In the past 20 years manufacturing companies have found that if they do not move their production to the Far East then someone already there will take their market away. For volume production you cannot beat countries with a low cost of living, and where the educational and technical standards are not as far behind Europe as they used to be.
If you want to succeed you need intellectual property, branding, design, or automation. But even something made by a machine can be made by a machine in China more cheaply. When optical component makers started moving East, things got tougher, but while some optical components can be made by a machine, the really high quality can only be produced by craftsmen.
WZW is one of a number of precision optical manufacturers that discovered it could survive, or even grow, if it aimed for markets where price was not the main consideration – i.e., where customers want something made quickly and to the most demanding specification and they understand that they will have to pay more for it.
Up in the Swiss Alps, in the village of Balgach near Lake Constance and the Austrian border, the scenery may be stunning, but you can’t eat scenery. WZW set about changing the company to introduce the latest technology in lens manufacture and coatings and found that far from there being a shortage of customers for what they could make, there was a shortage of suppliers.
More than 10 years after making the change from camera optics to laser optics, the growth is continuing fast. In the meantime WZW, under CEO Willi Weder, has striven to create a family culture around the company to build loyalty from its employees and the confidence of customers, who know that the company will be able to continue delivering quality.
Being up in the mountains provides a high quality environment for its staff, but the location is also just two hours' drive from Munich and within striking distance of most of the industrial belt of Germany.
WZW was founded in 1965 by Willi Weder as a manufacturer of optics for cameras and microscopes. It effectively spun out of Wild Heerbrugg, which is only a few hundred metres away. In 1995 the company was taken over by his son, also called Willi, who had worked at the factory and qualified as an optician. He also worked in his mother's restaurant, which he says taught him about customer service. He realised that the camera optics business was facing increasing competition from Asian suppliers and, being based in Switzerland, WZW was not really able to compete effectively. He decided to shift the company to the production of laser optics.
Weder says: 'The Asian market was opening and competitors were coming. Laser optics, by comparison, were much more delicate and were moving fast, so it seemed to be the area to make investment and gain knowledge. We had done some defence work before, so we had some advanced knowledge. The most important thing for us was flexibility; we could produce parts from three to 500mm, which allowed us to serve a lot of different markets. Another issue was that we could turn jobs around very quickly, and so we could do fast prototyping.'
The company started a marketing drive to the laser industry by attending key exhibitions. It also approached nearby research institutions, such as the Fraunhofer Institute in Germany and the ETH Research centre in Switzerland. Weder decided that the best way to learn what was required by the laser industry was to work with the leading research groups.
He found that there were plenty of takers for what he had to offer and the company started to grow rapidly. Almost all its production is for OEMs with a lot going into military equipment, such as night vision, but also into medical applications.
'Our main advantages are fast response and working closely with customers' WILLI WEDER
Weder says: 'It took us three years to change the company. We started step by step, with single orders and acquiring technology. We invested in measurement equipment and then polishing technology. Our polish roughness is less than one Angstrom. Everything we sell, we can measure. We can measure surface roughness to less than one Angstrom and the angle to less than 0.4 arc seconds.
'Our main advantages are fast response and working closely with customers. We can produce a prototype for an optomechanical assembly at short notice. We do all the steps in-house, from designing, cutting, grinding, polishing and mechanics through to coating.'
The defence sector is proving to be the area of largest growth. Weder has found that the defence contractors tend to follow each other around. Once they have done work for one major contractor, the others start to realise they can meet the standard and follow suit. The most effective marketing tool has been word of mouth.
As business picked up WZW started adding facilities and recently opened a new clean room and capacity for making sub assemblies with opto mechanical parts.
'We like to have a team spirit where people get together socially. That helps bind people' DAVID VARRIE
As the company has grown Weder was determined to retain the same family business culture. The company currently has 75 employees, the number having doubled in the past four years. Two of these were from the original camera company, but they are encouraged to see themselves as part of the family. The company has a restaurant, Laserbar, where employees take part in a lot of social activities together to build the corporate spirit. Employees with children can leave them in the company kindergarten while they are at work and there is even a small hotel on site used by visiting customers. Many of the employees live in the nearby village and cycle or walk to work. Being in a small village in the Alps with ski slopes nearby and stunning scenery all around has proved an irresistible draw to engineers and experts from all over the world.
Weder wants the company to be regarded as serious about its business, but a fun place to work. He has even commissioned a company song! Sales and marketing manager David Varrie says: 'We like to have a team spirit where people get together socially. These events get people mixing on a social level and involve their families on a social level. That helps bind people. We have our own kindergarten and that has been a great success for keeping our staff happy. A large percentage of our production workers are women and the average age of our staff is 32, which is the age when people want to settle down and have children. We get 110 per cent productivity out of them, because they know that their children are being well looked after in the same building. It helps to cement that family thing. It is very seldom that people want to leave the company.'
Varrie says that customers have been very happy to accept the notion of Swiss precision and Swiss quality. He accepts that this may make its products more expensive, but it is aiming its services at the kind of company that is more concerned about the quality and the precision than the price. He says: 'A lot of companies all over the world want the quality and the precision and are prepared to pay. We have become known for our fast prototyping, and word spreads within the industry. We have to go through a long process proving ourselves with the prototype and hoping that it will go into series production. We have been making optics for many years and many larger customers in defence and medical industries are changing and downsizing and they want us to do more of the assembly. We are now doing assemblies, because the market wants this and we have reacted.'
WZW generally prefers to deal directly with its customers, but it has built up an international network of sales agents to help it find new opportunities. They also support existing customers and handle day-to-day administration. All its agents have optics experience and can help in the communication between customer engineers and the WZW engineers, even though English is the business language of the industry. Weder and Varrie are the public face of the company, travelling about half of every month to visit customers to cement relationships and show the company flag at the leading trade shows. Modern communications technology means that engineers do not have to travel to customer sites as much as they used to.
Varrie believes that defence and medical industries will continue to deliver strong growth going forward. He says: 'From my experience the demand for optics far exceeds the capacity to manufacture. There are a lot of companies at the lower levels, and there are factories opening all the time in China with machines. But you cannot do it with machines; it is a craft. We are adding capacity in terms of production space and are not just sourcing people from the local area, we are sourcing them from all over the world. We have an apprenticeship programme in place and we are constantly training people in new technologies. What we are doing is craftsmanship, and it takes many years to learn.'
WZW is owned privately and Weder is quite happy for it to remain so. Any future growth is planned to be organic rather than the expansion and acquisition road preferred by some. The market for a company in the heart of Europe is for the ultimate end of the quality spectrum, where the price is less important than other factors. Weder knows that in order to have a business, the quality has to be maintained, even if that does mean the whole market cannot be satisfied just yet.