LOGITECH is a Swiss company, quoted on the Swiss stock exchange but with offices in North America, Taiwan and Ireland - among other places.
Its products are now manufactured by 300 employees in Taiwan and around 1,500 employees in Shuzhou, 90 kilometres from Shanghai.
Logitech Ireland's turnover last year was over $70 million but as it has shifted its manufacturing operations back to the Far East, employment at Logitech Ireland has now dwindled to 18 people . . .
Martyn Green: Logitech started off manufacturing in Taiwan, then opened a production facility in Ireland. Now you no longer manufacture here. Why is that?
Maurice Spillane: In 1995, we had a big rationalisation programme. An American company, Ogden Atlantic Design, Europe, came in and took over a lot of the employment.
They have been sub contracting the business from Logitech for a one year period ending in May 1996, to facilitate the transition for the new company. But after May, Logitech will have no products manufactured in Ireland. However, we still own the building we are in, and lease it to Ogden Atlantic.
Why do it that way?
The choice was either shut down the whole place and carry the cost of laying people off, which involved redundancy pay and government grant repayment, or pass production over to Ogden Atlantic. This arrangement not only saved a lot of jobs, but also saved Logitech some money. So now we are basically a service centre, servicing our strategic OEM [original equipment manufacturer] customers in Ireland and Europe.
But presumably Logitech came to Ireland because they believed it was cost effective to produce here. Why did you then move production out of Ireland, to mainland China?
Price pressure - we couldn't produce here at the right price and still make a decent profit margin. We were producing in Cork for seven years, and there were a lot of changes in that time.
Ireland is as cost effective a place as you can get in Europe. But even that is not cost effective enough for this business any more. Switzerland still does R & D and sales and marketing, while the American office, which has between 300 and 400 employees, services the North American market, and also has an R & Department. There is also an R & D department in Taiwan, too.
When we first spoke in 1991, things were going along quite well. How successful has Logitech been since then?
We went through a pretty tough time in 1992. The company was growing very fast and it was the time when computer companies were starting to bundle mouses with their computers. This didn't happen previously, so there was massive growth. IBM and Compaq and all the big companies signed up, and there was a lot of pressure on prices.
Logitech wanted to win the business, and I suppose they did that without paying too much attention to the price. And we paid the price for that in 1992, when profits went down. It was a temporary hiccup because it didn't affect the overall viability of the company. However, we also went into some product ranges that probably weren't suitable for the company.
Such as sound cards?
Yes, and that didn't work out very well. There were a few poor decisions made about strategies, which hurt the company over the next couple of years. But now we tend to stick mainly to mouses, trackballs and scanners, although we are involved with other peripheral devices like joysticks, gamepads and PC video.
Our PC video allows desktop conferencing, but currently it is only available to OEM customers. But hopefully this is a market that will explode. It is now at the stage where the video card and camera are being bundled with the computer.
Is your major business still in mouses and trackballs?
Mouses, because the unit growth in mouses is still very considerable. However the pressure on prices is considerable too. Street prices of mouses start at $7 on up to $100. Mind you, a Logitech made mouse costing $7 wouldn't bave the Logitech brand on it. With our brand name - maybe $20.
But to an OEM customer, they are much cheaper because our customers would be buying in gallets - so at least 100,000 units a year. And we deliver it any way they want.
How long does it take to develop a product?
If it is a mouse, then it is a revision of a previous model - about a year. Ideas for products come from customer feedback, and from within the company. I believe we have a certain talent for spotting an opportunity like joysticks, for example - which, are again very much a growing market.
With all the games now available, they have become big business, especially in America.
Joysticks are more complicated than they used to be - with trigger buttons within the joystick rather than on the base of the unit.
The other product we are involved with is a remote controller for the new PC TVs - really a multimedia device.
You are making the video system and your scanners in Taiwan. Presumably because they are a little more hi tech than mouses and trackballs, made in China?
We have to have an alternative to China as a manufacturing centre. You need to give your customers some security, knowing that there is an alternative, because we are often asked: "What happens if something happens in China? Where would we get our product from?" So we need an alternative production centre to reassure them.
The products coming here from China and Taiwan - where are they being sent?
We service our strategic OEM customers in Europe - customers like Apple, Dell, AST, ICL, Compaq, IBM, and HewlettPackard. Basically we are focusing on western Europe, but eastern Europe is in our plans. This facility is for servicing our customers, for bundling, but we have a distribution centre in Holland which has a retail focus.
We have different centres because nowadays with big customers you need to be right next to them. Or at least near them, because Hewlett Packard, for instance, manufacture in France. Although they are in Ireland, they don't manufacture PCs here. AST and Dell are close by in Limerick, while Digital is not far away in Galway. In fact, Digital now employs a lot of people there, alter it looked for a while like it was going to close down.
Who do you see as your competitors?
Microsoft are our number one competitor in both retail and OEM business. Mitsumi is another, along with Taiwan's, Primax. And of course Alps. We make something like 50 times as many mouses as trackballs. Part of the reason for that is that trackballs go into portables, and the amount of [desktop] PCs sold is far more than portables about five to one. But it is also because a mouse is much cheaper.
There are so many different types of trackballs too. Normally we design the trackballs, but the latest thing for portables of course is the touch pad, and ours is currently under development, and should be out by July. In that we are a bit behind the market, which is a fairly costly mistake. Actually our designers were looking at them years ago, but it took a long time to get the project going.
How do you see the future for Logitech?
Much depends on the success of our new products with the established customer base. We believe mouses will always be necessary but won't bring us revenue growth in the future. It will certainly grow in unit terms, because everyone needs a mouse, the number of PCs being sold every year is increasing, and the rate of increase is considerable. However, it won't bring that much extra revenue every year.
So we need new products to succeed, but new products bring different problems - and different selling expertise is needed for different customer types. It depends on how successful the new products are, how successful Logitech Ireland will be, although we won't grow to be a big centre we are only a service centre. But if the new products succeed, we will succeed.
They say people are always looking for a way to make a better mouse trap. We at Logitech are always looking at ways to make a better mouse.