Straight-talking enthusiast happy to do other firms' work for them

One of the secrets of the computer industry is the extent to which operations are outsourced to other companies

One of the secrets of the computer industry is the extent to which operations are outsourced to other companies. John Culliney, who heads a company engaged in providing electronics manufacturing services (EMS), does not name his clients because they all wish to promulgate the myth that their products are their own.

"Some customers would not admit that they are outsourcing. The reality is manufacturers are doing more and more outsourcing. They know that is the only way they can remain competitive," he says.

His company, Benchmark Electronics, is engaged at the higher end of electronics manufacturing, building complex printed circuit boards and providing so-called "mission-critical applications". He gives the examples of automatic teller machines (ATMs), airline reservation systems and stock exchange equipment.

"A lot of our products would be far removed from the day-to-day person in the street but if they were not there, they would be missed.

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"It is not by their presence but by their absence that they would be noticed. They tend to be buried in the hearts of our customers' solutions."

The manufacturing facility at the Blanchardstown Industrial Park is relatively small. The 280 workers assemble custom-built central processing units (CPUs) at the rate of about 200 a quarter year, compared to 1,000 a day at major plants such as Dell and IBM.

"We are really dealing with the crest of the wave technology. What we bring to our customers is the expertise and the skill to produce such equipment."

At the level of sophistication the company is involved in, there are few competitors. "It is actually very expensive to get into this space. We would invest significant amounts of money in training people and educating people."

Outsourcing has made technology cheaper, he believes, through the economies of scale being achieved. Companies such as Benchmark can "leverage power" and its clients expect it to reduce prices by between 8 and 10 per cent annually.

It is a growing area, with Benchmark increasing its market by about 25 per cent annually. "They see that growth continuing for the next five years."

The Dublin facility has only been in place for five months after Benchmark bought the manufacturing part of Stratus Computers following its take-over by Ascend.

The company is really selling "skills sets" rather than product, which puts the focus on good relations with employees and is the "virtual manufacturing arm" for many equipment manufacturers. "People are very important to us. We put a lot of effort in focusing on creating the right environment."

Another cost of maintaining the skills sets is the extent to which his employees are wooed away by other electronics companies establishing operations even though the core has been together for about 10 years and "are a well well-established group and a well-trained group".

"We tend to be at the butt end of poaching, people tend to be poached from us by the large multinationals coming in. That tends to be typical for the guys who are established for some time."

Companies, he says, pay over the odds quickly to establish a basic workforce. In the early months of the new operation, he lost about 10 per cent of his workforce to poaching but that has eased now to a trickle of about 2 per cent. "But it is also distorting the market. A point will come when they reach critical mass and they will back down from that."

Like most US subsidiaries, Benchmark offers a share-purchase and share-option scheme along with a basic salary. But he believes the work's level of sophistication is an attraction in itself. "The products that we support are probably the most technically-challenging being manufactured in the country.

"People would not have experience of the technology generally. Also, some of the equipment that we manufacture is what they class as fault-tolerant. It is stretching the boundaries of design."

He and his managers have complete autonomy at the plant and, appropriately, the new function of sales and marketing is outsourced. "It is the nearest we will get to owning our own company," he says.

He has long ago disregarded his parents' advice to stay in one job but he has spent more than 20 years in the computer industry, starting with Digital in Galway in the early 1970s. "At the time, it was really the beginning of the electronic era in Ireland. There were more opportunities than people at the time, which was good. I got in early."

He was always attracted to technology and remembers the days of the Meccano sets while growing up in Ballyhaunis, Co Mayo. He went to Cork to train as a radio officer after leaving school and, from there, joined Digital. He has also worked for Amdahl, CompuCork and was plant manager at Stratus before heading up Benchmark's "beachhead into Europe".

"If you get a young company - I would class Benchmark as a young company - they tend to have an entrepreneurial approach and attitude. They are hungry. It is contagious. People adopt that attitude. We will succeed, we will grow and we will expand."

Last week, Benchmark announced the completion of its acquisition of Avex Electronics, a private contract manufacturer, which has a centre in Cork where more than 100 people are employed and a presence in Scotland, Sweden, Hungary, Brazil and Singapore.

"It has brought us to the top tier of contract manufacturing, providing us with global capability. Prior to this, the only international manufacturing site which Benchmark had was Dublin.

"I would see the five divisions in Europe working together to win a significant portion of that business," he says.

He has a badge pinned up in a corner of his office, `Be Direct', which is, perhaps at odds with the values of an Irish rural community. But he has had more than 20 years to adopt to a new culture.

"I have a very direct style. I suppose there is a level of goodness and badness about it. I will tell you what is on my mind, I will tell you it straight. You may not like to hear it but you know exactly what I think, and I encourage people to be direct."