IKOR is a global EMS committed to innovation that provides services for the design and manufacture of electronic circuits, including complete supply chain solutions for world-leading industrial and technological companies. They serve customers on all five continents and all key, emerging and mature markets from plants in Spain, Mexico and China. Recently, IKOR was acquired by ebm-papst; in addition, the company welcomed as it new corporate sales director Marco Duarte, who spent 10 years with ebm-papst. We caught up with Marco recently because the merger of a fan and motor manufacturer with an EMS is not something that happens every day, and we wanted to find out more about the strategy.
EMSNOW: Congratulations on your recent acquisition by the German based ebm-papst Group. Ebm-papst is a leading manufacturer of fans and motors. This might confuse some people as to what IKOR’s role and function will now be. Please explain the new corporate structure to our readers and its impact on IKOR.
There are two parts to this question: IKOR’s business after the integration with ebm-papst, and the new corporate structure. First let me give you some background on the relationship between IKOR and ebm-papst. The current relationship began in 2016; since May of this year IKOR has been 100% integrated into the German ebm-papst group, the world’s leading manufacturer of fans and motors. This union has strengthened IKOR. Our technologies, our knowledge and our capabilities are increased as we become full members of this technological leader. However, I would like to take the opportunity of this interview to dispel any doubts that may exist regarding the possibility of IKOR being exclusively dedicated to the supply of ebm-papst. IKOR’s growth is based on its legacy business. In fact, our growth strategy is based on our six key market segments, which respond both to our traditional model and to the positioning of IKOR as a global EMS. We offer comprehensive electronic circuit design and manufacturing services, including complete supply chain solutions to leading technology companies in Automotive, Industrial, Medical, Railway & Transportation, Energy & Telecoms and Refrigeration& HVAC. We are focused on non-commodity services that demand high requirements, quality, reliability, and durability. I must emphasize that the essence of who we are, our legacy business, will remain unalterable. Belonging to ebm-papst will enhance IKOR’s capabilities at all levels, but IKOR’s core business remains EMS.
In relation to the second part of the question, the new corporate structure, as Corporate Sales Director, I would like to highlight precisely the new structure of the Sales Department that I now lead. It is a much flatter and accessible organization, which is specialized and in daily and direct contact with the essential and different needs of our diverse customers. We are a customer centric organization, specialized in the different sectors of activity of our clients. We aim to be an organization that understands the needs of its customers and speaks to them in their own language. Perhaps because we are not the biggest (nor the smallest), we place special emphasis on proximity, flexibility and readiness to act, and in understanding the needs of our customers, and those of their customers, and making them our priority.
I am therefore convinced that this new commercial structure will be a key component of IKOR’s sustainable growth strategy. Because at IKOR we do not sell products, we sell certainty, security, knowledge, trust, quality … in short, excellence.
EMSNOW: What is the benefit of this merger to IKOR as an EMS company, and what effect will it have on your approach to the market?
Belonging to one of the largest business groups in the world, as a full member brings great opportunities for IKOR and for our reason to be: our customers. Ebm-papst is an important multinational company, with more than 15,000 workers, 2 Billion Euros in revenue and leadership in its different markets. Some of the opportunities are rooted in the different synergies and advantages in which we leverage, for example, access to better financing and solvency, access to new technologies within the group, greater bargaining power with global suppliers, access to best practices in terms of efficiency and operational excellence, access to global information systems.
The alliance with ebm-papst also allows us to exploit numerous commercial synergies through the cross-selling of Contract Manufacturing or Contract Design Manufacturing services to the large multinational client base, leaders in their respective sectors of the German multinational and its subsidiaries.
To elaborate, I would say that our commercial structure focuses on two basic pillars: Having a specialized sales team by sector (both for the management of the current customer portfolio and for the acquisition of new customers) allows us to have a more direct and simple contact, at the same time, that we ensure that we understand perfectly the different and constantly evolving needs of customers. Second, our bi-directional direct access, with a lower hierarchical structure greatly facilitates flexibility, the ability to react, agile decision-making, and where appropriate the escalation in time and form of any event that may arise.
This change, which will be seen and felt right now, and also implies important changes in the way we communicate with the market and in our marketing. A simpler and more direct information, flow which pivots around the main purchase drivers and pain points of our different customer profiles by segment, and for which we use a communication code very similar to the one that our clients use to communicate with theirs.
EMSNOW: Marco, you recently came to IKOR from ebm-papst to lead the sales organization. What has it been like for you transitioning to selling manufacturing services instead of products?
Products offer a uniform solution to customers’ problems. If you sell products, you sell identical versions to numerous customers. You may offer advanced or improved versions of products, but even those remain very similar to each other. Your prospects can evaluate features before they buy, and if you do not sell to one prospect, you can try to sell the same item to another prospect. But always in the highest levels of quality as ebm-papst always had. ebm-papst would not be ebm-papst if were not constantly striving to optimize the products and advance their development.
IKOR, as a manufacturing service creates value for its customers by assuming the operational authorities of the OEMs and executing complete solutions, adapted to their unique needs, which in turn, ensure our customers can deliver their products to their customers. IKOR’s experience in process management allows our clients to focus their resources on their core competencies, and our investments require original equipment manufacturers the flexibility to respond to short-term opportunities. Through collaboration with IKOR, OEMs reduce their exposure to risks and increase the speed of their capital, while IKOR’s knowledge and experience helps OEMs thrive and grow. Simplifying the development of complex electronics that one of the reason we exist as a company and service provider. So the answer of your question is that I am full of enthusiasm about my adapting to this difference. I’m here for the long term.
EMSNOW:IKOR has a well-balanced geographic footprint with facilities in three countries (Spain, Mexico, China). Are you considering expanding into other regions and are you able to leverage the ebm-pabst global footprint as well?
In the short term we plan to focus our manufacturing activity in our current three locations, as all of them still have some room for growth.
In any case, our strategic plan does envisage the opening of a new production site in Eastern Europe in the medium term, basically in response to the need of our growing industrial segment demanding to transfer their manufacturing to countries with lower manufacturing costs.
Naturally, IKOR’s membership of ebm-papst (with 29 production sites worldwide), gives us an important source of competitive advantage in terms of internationalisation strategy, by giving us access to different very well-positioned locations (from the point of view of logistics, supply chain and the attraction and retention of talent) throughout the world, and by favouring the minimisation of risk, the level of investment, as well as the start-up and operating period of potential new international implementations.
EMSNOW: Please tell us about IKOR’s Design for eXcellence service and how this differentiates you from your competitors.
IKOR delivers operational excellence coupled with value-added services. Over time, we have gradually evolved from being a contract manufacturer to evolve our legacy business into a high value added solutions and services provider. Among our value-added services ( In–house Design Center; Product definition; Product Design; DfX in Manufacturing; Test development & optimization; Product redesign) IKOR gives exceptional importance to Design for Excellence, assuming that this service is critical for complex sectors that seek high reliability, such as the sectors we are targeting. Sometimes, deadlines and budgetary constraints combined with an excessively focused approach to functions and features, means that companies don’t pay the due attention to the DfX, which in most cases is a very costly mistake: redesign needs, inability to meet scheduled release date and the defined budget, and so on. Our early partnership involvement mitigates these risks and ensure the best soft-landing in the launch of a new product.
By clearly understanding how our customers develop their products, we can determine the right DFX services to maximize benefits early in the design process. (DfL:Design for Logistics; DfC: Design for Cost; DfM: Design for Manufacturability; DfA: Design for Assembly; DfT: Design for Test; DfQR:Design for Quality and Reliability and DfE Design for Environment)
We provide integrated product and process services at each stage of the product lifecycle, identifying the challenges we will face in the mass-production environment from the very beginning, therefore strengthening the design, reducing time to market, minimizing risks while increasing competitiveness.
Our main source of differentiation is based on the use of our own DFX rules based on experience. We not only rely on industry standards, Best in class rules, Guidelines and Methodologies, but also on the extensive and proprietary know-how, generated internally, over the years, obtained from very diverse product launches in sectors with high requirements.
EMSNOW: Where do you see the opportunities for growth in the EMS industry and how is IKOR positioning itself to address these?
Because of our positioning, we are focused on non-traditional EMS sectors such as industrial electronics (Global Industrial electronics assembly value is predicted to grow 5.9% through 2022) and medical (Global Medical electronics assembly value to grow 6.2% through 2022), which continue to be seen as the strongest drivers of industry growth. These trends are also supported by increased spending on clean technologies and telecommunications and the growing electronic content per vehicle (Global Automotive electronics assembly value to grow 8.3% through 2022). All of these areas show compound annual growth rates above the sector average. Our exposure to a relatively wide variety of customers in our six targeted end markets helps us to minimize the risk inherent in each sector as well as to smooth out fluctuations in demand. The common denominator of all of them is that they allow a minimum space for error: they are high requirement sectors, and they are customers that highly appreciate the value proposition that IKOR offers them: A reliable partner to whom to transfer their risks so that they can focus on their true core business.
On the other hand, at IKOR we are aware of the enormous potential that certain technologies have within our sectors of activity, hence, we have developed an important specific expertise in certain key technologies that are transversal to all our market segments such as LED LIGHTING (efficient and attractive lighting); IoT (We make devices connect with the world); HMI (We know the way human and machines interact) and POWER ELECTRONICS (We believe in clean energy and we design environmentally friendly products).
Our growth strategy is therefore based on the markets in which we focus (with growth rates higher than the market average), on our positioning, and on the use and development of key technologies that boost the competitiveness of our customers.
EMSNOW: What issues do you expect to be the most challenging for IKOR and the EMS industry in the next few years?
Customers will always partner with the firms offering the highest quality at the most competitive price, but there are many other factors determining the selection of an appropriate EMS provider.
More OEMs are turning to contract manufacturing organizations to help them accelerate growth as well as manage supply chain efficiency and resource or capacity re-allocation. They also seek innovation partners to solve issues related to manufacturability of design, leverage new process technology, and improve cost structure. Over the past several years, our own relationships with customers have evolved significantly, with OEMs increasingly coming to IKOR for innovation and design collaboration to accelerate organic growth and speed to market. Today’s EMS firms are no longer necessarily viewed as a single manufacturing service provider. The “S” in “EMS” has come to mean “solutions.” OEMs now recognize manufacturing is only a portion of what “EMS” firms can provide. They also offer product ideation and development, supply chain management, order management, logistics as well as repair and after sales service.
On the other hand, the EMS should not be oblivious to the megatrends that prevail in the sector, at least for the non-conventional industries that IKOR has always bet on, such as:
NEARSHORING: Shorter time to market, increased flexibility, NPI closer to customer.
What we are seeing and doing ourselves is building our supply chain around where we are manufacturing or where we are selling. There are fewer and fewer shipments of materials between geographically distant points, which until recently were normal, between Europe and China for example.
HIGHER DEGREE OF CUSTOMIZATION: our customers wants shorter batches, shorter lead time to market, they want more complexity on their batches.
INCREASED REQUIREMENTS: Cyber security (End to end Smart management systems with embedded cybersecurity), conflict minerals, corporate social responsibility, trade compliance, General workmanship standards, certifications / regulations and directives, both general such as ISO 9001, ISO 14001, ISO 45001, and sectorial specific like IATF 16949- AUTOMOTIVE-, ISO 13485- MEDICAL-…
The level of overhead, the level of requirements that we need comply with to be able to do business with our client industries is higher as ever been.
ONE COMPANY; ONE INTERFACE, ONE POSITIONING: Customers demand global companies with a local approach. Equipped with standardized processes in all production sites that allow products to be seamlessly transferred from one site to another, providing a high quality and consistent service. At IKOR our 3 sites are aligned within the same global strategy, processes and procedures, to provide our customers with a unique experience of quality, proximity and reliability all over the world and throughout our relationship.
EMSNOW: Is there anything else you would like to say to the EMSNOW readers?
It only remains for us to thank you sincerely for thinking of us to do this executive interview and give us the opportunity to explain first-hand the main changes and challenges that IKOR is going through.Of course, we invite to visit us to all those who are interested in knowing personally our facilities, as a well as contact us to resolve any questions or further information through firstname.lastname@example.org
Finally, it being December, we take the opportunity to wish the great community of EMSNOW a Merry Christmas and an unbeatable start to the year.
IKOR. Great Things are to come!