KCE Group: A Thailand-Based PCB Manufacturer with a Growing Global Footprint

Estimated reading time: 10 minutes

Rhodes: We manufacture today about 2,800,000 square feet of printed circuit boards per month presently but we can easily add an additional 1,000,000 square feet per month without new construction. We are in phase 2 of a 3-phase development at our newest facility outside of Bangkok. We have over a million square feet of manufacturing floor space. With four factories we're at about 4,000 people in Thailand to support manufacturing. Then we have on average 25−26 people in each of our distribution sites, including KCE America, KCE Europe Enzmann here in Germany, KCE Japan, KCE Thailand for local sales in Thailand, and KCE Singapore, which covers Asia, excluding Japan and Thailand.

The support goes beyond just sales. We offer design for manufacturability assistance with CAD/CAM systems in our offices. We assist our customers with their designs but we do not design from the ground up, only for manufacturability. We have full accounting departments, full logistics departments, and we specialize in setting up vendor manage inventory programs, customer manage inventory programs, these kind of things. They are very big in demand within our customer base.

Warner: You’re using direct sales people exclusively rather than independent reps. What made you decide to go that direction since you're so broadly spread across the globe?

Yeo: I think for the most part the direct sales person is key to the KCE organization. We believe that as a direct individual you are able to transmit the right information to the customer. There’s a lot of real time updates where the factory comes to us. We feel that as far as that is concerned, that is the best way to transfer this information to our customers. The preference is more direct.

Warner: It seems like the focus would be better since you have the full time and attention of that sales person, as opposed to time spent by reps on other lines they carry.

Yeo: It's not a matter of whether the reps are good or not. We think that there are a lot of good reps out there. Now, we just prefer this direct sales approach.

Rhodes: That's been the way so far. It may not be the way as we grow in the future. We're trying to build a one billion-dollar plus printed circuit board organization and to get there is going to take a lot of sales resources, so who knows. We're not opposed to using reps, but just in the current organization right now we're all direct sales.

Warner: Well, it seems to be the trend in the industry these days, even just inside the United States. When we talk to many organizations, they generally seem to prefer the full attention of their direct sales people. You mentioned you did some investment into your facility recently. Tell us more about that.

Rhodes: We built a new factory in Lat Krabang, which is where the international airport is in Bangkok. We're only about 15 minutes away from the international airport. It's where our company started, in the Lat Krabang Industrial Estate. We built a new facility virtually across the road from the old, existing facility. It's a much more modern facility. It's all brand new equipment. We've increased the panel sizes. We've added new processes. The last facility we built before this was KCE Technology in Ayutthaya, which is north of Bangkok. That facility is 14 years old now. It was time to build a new facility, and there are plans on the horizon to build yet another facility as we go forward. We're in the planning stages now, but probably in the next couple of years.

Like I said, we have a young, smart, and aggressive CEO. His whole push is on efficiency and expansion. He wants to grow the company. He's a young man, and wants to really grow this company.

Warner: In light of chasing that aggressive growth, what are the primary challenges that you see in the marketplace for OEMs right now?

Rhodes: The customers are demanding faster and faster turnaround times, both for sample production and regular production. They want shorter cycle times, quicker turnaround times. They want full support, logistic support, able to manage the inventory programs. Our inventory that we build is all custom inventory. If we build something for customer A, and customer A decides not to buy it, there's no other customer that we can sell those products to. They're fully custom and we’re a custom manufacturer. The customer wants full flexibility. They don't want to buy that product until it hits their production floor, but they want to know that it's there and it's next door. They want to have it right there, so when they need it, it's JIT.

It's a challenge for us. We've got to get this stuff from Thailand to a location next to where our customers are building their product, and be able to make sure that that product is replenished when the customer needs it.

Warner: Joe, I assume that, like most manufacturers, you experience a lot of cost pressure from your customers?

Yeo: Oh, the pressure is always there. Because our customers, many Tier 1 automotive suppliers, they are all under the same pressure by the car manufacturers. The pressure goes downwards from them and to us, and then from us to our suppliers. The cost pressure is always there. We have been in this business for so long, we know how to deal with the cost pressure. We know how to manage it. That's all that matters because everybody else in this industry must go through the same pressure.

Warner: It seems like these days, at least in the bare board industry, more is being demanded, but the drive to cut cost continues to increase as well.

Rhodes: Yes. That’s always going to be the case.

Warner: That tension between “give us more and charge us less.” How does KCE manage that? Is it by increased process controls or automation?

Yeo: Absolutely. Not only the processes, but you must have good suppliers, high yields, all the above.

Rhodes: Yes, and you have to continually invest in automation. It's the only way it's going to happen. We're not ever going to eliminate people from our factories. Automation is not just a money saver. It lends itself to process control. It’s much easier to control the process through machines than it is with people. We never stop learning that. It's just ongoing all the time.

Warner: We're on day one of this show, which isn't always the busiest day, but how's the show been for you so far?

Rhodes: It's been a very good first day. We have two meeting rooms here and they've been busy all day. That's good for us. That means we have customers in the meeting rooms. Tomorrow we expect it to be even busier. So far, so good.

Warner: Well, I want to thank you both for taking time to talk to us. Good luck with the rest of your show.

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