It's not often that the contract falls into your lap from what will turn out to be your biggest customer.

Yet it's pretty much how Plade - a manufacturer of custom designed equipment for the semiconductor industry - landed its biggest prize to date, with a little help from its website.

While reviewing traffic to the site one day, Gregor Egan, 63, managing director and 50% owner of Plade, noticed recurring visits by researchers at Hewlett Packard in the United States.

He followed up the lead by email and phone and the result was a three-year, £6m contract. It was Manna from heaven at a time when the electronics sector is in recession and the semiconductor industry is in long-term decline.

The business, based in Renfrewshire, Scotland, produces benches that carry out the wet process stages of manufacture in the production of silicon chips. It's a highly specialised and highly skilled line of work, often requiring some creative problem solving.

"We are good at taking ideas that customers have and designing equipment specially," says Egan. "Often, we even custom make the process for them."

Plade's difficulty lies in marketing its specialist product offerings in a declining sector. The benches are made specifically for customers' needs and therefore cannot be mass marketed in a conventional way.

The web has turned out to be a great marketing tool and fortunately Plade was an early online adopter. Its site was set up in 1995 by Egan's son, Gregor junior. Within a couple of years, however, it had become 'a shambles' with far too much cluttered information on it, according to Egan.

The contract for an updated version of the site was outsourced to web design company iTs-Designs, which played a big part in helping Plade win the regional e-Commerce Award in 1999.

The new design soon proved its worth, says Egan. "There is absolutely no other way the likes of Hewlett Packard could have found us. We haven't found a downside to the website yet". The original contract with Hewlett Packard (HP) has led to similar work for HP UK and Ireland.

The website averages 7,400 page requests per month. Given the obscure nature of Plade's business this is a high figure, proving that the site is being easily found by search engines. The true measure of the website's value is the amount of business that comes from it. Egan estimates it has been the single biggest factor in driving growth in exports, which have accounted for all of Plade's sales growth over the last five years.

Egan is particularly proud of the administration page that assesses what is happening throughout the site. The benefits include identifying the companies that come to the site and the frequency of their visits, "which," says Egan "allows us to calculate how serious their interest in our company is.

"It also allows us to analyse statistical information such as a month-by-month or year-by-year comparison that gives us feedback on the state of the market in any particular country or shows whether an agent is performing as well as they did previously."

The admin system has been set up so that this sort of information can be tracked every week at the factory premises. Staff are trained not only to do this through the seven networked computers on site but also regularly source and purchase high volumes of lower value components and materials online.

The website has served Plade well as a marketing, administration and cost-saving sourcing tool but, as yet, its own goods cannot be ordered and sold via the site.

This will form the next stage of Plade's online development and it is soon to experiment with online ordering. It plans online sales of small, high quality, Teflon type equipment fittings that don't attack chemicals. These are bought in bulk at discount prices and are always available. "If this is successful," says Egan "we may extend this to other areas."

Online sales should help Plade drive its overall turnover even higher than last year's. In 2002 sales were just over £3m and pre-tax profits came to around £200,000. They have also helped ensure a healthy boost to profit margins that have jumped from a sickly 2% to 15% during the last three years.

Egan says: "We have doubled turnover and profits in the last three years but have invested heavily in plant and machinery as well. It's better to do this than give it to the taxman."

Plade is also a successful exporter. On a regular basis it supplies equipment to Scandinavian countries, Switzerland, Malaysia, Thailand and China with smaller amounts to other countries. In the year to March 2002 the total percentage of overseas sales was 74.2%.

SERVICE STANDARDS ARE KEY TO SALES

Where it can, Plade markets its products using in-house staff, mainly due to bad experiences with sales agents. Egan says: "It has never worked out whenever we've gone out to look for agents. They usually have a range of products and put the new catalogues at the bottom of the pile."

In order to get the sort of results they want, Plade has funded start-ups where agents in Scotland and Ireland have been given a car, office space and wages to get them established. However, with agents taking a 10% cut of the already low margins, it is better to deal directly with customers - although this brings its own problems.

"We are too compliant to the customer's idiosyncrasies. We will never say no to them. If a customer asks for something 'extra' and the staff can do it - they will - without the need to ask the managers. They are autonomous and adhere to the Plade philosophy of good customer service."

Egan is proud of the service Plade provides, especially as it is a major contributor in bringing in much of the repeat business. It accounts for up to 80% of sales.

DEPENDENT ON A SMALL CUSTOMER BASE

It's the reliance on a small number of customers that is a cause for some concern, however. Currently, up to 90% of turnover can be attributed to one or two customers and the remaining 10% to as many as a 100 customers.

The smallest contract can be as little as £200 or £300 and can go up to £700,000. The largest contract to date (apart from HP) was worth £1.9m.

The time taken to carry out and install the equipment can also fluctuate. A single contract may take years to complete. Managing this disparity and the inconsistent workflows it creates is a further challenge.

Plade has not been slow to exploit other opportunities, however. The booming second hand market in its own equipment is one such target of opportunity. Plade has bought a respected customer's brand name which it will use on its own remanufactured products returned by customers when they become surplus to requirements.

The use of a separate brand name - Vinylglass - avoids the risk of devaluing the Plade brand when there is a glut of equipment in the marketplace and prices are forced down to almost non-profitable levels.

This equipment is sold with the same warranty and margin as the new ones but has the effect of removing the threat of competition and adding five per cent to the turnover.

EXPLORING NEW BUSINESS OPPORTUNITIES

The downturn in the industry and the long-term decline of the semiconductor sector means Plade must venture down new avenues to ensure its long-term survival.

Egan admits a need to change the core activity. Although the wet benches for the manufacture of silicon chips are still the main business, Plade also produces equipment for universities and colleges that lead the field in bio-medical science.

One such product is a 'stent', a small tube that can be inserted into arteries to allow easier flow of blood - thus preventing them from being clogged.

Research is also being carried out into producing the technology system that the Segway - the two-wheel human transporter system - uses to prevent it from toppling over.

Reengineering the business away from its semiconductor core will be a challenge, but radical change is not a process that holds any fears for Egan. It's a process he and the Plade employees have gone through a number of times before. Despite various changes in business focus, the company has a very low staff turnover. Six of the current 40 personnel have been with the firm for over 25 years, the newest member joined just under 12 years ago.

But is the ageing workforce still capable of being innovative and cutting edge - the qualities that saw them through the lean years?

"All the workers have full knowledge of the product and work as a great team because they know each other well," argues Egan. "They act as ambassadors for the company when they go abroad to assemble what they produce here. There is no doubt that they are a great asset."

Egan has played his part in a business that has had many ups and downs in its 32-year history. Clearly, with the challenges ahead, the future is still unclear. "We've got some barriers to overcome, " he says "but I'd be quite happy coming to work at the same place in ten years time." Making more of Plade's online activity is likely to be key...

www.plade.ltd.uk

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