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© Elcoteq Electronics Production | February 09, 2011

Elcoteq: 'Growth in EMS and AMS'

What does and EMS have to do with After Market Sales? That is a question we discussed with Vesa Keränen, head of After Market Services Business Segment at Elcoteq.
“2009 was a very difficult year for us and for many other companies too in this business. 2010 has been better. One reason being that we were able to improve the financial structure of the business. Our balance sheet today is stronger than it was a year ago and we are in a process of strengthening it further.”

Now – being better prepared for unexpected changes in market dynamics – the EMS-provider is looking at a healthy and very good business outlook. And with 2 European sites in Hungary and Estonia, the Elcoteq feels well positioned to serve its customers; both in EMS as well as AMS. There will be no immediate investments in either of the sites though, says Mr Keränen.

Both sites are strategically aligned to serve the northern European market (Tallinn) and the markets in Central and Western Europe (Pécs). “Business outlook for both sites look pretty good. We were able to grow our customer base and both sites have growth potential and prospects. We feel comfortable with these two European manufacturing sites”.

With the financial restructuring, the EMS-provider also revised its business strategy; and with it came a few management changes. “We are looking at developing our services business. Especially After Market Services. These strategic changes where the reason why we also had to align our organisational structure and management. We wanted to strengthen the company to be able to develop both of our businesses – the Electronics Manufacturing and the After Market Services.”

After Market Services is actually a major business segment for Elcoteq; has been for more than 20 year. However, the world in general has focussed mainly on Elcoteq's EMS-business. Despite the fact that Elcoteq now employs over a quarter of its staff in AMS. “It has been a profitable business and now – as we have revised our strategy – we will be able to grow further. Our goal is to develop Elcoteq as one of the leading companies in this business”.

So what is the reason to promote AMS more prominently now than in the years before?

“You can easily see that AMS is a very interesting business right now. We have estimated that in the area where we operate – Communication & Consumer Electronics – there is a huge market available. And it is steadily growing.”

Only a few large companies have been active in this area, leaving room for growth and consolidation. “We definitely intend to grow in After Market Services and our strategy is clearly aligned to that.”

So EMS and AMS are core competencies for Elcoteq? “That is absolutely correct. We see a lot of synergies between both segments. That goes from sharing resources all the way to sharing knowledge. We have manufactured millions of mobile phones, flat-screen TVs and set-top boxes over the years. The knowledge we have developed here is invaluable for our AMS business.”

Elcoteq’s AMS segment has traditionally offered high-volume depot repair services to its customers, but the service portfolio has been strengthened to include also other value adding services such as reverse logistics, refurbishment, recycling and related information management services.Furthermore, Elcoteq is also preparing expanding its geographical operations network servicing its AMS customer base.

In difference to EMS, which has been moving towards Asia with high volume manufacturing, Vesa Keränen sees Europe and North America as the main regions for developing Elcoteq's After Market Services. “We already have a good global footprint when it comes to AMS. We actually already operate in all major regions. In Europe (Tallinn /Estonia, Pécs /Hungary), in Asia (Bangalore /India; Beijing, Dongguang /China) and in North America (Monterey, Júarez /Mexico).
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Image: © Elcoteq

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