Steve Cranstone, managing director of Link Microtek, a specialist supplier and manufacturer of RF, microwave and infra-red products, talks to CIE about the impact cuts in defence spending have had on the business and how it has sought to diversify. Despite a difficult 2013, however, he sees some signs of improvement going forward.
1. How has 2013 been for your company?
As a specialist supplier and manufacturer of RF, microwave and infra-red products, the majority of Link Microtek’s business is in the defence sector, which has been subjected to cutbacks, redundancies and budgetary constraints for the last three years. Consequently, 2013 was a flat and difficult year for us. However, the pain was eased somewhat by the telecoms sector when we secured a large order for mitigation filters as part of the rollout of 4G mobile phone networks in the UK.
2. What has been the most significant event to have taken place for your company this year?
Winning the order for the 4G filters was a key moment for the company. It not only contributed significantly to our figures but also caught the attention of Maria Miller, Secretary of State for Culture, Media & Sport, who is also our local MP. She subsequently visited the company and showed great interest in the filters, which prevent the new 4G LTE signal at 800MHz from affecting digital terrestrial TV reception.
3. How would you describe the current condition of the markets you operate in?
When Link Microtek started up in the mid-1990s, companies like Nokia and Ericsson were investing heavily in mobile-phone infrastructure, so roughly 70% of our business was in telecoms, while the defence sector accounted for only about 30%. Nowadays, though, the market split has completely reversed, with around 80% of our turnover coming from defence-related projects. Typically, we supply the primes in the defence market with components and subsystems for development programmes, but over the last three years, many of these programmes have either been stopped completely or put on hold.
In addition to this stagnation, SMEs like Link Microtek are also experiencing unprecedented levels of red tape. Before you can even bid for contracts, there are numerous hoops to jump through. It’s not just a question of having ISO 9000 any more; now you need such things as an environmental management system to measure your carbon footprint, a disaster recovery plan and a policy on cyber security. These requirements, which generally originate from government, are simply being passed down the supply chain, and the situation has got noticeably worse in the last 12 months.
Of course, dealing with all of this is immensely time-consuming and incurs a significant amount of additional expense. It is a definite impediment to doing business – at a time when people are looking to SMEs to drive the country’s growth!
4. What’s exciting you about your sector at the moment and where do the opportunities lie going forward in 2014?
In our RF and microwave world, there is no longer the same breadth of customer base in the UK that there once was. So Link Microtek has pursued a deliberate strategy of diversification, one example of which is our involvement in the development and marketing of a new type of liquid scanner for use at airport security checkpoints. The EMILI 2 scanner can identify the contents of an unopened bottle in less than a second, and this speed of operation was a key factor in the recent decision by the International Airport of Vienna to purchase 33 of the machines. January sees the first phase of the lifting of liquids restrictions for EU airline passengers, so we are looking forward to further interest in this product during 2014.
Satellite communications continues to be an interesting sector, especially satellite-on-the-move and Ka-band technologies, for which we design and manufacture our own range of coaxial and waveguide rotary joints. In fact, across the board, the order book for our in-house engineered microwave products is looking reasonably healthy at the moment.
Link Microtek is also the UK’s largest supplier of EMF safety equipment – personal monitors and survey equipment for measuring electromagnetic fields – and we are confident that this side of the business will continue to hold up well in the next 12 months.