On the fast track to success

Molinari Rail - a dwarf among giants in the global rail business; and a successful one, too. What are the strengths of this SME? Who capitalizes on the expertise and experience of the ‘railway people’ from Winterthur? How do they address current trends and what are their objectives? A conversation with founder and CEO Michele Molinari.

Michele Molinari in interview

Mr. Molinari, how do you define Molinari Rail's business model?
Summarized in one sentence: we listen to customers and find out what they need, and in what form. We prepare studies and solve complex questions in technical, operational and business-related matters. It gets more complex when we link several things – engineering, material supply, guarantee services, financing, etc. – together. We create concepts for systems that still need to be designed, manufacture them and deliver them to the customer. It is therefore a combination of engineering performance with manufacturing, assembly and warranty.

80 percent of your revenue is generated through exports. In which markets are you active, and which not (yet)?
Our core market is Europe. GE is a big customer in America, but we primarily support it with projects outside the USA. In previous projects, we manufactured components in Switzerland or Germany, which were then delivered to the USA and assembled there into complete locomotives, before being delivered to railway operators all over the world. As in the previously described India project from GE, we only supply a small proportion to the USA, the largest value creation happens in India itself. Many of our customers are involved in tenders and projects in other countries where we are fortunate enough to know our way around or able tackle local circumstances. For example, via a French customer we were able to reach Australia – years ago, when almost nobody in Europe was concerned about the Australian public transport system.

Will it be more difficult to do business in the US under the Trump administration?
The US rail market already became more protectionist under President Obama. When project financing contained funds from the US state, at least 60 percent of the product had to be manufactured in the USA. Now the share has risen to 70 percent. Many suppliers from the railway industry are confronted with this issue. We ourselves are only indirectly active in the American market. But we help companies to organize in a way that meets US government requirements. For example, via technology transfer to production units in the USA, where a second local fabrication is established.

You’re doing well even without the US. How is it possible for you to be perceived in the global market as a medium-sized, owner-managed Swiss technology company?
Numerous customers have been with us for many years, and we have regular contact with many of them. This is important in this market. It is well known that we have extensive experience and are a reliable partner. We have a particular advantage when it comes to tailor-made projects in engineering or subsystems; even over a competitor from India, who is perhaps cheaper in production, but who doesn’t have the necessary expertise and references. Generally in Switzerland, we have a good status in this area. We have a long history in the railway industry and our well-functioning railway system is well known. So we know what we're talking about. In addition, we have a reliable supplier industry and work with proven components, systems and with expertise derived from experience. This is highly valued. The railway industry is evolutionary and technological progress is gradual and relatively slow. Experience and solid values are required here.

What is it that can you do better than the big players?
We are faster, we listen more carefully and we respond better to the customer. Our bread and butter is the fact that we understand what the customer wants in detail. And that we are able to best implement their requests, and quickly too. One advantage, of course, is that as an owner-managed company with a flat management structure, we are in a position to quickly make precise decisions. This is highly appreciated by our customers.

They are globally active and must themselves adapt to regional situations. Where do your greatest challenges lie, and how do you master these?
It is difficult to find the right partner in some countries straightaway. In light of this, working with Switzerland Global Enterprise is very important. We use this service wherever possible. We have successfully worked together in Russia, India and the Middle East. But we often find ourselves in places where S-GE is not present. The best opportunities lie in places where the big players do not go.

Did you ever have to cancel an export project?
We have often withdrawn projects when the market didn’t develop as expected. There is a certain forgiveness present in business life. I'm prepared to make mistakes. We wouldn’t be where we are today if I weren’t. One doesn’t get anywhere without taking risks.

Does this mean that your employees are also allowed to make mistakes?
Of course. Making mistakes in itself is not the problem, it’s only human to do so. Even if one makes the same mistake several times – this happens to me, too. Being able to admit to your mistakes is crucial, because then you correct them. The impact on the project and the customer can be minimized or avoided altogether.

What impact is digitalization having on the railway business?
Digitization has been a topic for us for a while now: destination displays, passenger information, ticketing via mobile phone, etc. We are expected to present such solutions in the international market – while in Switzerland we are somewhat lagging behind in terms of development. Swiss companies already developed electronic ticketing solutions years ago – but unfortunately they were not rolled out in Switzerland on a large scale. We have to take care today that we don’t sleep on progress and miss out on opportunities.

It was recently announced that Swissrail and the Verband der Bahnindustrie in Germany (VDB) will support the railway industry with a gigantic project under the patronage of Seco and the German Federal Ministry of Transport and Digital Infrastructure (BMVI). The project is called ‘Bioceanico’: a railway running across the South American continent, from the Atlantic to the Pacific. Something for you?
Of course! We are part of a working group together with a number of other Swiss SMEs and are confident that the project will be successful. This will be the next big step in our company history.

This means that you will continue to grow?
Not necessarily. We wanted that until recently, but size isn’t everything. It makes more sense to cooperate with other specialized companies and to further develop their strengths. It is important to find reliable partners, and the native SME culture helps us with this. We want to undertake specific tasks, be it in engineering and planning or in the areas of vehicle construction and maintenance. There are already exciting projects popping up here and there that will challenge us, and will enable us to participate in the development of remote regions – I have already experienced this many times and I know this makes a lot of sense and gives one a lot of pleasure!

About Molinari Rail

Based in Winterthur and with subsidiary companies in Germany and Austria, the technology company specializes in railway systems and supports customers around the world with the implementation of projects in passenger and goods transportation. Specialists from different disciplines work together on the development of rail vehicles and subsystems as well as on complete railway systems. Thanks to wide-ranging expertise and strategic partnerships with customers and partners, the company has been able to hold its own amid global competition, as well as being able to tap the major potential of the expansion of railway infrastructure and the shift of goods transport to rail. The company employs 30 people in Winterthur and has 150 employees worldwide.

About Michele Molinari

Trained as a machine mechanic, he studied electrical engineering at the Winterthur school of engineering and completed an additional master's degree in Traffic at Nottingham Trent University in England. From 1990 to 1994, he worked at Elektrowatt Ingenieurunternehmung AG in Zurich and founded Molinari Rail in 1994. He is 53 years old, married and father of a daughter and a son. His hobbies are gliding and motorised flying, traveling, reading, and he is interested in everything that has to do with mobility.


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