European policy

“The first thing to realise before setting out to sell a product or service in Europe is that even with a single currency Europe should not be viewed as a single business entity,” says Nigel Atherton, managing director of XYZ Machine Tools.

“Different countries have different ways of doing things. This meant that in pursuing a more aggressive and coherent European strategy we needed someone with a broad understanding of the European marketplace to take responsibility for devising market strategies, coordinating promotional activities and establishing distribution channels within each country.”

It is now four years since XYZ targeted further expansion in Europe and the decision was based on two factors – mitigating the risk of a UK only recession and adding volume in order to drive down costs. Although recession when it did arrive turned out to be global rather than national, Mr Atherton believes it was the right decision to make and the right time to make it.

Bringing with him previous experience of sales and marketing in Europe, Bob Massam, a fluent French and German speaker, took on the new role of export sales director at a time when Europe accounted for just 8% of XYZ's output.

“We achieved a considerable part of our goal in the 2008 calendar year when overseas sales, including ancillary parts, spares and so on, exceeded £4 million,” he says. “This compares with £800,000 in 2004, the year before we decided to up our game in Europe. The order intake then remained steady until the end of January 2009 when the global downturn began to affect our overseas markets. However, I am confident that export sales will recover their momentum and post recovery should increase to around 40-45% of total sales turnover.”

That may seem overly optimistic, but since 2005 XYZ has been busy appointing distributors in the major European countries, including new EU member states such as Czech Republic, Romania and Bulgaria. This is being done on a step-by-step basis, and, according to Mr Massam, is the inherent strength of XYZ's Europe wide dealer network that is seen as the key to delivering future growth and implementing the crucial part of XYZ's risk limitation strategy.

“We are continuing to focus on exporting CNC machine tools, whether CNC/manual mills and lathes equipped with our ProtoTrak controls or full CNC machines equipped as standard with Siemens ShopMill or ShopTurn conversational control systems,” Mr Massam explains. “All aftersales and warranty requirements, as well as installation and commissioning, are now the responsibility of our European dealer network. The network's technical people are fully trained by XYZ although the UK headquarters does provide a complete backup service should this be required. As a low cost operation, exports to Europe are contributing a significant margin to the company.” Milling machines and lathes featuring the shopfloor programmable ProtoTrak CNC system, for which XYZ is the exclusive UK and Europe agent, are selling well in Europe, even in Germany. This has been something of a surprise to Mr Massam as the initial expectation was that the Siemens-based CNC machines would be the main draw. He believes it is a reflection of lower production volumes in key market sectors such as automotive, which have had a ‘trickle down' effect on a supply chain now increasingly faced with smaller batch sizes. “There is considerable market potential throughout Europe“, he says, “and ProtoTrak, which is ideally suited to prototype and low volume production, currently accounts for around 70% of total sales.”

Reflecting the generally positive outlook for the company, XYZ is introducing the new Siemens 828D control system to its range of machining centres and turning centres. This development is expected to give a competitive advantage in mainland Europe and result in additional sales activity. The close cooperation with Siemens was evident at the recent EMO exhibition in Milan, where visitors to the Siemens stand could see an XYZ 710 VMC and XYZ Compact Turn 52 – equipped respectively with the ShopMill and ShopTurn variants of the new control – cutting metal.

XYZ
www.xyzmachinetools.com