Emerald EMS VP of Sales and Marketing, Joe Garcia, joins Trevor Galbraith of Global SMT at APEX 2022.
Galbraith: I’m delighted to be joined now by Joe Garcia. Who’s the vice president of sales and marketing for a company called Emerald EMS. So welcome, Joe. Nice to see you this morning.
Garcia: My pleasure. Good to meet you.
Galbraith: I took a quick look at your website earlier on. I’ve actually got an image I grabbed from it this morning that we can look at – which shows some of the acquisitions you’ve been making recently. Can we have that up? There we go. You can see along the top, you’ve been a busy guy.
Garcia: Not just me, but yes, our team has been very busy over the last couple of years. For sure.
What was your strategy going forward?
Garcia: I should probably start at a high level. So Emerald EMS came together, I think it was September, of two-thousand and nineteen. A private equity firm called New Water – out of Boca Raton, Florida – had this thesis to basically bring tier-three EMS companies into a platform that allowed them to have the capital to expand, to grow, and to scale. So they did that primarily through acquisition. The first entities that were under that platform were DataED, and as you saw, there are three facilities. The stand-alone NPI facility, the production facility in Salem, New Hampshire, and there’s the China facility in Shenzen. So the DataED and Bestronics deals, if you will, closed practically on the same day. And that was the formation initially of Emerald EMS. And then, over the course of 12 months during this crazy pandemic, we were able to find two very good, very well-operated organizations to put under the platform. And that was Saline Lectronics in Saline, Michigan, and Veris in Veris, California. So that rounded out the current infrastructure. And if you didn’t already know, December 30th New Water exited the company as our private equity partner. And now, Crestview Partners out of New York owns us. So we’re expecting more of the same.
What’s the strategy in terms of technology?
Galbraith: I was going to say: they must be coming with a second round of acquisitions in mind? I’m assuming. And to take this up into essentially a tier-two company and concentrate on a specific market segment like high-reliability applications? Or what’s the strategy in terms of technology?
Garcia: Sure. Very well said. Except, the only thing is that we desire – and I know how the tiers work in regards to revenue – we want to continue to call ourselves a tier three. We want to provide the service level that a customer would experience at a mom-and-pop shop or tier three – where it’s very intimate, very hands-on. And we’re going to support the type of business you just said. High-reliability stuff and Aerospace, defense, medical, complex industrial. But so, in marketing terminology, we’d like to be a billion-dollar tier three. We don’t want to race to the bottom of the margin thing. We want to satisfy our customers. We want to find value, but we don’t want to necessarily call ourselves a tier two.
Galbraith: Right, I hear what you’re saying. I’m guessing one of the big things you’re gaining out of this is, of course, the extra buying power.
How bad has the supply chain shortage affected you, and how have you negotiated it over the last 12 months?
Galbraith: The combined buying power of all of these small companies would be quite significant. What about, of course, the industries going through the horrible issues with supply chain shortages? How bad has this affected you, and how have you negotiated it over the last 12 months?
Garcia: Sure. So luckily, we’re not chasing high-volume stuff. We’re not looking for 20 reels of a part to finish a job. We’re typically running lots of two to three-hundred, four-hundred, or even smaller. So we’ve made a lot of diving catches for our customers for the last 12, 18 months. We’ve gotten bit too – it’s almost impossible not to. We brought on board a vice president of supply chain. To your point of all these sites that operate very well – they’ve all got supply chain leaders that are doing a really good job. But Chris Lentz is coming in saying: well ok, everybody is. But now, let’s look at it at a global perspective. And he’s been able to get good relationships with distribution partners, with some custom-made commodities. So we’re managing through. It’s the high touch stuff. So we’re very intimate with our customers’ materials and what they need. They’ve been helpful in giving us more lead-time. So our backlog has expanded. We’re working it probably just like everyone else, but probably a little more closely with our customers.
Have you been able to expand upon the range of features you can offer customers?
Galbraith: Looking at the mix of companies you’ve got, have you been able to then expand upon the range of features you can offer customers? Some factories have extensive cleaning capabilities, others have better coating capabilities? How are you operating? How are you dividing up the workflow?
Garcia: That is a great question. And that has been a big part of my focus over the past 12 months on board. As we acquired these companies, each company had salespeople. And so now, they are all integrated under the Emerald EMS sales team. But we had to do a lot of work to educate on exactly what you said. Yeah, your site that you’re very proud of that you love feeding families in is great. But you have this whole solution set now. And if your customer needs some specialized RF work, then let’s look at Saline because they have an RF room. If a customer needs cleanroom work, Bestronics has 2,500 square ft cleanroom. So there’s these niches that now we’re educating the entire organization on. And we’re trying to put the customer in the place where we have the best opportunity to support them long-term. But also, they’ve got to want to be in that region. We’re in that education process now. We’ve got charts and things that are getting pushed out to the various organizations. There’s collaborative meetings amongst leaders that say: ok, this is what we do well here – let’s make sure we share that with everyone. We’re trying to make sure we understand what the best solutions are in each site, and we’re making sure our customers are aware of that too.
Are you seeing a bigger trend toward the advanced packaging side and integrating that into the EMS world?
Galbraith: It’s an interesting range of capabilities you’ve got. Talking about the cleanroom moving into the semiconductor side – are you seeing a bigger trend towards the advanced packaging side and integrating that into the EMS world?
Garcia: We’re not seeing that so much. Our cleanroom is more for optics or just cleanroom assembling in the medical space. So we’re not seeing too much in semiconductor. We do support a lot of semiconductors – that segment is big for us. But what you just described, we’re not necessarily seeing that bleeding into us. Not yet, at least.
Galbraith: Wow, that’s really interesting. Ok, I was going to say: what’s next? But apart from acquisitions, that’s pretty much going to be the main story with the new private equity company.
Garcia: Yeah, there’s a list. There’s a list of companies that we’re interested in. One of the great things that happened very early in this relationship with Crestview is we’ve already got a very good understanding of what is a fit. We’re very clear on the characteristics that would make a good fit for our growth – for our strategic objective to grow and expand. So, we’re working that right now. Other than that, there’s an organic piece to that as well. We have a tremendous fortune to have customers that are Fortune 500 customers. Or otherwise, leaders in their segment who have chosen us to be their partner. And what we’ve not done a great job of in the past is saying: ok, well, let’s leverage that relationship to get to another division or product line. So, the sales team and program and account management teams are really focused on landing and expanding within that model. So there’s an organic opportunity, and there’s the acquisition stuff. Our leadership team is very busy. But it’s one of those times in EMS with this thing coming together, and it’s moving so fast. It’s a lot of fun – and you don’t always have a chance to have fun here.
Galbraith: One of the things in the acquisition business, or merger business, is it’s very difficult being able to get the right culture match.
Garcia: Ah, very true.
How have you managed to bring everyone into the fold?
Galbraith: So how have you negotiated that? Because I’m sure that there’s a different culture in a number of these different companies. How have you managed to bring everyone into the fold?
Garcia: That’s a good question. So, Vic Giglio is our CEO out of New Hampshire. He’s owned a couple of CMs before, and he’s one of those people that has his gut spot on. And through the due diligence process, that is a big part of the assessment. Not only the culture and leadership team, but will this thing gel? Is it already operating well? And what kind of exponential growth or profitability can be expected if it’s rolled under this platform? So, culture’s huge. Especially if you think about the segment that we’re trying to service or are servicing and our desire to stay a tier three. Culture is huge, right? We can’t become bureaucratic. We’ve got to have the mindset that the customer is first. And we’ve got to be a solution solver or a problem solver by providing solutions. Culture is big.
Galbraith: You’ve got a big job ahead of you, Joe. You’ve done well so far. So, I wanted to thank you for coming and telling us about it today. And I want to wish you every success with the future.
Garcia: Thank you. Pleasure meeting you. Thanks for having me.
Click HERE to see all our videos.
Have other questions? . . . Contact us HERE.