Outsourcing Sector

Who Ya Gonna Call?

ferchau
Frank Ferchau took over the family business from his father in 2001. Photo: Ferchau Engineering
  • Why it matters

    Why it matters

    Given the increased complexity of projects, companies seeking to remain flexible and save money need the services of outsourcing firms such as Ferchau Engineering, the company’s leader says.

  • Facts

    Facts

    • Ferchau has more than 6,600 employees who work on projects for 2,000 different client companies.
    • The family-run firm based in Gummersbach has more than 90 branches and annual sales of €530 million.
    • Frank Ferchau, 51, runs the company founded by his father 50 years ago.
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    Audio

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Heinz Ferchau founded an engineering office for factory design 50 years ago in Gummersbach in the German state of North Rhine-Westphalia. He couldn’t make a living just from his old employer’s contracts and the businesses in that part of western Germany. So his Ferchau Construction firm in the Bergisches Land region started taking on projects from all around the country.

Mr. Ferchau was soon setting up branches close to his customers. His employees took a burden off the client companies, particularly when the firms had a surge in orders. In 2003, German Chancellor Gerhard Schröder relaxed laws on temporary employment. Mr. Ferchau’s 51-year-old son says that change had a profound effect on the company.

“That resulted in a dramatic boost for our services,” said Frank Ferchau.

“If the economy is humming, our employee turnover increases.”

Frank Ferchau, Leader, Ferchau Engineering

What started as his father’s one-man office has since become Able Group, and it now has about 8,500 employees in Europe. Ferchau Engineering, with more than 6,600 employees, is part of the corporate group.

The business model: Engineers, technicians and information-technology specialists are regular employees of Ferchau and work on projects for 2,000 different companies. The Ferchau experts then work either directly for the client companies or remain in the Ferchau’s more than 90 branches.

With sales of €530 million ($597.8 million), Ferchau Engineering ranks among the top four technology consultants and engineering services providers, according to market research firm Lünendonk. Even so, Ferchau sometimes faces staffing issues.

“If the economy is humming, our employee turnover increases,” Mr. Ferchau.

That’s because the customer companies often hire the Ferchau specialists assigned to them. The employees usually make the switch to the customers after two to five years. For that reason, Ferchau has a constant need for new, qualified employees. Finding them means time, effort and expense. The group also wants to hire another 1,000 engineers and IT specialists by the end of the year.

Subcontracted labor and temporary employment are forms of work that haven’t had a particularly good reputation in the past. But there has been a drastic increase in the complexity of projects. To remain flexible and to save money, some companies are no longer doing everything themselves.

“The ‘breathing’ business also buys services in addition. That is socially acceptable today,” Mr. Ferchau said. “We are very clearly sensing that.”

But he sees himself less as a temporary-employment businessman and as more of a technology service provider. His largest customer is European aircraft producer Airbus, where about 900 of his employees work. Germany’s largest carmakers VW, Daimler and BMW also draw on Ferchau’s experts.

But why should engineers, who are sought after as employees everywhere, go to Ferchau instead of directly to Porsche or Airbus?

“As college graduates, they can collect a wide variety of experience with us in just a few years,” said Mr. Ferchau, whose employees are put to work in aerospace, the navy and the automobile industry and often stay on with their same client employer. “Who else can offer that?”

To keep the coveted engineers, the corporate culture must be right: “Our reputation is extremely important for our success,” he said.

The Kununu website is a place where workers to can rate their employers. Mr. Ferchau wants his company to have a rating of at least 4 on the 5-point scale. At the moment, his company is at 3.9. Interesting projects, advanced training, and attractive wages are meant to lure good job applicants. Mr. Ferchau pays college graduates a gross annual salary of €42,900 to €58,500.

The IG Metall labor union approves of Mr. Ferchau’s approach.

“The 2013 equal-pay salary agreement with IG Metall was groundbreaking for the industry,” said Werner Kusel, the chief delegate of IG Metall Gummersbach.

Almost all of Ferchau’s employees receive the same wage no matter the client company, be it VW or Airbus. The pay is scaled according to qualifications, experience, city and state.

“Of course, Frank Ferchau is a businessman and not a social romantic; there are always things that need to be improved,” Mr. Kusel said. “But in his dealings with us unions, as a rule everything is handled fairly and with respect.”

Mr. Ferchau is an engineer and business-administration graduate who originally wanted to be an auditor.

“When I graduated, the company was still small and my father was only in his mid-40s. My taking over was never discussed,” he said.

However, Heinz Ferchau became ill at 50, so the question became whether to carry on or sell. He asked his son, who was 27 at the time, whether he wanted to enter the business. “I very naively said yes,” he said.

Frank Ferchau started in 1994 as an assistant in the Munich branch and worked his way up.

“But when it came to the handing over of the company, I was simply overwhelmed with the legal and emotional aspects of a transfer of power,” he said.

Advisors helped him get through it. His father retired in 2001.

“There can only be one captain,” Heinz Ferchau said at the time.

All the same, the son did get some tips from his father.

Frank Ferchau also occasionally seeks business advice from Norbert Heckmann, chairman of the management board at screw specialist Adolf Würth, who says that Mr. Ferchau embodies the typical family business leader: “a combination of entrepreneurial straightforwardness and social responsibility.”

Alongside business and family, Mr. Ferchau enjoys tinkering around in his garage. He goes on motorcycle trips with old school friends. Fellow motorcycle enthusiast Thorsten Schramm says what he appreciates most of all about Mr. Ferchau is that “despite his success, he still has his feet on the ground.”

With his family, Mr. Ferchau is deeply rooted in Gummersbach. Two of his three children play handball with the local team. As for the question of whether he wants his children to take over the business some day, Mr. Ferchau said: “That would make me very happy.”

 

Katrin Terpitz covers companies and markets at Handelsblatt, focusing on Germany’s Mittelstand and family-owned businesses. To reach the author: terpitz@handelsblatt.com

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