Unlike many of its competitors, contract electronics manufacturer Via-systems Group Inc. has established its business by offering a full range of electromechanical services to telecom and datacom customers.
"What differentiates us from others players in the sector is that we focus on the entire enclosure and what's inside it," said James M. Mills, chairman and chief executive of Viasystems, pointing to the company's fabrication, assembly, testing, and shipping services.
That approach has proved successful, in terms both of growth and customer satisfaction, according to analysts. And much of that growth can be attributed to Viasystems' acquisition strategy, which supports its push for vertical integration.
"Viasystems' vertical integration helps them lock in customers early on by presenting them with a clear competitive advantage," said Herve Francois, an analyst at Credit Suisse First Boston in New York. "One way that Viasystems gets around the competition is by providing one-stop shopping. The advantage is particularly clear for those customers dealing with the large explosion in the telecom segment."
The St. Louis-based company's third-quarter 2000 revenue was well ahead of the 20% to 25% growth rates that CEMs on average have been achieving, analysts said. Viasystems' third-quarter revenue increased 72% over the same period in 1999, and 13% sequentially.
"About half of our growth was organic and half was through acquisition," Mills said. "We see that [acquisitions] will be an ongoing way of life for our company as OEMs outsource and sell assets for electromechanical assembly."
Viasystems' two most recent acquisitions have allowed it to extend its reach both technologically and geographically. Later this quarter, the company will complete its acquisition last year of privately owned Accutec, Oak Creek, Wis.
"The Accutec acquisition gives us a more complete platform for our business," said Tim Conlon, Viasystems' president and chief operating officer. "Although we already fabricate metal products and assemble enclosures in several sites in Europe and Asia, we don't have a fab in the United States. This gives us a huge capacity for metal products, particularly for large enclosures."
Viasystems last October bought Lucent Technologies Inc.'s Global Provisioning Center in Rouen, France. The Rouen plant, with 450 employees, provides assembly, test, and repair of printed-circuit boards, and has developed expertise in manufacturing telecom networking equipment.
The company in October also acquired Laughlin-Wilt Group Inc., a Beaverton, Ore., CEM that is expected to generate about $105 million in sales.
In July, Viasystems expanded its manufacturing services further into China with the construction of a 150,000-sq.-ft. plant in Shanghai. And in coming months, the company plans to further extend its enclosure manufacturing capabilities in the United States to both coasts.
Given all the acquisition activity, Via-systems' biggest challenge in the period ahead will be managing growth in a healthy way, according to Credit Suisse's Francois.
"The opportunities in the marketplace are so hugely endless that the pie is large enough for everyone to benefit from telecom outsourcing," Francois said. "However, Viasystems has to go ahead and do an efficient job of integrating their new acquisitions from 2000, as well as those they are planning for this year."