Going from a product to a technology company

Small and medium-sized companies have a role of special importance to play in the new economy, said Dietmar Harting at the opening of the company's new automotive systems manufacturing plant earlier this year. Here, Harting explains how he has been reinventing the company his father founded beyond its traditional business of supplying connectors to the electrical and electronics sectors.

DESIGN NEWS: What is happening in your core business?

HARTING: Our main business, connectors, is affected by three major trends: globalization, concentration of suppliers, and continuous development of the technologies employed. The process of concentration in the industry is not causing my medium-sized company any concern. On the contrary, there are increased opportunities in the reduction in the number of suppliers. For example, the basis for Harting's positive performance is our move towards the development and manufacture of complete systems and subsystems, and consequently towards increased technical complexity, rather than supplying just components. We recognized this trend years ago, and we have responded by strategically extending our own capabilities. We are on the road to becoming a technology-driven company.

Q: Are you approaching new markets?

A: Two of Harting's development paths will end the traditional classification of the company as a product supplier. First, opening up the company to new sectors such as the automotive and telecom industries, and second, our move towards technology-defined areas of business such as electro-optical components. Thanks to a consistent technology focus, we have now achieved sales of approximately DEM10m annually in such a notoriously closed market as the automotive industry. Of the company's total year 2000 sales by value, 85% were accounted for by components and 15% by machines. And within the components sales, 73% of revenues were in the market segment of industrial electronics and 23% in telecommunications and information technology.

Q: What are you doing to reach the important automotive sector?

A: Since October 2000, we have invested DEM20m to develop a new manufacturing site, Plant 4, at our headquarters in Espelkamp, Germany. This accommodates Harting Automotive, which presently employs 36 people. However, with a targeted turnover of DEM100m, the staffing figure is set to increase six-fold. At around DEM40m, Harting's total investments amounted to 7% of sales during 2000. We have managed, by our investment in new technologies, to create successful impetus for growth in the group. During 2000, the group achieved worldwide sales of DEM561m (Euro287m), an increase of 27% over 1999.

Q: What is the company doing beyond Germany?

A: There was some company restructuring in the USA following a sharp drop in sales in 1999, which led to an increase of 65% in sales there to DEM117m during 2000. Adjusted for currency, the growth of the Chicago subsidiary was around 40%. In the Far East, Harting achieved revenues of DEM47m during 2000, that is around 68% more than the previous year. The Asian subsidiary has now reached the essential "critical mass" required for independent development, so that the whole group has come a big step closer to its vision of a global enterprise.

Dietmar Harting, Managing Director and General Partner Harting KGaA Espelkamp, Germany

Dietmar Harting studied electrical engineering and economics at the universities of Munich, Hannover, and Cologne, gaining his Economic Diploma in 1967. Also in that year, he entered his father's company, becoming managing shareholder of Harting Elektronik GmbH in 1973, and the general partner of Harting KGaA in 1996. He is president of ZVEI, the German Central Association of Electrical Engineering and Electronics Industry, as well as the European Electronic Component Manufacturers Association. Harting will open this year's Hannover Fair alongside the keynote speaker.