AMP and Komax Nearing Agreement

Former competitors now collaborate to sell lead maker equipment

Wire processing equipment maker, Komax, and AMP, Inc. will soon sign an agreement whereby the AMP sales force will sell Komax' product line, according to company spokesmen. "This agreement delivers to customers the best of all worlds," said Jim Sopp, president of Komax, USA, headquartered in Buffalo Grove, Illinois. "We will give customers the choice of which sales and service organization they prefer to work with – if Komax customers want to continue their relationship with us, that will be possible. However, the AMP organization has economies of scale, so customers will have the benefit of 400 sales people, as well as a well-established service organization with convenient local service centers. In addition, AMP will offer customers finance packages and leasing programs, a service Komax was not able to provide in the past. We envision our eleven sales people acting mainly as technical advisers to the AMP sales force, allowing us to penetrate a much broader market."

Komax' sales strategy took mainly a direct marketing approach in the past, through the use of a salaried sales force and a few manufacturers' representatives; it had no distribution network. Under this new agreement with AMP, Komax will terminate its relationship with most but not all of its manufacturers' reps. "We want to make it clear to customers that we have the highest quality manufacturers reps and we are not terminating our relationship with them due to any fault of theirs. This is purely a strategic decision for Komax. We were very happy with our reps," Sopp explained. "We just needed to take a more direct approach to reaching our customers."

Yes, but aren't AMP and Komax competitors? Steve Merkt, director of AMP's business office and marketing for the global application tooling division pointed out that while there is some overlap in product offering, this agreement will broaden AMP's line considerably. "AMP's offering has historically been limited to basic leadmakers. The Komax line offers our customers the flexibility to handle more complicated leads. Working with Komax allows us to offer features such as doubling, tinning, twisting, and the application of seals. In the areas where there is an overlap in the AMP and Komax offerings, the customer will have the freedom to choose the solution that best serves their needs."

No acquisition or transfer of interest will occur as part of this agreement. AMP and Komax recently concluded a transaction that in some senses paved the way for this agreement. "AMP sold ARA to Komax last August. ARA is a French high-end harness equipment maker that sells primarily to the European market. That was a perfect fit for Komax. In this agreement, however, there is no acquisition either way."

Both AMP and Komax spokesmen believe this agreement will benefit customers by simplifying the wire termination equipment buying process. "Our customers will like the breadth of product line they will now have from AMP. Komax customers will like the increased convenience and efficiency of working with such a large sales and service organization. Both company's customers will be able to continue dealing with individuals with which they have a high comfort level, but also will be able to take advantage of the strengths of both organizations," concluded Mr. Merkt.