Max Viessmann for sale: “They are aware of their social responsibility”

The heat pump manufacturer Viessmann sells its core business to a US group. In an interview with tagesschau.de CEO Max Viessmann explains why he believes the sale is necessary and why the Americans appreciate the locational advantage of North Hesse.

tagesschau.de: Mr Viessmann, your company is earning very well at the moment and now, of all times, when an economic stimulus program for heat pumps worth billions is being developed, you are selling to a foreign company. To outsiders, this seems counterintuitive.

Max Viessmann: As a company, we have to invest massively in structural change. This is mainly due to the fact that we, as the market leader for heat pumps in Germany, have found a market that used to be a niche market and is now becoming the dominant market segment in a very short time, also due to regulatory decisions. This means that we have to rebuild our more than 100-year industrial past in a few months and weeks. That requires a lot of resources.

But it’s not just that, it also requires a lot of resources to finance the growth. So, for us, the more relevant question is: How is our liquidity actually developing in the medium term in order to be able to shape this change? And there we, as an entrepreneurial family that invests 120 percent in the family business, are limited in our own options. We can only invest what we earn or increase the debt. This is what we have been doing over the last few years to ensure change. And we are now at the point where we are looking forward to an even faster change that we want to go along with and can also go along with through the partnership that has now been formed.

is international market leadership still possible?

tagesschau.de: Conversely, does that mean that no German medium-sized company, no family business can no longer be a market leader, nor can it be an international market leader?

Viessman: As a family business, we are market leaders in other business areas in which we operate. We have always been a market leader in Germany for the individual segments in the climate solutions business. But the world is big and we are confronted with a competitive landscape that is mainly dominated by air conditioner manufacturers – and air conditioners are used to a large extent in Asia and America.

The economies of scale that the device manufacturers have can be transferred one-to-one to the heat pump. The components of the air conditioners are comparable to those of the heat pump. This means that we have been very successful in the niche we were in before in Europe, but are now faced with an international market that necessitates being able to access these major assets.

We would not have been able to do that on our own in this industry. In Carrier we have found a partner who has these economies of scale, both in Asia and in North America – but who has a market niche in Europe that he can close by working with us. Why is this so important to us? Because that way we ensure that it’s not just about cutting costs, but about financing growth and successfully bringing these two units together.

“We have guarantees with the location that are very extensive”

tagesschau.de: Germany as a business location is quite expensive. Now there are graduated guarantees for jobs and locations after three, five and ten years. But in the end they go around quickly. Did you get the impression that things would continue after that at the location in northern Hesse? Or will that be the end of it, as was the case with other companies whose production was then relocated to Eastern Europe?

Viessman: I think you have to see two things. On the one hand, our location in Allendorf in northern Hesse, for example, is so successful because it acts so productively. People are passionate about it and have a constant obsession with optimization. In other words, it is not so much the wage costs that are in the foreground, but simply the productivity and the type of products that are manufactured here. And Carrier is also aware that this is a huge strength of the company. This also applies to other locations.

The other aspect is that in the end it has to be a European and international solution. We have guarantees with the location that are very extensive. You have to keep in mind that something like this is usually negotiated afterwards and not set as a condition in advance. And that was the decisive point for us, because we are concerned with social responsibility.

That was the starting point of the discussion and Carrier has the same understanding. They are aware of their social responsibility, they are aware of the investments that are necessary but, to be honest, are also associated with huge economic potential. They don’t put a question mark on Germany or Europe, but a bold exclamation mark and want to grow in the region with the strengths that we have, but also give our products the opportunity to gain access to their international sales platforms. On my own I would never have been able to build up a relevant size in America, for example, where the Inflation Reduction Act is creating a huge market that can be served with Viessmann heat pumps, looking forward.

What if that Ministry of Economy doesn’t play along?

tagesschau.de: One question mark remains: The Federal Ministry of Economics now wants to review its sales plans again. Are you afraid that the federal government will throw a spanner in the works for you again?

Viessman: Both Mr. Habeck and Mr. Scholz have expressed that this transaction makes the heat transition possible because things are happening at this speed and also on a scale that would not have happened on their own. The fact that the federal government is very keen that there are appropriate prospects and security for the employees is also in our interest and we are 100 percent in agreement. This is exactly why we have now decided to take this step, because we can ensure that future-proof prospects are created for 10,500 employees.

And in other cases, as just outlined, it is often the case that these guarantees are only given afterwards and not in advance. That’s why I can understand the test project and see it as an important duty of care, but I’m equally happy that we were able to win a partner who doesn’t correspond to American clichés, but who will bear social responsibility and invest in a forward-looking manner.