New CEO Jeff Waters Outlines his Roadmap for Isola

Estimated reading time: 26 minutes

Waters: Not at all really, to be honest. It reminds me a little bit of the analog semiconductor market, where Texas Instruments is the leader in analog, but they're less than 20% share of the market. For Isola, although we are a leader in the market, our market share is fairly small, relatively speaking. We don't need the worldwide market to grow in order for us to grow. There's a lot of market share that we can take and many markets that we can go after in order to drive growth. The market in China is going to be down and it's going to be up. We can't have a strategy that's predicated and based solely on that market continuing to grow. We need to find other ways to drive growth.

Matties: In our past interviews, though, Asia was the center focus of the strategy, so I would think that these influences do bear some impact.

Waters: They do bear some impact. Certainly as the growth slows it will have an impact on sales. I think the industry has seen that.

Matties: We see when the growth is lower that you see a lot of aggressive pricing come in from competitors that can certainly delay your capturing new market share, especially in China.

Waters: I think if you look at the markets, we've got the ability and the cost base to compete effectively there.

Matties: Hasn't pricing been one of the issues that you guys have been faced against, with your higher pricing compared to the competitors? Was that part of the reason for falling off course?

Waters: I would say for certain markets, absolutely. There have been cases where we just said, "Ah, we're not going to go after that business," because we didn't think it was a market that we could serve profitably. Looking at that though, it doesn't hold a lot of water. It really doesn't, and that's one of the things where I see great opportunity for us because there are markets and pieces of business that we've chosen not to go after which if you look at now, especially given that we've got upside in our production capacity, we have the ability to go after those bits of business.

One thing I want to say about our strategy in Asia is certainly, as the market has shifted, and as OEMs have put more of their manufacturing into Asia, we have shifted more of our strategy toward Asia. That said, there is still a good presence for us in North America and Europe. Given that a lot of the business that you see happening in Asia emanates from North America and Europe, it's still a very strong part of the strategy. It comes together nicely in Asia, but I would see it being more broad-based than just saying it's solely an Asia-focused strategy. Asia is where we've needed the most help though, I'll say that much.

Matties: A lot of competition there. You're an international businessman, so you know what the challenges are culturally there as well. There are just a lot of variables over there, but you’ve got Matt and a good team and a good footprint over there.

Waters: We do. This is a fairly unique experience for me in that I'm used to working at companies where you have the majority of your employees sitting in North America. We would service markets like Asia predominantly with North American resources. If you look at Isola, the highest percentage of our resources is actually in Asia. If you look at the competition and how we're competing over in Asia, it's with a factory that's in Huizhou, China, which for us has probably one of the lowest manufacturing costs and more effective factories that we have. We've got people that are over in Asia and we look, outside of me, like an Asian company over there. Matt LaRont, as you mentioned, heads our team in Asia and has been there for the vast majority of his career.

Even though we have a North American headquarters, I want to challenge that notion that we cannot go head-to-head with some of the competitors that are even more cost aggressive in that space. There's no reason that we can't. Where there are things that are making it hard for us to do that, we're going to figure those out and fix them so that we can.

Matties: There are 1,800 people working at Isola, and there's a cultural shift going on in your company now as new leadership always brings a new culture. What sort of culture or message are you bringing to your 1,800 people?

Waters: It goes back to the strategy.  The culture has to be aligned with the strategy. When you look at where Isola has maybe gone a little astray, it has been in some areas where we've gotten a little bit more insular in our thinking. For people in R&D, sales and marketing, product definition, etc., I really am going to be making a strong push towards a more outward-looking focus. Not just on the PCB fabricator side but also on the OEM side.

From an employee perspective, another takeaway I have from my career is that companies typically go astray when the leadership and management of the company start to believe almost too much in what their own thoughts and opinions and ideas are. They don't get enough transparent and sobering feedback from the broader organization. To run a company well, to run an organization well, you have to have decision-making and ideas coming from the people that are sitting right in the heart of the market and that are sitting right at the heart of the development challenge that you're having.

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