11 January 2006
BreconRidge builds on hard lessons learned from tech bust

Ottawa Business Journal, January 11, 2006 - With its own global manufacturing capability having increased 65 per cent in the past 16 months, BreconRidge has proclaimed the end of Ottawa's acute high-tech melancholy.

"The reality is that most of the restructuring is behind us now," says chief financial officer Shaun McEwan. "People are starting to focus on what's next, and that general excitement - and I say excitement compared to the general malaise that's been around here the last couple years - is making for some sizable operations that want partnerships."

Indeed, it's been a busy year for Ottawa's tech sector, as well as its largest electronics manufacturing service (EMS) provider. In 2004 BreconRidge opened additional manufacturing facilities in Ogdensburg, NY and last year acquired manufacturing operations in Asia. The company added a direct sales office in Boston to round out its international expansion.

Headquartered in Kanata, BreconRidge is already considered one of the world's top 50 EMS companies after only four years in existence and has recorded a more than 25 per cent growth rate compounded annually over the past four years. Its sales for fiscal 2005 were US$197.6 million.

The new U.S. outposts, Mr. McEwan explains, gives the company excess manufacturing and sales capabilities while the facility in Shenzen, China allows for the cost-effectiveness of employing the same business model in a relatively low-cost area.

Indeed, he adds, any new hiring by the company will most likely occur in Asia as opposed to its Ottawa facilities, which according to the company right now employ around 1,000 workers.

Ron Watt, marketing director for Empowered Networks - a smaller Kanata company specializing in design and manufacturing - agrees the electronic manufacturing market in Ottawa is currently catching fire like an overheated semiconductor.

"Our business with equipment manufacturers has shown a great deal of pickup over the past year," he says. "And standing at the beginning of 2006 it looks very promising to continue along that track.

"We're seeing a resurgence in business from established players, and we're seeing the new companies that had been plugging along are also picking up their activities."

All this equates to huge gains in the world of technology manufacturing for BreconRidge and its competition although, as McEwan is quick to point out, cranking out product is only a small part of what his company does. As an EMS, the company partners with various customers throughout their products' life cycles to facilitate anything from early product development and design, to component sourcing, global procurement, supply chain management, delivery, after-sales support and warranty tracking.

"We are truly a new breed in our industry and our customers are realizing the benefits directly on the bottom line," continues Mr.McEwen, adding that it was the tech slump, ironically, that necessitated and allowed for such a previously unorthodox business structure in the first place.

"It was a really good time to start seeding the thoughts of a new operations model of EMS industry. (Original equipment manufacturers) didn't need more of the same, they didn't need someone to do just more of the same.

"So the market was fairly hungry," he continues. "The market didn't really know what it wanted at the time, but it knew it didn't want what it had. We were fresh, we didn't have the baggage, and we offered a different approach to the market."

Add to this the 20/20 hindsight that comes with living through a crash of that magnitude, plus its capitalization on the overabundance of cheap, unemployed tech talent and facilities lying around Ottawa the past couple years, and it's easy to see how BreconRidge has made the gains it has.

"More OEM's are looking to outsource more of their operations," he says. "We believe companies want to outsource more than just manufacturing capabilities, and we think that's why we're doing so well."

Statistics Canada studies show the tech sector in Ottawa-Gatineau has gained 12,000 jobs in the past year, thanks in part to a vanguard of fresh-faced companies led by BreconRidge, Kinaxis, N-Able Technologies, IDT and Research In Motion.

Not to say there haven't been challenges, however - far from it. The technology sector, fractured and segregated from years of bottom-line disasters, scandals and mass layoffs, was a difficult nut to crack in terms of winning back customers' trust. "That level of trust and respect here disappeared during the crash," he says. "With people hiding money to get better margins and things like that, it caused a whole pile of credibility issues."

But Mr. McEwan says that thanks to employing a mixed bag of solid business practices, a novel business model and good, old-fashioned patience, the next generation of high tech have shepherded the industry into better times.