Vossloh AG SWOT and PESTLE Analysis

Strength

1. Vossloh is a 135-year-old rail infrastructure company with high-quality products and solutions: Vossloh AG is a German company with expertise in Rail infrastructure and technology, which was established 135 years ago in 1888. Since its founding, Vossloh AG is a global market leader for switch systems and rail fasteners, receiving major strategic contracts around the world in the public sectors. The company’s unique selling point lies in its comprehensive range of track-related products and services. In 2020, Vossloh celebrated the production of its one billionth tension clamp, reflecting the extremely huge amount of production the company has undertaken. In the early stages of the company, Vossloh produced products other than the core existing products, such as general hardware such as decorative items and electric light lamp holders. However, the company has now toned down its core competencies to rail maintenance, fastening systems, tie technologies, lifecycle solutions, rail tiles, Turnout systems, Signaling products and systems and other products. The company’s rail fastening systems are used in more than 65 countries around the world and its switch systems are used in more than 20 countries around the world. Vossloh has wide global presence, from countries in Europe to the Americas and Asia, the company has expanded its operations through strategic acquisitions and opening new production sites. Owing to its vast expertise for over 100 years in rail infrastructure, solutions and technology, Vossloh produces extremely high-quality and certified products.

2. Majority of customers of Vossloh are from the public sector: Rail systems are becoming increasingly important all over the world. Many countries are now far more willing to invest in their rail networks than they have been in the past, with generous subsidy schemes becoming increasingly commonplace. Most of Vossloh’s customers are governments and public sector companies, therefore the demand for products stays stable since government expenditure on infrastructure is free from the effects of market volatility or fluctuating economic conditions. In 2020, Vossloh received the contract in the Middle East for a 139 km route and supplied switches and heavy-haul fastening systems for the Gulf Railway. In the second quarter of 2020, Vossloh was awarded the contract to supply rail fastening systems for The Uruguay Central Railroad project for modernizing and building a new 273 km rail lines between Paso de los Toros and Monte-video. In the third quarter of 2020, Vossloh won a tender in China for over 30 million Euros to supply rail fastening systems for a high-speed route between Nanning and Guiyang in China. The company also supplied rail fastening systems for a heavy-haul route in Mongolia and won more tenders packages for the Gulf Railway. In the last quarter of 2020, Vossloh was awarded strategically significant multi-year contracts in Sweden and maintenance agreements for tram networks with the individual operators in the French cities of Valenciennes and Le Havre. Since building and maintaining rail infrastructure is unavoidable for governments and operators, Vossloh continues to win tenders and contracts with stable revenues.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Rail companies are investing heavily in becoming more sustainable: The rise of climate change risks is being felt by countries and individuals around the world, therefore there is a rising demand and push for corporates and businesses to become more sustainable and include sustainability in their business models. Europe has especially taken up the “Green Deal” project which aims to strategically reduce EU’s contribution to GHG emissions, pollution and resource consumption, through energy efficient technologies and use of renewable energy. Vossloh AG is one company which puts sustainability and the environment at the center of its business, with its vision to promote ‘Green Mobility” and “Sustainable Mobility”. Rail is considered to be a green mode of transport and thus will play a greater role in sustainability in the coming future.

Vossloh signed up to the UN Global Compact in early 2020 and continues to promote UN SDGs through its operations. It also set up a central office for sustainability, health and safety at a Group level. The strategic approach has been defined: Vossloh strives to achieve climate neutrality in Europe by 2030. Vossloh’s primary focus in environmental management is centered around minimizing environmental impact and improving the efficiency of resource consumption and products. To achieve this, the company is optimizing relevant processes and structures in the manufacturing of rail infrastructure products as well as the provision of rail track services.

Environmental officers have been appointed in the Group companies and a corresponding report system has been put in place. For years, all Vossloh divisions have made targeted investments to reduce energy consumption and boost energy efficiency, such as switching to LED lighting technology. A number of production sites use waste heat from production. The “Factory of the Future” at Vossloh Fastening Systems in Werdohl and the new “OT 2020” foundry at Vossloh Cogifer in Outreau are regarded throughout the Group as flagship projects in terms of energy-efficient production. The company’s operating units are working on further reducing CO2 emissions with a wide range of measures. These also include small changes such as orienting the fleet on low-carbon vehicles. Employees of the German Vossloh companies are encouraged to use the train for business trips; frequent travelers can receive a business rail card (“Bahn card Business”).

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