Illuminating the origins of Pacer

10 March 2020

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From its humble beginnings back in the late 1980s with one man & a vision, Pacer International has become a leading name within the optoelectronics market, with OEMs across the world seeking out its specialist knowledge & expertise. Reflecting on the company’s journey, founder, Chris Tassell takes us on a trip down memory lane with John Macmichael, Managing Director, revealing what we can expect from his 36-strong team in the years to come.

Q:    Chris, tell me more about the original business idea?

A:    To say it was planned would be a lie. That said, what I did recognise at the time was that there were very few companies focusing on optoelectronics components as an enabling technology. At the time, there were many semiconductor supermarkets selling a plethora of components – but optoelectronics was never like that. It never had the level of standardisation that other semiconductors had, so I realised that there was an opportunity for me to act as a distributor, leveraging the network of contacts I had built and nurtured within my 20-year career.

Q:    How did you come up with the name Pacer?

A:    This is an interesting and unexpected story. I previously worked for the RCA Corporation, within the electro-optics division, and I remember the first time I went to the US to visit various factories. I was taken to a baseball game, and at half time, a car full of baseballs was driven onto the pitch. The idea was that you had to guess how many baseballs were in the car – guess correctly and you won it. No, I didn’t win the car – but it was called a Pacer, and it was the first ever hatchback to be built. Naturally, it had a lot of glass, and its main claim to fame was appearing in the iconic film, Wayne’s World. From there, it planted a seed – it was a short name that everyone could spell and, it was associated with energy. And so, we became Pacer.

Q:     What was the company’s first breakthrough?

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A:    It was after 12 months, when we were appointed as a franchised distributor for the RCA Corporation. Prior to this, we never really had formal agreements with our suppliers but when my network acknowledged that I had set up this special distributor, they were keen to be a part of it. This was the year we registered the company – the RCA agreement, as well as some existing military opto-electric business we inherited were the key turning points creating significant impact to our turnover. 

Q:    Did this mean you had to start employing people?

A:    Not initially – because of the specialisation, we weren’t talking about hundreds or thousands of orders a day. I kept the business very lean, which meant we were profitable from the outset. Some of those close to me would argue that I kept it lean for too long and while that’s probably true, we were self-sufficient and in a solid position to grow.

   

    That said, I did recognise that if we wanted to evolve, we needed to mature as a business and bring in more expertise. Graham Rothon came on board at this point as my right-hand man; with a wealth of industry experience, this meant he could take care of sales and I could spend more time moving the business forward.

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Q:    When did the value-add proposition come to life?

A:    I recognised quite early on that life as a distributor was somewhat vulnerable – essentially, we were selling someone else’s product, and providing you stayed ‘flavour of the month’, you were doing ok. There was this issue that you could be unsuccessful and they would fire you, but equally, you could be too successful and someone would think they were giving away too much margin and then want to go direct to the supplier. That situation still exists today.

    So, in order make the business more secure we wanted to look at ways to add value to the components we were selling. People would often say to us something like: "I like that product, but if it had 2ft of wire and a connector added to it, we would like it even more". Recognising that customers wanted a more bespoke solution, we armed ourselves with subcontractors to carry out that role. This was another turning point for the business – we were no longer simply a distributor, we were adding value and creating an opportunity to differentiate ourselves from the competition.

Q:    What has been the biggest headaches?

A:    For me personally, it was having to give up my baby – when you have built the business from nothing, it’s quite difficult to let go even when you know it’s for the greater good of the business. It of course got easier over time and to see the business flourish over the subsequent years gave me a huge sense of pride.

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    The 75% management buy-out in 2010 took longer than anticipated, mainly due to the economic climate, where it seemed the whole world was about to implode. Getting this over the line was a huge achievement and took us on to the next growth phase.

    The next aggressive step was the sale of the company to Solid State, which wasn’t particularly planned. Looking from the outside in, Pacer was a profitable business with a strong profile, and so we were approached on a regular basis; but when Solid State approached us in 2018, it felt like a natural fit, and we recognised that Pacer would benefit from being part of a larger group. It also meant that Graham and I could finally retire!

Q:    John, what attracted Solid State to Pacer?

A:    As part of our acquisition strategy, the main attractions were Pacer’s traction in the medical market, its US office, the solid level of European sales and the fact that there was no customer conflict.

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Q:    What made the acquisition a success?

A:    The biggest cause of failure for any acquisition is the companies’ inability to come together and create a culture that works for everyone. What became clear from the outset was that both Pacer and the Solid State group had similar business cultures, centred around their people. Pacer values its people, respecting and nurturing the extensive knowledge and expertise they have. Solid State Plc also greatly values its people, and has always heavily invested in the professional development of its employees. Similar cultures made for an easy acceptance of the acquisition, but it’s the great people within both businesses that are making the acquisition work towards a stronger future.

Q:    What’s next for Pacer?

A:    Growth, growth, growth. There are a multitude of other sensing opportunities within the customer base we have – opportunities that we will certainly want to harness over the coming years. There will be even greater collaboration across the company with each business continuing to maintain its separate expertise. There will also be more investment in our value-added processes. The higher the production levels that go through the Weymouth facility, the more automated those processes need to become. We’re already looking at semi-automated equipment for the clean room, to see if we can improve efficiencies and yields, which in turn will improve profits and make us more competitive.

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Q:    What challenges does the business face moving forward?

A:    Internally, the biggest single issue will be finding and attracting the right complementary product lines to both support and grow the business. Externally, I would have said Brexit and the global commercial uncertainty, but the recent General Election result has provided a level of stability and certainty and we’re already seeing an improvement on share prices as confidence increases. That confidence means that both we and our customers can plan and invest for the long-term, removing that level of uncertainty we’ve seen over the last year or so.

Q:    What measures are you putting in place to help overcome those challenges?

A:    A thorough strategy review has taken place which has given us a clear direction of travel for the business. The biggest transition is moving the company from a finance-led to a sales-led business. This will make the company more resilient to the commercial and political challenges, while reorganising the business to create and cope with growth.

Q:    How does Pacer differentiate itself?

A:    Pacer’s expertise in optoelectronics is unrivalled in the UK distribution space. This, coupled with its value-add capabilities, is key to us standing out from the crowd. It allows us to offer customers a truly unique combination of skills, expertise and facilities to support their business.


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