Q5 Interview - Tony Higgins, Dynamic-EMS

Tony Higgins, MD of electronic manufacturing service specialists Dynamic-EMS, talks to Electronics Weekly about design activity in his OEM customer base, opportunities in the current economic climate, and market growth prospects.

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

We are witnessing a reduction in sales revenue and profitability due to a downturn in demand from our existing customer base. We are not losing business but there is a general slowdown in demand across the board. My feeling is that it has just about bottomed out and there are now one or two signs of improvement, but it's very early days.

2. How is design activity in your OEM customer base affected?  
  
Encouragingly we are seeing an increase in demand for prototype manufacturing as the OEM market explores new business opportunities, cost reduction and product enhancement. The big question, is how much of it will result in significant volume business? Nevertheless, it is encouraging to see our customers fighting the recession and not just accepting it.

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

It is very easy with all the economic doom and gloom in the air to just focus on the negatives but that gets you nowhere. The decrease in the value of sterling, particularly against the Euro, has opened up some opportunities for us in Euro land although the competitive advantage is somewhat eroded as more suppliers are switching to payment in euros.

Also, it may sound very mercenary, but inevitably and unfortunately some of our competitors will go out of business due to this recession and that in itself is providing new business opportunities (if that's the right word) for those of us who are left behind.

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

This is the big question. The priority is to focus on cash flow as the banks are restricting lending in spite of what both they and the Government claim. Manufacturing will have to stand on it's own.

We have reduced our cost base with temporary short time working across the entire company and we continue to manage our non-salary costs very carefully. What we have not done is cut back on our sales and marketing activities as we search for new business opportunities and maintain the level of service that our customers have a right to expect. Inventory management is a very important aspect of cash flow and, unlike the OEM suppliers, winning new business for a CEM supplier results, on many occasions, in a requirement for additional inventory with the resultant impact on cash flow.    .

5. Do you see any end market growth prospects?

Virtually all our traditional markets are suffering at the moment. The only growth prospect I can see is the defence market and as previously mentioned euro land.

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.

See also: Electronics Weekly Live, the "How To" exhibition and conference taking place within National Electronics Week, 16 - 19 June, Earls Court 2. Themes of the show are: Eco-Design, Embedded processor design, Using Linux, Power-efficient design, Test for embedded systems, Wireless system design.