The economic storm that touched down in 2008 was a tumultuous time for businesses and consumers alike; gloomy financial forecasts caused people around the world to tighten their wallets and buckle down for the uncertain days ahead. Motor vehicles, in particular dropped down the priority list of expenses, and major auto manufacturers, along with their supply chains, were hit hard by the fall in demand.
At the time, Woodbridge, Ontario’s D & V Electronics Ltd. was designing and manufacturing testing systems for the automotive industry. Their customized devices, ranging in size from table-top testers to 6-by-6-metre 15-tonne giants, were used to test automotive systems such as starters, alternators, batteries and electrical motors. Prior to 2008, over 60% of their business was with the United States, the other 40 per cent of sales were to Europe and Asia. Then the recession hit, and the worldwide decline in the auto industry significantly impacted their business.
“We had been growing steadily since 1997, building more systems and hiring more engineers, but then in the late 2000s the orders virtually stopped,” said Voiko Loukanov, CEO and Founder of D & V. “The recession slowed our growth, but we were determined to keep our people employed and continue producing high-quality testing equipment.”
To keep his team of specialized engineers, Loukanov continued to focus on R&D, convinced that demand would return post-recession. D & V also used the Ontario Work-Share Program to keep as many skilled plant workers as possible on reduced work weeks. Even Loukanov himself, a Bulgarian born professor with a Ph.D in electronics, took a salary cut.
“While we might be a smaller company compared to our counterparts in markets like China, we invest more of our revenue into R&D, and lead the competition in innovation, not capacity,” said Loukanov. “We are continuously moving forward researching new solutions, and like they say – it is hard to hit a moving target.”
D & V Electronics post-recession: R&D and patience pays off
Because of these measures, D & V survived the crisis, and when orders started returning in 2010, their R&D efforts put them ahead of the curve. Since then, the company has expanded its international operations, aligning with the global trend that saw vehicle production shift to non-traditional locations outside the United States.
But this kind of global expansion comes with its own set of challenges, such as language barriers, time zones, and cultural differences, not to mention the inherent risks in taking orders from unknown clients.
Then there was the challenge of meeting increased demand once the new orders started to flow in. For a relatively small company like D & V, whose customized systems take years to develop, huge amounts of raw materials, and thousands of man-hours, working capital is needed to support the projects, especially when there are multiple projects running concurrently. And once those systems are completed, there must be absolute assurance that contracts will be honoured by the customer.
Export Development Canada (EDC) was able to help, providing D & V with products like accounts receivable insurance and working capital solutions, which gave D & V peace-of-mind when they accepted new international orders. This also helped free up capital enabling the company to take on new projects.
“D & V Electronics is a great example of how a smaller Canadian company can succeed on the international stage by specializing and being innovative,” said Carl Burlock, Senior Vice-President, Financing and Investments, EDC. “They certainly showed resilience in staying afloat during the financial crisis. EDC’s job is to help them with tools and expertise that will ensure they continue to be financially viable, and allow them to take on new business without reservation.”
D & V Testing the Future
Today D & V is a truly international company. While the U.S. is still a major customer, the company estimates that one-third of sales are to North American customers, one-third to Asia and another third to Europe.
Given the extent of their international operations today, some say that Loukanov now spends more time in the air than on the ground. To help navigate the challenges of doing business abroad they have started to hire local agents, and train them on D & V systems to provide specific services to foreign clients.
Moving forward, D & V’s main priority is testing electric vehicles, specifically key components like electric propulsion engines, batteries, and electric brakes. Vehicle pollution is a global issue, and governments are actively looking for solutions to lower emissions. The large-scale adoption of functional electric vehicles will be a considerable step towards green transportation. D & V is ‘Testing that Future’, and ensuring it is as safe and efficient as it can be.