The History and Downfall of a German Wholesale Company “Wollschläger” – Part 3
It continues with part 3 of the story and the downfall of the wholesale company “Wollschläger”. What can wholesale companies learn from this? Click here, if you have not read part 2 yet.
As a company grows, integration, coordination, and profitability become critical. As a company grows, integration, coordination, and profitability become critical. You can sell more, and more, and more. If you are selling at a loss, you will soon run out of cash. Nonetheless, running out of money did not seem to be a problem in 2013 for Wollschläger.
Carsten Wollschläger, son of Frank, declared his family business “a real solid one”. And the past two decades seemed to prove him right. The Wollschläger group was 2013 a respected company in the Ruhr region and nationally.
I had the chance to watch almost all interviews given by Wollschläger, father and son, about the years running to 2016. Interestingly, they asserted countless times that the Wollschläger group was a “solid” company. Solid, solid, solid. Reiteration only means repetition, nor sincerity or veracity.
Regardless of the authenticity or doubts about the claim, in 2013, Frank Wollschläger appointed a management “dream-team”. He hired Walter Göttinger as Head of E-Commerce Sales; Stephan Wild as Sales Director Europe; Patrick Saigal as Purchasing and Product Manager; Siegfried Hakelberg as a general manager. Hakelberg, a trained mechanical engineer, became the national sales manager. Was this position not reserved for Haberstock before?
The Wollschläger Group had a great management team, an excellent reputation as a reliable international distributor, and a brand-new logistic centre. In around 30 years, Frank Wollschläger went from taking over 25 employees to managing almost 1,000. He repeated his mantra: to be leading a “solid family company”.
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However, losing money is not a sign of solidity. In 2014, according to the consolidated financial statements, Wollschläger lost 34 million euros. As if the losses were not bad enough, Haberstock left the company the same year. He is now CEO of the leading industrial wholesaler Perschmann Group. In 2015, two years after having joined, Siegfried Hakelberg likewise left Wollschläger to become Sales Director of Mercateo.
Losses, losses, losses. Nothing Frank was used to.
In 2015, the now 68 years old Frank Wollschläger left his post to his son Carsten and switched to the board. Carsten Wollschläger, 37 years old at the time, declared that “…above all, I want to give our employees even better opportunities to contribute and implement creative ideas.”
One of the ideas being discussed was to use the vast amount of ERP Data to discover cross-selling and pricing opportunities. Around this time, I met with some of Wollschläger’s managers looking for a solution like the one we were developing at Qymatix.
To that end, we started exploratory discussions about the available ERP data. “We have the same company registered in different ERP Systems under different Customers IDs – we cannot always reconcile them” – told us one IT Director.
It was soon clear to me that frustration, lack of determination, and real integration problems would make it impossible to implement our (at that time not yet ready) software. “The importance of data mining in our ERP system is ignored at our own peril”, – declared one Business Analyst. We understood back then that employing our sales analytics tool would be impossible under those conditions. We stopped following up a few weeks later.
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2016 started full of confidence for the Wollschläger Group. In February, the Hommel Group, part of Wollschläger, presented its new corporate design during the METAV. The METAV Düsseldorf was an international trade fair for metalworking technologies. The selected product range of Wollschläger GmbH & Co. KG topped the exhibition highlights.
Confidence is not reality. Sometimes it is just hope. After a winter full of hope, a more hopeful spring followed. Although rumours began to circulate about the company’s solvency, Frank was very optimistic about his cash position.
The restructuring of several group companies was underway, including merging Erna Aretz GmbH & Co. Betriebs KG. The merging of two companies is like the melting of two metals: it can make both of them stronger but both cannot hide their imperfections. Frank Wollschläger was still an expert in metal melting.
Insolvency rarely comes as a surprise. As the manager of a limited company, in Germany, you must have a clear and plausible cash flow plan for at least the next 12 months. This “ongoing concern” is found in most advanced economies. Throughout the spring of that year, there must have been hope in abundance in the company. Money was short, nevertheless.
June, July, and August of 2016 were warmer than usual in Germany, with an average of 17.8 °C – and drier. That year, 9 litres less rain fell than in the summers between 1961 and 1990, a period used internationally to compare weather data. In lieu of the restructuring, there were still 580 employees working at the company’s headquarters. On some hot days, air conditioning would not be turned on.
The summer was hot and quiet, maybe too quiet. Nothing moved in the newly opened logistic centre. “The capacity utilisation was no longer as good as our previous location”, a logistics employee told the magazine WAZ. It all seemed as if years of anticipation were reaching a melting point.
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Rumours about an impending disaster must have kept circulating during those hot days. Some were baseless, some were true. First, the temporary workers left the company. And in July, Wollschläger could no longer pay wages. During the month, Frank tried to find an investor for his now 140 million euros distribution business. He failed.
It was also hot and dry when on Monday the 1st of August 2016, Carsten and Frank applied to open insolvency proceedings with the competent local court in Bochum. The court appointed lawyer Dr Dirk Andres from the law firm Andres Partner as provisional insolvency administrator. The administrator secured two more months of wages for the employees.
Insolvency is, in many cases, not the end of a company but just a way of protecting it from its creditors. In that spirit, Andres and the Wollschläger pair drafted a plan to rescue the group. After the announcement, the father, the son, and the administrator took an outlandish photo. They held the company logo under the raging sun in front of the main building. Andres was wearing a tied. Father and son Wollschläger were not.
Carsten explained that they “… wanted to use the opportunity to continue our trading business as smoothly as possible with the instruments of the insolvency code as well as to reorganise our financing and balance sheet structure.” Reorganising Wollschläger’s balance sheet would be more challenging than beating raw wool.
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August of 2016 was to become the most brutal summer of the entire life of Frank Wollschläger. According to article 43 of the German Limited Liability Companies Act, managing directors are expected to perform their role in the manner of a “prudent businessperson”. In addition, they must not disclose important information to rivals.
If the law obliges you to act prudently and only have a couple of weeks to save your company from liquidation, what would you do?
Frank Wollschläger, his son and Andres, appointed the auditing and consulting firm KPMG. KPMG needed to find an investor willing to take over or to rescue Wollschläger. There were not many investors available to take a company of the size of Wollschläger in Germany. KPMG had to look abroad. It was summer in Europe, and not many investors might have been on hand.
However, after a month of frantic calls, meetings, and discussions, in September 2016, the almost 80 years old company seemed to be rescued. Andres, the provisional insolvency administrator, had found an investor for the Bochum-based distributor: the listed Danish trading company Sanistål from Aalborg. The deal came too late for 131 employees, who would not be taken and had to leave the company. Frank saved two hundred eighty-five jobs. Or so it seemed. The deal was to be concluded in October.
Whether the investor can save the Wollschläger company for the time being, you will find out in the fourth and last part of the Wollschläger series.
I WANT PREDICTIVE ANALYTICS FOR B2B SALES.
Further Read (all sources are in german language):
Simone Podieh: Alles für den Kunden
Alexandra Rüsche: Siegfried Hakelberg neuer Vertriebsleiter bei Mercateo
Martin Wocher: Das Ende einer Bochumer Traditionsfirma
Dirk Andres: In welchen Branchen die nächsten Pleiten drohen
Thomas Schmitt: Dänisches Handelshaus übernimmt Wollschläger in Bochum
WollschlaegerGroup: Erfolgsgeschichte Wollschläger
Andrea Schröder: Wollschläger: Investor zieht Kaufangebot zurück – 420 Mitarbeitern wird gekündigt
Industry Arena: Neue Metav hat überzeugt
Derwesten: Wollschläger-Gruppe aus Bochum hat Insolvenz angemeldet
