Navigating the downturn

90947

Radiall is coping with current adverse market conditions not just through cutbacks, but with the bold step of forming partnerships with competitors and customers alike.

Over the past 25 years, Radiall has developed connectors for service providers, installers and OEMs, who remain our core business. Anticipating the rise of integrated optics technologies, in the mid-1990s we took part in several universities' research projects. A few start-ups emerged from these French laboratories, such as Teem Photonics, Opsitech, and Ifotech, and Radiall keeps strong working relationships with them.

To develop solutions for connecting the chips from the box to the network or other equipment, Radiall invested in silicon technology for fibre arrays and silicon platforms, and equipment for micro-alignment. Demand was actually pretty high - until the market collapse in 2001.

Then we had to implement a drastic cost reduction program, slashing budgets and reducing staff on our empty production floors. When activity dipped so low that additional cuts in our core expertise became inevitable, we faced serious dilemmas. Despite the cost, we were determined to retain a strong international presence by keeping open three centres of expertise, in Europe, the USA and China. We also wanted to preserve our investment in technologies for integrated optics.

Defining the correct size of the team was difficult. We balanced the cost of lay-offs and training for rebuilding a team against the potential saving. We took the opportunity of re-engineering our main processes to improve cost and productivity. At the same time, we dramatically increased cross-training. This has allowed us to move people around and to improve short-term projects that generate business, mainly accelerating Telcordia qualification for our fibre arrays product range.

Sharing knowledge
However this approach was not sufficient to generate the necessary savings. The best way to generate profit is additional business. The downturn will not last forever, so we have decided to strengthen our friendships with others facing the same burdens: our customers. We have shifted our focus towards longer term projects, aiming at building mutually beneficial partnerships. We cannot escape the current pressures of the cost reduction spiral, but we believe it is better to work out a constructive cost reduction program for critical components.

We are sharing more and more of our technology road map beyond Radiall with research groups and designers for feedback, advice, rough specifications and target cost. For example, in the field of integrated optics, packaging is an important cost driver. And partnerships are critical to improving efficiency, speed and cost. Most new optical network projects are not yet demanding significant volumes, but, nevertheless, the suppliers need to survive. Therefore, we are trying to increase our presence in various markets by expanding our product range, either through modification or "ruggedisation" of our telecoms products. Diversified markets include: the medical industry, where we have some interesting solutions; and defence, where we were strong in the 1980s. We have created a task force focused on quickly "rejuvenating" an older product range from the heydays of the internet revolution.

Managing such a sharp downturn is so difficult that nobody will survive without incurring some deep wounds. It is an impossible exercise to restore short-term profitability, without jeopardising long term competitiveness in an industry that requires long term planning and heavy investments. There is no magic recipe, but the most applicable qualities.are: good sense, courage, faith in our business and people - and humility.


Etienne Lamairesse VP & General Manager, Fiber Optic Division, Radiall, Paris elamairesse@radiall.fr

More in Companies