Owner & CEO von Nathusius on Increasing MIFA’s Speed to Market
SANGERHAUSEN, Germany – For generations the Von Nathusius family has been part of the long history of Germany’s industrialization. In 1992, Heinrich von Nathusius acquired IFA-Rotorion and transformed it into the world’s biggest producer of drive shafts for cars.
In November 2014 he was asked to takeover MIFA and save the country’s largest bicycle factory from closure after bankruptcy. Von Nathusius quickly developed a new strategy and planned the construction of a new factory – all based on his long time experience in the car industry.
Why have you started in bicycles with the MIFA take-over?
Cycling will become an important issue in the next decades. Not for fitness or fun, but to provide mobility, especially in the big cities. Amsterdam is a great example, which shows that cycling is not important since it is cheap, but because of the limited space.
That was very well understood by Amsterdam’s local authorities when they paved the way for cyclists in the Seventies with extensive investments in infrastructure. More and more cities worldwide follow this example and I think that finally the e-bike will take the lead in cycling mobility.
Your start in an entire new business sector came at an age of 70. Next to that, as is reported in the German press, you invested some €10 million of your own, private money?
Yes, but that was the initial investment. In the meantime that amount increased even further. My aim is to develop more industrial activity here in Sangerhausen with my revenues at IFA over past decades. This area struggles with a high unemployment rate of 20%. When I decided to step in this project I got full support from the banks and the regional authorities to keep MIFA up and running.
Bicycles were always regarded as a nickel and dime business, in particular when compared to the automotive sector? You have a long history in building a big business in making IFA the biggest producer of drive shafts for cars in the world. Still you reacted positively when you were asked to take-over MIFA. Again why?
The bicycle industry is regarded a high potential business, especially thanks to the e-bike, and the automobile industry is the example on how bicycle companies will operate in the future.
Today nearly 75% of all bicycles sold in Europe are directly or indirectly imported from countries like China, Cambodia, Pakistan, or India. Everything in our industry is aimed at China, that’s why the bicycle industry is called a nickel and dime business.
Why is the bicycle industry not working with standard platforms? Volkswagen has just 20 platforms for 100 different kinds of cars. That’s an example for the future of the bicycle industry. At the moment we import 400,000 frames annually from China and we have to work on all of them for quality issues. We can do better than that!
How will you do that?
It is very difficult to compete with the Chinese in the production of aluminum bicycle frames in Europe. It requires a lot of energy and we have no local source of bauxite in Europe. However we do have polyethylene factories in the region working for the automobile industry.
In close cooperation with the well-known research institute Fraunhofer we developed a polyethylene frame platform. This project will increase our speed to market tremendously, from 18 months today to only 6 in the future. Next to that we will also start-up our own steel frame production. Both projects are a major reason for the construction of a new factory.
Another reason for the construction of the new factory is that production and warehouses are on different levels, as it is built on a hill, requiring a lot of internal transport. In the future we will be located next to the highway, which will (as well) improve the logistics for the 150 containers we move in or out every day.
How big is the investment in the facility? And are components makers like Büchel setting up shops nearby?
The concept is to develop a bike valley in Sangerhausen so we reserved a large area. The German component manufacturer Büchel is the first to invest in a factory as well. All together we are aiming at a facility with a capacity between 1 to 2 million bicycles.
Can you tell something on your business strategy for MIFA. The German press wrote that you want to hold on to making bikes for discounters as that provides MIFA the needed production volume. Is that correct?
MIFA has always and will always supply bicycles to supermarkets. We need large volumes to be profitable and we will always be in the market for new customers. However the supermarket business is drifting away from large qualities. Series of 2,000 units was minimum at MIFA but today the production runs are much smaller, also for the supermarkets like Aldi.
In the past MIFA had to supply the supermarkets to survive but they forgot to make a clear distinction between the IBD and non-IBD markets. We can only be successful with the most optimum cost versus performance level when the anti-dumping duty will be removed in the Chinese will try to enter the European market.
For the IBD market in the mid-price range we will continue our brands Grace and Steppenwolf, but exclusively only. To grow our IBD business and to cover more price categories next to Steppenwolf and Grace we will introduce the entry-level brand Vaun this summer which will include bicycles in all categories. Next to Steppenwolf and Grace, Vaun will also be exhibited at Eurobike.