The quiet tech giant that's found success for UK plc
Posted on July 29, 2010
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The quiet tech giant that’s found success for UK plc
0 Comments | Sunday Telegraph, The; London (UK), Jul 4, 2010 | by Andrew Cave
Despite the gloom surrounding British industry, there are still UK companies with commanding global market shares. In Cambridge, ARM Holdings is the world’s biggest microchip designer, while Malmesbury in Wiltshire is home to the research and development hub of Dyson, the world’s biggest manufacturer of vacuum cleaners.
It might sound a little less sexy, but in Crawley, West Sussex, Edwards controls nearly 50pc of the global market for vacuum pumps used in the semi-conductor industry. It is a vital part of the manufacturing process and one of the most important elements of the technology industry.
If you’ve never heard of the business, you’re far from alone, perhaps because of its history is buried within BOC Group, the gases company acquired by Germany’s Linde in 2006. Yet that’s changing.
Now owned by the private equity groups CCMP Capital and Unitas Capital, Edwards caused a stir last month by hiring British industrial heavyweights Matthew Taylor, previously managing director of Land Rover and chief executive of excavators group JCB, and David Smith, the former Jaguar Land Rover chief executive.
Taylor joined as chief executive, recruiting Smith as chief financial officer over a lamb and beer lunch in an executive box at London football club Queen’s Park Rangers.
Edwards might seem a step down for both of them but the company, founded in south London in 1919, has an impressive record – 500,000 pumps installed worldwide and 40,000 corporate customers including Samsung and LG.
About 50pc of its products go into the semi-conductor manufacturing processes. Then there are applications in flat panel and light-emitting diode (LED) displays, solar panels, scientific instruments such as mass spectrometers and processes in the chemical, pharmaceutical, oil, gas, steel and power industries.
The company’s vacuum technology creates a low-pressure environment that’s cleaner and more controllable than atmospheric pressure, enabling critical processes to be as effective as possible.
“We can create emptier vacuums than those that exist in space,” adds Taylor. “We take one atmosphere of pressure, which is essentially what’s around you all the time, and reduce it 1bn times.
“David and I come from a background of working with brands and seeing how much further you can take them to get to a wider audience and strengthen their offering. When you have such a strong starting point as we have here, the opportunity is huge.”
Smith, 49, agrees. “There are two or three things that are really going to change economies over the next 10 or 20 years,” he says. “The emergence of the BRIC [Brazil, Russia, India, China] markets is a big factor. Then there’s the change in innovation and technology and the environmental and sustainability agenda. Edwards is right in the middle of all those things.
“A lot of the growth we’re seeing is in Asia, while the technology applications are fascinating. Whether they’re in LEDs, the next stage of biotechnology and nanotechnology or battery developments for vehicles, they all require low-vacuum systems to produce the parts.”
Edwards is coming out of a tough period caused by a slump in the semi-conductor industry that resulted in turnover falling from Pounds 510m to Pounds 371m last year, when earnings before interest, taxation, depreciation and amortisation dropped from Pounds 71.9m to Pounds 21.6m.
Its private equity owners have taken action, refinancing the business, selling non-core operations and announcing plans to move most of the operations of its vacuum pump factories in Burgess Hill and Shoreham, West Sussex, to South Korea and the Czech Republic by the end of next year. “Those decisions were based on cost and quality factors,” says Taylor. “It was difficult to be competitive here in the UK.”
He says that Edwards will keep its more specialised toxic gases abatement systems business in Clevedon, Somerset, its electronic systems in Eastbourne and all its UK research and development operations. The company has 890 staff in Britain and 2,800 globally.
Business is recovering, with firstquarter revenues up 67pc to more than Pounds 130m. “The second quarter will be better and we think we will have good results throughout this year,” says Smith. “The market for phones, laptops and nextgeneration displays is exploding, so the big semiconductor manufacturers are making huge investments in capacity, which falls through to us as well.”
When a sustained recovery comes, Edwards’ private equity owners may want to cash in through a flotation or trade sale.
“That’s something they’ll look at over the coming months,” says Taylor, “but the key driver and the reason we were brought in is that the company has restructured and thrived but also has huge potential. That’s why they’re looking at it as a longer-term investment.”
The pair are used to long-term corporate careers. Taylor joined Ford in 1985 and spent 21 years there, becoming managing director of its Land Rover operations in 2002
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