Enics AG Unit, Sponsored Consolidating Gains and Reinforcing by SAP Customer Trust

Manufacturer profile

A report from the Economist Intelligence Enics AG Unit, sponsored Consolidating gains and reinforcing by SAP customer trust

witzerland-based Enics AG, in the purchase of nine plants in current growth strategy is now based a contract manufacturer Finland, Sweden, Slovakia and China. on consolidating its hard-won gains Sspecialising in industrial The acquisitions have increased the of expansion. Mr Itkonen believes and medical electronics, is a company’s staff to 2,700 employees. that growth in the near future will midsize manufacturer that has Annual revenues reached US$370m be based on wholly-owned resources undergone rapid growth in recent in 2006, and Enics expects to grow rather than new acquisitions, and years. Founded in the late 1960s in this to US$500m within the next three says the company’s aim for the Baden, Switzerland, the company years. coming years is to grow organically. underwent a management buyout in Growth by acquisition has not Notwithstanding the outlook for 2004, and in the three years since come easily, however, as the firm’s slower macroeconomic growth in it has experienced annual revenue president and CEO, Reijo Itkonen Europe and North America over the growth of over 40%. By its own explains. “It takes time to integrate next couple of years, Mr Itkonen reckoning Enics ranks 21st in the other businesses, and during periods remains positive on his firm’s growth list of the world’s largest electronics of assimilation, changes can be prospects. “In our sector, growth manufacturing services (EMS) firms. made that have a negative effect on and outsourcing will continue. At Acquisitions have been at the the business. Once integration is Enics, we have developed a corporate core of the company’s expansion complete, however, the impact on the structure that is particularly suited to plans, particularly since 2004, when bottom line can be very positive.” support outsourcing, which fits our a flurry of business deals resulted Such experience means that Enics’ focus.”

Customer confidence objectives are beneficial to both The inventory challenge For producers everywhere, customer parties, we start to focus on the For the moment Enics is squaring demands on supplier performance manufacturing aspect.” its shoulders for the next phase of are increasingly coming to shape Once a deal is sealed, Enics development. “We have focused manufacturing processes. The human starts what it calls a “lifecycle primarily on customer relationships element in this—direct relationships service programme”, which covers and the creation of a service culture, of senior managers, sales and engineering development through with the aim of creating trust based service staff with the customer—is to product relaunch, once cost- on consistent performance,” says an important asset of midsize reduction processes and product Mr Itkonen. “Our customers want to producers in their rivalry with larger enhancements have been taken into see that we keep our promises and competitors. When asked how they account. Early involvement in the stick to our strategies. It is now time can keep pace with the changing engineering process can help both for us to expand our attention to demands of customers, respondents sides to produce a high-quality result. look at inventory control and waste to an Economist Intelligence Unit Such partnering also requires the elimination.” survey pointed to the better training participation of every department, To get this right, the company of sales people to solicit customer in order to create a supply chain that is investing in technology to help information, as well as regular site enables Enics to build different tools optimise waste reduction. It is no visits of production and design to satisfy particular demand. easy task, however, and one that, managers. Internally, Enics uses a Knowledge observes Mr Itkonen, requires world- For Enics, forging close Portal System (KPS) to measure class machinery and the technology relationships with customers is an its operational performance on a to run it at full capacity. The other important part of manufacturing quarterly basis. According to Mr challenge, he says, is to manage and overall growth strategy. Says Mr Itkonen, this allows Enics to set inventories and the supply chain, so Itkonen: “We communicate with the targets for each business unit, to the business can identify the extent senior executives of our prospective ensure continuous improvement in to which cash resources are tied up in customers to make sure there is a productivity and the elimination of idle products. common goal, even if, at first, the inefficiency and waste. It has started The potential rewards on offer customer’s needs are not totally to measure the results on a monthly are promising. The firm’s projected visible to our own people. When basis, but Mr Itkonen admits there is annual growth rate of 15% will double we are convinced that our mutual still a long way to go in this area. the size of Enics’ gross revenues in

2 © The Economist Intelligence Unit 2008 Enics AG Consolidating gains and reinforcing customer trust Manufacturer profile

five years. Growth at such a rate, and concentrate on those market it looks to build a presence in North however, can be very disruptive for a sectors where it has proved to be most America. “We have to support the midsize firm, and Mr Itkonen is under effective in the past. “Consumer EMS customer’s strategy to build their no illusion about the challenges products have a product life of eight capability and serve them wherever facing the business. to 24 months, while our products they are.” For low-volume, high- “Competition is heavy, and the have a life of ten times that. It takes margin customers, this means, pressure to buy materials at the right discipline, however, not to follow for example, being able to “hold price is always an issue. This is made demand that takes us away from our discussions with their engineering worse for us because we are not yet a core competence. We want to benefit staff in the same language.” For those global enterprise. Currency exchange from the opportunities to diversify customers requiring higher volumes, rates are another concern, which within the industrial and medical says Mr Itkonen, you must also be frequently fluctuate far more quickly electronics sectors, but at the same able to deliver competitive prices in than our contractual commitments. time we need to remain close to our some areas such as eastern Europe Labour and fixed costs cannot be roots.” or China. “You have to have both overlooked either,” he says. Such a delicate balancing act cost competitiveness and customer To mitigate these risks, Enics is could also be applied to the next proximity,” he maintains. looking to minimise its expenses phase in Enics’ growth strategy, as

© The Economist Intelligence Unit 2008 3 Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper.

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