Growth-oriented acquisition

When the Siplace acqusition was announced last summer, it sounded like Siplace no longer fit into the Siemens scheme of things, but would be a welcome addition to ASMPT. Did this turn out to be a realistic assessment?

WK Lee: ASMPT has grown into the leading provider of back-end assembly and packing solutions over the years. Once you have reached such a size, growing further in our traditional markets naturally becomes more difficult. That’s why we looked specifically for new areas in which we could grow. At the same time, Siemens decided to re-orient itself and no longer considered electronics manufacturing a strategic core segment. The combination also worked regionally – ASMPT with its extremely good network in Asia and Siplace with its strong presence in Europe. The deal therefore looked very promising on a strategic level. We did not acquire Siplace to consolidate or reduce costs, but to grow. Together we want to become the No. 1 in electronics production. Our high expectations have not been dissapointed. Our first joint projects on an operational level have shown that the management and the employees of both companies work very well with each other. I also trace this back to our shared values. The people in both companies are highly technology-oriented and strive for outstanding quality. They are extremely innovative and work diligently to give their customers a competitive advantage over the competition. The Siplace team is clearly a very welcome addition to the ASMPT family.

Until now, ASMPT has grown mainly from within with equipment that is positioned above Siplace’s SMT placement process in the overall electronics workflow. Do you consider this a good thing or a disadvantage?

WK Lee: We have indeed been able to grow organically in our traditional markets up to this point. SMT placement is very close to us in the field we operate in, but it is a new market for us. With Siplace we acquired valuable technologies and a great deal of experience. This deal accelerates our successful entry into this market while reducing our costs and risks. Since back-end assembly and SMT placement are ‘neighboring’ applications, we believe that this acquisition generates significant advantages and lots of potential for valuable synergies in terms of sales and technologies. But there are other benefits, too. For example, we want to take advantage of synergies in component purchasing or in production in the future. But we must always remember in everything we do that it is ultimately the wishes of our customers and the cost and competitive benefits we generate for them that form the basis for our success and the growth prospects of both companies.

This is probably one of the reasons why Siplace will be run as a separate business unit wihin ASMPT.

Günter Lauber: Yes, it was certainly an important aspect in this decision. Both companies are well-positioned in their markets, as their history clearly indicates. The goal is to generate and use synergies, but there is no sense in lumping both application segments and their customers together in organizational and operational terms. Doing so would weaken both parts of the company. As a separate division, Siplace can keep building on its strengths while minimizing any integration costs.

The name Siplace is well known and highly respected all over the world. How do you think this deal will affect the Siplace brand?

WK Lee: We built our own successful brand over many years and we know its value. Siplace’s customer surveys as well as our own talks with customers prior to the acquisition confirmed to us that Siplace is a globally established brand that is associated by the market with positive characteristics like innovation, technological leadership, productivity advancements and quality. As ASM Assembly Systems we want to build on the value of this brand.

The Siplace’s organizational structure will remain in place, there will certainly be some changes. How will Siplace help ASMPT to grow in a profitable manner?

WK Lee: Siplace is now part of a company again that considers the electronics industry its strategic growth market. The time of strategic uncertainty has come to an end for both customers and employees. We also see huge synergy potentials with respect to the applications. Together we will be able to offer solutions that make the overall processes much more efficient. For reasons already mentioned, the sales organizations will remain separate, but we will naturally use our established networks in Asia and Europe to turn potential customers into productive accounts for each other. We believe that medium-sized Asian manufacturers in particular offer lots of potential growth for the company, but many European regions harbor plenty of untapped growth potential as well.

Working together in sales certainly makes sense. Do you also have any changes planned in the manufacturing area?

WK Lee: Siplace machines are outstanding technological advancements. Based on our own experience, the only way to achieve this kind of performance and manufacture it over the long term is by having development and production work very closely together. Since Munich is our center of competence for SMT placement, it will continue to be our core production facility; the same applies to the Siplace factory in Singapore. The best way to support our customers and make them excited about our products is with innovations. The success of the Siplace SX is a prime example of this approach.

Günter Lauber: In a highly competitive and price-sensitive industry like ours, reducing your costs must be an important objective of management. That’s why we formed a joint sourcing team to reduce the costs of components we procure from outside suppliers. For example, we will take advantage of economies of scale when suppliers deliver to both. Another way we will minimize our costs is by expanding our internal value creation process and procuring goods and services from ASMPT. We have no regional or any other preferences when it comes to selecting our suppliers – only quality and cost matter.

Which improvements do you personally expect to see?

Günter Lauber: Over the short and medium term, most improvements will come from the optimization of our supply chain processes and our sourcing. Other areas have much less of an impact. For example, over the course of our negotiations we took a close look at our organizational structure, and our new Asian partners agreed that the Siplace cluster organization is extremely customer-oriented, flexible and lean. The same applies to our service activities.

How did your customers react when this deal was announced? Did you receive any negative comments or even complaints?

Günter Lauber: No, we did not encounter any problems. We communicated the acquisition, our objectives and the entire closing process very openly to our customers. To be perfectly honest, I was quite surprised how many customers responded personally and clearly supported our decision. I am sure the fact that we found in ASMPT an industrial investor from our industry and a company with a good reputation as a partner was a great help. Many of our customers are very pleased that we are now part of an organization again that places its strategic focus on growth in the electronics industry.

What about the employees taking the new situation? Are they getting along with their new colleagues?

Günter Lauber: Against the backdrop of the many restructurings within Siemens, there was certainly a good amount of trepidation – that was to be expected. But the clarity and speed of the decisions regarding structures and locations and the open communication created a lot of trust right away. The fact that WK Lee personally explained the objectives and logic of the acquisition in almost all Siplace locations around the globe was a great help as well, as were the positive experiences of our employees in the first projects with their new colleagues from ASMPT. Let’s also not forget that ASMPT has its headquarters in Singapore. Because of our factory and our colleagues in Singapore, the entire Siplace team has plenty of experience with the country and its people and maintains a close friendship with it.

WK Lee: I am truly impressed by the spirit and dedication of my colleagues at Siplace. The commonalities in the way people think at both companies are tangible everywhere and helped to quickly alleviate the initial reservations which are always there in such situations. I believe that the employees noticed right away that we view both companies as a team and want to look forward. Our common goal is growth, and we want to become the No. 1 in electronics production.

The SMT Hybrid & Packaging 2011 is just around the corner. Will ASM and the Siplace team be present in Nuremberg?

Günter Lauber: This year the Siplace team will participate for the first time as ASM Assembly Systems with the Siplace SX and innovative setup concepts. In a live demonstration, we will show setup solutions for the production of medium-sized, small and very small lots with frequent setup changeovers – the kind that many European producers have to deal with all the time. Our focus will be on the kind of setup optimization that integrates the machine and its feeders and the software with the setup preparation area into a smoothly functioning system.

SMT/Hybrid/Packaging Stand 7-204