Electronics Production | March 30, 2010

Assel believes in bigger growth in 2010

In an interview with evertiq, Assel's CEO, Jarosław Prolejko explains that the company will end 2010 with an even bigger sales growth than in 2009.
Could you describe current Assel’s market position?
Assel has been operating as a contract manufacturer for 10 years. Our facility in Pruszcz Gdański has 14.000 sq. m., including newly constructed area, which is gradually utilized for new projects. We serve Polish and European customers, which expect highest level of co-operation from their manufacturing partner.

How would you like to distinguish from competitors?
Our aim is to achieve a world-class level in production. I suppose, that in many aspects, like logistic services, technical competences or production technology, we already did it.

In my opinion, competences of contact manufacturing company should extend far beyond production process, since technology is only a part of skills, that EMS company should posses. Of course, first we try to ensure the highest level of production process, supported by the newest technologies, but according to my vision, is still not enough. Our management model is focused on wide scope of competences, so even the most demanding customer could expect complex, professional service from us.

Which customers do you address your business model?
We do not select customers like ‘more or less desired’; we welcome every company. However, I can see that Assel can serve even those customers, which expect really a lot from their production partner. We achieve the development stage, which enables us to support our customers in designing and production processes, what is generally impossible in case of smaller EMS, which knowledge and competences are limited strictly to production process itself. Assel do not focus on lowest cost of production process, emphasizing the total cost for customer and working on also those problems, which appear beyond manufacturing.

How Polish companies perceive this business model?
We can see, that Polish OEMs are not able to express their expectations as clear as other European companies. The exemption are those mature companies, which operate on the market for a long time and know, how deep co-operation with EMS could be. Nevertheless we could state, that Polish companies still consider that EMS services are limited only to a component assembly.

What do you expect from 2010?
We have much better situation here in Poland that our competitors from Western Europe, where crisis was much more visible. Assel was not impacted by the slowdown and we can say, that we finish 2010 with even bigger sales growth that we gain in 2009, when we increased turnover by 20%. Perspectives for 2010 are promising. We constantly start new projects that extend our scope of competences, like implementing extensive IT system or investing in new technologies.

What are your plans in longer time frame?
We do not plan spectacular growth in sales, it is not our target. We rather focus on building wide scope of competences and creating ‘made in Poland’ brand. I would rather prefer Assel remain the company which base on ‘decent’ profit, the company which create added value for its customer, rather than on just big turnover. Assel already is not a company focusing on electronics, we would rather describe ourselves like complex manufacturing partner. Electronics assembly generates about half of sales, the rest come from other contract services like mechanics, engineering or electromechanics.

It seems that recently complex service is a major trend in EMS industry?
Most of goods is always something more than only electronics: PCB with components fixed on it is not a product yet. For customer, the main target is to shed a problem with maintaining production capacity, personnel and facility area, what is always connected with some consequences, particularly during demand fluctuations. Complex service is for me more real need than a trend.

What is your opinion on Polish EMS sector? Do Polish EMS companies differ from their foreign competitors?
The whole concept of contract manufacturing came to us relatively recently, so we still have to pass a process of ‘natural development’. However, I can see a one distinctive feature, concerning especially small companies: when in other countries companies look rather on ‘total cost’, we concentrate on ‘cost per component’, what is a very narrow conception of contract manufacturing. In Poland, outsourcing in electronics often is limited to PCB assembly only, what in my opinion, is too limited perception of cooperation.

Would you agree with the statement, that Polish OEM companies are much less eager to transfer production outside the company, than companies in other countries?
Among other aspects, it is the question about economic base of maintaining in-house capacities. Without any doubt, many decision about investing in own capacities are the result of enthusiasm after a success of company’s products on a market. When the production is high, effectiveness of own production rises, although nobody can see that in future production could be lower again and financial effectiveness of such decision could be questionable. Nobody asks, what to do with machinery, people and facility area then.

Investment decisions are made assuming further growth, but development can fluctuate and company will face the problem of overcapacity. Some people hopes for machinery utilization on EMS market then, but this in turn requires strong focus on this activity. It is extremely difficult to produce own goods and render EMS services: often such model fails, also customers are quite reluctant to such offer.

Indeed, since outside production conception is still quite new for us, Polish companies are distrustful for it. However, the production will evolve to the model established in Western Europe. In future, we expect higher labor cost, what additionally will negatively affect effectiveness of in-house production. What is more, when output volume increases, except proper production capacity problem, the companies have to focus rather on some additional challenges, like marketing and distribution.
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