My Week: Philip Johnston of S3 Interactive

The founder of the mobile phone recycling company on growing during the downturn, seeking acquisitions abroad, and keeping the manufacturing base in Scotland.

by Elizabeth Anderson
Last Updated: 04 Feb 2011
I’ve been repairing mobiles since I left school in 1985, so I’ve seen them all: everything from the heavy bricks with aerials in the 1980s to the modern smart phones today which have Wi-Fi, videos and emails. It’s amazing how the product’s changed over the years.

I decided to start my own wholesale mobile phone recycling business in 2003. In the first year turnover was £1.2m and by last year that had grown to £16m - this year we’re aiming for a turnover of £20m. We must be in the minority of businesses which has continued to grow throughout the recession. Our earnings trebled during the downturn and I think that’s because we made sure we were keeping up to date with the popular technology. I took over a plastic business last April and that’s made a major contribution to our success because it means we’re able to repair iPods (the screens and cases for example) and not just mobile software. Also, the downturn hasn’t stopped people wanting the newest handset – people are desperate to keep up with the latest model.

This week I’ve been concentrating on looking for more acquisitions. At the moment I’m looking to takeover a business in the Netherlands, so I spent Monday and Tuesday visiting the company. On Wednesday I spent the day with my financial advisers and accountants talking through the Holland takeover and discussing another TV repair company that I’ll be taking over within the next few weeks. I’m really interested in moving into the TV repair business, as I think this is where a lot of our business could move towards. Homes are becoming a lot smarter now when it comes to TV technology - particularly with the rise of HD and 3-D pictures.

We’re up to 95 staff now – and a high proportion of those are technicians. People trade in their old handsets back to their phone company, and these then get passed on to us in bulk. We take the phones apart, make them look like new again and fix anything that’s wrong with the software. We’re proud to be one of the few manufacturing businesses in Scotland - an industry that’s really declined here within the last 20 years or so. There’s an excellent pool of engineers that have been forced to work in call centres because a lot of the manufacturing sites have moved to Eastern Europe and China, so we were able to take on some really skilled people.  We can afford to make the products in Scotland because we only work on the more expensive phones – if it’s 10 or 20 quid then the cost of labour here doesn’t really merit me working on it.  But fortunately because everyone wants smart phones, which are often in the region of £450, the price of labour’s negligible.

We export a lot of the products to Asia, which some might think is unusual given the small percentage of UK goods which are exported to China and other developing nations at the moment. There’s a massive appetite for brands in China – they want to own a Nokia, Blackberry, or an iPhone. But because they’re expensive we offer a cheaper model which is a year old and has been refurbished.

We have a factory in Glasgow which has three units, but no other sites elsewhere. Over the next few months I’ll continue searching for more acquisitions that I can absorb into the company - and although we’re looking abroad, my Scotland site will be safe for the time being.

Philip Johnston is founder of S3 Interactive, a company which repairs and refurbishes mobile phones.

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