09 October 2012
Grasping the nettle: Interview with Keith Attwood, ceo, e2v
Many UK based technology companies can trace their origins to the years immediately following World War II. Chelmsford based e2v is one, building its business on core technology developed for radar systems.
Founded in 1947, it became part of the English Electric group and, as its portfolio grew, was remanded as English Electric Valves. English Electric was sucked up into the GEC empire by the then Arnold Weinstock and became part of GEC Marconi Avionics.
Keith Attwood joined the company in 1998 as managing director. "I was faced with a rag bag of businesses," he noted. "The shape was wrong, there were too many product lines, it had too much manufacturing space. In many ways, it was symptomatic of British industry."
It turned out that set of challenges would be the least of Attwood's problems. "When GEC started to deconstruct, GEC Marconi was sold to BAE Systems and EEV – as it was then known – became part of the new Marconi telecoms business – which imploded."
EEV was one of the assets to be disposed of. "It created a great opportunity for the company to become independent," said Attwood. "But the question was where the company might go."
Attwood and a number of colleagues constructed a management buyout, in turn renaming the company e2v. A new era began. "It became clear to us that if we were to continue to be a specialised business, we would have to find new markets. We were already in the top three of the markets we served, so we acquired technologies and built a portfolio to better supply a broad industrial customer base."
In 2004, the company was floated on the London Stock Exchange. "We thought we'd be better off as a listed company," he said. And e2v was – until 2008. "There was a 'hard stop' to the economy," Attwood recalled. "It created a real challenge for the management team. Our plans didn't prove to be quite as good as anticipated."
It was time for action, Attwood recalled. "We needed support from shareholders to provide us with headroom for a dramatic restructuring of our worldwide operations. We had to draw up a new strategy to change the way the company operated, its focus and its position."
He said that 'big decisions' were made about where the company operated. "We were very strong in Europe, with a market share of about 20%. But we were underperforming in the US and in Asia. We had an 'old company' outlook; we focused too much on exports."
The collective decision was to grasp the nettle and create opportunities, rather than waiting for the economy to pick up. "We chose those with the best chances and where we had a strong market position. But, instead of supplying components, we moved into systems and services," he said.
Attwood said the whole process was a huge intellectual challenge. "What we thought was right wasn't. We weren't executing and if we wanted to move up the value chain, we needed the right people." The consequence was the company had to change a wide range of skills while, at the same time, pulling out of markets which it had previously considered important. "Automotive was one of the sectors we left," Attwood recalled.
Things changed at e2v. "Before, we would have brought people on board and done almost everything in house," he said. "Now, having gone through these problems, we are addressing new business areas, using external engineering support and temporary labour. To an extent, we have adopted the outsourcing business model. And these are cultural issues which take time to wash through."
He gave an example of how the company raised its sights. "Take industrial processing," he said. "Before, we might have been supplying a component worth £10,000. Now, we're supplying a subsystem which may be worth in excess of £300,000."
So what is e2v today? "We have two fundamental technologies," he explained. "RF and semiconductors which support high reliability and imaging applications. And we serve the medical, scientific and aerospace and defence sectors. But the difference now is that more than 50% of our sales are outside of Western Europe; the largest market is the US and we are building sales in Asia."
Attwood claims a global outlook for e2v. "Our export focus in the past was too shortsighted; companies have to operate and compete in the regions they target or be left behind."
While employment levels at e2v are significantly lower than in the 1990s, the company recognises the importance of attracting, developing and retaining staff. "We are more creative in how we acquire skills," Attwood admitted. "We use our relationships with universities to access and develop new technologies and to build relationships with good people.
We don't have a big turnover of engineers; once they're here, they like it and stay."
But there is what he called a 'more radical' approach to hiring, including a focus on apprentices. "In some product areas, it makes sense for use to bring in apprentices with the right mindset and grow them over the long term and more than 70% of our apprentices stay with us for more than 10 years."
Attwood spoke here partly with his CBI hat on – he is chair of the CBI's Education and Skills Committee. "It's one of the areas in which the Government has listened to us," he claimed. "We don't want a lot of graduates produced with degrees that we're not interested in. We need graduates with a broad set of skills and we want to see more STEM subjects."
With the turmoil of the last few years settling, Attwood said he was getting back to thinking about acquisitions; where and what they may be. "It will all be about strengthening what we are doing and moving further up the value chain."
Concluding, Attwood said: "We are in the middle of a journey and there is still long way to go. The important thing is that the team has evolved and we continue to question on regular basis what's correct, what isn't and what our choices are."
Keith Attwood joined e2v as managing director in 1998, having previously worked at a senior level within the telecommunications, defence and aerospace sectors. He led a management buyout of e2v from Marconi in 2002 and subsequently floated the company on the London Stock Exchange in 2004. A former chair of the CBI East of England Regional Council, he is currently chair of the CBI's Education and Skills Committee.
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