ME415 MicroE Systems: Proposal and Conclusion

The case study concludes near the end of 2002 when the CEO Ray gathered the MicroE team for a meeting to talk about their current situation and future choices.

Current Situation

Their Mercury product line puts them in direct competition with companies much larger than them. And they don't have any manufacturing engineers who are experienced in the low-cost, high-volume market. (Reece)

(Minglei covered how) China's mass-production capabilities are more than competent, and is becoming more and more accessible so if MicroE doesn't take the opportunity, someone else will. Eventually another company with Chinese manufacturing will be able to undercut them.

To make the decision more difficult, MicroE has a loyal employee base that they cherry-picked from the top percentile, as per their company values. Using Chinese manufacturing would mean dissolving their own assembly staff.

Proposal

So after studying the company and their options, our group concluded that

For MicroE to compete in the low-cost, high-volume market, experienced manufacturing engineers are a necessity. As Don Mitchell concluded from his previous business ventures, manufacturing was always a weakness. A US-based manufacturing executive would also help preserve the niche market dominance they worked hard to maintain for many years.

The company should definitely consider utilising Chinese manufacturing due to the equivalent quality and unrivalled costs. For issues like unethical conduct and property rights, MicroE would just have to spend more money ensuring their safety. However, the cheaper manufacturing costs would far outweight the risks.

MicroE could also offer to relocate their current assembly staff to work with manufacturers in China or elsewhere if they don't want to dissolve their assembly facilities completely.

Another option we came up with was to set up their own manufacturing divisions in China. They could start by partnering with already established and reputable manufacturers and gradually build up their own facilities. Thereby avoiding the dangers of property rights and allowing their current assembly staff to pioneer their Chinese branches.

Actual

This is a timeline of what actually happened after the case study. The Mercury series was released in 2002, and the case study ended straight afterwards. MicroE released another product line before being acquired by GSI Group for $54.6 million. GSI then attributed 25% of their sales growth that year to MicroE. They also reported that 60% of MicroE sales were in the Asia Pacific, suggesting that they may have invested more into the Asian market with GSI's backing.

Afterwards, they released a steady stream of new and improved products until 2015, where GSI acquired Applimotion and merged it with MicroE and named it Celera Motion. With MicroE specialising in encoders and Applimotion in motors, Celera Motion aims to provide all-in-one kit solutions to industrial problems. They've also started producing their own scales and gratings (Stuart) as well as software packages to provide for this.

In May last year, GSI Group changed its name to Novanta. So that's what's become of MicroE today, Celera Motion, a Novanta Company.


The case study concludes near the end of 2002 when the CEO Ray gathered the MicroE team for a meeting to talk about their current situation and future choices.

Current Situation

  • Lack of experienced manufacturing engineers (especially to compete against low-cost, high-volume "entrenched" industry giants)

  • Future competition from China (low cost manufacturing, higher margins)

  • Loyal employee base (that the company doesn't want to let go of)

Proposal

  • Experienced manufacturing engineers in US (preserve market dominance that they already achieved)

  • Source to China (at whichever pace the company felt comfortable - substantial capital from previous years)

  • Offer transfer of current assembly staff (no other choice if demand in the Americas is not high enough)

  • Increase manufacturing capabilities in China instead of outsourcing (move current assembly staff or hire new ones according to MicroE values in China/anywhere else)

Actual

  • 2001: Mercury™ Series Encoder

  • 2003: ChipEncoder™ SMT Mount Encoders

  • 2004: Acquired by the GSI Group - $54.6 million in cash (25% of sales growth attributed to MicroE; 60% of MicroE sales were in the Asia Pacific)

  • 2005: Mercury™ II Series Encoders

  • 2007: Acquires DRC Encoders product line

  • 2008: Begins production of metal tape scales and gratings

  • 2012: Searchlight™ as an OEM solution

  • 2015: MicroE merges with Applimotion to form Celera Motion

  • 2015: Celera Motion Pathfinder development tool; Optira™ Series Encoders

  • 2016: GSI Group renamed to Novanta, Veratus™ Series Encoders with VeraPath™ technology

http://www.wikinvest.com/stock/GSI_Group_(GSIG)/Corporate_History
http://www.wikinvest.com/stock/GSI_Group_(GSIG)/Filing/10-K/2006/F2551092

Celera Motion

Combination allowed the company to develop customised solutions as a full set rather than outsourcing and only providing the encoder.

eg. An industrial metrology equipment manufacturer designed a laser based scanning system where they had a scan mirror spinning rapidly in one axis and slowly in another axis. They required a set of motors and encoders with very high resolution and smooth position and velocity control. Celera Motion was able to take their previous technology and tailor it to this specific problem, and produced a 14g encoder with 19 nano radians resolution. As well as a frameless motor with specific specifications that could not be found anywhere else.