EMS@C-LEVEL

Electronica 24: Exploring Resilience in Global Manufacturing with GPV CEO Bo Lybæk

• Philip Spagnoli Stoten

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I join Bo Lybæk GPV CEO on their booth at Electronica 2024 to unravel the complexities of global strategy in a world rife with political and economic uncertainties. How do businesses plan for the year 2025 with the recent US elections and potential rate cuts on the horizon? Bo offers a glimpse into GPV's strategic expansion efforts across Southeast Asia, Slovakia, and Mexico. 

He sheds light on how the company is navigating the transition from globalization to regionalization, all while contending with the competitive pressures from China. As the global business landscape becomes more unpredictable, adapting to shifting regulations, tariffs, and market restrictions becomes crucial. My conversation with Bo delves into the vital agility required to flourish in this volatile environment. While past trends leaned towards globalization, today's challenges demand flexibility and resilience. 

Bo & I also discuss the numbers behind the numbers, exploring what makes GPV unique, as well as the importance of team and culture, and doing business in an 'orderly' and planned fashion. Bo’s strategic insights provide a firsthand look at how EMS businesses like GPV can thrive despite global uncertainties, offering valuable lessons in competitiveness and resilience.

EMS@C-Level at electronica 2024 was hosted by IPC (https://www.ipc.org/)

Like every episode of EMS@C-Level, this one was sponsored by global inspection leader Koh Young (https://www.kohyoung.com).

You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.

Philip Stoten:

I'm joined by Bo on the GPV stand. Bo, absolute pleasure to chat to you again. Nice to meet you again. We were going to talk earlier in the week, but it's kind of nice. We didn't because I got to see your results before we spoke. No real surprises. I think the market is where the market is when you kind of look forward. I think some of the delay in the market was due to politics, due to the election coming in the US, due to the potential for rate cuts, those kind of things. I know they're behind us, but they're only just behind us. How did those decisions affect what you think will happen in 2025? And how do they affect how you plan your?

Bo Lybæk:

business. I think our business plan or budget for 2025 is another complex budget to make. It was also complex to make the 2024 budget and even though we thought that we had made a good budget, we are still a little bit below the budget. Of course, it was not a surprise that we would be below 23. But what about 2025? I think we have seen that the inventories where our customers have been going down have they finished going down?

Bo Lybæk:

Maybe not completely, but at least we see that we are starting bottoming out, and if that is the case and if they are still selling at a certain sensible level, then it should lead to a certain upturn next year.

Philip Stoten:

Yeah, it should be expected, shouldn't it year? Yeah, that's kind of… it should be expected, shouldn't it? But we don't know what the timing is.

Bo Lybæk:

Of course we don't know, and I don't know the timing either. So what we have communicated, that is in the latter part of 2025. Whatever that is, is it the 23rd? Of July or what is it. So I don't know, but I think that we'll still see a challenging year next year.

Philip Stoten:

Yeah.

Bo Lybæk:

Or a soft year, or whatever you call it.

Philip Stoten:

Yeah a flat year. I'm inclined to agree with you. I think part of it, as I say, was politics, part of it was the inventory bubble that you spoke of. Have you managed to push inventory out of your business? Has your inventory load gone down?

Bo Lybæk:

Yeah, inventory out of your business. Has your inventory load gone down? We have, of course, also worked to reduce inventory, like our customers have, and we are still not back on the level where we were before. But I think we are at a level where it is much more digestible. But of course, it's a continued process and I think our customers are living up to their responsibility because they have asked us to order this, and so thank you very much to our customers for doing that.

Philip Stoten:

Yeah, that makes a big difference, doesn't it? Having had the Final decision made in the US in the presidential election, my sense is we're headed for an era where that pendulum swing from globalization to regionalization continues. Maybe the US gets a little bit more protectionist. How does that impact where you manufacture and your overall strategy with respect to global footprint?

Bo Lybæk:

I like that you say continue, because I think the tracks for this direction has been laid many years ago.

Bo Lybæk:

So it has actually always been running in that direction for quite a while and I think that you're right, trump's government will continue that direction. So what we see, that is still tension between the US and China on the trade side. So for us, china is becoming fast, china for China. And then we have Southeast Asia, we have best-cost Europe, proximity Europe, which is high-cost Europe, and America, so Mexico in our case, and we have expanded actually in all regions except China and high-cost Europe. So we have expanded in Southeast Asia, in Thailand and in Sri Lanka. We have set up a new factory in Slovakia and we have expanded double our size in Mexico, yeah, and that is because we think that is supporting this change in the supply chain direction. Mexico is having a very attractive pipeline, yeah, and we need to execute on that and hopefully we can execute well and fast on that. But also this more regional globalization, if I can use that word, because there are rules and regulations in the different regions that we have to fulfill, that we have to live up to and understand.

Bo Lybæk:

So it is a more complex world that we are operating in now and five years ago.

Philip Stoten:

Yeah, I would say two things to that. One is I absolutely agree with you that people are looking for low-cost local rather than low-cost global, which is like chasing one area of low-cost labor to wherever it is in the world. So I think that's an interesting change. But I think the other thing is…. One comment to that.

Bo Lybæk:

I would actually hope that you…. One comment to that I would actually hope that you were fully right in that. But I also see that China is lacking work, so they are also offering extremely competitive prices. And is that really a level playing field? I'm not so sure, but it is as it is. Werices, yeah, and is that really a level playing field? I'm not so sure. No, but it is as it is and we have to deal with it. We have done that before and we'll also do that.

Philip Stoten:

Now. We'll come on something else that talks to the level playing field in a minute. But the other thing I wanted to add in terms of having that global footprint is I think there's a realization that when we design a global footprint, we have to design in agility. We can't design something that's fixed and rigid. We have to be ready for trade tensions and changes as they occur.

Bo Lybæk:

I agree to that and I think that we are also operating agile. I think we have shown that and if I just look at what we have been doing this year in GTE to further be ready for when an upturn is coming, we made a new organization after the integration with the former Enix and now that some time has passed and we have allowed ourselves to test again through a program that we have called Simplify and Optimize, Is this the real best simplified organization that we can have for the business environment that we're seeing? So we have had to take some structural changes and so on, so that we hope that we are standing that's the aim standing even stronger when things start to pick up again.

Philip Stoten:

When we look at your results, we look at the financial side of it, but there's so much that you're looking at which is the numbers behind the numbers, the performance that you have on sustainability, the performance you have on diversity and inclusion and accessibility to the workforce, how you take care of the workforce and the environment you operate in. Those are really important elements of GPD's DNA.

Bo Lybæk:

Yes, it is or they are. We have always prided ourselves to be an orderly company and we want to do business in an orderly way. There's no discussion about that. So we also have targets. We have our financial in our strategy house. Our financial targets are through the left-hand side and the more maybe soft targets or ESG targets they are through the right-hand side because they go hand-in-hand and you cannot do the one without the other.

Bo Lybæk:

So, we need to have a certain profitability to be able to do the other, and we strongly believe that we need also to have the other to do a responsible business going forward, and it was fantastic for me to participate yesterday, from Munich, in a call with our colleagues in Denmark where they got a prize by one of the biggest unions in Denmark for collaboration in the site promoted by our own employees, so that was fantastic. When it comes to sustainability, or ESG, we are also committed to do our fair share of this. There's no doubt about that, but we'll not go to the edge where we go bankrupt, yeah of course.

Bo Lybæk:

So I am concerned about the competitiveness that we have. I'm concerned about the competitiveness that we have. I'm concerned about the competitiveness in Europe. Now we are in Europe and we have to understand that we are living, at least as an EMS player. We are living in the entire world, so we are exposed to the entire world and we have to be sure that we have the necessary competitiveness to generate business for GPV.

Philip Stoten:

Yeah, and to achieve what you want to achieve. And that means being aware that the regulations that you work to might not be the same as the regulations your competitors work to. And also, you know tariffs, incentives, restrictions are in the market. You have to be agile enough to deal with them, and that's a big challenge, isn't it?

Bo Lybæk:

It is a challenge and it is as I said before. It is a complex world, more complex. I'm so old that all my professional career it has actually been going towards more and more globalization, but at least for the moment, that has changed. Will it also be like this in 20 years? I actually don't think so. I think, we'll see many more changes than we have been used to.

Philip Stoten:

Yeah, it's moving faster than ever, and I, too, have been in this industry a long time, so I've seen many of those trends. What I'm excited about, bo, is you running a business in an orderly fashion in a relatively chaotic world, so thank you for that and thank you for talking to me. Have a great show yeah, thank you.