Do you have a famous brand of music system in your car? Is the B&W Bowers & Wilkins logo adorning your speakers? Chances are you bought the name and image of a known speaker brand, even though, behind the scenes, Dendermonde-based PSS designed and produced the top-of-the-range loudspeaker. No less than a third of the cars on our roads are fitted with loudspeakers from Dendermonde.
The Belgian PSS, short for Premium Sound Solutions, supplies speakers to almost all major car manufacturers, sometimes under a premium brand name for premium makes: BMW, Citroën, Jaguar, Land Rover, to name but a few.
And it gets even better. The audio specialist from Dendermonde is planning on even doubling its turnover by 2025.
“500 million euro is an achievable goal thanks to our long-term relations in automotive, growth ambitions and acquisitions, as well as our top quality design and reliable production,” CEO of PSS Achiel Verheyen told BeAutomotive.
PSS has evolved from an activity divested by Philips to a preferred a supplier for the major car manufacturers. Why this reversal?
Achiel Verheyen: “We have a very unusual history: from a child divested by Philips to an equity holder who wishes to guide the child and let it grow up to become a child of the future. We really felt this evolution over the past two years, under the Dutch private equity group Value Enhancement Partners.
They share our vision to not just make products. Instead, we aim to become a long-term partner of choice for customers who want the right quality with the right performance. Speakers remain an important component, but we are putting more focus on the sound solution, which is a much broader concept than speakers.
This means that today we think more in terms of solutions, such as anti-noise systems to insulate from the disturbing noise and vibrations penetrating the vehicle, and external speakers to make electric cars noisier than their almost nil initial noise output. As regards music, we don’t listen solely to CDs or the radio. No, mobile devices have to connect seamlessly. The central unit should be able to do much more than play music.”
Where is PSS today?
Achiel Verheyen: “Once upon a time, PSS stood for Philips Speaker Systems. Today it is Premium Sound Solutions. This means that we are now a company developing and manufacturing speakers, tuners with built-in navigation systems and audio solutions. In our sites in Dendermonde, Leuven, China, Malaysia, Mexico, Hungary, Detroit (USA), etc. we employ 1,000 people directly and a total of 3,000 people if we include our industrial partners.
60 million speakers come out of our production lines each year, and our turnover reached 257 million euro in 2015. About 80% of our production goes to automotive customers. We expect to produce more than 100 million units per year by 2020. And let’s not forget that we now offer much more than speakers: real sound solutions, radios, amplifiers with built-in navigation through our recent acquisition of the Blaupunkt plant in Malaysia, and speakers connected to the exhaust to strengthen the engine noise.”
Is doubling the turnover in 5 years feasible?
Achiel Verheyen: “In 2005, our turnover was no more than 100 million euro. And yet our current sales goal is attainable if we look at what we have achieved in the past 15 months. We will add on a number of platforms in order to make sure we can maintain a certain turnover over a number of years. Indeed, that is the advantage of our automotive activity. It is not easy to win a new contract with a car manufacturer: they turn your whole business inside out, want to know everything and keep the price down. But once you have the contract and deliver quality products without any mistakes or problems, it keeps being renewed. These car makes have no reason to change suppliers; on the contrary, switching suppliers is a costly business for them.
Then we can respond to the trend for more and more speakers in one car. 20 years ago, a car had 2 speakers, or 4 in the best case scenario. Today, 4 or 6 speakers are the basics. A car with a decent audio system is fitted with 12 to 14 speakers. And thanks to our focus on top hi-fi systems, we supply cars with 20 speakers, which is equivalent to 6,000 euro in sound systems.
Through our excellent relationships with luxury makes such as Jaguar and Land Rover, we are also riding on the crest of their growing success. 10 years ago you hardly saw those cars on the roads. Since the investments by Tata Motors, these brands have become very successful.”
PSS is spread widely internationally. Why this need to be everywhere?
Achiel Verheyen: “It is no coincidence that we operate in 8 countries. We want to offer our solutions worldwide to make sure we are considered by the GMs of this world as a global player who is wherever they are.
The automotive industry is hugely globalized. On all the continents, car manufacturing plants want to work with similar platforms, and the same suppliers. For instance, we are currently considering whether we should start operations in Brazil. It seemed to be going well there, but the country is now a question mark for us.
My experience abroad is essential in this expansion. I would not be sitting in this chair if I hadn’t spent 10 years working abroad, including in Silicon Valley. I have gained experience in different cultures and can easily maintain good relationships with high level customers.”
R&D, too, is spread between Belgium and Asia. How are the fields of research divided?
Achiel Verheyen: “In Dendermonde 35 people develop only premium speakers for Western European car brands. Leuven is working on electronic hardware and software, the architecture of an amplifier. These developments are what allows us to evolve from a loudspeaker manufacturer to a sound solutions company. There are now 35 people. Depending on the deals we win, this team might be increased by 10 men/women in the coming 2 years.
In China, we have 35 people focusing on speakers for mainstream cars and consumers. The plant in Malaysia which we took over from Blaupunkt specialises in head units for audio and navigation. It employs 45 researchers.
In addition, we invest in new production methods that are much more efficient. In Dendermonde, for intance, the plant is almost fully automatized. Our plants in China and Mexico which are still based on traditional production processes are now being converted to be more efficient. There, too, we need staff with an ever higher level of skillset for this to happen.”
It is remarkable that all your products are custom designed and manufactured. What is the development process for such products?
Achiel Verheyen: “Many of our engineers work with the customer’s development team and act as the interface between us and the customer. That’s because we don’t just make speakers that any car manufacturer can fit in its models. On the contrary, oftentimes barely any thought goes into the speakers in the design of a car. Then, we are shown in which cavities we have to build in the tweeters and woofers, and that’s the beginning of our challenge. We produce the most striking shapes of sound boxes as a result. In this respect, every car is different. Every manufacturer has specific requirements. It is up to us to turn them into highly cost-effective designs.
Investing proactively is crucial in this respect. We have to come up with solutions in line with our vision. And then match them with the goal the customer is trying to attain. In the coming 3 to 4 years, for instance, we will have the upper hand with a great innovation in the architecture of amplifiers.”
How strong is your focus on strengthening Belgian sites?
Achiel Verheyen: “We manufacture 11 million speakers here in a semi-automatic process, which makes us the biggest producer in Europe. In our Hungarian facility we produce 6 million units annually.
Yet, we do not think of ourselves as a Belgian company, but as an international player. And that is necessary in order to succeed in automotive.
If I did not think internationally, I might make the mistake of putting too much emphasis on this Belgian plant. It would be logical for me to want to protect it… Even though we enable major breakthroughs here in Leuven, we assign the production to the plants which are closest to the customer.
I would not go as far as say that without this international approach we would no longer exist, but our fate would have been different. And we would have had fewer opportunities to grow.”
Is working for automotive customers challenging?
Achiel Verheyen: “Challenging for sure. Nowadays, car manufacturers want speakers that are light, flat and sensitive, don’t take any space and are able to withstand all kinds of extreme climates. And they want them at as competitive a price as possible.
We used to be the specialist who had all the knowledge in-house. Now, we collaborate with highly competent sound engineers employed by our automotive customers and who know exactly what they want.
This means that the margins are not huge. If you sell something to someone who has great insight into the technology, you cannot charge a 50% margin. So, what you have to do is be creative, maximize relationships and differentiate yourself from competitors.
The game played in automotive is very competitive.
However, the sector also has advantages. Especially if we compare our stable growth in automotive with the other market in which we operate: the consumer market. In that one, we are affected by greater market fluctuations. You have to work very hard to generate stable growth. We achieve this as a supplier of well-known brands. For them, we develop and produce speakers and even sometimes whole systems, such as the famous Zeppelin by B&W, which is described by the company as “The next level in audio performance” and is operated via wireless apps and smartphones.”
Why is Belgian talent essential in the growth of PSS?
Achiel Verheyen: “We – and that is an asset shared by all our Flemish employees – speak the language of our customers. Be it German, English, French, and so on. This is still more important than you think. When I started it was impossible to speak to a German or French customer in English. Even though this is less true today, addressing the customer in his or her own language is preferred, which is logical.
Our other strengths? Creativity and extensive know-how in acoustics. We understand the whole system, the hardware and software. We have a lot of patents on flat designs and lightweight speakers for instance. Saving a few grams or kilograms is important in times of CO2 reduction.”
Are you able to attract new Belgian talent?
Achiel Verheyen: “We are successful in a number of segments, but acoustics is a narrow specialty in which it is difficult to attract people of a certain level. We have trained most of our people ourselves as a result. Whenever we lose someone, it doesn’t just hurt, it also takes us a while to fill the gap. Since, in Belgium, there are no courses in acoustics and speaker development, we are increasingly dependent on international recruitment.”
Most of the general public doesn’t know about PSS. Is this an inconvenient or an advantage?
Achiel Verheyen: “It is perhaps unfortunate that most people do not know that they are listening to music through our speakers, but we actually do not need a strong brand in the outside world. On the one hand, we are perfectly known worldwide, and we also attract talent as a result. And on the other, this allows us to focus on our strengths: the development of ever better sound solutions. Working behind the scenes with our customers to create new success stories makes us stronger.”