Every day Ian Mason comes to work knowing that his company order book — for the UK and Europe at least — is blank. But this situation, which would cause panic among other stock market-listed large firms, is perfectly normal.
That is because during the course of the day Electrocomponents, which trades as RS Components, will take hundreds of thousands of orders for anything from batteries to books, switches to semiconductors. About £500,000 worth of stock is held globally at any one time.
Managing director Mr Mason said: “We take about 40,000 orders daily, none of which existed before. It is a complex short-term business managed on a day-to-day basis.”
Electrocomponents was founded in a lock-up garage in London as Radiospares in 1937, by JH Waring and PM Sebestyen, two Jewish emigres, who decided there was a demand, as the name suggests, for spare parts for radios.
The company catalogue now stretches to four volumes selling to engineers around the world.
Mr Mason, 48, a typically genial Geordie, who has been with the company since 1995, added: “We have always got what you want, when you want it. That was the model our founders established.”
The promise extends around the world to its 27 operating companies, 26 of them operating under the RS brand — the other is Chicago-based Allied Spare Parts.
About 65 per cent of sales are outside the UK — 20 per cent in the USA and ten per cent in Asia.
The company’s customer base is made up of engineers, ranging from people in white coats in laboratories to washing machine mechanics.
The average order is just £100 but the company has sales of £1bn from a customer base of 1.6 million.
Mr Mason said: “Any domestic engineer will know RS. It is not sexy, it is distribution of high-tech and low-tech products, such as components and resistors, which keep the wheels of industry turning.”
The company sources its catalogue from more than 2,500 suppliers globally, many of them in the UK, but increasingly in Asia.
But what binds them together is their commitment to quality and service.
Mr Mason said: “Engineers believe the same around the world — Chinese, Japanese, Europeans, the model works everywhere.
“They order frequently and what they want is a very high standard of service.”
Electrocomponents is the biggest company of its type in the world and it only has three competitiors on its level, although there are thousands of others, meaning it only has a small share of an extremely fragmented market.
The international market is fuelling the growth of the company and China is becoming one of its biggest markets.
“The country is churning out 600,000 engineering graduates every year, and they are all thinking about what they can design and maintain.
“In 1990, this was a British company. We completely turned it around and expanded across Europe, Asia and the United States.”
Electrocomponents employs 90 staff at its headquarters on the Oxford Business Park, with a total of 6,000 around the world, half of them in the UK.
The company moved to Corby in 1983. In 1994, the head office function shifted to Peterborough but, logistically, it was not convenient for access to Heathrow and the motorway network, so Oxford offered the perfect solution.
Mr Mason explained: “We were becoming more and more international and wanted a place with the skills and infrastructure to support that. It has the benefits of London without the disadvantages of being there.”
The growth of the company’s e-commerce division has helped cement it as courier company DHL’s biggest customer in the UK.
The recession did have an impact, however, with sales dropping 17 per cent around February/March last year, but the company continued to invest in e-commerce and electronics, and that is now paying dividends.
In February/March this year, sales grew 15 per cent and the company is predicting pre-tax profits of £73m for the financial year to March 31, ahead of expectations, although significantly down on the 2009 figure of £86.6m.
Mr Mason said: “Compared to a year ago, the picture is a lot more positive, although generally, I think there is still a lot of pain to come through the system.”
The nature of the business naturally lends itself to online application, so it is not surprising the company has had a web presence since 1998.
“In some areas nearly 70 per cent of business is conducted through the web and now we launch many more products on the Internet that are not in the catalogue.”
The latest innovation, launched this month, is 3D imaging, which allows far more content and information to be added.
All of which should help spur Electrocomponents into another chapter of its successful history.
ame: Electrocomponents Established: 1937 (as Radiospares) Managing director: Ian Mason Number of staff: 6,000 (90 in Oxford) Annual turnover: £975m
Contact: 01865 204000 Web: www.electrocomponents.com
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