Heilind Electronics: growth through strategic acquisitions and partnerships

Bob Clap founded Heilind Electronics in 1974 in Massachusetts. The company's headquarters remains there, and has witnessed major acquisitions both in 1986 (Force Electronics) and 1991 (Help Electronics). A leading distributor of switches, circuit protection and thermal management products, relays, connectors, wiring accessories, terminal blocks, wire and cable, identification and insulation products, Heilind Electronics prides itself for being a company with a focus on foundational ideals of reactive systems, deep inventory, educated technical support, flexible policies, and unrivaled customer service. With a more than four-decade long history and 30 locations throughout China, Hong Kong, Mexico, United States, Singapore, Canada, and Brazil the company has access to several distribution centers (7) that enable fast delivery of inventory (one-day shipping available) for the majority of their customers.

Along with having geographically spread out locations making for easy and fast shipping to their customers, they also maintain two fully equipped value-added centers in Hong Kong as well as Hudson N.H. (Heilind Electronics, 2016). These value-added centers offer a comprehensive menu of part packing, part assembly, and part modification services. Their growth was spurred on by the strategic acquisitions that generated successful internal expansion. Along with the two acquisitions seen in 1986 and 1991, Heilind Electronics also acquired Sage electronics (1991), Gateway Megatech in 1998, and in 2011 and 2012, they acquired Thompson Electronic Supplies and Kotek Eletro Electronica Ltda (Heilind Electronics, 2016). With these acquisitions, the company conceived a way to include and focus on aerospace and military market segments through formation of the Mil-Aero business unit.

Acquisitions were not the only way they expanded. The company expanded its influence via partnerships. 1974 was the year the first began franchising partnerships with Molex, an American manufacturer of connectors. Then came another significant partnership with another American connector manufacturing company called TE connectivity that was previously known as AMP. Later in 1985, Heilind Electronics partnered up with a Japanese relay manufacturer called Omron and a Japanese connector manufacturer, Hirose 4 years later. In 1990, FCI, formerly by their previous name, Berg Electronics, partnered with Heilind. The most recent partner added was LEMO, a Swiss connector manufacturer in 2008.

Such expansion internally led to successful expansion internationally. Many of the leading manufacturers in the electronics industry have opened up franchise opportunities with Heilind. With the various facility and office openings in the western and eastern world, Heilind can now offer products within twenty-five diverse component categories. Along with the wide variety of products the company offers, they also have a large number of employees that provide highly effective customer service. Heilind Electronics is a medium sized company which means they have anywhere from 500-999 employees. These employees help the company bring in $250 million+ in annual sales. While the company has experienced successful expansion, recent efforts may spell trouble. One major challenge the company faces is the recent acquisition of MPS Group, a German electronics company (Electronics, 2016). This acquisition means working with employees that have done things at a different standard that Heilind is used to. The MPS Group was founded in 1978 and has almost as much experience in electronic components and special tools distribution as Heilind does. They may operate at a higher standard than Heilind.

Another specific challenge that can come into play is managing all these locations across such a widespread area. Switzerland, Brazil, China, Hong Kong, and now Germany means Heilind has to work with various cultures, languages, and customs that they may not be able to handle. Rome for example, expanded their civilization so much, it could not guard its own walls and were eventually invaded and the civilization collapsed. Heilind may be expanding too much too soon.

Lastly another challenge that could arise for Heilind is quality and delivery of products. With such a large array of products for sale and distribution, quality assessment may go down. This is especially true in newly acquired areas. If Heilind cannot maintain quality assessment and quality distribution, they may lose business. Maintaining so many facilities also costs money and if quality diminishes, they may face closing these facilities, losing even more potential sales.

2.

Heilind Electronics has several strengths and weaknesses. The SWOT analysis detailed below will provide a clearer picture of what the company should focus more on and what the company does well.

Strengths

Variety and Convenience: The company has a wide selection of products from connectors to electronic cables. Thanks to multiple acquisitions and partnerships, Heilind has over 25 different component categories. Customers want and often need variety because of the diverse personal and professional needs they may have. Heilind offers variety and reasonable prices that satisfy these needs. Furthermore, Heilind's offices and facilities are spread out across several continents, making it easy to deliver parts and products to customers all over the world. Their one-day shipping option makes for higher levels of customer satisfaction. Who doesn't like to get their products shipped to them in a timely manner? Along with a wide variety of products offered, the company has excellent customer service. Reviews for the company show that customers appreciate not only the reasonable pricing, but also the level of customer service offered.

On time Delivery: Heilind has multiple locations throughout the United States and Asia, along with a facility and office in Brazil. With their new German acquisition, they can deliver products quickly and promptly in Europe, South America, Asia, and North America. On time delivery is an important aspect to customer satisfaction and customer loyalty. By providing one-day shipping and delivery, Heilind offers what other companies cannot.

Customer Support: Customer support is unparalleled with value-add needs where the company offers Heilind component modification services where customers can minimize inventory levels, minimize/eliminate factory minimums, and free up manufacturing resources. Heilind even supports custom packaging, labeling, quality inspections, and bar coding. These kinds of services make the company valuable within their industry. The company even offers supply chain management services thanks to their estore.

Weaknesses

Expansion: Heilind Electronics has expanded at a rate that the company may not be able to handle. Expansion means requiring more resources to and more employees to handle the increased workload. Expansion also means new acquisitions. Acquisitions are notoriously hard to manage, and take a long period of collaboration and communication to properly execute.

Low retention rates: Retention rates at Heilind are low. This leads to lower performance in their manufacturing and customer service (Wilkinson & Wood, 2014). Quality of products and customer service are essential parts to any organization. Without a standard training model and a decent rewards package for their more skilled employees, the company may not retain high quality employees long enough to maintain quality within the company. With acquisitions of overseas company, the training aspect of Heilind may be harder to execute. Different cultures mean different ways of handling problems and scenarios. Heilind needs to introduce standard practice within their human resources department and attempt to improve their recruitment methods if they are to see progress in their retention rates.

Recruitment: Heilind Electronics can see improvement in regards to recruitment. Heilind's HR department does not play any role in the hiring, training of employees. In terms of assessment, little is done to engage with employees or evaluate their performance. This includes feedback and reviews. HR's main responsibility at the company falls under the realm of legal issues concerning employees (i.e. FMLA and workman's compensation claims).

Opportunities

Market-Share Growth: While Heilind Electronics experiences consistent and solid annual sales, the company can experience an increase in profits and sales if they streamline their manufacturing, recruitment and training process. By standardizing the training and recruitment process throughout all facilities and offices, the quality of product and service will increase yielding greater customer experience, greater customer demand, and thus greater annual sales and profit. It is important for Heilind to realize the potential of working with what is already available instead of continually expanding to get the maximum benefit from the existing workforce. Concentration must be focused on recruitment, retention, and standardization for the company to not just continually do well, but reach the top of the industry and remain there for years to come.

Social Media: Social media is a great way to get involved with the current generation and potential future customers of the company. Social media can also allow employees to connect and network with each other creating cohesion and communication. Customer loyalty may increase with increased interaction by customer with Heilind.

Surveys and Feedback: Customers and employees need to have a voice in Heilind. They need to be able to give feedback and share their thoughts on the processes within the company. Now that Heilind faces a technological upgrade, the company should introduce a more connected company via technology.

Threats

Competition: Asian competitors offer the same products and services but often at a lower price. This can prove disastrous to a company like Heilind. The way to counter this kind of issue is to provide high quality products at a reasonable price. This means creating a supply chain and customer service that is high quality and also maintains low costs for the company. Zantech is a Maryland-based electronics contract manufacturer that has successfully been able to compete with their Asian competitors. They offer a good price for consumers and high quality. They achieved this through hiring high quality workers and streamlining the training process so workers can perform their tasks with relative ease (RMI, 2016).

Environment: Companies are now offering online services throughout the world with fast shipping options. Many companies have also upgraded their warehouse management systems enabling for fast and accurate inventory assessment and invoicing. This new technological climate may prove a threat to Heilind because of their outdated use of a 1980 DOS system.

Political Climate: Taxation rates change; trade deals have been underway in various parts of the world. These have effects can have a negative influence on Heilind sales. Skilled labor force may also dwindle due to the increasing instability of developed nations and the lack of affordable higher learning opportunities.

PEST

Impacts of Political Factors on Heilind

The main political factors lie in sourcing raw materials and following laws and regulations of other countries that work with Heilind Elecrtronics. As of 2015, Heilind acquired a German company. Germany has a minimum wage nationwide of $9.25. The nationwide minimum age for the United States, where the company has its headquarters, is $7.25. Since the minimum wage must be met in each respective country, this must be budgeted into the company's finances. Canada also has a higher minimum wage with the minimum wage being $10.50 per hour. Along with concerns for handling minimum wages, the company must also handle environmental policies. Germany has recently made new environmental policies that involve the use of eco taxes that the company must effectively deal with. In addition, Germany is part of the European Union and with Brexit taking place in June of this year, things may change in regards to trade policy.

Impact of Economic Factors on Heilind Electronics

The economy throughout the world has stagnated in recent years, especially in European countries (Simonazzi, 2016). That spells potential trouble for Heilind should they decide to acquire more European companies. Furthermore, Asian electronics companies are on the rise. They may offer competition that could dwindle the profits of Heilind. Low retention rates can also signal possible lower annual sales and profits. If the company cannot maintain a strong supply chain, improve their human resources department, and provide incentive for skilled employees to stay in the company, they may face the prospect of lower quality employees and thus lower quality customer service and manufacturing.

Impact of Socio-Cultural Factors on Heilind Electronics

Heilind Electronics has a facility in Brazil. Brazil experienced and is experiencing political upheaval that has led to massive protests. "Already struggling with an impeachment challenge, the worst recession in a century and the biggest corruption scandal in Brazil's history, the Workers party leader was given another reason to doubt she will complete her four-year term" (Watts, 2016). With this kind of instability, Heilind may face trouble in the long run. Even in the United States the social climate is changing. Now that the presidential elections are coming up, the nation has become divided with various shootings and violence taking place all around the country. As the new generation of customers come reach adulthood, the company will also have to evolve how they market and produce their products. The new generation expects even more convenience and lower prices due to globalization and better buying options. If the company cannot meet demands due to potential problems down their supply chain and manufacturing process, this could become a major problem.

Impacts of Technological Factors

Technology plays an important role in any company, especially now that the internet has become such a major means of business and marketing. Social media has become a major means of connecting with customers and generating business for companies. If Heilind wants to keep up with this trend, they need to invest in developing a strong social media presence. Warehouse management is also an important factor to consider for Heilind Electronics. Their 1980 DOS-based computer-based program is not an ideal situation to handle inventory and checking invoices. It is unreliable and can lead to higher expenses. Although the company is researching development and implementation of a new warehouse management system, they need to expedite execution.

3.

The top three HR initiatives recommended for Heilind Electronics revolve around the challenge of maintaining and delivery high quality products and services to its customers. The first HR initiative is increasing retention rates for the company. Increasing retention rates means increasing loyalty and employee satisfaction. This can prove a hard task considering the multiple facilities and offices placed in various countries. However, through researching cultural awareness, steps can be taken to increase employee loyalty and satisfaction. To do this, HR must provide managers with a variety of approaches to increase loyalty and satisfaction. Coca Cola is a company that employs a multitude of employees (over 73,000) on an international basis. They had difficulty retaining employees. However, they were able to employee different strategies such as offering peer-coaching support to new employees as well as reinforcing learning via reflection. This helped the company increase employee retention rates while also lowering training costs.

Another important method that can help increase retention rates is the use of employee focus groups. "Ritz-Carlton developed employee focus groups to concentrate on increasing employee engagement and innovation. These focused groups described drivers that influenced employee engagement" (Vizzuso, 2015, p. 112). Employees need to feel a sense of empowerment, be given a level of input that can then lead to higher job satisfaction and thus higher retention rates. This lead to the next HR initiative. That is standardization of training.

Because Heilind Electronics has such a diverse line up of products with multiple facilities and offices in different countries, standardization of policy and training can prove useful. TWI training has its history in the early 1940's with the American government re-training workers to help prepare for World War II. The training program was then taken to Japan to help establish a peaceful, industrial base. The results from the program implementation led to a 25% increase in production as well as a 25% decrease in labor hours, employee grievances, and training time. Training within the program involves coaching and training supervisors. HR is all about effective management. By training properly supervisors/managers and then preparing the worker on the various tasks needed to perform their duties, Heilind can save money on training and increase employee satisfaction.

The TWI matrix is a tool the company can use to help track progress of standardization implementation. "The TWI matrix, is a tool for tracking the progress of the TWI-based work standardization implementation in an area. In practice, the TWI matrix will gradually replace the skill matrix as the major skill management tool" (Misiurek, 2016, p. 110). What the matrix involves is planning work standardization, implementing work standardization, assessment of implementation, and finally maintaining the work standardization process. This multi-step process is efficient and truly can help Heilind with their predicament of having multi-cultural employees.

The next HR initiative that can help Heilind Electronics is improving the recruitment process. Although the recruitment process for companies and organizations vary, the core objective is to hire highly qualified individuals that will help the company/organization achieve the level of production and service that will provide high annual sales and profits. One of the most important steps in a recruitment process is to gain a better understanding of what the current selection process is and how to improve it. Improving involves understanding and detailing what specifically is needed from prospective employees. By know what is needed, this makes the recruitment process easier. The next step is using new ways to reach out to qualified employees. Businesses like Hielind can use social media in order to find prospective employees and contact them from anywhere across the globe.

The next step involves research and analysis. "Reviewing existing documentation on the process and meeting with Personnel Department staff to better understand each step in the selection process ... analyzing quantitative data to better understand the demographic impact of the selection process" (Oak, Hardison, Lim, & Saum-Manning, 2015, p. xii). By seeing what kinds of employees have been hired and what demographics they fill, they can see the trends within the company with regards to current employee population. They can then make adjustments to suit the needs of the company.

4.

The three HR initiatives do not require much in terms of capital. It may cost less to employ these tactics than sticking to previous methods. However, there may be a need to invest in technology. One of the previous mentions was the upgrading of their 1980 DOS-based computer-based program.

This can be expensive, but in the long run will pay off for the company as it will improve warehouse management and inventory assessment. This kind of technological upgrade should be spread out and done for every aspect of the business enabling technological upgrades for each business user. The average cost to upgrade per business user is roughly $1,500. Taking into consideration there are at most 1,000 employees working for Heilind, this can lead to about a $150,000 investment. The costs for implementing a full warehouse management upgrade is also $150,000 for a total investment of $300,000. Companies like HighJump Warehouse Advantage enable quick and easy upgrades without costing too much to implement.