Q&A: Revolve Technologies
UK-based engineering firm Revolve Technologies was formed by an MBO in 2007 when Roush Industries (an engineering arm of the Roush empire that is perhaps best known for Roush Racing and NASCAR) decided to divest its European operations. Revolve says it has a diverse portfolio of multi-tier automotive and non-automotive clients across a broad spectrum of industries including car and commercial vehicles, transportation, infrastructure, agriculture, defence and energy. Dave Leggett recently spoke to John Mitchell, Managing Director, and Chairman Andrew Williams, to find out more about the business.
DL: How did Revolve come about and why did Roush decide to divest European operations?
JM: Well, Roush in the US decided to have a long hard look at its operations and assess what is core, what works for them and so on. At one point they had over 50 engineering operations scattered around the US - mainly in and around Detroit - and there was us in UK acting as a European outpost.
Roush wanted to position itself to survive the decline in the US auto industry and focus on what they felt was core and profitable for them.
Now, while we were wholly owned by Roush, we were always left to more or less run ourselves; the European operations pretty much constituted a standalone business. Therefore, that offered them the opportunity to sell a going concern without any real impact on the main business in the US.
They also felt that the management of the business in Europe, small though it was, was an unnecessary distraction to them over in the US while they were concentrating on the impact of the wheels falling off of the car industry in America and what that meant for their business.
AW: And strategically, the European set-up was seen as needed to support global programs but that business never quite materialised for us in the scale we thought it would.
JM: That said, with initiatives like 'One Ford' going on, now doesn't seem like the time not to have a global capability - so we continue our relationship with Roush; we represent them in Europe and they represent us in the US.
DL: There is still an ongoing relationship then?
JM: Yes, quite definitely. The only thing that has actually changed is the ownership of the business. We have very close links. So, for example, should one of our customers like Ford say to either us or Roush that they need support on a global programme, we do possess a global resource that we can put in place quickly.
DL: And it's engineering services rather than the motorsport side where you would be working together?
JM: Oh yes, absolutely. Roush in the UK was set up purely as an engineering services provider to support what was Roush Technologies. The Roush business has got two distinct pieces: one is motorsport and the other is engineering. We were linked in very much with the engineering work.
DL: Is the Roush history and the brand name still important to you guys? I noticed you kept using the Roush name for a while after your MBO.
JM: Yes, we had an agreement with Roush to continue to trade under the Roush name until the end of last year. We changed it for this year. I was one of the team of three that set up the Roush UK business in 1995, so it was the second time around for me, in terms of getting a new brand known in the UK. Nobody in Europe - outside Ford - knew Roush back then, so it was thirteen years of building up a business and a reputation.
The important thing about the Roush name, as far as we are concerned, is the reputation we have built up as a solid engineering company. We are very proud of the heritage that we built up and it will be a while before the Roush moniker goes - and we don't have a problem with that, even though we are building a new brand. Just because we changed our name, it doesn't mean we changed our business formula. And we don't have a problem at all with people making the Roush connection, though it will fade over time.
Which is also why Roush are very comfortable in having an agreement with us - we both work the same way. The brands sit well together.
DL: Can you explain how the Revolve business is set up?
JM: After the change of name, we took the opportunity to refine things a little more. But there are basically three major areas of business. Our core activity is the engineering business which we term 'product development'. It has many pieces to it but we don't divide our business by end application such as military, marine, automotive...it's all part of our product development business which is where we provide our engineering services.
Within that, a core business is powertrain engineering which effectively is the design and development of engines, the associated engine systems and engine and transmission calibration. That will also involve the integration of that unit into a vehicle. That really is where we start from and is our core business.
Whether it's, say, automotive, marine or military is almost irrelevant. There are different conditions you have to work in but the principles are the same. Powertrain integration is still powertrain integration, regardless of the end application.
The calibration part of that has been the biggest piece of our business in recent years. That's been driven by things like changing emissions demands and working for the major OEMs (for example, Jaguar Land Rover and Ford) has been a big slice of that.
We also have a link to Ford Component Sales. FCS is a wholly owned subsidiary of Ford and we are their Engineering Partner, supporting integration and calibration work on the low volume engine sales that they supply to companies like Morgan, and more recently supporting their new business into the Marine and Industrial engine markets.
Also, in product development is what might be termed 'general engineering' where people come to us with engineering problems or challenges - maybe it's too expensive or complex to make - requiring solutions. We take the design, look at it and modify it and then might get involved in the manufacture or assembly of that product. It could be anything. It's still product development, but it's not cars.
That helps to give us diversity and a certain flexibility of operation.
And the mix of our business really gives us some advantages. If you think about automotive and the cost pressures the sector has been under for years, we're now finding that experience useful when dealing with the military sector which is now becoming much more commercially focussed than it used to be.
There are two other parts of the business making up our three areas. The smallest is what we call consultancy services. That involves supplying people resources into the OEMs as technical specialists. We're not a recruitment agency as such, but we can supply technical specialists for specific projects. It's an area of business that has grown out of our engineering work and reputation.
And the third area - which touches motorsport - is performance engineering. That includes Mountune Racing - it was the engine supplier to the 1998/99 Ford Focus World Rally Car before Ford bought Cosworth and put a Cosworth engine in it - which is all about motorsport engines and calibrations for those engines. It's a good synergy for us. We've been able to work with Ford in Britain to develop and sell performance upgrade kits through the Ford dealer network as a supplier branded accessory. I have heard it described as a kind of AMG for the masses!
We're very pleased with this aftermarket performance niche and now have TUV approval to sell the Ford Focus ST kit across Europe; we hope our new Fiesta kit will follow shortly (it is currently UK only).
Also under performance engineering, we are the only Ford GT dealer in the UK and we won the contract to re-engineer and convert the 101 Ford GT vehicles that Ford officially brought to Europe. We also convinced Ford that it would be best for us to service the cars, so we look after many of the European and imported Ford GTs that are in the UK. The two other European dealers who were appointed for the European cars - one in Germany and one in Switzerland - also see us as 'the works' and come to us for parts and technical advice.
DL: How many people do you have working for Revolve?
JM: We have got 82 people in our employment at the moment. We are on one site. We are in Essex and not far from Ford's technical centre at Dunton or the engine facility at Dagenham. Annual turnover is around GBP11.5m and growing.
DL: How are those 82 people allocated, broadly, in terms of the three-way organisational split you just described?
JM: Around 50% are on product development and then it's more or less 25% each on consultancy and performance engineering.
DL: And the company is privately owned?
AW: Yes, that's right. And the way things are in the market an IPO is not going to happen anytime soon though it is possible in the future.
DL: Who do you see as your main competitors?
JL: Ricardo, AVL (an Austrian powertrain company) and FEV. AVL and FEV are mainly powertrain engineering, but Ricardo also do some vehicle and military work, so we are perhaps more aligned with them than the other two.
We believe our strength is that we can offer complete vehicle programmes. While we are not a body-in-white or full body engineering company, we are essentially everything else and we have worked on and do work on complete vehicle programmes. It is the understanding of the rest of the vehicle - besides powertrain and related systems such as exhaust - that I think sets us apart. We have a full appreciation of the whole vehicle and can provide a full engineering service.
DL: Obviously the Ford connection is a strong one. Are you happy with the rate at which you are diversifying the business?
AW: Yes, of course, we are seen as having close links to Ford and Ford's history, and ongoing business remains very important to us, but it's far from the whole picture. Diversification and flexibility is absolutely key to the business going forward and that has been something that has made a difference over the past twelve months. In fact, our work with Ford now accounts for just a quarter of our turnover.
Being diversified and flexible with a range of clients - and not just automotive - is a key strategic requirement for our company and a basis for future success.
JM: And the military projects we undertake can be either directly for the MoD or in partnership with any one of their major suppliers.
DL: Can you sell products to overseas defence buyers, such as the Russian military, for example?
AW: Yes. We are constantly demonstrating our expertise and products at international defence shows and we attract plenty of interest from foreign governments' military buyers and suppliers. They also will see something in operation, decide they like it and then find out where it was made.
DL: Coming back to automotive, can you describe a typical 'global' programme that you have worked on for an OEM?
JM: Whilst I can't be specific, as we work strictly within our confidentiality agreements, but I can generalise a recent global project, with launches both here in Europe and the US. There was a vehicle and engine plant here in Europe and also the same in North America. The programme was awarded to two companies outside of the OEM. One company did the engine and calibration - strangely enough, not us! - and we did everything else including the exhaust, intake, transmission controls, transmission mounting, engine mounting, wiring, trim and project management.
So we took that job through from the 'programme approval stage' (where one car has been built) through to 'Job 1 plus 90 days'. And for the systems and components for which you have responsibility, you will complete the design, package, development and testing, and release into the OEM's system. You will also have to liaise with suppliers nominated or chosen by the OEM. You work with the suppliers to get that product/parts into the plant, approved for manufacturing and subsequently into the production process.
DL: Why does the OEM decide to outsource to that extent?
JM: It's all about capacity. Some of the more niche programmes aren't there at the beginning, but a decision might be taken down the line to produce a certain niche variant. In that situation it can be easier to simply outsource the new niche variant's engineering and avoid diverting valuable internal resources to it.
In terms of efficiency, there might be a situation at which the OEM can decide to employ contract labour to enhance the internal team's efficiency, but there may come a point where the option of outsourcing more, such as the management of the project, becomes attractive.
Typically, when working in this way for an OEM, you will go to regular reviews so you are part of the OEM's broad management team - they maintain overall control, of course.
It can be a very cost-effective, timely and flexible solution for the OEM on particular projects.
DL: But it's only niche products?
JM: Yes. It's very rare for anyone outside the OEM to get a mainstream product; it would only be a derivative and there aren't many of these jobs around. Some of the calibration work we do now though is not niche product, but it is in a sense niche market. So we might be making small changes to a car for a particular relatively low volume market - it could involve fuel quality or unique market requirements such as climatic conditions or emissions requirements.
DL: On the general engineering side, can you give an example of an application that is perhaps a little different?
JM: The one that springs to mind is the horse trainer that we did for Kurtsystems in Turkey. The client firmly believes that you should not put a jockey or saddle on a horse until its legs are strong enough. Without going into great detail, he had a prototype trainer vehicle and we took that concept and developed it further, fully engineered it. Weighing in at around 4 tonnes, the vehicle effectively provides a moving enclosure similar to a starting stall, in which the animal can walk, trot or full gallop freely in a controlled environment, whilst being monitored and trained to optimise race performance. It's a highly complex mobile race trainer which enables continuous monitoring of the animal at speeds of up to 60kph.
Effectively, it's a data capturing laboratory on wheels. And yes, it is a rather unusual bit of equipment, as the pictures testify.
Another example that springs to mind is a roll-over protection system (ROPS) we have developed for military use. It's a seating system that you can clamp onto a flatbed army truck in order to carry army personnel safely. It's a seating system with an integral roll-cage and full harness restraints. We have designed it, tested it, got it certified and now we are assembling that. We have chosen suppliers for key parts and we put it all together here. It is for the military, it's a seating system and it has nothing to do with anything else here really: it's seats and a little bit out of what people know us for. But we have an army of engineers here and we pride ourselves on our ability to turn our skills to any engineering challenges.
DL: So how does this seating system work?
JM: Well the flat-bed on the truck has a set grid of fixing holes in the base and we have designed a very unique clamp assembly that will lock the frame in place. It provides a safe way for the personnel to travel and the truck can be used for other things, too. This is not for 'in-theatre' use, but rather for, say, transporting troops safely between bases or camps.
And we are working on further adaptations.
DL: How do you see Revolve developing in the future?
AW: First of all, we need to be bigger and have a larger critical mass. As part of that also, we need to strengthen some of the key expertise and capabilities that we have. That will certainly be achieved through organic growth, but there could also be scope for acquisitions, joint ventures and partnerships. That also applies not only to capabilities, but also geographic markets as well.
We have a strategic partnership with a business in China that is helping to sell our capabilities into that market - especially with respect to the development of hybrid commercial vehicles.
India is another possibility. And there is room for us to do more in Europe, certainly.
DL: Do you think you will be setting up overseas facilities?
AW: Only through acquisition.
JM: In our business, the strongest will survive and we intend to get that foothold and critical mass so that the business is running rather than walking. We are trying to find like-minded partners now, 'who think and work like we do'.
There has to be a fit with the way we work. It can't just be 'they do that and we want that'.
DL: And you're not looking to move into other areas of activity than those you are currently engaged in?
JM: No, we're not. It's more about the possibility and aim of enhancing what we have got. A key growth area for us at the moment is electronic and electrical integration in the context of hybrid and alternative powertrains, where the electrical systems and electronics are clearly key to getting the whole thing to work. So we are looking to grow into areas where we see strong growth potential, while developing the resource capability and scale to realise that potential and build on what we already have - which is a very solid business.
It's about a mix of organic growth, looking also for opportunities to gain critical scale and get presence where that is beneficial, while also not losing sight of the key strengths we have in the way we work - things like our flexibility of approach and a reputation for quality and integrity in everything we do. We're also honest and people appreciate that. We'll take on a lot - as the horse trainer case illustrates - but we certainly won't say yes to something that, for whatever reason, we really don't think we can deliver on.
And at the end of the day, if we can have some fun in the process of doing our work, while making our clients happy and growing this business, that's no bad thing either.
Ford CEO Alan Mulally spoke with FOX Business Network's Liz Claman at the Consumer Electronics Show (CES) in Las Vegas, saying that he believes "we're at the bottom" of the recession and that Ford is ...
Value-added glazing products are becoming increasingly important in the automotive market, delivering greater functionality and adding a further growth dimension at a time when the industry needs it m...
Western Europe's car market is set to slide by over 10% in 2010 as the distortions caused by scrappage discounts unravel, according to analysts at JD Power Automotive Forecasting....
A surprise new player last night announced a bid for Saab in partnership with Formula One racing supremo Bernie Ecclestone, prompting the General Motors board to add at least a day to its deadline. An...
Chevrolet is to show this sporty RS version of its entry level GM Daewoo-devloped Aveo at the 2010 Detroit show....
GM has confirmed it will sell its Nexteer Automotive business....
South Africa's vehicle market ended 2009 on a relatively weak note, with the sales total for the whole year turning out a their lowest since 2003....
Vehicle production in Brazil fell only 1% in 2009, as strong home market demand offset falling exports....
- Jaguar Land Rover's lightweight future
- INTERVIEW: Ford of Europe's chief, Stephen Odell
- GENEVA WRAP: Europe still struggles, future bright
- INTERVIEW: Ford UK fleet director, Phil Hollins
- THE WEEK THAT WAS: iOS (and Android) in the car
- 'One Ford' has kept us alive in Europe
- GENEVA: Apple launches car iOS
- GENEVA: Jaguar names 'small' saloon XE
- JLR reported close to Saudi Arabia factory deal
- EXCLUSIVE: Renault axes another EV
- Tesla: The Californian start-up that made head way on the automotive giants
- Dacia: The no frills automotive brand, that is becoming a serious world contender
- PLDB - vehicle cycle plan database (annual subscription)
- China’s One-Child Policy is Shaping a New Automotive Landscape
- Global light vehicle HVAC market 2008 to 2028