Blackfriar: Plain-talking American paints a new picture for Pace

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ACCORDING to insiders at TV technology company Pace, new boss Mike Pulli is very different to the former management team.

The American has been sent across the pond to the group’s Saltaire headquarters to sort out the business after a string of profit warnings last year.

For a start, he’s very no-nonsense. There is none of the airy-fairy speak about Over The Top, HD TV, PVR and all the other hi-tech initiatives that Pace has been involved with in the past few years.

Mr Pulli, the former head of Pace’s fast growing US business, is about one thing – returning the group to profits growth.

Talking to the Yorkshire Post, Mr Pulli said Pace has a bright future and “a very talented group of people” working for it.

“We need to make sure we drive the company and go back to basics, which for me means making money,” he said. “I know my hard work will result in cash coming back into the company. We need to keep the focus on the basics.”

Pace said it expects underlying profit growth of seven per cent this year on the back of efficiency improvements.

So far so good.

This week the group’s shares shot up on the news that supply issues resulting from the flooding in Thailand will cost the company far less than initially thought.

Pace had forecast an earnings hit of between £22m and £32m in 2012, but reduced this to between £16m and £22m on Tuesday.

Pace faced supply difficulties after the Thai operations of key hard disk drive suppliers Western Digital and Seagate were brought to a standstill by flooding.

The former management, which was criticised by one analyst for using every excuse apart from “the dog ate my homework”, was also in trouble for relying on too few suppliers.

When acts of God happen such as the Japanese tsunami or the Thai flooding, it is vital that the company can source from elsewhere in the world.

This has been a key objective for Mr Pulli who said the set-top box supplier is working hard to expand its sourcing so it isn’t reliant on one region or producer.

“We are ploughing through to make sure we don’t have a situation like this again,” he said. “In areas where we can be dual supplied, we are sprinting down that path. Anywhere we see a gap, we are looking.”

You get the feeling that Mr Pulli means business. He talks about markets that need to be “attacked” – a very different approach to the former management.

He will be judged by the market on how Pace performs this year, but Blackfriar suspects Pace will overcome its problems under Mr Pulli. This plain-talking American is here to make money.

Besides new chairman Allan Leighton, the Asda to Post Office veteran, very rarely makes a mistake and he believes Pace can rediscover its former glory under Mr Pulli.

Britain has always been a nation which makes things, and does it rather well.

But somehow, it allowed this message to get lost during the past two decades, overpowered by the allure of finance and its heady alchemy.

Even so, Britain remains the worlds ninth-biggest manufacturer, employing 2.5 million workers and accounting for half of all British exports.

For Yorkshire, it’s all the more important, with manufacturing accounting for more than 12 per cent of the region’s output.

The iconic Burberry trenchcoat, made in Castleford, is shipped to China’s growing middle class by the truckload. East Yorkshire’s significant hub of caravan makers satisfy a growing desire to holiday in the UK.

So the wooing of Britain’s manufacturers and engineers by politicians of all shades and creeds is a welcome, if overdue, development for Blackfriar.

At the Engineering Employers’ Federation’s first annual manufacturing conference, Labour leader Ed Miliband called for a new patriotic industrialism and the adoption of a Made in Britain hallmark. Business secretary Vince Cable followed him onto the stage and said Government will “repatriate” supply chains – in other words, use some of Government’s vast spending power to support domestic companies.

The growth in green energy will be a big driver going forward, with plants such as the planned Siemens wind turbine factory in Hull providing hi-tech jobs.

And while Britain may not be able to compete with the Far East for cost, quality is increasingly an issue for firms, some of which are reverting to UK manufacturing.

But two of the biggest issues remain around image and finance. Manufacturers repeatedly complain that the output from Britain’s schools and colleges is not honed towards vocations such as engineering. Plus, they fear children have grown up with an image of men in grubby overalls toiling away in a dirty industry.

They also bemoan the banks, which for all their lending promises, still only support the safest bets. With access to capital at fair rates, they could afford to take the gamble to hire staff and buy new equipment.

Manufacturers don’t want a handout, they just want the tools to grow.