Expansion Planned for Phoenix Contact

Two members of the Phoenix Contact executive team traveled from Blomberg, Germany to its subsidiary in Middletown, Pa., on Sept.

16 to announce a corporate restructuring and additional investment in the United States. The company plans an expansion of its manufacturing operations and a 45,000 square-foot distribution center at the company’s U.S. headquarters in Middletown.

To speed new product innovation and enhance operating processes, Phoenix Contact (www.phoenixcon.com) is changing its business structure. “Moving to a Trans National Corporation (TNC) with regional centers to address product development allows Phoenix Contact to address customer and market opportunities faster than ever,” said Frank Stuehrenberg, executive vice president, global sales, Phoenix Contact GmbH. He added, “Phoenix Contact is establishing Regional Centers of Competence (RCoC) based at our facilities in Germany, the United States and in China.” This has led to the creation of a Regional Business Unit in the United States responsible for the research, development and engineering of new products for all of the Americas subsidiaries, including those in the United States, Canada, Brazil, Mexico and Argentina. The company expects to add 200 additional jobs over the next five years.

The existing U.S. sales operation will continue its growth, as will the now separate operations focusing on product manufacturing, logistics and central services. Jack Nehlig continues as president of Phoenix Contact, USA, with vice presidents heading each of the units. Newly appointed Vice President David Skelton has assumed leadership of the Regional Center of Competence.

Nehlig said, “We believe these new initiatives properly align us for the aggressive growth path we have set for ourselves. Our new direction will allow us to work closer with our colleagues in Germany to more quickly develop and deploy innovative products for the Americas region. Our new distribution center and expansion of our U.S. manufacturing operations is a testament to our continued growth that will enable us to create jobs in our local community.”

The current 28,000 square-foot manufacturing operations will expand to a total of 90,000 square feet by 2008. This will accommodate the growth in product development as a result of the newly formed Americas Regional Business Unit. The distribution center, slated for completion in 2007, is needed to address the rapid growth of product distribution through the Middletown facility. Already operating near capacity, the current distribution center cannot optimally handle the expected growth in shipments for customers in the United States, and increasingly, for Phoenix Contact subsidiaries across the Americas. The new distribution center will use Phoenix Contact’s control and automation systems in a state-of-the-art operation.

Roland Bent, executive vice president of marketing and development, Phoenix Contact GmbH, said, “At a time when many companies are looking to locations outside the United States for additional engineering or manufacturing services, Phoenix Contact is increasing our investment in the United States. Instead of off-shoring, we call this in-shoring,” Bent noted “Our continuing excellence in innovation allows us to offer even better products and services for the very important American market.

Phoenix Contact is known as one of the German “mittlestand” companies—that is, privately held companies of medium size. However, over the past ten years, it has realized the fruits of its investment in networking and automation, and grown significantly. With global sales of more than 720 million Euro (almost $1 billion) and employment of more than 7,000, the company is pushing the envelope of the mittlestand definition. Stuehrenberg took pains to note that Phoenix Contact management still tries to continue the innovation and entrepreneurial spirit of the founders. The Regional Centers of Competence are an organizational move designed to maintain those characteristics of the smaller companies.

Gary Mintchell

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