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Wednesday, March 18, 2009

Interview from an Industry Warrior, worth the read

This article is an old article but it captures what it is to create and sustain a business through the hard and the very hard times, I know the gentleman in question and can say that he is true gent.

JOHN Roseman has survived in Scotland's technology sector long enough to know ambition isn't everything. Credibility, steady growth and even profitability are also business drivers worth pursuing if your aim is to build an enterprise that lasts.

And 22 years after he set up the Sematek Group in his Kilsyth bedroom, the founder and chief executive of the Lanarkshire-based supplier of engineering services to the high-technology sector remains as focused as ever on ensuring the business continues to evolve in the decades ahead even through challenging times.

"I never wanted a flash in the pan, I wanted a solid business," says the former offshore oil and gas engineer who moved into Scotland's expanding semiconductor industry in the late 1970s before launching Sematek in 1981. "Over the last few years turnover has dipped slightly, but I still want this to be a (pounds) 20 million business in 10 years. We are in an industry that is finding it difficult to sustain growth when some players are pulling out. But that's why we are diversifying."

This process of expanding its core operations is not entirely new to the Sematek Group. Over the past 20 years or so, it has added to its service range to underpin profitability. In 2003, however, the pressure to evolve and keep pace with a fast-changing technology marketplace is greater than ever. So cutting edge is Roseman that he flies all over the country in his own helicopter to tend to clients' needs.

With four key divisions in place (Sematek Advanced Technology, Advanced Engineering, Process Control and Electrical Systems, and Hamilton Plastics Fabrication), it can provide a range of skills and technical expertise unmatched by any indigenous company. With a client base that includes the cream of Scotland's semiconductor sector (Motorola in East Kilbride and National Semiconductor in Greenock), as well as the likes of OKI, ShinEtsu and optoelectronics start-up Intense Photonics, its long experience in the sector remains an important factor in retaining and winning new business.

Sematek's divisions handle everything from design and construction management, gas and electricity distribution, planning and mechanical installation through to certification and facilities management. And although the company's origins were clearly in designing, constructing and installing process equipment and systems for advanced technology applications used in semiconductor manufacturing, the high standards required by the sector ensure that the firm is always focused on quality control and international standards.

"With a business like ours its hard to get into the big boys and you need credibility and stature. When I got my first job with National Semiconductors in Greenock [in the late 1970s] it opened my eyes as these guys dealt with a lot of dangerous gases and chemicals. In those days there wasn't a lot of experience in how to handle them, so that's why I formed my own business when Digital arrived in South Queensferry."

With 11 people on board, the Sematek Group's skills base was quickly recognised in the early 1980s by several other new semiconductor businesses, among them Siemens and Fujitsu in Newcastle and Intel, which at that time had a base of operation in Dublin. Since then, a small group of semiconductor manufacturers have formed the backbone of its client base, with the company supplying engineers and technicians who remain on site with the client. It has 40 personnel working with Intel in Ireland, some with Motorola in East Kilbride and others with Avanex (formerly Kymata) in Livingston. Over the years it has also undertaken projects in the US and Israel.

Mark Stevenson, Sematek's new business development director, says the company is keen to develop similar partnerships with other manufacturers and start-ups around the UK. With Sematek controlling day-to-day operations at the Avanex facility since August last year, the parent company has more flexibility in personnel numbers, cost and maintenance.

"We can offer a client everything in-house from one firm, from design and construction to facility management. There is a greater demand for outsourcing than ever before and it's vital that companies just focus on their core product. They don't want this chunk of personnel and manpower which is just a drain on cash. They just want to focus on getting products out to market. I believe we are head and shoulders above anyone else in this market. We are already picking up enquiries from England and are in discussion with several companies. But our competitors are either well established locally or are global businesses, and we are very conscious you have to walk before you can run."

Sematek's caution about expansion is predictable given the question marks semiconductor manufacturing in a Scottish sector hit hard by a global contraction over the past three years. However, with a relatively stable (pounds) 7m turnover, both Stevenson and Roseman believe its technical expertise and loyalty to clients who are only now beginning to increase project and capital spending should stand it in good stead in the years ahead. The problems suffered by competitors such as Motherwell Bridge and the change in focus from Steill's facilities management division could also work in its favour. However, adds Roseman, the focus on diversification remains as strong as ever. Sematek acquired a Greenock electrical installation business five years ago, and late in 2002 it concluded the purchase of Hamilton Plastics Fabrication in which it had earlier acquired a 50% stake. This deal also coincided with the company's move to a new HQ in Cumbernauld.

With Sematek targeting the petrochemical, pharmaceutical and biotech sectors, it is hoping to convince international clients and young Scottish companies of the financial sense of outsourcing and facilities management deals. Other potential growth areas are renewable and bio-energy plants.

Roseman adds: "The semiconductor market is declining and won't sustain us over the next five years. But the skillset our people possess has been finely honed in a competitive and high quality field, and the discipline they have to work in high-tech areas is transferable."

Roseman, a member of the Scottish Semiconductors Suppliers Forum and the Scottish Technology Forum, says there are lessons to be learned from the firm's conservative approach to growth (it has never taken on venture capital funding) and its focus on sustainability.

The recent failure of new technology businesses such as optoelectronics hopefuls Essient Photonics and Terahertz, he says, is almost inevitable if they are rushed out to market before creating products or generating revenues.

"When it comes to technology, Scotland is still not utilising its universities enough and firms are not nurtured in the way they should be. They need to be nurtured to a certain level before going to the marketplace, and if we do bring them on carefully then we can also make sure that the economy and education institutions keep people in Scotland. Currently, we are losing a lot of engineers and while five years ago we were at the leading edge of semiconductor production, now Ireland is way ahead.

"It's pointless living on a knife edge and that's why I have always reinvested profits in the business. You can chase work around the world, but if your base isn't strong enough then you could be in trouble. At the moment we have a solid business and if we can take it forward then I will be a happy man."

By Darran Gardner


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