Matthias Kohlstrung has been at the helm of Brother International GmbH in Germany and Austria since 2014. A time in which the printing industry has changed significantly and has had to overcome a number of challenges. He spoke to J-BIG about the company’s beginnings, the values that guide the Brother Group, and the future of a sometimes beleaguered industry.
J-BIG: The name “Brother” does not necessarily conjure up a Japanese company. How did this name come about?
Matthias Kohlstrung: The explanation is quite simple: The company was founded in 1908, 113 years ago, by Kanekichi Yasui as a repair workshop for sewing machines. To make the straw hats used in Japanese rice fields, special sewing machines were needed, all of which were imported goods. These sewing machines always broke down in the same place and were repaired in his workshop. At some point, his sons – the brothers Masayoshi and Jitsuichi Yasui – thought: “There must be a better way to do this”, and they promptly set about developing their own sewing machine. That was in 1928.
At that time, however, the company was not yet called Brother, but “Yasui Sewing Machine Works”. The young company initially built Singer sewing machines under licence for the Japanese market, until the company eventually developed, built and sold its own sewing machines globally. This was the business that made us big, and today we are one of the two largest sewing machine manufacturers in the world. In Germany, this line of business is rather unknown, but in Japan, we are still known primarily as a sewing machine manufacturer.
The fact that the company is called Brother today has to do with the Second World War: As an ally of the Germans, Japan and Japanese companies had a hard time after 1945, especially in important overseas markets like the USA. There are several examples of Japanese companies that changed their name to something more international in the post-war period: The Matsushita Corporation, for example, which was then suddenly called Panasonic. When it came to finding a name, the story of the two brothers came to mind, and the new name was found: Brother. Simple, timeless, and with a positive connotation, it has proved to be a good choice. The logo dates back to the late 70s and has remained completely unchanged since then.
J-BIG: How did you make the leap from sewing machines to printers and scanners?
Matthias Kohlstrung: We used our knowledge of the mechanics of sewing machines to move into various other areas. In the Brother Museum in Nagoya, you can see a motorbike, for example, so there were attempts to advance into the mobility sector. Opel, by the way, also started out as a sewing machine manufacturer – many people don’t know this. Another direction was the household appliance sector, where we developed microwaves, among other things. But we saw a lot of potential in the office machine market, so that’s where our development efforts were concentrated. Initially, we manufactured typewriters or desk calculators. These machines were also the first step in the direction of electronics. The area of printers, scanners and multifunctional devices eventually developed out of that.
In the beginning, there was no clear distinction between private and industrial use, by the way – neither for sewing machines nor for typewriters. With increasing industrialization and specialization, this naturally changed, but Brother still serves both segments today. With sewing machines, for example, everyone from a sewing plant in Bangladesh to a hobby seamstress in Bonn can find a suitable model with us.
J-BIG: Brother’s motto is “at your side”. What does that mean, exactly?
Matthias Kohlstrung: This claim is the core of our corporate philosophy and at the same time a concrete directive for how to act. In essence, it means that people, the stakeholders, are always at the center of everything we do. This can be applied to a wide variety of areas. If a customer has a problem, for example, they are probably annoyed about it and may even get angry at times. Our task is to make them feel that we take their problem seriously and work together to find a real solution. The same applies to shareholders, employees, distributors, or the local community here in Bad Vilbel: We want to let people know that they are not just a number in the system, but that we are committed and actually stand at their side.
That might sound a bit cryptic or pompous, but in the end, that’s not what it is at all. It was always important to the founders to get people into work: To create jobs and have satisfied customers and employees. The primary goal was never to earn as much money as possible. But if you consistently focus on the user and help him or her find a solution to a concrete problem, then success and growth will come automatically. Robert Bosch once said: “I didn’t become rich because I pay my employees such low wages, but because I pay them good and high wages.” That is also the thought behind the Brother philosophy. In the end, of course, we are not a charity, but a profit-oriented company. But we still take this claim very seriously. Only in this way are we able to invest again and make even better products, to move in even better directions. We always have our company philosophy, the “Global Charter”, at hand. In difficult situations, we check whether our planned course of action really fits this philosophy.
J-BIG: How does that translate to the end customer?
Matthias Kohlstrung: Even though we don’t do end-customer business in the traditional sense, the users are of course at the center of everything we do. If they are not satisfied with our products or service, it is no use for us to pack our distributors’ warehouses. We have two possibilities in indirect sales to pass on the “at your side” philosophy to the end customer.
On the one hand, we rely on our dealers and resellers: We are convinced that the cooperative behavior we show them will also be passed on to the end customer.
The second way is through measures and services from which the user benefits directly. The best example is our 3-year warranty, which has been unique in our industry since 2003. No matter where a customer has bought a Brother product, we as the manufacturer issue a warranty for three years. This gives them peace of mind – if a legitimate warranty claim arises, they can always contact us. Under current legislation, a warranty of two years is mandatory, but after the first six months, the customer has to prove that the fault did not exist at the time of purchase. Of course, that is extremely difficult and puts the customer at a clear disadvantage. We said: “That doesn’t fit in with our idea of ‘at your side’, we’re going our own way as a company.”
“J-BIG – Japan Business in Germany” is the e-mail magazine dedicated to Japanese companies and their business activities in the German market.
J-BIG: When and how did you make the move from Japan to Germany? How did business develop locally?
Matthias Kohlstrung: The overseas expansion started with America, but the move to Europe followed as early as 1958. The first locations were Dublin and even more importantly Manchester ten years later – at that time the city was an agglomeration of sewing machine factories, and that was still Brother’s main business. The company bought shares in a sewing machine manufacturer called Jones, which was successful at the time and was later taken over completely. Even today, our European headquarters are in Manchester. From there, the company quickly expanded throughout Europe – the first German office was already opened in Hamburg in 1962, followed two years later by a move to Frankfurt for better connections to Japan. There were no direct flights to the Far East at that time, and the connection via Anchorage was better from Frankfurt. Back then, we had eleven employees.
Business really took off in the 1970s, which was certainly connected with the move to Bad Vilbel in 1974. At that time, we had 35 employees and built up a warehouse, an administration, and a workshop – everything that is necessary for a company like this. For quite some time, we grew continuously. In the 90s, we bought another building and in 1991, we exceeded the 200 million DM turnover mark for the first time. That was also the year I joined the company, and we had a big celebration, with Mary Rose on stage and the whole shebang. When it comes to celebrating, Brother has never been stingy, and we are all looking forward to finally celebrating the inauguration of our new building, which we moved into in July 2020.
Of course, there are also setbacks and slumps in the chronology. At first, the German reunification caused us to grow dramatically – in the East, almost no one had a typewriter, which led to a small renaissance. Overall, however, Germany was already in crisis, and a few years later – around 1993 or 1994 – there was a kind of rupture. The typewriter market collapsed, and the business with printers or fax machines was not yet advanced enough to compensate the loss. That was a hard blow, which also resulted in some consolidation measures.
After that, we reorganized a lot of things and made sure to think and do business in a more sustainable way – in other words, in a typically Japanese way. We came from a period of continuous growth and assumed that this would continue forever. This mentality had taken its toll, and we learned from it. Until the crisis, for example, each managing director and each branch could do as they pleased. This was all modernized and restructured, and by 2000, we were back on a growth track. At the end of the 90s, turnover in printers and multifunctional devices grew strongly, but we did not repeat the mistake of the past and pursued staff growth slowly and steadily. In 2002, for example, we completely outsourced logistics because we could no longer manage it ourselves. Nevertheless, we did not lay off any employees, but rather retrained them as necessary and integrated them into other areas, in keeping with the “at your side” philosophy. Of course, this was only possible because we didn’t get overconfident beforehand and there was actually room for these employees in other places. The approach was very successful and most of the former logistics staff have stayed with the company in other roles.
“In some situations, it is still easiest to simply print out a document. Our task is to find out which situations these are and to offer the right solutions here.”
J-BIG: How have your technologies and products evolved during this time?
Matthias Kohlstrung: Our approach has always been to look at the needs of the users and to consider which technologies and approaches make sense based on that. I always say: If potato printing made sense, then we would include it in our portfolio, too.
A good example is the fax sector: We only entered this field at the end of the 1980s, as one of the last providers. Of course, we were met with some amusement, especially because we used thermal transfer, which was considered an outdated technology at the time. But we were convinced that in the end, it doesn’t matter to the customer which method is used, as long as the fax arrives in the desired quality. Since we were very good at thermal transfer and also had some patents in this field, we were able to offer customers a very attractive and cost-effective solution. This is how we made our way in the fax sector. On this basis, new technologies were then added that gradually replaced thermal transfer. First thermo-sensitive printing, then laser and finally ink in the late 2000s. The sewing machine division was spun off and the Austrian market was added. Here, too, we are proceeding step by step in the Japanese manner.
In the last few years, we have mainly been concerned with how we can make the company more efficient and identifying areas of new potential growth for our business. Corona has given the printing industry a partial boost, but in the long term, we expect demand for classic printers and multifunctional devices to decline. The print volume is not growing – that’s just the way it is, and you can’t sugarcoat it. So of course, we have to ask ourselves: What does this mean for our business?
First of all, we assume that printing will continue, albeit on a smaller scale. It is by no means the case that the older generation prints everything and the younger generation is strictly digital. In some situations, it is still easiest to simply print out a document. Our task is to find out which situations these are and to offer the right solutions here.
J-BIG: So it matters from your perspective why people print?
Matthias Kohlstrung: Yes, exactly. 20 years ago, the situation was relatively clear: There was a central printer in the office that was used by all employees. Some of these were huge machines that could do everything except make coffee. Companies looked at where the greatest number of employees often passed by and placed the printer there. That was a philosophy of centralism. IT departments also supported this – not least out of a certain sense of convenience. If there is a paper jam or the toner needs to be changed, EDP has to take care of it, after all, and they tried to reduce the number of service cases by centralizing the devices. Our business consisted of selling one device and achieving the highest possible print volume on it – and thus selling as many consumables as possible.
But times have changed, and printers are no longer as expensive as they were 20 years ago. Good devices for home use are now available for 150 to 200 euros – for most households, this is not an investment that tears a big hole in their finances. At the same time, wages have generally risen, and with them, of course, labor costs for companies. So what is more expensive, really? The time that employees spends going to the printer and back, or placing a printing device at everyone’s workstation? We say: In the long run, labor costs are definitely the bigger issue. It is much cheaper to have a hundred printers in the building than to have a hundred employees running to one printer, especially since repair and service concerns are actually negligible with today’s printers. We are therefore firm advocates of the decentralized workplace.
Of course, the remote working situation adds another component; a kind of forced decentralization. The solutions must be as diverse as the printing requirements are today. It may not make sense to have the same printers in the office and at home, but both devices still need to work together, perhaps even in the same network. Then an employee can send a printout directly from their home desk to the corporate office, or vice versa. Of course, you have to find ways to prevent private documents from being accidentally printed on the office printer, but there are already sensible approaches for this.
Another strategy is that we increasingly no longer sell printers but lend them out in some shape or form. Payment is then made according to a pay-per-print model, or there is a monthly flat rate. Basically, we are moving in a similar direction as the mobility sector with its leasing and car-sharing models: Away from personal ownership and towards consumption-based use. We believe that the users already know exactly what they want to print and when, and we have to enable them to do just that.
J-BIG: Where is Brother heading and how do you differentiate yourself from the competition?
Matthias Kohlstrung: Let’s take the example of Kyocera, which you have already interviewed for J-BIG. At the moment, we are clear competitors, but maybe in a few years that will no longer be the case. There is a strong diversification in the printer industry: Companies like Kyocera focus strongly on digital document management and software; the printer as hardware is only one component.
J-BIG: Printing is regularly accused of wasting resources. How do you deal with this issue?
Matthias Kohlstrung: Of course, this issue plays a role for us, and we also try to limit printing internally to when it really makes sense or is necessary. At the same time, I am convinced that we can significantly reduce the CO2 footprint of the printing process with a few adjustments – with recycled paper or corresponding toner cartridges, for example. Since 2007, we have been operating a remanufacturing plant in Slovakia where we retrieve cartridges currently in the market and refill them. A cartridge can be reused up to 345 times before it has to be shredded and recast. We believe that we are still the only manufacturer that actually does this. Others do also try to buy back cartridges from the market, but only so that no one else can refill them improperly – as a rule, used cartridges are then destroyed. Our return rates are very high – 1.6 million units in the last business year alone – 39 percent of which came from Germany and Austria. This works so well because we make it as easy as possible for users: We provide free return labels, and the carton in which the cartridge was purchased can be used for return shipping.
Much more important for us – as for many other companies – than printing documents, however, is a completely different issue: the travel that our sales team, for example, has to cope with on a daily basis. In fact, we have set ourselves an ambitious goal: We want to be the first supplier to make our sales organization CO2-neutral worldwide. And not by buying a certificate or planting a few trees. Not least during the Corona period, it became clear that it is not always necessary to be on site in person – there are also other ways we can look after our customers really well. Where travel is necessary, we can switch to an e-car fleet, establish a BahnCard concept, or even a mixture of both. We are currently starting with hybrid vehicles and have already installed the first charging stations on the premises. Not only for the field staff, but also for employees who commute. If we can also ensure that the electricity we use comes from green sources, we have already achieved a lot. It may cost a little more, but it is also really effective.
J-BIG: How much of what you talked about do you control directly from Germany? How does the cooperation with Japan work?
Matthias Kohlstrung: Our headquarters is located in Nagoya; beyond that, we are organized into regions. Asia is controlled from Singapore, North America from New Jersey, and Europe from Manchester. Then, there are of course also branches in the respective markets. That’s the basic organizational structure. Production is spread around the world, but mainly in South Asia, such as Vietnam, China, Malaysia, and the Philippines. Development, on the other hand, is centralized entirely in Nagoya – this is where the next patents are hatched in secret chambers.
Here on site, we are mainly charged with marketing and sales for Germany and Austria. Organizing the customer service is also part of our responsibility. That doesn’t mean that we necessarily solve all service requests ourselves, but we are the primary persons of contact and, if necessary, a mediator to Japan whenever a problem cannot be solved locally. We specifically cover Germany and Austria, and conditions are not always the same across different markets. The 3-year warranty, for example, is limited to these two markets. Due to cultural reasons, other countries might prefer an extended warranty system that works similar to an insurance plan. Here, we are free to implement whatever works best for the local market.
Market research naturally also plays an important role in our day-to-day business. We are there to recognize and analyze trends and provide feedback to headquarters. As the biggest individual company in Europe, our voice carries a certain weight. Together, Germany and Austria make up about one third of overall sales in Europe. Globally speaking, North America is ahead of us, but we are still one of the biggest individual companies in that context, as well.
Cooperation is therefore quite close: When Japan is deliberating a new product, they first ask the important markets for their assessment about market potential and so forth. Afterwards, we organize focus groups, anonymous surveys, and conversations with our resellers – the whole range of market research is put to use here. Then come test runs or small pilot projects, and all of this goes into the development process in Japan. I am very happy about this close and immediate exchange and the trust that is placed in the markets.
Globally, we are about 39,000 employees, in Europe, that number is a little more than 1,100. That is a manageable size; by and large, we all know each other. The dimensions are closer to a well-run family business than a million-dollar corporation with the corresponding hierarchies and internal structures. Experiences and knowledge are also shared freely within the European region. Personally, I find this very pleasant – it’s no coincidence that I am celebrating my 30th anniversary with the company this year. On the way, I have passed through very different departments, and I am not an outlier here. This is another typical trait of Japanese companies and helps people break out of their department bubbles to develop their skills more broadly. Of course, this approach initially means a lot of work as people need to be trained for new positions again and again. But it is worth it if employees actually stick around for a long time. I would say that this is the case more often than usual at Brother. In Bad Vilbel, the average time people have been with the company is 17 years, and that’s including five to ten new employees each year. A little less than 26 percent are women, and the proportion of women in management positions is 27 percent. Like many companies in the IT industry, we are struggling a little bit in this respect. But we have consciously worked to improve in the last few years, and we have seen a very positive trend.
J-BIG: How did you as a company experience the COVID pandemic?
Matthias Kohlstrung: Our biggest project in 2020 was the move into our new office facilities. We have been in Bad Vilbel since the 1970s and were initially located on a roughly 24,000 square meter plot of land. However, our building was flanked on both sides by the Hassia Group, one of the biggest private mineral springs in Germany. They had been experiencing problems with capacity for a while, and we were essentially the one roadblock in the way of expansion. We had been in conversation about selling the property for several years and finally reached an agreement.
We paid a visit to the notary on February 7, so shortly before the first lockdown in Germany. Naturally, this caused some uncertainty – Should we really move right now? Can we guarantee safe distances in the process? Moving a company is always a big project, and the COVID situation surely didn’t make things easier. In the end, we decided to do the actual move on a weekend in July, when the situation had temporarily relaxed somewhat. In hindsight, I have to say that that was absolutely the right decision. The new building is a lot more modern and more representative of Brother as a company than the previous exposed-aggregate concrete construction that has seen better days. This look was a real disadvantage, also in terms of recruiting new employees: The building just didn’t reflect what we are all about and instead projected a dusty, backwards-looking image. That’s not the kind of workplace where the talents of tomorrow really feel comfortable. When I enter our lobby today, I always feel like I’ve stepped into an airport terminal, heading towards the future. Even though this building is 20 years old already, it embodies the Brother spirit really well: The architecture is open and transparent and fosters communication and exchange. We feel quite at home here.
J-BIG: Did the pandemic also have an impact on your business or internal structures?
Matthias Kohlstrung: Definitely. Like most Japanese companies, we start our fiscal year in April, so the last month of the previous cycle was heavily influenced by the effects of the first lockdown. Everywhere, people started working from home and the right hardware had to be organized on very short notice. For a while, our warehouses were completely empty, and we were seeing some of the best sales results in our history.
At the same time, we too were worried about how things would develop and how we could get our people through this crisis safely. Ensuring the health of our employees was always our top priority. This was clear from the start and also the directive from top management. We tried to anticipate the developments as best we could to stay one step ahead. For example, most of our employees had already been working from home, armed with all the necessary equipment, from January or February. Wherever necessary, we organized training sessions and performed exhaustive stress tests on the VPN network. So when the lockdown came, we were prepared.
During the first remote working phase, we stayed in close contact with our employees and continuously assessed what was and wasn’t working. Towards the end of August, for example, it became clear that some things at least weren’t going smoothly with a 100 percent remote work setup. So we switched to an ABC shift system, with people coming to the office on a weekly rotation. In October, we moved to a “modul plus” system: In extreme cases, employees only came to the office twice a month. That was during a time where a “working from home” mandate was just starting to be discussed in the public. In the end, this also is a result of our “at your side” philosophy: Our highest duty is towards people, in this case our employees and their health. That is always true, but especially in times of crisis. I am proud of the fact that we lived up to this aspiration even during very challenging times and that hopefully, we can now all look towards a more positive future.