Paul de Krom (Louwman Group): ‘Mobility Services Are the Future’
Louwman is still one of the most important car importers in Europe (including among others the Japanese car brands Toyota, Lexus, Suzuki and, more recently, Chinese BYD). But slowly but surely the focus is shifting, and the family business wants to literally and figuratively ‘move people’. Since April 2023, they have been doing so with a new CEO: Paul de Krom. Xavier Baeten, professor of sustainability & reward management at Vlerick Business School, speaks with him. How do you tackle such a transition - supported by stakeholder engagement?
For car enthusiasts, the Louwman Museum is heaven on earth. Paul de Krom, former Secretary of State, former TNO Director and, since last April, CEO of the Louwman Group, is mesmerized. ‘Look at this.’ He pauses at a Baker Electric Roadster, a 1908 electric car from American automaker Walter Baker. ‘We all think we are so incredibly modern now with electric cars, but the fact is that there were electric cars over 100 years ago. Baker was one of the largest providers of electric city cars in the early 20th century. It is fascinating to see. The reason the electric car did not ultimately become a success back then is simple: the range was too small, and it was too expensive. Fossil fuel was available and that was much cheaper. They were simply priced out of the market and the electric car had to wait 100 years to return.’ With a broad gesture, ‘That is also the beauty when you walk through the museum here. It is not just about cars; it is also about the era in which they existed and the technological developments that went with it. It gives a very broad view of developments in society.’
What would your favorite means of transportation be, actually?
‘My favorite means of transportation? That very much depends on the situation. I prefer not to go on vacation to Portugal by scooter, but exploring the center of a busy metropolis is wonderful on a scooter. If I want to travel between two cities, the train is an ideal means of transport, but if you have to be in a place where there is no public transport, then the car really comes in handy. So, a favorite means of transportation depends on the circumstances and the purpose of the trip. That is why it is so unfortunate that in the public debate public transport and the car are always pitted against each other. That is a false contradiction. It is not either-or, but and-and.
You have been CEO of Louwman since April, a family business we know primarily as an importer of Toyota, Lexus and Suzuki, among others. How did your onboarding go?
‘I joined the company on April 3 last year. That was exactly the day Louwman celebrated its 100th anniversary. For the first few weeks I mostly immersed myself in all kinds of festivities, the highlight of which was being awarded the designation ‘Royal.’ There are very few companies that receive that honor. It is a wonderful recognition, especially for the Louwman family, a recognition especially for 100 years of responsible entrepreneurship.’
Why did you say yes to this position?
‘Because I have a passion for mobility. Mobility is quite literally the bloodstream of society. Without it, everything stands still. During my time as a member of Parliament, I already had mobility in my portfolio. Among other things, I was Chairman of Nederland Distributieland and of the public transport companies in the Netherlands. When I worked at TNO, we had a separate division that also dealt with innovative mobility solutions. So, I know the Dutch mobility world quite well. When the opportunity came along to work at Louwman, I pretended to think very deeply about it, but it was not that hard, I can tell you. This is a wonderful company. What attracted me to Louwman is that it is much more than an automotive company. It is a mobility company. Our ambition is mobility for life. We want to offer appropriate mobility solutions to our customers at all stages of life.’
So the focus at Louwman is shifting from importing cars to mobility solutions. Can you give an example?
‘Automotive is and remains the core of the company. But we started to view mobility more broadly. It is about much more than car mileage these days. It is also about affordability, about how to remain mobile and self-reliant into old age, and about developing and facilitating new forms of mobility. In our view, therefore, the company’s future lies partly in offering various mobility services. With the platform of our Mobility Investment Group, we offer various mobility services as an integrated service: public transport, public bicycles, shared cars, refueling, parking, cabs, bicycle parking, et cetera. We want to offer solutions for all transport challenges. In the city of Utrecht, 12,000 homes are being built without parking. That can of course be done, but people do want to continue to move around. We will have to think about how to solve that and we as a company would like to play a role in that. This automatically means it would be essential to invest in the whole chain, that solutions beyond just automotive need to be found.’
If you try to look into the future, how do you see the relationship between the familiar automotive branch and your mobility services?
‘I find it difficult to put numbers on that. Look at the phenomenon of shared cars. That is still marginal both in the Netherlands and at Louwman Group. But it is my firm belief that this will grow in the future. And that is why we are investing in it. But it is still too much of a thumb-sucking exercise to predict what the shared car will do ten years from now.
Our automotive activities are at the essence of this company and will remain so. That is what grew this company into what it is, that is what we know. The core of our company must be healthy in order to be able to also do these other things. That gives us room, also financially, to invest in new mobility solutions. We are a private company and making a profit is necessary for us. Not as an end, but as a means. We do want to achieve that profit in a certain way. For example, we think customer experience is more important than growth. That really is at the very top.’
Family businesses have a long-term focus, I often hear. Is that also your experience?
‘With listed companies you do indeed have the pressure of quarterly figures. There is less of that here. So yes, I definitely recognize that. Family businesses are the backbone of the economy. And with that I am not dismissing the importance of listed companies or small and medium-sized companies, which also have their role in the ecosystem. But in Germany, for example, it was to a large extent family businesses which kept the economy going during the corona crisis. Family businesses can change direction swiftly, also in relation to each other, I have noticed. Car manufacturers Toyota, Suzuki and BYD are all family businesses. They work together closely, including with us.’
Listening to you, Louwman is strongly engaged in stakeholder engagement and ESG goals. Is that also due to the fact that Louwman is a family business?
‘The family has always wanted to do something for society. Louwman breathes social commitment. The museum where we are now is a simple but beautiful example of that: we are happy to make this collection available to the public. Stakeholder engagement runs deep in the organization. If I relate it to myself with a small example: I spend as much time as possible with people from the company, to see how things work in practice. The other day I spent a day with someone from Welzorg, a consultant who helps people choose the right wheelchair and also does wheelchair adaptations for cars and homes. I found it an educational day and invited the colleague in question to spend a day with me in turn. I suspect that will bring a fresh perspective from outside and that is incredibly helpful.’
The ESG targets not only imply different behavior, but also entail all kinds of obligations. For example, you must also now report on it. Is that complicated?
‘I very much welcome the reporting obligation. Society demands openness. However, transparency throughout the chain is quite complicated. We should not underestimate that. If you have to import all kinds of components or batteries from abroad, it is very difficult to map out exactly which raw materials, from where, are used. I seriously question whether it is realistic to think that we can always get a clear picture of that. Incidentally, this is one of the reasons why I believe that we should maintain a healthy industry of our own in Europe. That we do not become too dependent on other markets.’
Louwman deals extensively with the international market. Not long ago, for example, you partnered with the Chinese automaker BYD. I am sure you follow geopolitical developments with interest. How do you see the future in that regard?
‘I am quite concerned about it. I particularly deplore the tendency to pull up the drawbridge everywhere - something you see all over the world now. People want to pull up the drawbridge to protect their own industry. For an open economy like the Netherlands, that is a major concern. I do not think the key lies with protectionism either, the key lies much more with innovation, R&D and increasing productivity. Universities and applied research institutions play a crucial role in this. Together with business, they can ensure that competitiveness remains intact, that the earning capacity of the economy remains healthy, and that the business climate remains in order. In principle, the Netherlands is excellently positioned for this. We have fantastic ports, we have good infrastructure, we have excellent research institutions and well-educated people. If we manage to keep using that well, I have every confidence that things will work out. But concerns I certainly have.’
As a professor at Vlerick, in addition to sustainability, I am also concerned with remuneration policy, including the remuneration system of top management. To take a sidestep: especially in large, listed companies we see very complex remuneration systems. Companies are increasingly incorporating sustainability into their remuneration policies. That in itself is excellent, but makes the systems even more complex. What is your experience with remuneration?
‘I have experience with different systems. Personally, I never really felt that I became more motivated to work because of a bonus. It makes no difference to me personally. You feel responsible for something, you are intrinsically motivated, and that bonus, well, I do not care - to put it bluntly. In my experience, bonuses are sometimes a dissatisfier rather than a satisfier. Bonuses can sometimes do unexpected things to people within a company. At least, if you do not think about it carefully. And the bonus system can also be complex.
At TNO we did not have a bonus system, but we did have a link between performance and salary increases. We let go of that link. Coming from Shell, I was used to a different system, but I was convinced by the scientific research. It worked fine. At Louwman, we do have a bonus scheme for a certain group, which is not just based on financial indicators. I think that is an interesting variable. I do not have a clear opinion on it yet, but I will delve further into it in the coming year.’
Speaking of Shell, you worked there for a long time. Shell is also a company in transition. How do you think Shell is doing?
‘Shell is the largest investor in sustainable energy in the Netherlands. That is sometimes not appreciated. They invest by far the most in sustainability in this country and I hope it stays that way. I also think we should be very happy with large international companies in the Netherlands. That is insufficiently recognized. In the Netherlands the importance of these companies is underestimated. Those large companies are often the engine blocks of economic ecosystems, which include numerous small and medium-sized businesses, universities, and knowledge organizations. I watched with sorrow as companies such as Shell, Unilever, Elsevier and DSM moved their headquarters abroad. That is a development I deeply regret.’
Finally, let us take a look at the future. Where will Louwman and Paul de Krom be in 2030?
‘For Louwman, I foresee that automotive, retail and wholesale business will still be the most important components of this family business. But the entire service provision surrounding it will become increasingly important, with a healthy earnings model behind it. And speaking for myself: I am 60 now and hope to make it to my retirement here at Louwman. I do not plan to be here for a year, I want to put all my energy into this company for the next seven years. I consider it a gift and an honor to still be able to get started with this job at 60. I also find it something very special that the family shares a part of the responsibility for the company with me. So, I want to take good care of this company.’
This interview was published in Management Scope 02 2024.
This article was last changed on 06-02-2024