| Littelfuse Inc.: Thinking Ahead |
| Manufacturing | |
| Thursday, 31 January 2008 | |
 Gordon Hunter says a delicate touch when making changes and careful new product planning keep this 80-year-old company on the cutting edge.  Gordon Hunter, CEO Through a flurry of moves over the past two years, Littelfuse has positioned itself to serve a range of demanding customers, each seeking smaller, lighter, more economical components for their products. In the process, the company has remained disciplined by making sure each initiative also stands to enhance what Littelfuse will have to offer in the marketplace in years to come. “We’re constantly making resource allocation decisions,” said Littelfuse CEO Gordon Hunter. “Where do we get the best long-term return from investments we make in new product development? That’s a critical part of making new product development decisions.” Adding planks Littelfuse, a mid-cap company that trades on NASDAQ and collects about $500 million in revenue, seems to be jumping at opportunities left and right. The firm has acquired a series of companies with varied specialties in circuit protection over the past two years. It’s setting up additional manufacturing operations in the Far East at locations from China to the Philippines. To an untrained eye, anything in Asia would appear to curry favor inside this firm’s board rooms. But on the contrary, each recent step represents a well-reasoned attempt to fill in gaps in a long-term strategy centering on customer service. With every move, Littelfuse’s bridge to long-term leadership attains a new, important plank. Example: acquisitions. Littelfuse has recently branched into semiconductor, polymer, and ceramic technologies as a result of purchasing companies with strong track records in those areas. In each case, Littelfuse gained not only a new revenue source but also a repository of circuit protection know-how in fields that stand to prove highly valuable to its core business as the electronics industry evolves. “Our branding is really to make the world and our customers understand we have the broadest product offering, multiple technologies, and the most expertise so we can help our customers design their products to be safe and reliable,” Hunter said. Still, Littelfuse isn’t forgetting about its own interests even as it caters on a whole new level to its customers’ needs. On one level, Littelfuse is bending over backward to keep its customers satisfied. Relocating to Asia is as much about being close to customers, who are also increasingly present there and working with suppliers there, as it is about trimming costs, Hunter said. Working closely with customers enables Littelfuse to be a total solution provider, Hunter said, by meeting their needs in every area from cost-cutting to quality control and support services. Littelfuse has begun developing custom products for customers such as BMW, which requires long lead times and close, long-term relationships with vendors. It’s also working with Apple to provide components that are not only ultra-light and micro-sized but also environmentally friendly. Triple benefit Tailoring so much attention to individual customers could seem a risky allocation of resources for a company whose bread and butter has long been in standardized, mass-produced devices. But this approach offers a potential triple benefit to Littelfuse. First, the company keeps its well-known and demanding customers happy by meeting their evolving needs. Second, Hunter said, close relationships help Littelfuse stay abreast of long-term trends that are likely to affect at least some of its other customers in the future. Third, customizing products for a few good customers can pay dividends down the line by expanding the company’s knowledge and building up its stable of design insights. “In developing a custom product, while that product may be for one customer only, usually the knowledge gained and the investment of time will help us develop similar products for other customers,” Hunter said. Even internally, Littelfuse strives to bring about mutual benefit with some of its most important business partners—employees—in times of difficult transition. A few years ago, Littelfuse relocated a manufacturing plant from Illinois to Mexico, and that experience has provided a foundation for smoothly relocating plants ever since. During the next 18 months, Littelfuse plans to consolidate its 15 manufacturing plants worldwide into seven. The massive move to Asia sometimes means job losses at certain plants, such as one in Ireland, Hunter explains. Yet the transition will only go well if skilled Irish workers understand what’s happening and help train Chinese associates who are inheriting similar responsibilities. To execute transitions in this and other cases, Hunter says, managers explain to production floor workers the company’s plans well in advance of the actual move. They offer bonuses as incentives for workers to stay with the company and pass along their hard-earned knowledge. With each step, managers keep in mind the principle of mutual benefit as a guiding light for the firm’s pathway to the future. “The process involves being very honest, having plenty of time to get associates’ buy-in, and helping as much as possible to find alternative jobs for people within the company or helping with outplacement,” Hunter said. This procedure requires a “delicate” touch on the part of company leaders, he said. Effective communication is as indispensable as a detailed plan for bringing off international moves without a hitch. When it’s done well, he said, employees have made the best of a challenging situation, and the company has positioned itself to be an industry leader for many years to come. G. Jeffrey MacDonald is a correspondent for the Christian Science Monitor. Based in Newburyport, Mass., he can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it |
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American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
