Leading the league table this year is a specialist in bespoke electronic contract manufacturing for clients in the industrial, telecoms, consumer, security, medical and leisure sectors. SMS Electronics also offers other services, such as optimising production processes, testing electronic products and debugging prototypes.
The company has a strong manufacturing heritage, spanning more than a century. It was part of Siemens Manufacturing Services, the German engineering conglomerate. However, in the late 1990s the Siemens board decided to rationalise the company, and Mike Harby, who ran its operation in Nottingham, was faced with having to close the factory. He took a calculated risk and, with fellow employees Mark Goldby, Christopher Hunt, John Wyles and Robert Bridges, bought the business in 2002 for an undisclosed amount. Each took a 20% stake.
Harby and his team decided to focus on contract manufacturing but made the strategic choice not to move production offshore to reduce labour costs. Instead, SMS differentiated itself by making complex products with high reliability, sometimes in very small batches, a decision that has proved to be pivotal. In 2004 the company was contracted by a small British firm to manufacture video-conferencing products. Three years later the client was acquired by a Norwegian teleconferencing business, and the resulting increase in demand for SMS’s services not only pushed up sales and profits but also established its reputation on the international stage as a high-quality manufacturer.
Demand for SMS’s video-conferencing systems is the main driver behind its impressive growth in international sales, which have rocketed by 418% a year, from £698,000 in 2008 to £18.7m in 2010. The company’s technology has become more popular during the economic downturn because it is a cheaper alternative to travel.
About 60% of the firm’s sales are now generated in mainland Europe, where its biggest markets are Norway and France. In contrast, overseas sales accounted for only 3% of turnover in 2008.
SMS manufactures its electronics systems at a 7,000 square metre factory in Nottingham, equivalent in size to two football pitches. The company has reinvested profits to upgrade equipment and to fund research and development to perfect its manufacturing processes. It now has 130 highly skilled employees working on five machine lines, with the capacity to place up to 5m components on a printed circuit board every day.
Its production is not limited to videoconferencing technology – the firm also makes smart utility meters, which Harby says are increasingly in demand overseas, particularly in the French gas market, components for telephone-exchange systems and circuit boards for split-screen monitors used by financial traders. SMS says it manages to retain 90% of its clients, and the company’s former owner, Siemens, for whom it provides repair and refurbishment services, is still a big customer.
Harby is optimistic about the future of the business and plans to increase capacity by installing another production line in June at a cost of £1.5m. The new line will be used to support the growing market in the Americas, where Harby expects sales to reach £10m this year. These plans should help the company’s success story to continue in 2011 and beyond.
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