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Goldman: Now you're based in Ireland?
McCabe: I'm based in Ireland, nominally. As an international business development manager, my role is to take the capabilities of Schoeller Electronics, both commercially and technically, and to present and articulate this service to customers worldwide. We have a direct sales team based in central Europe supporting our traditional markets there and then we have a smaller team who are providing international business development services. Of course, as our international customer base grows, we will be supplementing that sales team with additional resources.
Goldman: I can imagine. What international markets are you targeting?
McCabe: I think based on our competence and based on the market niches that we support—areas such as aerospace, military applications and defense, automation and industrial products, and the medical industry—those industries are particularly located in America and in Europe, and to a certain extent also in Israel. We are supporting those marketplaces first. It's not in our current plan to have sales activities in Asia, at this time.
Goldman: One thing at a time, right?
McCabe: Exactly. We do have a Director of Sales on the ground here, Michael Schumacher, based in Minneapolis. He is assisting us with the growth strategy in North America now. As I said, as we continue to develop new business and new customers here in North America we will supplement that sales organization as it makes sense to do so. With SES’s mode of selling, I suppose what differentiates us a little bit from other PCB vendors, who may receive a Gerber data package or an ODB++ package and then execute that design or convert it into a PCB, is that SES provides additional value add as a service. We go deeper into the design process, adopting a PCB perspective and joining collaboratively with design communities so that we facilitate choices, interconnect strategies, reliability decisions, regulation decisions. We help customers because we've noticed that the design process has changed over the years.
Historically, products may have been designed within an OEM where there were a lot of stakeholders internally in that company that understood what was necessary. You would have, for example, PCB experts, assembly experts, regulations experts, all within an OEM and so all could participate in that design process. Because of the way globalization has occurred and outsourcing has occurred, we now have situations where the design may happen in Site A, purchasing in Site B, and manufacturing in Site C, so the stakeholders may not be present during the design process. This can lead to sometimes awkward designs, sometimes poor designs, or at minimum it elongates the design cycle.
What we do in SES is try to help our customers by bringing our PCB experience and our assembly experience and our materials experience into the design cycle and collaborating proactively during that cycle so that the Gerber data or ODB package which emerges from that process is more ready and optimized for production.
Goldman: Wonderful. You must travel a lot.
McCabe: Yes, I travel a lot. I'm based in Ireland, but the key statistic there is I’m about 40 kilometers from the airport in Dublin, which as a major international hub for a number of the American airlines and also our national carrier, Aer Lingus. So there is the opportunity to easily fly to locations all over Europe and of course direct to North America. I'm typically visiting our facility in Germany one time per month and then we're visiting here in the U.S. every six to eight weeks, together with our existing sales director here, Michael Schumacher. We then schedule a series of meetings in a condensed period of one to two weeks and I attend those visits, assisting those discussions. Where necessary, we take our technical experts from Germany to join those meetings so that we can supplement those discussions with the right people.
Goldman: How long have you been with Schoeller?
McCabe: The story is a little bit complex. I began my relationship with the Schoeller Electronics factory when it was part of the Ruwel Group in Germany, back in 2005. Since that period in 2005 the facility has remained largely the same and the skillset largely the same, but the ownership has changed a couple of times. What was a facility, as part of the Ruwel Group at that time, became Schoeller Electronics and then Schoeller Electronics Systems, which is the organization we have today. My own personal story is also a little varied in that I spent nine years initially working with the facility in Wetter. I then left for a period in 2014 and began working with Viasystems/TTM, and I've only just restarted again with EES on the first of September of this year.
I'm resuming my relationship with the organization, but very excited to do that because the situation in Schoeller and the umbrella group EES is now considerably stronger than before. We have a very, very suitable investor who understands the nature of manufacturing and who is investing resources into Schoeller and indeed in our sister companies, and we have a very exciting and dynamic leadership team in our CEO Michael Keuthen. Michael is now overseeing the continuing restructuring of Schoeller and our sales strategy to bring all three entities into the marketplace. So very exciting times.
We're very pleased about it and we think the synergies that will come from the three organizations working together will be excellent. We will be able to leverage our purchasing in a way we couldn't do before as an individual facility. Our material sourcing strategy can change. We can leverage and share engineering experiences across all three facilities and of course we can leverage our individual customer bases and begin to utilise the reference customers that each factory had independently and bring those together.
Goldman: Are your customers mostly OEMs or a lot of EMS? How does that work? I'm curious.
McCabe: Our initial contact typically is with an OEM customer with the design organization within that customer base. Invariably then assembly is being done more and more with EMS companies. We are typically shipping our raw boards from Germany either to EMS contractors in Europe, also here in North America, and even to facilities in Asia. So we have an interesting scenario where we are producing PCBs in Europe and shipping them for consumption or at least assembly in Asia, for example in Singapore and Malaysia.
Goldman: This may be a crazy question, but does Schoeller normally choose the EMS company or does the OEM pick it?
McCabe: No, of course the OEM will typically have an existing assembly relationship with their EMS company. Then they will align us with that company. In many cases, because of our longstanding history in the industry we already have a direct relationship to those EMS companies anyway. All of the larger EMS companies you would think about, we are already doing business with. We have a customer service group who will then provide the logistic support to that EMS company, but the primary relationship is typically with the OEM.
Goldman: That must be the best way. Having the relationship with the OEM has got to be very important.
McCabe: Yes, it is. It's the key to our ongoing development. We're lucky and fortunate to enjoy very longstanding relationships with some of the blue-chip OEM organizations in Europe and also here in North America. We feel that by continuing with our applications engineering approach to sales and the knowledge-based service that we provide to those OEMs that we will be in a position to continue those relationships.
Goldman: I'm hearing more and more, from many people, that service, service, service is so important—personal or whatever-it-takes. Not just quick turnaround, getting it back to you fast, but all the in-between, the working together with the designers and going back and forth. Just having that close relationship.
McCabe: It's imperative, Patty. We see that on both ends of the contact relationship, you could say. The contact that we have during the design phase is critical but also the contact that we have in the fulfillment phase, when we ship orders and how we manage that. There are consignment inventory programs. There are kanban programs. There are logistical solutions that must be put in place, and these can become complex when EMS companies are also involved because they may have their nuances that we must facilitate. We may need to coordinate in a parallel approach with the OEM and the EMS provider to make sure everybody has the right level of information from our customer service and logistics teams. So, service at the fulfillment end and service through the design and the product maturity and industrialization phases are all very, very important.
Goldman: This is all great information. Padraig, thank you so much for your time.
McCabe: Thank you Patty, it’s been a pleasure.