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By Volker Feyerabend
Germans often discuss Asian economies, and yes, we sometimes
refer to Asian PCB makers as "yellow dragons." This, however,
is not so much a derogatory term, but rather a grudging acknowledgment
of our inferiority; it's hard to fight dragons.
While Asia didn't invent globalization, it has adapted
to this process to its advantage much more successfully
than Germany. For example, the German PCB industry will
shrink by approximately 25 percent, order entry is down
by 6.5 percent, and PCB industry employment will drop 15%
(compared to last year).
Some people say our political leadership has proven too
faint hearted to implement the reforms necessary to make
the German economy competitive in the face of new challenges.
The German public is to blame as well. It has not yet shown
sufficient willingness to let go of certain luxuries that
the current situation affords.
there are exceptions. Companies also exist that have seen
the challenges, faced them, adapted and whose success hopefully
will inspire others to follow. What makes these German companies
successful? They all share the same mindset, with the following
large parts of the world, these notions are common knowledge.
In Germany, unfortunately, this is hot stuff. Here are three
examples of companies who have adapted to global change.
Company Zollner (with approximately 5,000 employees) built
factories in Eastern Europe (Hungary 1988 and 2002, Romania
2001) to provide the customer with low-cost solutions. Its
approach has been to build prototypes in Germany, and transfer
regular production to Eastern Europe. In addition, employees
from Eastern Europe receive thorough training in Germany,
where they are familiarized with all methods of enforcing
strict quality control mechanisms. Thus, EMS Company Zollner
in Hungary and Rumania provide customers with the same level
of quality, service and know-how from their sites. The company's
"one-stop shopping" strategy includes horizontal manufacturing
services (EMS, sheet metal, inductive components) and vertical
offerings from R&D, Production, and Logistics to After-Sales
Services. Diversification is another key strength of the company
(different business sectors, type of volumes, customers and
technologies). Together, these strategies paid off. Instead
of losing business to Asia, the company won additional customers,
increased sales and invested more in Germany.
other players started to focus on lower volume, higher mix
production and OEM relationships with engineering support.
PCB manufacturer KSG GmbH (approximately 27 million deutsche
mark turnover and 250 employees) is another success story.
During the recent economic downturn, KSG grew strongly, added
new capacity in Germany, and plans to increase investment
over the next several years. What's its secret? First, customer
relationships; second, customer service; third, a long-term
strategy; fourth, the right technology mix; and finally, a
well placed investments at the right time. You will also find
diversification in business sectors, customers and technology.
What's so unique about that? Simple. They have the right mindset,
and they always execute.
equipment manufacturers are investing in Asia to provide their
customers with a lower cost solution, and to be close to the
customers. But isn't there a know-how risk in Asia? Just accept
the fact that the locals will have very soon built up the
industry know-how anyway. KSL Kuttler Automation Systems (maker
of handling systems, with 155 employees, 25 million deutsche
mark turnover) proactively manages the change to provide customers
with a superior level of service. By being flexible, offering
market orientated designs, excellent after sales services,
and a structure and company culture which allows very fast
decisions and implementations, the company is making money.
Early on, it recognized the fact that Asia would gain importance
in the PCB/ electronic industry. In 1992, KSL started with
a salesman in Asia, but by 2002 it built up a production site
in China (Suzhou, now 68 local employees) which designs, develops
and builds new products (wet processing equipment) since July.
The China site is part of its diversification strategy. The
approach is to offer synergies with its existing portfolio,
which can be expected to have positive effects on its German
It seems like in all levels of the supply chain one can
find companies with the right strategies, the right products/services,
and the right costs in place to be successful. This should
be cause for optimism in making the right strategic decision
today. If you'd like to discuss this further, please contact
Feyerabend is President of APROS International Consulting (www.APROS-consulting.com).
He has a degree in Engineering and Economics. He has worked for
Hewlett Packard, Agilent Technologies, Groz-Beckert in various international
senior management positions. He also headed a European Outsourcing
Organization with the focus on EMS/ PCB companies. Contact him at