Isola: Evolving with the Market

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In this interview from productronica 2017, Isola’s Karl Stollenwerk discusses the decline of the laminate market in Europe over the past 17 years, current demands on raw materials, and Isola’s new strategy to remain competitive.

Barry Matties: Karl, how long have you been with Isola, and when did you become president?

Karl Stollenwerk: It's now 30 years ago that I started with Isola—1987. I started in sales and for many years I held a number of sales roles. In 2006 I became the MD of the Isola plant in Düren, Germany. In 2009, I took on the responsibility for the European operation of Isola. At that time, we had three plants, but following market trends, the European market in terms of base material for printed circuit boards has been shrinking the last 17 years.

Our booming year, 2000, was the last year we saw growth. After that, we just saw a reduction on the market side. Customers disappeared, market disappeared, suppliers disappeared and competitors disappeared. When I started in '87, there were 23 different laminators in Europe. Today, we have a couple. That’s a very short overview of the last 17 years.

Matties: But, you hit the high points, and the low points.

Stollenwerk: We were growing a lot during the ‘90s, and growing fast. At that time, we had six plants in Europe. Now we have just one. I think we were always following market trends, and trying hard to survive in a shrinking market. In the year 2000, the laminate market in Europe was 21 million square meters, and we did, at that time, 5.2 million square meters, only from the Düren plant. Today the market is 5.6 million, and we still have the capacity to do 5.2 million. That is reality.

Matties: It's a tough reality, isn't it?

Stollenwerk: Yes, that's true. But that is what I always tell my people. It's a tough world, but we are still there and successful.

Matties: With it being such a tough world, I know that there's been some management shifts, and new directions set for Isola. How is that playing in from your role? What's shifting, and what do you think the impact is?

Stollenwerk: I would say number one, as I said, the market in Europe has been shrinking for years and we had to adapt ourselves accordingly. We were able to adapt, and we are still doing all the base material that is needed, starting from the standard Tg material, up to the high-Tg and high-frequency product. The strategy is very simple; we are producing in all three regions, and Europe is just one of the three regions. We are doing OEM marketing in all three regions. In a lot of cases, we start here with low-volume, high-mix. Then when it comes to real high-volume, we have to accept that it goes in other regions, especially to the Asian region. That is one part of the new Isola that is focused to start where it is developed, and to follow the market and the needs immediately where they want to do the volume. That is what we are doing, not being scared about doing something, and then losing it later. That is business.

Matties: Well, you're doing it by strategy now, rather than reaction. That's the difference I'm taking away from my interviews with people at Isola.

Stollenwerk: Exactly, and that is also important for the people in the plant; they have to and will understand that this is part of the business model. Therefore, that is where the influence is coming for that new model and strategy.

Matties: The new model is driven by the loss of market, right?

Stollenwerk: Right.

Matties: We don't change until we feel pain. You guys were feeling some pain, and you made some changes.

Stollenwerk: Correct. The other strategy is coming from our new management; we want to produce in all three regions, which is also an important statement for people who are working in a shrinking market. And, we are also dedicated to do R&D in all three regions.

Matties: Because the needs are different. In Europe, aren’t there about 300 shops?

Stollenwerk: I would say about 230.

Matties: Are the needs in the North American and European market so terribly different?

Stollenwerk: I would say from the technology point of view, we have different market segments. We have a very strong automotive business here, which is 20% of the total European demand for base material. We have another 50%, which is industrial, low-volume, high-mix. We don't have a lot of sophisticated products like the high layer-count laminates for the servers. This is a typical U.S. market. That is the difference. In the U.S., the average layer count is 15, 20, or above. We don’t have that much layer count in average in Europe. That means we have a lot of thicker base material and even more rigid material than in the U.S. The other difference is that in U.S., the market starts with a Tg of 170. We instead start at 130. From the U.S. point of view, Europe is doing a lot of low-Tg stuff. We are saying it is the standard Tg. You can see already the difference. These are the differences, but what is similar is that post-markets in the U.S. and Europe have been shrinking over the years.

Matties: The other issue is cost, or selling price. You had to lower your selling price to really be competitive.

Stollenwerk: Yeah, we were able, over the years, to restructure in a positive way. Taking cost out and what is not needed. Providing good service in the way of short lead times.

Matties: Was that a difficult process to remove cost?

Stollenwerk: Yes, and it still is difficult.

Matties: Painful, I would think too.

Stollenwerk: In 2000, looking back on the 5.2 million square meter output, we were doing that with 1,050 people in Europe. We were doing it in a four-shift model with seven days, 24 hours. Today, we are running between five and six days, three shifts, with 320 people. If we were able to get the whole 5.2 million, then we would have to add a fourth shift. But, then we would do the 5.2 million with about 420 to 440 people.

Matties: So, it’s about 40%, or thereabouts, of what you had previously.

Stollenwerk: Right.

Matties: What were the greatest gains in efficiency that allowed you to do this?

Stollenwerk: A lot of internal logistics. The big change was to change the production logistic from make-to-store to make-to-order. Accept the low-volume, high mix, and be very flexible in that. We learned from the U.S., for example, the quick-turnaround business. We started to do quick-turn in 2010. Before that, we never did it. I think these were really major changes in our world, like, let's say, the lean activity over the years. The same comparison can be made in terms of used building space and area. In 2000, we were occupying 40,000 square meters of buildings. Today, it is exactly half, 20,000. That means we have reduced a lot of internal transportation. We have reduced a lot in terms of different machinery.

We were putting in Lean, and a one-piece flow wherever possible. We are doing a lot of automation in order to reduce labor costs further. The beauty, over the years, is that we were pushed to increase automation to reduce labor, just for cost reasons. In the meantime, automation has brought, in addition to much higher quality, much more stable quality. Companies in Asia, especially in China, have 20-25% changeover in terms of people, and we have a changeover of 1% or even less. That means that our people have knowledge, and the average of all our 320 employees is 21.5 years of service. A lot of people have been working here for many years, which means people have a lot of experience.


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