Together With The Community and The Environment

Interview with Alexander Knauf and Manfred Grundke

In the interview, both managing partners of the Knauf Group express their views on the subjects of sustainability and responsibility, trust and transparency, innovation, employee development and challenges, today and in the future. Alexander Knauf has been in his current position since January 2013, and he is responsible for Financial Control, Legal and Fiscal, Information Technology, Materials Management, and Marketing. Manfred Grundke’s areas of responsibility comprise Production Technology, Research and Development, Technical Product Support, Raw Materials Supplies and Technical Gypsum.

What is your understanding of the term “corporate responsibility”?

Alexander Knauf: Knauf is not just any old company, it is a special kind of company – a family business. As such we do not think on a short-term scale but from generation to generation. This means that long-term thinking is built into everything we do. It includes responsible treatment of resources, of all resources. This can mean how we treat the environment, how we treat the resource of time – in other words, our employees – but also the way we treat capital.

Manfred Grundke : Corporate responsibility and sustainability do not represent any special challenge to a family business. Sustainability forms part of how a family business sees itself. While a publicly listed company is guided principally by the return on the capital it invests, a family business also pays particular attention to an orderly transfer of its assets to the next generation. The natural result of this process is that all decisions are based on sustainable factors and not on the short term.

The negative aspects of managerial decisions can also be sustained.
How do you ensure that only the positive decisions and consequences are sustainable?

Manfred Grundke : Seen from this perspective, sustainability has a very special status at Knauf, as our natural resources are hidden in quarries. Here we attach great importance to recultivation after we have finished using the quarry. There are a lot of positive examples showing how quarries used on an industrial scale have later been turned into real biotopes. And if you take synthetic gypsum, you can see that we now use several million tonnes of flue gas desulphurised gypsum (FGD) as a secondary raw material.
In the coming years we will also increasingly feed recycled material back into the production process. In an ideal situation we first help to keep the air clean by desulphurizing flue gases from coal-fired power stations, and we use the resulting FGD gypsum back into the value added chain as a recycled material.

Alexander Knauf : Those are precisely the two points. It looks at first as if we are interfering with nature, but we are able to turn our actions into a benefit. A renaturalised quarry is a biotope with higher species diversity than was previously present. By doing this, we want to show that it’s not just a question of mining resources but of achieving lasting success by working with people and the environment.

Family businesses are generally regarded as reliable and trustworthy, but at the same time as not very transparent.
How far would you go to create trust through transparency? Where is your limit?

Alexander Knauf :I think the dividing line is really very clear. We have selected clear indicators in our sustainability reporting against which we want to measure our actions. In terms of these indicators we are clear and transparent. The dividing line with family businesses runs precisely between the company and the family. The family is private, as it is for all of us. Manfred Grundke :You also have to differentiate between what is required to assess the company and its behaviour and what serves purely to satisfy curiosity. If it’s only a question of curiosity and sensationalism, we are more reserved, even up to 100 percent so, I would say. But if it’s a question of assessing the company and its behaviour in society and in the environment, in that case anyone can have any information required for this purpose.

Knauf is a worldwide diverse company with numerous subsidiaries and national companies, which in some cases act very autonomously. At the same time you have central guidelines such as your corporate values.
How do you ensure that, for sustainability, everyone is singing from the same hymn sheet?

Manfred Grundke: I think that any short-term action that is not based on sustainable parameters does more harm to the company than good at the end of the day. For example, if a company in the Knauf Group were to plunder raw materials to save mining costs, it would very quickly get into trouble with the local community or the region. For us it is important to run our business together with the communities in the various regions and not at their expense. This is, if you like, a self-regulating factor because the person concerned would otherwise harm themself.

Alexander Knauf: Our corporate values are the best way to impose a moral duty on the national companies. By acting in this way, we are telling them what’s in Knauf’s DNA and how they have to deal with the environment. I think this is the way it works best in a decentralised company.

To what extent does the concept of sustainability drive innovation at Knauf?

Manfred Grundke: I will take the classic example: flue gas desulphurisation technology was first developed by Babcock Noell and Knauf together. It was Knauf who built the first systems. Later we withdrew from the engineering business and concentrated entirely on the manufacture of building materials. As far as plaster is concerned, we developed plasters suitable for processing by machine. With insulation material, the first binding agents for glass and rock wool containing no formaldehyde came from Knauf. The list goes on. In each case the idea of environmentally friendly technology and modern building materials was specifically pursued through innovations. Alexander Knauf: There are internal and external drivers, which lead us to sustainability. Internally we of course have an inherent interest in optimising energy consumption, for example in our production. At the same time, our customers keep asking us: How can you design buildings to be even more energy-efficient? How high is the share of recycled material in the product? And in this way, internal and external forces combine and are reflected in our R&D work.

On the subject of your employees: Many companies are finding it an ever greater challenge to find and retain qualified staff.
What is Knauf doing to ensure it is involved in the competition for talent?

Alexander Knauf :I would like to summarise our policy in three words: attract, retain and develop. We attach great importance to making Knauf attractive to the best potential employees. That begins in the schools where, for example, we support the STEM initiative for the sciences (STEM: science, technology, engineering, and mathematics). Our employees provide information in universities and take part in graduate job fairs. Many highly qualified graduates decide to join a family business because here they can see the results of their work sooner than if they are a just a number in a major corporation. We also do a lot when it comes to looking after our employees. Daily activities form part of it, but above all it’s a question of recognising achievements.A major part of our annual staff meeting is when we honour those celebrating special anniversaries who have shown themselves true to the company through many years of competent, loyal service. Recognising achievement plays an important role at Knauf. In terms of employee development, we hold thorough discussions, which then serve as the basis for structured development – for training and career planning. For young people, the work-life balance is very important and we put this into practice at Knauf.

Where do you see the biggest challenges for the future at Knauf?

Manfred Grundke: Gypsum as building material has been successfully used for over 5,000 years, and – as regards our business – we are convinced that this will not change. As far as insulation material is concerned, the question of energy efficiency will again be a long-term issue in spite of the current low cost of energy, and we are well prepared for it. Now it is a question of creating the conditions for the next 50 or 60 years of successful development by ensuring our staff have the right qualifications. Many companies may have a similar strategy but they don’t have the same employees. It will be a central assignment to ensure we have the exact blend of well qualified and motivated employees who can outperform others in competition.

What about political and economic risks? The Russia-Ukraine conflict must be having an effect on your business, too?

Manfred Grundke: It’s certainly having an effect. Knauf manages this effect by ensuring our value chain is invoiced in the same currency, confining the economic risks to exchange rate variation. We are therefore not as badly affected as other companies, which produce in a hard currency, for example, and now have to invoice in roubles. We are only affected by the exchange rate and we are well placed to be able to deal with this. Business in the local currency is running relatively undisturbed, as the Russian economy wasn’t going very well anyway. When your business is global this should be expected.

How would you describe Knauf and its products in 100 years’ time?

Alexander Knauf: Maybe you have to consider to what extent the underlying conditions will be different in 100 years. I think we will probably be recycling considerably more. Our processes will also probably be less labourintensive. Buildings will be built differently. The processes will be more automated, prefabrication will be more important in construction, and that is why we are thinking about how modular construction will be handled in the future, for example. They’ve already printed a house in cement! We want to be the Apple of the construction industry, the total solutions provider, the systems supplier, the innovation driver, when it comes to modern construction.
We will continue to invest a very large part of our profit in the systematic expansion of the Group. That will mean investing in new countries or new pillars for the business, as well as securing our existing business.

Manfred Grundke: So far, Knauf has always demonstrated the ability to adapt to changes in the surrounding conditions. It’s possible that two or three new areas of business will be added. New materials that are made with similar techniques or processes will be an interesting subject. But one thing is pretty certain: if we keep the dynamism and adaptability that we have shown over the last 80 years, a large part of the value added will be coming from Knauf.