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Successful, Long-Term Growth at Prime Technological ServicesMarch 28, 2017 | Barry Matties, I-Connect007
Estimated reading time: 19 minutes
Prime Technological Services has been featured on Inc. 5000 for four years in a row—quite a feat for a North American EMS company based out of Suwanee, Georgia. Publisher Barry Matties sat down with the CEO of Prime, Greg Chesnutt, at IPC APEX EXPO, to glean how they continue to find success and have been able to maintain such an impressive growth rate over the last four years.
Barry Matties: Greg, please start by telling us a bit about Prime Technological Services.
Greg Chesnutt: We’re a contract manufacturer who’s been around for about 27 years. We began principally with NPI work and prototyping, and we've evolved over our 27-year history to provide a full suite of services, excluding original design services. We're not doing original design work, but we do a fair amount of DFM and design for test, reliability testing and failure mode analysis work. We're a PCBA manufacturer and all of our work is turnkey. We also do a fair amount of box build or complete product manufacture for our clients. We also selectively provide 3PL services, depending on our customers need.
Matties: You’ve been in this particular business for 27 years; were you in the industry prior to that?
Chesnutt: I was not, actually. I came to the industry in 2007. My partners and I bought this business from the entrepreneur who founded it. We have an investment firm as well that invests principally in niche manufacturing businesses. We found this opportunity through an intermediary. Really didn't know a lot about the industry but looked into it, liked it, thought the company in particular had some interesting growth prospects. I'd say we’re nine to 10 years in now, and we're pretty excited about it. We think we've had a good run with it in terms of our ability to build value.
Matties: You came through some difficult times. You bought it when the market was down and you probably got a pretty good price on that.
Chesnutt: We’re in the lower middle market, so we’re sort of dealing in companies that are $50 million and under, for the ones that we acquire. Valuations over the years have begun to creep up a little bit, but certainly ‘08 and ‘09 were interesting years to be in any business, but particularly interesting to be in the lower middle market.
The company was a lot smaller when we bought it. It was, what I like to think of as, a lifestyle company, entrepreneurial founded. The gentleman had done a great job building it over time. We just felt like, and still feel like, it represents a very attractive growth platform. We’re happy we have it.
Matties: How many employees do you have?
Chesnutt: We have about 110. We’re a single facility, with 50,000 square feet in Suwanee, Georgia, which is in the northern suburbs of Atlanta.
Matties: In all those years, what’s the thing that surprised you the most coming into this industry?
Chesnutt: The thing that has probably surprised us the most is the momentum we’ve enjoyed in growing the business. When we bought the company, it had been a solidly profitable business, very well run, with an excellent market reputation, however, we wanted to redefine the culture of the company as a growth business. That's challenging proposition when you're in an industry where growth rates are in line with overall GDP growth or slightly higher. I looked at a forecast yesterday of maybe 4 percent growth targeted this year for this industry, and as you move a little further out, there's some debate as to whether even that number is sustainable.
We’ve been on the Inc. 5000 for four consecutive years now. So really, the most pleasant surprise for us has been our ability to take the company as a platform, invest in it very aggressively in the four pillars of investment in our business—capital equipment, the information architecture, the people and some sales and marketing—and have it exceed our expectations for growth. That's not always the case in every industry. Sometimes you can do all of those things right, and growth can be difficult to come by.
It’s not easy in any business, but the circumstances during the time that we've owned it—some of the technologies that we've focused on, the verticals that we've focused on—have been pretty accommodating to that. So, we've been pretty pleased with it.
Matties: Growth comes from great leadership, but also from great strategy. What strategies did you employ to create that growth?
Chesnutt: A couple. First, it had to do with completely retooling the factory—it was the first thing that we needed to do.
Matties: Looking for efficiencies, or just capability?
Chesnutt: Capability and efficiency. Our motto in our business is if you're going to build technology, you have to have currency and redundancy in your technology. So, I'd say probably the first component of the strategy was to really build the platform in terms of capital equipment. Then, to run any business effectively today, you need an excellent information architecture. We didn't have one in the business, so we made substantial investments in that area. Culturally, sometimes when you're running a business, if you want something to become a reality in the business, the first important step is to believe in it, and the second most important step is to talk about it a lot.
So, we engaged our workforce. We engaged our market. We engaged the influencers in the business, which are probably no different for us than for any other Tier 3 North American EMS company, the distribution and design community. We told them we wanted to grow. More importantly, we backed up the desire with deliberate investment that was demonstrative of our intent to go try to make it happen. I know there's not a lot of secret sauce in that, but that's just what we did.
Matties: But those are fundamentals that oftentimes people miss.
Chesnutt: They are, particularly in a business like this where there are great companies in this industry. I kind of think of it as a bit of an open architecture business, certainly on the EMS side. Not a lot that's proprietary. Everyone has access to the same asset base. Certainly, labor pools are different if you get in different parts of the country and different parts of the world, but a lot of times it just comes down to having a vision and being kind of relentless in terms of how to stay on target and executing.
Matties: What sort of culture did you bring to your organization?
Chesnutt: We took the organization through a fairly extensive planning exercise when we first came on board, and we started with our core values. Number one on our core values was to be as customer-centric a company as we would want to engage with if we were on the other side of the commercial equation.
So, we really spent a lot of time with all of our associates and all of our teams talking about the importance of the customer. That's kind of manifested itself in some things that have become phrases or quotes in our business. But in any mature business or really in any competitive free-market economy, the only source of enduring success is getting and keeping happy customers. If you don't make that idea the centerpiece of what you're trying to do, then you can be successful for a while, but it’s very, very difficult to sustain it over time.
The customer centricity, as embedded in the four core values of our business, was really the starting point for the messaging that was critical in building the culture we sought.
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On the cusp of another IPC APEX EXPO, we focus on how bare board fabricators can maximize their time and investment at the show. We visited with Matt Kelly, IPC chief technologist, and Julia Gumminger, IPC professional development and events manager, as well as Udo Welzel and Stanton Rak, the chairs of the technical program committee, to discuss the technical depth and breadth that the 2024 show will bring to fabricators and professionals all along the supply chain.
Each quarter, IPC releases a list of standards that are new or have been updated. To view a complete list of newly published standards and standards revisions, translations, proposed standards for ballot, final drafts for industry review, working drafts, and project approvals, visit ipc.org/status.
IPC’s efforts in government relations and advocacy have been pivotal in getting legislation like the CHIPS Act passed. In February, IPC President and CEO Dr. John W. Mitchell was back in Washington, D.C., representing our industry in a meeting convened by the U.S. Department of Commerce, where he discussed workforce issues in our industry and how to ensure that our businesses have the workforce they need. In this audio interview, he reviews his concerns and solutions on workforce development.
Like any great tech industry event, IPC APEX EXPO pushes us out of our busy 24/7 manufacturing bubbles. It forces us to pay attention to things that are important but not always present in our day-to-day lives. But there is so much to see and do. This issue of PCB007 Magazine previews many of the important events taking place at the show this year and highlights some changes and opportunities. Let us help you map out your show plan. This issue is focused on the PCB fabricator’s show experience and how you can get the most from your valuable time and investment in attending the show. So, buckle up. We are counting down to IPC APEX EXPO 2024.
It’s been another busy week in the industry. We lost another old friend last week. The EIPC show happened, and Pete Starkey provided us with complete and compelling show coverage, from start to finish. Recently, we posed the question, “When is it time to introduce embedded components into your PCB design?” which was asked and answered by design aficionado Kris Moyers in the latest issue of Design007 Magazine. We are proud to be a part of the exciting Global Insights weekly newsletter, which Nolan Johnson and Brian Knier explored in their interview, and we rounded out the week with some big merger news. Here are my picks for the past week’s must-read news items.