Posted on Thursday 26 August 2010 byUlster Business
Manufacturer Schrader Electronics has managed to defy the downturn. Symon Ross talked to managing director Stephen McClelland for an insight into the business
Antrim firm Schrader Electronics has gone from strength to strength in 2010 at a time when many other manufacturing businesses have faltered.
The success of the company – which makes remote tyre pressure monitoring systems – is all the more impressive given the torrid time which the motor industry has had during the recession.
After a slump in demand for its products in early 2009, Schrader saw marked turnaround in the second half of last year and throughout 2010.
Managing director Stephen McClelland told Ulster Business: “Our sales year-on-year are up about 70%. It really is a fantastic turnaround and has been driven by our main market - North America. There is a tyre pressure system mandate in North America so about 90% of our production ends up there.”
Mr McClelland explains that while the US economy was entering recession the motor industry had overproduced, building up inventory that went unsold. With the added hit production took when General Motors and Chrysler went into Chapter 11 bankruptcy protection, Schrader’s long stretching record of sales growth was interrupted.
But the US cash-for-clunkers scheme and a stabilising of the economy – allied with the fact that production had been so low – saw demand pick up rapidly at the end of 2009 and early 2010.
“On the first of January 2010 they had no cars. They had massive trouble getting the cars built fast enough,” said Mr McClelland. “We normally ship once a week but we’ve been having to ship once a day to keep up with demand.”
The MD admits that Schrader could have let around 150 staff go during the downturn but opted to keep them on, going to short-time working across the company and spending time retraining employees. The upturn in fortunes for the industry means it has brought in two new shift teams and taken on 75 new workers this year at its plants in Antrim and Carrickfergus. Schrader now has around 950 staff, of which 830 are based locally.
“We were always confident about coming back. We’d had four or five years of growth and then a stagnation in 2009, but we didn’t really want to give out a negative message that the growth period was over. We saw it as a stutter and had a belief that we will continue to grow very strongly,” said Mr McClelland.
With a 52% share of the market for TMPS in North America, the company now has its sights set on Europe, where the European Commission will require the technology be installed in European cars by 2014. As well as increasing safety, it is estimated that correct tyre pressure can save on average 2-3% on fuel – a key factor in the EC regulations being introduced.
Ahead of the mandate Schrader will be expanding its offices in Germany and Paris. It currently produces 35 million units a year but by 2015 expects to have doubled that – a massive achievement when you consider the firm’s first contract in 1996 was for 120,000 parts per year.
“Europe is a bigger market than North America. Our job is to make sure we get the same market share. We’re confident we have a good chance of getting that, at least around 40%, because we have strong positions with many of the main customers in Europe anyway,” said Mr McClelland.
While the company also has plans to expand its production facility in Tennessee, the managing director said it intends to remain a Northern Ireland company.
“We are not going to go to Eastern Europe or somewhere like that, we’re going to stay in Northern Ireland and expand here because we’ve identified how to do that in our existing two factories. We really see NI staying as the main core business both R&D wise and manufacturing wise for a very long time,” he said.
Last month Schrader’s parent company Tomkins received a takeover offer by a private equity consortium of the Onex Corporation and the Canada Pension Plan Investment Board. But Mr McClelland said he would be excited by the change rather than concerned, noting the prospective new owners have been twice to view Schrader’s local factories and are supportive of its business plan.
“We are one of the jewels in the Tomkins crown, because we have growth opportunities,” he added. “We have been set targets by the new owners and we are already meeting them.”