How did a UK electronics vendor successfully expand globally, compete against industry giants, and grow exports to over 40% of their business?

In this podcast episode, John Davies, former Managing Director of TDSi, reveals some strategies that transformed a regional Access Control vendor into an international player.

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How a UK Electronics Vendor Grew Export Sales to Over 40%

James: John, welcome to the podcast.

John: Thank you very much, happy to be here.

James: We’re happy to have you. You’re recently retired from TDSi?

John: I’m in my fourth week of retirement. After 46 years of working, it was time to hang up my boots.

James: Good for you. I wanted to focus on TDSi because that’s the company that I know best. Maybe we can start with when you came to the company in 2003?

John: I came to the company in 2003. I had been in touch about an opportunity at Norbain. They were looking for an export sales manager and a brand manager for the Vista product. During the interview process, Alan John, who ran Norbain at the time, decided to split those two roles.

He took me aside and said neither of those roles were right for me, but they had another opportunity within the group. They’d bought this access control company called TDSi a couple of years ago and were looking for a new MD. I started talking to Allan John and the guys at Norbain in May or June of 2003, and I eventually joined TDSi in October of that year.

James: For those that don’t know, when you say access control, you’re talking about electronic systems?

John: Yes, electronics system for controlling who goes through particular doors at what time of the day. Different doors have different levels of security – some doors will have biometric readers, others will just be card-based systems. Anyone who works in an office will probably be familiar with those kinds of card-based systems for access.

James: Then in 2005, about two years after you joined, there was a management buyout?

John: It was quite strange actually. When I first started talking to Alan John about the role at TDSi in 2003, I got a feeling that if there was an opportunity to buy the company, I would go for it. There were fundamental things wrong with the business – it wasn’t very profitable, the cost base was too high. Norbain was owned by a private equity company, and in late 2004, they decided they wanted to divest the two manufacturing businesses they owned: another company who manufactured CCTV cameras, and TDSi who manufactured access control systems.

The PE company wanted to divest the manufacturing businesses so they could then sell the distribution business. In mid-2004, they told us Siemens was interested. Siemens was buying Bewator at the time and said they couldn’t do anything until the beginning of the second quarter 2005. I took that as an opportunity to get some advisors together and proactively approached the board at Norbain.

I approached them at the end of October at an England-Australia rugby match at Twickenham. The chief finance officer said, “You must be drunk, John.” I said, “No, I’ve only had two pints – I’m really interested in putting a bid in.” The board needed to talk about it, and they got back to me four or five weeks later saying I had two months to put a bid in. This was the beginning of December, and we needed to agree heads of terms by middle of January, which we did. We completed the deal at the end of February.

James: So then you’re now in charge of the business, and you’d already seen some opportunities for improvement. What was the process then?

John: It was about looking at efficiencies within the business. We looked at where staff were deployed, the cost base, and the office space. The business was in a 26,000 square foot office but only using 10,000 square feet, with no subletting arrangements. We started by breaking that lease – moving offices took about £120,000 off the cost base of the business. It took about 18 months to get out of the lease.

Then it was about looking at the headcount in the business, where people were deployed, and focusing on productivity and efficiencies. We started re-engineering the business as soon as we bought it in February 2005. So when the financial crash came along in 2007-8, we were already lean and mean. We’d gone through the reorganization, so we were a lot fitter and could weather that storm.

James: One of the things I know is that when you took over, you were doing exports around 25%, but you grew that to 40%. Could you walk us through the main ways you were able to do that?

John: TDSi was an interesting business because they had an OEM deal with Chubb from 1984. Chubb took some of the readers and started selling them under their own brand across the world. They had offices in Singapore, Hong Kong, and Australia. When I came along, TDSi was doing a lot of export into Europe but relying too much on old relationships that Chubb established in the 80s for business in Asia.

I’d spent 13 years prior to TDSi working in Singapore, Japan, and China. While I was in oil and gas and environmental fields rather than access control, I understood the fundamentals of business in these markets. I saw a huge opportunity for TDSi to use my knowledge of Asian markets to establish ourselves there.

We started working closely with Panasonic in the UK initially in 2004, and then expanded to Japan, Malaysia, and Thailand. We had some very good partners working for us in Hong Kong since the late 80s. That distribution business was bought by Honeywell in the mid-90s, but the Chinese team didn’t want to work for a big American corporate, so they started their own business selling TDSi products.

James: So I’m hearing things like partnerships and listening to customers?

John: Listening was so important. Many companies make the mistake of thinking, “I’ve got a great product selling well in the UK or Europe, I’m going to take that and sell it to the Chinese.” If you don’t listen to what your new potential customers want and need, you’ll fail. They might want different features or have different priorities.

You have to listen and be willing to change your product to take advantage of the marketplace. Obviously, you have to prioritize what you’re hearing and align requirements with the potential size of opportunities. We looked for sustainable opportunities within the marketplace – thinking about one, three, five, seven years ahead.

James: Access control is a competitive market with a lot of different factories, especially in China, North America, and Europe. What allowed you to carve out that export niche? Why were they choosing TDSi?

John: In the ’90s and 2000s, the Chinese companies competing against us didn’t have the broad feature set or integration capabilities we did. Their hardware pricing was very competitive, but they didn’t have the software side, which is where solutions are engineered. We spent a lot of time making our software and systems easier to integrate with other aspects of security or building management systems.

We looked at what companies like Honeywell were doing with ProWatch and what Lenel was doing with their enterprise systems. They had all the bells and whistles but at a very high price point. We realized early that if we could bring the price point of integration down, that would enable engineering companies and end users to engineer solutions more effectively with our system. This gave us a unique selling point in the marketplace.

James: In order to close those sorts of deals, did you have a sales team on the ground?

John: We had very good partners. These were Chinese nationals who had been working in Hong Kong before setting up their own business with offices in Shenzhen, Shanghai, and Beijing. These partners had relationships, particularly with the engineering companies. In China at that time, it was all about guanxi – the connections. These partners had been in the security market since the 1990s, so as time went on, many of their contacts were promoted within engineering companies, allowing us to exert more influence.

We didn’t need to establish our own office initially; we just worked through very good partners and listened to what they needed. We didn’t force them to sell a particular amount of systems every year. We had a medium-term outlook for growth, but we worked in true partnership. They weren’t TDSi employees, but I treated them as though they were – they were part of the family. It was a friendly relationship rather than just a commercial one.

James: You mentioned earlier software and the importance of integration as one of your USPs. What was your approach to innovation and R&D, because I imagine that was an area where competitors might have been outspending you?

John: They absolutely had deeper pockets. We aligned what we were doing in the marketplace with how we wanted to set up the business. We saw ourselves as enablers of integration to other systems, providing people with the tools to make that happen. That was our yardstick.

We put an NPD (New Product Development) process in place – a committee with a stage-gate system. We asked our partners and employees to contribute ideas. The first test was always: does this opportunity, whether technology or new market, align with our strategic intent? If it did, then we’d look at the size of the opportunity, timing, investment needed, and potential partners.

While we didn’t have the deep pockets of Honeywell, we were more flexible. We realized we didn’t need to invent everything within TDSi – it was about finding the right partners to deliver solutions to customers. We developed strategic relationships with other smaller businesses to put offers in front of potential end users and markets. It’s about finding like-minded companies and people, and dealing with them on a level that engenders mutual respect.

James: Relationship building is so important still in business.

John: Absolutely, 100%.

James: I had a couple of final questions. With all that experience since 2003, what advice would you give to an entrepreneur now who’s thinking about starting an electronic manufacturing business? Are there three things that stand out?

John: TDSi is an electronics vendor, but the electronics manufacturing capability isn’t within the TDSi business – it’s at the partnership level. We treated our manufacturing partners as though they were part of our business. Because the access control market was so fragmented with many competitors, pricing was very important in markets like China and the Middle East. It’s about finding the right manufacturing partner that can help you engineer cost-effectiveness into your product.

When I came to TDSi in 2003, it had an electronics manufacturing partner on the South Coast. I moved it to a larger business in the Midlands. That company is now part of a global business, but our relationship remains with the people we started with back in 2005. They help us engineer cost out of the product and keep us aware of component obsolescence.

If I had advice for companies starting out: you don’t need to do everything yourself – find the right partners. Apple doesn’t make anything, Cisco doesn’t make anything, but they have good electronics manufacturing partners. They design systems with partners that are easy to manufacture. When designing an electronics product, think about how it will be manufactured and remove anything in the design that will increase costs unnecessarily.

At TDSi, we designed systems, marketed them, sold them, and supported them. The actual electronics manufacturing was done by someone else, but in a long-term partnership.

James: Have I missed anything critical that was responsible for the growth of TDSi?

John: The thing with entrepreneurs – and I know because I am one – we like the sound of our own voice, we think our trumpet is the best in the world. You’ve got to be open to listening to other people who can help you. Don’t think you can do everything yourself. You need to understand your own individual strengths and the company’s strengths and weaknesses, then find partners who can shore up those weaknesses.

Prior to TDSi, I’ve always competed against bigger organizations. You shouldn’t be afraid of that. If you understand a market better than someone else, being small means you’re more nimble.

I sold TDSi in 2019 because there were too many opportunities to pursue and my pockets weren’t deep enough. I was thinking about what’s best for the people in the business and the brand. Now TDSi is part of the Vitaprotech group, which helped during COVID – if TDSi was still on its own during COVID, that would have been really tough.

There comes a time in the lifecycle of all businesses where you need to be brave enough to say you need help. Even as a startup, you need to admit there are things you can’t do alone. Be open and honest with yourself and the people working for you. It’s about not being selfish and being as open as possible.

James: That’s great advice. Thank you for sparing time to tell the TDSi story.