The next step in your business with a quality friend

Natural is a word he likes very much. I've often heard it from him. He doesn't seem like the kind of man who tries to appear to be something he's not, to hide behind an image. He's natural, direct and friendly. I didn't know Dragoș Mărăcineanu before this interview. We had never spoken before, but I knew the company he runs. I was very curious to hear from him about his journey as an entrepreneur in Romania. So I invited him for a chat at the company he founded and runs, Felder Gruppe Romania.

How was your start in entrepreneurship?

The beginning was natural. I simply wanted to buy a machine. I was helping out a friend. At the time I was working in an American company, in the oil equipment area. I really enjoyed interacting with the people at Felder, it was very professional. The way I formed a personal relationship with the Felder KG guy I was talking to led us naturally into a discussion about what if we did something more articulate in Romania? The Felder brand was, let's say, under-utilized, not enough exposure. So it fit me like a glove. Then I worked hard, I liked it, I work hard, I like it, I found my place. Me being a construction man, and Felder being a family firm - started by Mr. Johan Felder 60 years ago - slowly, slowly things have evolved and are still developing. Until the crisis we had double-digit growth every year. The market was growing, we positioned ourselves very well at that time, it was a happy meeting.

Did you have business experience when you started Felder Gruppe Romania?

The business experience is there. The environment I was exposed to before I started with Felder was quite high. I got to meet American top management of companies I had only heard of in Forbes or the Financial Times. At the time I didn't realize the true value of my experience. But then, when I was on my feet, I always remembered what I had learned, how the problem was posed. This helped me very, very much. It's just that the entrepreneurial zone takes you out of the corporate zone. I felt a bit constrained there. I like to push things, not delay things that can be done immediately.

How do you see the history of Felder Gruppe Romania?

I think our activity can be divided into three periods. The first was until 2008 when we had growth. Then, until 2015, it was a period of recovery that was not at all smooth, with jolts, with all kinds of realignments, both in terms of strategy and in terms of market settlements. Then from 2016 things started to take a minimally predictable trajectory, it started to feel better year on year.

How during the crisis? I know you had to break up with 2/3 of your coworkers.

Yes, it is. They don't call it the crisis of the century for nothing. The adjustment was radical. Investment goods are the first to go into crisis and the last to come out. Obviously we had to adapt. We were then trying to strengthen the team, the results were good. From November 15, 2008 things froze. Sales then dropped by 82%. It was not easy.

What happened next, in 2009-2015?

In the industry, not much, frankly, because there was nothing more you could do than try to adapt and find solutions. But at the same time, there was enough going on to change my perception of how things were going and influence my decisions going forward. Until 2010, things stagnated, they had their own rhythm that you couldn't really intervene on because the market was not ready. From 2010-2011, we shook things up a bit and started to think applied, things couldn't go on like this forever. If the market wasn't going to open naturally, then you had to do something.

So, we tried to thaw the market by offering clear solutions to producers. We launched the Flex-Fin flexible financing program, which was a real help to manufacturers when they were coming in after the crisis, banks were not offering easy credit, etc. Through Flex-Fin, we responded to clear needs, we offered leasing, fund advice, installments. We launched the Buy-Back program and created a G+ program of extended guarantees, all designed to offer more security to customers, more confidence. And it worked!

The 2014-2015 period was significantly marked by the European funds, a sign that the market was starting to have the courage to invest again. And this was felt. It was a breath of fresh air after years of ups and downs not only for clients, but also for us. And that brings me to today.

That means from 2015 until today...

European funds and the temptation of money that seems to pose little risk distort the perception of the relationship between real need and aspiration. The clinicians' discourse had changed because the market had gained momentum. And that's when we felt we needed to talk to customers in a very applied way about the quality they need. We didn't want to sell at any price. Quality isn't about having the best, the most expensive, it's about what's best for you at that point in your development. In short, all our communication went in that direction.

This is how it came about A quality friend. We concluded a Partnership for Excellence in the Wood Industry with the Romanian Quality Association. We started delivering articles for quality to define it, we tried to have a common language together. These things also happened internally. It was natural that employees also understood quality in their work, whether it meant simply doing your job better, or wanting to become a consummate professional.

We have therefore started to invest heavily in employee training, especially for the Blitz Service team. Quality cannot be served without knowledge. We couldn't expect the customer to understand quality if we weren't trying to get better and better. Since 2015, Blitz Service technicians have been attending traning several times a year in the Austrian Training Center at the factory in Austria. Sales consultants receive annual technical and product trainings. If you don't know the machining machines and what their needs are, then how can you expect to offer the customer customized solutions? How can you tell him about the quality he needs if you don't know how to deliver it? The answer is simple, you can't unless you are well prepared. So we've invested in people and their training. We have invested in solutions to ease the relationship between the client and the firm, in communication and internal organization platforms, in a new CRM much more powerful and adapted to the new market requirements, new dynamics, in the development of an e-commerce platform similar to the retail markets.

Since 2016, the market has become more stable, which has allowed us to continue the pace of investment. Today we have the largest team in the industry, we have doubled our number compared to 2014-2015. We have 7 technicians at Blitz Service - the technical support program, 2 dispatchers for the service hotline, 9 sales consultants, 4 specialized trainers. These are just the structures of the company that connect with customers on a daily basis.

How has entrepreneur Dragoș Mărăcineanu evolved during this period?

I like to think of myself - and this is also true for my team - that we learn every day, both from our own mistakes and from the mistakes of others. The one constant in this industry is unpredictability. After 20 years, I still can't manage to have a sales forecast that is even remotely in line with the bottom line. We've tried looking at time series, seasonal influences, we've been unable to come to any conclusions. The most eloquent example was in 2012 when, after we had some very tough downturn years, in the first quarter we had a 100% growth. Then events such as the fall of the Boc government, the fall of the Ungureanu government, President Băsescu was suspended and all of a sudden that year's turnover fell to 501TPTP3T compared to what we had budgeted. How can you predict that? Especially in an industry that is dominated by small and medium-sized firms to the tune of 95%.

Dragoș Mărăcineanu is not the kind of interlocutor with whom you have to "work" a lot to find out what he is thinking. He likes to talk, and his thoughts seem to always come before his words. He is very coherent and dense in his communication.

And how has the industry evolved over this period?

Looking back, both at us and the industry as a whole, I think naturally. In this industry we sell investment goods. Decisions are made in relation to your confidence in the future. You don't start investing your money or borrowing if you don't have confidence in what the future holds. And the future offers a lot of unpredictability. And then the instinct of self-preservation in business kicks in and you say, "let's stay a little longer, let's see what happens". And it's natural. I think this fine balance between how much you listen to your self-preservation and how much you develop your appetite for risk can make the difference between failure and success. If you're three days smarter than your competition it can be dangerous, but if you're an hour smarter it can be enough to give you that advantage in the long run. The point is not to sit still.

In addition, industry has become much more receptive to change, to technologies. The openness of communication, the dynamics of technology, as well as current challenges such as labor shortages, are making people look around for new processing solutions. But the real challenge is to understand technology and what it can do for you. Now it's about information, it's about knowledge.

What exactly happened from this perspective?

A few years ago there were customers who didn't want to hear about CNC, refused to discuss CNC technology. This was another step in their development and a game-changer, a perspective and rule changer. Nothing is the same when I have a CNC in the shop. They said they didn't have the money. We would explain to them that the solution is not for now, that they have to understand the technology first, understand what the technology can do for them and slowly, slowly take the leap. As long as you don't access new levels of knowledge, you are condemned to stand still. Our advice is not conditional on investment. When the client wants to - because it's their money - we will discuss the commercial side, but in the meantime we are a quality friend. We try to go with the client until he decides to take the plunge. Hopefully, with us.

It can take two years, three years from the time we start the investment advice with the client to the time we actually do the transaction. As long as we have someone to talk to, as long as people are open to thinking about their future, for us it's a sign that they will buy. We have the opportunity to transfer know-how and not let them make certain mistakes. Because it's not the same situation as when you've got a TV and you've got the wrong diagonal. You can put it in another room or in the attic and you have solved the problem. In our case, if you haven't made the right move to a machine that then conditions your capacity and flexibility in production, it may be that all subsequent decisions will be a function of that. If, for example, you switch from hand tools to CNC it might be too much. Because you need a period where you have to digest, get used to the new technology somehow.

We believe in right steps, not big or small. The Felder portfolio is purpose-built as a ladder that allows you to evolve at your own pace. We don't have €2,000 equipment, €10,000 equipment and then €100,000 equipment. We have, for example, 15 circular models that start at €3,000 and go up to €200,000. This allows us the flexibility not to impose only certain solutions. Exclusively! We can sell in each step what the customer wants and very importantly, at his pace of development. We advise customers not to burn steps because it is counterproductive for them. A CNC is not an end in itself. It is a means of production that helps you produce better, more efficiently. You have to be aware that the money you have given must fulfill that purpose. This is not about status. I don't have to look away. These are things that show up on the balance sheet. There it will say whether you made a profit or a loss, whether you met your goals. The rest is just excuses or regrets.

After Ligna there has been a wave of excitement about Industry 4.0. What do you think of the momentum it has gained in Romania lately?

The main markets for machinery manufacturers are in the West. There is a different level, there is different money, different culture, different experience, there is predictability. It is obvious that the discourse of the big manufacturers is oriented towards their key markets. There it's much more natural to push 4.0 when they've already reached the industrial machines whose only problem was that they didn't communicate with each other. It's a bit different here. We haven't yet come to understand what effect the use of a CNC has on production, that it has to be placed in the right context.

We have clients who have invested in technology and can't find people to operate it or don't know what to ask them. It's good to show the furniture manufacturer where it's going, but everyone has to go there at their own pace. Unfortunately one distorting factor is European funds. Access to some free money creates the possibility to buy expensive and very complicated machinery. But what is more expensive is not necessarily what is better for you.

The discussion inevitably comes to the client. Dragoș puts the customer and the relationship they build together at the center of his business. Knowing some of his colleagues, I realize from whom comes the coherence in communication that I observed at Felder Gruppe Romania. The consistency with which Dragoș communicates a basic idea (Felder, a quality friend) in so many ways is almost impossible not to have infected them.

What exactly does Felder Gruppe - A quality friend - mean?

Being a quality friend reflects our company philosophy. You can't fake it here. The customer senses you if you are not authentic in what you say and what you deliver afterwards. It's kind of hard to be credible. We started communicating publicly about this five years ago and developed the direction where we wanted to get closer and closer to the customer. To understand him, to advise him, not to make him feel pressured to buy from us, not to lure him with special offers that don't have coverage. Because what I have on special offer might not suit you. I think you don't get a machine with special offers, you get it when you need it.

It is important that the things we deliver from an information point of view are covered by subsequent facts. We have customers who started with Hammer, our small workshop range, and now have CNCs. That doesn't happen overnight. Slowly but surely, they are now in a different league because they've trusted this partnership, and we feel comfortable working with customers who want to continue working with us. It's win-win situation.

The way he seeks and finds ways and tools to meet customer needs is a lesson for others in the industry. Terms like buy-back, installments, leasing come up often and demonstrate the willingness to learn, transform, adapt of the organization he leads.

The way in which we grow with the customer is not only about the vertical, i.e. he will at some point end up buying the most complex machine we have. We also grow with customers in the new investment process. We offer consultancy, we offer buy-back if necessary, we have a unique program in the industry of Flexin financing that includes both installments and rental, leasing, consultancy for European funds, consultancy for obtaining bank loans, just to see, both us and the customer, what suits him. Everyone has their own appetite for risk.

We have to adapt and put the right solutions on the table, so that in the end we meet our goal of making the customer happy. He has to say in a year or two "Yes, you were right, this is the machine I need. Now I'm ready to take the next step." I couldn't have lasted 20 years if I just sold once and that was it. There are still over 4,500 customers who have bought from us. It's no accident.

And that brings us to the recently launched campaign: Next step for your business. What is the purpose of this campaign?

The main goal of this campaign is for people to define development. We want to make them realize development themselves. Do I need people or another machine? Do I need to cut losses? It may sound slightly arrogant. I'm now in the business of teaching customers what development means. "Wait till Felder teaches you about growth!" That's not the point.

This is somehow the result of an experience we had with the Quality Friend platform, when we started to talk articulately and applied about quality. Surprisingly, everybody talks about quality, but when you try to define it you get contradictory answers. We had internal meetings in which we asked colleagues What is quality for you? The answers made me realize that we talk about quality, but we fail to conceptualize it. In a business it is good to have a common language somehow. I don't think that, for example, Japanese quality should be different from the quality of the smallest producer in Romania. I'm not talking about the level of quality, I'm talking about understanding what quality means. And because we don't have to invent the wheel, we simply communicate it. It's the same in this area of business development. Not to mention that a Romanian-born scientist from Brăila, J.M. Juran is considered one of the founders of the total quality management concept.

Every entrepreneur sees his company in a certain way, wants to do it in a certain way. That's very good. I'm not teaching you how to grow yourself. This is the internal engine that drives you forward. But again, we don't want to reinvent the wheel. This development has coordinates. What are my goals, what do I expect from a new investment, from my next development step. Everything has to be measurable and scalable. Maybe a more expensive machine is not the solution, maybe you need a machine with which you can produce something different. Maybe you realize that you have a skill that is well suited to an area that many people are not good at. Then maybe you don't need to buy a seventh machine to produce more, but a different, different machine that, together with your expertise, can help you stabilize your business better.

I refer, for example, to the integration processing of mineral materials in woodworking, or replacing conventional circular saws with an industrial pack saw. Because not many can do the job. You have to decide what you need most. If I want to produce faster I need certain specifications. If I want to produce more flexibly I need something else, because I can't be flexible and fast. Technology limits you! Labor limits you! Skills limit you! Raw material suppliers limit you! There is no one thing that does it all. We say this every day to our customers: there is no machine that can do it all, no matter how much money you have available, just as there is no cheap technology, even CNC technology, that you can rely on.

Rather we try to recommend to the customer what we think would suit them: Look, you have this kind of machine, we think the next step for you would be this. Think about it, consider our experience. They're like seeds that we're slowly planting, so that they can benefit from the know-how that we've built up over so many years. If they say yes, but I'm not buying from Felder or yes, but I don't want that, that's not a problem. At least we launch the development theme, we put it on the table and from there everyone will take the next step according to their openness.

How have you thought about applying this concept? How will you help clients to define their development, to discover their priorities, their goals?

We want them to practically experience the next step in their own workshops or factories. Basically, we will give them machines to use for a year at no cost to them. They will have to use them and see what they can achieve with them. Everything comes with training. We have experts who will come and explain to them what this technology means for them: this you can do, this you can't do, you can improve here, these are the limitations, etc. They may find that they are using the technology, the machine, only at half capacity. We have had cases! What do we ask customers? Openness! The moment they want to interact with us, we will force them to ask some questions so that together we see what is realistic and what is not.

Through this program Dragoș wants to share the business experience that he and his colleagues at Felder have gained over the years. It's as if he considers the accumulated experience as a resource, an asset as some would say, which he wants to capitalize on for the benefit of Felder, by offering a free service to his clients.

What do you think should change in the industry?

Companies confuse technology with business. The fact that you know very well how to make a piece of furniture is all very well, but you have a business to run. As I learned in college, nothing happens until something sells. As long as you're not able to deliver and collect what you've produced, nothing is going to happen. In order to get to that end, everything behind it has to be in place. There's no point in getting machines if they don't help you. Maybe too expensive, maybe too cheap. You simply have to understand which solution is right for you and when it's time for it. So you can sell more.

For example, European funds have caused many producers to think about investments en bloc, they have postponed any investment until the money comes. But this can take years. In the meantime, however, one-off investments can be made to solve one-off problems and this brings you closer to your goal: The circular is giving me nothing but trouble? Then replace it with a new one. Otherwise, I may get stuck and the difference will show in orders because the market won't stand still.

15 years ago nobody thought about rounding at the ends (editor's note: cant application). Now the end customer looks right there. It's the first thing they touch. What are you doing?! You are forced to do that and if you don't do the next step on time you miss the next order, then the next and you don't even know where your problems are coming from. Because you are mentally stuck in taking that necessary step. You've been waiting for years for European funds, they come eventually, but the social and economic conditions have changed so much that, for example, you can't find people to work on those machines. So what do you do?

The even sadder part comes when your expectations remain intact even if you want a fund with much less money, for example Start-up Nation. You try to cram everything you ever wanted in there, without understanding and without wanting to listen. That's how you end up having in your workshop - your first workshop, your dream - a lot of stuff that breaks all the time and you don't understand why. Start-up Nation should be a business plan, not an online shoping session. Starting a business in Romania is hard enough. Why choose to make it harder? Unfortunately, that's when you start to understand the saying that it's not quality that costs, it's the lack of it.

How the 2 communication platforms will reconcile. I'm talking about A Quality Friend and The Next Step for your business?

A quality friend and Next step for your business are congruent and based on our business strategy from the beginning. When there were floods in 2006 we, on our own initiative, called our customers in Moldova. We went there and repaired the machines of those affected for free. Between 2007 and 2009 we offered excellence scholarships to students from the Faculty of Wood Engineering in Brasov, in 2013 and 2017 we equipped the laboratory of the same faculty with complete machining equipment, we offered our customers exhibition stands at BIFE-SIM, we organized annual machining workshops, recently we conducted free seminars for Start-up Nation consulting all over the country with selected banks and consultants. These are things we haven't publicized a lot, but they are an important part of our relationship with customers. We believe we enter into partnerships, not transactions.

We are the only company that, for almost 20 years since we have been participating in BIFE-SIM, we enter the pavilion 10 days in advance, even if we have to pay extra. Because we want to have everything ready two days in advance. Out of respect for what's going to happen there, out of respect for those who will be visiting us.

It is proverbial the way I arrange machines after they have already been arranged by my colleagues. I want that one on the left, that one on the right. And everybody jokes about it. But that's because I want us all to have the peace of mind that we've given everything. Then we can say: Now come to us, we are 100% ready for you.

How do you see the future? What do you propose to do next?

Unlike other times, people now have a different relationship with the future. Things have begun to move beyond the bumps in the context. The worries are no longer orders. The worries are now people, the workforce.

We will continue to do what we do best, we will keep our promise, we will take the next step with our customers. In the coming period we will launch the most comprehensive web platform in the industry where customers will find everything they need, we will launch in Bucharest a complete training and demonstration center for operators in workshops and factories, we will continue to organize machining workshops and consulting. We will continue to train our people in all company structures. We will speak more and more intensively with manufacturers about automation and improving production flow, not only at the industrial level but also at the classical machining level. All small and medium-sized companies need to know that production improvement is not just CNC, not just Industry 4.0, but that there is applied technology for classical machining. We have already launched this theme at BIFE-SIM: Craft 4.0 and Industry 4.0.

When the orders are pushing you, the financial slack is greater and it's natural to think about the next step. We are in a period when people can think about growth, and our message is that the next safe step for your business is with Felder.

Felder Gruppe Romania is a trend setter for the Wood Industry, a benchmark for others. Their moves are analyzed by the market. Dragos is aware of this fact, he knows it very well and he wants it. He has vision and that helps him. And his medium and long term plans give the impression that Felder Gruppe Romania is firmly establishing itself on the Romanian woodworking machinery market, with clear and coherent policies. And all this because Dragoș Mărăcineanu wants to be an hour smarter than the competition.