Interview with Julius Renk CFO, LEM Holding SA

Electronics InterviewSouth-East European INDUSTRIAL Мarket - issue 1/2013

LEM establishes a new production plant in Sofia

Dear Mr. Renk, what was the reason for investment in a new production plant in Bulgaria?
Although we are a rather small company with only about 1 200 employees we operate very internationally. We have a distribution network across the globe and currently three production sites in China, Switzerland and Japan. In order to increase capacity near our most important customers in Europa and diversify our low cost production we have decided to establish a new production site in Sofia. The advantage is that with this new site we will not only increase capacity in a low cost environment but also reduce the currency exposure of the entire LEM Group.

We have analyzed a number of different locations and opportunities for new sites. Since we already had significant capacities in Asia we were looking for an alternative in Europe. Western Europe represents a significant part of our sales and Bulgaria is ideally placed to serve this market. Furthermore, Bulgaria has proved to be the best opportunity because of the high quality of its workforce, the good infrastructure, its sound economic prospect and stable currency.

What is the importance of this investment for your company?
We run the current three production sites for many years now. Opening a new one is a major step for LEM, which we took after careful analysis of risks and opportunities. We believe the new site will be a major factor for LEM’s future as it provides increased capacities to meet future growth of the company and better diversification of our production platform. We are confident that LEM Bulgaria will be the second largest production site after China in only a few years.

What will be the production range of LEM Bulgaria?
In Bulgaria we will produce current and voltage transducers for a broad range of applications in our industrial markets. We will assure that the Sofia plant will assemble products in the same outstanding quality as the other LEM sites. In our sector, LEM is the only provider offering a five years warranty on the products irrespective of the country of assembly. The same warranty will be offered to customer for products assembled in Bulgaria. We will invest considerably in training of employees and quality management in the new site.

Which markets and industrial sectors is the output intended for?
LEM Bulgaria will produce transducers for our Industrial segment, serving the applications in our markets: drives & welding, renewable energies /power supplies and traction.

What is your long term development strategy for Bulgarian market?
LEM Bulgaria will considerably grow over the next five years and its output will represent an important share of the Group’s sales.

Could you please, present to our readers Swiss company LEM as a history and a scope of activity?
LEM is a focused manufacturer and a global market leader. Our core products, transducers for measuring electrical parameters like current and voltage, are used in a broad range of applications. Although these devices are not visible to the outside world, they are vital for application functionality. Starting with products for locomotives in the 1970s, LEM expanded into a vast area of industrial applications, including variable speed drives for motors and power supplies for industrial applications. Today, LEM’s current and voltage transducers are also used in AC/DC converters, uninterrupted power supply systems for computers as well as in new innovative energy applications like micro-turbines and wind and solar power generation. In addition, opportunities have been developed in the automotive market for battery management and electrical motor controls for steering and braking systems.

LEM has the strongest brand recognition in its markets. Our products - commonly called "LEMs" - are at the heart of many power electronics applications. Our strategy is to exploit the intrinsic strengths of our core business and develop opportunities in new markets with new applications. At the same time, we are committed to maintaining customer focus and operational excellence by running cost effective and service-oriented production platforms.

LEM is a global organization with production plants in Beijing (China), Geneva (Switzerland), Machida (Japan) and soon in Sofia (Bulgaria). We have sales offices across the globe and offer seamless service.