As I reminisce with Donald MacCallum, co-founder of OnePointZero, about the heady days of contract electronics manufacturing in Ireland in the 1990s before everything went east, I’m amazed we hadn’t met before. We share many friends, some sadly no longer with us.
It was a frenetic industry involving printed circuit board manufacturing for PC giants such as Dell, Gateway and many others. Donegal native and University of Ulster graduate MacCallum cut his teeth working at electronics manufacturers such as Motorola and Madge Networks.
‘We are working with key customers to deliver useful things to the world’
– DONALD MACCALLUM
As the industry wound down at the turn of the century, MacCallum also headed east where, in the course of a single meeting with PCH International on behalf of a client, he found himself headhunted by Liam Casey (‘Mr China’) and concluded the meeting negotiating on behalf of PCH International with his former employer.
The timing was fortuitous for MacCallum, who spent the last 17 years in the heart of the booming Shenzhen and Hong Kong tech industry where most of the world’s smartphones are made.
As well as Hong Kong, MacCallum has forged a new foothold back in Europe, where he co-founded Austria-based accelerator Io2Hub. Splitting his business life between the two continents, MacCallum is also a partner at Detekt Design and OnePointZero in Hong Kong.
OnePointZero, which he co-founded with Eric Voigt, is using a combination of business savvy and knowledge of the Chinese manufacturing landscape to engineer the turnaround of global businesses struggling to survive.
MacCallum’s perspective on the economic powerhouse that is China is worth noting. “Shenzhen is the jewel in China’s tech crown. In 10 years, they did what Ireland did over a 30-40-year period in terms of economic development.
“The quality of manufacturing coming out of China has evolved too, and why wouldn’t it? They’ve been making the iPhone for more than 10 years now.”
After PCH International embarked on a major restructuring two years ago, MacCallum was up for a new challenge and met Voigt at a barbecue in Hong Kong, where their wives were friends.
“We both recognised that globalisation has led to a separation of skillsets. A company in Ireland or the UK could be very good at designing and selling but in order to compete with the rest of the world on the same cost point, you have to be in Asia. But you cannot run an operation in Asia from Europe because of the complexity of the ecosystem here.”
Combining MacCallum’s nous of China and particularly Shenzhen’s tapestry of tech with Voigt’s expertise in turning around struggling businesses, the two got to work.
MacCallum explained that European and US manufacturers are finding themselves at a point where the businesses are no longer profitable, cannot pay their suppliers, have an ageing and highly paid workforce, and no longer have their former momentum.
“In many of these businesses, there is not enough money to pay the suppliers, there is a broken-down sales team and a disillusioned staff, and a big clock on the wall counting down the weeks to closure.
“Our job is to fix that. We work fast, engineer a financial and supply turnaround, and restore these businesses to financial health. You have to work fast and people who don’t want to change have to go.”
For most business owners, it is hard to see the wood for the trees let alone even attempt to get to grips with Asian suppliers and a different culture and way of doing business.
The world is moving on, with or without you
“Globalisation, as I said, means the separation of skillsets. We can take a business’ skillset at end of life and bring it back to the start and run it for them in an incredibly lean way.
“We look holistically at the business from the point of view of equity value of the share and how can we impact that. All businesses are based on cash and if you can’t pay suppliers, it’s lights out. What we do is, we bring legacy manufacturing businesses into the 21st century.”
MacCallum cited the example of an Irish manufacturing company whose directors wanted to sell the company but it was held back from doing so because of a poor credit rating. “We had incumbent directors who wanted to sell the business but no one would pay what they wanted; the businesses was trapped by inertia.
“We came in and took over the responsibility of the materials management and helped the business evolve from one product line to 16 product lines. We brought a manufacturing company into the 21st century.
“We reduced the cost of manufacturing by 30 to 35pc, restored their credit rating and, within a few months, cash flow improved by €1m and they didn’t need to sell the business.”
In a way, OnePointZero is the consulting equivalent of a Couch to 5K app for struggling firms.
“It’s basically about getting them fit, cutting their supply costs and improving their credit. In the case of the Irish business, we improved their credit from 30 to 45 days, reduced their cash conversion cycle to zero and their bank balance is healthier. We win if they win.”
OnePointZero is working with traditional manufacturing firms and brands in Ireland, the UK and mainland Europe that currently cannot keep up with Asia, by enabling them to work with Asian suppliers. The Hong Kong firm works with companies that have turnover in the region of $30m to $100m.
“There is so much technology development happening in Shenzhen that as soon as you start talking about the next big thing, it is already there. But, for European firms, there are a lot of potholes and we are there to hold their hands.”
In one case, OnePointZero even helped turn a traditional and highly respected German instrumentation firm into an internet of things (IoT) company.
Crucially, MacCallum points out that the war for manufacturing is over and China has won. European businesses need to instead focus on design and selling. “After that, it is about paying suppliers on time and being financially healthy, with no distractions from creating and selling the best products,” he concluded.
“We are working with key customers to deliver useful things to the world.”
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