Driving through tough challenges to achieve world leader status

AVID Tech

Knowledge: Mark Lane hears how Cramlington’s Avid Technology has steered a course through a variety of difficult business hurdles to find its products and services in demand from some of the biggest names in the worldwide automotive industry

Positive PR comes in many weird and wonderful forms. One would be hard-pressed, however, to find a more original example than that experienced by North East electrical component specialist, Avid Technology, just recently.

The company, which is based at Nelson Industrial Estate, Cramlington, was going about its daily business recently when staff there noticed a large advertising truck parked outside its premises. The van was clearly operating on behalf of an Oxford- based competitor and was advertising a recruitment fair it was running at a local hotel. “That’s a bit cheeky,” Avid’s managing director Ryan Maughan (pictured below, left) tells me with a smile.

 

Some company owners might have gotten on their high horse about such an approach, which could be construed as being underhand. Ryan was fairly relaxed about it though, instead taking it as a compliment with regards the talented team and genuinely world-class engineering skills Avid has assembled in the North East.

Here he makes an interesting point. “When you are involved in the investment world, you find there are a lot of people out there thinking all the clever stuff happens in Cambridge and Oxford and that the North East is just about bashing bits of metal,” he says. “The fact that an Oxford business is looking to poach staff from our region is recognition of our business, and the region as a whole, in terms of the skills we have developed in engineering and related technology areas.”

There’s another point to be made here. A cursory glance on Right Move will tell you that if you want to purchase a house in, for example, Oxford, you’d better have been saving for a decade for a deposit or have had a nice leg up from the bank of mum and dad. “Actually, a lot of engineering graduates coming out of the region’s universities are choosing to stay here as they realise that the quality of life is excellent,” Ryan says. “They can also earn similar salaries, and afford to get on the property ladder.”

Ryan is a passionate North Easterner, who was born and raised in Blyth. He had a lengthy career in engineering before setting up Avid, spending more than a decade in the motorsport industry before becoming disillusioned.

“I literally woke up one day and decided I wanted to do something meaningful,” he explains. “Motorsport is exciting but you are in an industry which is doing so much damage to the planet. The industry is about marketing, not engineering, or making the world a better place.”

Ryan, who had travelled the world in that industry, headed back to the North East. He took an engineering role in Consett but harboured plans of branching out alone.

He established Comesys Europe in 2004 to design and manufacture control and measurement systems for heavy-duty vehicles, such as electronic throttle controls, electronic control systems, and other mobile electronics.

The company also became involved in the design of more efficient engine thermal management systems.

In 2008, Avid Vehicles was established as a spin out of the company’s R&D business into a stand-alone company.

The focus was on the development of electric and hybrid vehicle powertrain systems and the continued development of electrified engine ancillaries and thermal management systems.

Avid Group was formed in 2009 by bringing together Avid Vehicles and ComeSys Europe. The Avid Innovation business, which contained all activity relating to the electric vehicle battery development unit was sold to Hyperdrive in 2012. In May 2012 the drive by wire controls business was also sold to Continental Automotive.

It sounds quite a straightforward process of development, but it has actually been a bumpy and challenging ride for Ryan and his team. Indeed, the story of Avid’s development to the present day is worthy of further investigation for it offers some valuable lessons about never giving up, sticking with what you believe in and continuing to knock on doors even if the market might not seem quite ready for your products.

The first setbacks came in the 2008 financial crash, which hit vehicle manufacturers – a key customer base – who pretty much stopped production overnight. This badly impacted the order book but Ryan managed to keep things afloat and decided to focus on electrification.

Coming out the other side of the recession, the business began to grow again but what became apparent was that financially, it would not be possible to scale all areas. Something would have to give and so parts of the business – as highlighted above – were sold, in effect to put funding into the core area.

“My naïve and optimistic mind didn’t think it was high risk as electrification seemed obvious to me and the way things were going,” Ryan says. “But in hindsight, things took a lot longer to develop here than we anticipated. It was a big risk at the time but we still believe this was the right approach.”

The faith has paid off. Initially, Ryan and his team spent much of their time educating the market, working with customers on electrification issues to help them understand the process of electrifying their products. The last couple of years, however, things have moved on a pace as it has gone from a case of working on early stage, low volume electrification programmes to greater volumes and major programmes. Ryan relates how, in recent times, several customers have announced new strategies which have electrification at their heart. Avid has been in this space for years and, as such, is now well placed to capitalise
on this huge push towards electrification, from governments, consumers and businesses.

“The market is now very much that everybody is moving to electrify their vehicles,” Ryan says. “There is the pull from consumers on one side and push from legislators on the other.”

The latter has seen the introduction of tough new emissions testing laws in the wake of ‘diesel-gate’ and this is affecting all vehicles, including cars and trucks. In essence, it is hard – if not impossible – to meet these new requirements without having some electrification.

On top of that, we are seeing broader government targets about climate emissions and the goal-setting of cutting down CO2 emissions in the UK. These are, in turn, linked into the Paris Agreement which many countries are now working towards (notwithstanding the world’s largest economy, the US, whose President has inexplicably opted out of the Paris Agreement).

Cutting down on CO2 means moving towards electrification in vehicles, if not a move towards hybrid vehicles whether that be general cars or more specialist areas which Avid focuses on – these include off-road, construction sector vehicles, trucks, and high-performance cars.

On the heavy-duty side, Avid now deals with all the major global truck manufacturers, both in the US and in Europe, including the likes of Mercedes. In terms of ‘off-highway,’ the company is again working with all the major players in Europe and the US. Indeed, as we spoke, the business had just recently signed a major deal with Caterpillar.

Finally, on the high-performance car side, Avid is working with some seriously blue-chip names, including McClaren and Aston Martin. “I don’t see us getting into mainstream passenger vehicles,” Ryan says. “The reasons for that is we believe we can add value on vehicles where electrification is difficult to do and technically complex. We want to be electrifying vehicles nobody else can. The only area we are getting close to mainstream cars is with Jaguar Land Rover on their future vehicles, but even that is at the high-performance end of the market.”

Ryan reels off big blue chips quite matter-of-factly, yet there is never any sense that he takes such business for granted. He has been at the heart of the company since the start and, as such, has experienced many setbacks and periods where large swathes of the sector were turning pretty much a deaf ear to electrification.

“We have been in a unique position in that last 14 years in that we have been out there advocating electrification,” Ryan says.

“We used to get laughed at. We would go to a meeting with a large vehicle manufacturer and they simply weren’t interested, but we kept at it and have been persistent and consistent. That has helped us – we are not just a component supplier, we really help with customers, add a lot of value and so on.

“Large blue chips can be hard to deal with, they do move slowly, the corporate decision-making is vast and complex. But if you are persistent and have something they value well… the situation we are in now is that they come to us. We don’t do any outbound selling, we have a great existing customer base and we get amazing inbound enquiries. On a frequent basis, we are getting enquiries through for multi-million-pound programmes.”

While this sounds fantastic – and it is certainly better to have a business whose products are in demand than not – growth has never been straightforward. Nor has finance.

Ryan asserts that finance and funding have been a “consistent issue”. He suggests the business has been able to raise funding but never quite in the quantities required to execute plans and scale in the way intended along the way. Selling off chunks of the business was a necessary evil in order to fund the electrification part of things.

Explaining, Ryan says: “Investors like businesses which generate cash, they don’t like things where you are investing in high risk, or where you have to use cash in the short-term to build a bigger business in long-term. There is a problem with that in the UK, compared to the US.”

There is indeed. In the US, early-stage tech businesses in all sorts of weird and wonderful areas seem to attract seed funding, perhaps as a result of a generally more entrepreneurial, risk- taking climate but also perhaps due to less onerous laws around bankruptcy in the States. Failure isn’t a big deal in the US.

When Ryan sold off two parts of the business, he was left with just seven staff and admits that, at that time, it was “like starting from scratch”.

It may have been daunting but things have come a long way since then to the extent that the company, which now employs more than 100, has huge plans for investment over the next 12 41months. “We plan to move into a new facility which will the triple size of our footprint, with new space, better facilities for testing, prototyping and so on. We don’t know where we will go next but we will be staying in the North East.

That last point is very important for Ryan. He speaks with great pride about the region and he is clearly absolutely
thrilled to have been able to build a business which is a genuine force for good in the area in terms of job creation and which is also emphasising the strengths of the region in high-tech manufacturing.

He says: “One of the big things I wanted to do was create a substantial business in the region. Growing up through the 1980s, it was tough times around here. My family were involved in coal and went through hard times to the extent that my dad didn’t want me to come back to the region, he didn’t see any opportunities here.

“I did travel around but wanted to come back and do something substantial. I saw an opportunity in that we have great universities, great people but, also, the area is not over- developed in that we have plenty of industrial space, a great workforce and lots of good engineering graduates coming out of our universities. It is a great place to start and grow a business.”

Ryan concludes: “I wanted to create a great business and I recognised that the only way to do that was by having a great team and being a really great place to work – challenging, stimulating and fast-paced. I am really keen that this is a company that gets people excited, gives them a reason for wanting to get out of bed in the morning.”