American parent Methode Electronics, Inc. is faring better than other companies in its line of business, according to its president, Don Duda.

Mr Duda, who was in Malta for the inauguration of the new wing at the Methode Electronics Malta Limited factory in Mriehel last month, was in an optimistic mood.

In line with international trends, group sales have been falling in the past five years but Mr Duda pointed out that this was due to Methode's exposure to the telecommunications and computer sectors.

"Automotive has done very well," he affirmed. "A third of our business is telecommunications and computers, and that market is seeing the worst downturn in its history. And I don't even believe the computer market ever had a downturn in its history.

"So they are experiencing the first major reduction and in telecommunications... most of that is capital spending driven by the consumer and the bottom effect of that. Methode, like any other company, suffered. We have consolidated and (done) all the things that companies do.

"So, our earnings, if you were to look at automotive by itself, were actually quite good. But relatively, Methode needs to be a multifaceted business with good roots in the automotive and electronics businesses. That business happens to be on the downside.

"As a company, I tell our shareholders Methode is very healthy. We have no debt, about $70 million in the bank, so we can fund internal growth, which we have done here. In fact last quarter our earnings were up 67% over a year ago, and mostly because of automotive."

Only last Friday, Methode announced that it has completed its acquisition of the business assets of its exclusive automotive sales representative, Kill & Bolton Associates International, Inc. (KBA). KBA is headquartered in Detroit with offices across Europe and Asia.

In a company announcement, Mr Duda was quoted as saying: "As world markets shift and globalisation brings us closer together, this acquisition will allow us to better manage our customer relationships and the introduction of new products." The company does not expect the acquisition to impact earnings per share and the terms of the transaction were not disclosed.

Methode continues to do what it is best at: manufacturing. "In some of the other technologies, the margins are higher, so you can be a little sloppier, and you are still going to make money. But in automotive, you have to very good at design (and) very good at manufacturing. If you do, you make money.

"But there is no room for quality problems, bad designs or paying too much for something. All of that chews up your profit. And what Methode Malta has done very well is the manufacturing infrastructure. It's superb."

Mr Duda called Methode Malta "a gem" - and customers recognise this, too. "Their biggest challenge is to convince the automakers that they're more than just a hidden switch company. They are so much more than that."

Methode also places great importance on worker morale. He says the work ethic of the Malta plant is at the same level as its plant in Carthage, Illinois, in the United States. "They want to be proud of what they do. Quality does not only effect your reputation (and) your bottom line but morale in your factories.

"So, a good infrastructure makes sure that when a quality issue does occur, it is taken care of very quickly."

Mr Duda said Methode has concentrated on areas of the automotive business where there is an element of safety and in making parts that are hard to build, like multi-function switches.

"So, by staying somewhat specialised in switches (and) safety products, we get higher margins, versus making windshields or a dash panel. Those are very competitive." Mr Duda prefers to aim at quality, organic growth rather than growth by acquisition.

"In terms of strategy, it is clear if you look at the vehicle, particularly a European vehicle, that switches are not just on-off devices. There are microprocessors in them. So our strategy is to continue to grow as the automobile becomes much more advanced.

"But you will not see Methode buy a seat manufacturer. You might see us buy another switch manufacturer but I like internal growth. That's the most solid, more consistent and organic."

Methode integrates its various manufacturing activities around the world through quarterly strategy meetings. "We discuss what opportunities there are with the sales group; what engineering should we have, what advanced engineering, and from that we decide.

"David (Mifsud) is part of that, our managing director in Scotland and our (engineering) director in Germany. I come over for that meeting." Decisions are then taken according to the capabilities of the various plants. "We do not set a firm straitjacket and managers discuss, agreeing what makes sense."

As cars become more complicated, Mr Duda sees the employment mix also changing around the world. "I see them (Methode Malta) employing more software (and) electronic people.

"There will always be mechanical requirements but, if you look at s pedal switch, there is a tremendous amount of electronics there. The competition is not as advanced (as Methode) and you have to stay ahead of the game in the automotive industry.

"We are very excited about Methode in general. It had a very good start; good roots, concentrating on fibre optics for a while, almost to the detriment of automotive. Then we spun that off. Unfortunately (chairman) Bill McGinley passed away, but Bill (William T.) Jensen came back and the board appointed me president.

We looked at everything and (asked ourselves): where did we get off track? We have to get back to being what we are good at, and we are good manufacturers.

"And we like the people we work with. So, in terms of turning Methode in the right direction, I think it is certainly easy. We did not need to recreate the people."