Owen Reeves, MD of ACW Technology, the UK contract electronics manufacturer, talks to Electronics Weekly about design activity, opportunities in the current economic climate, and end-markets with growth prospects.
1. What impact is the downturn having on your markets?
The downturn in the economy has mostly affected consumer and automotive electronics globally which has had the greatest impact on manufacturing businesses dependant on those markets, more specifically in low cost regions. In the UK we have not seen a significant reduction in demand for our service, on the contrary, ACW's business will grow by almost 20% in terms of revenue this year.
However companies and governments will reduce their funding of capital equipment during these times, as borrowing is more difficult to acquire and money is less available. I am sure that this will have some impact as time moves on.
2. How is the design activity in your OEM customers being affected?
I am not close enough to the day to day strategic moves of our customers but I would expect that design programmes requiring significant investment, and are more speculative, would have less opportunity to move forward today than if the economy was stronger.
However, ACW has been fortunate in that it has not witnessed significant changes to the programmes we are working on with our customers. They are mainly large multi-nationals and I would expect them to be reviewing costs globally which may affect where design programmes are initiated or completed.
3. Can you identify positives or opportunities in the current climate?
There are plenty of opportunities in the current market and these can stem from:
OEMs are more likely to review their 'make or buy' decisions in favour of outsourcing their manufacturing as fixed costs are those looked at first when trying to improve a financial position in a downturn.
With business contracting this is often a time when OEMs regard the financial strength of a business a key factor in choosing a new supplier. This should always be a key consideration but is less of a focus in more "bullish" times. ACW can offer that security to its customers today and has benefited with real and significant business because of it in the last 12-18months.
There is more staff available to choose from today covering all skill levels and regions of the country. This similarly applies to our businesses in China. ACW is recruiting in all areas today.
The reductions in volume sales of some products has resulted in those customers choosing to return products to the UK for manufacture or to select a supplier that more suits their business size and spend.
Today customers view security of supply when choosing a new supplier as a key ingredient in the decision making process. This not only covers financial strength but investment plans, capacity, disaster recovery etc. For ACW our factories in the UK and China have significant available capacity and all demonstrate high levels of investment to meet our customers future needs.
4. How are you adapting to the changing economic climate?
ACW has, over the last 5 to 10 years has significantly changed its customer base and service offering. This was driven by the fact that most volume manufacturing was moving from these shores and we had already seen a decline in certain market areas.
Today we trade with financially strong customers in diverse markets that need UK support, have significant design activity in the UK and globally and are seen as major players in their market. This changing customer base has brought with it higher expectations and standards of operation which has meant we are a much stronger business, one that is able to demonstrate excellent supply chain solutions with very strong technical capability.
Our global operations in manufacturing and purchasing based in China, which were set up three years ago, give us an ability to provide competitive solutions for all the products that we manufacture.
The reason we are able to adapt and grow today is because of the strategy we initiated some years ago. ACW cannot control the economy of the world but needs to provide a service that its customers and others will need. If you want to deal with and attract strong customers you need to invest in improving your service, your people and manage your finances wisely. These actions will stand you in good stead in most economic circumstances. A bit of luck, preferably good, always helps though!
5. Do you see any end-markets with growth prospects?
ACW is gaining market share and therefore it is difficult to perceive whether a particular market sector is growing but we have seen a significant increase in products that are used to prevent terrorist activity, that protect perimeters of either countries, buildings or areas and that provide for the secure transfer of voice and data in all applications. ACW has classified this market under the umbrella of security but it covers many technologies and so could logically be classified in a more diverse way.
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