EMS@C-LEVEL

Electronica 24: Markets, Geopolitics, Culture and AI in Manufacturing, with Zollner's Markus Aschenbrenner

• Philip Spagnoli Stoten

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Explore the strategies behind staying ahead in the global market as I chat with Markus Aschenbrenner from Zollner. Markus unpacks how the inventory bubble, geopolitical influences,  inflation and interest rate shifts, and a tilt toward protectionism, are shaping manufacturing strategies. He also shares Zollner's recent moves in broadening their reach, such as acquiring EIT and Bluechips, to create a more versatile, globally-spanning manufacturing network designed to weather economic shifts and meet diverse customer demands.

We delve into the pivotal role digitalization plays in fortifying supply chain agility. With a network of 7,000 suppliers delivering 300,000 products, Zollner is at the forefront of harnessing AI and forming strategic alliances, like their technology partnership with Luminovo. These technological advancements are not just about keeping pace but about achieving new heights of predictive insights, transparency, and operational agility. We spotlight Zollner's steadfast commitment to innovation and adaptability, ensuring they remain true to their culture and vision, and not just participants but leaders in the ever-evolving supply chain landscape.

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:

Hello, I'm Philip Stoughton. I'm at Electronica 2024, and I'm joined by Marcus Aschenbrenner from Zolder. Marcus, always a pleasure to talk to you. We had a really nice chat on stage at the IPC EMS seminar in Gdansk and we recorded. I'm not going to ask the same questions again because I kind of sense that between then and now the market hasn't changed. The market remains challenging. People suspect those challenges are going to be well into next year. Is that how you see it at the moment, timing-wise?

Markus Aschenbrenner:

You know you have to separate a little bit because if I talk about the market, you know it's not all over the globe the same situation that we see right now. So the US is doing very well. Asia is also not doing bad. There's a little bit of downturn in China, or not that much growth in China than we used to see in the past. But the rest is good. So the downturn is really in Europe, and especially in Germany.

Markus Aschenbrenner:

So that's where we have the downturn, yeah, and for Germany and Europe, I really see that the downturn also going into next year. And if you would have asked me last year, I would have said okay, second half of 24, we see an upturn, I think during customer this week it will be the second half of next year, but you know there's so much insecurity and all the discussions that I customer this week.

Markus Aschenbrenner:

it will be the second half of next year, but you know there's so much insecurity in all the discussions that I had this week with customers and also with our foreign supply chain. So much insecurity I haven't seen for a while. And this is really we look forward in 2025 that during the second half and during the end that should get better, because then all the stocks should come down so. I expect that there's something happening.

Philip Stoten:

Yeah, no, I'm inclined to agree. We've managed to get. The other challenges, I think that were stressing the market were political elections coming up and also interest rates coming down. In the US, We've seen two rate cuts from the Fed since we last spoke. We've seen the result of the presidential election. The issue with there might be. We're heading into a perhaps more protectionist environment, which again makes you think about manufacturing geography, where you should be, where that footprint should be. How challenging is it for you to predict where people are going to want you to make stuff? And is it about designing the footprint or designing agility into the footprint?

Markus Aschenbrenner:

That's not an easy question to answer and it's not easy to answer for the different customers that we have in the different industries, but what we did as a group is to prepare for that. You are watching us since years already and you saw what we did over the last couple of years.

Philip Stoten:

Yeah, probably for the last decades as well.

Markus Aschenbrenner:

We developed our footprint, the way that we could manufacture all of the needs of our customers in the different geographies, and that's exactly what we, what we did and what we continue. So with the, with the acquisition of EIT on the east coast, we have three sites on the east coast, two on the west coast, so we're quite well equipped in the US. In the meantime, costa Rica we are tripling the floor space there right now. So that's again to deal with what we think will happen that there's business moving into the US, partly driven by the government protectionism, partly also driven by our customers saying we need to get there in order to address the market. That's the one side, and on the other side, our China Plus strategy.

Philip Stoten:

We just announced this week that we made an acquisition in.

Markus Aschenbrenner:

Thailand with Blue Chips, and that's exactly to accommodate with those things that we see that there's a need, a desperate need from our customers that need to have another footprint in Asia in order to bring products out of China but keeping it locally in Southeast Asia.

Markus Aschenbrenner:

And therefore, the strategy is pretty clear that China will be a manufacturing spot for the local demand, whether it is a Chinese customer or an international customer looking for the Chinese market, but it will be manufactured in China, and Thailand will be then the spot for us where we can ship all over the globe, because there's nearly no restrictions out of Thailand, and that's how we're preparing for exactly the things that you were mentioning.

Philip Stoten:

Yeah, and it makes perfect sense. It was interesting actually. I bumped into Stefan Deiss today who I hadn't seen for a while. Couldn't believe he'd been in California for 13 years.

Markus Aschenbrenner:

He is long-term there.

Philip Stoten:

Yeah, he hasn't aged at all though, bless him. But he was telling me how delighted he was with the EIT thing and how it was a good cultural fit for you. When you look at companies like blue chip and those, those we, we used to zone up, putting their own facilities in places, so it's automatically your culture when you're acquiring, it must be really important to try and at least recognize some matching culture.

Markus Aschenbrenner:

So we are not doing it the usual way you know, hiring an M&A company who is looking for candidates. We do it a little bit different. We have a good network, we know a lot of companies and it's actually what you're saying. We are a family-owned company with a known culture and that culture is very important for us, because you were visiting most of our sites and I think you have a very good overview that. The culture that we have in germany, yeah, we already developed that culture around the globe in all of our sites and it works and your customers expect it and our customers are expecting this, and I like that, and especially then if we are acquiring a company.

Markus Aschenbrenner:

one of the really things where we spend a lot of time is getting a feeling for the culture which is there and looking at EIT. Eit is a family-owned company having the same cultural layout or base that we have, and for Bluechips it's the same. So a German family running or founding and developing a company in Thailand with really the same spirit that we have and a proper cultural fit.

Philip Stoten:

That's very seldom and this is exactly why we did it, why they're a good fit and it's that passion for quality engineering, passion for performance and the way you support customers. Passion for people. Passion for people is the most important topic.

Markus Aschenbrenner:

Quality technology, all the kind of stuff that's also necessary, but people is the most important topic.

Philip Stoten:

Quality technology, all the kind of stuff that's also necessary, but people is the most important thing, yeah no, absolutely, and you know it goes all the way back through the history of the business, one of the things I really like about Zona and that stands out and I've always, as I've watched the development of the industry, I'm always interested in the DNA of companies. What makes companies different? You know industry, I'm always interested in the DNA of companies. What?

Markus Aschenbrenner:

makes companies different? What?

Philip Stoten:

makes the larger players different from each other and Zona's never wavered. It's been Zona as we know it for as long as I've been in the industry and that's 25 plus years, and you recognize that when you're in a Zona facility, you recognize that when you're talking to a Zona executive. They've avoided that temptation to chase bright and shiny things different operations. They know the most important word is service and they deliver on that. Is that something that's just happened? Has that been a cultural core, or have you constantly had to maintain that?

Markus Aschenbrenner:

So I think that was there from the beginning, because it's the spirit, how our founder founded the company and what he tried to teach us as young kids getting grown up in the company. He teaches us how to handle customers, how to treat people.

Markus Aschenbrenner:

It's very important and that's the cultural fit that we think is for the business that we're doing, which is more in technology, low-volume, high-mix, complex systems in the high technology field. I think this is why we're seen as a very reliable, long-term thinking and customer-oriented partner, and that's exactly the culture that was there from the beginning and that we try to keep on and also develop further, although we are growing on a global footprint. And that's one of the hard things to do, because it's not that easy, but that's something that we want to keep here.

Philip Stoten:

Yes, so valuable. And just on that note, it was an absolute delight to see Manfred here yesterday he was looking well and nice to see the father of that, almost the father of the German industry, but certainly of the Zollner group and that, as you say that identity remains in there.

Philip Stoten:

What I think is fascinating is there's lots of tradition in what you do, but there's also a desire to do new things the partnership that you talked about with Luminovo for example the way you're embracing AI and new technologies, the way you're using your domain expertise as a manufacturer to match with other people's domain expertise in the application of AI or inspection all those things to do really good things. That's hugely valuable and that's helping you stay in front, I guess.

Markus Aschenbrenner:

Of course, you know also, we try to keep our traditions and we try to keep our culture. It's necessary that you look what is out there there, what is changing, what are new things coming up, what can you embrace or what can you integrate in your business model in order to develop further. So that's a constant view that we have on on such possibilities and that was also the reasons for um, for the acquisition that we made in the ai field with tiki, that we that we acquired already three years ago, and also the partnership with LuminOVO in order to get more power in the whole AI arena and also in the interface towards customers, towards suppliers, and that's exactly why we did this. And this is a constant view that we have on digitalization, optimization, new technologies, what could the market require tomorrow? And this is exactly why we do this.

Philip Stoten:

Yeah, and I think it's fascinating that and we've talked about this in the past and you said that you know it's not just about the factory floor, it's about business systems supply chains, things like that.

Philip Stoten:

It's really nice to see so much investment and new technology in the supply chain because when you look over the last three years, the supply chain has been hurting and it's caused problems. I personally kind of felt a little bit disappointed that we ended this recent crisis with so much inventory overhang, just like we did in the year 2000. I'm thinking 20 years we haven't learned anything. We have, but we need a much stronger digital thread through that.

Markus Aschenbrenner:

It's always the same and we talked about that a lot during the years because the cycles are getting worse. That's happening and that's a given in my opinion. So digitalization the visibility in supply chain is one of the key things.

Markus Aschenbrenner:

Look, we have about 7,000 suppliers, 300,000 products or parts that we purchase in order to do the products for our customers, and without digitalization you can't deal with that. And this was exactly the reason why we went into the whole AI thing and in the partnership with Nomi Novo, in order to get that connection into the supply base and into customers more advanced, predictable and the insights there. And that's for us a must, otherwise we can't deal with that variety of supply chain.

Philip Stoten:

And that's going to be huge and that's going to play to what I talked about earlier, which is agility in your manufacturing, agility in your supply chain, your capability to move from one place to the other. So, yeah, I think it's fundamental.

Markus Aschenbrenner:

Keep doing what you're doing.

Philip Stoten:

Keep being Zona, most importantly, that's what we do. Yeah. Thank you so much for your time again.

Markus Aschenbrenner:

Thank you, phil, thank you.