THE BIG FEATURE
‘Manufacturing needs skilled, capable people entering it in the knowledge that there is a future to be had. Small manufacturers need to benefit from adequate help when it comes to investment in kit and in exporting around the world. All our competitor nations have this much’ LORD DIGBY JONES, FORMER CBI DIRECTOR-GENERAL AND TRADE MINISTER
of international competition HOW CLEVER MARKETING AND UK MANUFACTURING MADE WEST LANCASHIRE SHOE FIRM A HOT PROPERTY STEWART HOULGRAVE can’t hide his pride as he walks round his Skelmersdale shoe factory. Hotter Shoes, the company founded by Mr Houlgrave’s parents, has been transformed into the UK’s biggest footwear manufacturer, thanks to a combination of direct marketing and great product development. Mr Houlgrave is proud that the company is still committed to UK manufacturing, with its West Lancashire factory producing 1.3m pairs of shoes every year. Until the 1990s, the company made shoes for other retailers, but found itself under pressure from rivals overseas with cheaper manufacturing costs. But, rather than ship manufacturing overseas – or even close the company down – Mr Houlgrave decided on a new marketing strategy. He created the Hotter Comfort Concept brand and set to work designing lightweight,
comfortable shoes to appeal to the 50-plus market. Then the company began a direct marketing campaign, selling to customers by mail order and telephone. Today, Hotter has hundreds of thousands of regular customers, who are loyal to the brand – its catalogues and website generate 70% of its sales. The company, which employs around 350 people at its factory and call centre in Skelmersdale, also has a small chain of Hotter stores and sells to independent retailers across the UK. In 2007, Gresham Private Equity bought a stake in the business for £21m. Mr Houlgrave says the company’s decision to sell for itself, and not rely on large retailers, has paid dividends. “If you have a relationship with a retailer that you cannot rely on, it takes away your ability to invest,” he said. “The strength of this business is that we have been heavily
investing in the business. We have quite remarkable machinery. We’re probably one of the most efficient production lines in the world.” Hotter’s design team develops its plastic soles, which are moulded to an accuracy of a fraction of a millimetre before being attached to imported leather uppers. Houlgrave says Hotter customers are proud the company manufactures in the UK – coach parties occasionally visit its Skelmersdale plant – but he says having a UK base has other advantages. “We are not reliant on the pound, which is probably the biggest problem in recent years for importers,” he said. “Our shoes are made specifically for the UK market. We work with English sizes. “We are also more flexible. If we have a hot summer, we can easily make more sandals. If you’re importing with long lead times, you cannot react as fast.”
Stewart Houlgrave, managing director of Skelmersdale’s Hotter Shoes
Has British manufacturing all transferred to China?
The UK and China had similar shares of global manufacturing output in the 1970s and 1980s, but since then Chinese production has pulled massively ahead Source: UNCTAD
THE growth in the manufacturing output of some countries has been phenomenal in the last generation. Data from the United Nations Conference on Trade and Development (UNCTAD) shows global output – measured at current prices and current exchange rates – has increased from $1,900bn in 1977 to $9,400bn in 2007. Each country’s market share shows how eastern countries have seen massive growth. Thailand has grown from 0.2% of the global output to 0.9%, India has jumped from 0.9% to 1.9% and South Korea from 0.4% to 2.8%. But it is China that has
seen staggering growth in its share – from 3.8% (when the country was already fifth) to 15.1%, almost doubling in the 20 years to 1997 and then doubling again in the following decade. There have been losers – USSR was at 15% in 1977 but the Russian Federation had just 2.2% in 2007, the United States is down by a fifth, from 24% to 19%, and France fell from 4.4% to 3.1%. As for British manufacturing and its shrinking manufacturing sector – in 1977, it accounted for 3.3% of the global output. In 2007, it accounted for 3.5%.
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