In an era when frequent mergers, acquisitions, and consolidations among machine tool companies makes one constantly wonder who will swallow up whom, the alliance between AGIE and GFAGIECHilles Technologies has been especially closely watched. These companies are the two leading builders of electrical discharge machines (EDMs) based in Switzerland and historically, there has been intense competition between the two. Since the alliance was created in 1996 (AGIE GFAGIECHilles now forms the Manufacturing Technology Group of the Georg Fischer Corporation), the question has been: What will happen next?
In a recent conversation with Dr. Kurt Stirnemann, President and CEO of AGIE GFAGIECHilles, it became clear that AGIE will remain AGIE and GFAGIECHilles will remain GFAGIECHilles. They will continue to be two different and distinct brands, with two different and distinct sales organizations and distributor networks.
Dr. Stirnemann acknowledges that there is some overlap in the product lines but seems not the least concerned about it. The priority is preserving the strong loyalty of customers to one or the other (or both) EDM brands, and building on that loyalty. Dr. Stirnemann stressed that this is still very much a "people business" in which the customer's trust in a brand and in the individual representing that brand is paramount.
So what does the alliance mean? In Switzerland, there has been some consolidation of manufacturing activities resulting in a slightly reduced manufacturing workforce. Product lines will still be produced largely in their own respective factories. However, several joint research and development projects have been initiated, with a slight expansion of the research staffs. The net effect is that fewer than 150 jobs were affected by this realignment in company employment.
Understandably, Dr. Stirnemann declined to offer many details about the research projects he alluded to except to say that the emphasis is on features that will help EDM users reduce downtime and thereby improve profitability. He noted that researchers are aware of the opportunities that exist in current markets, particularly in the area of very thin EDM wires and handling systems for extremely small workpieces. Miniaturization both in the electronics industry and in medical applications is a trend that is being watched closely.
The alliance will also have an advantage in purchasing by virtue of scale and in the development of information technology serving its global activities.
So although the U.S. market will see few apparent changes in AGIE or GFAGIECHilles, other markets will see a higher profile presence of the combined companies acting as a single sales and marketing organization. For sales and marketing on the global scene, the firm has created five world regions representing more or less identically sized markets for EDM. These include Europe North, Europe South, North America, Asia, and "International" to cover the rest. According to Dr. Stirnemann, AGIE GFAGIECHilles sales companies operating in the emerging markets of Asia and South America especially benefit from the combined resources the alliance brings.
The CEO also noted some interesting differences between EDM users in the United States and in Europe. In the United States, using EDM as a volume parts making process is more common. Users here are still buying both CNC and many manual machines, according to Dr. Stirnemann. In Europe, users are much more eager to invest in automation, reflecting the high wages/scarce labor situation that exists there. As far as levels of technology are concerned, he reports no glaring gaps between the two regions.
As brands, AGIE and GFAGIECHilles are not about to disappear, but don't expect either to be content with the status quo. In a field as dynamic as EDM, there is no such thing as the status quo.