Re: Uli Behringer of The Music Group Q&A
Dear John,
Thank you for your comment.
Allow me to share a slightly different view. While Apple outsources all its manufacturing operations to contractors like Foxconn and Flextronic, other companies like Dell have gone in the opposite direction. As with every business one has to decide which disciplines are core to overall strategic direction. It is the business model that influences this decision.
While Apple’s business is defined through a high volume/low model mix, Dell’s model requires a more flexible approach due to its diverse product portfolio and the need to adapt to unique customer specifications. As a consequence, Dell focuses on extreme production efficiency in highly customized factories which require massive investments that no 3[SUP]rd[/SUP] party contractor would ever consider. The fact that Dell owns 3000+ manufacturing patents is proof of the strategic importance of manufacturing to its business.
Compared to the consumer industry, production runs in the professional audio industry are very low and generally unattractive to large contract manufacturers like Foxconn and Flextronic. Audio companies are left to deal with medium size or even 3[SUP]rd [/SUP]tier contractors. Today, almost all companies in our industry use Chinese manufacturing and are constantly on the hunt for the next factory that offers lower cost. As a result, contractors have a short-term mentality and do not invest in long-term relationships or expensive quality measures. It’s all about today’s order!
Behringer was the first audio company to move production to China. I must admit, in the early days we had our fair share of painful experiences with third-party manufacturing facilities. The reality of manufacturing in China is that you must control it or it will wipe you out. Initially we used 3rd party manufacturers who had little experience with audio products. It is common knowledge that those manufacturers made unauthorized parts substitutions to maximize profit and explicit work instructions were often ignored.
Frankly, it was a losing battle. So 10 years ago we opened our own manufacturing plant and today, we are one of the very few companies that has its own plant. We are proud of our dedicated people and high quality facilities. Was it easy? Absolutely not; but, it was worth the pain as today it is a huge competitive advantage. We now control our own destiny, we make long-term investments and we achieve quality levels only top tier contract manufacturers can offer.
When we acquired Midas, we invested in the most sophisticated equipment and spent over US$ 20 million. We built one of the most high-tech and automated plants in the world with high-precision SMT machines, in-circuit testers, optical inspection systems that automatically check every solder joint and x-ray equipment that can “see” through multilayer boards with fine-pitch and ball-grid parts.
If you take a look at our company videos on YouTube, you can see the huge investment we made in “Behringer City” or "MUSIC Group City" as we call it today. Hopefully you will experience the difference the MUSIC Group offers and better appreciate our decision to make our manufacturing processes a strategic priority.
MUSIC Group continues to invest both in great people as well as in cutting-edge infrastructure and this is our long-term strategy.
Uli
