The longevity of a company depends largely on its ability to adapt to market conditions, and when Pasquale Forte established electronic component manufacturer Eldor in 1972, this was a lesson he was not to forget. By 1998, Eldor was the European leader – with a 72% market share – for fly-back transformers – a component of the pre-digital television.

At the peak of Eldor’s success, Mr Forte realised that the television component Eldor manufactured would have no future after the advent of digital television, so he created an automotive parts division in 1997, a diversification strategy which would pay off in the long term and save the company from the vagaries of technological advances. Mr Forte decided to spin off the consumer electronics division to a US company in order to focus on the automotive sector, and shortly afterwards Eldor won a contract to supply global car manufacturer Volkswagen with 75% of its ignition coils.

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Expanding empire

The company now has four production facilities in Italy and Turkey as well as three R&D centres in Italy. Plans are already under way for a new production facility in China. The facility will accommodate the company’s annual 40% growth rate and increases in orders, says Mr Forte. “Volkswagen is pushing us to operate in China and there are big opportunities for us there,” he says.

While automotive components are good business for now, R&D is the future, according to Mr Forte. Eldor has invested heavily in R&D to produce ignition and braking systems components, and engine and combustion control units. Most recently, the company has been investing in hybrid and electric vehicles component research. “We are working on parts for a hybrid vehicle this year, a Piaggo hybrid scooter, and we are already supplying and testing 100 vehicles,” he says, adding that this is what will give the company a strategic position in the market.

Mr Forte says that big markets such as China will start to use electronic vehicles and Eldor will reap the reward for being ahead of its competitors. “European companies must move to where the business is if they want to be successful,” he says of the company’s expansion into China. Mr Forte expects the new facility to be built in one year, and the company has chosen to locate it on a free zone because it is much easier to navigate the local business environment that way.

But the company’s European presence is steadfast and the strategy is to keep the R&D work in Italy. “Intellectual property in China is poorly protected so we have to protect ourselves where we can,” says Mr Forte. Eldor will start with a single production line in China with a $13m to $20m investment by 2010, with the aim of supplying seven Volkswagen markets.

Importance of investment

Investment in new facilities is key, according to Mr Forte. Eldor recently increased its production capacity with a new 26,000-square-metre plant in Izmir, Turkey, where it plans a total investment of about $66m, with eight production lines in full operation by April.

“We looked at Spain and central Europe but the skills potential was higher in Turkey because as a society the people are disciplined, motivated and educated to a good level,” says Mr Forte, who adds that he finds women more reliable employees than men. In fact, 85% of the Eldor workforce are women between the ages of 25 and 27, of which 79% are educated to high school level and 20% to university level. The company expects to increase its staff count from 800 to about 1000 by 2010.

COMPANY PROFILE

ELDOR

Headquarters

Italy

Turnover

$132m

Employees

800

Annual growth rate

40%