Juan Arango on Koh Young’s New U.S. Headquarters
At the recent Koh Young America open house, Managing Director Juan Arango discussed his role in the company’s transition from their Arizona facility to a new headquarters located outside of Atlanta, Georgia. Juan details many of the benefits customers can expect, including brand new spaces dedicated to machine demonstrations as well as customer training.
Andy Shaughnessy: We’re here at the Koh Young grand opening in Gwinnett County, and it’s pretty exciting. You’re opening a brand-new facility. Tell us a little bit about how you reached this point.
Juan Arango: When I first took over as the managing director, I asked Dr. Koh if we could move the corporate headquarters from Arizona to Georgia. I gave him some strong business reasons why, such as the fact 70% of our customers are east of the Mississippi. He agreed it was a good decision and gave me the go-ahead.
During the process, we opened a new artificial intelligence (AI) center in San Diego called Koh Young Research America (KYRA), so there was an idea to make San Diego our only location. My suggestion to Dr. Koh was to have two offices: one in San Diego and a second in Atlanta, so he gave me his second blessing to continue pursuing a space in Georgia.
We were ready to sign a lease for our first location when the realtor went dark; the facility was being sold to another company, and they weren’t negotiating. Rather than waiting, we searched again and found this location. As the saying goes, “Everything takes longer than planned,” and it did here. My original plan was to unveil the new facility in December, but that didn’t happen. Nonetheless, we moved forward and are proud to host our guests at this grand opening event.
At that time, we had some great people who helped reduce the timeline and make everything happen. My wife helped with the décor by picking fabrics, accent wall colors, artwork, etc., and she loved it. Then, we gave our choices to Dana Anderson at Planning Interiors Inc. who incorporated our corporate green and blue colors and finished the facility design.
Shaughnessy: How are things going for the company now that you’re in the new office?
Arango: We’re doing well. With solder paste inspection (SPI), we have over 50% of the market; second place has 12%. We’re the market leader. With automated optical inspection (AOI), we have 30–32% of the market; second place has around 25%, which is tight.
Shaughnessy: AOI is rough; there are a lot of people swimming in that pond.
Arango: Correct, but we have some clear advantages over the competitors. Many AOI suppliers will sell 2D and 3D or a blend to make a “2.5D” technology, but we only sell 3D; it’s our core competency and the driver behind everything we do to measure and optimize the process. With a focus on our True 3D technology, the industry recognizes the benefits, as our market share proves.
Shaughnessy: From this location, what market are you mainly working with?
Arango: This new facility is the headquarters for the Americas. For us, Mexico and South America represent about 50% of our market with Canada and the United States being the other half. Last year, we sold 402 machines in the Americas with about 200 from one side and 202 from the other side of the border. The challenge is that Mexico is a high-volume environment that buys machines in bulk quantities while the U.S. is predominately a high-mix environment where manufacturers mostly order one machine at a time.
In the U.S., 200 machine sales would need 150–175 customers. Meanwhile, in Mexico, 200 machine sales would require fewer customers because they order multiple machines at a time. For instance, we received one order in Mexico for 17 machines. We call the sales “onesies” or “twosies” in the U.S. These days, onesies don’t move our growth needle. We have grown so much over the years that percentage growth isn’t a real indicator of our growth; more on that later.
When I started with Koh Young America, we were under $15 million; last year, we did well over $50 million. At Koh Young America, we’ve been blessed to put a great team together – in all facets. For example, this is the second time I’ve hired Brent Fischthal. First, I hired him for Panasonic. When I left, I knew I would need him here at Koh Young; it was just a matter of timing.
Shaughnessy: He’s outstanding. Everyone says, “Talk to Brent.”
Arango: Right. He makes sure we put out clear facts. For example, in an interview about our 2019 performance, I said, “We sold 402 machines. Ask my competitors what they sold.” The chances are that they will give a percentage of growth and not a straight number.
Shaughnessy: A lot of people won’t say how many; instead, they’ll say, “We went up this X% this year.”
Arango: Right. Because if you go from selling four to six machines, that’s 50% growth. And many of the suppliers don’t move the same volume of equipment as Koh Young.
Shaughnessy: So, what exactly is going to happen in this facility?
Arango: This facility is all about elevating the user experience with dedicated training rooms plus state-of-the-art demonstration and application testing facilities that highlight smart factory solutions. In the past, our training and demonstrations were in just one room. So, if we were holding a training class, a demonstration would disrupt the class.
Now, we multiple training rooms with dedicated equipment. As such, students have a dedicated classroom and resources to ensure the highest level of training retention. Plus, we can hold multiple training sessions simultaneously. We want to react in real time with what our customers need, and I have engineers in the facility dedicated just for that. We’re not a machine-selling company; we’re a solutions provider. So, if I have a solution for you and it meets your ROI, then it’s a no-brainer. You don’t want to buy a box; you want to buy something that fixes a headache, and that’s our focus.
Shaughnessy: Will the machines be built here?
Arango: No, our production will remain in Korea, but Dr. Koh has allowed us to carry more than 100 machines in inventory. If you need a machine tomorrow, there’s a good chance I have one. This has been good because one of the biggest things with the economic uncertainty is that customers wait until the last moment to give you a purchase order. If I order the machine only when we get that PO, the customer is looking at four to six weeks until delivery. While it’s only a two- to three-week build cycle, it takes another three weeks to transport the machines.
Now, we have 100 machines in our warehouse, so you can have it tomorrow. One of the processes we have improved, and one that Dr. Koh endorses, is “pre-ordering.” If a manufacturer says, “This is what I need and when, but I can’t get you to the PO until later,” I say, “no problem.” Our machine configurations are relatively standard; if a machine arrives and the customer project fell through, we are confident it will go to somebody else.
Shaughnessy: Or you could take it to a show, right?
Arango: If you attend productronica or ICP APEX EXPO, our competitors take, at best, three machines. We had 16 machines at IPC APEX EXPO last year between our booth and our partner booths. In the United States, we have partners that use our machines, such as our reps and mounter partners. Fuji, Panasonic, and Universal are just some of the partners that have our machines. We’ve used those partner spaces for training and demos, and one thing we’re considering is putting a mounter in our demo room. I’m working with several partner companies to find the best fit.
Shaughnessy: So, it worked out that you were already here in Atlanta.
Arango: I’m very proud of the space. I think it’s a value-add to our customers to understand that we can give them more now.
Shaughnessy: How big is this space?
Arango: We have over 11,000 square feet total, which includes a 2,000-square-foot warehouse; the rest is all focused on elevating the user experience with training rooms and our demonstration center. The way we say it is “we’re bigger than most mounter companies.” Our demo room has 10 machines in there right now, plus our training machines; by comparison, Arizona had 6,500 square feet.
Shaughnessy: And Georgia seems to be a pretty central location for customers?
Arango: For us, it is. A lot of our customers drive to our office, but with the Atlanta airport nearby, it’s also easier for some to take direct flights. When going to Arizona, it took one day to get there and one day to get back. It has worked out. I’m happy that I was able to earn the trust of Dr. Koh.
Shaughnessy: Is he the original founder?
Arango: The name Koh Young comes from “Dr. Koh” and “Young” because he wants to work with fresh ideas and young people.
Shaughnessy: We’ve hired some young people, and it is great. People say some negative stuff about younger people these days, but if you hire the right ones, they’re on fire.
Arango: Yes. Back when I was earning my MBA, I was studying at the kitchen table, and my high school son saw me. He asked what I was working on, and I said I was studying for a test tomorrow. He responded, “Good. We don’t accept Bs in this house (laughs).” And one joke at work is that [Koh Young Americas Director of Sales] Joel Scutchfield and I are a little older, so a younger guy from Korea gave us nicknames: I’m D1, and Joel is D2, meaning “Dinosaur 1” and “Dinosaur 2” (laughs).
Shaughnessy: I’ve told some younger people that they could cross the street and double their pay in San Jose, and they’re surprised after having grown up around the recession. But now, things are going better in the U.S. with only 3.7% unemployment.
Arango: We had a hard time finding an office assistant. We must have gone through a couple hundred resumes and interviews. As a market leader, we’re looking for the cream of the cream for every position.
Shaughnessy: And they’re out there.
Arango: Right; they may just be a little harder to find, and it may cost more to find and keep them, but it’s worth it.
Shaughnessy: Juan, thanks again for having me today.
Arango: Thank you for coming.