EMSNOW Exclusive Executive Interview: Peter Lakatos and Otto Sinko

Jul 19, 2018 | EMS, Europe, Feature, People – EMSNOW chooses its EMS Executive Interview subjects with a view to bringing innovative business models and practices to the industry. In that vein, Hungary-based Videoton is a rich subject. For example, there are two CEOs: Peter Lakatos and Otto Sinko share that role. Here’s how they explain it:

“We handle the management of the member companies (15 closely controlled subsidiaries and 10 joint ventures) together. Peter Lakatos is primarily responsible for ongoing businesses, customer-supplier relations, business development, pricing issues. Otto Sinko is mainly responsible for the control of the financial management, treasury decisions, wealth, property utilisation – development, technical development, acquisition of innovative companies. The establishment of strategy, decisions on investment and acquisitions are made together. HR, inspection for management is done together in line with the personal fields of competencies evolving from the settled share of responsibilities.”

We asked Peter and Otto to explain other aspects of their unique management strategy for EMSNOW readers:

 Sinko Otto Lakatos Peter 
 Ottó Sinkó  Peter Lakatos

EMSNOW: For 2017 VIDEOTON was listed at #30 on the MMI Top 50 EMS list and experienced its 8th consecutive year of record revenue. Despite these accolades your company is a quiet success story that is not as well-known as many of your peer companies on the list. What are you most proud of about VIDEOTON’s growth and performance in 2017?

We are proud to own, restructure and rebuild a historically successful company over 2.5 decades. Our horizon is much longer then a single year’s performance. Behind brilliant sales and profit data might be fundamental problems which are forecastable knowing the insights; and vice versa, behind negative looking data might be the sprouts of a bright future. Our aim is to build a sustainably successful robust company. The 2008 crisis was a big milestone for us. That’s when our double digit growth really began. We are especially proud of the last 10 years as a whole, and not only 2017.

EMSNOW: VIDEOTON began as a state-owned company making consumer electronics for the Soviet Union. How has that history impacted your development and capabilities?

The story you are talking about is 30 years old. At that time VT had competences in computing gear (mini-computers, printers, and terminals), defense electronics (system integration, direction finding, troop radios, etc.) and consumer goods. Once we took over, all the assets (human, real estate, manufacturing know-how, machinery) were converted to be integrated into the non-branded supply industry. This time we did not even know about the CM, EMS and similar terms.
We bought assets from liquidation in 1992, and “inherited” many good people but definitely not a working company with organization. The technological knowledge was a value but the products were only burdens, as they were not competitive.

EMSNOW: Your company tagline is “One Company – Infinite Possibilities.” Please tell us what this is meant to communicate to customers?

This suggests that we are a set of companies, which are standalone market players but together they create a vertical integration. Our customers have infinite choice of which services to use and how to combine them. One of our customers defined it as a one-stop-shop where you can get the all the ingredients of a meal but it is your choice which one to buy here, or whether to ask us to prepare the food and eventually cook it.

EMSNOW: Your factories are all located in one geography – Eastern Europe – which is unusual for an EMS as large as you have become. What is the strategy behind the decision to maintain your facilities only in this one geography? And do you receive any pressure from customers to develop facilities in other global regions?

Yes, we got pressures to provide global services as early as 1998. Our intention is to do only things where we have demonstrated competency. It does not mean we always succeed, but at least we believe we can. Technology wise we are more a follower. As headquartered and rooted in Central and Eastern Europe (CEE), we are not as integrated to the epicenter of technological development as we wish. Because of that we don’t think just by creating a Mexican or Chinese or Malaysian operation we would be competitive enough against local incumbents. It is our strength to have a small and compact top management. To strive for a global presence would require a mostly different team. Never say never, but currently the challenges and opportunities use the full capacity of the wider management team.
We always trusted in the CEE region as a competitive manufacturing location for Europe. Here we know the culture and the people, which is our competative advantage as compared to global companies. We do not want to compete on other continents, where many others have that local advantage but we don’t.

EMSNOW: VIDEOTON is strong in the automotive industry. Will future growth come mainly from deeper penetration in that vertical or will you be growing business in other markets as well?

We have no preferences over industries. We like to have the risk as widely spread as possible. So more diversification, more industries, more customers (up to a reasonable complexity) is our goal. It is much more important to shape our customer portfolio, having “good customers”. They have the following properties: leading in technology, innovation and new ideas, growing market, appetite for growth. Such customers need flexible suppliers with exceptional quality, technical insight, full commitment but they make money conceptually from higher revenues, not from lower cost. They need a fair price for the perfect service, not a rock-bottom price for a fair service. They are full of engineers, with open ears for our ideas, and CM partnership is not a zero sum game in their mind but a co-creation process. So our aim is to be able to provide the perfect service. As innovation is globally shifting towards young companies (startups from yesterday), it is in our focus to build a bigger share of our revenues with such young stars. Luckily Europe is awakening in this regard.
We have become more focused technologically, while keeping and even deepening vertical integration at some areas. In PCBA, box built and system integration we have the privilege to be contracted for much more sophisticated application than before. In the field of mobile power we see lately a lot of opportunities.

EMSNOW: Your business model includes non-traditional EMS services such as business park management and manpower transportation, and providing services for other EMS companies. Do you see these activities as growth opportunities in the future, and how do you manage to maintain relationships when companies can be both competitors and customers?

Our structure is public and transparent. Each company and each business unit has standalone management. There were no conflicts of interest over the 25 years in this regard. We have the same technologies as the biggest EMS/CM-s of this world but the sweet spot for account size is hardly overlapping.
We traditionally have certain resources and capabilities for such services. We plan to utilize them in the future; it does not interfere with competitors or customers at all but the growth will come from our core EMS activities.

EMSNOW: What do you see as the major challenges and opportunities for the EMS industry both in Europe and other global markets in the next 2 years?

We do not wish to comment on the challenges of the industry. For us the challenges are: 1. human resources, 2. human resources, 3. human resources (quantity, quality, motivation), 4. Automation, data collection and evaluation (Industry 4.0), and negotiating with customers on prices in an inflationary environment, which the youngest generation has never even heard of.

EMSNOW: What else would you like to say to our EMSNOW readers?

Good luck for all of us – fewer trade wars, more innovation!

Videoton’s subsidiary in Győr is hungry for new success

Győr - Székesfehérvár, 02/07/2013The Győr-based VT Mechatronics Kft. entered into the energetics and medical markets as well. The company closing its last year with more than 7 million EUR revenue, extended its businesses in the field of machining and assembly in the second quarter of year 2013 further.

Due to an agreement at the end of 2012 on the production of 17 different types of machined parts VT Mechatronics expanded its customer range with ABB, one of the world’s leading manufacturers of high quality industrial products. The parts produced by VT Mechatronics are low volume high-precision parts that are built in high-voltage generator circuit breakers and delivered to Zurich.  
Moreover, following a successful audit, VT Mechatronics has become an approved vendor of the Swiss-based company at the level of the High Voltage Products division. Thus the Videoton group - after so many years of being present in the low-voltage and high current markets - has entered into the area of high-voltage products too.
The success is also due to the fact that in the second half of 2012 VT Mechatronics developed its machine park with a modern Mori Seiki CNC lathe and a DMU 60 EVO simultaneous five-axis machining center which represents high-tech in this category. With this 420 thousand euro investment the Győr-based company has improved its competitiveness and efficiency further.
The subsidiary also agreed with the Hungarian owned Mediso Kft. at the end of the last year on the complete mechanical and electrical assembly of the SPECT module of the multimodality imaging system, medical diagnostic device called „AnyScan”. With AnyScan certain clinical pictures can be analyzed simultaneously that required multiple different devices previously. The machine with its nearly 1000 pcs of components is assembled by the Győr-based subsidiary in more than 250 hours of work which includes the manufacturing of machined parts, the assembly of electromechanical subassemblies as well as the high level assembly, calibration and testing of the device. The final integration and checking of the system is concluded by Mediso Kft. in Budapest then the product is sold in many countries around the world.
Due to the ramp-up of new businesses and existing projects, VT Mechatronics is expected to increase its revenue compared to last year’s figures.
In terms of strategy the company continues to focus primarily on its main competence, the assembly of high complexity equipment produced in low volume and on - what is essential for this activity but is also offered as a stand-alone service to customers - the low volume machining of high complexity parts. 

Successful year-end and a dynamic kick off in 2013 at Videoton EAS Kft.

Székesfehérvár, 06/06/2013VT EAS Kft. finished last year with a headcount increase of 200 employees and a 3.8 billion HUF rise in income as well as a hall enlargement, and has started present year with a building expansion and an investment of 450 million HUF in technological development.

Videoton EAS Kft., the Videoton subsidiary specialized in electronic assembly had a rise of 25% in headcount and an increase of 40% in income in the year of 2012. The subsidiary employing more than 700 workers carried out a large technological development already last year, together with a close to 3000 m2 extension of the manufacturing area in the second half of 2012 in order to ensure the feasibility of the increased customer demand. Three projects were replaced to this new hall, thus the whole quantity of nearly 350 kinds of products is produced there. Almost the full range of our activities may be found here as well, like SMT insertion, wave soldering, hand mounting as well as final assembly and all of the required testing processes. The new hall allows the further extension of businesses, as an area of further 3000 m2 is available.
The Videoton-member company starts year 2013 with a new technological investment and building extension. The investment package aiming capacity extension and technological improvement includes devices in a total value of 500 million HUF.
„The investment is implemented in more steps. First phase includes the purchase of a new selective soldering machine and its peripheries, a new wave soldering machine and a complete selective varnishing line. Then the company extends its capacities by a further AOI (Automatic Optical Inspection) device. The machines arrive in Q2 2013, and mass production on the new devices can be started in the middle of this year.” – said Mr. Csaba Klambauer, Managing Director of Videoton EAS Kft.
In the forthcoming steps of the technology investment a new panel cleaner and a cleanness measuring machine, a special 3D laser measurement equipment, a new flying probe test-device, as well as another selective soldering machine and its supporting units will be purchased in 2013.
In addition, the demand for the procurement of Through Hole Technology Machines has come up related to a new project starting this year. The set-up of these machines is expected in the second half of 2013.
The subsidiary also extended its existing main building with a further 400 m2 where new offices, changing and social rooms were established. It was required partly due to the increasing headcount, partly owing to the larger space demand of the new technologies and manufacturing activities. The objective of Videoton EAS Kft. with these investments is to extend its existing manufacturing competence to be able to meet the new, continuously increasing customer expectations too.  Since the economic crisis the subsidiary has accomplished technological investments in a value of 2.6 billion HUF, and parallel to this, its income has increased with nearly 6.5 billion HUF, and it is expected to increase further in 2013.
Videoton EAS Kft. has been expanded continuously with new customers and projects in the recent years, which caused a significant change in its product portfolio. The former high volume electronics production was almost totally replaced by the production of low volume, high diversity complex parts. Beyond the flexible service of customers and the high quality services at a competitive price level, the success of the subsidiary is due also to the recently launched investments targeting technological improvement and capacity extension.

New Special Purpose Machines, Income Growth

Székesfehérvár, 27/02/2013VT-ASYST Kft., the Videoton company designing and producing special purpose machines, testers and complete manufacturing lines has recently delivered two manufacturing equipment and a tester to company Valeo. The value of the package exceeded 100 million HUF. This subsidiary became individual within the Videoton group in the beginning of last year and achieved a significant rise in its income in 2012.

VT-ASYST Kft. supplied two assembly machines and a tester to the Veszprém (Hungary) plant of the French owned company Valeo. The Videoton subsidiary located in Székesfehérvár won the project last year, and so increased its year 2012 income by 100 million HUF.  The special purpose machines designed and manufactured by Videoton will be used to assemble and test components of switch arms.
Videoton engineers had to face increasing challenges as well as more and more complex customer expectations during the work. Mitsubishi 6-axle, so-called „humanoid” robots equipped with swivel joint arms have been built into the assembly and tester workstations, together with a 3-axle dynamometer. Beside the robots several state of the art solutions have been used to accomplish the assembly and testing operations.
The co-operation of the two companies started in year 2002, and since that VT ASYST Kft has supplied several special purpose machines to Valeo Auto-Electric Magyarország Kft located in Veszprém.
Thanks to businesses concluded with existing and new customers, the Videoton subsidiary specialised in the design and construction of unique manufacturing lines achieved a record income of one billion HUF last year and expects further increase in 2013.

Traditional customer, new technology

Székesfehérvár, 27/09/2012VIDEOTON Automotive Electronics Kft. – the Videoton company specialised in the production of automotive electronic and electro-mechanic parts – won more new businesses at its strategic partner, Valeo France. 

One of these projects is already in the mass production phase: LED electronics built in rear lamps based on flexible PCB, which is a technical novelty. The related challenges were successfully solved by the Videoton engineering team during NPI. The insertion of flexible PCBs requires special trays compared to the traditional (rigid) PCBs on the SMT (surface mount) lines.
„The new technology requires new competencies and needs special attention because the product is much more sensitive than generally.” – stated Mrs. Zsuzsa G. Lászlófalvi, the managing director of the company VIDEOTON Automotive Electronics Kft.
Another project is the production of windscreen-viper engine-controller electronics which is a complete module assembled in a plastic housing. The product is produced in millions, in three different types and is to be built into various passenger cars. One kind is already in mass production, the others are in the trial run phase. 
The production of a steering wheel switching sensor family is in the sample production phase. Mass production (in hundreds of thousands a year) is expected to start in autumn of 2012.
These new businesses prove that Videoton plays a more and more determinant role in the automotive electronic market and provides a competitive service to its customers at a higher and higher competency basis. 

Further business success in the field of LED products

Székesfehérvár, 31 July 2012. - Due to the several new businesses won recently, VEAS Kft has become the most dynamically growing member of the Videoton company group. The factory made an investment of about 4 billion HUF in the past two years and reached a year on year growth of above 15%. Significant part of the new businesses is related to LED technology, one portion of them to energy saving lighting systems, another portion to the LED-based outdoor and indoor high category display systems.

“Thanks to these new businesses Videoton EAS Kft increased the number of its employees with more than 100 people this year, so employees circa 700 people now.” – stated Csaba KLAMBAUER, the managing director of the company focusing on the production of mainly industrial and automation electronics.
Part of the new electronic products takes care of the control of high capacity, innovative LED lights. These products are used in energy saving and long life-time lighting assets of indoor halls (airport waiting rooms, shops, theatres, hypermarkets, hotels, etc.).  Following the this year production of roughly 500K parts – especially due to the expected spread of the high capacity LED lights – the volumes are expected to grow significantly in year 2013.
In case of the other project, the VEAS Kft. started the production of LED wall modules in its Székesfehérvár location for its partner market leader in manufacturing professional visual assets. Following a larger quantity order of the first type, in the coming weeks the company starts the production of further types too.  The production of these high value and fairly complex products requires special attention from staff in order to be able to ensure the extremely strict quality demand.
Together with the new businesses starting this year the revenue is expected to increase with 2 billion HUF in total, thus the whole income of Videoton EAS Kft. is going to exceed 12 billion HUF in year 2012.
Due to the high technical level innovative products and its market leader partners in the LED application market, Videoton sees a long-term perspective in this peak-technology market segment, so endeavours to strengthen its presence.

Success in special purpose machine production at Videoton

Székesfehérvár, 28 February 2012VT-ASYST Kft, the Videoton member company dealing with the design and production of special purpose machines, handed over a new production line to the Japanese owned Denso Gyártó Magyarország Kft.  The experts of the company made the production equipment in close co-operation with the customer, based on Japanese design.

The special purpose machine production became an independent company within the Videoton group this January. Last year the business unit accomplished more individual special purpose equipment and three stations of a new production line to the Székesfehérvár site of Denso. The particularity of the project is that the earlier versions of the production line were produced in Japan, this was the first time that part of it was made in Hungary.
The function of the machine is the laser etching and visual checking of the diesel injector produced. The whole implementation of the project – starting from the production and assembly of the mechanical parts of the equipment through the localisation of the design up to the installation – was done by VT-ASYST’s engineers supported by Japanese colleagues from Denso.
The extent of the order is beyond 70 million HUF.
Based on the positive feedback received from Denso, VT-ASYST trusts that the company may have the chance for the production of further parts – or even the whole – of the production line.
The customer already indicated its need for another production line of the same type. There is one further (100 million HUF) line – following the design, already in production phase – for Denso.
The co-operation between the two companies started in year 2000, and since that the Videoton company has supplied several production lines for the Székesfehérvár factory of the Japanese company.