Welsh economy on the world stage
THE unique warmth and classlessness of Welsh society combined with a commitment to developing entrepreneurship can allow the Welsh economy can compete and flourish on the world stage — especially as labour costs in countries such as China start to rise.
That was the bold message delivered by Sir Howard Stringer, the chairman of the board of Sony Corporation until just weeks ago, in a visit to Swansea. Stringer was in the city to collect a DLitt Honorary Degree from Swansea University's College of Arts and Humanities.
"Wales does have a unique appeal and intimacy, which sets it apart from the rest of the UK," he told Swansea Bay Business Life. "Combine that with the type of corporate entrepreneurial attitude that Sony has fostered here in Wales and it certainly can compete on the global stage," he said.
In a remarkable career, Cardiff-born Stringer spent 30 years working for US news organisation CBS before moving to Sony and ultimately becoming its chairman and chief executive.
When he first took the role, the factory in its old form was closing. He fought to save it in some shape or form and was ultimately directly instrumental in Sony's investment in what is now the Sony Technium at Pencoed near Bridgend.
Since then, he says the plant and its 400-strong workforce has been forced to become more entrepreneurial. It leverages the experience and the skills of its workforce to win contracts from third parties. He reserves especially big praise for the role Steve Dalton OBE, managing director at Sony UK Technology Centre, who he says has consistently fought for and justified the future of the plant at Sony's head office in Tokyo, Japan, and has been tireless in securing new contracts and business for the plant.
"The way that factory has transformed itself has been remarkable over the years," he said. "It has a very entrepreneurial boss in Steve and has won a number of big profitable contracts there. It is an example of what can be achieved by organisations in Wales and a great tribute to the men and women who work in that factory."
One of the most high profile contracts won by the plant has been the contract to make Raspberry Pi — a credit card-sized mini-computer aimed at getting youngsters into computer programming.
The factory won the contract in direct competition with China. The main global distributor of the £25 micro-machines — Premier Farnell subsidiary Element14 — confirmed earlier this year it has now shifted all its production from China back to Wales.
The move means almost all the world's Raspberry Pi computers are now being made in Pencoed. The extra work also created new jobs — on top of the 30 created when Raspberry Pi production started in Pencoed in 2012.
Stringer believes a combination of the highly skilled workforce and a proximity to the client and its customers were instrumental in winning the contract and are as good indicator of how Welsh companies can set themselves apart in the world.
"As labour costs start to increase in China, I can see this happening more," Stringer says. "The cheaper cost of doing business in parts of Asia has to be offset by a closeness to the customer and the creation of rounded intimate relationships with the end customers. If that can be achieved, you will also sell more.
"Sony in Bridgend is a great example of this happening. Also, technology is moving so fast these days, some customers cannot afford to wait for a container ship to arrive from China. By the time it does, technology will have moved on. It proves that manufacturing businesses can succeed outside Asia."
He also says he believes Wales as a nation has special qualities that can also give its companies a competitive advantage. He notes that when Sony had a much bigger manufacturing presence in Wales, many of the company's senior executives formed strong and deep rooted emotional links with the Welsh people — something that help protect the plant from full closure later on.
"My colleagues in Japan still talk very warmly about some of their friends they have made in Wales. Many lived here for long periods of time and enjoyed the hospitable and classless society in Wales. They appreciated the way they were treated and the welcome they received. Many are still very emotional about that. Wales has an intimacy and appeal that is not replicated in other parts of the UK.
"But the same is true in many other contexts. When you consider the Welsh brand as it is regarded in the wider world — there are no real negative connotations. People know of a few famous people from Wales and they regard us as a nation in a few warm way. We sometimes consider ourselves small and distant from the major hubs of business but Silicon Valley is small and a long way from many of the cities those businesses predominantly do business in."
Sir Howard retired as chairman of the board of Sony in June 2013, ending the latest chapter in what has been a remarkable career in business.
Sir Howard Stringer was born in Cardiff in 1942.
He began work at Sony in May 1997 as president of its US operational unit and was made a Sony group executive officer in May 1998. In June 2005 he became chairman and CEO of Sony, overseeing the entire businesses of Sony including its media and electronics subsidiaries. It was in this role that he was directly instrumental in Sony's investment in the Sony Technium at Pencoed.
In April 2009 he became president of Sony Corporation, also serving as executive chairman and chief executive officer of Sony Corporation of America. He has also been president of Sony Broadband Entertainment Corporation since March 2000.
Stringer stepped down as president and CEO in April 2012 but remained chairman of Sony Corporation until June 2012 when he became chairman of the board of Sony. He retired as chairman of the board of Sony in June this year.
One of the trademarks of his career has been his ability to inject entrepreneurialism into large organisations — this is also the trait has ultimately underpinned the success of the Pencoed plant. He admits that large companies are not well suited to innovation. But he also believes it can be done.
"Former US president once said: 'Being president is like running a cemetery: you've got a lot of people under you and nobody's listening.' The same is true of running a very big business," Stringer says. "He it can tough and size is a problem for companies that want to react quickly and innovative. When you look at all the amazing technology and innovations that emerges from California, all those companies start small and nimble. They then grow fast.
"They way to achieve a similar mentality in big business is to create units within a company that effectively act as silos. Although this also has negatives, you can create teams able and willing to fight for their futures and they can become very entrepreneurial as a result. That is exactly what happened in Sony in Bridgend with Steve Dalton and his team."
He says another source of innovation in Wales can be the universities locally.
He says he has been especially impressed by things such as the Institute of Life Science in Swansea University, which represents a great example of how academia and business can partner for the greater good.
"Size doesn't matter on these things," he says. "A lot of the American universities' business schools are way too big now and just churn out students who go to work in private equity. Wales can definitely compete in this area.
On receiving the Honorary Degree, Stringer said it was an honour "to receive an Honorary Degree from a university whose academic reputation is soaring, in a town whose profile, thanks to a spectacular waterfront, wide sporting success in football and rugby and proximity to the most beautiful beaches in the world, is generating international acclaim".
He said he retains strong ties to Wales but splits his time between the US and a family home in Oxfordshire. He says with his background in media, he feels very at home in California but plans to spend more time in the UK going forward.
He also remains especially passionate about Welsh rugby (speaking just days after the British and Irish Lions' series win in Australia) and will be speaking at Cardiff Business Club in the autumn.
"I am a passionate Welshman and always will be," he says. "I have huge time for the country of my birth and take a close interest in both the Sony operations here and the local economy. I see a lot of positives in both at the moment and there is no doubt in my mind that Wales has the raw ingredients to compete and win on the world stage as globalisation continues apace."