Re-focus and excel
09 December 2008
Having decided what to write about this week, which I felt was a very positive story, I have since had a slight wobble about the ‘message’.
Let me explain.
Last week, I had a very enjoyable breakfast meeting with a couple of gentlemen from C-MAC; a UK-based company who are both EMS and OEM. They specialise in aerospace, defence and other high rel markets, and have a host of accreditations to back this up. One of the most recent of these was the Class K certification that gives it a unique position, in a European sense, with respect to bidding for certain aerospace/defence projects. C-MAC is the only company outside the US with this accreditation. The most recent accreditation was actually the demanding aerospace standard AS9100.
Attaining Class K was one of a string of initiatives that were part of the company’s strategy to focus in very specialised markets. This strategy came into place three years ago as Indro Mukerjee, CEO of C-MAC explained: "We decided we needed to re-focus the business. Without it we would be slipping down the ‘margins’ slope and our target customers in high skill markets wouldn’t trust us to provide work to their exacting standards. We decided that doing high margin, high quality work, principally in the aerospace and defence markets of Europe, UK and USA, was the most sustainable model for us.”
Indro continued: “Our model is based around ‘Electronics craftsmanship.’ We think it would be a mistake to try and do everything – our policy is to focus and be excellent. In these markets however, customer acceptance takes a while and the need for accreditations is high.”
Having many years of experience in a market is also very important, as Indro went on to say: “It is difficult for other companies to get started in some of these markets because they don’t have 25 years experience. Even the Chinese market is too young – high rel products are often just not available in China so they come to us. There is still a role in global electronics for the UK. We think the UK has got some really good electronics businesses and we, of course, are one of them.”
The sort of technology required of C-MAC has also lead them off on fairly predictable tangents in automotive (which the company largely deals with through its Belgium plant), medical, and energy. In the short term it is also the case that most of the projects that CMAC works on are long term and are largely unaffected by the current economic woes.
But….
C-MAC therefore is an example of a company who have appeared to make the right decisions at the right time, but such a re-focusing is not possible, or at least not as straightforward, for most companies. C-MAC’s process started long before the first credit was crunched and it is a combination of good fortune as well as undoubted good planning and vision that has landed them in a position to prosper in times where others are faltering.
Everyone can re-focus – but for an OEM there may be limits to which this can be done. If someone makes, to pluck an example out of the air, digital alarm clocks, what should they do? There is no easy transition to other products in other markets as there is for a contract manufacturer. Also, is a change the right move – and do you only find out when it is too late? Investing a lot of money in getting military approvals may come to nothing if you are still not making the right products that are needed a few years down the line. Remember, so many companies, EMS as well as OEM, ‘re-focused’ on communications in the late 1990s, only for the market to collapse a few years later, taking many worthy businesses down with it.
Another consideration is the geography. C-MAC's approach is working because it is a relatively small EMS company, and a very specialised OEM, working in a rarefied atmosphere of the UK electronics industry. A strategy of re-focus and excel has suited them very well, but a global EMS cannot afford to be a specialist. At the top table you must be able to be all things to all men – if ultra low cost and high volume is the name of the game then it needs to be on offer, and where excellence is required it must be on the menu as well.
So hats off to C-MAC; it was great to talk to an optimistic British company doing well, and I am sure that there are a number of companies who would do well to look at how C-MAC has approached its strategy for the coming years. But one size doesn’t fit all and to rush into a programme of accreditation and specialisation may cause some companies more problems than it solves.
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