With his long experience in the electronics industry and distribution it came as no surprise when Avnet Memec appointed Chris Shipway as Country Director UK back in 2008. At the time of his appointment Steve Haynes, the company’s President said that “his reputation in the market would enable the company to further strengthen its position and maximise the business opportunities in the UK.”

Shipway began his career in electronics back in 1982 when he started work in the Memec warehouse at Thame. After four years he helped found Sequoia Technology and then worked for Tekelec, a French distribution company, after it bought Sequoia in 1992. Four years later he left to start up Azzurri Technology which was then sold to Avnet in 2008.

But while this suggests a driven and focused individual it wasn’t quite like that when he first started. Like many he stumbled into the electronics industry.

“My father was a very driven individual. A pilot he started with the RAF and then ended up flying commercial jets. I wasn’t, to begin with. I left school without much in the way of qualifications and ended up taking a year out and travelling around Canada. When I got back my father demanded I get a job, any job and I ended up working for a couple of years in an abattoir.”

I’ve interviewed a lot of people for this column but never met anyone who’d worked in an abattoir before.

“It was certainly a different way of getting into the world of work and it was an experience. I worked with people from very different backgrounds, - some were very challenging indeed - but looking back on my time there I actually think it set me up to be able to work with all different types of personalities.”

Over the next fours year Shipway found himself managing a team and being drawn into the sales environment as a product manager.

“I liked the technology we were working with and enjoyed being with people.”

It was a great time to be in the electronics industry, a period of rapid growth with new businesses being set up across the sector. As such in 1986 Shipway decided to leave Memec and join forces with Glyn Jones and Mark Carlucci, who he’d met at Memec, to set up their own business - Sequoia Technology - the aim of which was to bring little-known US semiconductor companies, preferably star-ups, into the UK.

“They were looking for someone to manage the company’s internal sales and I think I’d impressed them by the sheer hard work I’d shown at Memec. I saw an opportunity with Sequoia and decided to go for it. While Mike and Glyn went out to the US to drum up business I was based in the UK managing the office. There were only three of us and we had to do everything, but it was the hey-day of semiconductor manufacturing with start-ups being set up all over the place.”

Breakthrough

The company’s big break - and Shipway believes luck does play a significant role in any business - was when they got the franchise from Crystal Semiconductors, then an innovative new US start-up, despite intense competition from the likes of much bigger distributors.

“That gave us a franchise with a good line of products that you could take to a wide range of design engineers. It was that bit of luck that any start-up needs. We worked bloody hard to get it though, and I do remember that we did promise them the earth. Few people had heard of Crystal at the time and even fewer knew who we were. We had a short window to make this work and had to meet as many clients as possible. At the time it took, on average, 18 months to design in parts so we needed to bring in as much revenue as we could.”

Over the next six years Sequoia grew rapidly focusing on cutting edge technologies and start-up businesses.

“We had no intention of getting involved with the likes of a National Semiconductor or Intel.”

The company took on more staff and by 1992 was employing upwards of 40 people and turning over £14m a year. For Shipway the success of the business had brought with it a 20 per cent equity stake and an increasingly important role within the business providing a bridge between fellow owners Jones and Carlucci.

“Glyn was the technical guy in the team. He was bright and talented. Mike brought the commercial drive that we needed and I slotted rather nicely between the two.

“We had become really successful as distributor in the UK, so much so that when we started to look to expand into Europe we were approached and made an offer to by the French distributor Tekelec. They were looking to expand their presence in the UK market. It appeared to be the perfect fit for both parties.

“What we’d like to have been able to do was to have gone into Europe ourselves. That costs money to do well. You could also see that distributors were getting bigger and there was a growing need for more technical demand type distributors. You could still make a decent living out of working in distribution, don’t get me wrong, but we needed investment to do that. So the offer from Tekelec did come at the perfect time for us.”

Big business

Within six months of becoming part of the $400m Tekelec business Carlucci had moved to France to head up the company’s semiconductor business and Shipway found himself appointed Managing Director in the UK.

“I can’t deny it was a surprise to find myself working for a large business again but they did leave us alone to get on with it and we did deliver. We grew strongly and reported good results.”

As Shipway explains the distribution market was still relatively new back in the early 1990s but even then it was apparent that it was becoming increasingly global with new markets coming to the fore in China and the Far East.

“Back then there were loads of opportunities in this industry. Today what have we got in the UK? Avnet, Arrow and a couple of other distributors dominate the market. I’ve been involved in setting up two start-ups and selling those business. Not that long ago there were something like 50 distributors in the UK, all making a decent living.”

After four years with Tekelec, amid industry murmurings that Shipway, Jones and Carlucci were planning to set up a new semiconductor distribution company, the three quit and after a couple of months set up Azzurri Technology.

“I think we found, I know I did, working at Tekelec to be stifling especially after running our own business. So in 1997 the three of us left the company and within a month had decided that we wanted to start all over again with something new.

“Initially I think we thought that Azzurri would be a specialist distributor that would focus solely on semiconductor start-ups. But while we had intended to focus on smaller businesses we knew that we had to look at bigger companies in order to generate a sufficient cash flow to keep the business afloat, especially if we intended to move into Europe.”

With their track record the company had little problem in obtaining funding. In fact they went to the City and were given a not inconsiderable sum by 3i the venture capitalists. Then a further stroke of luck arrived.

“We signed NEC and Dallas Semiconductor, which was ultimately sold to Maxim, as our first franchises in the UK. They were looking for more from us than simply selling their products to established customers, they were looking for us to create new demand in the market for their chips and that fitted the model we were looking to create.”

All three men slipped back into their former roles with Shipway managing sales, Jones the technical side and Carlucci driving the broader business.

At the time there was a feeling that the pendulum was swinging back to the specialist distributor. And while the mullti-national distributors were good at supplying products they were not able to generate new demand in the marketplace.

“Despite our success the one thing that was missing was Germany. If you want to do anything in Europe you have to be in that market and out of the blue I was contacted by Arrow in Germany which had just bought Tekelec. They wanted to know whether we wanted to buy back Tekelec Sequoia’s operations in the UK and Germany, where they were already strong.”

It was a nice idea and fitted well with the company’s aims.

“Ultimately it was where we wanted to go so we agreed to buy the German operation back. It gave us a foothold in Germany and while we ended up divesting ourselves of less profitable lines, its acquisition doubled the size of the business at a stroke and got us into Europe’s premier electronics market.”

Shipway’s main focus however was on the UK.

“If you’re going to build a new business up it requires hard work, long hours and at the end of the day it remains all about knowing your customers, building relationships and treating your suppliers well.”

The semiconductor industry had certainly changed by 2000. It was a more mature market with bigger companies that wanted to deal with larger distributors.

According to Shipway while Azzurri had done and was still doing well in the face of growing competition, if it was going to survive as an independent distributor it would have to look at opportunities further afield. And that meant the Far East.

“We understood the technology we sold, we were faster than some of the bigger guys in responding to the needs of customers and we had got hold of the right lines, but we knew we had to look beyond Europe. In fact we were looking at expanding into the Far East, we were already getting orders from out there, when we were approached by Avnet. They had just bought Memec and were looking to provide a more design led offer in the UK. Most of our customers were tier two companies needing that kind of design support. It felt right and the deal went through back in 2008.”

It has been three years and it has, according to Shipway, gone extremely well especially in the UK.

“Back in 2008 Avnet was doing around 10-11m euros in the UK. Today that is up to almost 40m euros.

“The quality of people here is exceptional. I’m the UK country manager and I love my job. It’s still a challenge, especially as we’re aiming to get sales up to 50m euros. The consolidation we are seeing in distribution channels it inevitable and we have had to change our approach to the way we do business. We’ve adopted a vertical market approach that we believe will enable us to better penetrate sectors that we have identified as offering real growth.

“Today you have to be a little smarter to succeed in the distribution market than perhaps was the case 20 years ago. There are far fewer electronics companies in the UK and you have to target the right markets. You can still do well but you do need a bit of luck and when you get it make the most of it.”

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