CB Technology is a market-leading provider of high performing, reliable electronic products to both UK and international markets. Founded in 1999, the company initially focused on the design and manufacturing of specialist probe cards for the semiconductor industry but quickly diversified into the testing and manufacturing of rugged downhole electronic assemblies for the oil and gas sector.
In 2014, the business was acquired by a management team supported by a private equity firm, Maven Capital Partners. Having developed an impressive portfolio of blue-chip customers, the company’s new management continues to leverage the skills and expertise gained in delivering complex, tested electronics to strengthen the business in its current markets, as well as expand in terms of capabilities.
We sit down with John Cameron, CB Technology’s Managing Director, to talk us through the process behind the management buy-in (MBI) and how the team has delivered a 36 percent increase in turnover in its latest financial year, as well as changes in the market that have characterized the company’s operations over the last few years.
“The company itself is over 20 years old and was established in Scotland by experts in the semiconductor industry,” John begins. “The founders built the company from the ground up, eventually growing to a turnover of around two-to-three million pounds. Then, in 2015, the founders were looking to retire, and we saw it as a great opportunity to acquire the business through an MBI, supported by Maven Capital Partners.
“It’s an exciting company! We predicted potential for growth with a great customer base already established and a commitment to provide excellent service. We organically grew the company, taking the revenue from £3 million in 2015 to £14.5 million last year, which we’re on track to increase to in excess of £16 million in our current financial year.
“While the core manufacturing processes behind electronics manufacturing services (EMS) are relatively standard, companies like CB Technology differentiate themselves by adding unique value through the development of specialist capabilities and equipment that provide value and advantages to their customers,” he continues. “Our key differentiation is our ability to produce highly complex, highly reliable electronics that can consistently perform at high temperatures or in harsh environments.
“As part of our acquisition and growth strategy we identified a market opportunity for expansion in this key sector of electronics contract manufacturing. It is these specialist capabilities alongside our skills and equipment that enable us to service the specific requirements of customers that other, more generic contract manufacturers couldn’t meet.”
Much of the new team’s focus has centered around investment, with a goal to increase both efficiency and productivity. “Most of our investments have seen us upgrade our technology to ensure that we have the latest and most flexible capabilities,” John states. “It also means that we maintain the optimal capacity and capabilities to support a highly flexible low-volume, high-mix business model that is typical of the UK manufacturing industry. Then, of course, we must invest in optimization to continuously upgrade new and existing technology.
“Our growth in recent years has transformed us into the largest independent EMS company in Scotland, however we’re not the largest in the UK. As a competitive company that is currently based at a single site, we’re continually looking into opportunities to expand to strengthen our capabilities and expand our geographical coverage,” he explains.
As a UK manufacturer, the discussion inevitably turns to the challenges of the last few years and how geopolitical issues have impacted the manufacturing industry in the UK. “The UK market is a little bit polarized at the moment; and as a result of manufacturing decline and investment over the last few decades, there is currently a lack of quality capacity in the manufacturing sector,” he argues. “However, we’ve definitely seen a shift away from the automatic outsourcing of manufacturing to low-cost countries as businesses are concerned with the ever-increasing risks related to global sourcing.
“We’ve also had to battle with the implications of Brexit,” John continues. “The resource pool for talented individuals in the UK has shrunk, causing a labor shortage that is certainly not helped by the ageing population associated with the manufacturing industry. A shortage of resources has driven wage inflation across the sector too, creating a challenging, competitive dynamic where fewer people are coming into the industry, so companies are battling to recruit and retain the best talent.”
When asked what the company is doing to combat such challenges, John confidently responds: “We must strive to be a strong local employer that pays good salaries, provides great benefits, and ensures job security. We’re bringing in apprentices too; we currently have four in the business and aim to onboard two new apprentices every year. The challenge then is retaining them, so we try to provide long-term career paths that meet their aspirations.”
Turning to the future, John proposes: “There is definitely more stability around both the economy and predictability as we head into 2024, especially when compared with this year. We’ll continue to operate what has so far been a successful business model, as well as invest in our people and are confident we can continue to deliver double-digit growth in the years ahead.
“Further afield, it’s all about preserving our glass-half-full mentality, navigating risks or challenges, and identifying opportunities for growth as they arise,” he concludes. “With a more positive external environment and secure finances, we’ve outlined a strategic three-year plan that we hope will take us to more than £20 million revenue.”