Annual Report 2013

Economic report

Production

We further optimized our production sites in fiscal 2013, with Henkel manufacturing products to a total weight of around 7.7 million metric tons at 164 sites in 54 countries. Our largest production facility is in Düsseldorf, Germany. Here we manufacture not only detergents and household cleaners but also adhesives for consumers and craftsmen, and products for our industrial customers. Cooperation with toll manufacturers is an integral component of our production strategy, enabling us to optimize our production and logistics structures when entering new markets or when volumes are still small. We currently purchase around 10 percent in additional production tonnage from toll manufacturers each year.

Number of production sites
2012 2013
Laundry & Home Care 28 27
Beauty Care 8 8
Adhesive Technologies 135 129
Total 171 164
 

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In the Laundry & Home Care business unit, we further reduced the number of production sites worldwide from 28 to 27 in the year under review. Our plant in Düsseldorf continues to be the largest production site for this business unit. Here we predominantly manufacture powdered and liquid detergents, fabric softeners, liquid cleaning products and dishwasher tabs. Concentrating our production on fewer, more efficient factories close to our customers has enabled us to continuously improve our performance.

By the end of 2013, Group headquarters and 24 other sites had been certified under the new standard for energy management, ISO 50001. This year, in addition, we introduced a digital energy management system worldwide. Within a span of just six months, nearly all of our locations worldwide were connected to a real-time resource consumption monitoring system.

Building on an international study on optimizing logistics flows performed in 2012, we initiated various related projects in 2013. One of these involves our investment of 35 million euros for the construction of a new, automated warehouse at our Düsseldorf site. The new distribution center will be Henkel’s largest warehouse with a capacity of 90,000 pallets and will replace four regional warehouses in Germany. The new warehouse concept is part of a worldwide program to achieve Henkel's sustainability targets in the area of logistics. Through automation of the warehouse and a direct connection to production via conveyors, 1.5 million forklift movements and 20 percent of the current transportation distances in Germany will be saved.

In the Beauty Care business unit, we further optimized the environmental footprint of our production processes based on our production strategy. In Western Europe, we completed the alignment of our production sites based on dedicated product technologies, and merged common functions together. We consolidated our sites in the Africa/Middle East region. To strengthen supply chainsupply chain
Encompasses purchasing, production, storage, transport, customer services, requirements planning, production scheduling and supply chain management.
operations in Eastern Europe, we acquired a production company with a site in Russia and now have a globally efficient production network across eight sites. This acquisition supports volume growth and further development of the Eastern Europe region. We also made selected investments in capacity expansion in the emerging markets outside Europe, again to support and expand the organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
planned for those regions.

Our program “Total Productive Management Plus” progressed at all of our production sites worldwide, continuously improving efficiency and productivity through process optimization and further reducing energy consumption and waste and wastewater volumes.

The Adhesives Technologies business unit has a global production network of 129 sites serving the growing demand for the solutions we provide and ensuring efficient delivery to market. By consolidating sites primarily in mature markets, we were able to lower the overall number of sites from 135 in the previous year to 129 in 2013.

We expanded production capacity in the emerging markets in the reporting year in order to ensure market supply close to the customer. In Shanghai, China, for example, Henkel’s adhesives factory – the largest in the world – commenced operations. It pools together adhesive production from around the greater Shanghai area and supplies, amongst others, enterprises in the automotive industry and various consumer goods sectors. Employing a variety of production technologies in one location enables additional economies of scale through the joint use of infrastructure. The concept is to serve as the basis for site development in other regions.

The pooling of production capacity drives ongoing optimization of our manufacturing costs. Continuous improvement of our production processes also plays an important role in increasing our efficiency. In the reporting year we launched an initiative with the goal of standardizing our processes and workflows in the production domain. In addition to defining standards, lean training and workshops at our production sites are important components of this initiative. All production employees participate in these programs, thus firmly anchoring the continuous improvement process in the organization.

As an important aspect in our promise of quality, our optimization efforts in all three business units aim to reduce the environmental footprint of our production activities. We focus in particular on cutting energy consumption, thereby contributing to climate protection, reducing material consumption and waste volume, and limiting water usage and wastewater pollution. New warehouse concepts and the production of packaging materials directly on-site where filling takes place reduce transport mileage and thus also contribute to climate protection.

Overall, our global programs in 2013 resulted in 59 percent of our sites reducing their energy consumption, 65 percent decreasing their water usage, and 50 percent lowering their waste footprint.

Keeping our “Factor 3” goal in mind for the year 2030, we have set concrete interim goals for our production sites that we intend to reach by the end of 2015:

     

  • 15 percent less energy per production unit
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  • 15 percent less water per production unit
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  • 15 percent less waste per production unit
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  • 20 percent increase in occupational safety per million hours worked

By the end of 2013, we had achieved significant progress in all areas and had already reached our 2015 targets in specific areas, such as our 15 percent improvement in energy efficiency and 50 percent improvement in occupational health and safety.

For further details on our sustainability targets, please see here and our Sustainability Report on our website at www.henkel.com/sustainability

Our standards for safety, health and the environment, and our social standards, apply to all our sites worldwide. Using a clearly defined process of communication, training and audits, we ensure compliancecompliance
Acting in conformity with applicable regulations; adherence to laws, rules, regulations and in-house or corporate codes of conduct.
with these standards, especially at the production level.

We have the environmental management systems at our sites externally certified wherever this is recognized by our partners in the respective markets. By the end of 2013, around 95 percent of our production volume came from sites certified to ISO 14001, the internationally recognized standard for environmental management systems.