Fujitsu claims customers were unwilling to pay a premium for products made in Germany as it states the market has fundamentally changed since 10 years ago
Fujitsu has stressed that it has not lost a key competitive advantage through its decision to shutter its last-remaining manufacturing plant in Europe.
The vendor last week announced that it will close down its manufacturing, logistics and R&D operations in Europe and move them to Japan by September 2020.
The closure will directly affect 1,500 staff at the facility in Augsburg, Germany, in addition to another 300 situated elsewhere in the country. Fujitsu previously said it is looking for a "socially acceptable" solution for all employees affected.
Speaking to CPI, Fujitsu's VP and head of product in central Europe, Christian Leutner, said that moving functions to Japan will give the vendor an opportunity to improve its supply chain for European customers. The two-year window leading up to the closure of the Augsburg facility will afford Fujitsu a long transition period to ensure customers receive a consistent service, he claimed.
"I am not saying that while we move processes to Japan there won't be any transformational hiccups - that might happen - but, in the end, we have the commitment from our Japanese colleagues that we won't only receive the same quality of service and products from Japan, but actually an even better one," he said.
"We cannot afford to reduce our service level to our customers… We will try to improve our supply chain as well as benefit more from the quality of processes we receive from Japan."
Leutner said that when he spoke to customers following last week's announcement, most expressed their surprise at how Fujitsu could afford to run manufacturing in such a high-cost country and asked why it hadn't closed the Augsburg facility sooner.
He also rebuked claims that Fujitsu has lost a unique selling point over its competition in centralising these functions to Japan, arguing that customers were unwilling to pay more for products made in Germany.
"One or two public sector customers said we would lose our differentiation, or our USP, about being ‘made in Germany'," he said.
"I wouldn't call it a USP, but a very good story. To be honest, specifically to those customers from whom this was coming, ironically none of them were willing to pay us a premium for it."
"You cannot expect a company like Fujitsu to keep a factory in a high-cost country when our competitors have long ago moved to low-cost countries, and then at the same time put us on e-auctions where we compete tin to tin and euro to euro.
"This is understood by our customers and this is part of why we need to make ourselves future-proof and [closing the Augsburg plant] is one piece of that process."
Leutner urged the industry to view the closure within the wider context of Fujitsu's shift towards selling more services-led products. He said that costs saved from closing its European facility will be funnelled into hiring staff in areas such as cloud, cloud services, IoT and security and will be reinvested into R&D.
He said it was too early to give an estimation as to how many new staff Fujitsu will look to hire, but said its so-called "Connected Services" offering is one such area that will see heavy investment.
"I think it will definitely mean our investing in people and the right skills for central Europe as well as the other countries in EMEA. I think that is important specifically when it comes to sales and sales specialists," he said.
"We want to transform the company into a services company which includes all the infrastructure you need to complement those connected services. That is the vision of the company, which obviously needs investment in skills, in marketing and in developing solutions in R&D and all the areas connected to this."
Closing the doors on its European facility is a sign that the market has fundamentally changed in the last 10 years, with Fujitsu becoming a much smaller player in the PC market, Leutner said.
The firm considered various options leading up to the Augsburg plant's closure, including putting it up for sale or transforming the site into something new, said the regional product head, but Fujitsu ultimately came to the conclusion that it "needed to take this step".
"Obviously it has been a very tough decision and for the individuals affected, the 1,800 people, it is very sad and it is a difficult situation… One of the reasons we allowed this process to take until September 2020 was to make sure that we manage this process with integrity and we come to fair solutions for these people. This is the number one priority," he said.
"There was a time as Fujitsu Siemens Computers where having the factory in Germany was giving us a lot of advantages. We had a much bigger business, much bigger volumes and a much bigger market share specifically in Germany. This was a real asset to have the proximity to the customer, to be able to react fast and have short delivery times and so on.
"This advantage has blurred over the past 10 years or so because the business has changed, the market has changed, the pure volume business and the pure PC business is declining and the margins are deteriorating as commoditisation continues. So all this blurred the advantage we had some time ago where it did make sense to have a factory in Germany."
Leutner stressed that Fujitsu's product division will remain loyal to the channel during its transformation. He expects the vendor's channel business on the product side, which accounts for more than 80 per cent of total sales, to benefit as Fujitsu moves towards services.
"We need the channel and the channel needs us. We have a very healthy set-up with our channel partners. Looking at connected services, we are working very closely with our channel partners. They are in a huge transformation as well; they have the same challenges and opportunities as we have. We need the channel ecosystem to approach our customers together and we think we can help the channel here and vice versa."