Freudenberg's Guide to Manufacturing Longevity

Meet Mohsen Sohi. Born in Iran, he's an American citizen who spent many years developing his career at large U.S. public companies including Allied Signal, Honeywell and NCR Corp.

Today he's chief executive at Germany's Freudenberg, a 166-year-old family firm that manufactures a vast array of products from seals and vibration control technology components to specialty lubricants. The company employs a workforce of 40,000 around the globe and in 2014 reported sales of more than 7 billion euro.

Given his background, Sohi brings a welcome – but not unexpected – diversity to the long-established private company. It's not unexpected because Freudenberg thrives on diversity as a corporate value. It's welcome for the same reason. Says Sohi: "Cultural diversity improves performance and enriches the corporate culture. Cultural diversity shapes the working environment at Freudenberg."

Sohi has served as chief executive of Weinheim-based Freudenberg since 2012. His association with the company dates back to the early 2000s, however. In 2003 he was named president and CEO of Freudenberg-NOK in Plymouth, Mich.

Given his career, Mohsen brings an interesting perspective to Freundenberg on several fronts. He also brings an engineer's perspective. Sohi has three engineering degrees, including a doctorate, as well as a master's of business administration.

Freudenberg's chief executive recently took some time to respond to a few questions from IndustryWeek:

IW: You have a robust engineering background. How does that help you in your current position?

Sohi: Freudenberg is a technology company with considerable materials and product design competence – in which I have some expertise. So my technical background helps me in discussions with our engineers and scientists. We have to ensure that Freudenberg has a sustainable portfolio of technologies and products for future growth.

IW: How would you describe your leadership style, and how has it changed over the years, if it has?

Sohi: Participative, goal-driven, multicultural and – last but not least – “open.” I stand for openness and transparency. A continual dialogue with the business groups, senior colleagues in the world regions and with colleagues in the holding company are important to me. 

We in the board of management run the company by the concept of a “Strategic Guide.” The “Strategic Guide” establishes a coordinated guideline for the general strategic direction of the Freudenberg Group businesses. It supports and checks the strategic development of Freudenberg Group Business Groups. It ensures that the Freudenberg Group is always more than the sum of its parts. The “Strategic Guide“ management concept suits us best, because it creates entrepreneurial freedom for the business groups and at the same time raises the potential of the entire Freudenberg Group by focusing on group strategy.

IW: What leadership advice would you give to a new CEO or someone struggling to be in that role?

Sohi: Connect with people.  Build a good team based on meritocracy.  Get rid of politics by being transparent and demand transparency.

IW: What advice would you give to newly minted or aspiring engineers?

Sohi: You must love what you do!  Otherwise do something else.  Engineers make a very valuable contribution to society - they are able to live their creativity and help provide answers to tomorrow’s most pressing problems.  They create the real value.

IW: I read an article in the Financial Times where you said German companies are long-term thinkers compared with other businesses. “We are talking about 10, 15 and sometimes 25 years” out, you said.  Describe the value of taking a long-term view. And how does one go about looking out 15 years given the pace the world changes?

Sohi: For us, long-term orientation means that we must ensure our plans ensure both short-term, that is less than five years, as well as long-term success.  We never risk future success in order to make our short-term results attractive.  It also means that “total success” means more than just financial success; we must also fulfill our social responsibilities.  Taking a long-term view does not mean complacency or lack of results orientation. Freudenberg has survived and flourished over 165 years.  Although we invest above average in technology and production assets, we still produce outstanding financial results.

IW: Could you comment on the value Germany places on manufacturing as a profession? I ask this because the prevailing view in the U.S. by many is that manufacturing is no longer a career the youth aspires to enter. That does not seem to be the case in Germany.

Sohi: In my view it was somewhat shortsighted to think that we are now in a post-industrial era and therefore industrial production is no longer important or in vogue.  As we see, “Made in Germany” has become a global brand standing for high technology and high quality products.  The concept of Industry 4.0 will define the factories of the future in which we combine the best production concepts with the power of information technology to drive productivity and quality.  I think this is pretty “cool” for the young engineers. 

IW: What have you learned — or gained — by working for a family firm (albeit a huge one) versus a public company?

Sohi: Good governance has the same meaning and applicability in a large family-owned firm as it does in publicly traded companies.  As does talent management and the effort to attract the best and brightest to the company.  At Freudenberg the main advantage has been the flexibility to take a longer-term view of things.

IW: Can you comment on talent management at Freudenberg?

Sohi: We can only achieve our goals if we succeed in attracting and retaining the best people from all regions of the world. To promote the talent of our employees and optimize inter-group cooperation between business units, Freudenberg has developed a groupwide talent management process. We hold Talent Dialogues across the globe – in Germany, China, North and South America and India. The goal is to identify the top talents within the regions and open up opportunities for them to develop and apply their talent and skills. Besides, such an exercise also develops great focus among our leaders regarding potential competencies and developmental needs of their team members.

IW: Can you describe the value of your company's global reach?

Sohi: Freudenberg has been globally active for more than 165 years with long-term customer relationships – successfully. Today we are present in some 60 countries and systematically follow a strategy to manufacture products for the needs of local markets using our global expertise. Thanks to our broad diversification, we serve more than 30 different markets throughout all regions of the world. With diverse business structures, we are much more resilient, as we are able to cushion short-term turbulence in individual markets. 

Working in different countries also means diversity in the workforce. This is essential for our long-term success. Cultural diversity improves performance and enriches the corporate culture. We have challenging targets. And that’s why we need the best minds, regardless which culture they come from. Cultural diversity shapes the working environment at Freudenberg.