172 | PAVEL PAICKR | HOW TO TURN THE AUTOMOTIVE CRISIS INTO A GROWTH OPPORTUNITY

"Diversify, look for new business leads, and get as much fuel - i.e. money - out of existing ones so you can develop new things."

Pavel Paickr | Founder and CEO @ Entry Engineering s.r.o.

Even in the biggest trouble you can find positive glimpses and a chance for growth.

I think we all know that the European car industry is in trouble. And so the whole episode could turn out pretty grim. But it wouldn't be my guest to make every change in the market he hasn't at least shaken off a small spark of hope for the growth of his own company, the Czech Republic and Europe. I wish more people in our country had such a setup.

Pavel Paickr of Entry Engineering knows what he's talking about. He tests electronics for the entire Volkswagen Group. He sees how cars change and where the wind blows from. He collaborates with universities on research projects, and on top of that he has his own - albeit mini - car company. With a company like that, you already know something about the industry, and you're right to be slightly optimistic. That's why I tried to squeeze as much as I could out of Pavel:

🔸 How hard is it to succeed in electronics?

🔸 Do we manage not to be an assembly plant?

🔸 What to prepare for in the future?

🔸 Is hydrogen the fuel of the future?sti?

🔸 Why are we losing ground in the automotive industry?

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HOW TO TURN THE AUTOMOTIVE CRISIS INTO A GROWTH OPPORTUNITY (INTERVIEW TRANSCRIPT)

Martin Hurych

Hello. I'm Martin Hurych and this is another Ignition. Today we're going to talk about automotive, what it's like to supply services to it, even internationally. Before I introduce today's guest, I have a traditional request. If you enjoy what I'm doing or want to be kept up to date with the latest news in strategy, business, innovation and working with people, then consider signing up for my newsletter, which I call My Notebook. The newsletter is now subscribed to by more than 1,100 owners and directors of engineering, technology and manufacturing companies and and I'm pretty sure if you're not there yet, you should be. Today's guest is Pavel Paickr, hello.

Pavel Paickr

Hello.

Who is Pavel Paickr and what does motorsport bring to the business?

Martin Hurych

Pavel is the founder, shareholder and also the principal, CEO of Entry Engineering. Before we get into the company and what you do, I've seen that you're a pretty action-packed guy. Motorsport is one of the things you enjoy, you have a little private car company. What does motorsport bring to your business? What parallels are there, what can you learn from motorsport for business?

Pavel Paickr

Calmness, persistence and the outcome can always change in a second. The important thing is not to collapse from it and continue the next day.

What does Entry Engineering do? Martin Hurych

I wasn't all that great at electricity in high school, I experienced programming somewhere around the basic and goto 110 level, so when I was preparing for you I had a bit of trouble understanding what you were doing. Come explain to my 15 year old son what Entry Engineering does.

Pavel Paickr

That's going to be quite a challenge, I was going for a five-year-old child. Entry Engineering is trying to make money and entertain people to make things work together. Our primary focus of the business so far and the area we're in is automotive, which means putting together electronic items in and out of the car. We also make phones, but also all other music around so that it listens to each other and shows as few errors as possible. So the big thing is the test teams, designing new processes and different improvement things to make it all work well.

Martin Hurych

Are we talking about the complete car electronics or just the infotainment?

Pavel Paickr

Infotainment is related to the complete electronics of the car. You see a display in front of you, or two displays, maybe some head ups today, but to make it work, you have the radio running, but you have cameras, you have sensors, you have radar, you have motion assistants, you have some other sensors. When you go into a tunnel, your navigation can go offline by counting how the wheels are moving. So the topic is huge, complex. I'm not a fully forged electrical engineer either, but I did some of that automation and cybernetics stuff, and it was suggested to me at my state school that I wasn't going to be entirely the best fit to sit in a lab somewhere and develop something. Admittedly, I've heard this nice line, imagining the kind of engineer I am, I'd be afraid to go to the doctor. So I was advised that it might be a good idea to maybe do more business with it, and that's been quite successful.

Martin Hurych

This is quite successful, today there are over 300 of you in several locations across the country and in Germany. If I understand correctly, you are supposed to test that all electronics work as they should. So when yesterday, on the way from Liberec to Prague, the infotainment suddenly went dark in my Superb for no apparent reason, and then came back on a few seconds later, is that your fault or the fault of the coders?

Pavel Paickr

Of course, this is primarily the fault of the coders, and our goal is to point it out and look for solutions so that it happens as little as possible. The important thing is that the software has come back up and that the car hasn't stopped on the side of the road.

How hard is it to succeed in electronics?

Martin Hurych

I've always had this idea that electronics in Europe is lagging behind China, Asia and so on. While I understand that it's a specialized B2B electronics and a very developed segment, what's it like to succeed at it as Czechs, a relatively small country in the middle of Europe? What are we like in electronics?

Pavel Paickr

For me the Czechs are super great in electronics. We're completely moving away from our involvement here in the automotive industry, but there is investment for a chip factory, there are tons of useful universities here, we cooperate with most of them and I think we have nothing to be ashamed of. We have very good business but a l s o research links with Taiwan, so I don't think the Czech Republic is in a bad place in the electrical field.

What led Pavel to the automotive industry?

Martin Hurych

So if it's like that, what led you to automotive specifically?

Pavel Paickr

As I mentioned at the beginning about the studios, I then tried to go through different technical roles and in the meantime I came to the conclusion that maybe it would have more effect if I listened to people more and felt what they wanted. Then the next step I found that even better than doing things alone was to surround yourself with a capable team, so that's kind of where Entry came from. Listening to the customer when others aren't listening, bringing people together and giving them the space to make it happen.

Martin Hurych

I'm specifically interested in the automotive one, because in my bubble, automotive is considered by people who want to supply to automotive to be the most professional and difficult bubble to get into. You specifically are doing extremely well in that hardest bubble because if I understand it, the vast majority of activity so far is into automotive. Was there any intention there?

Pavel Paickr

The intention was probably because Liberec and Boleslav are the locations where I live and it was far to Aero Vodochody, so Skoda. The series on my ability to be organised and stuff like that is nothing at all, so where to look is development and the services associated with that, to address interesting know-how and combine that so that we could do things a little bit differently or easier.

How does Pavel like the automotive industry in Europe today?

Martin Hurych

How do you feel when you look at the European automotive industry?

Pavel Paickr

I think it's a very sad story. Everyone or anyone wants to make a profit, so expanding into China and giving away all the know-how in China was obviously an idea that had some logic and was motivated by maximum possible profit. It turned out to be pretty much like every good deed so far in history. I think that is the challenge now, what to do next. We see that globalization is slowing to a halt these days, so it's important not to be an assembly line, but to develop new things and be able to learn from mistakes.

Are we managing not to be an assembly plant?

Martin Hurych

If it wasn't for the assembly plant here I hear, do you think we'd be doing well?

Pavel Paickr

In my social bubble, we're definitely doing well, which is why I mentioned the chips. But that's my social bubble, where it's some tech, some business, some higher education, but I think it's thriving. But it's going slow, it could go faster. Then there's some sort of ethical thing, if we wanted to do that. I've heard an awfully nice line about what SpaceX might look like if Elon Musk were to build it in, say, France. Maybe now he'd have a stamp of approval to build the engine for the rocket. We're way into ethics here, though, because I don't think the US system is all glitz and gold either.

What to prepare for in the future?

Martin Hurych

How does Entry Engineering see the future of automotive here? What are you looking forward to?

Pavel Paickr

To the future so that there can be some kind of rescue. One thing is that there will now be a fairly frenzied rush of tariffs and retaliation against them. The services that have been linked and tied up are all the car communication services, which the average person can't even imagine, because of all the regulations that car is basically online all the time. There's other security things, black boxes are coming soon and that's all going to have to be more limited and more secure in some way. There's still quite a bit of buying power in Europe to do it ourselves.

Martin Hurych

From what you say, I hear opportunities there, paradoxically, because a lot of people might understand that breaking up some global market is rather a bummer, but I hear localization a lot of things there.

Pavel Paickr

That's exactly what I meant. In the short term, it will definitely mean chaos and decline, but I think we still have a chance here and we can take it. People are smart and it won't count in cents, but we are also able to produce for relatively decent money.

Martin Hurych

I've heard this before around Covid, then around the Suez hack, now recently when tankers were fired on in Suez, and actually the deglobalization never really happened. We've had a few people here before,

who said they were planning something similar, but I don't see it on a large scale. Do you see this as something real that may be coming soon?

Pavel Paickr

Step by step, if it came quickly, of course it would all collapse, so it's not that way, it's by incremental steps.

Martin Hurych

You supply tier 1, the car companies, the whole holding company, if I understand correctly. You see the trends there? Because once it doesn't come from them, it doesn't happen.

Pavel Paickr

There are of course tendencies based on the next one and three year plan, so even if the coxswains are already aware of it, no one is going to dig into it. I saw Audi's marketing strategy yesterday split between Audi and Audi in China, so that's going to hurt. There are going to be sales declines and a lot of good ideas still need that operational stuff and that's the cash that will be missing at the moment. A lot of companies are going to fail, but for me, it can be resumed and the market is there.

Martin Hurych

How fast will it come? What are you planning to own your own company for?

Pavel Paickr

We need to focus. It's one thing to have some global tactics and then it's strategy. The current strategy is to diversify quickly on what they can do in automotive, the same things are needed in the green stuff. We are making some moves there, I think we are quite successful, but we are diversifying towards the defence industry. If tomorrow maybe we get lucky and the war ends in some reasonable non-eastern peace, we'll still need to rearm.

The world has changed, there are other threats, so this industry will go for 10 years now even if nothing happens. We've got empty warehouses where mice are walking around, so that's the strategy. The tactic is the five-year one is that we have to look, deal with things locally, which means going back to Germany and having a parallel. The worst thing is when you are then a slave to something that looked beautiful and you have no alternative choice, then there is no going back.

What exactly are the carmakers up to?

Martin Hurych

You say rescue, maybe a slightly reformatted rescue. So which way are the car companies going? I'm listened to by a lot of automotive suppliers and from what I hear nobody is telling them much, a bunch of new projects stopped a couple of years ago and so on. Are we praying that they allow internal combustion engines or are we massively developing batteries and trying to catch up with the competition left, right?

Pavel Paickr

If we talk only about the group, last week, with the American elections, the idea that Porsche, for example, had resumed the development of internal combustion engines completely fell into disuse. The fuel may be based on some hydrocarbons, but in principle why couldn't it burn something

of another or synthetic gasoline and things that were taboo, but which physically and logically come out. If we look at history, and historical things keep repeating themselves to us, when Germany ran out of gasoline, they had those coal or wood gas generators here in six months.

As long as I can fill up my tank at a gas station, no one is forced to have any discomfort and cut logs with a saw out there in the woods. With synthetic gasoline, I think we're so far along that all it takes is a nudge, one oil crisis, no batteries from China, and there's no reason it won't work.The price tag of 100 CZK per litre looks terrible, but if thousands of litres are taken out, it will suddenly be 50 CZK and that will be quite believable, it is slowly approaching where we are heading. So we are solving some global problems, recycling plastics, where to get that synthetic fuel. Hydrogen is a huge topic, I haven't reconciled within myself yet if hydrogen is really the future now or if it's an intermediate step to some even further leap in propulsion.

Is hydrogen the fuel of the future?

Martin Hurych

That's interesting. What would be behind the hydrogen?

Pavel Paickr

I don't know about that right now, but hydrogen seems to me to have so many buts that are gradually being addressed that there should be some sort of multi-functional combination.

Martin Hurych

I've heard an interesting opinion recently that the car is such a small toy that it doesn't deserve hydrogen because pure hydrogen will be so difficult to produce and so scarce that if it is to be used, it should be in ships and planes.

Pavel Paickr

That was absolutely beautifully said and it perfectly describes the fact that one is focused on what is in front of them. We are dealing with cars here, we are dealing with environmental protection and emissions, and cars are some 2% of emissions. If we had invented the hydrogen ship, we would have helped both consumption and everything far and wide.

Martin Hurych

Are we coming to our senses again after a few years?

Pavel Paickr

There's always a twitch, but I think it's going to take time.

What opportunities are there for Pavel in electromobility?

Martin Hurych

You have your own field in the automotive industry that you can plough in both standard internal combustion and electric cars.

Pavel Paickr

There is even more potential work and orders in electric cars. As far as automotive is concerned, the biggest generator of new business and things that are growing pyramidally for us is not so much the car, but the mobile phone, connectivity, entertainment for people. Travel is no longer just about going somewhere at all, so that generically creates more and more opportunities. You just have to stop and think. Of course, if we sit down here at the table and think of a topic, we probably won't come up with much, but if one normally slows down, it just jumps to what could be next.

Why are we losing ground in the automotive industry?

Martin Hurych

I'm not some big petrolhead, I think of a car as a means of transportation, although as a guy a car has to be beautiful at least to some extent. What happened to losing ground so quickly? Because it's not just about some regulations from the new headquarters and central brain of humanity, but I hear from people who work in cars that the differences are also design differences. So what's the main difference between what we produce here in Europe, even if it's in electric cars, and what we're starting to quite like? So yesterday I was driving around Prague and I found my first Chinese car company dealership. Where are the main differences where China is potentially kicking our ass technically?

Pavel Paickr

Here, for 20, 30 years, we've been building some platforms and shoring up parts and everything to make it perfect, and when we got it perfect, we left it all to the Chinese. He didn't need the 30 years, but he needed 5 years to find out that you can make the parts so many times easier and simpler and he got it served up. I don't entirely share the notion that the Chinese comrade is totally the main wave of the world's innovation process. He can suck it up, he can do complete reverse engineering, and he can tweak it a bit. Now there's basically a combination of Musk's thinking and some aluminum frames crawling around and lining it up with simple parts.

Martin Hurych

That's what I wanted to ask because reverse engineering and some value engineering platforms, I can understand that if we're talking about combustors. To me, an amateurishly outwardly built electric car may not actually have all these limits. So are the Chinese making electric cars the European way, or is

do it from the start the way I would expect it to be done when you're not limited by any design constraints?

Pavel Paickr

What happened here is that, for example, the development of electric drives and batteries was something we produced ourselves x years ago and was the main direction of development there. European companies in China did it this way, of course, using certain joint ventures, where there always had to be a Chinese partner, there was always a Chinese comrade sitting there, so they are not stupid at all and there are a billion of them. So this combination creates the fact that we have passed on and handed over the best know-how as a matter of convenience and now they are up to speed on the batteries and the motors and they are doing better. But the car still has its limitations, so when the next technological shift comes along again, I don't think it has to start entirely in China.

When will we catch up and overtake Chinese electric cars?

Martin Hurych

So what chance do we have here in Europe to catch up and overtake our comrade?

Pavel Paickr

I think the best chance would be to loosen the freedom a little bit and let people have room for creativity, and that's usually the basic recipe, then everything would work. I probably don't need to mention the United States now, which is also a black box for us, but let's look specifically at Texas. There is

Reduce taxes, free up space for companies to relocate there, minimize regulations, and it's pretty much done. Globally the economic numbers the state of Texas has.

Martin Hurych

That looks pretty hopeless. So does that mean that the whole automotive industry here in Europe is giving up the race, or what is the automotive industry here up to? Because when I listen to some of the main leaders, suddenly there's this epiphany that electro is not going to be this great bright future, but on the other hand, at the same time, they're not saying it's not going that way. I don't think anybody has fully come out and said we're only going to run internal combustion engines, it's a bit of a Princess Scooter fairy tale. Who's going to come in and turn this whole market around? There aren't that many realistic automotive directions, VW Group, maybe Stellantis and nobody else in Europe seems to have the power to turn the market around.

Pavel Paickr

Rather, Stellantis, at least in my opinion and conscience, is now waiting for the French government to start shovelling subsidies. Of course the Chinese are making something that is cool and sexy and ahead of us, but when you subsidize something at 5 levels of development there is no room for crying now, it's a fact they have a certain head start, but they don't have a head start in having a basic worker there working for a bowl of rice. That may be the main direction. We've gotten used to not growing that much here now since Covid and there are some percentages and forecasts and everybody's distressed and everything looks like it's going to fail, but it's still going well and people have gotten pretty used to it. That's when it happens in China, where everybody's been taught that every year is 15% plus, that business model of theirs can also make a pretty big boom and then they'll reshuffle the cards again.

What can your own small car company teach you?

Martin Hurych

Now let's turn the page a little bit to the positive. You have your own mini car company.

Pavel Paickr

It's a very mini car company, it's our co-shareholder project Sigma Motor, a car for fun. Our co-owners, Martin Straka and Honza Hrudik, made a dream come true and built a car that should look fun. Every year, it manages to give it to units of customers and it's really fun. It's a manufactory that works to improve the technical growth of our people and they can try solutions on it. There's a lot of work behind it.

Martin Hurych

I have a friend who specifically searches the UK for such small manufactories and supplies them. So what can you learn from that, what is the benefit of having your own car build versus the main business?

Pavel Paickr

Still one of the main businesses, whether we can pretend our own products and so on here, is selling engineering services, packages, handy people, there are still a lot of engineers. So it's basically a kind of an extension study. The car is an internal combustion engine, but here we're talking more about chassis tuning and traction. We have a joint project there with the University of Brno again on electric cars, where we have our own prototype car with 4 motors and we are able to simulate some different scenarios on it.

This is the kind of innovation where we might find something interesting. Each bike has its own motor, its own logic, it's able to adapt and ideally transfer 100% of what it can handle at that moment. There's quite an interesting complex mathematical model above that and there are probably hundreds and thousands of hours of work to do with it further.

Martin Hurych

Funnily enough, a friend from college who makes cars once told me that the moment a Chinese guy figures out that every bike can have a lux engine, we're all screwed. Because the vast majority of what makes a car a car today, and what brings the biggest margin to Europe, falls out of that car. So are we really going in that direction?

Pavel Paickr

I think for part of the car pie applications it looks like this.

Martin Hurych

So where could this solution theoretically fit in? The new electric Géčko is going in this direction, that it turns on a dime. Where could these applications go?

Pavel Paickr

A lot of it is motorsport, because getting 100% of the power the tyre can handle at each point is it. But at the same time, it's all autonomous stuff and it's a lot of autonomous movement afterwards, not so much on the road, more off-road where I'm really looking for those grains to get somewhere. That broadens the scope overall, because that electric drive makes a lot more sense than in cars, just in all the different construction machines, excavators and so on. I don't know why there isn't electric drive in excavators nowadays, where you could have three-ton batteries and it would all fit. With the vacuum cleaner, it's also

is not entirely true, because I have to charge the batteries somehow, I have to cool it somehow, I have to control it somehow. So it's nice on paper, but we're going to end up with maybe a gearbox out of those components.

What is Pavel preparing the company for in 3-5 years?

Martin Hurych

What are you preparing the company for in the next 3, 5 years? When I invite you in 3 years, where will Entry Engineering be?

Pavel Paickr

Let's see how we did. As I said, diversifying, looking for new potentials and trying to get as much fuel as possible out of the current one, which is of course, ultimately money, to survive new challenges and be able to do new things.

Martin Hurych

Good luck to you, Pavel.

Pavel Paickr

Thank you.

Martin Hurych

That was Pavel Paickr from Entry Engineering. What can I say, we've peeked into a rather bleak future, or so it seemed today, although there were glimpses of potential for each of you. If we've got you doing some thinking about your business and what your market looks like at the moment, we've done our job well with Pavel. If you enjoy what I do and want the most up-to-date news, be sure to sign up at www.martinhurych.com/newsletter to be one of the more than 1,100 owners and directors of engineering, technology and manufacturing companies who already subscribe to the newsletter. Check out the other episodes just off the site in the Ignition section, which not only has this one, but all the other episodes I've done. All I can do is keep my fingers crossed and wish you success in the days, months, weeks and years ahead, thanks.

(automatically transcribed by Beey.io, translated by DeepL.com, edited and shortened)