An EMS with a Nimble Global Footprint Makes a Big Splash at electronica

Estimated reading time: 12 minutes

Rea: Firstly, we have another strategy where we try and deal direct whenever possible. Nothing against the distribution industry, but we prefer to deal direct with component manufacturers and build relationships with them. We have a decent spend of about 180 million Euros, so it's becoming respectable, and we ask our customers and our suppliers to help us put buffer stocks in place to advance us inventory and put those things in place that allow us to be flexible. How we do that is by discussing with our customers what they want and what flexibility they require. Certain customers don't require flexibility. The automotive industry is a good example, they want 300 a day and it's 300 a day because the plant can't build any more.

In connected objects and our startup business, the difference between an initial forecast and the reality can be an order of magnitude different. So you must organize to be able to do it in terms of the way in which you dimension your test equipment to be able to respond, and that's speaking with the customer and finding the right compromise.

Warner: Now logistically, in-house, do you set apart a prototype facility or prototype lines to keep from interrupting those that are running high-volume programs?

Rea: No, we mix it up. It depends what plant it is, but certain customers require that their prototypes be built on those lines that will build the eventual series because they want to prove the repeatability of the manufacturing process. Another customer might just want the prototype and they don't care particularly which lines they're on. So we have both dedicated prototype lines and other full service lines that will also build prototypes.

Warner: You mentioned the facilities in France, but can you just explain for our readers about your other locations and what you're supporting in those?

Rea: The exciting news at Electronica this year and what we're announcing is the opening of our plant in Guadalajara. A number of our customers in automotive but also in medical have asked us to be present there. We'll be opening that plant with four surface mount lines early in 2017, so that's really exciting for us. We're also going to set up a sales presence in North America and we’ll see what comes from that, but we're essentially there to support existing customers who've asked for us to be present because they're happy with the service levels that we give them. So that's exciting. We have a site in Tunisia in North Africa, I know that makes U.S. readers shiver a little bit, but it's quite a safe environment for us. I go there once a month and we have 1,200 people on-site there and it's extremely competitive. Tunisia is a country where you’ll find a good level of trained engineers, so that's a plant that we're growing with new customers starting in North Africa as well in the automotive industry.

We've also just bought an R&D facility in the west of France which allows us to support those customers who have asked us to do R&D for them. The next step in the upcoming year or so will be a Chinese facility, and though that's moving very quickly, it may well be a Cambodian facility or an Indian facility. We'll just have to see what the market asks us to do and where they ask us to be.

Warner: Especially now that the U.S. has a new president, who knows where it's going to go.

Rea: Well yes, as long as there's a hole in the wall to allow us to deliver the electronics through it. (Laughs)

Warner: Call me, I know where some tunnels are. (laughs) Tell us a little bit about the response you've had here at the show meeting existing customers or greeting new people for the first time?

Rea: It's been great for us. The first thing to note on a general scale is it's as busy as it's been for the last four or five years I think. It's anecdotal, because I don't have the figures from the organizers about how many visitors they've had, but there's a certain buzz about the exhibition this year that we didn't see two years ago and we certainly didn't see six years ago. There's a sense of optimism generally around. It’s great to see existing customers who drop by and talk to us, and yes, we’ve had some interesting new prospects. We have new shareholders as well. A tier one automotive supplier who was a customer of ours decided that they wanted in and bought us the middle of last year. That’s a great sign of what we do.

Warner: That is great, so tell us a little bit about that.

Rea: They’re called IEE and they supply automotive constructors and are one of the world leaders in automotive sensors. That annoying buzz that you get when you don't buckle your safety belt up? There's a one in five chance that it's an IEE product. It's much more complicated than that, like if you have a passenger, is the passenger a child, is it a person, or is it a baby carriage? If it's a baby carriage the system will automatically disengage the airbag on the passenger side. They're experts in sensors, radars, with a lot of exciting products coming out of there. It was good for us to be bought out by an industrial shareholder as opposed to an institutional financial one. We're on industrial time scales and more or less on a 10-year business plan as opposed to the results next quarter. It's nice to be in that sort of environment.

So we bring them electronics know-how which they didn't have, and they're bringing us sensor know-how which we didn't have. They're also opening us into new markets because they've been present in Germany a lot longer than we have. They're also present in North America and they also have plants in China. The Mexican plant is a joint venture between our parent company and us, so we reduced the costs of starting up a company as well. So even though it's a horrible cliché, it's win-win.

Warner: That sounds very exciting, is there anything else we that should know about you? It sounds like you have a dynamic and exciting company with everything to look forward to.

Rea: Yeah, it's good and we're pretty happy. We're financially stable, and I think that's important. We talk a lot about technology but choosing an EMS that's in good financial health is a pretty good idea, so we've got good financial support, good cash flow, and no other news really other than to say, "Watch this space."

Warner: We'll keep our eye on ALL CIRCUITS, Alwyn. Thank you so much for taking time to talk to us and all the best on your success.

Rea: My pleasure.

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