How cheap Asian competitors put the squeeze on Dyson

Despite its increasingly international status, Dyson has always prided itself on investment in British engineering talent.

Sir James Dyson’s company shifted production to Malaysia in 2002 and made Singapore its international headquarters five years ago, but it has continued to base its research and development efforts in Malmesbury, Wiltshire.

Just last year Dyson said it would spend £100m on an artificial intelligence centre in Bristol, which combined with other UK hubs meant it would employ 3,500 R&D workers in the UK. 

Tuesday’s news of job cuts stands to affect 1,000 staff in Britain, although chief executive Hanno Kirner said it was the result of a wider review into the company’s operations.

On the face of it, Dyson’s business is in rude health. Sales hit a record £7.1bn last year, while earnings before interest, tax, depreciation and amortisation, a measure of profit, was close to an all-time high at £1.4bn. 

However, growth has slowed in recent years. Between 2015 and 2019, revenues trebled, climbing from £1.7bn to £5.4bn. In the following four years, they have risen at a steadier pace, climbing by a third.

That has been outpaced by heavy investment spending. R&D costs rose by 40pc last year alone and the company has forked out for new facilities such as a cutting edge battery plant in Singapore.

Dyson has been squeezed by low-cost Asian competitors. A search for cordless vacuums on Amazon yields dozens of lookalike products, some even in the company’s trademark purple hues.

Announcing the job cuts on Tuesday, Kirner pointed to “increasingly fierce and competitive global markets” and added that the “pace of innovation and change is only accelerating”.

Dyson has traditionally stayed one step ahead of rivals with innovative new products, pioneering bagless vacuum cleaners in the early 1990s and the “stick” design in the late 2000s that has now become universal.

However, its innovation credentials have come into question in recent years. In 2019, the Brexit-backing Sir James was forced to scrap a £500m electric car project, saying the plan was not “commercially viable”.

The following year, the company sought to bounce back, laying out a £2.75bn investment plan which it said would push it into areas such as artificial intelligence, robotics and energy storage and double the range of products it sells. It signalled an apparent ambition to move from an appliance maker to a high-tech gadget maker that would rub shoulders with the likes of Apple.

One of the fruits of that push has been the Dyson Zone, an unconventional set of headphones with an attached air-purifying mask that has encountered mixed reviews. Sales numbers have not been disclosed but the premium Zone model is currently retailing for £580 – well below its initial £820.

Its £1,200 robot vacuum cleaner, marketed as the world’s most powerful, was passed over by one reviewer for a £150 alternative made by China’s Eufy.

The other contents of its famously-secretive research lab are private, but Sir James himself has cut an increasingly frustrated figure in public. Last year he attacked Rishi Sunak’s government for taking a “short-sighted” and “stupid” approach to the economy and said that “growth has become a dirty word”.

A meeting with Jeremy Hunt in March reportedly boiled over with the former chancellor telling Sir James to run for office if he thought he could do a better job.

Dyson committed to Britain remaining its centre for R&D, calming potential fears that the company’s focus will shift further overseas. But the company’s high-tech credentials have taken a knock.