David Smith is the Managing Director of Specac Ltd, a high-quality spectroscopy equipment manufacturer, as well as a board member at Gambica, the Trade Association for Instrumentation, Control, Automation and Laboratory Technology in the UK.
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We talk with him about best practices in marketing for manufacturing companies like Specac, as well as how SMEs have met the challenges of COVID and how they can prepare for Brexit. Below is an adapted transcript from AZoNetwork’s Marketing Science Podcast.
How can UK manufacturing companies prepare for Brexit and the new rules going into effect in January 2021?
For purely practical reasons, we’ve imposed our own embargo. From Christmas until the middle of January, we have decided that we are not going to ship, import or export. We’ve spoken to all of our customers and suppliers and we have brought our supplies in already.
Our largest customers have sent their orders in early, so we will get a boost of some shipping before Christmas. We’ll carry on manufacturing, but we won’t ship again until around the 18th of January, 2021.
We’re not doing this for ideological reasons, but we want to mitigate against the risks that might arise. It may not be as bad as the 7,000-long queues of lorries that I’m expecting, but unfortunately, I think that a lot of small companies may wing it.
Last week, a civil servant told me they expect 30 - 70% of SME exporters to arrive at customs with the wrong paperwork for the first three months of 2021. I’m hoping that the learning curve only lasts a couple of weeks for us.
Do you think it’s too late for businesses to start preparing?
No, I don’t think that it’s that scary for businesses because freight forwarders are already used to dealing with things like tariffs. However, the freight forwarders can only deal with the paperwork that they are given. Getting the paperwork right isn’t that difficult, but it’s going to be a new process on the 1st of January.
If SMEs really put their minds to it, even in the last few days before the new year and they research what they need to do, they can still get it right.
On the other hand, if companies like us want to develop preferential tariffs in trading with the EU, then that is something that will require more work in terms of looking at our supply chain and looking at where we can add value but isn’t something we need to do on the 1st of January.
If other businesses want to do an embargo like Specac, would they have time to prepare for that now?
Depending on the lead time for supplies, I think most companies can still get through it. We don’t have a lot of foreign suppliers, but the ones that we do work with may try to send us things in the first week of January that gets stuck in customs. But we’ve looked at all of our key parts and we ordered those early.
I’ve spoken to a lot of people about our embargo and I haven’t found any other companies doing the same thing, but none of our customers have complained about it either. No one has told me that they think it’s a bad idea to do an embargo. Our customers, even our multinational customers, have been quite happy to put in their orders early.
How can the UK maintain regulatory alignment with the EU?
From the 1st of January, European standards will start diverging in a different direction and if we don’t maintain convergence with those standards, then the UK PLCs become less competitive.
I’ve been to many Brexit discussions over the last 4 years and it’s troubling when people start talking about the great opportunities for the UK to grow its exports outside of Europe.
They are forgetting that 43% of Britain’s exports are into the EU. It’s unrealistic to think that new exporters won’t go to the EU first - it’s about proximity. We must have the EU market as an open market for us and that won’t happen if we allow divergence from EU regulations.
Can you tell us more about your role at Gambica and within the SME community in the UK?
Gambica stands for: the Group of Associations of Manufacturers of British Instrumentation Control and Automation.
Gambica has four divisions:
- Process Instrumentation and Control
- Test and Measurement
- Industrial Automation
- Laboratory Technology
I am chair of the Laboratory Technology division. Gambica has 200 company members and it does what trade associations do: share knowledge, have influence and create a sense of community.
What are the benefits of being a member of an industry association like Gambica?
Gambica offers a way to bring people together to share best practices and to talk about where opportunities are. We have a list of distributors located all around the world. It’s a great place where relevant information can be shared.
What I love about Gambica is that we help to bring competitors together to share best practices. For example, we have several autoclave manufacturers in the UK and many of the leading individuals from those companies come together through Gambica to talk about the industry, but without jeopardizing commercial confidentiality. I think Gambica is a very well-run association that makes a real difference.
How did Gambica help SMEs in addressing challenges during lockdown?
We had about 8-10 COVID resilience meetings through Zoom or Teams calls. These calls were made up of 25 - 30 business leaders coming together to listen and share ideas. I think people took great comfort in getting together with their peers and realizing that everyone else was in a similar boat.
We had the benefit of being able to work together to find the best and most practical solutions to issues at the time. Gambica is a great place to find information and now we’ve started to move on from these COVID resilience meetings to focus on Brexit resilience.
We still have COVID resilience meetings once a month, but now we all have a better idea of how to handle the challenges of the pandemic. I don’t think Brexit is the same in terms of the level of uncertainty, but our members are still getting great value from learning from others about how they are reacting and addressing Brexit concerns.
What does good leadership mean to you?
The thing that businesses have learned this year is that they need to put both the physical and mental well-being of their staff first. Even big companies that can be very impersonal with their staff have had to learn to prioritize people-first policies.
"I think having a flexible people-first approach is the right kind of leadership."
At Specac, we asked some of our assembly staff to continue to work on-site and we were very quick to adopt social distancing and safe working practices. But I recognized that we were asking them to take a risk - more than the office staff, who could immediately start working from home. We were flexible in the way that we addressed this with staff, but most of our staff were content to support us.
We’ve built a high level of trust with our employees over a long period of time and I think they realized that we wouldn’t put them at risk unduly.
Leadership is also about people being able to predict the decisions you will make because they already have an understanding of what you stand for and the way that you lead.
What does stakeholder capitalism mean to you? How important is that in 2020?
I think this is more difficult in large companies because it often becomes about the latest quarter. Suboptimal decisions are made to satisfy what I call the ‘spotty analysts’ who only measure company success based on the last three months.
The luxury that we have is that our job is to create long-term value. It means that short-term choppiness doesn’t necessarily affect the long-term value of the business and it can also give us more room in which to grow.
I’m fiercely protective of our staff because I believe that is my job. My job is to act as a filter between the stakeholders and the business. I think stakeholders are going to need to learn a lot this year, especially about how not to panic about poor short-term results.
The long-term shareholder play is to look after your staff. How do you see that type of approach paying off over the next few years?
We’ve doubled in size twice in the last 12 years. We had the great honor of winning a Queen’s Award for International Trade in 2018 because we had grown our exports at double-digit growth consistently for six years.
We’ve brought out great products, traveled the world meeting customers, and found instrument manufacturing suppliers and sellers all over the world.
"Fundamentally, we have only been able to do that because we’ve been brave enough to invest in more people."
The work we do with AZoM is something we wouldn't have contemplated five years ago and we couldn't do it if we didn’t have the manpower to put together the content that goes on the AZoM platform. What you have to fight against are those stakeholders who think, ‘I want more with less. You’re overstaffed, so cut your staff, but give me growth at the same time’.
What were some of the biggest challenges that SMEs faced during 2020?
Universities haven’t been operating and businesses have been operating below capacity. People have lost business and that means smaller profits. The lack of cash has brought many companies to the brink.
Companies have also had to deal with staff absences. In our company, we have 35 people in our operations, assembly and stores. We don’t have a lot of cover in these roles, so if one person tests positive for COVID, this puts a strain on company resources and manpower.
I also think COVID has helped businesses too. In some ways, I have enjoyed the challenge of COVID. I love change and COVID has forced change, especially in the way that people work. I have long thought that we would start having more people working from home and COVID has accelerated that.
There are good things that have come out of it, but bringing products to market is still not the same without the face-to-face interactions. Collaboration is still something that businesses need and I think that is where smaller businesses have struggled. SMEs that don’t have enough people or resources have seen slower progress, but I don’t think it will have a long-term impact.
How are businesses using automation to close the productivity gap?
There are a lot of barriers to automation in small businesses. They think that they can’t afford to spend £50k - £100k on automating a process, but companies must make this shift.
The government should help facilitate this shift and we have to be the champions of automation. I think the biggest barrier to automation is that people don’t have the time or money, but we need to make it easier for them. There are government subsidies out there if you look for them, but we need to get a whole generation of SMEs to make this shift.
I’ve started a movement in our business to get people to think about automation in the same way they think about engineering projects for new products. Constantly thinking about bringing in more automation should become the norm because it will make us more efficient.
How do you see sales and marketing of manufacturing equipment and scientific equipment evolving over the next five years?
In molecular spectroscopy, the global trend over decades has been usability. It’s something that is happening in so many areas of life, but marketing for manufacturing companies and science equipment needs to focus on how equipment is becoming quicker, clearer and easier to use.
We just brought out a new product, which is the first consumable product that we’ve made. It’s the same as an existing product, but we’re providing our customers with a consumable version that doesn't need to be cleaned between uses. With this product, you save people time and money.
Read: Sales and Marketing of Scientific Equipment
We’re also reflecting on how the market is changing. Our customers are behaving differently - they're reading more marketing literature and learning more about our range of products. To address that, we’ve become much more applications-focused in the marketing of our manufactured equipment.
I like to think of it as a Google search. If a customer in a lab has a problem, they don’t necessarily know the name of the product that they are using to do their analysis, but they know they need a solution to a problem. We need to focus on understanding those problems and directing them to our website to find the solution.
Can you talk more about what a problem would look like in terms of the Google search example you just gave?
A customer might have a material that is going to be heated and will change in condition when being analyzed over time. Then they say, ‘how can I analyze the change in nature of my sample?’, and that’s what they would type into Google.
Ask about digital marketing
Now, our job is to interpret that question and point them to our website. We don’t want to point them straight to the product page - we want to direct them to our application content. It may not be the same experiment, but it’s similar enough that the customer sees our company as one that knows what they’re talking about.
Do you use any specific platforms to reach customers with this application-based content?
A platform like LinkedIn is a much more indirect way of marketing to customers. I’m a big fan of LinkedIn and I encourage our staff, especially sales staff, to post on LinkedIn. The people who are best at using LinkedIn to reach customers post things like application notes.
They aren’t hitting you over the head with posts about buying our products. Instead, they post information about the kind of problems you can solve with our equipment. It doesn’t matter if this is a relevant application. It lights this spark in a customer’s mind that makes them think that this company has good science and knowledge behind it.