Restructuring Goals and Priorities for U.S. Operations Leads to Accelerated Growth
BUSINESS CHALLENGE: Streamline sales, expand engineering, and develop U.S. manufacturing
The shift of high-volume manufacturing from North America to low-cost regions in Southeast Asia presented a massive challenge for the American electronic component industry, and this challenge was further exacerbated by the devastating financial crisis that began in 2008. The shrinking North American market potential led to intensified competitive pressure, engineering staff reductions at most major original equipment manufacturers, and an intensified focus on digital communication and other operational efficiencies.
While EAO had a proven reputation as a leading supplier of pushbutton switches, indicators, keypads, keyboards, and other electromechanical components, the organization was ill-prepared to address these dramatic changes. The company hired Lance A. Scott, founder & CEO of Alliance Technologies, to serve as EAO’s North American President and CEO, and to work closely with EAO’s international management team to develop a strategic growth plan for the Americas.
SOLUTION: A two-pronged approach to accelerate growth and enhance profitability
Existing long-term employees were selected to form a cross-functional U.S. management team, with a two-pronged approach to accelerate business growth of HMI components and more complex value-added HMI systems. The organization was streamlined for operational efficiency, and a comprehensive assessment was performed for all functions, processes, and external partners.
This unbiased business assessment served as the basis for a customized growth strategy with clearly actionable objectives, including:
Engineering and Manufacturing
Based on the initial business assessment and newly defined operational requirements, EAO’s U.S. headquarters were relocated to a state-of-the-art facility in nearby Shelton, Connecticut. The new facility was designed to mirror the atmosphere of the global headquarters in Switzerland, and the management team worked closely with the State of Connecticut’s Department of Economic and Community Development to secure financial grants to enhance technical training, automation, and advanced manufacturing capabilities. Due to rapid growth of the HMI system business, EAO was able to greatly enhance local engineering and production capabilities, and invest in automated wire-stripping, crimping, labelling, and other advanced manufacturing tools such as 3D-printing/additive manufacturing for rapid prototyping.
Sales and Marketing
With the addition of value-added component and expanded HMI system capabilities, EAO now had the opportunity to increase “wallet share” with existing customers and target highly valued new customers that had been previously unapproachable. The team developed an extensive portfolio of sales and marketing tools to demonstrate and promote the company’s offerings, and worked closely with suppliers, independent representatives, distributors, and international colleagues to develop customized training and demonstration tools.
In addition, a once highly complex components business was transformed for a more user-friendly ecommerce environment. EAO implemented a single-part numbering system for its strategic series, and developed simplified online tools for product selection and fulfillment. Relationships with longstanding distribution partners were rejuvenated and expanded, and new relationships with industry-leading global distributors were introduced to help bolster EAO’s marketing and digital transformation strategy.
To leverage the company’s critical sales resources, the U.S. management team also established and implemented a comprehensive key account management program to focus sales resources on EAO’s largest and/or highest-potential customers, and performance was tracked with a customized “strategy and action plan” management tool.
Through a comprehensive gap analysis for each market focus segment, EAO was able to define specific product and technology gaps that were identified as internal new product development projects, or as candidates for external collaboration and/or M&A consideration. The U.S team played a key role in participating in these market research, business development and strategic alliance discussions.
Quality and Regulatory Compliance
The new manufacturing and engineering capabilities for complex “mixed technology” HMI systems were developed in accordance with cutting-edge lean manufacturing and continuous improvement principles. The U.S. operation was certified to ISO 9001:2015 quality management standards, and the management team developed comprehensive import, export, safety and regulatory compliance programs.
Human Resource Management
The evolving organization opened opportunities to expand engineering, assembly, production, supply chain management, and related capabilities. The growing team was supported by a well-coordinated competency development program, a pay-for-performance reward system, and a culture of teamwork and idea-sharing.
RESULTS: Award-winning performance, accelerated growth and enhanced profitability
Due to the new North American growth strategy, EAO more than doubled sales and achieved a dramatic and consistent improvement in profitability throughout the assignment period. The company managed to bolster contribution margins by more than 16%-points through a focused value-add product strategy, new market penetration, and strenuous contract negotiations.
Alliance founder and CEO Lance A. Scott was honored by Frost & Sullivan with a Manufacturing Leadership 100 (ML 100) manufacturing entrepreneur award for his efforts to develop EAO’s HMI system manufacturing operations, and the company was also awarded a corresponding ML 100 innovative enterprise award for its outstanding work.
Navigating the Challenges of the American Marketplace
Understanding and overcoming the challenges of the American marketplace can be a costly and time-consuming endeavor for international advanced manufacturing companies attempting to develop their own strategic growth plan. However, with guidance from cross-functional experts for the Americas region, advanced manufacturing companies can navigate market intricacies that could otherwise derail the course to profitable growth. That’s when your business becomes Alliance Technologies’ top priority.
For more information about how your company can put Alliance Technologies’ proven approach and Americas-focused expertise to work, contact us or