IMI Shifts From Turnaround Mode To Focused Growth - with CEO Lou Hughes

They didn’t just trim costs. They rewired the business for the next growth cycle. I sat down with Lou Hughes, CEO of IMI, to unpack a pivotal year that includes sharp net debt reduction, major site consolidation, and a clear shift from stabilization to expansion. If you care about EMS strategy, global manufacturing footprint decisions, and where electronics outsourcing is headed next, this conversation gets specific fast. 

We talk through why IMI moved from a sprawling network to fewer, larger campuses and how that changes overhead, execution, and customer confidence. Lou explains the manufacturing investments that matter most right now: building mechanical capability in the Philippines, expanding injection molding, and bringing more critical processes in-house so bulky parts stop riding expensive freight lanes. We also dig into the growth engines IMI is betting on, from power module packaging for EVs, industrial, and data center demand to driver monitoring cameras, megatronics controls, and exterior lighting processes that require real manufacturing muscle. 

The episode goes deep on sourcing and supply chain resilience, including what a “strategic supplier initiative” looks like in practice, where an EMS provider can create real value in electromechanical commodities, and why active components like ICs and memory often stay customer-driven. You’ll also hear candid perspective on China’s shifting role amid tariffs and geopolitics, plus why India may be the next serious platform for power modules and camera modules. Subscribe, share this with a manufacturing leader, and leave a review with your biggest takeaway.

EMS@C-Level is hosted by global inspection leaders Koh Young (https://www.kohyoung.com) and Global Electronics Association (https://www.electronics.org)

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Transcript

Welcome And 2025 Results Snapshot

Philip Stoten, Journalist and Podcast Host 0:00

Perfect. Hello, I'm Philip Stowton from My House to yours. Welcome to EMS at C Level. I am joined by Lou Hughes. Lou, always a pleasure to chat. Lou is the CEO of IMI. I got a good look at your Yeah, good to see you too, my friend. I got a good look at your 2025 results. And it feels like it's a real pivotal year in terms of changes that you've made as CEO to the business and really you know delivering on what you were trying to achieve and what we talked about in previous discussions. Um when I look at the numbers, there's some interesting stuff through. There's a deleveraging story, you've really cut net debt from nearly 200 million to just under 120, um, in it, which is a remarkable achievement in a single year. What drove that discipline? What was the change internally? Um and does the balance sheet reflect maybe a more offensive, more aggressive strategy for 2026?

Philippines Mechanical And Molding Buildout

Power Module Packaging Growth Forecast

Camera Programs And Megatronics Focus

Europe Footprint Consolidation And Labor Strategy

Lou Hughes, CEO of IMI 1:01

Yeah, Phil, that's a great question. You know, when I joined uh the company in early 24, we had about 280 million in net debt. So uh over the course of the past two years, uh, we've taken net debt down uh to 110. Uh this year uh we expect to uh be investing in our business uh a bit because uh now we're looking to go back into growth mode. Uh the past two years have really been about uh reviewing our sites because you know I think we had uh far too many sites. I'm a believer in fewer larger sites uh that operate uh efficiently because of overhead distribution. Uh so now we're down to a total of five sites globally, you know, two in Europe, uh two in China, uh six sites. Two in Europe, two in China, one in the Philippines, and one in Mexico. So um so and that's down from what was you know almost 15 sites uh when I joined. So and we're doing you know about 20% less revenue uh than when I joined, but I think we've done a good job of focusing the company on uh the customers that have long-term value uh for the company and that leverage the company's differentiated capabilities. Um and you know, so you're gonna see us continue to invest in mechanical. Uh, we have uh invested heavily over the last uh 12 months in the Philippines in mechanical, which you know, the Philippines had no in-house mechanical capabilities. We didn't have injection molding at all, we didn't have uh machining, and uh, we don't have metal stamping. So now we've got a full machining uh uh capability uh together with uh the second or third largest Chinese uh machining company, which gives us uh great capabilities there in terms of uh just the you know capability of machining and finishing and uh but raw material supply from China because we we go through one pass uh in China and then we move the material because you you know you can't export the raw steel. Um so we do a single pass and then bring it down to the Philippines, and we've invested in a lot of equipment there uh to be able to do the uh uh uh finishing um and uh and of course then have product available at the right price. Yeah. For a lot of our uh precision uh business with you know the locking companies, um, with access control, uh, with automotive and et cetera. So, you know, injection molding is also, you know, we've got four machines in now, the Philippines, and uh, you know, we have the ability in our shop to go to 40 machines. And so I think in the next uh 12 months you'll see that happen. And um, you know, our continued focus on electromechanical, you know, things that are difficult uh to build uh from uh an electromechanical perspective. Uh, you're gonna see us continue to focus on that kind of work. Um we're also investing heavily in power module packaging. Right. Um, so that business is doing great for us right now as um, you know, the power modules get more and more dense uh, you know, from a power and thermal uh perspective. Uh the platform, the packages that we've chosen to invest in, um, like the EasyPack form factor uh are right on. And uh we've got multiple customers we're building for. And you know, that business will go from a you know uh $15 million business to a $50 million business next year or this year, um into next year, and then uh the following year it'll be a hundred million dollar business. So I am really, really excited about where we're going with the power module packaging business. And um, and then there's camera, right? The driver side monitoring cameras, um, which is a business that we've invested heavily in from a design uh perspective. And uh operationally we're kicking off uh the first two big customers in Q1. And uh that's been a little bit of a struggle, uh, but uh we're coming through that. And uh that business, you know, is gonna go from that business is gonna double in size due to regulation. Yeah. So um, so we're really excited about uh what's happening there. And um, and then you know, just overall our megatronics business, you know, that's our that's our single biggest segment in automotive. And these are basically uh control devices uh for you know doors, windows, side view mirror, um, wipers, um, where you've got a pretty simplistic PCB with a with an intensely difficult uh connector that's insert molded and in some cases 2K molded. Um so we're uh we're really you know doubling down in that business because I think we're one of the best at it internationally, and um we can uh be the low-cost supplier in the regions that we're in, you know, Philippines, Mexico, Bulgaria, Serbia. So yeah. So yeah, that's a that's a you know, we're getting the message is we're we're getting back into growth mode, right? We're we're moving from what was a pairing, a heavy pairing and um and you know, optimization process over the last 24 months, getting our balance sheet back in order, and now uh really focused on getting back into growth mode.

Philip Stoten, Journalist and Podcast Host 7:06

Yeah, and I think that's really interesting. And you know, when you look at it, beyond those, uh beyond the financial constraints within that and getting everything, as you say, the balance sheet and the PL uh as well in order, it's been it's been a thoughtful process. You've increased your non-automotive business to, I think, what, 38% or so of core revenue, uh, which is really important. Czechoslovakia's out, Serbia's growing, you're absorbing transfers into into Bulgaria. So Europe feels like it's it's settling around those um, you know, those those two facilities.

Lou Hughes, CEO of IMI 7:42

Um, you've got whatever's you lowest lowest labor rate in EU is Bulgaria, little known fact. So great skilled workforce, uh great site for us. Um you know, they do mechanical extremely well. Uh, we do cable assembly there. Uh because the labor rates are low, we can be great at mix uh, you know, if there's no automation. Um, so and then Serbia's non-EU and even lower labor rates had and great positioning geographically uh to support customers in Europe. So yeah, I'm you know, getting moving out of Czech was an important move for us. Um, you know, we only lost about 40 million, 30 to 40 million dollars in business, and uh we consolidated most of it down into Serbia and Bulgaria. So from a from a PL perspective, it was a great move for us. Yeah, a successful transfer. Yeah, a little bit painful, you know, because you know, you're transferring internally, but now that that's over, um, we're you know, I think we're just in a really good place financially. Yeah, that's really important because when I joined, um, things were pretty tentative, right?

China Footprint Cuts And Sales Reality

Philip Stoten, Journalist and Podcast Host 9:00

So yeah, absolutely. And you know, a part of that rationalization comes in around China is does China feel different than it did five years ago? Does China feel different than it did even when you joined the company? Has it changed in terms of that low-cost factory of the world?

Lou Hughes, CEO of IMI 9:20

Yeah, I think China is the low-cost factory of the world, without a doubt. Um, I think China is, from an operating perspective, uh, even today, I think they're our most uh uh uh cost-effective factory when it comes to execution. Um they're just Phil, they're just fantastic for us, right? But the problem is sales, right? We have to be able to compete with a lot of estate-owned uh companies when it comes to automotive in China.

Philip Stoten, Journalist and Podcast Host 9:54

Uh and there's capacity, isn't there? There's a lot of capacity there.

Lou Hughes, CEO of IMI 9:58

There's a lot of capacity because you know, so many of the companies are leaving uh China for substantial transformation in Southeast Asia and Mexico as it relates to U.S. business uh due to the tariffs and due to the geopolitical pressures. So, you know, we're we're seeing a lot of business leave China, and that's why we reduced our footprint almost in half. Uh, you know, right when I joined, I knew that I had to be aggressive about reducing footprint there. Um so we did that. Um, our sites, you know, we took the two Shenzhen sites and brought it into one. Um, we took the Chendu site and merged it into Jank Juxing, which is up near Shanghai. And you know, now we're operating at 60% capacity, right? Uh, which still isn't great, but at least we're making money.

Philip Stoten, Journalist and Podcast Host 10:50

But it's a lot better.

Lou Hughes, CEO of IMI 10:51

Yeah, a lot better. So, you know, I I'm, you know, there are opportunities out there. I think it's up to our sales team to find them. And I think a lot of the opportunities are shipping back to Europe, uh, because Europe is still pretty open to receiving uh exports from China. Yeah, and then you know China, China for China, right? We've got to be coast. And we've our team there has to step up, uh, especially on the sourcing side with mechanical and electromechanical. That's where we can win versus the majors who we're never gonna beat them with active or discrete electrical purchases. We just don't have the volume. Um, but we can be scrappy on the electrical and electromechanical side. Mechanical stuff, yeah.

India Partnerships And Policy Tailwinds

Philip Stoten, Journalist and Podcast Host 11:37

Yeah, and that's where you need to be. And I think it's I think it's uh fascinating what you say about the opportunity in Europe because of the geopolitical tensions we've seen have actually pushed Europe and China a little bit close together in terms of trade relations as the US, European trade relations has perhaps had some stress there. When you look at what what else is going on in Asia, obviously you have the facility in the Philippines. Do you look to anywhere else? Does the grass look green in India, for example, where many, many companies uh are investing?

Lou Hughes, CEO of IMI 12:08

Yeah, you're a straight man. Um I I flew back, um, and I haven't even talked to you about this. Uh, I flew back Friday from uh Delhi. Uh so I was there for a week and a half with a potential partner that we're talking to. And um we're looking, you know, uh that that that corridor from Delhi down to Pune is the corridor that uh we're looking to invest in. Um and our power module, they don't have a good power module packaging uh uh company, um, you know, uh local to India. So uh there's a real drive from the government side for that. So I was there for that. And then there's also nobody in the camera business there for modules. Um so you know, right now the tariff on components for camera is higher than the tariff to import a finished module, right? And the government knows they have to change that. So again, exchanges with the government up in Del Delhi uh on that front. Yeah. And um, and you know, we're already invested there on the component engineering and design engineering side down in Koin Batura. So, you know, I really am bullish about India.

Supplier Shock And Strategic Sourcing Playbook

Philip Stoten, Journalist and Podcast Host 13:26

I think that I think that would be that would be the opportunity. And you know, there is no doubt we're gonna see growth there. It's just a question of of who can seize that opportunity and who has the right kind of skill set and the right the right muscle to do that. Um, you talked a little bit earlier about uh supplier shock, quite specifically, um, and that had a big impact in Q4. It feels like it's a broader industry vulnerability. There seems to be an issue around suppliers at the moment. We're seeing problems with memory chips, AI is sucking all the oxygen out of the room in uh in the chip foundries. Um how are you thinking about supply chain resilience and what do you see as you have a strategic supplier initiative. What does that actually look like in practice?

Lou Hughes, CEO of IMI 14:17

Uh what what it looks like is is being intentional about who your partners are and defining, you know, not allowing your customers to define everything as it relates to who the suppliers are gonna be. Uh, for us to have a seat at the table with the customers, to and by the way, to earn that seat at the table, because I feel like, you know, if if you don't have a strong sourcing team, if you don't go out and create um some value and differentiation through uh your sourcing efforts, then you you're not gonna get a seat at the table. Yeah, uh, especially with the big global, you know, ODMs, OEMs that we work with. So on both the industrial and automotive side. So we've worked really hard, as I mentioned, especially in electromechanical. These are things like power supplies, magnets, springs, uh uh um you know, batteries. Just go down the displays, go down the list of all those electromechanical items that um have to be good, great quality, but that also have to be very, very sharply priced. And I think we've done a great job developing uh relationships with the very best in uh those fields, those commodities. And we're bringing those ideas to customers and uh commercializing those suppliers within our supply chain. And then we're rationalizing uh some of the suppliers out who our customers have defined in the past. And then, you know, I would tell you that on the active side, um, we don't provide much value. These are the ICs, semiconductors, um, memory. Our customers uh are uh very intentional in that area. They're designing software in that in those areas, so yeah, we kind of stay out of that, Phil. Um, and maybe that's been a good thing for us because that's been, I think, the world that's been really tight of late.

Philip Stoten, Journalist and Podcast Host 16:16

Yeah.

Lou Hughes, CEO of IMI 16:17

Um, and then, you know, on the passive and discreet side, we're it's from my perspective, it's China Inc. right now. So, you know, I am really uh doubling down with uh some of the Chinese suppliers um in that area. And I think that's helped us with uh from a competitiveness perspective, because some of the other big companies, uh, the top-tier EMS uh are not as aggressive in that front. Uh, I don't feel like. And so I think that gives us a little edge um in differentiation because we're sure as heck not going to compete with them uh with the typical suspects. We don't have the volume uh that they do, and they just buy better uh because of that volume.

CapEx Choices And Vertical Integration

Philip Stoten, Journalist and Podcast Host 17:04

Yeah, yeah. I mean it's it's a supply chain's a huge part of what we do, you know, at the end of the day. Oh, it's 75% of the value, right? Yeah, absolutely. It's a huge, it's a huge part of the process. So having areas that you can excel in, and as you say, being super intentional about that kind of thing. You also seem to be very intentional about CapEx. You know, last year was a kind of a crossroads year for CapEx. Now you're investing very much in the uh, you know, like you say, the mechanical areas, in the in the molding areas, in in stuff that you think is really adding value. Do you feel that there are vertical integrations that really resonate with your customer that they feel, okay, if these guys have got this and this in the same campus, uh, and they have got these larger campuses, it really fits with um, you know, with that, with their outsourcing strategy?

Segment Strategy And HALP Lighting Advantage

Lou Hughes, CEO of IMI 17:56

Yeah, I think, you know, our you know, our facilities, uh, if you go to Philippines, right, you don't find the best supply base uh for things like plastics and machining and metal stamping, right? And so we, the company has traditionally had to source those items out of Malaysia, China, Taiwan. And uh with shipping cost, with oil, where it's gone, uh shipping cost just seems to, you know, go up, up, up, and up. Uh, you know, it after COVID, it was high during COVID, right? It came down a little bit post-COVID. Now it's right back up to where it was uh during COVID. So, you know, shipping big, bulky, low-value parts um is uh is is just not the right way, right? So um, so you know, localizing a supply base in the Philippines, which is where our that's our biggest site, right? Um has been incredibly important for us and and has been incredibly important to make our customers feel secure, uh, that we can control our own destiny there. So machining, injection molding is done. I think you're gonna see us get into the metal stamping uh uh world pretty quick there. Um, and then in Mexico, we've got uh injection molding. You're gonna see us go into machining there next. Um, you know, similar situation in Mexico where they've got plenty of injection molding facilities and locations, but for whatever reason, we can't seem to buy at a competitive price from those outsourced suppliers. So um, so uh we've really had to take that into our own hands to get competitive price points for our customers. And then, you know, Bulgaria, we've been injection molding for the last five years. Now we're doubling down on injection molding there, especially precision, you know, insert 2K, uh that kind of molding that that supports our megatronics uh business uh nicely. So yeah, I mean those are those are the areas because look in SMT we have all kinds of capacity, right? Um, automation, uh test, we have very flexible test equipment. Yeah, so we don't really have to invest. Uh we're still only operating, you know, at 50 or 60 percent uh utilization globally for those assets. So we don't have a lot of investment to make. Um it's in mechanical and it's in power module, and and um you know that that makes us a very cash flow positive uh business, right?

Philip Stoten, Journalist and Podcast Host 20:40

So yeah, I think it's really interesting, Lou. I've I've kind of followed the IMI story before you joined, and I followed it out, followed it throughout throughout your tenure. And the word I would describe that that I would use to describe your tenure is something that you've used, which is intentional. You've come in, you've looked at the business, you've been very intentional about the footprint, you've been very intentional about the product mix, very intentional about what you want to do with the financial side of the business to build to this point you are, this inflection point you are at the moment.

Lou Hughes, CEO of IMI 21:12

And uh, yeah, and and one thing, one thing I really want to get across to anybody watching today, right, is that IMI is intentional in each of its segments, right? For automotive, we are active safety, which is camera, we are megatronics, which is uh all the controls that you find throughout the car that need connectors, need mechanical and some electrical. And then we're lighting. The one thing I didn't speak about is exterior lighting. Um, you know, uh when it comes to LED headlights, uh, we have a technology we call HALP, which is high accuracy LED placement. And um, it gives us the ability to very, very precisely uh orient the LEDs on the PCB. You Using a really interesting uh mix of adhesives uh plus solder and uh paste, basically. And so uh we're really good in that world. Plus, we have big injection presses uh that that can build the housings, the rear housings of those headlights, uh, which are very complex and large and tight tolerance. Um so those are our three businesses in automotive. In industrial, we're access, uh control, and um and uh electromechanical uh locks and locking, and uh we're sensors because we've got a lot of different sensor uh uh customers. And um, and then over the top of all of that is power module, right? Because we're we're selling power modules now for each of those verticals, including data center, including EV, right? And uh, and that's really nice because we have access to all those customers. So when we're in with our bag, you know, selling them the things that I just mentioned, we're also uh making sure they know about what we do in in power module.

Closing Thoughts And What’s Next

Philip Stoten, Journalist and Podcast Host 23:11

Yeah, no, it's fascinating. You you look at a sector, you understand the IP, you understand what needs to be in-house for you to be able to manufacture that, and you've really you've really built muscle very specific to those marketplaces, which uh is great. I've enjoyed watching the journey so far. Um I'm looking forward to the uh the coming chapter, so keep us informed. But in the meantime, Lou, thanks so much for your time.

Lou Hughes, CEO of IMI 23:36

Thank you. Thanks for talking to me, Phil. It's been great. Thanks a lot.