One of Germany’s largest electrical components manufacturers is restructuring its supply chains and commercial model in response to mounting geopolitical pressures, as it seeks to return to sustained double-digit growth.
Ulrich Leidecker, Chief Operating Officer of Phoenix Contact, said the family-owned group is hoping revenues return to 2022 levels of €3.6bn–€3.7bn in 2026 after a tumultuous four years in which demand spiked due to the pandemic and then slumped.
Speaking at a press event ahead of the 2026 Hanover Messe, Leidecker said revenues rose from €2.4bn in 2020 to €3.3bn and then €3.6bn during the pandemic, as customers stockpiled amid shortages.
“We grew €600mn two years in a row,” he said. “That was definitely a big challenge for the group.”
The subsequent correction was sharp. Sales fell 6% in its centenary year and a further 12% the year after, before recovering to about €3.3bn–€3.4bn in 2025. For the current year, the company expects roughly 10% growth.
“That is the growth path we feel comfortable with,” Leidecker said. “A stable, reliable, double-digit growth phase — that is what we have learned over many years.”
Phoenix Contact manufactures components and systems in electrical engineering, electronics, and automation. Headquartered in Blomberg, in the Lippe district of Germany, it is one of Germany’s three biggest manufacturers in connection technology.
Founded in 1923 and still 100% family-owned, the group employs more than 5,000 people at its headquarters campus and operates more than 50 subsidiaries worldwide, with over 10 production facilities outside Germany.
Leidecker said that over the past year or so, regional performance has diverged. The US delivered growth of more than 20% in local currency terms, while China and India posted strong double-digit gains. Europe lagged behind, with Germany particularly subdued.
“There is something we are suffering from in Europe — a lot of over-regulation and a lot of bureaucracy,” he said. “We see less of that in other parts of the world, and it is a big impediment for us to grow.”
He added that rising protectionism and tariff disputes were creating new obstacles. “This is a huge hassle,” he said. “Since I have been working with Phoenix, something like this has never happened before.”
As a mid-sized industrial supplier, Phoenix Contact has also found itself exposed during semiconductor shortages. “We are not a hyperscaler. We are an industrial player,” Leidecker said. “When allocation happens, we are not on top of the list.”
In response, the company has shifted towards localisation and diversification of supply chains.
“In the past, you were always buying from the cheapest spot,” he said. “Now you are trying to buy from several spots. You will not get the cheapest price anymore, but you are more resilient.”
Customers have questioned the need for higher-cost sourcing as bottlenecks ease. “They say: now supply chains are stable again, so why not go back?” Leidecker said. “We say: we have to think long term. We have to think resilience first.”
The strategy is backed by investment. A new production facility in Mexico is due to open in March, logistics operations in Germany are being expanded with an investment of more than €100m, and capacity has been increased in Turkey, Vietnam, and India. The company continues to invest in China despite geopolitical tensions.
“You have to keep investing, or you are out of that market,” Leidecker said. “It is stressful for a smaller player like we are, but we are managing.”
Alongside operational changes, Phoenix Contact is moving from a product-led approach to an application-driven model, reflecting growing demand for integrated energy and automation systems.
“It was product, product, product,” Leidecker said of the past. “We made more components, we found new customers.”
Now, he argues, customers expect complete solutions. “The world is getting more complex. Customers do not want to handle each and every component. They expect applications to be made up by us in advance.”
That shift is encapsulated in the company’s “all electric society” strategy, which envisions a fully electrified, climate-neutral energy system based on renewable sources.
“The climate has not stopped warming up just because we have other problems,” Leidecker said. “Today, the discussion is also about stability of energy supply and resilience of our grids — but the climate issue is still there.”
He pointed to 2025 as a symbolic milestone. “For the first time in the European Union, wind and solar alone overtook fossil fuel generation,” he said. “And it is not going back. It is only going in one direction.”
For Phoenix Contact, that structural shift underpins its four core business areas: connectivity, cabinet efficiency, power reliability, and automation. “We started by connecting two wires,” Leidecker said. “That is still the backbone of what we are doing. But now we integrate energy solutions.”
“Nobody can be sure what will come next,” he added. “But we have to strengthen our resilience and our competitiveness. That is how we prepare for the future.”
