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Our manufacturing base in Switzerland is at the heart of the company's identity, Barbara Artmann
echo-interview, June 2015

Our manufacturing base in Switzerland is at the heart of the company's identity

ELIPSLIFE ECHO - INTERVIEWS WITH PROMINENT BUSINESS LEADERS

Our manufacturing base in Switzerland

echo-interview with Barbara Artmann, owner and CEO of Künzli SwissSchuh AG

elipsLife-echo: Künzli is primarily known for its orthopedic footwear. A few years now, you also launched a range of life-style shoes. How do you manage the balancing act between these two very different customer groups?

Barbara Artamnn: The origin of all Künzli products is sports footwear. Our high-top shoes were also derived from the sports sector where they provide vital ankle support, for example in handball. Reinforced footwear, designed originally to be protective, later developed a therapeutic function in the medical field. Today, the Künzli Ortho® footwear range is a highly regarded medical aid. Sneakers, on the other hand, are an offshoot of the sports shoe. So the Künzli Classic line of fashion shoes and the Künzli Ortho® range of surgical footwear have the same origin, the sports shoe namely. Of course, these ranges of shoes require very different marketing strategies. Whereas our sneakers sell through fashion outlets, our orthopedic footwear is distributed via specialist retail channels.

Where does your company derive the necessary knowhow to be able to manufacture high-quality orthopedic footwear?

Over time, we have nurtured our own footwear savvy in-house. Since Switzerland has not provided vocational training in shoemaking for ten years now, we are obliged to retain our own specialist knowledge, to cultivate this knowhow and to pass it on to our employees. And we've been pretty good at it, since we've meanwhile built up a very impressive body of footwear knowledge and skills. On the surgical footwear side, we have specialist knowledge in exercise science. The head of our orthopedic department is a fully trained professional in this field. We also cultivate intensive research and development cooperation with doctors. We are very fortunate that Switzerland is the home of the best orthopedic doctors in the world and that with many of them we are in constant, close dialogue.

How important is "Swissness" for your company?

Our Swiss identity is enormously important for us. Right from the outset, I focused on the question whether we could manufacture our shoes here at home rather than in Asia, like all the others do. For eleven years we've been doing just that in Switzerland. Our domestic manufacturing base is at the heart of Künzli's identity. It's in our DNA. We all take pride in the fact that we're doing it differently to other companies. We have successfully positioned ourselves in niche markets. We couldn't survive in mass markets because there the dominant factor is the price. With our sneakers we are established in a small luxury niche, and with our surgical and special-purpose footwear in a market where hardly any competitor can match our expertise. For the big players, our market would be too small, but for us it's just right. Actually, I'm not such a big fan of "Swissness." This can be a t-shirt made in Asia with the Swiss flag printed on the front. I would prefer the term "Made in Switzerland."

elipsLife echo-interview with Barbara Artmann

Does Künzli manufacture all its shoes in Switzerland?

Yes we do. The Intellectual Property Office in Switzerland requires that we prove the share of domestic content in the footwear we manufacture. We calculated this share to be 80%. It's only the sewing process that we outsource, in this case to Eastern Europe. Everything else we do here in Switzerland. This includes all the development work too. And we want to keep it that way.

Which are your most important markets?

We used to be more export oriented than we are today. Let me explain: Künzli was involved in a protracted trademark dispute. The battle over the five stripes, our identifying feature since the 1950's, began in 2004 when we launched our line of sneakers based on the traditional sports shoe. Künzli's former importer, now the U.S. company K-Swiss, decided to dispute our trademark rights. Because in 1990 K-Swiss had registered the trademark internationally, and therefore also in Germany, and Künzli had neglected to do this in its most important export market, 2012 saw us lose the case in Germany for good and all. Since there was then no further chance to defend our old trademark in the international arena, we had to come up with a new one. So we changed to the five little bricks which gave us a foundation to build on.

Since 2012, we've been rebuilding our whole fashion line and with our export business we've had to start again from scratch. We're still not quite where we were before but we're making good progress all the same. And we do want to continue pushing our export business. Just recently, we were able to sign a contract with a Hong Kong-based sales and marketing agency,' Greater China.' This was an important step for us and was only possible, by the way, through using our new, very own trademark, the five bricks. Notwithstanding all our export plans, I do want to emphasize that Switzerland is our home market and remains very, very important for us.

How can a small, Swiss footwear manufacturer hold its own against the big international players?

By finding the right niche markets. This is a very typical Swiss speciality. We don't do what everybody else does. But what we do is better than what the others do – much better.

Then Künzli SwissSchuh AG has to be an attractive target for a takeover bid.

Yes, this seems to be the case. Companies frequently come knocking on our door with offers. In fact, the most recent occasion was in the spring of this year. This is very gratifying and comforting, but that's as far as it goes. We, the Künzlis, want to take this company forward under our own steam, as a team!

echo-interview, June 2015, Barbara Artmann

Künzli started out as a producer of sports footwear. Are there any plans to return to manufacturing sports shoes?

No, even though we certainly believe we're capable of good ideas for the sports sector. But the reality would be like this: as soon as a competitor saw a good idea, he would invest 20 million, launch a huge marketing campaign and we'd be dead in the water. I mean we wouldn't even try. It makes no sense for us to enter the mass market.

The only competition footwear we still manufacture are Schwinger shoes. We take pride in the fact that many Schwinger wrestlers are able to keep their feet in the sawdust ring wearing sturdy Künzli shoes. Every serious Schwinger wrestler wears Künzli shoes.

What does a successful entrepreneur need to bring to the table in your view?

I see three things: product offering, corporate culture and being able to stay the course. The most important is always the product offering. Companies need to provide solutions. Ideally, these need to be solutions that solve problems customers don't even know exist. Also crucial in my view is the corporate ethos and team-oriented thinking. Our employees are happy to come to work. You hear people humming tunes. They feel content. And when people are content, they work better and more efficiently. It's just a thrill to come to the office in the morning and feel this cheerfulness among our employees. If the people are front and centre in the company, then good shoes are the inevitable consequence. The third ingredient for a successful company is perseverance, being able to stay the course, especially when times are tough. By perseverance, I mean qualities such as determination, a sense of mission and consistency. And I would even add a degree of stubbornness which I believe I have inherited from my Appenzeller great-great grandfather.

Künzli SwissSchuh AG employs around 25 people. Is the topic of old age provisions relevant when it comes to hiring new staff?

This is seldom the case because we are a relatively young team, and this topic only becomes important when you get older. As far as I'm concerned however, making provisions for old age is very important. I have a financial background as you know, and when I took the helm at Künzli I decided to change our pension fund. For me, it was important that our new pension fund pursued a sound investment strategy. And even during the last financial crisis, our company pension scheme never suffered from funding shortfalls. Moreover, we offer low-key benefits which our people are often not even aware of. For example, we insure all our part-time employees and not just from the statutory level.

Switzerland has a highly developed retirement benefit system whose three pillars combine state and private provisioning. Will this three-pillar-system survive into the future do you think?

Absolutely! This is one of the major competitive advantages this country has. There are enough people who realize how brilliant this system really is.

To understand the proposed changes to the country's retirement and pension system (AVG-Revision 2020), you need to know the details. So a dialogue with employees is important. Is this on your company's agenda?

No. When everything's decided and the changes are to be introduced, we'll certainly place it on our agenda.

Barbara Artmann, Owner and CEO of Künzli SwissSchuh AG

Should pensioners also have to make a contribution to the recapitalization of the retirement benefits system in Switzerland, or is this topic taboo?

As a guest in this country, I rarely make statements on political issues. However, as a company owner I do have a clear standpoint on this topic: Taking away entitlements is hardly the right way. Switzerland will manage to put the system in order without resorting to this. But there has to be a willingness to think creatively, to adapt and to raise awareness of the issues involved. The biggest problem in my view is the shift in the age pyramid. The shift in the pensioner- employed person ratio from 1-6 to 1-2 is drastic. And it's not just about restructuring the retirement benefits system, but also about labour redistribution, towards the employment of more women, more part-time jobs and keeping older people in work.

The pension funds are in stormy waters, above all due to our ageing society and rock-bottom interest rates. Are they – and indeed all of us – going to fall victim to financial promises they can't keep?

I wouldn't say that. This could happen with some of our European neighbours though. There are two different aspects that need consideration: on the one hand the low interest returns from the cash investment and, on the other, the financial markets which are once again working smoothly. Low interest rates are naturally a problem, but in past years the pension funds did very well from their stock market investments. And right now, they are not complaining about under-funding either. The problem is not interest rates and investment policies but, as I said, the age pyramid.

A reduction in benefits seems to be inevitable and the proposed changes to the retirement benefits system signal that this is coming. What's your take on the planned raising of the pension age for women to 65?

It would make sense. It's a question of fairness and often of willingness too. Whereas earlier, people lived to 70 and reached pensionable age at 65, today they live to 86 but still draw their pension at 65. Firstly, this system is out of kilter and, secondly, there are many people who can work longer and indeed want to. Right now, the labour market seems to be unable and unwilling to do very much about older job seekers. This is a challenge not only for individual companies, including my own, but also for our politicians. In the future, there will perhaps no longer be just the one job you stop doing at 65, but another that you swap it for, or you take on different roles. Consider the online marketplace for pensioners seeking employment opportunities. We use this service for all sorts of things. This is only a modest contribution of course, but if life expectancy is going to increase much more, we will also need longer working lives as well. And this also applies to women.

Personal Profile
Barbara Artmann
Owner and CEO of Künzli SwissSchuh AG

PERSONAL INFORMATIONBarbara ArtmannOwner and CEO of Künzli SwissSchuh AGBorn in 1961, Barbara Artmann has been owner and CEO of the iconic Künzli SwissSchuh AG in Windisch since 2004. Founded in 1927, the company which originally made a name for itself as a sports footwear manufacturer, focuses nowadays on surgical footwear and on fashionable sneakers in the lifestyle segment. From 1999 to 2003, Artmann was Head of Asset Management Strategic Products at UBS. Prior to this, she spent two years as Project Head, Financial Products with Zürich Versicherung and was responsible for establishing Zürich Invest. From 1993 to 1995, she was a Senior Consultant with McKinsey, following three years as Head of Marketing at Lieken Urkorn at the beginning of the 90's. She was Brand Manager at Procter & Gamble from 1986 to 1990. Artmann is a German national and studied psychology and business administration as a subsidiary subject in Mannheim. She has lived in Switzerland since 1996 and in 2014 was appointed to the Supervisory Board of Valiant Bank.