Difficult US economic conditions, general global uncertainty, slow demand for capital equipment, and the prolonged weakness of the Euro were all cited by Gerber Technology when it announced a restructuring of its operations at the end of May. Redundancies, discontinued product lines and a consolidation of its facilities have all been undertaken in an effort to reduce costs. In this interview, Marc Giles, president and CEO of Gerber Technology talks about the changes this hi-tech systems and solutions provider has been through - including its new product/business management organisation, the demise of Gerber Information Systems, and the world market for CAD/CAM.

Let's start with your background. What did you do prior to joining Gerber as President in November 2000?
For the last 12 years I was with FMC Corporation based in Chicago, Illinois. It's a $4 billion per year producer of machinery and chemicals for industry and agriculture. I held positions in sales and marketing management, strategy development, and mergers and acquisitions. My most recent position was as division manager of food systems and handling where I and my colleagues integrated four separate businesses, built a new management team, and restructured the division, forming strategic alliances with international and domestic firms.

So, you're not from the apparel or flexible materials businesses?
No. But interestingly there are several similarities between the food and flexible materials industries. Both tend to grow along with disposable incomes. Both have globalised. Production has moved, or is moving, offshore. The suppliers in the apparel and flexible materials industries are either North American or European, and it's the same in the food processing industry.

Why did you join Gerber during this time of instability?
Many people have asked me that question. What I found is that the fundamentals at Gerber are tremendous. We have some of the best technology in the world to support our customers' needs. And, most importantly, we have the best people in place to support our customers. So, it really wasn't as difficult a decision as you might think. Gerber is a great company with great people with great potential going through a tough time. I've embraced the challenge and take comfort in the fact that, with the changes we've made, we're headed straight for success.

"I take comfort in the fact that, with the changes we've made, we're headed straight for success"

We've heard a lot about Gerber's downsizing and office closings…?
Like many companies in the 80s and 90s, Gerber experienced a great period of expansion, both in terms of technology and geographic coverage. But, as the industry began one of its downward cycles in the late 90s, it exposed the fact that we were overextended - that we had over-invested. We realised we were doing our customers and ourselves a disservice. This, along with the realities of the European currency situation, compelled us to refocus, trim costs, and prioritise those activities that were most important to us and to our customers. We have closed some field offices in different parts of the world where we could no longer financially justify maintaining them. On the other hand, we have been opening new offices in regions of the world where the apparel and
flexible materials industries are thriving. In China, for instance, we've opened several new offices recently to support our growing market. We now have a total of 11 sales, service and training offices in China.

How does Gerber view the world today?
For strategic purposes, we've divided the world into seven regions - northern and southern North America, central and eestern Europe, Latin America, Far East and one division for south west Asia, Middle East and Africa. We have different focuses in each.

What will you do in your native US?
In North America, particularly the US, we will maintain our leading position. That doesn't mean that we're not going to grow. We think that there are more customers in North America that haven't taken advantage of automation to increase their bottom line. We're clearly not going to lose business in NA - period!

And in Europe…?
We've had to rethink our strategy in Europe. Going forward we will concentrate on those areas where we add the most value for our customers. As a result, we've had to make some difficult decisions and separate ourselves from several great people. We removed management layers in some European countries. Those individuals who remain on the ground are experts in their respective markets. Although Europe is not the growth market for us in the apparel industry, it's still a good, healthy market and we will continue to actively participate in it.

Who's in charge of Europe?
We've divided Europe into an eastern portion and a western portion. Mr José da Silva, based in Porto, Portugal is leading the western region and Mr Werner Vetter; who's based in Munich, Germany, is heading the eastern region.

So that leaves the rest of the world…?
Yes. There are other parts of the globe - particularly China, parts of SE Asia, Mexico, the Caribbean basin, regions of South America, India and the surrounding areas - that represent tremendous growth potential for GT. Apparel manufacturers are flocking to these regions and, when they arrive, they find us there ready to support their activities. We see long-term, sustainable growth in these areas and we want to make sure we remain the automation supplier of choice here. So, we plan to invest heavily in these areas to make sure that we remain number one.

From left to right: James Arthurs, Senior Vice President Global Sales; Werner Vetter, Regional Director Central Europe; Marc Giles, President and C.E.O of Gerber Technology; Jose da Silva, Regional Director of West Europe.
And who's managing these areas?
James Arthurs is the newly appointed vice president worldwide sales. James has been with Gerber since 1980 and boasts an impressive record of success. Bud Staples and Jeff Rosenzweig are regional directors of northern and southern portions of North America respectively. Steven Tang is regional vice president, Far East/Pacific. Joe Finelli is regional director of Latin America. And Bob Vallender is the newly appointed regional director of southwest Asia, Middle East and Africa region.

Do you plan to pull out of any of your former markets?
There isn't a market in the world that we're no longer interested in. Every region of the world has its specific needs. We're just going to concentrate on different things in different regions.

What separates you from your competitors?
Well, we operate very differently from our competitors. We partner with local agents and distributors whose knowledge of the local market is extensive. In this way, we feel we can offer better service by enabling our customers to be able to deal with representatives in "their neighborhood" who speak their language and understand their challenges.

What does Gerber Technology do best?
I believe what we do best, and what we offer our customers, is process expertise. We understand the complete picture - from design to cutting to merchandising. We understand our customers' customers and the challenges they face in their day-to-day operations so we can work with them to provide automation solutions that will help them be more productive and more profitable.

What are your plans for the Information Services Division and your PDM products?
Well, as of today, there is no Information Services Division. What we have now is powerful Product Data Management software and an Internet version of that software, WebPDM. We decided to restructure that business because we determined it was best not to operate it as a separate business anymore. As a result, we eliminated much of the management and incorporated it as a product within the GERBERsuite line.

We're still fully committed to our PDM products. It's a technology that is far ahead of anything else being offered today; a system that will enable our customers to better manage their supply chain worldwide. It's really the answer to the issue of supply chain management.

How do you plan to serve your customers through this change?
We've restructured our service organisation so pre-sales, post sales, service and support are all under one roof. Our intent is to make it easier for our customers to get at the services that are important for them and for us to construct programs that provide better, more straightforward service to our customers. Faster and better…that's our goal for service, and, with the help of some state-of-the-art technology, we will achieve it!

We're also putting in place a whole new organisation within GT - the product/business management organisation. This will provide a bridge between our customers and our R&D that we've never really had in a formal way. Instead of our technologists trying to determine, through indirect dialogue, what our customers want, and rather than enlisting our sales force to understand where the industry is going, as opposed to where individual customers are going, we're investing in this organisation to anticipate years in advance where our customers and the industry will want to prosper.

"The new product/business management organisation will provide a bridge between our customers and our R&D that we've never really had in a formal way before"

What about R&D?
During the restructuring process, one of the things we've ensured is that we retained our capability in terms of R&D personnel. That was one of the areas that wasn't affected by the downsizing. We've also unified our technology organisations into a hardware and software group. In the past, we had pockets of wonderful technologists dispersed throughout different segments of our company. Now they're part of the same team working toward common goals.

What's on the horizon for new products?
We're looking seriously at 3-D technology for conceptual design and pattern making and linking it all to our PDM software. But the new products that we've introduced in recent months - the GTxL cutter, Infinity plotter and Taurus Leather Cutter - are getting rave reviews by our customers. We've grown three-fold in the leather business since 1999 when the Taurus was introduced.

Where do you see the CAD/CAM market in the near future?
I think the world market for CAD/CAM will grow faster than it has in recent years driven by growth in regions outside of NA and Europe. And that will not be due simply to manufacturers relocating. Growing economies in developing nations will generate increased disposable incomes for their middle class. This, in turn, will create greater demand for fashion. If we look only at China and India, we find nearly 2.5 billion people with increasing amounts of money to spend on apparel.

"The world market for CAD/CAM will grow faster than it has in recent years driven by growth in regions outside of North America and Europe"

Are you eliminating the GERBERmover product line?
We are not out of the mover business but are rethinking our strategy in how we want to participate in that. Whatever the final decision is, we're not going to abandon our GERBERmover customers.

Why is Gerber Scientific's stock price so low?
Our parent company's profitability and return on investment has dropped significantly. That's one of the circumstances that motivated us to restructure. But we wanted to avoid casual cost cutting or employee reductions simply to eliminate costs today because it could seriously harm us tomorrow. And, although the process has been difficult, and the cost cutting has been aggressive, we've done it carefully and with forethought because we want to position ourselves to continue to be a leader in the industries we serve.

What do you hope customers are saying about Gerber one year from now?
That's an easy one. I hope that, one-year from today, our customers see and experience a marked improvement in customer service from Gerber.