Bring it on!

Posted on 12 Aug 2008 by The Manufacturer

Passionate sports enthusiast and family man, Vitec Broadcast Systems CEO Joop Janssen tells Gay Sutton how he pulled off the coup of bringing manufacturing back to the UK and made it hugely profitable, and why he has a soft spot for the Olympics

If you turn on the television or go to the cinema the chances are you’ll be watching film footage shot using the latest high tech equipment from Vitec. These tools of the trade travel to the most difficult and inaccessible parts of the globe, follow the lives of politicians, the rich and the famous, create advertising and produce the latest box office smash hit films: Barak Obama and Hilary Clinton, Burma and Zimbabwe, Steven Spielberg or of course, the Olympics. Yet they are designed, developed and manufactured in a leafy suburb of the historic town of Bury St Edmunds, Suffolk.

Five years ago, the company that made this equipment was in the process of systematically outsourcing its manufacturing, “firstly to local companies here that were dedicated to that type of production, and increasingly overseas. I stopped that,” explained the company’s gently spoken Dutch CEO, Joop Janssen.

It might seem like financial suicide to be running counter to the popular trend of moving manufacturing to China, India and more recently to Vietnam, and Janssen said: “You could argue that we shouldn’t be here in England. But we happened to find the formula of how to take advantage of being here, close to Cambridge, close to knowledge, and how to make it work.”

And he undoubtedly has made it work. Since his arrival in 2003, the company has been continuously
growing. Last year alone the business grew by 40 per cent while revenue increased by 30 per cent and operating profit by an impressive 93 per cent.

The location of the factory at Bury St Edmunds and its proximity to the high technology corridor around Cambridge was the driving factor in the business decision to bring manufacturing back to the UK. “We have a unique combination of topof- the-world engineering, product design and product ideas here. It would be a nightmare for us to have precision products being made far away from our development engineers – because they interact very closely. And although our products are basically mechanical, incorporating electronics, robotics and software, we’re continually inventing new materials [in collaboration] with the universities and with our suppliers. We create new patents all the time and, frankly, that keeps us as the global leader.”

He calculated that if he brought manufacturing back in-house, invested heavily in the latest equipment and created the internal climate whereby the company and its staff could simply work more smartly, “then manufacturing here in the UK would in fact be a lot cheaper than the outsourcing that we were planning to do,” he said “And it worked out exactly like that.”

Janssen has made considerable investment in the latest manufacturing technology, installing new equipment and replacing that which was outdated or inefficient. And the investment is still in progress. Alongside this he has worked hard to inspire the workforce with his vision, and to gather their support and effort behind him. “Morale was quite low when I arrived, because people saw more and more being outsourced. I turned that around and said: ‘No, no, no. We are more clever than the people around us. We know our business best. If we buy better machines we can grow our activities here. We need to be the smartest and most efficient in the industry.’” He promised to invest in the site at Bury, and to provide the training they needed in order to increase their efficiency. “But,” he told them, “you have to work harder.”

He has put in key performance indicators, and raised the bar year on year. “Every time we squeeze 50 minutes out of a certain operation, then we are here for the long run. And it’s working.” His staff are all incentivised by a share in the profits they help to generate. “And they’re proud that they have made their targets every year.”

During the early part of his life, Janssen enjoyed a professional sporting career as a member of the Dutch national volleyball team. Indeed, he almost made it to the Olympics. “At that time we were number seven in the world. But the competition was very tough in Europe so we didn’t make it. That was a little bit painful,” he said, “but it was a good time.” The experience has given him a long lasting affinity with the Olympics. In addition he has brought with him the positive can-do mind-set of the sportsman, along with belief and self discipline – which he seems to have passed on to those around him.

Looking forward to the future, Janssen plans to continue bringing manufacturing back to the UK site at Bury, including components that are currently outsourced abroad. “That will give us a better quality, better flexibility and lower cost,” he said.

But Vitec is not only about the future. It retains an affection for its colourful and successful past. Created in 1910 by Bill Vinten senior, it originally made the first film cameras for the BBC and the RAF. Its products have migrated away from the camera to its support equipment, and nearly 50 years ago the manufacturing site moved from London to Bury. However, the founder’s son, Bill Vinten junior, still lives close by in Bury St Edmunds, and although he is now in his late 80s he continues to take an interest in the company. “He comes into the company now and then. He’s a technical person, a real inventor – and still comes in and says ‘hey, I’ve invented this, and do you want it?’” The personal link, and the expertise are deeply appreciated in the company. “We’re very proud of that.”

The global marketplace in which Vitec operates, however, is notoriously cyclical. The industry is currently in the middle of what it calls an ‘event year’. The Olympics in China combined with elections in the US, Spain and Italy have meant that news reporters from around the globe have been heavily investing in the latest and most high tech camera equipment.

“The question is what will happen in 2009 when there’s no Olympics, no world cup or European cup football? Because despite all the news you read in the FT, I believe we’re still not seeing the impact of the recession. And yes, it is a recession. I’ve just been for three weeks in the US where you can see the disasters in the retail sector and in the property market. It is a recession, but nobody dares to say it.”

The effects of a recession could be uncomfortable if it coincides with this ‘non event’ period. “When the retail sector suffers advertising falls dramatically,” he explained. “Normally, though, when the retail markets go down the homeland security market (which includes camera products with law enforcement and military applications) goes up, and we saw this most prominently in 9/11.” The two effects, however, do not completely balance out.

Janssen and his team have been working to increase the flexibility of the manufacturing base so that during non event years or slumps in demand, he can cut back on production without adversely affecting the company and its employees. Staff have been retrained and multiskilled, and he employs a number of skilled temporary staff. “We have agreements with them or with their agencies that we can breathe with the market needs in such a way that they can benefit when demand goes up and then we also tighten our belts on both sides when times are tough.”

One of the most influential trends to affect the business recently is the migration to high definition (HD) programme making, which has generated increased revenue. But the market dynamics are also constantly changing, affected by a number of factors such as the BBC’s outsourcing of some of its programme making. One fascinating observation that Janssen mentioned should perhaps make us question the functioning and funding of the European Union. “The BBC had been one of the company’s largest single customers, but the European Parliament in Brussels has become an even bigger account than the BBC.” Their needs, he explained, include recording, archiving and broadcasting. “So we see a shift. Maybe some
of our tax money, as a European citizen, is now more in Brussels than the BBC.”

Janssen began his manufacturing career with Philips Electronics in Holland, then moved to France, and finally to the US with the Philips Broadcast division, where he was instrumental in its sale to Thomson. After such a peripatetic life, I wondered if he planned to stay here in the UK. “Yes,” he replied. “We have been living all over the place but certainly during the teenage years, it’s very important to give our children a European upbringing. We’ve lived a long time in the US but I think it’s the values and the European cultural aspects that we wanted to give to our children. And also that life is not only Disneyland. We lived on the western side of the US where life is so easy, so comfortable. Everything is available. There are no crowded streets. Europe is different. You have to be patient sometimes and wait in line. You have to fight for your support in a company or in a school. It’s a little bit more competitive, and we wanted to give that to our children. If they grow up where we were in the States, they wouldn’t be able to survive in the rest of the world.”

Finally, I asked him if he had any thoughts about the future of UK manufacturing. “I think there are many high precision high technology companies that regret that they have gone for outsourcing, and have found that they can’t make it work, because there’s so much cost involved. I also think – and I’m telling my son this – that Europeans need to be more eager to work.

“Living in Cambridge, I see how eager Asian students are, compared to some of the western European students. They’re going to compete for our business and take it. But I do see positive signs here. If we’re eager to work harder, are more efficient and smarter – especially smarter – then there’s a future. Otherwise western Europe will become a tourist attraction for the rest of the world. Complacency,” he finished, “is our biggest enemy.” Complacency is certainly something that Janssen doesn’t allow from the people that work for him.