WPG Holdings looks to grow its North American business
By James Carbone -- Purchasing, 8/13/2009 2:00:00 AM
Asian distributor WPG Holdings has its sights on becoming the world's largest electronics distributor and part of its strategy to do so is to grow its business in North America.
"Being number three in the world, you can't be number one without selling in all markets," says Al Hamilton, executive vice president of WPG Americas based in San Jose, Calif.
WPG Holdings, headquartered in Taiwan, does the bulk of its business in Asia and established WPG Americas to grow its business in the U.S., Canada, Mexico and Brazil. With sales of about $4.5 billion, WPG Holdings is the largest electronics distributor in Asia.
"A lot of customers are global now and the reality is we need to be fully global to support global customers and to support our suppliers," he says. In fact a lot of WPG's suppliers in Asia encouraged the distributor to have a presence in the Americas, according to Hamilton.
"Global suppliers said 'we need you to be a more global presence,'" says Hamilton.
As part of its strategy to grow revenue in North America, WPG last January acquired the electronics component business of Jaco Electronics, picking up a lot of semiconductor and passives lines from the Long Island-based distributor.
WPG Americas' goal is to get to $1 billion in sales by 2012. It has a long way to go. Last year it did about $15–20 million of business and this year it had hoped do $150 million, but it may "undershoot" that goal because of the recession, says Hamilton.
To grow sales WPG Americas plans to add more product lines, to focus on second and third tier OEM and electronics manufacturing services (EMS) providers and to offer a lot of design support.
Last year about 70% of its revenue was from selling displays and optoelectronic components. It carries LG, Avago and Cree lines. But the company plans to add more component suppliers to its roster. Specifically it plans to add microcontrollers, power supplies and connectors to its linecard, says Michael Hayman, senior director of business development for WPG Americas.
However, it will not go overboard adding new suppliers. "Our business model is completely different than other large distributors," says Hayman. "We are not going to add five or 10 competing redundant lines to our line card. That is something suppliers appreciate," he says.
In the future about 80% of its business will be components and 20% displays.
"What you see is the strong passives line card that we have right now will become more global. We will add lines from WPG's Asian line card," says Hamilton. He says the goal is to have 150–200 lines in North America. "We will never have 700 lines like Arrow and Avnet. We are much more focused than that," says Hamilton.
About 95% of WPG's business in Asia is semiconductors, but it plans to have a more balanced offering in North America, says Hamilton. "It is one of those things where we didn't know what we were missing," he says.
Offering design expertise will be important for WPG Americas to grow its sales, says Hamilton. "In Asia if you don't help a customer do the design, they won't know what to build. The maturity of the design community is a lot lower on average than in the U.S.," he says. In Asia, WPG engineers design televisions, portable navigation devices and MP3 players among other products.
WPG will offer similar design expertise in the Americas as well.
While WPG has bold plans for growing business in the Americas, it is challenging to grow business during a recession.
"This year is a transition year for us," says Hamilton. He says WPG is building its sales force and the recession, in a way, has helped WPG. He says with the recession, has "freed up a lot of good people" some of whom WPG has hired.
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