The electronic contract manufacturing business in South Africa is alive and well. One of the major players is East London-based Vektronix, which has a long pedigree dating back to 1974 when it was established as one of four television manufacturing plants in South Africa.
The company quickly diversified into audio products and its industrialisation of the M-Net analog decoder was followed by large orders for these devices. By 1993 the plant had manufactured over 2 million televisions and 1 million analog decoders and it introduced surface mount technology in 1989. By 2003, Vektronix had manufactured 1,5 million (60%) of the analog decoders made so far.
The company was originally part of Plessey (known as TEK Electronics). Following the buy-out of the latter by Dimension Data it became part of the privately owned Tellumat. Tellumat also had a manufacturing facility in Cape Town but its focus was key niche areas such as private switching communications systems, microwave radio equipment as well as avionics products and systems. It was considering closing TEK Electronics in 2003 when an offer to buy out the plant was made by its own management, saving over 100 jobs. The offer was accepted and Vektronix was born, starting its new life with orders on its books for R20 million in terms of products for CBI, analog television decoders and pre-paid electricity meters. It also immediately brought back into operation its mothballed television production line. In a more recent initiative, the company became the only manufacturer in the country to populate circuit boards for Gauteng-based Rural Area Power Solutions which is responsible for solar power installations in areas that fall outside of the Eskom grid.
All of the members of the Vektronix executive team are also shareholders, having been involved in the initial buy-out. Vektronix is located in the Wilsonia Industrial Park which also belonged to the directors of Tellumat, but a successful bid was made to purchase the Tellumat buildings in 2004 with some 34 000 m² under roof and a separate company owned by the directors and shareholders of Vektronix are now developing and leasing out this prime space.
As for capabilities, the many years of expertise within Vektronix make it an ideal partner for product industrialisation and test jigs are designed in-house. The quality of the company's design expertise was recognised as long ago as 1983 when it received the Shell Design Award for a locally-designed portable colour television set. In order to maximise efficiency and productivity, Vektronix makes use of an ERP system and it is certified to ISO 9000. The storage and stock handling facilities are designed to automatically deliver parts to exactly the right point in the manufacturing process and all parts are tracked using bar coding. Besides possessing the latest television production technology the company can place 40 000 through-hole and 35 000 SMT components per hour. The facility has three SMD and four wave-solder lines. The factory currently has a floor area of 8 000 m². Vektronix has its own in-house calibration laboratory, which is accredited for a range of measurement parameters.
Vektronix has had an impressive list of clients over the years and these include Multichoice, Tedelex, Sony, JVC, CBI, Plessey, Tellumat, Pioneer and Temic. Vektronix is, of course, vendor-independent and still has a major focus on televisions to the point where recently they were handling the full manufacturing cycle for both JVC and Telefunken while simultaneously building the chassis for Sony and circuit boards for Tedelex. Besides its permanent labour force, Vektronix has access to a large number of contract staff that were trained in-house over the years and this allows the company to expand and shrink its manufacturing capacity according to demand. The management of Vektronix also believe that they are highly competitive as their modern equipment was acquired at exceptional prices during the buy-out and this price benefit is passed onto customers. The flexibility in terms of labour and the relatively low labour costs in the region means that Vektronix is profitable with large and small volume runs.
In a recent interview, Vektronix CEO, Craig Tyzack, is quoted as saying that there is a great future for local manufacture of televisions providing this is carried out through dedicated hubs (such as Vektronix) instead of small volumes being produced by vendor-specific labour intensive manufacturing plants. The latter's profits will not justify plant modernisation and they suffer from economies of scale.
In regard to analog decoders, although the subscriber base is declining there are still some 500 000 analog users in South Africa, Africa and Greece. The company still supplies up to 11 000 decoders per year and Vektronix is now the sole supplier and re-furbisher of analog decoders. Vektronix also manufactures products for the telecommunications, automotive, pre-payment and audio industries.
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