The performance of the top management at Starrag has given the main shareholder Walter Fust little pleasure for years. Now the second CEO has to go within five years. The new one should finally put the machine manufacturer on the road to long-term success.
Management problems seem to be a perennial issue at Starrag, a mechanical engineering group in Eastern Switzerland. With Christian Walti, the second CEO of the Rorschacherberg group has to step down in just five years. As with his predecessor Walter Börsch, his departure became known at the end of September 2017, the company justified the departure with “personal reasons”. But in fact, both managers may not have met the expectations of the main shareholder, Walter Fust.
“There were always management problems”
The 81-year-old founder of the electronics retailer of the same name has held the majority of Starrag’s capital since the late 1980s. Over the years, things at the head of the machine tool manufacturer have repeatedly not been to his satisfaction. “There were always management problems at Starrag,” he said in an interview with the NZZ a few weeks ago, adding: “Every company stands and falls with the quality of the management.”
Fust had headed Starrag’s board of directors for a long time. He has been Vice President since 2020. A person he trusts is the current President Michael Hauser. He is the full-time CEO of the machine tool manufacturer Tornos from Moutier and should now also look after Starrag until a new boss is found. Fust is also the largest shareholder at Tornos. He holds a 48.9 percent stake there, while Starrag holds 53.9 percent.
Specialist manager wanted
Hauser said on request that the CEO’s resignation had nothing to do with the company’s economic problems. On the contrary, Starrag is in excellent shape. “Production is very busy.” In order to take the momentum, you now need a total implementer, someone with great experience in operational excellence, who is also a specialist.
The previous CEO is a business economist with a doctorate from the University of St. Gallen. Before joining Starrag, Walti worked as a managing director for Bosch Packaging Technology in Beringen, near Schaffhausen. In the communiqué that Starrag sent out on Friday, his merits were only just acknowledged. He had managed to “lead Starrag well through the Corona crisis and bring it back to an expected level of incoming orders”.
In the first half of this year, orders from the mechanical engineering company increased by 27 percent to CHF 190 million. This ensures capacity utilization “well into 2023”, the company stated at the end of July 2022.
However, sales stagnated at 140 million francs, which the company justified with interruptions in the supply chains and certain delays and corrections in customer projects. The operating result (EBIT) recovered and rose from just under CHF 1 million to CHF 6 million. At 4.1 percent, the EBIT margin was still unsatisfactorily low.
Good business with luxury goods branch
According to Hauser, Starrag has been less affected than other companies by the recent downturn in the Swiss mechanical engineering, electrical engineering and metals industry (MEM sector). The industry association Swissmem reported on Thursday that orders from foreign markets were industry-wide in the third quarter plummeted by 21 percent. Starrag apparently benefits from continuing to do good business with customers in the energy, luxury goods, defense and aviation sectors.
Walti will be available to the company by the end of November 2023 at the latest. However, Starrag will hardly take that much time to arrange the successor at the top of the group. The search for a new CEO will start immediately, the company said. Hauser, who has many years of management experience in the machine tool industry, wants to closely monitor the process. He will also play an active role in the induction of the new CEO, he said.
The announced change at Starrag’s top management was positively received on the stock exchange. The company’s share price ended Friday’s trading 2.56 percent higher at 48 francs.