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

Philip Spagnoli Stoten (0:08)

Hello, I'm Philip Stoten, I'm at Electronica 2024, and I'm joined by Markus Aschenbrenner from Zollner. Markus, always a pleasure to talk to you. We had a really, really nice chat on stage at the IPC EMS Seminar in Cadets, and we recorded, so 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 (0:38)

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 very bad. You know, 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. So that's where we have the downturn.

And for Germany and Europe, I really see the downturn also going into the next year. And if you would have asked me last year, I would have said, okay, second half of 2024, we see an upturn. I think during the customer this week, 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 farmers and supply chain. So much insecurity I haven't seen for a while. And this is really, we look forward to 2025, during the second half and during the end, that should be better because then all the stocks should come down. So I expect that there's something happening.

Philip Spagnoli Stoten (1:51)

Yeah, no, I'm inclined to agree. We've managed to get the other challenges, I think that were stressing the market where 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 gonna want you to make stuff? And is it about designing the footprint or designing agility into the footprint?

Markus Aschenbrenner (2:29)

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 Spagnoli Stoten (2:45)

Yeah, well over the last decades as well.

Markus Aschenbrenner (2:50)

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 did and what we continue. So with the acquisition of EIT on the East Coast, we have three sites on the East Coast, two on the West Coast, so we are 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, we just announced this week that we made an acquisition in Thailand with Bluechips. And that's exactly to accommodate with those things that we see that there's a need, 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.

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 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 Spagnoli Stoten (4:23)

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