Viking Test Services: Much More than Test
Recently, 007 Technical Editor Pete Starkey and I toured Viking Test’s facility in Hants, UK where we met Managing Director Jake Kelly to learn about the history of the company, their recent involvement in the Indian PCB market, and what he thought of the EIPC Summer Conference.
Barry Matties: Jake, will you please start by giving some of the history of Viking Test—where you started and how arrived at where you are now?
Jake Kelly: My dad started the business 30–35 years ago. As the name Viking Test Services suggests, we were a testing service for testing bare unpopulated printed circuit boards. We started in a small, approximately 700 square feet unit with a few people doing opens/shorts testing. That's where the business started, using a small electrical tester made by a company called Viking in Scandinavia. At that time, there were probably 500 printed circuit board companies in the UK, and electrical testing was not commonly used.
We started doing a little bit of service for some companies to see if they were getting some opens and shorts on some boards, and so the service became more popular and more commonly used in the industry. That was pretty much just PTH or single-sided conventional boards at the time. Then it got more complex and we started talking about surface mount, and a bit more complex again when we started getting double-sided and having to make double-sided adapters and pin adapters. It was when flying probes came in when the business started to change, because we bought a flying probe machine called MicroCraft from Japan. We were using that as a service; we became very competent at using the machine and repairing the machine, so we started offering the machine for sale.
Matties: That's when you began your sales side of the business?
Kelly: Yeah, that's exactly right. Customers, when they're spending a certain amount of money with us per month on the services, are going to look at bringing that service in-house, not just for the cost but for the logistics point of view and the time point of view.
Matties: What year was that?
Kelly: That was probably between 1998–2000, when the PCB industry was extremely strong. There were a lot of PCB companies in the UK making a lot of money, and selling testers was easy. We were selling, I don't know, 10–15 sets of electrical testers a year, on top of the electrical test services. It was nice.
Matties: You were a really healthy business. Your overhead was low and your revenues were good.
Kelly: Yeah, that's how it was, and then at some stage in the early 2000s was the migration to China. The big shops were going, and the Chinese shops were just taking more and more of the business in the UK. Here we are now in 2016 and we've probably got approximately 50 PCB companies in the UK—small to medium size, no big ones at all. That wasn’t just in the UK—that's what's happened all over Europe. We've adapted an awful lot; our services are almost non-existent now in terms of electrical test services. Everybody in the UK has a tester, we either sold it or somebody else has, but the MicroCraft name is now probably the number one in the UK.
Matties: Back to the heritage of you guys introducing it early on.
Kelly: Yeah, and being able to service and support it, that's been the key. We're not just a guy in a car, or working from a front room office offering equipment for sale where if there's any service or support needed it's going to come from Japan, China or Europe. We're here, we're local, and that's always where we've been focusing to make sure that we can do that right. Because the majority of our sales is second or third machine sales, it's not the first one, so we need to make sure that that service and support are right, which has always been the case. Based on the successful sales of the flying probers, customers really started asking us if we could expand and if we could offer this or that machine, and we weren't offering that; it wasn't in our product portfolio at all.
I remember one customer asking us if we could sell a Silverline, and he wanted to buy a Silverline from us because there was a lot of trust there, and a lot of confidence that it would be right even though we didn't have it. I found him one, actually a European-made one, and we sold it to him, it worked fine and he was very happy with that. At some stage I went to China myself, because there was all of this talk about everybody buying the boards in China and setting up offices there, or European companies buying Chinese businesses and setting up a manufacturing facility in China. So I went to a CPCA show in in about 2004, and I went into these enormous halls and saw all of this equipment and some was bad quality. I thought, well I can't do anything about that, but some was good quality. Good quality and very reasonably priced, and I was thinking that we could work with this.
I didn't go over there looking for a specific product or specific line, but I definitely came away with the feeling that we could work with some of these companies. Coupled with some local knowledge, some local support, some local service and spares, we could work together. That's what we did and haven't looked back since. We've got a good range of suppliers now, and Universal (UCE) looks after our process lines, an absolutely fantastic company. They're the biggest manufacturer of wet process in the world.
Matties: And often copied, I’ve noticed.
Kelly: Oh yeah, there are a lot of copycats over there. That's good, and they're proud of that, because if you're going to copy someone, you're going to copy a good one and not a rubbish one, right?
There are copycats out there but it's never as good, it's always one or two years behind in the technology. UCE manufactures something like a kilometer of wet process equipment every month, and they come up with something like 2500–3000 people all together. Out of those people there's a couple hundred in R&D alone. Although they're making a lot of equipment, their primary focus is still on quality and technology. They’re a brilliant partner for us.
Matties: How does the partnership work? Are they manufacturing equipment for your brand name? Tell me about that.
Kelly: No, it is just UCE. I have never thought of branding it as a Viking, because I don't need to. I think the UCE name has come from almost nothing in Europe to a very well respected name now in the last six or seven years since we've been working with them. We've sold to some big companies.
Matties: Are they taking your designs and building them? I'm not quite sure I fully understand the partnership.
Kelly: We're a sales and support partner, an agency/distributor, but we have introduced them definitely to some different design concepts that they weren't aware of so much before. Our engineers have gone to China today and we're there to buy-off on some lines that we've got in build at the moment that are coming here to Europe. Part of the visit will be talking to their top manager about new features that we need to be put onto the line. Definitely their technology has increased a little bit since they’ve been working together with Viking.
Matties: You sell their product lines, you help influence the design, and what territories do you sell in for that product line?
Kelly: Europe and India.
Pete Starkey: What are your thoughts on the Indian market?
Kelly: I'm really excited by India, actually. This all came about when I was looking for a sales manager to help Viking grow in Europe specifically, and I advertised about a year ago. I wanted to replicate what Viking is doing in the UK in Germany, because we've got 80% of the market in the UK now for wet process equipment. There's no reason why we can't do that in Germany and other European countries, but Germany was the focus market. I advertised for a European sales manager and a lady by the name of Veena Bopanno applied; she is Indian. She's been in the PCB industry 25+ years and started her career at ATNS in India. She then moved to ATNS in Austria, and she's been with us for the last year.
It wasn't the path I was looking at by any means; it's just the path that we've gone down. She's been focusing on India, and we've developed some strong sales in India already. Better than that, it's the projects that we're working on now that some big contract electronics manufacturers have moved to India in the last couple of years. With India’s enormous defense budget and the new Indian incentive ‘Make in India,’ the growth in electronics in general is enormous. Our segment of that is PCBs, and we're working on some complete turnkey projects now. I've probably got eight on the go at the moment at various different stages of developments and at various different sizes, ranging from relatively small, high technology plants, to enormous mobile phone plants that have been rated as some of the largest in the world.
Starkey: That's great news.
Kelly: Yeah, it is. It's fantastic.
Starkey: That would really add to your total revenue and give you a nice boost.
Kelly: If we get them it will be company changing. We've opened an office to support what we're doing there and we’ve joined the IPC and some other trade organizations there. We've taken on local staff, and we're heavily involved now in what we're doing. We're actually going to be setting up a lab as well. Because again, we want to do it similar to how we're doing here at Viking in the UK. We don't just want to be a guy sitting in an office with a suit and tie selling equipment—we need to do more than that.
The Indian market has struggled because people have gone in and sold equipment, but there's been no service and support, so if the companies that buy equipment want service it has to come from China, Japan, or Europe. It's costly, it's expensive, and so it doesn't actually help them. We need to be there with trained staff to service and support and do the job correctly, so that's what we're involved in now. We've got training programs and we're in the process of setting up a high-reliability test lab as well. We're going to do proper reliability testing on finished boards. There's only three or four labs of this type in the world. We want to set up in India, where there's a market there for it. It won't be just for Indian customers, the boards will come in from all over the world to do that. That will just further show what we're doing for the market.
Starkey: You certainly are putting together a strong team with a lot of capability. How many people do you have working for you now?
Kelly: Approximately 20, worldwide. We've got an office in China as well, where we've got two people working.
Starkey: What do you think of the China market?
Kelly: I hear that PCB manufacturing has slowed slightly, but I don't see that because I'm not there. From our point of view, the equipment that we're getting is the same quality. If it's slowed slightly in China, if anything I should get a faster delivery of the equipment that we’re buying. All I can say is it doesn't seem to have affected our major suppliers. For wet process, UCE is only our supplier, but we work with cut sheet laminators, we work with drilling and routing equipment, UV exposure machines, so there's a whole range. They're carrying on as strong as normal.
Matties: When people think of Viking Test, what is it that they should recognize your company as? A sales and distributor, a service, a manufacturer? Because we saw on the tour downstairs that you do spindle repair and equipment refurbishing as well.
Kelly: I suppose we have got a broad portfolio of equipment and services now.
Matties: Are you actually manufacturing wet processing equipment yourself?
Kelly: No, we don't and we wouldn't be able to. There's no point in us trying to do that here in the UK. The costs are too high and we've got our Asian partners that can make a considerably better machine than us for a considerably better price.
Matties: Because what I'm hearing first and foremost is you're a sales and distribution company.
Kelly: I like to think that we're more of a partner company to our customers.
Matties: Which would be the service aspect of what you provide.
Kelly: Yeah, but kind of a little bit more than that as well. We often get asked general advice of how to do something. Because, like I said, we're not just a sales guy sitting in a front room. The people that work for us and most of our engineers have come from the PCB industry so they understand the process.
Now to give an example, we've got a customer in Europe and he came to us a while ago because he wanted to buy an AOI. He came to the UK, he saw the AOI that we sell at another one of our customers, he liked it, the price was right, the product was right, and he bought it. When we were installing the machine, he asked us to advise him and showed us his shop and said, "What about this etcher?" We looked at his etcher and said, "It's not very good, it doesn't have this, it doesn't have that, you could probably do a lot better." He said, "Well, could you come along with a design of a machine?" We offered him a Universal etcher and within a couple of weeks he bought it. Then he bought an exposure machine, and he's bought this and he's bought that.
He's come to be a very good customer of ours now. He's by no means the biggest in terms of revenue, but in terms of a trusted partner, he's almost like our perfect customer because there's trust both ways. It shows that we're not just a supply company to him, but we're part of his team, if you like, to look for the right machine and design to help his company grow and improve its quality.
Matties: I keyed in on ‘trusted partner;’ you built your company on the reputation of trust.
Kelly: That is it. Most of our sales now are second and third and fourth machine sales, and we wouldn't be getting those sales if the first machine hadn't gone in right and done what it's meant to do—and they don't always. We can't control absolutely everything; sometimes there might be a small quality issue or there might be something that happened in shipment, but we can only look after what we can, and I think we do a very good job in terms of that.
Matties: The real value is in the front-end of the relationship, where you can go in and help a partner design the best system or acquire the best system that meets their need and is the right budget.
Kelly: That is what it's about, because you have to understand the process of what he wants. It's very rare a customer will come to us and say, “Right, this is the drawing, this is the spec, please can I have one of those?” We need to understand the pre-process and the post process. For example, why have you got a problem with your stripper? Why does your current machine not strip out between these traps, what's the problem? Look at the problem before; you may not actually need a new machine here. Maybe if we look at the prior processes we can look at something…
Matties: And modify their process.
Kelly: Yeah. Sometimes we're doing ourselves out of a sale, but in the long run it's the right thing to do.
Matties: But you're building the trust and servicing the customer properly.
Kelly: You mentioned spindle repair, and we've done spindle repair for 10+ years now. The guys that do that have been repairing spindles and general engineering for nearly all of their lives, so we have an excellent spindle repair business. What makes it so strong is that we repair all types of spindles, from Westwind, Jaeger, Precise, PluraTech, and a whole range of others, and not just the common ones but all of the ones 20+ years old that are obsolete. Again, this is part of that trust. The little, small companies that have got this 20 year old drilling machine in it need somebody that's going to support them and fix that spindle. They can't afford to just go out and buy any spindle or, the worst option, buy a new drilling or routing machine.
Starkey: Now in that service, are you primarily focused on the UK market? I would think globally this is more difficult for people to select you, just from a geographical point of view.
Kelly: Most of our spindles probably do come from the UK, but I would like to do more abroad and there's no reason why we can't, because a spindle will fit in a box the size of a shoe box and weighs on average probably three kilograms, so there's no reason why we can't do more abroad. We do quite a lot for our customers, and we probably do so for a lot of foreign countries.
Starkey: It's open to the entire world, you're not limited in any way then?
Kelly: Yeah, and there's no big tax or duty issues because it's classed as a repair so it comes in and it goes back out again. We’re just looking at an international shipping charge, which isn't so huge. That's only a small percentage of the overall cost anyway.
Matties: When you look at India, how many shops are there that you can service in the PCB sector? You mentioned the phone sector as well.
Kelly: Currently in India there's approximately 50 PCB companies. There's probably a similar-sized market to the UK in terms of the gross value of the product as well. You've got one huge player there that probably looks after, on its own, about 50% of the total value of the boards manufactured, but 95% of that is exported and it's simple. It's double-sided or single-sided boards or low layer count. You've got a handful of low technology, small shops. You've got those in-between, and then you've got a couple of, I wouldn't say high technology, but moving towards higher technology companies. We're in a position, or we will be soon, to be able to service them all to one extent or another. India's got a couple of government facilities as well that are making high technology boards for aerospace or for military application.
Starkey: As far as servicing them, you mentioned the test lab for some HDI and such that you're setting up in India. Is that part of the strategy there?
Kelly: Absolutely. It won't just be for the Indian market, we would be able to expect to get samples and products from all over the world for that because it's such a niche market. The high technology shops in India I'm sure would use that service or have said they would use that service.
Matties: In India, I've not been there yet to look at the marketplace. Are the shops relatively newer shops?
Kelly: No, they're not. I would say they're older shops with mostly older equipment, with old technology and old manufacturing styles.
Matties: There's room for new ...
Kelly: Huge room. This is what it's all about. Since this huge defense budget's been released, since the new Make in India incentive has been released, and with these big contract electronics manufacturers there, we're just getting so many inquiries at the moment for equipment. But more so, it’s not just for a few individual items of equipment, it's for complete turnkey greenfield sites to build and manage.
Matties: It's a game changer for you?
Kelly: Yeah, totally, and a game changer for the Indian market and for the PCB market. I mean some of these factories I'm talking about are enormous.
Matties: Great. How much time are you spending in India these days?
Kelly: I've gone out three times in the last six months.
Matties: Quite a bit.
Kelly: Yeah, and it will be more since we've now opened our office, which I did on my last visit. I'm going to have to be going out there a little bit more now.
Matties: What city is your office in?
Kelly: It's in Mysore, near Bengaluru, which is fairly central. We're in the southern side of things.
Matties: We always hear about the weak infrastructure and the challenges in that regard; what have you seen?
Kelly: I think in some respects the infrastructure in India is considerably better than the UK's actually. If you look at data and mobile phone signals, I get a much better service in India than I do here in the UK. The road system is, in terms of that, not as good, but saying that, they're building an awful lot of new highways and roads at the moment. Everywhere I go you see building work going on. It's still a developing country so I wouldn't expect it to be as good as here, but some infrastructure is better.
Matties: People are likening it to China 15 years ago, and we saw how fast China turned from 15 years ago.
Kelly: Yeah, China's incredible. Every time I go there there are new roads, new subway stations, and not just stations, but complete networks set up. We go to Shenzhen primarily, and when we first went I think there were five underground subway networks, and I think there's now 12. There's a new railway being built between Shenzhen and Shanghai. It's just phenomenal how they've grown, and it seems to be in a very controlled way. It's quite amazing. I don't know if India is ever going to get there.
Matties: Automation is obviously key in China and a big driving force. How is the attitude towards automation in India?
Kelly: There is very little automation in India at the moment. The labor rate if anything is lower in India right now, I would say, than China. As China has developed, the labor rate has gone up and up and up and up.
Matties: It's skyrocketed. Do you think that the shops going into India will obviously be looking at automation?
Kelly: Yeah, the factories that we're designing at the moment are fully automated. That's not just from a cost point of view, that's from a quality point of view more so than cost. Less handling involved, but less defects and that's it really.
Matties: With the products that are being built there, there's almost 1.3 billion people in India, so there's a large emerging marketplace right there—like we’ve seen in China with their transition from export to domestic.
Kelly: There's something in the order of 20 million mobile phones being sold every month in India at the moment. It's a staggering amount, and all of that is finished product being brought into the country. There are some large contract manufacturers set up now that are doing assembly work, and from those will be satellites of businesses coming in to support that. If you look at the bill of material of a mobile phone, you've got the component, you've got the assembly side of it, you've got your casing, you've got the packaging, and you've got the bare board itself, which is somewhere around 7% of that total value.
Matties: Jake, is there anything that we haven't talked about that we should be discussing?
Kelly: We are developing a new machine at the moment that’s in the very early stages. It's a plasma technology, but I don't want to give too much away at the moment actually on that. It's too early on and it's too novel.
Matties: This will be a piece of equipment that you will manufacture yourself?
Kelly: I hope so.
Starkey: So you're still looking to be in a manufacturing capacity of some sort.
Kelly: I would like to. I want to make something. We've got this concept, I can only say it's not a design, it's a concept at the moment that we want to work with the government to get some funding. I want to maybe work with some universities to get some additional help. I see this as a potential technology-driven machine that I think would work well and I want to make it here.
Starkey: That's good. There's nothing like being a craftsman and building a product from the ground up and seeing it come to fruition and off into the manufacturing environment.
Kelly: Yeah, and sell it worldwide and get distributors set up and work that way. I'm excited about it.
Starkey: Let's shift gears just a little. We were recently at the EIPC conference, what do you think of those sorts of conferences and what do you get out of that?
Kelly: I got a tremendous amount from this conference. The last EIPC conference I did was probably 10–12 years ago in Russia. I always get a lot from going to these events and I don't do enough of them, but based on this last one in Edinburgh I'm definitely going to go again. I want to sponsor it again, I think it's a great networking event, and like I said, I've always kind of shied away from these things. There always seemed to be something better to do, like go and see a customer or something.
But I got tremendous value from being there, meeting not just customers but suppliers alike, listening and learning about the trends in manufacturing worldwide from different global markets, and looking at new technologies that are coming out and just being part of our industry. I'm still quite passionate about our industry and I want to support it, and it's a shame that even though there were 80+ people at this conference, it didn't seem to be enough. There's not enough people there supporting it, whether that would be customers or suppliers alike.
Matties: It sounds like they were pleased with 80, because I guess there have been smaller groups in the past. I'm not sure, it was my first time there as well, but it was nice to see you as a sponsor and being there for sure.
Kelly: I like doing it, and they were appreciative of us being there and supporting it. They would be appreciative of more people being there and supporting it, whether they're sponsoring it or just coming out to the event. I really do get tremendous value out of it and will definitely go again. Not just to the EIPC but hopefully other worldwide events as they come up as well.
Matties: Are there any other conferences you’re attending? I know that the India Printed Circuit Association has a big event, I believe in August. Isn't that like the hottest time of the year to have one?
Kelly: Yes, you're right, the Indian Printed Circuit Expo is in Delhi in the third week of August and our company will be there. We will have a stand, we will be exhibiting and it will be our first event there.
Matties: That'll be interesting to see how that works out, but it sounds like a smart move for you with the investment that you're making there. Back to your business, one more thought came to mind. We talked primarily about equipment sales, do you do any consumable sales?
Kelly: We do consumables and small tools for spindle repair, but we don't do much else in the way of consumables. I've always looked and had an idea to do material consumables, whether it be laminate, whether it be entry back-up material, exit materials, drill bits, but I don't want to go down that route. I need to leave that to the experts; there's people that are much better qualified at doing that than we are. We need to be a value-added company, and that's what I'm trying to get at when I say that we're a service company and we're more of a partner. We are adding something. Like I said, we're not just buying a machine, chucking 20–30% mark-up on it and selling it again, and that's what I’d be doing if we started selling laminate, dry film, or entry and exit, and that's not our business. We do give a true added value.
Matties: How does the North American market play into your business model?
Kelly: We can go to America. We've been to shows before. I want to start with Universal in America, and I'm talking to a couple of agent companies there right now. It's finding the right bond and it's finding the right company that's going to work with us and be able to give the added value of the service and support.
Matties: They have to adopt or be aligned with your business philosophies to make it work.
Kelly: I'm talking to two or three people at the moment. I need to focus a little bit more on that in truth. Because I know some of the equipment that we work with, like our exposure machines or our wet process lines, once I've got one or two dotted on the floor there, word is going to spread. These machines sell themselves. I'm not looking for a guy in a suit that's out selling, I don't need that. I need more of a service company that's going to look after the equipment for us.
Matties: Sounds like your plate's pretty full; how do you manage your day?
Kelly: I do have a lot going on, but I thrive on being busy.
Matties: Do you have enough support around you? Because when you spread it so thin, things start…
Kelly: Falling apart. No, as we've grown steadily, and our business has grown steadily over the years, we've taken on steady growth in the number of people that we're employing as well to keep up with that, but we do have quiet spots as well. This is the difficulty with the capital equipment sales business. There are peaks and troughs, and the troughs unfortunately are quite…
Matties: They can be deep sometimes.
Kelly: They're uncomfortable. We have a lot of mouths to feed here, the payroll is high, and we will go through some months with no machine sales. We've just got to accept that. I can't cut staff down, because overall I think we're about right. Sometimes we could run on a lot more, sometimes we could run with a lot less, but you can't just take on qualified people like that. If I look at it year by year, the business works well. I'm busy on a day-to-day basis, but I've got very good people to support me thankfully and that's why Viking works. We have got a tremendous bunch of people that work for us that don't just consider themselves ‘9:00 to 5:00’ people. We give service way beyond what's expected of us. That's not me, that's the engineers and the other staff that work for us. They will be answering calls and writing emails throughout the night into early hours of the morning, because that's what we need to do.
Matties: You're a global business, that's how it works.
Kelly: Yeah, but even to the UK companies, if there's a problem we'll be supporting them. The day is finished when the job's done. The day doesn't finish at five o'clock when it's time to clock out. It works the other way as well, where if we've got a quieter day and the weather's nice, we can go home early if we've got something to do or someone wants to go and see their kid at a pantomime or whatever. It does work both ways and that's why it works well.
Matties: What year did you take over the sole management of the company?
Kelly: In 2000, I would say.
Matties: So you've been running the company for 16 years or so.
Kelly: Well, I think it feels more like 30 actually.
Matties: That's because you put so much into one day! Tell me about the Viking Test Services name; are you going to drop the test services part?
Kelly: It's gradually moving away.
Matties: Because it seems like that's the smallest part of your business these days.
Kelly: It is. We were called Viking Test Services Limited, and we're now called Viking Test Limited. We've dropped test services from the logo, so if you look at the Viking logo now it's just the Viking, but yeah we're gradually re-branding to Viking.
Matties: Maybe we should just pull the Band-Aid and do it, because it sounds like you have so many other wonderful things going on that you don't want to confuse the mind of the other prospects.
Kelly: Yeah, just do it. You're absolutely right.
Matties: Jake, it's been great spending time with you today and learning about your business, it's been really revealing. Thank you so much; we appreciate this.
Kelly: Thank you.