Edwards' green focus pays off

By Bob Sherwood
Published: October 6 2008 03:00

The drive for green energy sources is helping a West Sussex-based manufacturer to expand in spite of a weakening in its traditional semiconductor business.
Edwards, a global vacuum technology company, is seeking to exploit growing demand for solar panels and biofuels as new markets open up for its industrial products.
The Crawley-based company, founded in 1919, makes vacuum pumps that are used in the manufacturing of products such as semiconductors and flat panel displays as well as other chemical, pharmaceutical and metallurgical processes.
The company is the largest vacuum supplier to the semiconductor industry but Nigel Hunton, chief executive, says its products are in greater demand from a growing range of industries.
He says: "New markets are opening up for us all the time, such as biofuels and solar. We are starting to see some of the technology that is in flat-panel TVs coming into thin-film solar panels.
"Last year, we did virtually nothing in solar, and this year we will do $80m (£54m) [of business] and next year we will do more than $100m."
Edwards has increased its turnover to $1bn and is on track to raise it again this year, even though the semiconductor market is down by about 30 per cent. It predicts "strong growth" over the next three years, driven by emerging markets and new products coming through its development programme.
Mr Hunton says the company has become more entrepreneurial in the past year since it was bought by CCMP Capital Advisors, the private equity group, last summer from The Linde Group. It means Edwards, previously part of industrial gases group BOC, which was acquired by Linde, has been able to re-establish itself as an independent company.
He adds: "Edwards was a hidden part of BOC and not high on their agenda. But it's completely different now. It is reborn in a way. BOC was always about gases but now we have a board that is really interested, passionate and engaged."
The company is able to be more fleet of foot under the new ownership, he insists, and has disposed of its non-core chemical, parts cleaning and bearing businesses, generating $100m in the process.
It has also invested about £20m on manufacturing equipment in its south-east sites of Shoreham, Burgess Hill, Newhaven and Eastbourne in the past two years and is moving its headquarters into new offices in Crawley. It employs about 1,000 people in the region.
"Shoreham is now one of the most advanced machining facilities in the UK," says Mr Hunton, stressing that manufacturing in the UK is crucial to the company, even though it now employs 3,600 staff in more than 20 countries, with manufacturing facilities in Korea, Japan, China and the Czech Republic.
The UK bases are instrumental in designing and manufacturing the company's most innovative products, with about 50 per cent of its turnover manufactured in the UK.
Shoreham will, for example, play a role in the manufacture of the world's biggest dry mechanical vacuum pumping system, recently ordered by Ching Qing Steel Group in China. Worth about £4.3m, it is Edwards' biggest-ever order.
And by sharing data between its development sites in the UK and Korea on a daily basis, the company can take advantage of time differences and achieve "24-hour-a-day development".
Among the advantages of the new ownership, says Mr Hunton, are the excellent financing arrangements, including favourable credit agreements and a flexible loan structure, as well as ensuring the business is not over-leveraged.
"But they are performance-driven," he adds. "And so I think the company is more performance driven than before."
And the new owners appear prepared to take a long-term view, with no talk of an exit strategy yet.
"We did a three-year strategic plan review in July. It's very much about investing for the long term ," concludes Mr Hunton. "Though an IPO is clearly one exit option in the future at some point."
Copyright The Financial Times Limited 2008