Soennecken eG and the Kiel based company group “Hugo Hamann” – a member company of the cooperative – are building a new logistics centre near Kiel in the next two years.
Growth market logistics – opportunities and limits
Soennecken eG has become the leading logistics service provider for office organization products. The LogServe business unit is growing significantly and in 2017 exceeded the “magic level” of EUR 130 million for the first time. But the Overath site is bound to reach the limits of its capacity – even though Soennecken eG is investing a further EUR 8.5 million in logistics there in the current year to handle additional ranges and orders. Already in 2017, the cooperative informed its members that a second base is inevitable.
Economically wise – with partners
“A second warehouse is essential for Soennecken if we want to secure growth and service quality for our members. In order to be able to ensure 24-hour delivery in the future, as road traffic increases, we need to be geographically closer to our customers. We have therefore, made the step and decided in favour of Northern Germany and this together with a partner.”Soennecken’s board member Dr. Rainer Barth
It was in the winter of 2016 that Soennecken first learned that one of its members Hugo Hamann was also considering the construction of a new logistics location.
Dr. Barth: “In discussions with Hugo Hamann, the idea of jointly building the new logistics centre matured. So both partners could achieve significant economic benefits. “
“In this regard, a cooperation with Soennecken eG is much more attractive to us economically than to set up and operate logistics on our own.Michael Meuel, Managing Partner of the Hugo Hamann Group of Companies, describes the reasons for the joint investment
In February 2018, the plans were completed and the contracts signed.
- Hugo Hamann will be building a new 10.000 m2 warehouse on a recently acquired site in Melsdorf, west of Kiel.
- Soennecken eG brings in its logistics expertise through the LogServe division and is responsible for the entire intralogistics, commissioning and operation of the warehouse. Soennecken leases the new warehouse building at standard market terms and installs a logistics infrastructure similar to the existing Overath logistics centre in the building. From the new Nord logistics centre, Soennecken initially supplies mainly members and customers from the north and northeast of Germany. All cooperative members can take advantage of the services offered by the new logistics centre.
The advantages for Soennecken eG and the economic benefits it will gain from cooperation with Hugo-Hamann Group are described by CEO Dr. Ing. Benedikt Erdmann:
- The capacity limits at the Overath site will soon be reached; further expansion of the logistics centre there would be disproportionately expensive, since the property is simply physically limited.
- The commissioning of a completely new location, in turn, requires a high investment and significant initial losses. New logistics capacities are planned and built for sales and customers that you expect, but do not have today. Until a certain capacity utilization is achieved, the high fixed costs are offset by relatively low yields. The consequences are multi-year losses, which, as a rule, are attributable to the investment sum.
- With our partner Hugo Hamann, we have a large customer from the first day on which the logistics centre North has more than 50 % capacity utilization. This allows the new location to start much more profitably.
- In addition, Soennecken reduces its equity capital ratio as Hugo Hamann takes over the investment for the warehouse building.
- We expect that the Kiel site, as of 2021, i.e. as soon as one year after the planned commissioning, will not generate losses, because the new offering makes it possible to win additional members and / or new customers for our warehouse and logistics business – and not only in the north. An interesting option for Soennecken eG is to relocate gradually to Kiel “North Turnover”, which we are currently working on in Overath. This gives us the opportunity to acquire new customers from other regions and handle them via Overath – a perspective we would not otherwise have, because of the capacity limits in Overath that will soon be reached.
The managing partners of the Hugo Hamann Group, Wolfgang Sothmann and Michael Meuel also expressed their point of view:
- Wolfgang Sothmann: We were faced with the decision to invest large sums in the necessary expansion of our office supply logistics. However, we would not have been able to achieve the efficiency and price advantages resulting from the size of the logistics facility planned together with Soennecken with our own investment. At the same time, we secure our investments in land and buildings with Soennecken eG as a solvent, long-term tenant.
- Michael Meuel: With Soennecken eG, we have a partner with many years of experience in the construction and operation of sophisticated logistics. We do not have to build up the necessary know-how ourselves and can benefit from the efficiency of the Soennecken LogServe.
- In addition, we will increase the logistical efficiency of the Hugo Hamann Group and, also have access to the now very extensive assortment of Soennecken. This is a benefit for our customers as well.
- Overall the cooperation will relieve our business operations and give us “a free hand” on our core business and other projects with our customers.
The schedule and the next steps
- At the end of February 2018, the Soennecken Supervisory Board and Management Board as well as the committees of the Hugo Hamann Group took the relevant decisions and signed the contracts. Hugo Hamann has acquired the land and submitted the building application.
- The project plan envisages the start of construction of the building for the early summer of 2018.
- At the beginning of 2019, the installation of logistics technology will begin.
- The gradual commissioning will take place from the summer of 2019, so that the new “Logistics Centre North” is fully operational for the 2019/2020 season.