Know your customer, know your market
Phoenix Contact is a global leader and innovator in the development and production of solutions for electrical engineering and automation products, and has locations in dozens of countries across the globe. We recently spoke with Frank Stührenberg, the head of corporate sales and an executive board member at Phoenix Contact, as well as a featured panelist at our recent Turkish-German Innovation Summit, to learn more about how Phoenix Contact became the production powerhouse that it is today.
GSC: According to the slogan on your website, you develop "Solutions for the Future." How do you manage to identify the latest trends and industry demands as well as to account for the development of your products, ranging from electronics housing to measurement and control systems to wireless data communication technologies? What is research and development like at Phoenix Contact?
Frank Stührenberg: Phoenix Contact is a worldwide leader in products, solutions, and systems for electronics and automation. We are a rapidly growing company that aspires to be a technological leader through its products and solutions. Therefore, we maintain close contact with our customers in order to develop products that match their needs, and through this we keep up with current market demands. This close market and customer relation allows us to identify technological trends early on and develop our own solutions for them. Because of this, we have become leaders in innovating new technologies. The phrase "Solutions for the Future" encompasses what Phoenix Contact has to offer for future markets, specifically in the areas of new forms of urban infrastructure for metropolitan regions, new forms of mobility, or in the area of renewable energy. These trends present challenges for which we offer and develop solutions through our products.
GSC: Phoenix Contact's product portfolio is full of the newest technologies, such as safe control solutions, and seems to have everything an industrial producer could want! What distinguishes your products from your competitors' products?
Frank Stührenberg: Phoenix Contact is a company that has established "Inspiring Innovation" as a corporate philosophy in order to continuously implement new trends and technologies into the latest products and solutions, as well as to optimize existing products. Through this, we provide customers with products that meet current and future market demands. Each year we expand our portfolio, which today contains some 60,000 products, by 1,000 to 2,000 new products. Thanks to our in-house engineering, we are also able to test these products ourselves, which, in turn, means that feedback and our own experiences can be immediately incorporated into the product development. The diversity of our product offerings for electrical engineering and automation, which offers customers a single source for system solutions, helps users simplify their processes in addition to other product advantages.
GSC: Phoenix Contact has actively helped shape Industry 4.0 through being involved with industry associations like Bitkom, VDMA and ZVEI, as well as through "It's owl" – Intelligent Technical Systems OstWestfalenLippe. What progress have you already seen as far as decisive changes in the manufacturing industry? And what significance does this have for your business?
Frank Stührenberg: For the automation of tomorrow, the production must be modularized, almost arbitrarily, in terms of individual production in quantity and flow. For machinery and plant designs, new conditions must adapt flexibly. To achieve this goal, automation technology, which is used in production, and the classic IT used in the office will continue to grow together. Phoenix Contact offers many years of expertise in the infrastructure network including the security aspect, which is essential for good technical solutions. Moreover, our company has its own industrial engineering department and facilities that develop and produce production machines and automation solutions for our production sites worldwide. We already use aspects of Industry 4.0 and will continue to develop them further.
GSC: Phoenix Contact has 13,000 employees in more than 70 countries. The company's claim to being near to their customers is clearly backed up by its seven manufacturing facilities abroad as well as its nearly 50 sales offices and 30 local agencies. What are the advantages of being in foreign markets, apart from the proximity to the customer?
Frank Stührenberg: Proximity to customers is certainly a determining factor, since only through close contact with the customer can the challenges of the market and customers be balanced with the products. Benefits present themselves particularly in the varying growth potentials of different countries. We have recorded strong double-digit growth rates in the Asian and Eastern European markets in recent years. With regard to the poor economic development in southern Europe, this allows for a balance during volatile economic times. Also, effects on currency by internationally balanced value chains (production, logistics, value-added, etc.) are balanced. In this way, Phoenix Contact benefits from good market fluctuations, offsets negative developments, and even records above-average growth.
GSC: In 1981, the first foreign subsidiary of Phoenix Contact was founded. Since then, the company has grown extraordinarily. Such internationalization is impressive. What factors have led to this international success?
Frank Stührenberg: Several factors are at play here. We decided quite early to enter markets where we saw significant potential after first conducting a thorough analysis and detailed market surveys. So we were, for example, already represented in China and India in 1993 due to joint ventures. These entrepreneurial steps have paid off in the long-run. Additionally, we do not build our subsidiaries with a leadership team from the German headquarters, but rather have always turned to local management. Thanks to this, we can better integrate peculiarities of the market mechanics and local customs into our group. This has helped us in establishing a presence in many markets.
GSC: Your website names responsibility and sustainability as two concepts that guide the day-to-day operations of Phoenix Contact. In addition to maintaining long-term, mutually-beneficial relationships with partners, customers, and employees, a healthy, responsible growth is emphasized. What challenges have you encountered in your internationalization in relation to this approach?
Frank Stührenberg: Starting entrepreneurial activities in new countries and expanding sales companies always means breaking new ground. Despite extensive preparation and analysis of the market situation, the political and economic conditions of a country can change a plan entirely or necessitate the adaptation. Here, a well-thought-out approach is necessary, in particular, one that is marked by long-term growth objectives. We have proven our staying power as a company several times, and we are currently doing so in Argentina. For us, this is also a clear signal that Phoenix Contact is a partner on whom you can rely on. This is very important both for customers as well as the employees in the country.
GSC: Phoenix Contact has made a commitment to national and international training programs for technical jobs. Your engagement is characterized by a network of partnerships with a sizable list of international universities. The EduNet initiative, which was founded by Phoenix Contact in 2007, is a collective response to global technology trends and developments. Your company is cooperating in this framework with the Yildiz Technical University in Istanbul, Turkey, among others. What potential do you see in the Turkish market?
Frank Stührenberg: This commitment to technical education is an important, cross-border issue for Phoenix Contact. As part of our collaborations in Turkey with universities like the Yildiz Technical University, Selcuk University, and the Turkish German University, we have established projects like laboratories for automation. Thus, students receive not only practical experiences with modern automation technology, but they also form their experiences through direct contact with Phoenix Contact's products. Turkey's status as a strong emerging market and an important hub for neighboring countries in the growing southeast European and Middle Eastern regions has important implications for our growth and the growth of the Turkish economy. With our sales company, founded in 1986, we have recorded a strong, more than double-digit growth for years, which accompanies the local added value from our manufacturing joint venture in Bursa, begun in 2011.
GSC: Thank you for this interview, Mr. Stührenberg.
More information: www.phoenixcontact.com