Dear valued partners and customers,
a significant challenge and responsibility we currently face at ficonTEC is to provide full transparency to our valued partners and customers on how the current global constellation has until now affected – and will continue to affect – ficonTEC’s ability to meet both business and strategic deadlines.
The past few years have seen successively higher numbers of requests to ficonTEC for new machines and machine relocations, as well as for service-related machine upgrades and re-purposing. Even in ordinary circumstances, this positive dynamic in the demand would have been extremely difficult to manage with our previous structure, and thus in 2019 the decision was made to consolidate and update our management and process structure and thus be better able to stem further growth for the long term.
At the beginning of 2020 the coronavirus (COVID-19) pandemic then struck. Not only does coronavirus to this day continue to evolve and impact all our personal lives, but we have also witnessed the global effects the pandemic has had on manufacturing as a whole. In particular for the supply of real goods, this has negatively impacted the ability for all of us to even simply do business.
At the same time, it is our responsibility to consider the impact that, firstly, an obstructed strategic plan, and, secondly, COVID-19-related production difficulties make on our ability to fulfil agreed specifications, meet delivery deadlines and generally serve our customers’ needs. Naturally, each of our customers has their own set of challenges and responsibilities, and we have certain obligations towards minimizing the impact and interruptions to their own business activities.
Starting with the planned strategic changes, while designed to benefit all departments, these were nonetheless firmly seated within Operations. By streamlining product structure and availability, without sacrificing access to class-leading capabilities, the goals remain greater transparency in our offering, improved efficiency in manufacturing an increasingly diverse range of complex systems, and restored targeting of delivery and service deadlines. In parallel, ficonTEC is introducing new product lines and technologies, for example, as is desperately needed for volume testing of integrated photonics.
However, since early 2020, and while attempting to act out these changes, we, as others, have experienced both regional and international supply and labor issues whose cause is often beyond our scope of control. The cumulative effect of this pandemic has had unprecedented impact on our ability to plan and execute our business operations. This impact has affected our ability to fill new strategic roles within ficonTEC internationally, has created artificial shortages in the existing workforce due to lockdown and quarantine, as well as resulting in component and material supply issues affecting suppliers across the globe.
And even at the point when a machine system can be delivered to the intended customer, the teams in the field required to carry out the requisite SAT (site acceptance test) have been confronted with both general restrictions in their freedom of movement as well as the customer organizations themselves having their own restrictions in place for on-site visits. As a result of all of these concatenated issues, many of our customer projects have been unfortunately but inescapably delayed. It is indeed unfortunate, on the one hand, that we find demand for photonics-based equipment is at record levels, while on the other we must accept the fact that our business environment is the most difficult it has been in decades.
In dealing with the COVID-19 situation
Our primary focus remains the health and safety of our own teams, our partners and, of course, our international customers. Our commitment to safety covers everything within our power, ranging from adherence to local federal and state government regulations aimed at preventing the spread of the virus, to making educated decisions on reducing the need for regional or international travel. These have at different times affected the way we can staff our factory and automation teams, and occasionally we had to shut down part of the factory or move to a two-shift model in order to accommodate these regulations. Unfortunately, many of the production-associated job functions at ficonTEC such as assembly and programming are ‘hands on only’, so there is reduced scope to have our employees work from home.
Many of our 300+ suppliers have been affected by their own supplier issues and loss of productivity due to the pandemic, resulting in supply chain issues up and down the line. There are now longer lead times for parts that we rely on to build our systems, and some of which that now are only available at a higher price. In a recent SPIE photonics industry report, Reuters is quoted as stating that:
“German manufacturers struggled to meet strong demand for industrial goods in August as supply shortages for raw materials and components such as semiconductors continued to hold back production and push up prices, a survey showed … Corporate efforts to increase industrial production in light of vibrant demand were often hampered by supply shortages for basic materials and intermediate products, the survey showed. Growth in output has now fallen behind that of new orders to an extent previously unseen in over 25 years of data collection…”.
Arranging and carrying out travel to most locations both within and between Europe, Asia and North America rapidly became, remained, and have continued to be very tough. Time-consuming, frequently shifting and often inconsistent government-imposed travel restrictions in many locations for Europe and North America have severely impacted our ability to travel between Q2 2020 and Q4 2021 for the purposes of service and installation. Even with the global situation easing towards the end of 2021 and at least local and regional travel initiating a return to a new normal, some intercontinental travel remains a challenge due to the lack of inter-recognition between regional vaccine types.
How are we trying to mitigate the negative effects these circumstances
are having on our business operations?
While the influences of the pandemic often come at short notice and remain for an indeterminable amount of time, in attempting to solve the outcome of these issues, ficonTEC is taking the mid to long-term approach – the intended actions are summarized below. Realistically – and sadly – we must accept that little of this is likely to lead to short-term improvements on any one or collection of issues, but we will continue to do our best to solve immediate issues as and where we can.
- Our manufacturing teams continue to work tirelessly via shift-based models to overcome the productivity issues that have accrued. Obviously, we cannot risk the cumulative effects of fatigue within our employee base, so this is unlikely to be a sustainable solution and we may need to roll back somewhat to protect their long-term health and well-being.
- We have hired a significant number of new employees in Asia and North America to allow us to provide more local support and thus reducing our dependency on the erratic easing of international travel restrictions. However, given the extensive training to the required level of knowledge for our systems, it is only fair to expect the local staffing situation to improve accordingly.
- We are additionally hiring more staff for strategic roles within our HQ in Achim, Germany. With this move we are aiming to develop and implement permanent solutions to the issues that have affected our operations, with the intention of bringing ficonTEC back on track for 2022 and beyond.
- We have a team in place internally at ficonTEC that is exploring ways to further improve our operations under the current pandemic-impacted situation. We are working closely with internal resources, external partners and suppliers to reduce the impact of supply shortages on our processes and delivery times. Where practical, this includes the use of online tools to augment the customer experience.
- We have hired an external consulting group that will work closely with ficonTEC leadership and managers to review all facets of our operations and provide input on how to best increase efficiency, improve quality and provide additional training to our employees using best industry practices.
The unprecedented and on-going effects of the pandemic on global industry and supply chains have created a very challenging environment for us all.
We are working hard on improving those aspects within our reach to improve performance, and we are communicating with our suppliers and vendors on how we can mitigate some of the effects of part shortages and delivery delays. We are doing our very best to deliver innovative, high quality and reliable machine solutions to our customers, and at the same time we are establishing a solid base form which to support further and significant growth. We hope for your understanding and patience as we work through the issues that we are faced with in the current environment.
Over the next few weeks, we will communicate revised delivery schedules to our customers, based on how we can allocate staff to your equipment, get access to the parts we require to build the machines and assign our engineers to execute on Factory and Site Acceptance Tests (FATs and SATs). Please work together with our project managers who are coordinating all the resources, and who will have more detailed information about your project.