Case study: Pace Micro Technology plc

Global manufacturing outsourcing

We advised Pace in connection with the outsourcing of the manufacturing of its digital television set-top boxes to Solectron Corporation, who established new manufacturing plants in various centres of excellence around the world. The manufacturing plants were built to an agreed specification and are identical save to the extent dictated by local legal requirements.

Previously Pace used a number of alternative suppliers as well as manufacturing itself in the UK. The outsourcing to Solectron enabled Pace to capitalise on economies of scale and benefit from Solectron's enhanced purchasing power, whilst focusing its own resources on product development and innovation.

Commenting in February 2005, as part of a visit to the Shenzhen facility in China by the Chancellor of the Exchequer, Gordon Brown, Sandy Barblett, Regional Director for Pace Asia Pacific, said: "As a result of this move, Pace has been able to compete with the increasingly crowded market on price as well as quality. As a direct result of this, Pace has been able to continue to develop its UK headquarters into a centre of high technology engineering and innovation, enabling the company to continue to lead the way in set top box development and technology as well as grow its business."

Ensuring the highest standards of product quality, and adherence to challenging service level and continuous improvement targets, lay at the heart of the contract, particularly given that Solectron is effectively the only manufacturer of Pace's entire product range, and given the time and costs involved in switching production to alternative suppliers.

Nigel Stacey, formerly Pace's Operations Director, commented:

"I am under no illusion that had it not been for [Pinsent Masons'] involvement in this contract, Pace would not have ended up with such a comprehensive contract which has minimised the risk to Pace whilst at the same time maximised the deliverables expected from Solectron".

See: Pace Micro Technology plc