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Edwards has invested almost £50 million in a new vacuum pump manufacturing facility in Lutín, the Czech Republic. The British firm also has factories and technology centres in the UK, Korea, Japan, Brazil and the US, giving it a global footprint. The company was formerly part of BOC Linde and is now owned by private equity. PE caught up with Edwards chief executive Matthew Taylor at the opening of the plant.
Q. You've built this facility in the Czech Republic and have other sites all over the world. Is this something emblematic of what British manufacturers may have to do in order to survive?
It's not just about survival. We've had to understand where our markets were and how we can be most competitive in those end markets. Sixty per cent of our business as a whole is in Asia and when it comes to dry pumps it's actually more than that. To have our dry pump manufacturing close to that core of demand is logical. That's driven by semiconductors, flat panels, solar cells and LEDs, with China becoming increasingly important but Korea, Japan and Taiwan strong; so that's why we established our operation in Korea.
General vacuum technology [for example, for steelmaking and scientific instruments] is more dispersed around the world but it made sense to establish this centre of excellence at Lutín; it gives us a cheaper cost base than the UK and is logistically close to growing markets in Europe such as Germany.
There is also a strong machining skills base here in Lutín – because so much manufacturing has moved out of Britain there isn't the same training and development of that skills base, although we've been blessed to have a strong, highly-skilled workforce in the UK too. But there are good competencies in the Czech Republic allied to low cost sourcing. We have been very impressed with the quality of people here.
Q. Do you think of the UK as more of a high-tech engineering and R&D hub?
It will be but we will still be manufacturing in the UK - just different products. Our core technology activity is going to be based in the UK. We have got the best vacuum technologists in the world, I have no doubt about that and because of our scale we have the ability to keep attracting outstanding people and to train them up. Vacuum technology isn't something you learn at university. Britain is a strong base and I wouldn't want to walk away from it. Our centre near Bristol manufactures our exhaust gas abatement equipment and we have an operation at Eastbourne where we still make our electronic control systems. The Clevedon, Bristol, centre is both an R&D centre and a manufacturing base and we'll keep that in UK as those two sides of the business go together strongly.
In terms of Eastbourne and our electronic control systems, we've looked time and time again to see whether we could outsource those to China as people might suggest. But actually, our control systems are not high volume systems where everything is the same. They are actually pretty unique and developed to respond to particular requirements on the part of our customers. We're able to develop and build those solutions very cost-effectively in Eastbourne so that makes sense for us still. The decision to switch some manufacturing to Lutín will see some jobs going in Britain but on the other hand we will be recruiting more technologists – in net terms, there won't be a huge reduction in terms of the number of people we employ in the UK.
Q. Is there is an advantage in being owned by private equity in terms of investment in the business and are you still considering an initial public offering (IPO)?
We certainly intend to become a publicly-owned company but I think private equity ownership has been very good for this business. Private equity is sometimes thought of poorly, with people saying it strips out the business – our owners have done exactly the opposite. They've spent £200 million allowing us to restructure it.
We recently attempted an IPO but the timing wasn't quite right due to the events in the wake of the Japanese earthquake and volatility on the global markets due to the situation in the Middle East and Africa. But investors' reaction to this business is fantastic – they are very interested. We nearly got over the line last time, there wasn't a big gap. At some stage we will make the transition to a public company and I think that's the logical next step for us. We are a business that is growing, with a £650 million turnover which will increase. We'll be a business that warrants a strong place in the FTSE indexes.
Q. Has leadership of the business come naturally to you or have you had to take courses? Is it something that can be learnt?
I haven't taken any courses, but having said that, people talk about natural or born leaders and the reality is that everyone has to learn leadership skills, and you have to to learn continuously as you go through life. Some of those traits and skills may come more naturally and may sit more comfortably with one type of person or another – I find them relatively easy to learn and to adapt to but I've had to learn a lot and evolve as a leader.
Interestingly, my most formative time as a leader was not in industry but in the navy, where I spent four years after university. A fair chunk of that time was on a small ship with quite a few people on board, a confined environment, and you had to get on with people and learn how to make people get on with each other. So that you could deal with whatever was thrown at you.
It wasn't about rank – people think that that hierarchy in the armed forces makes it straightforward to lead. In actual fact the one thing you learn as a leader is that you can't rely on someone having given you authority to lead: you will fail if you rely on the hierarchy of rank. Rather, you have to earn that authority with the people you are leading so that people have belief in you and where you are taking them. If you just assume they will do what you want because of your status you might as well give up.