Still Flexing muscles in the UK
22 February 2011
Author : Tim Fryer
Flextronics reveals how it operates its ‘local but global’ businesses.
Tim Fryer interviewed Mattias Lindhe, Vice President of Flextronics' Special Business Solutions (SBS).
Tim Fryer: What is SBS and how does it fit into the Flextronics portfolio?
Mattias Lindhe: Flextronics is currently organised into five strategic market sectors, Consumer-Mobile, Computing, Industrial, Infrastructure and Medical. The SBS brand is currently part of Flextronics Industrial which is a highly diversified business supporting over 300 clients worldwide.
TF: Does SBS have a lot of local branches and a lot of different geographies?
ML: Today we have 18 sites across Europe, North America and Asia. The strategy behind SBS was originally developed in Europe as we identified that there was gap in the market for a Tier 1 EMS provider to provide local customers with local design, manufacturing and other services such as product fulfilment, distribution and repair.
The gap existed as many of our competitors had restructured operations in Europe and, simply put, not all customers wanted their business to move to an overseas location. By being local, it allows us to service our customers in the same time zone, same language and culture. Many of our customers’ products are extremely complex and require high amounts of engineering and testing. So if our customers need to be onsite for any engineering changes for example, they can do so very easily.
TF: Are you competing directly for medium volume business or are you hoping to catch companies early that aregoing to grow into high volume?
ML: It is both. As I mentioned, SBS works with over 300 clients today. We have engaged with several clients at design and concept stage and worked with them as their product and market matures over time. There are really no rules around ‘volume’, each client has its own unique requirements, and we align our strategy accordingly to support their needs. It is really about finding the best fit.
TF: What do you count as a good fit?
ML: A good fit is a customer that we can grow with and continue to expand our service offerings and product portfolio. The EMS market is an extremely competitive environment and we recognise that we have strong competitors, so it is very important that we can continue to create value for our customers.
TF: How do you approach the market in the UK and Ireland?
ML: We have a dedicated sales team located in the UK who are focused on servicing the local markets. Our manufacturing facility is based in Cork, Ireland, where we have around 350 people supporting around 15 clients. But we also have several distribution and product fulfilment sites where we offer expanded services such as spare parts management and product repair.
TF: Does all the work from the UK and Ireland go to the Cork site?
ML: It all depends on the strategy we develop with the customer and how we can best support their needs. We have customers in the UK that are served in Eastern Europe or Asia, but equally we have customers from North America that we support in Cork for example. The site in Cork has experience across a wide range of market sectors including telecom infrastructure, networking, storage, industrial and medical devices.
TF: But certainly all the NPI stuff would be done in Ireland?
ML: In the early stages of any relationship, particularly for complex products, then typically engineers from both sides like to stay close to each other, and so having the NPI done locally could be a better strategy for the customer. We invested around 12 months ago in setting-up dedicated NPI lines and capabilities, based on the feedback from existing and target customers based here in the region.
TF: How is business in the UK at the moment?
ML: The UK market remains pretty challenging, but we are pleased with our success during these last few years. I think it is important to recognise that the UK market is still involved in technology R&D and therefore the electronics market overall remains a key part of our business economy.
But as I said earlier, there are many local and “strong” competitors in our market, so we cannot be complacent around the challenges we are faced with as we are all competing to win the same customers. This is why we continue to invest and promote SBS and the expanded portfolio of services that allow us to help our customers become more competitive.
TF: As you say, there is still quite a lot of design done in the UK. Are you looking for these designers or are you looking for established product lines?
ML: Both. There is definitely an increase in activities where we are helping customers with product design and development, helping them to transform their product concepts into tangible solutions. As I mentioned, the UK is still very strong in R&D, particularly in the emerging areas such as Clean Technology, LED lighting etc. But we also see many OEMs coming to Flextronics as they wish to take advantage and leverage our global footprint and services to help them expand into new markets.
TF: With the rise in oil prices, and people becoming increasingly aware of the environmental costs of shipping goods around the world, is the model of manufacturing in the end market now returning? And therefore, as you now have what is by UK standards a sizeable facility, will this be to your advantage?
ML: I have no doubt at all. The focus around all of our European sites in the future is for higher level electronic assembly. You are absolutely right that 99% of all OEMs are concerned with the amount of capital they have tied up in their supply chain around the world. Time to market is very critical, particularly when you see what is happening in terms of technology convergence such as the connected home or smart grid. We can help our customers to understand the true costs of manufacturing their products and understanding the true time to market costs by using our SIMFLEX tool. This is basically a propriety software simulation tool that creates “optimised” supply chain scenarious, taking into account all key variables and measurements that are important to our customers, and their end markets.
TF: So there are factors favouring European manufacture again?
ML: Yes, our facilities in Europe continue to win business, both with existing customers and new customers so there is still a strong trend for manufacturing close to the end markets, particularly for complex build to order products or large form factor electro-mechanical type assemblies.
In addition, there are also many government incentives on offer to secure manufacturing jobs, particularly in the areas of Clean Tech as I mentioned earlier. So all of these factors combined help to ensure that we have a strategic future in the region.
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