Sound investment Alpine Group

SOUND INVESTMENT

The Alpine group made a good investment when it chose Hungary to become the European production centre of quality mobile solutions more than a decade ago. Whilst achieving rapid growth, Alpine Hungary has built strong links with its partners and today makes large contributions to the group’s global success. Edina Beale reports.

European sales in the field of OEM production were rising fast in 1999, when Alpine decided to set up its first and only European production facility in Hungary. The former Eastern bloc country provided a perfect location for the Japanese parent company for various reasons. Alpine at that time had already been operating its European headquarters in Munich, with sales and development center in Stuttgart, the UK, France and some other European countries. Hungary’s geographic position has enabled the new factory, Alpine Electronics Manufacturing of Europe Ltd (AOHU), to closely liaise with these centres in order to fully satisfy customers in the whole region. In addition to its low labour cost and low transportation cost, Hungary’s position also provided the opportunity for custom free import within the European Union via applying Customs-Free Zone business scheme for the Hungarian plant. The brand new state-of-the-art manufacturing plant was built in a 129,000 m2 land in Biatorbágy, 20km west of Budapest capital. Strong links with partners on both sides

Today AOHU supplies products to the most prestigious European car manufacturers. The portfolio includes CD and radio audio products, navigation systems with built-in DVD readerand dash information displays. BMW and Mercedes are the most significant customers, but sales with the VW groups and Honda have also increased lately. In addition, the company manufactures a small volume – approximately 200 products – for Volvo each month.

Mr Yasuki Matsui, managing director of AOHU, believes that its effective communication with partners is a major strength of the company: “Our 13 years of experiences in communication enable us to handle problematic situations efficiently and we can reliably build on our relationship by keeping every day contact with our partners. Our suppliers have an important role too, since as a TIER1 supplier we rely on our efficient and well-established relationships with them. In recent times, our domestic suppliers acquired growing significance; more and more components are being supplied by companies in Hungary and other European contries.”

Efficiency and quality increasing projects

Products are being developed in the Japanese R&D plant that works closely with the development centre in Stuttgart. “Our priority is to fully satisfy our partners, but efficiency and quality are also our main focus,” highlights Mr Matsui. “We believe in our ability and have put in place many efficiency-increasing projects that will improve our quality, flexibility and efficiency as a result.”

Due to its geographic location, AOHU is able to cut its logistics cost significantly by serving partners directly from their own warehouses. The company began the direct supply of BMW in 2005, and reduced Alpine’s 2–3 week consignment warehouse needs to 4–5 days storage in the Hungarian plant, and therefore also eliminating the shipping cost. “It is particularly important for the customer from

cash flow and quality aspects,” explains Mr Attila Cserepes, SCM director of the Hungarian plant. “Due to our low stock we are able to adjust to the latest changes made by our engineers that further improve our quality level or required by our customers. Our efficient production and the dynamic team behind it, largely contribute to our success. Alpine uses the Hungarian factory as a showroom to demonstrate Alpine production capabilities to our partners,” continues Mr Cserepes.

Recent investments have enabled AOHU to meet the stringent criteria control measures and ensure that the products leaving the plant are to the highest standards. In order to improve cleanliness, AOHU installed suspended ceilings and ESD barriers in their manufacturing facilities as well as invested in a condensation system to precisely control humidity in the building.

Key role in global operation

After ten years of dynamic growth, AOHU has now a key role in the Alpine group’s global operations. Alpine manufactures worldwide nearly 8 million pieces of finished goods of which over 1 million pieces are produced in Hungary. The factory last year turned over €222 million and currently employs 950 staff. Since its establishment, the plant facilities in Hungary have been expanded three times, most recently in 2008 when manufacturing capacities were increased by 7000m2. “Alpine has six other manufacturing plants in other worldwide locations, and we can produce the most complex products to provide one third of the group’s total European sales,” confirms Mr Cserepes. “If we consider the fact that European sales contribute 40 per cent of the group’s total turnover, our output indicate a significant production volume.”

Alpine in Hungary has acquired significant experience in the past decade and built strong relationships with their customers and suppliers. At the same time, the Hungarian plant adapted well to the Alpine structure and established a smooth cooperation between the Japanese, German, English and Hungarian multi cultural operations. Mr Cserepes has even more reasons to be optimistic: “We believe, that our factory has an increasing responsibility in Alpine sales and that we make large contributions in assisting Alpine to manufacture more efficiently. Following our ‘Made in Market’ policy, utilising the capability of local engineers and considering the strength of Alpine’s customers the company’s future is guaranteed for the next 4–5 years and we can expect 15–25 per cent annual output growth. We believe that when the European car industry starts growing again, Alpine Hungary, with its awareness towards the total production cost, recognising the needs of flexibility and pursuing to supply high quality products, will be able to take on a big role to satisfy customer demands.” n