Union Tool Europe
Issue Iss 1 2008
Union Tool has a license to drill
Union Tool Europe is a privately owned company and was founded in 1960, specialising in the production of printed circuit board drills.
The organisation has steadily expanded over the years to become the largest producer of circuit board tools, holding a 40 per cent global market share. The business has recently met with increased demand for its products in the Far East by opening up several new factories.
Throughout its history, the family that founded the business has directed Union Tools’ market strategy. Managing director Christopher Serre outlines the competitive advantages this process has provided: “Being family-owned has been an important feature for the business in terms of the general direction and strategies that the company has used over the years to grow organically, rather than through acquisition. Large amounts of profits that are generated each year go back into Union Tool to design new innovations, and this is one of the reasons why we have maintained our technological advantages over major competitors.
“One area where we are also unique is that all our manufacturing equipment is developed and manufactured internally – we do not buy any machines on the open market,” Christopher explains. “This gives us a very tight control on the quality and output of our manufacturing, which is important. Buying a machine on the open market means you become reliant on the speed and technology of someone else’s specification, but if you make your own machines then everything is designed to your exact needs.”
Christopher elaborates on Union Tools’ position in the market: “The industry in which we operate means we work with the manufacturers of printed circuit boards, and the majority of these are subcontractors. Looking at companies like IBM that sell portable computers, they will purchase the printed circuit board from an outside subcontracted manufacturer – and these are our primary customers. Articles such as digital cameras, mobile phones, electrical components in our cars, and palm pilots all require the circuit boards we produce.
“We also have close relationships with other suppliers to the industry, like printed circuit board, chemical, and drilling machine suppliers, so that altogether we can offer a total solution for circuit board manufacturers,” Christopher continues. “It’s not just a matter of drilling a hole; the adequate machines, chemicals, processes, and raw materials are needed to develop the right drilled specifications for our customer. It is important to create an understanding between all the suppliers within the chain with regards to the final manufacturing of the printed circuit board.”
Circumstances in Europe at the turn of the millennium encouraged Union Tool Europe to start selling products the company was manufacturing elsewhere in the world. Christopher comments: “In 2001 in Europe, the huge crash within the electronics industry, caused many printed circuit board manufacturers to lose volume or go out of business entirely. At Union Tool in Europe, we realised we were only selling one product, the market of which decreased by nearly 50 per cent. We had to find another product area to survive in Europe, so we looked at solid carbide end mills, and realised it was a high quality Japanese-made product that was well accepted in the European market. After completing research in 2001, we came to understand that there was a very large market in Europe for these tools, so we began to launch them into the market.
“The success was rapid, predominantly because of the good quality of the product from Union Tool, and as a result of this, end mill sales accounts for around 40 per cent of our current turnover,” Christopher states. “The growth in this area has been significant, requiring us to set up a completely new distribution networks throughout Europe for both PCB tools and solid carbide end mills.
“As a result of the success we had in Europe with these tools, Union Tool Japan has taken this strategy on to the global market, and for the last four years, our parent company has been actively pushing its subsidiaries to commercialise these products, which has increased sales rapidly. As a result of this, in November 2006, we founded a new factory specifically to manufacture solid carbide end mills. All the factories located in Japan, Taiwan, and China, are making printed circuit board drills, and we now have a product-specific factory in Japan that only makes end mills.”
Christopher describes the market at this time, and some of Union Tools’ plans for the future: “The big challenge that the company must face is price erosion. The majority of our competitors are located in China, which places huge amounts of pressure on price reductions. For instance, a computer costs less today than it did two years ago, so manufacturers are asking their suppliers to reduce costs across the chain. Hence, we must reduce the price of our tools in order for our customers and ourselves to become more competitive. The company has some impressive growth plans, and we aim to have a 70 per cent share within the micro drill industry in the near future. We also aim to continue investing into increasing our capacity, and the challenge is always to bring new technological innovations to the market.
“The primary reason for the company’s success is the consistent quality of products, as well as the technological innovation possible with our in-house manufactured machinery,” Christopher points out. “We have always managed to remain the market leader in terms of technology, and we have also increased capacity year after year to meet the ongoing demand,” he concludes.
Union Tool Europe
Products: Drill and cutting tools
Sites: Switzerland (and global)
Employees: 1200 worldwide