Mittelstand business model:
A good example of this controlled growth came with the opening of a new factory in the Czech Republic in 2005, which now handles two thirds of Pickering’s manufacturing requirements. “We needed a factory which was close to key European markets, especially France and Germany,” says Keith. “The Czech Republic is widely regarded as a stable business location, with an educated workforce and good transport links. Over 200 people now work there for us, and the venture has been so successful that a new factory is now being built five miles away from the original site, and due to open in 2020.” The structure and strategic development of Pickering is a good example of the German business model known as the Mittelstand. These are the small and medium-sized highly successful German companies, which according to the Financial Times, account for 70 percent of all jobs and 90 per cent of apprenticeships. Mittelstand companies are based on long term investment and profit, are usually family owned and run, and focus on a specialist product or service which can be exported widely.
The next generation of the family is now involved in the business, as Keith’s daughters Poppy and Daisy become more involved in day- to-day operations. “We know that for Pickering to continue to succeed, we need to continue to put our employees at the heart of what we do,” says Daisy. “We have a very high employee retention rate and encourage and support staff training and development.” comments Luke Morris, Corporate Finance Partner at Scrutton Bland whose Corporate Finance team continues to work closely with Pickering in a strategic advisory capacity. “They know that they need to prepare their business for the future, secure existing jobs and create new opportunities. Seeing them being given The Queen’s Award for Enterprise is fantastic, and very much deserved for the whole company.” “Pickering is a great example of a company that is thinking in a sustainable and long-term way,” Scrutton Bland’s Corporate Finance team have extensive insight and experience of the region’s business landscape, allowing them to provide in-depth, independent professional advice for complex and confidential transactions. For more details contact the Corporate Finance team on 0330 058 6559 or email hello@scruttonbland.co.uk
Owner operated, mostly private or family- owned businesses
Usually fewer than 500 employees
Stable and highly skilled workforce, recognised mutual interdependence between company and employees
Focus on a particular market niche, often requiring specialist technical expertise
Has a very high market share, up to 50- 70%, meaning their product becomes indispensable Emphasis on long term value and profitability as opposed to short term targets and expectations
Low levels of debt, through retention of profits and equity investment
Innovative but incremental product development strategy
Focus on the end user as much as the immediate customer
Less competitive on price, more on quality
Product specialisation enables sales to be focused on export markets
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