Xerox Europe's Joe Browne has set targets for the Irish operation to treble revenues in five years, writes Jamie Symth

Joe Browne looks well for a man who has endured two years of hard graft working to stabilise the fortunes of US copier giant Xerox Corporation in Europe, and who will this month re-launch the company in the Republic on the theme of "Xerox taking back the office".

Sitting deep in the bowels of the Fitzwilliam hotel on St Stephen's Green this week, he is keen to talk about the results of Xerox's turnaround plan and the company's first quarterly profit in a year.

"It's all based around revenue and market growth," says Mr Browne, who has set targets for Xerox's Irish operation to treble revenues within five years.

"That sounds almost ridiculous, but it is very achievable. If we move from a single digit player in the office space to 25 to 30 per cent market share, that gets you there. I've done the numbers."

Xerox Ireland will generate revenues of €30 million in 2002, compared to €17 million in 1999 by selling digital and light lens copiers, laser printers, scanners and fax machines, publishing systems and software. It will also boost its services business, says Mr Browne, who admits its global services business is a "minutiae".

But Mr Browne, who was only recently appointed head of Xerox's Irish operations in addition to his responsibilities for Xerox Europe, admits the focus came off the Irish market recently, resulting in a drop in market share.

"In Ireland in the past we have suffered in this space because we haven't always had a product that has been competitive. The Japanese invasion into our space has hurt us, because the technology is not the key enabler, rather it's a commodity. It's really about economics, productivity and value."

The same is true in most other global markets where Xerox has moved from being a near monopoly provider to a struggling competitor with sub-10 per cent market share.

In an unflattering article, Business Week magazine recently claimed Xerox's share of the market for black and white devices was down from 27 per cent to 14 per cent in three years.

A radical turnaround strategy announced by Xerox in October 2000 has seen the US firm outsource its manufacturing of office equipment and adopt new marketing and sales strategies. Xerox Ireland's "taking back the office" campaign this month will unveil its new approach to the market.

"Our route to market is fundamentally changing. In the past, our coverage has been mostly direct sales with just a few partners in the field," he says. "We never embraced what I would call the channel model or indirect model. As a result, our penetration into the corporate and public sector has been weak and sporadic," he says.

Xerox Ireland has appointed two distributors, Midia and Clarity, to support its products in the Irish market. It will announce several new resellers for the domestic market on October 17th.

"I'm bringing the product to market on time and we've now got the economics that will beat the competition... on feeds, speeds and economics every time," he says.

Such confident talk is a far cry from the last conversation that I had with Mr Browne in October 2000 at Xerox's European shared services and finance centre in the Ballycoolin industrial estate. At that time, Xerox was given just a 50/50 chance of survival after a botched sales force reorganisation in January 1999. By December, Moody's had cut Xerox's debt to junk bond status.

Rumours of a Chapter 11 bankruptcy filing had to be denied by the corporation's management. Just six months later, the firm's 2,000 strong Irish workforce was rocked by the announcement of the closure of its ink jet manufacturing plant in Dundalk, Co Louth, with the loss of 400 jobs.

"The good news is we don't talk about it much anymore. In the first six months we spoke to the press many times, almost every week... but not anymore," says Mr Browne, who believes that there will not be any more job cuts.

The failure of Xerox to meet the terms of its employment agreement with IDA Ireland forced the company to pay back some €7.3 million in grants.

"I'll be very honest with you. The grant is incidental. It's not a big number in the scheme of things," he says. "The grant issue has not taken one hour of my management time."

Neither will Mr Browne spend much time debating Xerox's persistent problems with accounting, despite the fact it paid a $10 million fine to the Securities and Exchange Commission in April after restating $6.4 billion revenues.

"If you study what has happened, we had a negotiation, an investigation and a discussion with the SEC around how we account for the sales type leases which we write, which are about timing of revenue," he says. "The story of Xerox's turnaround is closed. Part of that was the resolution of the accounting differences."

But the accountancy issues just won't go away, and last month the firm learned it would be the subject of a criminal investigation, news that sent Xerox shares plummeting 15 per cent to below $5 again.

"They \ will go through due process and it is not something that concerns me. My concern is Xerox Europe's operations and that's what the customer wants to know," he says.

Xerox's decision to locate the majority of its European operations in the Republic was a major win for the IDA in the mid-1990s. The firm has invested more than €200 million in the Republic since 1998 and now employs 1,400 people at its European shared services centre in Dublin. A further 500 staff work at the Xerox Technology Park in Dundalk in a variety of functions, including toner production and the manufacture of industrial-type document production devices.

One of the core reasons for Xerox locating here was the low corporation tax rate although, ironically, Xerox Europe's most recently filed accounts with the Companies Office show it lost €610 million in the 12 months to December 31st, 2000, and did not have benefit from the tax rate.

So has Xerox's view of competitiveness in the Republic changed?

"In terms of the cost of doing business in Ireland, it is certainly more difficult but having said that Ireland is still a superb place to work," says Mr Browne. "The social regulation and the employment regulation is business- friendly, employment-friendly and growth-friendly. The government and industry partnership is very positive and open and commercial and that is very good for all."

The downturn in the economy has also removed some significant staffing issues for Xerox. During the boom, staff attrition levels at Xerox's shared services centre were running at 30 per cent as people "spun around different organisations," he says.

"People look before they jump now and I find the tenure of employees has improved significantly. That means you get greater stability, the same people talking to our customers for longer, and then they start to get greater satisfaction from that also."

Mr Browne says the economic downturn presents firms with opportunities to build market share.

We can go to corporates and tell them we can deliver 10 to 30 per cent productivity. "That's a compelling argument which is winning us business," he says.

A global economic recovery will not occur before the second quarter of 2003, says Mr Browne. Both Xerox and Mr Browne will hope the accounting issues will finally be behind them by then. Next week: Jamie Smyth interviews Mr Lars Svensson, president of Ericsson Enterprise.