Phoenix Contact expands in U.S., China

Phoenix Contact ( www.phoenixcon.com ) developer and manufacturer of specialized electronic components and connection systems, is expanding design, engineering, manufacturing, distribution, and support activities in the U.S. and in China, company executives announced to media here on Sept. 16. Employees learned of the U.S. expansion about year ago, including more than $6 million in U.S. investment for a new 45,000 square-foot automated distribution center, to be finished in 2007, adding 200 employees by 2010. Employees number 355 now; 370 are expected by year-end 2005. Manufacturing expansion details are not yet final, but it will more than triple capacity from leased space across the street from its Phoenix Contact – USA headquarters, near Harrisburg, PA.

To speed new product innovation and enhance operating processes, Phoenix Contact is “Moving to a Trans National Corporation (TNC) with regional centers to address product development allowing Phoenix Contact to address customer and market opportunities faster than ever,” says Frank Stuehrenberg, executive vice president global sales, Phoenix Contact GmbH & Co. KG. Company sales outside Germany are 60%; 90-95% of growth is outside Germany, he says. Its three largest markets are Germany, USA, and China. “How can we go on without a bottleneck in Blomberg activities?” The answer is by investing in “Regional Centers of Competence (RCoC) based at our facilities in Germany, the United States and in China.” The U.S. Regional Business Unit will include research and development of new products for company subsidiaries in the Americas, including United States, Canada, Brazil, Mexico, and Argentina. Existing U.S. sales operations will continue growth, Stuehrenberg says, as will newly separated and expanded operations for product manufacturing, logistics, and central services.

Jack Nehlig, president of Phoenix Contact – USA, says the changes better position the company for aggressive growth, better serving existing business units and their customers. “Our new direction will allow us to work closer with our colleagues in Germany to more quickly develop and deploy innovative products for the Americas region.” Phoenix Contact – USA sold $109 million in 2004, a 23% increase over 2003. U.S. sales will be “well in excess of $200 million by 2010,” Nehlig says. The current 28,000 square-foot manufacturing operations are slated to expand to 90,000 square-feet by 2008. Already operating near capacity, the current distribution center cannot optimally handle the expected growth in shipments for customers through the Americas, Nehlig says. The new distribution center, and, to the extent possible manufacturing, are expected to use Phoenix Contact’s control-and-automation systems in a state-of-the-art operation, he says. Design and manufacturing expansions in the U.S. facility will start with Ethernet and wireless technologies, since the U.S. company has led in development in these areas, Nehlig says. ODVA-based industrial networks and next generation of cabling for the Varioface system of wiring interface modules will also be U.S.-based.

Roland Bent, executive vice president of marketing and development, Phoenix Contact GmbH & Co. KG, says, “At a time when many companies are looking to locations outside the United States for additional engineering or manufacturing services, Phoenix Contact is increasing our investment in the U.S. Instead of off-shoring, we call this ‘in-shoring,'” to enable a more complete offering for customers in products and services, he says. Bent told Control Engineering he was “surprised how quickly the whole thing developed after the internal announcement a year ago. We threw a stone into the water and it expanded and developed from there.” Bent and Stuehrenberg acknowledged the need to expand training in culture, guidelines, product lifecycle maps, and collaborative engineering tools.

Dave Skelton, vice president of the Americas business unit and of the U.S. RCoC, showed newly constructed, test-and-functional labs, more than $200,000 in investments, and an area for new engineers and managers, resulting from the announcements. “These are functional equivalents to labs in Germany,” Skelton says. One immediate role will be to ensure compatibility among customers’ ODVA-based industrial network products.

Phoenix Contact has been operating in China under a joint venture and continues to work on details to expand with an independent subsidiary operation for the RCoC in Nanjing, China. Details will follow in a future announcement.

Globally, privately held Phoenix Contact operates 38 subsidiaries employing more than 7,000 people, with annual sales exceeding 720 million Euro ($1 billion). The parent company was formed in Germany in 1923; U.S. company began in 1981. Six major product lines include more than 20,000 products. The lines are: Clipline, industrial connection technology; Combicon and Pluscon, device connection technologies; Trabtech, surge voltage protection; Interface, signal level matching; Automationworx industrial PCs, I/O devices, HMI, and software (including the acquisition of Entivity with the Steeplechase and Think&Do PC-based control product lines).

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