Productronica 2005 - The reality of the global market
by Philip A Stoten
Nov 16, 2005
It's November and it's Munich so it must be Productronica. The whole industry again decamps to Germany to show Europe what it has to offer for the coming two years.
Productronica has always been a good gauge for the health of the industry and an opportunity to explore the issues that drive the industry. Of note this morning at the show was a roundtable discussion on the subject of globalisation.
The roundtable was chaired by Prof.Dr. Hermann Simon of Simon-Kucher & Partners, who introduced the group of distinguished speakers (from left to right - Participant: Amir Aghdaei of Agilent Technologies Sales & Services & Co.KG GmbH, Francois Barbier of Flextronics, Tilo Brandis of Siemens AG A&D EA, Steve Corbett of Cookson Group plc Electronic Division - and to the right of Prof.Dr. Hermann Simon, Dr. Thomas Gambke of Schott Electronics GmbH, Stefan Janssen of Fuji Machine MFG Europe GmbH and John E. Pomeroy of Dover Technologies.
The group discussed the issues around globalisation, accepting it is part of modern business and in fact has been around for some time, quoting examples such as Bosch who was exporting more than 90% of its production in the early 1900s (spark plugs for the Model T Ford).
In terms of the modern version of globalisation that affects the electronics supply chain, John E. Pomeroy described the main factors he saw as essential. Firstly design, build and/or configure all over the world; secondly, roll out infrastructure everywhere; and thirdly, hire local - promote and train local talent, give them responsibility and empower them to do their job...
Amir Aghdaei of Agilent pointed out that some 40% of its top flight staff are now Asian, and that is a number that is growing. Steve Corbett's number was around 44%, and he said that Asian staff would soon be in a majority. Steve also told us that his product has to be made close to where it is used, transportation costs and risks prevent it being shipped over excessive distances, this means they have to be, and are, truly global...
Flextronics has half its staff in Asia, that's 45,000 of 90,000. Francois Barbier quoted closeness to customer and indeed to end user as part of the reason for a global footprint. He also intimated that the next big growth for Flextronics would occur in India...
Tilo Brandis of Siemens has a clear view of a global business - you have to understand what is needed in each market that you are addressing and you have to deliver it locally. Siemens builds machines in Singapore for the Asian market, and Tilo explained the process of building a supply chain for Siemens Singapore. He did not however rule out being active in China in the future. "Time will tell" he said...
All agreed that the development of people was fundamental to having a good business in Asia. This has resulted in many collaborations with academia in China and the rest of Asia, as companies try to ensure that development happens throughout the world and that they have access to skilled and educated people.
Stefan Janssen of Juki explained how the Japanese view was somewhat different and that protection of IP and the need to keep control meant they were embracing both the trend to China and outsourcing in a more cautious manner.
It was agreed that you have to be prepared to deal with infrastructure issues. Flex spent $20M on its own power/water plant due to high demands of its PCB fabrication operation. This is just one example of the challenges that make doing business in these newer regions different to working in Europe or North America.
In closing, most agreed that China would have the lion's share of volume and that Europe had to be more flexible to survive and prosper. You have to recognize the West to East movement and understand the impact it will have on your business, and adapt. Globalization is a great opportunity for business, but for society it can be a threat. We need to make sure it benefits both. Understand your environment and be flexible.
Clearly Productronica shows the very best that Europe has to offer - and there is plenty of it. Plenty of innovation, plenty of expertise and plenty of experience. How Europe leverages these values will influence its future...
Also in yesterday's show bulletin:
Siemens - Electronics manufacturing without non-productive times - http://www.emsnow.com/npps/story.cfm?ID=15517
Interview with Michael Brianda, General Manager, Europe, DEK Printing Machines - http://www.emsnow.com/npps/story.cfm?ID=15516
More this evening form Munich...