Tearing Down Walls - The year 2000 marked a new beginning for family-owned Ferak Berlin GmbH. Today, the company produces fine chemicals for the life science and electronic industries under the direction of CEO Thomas Gründemann. After earning his degree in chemicals in 1992, Gründemann joined Ferak Berlin, the chemical company founded by his father in 1954 in the former West Berlin.

However, despite enjoying success in the 1970s and 1980s, the company lost nearly all of its customers and employees in the 1990s after German reunification. In retrospect, Gründemann said he now regards the generational change at Ferak Berlin as a generational problem; in order to align the company's portfolio in order to meet the needs of a changed market, he had to assert himself over his father.

He was successful, and he was able to establish the company as a service enterprise for organic synthesis. He was also able to increase the turnover to several million euros as well adding 25 employees to the company.

Gründemann talked to Dr. Michael Reubold asked about his next goals for the company and his passion for chemistry.

CHEManager: Thomas, how do you judge retrospectively the situation that led to the reconstruction of Ferak?

Thomas Gründemann: Ferak Berlin was established in the time of the former German Democratic Republic (GDR) as a manufacturer of laboratory chemicals and was based in West Berlin. The company maintained business relations with our customers in the GDR at that time and in other Eastern European states with an emphasis on the Soviet Union. In the mid 1980s, Ferak Berlin had over 60 employees and an annual turnover of 15 million German marks. With the reunification came the loss of most of our customers from Eastern Europe, which led to the breakdown - or one can nearly say collapse - of the company. I entered the family business, which was run by my father, in 1992 as a chemist fresh from university.

Reconstruction is a typical generational change problem. As a successor of the company's founder, it was expected that I would prove my worth and go forward positively into the future. But sometimes things do not change in the way that is expected, in particular events concerned with the radical political changes at that time. Therefore the transition period from 1992 was difficult, and one which I was personally involved in up until 2000.

You then created a new company.

Thomas Gründemann: Yes. The follow-up regulations are really not simple for a family-owned private company. I first looked into several opinions for the possible future strategy of Ferak Berlin before I created Ferak Berlin GmbH in the year 2000 as a service partner for research projects and custom organic synthesis with me as exclusive partner. That was completely intentional to throw away the baggage from the past and to create starting point.

The only leftovers from the company history were the rented business building in Berlin district Neukölln, a few remaining co-workers, a cleaning agent named Q9, which we manufactured and sold, and the business contacts we had.

How did you then continue after this new start?

Thomas Gründemann: Firstly we remained with our own developed high specification cleaning agent for electronics products. This product, Ferasil, became in the course of the time a strong trademark and has since been supplemented by other branded products. In addition, I started contract research investigations for customers in the laboratory. We synthesized reagents in the laboratory on a gram scale, tested, packed and dispatched them. With time more customers came to us because they became aware of our know-how.

Our clients saw that we had excellent chemists. We were a small company but one with the knowledge of the German Academy of Sciences at Berlin, which was the most important research institution in East Germany. We absolutely wanted to be successful - we had no other choice. Therefore we began looking for projects we could progress; at the time, it was just me and another colleague in development.

By 2006, Ferak Berlin had four ranges: contract R&D; custom synthesis; sales of NMR analysis and expertise; and our cleaning agent business. In 2007 followed certification according to DIN ISO 9001 and today Ferak Berlin again has 25 employees, and we want our success to grow further. Production is working at full capacity, so we are really reaching our limits. We have recently financed major investments in order to develop our analytics. Now we want to invest into the development of our production, packing and storage capacities.

What exactly are you planning?

Thomas Gründemann: We will expand into a 1,500 m2 area adjacent to our main building and establish three production areas as well as packing units, raw and finished material, supply and packaging items compliant with the most recent quality standards. Our "one product per campaign" strategy will be continued, both in the production and in the filling areas.

With this strategy we can absolutely guarantee that cross contamination is excluded. In addition to guaranteeing industrial safety, the exclusion of all cross contamination in our business is absolutely essential. We work within the area of fine chemicals, which has very strict specifications and high purities in a niche market with high creation of value. But you must meet the highest quality standards. This is a niche market not only regarding chemistry, but also regarding the volumes.

In what quantities are these products manufactured?

Thomas Gründemann: We feel that from 50 l to approximately 800 l reactor volume is our working range. We have full permission from the authorities for this. We want to remain with reactors under 1,000 l, because firstly we are located in an industrial area in Berlin and secondly it gives us a middle place in the market to be sufficiently different from those companies with capacity over 1 m3. At present we have reactors from 100 to 500 l. In the new production departments, we want to go to approximately 800 l.

This is sufficient to transfer customer projects from the laboratory scale relatively quickly into production. With this new development, we will at least double and possibly triple the existing production capacities.

However, it is not our plan to become bigger than this. That is a clear strategy, because I believe that the personal commitment to the clients and products would then suffer. As far as I am concerned, that kind of growth wouldn't be in line with what Ferak Berlin stands for. Ferak Berlin stands for excellent products whose chemistry and synthesis we understand in every last detail. The requirements of our customers regarding consistency of quality and service are time intensive to take care of. That is an important factor in defining Ferak Berlin's size and growth strategy. Some business managers nowadays have only growth in view. What is forgotten is the fact that controls and limits must also be respected.

Not just limits concerning size, but also concerning expertise.

Thomas Gründemann: Absolutely! I personally look at customer inquiries very closely in order to decide whether a project fits us or not. I usually answer 70% to 75% of all inquiries negatively, because I recognize that a project for some reason does not fit Ferak Berlin, for a reason such as the plant layout, the know-how, permission from the authorities, or simply because the finances are not correct.

These are the classic four reasons that can lead to a refusal of project proposal. It is quite something that we can decide on which projects we take forward to work on.
However, I am quite conscious that for me this is a nice problem to have.

On the other side of this philosophy is the customer who expects the highest quality, good service and an increase in value from working with Ferak. That is only fair.

We are also a member of CASID, an interest group for chemical custom synthesis in Germany . If I receive enquiries that do not fit into the Ferak Berlin portfolio or plants, then I have the option to ask for permission to pass them on to another German colleague who might be able to take on the project instead.

CASID was created in the same year as the new Ferak Berlin. How has the association developed over the last 10 years?

Thomas Gründemann: CASID, which is now a registered trade association, has developed to become a very successful network. In CASID, our members put the competitive situation aside in order to haveregular exchanges of experiences and recommendations. We want fine chemical manufacturing to remain in Germany, and we are all united under that goal.

CASID is a Germany wide network where ideas are exchanged about regulatory matters which are of concern to all our members, e.g. GMP, Reach or the federal emissions law for the protection of the environment. It is actually very interesting to hear concepts from other members about how they have complied, at their manufacturing locations, with the federal emission protection laws.

Will the development of the new production capacity create new jobs at Ferak Berlin?

Thomas Gründemann: I think we are moving in the direction of employing 35 people, which is about 10 more than today. That is appropriate and viable. I still would like to know the names of every employee and see them every day. Ferak Berlin is a typical family business, and I make sure much that a certain amount humanity prevails.

That is just as important to me as specialized know-how. Therefore we work only with our own trained employees and do not with borrow or hire agency personnel. Some would call it boring, I call it solid. We are a team - I can rely on my co-workers and they can rely on me.

Do you have problems finding good people?

Thomas Gründemann: No, I see no difficulties at all in finding outstanding qualified technical personnel. It is true at present that there is a lack of specialists, but in Berlin in the past few years many companies have reduced their personnel, and many are still doing so. Think of Schering, Jerini and Daikin. Therefore there is an enormous potential supply of specialists for research, analytics and production on the job market.

Excellent chemists with unbelievable specialized know-how apply for jobs with us. Job applicants who come from a large company structure look at the family-based character of Ferak Berlin and notice that it can works well and that small firms can be completely successful.

Ferak Berlin is a small company with a large global base of clients. Where are your customers today?

Thomas Gründemann: We have many customers worldwide in 40 countries, in Europe, America, Asia, South America and Australia. We supply to India and Japan and have developed relations with a Chinese agency, because I believe that China offers a large potential not only for large businesses, but also for small companies such as Ferak Berlin.

For many western chemical producers, China represents not only an attractive market, but also a threat by the increasing number of new competitors. What's your take on that?

Thomas Gründemann: I have mixed feelings on this. We source raw materials from both India and China, and we submit these products to the strictest quality inspections. Naturally it is important to control suppliers as well, and I personally evaluate the conditions under which they produce and they supply to us.

Since I am at heart and soul a chemist, I can do this. There are quite a few Asian companies who work really well, and their prices are not far from ours. Within the product quantity range up to 500 kg, in which we mainly work, the competitive situation is still quite small. But that can naturally change.