©Stadium Electronics Production | September 10, 2012
Stadium CEO: New acquisitions likely in the future
Last week Stadium announced the purchase of IGT Industries, a UK designer and manufacturer of intelligent displays. Stadium CEO, Stephen Phipson says he hopes there's more acquisitions to come.
Despite owning a successful contract manufacturing business, Stadium sees a gap in the market between subsystem design and contract manufacturing says Phipson over the phone. “I've been in the electronics industry for 35 years,” he says. “I think this is a very advanced gap in the electronics market. You've got clever little companies doing innovation, you've got contract manufacturing struggling because they've got no IP or no design input, and if you can join these two these things together. My vision is that [we] could build Stadium into a bridge between the two. I think that's a really interesting extension of the typical ODM type philosophy in really being able to provide a much fuller capability to these customers. I think that's the way electronics manufacturing is going to go over the next few years". So this is where the acquisition of IGT Industries fits in - Stadium viewed the company as an opportunity to expand it's customer offering. The company was a prime target “because they have very unique innovative ways of doing [design]. They've implemented a number of good growth programs,” Phipson explains. “What IGT brings to us is the human machine interface components... They have big customers”. This in turn feeds into other Stadium offerings says Phipson. “Basically behind each one of their products sits a printed circuit board assembly and of course a power supply. We are able to link all this together and go to those customers and say we have a complete package of capability for you, manufacturing and design. I think, even in this economic time, now is a very very good time to be really putting some effort into those companies that are in growth markets. And IGT demonstrates it's one of those”. Identifying these growth markets, less impacted by the current economic climate, is the key to expanding Stadium's offering Phipson thinks. While the company's EMS services in France, Germany and U.K are facing sensitive customers and reduced schedules, finding these areas is one way to combat the uncertainty. “Stadium has for a number of years, alongside its contract manufacturing, has had a custom power supply business where we design power supplies for a range of professional electronics customers. We do for example, weighing machine manufacturers through to communications equipment manufacturers and we design their custom power supplys for them. That business has continued even though there’s economic downturn. It's growing about 15 percent a year. And the difference really is that long term new projects in growth markets, such as things that are derived from regulatory changes, through to the LED lighting market and those sort of things, which are kind of immune to where you are with the economic downturn.” “One thing we started to do about nine months ago was to sell to our contract manufacturing customers the capability to design custom power supplies. So that as well as doing build to print we can say to them, look in your next generation of power supply, why don't you let us have the opportunity of doing that and then supplying to you the complete subsystem which is the contract manufacturing part plus the power supply that we have designed as in as part of that. There appears to be a gap in the market, I would say for someone that is truly able to be a design and manufacturing partner for subsystems". The strategy has worked well says Phipson. "There appears to be a gap in the market for someone that's truly able to be a design and manufacturer part of subsystems, people that are doing the hardware subsystems that are going to OEMs”. The strategy has been successful enough that we can expect more acquisitions from Stadium in the future says Phipson. At the very least, the company is certainly busy searching for opportunities. “In the last sixth months or so we've looked 30 companies in Europe and in the UK. There is a wealth of really innovative clever little businesses out there at this level, which is five or six million GBP sales type level. Which are contracted to the major OEMS such as Siemens and are providing key pieces of technology which would benefit our portfolio so we can broaden it out”. “I would hope to say to you in the next sixth months there will be another acquisition that looks very similar to IGT one joining Stadium. Our objective here is to build something like one hundred million pounds turnover group of specialist technology businesses in the next four years and be able to offer our customers a comprehensive supply of design and manufacturing capability. I think there are not many people in the top of the subsystem level that are doing that in Europe at the moment”.
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