Electronics plugged in for years to come

The Keltek deal does not mean the death of electronics in the Borders but points the way to a rosier future, says Elizabeth Thompson

WHEN US electronics firm ViaSystems closed its Selkirk and Galashiels plants two years ago, with the loss of more than 1000 jobs, it was a major economic blow and a serious loss to printed circuit board production in the Borders.

To many observers, the loss of ViaSystems might have seemed to be fatal to the future of electronics in the area, but closer observation shows this to be far from the case.

The recently-completed purchase of the Keltek Group by US corporation Plexus has once more focused attention on the Borders where, in spite of losing one of its major flagships, the electronics sector is not just surviving but growing steadily. In an area with a population of 100,000 and a workforce of around 35,000, just over 1000 are currently employed by the electronics firms.

The two largest companies, Keltek Group of Kelso and Signum Circuits of Selkirk, employ more than 700 people between them. Signum manufactures bare boards and back planes, which are added to and built into products by the companies which Signum Circuits supplies, one of which is Keltek.

As part of its business, Keltek is a contract manufacturer, purchasing bare boards from suppliers locally, such as Signum, and globally it adds components to the boards and produces full products or sub-assemblies for OEM's (original equipment manufacturers), which then complete, or possibly simply ship, the final products which the consumer sees.

Besides these two leading companies there are a large number of smaller firms, employing more than 235 personnel, which provide a wide range of services, such as printed circuit board design, printed circuit board manufacture and other contract manufacturing.

A spokesman for the electronics support arm of Scottish Enterprise Borders says there is obvious pride in the breadth of services provided by these companies and especially in the fact that the majority are controlled by individuals based in the Borders.

The existence of four "spin-out product"-based companies which have emerged in recent years from the existing firms was pointed out by SE borders. These are new Borders-based companies which have developed highly innovative specialist products that are starting to be well received in the market place. These companies employ 16 people, but are set to grow.

Like the textile industry, the electronics sector has been severely affected by competition from the Far East and Borders' companies have had to use imagination to survive in an aggressive market.

Rather than compete in an unequal price war, the firms have found niche markets to supply and have invested in research and development.

It has been an uphill struggle, but growth has been delivered. The companies' awareness of future requirements enables them to consider new avenues of finance and support provided by government aid schemes, links with educational establishments, local enterprise companies and/or mergers with other firms, such as Keltek and Plexus.

SE Borders is closely involved with the companies, helping them to develop their business and to obtain what support is available to them. One aspect is Regional Selective Assistance (RSA). Signum managing director Ernie Jamieson pointed out that Signum began the process of applying for this aid in October 1999 and that its application has been accepted, subject to ratification by the EU. Signum intends to use this aid to fund expansion, which Jamieson expects to enable Signum to go from a turnover of #13 million last year to more than #20m this year.

The combination of skilled personnel, commitment to quality, innovation and imagination is working for the electronics sector in the Borders. It is worthy of practical and financial support from government, not just in terms of grants and advice but also in the building of suitable infrastructure - good road and rail transport, lower taxation of fuel and lower interest rates on money to finance business improvements and expansion.

Elizabeth Thompson is a director at Ettrick Computer Services Ltd, Selkirk

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