See also interview: 2022
Amid a period of economic uncertainty and volatile markets, Rutronik plays a key role as an trailblazer, advisor, and partner in the electronics market. CEO Thomas Rudel offers insights into the current challenges and opportunities at the intersection between suppliers and customers.
— The overall economic outlook this year is less than stellar, with many companies exhibiting cautious or uncertain ordering behavior. What are you observing at the intersection between suppliers and customers?
Manufacturing planners in Germany are still very hesitant, even though the current situation is much less precarious than it was during the COVID-19 pandemic or the banking crisis, for instance. We are noticing significant inconsistencies in ordering patterns, following a stop-and-go approach that includes cancellations and, at times, substantial double bookings.
This has consequences for overall economic activity. In boom phases, massive overbooking quickly occurs and storage facilities fill up accordingly. This can lead to cash flow problems and ultimately to overproduction on the part of component suppliers. Our in-house analysts, but also industry analysts, anticipate that periods of shortages and oversupply will alternate more rapidly. Historical comparisons also indicate that the frequency and amplitude of fluctuations in the Purchasing Managers’ Index (PMI) are increasing. This is an indicator of faster changes between shortages and oversupply.
— What are your key strategies in response to the current uncertainty among customers?
We are in constant exchange with suppliers and customers. As a distributor, it is essential for us to act as both a seismograph and a mediator between the various market participants. With this in mind, the market researchers of our Strategic Marketing team conducted a survey in the first quarter of 2024 to gauge our customers’ perspectives on the normalization of the economy. By March, so quite early on in 2024, over a third of the more than 140 customers surveyed from Germany, Austria, and Switzerland indicated that they no longer anticipated normalization this year. Just under a third expected recovery in the current fourth quarter. For several months now, we have also noticed that many companies tend to delay placing repeat orders. This obviously increases the risk of renewed allocation.
— What conclusions can you draw from this for your business activities?
As a broadline distributor, we have access to an extensive product portfolio. We are there fore able to offer alternatives. Nevertheless, stronger economic policy support remains crucial to boost Germany and Europe’s independence. In Europe, funding and subsidy programs are often too short-sighted, typically supporting only the development of front-end production capacities. Investments in development, design, and expertise do not appear to be top of the agenda for policymakers.
In this context, I see further potential in adopting a pragmatic political approach aimed at easing the burden on the local SME sector. We definitely need to streamline bureaucratic processes to enhance Europe’s resilience.
— Why do you believe focusing on the SME sector is key to unlocking the potential of the European economy?
I see a trend of long-term and consistent growth in the SME sector. As a medium-sized company, we also focus on achieving longterm growth through healthy and self-financed means. The typical practice of meeting quarterly targets, which is often mandatory for capital market operators, is alien to us and many other SMEs that we work with as customers. Furthermore, we are still an ownermanaged company. This approach helps level the playing field with our customers and supports our long-term strategies through sustainable growth. Our customers also appreciate our independence when it comes to giving advice, as it allows us to always find the best solution for them.
— What is your greatest advantage as a medium-sized, owner-managed company in comparison to large corporations?
As a distributor, we provide many SMEs with the sole access point to the electronic components they need from the suppliers. Moreover, we speak the language of medium-sized customers and are aware of the challenges they face, also in the field of research and development, which often differ from those faced by large corporations. We therefore maintain close contact with both suppliers and customers. This also ensures that we know the challenges our customers have to deal with, enabling us to provide top-level advice with synergistic benefits.
With Rutronik System Solutions, our goal is to empower our medium-sized customers in precisely these areas. This strategy of in-house development with partially patented solutions is unique for a distributor. It fosters completely new approaches to hardware and software development. The developer boards allow our customers to significantly shorten their time to market and gain an innovative edge, even if they do not have hundreds of engineers at their disposal like large corporations do.
— And what are the reasons for retaining the company headquarters in Ispringen?
I think I need to elaborate a little bit about this. At Rutronik, we can look back on more than five decades in the electronics market. My father, Helmut Rudel, founded Rutronik in 1973 and strategically chose Ispringen, near Pforzheim, as its location. He saw an opportunity in the fact that many Germans were particularly keen to watch the 1974 Soccer World Cup, which was being held in Germany for the first time, on a new TV set. At that time, many German suppliers like Grundig, Loewe, Schaub Lorenz, and Metz were based in southwest Germany. Even today, southern Germany remains renowned for its high concentration of successful SMEs, many of whom are world leaders in their respective sectors. We continue to be a strong partner for the SME sector. Therefore, despite the many challenges, the location remains essential. Our investment in our new location in Germany, for example the new office in Karlsruhe, which opened in January 2024, reflects our confidence in the region’s potential.
— And what is different to 50 years ago? Who are your current customers, and what makes them depend on you as their business partner and supplier of electronic components?
This summer, Germany hosted the EURO 2024 soccer tournament. Let me highlight once more the significance of the 1974 Soccer World Cup, which played a pivotal role in our company’s history. Today, electronics enable much more than just the viewing experience in front of a screen, especially in the realm of sensor technologies.
Here are just two examples among many that I would like to share with you briefly. Soccer tracking systems use a range of sensors to gather detailed data on players throughout tournaments and training sessions. GPS or real-time kinematic sensors measure, for instance, geographic positions and movements with high precision and frequency, which is essential for dynamic sports like soccer. In addition to their use on the pitch, sensors are also utilized within stadiums to monitor crowd movement and to manage admission. Radar technology is, once again, an exciting field.
The reason why I mention this: This year, we introduced two adapter boards from Rutronik System Solutions specifically designed to support these technologies, RAB4 for real-time kinematics (RTK) and RAB3 for radar, thus enabling our customers to test their respective applications. This could be in the field of sports, but our customers primarily utilize these benefits in applications within the smart factory, smart home, smart farming, and health care sectors.
— Rutronik’s in-house research and development activities are fascinating. Where do you see Rutronik in the future, and how do you plan to develop the company further?
We know the requirements and challenges of the industry and are constantly analyzing the market. Therefore, by the middle of this year we had already established global partnerships in the wireless sector with Adlink and Cherry Embedded Solutions, as well as with VIA Technologies in Europe.
Our new Rutronik IT Electronics division was launched about a year ago. The advantage for us lies in the fact that this expansion of our portfolio enables us to provide both individual components and complete systems from under one roof. Rutronik IT Electronics and Rutronik Embedded, which specializes in industrial, medical, and automotive computer solutions, are closely interlinked. The collaboration allows us to blend commercial and customized components to create an optimal solution for our customers. The Rutronik Automotive Business Unit is celebrating its 10th anniversary this year. Over the past decade, it has been developing automotive reference designs in collaboration with manufacturing partners to boost the predevelopment efforts of our customers.
Our goal is to continue providing equal support to customers in both the industrial and the automotive sector. We aim to do so primarily through system solutions, making the most of our extensive experience in consulting and design-in. Key applications that our customers are researching and bringing to market are at home in areas such as Industry 4.0, (I)IoT, Future Mobility, and Energy and Power. And we are their enabler, advisor, and partner in this respect.
source: RUTRONIKER 2024