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Electronics Production | November 09, 2009

Gargnas launches new EMS concepts

evertiq has received information which indicates a new unique concept that changes the conditions for the production moved at a cost effective and flexible way between factories in the world.

Today deadlocks often occur when a product reaches a volume that makes the transfer of production necessary because of cost and production reasons. These problems are usually caused when the factories at the local level are working for that production should stay, while the company management wants to move production because it really is better suited to manufacture elsewhere. "Many of the contract manufacturers today are in a situation where they have their fixed assets in Scandinavia and Eastern Europe", says Mikael Jonson, Chairman of cabling and contract manufacturer Gargnäs, to evertiq. "As I have previously worked with clients in the EMS industry, we had access to Sweden, Norway, Finland, Poland and China. But the organization of the local units did often not move into Eastern Europe. At the times we did it, we were often forced to do that anyway, in order to retain the customer or the customer forced us. Then we had the same problem when we should move from Eastern Europe to Asia. It became a kind of rescue operation and the problem was due to account managers worked at the same sites that had production”, he continues. Gargnas want, together with its partners, reverse this and build something new where these blockages are eliminated and create something that is right for the individual customer. A business team with a manager who sits above the entire product lifecycle with an interest in constantly moving production where it fits best is what the new concept is aimed at. When the product is ready technologically to be moved it will be moved. There is more technology and logistic reasons that is important for the decision to move than the volume. "Since I started work for Gargnas we have looked at how we can become a great partner in contract manufacturing, and there has been a lot of big changes there over the past year," continues Michael Jonson. Gargnäs, with CEO Michael Åkesson, are building up a very strong management team with talented people who have many years experience in contract manufacturing. Among others, one of the best systems integrators and one of Sweden's best purchasing managers of electronics are recruited. Gargnas has also opened in China and has built a strong team there. Within the framework of the cooperation Gargnas has started work with two partners in China. One is a Taiwanese-owned cable assembly manufacturers named YFC, located in Dongguan, China. Gargnas has already started production at this plant for a Swedish customer. The second is the world's 15th largest contract manufacturer 3CEMS with 10,000 employees in Guangzhou. Gargnas has signed an exclusive agreement with 3CEMS to become the extended arm in Europe on a larger scale. Gargnas works closely with 3CEMS and can have their engineers working in Sweden. Furthermore 3CEMS's size is important for Gargnas, where it is necessary to be locally strong in the Chinese market in order to gain sympathy with the authorities and reaching a high stability in everything they do in China.   Gargnas has also bought a business in Poland, about a year ago. After this, the company moved its Polish business to a new factory in Gdynia. Gargnas has also moved its past activities in Riga to the new factory in Poland. The new factory is specialized in cabling, systems integration and box build. The Malmö-based contract manufacturer Onrox is also linked to the concept as the first local partner of prototypes and short runs. Onrox has during the past 25 years built up a base of a total of 400 clients in need of smaller and medium-sized production from a local flexible partner. The contractor is mainly locally in the Skåne area, but deliveries are made worldwide, and Onrox has no ambition to change its successful concept. This new collaboration sees from Onrox as an additional service to the existing business idea. In addition, Onrox now includes the ability to offer its existing customers the Chinese production, when this adds value to the customer. "The whole concept is based on strong partners and we are proud to have Onrox as a part of it," says Mikael Jonson. Gargnas, part of the Fairford Group, is currently just over 100 employees. In Sweden, it is not intended to be more than 20 employees. The rest will be abroad and working at the partners that the company is cooperating with. The idea is to create an organization where production can be moved in a smooth and cost-effective way between different factories during a product life cycle, but without the problems that were described initially. Gargnas now creates a path right into their partners. Both plants and people are very in sync with each other and Gargnas have staff on site in the various units that appear throughout the product lifecycle. Gargnäs take responsibility for the business, but then the customer makes the transaction with the partner that has production. However, there is always a person in charge at Gargnas who always has an interest to take the production to where it is most profitable for the customer ". "For the customer this will become cleaner and the customer knows what he pays for." There is nobody on the actual factory which can keep production local, because it will be worked on from the top”, says Mikael Jonson. "We are trying to find something that is very easy for the customer and do not have the built-in error where someone is trying to keep production in the wrong place". For purchasers the BOM-list will be set in Sweden together with all involved partners. Afterwards, the purchases in Europe and China will be done in one moment. "This means we get the best out of each place, while there will be no margin on  margin when we bill the customer," says Mikael Jonson who find it difficult to see that someone can beat them in this calculation. Gargnas has received a major order within the framework of this cooperation. The order is as big as the whole Gargnas turnover. This despite the fact that everything is not in place yet. "We're testing this on a number of clients, we listen and try to understand customer needs so that we get all pieces of the puzzle right. Then it will be best for the client, and that it is also best for us," says Mikael Jonson. The cooperation aims to customers with high turnover, but not necessarily large volumes. Short volumes should be no problem. "What we are doing here is that we are building something of real-qualified components. We do not have a complete business concept yet. We have gathered a number of pieces that we think are extremely good, but we have not finished the whole puzzle yet. We are starting with very little so that we do not have large fixed costs in the wrong place, but we start with something that feels very right from the beginning. We also have great fun along the way", concludes Mikael Jonson. The three companies, Gargnas, 3CEMS and Onrox in cooperation will be co-exhibitor at Elmia Subcontractor in Jönköping this week, where the concept will be presented in more in detail.
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