by winston » Sat Aug 20, 2016 7:46 am
not vested
20 July 2015
Tech a load off
CEO of electronics manufacturer Salutica Allied Solutions James Lim believes you have to keep pace with or be ahead of the world to stay competitive and keep your company on sure financial footing, writes LIM WING HOOI.
As the saying goes, nothing beats real-life experience. Having once been tasked with kicking 10,000 people out of a job, James Lim Chong Shyh vowed to never undergo such an unpleasant experience again.
Turning around businesses and saving jobs has since became something of a specialty and priority for Lim, and it is what led to him becoming a factory owner.
Now chairman and CEO of Salutica Allied Solutions, an original design manufacturer (ODM) of electronic components, Lim still vividly remembers the nasty task he had to execute. The year was 2000 and he was operations executive director at hard-disk drive manufacturer Seagate in Ipoh.
Worldwide recession and excess capacity meant the Ipoh plant had to be shuttered, with 10,000 workers left out in the cold.
“The thought of affecting so many people’s livelihood was dreadful. Each day passed like a knife slicing across my heart. It was beyond my control. I forsaw many employees would be unemployed for several years,” he recalls.
The company operates a 30,000 sqm one-stop design, sales, administration and manufacturing plant in Kawasan Perindustrian Zarib, Ipoh.
After they were retrenched, some took to selling insurance, some set up fried banana stalls or gave tuitions, and many became brokers and traders.
“I fought on their behalf for the best compensation, even threatening to resign if the company did not accede. And the Singaporean management listened to my plea, finally acceding fully to the best bargain I put on the table,” he says.
Subsequently in mid-2000, Lim was offered the same position at Seagate’s Penang factory on the northern side of Bayan Lepas, with a strong chance of becoming managing director of Penang operations within two years.
“I rejected the offer in the spirit of soliditary with the laid-off employees,” Lim reveals.
Instead, he asked to be transferred to another division, Seagate RSS (removable storage solutions) another plant in the southern part of Bayan Lepas, Penang, which had been facing financial and technological challenges for years. Lim took this difficult path because he hoped to turn things around and save the 800 jobs that would be at risk should management decide to close down the plant.
He spent three years there, and when he left he had a strong team in place and a unit that was beginning to show a profit.
“I put a strong management system in place with quality systems, and the division was eventually sold to another electronics manufacturing multinational corporation (MNC), Benchmark Electronics in 2007, with most of the jobs intact,” he says.
By then, Lim had acquired a reputation as the “turnaround guy”. In 2003, he was headhunted and offered the position of managing director at a hearing aid component manufacturer in Penang.
The Chicago-based MNC had a management crisis, and when Lim took charge, he shipped out some of the more senior management staff. Middle management and staff from the lower echelons were sent for retraining based on performance and attitude.
The company started to show improvements in its operations, but then Lim had disagreements with the overseas management who intervened with some of the staff movements he had implemented.
Being headstrong and holding to a merit-based policy, Lim left in 2004 after he was offered the job of CEO at Balda-Thong Fook Solutions Sdn Bhd, a Germany-Malaysia joint venture company that was doing original equipment manufacturer (OEM) jobs in electronics and plastic components for consumer electronic devices, including feature phones.
Having had three bad experiences involving technological changes making jobs obsolete, Lim stressed to the owners that the company had to move away from labour-intensive activities and merely charging for labour and assembly costs.
Telling the owners: “You may own the company but I am the CEO”, he started a R&D department and steered the company into the original design manufacturer (ODM) business.
His instincts proved right on the money as the OEM business took a hit in 2009 with the introduction of smartphones. Almost overnight, feature phones became obsolete.
Meanwhile, the R&D department, which was able to build and design almost any electronic item, secured new clients who wanted electronic goods like headsets and speakers.
“The ODM business, which made us very good at bluetooth technologies involving headset to speakers, kept us standing, but the German owners (who took 100% control in 2006) were not interested in the electronics business, compared to the plastic-moulding segment,” Lim recalls.
This was understandable as the margins for plastic-moulding OEM were as high as 20% whereas electronics ODM could, at most, fetch 7%, according to Lim.
“They couldn’t accept this, and so on April 2013, proposed that we take over ownership via a management buyout (MBO). After deliberating for a few months with the top management, we signed the deal in September 2013 and changed the company’s name to Salutica, beginning a new journey as new owners (with Lim taking majority ownership),” he explains.
Lim was already 55 at the time, and his wife wanted him to retire instead so that he could spend more time with the grandchildren. Much as he wanted to do this, Lim knew he had to go ahead with the buyout. The future of the employees looked uncertain, especially with new owners not understanding the business.
“The first thing on my mind was to preserve as many jobs as possible, with comparable remunerations so that everyone’s livelihood could be sustained,” he says.
Lim’s next move was to offer all qualified employees a stake in the new company, and he paid generous bonuses depending on the company’s financial performance. The company continued to invest in state-of-the-art equipment throughout the factory.
“We also play by international ethical rules, being fully compliant with IP rights and quality standards. This put us in a business sector that has a high barrier to entry for would-be competitors,” he points out.
The company’s chain of command had also gone through a shake-up, with greater autonomy given to senior managers, which Lim reinforces from time to time with this line: “Just do what you think is best for the company.”
Today Salutica operates a 30,000 sq m one-stop design, sales, administration and manufacturing plant in Kawasan Perindustrian Zarib, Ipoh with about 980 workers (both contract and permanent). It’s a head-count that has remained stable since the MBO days.
Having invested over RM5mil to date on machinery and other technological upgrade, such as starting a mobile applications (apps) development division, the mid-tier company is also now marketing their own products. The FOBO Tire is one of them.
The Tire Pressure Monitoring System (TPMS), which uses the latest Bluetooth technology to monitor tyre pressure, was launched in late 2014 and has sold over 5,000 units to the US, Germany, Japan and countries in the region.
When asked about his five-year plan, Lim laughs.
“That’s an oxymoron plan in this business. Things change so fast, it requires constant decisions. And you would be thankful if you could nail down a plan for a year,” he remarks.
“I revised our plan every six months with the management team, where we will decide to retain, chop, add, downsize or increase the risk in all our business portfolios. This is even more true for our design directives, as you have to keep pace with or be ahead of the rest of the world,” he concludes.
Source: The Star
It's all about "how much you made when you were right" & "how little you lost when you were wrong"