Munich Control cabinets for marine diesel engines, robots and e-bike motors: the factories of the Bavarian electronics manufacturer TQ are working at full capacity. Sales will increase by around a quarter in the current financial year, says Managing Director Rüdiger Stahl. The medium-sized company will generate revenues of at least 440 million euros. Ever since the engineer founded the company with a partner almost three decades ago, things have never gone so well.
Electronics from Germany are in demand again. “When we started, it was a disadvantage not to produce in Asia,” the entrepreneur recalls. Today, customers from sectors such as medical technology or aerospace appreciate the short distances. Stahl: “We deliver tailor-made what the customers need.”
Like TQ, other electronics manufacturers in Germany are also thriving. For many clients, “proximity is an important issue,” emphasizes Rainer Koppitz, CEO of the listed competitor Katek from Munich.
Koppitz describes the manufacturer’s formula for success as follows: “We offer exactly the electronics that make the difference for German and European industry.” The products are often complex and expensive, but durable and can be ordered for years.
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Koppitz adds: “We are also able to produce twice as much on demand.” Katek supplies, for example, electronics for robot manufacturers, door locking systems for vehicles and so-called wall boxes, i.e. charging stations for electric cars.
Industrial electrician: The listed Munich company Katek is also growing strongly through takeovers.
(Photo: Katek SE)
The electronics producers in Germany concentrate on niches – from which lucrative business can develop. Example Swissbit: The Swiss company tests and packs storage solutions in its factory in Berlin.
At the end of 2019, the former Siemens subsidiary rebuilt its factory – and expanded it last year. “In the last five years we have doubled our turnover and number of employees,” says CEO Silvio Muschter.
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Swissbit employs 250 people in the federal capital. The medium-sized company has a total of 430 employees and generates sales in the hundreds of millions. The fact that Swissbit manufactures in this country is clearly an advantage, says Muschter. “In the past year or two, local procurement has become increasingly important.”
Our markets are too fragmented for the really big manufacturers. Swissbit CEO Silvio Muschter
Swissbit memories can be found in machine controls from corporations such as Siemens and ABB, in medical technology and also in airplanes. “Our markets are too small for the really big manufacturers,” explains Muschter.
TQ is independent of financiers
The focus on selected market segments and high-quality electronics is common to the manufacturers in Germany. However, the growth strategies differ. “We are independent of investors,” emphasizes TQ boss Stahl. The company is family-owned – and should remain so.
The two founders from Upper Bavaria have occasionally taken over locations from other companies, for example a former Fujitsu test center in Augsburg two years ago. Over the years, the workforce has grown to around 1900 employees. However, the business has essentially developed under its own steam.
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Completely different Katek. CEO Koppitz recently raised 19 million euros through a capital increase in order to finance an acquisition in the USA, among other things. The manager is constantly on a shopping spree, including overseas. He is now applying his recipe for success from Germany in America: supplying customers on site from local production.
For 2022, Koppitz promises sales of more than 635 million euros, an increase of almost a fifth compared to the previous year. The adjusted operating profit, the so-called Ebitda, should climb by at least ten percent to around 33 million euros.
Wherever possible, the production of TQ is highly automated. Because suitable staff is scarce.
According to Koppitz, there is no end in sight to the upward trend. According to the head of the group, car manufacturers are now increasingly approaching Katek: “They are looking for direct cooperation with us.”
Instead of serving the automotive suppliers as before, Katek is now doing business directly with the brands. This involves complex electronic assemblies, such as for battery management. Meanwhile, the expansion strategy has not been well received on the stock exchange: last year, the price collapsed by around 40 percent.
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TQ shareholder Stahl does not need to worry about share prices and investors. He can afford to build businesses over decades. Just like with the e-bike drives. TQ has been developing the engines since 2008.
The breakthrough came only recently with an order from the US bike manufacturer Trek. The Americans were impressed by Bayern’s staying power and know-how. “Anyone who makes robots and supplies space travel can also build bicycle motors,” says Trek manager Travis Ott.
Industry association ZVEI complains that the costs are too high
Although the electronics manufacturers in this country are thriving: Global bestsellers such as the iPhone will continue to be produced in Asia for years to come. There is one main reason for this: German wages. “Electronics are usually not competitive on the world market at our costs,” emphasizes Gunther Kegel, President of the ZVEI industry association.
The family company TQ produces robots and also uses them in its own production.
There is also a lack of personnel in Germany to set up large-scale electronics production like in the Far East. The iPhone manufacturer Foxconn employs around 200,000 people at a single location in Zhengzhou, China.
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Electronics production in Germany is anything but a sure-fire success, despite the good order situation at the moment. The costs in this country have recently “increased unbelievably”, complains Katek boss Koppitz.
Electricity has always been more expensive in the Federal Republic than elsewhere. But now the distance to other countries has widened again. Getting through price increases with customers is still difficult, but unavoidable.
In addition, people are currently missing “in every nook and cranny”. “The sickness rate is extremely high.” For the Katek workforce, this means: Saturday work and sometimes night shifts. In any case, it is difficult to find people, says Koppitz. Therefore, Germany must break new ground: “We welcome the government’s immigration initiatives.”
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