You’ll hear that often from Peter Mueller, executive vice president of STIHL Incorporated.
In a shaky economy, he’s managing to outproduce China, take advantage of green technology, embrace automation and robotics and oversee a thriving workforce from STIHL’s Virginia Beach facility.
A credit to the Commonwealth
Mueller gives Virginia much of the credit for STIHL Inc.’s success. Convenient shipping, an educated workforce and labor laws that encourage productivity have made STIHL’s 35-year tenure in the Commonwealth a resounding success.
STIHL, headquartered in Waiblingen, Germany, opened its U.S. operation in 1974 with about 50 employees. Today, it has more than 2,000.
“The American worker is very highly productive,” says Mueller. “I can put my people against the rest of the world.”
He has, and the Virginia plant has garnered accolades, including the prestigious Shingo Prize for Operational Excellence.
“For me, the Shingo award shows world-class manufacturing. It’s like you are ‘Factory of the Year,’ and it’s a great honor,” he says.
The right culture
Mueller also attributes success to STIHL’s philosophy. “Corporate culture is more than a pay scale. If you have the right environment, that’s critical to success,” he says. “And that’s what we’ve done here in Virginia Beach.
“We came here in 1974. You know what we did in 1975? We gave everybody health care. We were small then, about 100 people, but we had paid health care. We have health care, we have pension plans, and we have profit sharing. We have stable employment.
“When you do all that, you have the right corporate culture and you can outproduce anyone.”
Mueller also makes sure that his employees – current and, perhaps, future – have the right training for the job. STIHL has an engineering co-op program with Old Dominion University and Virginia Tech.
For almost 30 years, STIHL has conducted an in-house apprenticeship program, training individuals in the areas of tool and die making, machining, and electronics.
“All of them are going to stay with me, and they’re going to be incorporated into our workforce as technicians. And the best thing is that some of them will continue with education,” Mueller boasts.
At STIHL, it’s not unthinkable to begin as an assembly-line worker and eventually become an engineer.
Mueller scoffs at those who think other countries can make chainsaws and other power tools cheaper or better than he can in Virginia. He dismisses notions that green initiatives — such as eco-friendly building and alternative energy production — cost too much.
“You know, it can be done,” he says confidently. And so it is.
Tell us about STIHL’s Virginia operations.
The Virginia Beach campus is about 125 acres. We have about 1.3 million square feet of space under the roof and at the present time more than 2,000 employees.
In 1974, we made one chainsaw, the Model 015. We make 200 products right now. We have 15 assembly lines and more than 200 different models.
We are not just a chainsaw company. We also make trimmers, hedge clippers, handheld blowers and backpack blowers.
What attracted STIHL to Virginia?
In 1972, we did our first site selection in regards to manufacturing in the United States.
What attracted us at the time was the container ports at Norfolk International Terminal. We have been very pleased with them. We are still bringing in a lot of containers from Europe and also sending hundreds of containers out. I would rate it the No. 1 container terminal on the East Coast.
I’m an ambassador for Virginia. Whenever you bring in European companies or other American companies who want to relocate, I’m selling Virginia. It’s a good place to have a factory.
STIHL has received accolades for its green initiatives. Why is that a priority?
When you are in the business of making chainsaws, people translate that into cutting down trees.
But take a look at our product. When it comes to emissions, we have the cleanest trimmer and the cleanest backpack blower being produced on the market. We are in the clean two-stroke technology and the very clean four-stroke technology. And the latest thing we have been doing is going into battery. When we talk about a battery product, it has to be as powerful and run as long as a gasoline product.
If you have a hedge clipper, it runs about 40 minutes on a tank of fuel. You want to have a battery hedge clipper that runs 40 minutes. You don’t want a toy that runs 10 minutes and then your battery is empty.
We don’t believe in products like that.
In regards to building, we want to have a green building. All of the buildings I’ve done in the last five years have had green roofs.
People would say to me, ‘Mr. Mueller, you are spending so much money on a green roof. Why are you doing it?’ My reply was that it makes sense. It’s reducing the heat load on my building and thereby reducing my air conditioning and that means protecting the environment.
We test 100 percent of our chainsaws before they go to consumers. We now have an automatic test so the operator who is testing the chainsaw does not have to be exposed to the smoke and fumes and noise. All he does is put the chainsaw into a box and the computer takes over.
And while it is running, the chainsaw is producing energy. We can take that energy and feed it back into the electric grid.
Can you talk about workforce development? And what about automation and robotics?
Workforce development is something you shouldn’t only talk about. You need to live workforce development. I’m telling young kids these days that the days of the unskilled laborer are gone. Those jobs don’t exist in the United States anymore. Those jobs are in Mexico and China.
We don’t want to create low-paying jobs. We’ve got to create jobs that are well-paying, middle-class jobs.
STIHL has invested millions in automation and operates many robots here in Virginia Beach. We have robots in the machining department, loading the piston machines and we have robots for welding.
You might say, “OK, he’s putting in a lot of robots, which means that he’s terminating people.” That’s not the case. The philosophy here at STIHL is that if we install a robot and replace three people, we have a rule that we have to guarantee these three people other jobs. As a result, nobody in our company is afraid of automation.
Mark your calendars for the 2nd annual Virginia International Investor’s Forum (VAIIF) set this year for May 6, 2010.
This forum addresses interests of and facilitates interaction within Virginia’s international community. The program is tailored specifically to the needs and concerns of international companies and offers a unique opportunity to exchange information with key industry, financial and government leaders about Virginia’s development plans and the overall economic environment.
The 2010 VAIIF Keynote Speaker is Mr. Jeffrey Lacker, President of the Richmond Federal Reserve Bank. We are excited to secure Mr. Lacker for this event and look forward to his unique prospective to the current and future economic climate.
There will be additional information regarding this event in the coming months.
The “Buy America” provision has many internationally-owned companies feeling removed from the benefits of the $787 billion American Recovery and Reinvestment Act (ARRA). But while “Buy America” language may have resulted from political pressures, the actual rules that govern ARRA show openness to global trade and great opportunity for companies around the world.
The American Recovery and Reinvestment Act of 2009 (ARRA) was enacted in February 2009. Its intent, as with similar measures in a number of other nations, was to provide stimulus to the U.S. economy through significant, temporary government spending in the midst of a private-sector economic downturn. At present, 58% of ARRA’s funds have been awarded to federal agencies and state governments. Moreover, only 13% of funds have been received, meaning that prime contracts representing the remaining 87% are not yet in place.
Companies from all over the world are eligible to compete for the remaining unspent 87% of ARRA. On its surface, the “Buy America” provision seems to inhibit international companies from competing for ARRA dollars if similar goods and services can be found within U.S. borders. But the government’s fine print in the “BAA Interim Rules,” published March 31, 2009, in the Federal Register, amend the original “Buy America” provision and levels the global playing field.
In short: companies from any “Recovery Act Designated Country” are exempt from the Buy America rules. These include:
1. Any country represented by the WTO’s Government Procurement Agreement
2. Any country having a Free Trade Agreement with the United States
3. Any country considered a Least Developed Country (LDC), excluding the Caribbean Basin.
The rules exempt a vast majority of Virginia’s major trade partners, including Canada, Mexico, and central American countries part of CAFTA; EU member countries and Israel; Hong Kong, Japan, Singapore and South Korea; and Australia and New Zealand. Goods and services from China and India are not exempt from the Buy America provision.
Despite the government’s exemption, international companies competing for sub-contracts or making joint bids with American firms for ARRA funds may face resistance from their U.S. partners. A lack of awareness of the BAA Interim Rules means that many in the U.S. private sector still operate under the assumption of a “domestic preference” for goods and services. Besides educating U.S. colleagues about the exemption, the keenest of international companies may see an even clearer path to ARRA funds by taking advantage of current market conditions to establish their own U.S. footprint. U.S. companies may be more willing to partner with a company who creates domestic investment and jobs, the very intent of ARRA. And in the long term, there is little doubt that establishing a local presence will aid in an internationally-owned company’s long term market growth.
The Virginia Economic Development Partnership offers a full range of services to internationally-owned firms seeking to establish a local presence in the United States. Please visit www.yesvirginia.org to contact one of our international investment managers for more information.
Sources: www.recovery.gov; 74 Federal Register 14,621 March 31, 2009.