Fernando Gil Bayona: “Leisure is now the biggest rival of home appliances”

Where is the company?

In a time of changes. We are very excited about the innovations we develop for new products that will be released in three or four years. In the short term, we are managing a somewhat complex economic situation, which we already know and is normal to happen. It sold well after the pandemic. And logically, since it’s a mature market, when you oversell, you then undersell. We are in a weak period.

How does it affect inflation to the company?

In different ways. First of all, production costs have increased due to what the prices of the entire chain (raw materials, energy…) have done. Therefore, what you sell is more expensive. On the other hand, families have lower disposable income due to salaries increasing below inflation. This is happening right after a period where we made a lot of sales. Our biggest competition now is free time, because many people say: I don’t have money to pay for a mortgage, I’ve already renovated parts of my house, what I won’t resist is to stop going out with my friends. For Saturday dinner, even less so after the pandemic with the memory of restrictions.

How do you deal with this situation?

We are now giving the message of the importance of energy costs, where sensitivity has increased. We have invested a lot to have appliances with good efficiency that consume less and less energy in cooling, washing or cooking processes. Appliance accounts for 50% of household electricity consumption; It should be intelligently designed to consume as little as possible. Here we are. Energy efficiency has been a struggle we’ve been fighting for 20 years, and unless there’s a major disruption, it’s starting to come to an end.

You say there are dark clouds in the industry, how is this year going?

There is a slight decline in the national market, less than in other countries. This year there is a decline in economic value of around 5% and we expect a value between zero and -5% for next year. I would be more interested in the idea of ​​maintaining the business rather than another decline because then I would say that is a negative aspect. Half of our production is exported and there are countries in Europe that are experiencing a strong correction. There were months when declines of up to 20% were experienced in Germany. We are in a mature and countercyclical market. They are basic devices needed on a daily basis. As a result, there is neither great joy nor great tears.

The company experienced a supply crisis, especially regarding michochips. Has the problem gone?

This was a supply chain infarction. This left us a big lesson. Overstretched supply chains, a few far-flung manufacturers and a single-supplier policy mean you’re left without production capacity when the black swan hits. This happens if you have a single manufacturer in Shanghai or Taiwan or China that produces one type of chip that also has to pass through sea lanes where there are no pirates, there are sharks, or there are very narrow straits. This will result in the disintegration of globalization as we understand it today because price efficiency in labor costs is coming to an end. In 20-30 years, more producers and being closer will have an impact. The worst thing that could happen to the industry right now is China invading Taiwan because that’s where the chip industry is right now.

Did they take notes to prevent reinfarction of supplies?

Establishing a chip industry is an investment of $10,000-12,000 million and costs two years. This needs to be public-private investment. The measures we take are to reduce the complexity we experience and work with platforms that offer more products. In other words, what the automotive industry has been doing for many years is to carry the same chip for the same control in different car models.

Is there still a risk that the white goods industry will move to Spain?

In the short term, I would say no. This is how offshore is back. Lower labor costs are ultimately paid for in logistics and risk costs. I do not see a problem in this sense in Spain in the medium term. What needs to be protected here are the demand volumes that justify owning a factory in Poland, Turkey, Spain or India. Companies are living organisms, and there may come a time when a factory is no longer needed because the products they produce are no longer sold.

The big storm on July 6 flooded the La Cartuja factory, what is the situation?

What happened on July 6 was completely unpredictable. These are statistically very unlikely situations. From July 6 to September 18, when production resumed, the factory was dismantled, cleaned, and reassembled with the same or new parts that could be used. The investment in all of this has been high and it hasn’t been shut down, but our policy has moved us forward a bit and so has the Insurance Consortium. The important thing is that we are back to normal and we are now ready to do three shifts if necessary. We are very excited, because this month, in line with market demands, we want to start production of a super-efficient, energy card A, anti-wrinkle program, ten-kilogram, 1,600-cycle washing machine for Spain and mainly for export. ..

What does Spain represent for the BSH group?

It is one of the main industrial centres, but also used for IT and technology development. Being a relatively small country in terms of population, we are in the fifth or sixth most important market as we provide 800 million of the group’s business. When the industrial part was added, BSH Spain’s turnover increased by 10% to 1 billion 715 million euros.

What will the devices of the future be like?

Smart, digitized and connected. They are connected to each other, to the user, and to the parts of the processes that give it meaning, the electrical networks, so the washing machine automatically knows when it needs to run. Or place a purchase order for the refrigerator depending on the supermarket. Digitalization will provide sufficient intelligence to make the device more autonomous.

Balay turned 75 in 2022. What is the health of the brand?

I see him as very healthy. Frankly, we’re enjoying tremendous consumer acceptance. It is a brand that includes all the innovations of the group. It’s fundamental to the brand pool in Spain, adding volume to factories and being super grateful. Balay immediately sells the product you give him. Its importance is increasing beyond the movements in the market over the years. 30 years ago Fagor and Zanussi were more important, now it is the number one brand in Spain.

The government has just started a new legislature with tensions high, how do you see Spanish politics from the perspective of a major company?

Our gentlemen and owners see this; Where there is no legal security and tension is not the place to invest. This is scary. It will be very difficult to govern the country. There is instability in every sense.