Recent interviews with top executives at TTI, Inc., an indirect, wholly owned subsidiary of Berkshire Hathaway, reveal key strategic initiatives that have supported and fueled dramatic growth in its business. Original plans anticipated TTI’s North American business would grow by 7% in the first half of 2018. The actual business jumped by 15% in the first half and is on a pace to reach $1.4 billion in North American sales for the full year, an increase of roughly 20% over $1.13 billion in the prior year.
Business continues to gain momentum as booking run rates and shipping trends continue to improve quarter-to-quarter. The global TTI Family of Companies is approaching greater than $5 billion in sales for 2018 after finishing with nearly $4 billion in sales last year. This robust growth has been driven by a combination of market growth, market share growth, and acquisition.
Don Akery, corporate senior VP and president of TTI Americas, explains that TTI has made critical investments in building inventory and growing its sales team to support its strong growth. As a specific example of proactive inventory preparation, he points to the company’s ability to identify a shortage of ceramic capacitors to meet demand and their moves to build inventory.
TTI expects a gap in supply/demand for MLCCs to continue. Current production capacity cannot meet demand. In the face of this challenge, the firm has prioritized the support of its current customers and turned down new business. Overall, TTI increased its inventory levels by 14 to 20% in order to meet growing demand from its customers.
Akery notes that TTI continues to work on expanding its customer base and has invested in growing its customer-facing talent. It has already grown its salesforce in North America by more than 20%. Entering the year it had 174 salespeople, a number that grew to 205 by September. Its plans call for the sales team to grow to 215 people by the end of the year and to 250 by the end of Q1 2019. This is in addition to 315 inside salespeople. The worldwide TTI Family of companies has increased its workforce from 5,600 to 6,300, with customer-facing hires growing at the fastest rate.
TTI views itself as a specialty business with a specific focus on the products it sells: connectors, passive components, electromechanical devices, and selected semiconductors. Its primary target markets are military/aerospace and commercial aviation, automotive, and industrial electronics markets (in that order). These market segments represent 65% of its business. EMS is also a significant segment. The medical electronics business is serviced primarily through its EMS channel. It counts all the top aerospace companies as customers and expects the major increase in the U.S. military budget will add to its growth.
Emphasis on Quality and Reliability
“TTI does not compete on price, but on quality and reliability,” says Jeff Ray, vice president, Product & Supplier Marketing Americas. It focuses on vertical markets that have higher barriers to entry and where regulations can often create complexity. The company is selective in the suppliers it works with and engages with market leaders in the specific segments they represent. It doesn’t simply collect product lines to build a large stable of multiple suppliers providing the same product. TTI teaches its sales team how to ask “smart questions” that will lead to quality support of the engineers they work with.
To drive a focus on quality, the entire management team at TTI meets on a monthly basis for a quality audit. This illustrates a commitment to quality from the top down. More than 300 TQM meetings have been held to date. Suppliers are monitored closely. If there is a danger of compromising on-time delivery, TTI will draw on its inventory to make sure commitments are met. It boasts of a 99.9% on-time performance.
Working closely with suppliers is emphasized by Lew LaFornara, vice president, Product Management & Supplier Marketing North America. “Credibility and transparency are important in working with suppliers so they understand why their product was sold or not,” he explains. “TTI fosters a culture that prioritizes communication and systems that allow tracking to enable global coordination.”