Engineer Mike Theaker knew enough about cars to spot a money-making idea. In the late 1990s, big car makers had begun to fit tailor-made parts from independent suppliers to improve the driving experience — and he wanted in.
“You could see there was going to be a growing market for this,” said Theaker, who left his job at Rover to launch Red Arch in 2003 with £320,000 savings.
He designed performance parts for household names such as BMW, including a Bluetooth-controlled exhaust system that allows drivers to switch to a sportier mode with a remote control.
“I invested everything I had,” said Theaker, who at first outsourced manufacturing. “It can cost up to £10,000 a week to put a car on a test bed, and doing that on your own can be difficult.”
Based in Daventry, Northamptonshire, Red Arch churns out 100,000 parts a year and employs 40 engineers, technicians and support staff. Its products are fitted to Rolls-Royces, Aston Martins, Range Rovers and BMWs, making profits of £200,000 on £3.7m sales. Foreign sales accounted for 95% of revenues last year, earning it a Queen’s award for international trade.
Although lucrative, selling to the higher end of the car industry has its challenges. “We have to guarantee continuity of supply,” he said. “Stoppages can cost tens of thousands of pounds a minute.”
Burgeoning demand for accessories is mostly down to car leasing, said Theaker. “If you’re paying £300 a month for a car and you want a power kit on it, the cost might be £10.” He added: “When you buy a brand new car you have the option to add performance parts. Customers are more likely to do it at that stage.”
Theaker, 50, and his younger sister Marie were raised in Derby by their school cook mother, and car mechanic father. As a youngster Mike helped his uncle, a builder, on construction sites for pocket money. “I learnt how to carry heavy stuff at an early age,” said Theaker, who went to Ripley Technical School, a grammar school.
His dream was to work at the Rolls-Royce engine factory in Derby, but the early 1980s recession pushed him into higher education . He read mechanical engineering at Sheffield University. In 1987 he joined Ford in Basildon, Essex, as a graduate engineer, but left after two years: “I didn’t have enough responsibility,” he said.
He moved to Gaydon in Warwickshire to join Rover and was thrown in at the deep end, looking after engine calibration.
“I wasn’t a trainee any more; I had to make sure that the engine wouldn’t blow up,” he said. During his 11 years at the company he stepped up to become calibration manager.
When BMW split up its Rover subsidiary in 2000, with Rover cars sold to the Phoenix consortium, he wanted to start anew. He resigned and began designing tuning parts and accessories while working as a contractor for other car manufacturers.
After three years, he had generated enough cash to focus solely on his brainchild. Word-of-mouth recommendations proved vital. “Referrals are very important in our industry; we still don’t have any sales people,” Theaker said. “All the work we gain comes from industry contacts.”
Red Arch brought manufacturing in-house in 2010 as demand grew. “We were finding it more difficult to get the quality and quantity we needed from our suppliers,” he said.
Theaker dug deep into his funds to open a £1m state-of-the-art manufacturing plant last year. “We decided not to go for second-hand machinery but bite the bullet and buy equipment that produced the quality we needed.”
There are plans to add to the range of 400 products and to rebalance exports: 97% of sales are to Germany. “We want to tap more into the British industry.”
He and his wife, Jackie, 53, own 70% of the business with the rest split between three company directors. But the founder might let others have a slice of it: “If we want to double our turnover within the next three years, that’s something we have to consider.”
Revenues are expected to reach £7m this year, but prospects could be hindered if Britain votes to leave the European Union in the June 23 referendum. “Right now we’re able to move products about in a very simple way,” said Theaker. “If there’s a trade deal there will be additional costs to our customers in Europe.”
Theaker lives in Hellidon, a village near Daventry, with his wife and daughters, Clare, 29, and Sarah, 25.
His advice for those steering start-ups is to make sure there is a market for their products or services. “If you can’t sell it, you’re wasting your time. And d on’t be half-hearted : you need to go for it 100%.”