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Link Magazine #1 2024

Call it a matter of recalibration. Of anticipating, too, a world that continues to change rapidly post-Covid. In any case, the fact is that Connect Group, as a contract manufacturer, is focusing more than ever on a division by region. With the further integration of the previously acquired IKOR as the main spearhead, the organization is also geared to this. All the more reason to ask ceo Jeroen Tuik about the new strategy. Which, it turns out, not only responds to an increased capacity, but has also deepened its own services.

BY JAN BROEKS

Jeroen Tuik, ceo of Connect Group, understood the comment. The acquisition of IKOR in 2021 had only just been completed when he heard that this was then definitely the step toward high-volume production. 'But no, that was not the main consideration. Connect Group has a great mix of products, combined with medium-low volumes. That's what we're known for and what we continue to do.' So it was opted to operate IKOR under its own name for the past three years, as a company that designs and manufactures electronic circuits. This complements Connect Group's assembly of cables, circuit boards and modules. Tuik states, "Because we had no idea of the impact of a name change on IKOR's customers, we opted to keep the name.

Financially healthy

How different it is now. IKOR has been made profitable, Tuik says, and further integrated into the organization of Connect Group, based in the Netherlands in Veldhoven. Together the companies reach worldwide, with divisions for Asia, North America and Europe. According to the ceo, it has provided the necessary clout with an organization that is set up for the future. Hence, later this year, IKOR will still merge into Connect Group, which will then employ a total of just under 3,000 people. 'With that, we are adequately staffed, as is our capacity. Last year our plant in Mexico opened, and later this year we will expand the location in Romania and the Czech Republic. In short, we have the people, machines and square meters. Add to that the fact that we are financially healthy, and you can say that we are ready for further growth.'

Regional consolidation

For that same growth, Tuik is not looking too far ahead. A benchmark like 2030 is too far away for the ceo; geopolitical changes are moving too fast for that. 'Consider how fast things have gone after corona. Companies are pulling out of China and consolidating regionally. It's up to us to anticipate that, which we are doing by focusing on the three regions.' In any case, the fact is that Connect Group has grown organically in recent years in addition to the acquisition of IKOR. And that this development will continue in 2024, which with IKOR added should result in a turnover of some 365 to 370 million euros in 2023. 'In addition to our investments in terms of capacity, we have also acquired many new customers in recent years. Moreover, I have good expectations from our Connect Technology Center (CTC). This center has been set up as an independent fourth division, with which we focus specifically on prototyping, design & development, production services and testing. This independence ensures that CTC can both serve the entire group and enter the market independently.

Contributing to success

CTC is an asset with which a contract manufacturer such as Connect Group can distinguish itself, Tuik emphasizes: "Our global presence does not distinguish us enough from other contract manufacturers. So you have to look for it in the corporate culture, in the drive to really understand the client. We do that with a no-nonsense approach, transferring our knowledge with additional services such as through our new competence center CTC. As a result, we contribute to our customers' success by working with them to find solutions to their problems. 'Technology is a Service' is a broadly worded mission but, still describes what we stand for.'

Supply chain at multiple levels

With the integration of IKOR, Connect Group is also more broadly positioned in the market. If the client grows and/or leaves for another region, we can anchor the cooperation in a global organization. Moreover, coverage in Asia, North America and Europe leads to a stronger procurement position, Tuik notes. "We opted for a hybrid model where the planning and ordering functions are housed locally, in the different regions. The sourcing on the other hand, the determination of the conditions at which we purchase, is housed in a central organization in order to be able to speak on the same level with our manufacturers, who are also organized globally. It allows us to make agreements at different levels, depending on the need and the opportunity. Sometimes global, other times very local.'

Sharp on working capital

There is no shortage of opportunities, although Tuik is keen on the risks. Because of the long delivery times on components and our customer's demand for flexibility, Connect Group is a very working capital-intensive company. We make our money, while our margins are small, available to our clients by building inventory that allows them to conduct their business. That demands something of our sales if we are to be able to fund everything.' Hence the importance of responding flexibly to change, Tuik stresses. 'During Covid, we too were far from always knowing when we would get what materials. In half the cases, we didn't even get confirmation. That made planning difficult, and increased the need for real-time analysis. So we started working on that internally, setting up our own processes and building an online overview. That approach allows us to be of service and communicate quickly and accurately with the customer. That's where this system helps us. It is not finished, we are still working on it. Visibility on the availability of components has improved by leaps and bounds, which means that for control of the process, steps have definitely been taken.

Infrastructure share grows

Connect Group was founded in 1987. Headquartered in Belgium, the company also already had locations in the Netherlands, Germany, Romania and the Czech Republic. The acquisition of IKOR added locations in China, Spain and Mexico, allowing Connect Group to further focus on markets such as railway, healthcare, automotive, industrial and infrastructure. It is precisely the latter market in which Tuik sees a lot of potential. "Industry is the largest market for us, although it is precisely there that companies are making a U-turn. They are moving towards infrastructure, among other things. We have everything we need in-house for the assembly and cabling of public charging stations, among other things.'

Source: Linkmagazine.nl