Q5 Interview - Eamonn Walsh, Brainboxes

Eamonn Walsh, chairman of data communications systems manufacturer Brainboxes, talks to Electronics Weekly about OEM design activity, opportunities in the current economic climate, and end-markets with growth prospects...

1. What impact is the downturn having on your markets?

No one will escape the effects of this recession and Brainboxes was affected very early on, shortly after the run on Northern Rock. After a great FY2007 we saw a step down in business in November, the first month of our FY2008. We took immediate action and downsized in Jan 2008.

We believe this fast and decisive action has put us at a good cost base going forward even though the downturn continues through into 2009. Our products are used widely in the banking connectivity and point of sale markets and we are finding that customers are only ordering what they must, not just what they would like.

2. How is design activity in your OEM customers being affected?

Some or our OEM customers are finding the current financial climate difficult whilst others are grasping the opportunity to innovate their way out of the recession. Brainboxes is having the most innovative time in the company's 25-year history. In 2008 we brought out 18 new products, and already in 2009 we have released 6 new products with 7 additional cards to be released in the coming months.

We remain on track to deliver at least one new product a month right through to the end of 2010. Getting new products to support existing customer demands, to innovate new products for existing markets and for entry into new markets is key to our strategy of ensuring growth.

During 2008 we broadened our range of products for use in Laptops with the introduction of our ExpressCard range. Also, our PCI card range was extended to include PCI Express cards to meet the new connectivity option now being delivered in the latest PCs and Servers. We have already started to launch two new product ranges with the introduction of USB to Serial products and Ethernet-to-serial device servers. We are well financed and are making solid investments in our future.

3. Can you identify any positives or opportunities in the current climate?

On the positive side we are seeing good opportunities at both home and abroad. All of our competitors are overseas, so our UK customers who also buy from these competitors are finding those prices are rising due to the fall in the value of the pound versus the dollar or euro. Our pricing in the UK has always been extremely competitive and we are now winning more market share.

We also directly export over 60% of our products and many companies that did not think of buying from Brainboxes before are now very interested in our products as the fall in the pound has made us extremely competitive. I believe that UK manufacturing has an opportunity to experience a surge during this recession. On the negative side Brainboxes is seeing consolidation in suppliers, and we are hearing of job losses from some suppliers and customers.

4. How are you adapting to the changing economic climate?

Brainboxes has been manufacturing in the UK for 25 years so I have seen a few economic cycles in that time. It is a bit like poker, the longer you stay in the game the more the ante goes up. This time we have taken a step back and looked at how we can manage customer expectations and keep control of outgoings. Whilst we are managing our raw material stock very tightly we are very focused on, and determined to improve on, our key performance indicators such as On Time In Full delivery. This way our customers experience the best service from us.

The main issue is not to let a quiet time force us into a go-slow. At Brainboxes we always endeavour to work at our top speed and so free up time for improving ourselves via training, innovation and new research in new product areas.

5. Do you see any end-markets with growth prospects?

We believe that the export market is where we will be able to win new customers and I see the focus for 2009 is on winning market share. In a contracting market this may mean lower sales than a few years ago but it will put us in an excellent position for when growth returns.

Continuing to manufacture in the UK means that we are in control of our production and can accelerate quickly to meet demand. If customers want a product within a short lead-time we are able to deliver. We have high hopes for our Ethernet-to-serial products in industrial control markets, such as utilities and petro-chemical industries.

We have seen a lot of changes in the past 25 years, now we're getting ready to take on the next 25.

See also: Q5 - Interviews with electronics industry leaders
Read all the Electronics Weekly Q5 interviews. From ARM's chairman, Sir Robin Saxby, to touchscreen technology firm Zytronic's MD, Mark Cambridge, the business leaders share their particular insights on the UK electronics industry.