2004 – 2012 Atlas Magnetics Group

Chief Financial Officer – Shareholder

The Company

When Atlas was founded it wasn’t the only company sourcing magnets in China; it did however have a completely new business strategy. Whereas other wholesalers were little more than glorified ‘movers of boxes’, Atlas added a vital dimension: technical know-how !!

While in the standard rough and tumble wholesale world price was everything and suppliers could be switched at the blink of an eye, we decided to pick the technologically best supplier and build a real relationship. This allowed us to target multinationals who, up until our entry, trusted only European manufacturers. Should we be successful, we would be able to combine the highest margins in the industry with blue-chip customers and long-term stable supply contracts. It required us to invest in technicians to spar both with our client’s engineers, but also our supplier’s manufacturing people, a group where Cp might be a known concept, but Cpk certainly wasn’t.

Our success can, amongst other aspects, be measured through the ever growing list of multinational clients, starting in 2004 with Siemens VDO, followed by companies like: ASML, Emerson (Leroy Somer), Brose, Continental, VDL, Bosch, etc.. A further proof of success can be found in our turn-over, increasing from € 2.6kk in 2004 to € 75kk in 2012.

We always were aware of one danger in our concept: tying yourself to one, however technically capable, supplier, does make you run the risk of being shut out. We however believed, as we now know erroneously, that being successful would be our best protection. As it turned out, maybe it was exactly our success that caused our supplier to want to go it alone: mid 2012 it forced our customers, much to their chagrin – as witnessed during face-to-face interaction - to deal directly.

The Job

As may be inferred from the speedy growth in turn-over, my job was an ever changing one: obviously I was responsible for Finance:

Ensuring timely reporting in accordance with Dutch GAAP
Ensuring Financing at attractive rates (e.g. EURIBOR + 0.6%)
Preparing / presenting relevant documents to future Shareholder: Venture Capitalist
Reporting to in- and external entities (Shareholders, Bank, Supervisory Board, Management)
Due diligence of prospective take-over candidates
OA/IC

Other aspects I was responsible for, either during my entire tenure or part thereof:

Create / Professionalise the entire (financial) organisation
IT – implemented Dynamics AX in a, due to our many but absolutely necessary customisations, private cloud
General facility
Human Resource
Logistics, incl. Purchasing

The Main Challenge

But a major part of my job was negotiating with both our suppliers and our customers, for both of whom this new market meant a complete rethink. I had to reconcile all kind of opposing expectations:

Finance: Chinese suppliers generally want payment to be, at the very latest, before shipment, our customers on the other hand expect to pay 60/90 days after delivery at their premises. This was exacerbated by:
Logistics: while the customer wants just-in-time / zero stocks and guaranteed supply, we had to hold stocks in Europe and allow for shipping that alone takes 5/6 weeks
Product Liability: a near unknown concept in China (especially consequential damages)
Pricing: clients insist on prices being valid for at least one full year and expect their supplier to hedge the currency risk, however, hedging of the Chinese Yuan has been available only since the start of this decade, while the necessary raw materials (rare earths) cannot be hedged even today

My Successes

Successfully negotiate long-term contracts with our customers where the client

Runs a 3-6 months stock risk; accepts lead-times of 6-8 weeks
Accepts limiting our liability to our insurance coverage
Allows quarterly price updates reflecting changes in material pricing / X-rates

Acquire long-term financing:

2005: € 200.000 based on 70% A/R
2012: € 25.000.000 along asset-based-lending principle

Implement the overall organisation (AO/IC), IT (MS Dynamics), Reporting (Shareholders, Board of Commissioners, Financial Institutions), HR (employee handbook), Logistics, etc..
The company grew from 6 FTE in 2004 to 50 FTE in 2012 with, in order to limit risks, separate subsidiaries in China, the US (actually a Dutch BV) and several European countries