s DNA from day one. In order to give a more comprehensive and detailed account of sustainability at SFS and raise our focus on this topic, we are creating a dedicated, stand-alone reporting platform for sustainability. To this end SFS will publish its first, separate sustainability report in late May 2020. Therefore there is no section on sustainability in the 2019 annual report.

What is driving the strong demand for SFS solutions in the medical device business?

Demand in this business is being fueled primarily by demographic change and shifting consumer behavior. Health and well-being are becoming increasingly important in modern society. We offer customers innovative and future-oriented solutions that meet precisely these needs. Our comprehensive offering of solutions and services includes precision components and services for a vast range of medical and dental applications. Growing cost pressure is pushing OEM outsourcing rates higher and higher. With its many years of experience in the industrialization of products and processes, SFS has profiled itself as a value engineering specialist that can create substantial added value for its customers.

Why are most of SFS's acquisitions in the Construction division?

By making selective acquisitions, SFS gains access to new markets, customers and applications and, by extension, lays the groundwork for future organic growth.

The Construction division offers its customers in Europe and North America a comprehensive range of building envelope fastening solutions through multiple channels. This market is geographically and technologically fragmented and therefore offers attractive acquisition opportunities that enable the Construction division to steadily improve its market position and expand its technology and product portfolio.

Two acquisitions were closed in 2019. The takeover of Triangle Fastener Corporation (TFC) gave us direct access to about 6,000 active customers in the North America construction industry and the acquisition of Moderne Befestigungselemente GmbH (mbe) expanded our range of fastening solutions for façade systems as well as our presence and customer base in the European construction market.

Are D&L’s solutions also available internationally?

The D&L segment represents SFS Group's historical roots. Founded as the Stadler hardware store in Altstätten, Switzerland, in 1928, this trade business evolved over time and grew to include new products and new application areas. Throughout all these years, the segment has kept its geographic focus on Switzerland and thus steadily expanded and strengthened its market position. D&L is now selectively expanding its logistics solutions business beyond Switzerland’s borders. Large international customers are increasingly deploying SFS’s logistics solutions, which offer convincing scalability and other features, at their production sites around the world. By doing so, these customers benefit from the many advantages these logistics systems offer, such as lower levels of inventory, higher supply chain readiness and reduced process costs, and they can also access SFS’s product range at their sites outside Switzerland. This international expansion creates additional growth opportunities for the segment.

What does increasing vehicle electrification mean for SFS?

SFS manufactures products for various automotive applications, ranging from seat belts and airbags to brake systems. Innovation and growth in these application fields is being driven by trends towards greater comfort, safety and efficiency and, in a super­ordinate context, by the autonomous vehicle trend. SFS profits from the resulting vehicle electrification because it creates additional growth opportunities, actuators for electronic brake systems for example, that we can target. Sales generated with products for internal combustion engines currently represent a low, single-digit percentage of overall SFS Group sales so the phaseout of internal combustion engines in the long term will not have a significant impact on our business.

Will mechanical fastening systems be replaced by adhesives at some point in the future?

SFS is focused on selective application fields where its mechanical fastening solutions can offer customers extra value. Examples of value added are a more efficient fastening process, greater reliability or improved ergonomics. In the applications we target, adhesive bonding is not a viable alternative or it cannot achieve the same level of value added.

Are SFS’ digital logistics systems for C-parts exclusively designed for use with SFS products?

By deploying our digital logistics systems for C-parts, our customers can fully automate non-value-adding activities that improve parts availability while lowering overall inventory. We have opened up our proprietary platform so customers can profit from these advantages even with parts that they source from other suppliers. Scaling up SFS’s logistics systems, even across international borders, is easy to do. This represents a key competitive advantage that allows us to realize even more optimization potential for our customers.

Does SFS use additive manufacturing processes (3D printing)?

SFS is following the development of additive manufacturing processes and is already successfully utilizing it, for example to produce prototypes. Our focus, however, is on markets and applications with very large production quantities: SFS produces more than 30 billion precision components a year. With high production volumes like these, cold forming – one of our core manufacturing methods – offers significant advantages owing to its very high productivity. Additive manufacturing processes are not an alternative for high-volume manufacturing processes. However, as additive manufacturing technology matures, it could become a viable add-on to SFS’s technology portfolio.

What synergies are there between the company’s segments?

The organizational structure with three segments, all of which have different business models, brings benefits to SFS. The Engineered Components and Fastening Systems segments can help and augment each other in matters related to manufacturing technology and capabilities, while the Fastening Systems and Distribution & Logistics segments reap benefits from their pooled knowledge and competence in the areas of sales and distribution, services, and logistics solutions. Our value proposition – Inventing success together – runs through all segments of our business activities and requires the continuous intention for continuous improvement in order to create added value for our customers. With the aim to invent success together.

What are the potential implications of the recent rise in protectionism for SFS?

The global political stage became more complex over the past year. Nationalism is gaining ground in many countries. The confrontational approach to international trade relations is becoming a risk factor. The potential consequences for the world economy are hardly foreseeable.

Despite these challenges, SFS is guardedly optimistic about the future. As a value engineering specialist that creates added value for the customer with precision components in selective niche applications that are often mission-critical, we have always maintained close ties with our customers. That has motivated us to innovate and internationalize our business and it explains our global production platform. Standardized production facilities make us very flexible and this flexibility can, in a worst-case scenario, quickly become a critical competitive advantage.

For example, we are rigorously analyzing scenarios in which supply chains for the electronics industry are transferred to locations outside China and have been discussing these possible contingencies with our customers. SFS’s already established production sites in Malaysia and India could serve as potential alternative production platforms. Our strong footing in various niche applications puts us in a good position to cushion the impact of negative developments in any one market.

How green is cold forming?

Cold forming is not only a highly productive manufacturing process for large production runs, it is also an environmentally sound process thanks to its extremely high material efficiency. In contrast to alternative machining methods (e.g. milling or turning machining processes), cold forming does not remove excess material to produce the final part; instead it forms cold metal blanks into the specified shape in two to six progressive steps. The amount of material saved compared to conventional machining processes depends on the shape of the part, but it is significant in most cases.

Looking at the entire range of cold-formed products SFS makes, we estimate the material savings are equivalent to about 67% of the materials consumed using conventional manufacturing processes. Based on our annual consumption of raw materials and taking into consideration the emissions generated both to produce the steel and by the machining processes that are avoided with cold forming, we calculate that we save about 300,000 tons of CO2 emissions a year by using cold forming manufacturing processes.