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NCAB has been one of the most active companies in the industry when it comes to growth through acquisition, building an extensive global network over time. During the electronica show in Munich recently, Nolan Johnson met up with Greg Nicol and David Grant, both managing directors with NCAB’s UK organization. Greg and David had number of interesting insights on NCAB to share.
Nolan Johnson: David and Greg, you are both relatively new additions to NCAB Group, and this is an interesting story. I understand you both came into the organization on the same day.
Greg Nicol: The day I joined NCAB in the UK was the same day that NCAB bought the Kestrel organization, where David is the MD, so we did both start at the same time.
Johnson: Walk me through the story. Greg, why don’t you start, and then Dave can follow up.
Nicol: My background is not in PCBs; it is the electronics industry, but it’s on the component side. There was an issue with the Flatfield business wherein the UK management team had left, and I stepped in to fill a gap. We then had COVID, which then stopped everyone from meeting each other. I was working from my office at home when they announced that Flatfield was bought by NCAB, and I received a new boss.
I had some insight into what it was like to be bought by the NCAB Group and I liked was that NCAB is very consultative. As an example, they came in, intending to introduce new systems and processes, but because the Flatfield system had many advantages, they decided to keep it, whilst they investigated further. There was a lot of flexibility, a lot of communication, and that made me feel quite good about the business.
I then roll on nearly two years until there was an opportunity to run the UK business of NCAB. I took that challenge in June. On the very same day, NCAB announced it bought the Kestrel business in the UK as well.
Johnson: David, what was the Kestrel experience like?
David Grant: Howard Goff (NCAB VP Europe) had discussions with Neil Martin (Merlin Group chairman) about NCAB acquiring Kestrel for about two years, and if at some point in the future we were willing to sell, could NCAB be given a good opportunity to become the preferred bidder?
We went through a process of putting the company up for sale properly by using an agent. We had a lot of interested parties, but NCAB was extremely interested in buying Kestrel, and they put together a very good presentation. One of the things that really attracted us to them was their last slide that stated, “We value your staff.”
What was important in any acquisitional takeover was the continuity of the business, with the staff staying employed and continuing to flourish. With the NCAB takeover and integration, we’ve found that they have basically left the company alone. Kestrel continues as normal and is still under the day-to-day operation of myself, but with a lot more support.
We’ve benefited greatly from NCAB’s strengths in China. We are on better terms with Chinese suppliers, better costings with the level of service still very much the same, but there’s more support and help in terms of the operation and the size of the operation that NCAB has in China.
Johnson: What is it about the capabilities at Kestrel that caught their attention?
Grant: They they saw the synergy with Kestrel. When we competed with NCAB, we found our prices and policies were very similar. There was a big drive on quality and customer service, and the pricing wasn’t the big thing with Kestrel. We had a price; that was our price. We wouldn’t undercut competitors. If somebody wanted to put a cheap price in, we weren’t interested. NCAB has very much the same strategy. We’re delivering a service for our price, so our synergies and the whole way Kestrel works were very similar to NCAB.
They saw that as a very good way to increase their footprint within the UK and obviously make their business the biggest in the UK. Howard Goff made it very clear that they’re only interested in one acquisition in the UK and Kestrel would be the only acquisition they made.
Johnson: I am picking up that a key part of the choice was that they wanted a footprint inside the UK as a part of their network.
Nicol: I’ll tell you one thing, that in other businesses where we have been taken over, the thing that gets greatly underestimated is culture. Everyone says, “Oh, we can take some cost savings here, we can gain some market share there.” But if you don’t bring the business together in a way that the people believe in, you then get people not working very hard or leaving. The whole thing disintegrates, the service is not as good, then the customers start to leave.
If the cultures align, then the people will work; if the people work, the customers are happy. If the customer are happy, we grow the business. Sometimes that bit gets lost. NCAB is very good with its heavy emphasis on people and culture, the values in the business get talked about all the time. Take ownership, responsibility, quality, relationships—these types of things are essential to the business. That gets underestimated.
Grant: The last slide in their presentation read, “We value your staff.” NCAB values people., and as a business we always valued the people, which meant the longevity of our staff has actually caused the situation where we’ve got quite a lot of people who’ve been there literally since the company started 27 years ago
Johnson: Now, we just watched a presentation here in the booth in which there was a lot of discussion about NCAB having audit and qualification processes, which suggests that NCAB puts their own process on a company that they bring into their group. You’re saying that isn’t the case.
Grant: I think the presentation you’ve just seen there is about factory management of NCAB suppliers, not so much to companies within the NCAB Group.
Nicol: The other thing is, when you integrate business at the front face of the business, you’re facing the customers. If you are in a load of meetings in NCAB, the purpose of every single meeting is that whatever you do, as a minimum, we maintain the turnover we’ve got. That basically means we keep all the customers happy.
You have to be careful not to get so wrapped up with the internal processes that you forget about the one thing that’s really important—the customer and the top line. I’ve been in a lot of businesses which are easy to manage if the top line is going up. As soon as your sales start to go down, then you start getting into difficult conversations. You get into, “Who stays and who goes?” So the emphasis is very much in the right place. That doesn’t mean we won’t do efficiencies or look at synergy, it just means we do it in the right way.
We’ve started on the same day as two new MDs in the same company trying to develop the UK business. The process we’re going through and the synergies we can get was a very good match in the UK.
For instance, there are three external salespeople in Kestrel, and three in the NCAB Devizes. That geographic spread worked very well for us. We can become much more effective and efficient. That’s a really powerful thing as you go forward. When joining a company like NCAB, which has consistently bought and will continue to buy businesses, you know those synergies and growth plans make it good for both of us. It means more time in front of the customer and building strong, powerful relationships.
Over the next year we will transition to a brand-new system. Because we bought so many companies across the whole globe, we’ve ascertained that there are things we could do better and we need to upgrade our systems in general. When we do that, it gives us the clout back with the factories. Because we’re on one system, we’ve got visibility to all the numbers. We can have synergies on things like freight, logistics, and a number of other areas all when we’re on one system. It obviously allows us to be more efficient when facing the customer.
There will be a whole raft of things that will be of benefit as we go forward, but they will roll out over the next one to two years.
Johnson: It stands to reason that changing out your systems gives you greater efficiencies and probably better margins?
Nicol: Whether it gives us a better margin or not, it will certainly be more efficient internally, and will give us more clout with the factories because we have the visibility into those factories for the whole of Europe. We are doing this one step at time, one location at a time, which is a longer way of doing it, but it’s a much safer way of doing it. Every time we put the new system into a location, we learn something that we can improve on.
Johnson: What is the benefit that will come back to the customer from those improvements?
Nicol: It could well be in the long run a benefit in price. It could be because we will be more efficient and more effective. We don’t sell on price, but rather on quality and consistency. All the effectiveness and efficiencies we have can be pushed into the back end to make sure we’re managing and auditing our factories and all the selection processes we’ve talked about here today.
Ultimately, we all need to be competitive. We must have a good price and if we don’t use our efficiencies, we would be mad not to. But our go-to-market plan is not to lead on price. Companies that do that don’t win in the long run because you have to remain profitable.
Johnson: Well, that’s not NCAB’S selling strategy. You aren’t the lowest price. Customers go with NCAB for other reasons.
Grant: It is the value of the service. It’s our knowledge of the product, the savings, and the design for manufacture helping them make their own production a lot more efficient. Looking at ways that we can actually save the money without taking the cost out of the PCB itself.
Looking at how are you are actually manufacturing the board, how is that going down your line? All that side of it is the important thing that the customer, especially a CEM, is actually looking at. Can I build this board quicker? Can I build it more efficiently? Can I save time on my line? Because there all the cost benefits that move further down the line, and of course moving further down the line to their customer.
Because that’s what people want. They want to maintain their margin, but they also want a savings to pass down the line. We’re all looking to be more efficient rather than reducing our margin, but being able to give something further, further down to our customer that they can deliver on to their customer. The overall product may be reduced in price, but people’s margin and their profits remain the same.
Johnson: Closing thoughts?
Grant: Yes, I think this has been a good experience. When NCAB bought Kestrel, I had run the company for 27 years. So, you actually sit there thinking, “Well what is this going to be like? What’s going to happen?” Will I sit there thinking, “No, no, I really don’t like this.”
But it’s been the opposite. It’s been a good experience. The people within NCAB, the other managing directors, it has been a really good experience to meet and listen to them, learn what they’ve learned from the different areas of Europe and things like that. It’s been a very positive one. For the people working in NCAB Kestrel, it’s been a positive experience as well. We’ve seen that the people are actually taking to working for NCAB and they’re very happy and have that level of security, which is important.
Johnson: You now have happier employees?
Grant: They have security, and they feel valued.
Johnson: Well, gentlemen, thank you.
Grant: Thank you, Nolan.