Connecting the numbers at Neutrik UK13 January 2017
It was Neutrik UK’s 30th anniversary in 2016. The factory in Ryde on the Isle of Wight off the southern coast of the UK mainland, produces 60,000 etherCON connectors per week, as well as 70,000 powerCON chassis. The facility, on the site since 2004, is capable of producing 250,000 pieces per week. “We’re running at about 200 to 220 thousand at the moment,” says managing director Chris Arnold.
It’s the late summer of 2016, and Arnold – at the company for some 27 years, but not the longest-serving employee, oh no – is PSNEurope’s host for this factory visit. He is, from the off, very much a man who knows his business. Particularly in a numerical way. (“But when you are running with such tight margins, you have to know the figures,” he emphasises later.)
Neutrik UK serves two roles: it’s the subcontracting manufacturer for the Neutrik AG parent in Liechtenstein, and supplies and distributes all Neutrik products to the UK and ROI markets. Additionally, the outfit is the European distribution hub for Neutrik’s Rean “budget” connector range (Chinese-made components). But – Arnold notes – if it says Neutrik on the box, it’s made either in a small landlocked European principality nestling between Austria and Switzerland, or on an island in the English Channel. The ‘Swiss-made’ association still goes a long way.
Neutrik AG celebrated its 40th anniversary in 2015, and has established itself as the world’s leading brand for quality connectors, right across the entertainment industry – audio, video and more. From the notion in the mid-1970s by company founder Bernhard Weingartner that the ‘XLR’ connector of the time could be seriously improved, Neutrik produced it’s one billionth XLR (pictured) in 2015. Though still based in Weingartner’s Liechtenstein, Neutrik now has subsidiaries around the world (USA, Japan, France, Hong Kong, China & Germany).
The Ryde operation performs all the soldering work for the whole group, as well as putting its completed goods in the aforementioned boxes. “We package everything with European air, no vacuum packing,” notes Arnold. No, ‘European air’ is not a short-hop carrier operating off the Isle: he means the stuff in the atmosphere. “[Some of the piece parts go back to contract manufacturing in China, and where they’re made of quality nickel silver, they tend to tarnish quite quickly [because of China’s air pollution issues].” Hence, packed with European air here, the parts won’t tarnish when unpacked in Asia, suggests Arnold.
All goods are shuttled between AG and UK by road and ferry: pieces arrive on a Tuesday from Liechtenstein via Southampton and the Solent, then the truck returns with completed goods (“18 palettes at the moment”) on a Thursday. The IoW facility work on a four to five week lead time for the whole process: building, bagging, labelling, and finally shipping.
How come the IoW office does this work for Neutrik AG? It’s a long-standing arrangement, says Arnold: the UK buys in the piece parts from AG, builds the connectors and sell it back, all at a Swiss france rate. Then pieces to be sold to the marketplace are bought by Neutrik UK at a GBP rate.
The Isle of Wight wouldn’t be first choice for most manufacturing businesses. Arnold takes a breath: “It’s a long story…” Technical Projects, he recalls, was a company acquired by Neutrik AG but based in Westminster developing test sets for broadcast applications. In 1986, an offer was made by from the IoW Development Board and the TP directors took it, moving the operation to Cowes (the town on the north of the island famous for its yachting) in return for six months’ free accommodation and other perks.
Arnold joined what had then become Neutrik UK in 1989 as a test engineer. The company was expanding and moved to Ryde in 1991, firstly to a former pot-pourri factory (“It smelled very nice!”) where the semi-automatic assembly lines were installed. With staff levels numbering 50 by the Millennium, further investment was required.
“We bought the current Ryde plot in 2002, then we had a change in leadership – and it became my project to build the first part of the factory, and we moved in in 2004” he says. Space became tight within months due to the continued growth of the operation, leading to a second 2010 expansion, “And we’re already planning the third one.”
Neutrik UK is in the top ten biggest employers on the island (after the NHS, the government, and engineering companies such as GKN and British Aerospace). “We are 30 years old and we’ve gone from seven people to 160 – that’s one major success story for 2016!” smiles Arnold.
What’s more, the company has only had to make three people redundant in 28 years because of operational changes. “We’ve always found work for people.”
Arnold has been at the company for 27 years, but is not the longest serving? “The quality guy – he’s been here 30 years next April. He was here right at the beginning. We’ve got a lot of long-serving employees – the production manager, he’s been here 25 years. The finance controller 21 years and some of the shopfloor workers have been here 20 years.”
The subject of Brexit inevitably arises. Arnold reveals that after the referendum, the exchange rate plus surcharge levied for buying parts from AG (as mentioned earlier) went up by 14 per cent after the EU Referendum, so his margins had decreased by 14 percent. “I can’t live with that forever,” he warns. “At the moment, it’s all about productivity, when we’re running on these tight margins.”
He discusses how increasing the awareness of staff has increased productivity; equally, how, by his simple calculations, it can be shown by knocking just 30 seconds off the working day would clearly reduced the number of components completed by several thousand.
“You have to be efficient,” he insists. “You have to be.”
The last time PSNEurope spent any amount of time with the Neutrik team, it was for the launch of the Xirium digital wireless system. (So impressive was it, PSNEurope made a short film showing it in use.) Xirium (pictured) uses Neutrik’s own DiWA (Digital Audio Wireless) protocol in a system of base units and modules which add up to a discreet, compact and attractive way for transmitting audio at live events and presentations. Arnold is very pleased to report that the Xirium Pro is now with us: it’s built in Liechtenstein, and it’s a major improvement.
“It works in the ISM, Industrial Scientific and Medical band, 5GHz, so it’s clearer. It’s efficient and it’s got an iPad app to support it. So if for any reason you lose the signal, you can see why.
“You can tune the antennas for maximum gain, and it is more plug’n’play than ever. It has good battery life, it’s IP54 ready and a lot more robust. We do it as a starter kit of a transmitter and receiver and two aerials.
“We’ve already had some success with that, we did a Tom Jones concert at Aintree using it!”
While Xirium Pro has potential for growth, unexpectedly, the imminent project that represents the largest opportunity for Neutrik UK is from a totally different sector to pro audio. “It’s a very big industrial application for Hilti: we’re going to produce power leads for their tools,” says Arnold.
“Hilti recognised that goods were mainly being returned for repair with a broken power lead. Just like your [clothes] iron breaks at the cable entry point, that’s what happens with the power tools. So Hilti have commissioned Neutrik to come up with a plug and socket, which makes the lead replaceable by the customer rather than the vendor.” A simple idea, and yet one never implemented until now.
“We moved into data by producing Cat-5e and Cat-6a connectors; that’s already a ‘little bit less pro audio’. But, that’s where the growth is: new markets in the industrial sector. We shall no doubt be employing people with experience in that sector too.”
Arnold, of course, has done the numbers: the Hilti deal could represent “348,000 pieces per annum by 2020” and will be a gateway to new markets and new possibilities for the 30-year-old outfit.
After the visit, PSNEurope discovers a quote relating to the purchase of the land where the factory now stands. “One million and 71 pounds” say the notes. Surely, that was meant to be £1.71m, and Chris Arnold mixed up his words?
An email from Arnold later confirms: “1,071,000 was the exact figure.”
Of course. Never doubt Mr Arnold when it comes to his numbers.
Top picture: (L-R) MD Chris Arnold, stock controller and sales and marketing administrator Lynn Charlton, and business development manager Andy Croucher, near Ryde pier, summer of 2016