Support for medical engineering developers with free samples
May 6, 2020
"Our production capacity has once again reached more than eighty percent" – According to RECOM Group CEO Karsten Bier, the end of the current global lockdown will decide whether or not the crisis will end in a lengthy recession or an economic boom. RECOM itself is prepared for both eventualities and may even surpass its own turnover forecast within the year of the crisis.
Markt&Technik: RECOM has production locations in Xiamen, China and Kaohsiung, Taiwan. This has placed the company close to the epicentre of the coronavirus pandemic from the beginning. How do you see the current situation in Asia?
Karsten Bier: Wuhan and the Hubei province were most heavily affected after the Chinese New Year. This had hardly any effect on our supply chain with automobile production dominating Wuhan and the surrounding province. The central government reacted quickly and prevented a spread to other parts of the country. Any discussion on returning to normality might apply to mainland China, but there has so far hardly been any major coronavirus problem in Taiwan. Korea has also shown effective crisis management. Rigorous lockdowns announced at short notice in the Philippines, Indonesia, Vietnam and Malaysia are however causing problems at the moment. We stocked up on inventory after the allocation of 2017 and 2018, which is why the Chinese lockdown did not affect us that much.
RECOM has been dealing with the coronavirus issue for the best part of three months. Could you divide this period up into individual and clearly distinguishable phases?
The first reports came as a shock around two weeks before the Chinese New Year. We reviewed the situation and evaluated and analysed the information available to us. China then made some difficult decisions. Phase 2 was the lockdown, and the problems and challenges that arose from that. Phase 3 I think began when the pandemic arrived in western industrial nations. This was the first time for the virus to confront liberal societies after the battle against the coronavirus had been waged in an autocratic system. Austria took the lead by restricting freedom of movement for its citizens around two weeks before Germany did. Our experience in Asia helped us immensely at RECOM, and we were looking at various potential scenarios in short order. Apart from that, we had already set up our IT systems with enough flexibility for our office workers to work from home practically from one day to the next. Phase 4 has now been running since Easter. We all hope that the measures taken have been successful, and that we’ll be able to return to some kind of normality after the lockdown.
At the beginning of February, some people thought that China would be less of a problem regarding COVID-19 compared to the global pandemic. Looking back, they seem to have been right.
I think these people underestimated China’s obvious ability to contain the problem in the region affected. I personally thought it would end up in widespread devastation, but the opposite turned out to be true. Authoritarian structures together with official pressure and a highly developed sense of self-discipline have come to fruit in China.
Apart from employee safety, two things must have been especially important at RECOM during the crisis: Will the supply chain hold up, and how will the crisis affect customers?
Managing the supply chain is a dynamic process. Every power supply manufacturer without its own facilities for making magnetic components was affected by supply chain problems in the first few weeks. Currently, it’s individual components and semiconductors that are cause for concern. The longer the problems persist, the more important it will be to keep enough inventory. The main problem here is the V-curve that some have been predicting. This theory holds that the rapid decline during the lockdown will be followed by an equally sharp rebound after the crisis is over. If this happens, we’ll be facing component allocation again regardless of how strong the upturn is. If there’s a U-curve, which is more likely judging by the current situation, this allocation will not happen. After our experience in China, we were quick to examine how we could secure the supply chain for our customers in case the lockdown affected one of our logistics centres. We developed the corresponding crisis plans and scenarios in short order so we could respond quickly and easily if needs be.
What production levels have you reached again in the meantime? How has turnover been developing? Will you still be able to meet your turnover targets for 2020?
We’ve reached eighty percent in production levels. Our developers are working from home, but they can still go to the lab if they need to. We have more in the order pipeline than last year. As I see it, we’re not only going to keep to our turnover levels of 2019, we might even manage some growth according to the current situation. This is because we supply industrial customers in every market segment with a broad mix of supply unit designs and components of all kinds. Our customer structure consists of a broad variety of customers, so we don’t have to depend on a few key accounts. That dampens the risk, giving us reason for future optimism.
Has the current situation on the global market already led to shifts in competition?
Yes of course there have been major shifts. There’s nothing more to be had from a country like India that’s been in a nationwide lockdown for three weeks. Our global setup of production and development locations has increased our resilience against regional risks. Companies that currently have problems will be focusing more on risk and inventory management in the future. Some companies that are low on financial resources will have difficulties surviving the crisis as I fear we still have the most difficult part ahead of us.
Have you introduced any regulations or changes at RECOM during the crisis that have proven to be so beneficial that you will be keeping them after it’s over?
We are already set up as a global organisation, and we’ve not been able to make the occasional scheduled business trip. This begs the obvious question of whether we really need to hold these meetings face-to-face. I think that going through a crisis like this with our partners in Asia will bring us closer together. There’s still an obvious need for discussion and support; I think our deep mutual trust and confidence will stand us in good stead for videoconferencing in the future. I also firmly believe that we’ll be using the opportunities of working from home more intensively than we did before the coronavirus crisis. It’s also good to see that our IT emergency plans have come up to expectation. We’ve also seen how we can manage our meetings even more efficiently.
How has the coronavirus crisis affected your customers? Have some downstream industries come off especially badly from the crisis, or could there even be industries that have benefited from it?
We’ve seen a rapid rise in demand from medical engineering. The last few weeks have seen a real boom in demand, and not only in ventilators. Not all the medical engineering developers we serve are long-standing players in the field, so we have opted to provide developers in medical engineering with free samples as well. We’ve set up a feature on our homepage for them to do this directly with a minimum of red tape. As of now, we have rolled out the project in Europe, the USA and finally Asia. Our original plan was to run the project until the end of April. However, we have decided to continue the project until the end of June in order to address the high demand. The coronavirus crisis will affect us adversely if automotive and automobile suppliers that have worked off their backlogs start to suffer from the pandemic. Whether or not companies benefit from the crisis will depend on which technologies receive government support. This means either more Fridays for Future towards more environmental technology, or more adherence to traditional ways of doing things. The consumer will have a major say in this.
RECOM acquired the Italian power supply specialist PCS in early 2019. Northern Italy was especially heavily affected by the coronavirus pandemic. Does that pose a major setback for integrating PCS?
PCS is still in production despite the crisis. We manufacture medical, measurement and railway engineering products there, which count as essential products. We had already integrated PCS into the group as planned before the coronavirus crisis. The situation regarding suppliers in Italy gives us more cause for concern. Will they have enough liquidity to withstand the thorough lockdown that forbids any production unless it’s essential for sustaining life? Will it still be enough for recovery after the crisis is over? I firmly believe that we need assistance at a European level in such a way that is quantifiable and verifiable.
The lockdowns were quite sudden. We now have two exit options: Rapid return to some form of normality or the beginning of a deep recession. Will a market rebound come with the risk of extreme stress to the supply chain?
I’m certain we’ll definitely enter into recession. The losses that the automobile industry, their suppliers, and obviously retailers have incurred in the last few weeks can’t be recovered. I wouldn’t expect European industry to start gradually picking up pace again until the end of the year, and I don’t see any economic recovery beginning until the first and second quarters of next year. Nobody now will be able to say what the “new normal” will look like in production, shipping and logistics.
Were you aiming to launch new products in the last few weeks? Do you think the coronavirus crisis will lead to significant delays in industry with respect to research and development?
That might well apply to large companies and research institutions. We’ve also been forced to postpone releases. Even so, we have a full product pipeline; we’ll be focusing on rollouts in the next few months, especially for the autumn. Our customers have a lot to look forward to. We’ll be promoting our long-awaited 550W RACM550 release specifically using online channels. Many of our developers now working from home have more time for creative new ideas than they would usually have in the working environment they are used to.
This year’s key trade fairs in the power electronics sector such as APEC and PCIM have been cancelled. How will that affect the industry? Do you think that the InnoTrans and electronica trade fairs will still be taking place in the autumn?
Trade fairs live from their visitors and the face-to-face experience. This is why trade fairs provide us with an ideal opportunity to talk to existing and future customers. However, I think that the trade fair cancellations will have a more severe effect on startups. Startups really need these events to present themselves and show the world what they can do. After all, their aim in going to these events is to raise interest in their ideas amongst companies and investors. InnoTrans has already been cancelled, and electronica is still on the cards.
The events from the last few weeks have led to a discussion on reversing globalisation – is this a realistic proposition or a fake discussion?
I don’t see any worth in the “globalisation of patriots” brought up over and over in this context. A more pressing question would be how we define globalisation. I see risk management taking on a much more important role in the future. This especially applies to life-sustaining products such as drugs and medicines as well as PPE. I would also propose that if we want high-tech in Europe, we’ll have to put up the necessary cash for it. Regarding 5G, this will mean giving European manufacturers the opportunity to develop and market their solutions at competitive prices. Finally, it will be government policy and consumers with their buying habits that’ll decide on which products are produced where.
There are fears of a spate of takeovers by financially well-stocked companies and investors after the crisis. Do you think this could happen?
These fears will turn into reality. However, you could dress it up as assistance for companies that aren’t on such a financially sound footing. I’ll admit that we’re also on the lookout as we urgently need more development capacity. If we see an opportunity after the coronavirus crisis, we will take a good look at it; if it’s right for us, we’ll take it.
Karsten Bier, RECOM
A market rebound from the coronavirus crisis in the form of a V-curve will quickly lead to component allocation again.
Interview by Engelbert Hopf
Karsten Bier: Wuhan and the Hubei province were most heavily affected after the Chinese New Year. This had hardly any effect on our supply chain with automobile production dominating Wuhan and the surrounding province. The central government reacted quickly and prevented a spread to other parts of the country. Any discussion on returning to normality might apply to mainland China, but there has so far hardly been any major coronavirus problem in Taiwan. Korea has also shown effective crisis management. Rigorous lockdowns announced at short notice in the Philippines, Indonesia, Vietnam and Malaysia are however causing problems at the moment. We stocked up on inventory after the allocation of 2017 and 2018, which is why the Chinese lockdown did not affect us that much.
RECOM has been dealing with the coronavirus issue for the best part of three months. Could you divide this period up into individual and clearly distinguishable phases?
The first reports came as a shock around two weeks before the Chinese New Year. We reviewed the situation and evaluated and analysed the information available to us. China then made some difficult decisions. Phase 2 was the lockdown, and the problems and challenges that arose from that. Phase 3 I think began when the pandemic arrived in western industrial nations. This was the first time for the virus to confront liberal societies after the battle against the coronavirus had been waged in an autocratic system. Austria took the lead by restricting freedom of movement for its citizens around two weeks before Germany did. Our experience in Asia helped us immensely at RECOM, and we were looking at various potential scenarios in short order. Apart from that, we had already set up our IT systems with enough flexibility for our office workers to work from home practically from one day to the next. Phase 4 has now been running since Easter. We all hope that the measures taken have been successful, and that we’ll be able to return to some kind of normality after the lockdown.
At the beginning of February, some people thought that China would be less of a problem regarding COVID-19 compared to the global pandemic. Looking back, they seem to have been right.
I think these people underestimated China’s obvious ability to contain the problem in the region affected. I personally thought it would end up in widespread devastation, but the opposite turned out to be true. Authoritarian structures together with official pressure and a highly developed sense of self-discipline have come to fruit in China.
Apart from employee safety, two things must have been especially important at RECOM during the crisis: Will the supply chain hold up, and how will the crisis affect customers?
Managing the supply chain is a dynamic process. Every power supply manufacturer without its own facilities for making magnetic components was affected by supply chain problems in the first few weeks. Currently, it’s individual components and semiconductors that are cause for concern. The longer the problems persist, the more important it will be to keep enough inventory. The main problem here is the V-curve that some have been predicting. This theory holds that the rapid decline during the lockdown will be followed by an equally sharp rebound after the crisis is over. If this happens, we’ll be facing component allocation again regardless of how strong the upturn is. If there’s a U-curve, which is more likely judging by the current situation, this allocation will not happen. After our experience in China, we were quick to examine how we could secure the supply chain for our customers in case the lockdown affected one of our logistics centres. We developed the corresponding crisis plans and scenarios in short order so we could respond quickly and easily if needs be.
What production levels have you reached again in the meantime? How has turnover been developing? Will you still be able to meet your turnover targets for 2020?
We’ve reached eighty percent in production levels. Our developers are working from home, but they can still go to the lab if they need to. We have more in the order pipeline than last year. As I see it, we’re not only going to keep to our turnover levels of 2019, we might even manage some growth according to the current situation. This is because we supply industrial customers in every market segment with a broad mix of supply unit designs and components of all kinds. Our customer structure consists of a broad variety of customers, so we don’t have to depend on a few key accounts. That dampens the risk, giving us reason for future optimism.
Has the current situation on the global market already led to shifts in competition?
Yes of course there have been major shifts. There’s nothing more to be had from a country like India that’s been in a nationwide lockdown for three weeks. Our global setup of production and development locations has increased our resilience against regional risks. Companies that currently have problems will be focusing more on risk and inventory management in the future. Some companies that are low on financial resources will have difficulties surviving the crisis as I fear we still have the most difficult part ahead of us.
Have you introduced any regulations or changes at RECOM during the crisis that have proven to be so beneficial that you will be keeping them after it’s over?
We are already set up as a global organisation, and we’ve not been able to make the occasional scheduled business trip. This begs the obvious question of whether we really need to hold these meetings face-to-face. I think that going through a crisis like this with our partners in Asia will bring us closer together. There’s still an obvious need for discussion and support; I think our deep mutual trust and confidence will stand us in good stead for videoconferencing in the future. I also firmly believe that we’ll be using the opportunities of working from home more intensively than we did before the coronavirus crisis. It’s also good to see that our IT emergency plans have come up to expectation. We’ve also seen how we can manage our meetings even more efficiently.
How has the coronavirus crisis affected your customers? Have some downstream industries come off especially badly from the crisis, or could there even be industries that have benefited from it?
We’ve seen a rapid rise in demand from medical engineering. The last few weeks have seen a real boom in demand, and not only in ventilators. Not all the medical engineering developers we serve are long-standing players in the field, so we have opted to provide developers in medical engineering with free samples as well. We’ve set up a feature on our homepage for them to do this directly with a minimum of red tape. As of now, we have rolled out the project in Europe, the USA and finally Asia. Our original plan was to run the project until the end of April. However, we have decided to continue the project until the end of June in order to address the high demand. The coronavirus crisis will affect us adversely if automotive and automobile suppliers that have worked off their backlogs start to suffer from the pandemic. Whether or not companies benefit from the crisis will depend on which technologies receive government support. This means either more Fridays for Future towards more environmental technology, or more adherence to traditional ways of doing things. The consumer will have a major say in this.
RECOM acquired the Italian power supply specialist PCS in early 2019. Northern Italy was especially heavily affected by the coronavirus pandemic. Does that pose a major setback for integrating PCS?
PCS is still in production despite the crisis. We manufacture medical, measurement and railway engineering products there, which count as essential products. We had already integrated PCS into the group as planned before the coronavirus crisis. The situation regarding suppliers in Italy gives us more cause for concern. Will they have enough liquidity to withstand the thorough lockdown that forbids any production unless it’s essential for sustaining life? Will it still be enough for recovery after the crisis is over? I firmly believe that we need assistance at a European level in such a way that is quantifiable and verifiable.
The lockdowns were quite sudden. We now have two exit options: Rapid return to some form of normality or the beginning of a deep recession. Will a market rebound come with the risk of extreme stress to the supply chain?
I’m certain we’ll definitely enter into recession. The losses that the automobile industry, their suppliers, and obviously retailers have incurred in the last few weeks can’t be recovered. I wouldn’t expect European industry to start gradually picking up pace again until the end of the year, and I don’t see any economic recovery beginning until the first and second quarters of next year. Nobody now will be able to say what the “new normal” will look like in production, shipping and logistics.
Were you aiming to launch new products in the last few weeks? Do you think the coronavirus crisis will lead to significant delays in industry with respect to research and development?
That might well apply to large companies and research institutions. We’ve also been forced to postpone releases. Even so, we have a full product pipeline; we’ll be focusing on rollouts in the next few months, especially for the autumn. Our customers have a lot to look forward to. We’ll be promoting our long-awaited 550W RACM550 release specifically using online channels. Many of our developers now working from home have more time for creative new ideas than they would usually have in the working environment they are used to.
This year’s key trade fairs in the power electronics sector such as APEC and PCIM have been cancelled. How will that affect the industry? Do you think that the InnoTrans and electronica trade fairs will still be taking place in the autumn?
Trade fairs live from their visitors and the face-to-face experience. This is why trade fairs provide us with an ideal opportunity to talk to existing and future customers. However, I think that the trade fair cancellations will have a more severe effect on startups. Startups really need these events to present themselves and show the world what they can do. After all, their aim in going to these events is to raise interest in their ideas amongst companies and investors. InnoTrans has already been cancelled, and electronica is still on the cards.
The events from the last few weeks have led to a discussion on reversing globalisation – is this a realistic proposition or a fake discussion?
I don’t see any worth in the “globalisation of patriots” brought up over and over in this context. A more pressing question would be how we define globalisation. I see risk management taking on a much more important role in the future. This especially applies to life-sustaining products such as drugs and medicines as well as PPE. I would also propose that if we want high-tech in Europe, we’ll have to put up the necessary cash for it. Regarding 5G, this will mean giving European manufacturers the opportunity to develop and market their solutions at competitive prices. Finally, it will be government policy and consumers with their buying habits that’ll decide on which products are produced where.
There are fears of a spate of takeovers by financially well-stocked companies and investors after the crisis. Do you think this could happen?
These fears will turn into reality. However, you could dress it up as assistance for companies that aren’t on such a financially sound footing. I’ll admit that we’re also on the lookout as we urgently need more development capacity. If we see an opportunity after the coronavirus crisis, we will take a good look at it; if it’s right for us, we’ll take it.
Karsten Bier, RECOM
A market rebound from the coronavirus crisis in the form of a V-curve will quickly lead to component allocation again.
Interview by Engelbert Hopf
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