Fagor Electrónica consolidates its growth and should maintain the investment level of the last years
Written by Klaudia Weiss | 21 November 2016
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The semiconductors and electronic subcontracting divisions, in particular, are driving the Company, which allocated 15 million euro in the period 2011-2016 to improve their production processes
The Guipuzcoa-based company Fagor Electrónica, belonging to Mondragon Corporation, will close the year 2016 with a growth of 40-50% in results. This increase, along with that obtained in 2015, should allow the firm to maintain the powerful level of investments of the last five-year period, of roughly 15 million.
“2015 was a very good year. We had growth in sales of over 25% and, for this year, we expect things to go even better, particularly regarding results, which are expected to grow at levels between 40% and 50%”, explained the CEO of Fagor Electrónica, Mikel Trojaola. In terms of sales, the results should equal those of last year, with an increase of over 20% in semiconductors and over 10% in fleet management. In the other two businesses, electronic outsourcing and signal processing, figures should be similar to those of 2015.
Semiconductors is currently the division with the division with the largest weight, exceeding 50% of total sales
With the investments made in the past five years, the semiconductors division, where, as he recalls, “customers have a maxim, which they call ‘zero failures’”, has been especially reinforced. In order to comply with that, the efficiency of the processes was automated and improved in such a way that the products have a higher competitiveness ratio and greater precision and reliability, with the aim of eliminating possible future failures.
Currently, this is the business unit with the largest weight, exceeding 50% of the total sales. It exports over 96% of its production to Germany, United States and China, as its main markets, with a very strong presence in sectors such as efficient lighting and the automotive industry. In the medium term, investments will continue in this line. “It is a race where one cannot stop,” said Trojaola, recalling that, years ago, Fagor Electrónica adopted the strategy of producing components while avoiding the fight for prices and remaining in suitable competitive positions, with a product of prime quality. “That is what has allowed us to succeed in the semiconductor business”, he said.
In the future, the Company expects that, along with semiconductors, the electronic outsourcing business should drive the company, as both “move in the most powerful sectors”. Along with them, the firm also has high expectations regarding the fleet management business, where “we estimate that a revolution will happen in 10 years.”
“There will be a series of words, such as mobility, connectivity, efficient driving or autonomous driving, which will have an increasing importance in the world of transportation, and that is where we are positioned”, explained the Head of Fagor Electrónica.
This area, in particular, already concentrates major projects, such as the one carried out in Colombia in 2015, in which the firm equipped Medellin’s urban bus fleet. It will also begin equip the 12,000-14,000 urban buses of the capital of Peru, Lima.
The needs generated by the fleet management business in Latin America will lead Fagor Electrónica to consider the future establishment of subsidiaries in the region. Furthermore, the Company is also studying the possibility of opening a production centre for the electronic subcontracting division. It would be located, as explained by Trojaola, in the Mexico region, so that it may supply products especially to the United States and the Americas.
“The projects in which we are moving have very high investment needs, and we are having conversations with our customers in order to establish picture of future stability,” said Trojaola.
In this business area, the challenge is to invest in means of production to achieve greater productive efficiency, where the core of the business is. These are key investments, with production lines exceeding 1.5 million, whose productive capacity must be maximise to allow their amortisation, since they must be renewed in a very short period of time – from four to five years.
In addition to the R&D areas of the four divisions, it has a new business department
It should be noted that, in addition to productive means, Fagor Electrónica allocates significant resources to R&D, namely 3.5% of its sales volume. It has research & development areas in each of its four divisions, having also established a new business department, a fifth leg that operates in new developments to access new markets in the world of electronics, such as electric cars, energy efficiency, or aeronautics.
Precisely in the latter sector, the Company has recently taken an important step by achieving the EN 9100 and EN 9110 certificates, which allow it to enter “the select club of suppliers of electronic equipment in the aeronautical world”, where it is already supplying equipment.
50 years investing, working and planting
The year 2016 marks the 50th anniversary of the commissioning of Fagor Electrónica, which is currently one of the few semiconductor manufacturers in the world with a production structure based in Europe. It has a team of about 550 people, approximately 250 of whom work at the Arrasate and Santander plants, which focus on the development of software and applications for the fleet management business, plus a further 300 at the plant in Thailand. With a “future project” in which the “people are the key”, its CEO, Mikel Trojaola, points out that the Company’s challenges in the medium term consist of “becoming tremendously competitive”, which requires it “to invest, work and plant”, i.e. “to continue doing things as our ancestors have done”..