John Murphy meets the team at Gentec, a Canadian company with a strong reputation in power and energy meters
The name of Gentec has been around in photonics for many years, with its power and energy meters being trusted old stagers in many a university laboratory. In the past seven years, though, it has found a new lease of life with a focus on the power and energy meter market, and a dynamic new owner.
The product range has been developed with new ideas coming forward; the company has emerged again with its own particular culture, based on the long-term sustainable business rather than ‘smash and grab’.
Gentec Electro Optics is independent of its former large conglomerate owner and is determined to stay that way, looking to grow its share of the market and to grow the OEM market for its products its own way under CEO Michel Giroux Gentec is one of the best-known names in high tech in Canada. The original Gentec Inc was founded in 1959 and specialised in power transmission equipment. Like many other companies it started to diversify into new markets and, by 1972, was producing its own line of CO2 lasers. The first pyroelectric joulemeters were produced shortly after that for internal use but, eventually, Gentec manufactured both thermopile and pyroelectric laser power and energy detectors. In the mid-1990s, the company introduced the WB series, with an average power density damage threshold of more than 100kW/cm2, a level that is still unrivalled. In fact, the company did not succeed in the laser market but the power and energy meter business took off instead.
Michel Giroux was VP of the division that made the power and energy measurement equipment. As part of a very large conglomerate he felt that it did not really get the attention, or the investment, that was needed to make the most of its potential.
Giroux says: ‘We were a very small player within the company and so we were not a priority. I felt that, if we did not make some big investments, we would not survive. I told the company that they should either listen to me or let me go. I reached an agreement with the company, if I could find the finance, to buy out the assets. It took me about 18 months to find the money but, on 24 November 2000, we were able to get all the money together to start the new company. We made a deal to keep the name, because it was very well known within the industry, which I thought was very important. Gentec has been known since the early 70s as a pioneer in the laser field.’
With many other products available on the market, Giroux decided that the only way to compete was on quality rather than price. He believed that the lack of investment from its parent company was undermining the reputation that Gentec had acquired in the early days and so he set about doing his own thing and making the products even better.
He says: ‘We had many ideas for dramatically improving the technology; we just did not have the means to make them, and that is why we decided to found the new company. These ideas turned out to be very good and we have made dramatic steps forward that our rivals have not been able to make, because we have been able to invest. These improvements are around the damage threshold and the heat handling. We can make much smaller meters and withstand the heat generated because of the technology we use. We were just 12 people when we left Gentec Inc., and we are now about 36.’
The former parent company gave Gentec Electro Optics space to work for a few months while he found new facilities and hired his team. The company was based in Quebec City in Canada. According to Giroux, it was not difficult to find the right people – firstly, because there were a number of good universities and high technology companies in the area and, secondly, people living in Frenchspeaking Quebec like the culture and lifestyle and are always looking for reasons to stay rather than reasons to leave.
Giroux decided that, in founding a new company, he also needed to create a unique new culture for the company and only recruit people who were happy with that and so would want to stay for the long term. He believed that the business was about forming long-term relationships with customers who would often have their first contact with the company as research students and still be dealing with it as professors or heads of research.
He says: ‘I know what it is to have a large staff turnover in a company, because it usually takes six or 12 months for someone to be fully trained. If they are moving company every two years, it’s not the way to build a stable business. What makes things very stable here are the values of the company. We choose them and they choose us. There are three values: the first is respect, the second is common sense, and the third one is family. If somebody thinks that his family is less important than his work, he would not work here. Everybody believes in this and it makes them much less likely to go somewhere else. People like the ambience and invest their time in the company. I don’t need them to work 50 hours a week, 40 hours is plenty, but the time they spend here is more effective. I used to have people working much longer hours and in reality it was not very effective. People who like working long hours and not being effective do not like working here. This is how I was raised by my own family. Firstly, it was only respect that was important, but in the first three years I found out that other values were important. I realised that, if people did not share these values, then I would not teach them. I am very happy that we are growing faster than the market. That is partly because we are concentrating on the range of products. When I look at our competitors they are always doing other things. We are totally dedicated to the power and energy meter business.’
Apart from the company’s internal values, Giroux has also tried to make Gentec EO different from competitors when it comes to dealing with customers. While many customers are individual researchers dealing with a single purchase of a standard instrument there are many other larger customers who have very specific needs. Gentec is prepared to work closely with them and build the OEM side of its business in partnership.
Michel Giroux with a selection of Gentec’s product range.
He says: ‘Our approach to customers is also different; we are known as the company that really listens to the needs of a specific company and we have set things up to do this in a very efficient way. We have found many customers moving to us from competitors, because they have found that we are really prepared to listen.’
The flexible approach has also allowed it to get into some niche markets. Giroux says that Gentec EO has about 90 per cent of the laser fusion market. ‘With Lawrence Livermore Laboratory or AWE in the UK, we are listening to exactly what they need and we are offering them a solution that is made exactly for their needs,’ he says. ‘We do not offer the same solution to AWE as we do to Lawrence Livermore, because their needs are different. We need to be able to do this at a reasonable price and to be able to offer the kind of quality that projects like this need. It is part of the culture of the company to listen and to give back what they need. For some customers it is not easy for them to qualify their needs. We often have to take the time to go through it with people.
‘I am here to develop this business for decades and I don’t know how I can do this without developing long-term relationships with customers.’ While, in 2000, about 90 per cent of the business was standard products, the ratio of OEM customers is now about 50 per cent. That has made business planning a lot easier, because the OEM customers tend to buy to a known production schedule rather than the classic research one-off sales, which are difficult to predict. The downside is that the sales cycle is much longer. Rather than a single sales conversation, there could be a qualifying process lasting six to 18 months for an OEM product and then the volume of that product depends largely on the success of the complete system into which it goes. Even so, Giroux is keen to develop the OEM side of the business further. He has found that power meters are used in some surprising applications and he is always finding new windows of opportunity; often it involves waiting for a customer to start designing their next-generation system rather than trying to simply knock out a competitor.
One of the keys to OEM business is the small size of the detector, which makes it easier to integrate into a machine. He says: ‘I have heard many different reasons to come to Gentec: price, size and quality. We have a lot of room to grow in the power and energy meter market and will do so for many years to come.’
In recent years it has started working on beam-profilers, but this is still a sideline compared to the main business of power and energy meters. The beam profilers are clearly going to be aimed at the same customers as the meters so it made sense to have a product to offer while making the sales call.
Giroux says: ‘For some customers power meters are simply a commodity and it can be difficult to get them to open the door. A beamprofiler is not a commodity item. Customers like to see a beam-profiler working before they buy, because they want to see what it does in their particular set up. So a profiler can open up some doors for us. If we can open a door with a beam-profiler then we can also get into a customer and offer them a power or energy meter.’
Developing the beam-profiler has involved a significant investment – and an ongoing one – because the key differentiator is often the software that goes with it, rather than the hardware itself.
After spending the first few years getting the products and production processes right, Gentec EO has enjoyed very healthy growth. In 2004 growth reached 50 per cent and last year it was 25 per cent. Giroux is obviously happy with the sales growth, but he is cautious about growing too quickly, because he is aware that other companies that have grown quickly have ended up running out of cash. While, in the beginning, he had external investors, he has been able to buy them out and now owns the whole company. He now has no investors to keep happy except himself and he is very happy with the profitability of the business.
A lot of the sales growth has come from the extensive distributor network around the world. Many of these distributors have dealt with Gentec for many years and have been carefully chosen for their access to the customer base. There are usually more distributors of power meters in any country than there are manufacturers, but clearly the most interesting are those who are representing the laser companies where a power meter is an easy addon sale. Giroux is also interested in distributors who deal in OEM business. This means that they might not be aligned with any laser manufacturer and can work with the whole OEM customer base. Giroux is very interested in making sure the distributor base is well trained. When it comes to OEM business, he wants to work with them as a team and support their sales efforts by making joint calls on customers.
Distributors are also important in handling technical support around the clock, but calibration is always done by returning the instrument to base, or a calibration centre in Germany. Giroux is often amazed by some of the instruments that come back for calibration – some are more than 30 years old and people still use them because they are familiar and trusted and still work. Clearly he tries to sell them a modern replacement and sometimes they resist. In his offices he has started collecting the old equipment and made himself a small museum.
Giroux is far from a museum-piece himself and sees a long future ahead for the company as an independent manufacturer following its own values. He has no investors and is far from retirement so it’s likely he will be able to do things his way for a while to come.