I t has been seven years since Dennis Au took over the reins as group president and executive director of Frencken Group, during which time he kick-started a full business review and steered the company through a transformational process.
This year, Frencken sees the fruit of this labour as it is awarded the overall sector winner of the industrial and commercial services and industrial goods of the Centurion Club, part of the Billion Dollar Club 2022 company awards organised by The Edge Singapore.
Dennis explains that the company has roots that date back to 1947 from its European manufacturing facility which started the Frencken brand. “Since I joined, Frencken has seen changes and the company has grown quite significantly. Even our management team is almost entirely new,” he says in an interview with The Edge Singapore.
“But we have not taken out everything that was old — what was good we chose to retain, and what needed to be improved, we improved upon,” qualifies Dennis.
Some initiatives under his leadership include the Frencken Operational Excellence (FOX) programme and the global integration of the company’s entities which aimed to drive higher efficiencies at both production and corporate levels.
And despite the storms of macroeconomic uncertainty and global turmoil in the last couple of years, Dennis’ hand at the helm has steadied the ship and charted the course for Frencken to continue its journey towards building a resilient and sustainable company.
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The former vice president and general manager for Korea and South Asia operations at Keysight explains that Frencken’s focus has always been to be a global integrated technology company — and not only to a set of customers belonging to a single segment.
Rather, the company has always focused on building partnerships with multiple customers in diverse business segments, hence its tagline: “diversity brings resilience and stability”.
Frencken’s foresight could very well have been a key plank in protecting the company from the continuing global semiconductor shortage that started with the onset of the Covid-19 pandemic. For one, the company was asked why it did not focus fully on the semiconductor segment given the industry boom that had been taking place.
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Tempting as that may have been, Dennis was also aware that the semiconductor industry is notoriously cyclical and therefore prudently chose to diversify the company’s earnings base. This ensured that Frencken would not be dependent on any single industry sector, market or customer.
“When semiconductor supply chains are down, we have other industries to rely on because of our exposure to other segments such as the life sciences, medical, industrial automation and automotive industries,” he explains.
Core competencies
Dennis believes Frencken’s wide portfolio gives the company the ability to leverage opportunities and ride the waves across a wide spectrum of technology applications. At the same time, Frencken has developed a set of core competencies that enable the company to add value to customers in its different segments.
With its capability to provide endto-end solutions, Frencken can meet a wide range of specialised needs of customers. From product conceptualisation to value or volume production, the company can leverage expertise in precision motion control in high-vacuum environments, coupled with stateof-the-art production and test environments. It also has ultra-clean rooms that enable particle or molecular-level cleaning and surface treatment capabilities to satisfy the most stringent requirements of customers.
“Indeed, the company has continued to build up its ability to remain at the forefront of technology as a result of our close customer relationships with market-leading companies,” says Dennis.
“Ultimately, Frencken’s integrated business structure provides our customers in the semiconductor, life sciences, medical, industrial automation and automotive segments with a truly global solution,” he adds.
He also says that Frencken is careful with whom it works. Instead of accepting orders from just anyone, the company has gradually built up an enviable clientele of market leaders in their respective industries. These include leading semiconductor capital machinery makers ASML Holding and Teradyne, global medical solutions companies Philips Healthcare and GE Healthcare, as well as MNCs like Seagate Technology and Agilent Technologies.
“We have a list of customers now that are leaders in their respective segments. They will very likely be driving market trends and the consumer adoption of new technologies,” Dennis says. “When we remain relevant to them, they will see us as partners, allowing us to ride the same waves of growth with them.”
He cites Frencken’s analytical & life sciences segment and the company’s strategic relationship with Thermo Fisher Scientific, an industry leader in analytical laboratory instrument manufacturing, that gives Frencken priority when it comes to new product development.
“We want to be selective when working on new programs as we want to focus on our core competencies which have multiple interconnected areas,” says Dennis, noting that the semiconductor, medical and automotive industries are all connected by the use of similar technologies.
Company pillars
The way Dennis sees it, customers, investors, supply-chain partners and, importantly, the company’s employees, make up the pillars of Frencken’s business. He says the company ensures that there is a balance in the efforts focused around all these different stakeholders.
As Frencken continues to expand its wallet share with key customers, its emphasis on “execution excellence” is precisely how the company has managed to deliver profits for investors over the recent years.
Dennis explains that building a resilient business model for long-term financial performance, ensuring good corporate disclosure practices and rewarding shareholders by paying yearly dividends of at least 30% of profits since Frencken’s initial public offering (IPO) have helped to garner shareholders’ confidence.
For employees in Asia, Frencken has been looking to offer them the opportunity to gain employment experience in Europe to address the acute workforce shortage the continent is facing. “For new and established employees alike, Frencken is providing an opportunity to work abroad and gain industry knowledge. We give them the choice to return to their home countries and add value, or stay on with sponsorships through our companies,” says Dennis.
“This gives us an opportunity to further build up bench strength, with younger engineers typically interested in working in different locations around the world,” he adds, noting that Asia and Europe are showing a mutual interest in each other’s markets. “I think it’s a good opportunity for us to use that as a people development opportunity, as well as an opportunity for us to create a culture within the company that is truly diverse.”
This global effort ties in with Frencken’s environmental, social and governance (ESG) programme, Frencken*Sustain*Life. “Aside from the human aspects of ESG, we also brought in a formal programme to proactively look into how we’re going to quantify our scopes and ultimately implement some robust plans for our Low Carbon Strategy,” he shares.
Surprisingly, Dennis found that employees are eager to push forward the initiatives of Frencken’s ESG programme. “When we started our sustainability programme, we thought that a lot of employees would think it just meant extra work. But we actually found that our employees are on board with our efforts.” He believes this could have to do with the consistent message the company sends to employees across its 18 operating sites of Frencken’s impact-driven approach to sustainability and avoidance of more superficial sustainable practices.
“It’s one message that cascades from the top all the way to the bottom,” says Dennis. “Instead of being driven by changing standards, we are the ones driving the change. Frencken’s employees are aligning with both customers and vendors to drive our sustainability agenda across our entire value chain.”
Sustainable, profitable growth
While Frencken’s tagline has always been “profitable growth”, the company has in the past year added on to the tagline for it to become “sustainable, profitable growth”, says Dennis.
Similarly to Frencken’s double-pronged approach to profitability, he says that the company’s use of “sustainable” also refers to two areas of focus.
“The first refers to our environmental efforts that have been put in place and the other is that in times of turbulence, Frencken will remain a sustainable business and continue to be able to generate profitable growth,” says Dennis.
He points out that Frencken recently made significant investments to expand capacity and capabilities at its operations in the Netherlands, Malaysia and Singapore to cater to the company’s immediate and future growth opportunities.
Frencken’s growth in recent years has been driven mainly by expanding wallet share with its existing customers and the acquisition of new customers. It was also able to take advantage of the strong growth of the semiconductor market over the last few years as the company serves customers in both the front and back end of the semiconductor equipment industry.
And despite the difficulties that the semiconductor global supply chains have faced, Dennis says Frencken will continue to pursue new programmes with existing and new customers in the industry which he believes is still poised for growth over the long term.
“At the same time, we will continue to strengthen our medical and life sciences segments to counter the potential cyclicality of the semiconductor industry,” he says.
In the medium term, Frencken has also identified the aerospace and materials business as new growth engines. To this end, the company acquired two companies in these respective fields in 2021 and 2022: Avimac and Penchem. “The aerospace business tends to be a very long-tailed business and Avimac ties in well with our core competencies. Meanwhile, Penchem is a materials company that has a lot of intellectual property and technology. We see it as an opportunity that provides resources for us to create another facet for Frencken’s business,” explains Dennis.
The focus around the new area of materials is highly relevant to Frencken’s other segments, says Dennis, and he sees this as an opportunity to expand the company’s global footprint and customer base.
“Our strategy of diversification has always been very natural for us because our company began that way, making resilience a cornerstone of Frencken,” Dennis says. “We want to ensure that all our engines of growth will continue running as our aim is to drive sustainability and grow profitability
