ANAHEIM, CA—In the eight months since Harman acquired Brazilian speaker manufacturer, Electronica Selenium, the marriage of the two companies has been “a perfect match” and the year-long integration strategy is on pace, according to Blake Augsburger, EVP Harman, president Professional Division, Americas country manager. Augsburger spoke with Pro Sound News at the January NAMM Show in a conversation that included Rodrigo Kniest, Brazil country manager for Harman Brazil, which includes Selenium. “Everything is far exceeding plan,” Augsburger continues. “If you look at the financial performance of the business, we’re blowing it away.”
Blake Augsburger, EVP Harman, president
Professional Division, Americas country manager (left) is joined at the Selenium display during Winter NAMM by Harman Brazil country manager, Rodrigo Kniest.The acquisition had several motivating elements, he says. “One is a big push to grow our business in the emerging markets. You can do that at a very slow pace by setting up an office and starting to put people in there, or you can move it at a step-function-type rate by acquiring a local business.” Selenium satisfied the latter model for Harman. In practice, the goal of emerging market growth had two sub-elements with Selenium, Augsburger elaborates. “The first part was, ‘How do we grow our sales in Brazil with Selenium?’ And then the second point was, ‘How do we grow Selenium sales outside of Brazil through our current distribution channel?’”
Harman Brazil is answering those questions, he says. “The sales within Brazil have just been fantastic. We’ve transferred away from our distributor in the country, and so we now sell direct in Brazil through reps. And the Selenium team manages that sales process for Harman products. And then we are making very good progress on Selenium products outside of Brazil by introducing the Selenium product line to our current distribution partners.”
Kniest explains that Harman Brazil has “88 different reps all over Brazil that handle our client portfolio, around 2,000 clients in Brazil, and it’s widespread. Those stores now can access Harman products much easier, because we have the relationships and we have the sales force. The previous [Harman] distributor did not have a large footprint outside the Sao Paulo region. And now we have all the Brazilian country to work with.” By “taking the distributor out of the equation and going direct,” elaborates Augsburger, “we were able to adjust price points, so the dealer can make more money by selling Harman product. As you know, in this business, our customer is really that dealer.”
Local support is an additional factor in the success of Harman import products into Brazil, says Augsburger. “Before, we were just another import brand. Now we are a local Brazilian brand.” This is a “really important” factor according to Kniest: “Brazil is a country that imports a lot of high-tech products [from companies that sometimes don’t] really do a good job in warranty or technical support. When there’s a company inside Brazil, when you are local, the customers, the end-users mostly, they really rely on you.”
The reality that import duties into Brazil are very high prompted another question, Augsburger says. “How do we manufacture more Harman product in Brazil to address those high import duties?” Harman Brazil is adapting its facilities to build products for several Harman brands. By June, Harman Brazil expects to be shipping two fully Harman systems built totally in Brazil, including AKG microphones, Soundcraft consoles, dbx processing and Crown amplification, all driving Selenium loudspeakers.
Selenium, a 60-year-old company, was previously owned by the first generation that started the company, and “they were looking for an exit strategy” Augsburger relates. Kniest says that Selenium was a successful company that “had our best year in history just in 2008.” While he recalls 2009 as slower, on a pace with global economic woes, “We got back really fast. In fact, much faster than our competitors in Brazil.”
Though Selenium anticipated continued growth, the mutual benefits offered by joining with Harman would allow significantly faster growth. A total of 85 percent of Selenium’s pre-Harman revenue was from selling transducers, with the systems component of the business only begun five years ago. “Our portfolio in those systems was really narrow,” says Kniest. “Harman, on the other hand, is exactly the other side. It’s 90 percent from systems. It’s so complementary…For the World Cup soccer, with Harman we have now huge-size systems that can support the professional soccer stadiums. We’ve got most of the connections for those markets and now we can sell a Vertec.”
In the future, Harman speaker brands Selenium and JBL will be seen “becoming closer and closer together,” said Augsburger. “We’ve begun to share technology across both ways. I don’t think you’ll see Selenium being retained as a major brand. I think it will become a subset of JBL and a brand to designate product series versus a company.” Harman Brazil, building on the foundation provided by Selenium, anticipates its future will be one of continued rapid growth.
Abundant additional details on the Brazilian marketplace, Harman’s business philosophy, global manufacturing, the incorporation by Harman’s Digitech brand of the Selenium Maverick instrument amplifier technology and the potential for Harman products in the Brazilian automotive manufacturing industry can be found in the full transcript of our interview in the Blog section of prosoundnews.com.