Eat for two

Eat for twoThe competition between Britain and the Far East in power supplies has always been keen. It’s speedy delivery versus low cost goods. Alex Mayhew-Smith finds out who has the upper hand
What’s your favourite take-away? Good old British fish and chips or something a bit more exotic – Chinese or Taiwanese. The truth is the two sit happily side-by-side on our high streets; some Chinese take-aways even sell chips.  
  Work ethic… Celab is a UK power supply firm secure in a niche market. Most of its products go to the military market and, as a relatively new sales area, to the cable telecommunications market.Pictured is a team from Celab ensuring that power supply requirements are met.
For the power supply business, a similar accommodation has been reached by UK and Far Eastern manufacturers. They have had to because of the history of competition in this market between the two areas.
This does not mean it is a static situation, competition from the Far East has certainly increased, particularly in the lower power end of the market, sub 200W, says Martin Southam, UK sales director of Coutant Lambda. However the rapid delivery that UK manufacturers can guarantee is a prime factor in competing with the low-cost attraction of Eastern goods, he says.
Another way to compete is through the increased automation of manufacturing – it is simply not possible to compete against labour costs in the Far East. “This is seen in our strategy of lean manufacturing,” says Southam.
The concept of concurrent design also allows a power supply firm to cut its costs and makes it more competitive. Concurrent design means that while a new product is being researched and developed, industrial engineers are working alongside to design the production equipment. “The concept of throwing the work over the wall from one department to another has gone. A lot of companies now use industrial engineers in the product design stage,” says Southam, adding that it will cost at least ?1m to introduce equipment to manufacture a new product line.
One of the biggest factors in the tale of east-west competition is the duty tariffs placed on certain components shipped in from the Far East. These can be as high as 100 per cent, says Nigel Frey, sales and marketing director at Unipower and vice chairman of the Power Supply Manufacturers Association (PSMA): “It is an aspect of Far Eastern competition that impacts on local manufacturing.” These particular tariffs fall on large-can electrolytic capacitors.
The effect is that UK firms importing the capacitors from the Far East have to pay very high import tariffs while a complete power supply unit imported from the Far East, containing the same capacitors, does not face the same high duty. Barry Wood, managing director of Celab, says in some instances it could be cheaper to import a complete power supply unit and strip out the capacitor components for use in other units than to import the capacitors alone.
According to people in the industry, the situation is the result of certain large company’s ability to bend the ear of the Commission.
Much of the major competition from the Far East was felt among UK firms in the mid 1980s. Now UK power supply businesses have either found themselves a niche market that is not competing against the Far Eastern companies or have made connections with their overseas competitors. Nada Group, for example, manufactures and develops power converters for products such as lasers, ultra violet lamps and arc lamps as well as converters that allow solar energy to be fed into the National Grid.
“The focus of our business is changing. In the past it was more R&D, now we are doing more and more manufacturing. We manufacture for OEMs so our products tend to be customised. Because our products are specialised we don’t see much competition from the Far East,” says Mike Pearce, joint managing director of the Nada Group.
Celab is another UK power supply firm secure in a niche market. Most of its products go to the military market and, as a relatively new sales area, to the cable telecommunications market. “We are immune to the Far East. Our power supplies are niche marketed and produced in small volumes,” says Celab’s Wood.
Because of the MoD’s encouragement of the use of commercially available, off the shelf (COTS) components, Celab can actually benefit by buying the cheaper components from the Far East. As the PSMA financial director, Wood says, the UK power supply companies that didn’t change in the mid 1980s are gone: “Some brought into the Far Eastern market in some way and others found a niche market,” he says.
The Far East’s power supply products mainly address the commodity market, such as for printers, faxes and other office equipment. However, there has been a tendency for the Far East manufacturers to creep in recent years into the higher power product market, says PSMA vice chairman Frey. One example is the move among Far Eastern power supply manufacturers to make power units for servers as well as PCs.
Frey also believes that one of the answers to stay competitive is to automate production more. “Although there is not difference in quality, many of the Far Eastern power supply products are put together by hand. The labour is cheaper there,” says Frey.
However, one advantage in the UK, says Frey, is that manufacturers here are more aware of changes in European legislation that impact on power supply products.
Dave Weeks of Danish power supply firm Danica, recently acquired by Vero Electronics, says the threat from the Far East manufacturers is not any greater today than it was 10 years ago. At that time all power supply manufacturers suffered, “We would not be forming relationships with the Far Eastern manufacturers if we had not suffered,” he says.
Danica is an example of a power supply firm that linked itself to the Far East, acting as an agent for a Taiwanese manufacturer. Although 98 per cent of its products are manufactured by Danica, Weeks says the quality of the Far Eastern products is equal to that of European power s upply manufacturers.
However, Weeks, who also sits on the committee of the European Power Supply manufacturer’s Association, says dealing with a European manufacturer provides a certain comfort to European customers: “A European manufacturer can go with a customer to see their customer to sort out any problems.”
One example of the move by UK manufacturers to establish relationships with manufacturers in the Far East, is Advance Power. The firm has recently opened an office in China, which although embryonic, could lead to a joint manufacturing venture, says Alan Gobbi, product manager at Advance Power.
Far Eastern competition pushed UK manufacturers hard in the 1980s, forcing British power supply companies to move to niche markets, or import Far Eastern products. The pressure is now diminished, but still there with Far Eastern companies moving towards the wider niches. What the UK still has in its favour is fast response time and a better view of European legislation.


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