FCI: Making the connection

Emphasis on continuous innovation moves FCI to the forefront of the connector business.

By Martha Richards -- Movers and Shakers, 6/15/2001

	AT A GLANCE
	FCI Electronics Paris, France www.fciconnect.com Privately held

Most of the ink spilled over the electronics industry focuses on glamorous components like microprocessors and digital signal processors. But it’s worth noting that those much talked-about chips—and the systems and networks they power—wouldn’t function at all without connectors capable of transferring signals from place to place. And far from being an insignificant segment, connectors represent big business.

Just ask FCI (Framatome Connectors International), the worldwide supplier of electronic and electrical interconnect systems owned by the Paris-based Framatome Group, a leading European industrial group. The privately held company, founded in 1989, has established itself as a leading connector manufacturer, trailing behind giant Tyco Electronics. With 2000 revenue of approximately $2.4 billion, FCI currently employs more than 18,000 people and has more than 60 production facilities in 29 countries throughout Europe, the Americas, and Asia.

However, in this industry, it is only the fittest that will survive, and at a high price. As FCI has shown, climbing to the top requires some major investments—in technology, in understanding customer demand, and in globalization. Staying there will too.

Nearly 40 percent of FCI’s connector sales come from the Americas. This expansion has developed over the past 12 years, partially through a series of acquisitions. Notable among these was the $1.85 billion acquisition of Berg Electronics in 1998, which strengthened the company’s North American sales and propelled FCI to the top of the rankings.

As diverse as the countries where FCI has expanded is the company’s versatility in terms of market presence. FCI provides connectors and interconnecting systems to the communications, data, consumer, automotive, energy, military/aerospace, industrial, and instrumentation markets. Of late, FCI’s highest level of growth has come from high-end connector products for communications applications.

Michel Cuilhe, president of FCI Electronics, a major component of FCI, finds himself at the forefront of one of the fastest-growing markets. “High-speed systems are becoming the market today, as well as wireless,” he says. “It has changed the market.” Around 38 percent of FCI’s sales come from the communications market. Through the production of connectors that serve the Internet and data-communications markets, FCI has been able to capitalize on this high-growth industry, which has experienced excessive demand over the last few years.

“Our main strength is in technology,” Cuilhe replies when asked what sets FCI apart from its competitors. And it is in addressing the need for fast, high-capacity connectors for the emerging communications market that FCI has experienced some valuable technological gains to date. FCI has established itself as the leading supplier of 2mm connectors and systems for the electronics industry, specifically for telecom and data applications. The company reports sales of approximately $320 million for 2mm products for 2000.

	“Our main strength is in technology.” —Michel Cuilhe, President, FCI Electronics

Also of note is the company’s MEG-Array connector, the industry’s first high-volume BGA (ball grid array) connector. This board-to-board mezzanine connector for portable computers can handle signal speeds of up to 10 GHz. Other industry benchmarks are inevitably on the horizon, because investing in continuous R&D initiatives remains an important keystone in the company’s blueprint for developing innovative products. The company registers, on average, in excess of 100 patents a year for new products.

Amidst the expansion and innovation, FCI recognizes that unless customer needs are met, its success will be short-lived. “It is the only way we can succeed in the market,” Cuilhe says. Therefore, the company serves a growing number of customers who want manufacturers to be involved in the design process in order to add value to the end product. The company’s operations offer customers complete in-house backpanel and cable assemblies for customized product production. Value-added products amount to 17 percent of FCI Electronics’ sales.

FCI has not achieved its successes in the past year without hurdling some obstacles. The booming demand for high-speed connectors had manufacturers racing to ramp up their volume capabilities. “The growth was such that we were challenged,” Cuilhe admits. Production of the company’s 2mm connectors alone jumped by a factor of 10 in the past 18 months.

Now, in stark contrast, the market slowdown has left many manufacturers with excess inventories. This is a particularly costly situation for companies like FCI, which have built their capacity enhancements on a global level, expanding into Asia and China. However, Cuilhe counts this expansion as an advantage for future growth. “We will be able to serve global demand better in 2001,” he says.

Considering the level of growth experienced in just 12 years, it will be interesting to see what another 10 years will create. If those at FCI get their way, it will be a rise into the industry’s No. 1 spot.