Electronics Production | December 15, 2008

Kitron invests further in Kaunas and eyes Germany

evertiq has made an interview with Kitrons CEO, Jørgen Bredesen. During the interview he told evertiq that Germany was a country that Kitron considered to invest in. Additional to that the company is considering expanding the facility in Kaunas, Lithuania by a further 4000 sqm.
How do you see the development for Kitron in 2009?
We believe that we will have continued growth during next year and have seen good order intake supporting this.. Now – as everybody is decreasing capacities – we have been growing. We have a good customer portfolio in Marine, Defence and Medical. Further we see a positive development within Defence, due to our strong cooperation with Kongsberg. In the Telecommunications segment, we have not noticed any downturn yet. In Automotive, where we have a small business, we have noticed a slight decline. During the next year we expect to see a decline in Automotive by around 30%. As a whole we expect to grow organically during 2009. However, if we increase our capacity through acquisitions, it will not happen in the Nordic region.

How do you see Kitron’s future in three to five years?
Within three to five years, we plan to be twice as large as today with the same profitability. We will focus more on regional presence and follow our customers into new markets.

Are you planning to expand in other countries in Western Europe or would you like to develop further in Scandinavia?
In Norway and Sweden, we strive to get an optimal balance with low cost alternatives as Lithuania. At the moment we are looking into Germany as there is a great potential in this market. But we will not acquire any production capacity in Germany. If we are going to acquire anything in Germany it should be a company with good engineering skills. It is not feasible to deploy a few of sales employees who travel around in Germany; it must be an established local company with local staff.

Does your factory in Lithuania work as a support for other Kitron factories, or is it more of a self-producing factory in the Baltic countries?
Today 60% of the production in Lithuania goes to our direct customers. 40% of the production support our other factories. The largest customer group in Lithuania is from the Industrial segment.

Are you planning to expand further into other countries in Eastern Europe or do you see the factory in Kaunas as well balanced?
First of all, we see China as our next big establishment. If we are to invest into more production capacity, we will probably do that in China. The Baltic countries are similar to the Nordic countries and these countries are interesting to us. We have also looked at Romania, Bulgaria, Hungary, Poland and the Czech Republic. Russia and Ukraine are too corrupt at the moment.

Are you planning to invest in some of your factories or are you planning to hire more employees?
We have a good capacity in Lithuania, where we are considering to expand the facility by adding a further 4000 sqm.

In which segments do you see Kitron’s strongest presents?
We have a good balance between all segments, but it is within Defence and Offshore that we have grown mostly, especially at our facilities in Arendal in Norway and Kaunas in Lithuania. The Automotive segment has declined slightly. We have no a wide Telecom segment, but we are strong within the Medical. Quite recently we have received contacts from a few large global offshore companies.

Would you like to grow more in a particular area?
We would like to expand further in the areas such as Defence. We were very pleased that the Norwegian government has chosen Lockheed Martin as its supplier of the fighter aircraft. We hope that our plant in Arendal, Norway will grow more thanks to this decision. We would also like to grow more in the Medical segment – both with large and small customers – especially in Sweden. Development contacts have also increased in Sweden during this year. 2008 was the first year that we earned money in all our Swedish units. The Swedish facilities in Karlskoga and Jönköping are going very well right now. We feel that in these times, more and more customers choose Kitron as there partner, because they feel safe and that we have a good customer reference.

How has the overall EMS industry changed during the last five years?
What has changed most over the last five years is the production of consumer electronics, especially Notebook PCs, LCDs and mobile phones. 5-10 years ago it was more consumer electronics that was produced in Europe, while today it is more industrial electronics that remains in Europe.

evertiq would like to thank everyone at Kitron, who has made this interview possible.
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