Pelikan Looks To Sell Land Adjacent To Their Peine-Vöhrum Plant

Pelikan's Peine-Vöhrum Manufacturing Plant

While the central focus of this blog has always been the writing implements and related ephemera that Pelikan has produced over the past 90+ years, I find it insightful to also stay up to date regarding the goings on at the factory and beyond. Doing so can provide a window into the health of the company. Pelikan is a large organization with a very complicated corporate structure that contains many assets and investments which go well beyond their fine writing instruments. Still, some of their publicly reported business decisions hit close to home and those are the ones that I try to bring to you. I previously gave an account of three such occurrences beginning last June with demonstrations at Pelikan’s Peine-Vöhrum manufacturing plant by union employees protesting conditions at the factory. Then, in July 2021, Pelikan sold its logistics center located in Falkensee, Germany. By August, the factory had received a visit from Hubertus Heil (SPD), Federal Minister of Labor and Social Affairs, over the ongoing labor dispute. Since that visit, news about the goings on at the factory has been sparse, that is until now. Thanks to the recent reporting of Thomas Kröger for Peiner Allgemeine, we now know that talks are underway regarding a major project on the Pelikanstraße in Vöhrum. Pelikan is currently looking to sell a little over 6 acres of land in a plot that lies to the northeast of their manufacturing plant. The prospective buyer wishes to use the land to build a logistics center, a possibility currently being explored with the city of Peine. What does this potentially mean for Pelikan? Read on to learn more.

Pelikan’s Peine-Vöhrum plant is one of four manufacturing units for the brand and has been in operation since 1973 making it nearly 50 years old. The factory currently employees around 240 people. Vöhrum is the largest town in the district of Peine in Lower Saxony Germany with approximately 7,000 inhabitants. It was founded circa 1022 meaning that it achieved a milestone age of 1,000 this year. It is at this site that Pelikan manufactures writing instruments for children, ink cartridges, office supplies, and our beloved fine writing instruments to name just a few of the product categories for which they are responsible. In an effort to preserve a high level of quality and craftsmanship, they maintain their own R&D facilities, tooling department, quality management, product development, and new employee training. The school and office supply sectors of the market are huge for the company, bringing in 42% and 37.3% of the company’s annual revenue respectively based on 2021’s sales figures. For those interested, fine writing instruments accounted for 6.9% of the company’s revenue last year.

Pelikan's 2021 Revenues

Pelikan’s 2021 revenues by product group. The figures are provided in Malaysian Ringgits (1 RM = $0.24 at the end of 2021). The USD conversion was added after the fact for convenience and illustrative purposes only

Mr. Kröger spoke with Harald Schmidt, the technical plant manager at Pelikan’s factory, regarding the proposed sale. Mr. Schmidt had this to say; “We do not need the land that has been used agriculturally for decades. The request meets our strategic considerations to use non-operating assets sensibly. If the urban planning is now approved and granted by the political bodies, we could quickly conclude a purchase contract.” The paper reports that the prospective buyer is the Hillwood Group, a U.S. based investment company with German headquarters in Frankfurt am Main. You may recognize them from past reports on this site. The buyers of Pelikan’s Falkensee logistics plant were wholly owned subsidiaries of HWE Investor GP S.à.r.l, part of the Hillwood Group. That firm is a developer of residential, commercial, and industrial real estate with operations in the United Kingdom, Germany, and Poland. The sale price has not yet been disclosed but the proceeds would serve to give Pelikan’s factory a boost and may go a long way to ameliorate some of the issues reported last year.

Pelikan's Peine-Vöhrum Manufacturing Plant

This satellite image shows Pelikan’s factory in Peine-Vöhrum as it stands today along with the adjacent property owned by the company. The area outlined by the rectangular shape to the top right is the land which is the subject of negotiations

In fact, Mr. Schmidt is on the record as saying; “We would use the proceeds from the sale of the land to modernize our production. It is possible to rent part of the new logistics hall to store material needed for the production of our items.” Hopefully everything can be worked out because the additional construction could go a long way to shoring up what are now becoming antiquated facilities. According to Mr. Schmidt, “Our high-bay hall dates back to 1974 and will probably be gone soon. For this we need an alternative.” Works Council Chairman, Walter Dettmer, also concedes that additional facilities are necessary in order to make up for the older building no longer being well suited to its purpose. That said, there still seems to be some animosity between Pelikan and the Works Council. Chairman Dettmer levied the following criticism at Pelikan according to Mr. Kröger; “Our managing director Loo Hooi Keat from Malaysia did not inform us well about the sale. Therefore, we in the works council do not know what is specifically planned.”

Harald Schmidt, technical plant manager at Pelikan’s Peine-Vöhrum facility, is depicted to the far left in this photo from 2016 (Photo: District of Peine)

Aging facilities aside, when queried about the health of the company, Mr. Schmidt was rather optimistic and forward looking, stating; “This year we will again achieve 30 million euros (~$29,406,000) in sales at the Vöhrum site.” A lot of that growth is reported to be driven by the school sector and the demand for school related items, an area that Pelikan is heavily invested in overseas. Mr. Schmidt would not provide figures regarding how much of that was profit but, at least for the time being, the issues that the company was facing with their employees appears to be settled. Accounts from overseas indicate that the factory’s employees have received the money owed to them in full with interest, settling one of the major issues that prompted last year’s demonstrations. In addition to the currently proposed sale, some of the proceeds from the property in Falkensee benefitted the Peine location, earmarked to finance a restructuring to preserve the plant. Mr. Schmidt and Mr. Dettmer have gone on record suggesting that components of said restructuring could include a de facto reduction in personnel as well as an elimination of less successful product lines but everyone seems confident that the site will be preserved. The money to be obtained from the proposed sale of the land adjacent to the factory would go even further towards securing more modern production equipment for the Vöhrum facility, something that has been cited as a necessity by employees. Unfortunately, news of a new logistics center is not being universally well received. In a follow up article, Mr. Kröger relates that many Vöhrumers are worried about an increase in truck traffic on the Pelikanstraße which could worsen traffic problems, bring additional noise and pollution, as well as have negative environmental impacts.

In fact, there are still a lot of hurdles that need to be cleared before any proposed sale might come to fruition though the local political bodies seem committed to supporting the factory and the jobs the plant creates in the region. The mayor of Vöhrum, Dr. Ingo Reinhardt, is on the record saying: “For the local council, securing the location of the Pelikan plant in Vöhrum and the preservation of local jobs is very important. There are still a lot of questions left to be asked about the development plan. According to our information, however, it is not about the construction of a large logistics center, but – as stated in the administrative template of the city of Peine – about the construction of a warehouse and logistics hall, to bundle the existing small-scale storage areas in a new building and to enable extended use… However, most of the essential information will not be available until the course of next year as part of the public interpretation with the expert opinions on transport, environment and noise.” The mayor of Peine, Klaus Saemann, echoes those sentiments; “Our primary goal is to secure the Pelikan site and thus the jobs in Vöhrum… Pelikan is an important part of the Peiner economy.” The city clearly will need more detailed information regarding Hillwood’s plans for the site before deciding how to best move forwards. A final decision is unlikely to be reached prior to next year. All things considered, this would seem like a good business decision on the company’s part, one that would stand to improve the conditions at the factory which can only serve to benefit the fine writing instruments that so many of us enjoy.

Dr. Ingo Reinhardt, local mayor of Vöhrum (left) and Klaus Saemann, mayor of Peine (right)

References

8 responses

  1. Thank you for your work with this. Seems logical that if there is a shift in planning rules, that a formerly inexpensive or unattractive site for development may now be worthwhile to sell.

    I know UK local authorities reassess the ‘urban boundary’ of a town every 10 years and sometimes expand it, making rural land now inside the boundary much more valuable for housing or commercial developers. Reinvesting the money to modernise the factory is a good sign too. Stock is coming through to shops and the labour issues are resolved, so it seems concerns about the company from last year have now passed.

    Liked by 2 people

  2. Thanks for the nice work developing this report. The sale makes sense from a corporate perspective. Selling, land, not used by the company to generate cash that can be used for local capital investment makes a lot of sense. In light of the global economic downturn, this asset turned to cash without debt, is good. Thanks again for another excellent blog.

    Liked by 1 person

  3. Thanks for another great article. Yes, but he challenges in the fountain pen manufacturing business, especially at the scale of Pelikan, are many. I wish the fine writing folks every success in modifying their operations for long term structural health.

    Pelikan is a wonderful brand, and I hope we will continue enjoy their fine writing products for years to come.

    Like

  4. Excellent news. I’m glad to hear the employees have been paid in full with interest. Hopefully the profit made from selling the unused land can be used to bolster the company and grant the modernization requests of the factory workers.

    Thanks for covering this!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: