He fears his fate too much
And his desserts are small
Who will not put it to the touch
To Win or Lose it All! --James Graham, 5th Earl of Montrose
Sometimes you have to risk a lot to win. Most companies try to limit their exposure to risk...it is an actuarial calculation, risk/benefit analysis. But as the Earl of Montrose points out, sometimes you just have to put it all on the line.
Phoenix Contact has done just that.
Frank Stuehrenberg (sorry, this machine doesn't do umlauten, Frank, so I punted) the senior vice president for global sales and member of the executive board, announced in the company's Harrisburg PA American headquarters that Phoenix Contact was decentralizing their operations. "It was a very hard decision," Stuehrenberg said, "especially for a German company."
Stuehrenberg announced the formation of three "Regional Centers of Competence." The first will be, of course, in Blomberg, Germany. The second (and first outside of Germany) will be co-located with the existing Phoenix Contact sales and distribution center in Harrisburg. The third will be located by 2007 in Nanjing, China.
Risky, risky...but very smart.
First, it is risky to decentralize. Second, it is even riskier to put a strategic center in China that includes G&A, and R&D. All that intellectual property? In China? Yeesh, they are brave.
But "fortune favors the bold."
Stuerenberg's colleague, Roland Bent, Phoenix's senior vice president for marketing and development, and also a member of the executive board, went on to say that their real intent is to form a "TransNational company," and he pointed out, "if outsourcing and offshoring is your only cost cutting strategy, your company will fail. We are inshoring," he said, "enhancing our corporate activities and building up our competence in the field."
"We have to act like a local company, everywhere," Bent said.
He went on to define Phoenix Contact's two most closely watched trends as industrial wireless and industrial ethernet. He noted that they have had an excellent partnership with British Columbia-based Omnex for several years; "One of the few companies that has products, and also applications," Bent cracked.
Bent also pointed out that Phoenix Contact has steadily and stealthily become one of the "top five ethernet switch suppliers worldwide."
The "Frank and Roland Show" ended with them paraphrasing Queen Victoria: "The sun will not go down in our TransNational company."
Jack Nehlig, CEO of the US operations, and newly selected honcho of the Regional Center of Competence, explained how the RCOC concept will work. "Phoenix Contact USA," he said, "will continue to handle what it has always handled: m&c, distribution, service support, and sales." The Regional Center of Competence will bring clones of Blomberg's efforts in R&D, corporate services for the Americas (things like IT, etc.) and manufacturing, to the Harrisburg center.
In order to accomplish this, Nehlig announced, there would be a huge investment (approximately $6 Million) in new infrastructure (much larger warehousing and manufacturing facilities. PC will be quadrupling the square footage they have currently in Harrisburg, or maybe more.
After the big announcement, all us editor types met one on one with an assortment of PC staff, including Roland and Frank, Nehlig, Lou Grice (who is a reader of this blog), David Skelton, Larry Komarek, Larry Wasser among others.
One of the more interesting comments came from Komarek, who is product marketing manager for automation systems (the Entivity acquisition, among other things). I was looking at Phoenix Contact's display programmable automation controller, with the new version of Steeplechase, and Iconics running on top of it, and I asked Larry what a DCS could do that a system of that same configuration could not do. He thought a minute, and then said, "Well the DCS has templates..."
To which I replied, "Okay, when are you going to have those templates done?"
Some hilarity ensued.
Phoenix Contact is not the only company taking great risks for hoped-for reward...Yokogawa has also decentralized, moving their international business to Singapore. Smar has also done that, putting vice president of sales and marketing Marcelo Dultra in Houston, instead of moving him home with his promotion.
The fact is, the concept of "Think global, act local," is more than trite cant.
So, will Phoenix Contact succeed where Montrose didn't? (The Earl lost his head...) It's a good bet.
What do you think?
Walt
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