Solid State Supplies interview I Distribution


companies that would have an impact on the market.” The company’s objective is growth and to achieve that it has had to change its approach to the market and the way in which it conducts business. “Our structures were very internally focused and we weren’t reaching out to customers. It was a good team but we were too inward looking, especially for a sales company. What had been holding us back was, in part, our culture. Staff had been through thick and thin and to be honest were shell- shocked after a difficult few years. We weren’t growing and we were barely breaking even. Franchises want to see growth and they need to see new customers and more design-in wins taking place.”


MacMichael took some key decisions and looked at attracting new product. “We had to change the way we


approached the market, but first we had to control our costs. We got back into profit and restructured the business. Our focus was now on looking outwards and the next key step was to target bigger franchises.” McMichael has worked in engineering, sales and experienced business in the US, and as a result has a good understanding of the distribution channels and what manufacturers are looking for. “All companies want you to grow their business and win new designs.” Companies like Pulse who had


remained loyal to the business through the good and bad times are now enjoying the benefits associated with a business that saw growth over the last two years average over 30 per cent, and which is expecting growth in the next 12 months to exceed 20 per cent – that compares with the overall distribution market in the UK falling by between 4-12 per cent, according to the latest estimates from Afdec. Growth is being driven by having the right people and the right structures in place, according to MacMichael. “It’s vital to have the right


commercial and technical support in place. While we have an exceptionally talented team here at Solid State if we intend to carry on growing we need to be able to attract the right people – and that is proving hard to do. For most distributors finding application engineers is probably the toughest challenge. To do that job effectively candidates need an in-depth knowledge but it can’t be too narrow or specialised. They need to be able to talk to and assist a range of customers. They need good commercial knowledge.” As if to prove his point at the end of February one of its application engineers, Reuben Townsend, received the award for ‘2011 Distribution FAE of the Year, Europe,’ from Microsemi Corporation. Townsend was selected as the winner in recognition of his outstanding work in achieving design registrations and design wins for the company and was commended for his excellent technical knowledge and praised for his strong commitment to service and guiding customers throughout the design process, from product selection to delivery.


www.cieonline.co.uk However, according to MacMichael


there is a dearth of young engineers coming through which is a worry for the electronics industry, not just the company.


Customer focus “We have three groups working together serving and focused on our customers. Franchise managers, who have technical and commercial responsibility, a sales team and application teams; the more help and support you can give customers the more valuable you become to them and the more business you’re able to attract.”


Over the next few years the company will be focused on maintaining strong growth driven by more franchise acquisitions, however the upcoming twelve month period will be one of consolidation as Solid State works to ensure growth among its existing principals which include Microsemi, Orion Fans, Pulse Electronics, International Rectifier and Digi. “We want to ensure that we are delivering what we have promised to our existing principals,” says MacMichael. “That’s how we will achieve further growth. We have to avoid going down the broadline route.”


The last few months have seen the company taking on a number of impressive new lines from the likes of Energy Micro and Allegro Microsystems. “We intend to focus on discretes, power and embedded technologies. Energy Micro is a fantastic name and is a real door opener for us.”


Solid State Supplies announced the availability of a new family of ARM Cortex-M3 based microcontrollers from Energy Micro back in January. According to MacMichael being a niche distributor means it’s a tough challenge to grow the business from its current £6m turnover to £10m and beyond. “We’re laying the foundations at the moment,” he explains. “Two significant developments for Solid State have been our move into optoelectronics where we plan to build a strong portfolio and our move back into power supplies. In just under two years we’ve managed to grow this business from just over £3m to around £6m, no mean feat, and there’s a lot of scope to grow to £10m but beyond that the steps get a lot harder.”


Management changes While the company has worked at becoming more outward and focused on the needs of suppliers and customers its internal structures have also been changed. “We’ve made some significant changes to the company’s management structure. When you have a business turning over £3m you don’t really need formal structures, but as we’ve grown what was seen as a luxury has become a necessity and it’s not the way I want to run a business. You need defined structures in the group. The great thing has been that some of the people who have been with us for years have stepped up into more senior roles, and we’ve been able


to retain that wealth of experience within the business.”


One thing that MacMichael has


learned from working in the US is to promote people internally. “If you don’t give people a chance you demotivate the talent you’ve got. It’s important that you look after the staff around you. A company that cares about its staff will reap the benefits.” If you do have to go outside the business, how do you attract the right people?


“At the end of the day distribution is still a people business. When we need to bring in talent you tap into the networks around you and that is exactly what we did. When there’s a palpable feeling of excitement in a business, and there certainly is at the moment here, then attracting talent is a lot easier. The approach we’re taking with the business is certainly paying dividends.”


For example, at the end of October last year Colin Jacobs was appointed as director of business development. Jacobs, who had started his career in electronic components with the Memec Group, joined Solid State after 6 years as European Business Development Director for Acal Technology. Having restructured the business


what are the opportunities for smaller distributors in the market going forward? MacMichael is upbeat. “I think the opportunities for companies like Solid State are the best they’ve been for at least 7-8 years. We’ve seen so many mid-sized distributors – those turning over £15- 25m – bought out by the likes of Arrow and Avnet that I think a lot of smaller businesses feel that they are being ignored, to some extent, by the larger distributors, and especially if they can’t offer a sizeable amount of business to them. I’m talking around the £5m mark. These are not insignificant lines and they need attention and focus if they’re to grow and develop.”


Pitching for business is the easy part,


according to MacMichael. The hard part is getting channel managers to jump ship, even if they’re not getting the level of service they need. “Even if you are not getting the attention you need from a broadliner you have to be a very brave channel manager to move your business away from them, even if you’re seeing only marginal sales growth.” While there are real opportunities for the company going forward MacMichael is concerned at some of the intangible problems that are holding back the market and economy as a whole.


“I am concerned at the impact the


current austerity measures may have, especially on the military space, which remains very important to us. And because the military market is slowing and programmes are being delayed, we have trimmed our predictions for growth from over 30 per cent to around 20 per cent for the coming year. We certainly expect our core military business to remain flat.” However, in the current climate I’d imagine many companies would jump at the chance of 20 per cent growth over the next twelve months. ■


Components in Electronics March 2012 27


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