The Manufacturer - August Edition

www.themanufacturer.com August 2009 Vol 12 Issue 7

100

Morgan hits

Centurion sports carmaker is driving innovation

Leadership and strategy Banks quizzed on lending

Design and innovation

Rapid prototyping, 3D printing

Supply chain and logistics SC risk management model

www.themanufacturer.com August 2009 Vol 12 Issue 7

Interview Brian Stein

CEO, Samworth Brothers

Source of Supply

Editor’s comment

Finding your place in the value chain Can Rolls-Royce do no wrong? The aeroengine maker announced last week a six-fold rise in net profit to £1.86 billion for the first half of the year, in spite of the delays to many big civil aerospace contracts. Its engine maintenance division, such a key element of its systems integrator business model, has served it well.

Also in July the Government apportioned it with a large chunk of a £151m pot for advanced manufacturing projects, which some have said was disproportionate and at the expense of other less glamorous potential beneficiaries. But let’s not be churlish – building four new factories and creating jobs (even if some of those are relocated, not created) at this point in the economic cycle is reason for praise, whoever you are.

China and India feature strongly in this issue. UK Trade and Investment, EEF and accountancy firm BDO Stoy Hayward have all contributed articles that address the common idea that Asia and the BRIC economies will be the first over the line in an economic recovery, and highlight trade opportunities with these partners. Indeed, China’s growth to date this year of 8% shows little to indicate the recession was more than an irritating blip. Paul Calver, a global value chain specialist with UKTI, says for UK manufactures looking at BRIC opportunities it is all about identifying your place in the value chain, what you are really best at (which may not be what you think).

Brian Stein, CEO of Samworth Brothers, the biggest British-owned chilled food manufacturer in the UK, talks candidly to TM about the improving food standards and manufacturing standards in his industry, driven by high retailer demands.

Until recently. Now with more intense price competition among big retailers, and higher UK commodity food prices as a low pound has driven up demand, own label food manufacturers are being squeezed and there is real concern this might affect the product.

Michael Halls’ article on raising bank finance lifts the lid (as much as possible) on banks’ lending behavior to corporate customers six months on from the launch of the government loan guarantee schemes in January. The results are mixed – banks like to say they are lending to manufacturers but remain very tight-lipped on figures.

Morgan Motor Cars is 100 years old this year and adorns our cover. Happy Birthday Morgan and congratulations! You are a very worthy Factory of the Month for August.

Will Stirling – Editor

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News and features 04 News

Manufacturing news

10 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

13 Just Jones

The spread of Lean

Dan Jones reports on the history of lean manufacturing in the UK

15 Economics

Time to rebalance

Steve Radley suggests looking to the Asian market while waiting for the UK economy to stabilise

16 Interview

Recipe for success

Will Stirling talks to Brian Stein, CEO of Samworth Brothers, about how an uncharacteristic business model has facilitated their position as the UK’s biggest British owned chilled food manufacturer

20 Special feature

RBS – Can exporting offset recessionary pressures

RBS executives, Peter Brotherton and Mark Ling, investigate the capacity for international trade to alleviate financial pressures at home

22 Leadership and strategy

Finding finance in a flattened economy

Michael Halls investigates whether banks deserve their current reputation and what they are doing to assist their customers

26 Design and innovation

Prototyping – the means to an ends

Malcom Wheatley investigates the many options now available for developing prototypes

30 World class manufacturing Continuous improvement

Business consultants Sulko look at the importance of staff engagement in the continuous improvement process

34 People, skills and productivity Flexible working is working

Edward Machin explores how the modern concept of flexible hours is saving jobs during the downturn

37 Employee of the month Craig Brewster

At BAE Systems Submarine Solutions

38 Special feature

BDO Story Howard – The changing global perspective

Tom Lawton, head of manufacturing at BDO Story Howard, points to emerging economies to secure market growth

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Contents IT in manufacturing 39 IT News wrap

Keeping you up-to-date with whtat’s new in IT

Special feature 42

Martin & Partners – Reaping the rewards of efficient ERP

New ERP system provides Martin & Partners with considerable savingsh

Supply chain and logistics 44 Supply chain risk

Möbius Consulting demonstrates the effect of different risk scenarios

Operations and maintenance 48 Pharmaceutical manufacturing

Working towards a cure for automation headaches

Sustainable manufacturing 52 Talent management

Investing in the management of talent is the way ahead for the paper industry according to global management consultants Accenture

Special feature 56

CIPS – The return of engines of growth

David Nobel looks at whether UK manufacturing is still yet to hit rock bottom

Special feature 58

UKTI – China and India

Paul Calver says finding unique selling points can open up unique opportunities in foreign markets

Manufacturinginaction Factory of the month

Morgan Motors 62

Operations director Steve Morris on how a 100 year old brand, famous for its traditions, is approaching the next bold step towards its future.

Printing – GSM Graphic Arts 80 Microelectronics – Aeroflex 83 Food and beverage – Constellation 89

Europe Tyre technology – Pirelli 93 Navigation technology – Atlantic 95 Inertial Systems

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Newsinbrief Biofuel research should focus on planes and not cars, the influential think tank Policy Exchange has claimed in a new report. They say a crop area the size of the US continent would be needed to grow enough biofuel to power all the world’s cars and alternatives, such as electricity, already exist for them. Instead, it said the EU should fund research into using plant-based fuel for aviation to help cut emissions and the UK should increase its support for companies involved in its development.

The UK has a ‘moral obligation’ to contribute to global food production, said a report published by the Department for Environment, Food and Rural Affairs (DEFRA). While calling for the UK to increase its food production, the report, entitled ‘Securing food supplies up to 2050: the challenges for the UK’, stated that any proposed growth must be done so both sustainably and in response to consumer demand.

Angry Cadbury workers across the country protested during July because they say the chocolate maker is refusing to honour the terms of a pre-agreed pay deal, despite increased sales and revenues. The workers say they were promised a two per cent minimum pay rise in 2009 – the final year of a three-year pay deal. The deal stipulated that in the previous years the workers’ pay increase would be 0.5 per cent above inflation. With inflation sitting at zero in February of this year, Cadbury has offered its staff a 0.5 per cent rise and disregarded the two per cent minimum.

Four Cranfield University researchers have been elected into the Fellowship of the Royal Academy of Engineering this year. The highest national award for engineers of its kind, the title is only bestowed on leading engineers within the field who have been elected by their peers to the Fellowship. Professor Brian Collins of Information Systems at Cranfield Defence and Security, Professor Philip John of Systems Engineering and Human Factors at the School of Engineering, Professor John Nicholls of Coating Technology and Professor Paul Shore of Ultra Precision Technologies from Cranfield’s School of Applied Sciences, were named alongside 38 others at the Academy’s AGM earlier this month.

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Lord Mandelson introduces £151m package for advanced manufacturing Investment totalling £151.5m has been announced as part of the Government’s targeted strategies for key sectors and markets.

It will expand access to information, encourage take up of new technologies, and address specific challenges faced by the aerospace sector. ‘Advanced Manufacturing’ includes businesses which use a high level of design or scientific skills to produce technologically complex products and processes.

Given the specialised requirements involved, these are usually goods and associated services of high value.

Key measures from the package include: a £40m investment in the SAMULET Research and Technology programme, a collaborative aerospace project focusing on productivity and environmental improvements; a £4m expansion of the Manufacturing Advisory Service to help a wider range of businesses improve efficiency and increase orders; and a £45m funding package to Rolls Royce which will see four new advanced manufacturing facilities built in the UK.

The proposed Rolls Royce plants will produce wide-chord fan blades for the Joint Strike Fighter aircraft, disks in advanced alloys for fans and turbines of aero-engines, single crystal blade castings for high temperature aero-engine turbines, and components for civil nuclear.

Of the package, Lord Mandelson said: “At the heart of Britain’s knowledge economy is our manufacturing base. This practical package of measures will help equip British manufacturers, of all sizes and sectors, to take advantage of the technologies and new market opportunities now shaping our low carbon industrial future. “It’s about giving them the support they need to create jobs in Britain, and export the best of British manufacturing design, technology, skills, and innovation around the world.”

Manufacturers opt for value-add over cost Britain’s major manufacturers are increasingly moving towards customisation and additional service models instead of trying to compete on cost, according to a report from Cranfield University.

The report – The Policies, Practices and Performance of UK Manufacturing Industry – says that by offering services such as maintenance or design alongside their products, manufacturing companies can increase revenue, offer greater value to their customers and differentiate themselves from the competition.

And Cranfield’s research found 1 in 5 companies making a greater return on sales for their services compared with their products.

“The figures show that quality is a major strategic priority,” said Dr Marek Szwejczewski, principal research fellow at Cranfield

School of Management and author of the report. And Szwejczewski thinks the results point to a bright future of manufacturing, based on high technology sectors like defence and electronics, despite decline in other areas of the industry during the downturn.

Dr Szwejczewski went on to say: “My advice to those sectors that are experiencing decline is to refocus their business strategy and to focus on one or two areas where they can make significant improvements. I would also advise that these companies don’t lose sight of the importance of continuing to invest in their staff.

This will put them in a stronger position for the upturn.” The research also highlighted a move towards green manufacturing, with companies reducing levels of waste, improving recycling and reducing energy usage.

ManufacturingNews Return to growth is distant despite easing of manufacturing contraction The contraction in manufacturing output is easing, but a return to growth could still be some way off, the latest quarterly CBI Industrial Trends Survey shows.

The volume of manufacturing output continued to fall in the three months to July, with 43% of firms saying it declined, and just 12% of firms saying it rose, giving a balance of -31%. This figure represented a slower rate of decline than the previous three months, when the balance was -53%. However, a return to growth could still be some way off, with expectations for the coming three months remaining negative.

Manufacturing firms have run down their stocks even more aggressively over the past quarter, with stocks of finished goods reduced at the fastest rate in the 51 year history of the survey (a balance of -23%). Despite this rapid rate of destocking, stock adequacy remains high and firms plan to reduce their finished goods inventories at a similarly sharp rate next quarter (a balance of -25%).

The survey also showed that employment in the sector is continuing to fall sharply. 47% of firms reduced numbers employed and just 6% increased, giving a rounded balance of -42%. Ian McCafferty, CBI chief economic adviser, said: “These figures reinforce our view that the road out of recession will be long and slow. The further sharp decline in export orders is of particular concern as we are not seeing much of a boost from the relative

weakness of Sterling. There are also further indications that the inventory cycle may not be turning as quickly as many had hoped, with some manufacturers still having excess stocks of goods.”

More positively, the fall in business sentiment has slowed further, and credit or finance constraints have eased back to pre-Lehman levels. The balance for optimism about the business situation was -16%, which was the least negative since October 2007.

Meanwhile those citing credit or finance as a constraint on output eased back to 5% from a record high of 26% in April.

Mr McCafferty said: “While the figures on credit constraints appear encouraging, they should not be taken as a sign that bank lending is flowing freely again.

Larger sized firms have been able to tap into alternative sources of external finance, through share and bond issuance. For smaller firms however, who do not have as wider range of funding options, credit constraints have not eased.”

Capital investment plans for the year ahead continue to be scaled back at a rapid pace.

However, the cut-backs to planned investment in product and process innovation as well as training and re-training have slowed significantly since April.

Constraints to investment from internal and external finance have also fallen since the last survey, and as with the credit/finance constraint to output, are now back to pre-Lehman levels.

Newsinbrief

STMicroelectronics, one of the biggest electronics companies globally with manufacturing and design sites across the world, has announced it is to add 650 new staff to its payroll at its plant in Crolles, France.

The company is also investing $1.25 billion in the site, in a move which its CEO, Carlo Bozotti, says will give ST Micro “strategic independence”. The new jobs and investment are part of a project called Nano2012. This is a joint venture between ST Micro and CEA-Leti, a leading semiconductor research institute in France, which aims to develop semiconductor technologies for silicon chips with structural dimensions to the order of tens of nanometres.

Plus Semi, a semi conductor manufacturer based in Swindon is reportedly set to cut up to three quarters of its employees as it fights to survive the recession. Mike LeGoff, managing director of Plus Semi, said his firm will have to cut between 60 and 85 of the 115 staff at the factory in Cheney Manor. “It appears that owing to both the economic downturn and the fact that there’s huge excess capacity in our market, the semi-conductor industry, we’re unable to find sufficient demand,” he said.

The West Midlands can still be a force in world manufacturing, so long as it strives for innovation and utilises the region’s R&D facilities, according to the new chief executive of the Manufacturing Advisory Service-WM. Simon Griffiths issued the rallying call just days after replacing David Wright at the helm of the specialist support body, reinforcing his organisation’s commitment to helping hundreds of companies emerge from the downturn by providing more advisers on the ground and renewed funding towards developing new products.

Semta – the Sector Skills Council for science, engineering and manufacturing technologies – is to merge with the National Skills Academy for Manufacturing and Metskill in order to provide a simplified skills provision landscape. This consolidated organisation will have three teams which focus on strategy and policy; skills infrastructure; and employer services. The organisations said the move is a response to calls from employers for a simpler organisational structure which they have scope to feed in to.

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Newsinbrief Japanese electrical manufacturing giant Sony has announced a loss of £237m ($390m, 37.1bn yen) for the April to June quarter. This constitutes a sharp swing from the 35bn yen profit it made in the same period in 2008.

The group is suffering in almost all of its departments, with sales down 19 per cent on last year. Demand for televisions, cameras, gaming consoles and other electrical gadgets have been especially weak since the start of the downturn and Sony is losing market share against competitors like Samsung and Panasonic.

A drop in the number of manufacturing insolvencies in England and Wales is masking a potential climb in the second half of 2009, says accountancy firm PriceWaterhouseCoopers. The first six months of 2009 saw 653 UK manufacturing firms enter into insolvency, a figure representing the smallest decrease (10.4%) of those sectors profiled The accountancy firm’s analysis mirrors that contained in a Red Flag Alert study earlier this month by restructuring consultants Begbies Traynor, in which they found that the number of UK companies suffering ‘significant financial problems’ rose 43% to 190,559 in the second quarter of the year. Worryingly, the majority of companies experiencing such problems collapse into formal insolvency proceedings within 12 months, according to the firm.

The Government must produce an ambitious science and engineering strategy, conclude MPs. The Innovation, Universities, Science and Skills Committee (IUSS) says that while there are many positives to take from its inquiry into science and engineering policy in Government, ultimately, a broad vision for the future is missing.

IUSS chairman, Phil Willis MP, said: “I welcome the fact that these new places will be in science, technology, engineering and maths - skills that are essential to the future of the country.”

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Green skills centre set for Wales The UK’s first green skills centre is to built in South Wales, providing a boost for government’s plans of creating thousands of green jobs.

The centre will be mostly funded by European contingency fund and will “become a UKwide resource for industry and job creation,” according to Welsh first minister Rhodri Morgan.

Around 1,300 people a year will be schooled in things like solar panel installation. The centre is to be built in Tredegar, Blaenau Gwent, and will open later this year British Gas will train its new and existing staff at the centre as well as other people unconnected with the company. The centre will form a key part in the Assembly Government’s plan to turn the Heads of Valleys region of Wales into one of Europe’s largest low carbon zones. This will include 40,000 homes being kitted out with microgeneration and renewable technology.

“The Heads of the Valleys was the crucible of the world’s first

energy revolution, which was based on fossil fuels and the assembly government is now working to ensure this area is at the forefront of the future energy revolution promoting renewable sustainable green energy and low carbon housing,” said Morgan.

UK businesses demand better low carbon conditions A consortium of major manufacturers and other businesses has publicly revolted against government’s low carbon strategy and is set to demand revisions to the plans.

The consortium, including Pepsi Co and the British Chamber of Commerce (BCC), is calling upon Energy and Climate Change Secretary Ed Miliband to introduce fixed prices for carbon and capital allowances for green machinery among a host of other incentives and tax breaks.

The Manufacturer Awards 2009 are being held on November 12 in London. For further information please contact Alexis Catchpole on either 01603 671303 or a.catchpole@sayonemedia.com

The organisations involved have slammed the government’s Low Carbon Industrial Strategy, released earlier this month detailing initial investment from a £405m pot allocated to environmental business initiatives in this year’s budget. According to the consortium, the strategy does not provide enough motivation for UK companies to lead Britain into a low carbon future but merely stipulates that they must.

“The UK’s current climate policy has some way to go to incentivise businesses to green their operations,” said Walter Todd, vice-president of operations for PepsiCo. “Current calculations mean that the payback to business for certain types of green technologies can be up to 35 years. No business can meet its shareholder obligations and do the right thing for the environment.”

The Times reports that the consortium is preparing a paper in which it will outline its proposals to government, with plans to release it soon. The report has been given the working title of ‘Lessons from UK climate policy’.

ManufacturingNews Manufacturing the green economy EEF and British Gas Business have lined up a series of briefings across the country to help manufacturers cut costs through environmental strategies.

The conferences, dubbed “Manufacturing the green economy”, will each consist of a half day briefing and a networking lunch. Advice will be given on strategic tools to reduce costs through minimising the environmental impact of manufacturing operations and supply chain.

The agenda will include the reduction of raw material use; saving energy; reducing waste; developing and implementing an environmental strategy using an Environmental Management System; and lean manufacturing.

Gareth Stace, head of climate and environment policy at EEF, said: “In these tough economic times you have to be competitive

to survive. EEF will provide real case studies from manufacturers in their own area where the advice we are giving has made a real difference to the business, substantially cutting their costs.”

The conferences are to be held throughout October in Bristol, Sheffield, Leamington Spa, London and Chorley. For info or to book a place, see www.eef.org.uk/ greeneconomyevents.

Mitsubishi chooses Scotland for low carbon technology Mitsubishi Electric has announced it is to start production of its low carbon Ecodan residential heating system at the company’s manufacturing facility in Livingston, Scotland.

Ecodan is an air-to-water heat pump that can provide heating and hot water for domestic homes. The company says it has the potential to lower a home’s CO2 emissions by up to 50% and reduce running costs by 30%, compared with modern gas boilers.

One of the production lines at the Livingston factory will be adapted to make the pumps.

Mitsubishi said it expects to make 3,000 in its first year and anticipates production growth of up to 10,000 units as more markets adopt the system.

The company said staffing levels will increase in line with the expansion.

John Swinney, finance secretary at the Scottish Government, said Mitsubishi’s decision to choose Scotland for production of the system “is further evidence that Scotland

is seizing the opportunities that come from our position at the forefront of developing a sustainable, low carbon economy.” Mitsubishi Electric’s general manager of its AirConditioning & Refrigeration Systems Division, Yoshinori Miyata, attributed the choice of destination to “a great talent in the science and technology fields (in the UK)”.

The Ecodan system is accredited under government’s Microgeneration Scheme, making it eligible for a £900 installation grant. Manufacture of the product will begin in Scotland in September of this year.

Newsinbrief South Korean manufacturing giant Samsung Electronic has announced it is to spend $4.3bn on ‘greening up’ its products and production processes. The firm wants to cut greenhouse emissions from its manufacturing plants by 50 per cent while cutting 84 million tons of indirect carbon emissions from its products by 2013. The company’s vice chairman and CEO, Yoon-Woo Lee, said the intiative, dubbed ‘PlanetFirst’, is aimed at making Samsung Electronics a “truly green enterprise that places eco-management at the very heart of our business decision-making and growth.”

A leading display screen analyst firm has predicted an exponential growth in the active matrix organic light emitting diode (AMOLED) screen market by mid next decade. DisplaySearch expect the global AMOLED market will be worth $7.1bn (£4.3bn) by 2016, compared with $0.6bn (£0.37bn) last year. OLED screens are seen as a better alternative to Liquid Crystal Display (LCD) as they are brighter without requiring a backlight, making them thinner.

Contact lens manufacturer Daysoft has announced it is to buy the Scottish factory which it currently operates, increase capacity and take on more staff. The company is growing fast – increasing its orders by around 10 per cent a month – thanks to a switch in its business model which, since 2006, has seen it sell directly to consumers over the internet only. It is the only contact lens manufacturer to operate in this way.

Government has announced it is to inject £4m worth of funding into nuclear and resource efficiency through the Manufacturing Advisory Service (MAS).

The funding has been allocated under the UK Low Carbon Transition Plan. MAS delivers practical support and advice to UK manufacturers in improving efficiency, raising productivity, generating new and innovative ideas and addressing problems that may be affecting their profitability.

The 22 sub sectors it supports include nuclear, environmental and automotive.

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Manufacturing news

Datesfor yourdiary August 19 Imeche is holding a further learning

workshop at Scottish Engineering in Glasgow. For further information or to book, please contact Benedict Anstis via email: b_anstis@imeche.org

September 8-11 A panel of industrialists from the Defence Industries Council will present a major research report on defence and its importance to the UK as well as answer your questions. For further information please contact matthew.knowles@ defenceindustriescouncil.org.uk

8-11 SBAC will be supporting the Defence

Systems & Equipment International conference, to be held at London Excel. For more information please visit: www.dsei.co.uk

15 EEF is holding a HR Network Meeting, encompassing the Bedfordshire, Cambridgeshire and Milton Keynes areas.

To ensure you are invited to attend, please contact Zoe Salsbury on 01767 685925 or email zsalsbury@eef.org.uk 22-23 UKTI is part of Composites Meeting 2009, being held in Nantes, France. For further information visit: http://www.compositesmeetings.com/ 24 SBAC’s Toulouse office will be celebrating its 10th anniversary at Orangerie de Rochmontes. For further information please contact Gen Richards on 020 7091 4520 or gen.richards@sbac.co.uk 29 EEF is holding a Manufacturing the Green

Economy seminar in Chorley. For further information and to book visit: http://www.eef.org.uk/greeneconomyevents/

17 & 18 The 12th annual North West Manufacturing Exhibition is being held at the Reebok Stadium in Bolton.

Further information can be found at www.industry.co.uk

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Nissan plans new electric car battery plant Nissan announces plans to build new factory to manufacture advanced batteries for electric vehicles in the UK, and a second plant in Portugal Nissan Motor Company has announced together with governments of the UK and Portugal its plans to build two plants for the production of its advanced lithium-ion batteries in Europe. It marks RenaultNissan Alliance’s the first big step towards producing batteries for its Zero Emission Mobility Program in Europe.

Once details are finalised with the Government, the UK site will be located in Sunderland where Nissan’s UK main manufacturing facility is based.

The UK site will be the Nissan European headquarters for battery production and the centrepiece of the newly established Low Carbon Economic Area in the north-east of England.

Both governments have offered to extend financial assistance and other support to ensure that Nissan locates the proposed plants within their respective countries. A new plant will be a boost to the regional economy of Sunderland, by being central to the recovery of the car industry and associated industries, while boosting jobs and skills and leading the way in the manufacture and sale of zero emission passenger cars in Europe.

Prime Minister Gordon Brown said: “Nissan’s investment in a new battery plant and its hope to start producing electric vehicles here in Sunderland is great news for the local economy, creating

up to 350 direct jobs and creating and safeguarding hundreds more in the associated supply chain.

This investment is also hugely significant as we embark on Building Britain’s Future, our plan for recovery and beyond powered by low carbon, high technology industries, products and services.

Sunderland could now be a strong contender to produce electric vehicles for Nissan in Europe, and we will continue to work with Nissan to ensure this happens.”

As part of the newly established Low Carbon Economic Area, government intends to establish a new training centre, specialising in low carbon automotive technologies, a technology park and an open access test track for low carbon vehicles. “The North East has distinguished itself as the first specialised region for ultra-low carbon vehicles,” said Business Secretary Peter Mandelson. “The collaboration between local businesses, universities and colleges will create a hub of expertise to boost innovation and accelerate business growth in this important area of ‘green’ industry.”

Nissan’s Sunderland Plant, in partnership with Regional Development Agency One North East, has also recently been awarded the contract to assemble a new petrol engine from next year, securing future production on Wearside. Assembly of the 2.0 litre engine, codenamed ‘MR’, will immediately safeguard up to 130 jobs, with the expectation that an additional 200 posts will be created by 2013, depending on the market.

ManufacturingAppointments UK Appointments Manufacturing Advisory Service Simon Griffiths

Semta Philip Whiteman, Lynn Tomkins and Bill Twigg (pictured left to right)

Simon Griffiths has been appointed as new chief executive of Manufacturing Advisory Service for the West Midlands, replacing David Wright. Griffiths brings a wealth of experience to the position, having held previous posts at Land Rover and GKN among other companies

in a 25-year career.

Semta, the National Skills Academy for Manufacturing and Metskill are to be consolidated. This new organisation will have three teams which focus on the key steps in improving workforce skills: strategy and policy, skills infrastructure and employer services.

policy, Lynn Tomkins will be tasked with making it easier for employers to influence the skills agenda, and on their behalf, clarify current and future skills and provision gaps to government and UK skills agencies.

In addition to his position as chief executive, Philip Whiteman will establish the Employer Services team until an appropriate candidate is identified.

As director for strategy and

Toyota’s Richard Balshaw has been promoted to sales director. Balshaw, who has worked at Toyota GB for 15 years, moves from his position as general manager for Toyota and Lexus Fleet Services. In his new job he will report to commercial director Jon Williams.

Balshaw replaces Michael Cole, who has moved over to the role of managing director of Kia Motors UK. The Greenbank Group is pleased to announce the appointment of Paul Holt as product manager in their materials handling division, based in Woodville, Derbyshire.

Holt will lead Greenbank’s focus on providing pipe conveyor product solutions, expanding a portfolio which currently includes feeders, crushers and dust suppression as well as an extensive range of bulk material handling systems, including biomass, refurbishment, and full site management.

Jolyon Nash has been appointed as successor to Graeme Grieve as director of sales and marketing for Rolls-Royce Motor Cars.

Nash worked in a range of sales and marketing positions at two of South Africa’s larger corporations, Liberty Life and South African Breweries, before entering the motor industry.

Nash spent five years as an auto dealer in Herefordshire and has also worked in South Africa with the BMW Group, employed in a variety of roles.

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To notify The Manufacturer of your company’s appointments, please contact Daniel George at d.george@sayonemedia.com and 01603 671300

Commenting on his appointment Griffiths said: I have always remained a West Midlands lad born and bred and am extremely excited at the prospect of being able to lead MAS-WM in the next stage of its development.”

As director of skills infrastructure, Bill Twigg will ensure the early development and approval of sufficient good quality products and providers in line with the Skills Academy brand, and Semta’s standards and frameworks

The Food Standards Agency (FSA) welcomes the appointment of Lord Rooker as its new chair by the Secretary of State for Health. Lord Rooker, a former Minister at the Department for Environment, Food and Rural Affairs replaces the outgoing chair Dame Deirdre Hutton.

Derby-based supplier of chilled and frozen ethnic ready meals, S&A Foods, has appointed a new sales director and finance director to help bolster the company’s long term growth plans.

Mark Phillips, who arrives from Wellness Foods, has over 20 years experience in the food industry and has worked for firms such as Dairy Crest and Northern Foods. He joins the company as director of sales. Julia Wilson has been appointed director of finance, joining from the Derbyshire Building Society.

International Appointments Epson Deutschland GmbH welcomes Sevan Bachtanian to its factory automation business unit. The 34-year old will be responsible for developing the international sales structure as well as the development of new business units.

Bachtanian joins Epson from Keyence Deutschland GmbH where he has held the post of sales engineer since 2005. Sevan will report to Dirk Folkens, sales manager factory automation.

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12

JustJones The s p r e a d of Lean

It

not only demonstrated that a new global production standard was quite possible in the UK but it also opened the door to an influx of new management thinking. Learning from Toyota, we called this lean thinking. It is changing the way we organise work in every sector of the economy more fundamentally than we may realise. My hunch is that in this decade it will similarly transform how managers manage.

Thinking back, our predictions that leaner carmakers would squeeze out existing players have come to pass.

All the survivors (including newcomers from Korea and China) recognise that making and delivering parts as tightly synchronised with the assembly track as possible is the way to surface quality problems and to eliminate waste.

The aerospace firms now also understand the discipline of fabricating and delivering parts to a moving assembly line. This is how the Boeing 737 and Airbus 320 are assembled and how Rolls-Royce assembles its largest engines in its new plant in Singapore. Airlines quickly realised that they could get many more flying hours out of their fleet by monitoring wear and streamlining their strip, overhaul and reassembly process. Likewise the RAF (and the US Air Force) has significantly improved availability by streamlining the overhaul process for frontline fighters and helicopters, to the extent that they do not need to order as many of the next generation airplanes. This thinking is now being extended to many other aspects of the armed forces, from squadron deployment to replenishing aircraft carriers.

High volume in line with demand

Tesco’s pioneering work with suppliers of their high volume, fresh and own brand products to make, ship and sell their products within hours rather than months is now being followed by their competitors. As a result the UK has the most competitive retail industry in the world.

Branded goods manufacturers and even pharmaceutical suppliers are now realising the potential of making high volume products every day in line with demand, rather than in infrequent batches stored for months in several warehouses. UK retailers are also waking up to the fact that leaner competitors in Europe can respond faster and at lower cost than buying batches of clothing with longer lead times from China.

The Rethinking Construction Report showed how these same ideas could transform the design, fabrication and

I have always maintained that Margaret Thatcher’s invitation to Nissan to build a plant in the UK, shortly followed by Toyota and Honda, was one of the most important UK industrial policy decisions of the last several decades.

site assembly of large construction projects like Heathrow Terminal 5, so they are on time and on budget. Members of this team went on to deliver the stunning renovation of London’s Kings Cross Station and are now well on time with the Olympic stadium for 2012.

In our Making Hospitals Work workbook we show how hospitals can manage the flow of emergency and elective patients in a way that reduces length of stay while freeing doctors’ time to give better treatment to more patients. Many service and public sector organisations are also learning that streamlining the flow of work and improving the coordination between departments can significantly improve the delivery of their services with fewer resources, which will be critically important in the coming years.

a process focus to our traditional “Adding vertical, functional perspective will change management practices in the next decade as fundamentally as the way we are now reorganising the work

“

Dan Jones, founder and chairman of the Lean Enterprise Academy Email: dan@leanuk.org

Step by step, each sector has learnt how to overcome the obstacles by turning their work from a set of isolated, separately managed activities into a shared and coordinated process. They are discovering that the same ideas do not only work in a production environment or to routine office work but can also be used in managing design and project work of any kind.

However redesigning the work is one step. Building the problem-solving skills of everyone in the process so they can respond and root cause interruptions to the process is the only way to sustain it. This in turn requires a very different set of skills from managers used to telling staff what to do, doing what they have to do to meet their own budget targets and hiding problems. Adding a process focus to our traditional vertical, functional perspective will change management practices in the next decade as fundamentally as the way we are now reorganising the work. end

Have your say at www.themanufacturer.com

13

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Economics Time to rebalance Over

the past year, there has been a lot of talk about rebalancing the economy. Under this scenario, spending by households and government would grow more slowly as these groups looked to reduce their debts, with exports taking up the slack. This would create a growing role for manufacturers who would be able to take advantage of the more competitive exchange rate.

This sounds highly attractive but a quick glance at the economic statistics raises questions about how soon this is likely to happen and the challenges involved in sustaining a significant rebalancing. World trade is forecast to shrink by 10% this year, the largest fall in 60 years. The reality therefore is that a weaker pound and a more productive manufacturing sector can gain a larger share of the pie but the actual size of that slice is unlikely to be growing given what has happened to the overall pie.

Look east

Recovery in Europe is some way off and any upturn in the United States still in its early stages. However, we can take some encouragement from the fact that China and other parts of emerging Asia are showing signs of life. Some estimates suggest that industrial production grew by 30% in this region in the second quarter of this year, while China’s economy grew at an annualised rate of 16% in the last three months compared with the previous three. Growth in China is being encouraged by a combination of measures to encourage bank lending and a very large stimulus package of tax cuts and infrastructure spending.

Looking beyond this recession, we can be confident that this region will continue to lead the rest of the world and in ways that will create significant opportunities for manufacturers that have the strategy to exploit. Countries like China are in the catch-up phase where they are absorbing technological advances from other parts of the world and also have substantial scope to improve productivity. In most cases, the working populations of Asian countries are set to continue expanding in contrast to much of Europe. China is an exception to this but even here the decline doesn’t start to set in until the end of the coming decade.

Chinese consumers can spend too

There are also signs that many of the emerging Asian countries are looking to rebalance their economies away from relying on exports to drive growth. Indeed, it is something of a myth that trade has been the major

engine of growth. With the exception of China, consumer spending has taken a growing share of economic output in this decade. But given its size China is an important exception and the evidence that its government is seeking to stimulate consumer spending is therefore significant. This is being driven by sizeable tax cuts for rural households and an expansion in their welfare state which is reducing the need for households to save for a rainy day. The government is also using its significant reserves to invest in China’s infrastructure. In the coming years, a significant proportion of this funding is likely to be directed towards reducing the carbon emissions associated with rapid economic growth.

economy grew at an annualised “China’s rate of 16% in the last three months

“

Steve Radley, chief economist, EEF

EEF’s chief economist Steve Radley says the right conditions for rebalancing the UK economy, which will eventually emerge and these will benefit manufacturers. But with global trade forecasted to shrink 10% this year, be prepared to wait. Meanwhile look for opportunities in Asia.

compared with the previous three

These factors are behind forecasts of a return to rapid growth in many Asian economies. We believe that China is likely to expand by about 8% next year and, alongside India, growth by just under an annual 10% in the following three years. The Emerging Asian area as a whole is likely to be close behind at about 8% per year. The question, though, is whether enough of our manufacturers have the strategies to exploit these opportunities. We have seen a significant increase in the number of companies viewing countries like China as a major opportunity in recent years but our trade with these fast-growing markets remains fairly limited. Between 2001 and 2008, EEF surveys showed that the proportion of members viewing China as a major growth market rose from a quarter to about 80%. But sales to China and India combined still only represent 3% of our total exports and exports to Asia as a whole only 14%. However, this may underestimate our penetration in these markets, given that some companies will have established a presence there rather than relying on sales from the UK. Operating in these markets, though, remains complex and it will always be important to be close to the consumer to understand and to respond to changing tastes. For UK manufacturers, growth opportunities are likely to be greatest for those that can maximise their offshore presence to tap into the growth in these markets. However tough the current recession may be, it is vital that manufacturers have strategies in place to take advantages of the major opportunities that the upturn will bring. end

A assessment of opportunities for UK companies in overseas value chains by UKTI’s Paul Calver is on page 64

15

No manual provides this

recipe for success 16

For a company with an annual turnover of £650m, Samworth Brothers is relatively invisible. While it has few brands, the food industry knows it very well as the biggest British-owned chilled food manufacturer in the UK and owner of the Ginsters pasty brand. Will Stirling talks to Samworth’s CEO Brian Stein about an atypical business model and the effects of the modern retailing environment on food manufacturing.

Interview Brian Stein

Pulling

into the town’s train station, a sign reads: “Welcome to Melton Mowbray. Home of the Melton Mowbray pork pie and Stilton cheese.” A small reminder that this corner of Leicestershire, the self-styled Rural Capital of Food in the UK, is big on food manufacturing. Large dairies, cheesemakers, breweries, and meat product manufacturers dot the area, but it is dominated by Melton Mowbray’s single biggest employer, Samworth Brothers. It is the biggest pork pie maker in the world, producing five million pies a week, as well as 4.5 million natural casing sausages (biggest in UK), and 3.5 million sandwiches, which are mainly destined for the big supermarkets. The privately owned company has a long history of food manufacturing, and was instrumental in giving the Melton Mowbray pork pie ‘protected status’, lobbying government to award the pie the same geographical indicator status as the Italians give to Parma ham, for example.

“While the Europeans were good at it, it was never bothered with in the UK, hence we were losing our food heritage,” says Brian Stein, Samworth Bros’ amiable Liverpudlian chief executive. “Having forced the case with Melton Mowbray pies, I now see a host of other industries following us and trying to get their products through the process and protecting certain British foods. And I applaud that – I don’t want retailers dumbing down traditional British food. There is also a tendency to do that when there’s a recession on.”

Freer rein for managers pays off

Stein, who has more than 30 years in the food industry, is clearly passionate about his industry, and proud of the protected status of the Melton pie. But it is the Samworth Bros business model that he conveys the most conviction for. Samworth Bros has an atypical director group structure for such a big company – the group is the CEO and the finance director. Eleven main businesses make up the Samworth portfolio; Ginsters, the pasty brand, acquired 30 years ago for £1m which now turns over +£135m a year; Dickenson and Morris the pie company, Melton Foods, Kettleby Foods, a big sandwich making business, as well as Ye Olde Pork Pie Shop in Melton, a speciality sausage shop and more. Each business is run as a separate company, where lean manufacturing techniques, staff training and carbon emission reduction practices are tackled differently. “Our businesses are run as independent businesses, and we aim to run those with a fair degree of healthy paranoia, which would be to challenge them all the time in areas of efficiency and least cost manufacturing – on lean, six sigma, 5S etc,” says Stein.

“There is no manual from a centre that says ‘you’ve got to do these things’. One company might be good at traditional lean, others could have found great savings on waste, water utilisation, or certain lighting.” Stein says this decentralised model, while running counter to how other food manufacturers are moving, works for Samworth. And running the businesses in a granular way is something Stein prescribes to firmly. “In the past I have found I was most motivated when I ran my own business. If you take central techniques and then let the MD overlay his way of doing that, where it becomes his own, it works much better.”

Where lean manufacturing is concerned, the approach is pragmatic. The company encourages management

Samworth Brothers at a glance Added value chilled food maker best known for Melton Mowbray pies, Ginsters pasties, sausages and sandwiches for supermarkets. Salads and other chilled food products.

13 year history of growth by acquisition, turnover up from £90m to £650m Approx 10% growth y-o-y since 1995, discounting 2008 (flat) Manufactures 5 million pork pies a week – biggest manufacturer in the world Manufactures 3.5 million sandwiches a week – 2nd biggest manufacturer in the UK Manufactures 4.5 million natural casing sausages a week – biggest UK manufacturer of such sausages in UK Manufactures 2.5 million pasties a week – biggest manufacture in the world Acquired Ginsters 30 yrs ago for about £1m, with sales of £1m.

Ginsters sales today: £135m Ginsters brand now the no.1 pastry brand in the UK Investments at all sites, the biggest being £20m at Ginsters on automation, mainly robotics, also £20m spent last year opening new site, Blueberry Foods, for Marks & Spencer

from one site to visit other businesses to observe new learnings, but there is no dogma to adopt new rules.

“The processes would be quite different in the sites – sometimes there is learning that can be transferred and sometimes there isn’t,” Stein says.

An education in food manufacturing

The company has the Samworth Academy, essentially dedicated rooms at each business for in-house and external training, where employees are encouraged to take on extra-curricular learning. “If a member of staff wants to learn a language, a new skill, even fly fishing, we’ll buy the CD Roms and training material and encourage them to use the rooms to study,” Stein says. Having scoured many universities’ manufacturing degree courses circa 2003, Samworth Bros found nearly

17

Biography Brian Stein Education:

HND in Business Studies, Wolverhampton Polytechnic

1971:

Management trainee, Bowyers

1981-83:

Rose through ranks to become factory manager of a 1,200 employee slaughtering and manufacturing site in Trowbridge

We’ve tried to do it by consultation and discussion.

Then we were bloody-minded and just removed the hosepipes, making life difficult for people. But the results show how much we were wasting.”

1983:

Joins Northern Foods. General manager of a range of own-label sites

1987:

Managing director of Pork Farms

Finding good people, and keeping them

1990:

Promoted to Northern Foods executive

1995:

Joins Samworth Brothers

1997 to date: Managing director / CEO Samworth Brothers all courses were geared to non-food industries. The firm has since worked in collaboration with Loughborough University to develop a food manufacturing degree course. It was pioneered in one business and is now being rolled out in two others. Several management personnel are going through the process of the degree course and are being encouraged to complete it, but it is not mandatory.

Samworth Bros employs 7,000 people. Does it measure a return on the training investment? “I would hate to think there’s a pounds, shillings and pence equation that says derive this much return from training or don’t do it. It’s a philosophy – you either think better-trained and educated people are better for doing it, and this enhances your workforce, or you don’t,” Stein says.

Hosing down costs

A company that produces five million pies and 2.5 million pasties a week needs a lot of energy. Like other manufacturers, the imperative to reduce energy bills to save money and reduce carbon emissions is high for Samworth Bros, which is taking several energy saving measures. “At Ginsters we’ve done a lot of work to reduce energy costs,” says Stein. “There has been much work done on ovens and chills [refrigeration], to the extent where we’ve been invited to take part in drafting a national low carbon business strategy.

That gives an idea of the effort we’re putting in to be noticed, particularly in Cornwall, for carbon reduction.

We’ve also used other energy reduction methods – one business is using a daylight photo responsive lighting system to adjust lighting levels to the amount of natural light available.“ Food manufacturers use a lot of water. Recently Samworth Bros conducted a study of water usage, which revealed that water usage rates were highest at

18

times with the lowest shopfloor supervision – night shifts.

Water is a classic food industry problem, where so much is needed to both clean equipment – requiring steam used to generate hot water – and for manufacturing the food itself. “We put water meters at different points, and were horrified to see where the peak usage came from.

We’ve had massive reduction now by simply taking hosepipes away from the business.

The Food and Drink Federation recently brought the issue of recruitment in the food industry to attention of The Manufacturer. The processed food industry is big, resilient to recession and pays well, but it has been a transient workplace for graduates and young professionals. “The food industry is not a particularly sexy industry. It’s always been relatively difficult to recruit good people into it,” says Stein. “That has become more difficult over time. If you look at some areas where we’d naturally recruit from – food scientists, microbiologists, Reading University etc – the number of people taking courses that would lead into our industry are falling, which is a worry. We didn’t used to recruit graduates at all, but six or seven years ago we took a major effort to recruit them.” Graduates tend to stay longer at food companies once they have been in circulation for two to three years; the company debated whether to scrap graduate training altogether and focus on this group but decided they wanted to train people from the ground up. Stein says he knows from speaking to them that their graduate attrition is no worse than its competitors.

Applying good people to the company’s business model has been a challenge. At Samworth Bros, the managing directors, production directors, finance directors and sales directors actually run their businesses – there is a sense that management need to be empowered quickly and there are fewer layers of bureaucracy here than at comparably-sized companies. While at some food companies there are departments of mid-range turnover, £5m-£30m, and management climb the scale naturally. Samworth’s promotion puzzle is an indictment of the scale of the modern food industry. “Food manufacturing in the UK today doesn’t afford you that luxury,” says Stein.

“The scale of the businesses that are required to make a profit means they get bigger and bigger, the breakeven point gets bigger and small businesses don’t survive. That makes management promotion more difficult. Our businesses are £50m-£70m plus turnover, and translating a sales or production director to be running their own business is quite difficult. We have successes, but we have a quite a lot failures here too; the success of Samworth is not having a big group structure, because I’ve found in the past it gets in the way of a good MD of running a successful business. But again it is getting hold of those people and training them becomes more and more difficult.”

Interview Brian Stein

The food industry is well known for its resilience to the vagaries of economic cycles – in a boom it will benefit very slightly, in a recession it will drop very slightly, compared with other industries. But 2008 was different.

“In this recession, at the end of last year, I saw more changes in eating habits than any time since I’d been in the food industry,” says Stein. “We manufacture products that are the top end of the quality range – we don’t make a lot of ‘value’ food. In one or two areas, ham for example, we only make the top tier ham products.

Virtually overnight within a few weeks we saw demand falling by 20%. That was challenging. We had to modify a lot of processes, in product development, to make sure that we brought new things to market.”

Despite this, Samworth’s recession tale is one few manufacturers would criticise. The company has had about 10% growth a year since 1995, which stopped in the second half of 2008. “We did not go backwards, but we stopped growing due to the recession. I’m pleased to say this year we’re back to the kind of growth we’ve been used to, in the 8%-10% range. Don’t think that is happening due to green shoots, it’s more because we’re seeing some competitors struggling or disappearing.

We have a reasonable reputation with retailers so we are a good port of call to fulfil contracts – we’ve certainly seen that. We are 12-18 months away from green shoots. But because we are good at the day job – quality, delivery, service, on time, consistency – the retailers come knocking.”

Samworth Bros is a privately owned family business, which is 100% in trust to the family and has no borrowings. While it bought Ginsters 30 years ago for £1m, and one or two businesses since, Samworth has shunned the acquisition trail. “When we’ve considered them, we’ve fallen shy of the multiples demanded. So we’ve done it ourselves and built it from scratch. We have no debt, we invest heavily in our businesses but it has grown organically and as we’ve seen others have been paying silly multiples for some businesses and are now in trouble.”

Quality may suffer in price games

Food manufacturers face an array of pressures: competition, falling demand for product lines, energy costs, recruitment, health concerns like the salt and fat content of processed food, and food security. But Stein is sanguine about market condition issues – on a level playing field, these apply to the competition. For Stein, the biggest issue for the industry is the retailing environment. “[in retailing] Over the years we’ve seen many winners and losers, in recent years we’ve seen many of those losers disappearing completely, only the winners remain. As a result and because of recession, they’re all competing fiercely on price. I don’t mean that price is as important to Waitrose and M&S as it is to the discounters, but in a way it becoming so because although they retail their product at a higher price, there is a relative value between the two that consumers find is acceptable or unacceptable.

They might allow themselves to be 10% more expensive than the discounter. At the bottom end of the market, there is pressure to sell food close to cost – it’s what they feel they have to do to get their market share in the recession. They have to sell it half price, or nearly give it away, to keep market share. In today’s environment that is becoming difficult for the manufacturer.”

central techniques and then let “IftheyouMDtakeoverlay his way of doing that, where

“

Chilled food – a recession winner?

it becomes his own, it works much better And costs are up. The pound’s lower value has hit UK food processors, ironically by raising demand for UK produce and helping farmers. In the last 12 months since the pound has weakened, manufacturers who might normally buy pigs from abroad are buying from the UK. There is simply not enough UK pig meat so its price has rocketed, hurting UK manufacturers. “We’re seeing pork prices 20%-30% up on last year and we can’t get a price increase with any of the retailers. They’re frightened of losing market share in the price war so they will only move their retailer prices as long as everyone else does”. What are the chances of two or three retailers moving their prices on the same products on the same day? Not a prayer. So getting a price increase as an own label supplier is getting more and more difficult.”

Stein is genuinely concerned that price squeezing will manifest itself in food quality, where there are signs of that happening. “I’m concerned that if the own label manufacturers are not allowed to make a satisfactory return, standards will start to drop. We’re starting to see that – having been in this industry all my life, I’ve seen the quality of food standards, manufacturing standards and fabric (i.e. build standards) improve and improve, as a result of the quality of the retailers. They’ve been incredibly demanding in ensuring food standards have risen and risen – I’ve seen that throughout my life until the last few years, when I’ve started to see a big reduction in the investment in own label UK food manufacturing.

That’s a worry for me as I approach the end of my career, and as a food consumer. At the end of the day you get what you pay for and I see instances now with certain economy products with certain retailers that is selling food using quality meat being sold at cheaper prices than dog food. That is not right.” end

Have your say at www.themanufacturer.com

19

Can exporting offset

recessionary pressures in the UK?

By Peter Brotherton, Director of Client Coverage, Manufacturing & Infrastructure, RBS and Mark Ling, Regional Director, Global Transaction Services, RBS

As

manufacturers across the UK face up to the challenge of operating in a downturn, shifting part of the organisation’s resource to the task of developing new export markets or ramping up existing overseas trading, offers great prospects for continued growth.

investment goods usually falls further and faster than demand for consumer goods – people have to eat, firms don’t. This pattern was clearly visible in the UK in the 1991 recession – import levels collapsed while exports kept growing.

In this article we investigate the UK’s position as an exporting economy and ask how companies should look to exporting to accommodate poor demand at home.

But it’s a different story this time around, as the global nature of the recession means demand for exports has come under as much pressure as imports. No developed

The economy shrank by 2.4% in the first three months of 2009, significantly more than the initial estimate of -1.9%. This means that the loss of output in the first three months of 2009 alone was almost as much as during the whole of the 1990s recession, which lasted fifteen months. Other countries fared even worse: Germany and Japan both suffered declines of 3.8% q/q in Q1. So far, national income has fallen by almost 5%. By the time this recession ends, the decline is likely to be on par with the 1980s recession peak to trough fall of 6%.

Trade has not been the support it was in previous recessions

In a normal recession, a country can rely on external demand to pull the economy back to growth.

Historically a recession in one country has not tended to coincide with downturns in all its major trade partners. Imports would tend to fall faster than exports, so net trade provided a lift to the economy.

Moreover, imports tend to be more slanted towards capital goods, reinforcing this trend. Demand for

20

that are focused “ Businesses solely on the UK can do little about their fixed costs as their revenues decline Mark Ling, regional director, RBS

“

The UK suffered a heavier blow in the first quarter than previously thought

country, and few developing countries, has escaped the downturn. The situation is most severe in export dependent economies such as Japan and Germany, where exports have fallen c.50% from their peak. In the new, rebalanced world to come, these countries need to reduce their reliance on exports and boost domestic consumption. The UK, US and other countries running large current account deficits, actually need to export more, and move away from an economic model dependent on domestic consumption.

Mark Ling, regional director at The Royal Bank of Scotland argues that developing an exporting capability when confronted with diminishing local demand both lessens the impact of the local downturn and puts the business in a position to benefit from weaknesses in sterling relative to both the euro and US dollar. He describes how banks can assist the UK exporter

Specialfeature RBS

However, at the same time a weak pound makes it easier for UK exporters to penetrate foreign markets – thanks to the fact that our goods now look much cheaper to foreign buyers – it is undoubtedly also the case that companies tend to become much more risk averse in a downturn. Since exporting inevitably carries risk, it becomes harder to do, even as the economic conditions favour exporting as a solution to counter local pressure on margins and profit.

Banks can help in a number of ways, working to mitigate the risk of exporting while providing the trade finance solutions that make it possible. Look for a banking partner that is enthusiastic about understanding your cross-border aspirations and helping you target export opportunities.

Simplifying trade

In many instances, a simple matter such as the ability to quote prices in the local currency and providing local settlement instructions can make a huge difference.

This can be very challenging for a new exporter to do, but is something a global trade bank can provide as a core service. Another real differentiator for establishing your presence overseas is the ability to provide your buyer with extended credit terms. Again, look for a financial services partner with an on-theground presence in your target market, supported by teams who understand local processes and markets, and who are likely to be already known in your chosen export marketplace.

At RBS, our international network makes it easy for us to offer credit solutions at either end of the supply chain.

We can put in place a structure that allows the overseas buyer to take extended credit whilst simultaneously accelerating cash flow for the seller – the kind of support that helps companies win business. For larger organisations with offices in multiple countries we can provide a balance netting and “sweeping” service. This type of liquidity management solution ensures that they are able to make best use of working capital and minimise unnecessary interest costs.

Financing the supply chain

UK exporters are often also importers so there may be a requirement to finance the supply chain end-to-end. The financing need often starts several months before goods are imported and continues through a stock-holding period until they are exported and payment eventually received from the end-buyer. This kind of transactional financing, though less flexible than an overdraft, is inherently more visible and more secure. So in this difficult credit climate, the benefits of a transactional trade finance solution are even more significant.

Speed, visibility and control

Typically delivered through secure Web-based portals, trade finance solutions give companies the ability to view their trade transactions (eg. letters of credit, bonds, guarantees, collections) online, in real-time, as well as providing an end-to-end monitoring capability for both buyers and sellers. That gives your potential customers confidence and considerably simplifies the process of buying and selling across international borders.

instances, a simple matter such as “Inthemany ability to quote prices in the local currency and providing local settlement instructions can make a huge difference. Another real differentiator for establishing your presence overseas is the ability to provide your buyer with extended credit terms

“

Businesses that are focused solely on the UK can do little about their fixed costs as their revenues decline.

Finding markets overseas for products turns this state around and uses the weak pound to generate business.

A recent study from the Economist Intelligence Unit highlighted the fact that many British business leaders see more opportunity for growth in overseas markets than domestic over the next three years, with 55% actively looking at overseas expansion in the next 12 months*.

Shared goals for long-term success

Global markets can make a significant contribution to Britain’s economic recovery. However, it’s equally vital to ensure businesses have the knowledge and skills to reap the rewards. As the lead sponsor of the newly launched International Trade Channel in partnership with the Institute of Export, RBS is committed to helping UK companies of all sizes do business securely and profitably overseas. Moreover, we believe a healthy relationship between buyers and suppliers is fundamental to restoring the health of the real economy – ie. in reinvigorating the movement of goods from source to store – and trade finance is an integral part of that process.

So, whether you are taking your first steps as an exporter or are already experienced at trading internationally, we can help you connect to overseas trading partners, set up new buyer and supplier relationships and find the trade finance solution that works for your business. end Source: RBS 2009, Economist Intelligence Unit 2009

For more information contact: Peter Brotherton Director, Manufacturing and Infrastructure Team RBS UK Corporate Banking Tel: +44 (0)207 672 1341 e mail: peter.brotherton@rbs.co.uk Mark Ling Regional Director RBS Global Transactional Services Tel : + 44 (0) 207 427 9465 Email: mark.ling@rbs.co.uk

To receive a free copy of the EIU report ‘Exploring the Changing Global Landscape for UK Companies’, please contact Mark Ling (mark.ling@rbs.co.uk).

21

Finding finance in a flattened Banks have always been the bad boys of the credit crunch. But is this reputation deserved? And what are they doing to help their customers?

Michael Halls reports.

Big Bad Banks. That’s been the more or less unflinching media line on the financial crisis since the credit crunch started in 2007. Big Bad Banks have led the world into the biggest financial crisis ever, so the thinking goes.

And equally they continue to keep us mired in debt.

It’s a pleasingly simple picture. And it certainly suits the recent blame mindset of the public. Bankers now beat estate agents and journalists as the lowest of the low in terms of a profession to aspire to (though where MPs fit on the scale is still unclear.)

So what is the banker’s perspective?

Perhaps the first thing to understand is that banks’ prime purpose is to deliver value to their shareholders.

www.businesslink.gov

They are just like any firm in that they have to deliver a profit.

With the UK now in its fifth quarter of negative growth, the banks are also working in a far more risky environment than two years ago.

The three major credit rating agencies — Moody’s Investor Services, Standard & Poor’s, and Fitch — make no bones about their predictions for the coming year. Corporate defaults are going to rise to a high never seen before in the developed western world.

(And even though the consensus opinion among these agencies is that the bottom of the recession has now been reached.)

In such a climate, can one expect anything less than banks becoming more restrictive in their lending? So, for example, in the syndicated loan markets, where larger UK manufacturers find credit, the picture is dismal.

pick of the wwweb...

Perhaps the most complete resource for looking online for public and private help in raising finance comes from the government’s Business Link site. After visiting www.businesslink.gov go to “Finance and Grants” in the left hand panel. Then most of what you need can be found in the “Raising Finance” section. Also included here under the section “Grants and government support” is a comprehensive display of what is available.

22

Open for business

Katy Packard, relationship manager, manufacturing, Lloyds TSB Corporate Markets says: “Constructing a new banking syndicate is far more difficult now than in the past, when many more banks were willing to lend even without a close relationship with a business.

Companies now need to rely more heavily upon relationship banks which will provide additional funding but also expect a proportionate share of its ancillary business.”

Packard’s statement highlights the difficulties that bankers face. The margin — to the customer the cost of lending — for any borrowing has soared to compensate for the extra risk. The

Leadership and strategy

maturity has contracted: five year loans are too risky, three years is much safer. And now banks are demanding that they handle other parts of profitable, if ancillary, business, such as foreign exchange.

But it’s more complicated than that, says Eric Gunn, a divisional director at Clydesdale Bank — interestingly a bank whose business lending has risen by some 14% — around £1.2 billion — according to its first half figures.

Apportioning risk and return is complicated by how different parts of the manufacturing sector can bear the protracted recession.

“The UK manufacturing industry has been affected in varying degrees by the recession, depending on regions and sector,” says Gunn. “Major construction projects such as the London Olympics have helped maintain the Yorkshire steel industry, and food and

Viable companies “with good business plans are able to access finance in the current climate. From Gunn, a lending perspective, Eric divisional director, trading companies with Clydesdale Bank good cashflow offer the most attractive proposition at the current time

“

drink firms continue to see growth as the demand for UK food, both at home and abroad, rises. However, manufacturers that are heavily reliant on UK consumer spend such as furniture, soft furnishings, cars or electrical goods, are arguably the most at risk.

“At Clydesdale Bank we remain open for business. Viable companies with good business plans are able to access finance in the current climate. From a lending perspective, trading companies with good cashflow offer the most attractive proposition at the current time, and it is fair to say that many food and drink or FMCG (fast moving consumer goods) manufacturers fall into this category.”

SMEs rule, EFG mixed vote

The government, however, understands the importance of SMEs. According to the Small Business Service, a government agency to promote SMEs, 97% of the British economy is made up of small businesses, 99% of which employ less than 50 people.

In recognition of such, the government has set up three initiatives to help. One helps provide credit insurance, another looks at using venture capital for start-ups, but the most important is the Enterprise Finance Guarantee, which itself is a beefed up version of the previous Small Firms Loan Guarantee scheme.

Customer relationship is king When bank-customer relations go well, they can go very well indeed. “I can’t praise our bank high enough,” says Neil Warren, the marketing director at rapidly expanding battery manufacturer and distributor, UK Batteries.

“They’ve been behind us all the way.”

As part of the finance arrangement with UK Batteries, the firm was able to use the generous cushions of its existing credit lines with NatWest to acquire a rival, Energy Batteries, this spring. “I’ve no doubt that we could have extended our credit arrangement higher and further if we’d needed to,” says Warren.

Warren says part of the success of the relationship is simply providing the right kind of information so that the bank is aware of how the firm is progressing. “Our finance director Stewart Taylor provides Phil Harrison at the Bolton NatWest every month with a detailed breakdown of our profit and loss and our cashflow forecasts. And if we don’t make our target Stewart will explain why,” he says.

It’s not that we have to go into such depth but we want to. It provides them with re-assurance — we understand the bank’s position. They’re in business just as much as we are. No news for them is probably going to be bad news for a bank.”

UK Batteries is also in a fortunate position in that its managing director Chris Taylor is a serial entrepreneur.

His first contact with NatWest — now part of Royal Bank of Scotland — occurred in 1988. And when in 1998 he set up what has since become UK Batteries, he found himself dealing with the same bank and bank manager.

With the EFG, commercial lenders will lend to business customers, but in the event of a default or failure, the government will act as guarantor and step in for 75% of any loss.

Most importantly, it will support lending for business growth and development in cases where a sound proposition might otherwise be turned down due to a lack of security.

Small businesses with an annual turnover of up to £25 million can take advantage of EFGs to borrow up to £1 million. In all, up to £1.3 billion of new bank lending will be guaranteed. The scheme was set up in January.

The EFG has provoked mixed reactions, with some claiming that money is being pumped into where it’s needed, while others say that some bank lenders still won’t touch viable businesses because of the risks involved.

23

Leadership and strategy

That being said, banks such as RBS/NatWest and Clydesdale, in particular, can point to large chunks of EFG lending being made. “To date we’ve led the field in taking applications for the EFG scheme, with over £190 million worth of loans already agreed or in the pipeline,” says Peter Brotherton, director of client coverage in the Manufacturing & Infrastructure Group of Royal Bank of Scotland.

The gospel of customer relationships It’s less about heroes and villains, more about singing the same song in different ways. The gospel of doing business with manufacturing clients according to customer relationship managers of many of the banks and finance houses (but not all) interviewed

by The Manufacturer seemed to follow a trinity of responses.

Everyone, but everyone, said their job was to “support the customer”. When asked what this meant specifically, without exception the immediate response was “spending time with the customer”. And when asked why it was — equally invariably — “to understand the business of the customer”.

There’s nothing wrong with that.

But isn’t it rather like a customer relationship manager reading from their job description rather than talking about something concrete?

Because in practice — with a few notable exceptions — clearly “supporting the customer” isn’t happening.

According to the latest mid-2009 survey by EEF, the manufacturers organization, the cost of credit is rising (while interest rates are unchanged) as is its availability. A rather unusual form of support here.

Steve Radley, EEF chief economist said 45% of firms reported a significant or moderate increase in the cost of finance in the past two months, up from just over 37% in the first quarter. Over the same period, the proportion of firms reporting a reduction in the availability of new lines of borrowing fell from 49% to 42% but only just over 4% of companies had seen an improvement.

In addition more companies (39%) reported an increase in the fees on existing borrowing – `up from 34% in the first quarter and 27% at the end of last year.

Radley said: “Despite interest rates falling to a historically low level and the efforts to free credit markets so far, manufacturers are seeing few benefits.”

“We’ve seen a significant level of demand for EFG loans from the manufacturing sector, particularly in north west England, north Wales, and the Midlands, where it accounted for a third of all the EFG loans we had provided.”

But there has also been negative reactions to the EFG scheme. Towards the end of July, the government’s Business & Enterprise Committee issued it’s 10th report on the EFG scheme. The committee called for banks to play their part in increasing the flow of lending. It accused them of being over-restrictive with their terms and conditions.

“Banks have to play their part in ensuring the scheme’s success,” says Steve Radley, chief economist at the EEF, the manufacturer’s organisation. “There are still too many examples where tighter terms and conditions are being imposed which are turning many manufacturers away from using the scheme. If we fail to unlock this blockage, companies’ efforts to prepare for the upturn will continue to be hampered.”

One other new form of support is coming from the European Investment Bank, which introduced a special funding scheme for SMEs in December. Here selected UK banks act as partners — similar to the EFG scheme — in vetting the lending.

The EIB rules say this must be for new production or service ventures, and not for financial transactions like acquisitions. It is only available to SMEs with less than 250 employees. The finance is available for between three to 12 years.

The EIB says it has already signed loans up to the equivalent of Eu200 million (£170 million) this year, and expects to lend between Eu500 million to Eu1 billion this year.

The EIB has chosen five financial intermediaries to dispense this money: Abbey Corporate and Commercial Banking; Alliance & Leicester Commercial Bank (effectively these first two are now part of Santander Corporate Banking); Barclays Bank; Close Brothers; and Royal Bank of Scotland.

There have also been a series of initiatives from the banks themselves, which vary from bank to bank in what many see as a chance to gain new business.

Santander has been one of the most active here.

Lindsay Rix, regional manager for London and the South East for Santander Corporate Banking, says the bank is increasing its customer relationship manager staff by 25%. “That’s about another 100 managers,” she says.

The bank is also developing new products. One of the more exciting for smaller firms is being trialled at a local level with Essex County Council. Here eligible companies can raise up to £100,000 as a loan, with half being provided by Santander and half by the local county.

“The scheme with Essex was only launched in May,” says Rix. “But our plan is now to roll it out over other counties across the country.” end

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Have your say at www.themanufacturer.com

Prototyping–

the means to an end

The process of prototype development has changed dramatically from the days requiring cumbersome scale wooden or clay models. But with a variety of different technologies now available, including full digital as well as rapid 3D prototyping, which one is best and is the physical prototype a thing of the past? Malcom Wheatley investigates.

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In

March 2006, power tool manufacturer Black & Decker took delivery of a 3D printer from Stratasys, a specialist supplier of rapid prototyping machines. But the printer in question, stresses Black & Decker technology manager Steve Swaddle, had been supplied strictly on a loan basis.

“There was a sense that you tend to get what you’ve paid for — and at £17,000 or so, the printer was significantly cheaper than stereolithography or laser sintering machines costing £200,000 or more,” he says. “We had severe doubts that a machine costing so little would do what we wanted.”

But the printer, borrowed for a two-week evaluation period, never went back. Within days, the company had made the decision to purchase it.

Design and innovation

partner of CAD and 3D simulation specialist Dassault Systèmes. “With a process or product that might run for years, digital optimisation is cheap, and fast, and almost always worthwhile.”

still a need for “There’s physical prototyping —

Yet such stories are surprisingly rare. Even as they battle against shrinking product lifecycles and pareddown development budgets, many manufacturers struggle to get past first base with technologies such as rapid and digital prototyping. So what barriers stand in the way of adoption and how can manufacturers surmount them?

Digital vs rapid

One common confusion occurs right at the start.

While manufacturers hear of rapid prototyping, they also hear of digital prototyping. “Which is better?” they understandably ask. The answer: neither — the two approaches, if anything, are complementary rather than competing.

In large part, the choice comes down to what is trying to be achieved. At Cambridge-based technology and product development consultancy Sagentia, for instance, both digital and rapid prototyping are used.

“Digital prototyping is good for seeing how parts fit together, and ensuring that clearances and tolerances are accurate,” says Ian Anderson, head of product development. And to achieve that, he points out, there’s often no need to go beyond the CAD screen.

While a physical prototype could be built, digital prototyping through the use of 3D CAD software is significantly cheaper, as well as quicker.

Aero engine manufacturer Rolls-Royce, for example, at one time built wooden mock-ups of each new engine, physically making up and mounting the pipework that

a prototype “Where is in effect a real, fully-functioning part, the challenge can be producing Peter Dickin, it without marketing manager, disrupting ongoing Delcam manufacturing operations

“

went from one part of the engine to the other. No longer. These days, it’s all done digitally.

“Designing digitally offers not just the ability to optimise the design of a part, but also optimise the process that will be used to manufacture and then assemble it,” says Geoff Haines, managing director of Oxfordshirebased Desktop Engineering, a distributor and business

Richard Blatcher, northern Europe head of manufacturing marketing, Autodesk

but digital prototyping means that you need fewer physical prototypes, and that you need them later in the development process

“

“Within 24 hours it was running directly from our CAD development system, and generating real parts and it’s been in almost daily use since then,” says Swaddle.

And it paid for itself within three months, according to Swaddle, thanks to a sharply reduced requirement for inhouse CNC milling and outsourced stereolithography.

Something to grasp

Even so, most manufacturers find that there comes a time when a physical prototype is required. “I’m a great believer in handling and testing things, rather than going straight to tooling,” says Sagentia’s Anderson. “CAD doesn’t tell you how something feels in the hand.”

And just as importantly, perhaps, a physical object may be required for training purposes, for photography for catalogues or even market testing. Consequently, even the most ardent proponents of digital prototyping concede that going to market without first constructing a physical prototype is in most cases a step too far.

“There’s still a need for physical prototyping — but digital prototyping means that you need fewer physical prototypes, and that you need them later in the development process,” notes Richard Blatcher, northern Europe head of manufacturing marketing for CAD vendor Autodesk.

Tewkesbury-based specialist automotive manufacturer Smart Stabilizer Systems, for example, is one such Autodesk customer that has used the company’s Inventor 3D CAD system to digitally model products, delaying the need for physical prototypes until much closer to product launch.

And the company’s experience with digital prototyping, adds Blatcher, highlights yet another advantage of the technology—one that manufacturers aren’t necessarily looking for when they first adopt it. “Staying digital allows you to refine and develop the design more intensively: error rates can reduce quite sharply,” he says.

But given that physical prototypes will eventually be required, what options are available for producing them? And, what’s more, producing them rapidly?

Some approaches come close to being accelerated versions of production processes. Chippenhambased Fascia Graphics, for example, produces flexible keypads for manufacturers who incorporate such data

27

entry devices into their products. For Fascia, rapid prototyping involves cleverly leveraging a plastic printing solution borrowed from the sign-printing industry.

around 2002, “Since there’s been a real transformation in the value proposition of 3D FDM printing

“

Tim Heller, European managing director, Stratasys

“Prior to discovering Fascia, there was no alternative to going down the production route and paying £1,000 or so for a full prototype keypad — and even then, we might make changes, and consequently need another prototype manufactured,” says Geoffrey Swales, managing director of Bradford-based electronics manufacturer BioDigital. Now, he reports, he can get

a realistic-looking prototype in three days, rather than three weeks and at a fraction of the cost.

And Birmingham-based specialist CADCAM vendor Delcam points up yet another option: the cost-efficient production of small batches of parts, where the prototype in question might be a short product run for market testing, or a one-off special requirement.

“Where a prototype is in effect a real, fully-functioning part, the challenge can be producing it without disrupting ongoing manufacturing operations,” notes Delcam marketing manager Peter Dickin.

American customer Owens Industries, of Oak Creek, Wisconsin, for instance, uses Delcam’s PowerMILL CAM software to produce very small batches of complex components to very tight tolerances.

PowerMILL offers not just much faster component programming time but more efficient toolpaths, so the parts are produced more quickly. A recent project saw the company produce 25 parts for an aircraft braking system. “With our previous software, the new parts would have taken two months to produce,” says Owens vice-president Mark Plesnik. “With PowerMILL, because of the faster programming and the quicker machining, they took two weeks.”

Digital render of Smart Stabilizer Systems

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Each technology produces prototypes with different characteristics and material properties. Sintering, for example, fuses plastic particles together, while 3D FDM printing builds up parts by laying successive layers of thermoplastic. The resulting prototypes aren’t true prototypes of the final part (they’re made from plastic rather than steel for instance) but physical copies that for most purposes are good enough.

Costly misconceptions

In each case, though, it often turns out that the barrier to wider adoption isn’t so much to do with the technology, but flawed perceptions as to the cost of the parts, as well as their ruggedness.

“There’s a widespread misconception that SLA and SLS are expensive, when quite simply they’re not,” says Sagentia’s Anderson. As with many new technologies, it seems, high costs when a technology is introduced create a lasting impression that is difficult to eradicate, even when prices are far lower.

“Since around 2002, there’s been a real transformation in the value proposition of 3D FDM printing,” observes Tim Heller, Stratasys’ European managing director.

“Printer costs fell from around £200,000 to around £20,000—and, what’s more, produced parts that were built up from a much more robust material.”

And similar misconceptions as to cost, it turns out, cloud perceptions of digital prototyping, too. “In the marketplace, the perception is that the technology costs between £15,000 and £20,000 per seat in licensing costs, and that just isn’t so,” says Autodesk’s Blatcher. “The starting point is much lower, around £1,000 a seat in many cases.”

And potentially even lower still, given the emergence of new ‘software as a service’ based deployment models.

Hampshire-based Dezineforce, for instance, offers hosted CAD and simulation packages from a number of leading vendors on its high-performance computing clusters, which manufacturers can access remotely on a subscription basis, using them as needed.

“The ability to compress design cycles is increasingly linked to a company’s competitive edge,” observes Dezineforce chief executive Peter Collins. “A design process that might take three months conventionally can be reduced to between two and four weeks.”

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has met the challenge of turning an idea into a best-selling product; by taking it from blueprint or the laboratory, via CAD models and physical prototypes to the test bed and into a working production model. Some may have had to repeat this process multiple times to maintain a competitive edge or in order to apply advancing technologies. This award will recognise those who can show how they have become and remained competitive by increasing their rate of innovation, anticipation of and responsiveness to changing market conditions influenced by shifting design tastes, fashion, technology, legislation and economics.

to local third-party SLS specialists to obtain realisticlooking epoxy plastic cases was one thing, getting those cases machined from metal quite another.

design process that “Amight take three months conventionally can be reduced to between two and four weeks

“

Yet the need for the classic ‘one off’ prototype remains.

To deliver this, rapid prototyping solutions tend to revolve around three separate underlying technologies: stereolithography (SLA), selective laser sintering (SLS), and fused deposition modelling (FDM), the latter being the Stratasys technology that was adopted by Black & Decker.

Calling for entries: Is your company meeting the challenge of turning an idea into a best selling product?

enter at www.themanufacturer.com/awards

Design and innovation award

Peter Collins, chief executive, Dezineforce

Yet the final barrier to adoption may lie in the supply chain, rather than in the manufacturing enterprise itself.

“Everyone we went to said: ‘Give us the drawing’ and we didn’t have one, just a CAD file,” recalls Wood.

“We wound up getting them from Taiwan, from people we’d never met or dealt with before but who could accept a SolidEdge CAD file.”

Hampshire-based RF radio equipment manufacturer Wood & Douglas, for instance, has been increasing its use of both digital and physical rapid prototyping over the past three years, reports managing director Alan Wood.

But providing in-house produced SolidEdge CAD files

But transport times from Taiwan negated the sought-for rapid prototyping gains. The solution? The acquisition of an NC milling machine, equipped with a serial port.

“It took us six months to master, but we finally got there,” concludes Wood. end

Have your say at www.themanufacturer.com

29

Continuous

improvement hangs on total staff engagement

Continuous Improvement process (CIP, or CI) is a management process where delivery (customer valued) processes are constantly evaluated and improved in the light of their efficiency, effectiveness and flexibility. The absolute key factor to achieving continuous improvement is thorough engagement between management and shopfloor staff, say consultants at Suiko.

Time

and time again a key message that came across in a recent survey by business consultancy Suiko, called ‘What does operational leadership mean in this time of recession?’, was the need to engage everyone in the organisation in order to achieve a sustainable improvement programme. This article will

fig. 1

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look at how organisations are addressing the challenge of fully engaging employees to ensure they achieve the sustainable continuous improvement efforts for the that business that today’s conditions demand. Suiko devised a process for identifying operational excellence, the WHYWHAT-HOW cycle (see fig 1).

Worldclass World class manufacturing award

Why?

Taking your employees with you is vital Within most for-profit organisations, from the security booth to the board room, employees at every level want the same thing, which in the current climate might simply be to survive or keep their jobs. Beyond survival they want profit and growth and in the context of Continuous Improvement (CI) they want to improve and they want that improvement now.

There are countless examples of lean transformations and continuous improvement programmes where failure to win over the hearts and minds of everyone has resulted in sub-optimal results. Many manufacturers have seen the results of tools-based programmes where people are directed, but not engaged, where there is a lack of alignment of objectives between management and staff and a disconnect between results and practices.

Ordinarily... this may have taken “ months. By having the right people looking at the problem we came up with a better solution. On this one opportunity there are tangible annualised savings of £80k

Calling for entries: Is your company making quantified, sustained progress towards being world class?

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it is trying to achieve world class manufacturing standards – generally understood as scoring a minimum score (from 95%-98%) on an absolutely true measure of efficiency. Judges will look for evidence of benchmarking against best practice and will examine measures like lead times, customer returns, work content, labour minutes per unit, inventory levels and cycle times, checking that action has been taken to improve these.

“

Tom Parkinson, Patak’s Food

Chilled food group Uniq Prepared Foods is a good example. With Suiko’s help, Uniq has targeted CI as a strategic driver to achieve profitable growth (under the banner of the Uniq Operating System — UOS). CI is being embedded across the UK operation – Uniq manufactures in several countries. Mark Salisbury, Uniq’s UK lean director, says: “We have made a significant investment in building the UOS methodology and developing our people with the aim of enhancing and realising sustainable improvements. At the beginning of a profound change programme, continual support through recorded time on the floor by the leaders of the organisation is a pre-requisite for successful launch and putting in place the sustainable foundations’’.

To maximise continuous improvement, the direction has to be endorsed from the top. It is the role of the senior leadership to provide the vision and set the strategy, reinforce the vision and demonstrate visible commitment to the agreed business priorities and values – to lead by example. Workers will respond positively and be willing

to participate and engage in a new way of working if there is clarity of direction and a compelling reason to change. But turning people’s enthusiasm and energy into engagement demands attention, focus, and in many instances a different leadership style.

only have our results improved and “Not our people have developed, but we can see that we are in the first few years of long term sustainable profitability

“

In contrast, businesses with the most successful continuous improvement programmes generally have leaders who show empathy for and engage with people.

There are recurring themes in successful, sustainable continuous improvement efforts, but it is leadership that is most important. If the top leaders show every day that they respect and value everyone, their contribution and ideas and that they care about their staff well-being, it will foster an environment that will encourage engagement.

enter at www.themanufacturer.com/awards

manufacturing

Mark Salisbury, Uniq Prepared Foods

What?

The principles to establish the base on which to improve Fostering engagement to maximise CI result can start from Day One, but can take a long time before the necessary practices become habitual and for the change to be sustainable. It requires the basic building blocks to be established (see fig. 2 overleaf).

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How?

Maintaining the necessary pace while embedding a sustainable solution

fig. 2

Calling for change will inevitably require changes at every level. Delivery of successful CI results depends on the organisation’s ability to develop an holistic approach to improvement, incorporating process understanding with employee engagement. Good CI results will produce an integrated, joinedup programme that will lead operations on a sustainable and common journey to operational excellence of which CI is just one part.

The Suiko model (see fig 3) provides the ‘HOW’ part of the cycle and incorporates four key elements that must be brought to bear to ensure sustainable and accelerated change.

Imagine what it would be like if…

1.

[Foundation] Everyone in the organisation understood what their measures and targets were and how they could take action to improve their results. Everyone understood what was in their control; the equipment, consumables and directs (materials), the process (method) and the people. Everyone had clarity in what they were expected to do – now, today, this week, this month and this year – in a steady state and in a time of crisis!

2.

[Control] Everyone adopted a ‘go see’ approach to manage their area and solve problems. The work environment was one where everyone respectfully challenges themselves and others to take appropriate action. To support these foundations and to help everyone drive the measures at the right level requires a process that is transparent, where people can see how their area is performing and what actions are in place to resolve the issues and close the performance gap.

3.

[Improve] People are clear on their ‘top 3’ opportunities and prioritise them to exploit the biggest wins through resolving the root cause of problems with the best solution that they currently know – the ‘100 year fix’ then becomes standard. With effective use of visual management, everyone can make decisions on what to do next. If a company can get to this point, it would be operating a stable Level 3, with a problem-solving mindset that would provide the platform to optimise and excel.

Salisbury at Uniq continues: “The UOS methodology embraces the core principles of CI: measurement, involvement, focus and problem-solving to specifically tackle reductions in cost per case and improvements in overall equipment effectiveness. Our results have vindicated our decision to change the way we work. Not only have our results significantly improved and our people have developed, but we can also see that we are in the first few years of long term sustainable profitability.”

The case for committing to the development of a CI mindset appropriately should be based on the logic of adopting a structured approach, which when applied will be the ‘way of working’, not an addon ‘initiative’.

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The programme must be a strategic priority, have a clear strategic FRAMEWORK that is aligned to the business vision and sets out the roadmap for the journey. The framework will help to direct focus and should provide guidance to what needs to be done.

People need to have the right tools to deliver the expected results; the TOOLS & TECHNIQUES when used appropriately will help them see more clearly, measure, focus, problem solve, collaborate and as a result be more effective. Ultimately, this can develop into a group operating system that is accessible and available to everybody.

The programme must be driven; management needs to apply energy and attention to the critical activities to MAKE IT HAPPEN. This requires robust programme management and includes activities such as governance, tracking and strong change management.

To mobilise the organisation and ensure that CI is embedded in its widest sense requires a balanced approach to implementation.

Each element of the approach must run in parallel.

Jim Dobell, vice president and general manager of US plastic packaging and materials handling company Ropak, says of CI: “Structured commitment to continuous improvement and engagement of all employees is the most powerful tool managers have at their disposal. Adopting a consistent approach across the business with a common methodology has helped Ropak realise results through CI quickly. CI is an integral part of our manufacturing strategy and is led from the top. We have sought to engage with people at all levels and across all functions to reinforce the message that this is the way we do business.”

World class manufacturing

fig. 3

Casestudy Patak’s Food

The opportunities are in front of our eyes Short term wins key to staff engagement

Uniq’s Salisbury boils down why the company has been able to engage with the majority of their people to three key factors: “Firstly, getting commitment and resourcing at a senior level. Secondly, a clear, simple plan that educates

Patak’s Food did a scoping exercise to select the best team to execute CI and to train them in CI analysis. Senior team members were surprised by the success of the exercise.

Having acquired Patak’s Food, based at Leigh, Lancashire, AB World Foods have already successfully completed the integration of the business. The business is growing and has ambitious future plans. Andrew Downie, head of manufacturing, was keen to put a stake in the ground and, supported by Suiko, worked with the site team to map out a future vision of operations.

Keen to engage the staff in defining the future state he sought a solution that developed a core team of people from the start.

The scoping exercise involved training in key tools, including mapping and analysis techniques, and managing change. Downie says: “We wanted to involve a cross-section of functions as well as people from different levels in the organisation. The activity exceeded our expectations. We’ve learnt what quality [people] we have in the business, people who care.”

and is continually reinforced by the leadership’s behaviour through all levels of the organisation and finally, success – you need some short term wins because along the journey you occasionally take a wrong turn and in a time where short termism is paramount, a sustainable programme must deliver results.”

CI is more about a mindset than tools (about 80:20 ratio), about developing a culture where the organisation’s leaders show a visible commitment to CI; leading by example and exhibiting enabling BEHAVIOURS will help foster employee engagement. Self discipline and ownership are key attributes for everyone, for it is this that maintains the processes’ sustainability. end

Michelle Birchall, improvement manager at Patak’s, reinforced the message. “The teams were already willing to get involved, but the enthusiasm and commitment from the operators in the focus areas was that much greater when they really understood the opportunities. By working with data and talking in pounds [£], we were able to have open discussions and get to the bottom of some key issues.” Tom Parkinson, production co-ordinator, adds, “More importantly, the analysis was followed by some immediate action on the ‘just stop it’ and ‘just do it’ items, rather than adding to the wish-list. It demonstrated that by working as one team with the same objective [to reduce waste] and making time for improvement, we were able to resolve the issue within a few days.

Ordinarily this may have been something seen as too difficult or given to one individual to resolve and may have taken months. By having the right people looking at the problem we came up with a better solution. On this one opportunity there are tangible annualised savings of £80,000. It required us to involve the line team too and there was real buyin to the team result”.

Downie concludes: “The quality of the ideas surprised me, surprised us all.

If there are three things to do differently going forward they are: firstly, we will dedicate time for CI, it forced us to step back from the day-to-day ‘fire fighting’ - and the factory kept going without us! Secondly, continue to do more ‘go see’ and encourage others. We proved to ourselves the value and benefit of seeing with our own eyes and, more importantly, it provided the platform to engage with everyone. Finally, plan better what we want to do to improve and get the team aligned to the ‘one’ plan.”

There is now a real energy within the delivery team and a commitment from the site executive to support the change by following a process to accelerate the change. A key output from the scoping exercise was a strategy framework that the delivery team signed up to; it balances the drive for results with embedding new practices. They recognise that the challenge will be to maintain momentum and deliver real sustainable change.

Have your say at www.themanufacturer.com

33

Production back to a five day week at GM Luton

Flexible working is working Flexible working, and its recession-enforced sibling short-time working, has become firmly embedded in the national consciousness. Companies in every sector of industry are rushing to introduce schemes that allow their employees to opt out of the traditional five day, 40-hour week. Edward Machin explores this modern phenomenon.

A

recent survey of working practices among FTSE 100 companies by telecoms company ntl:Telewest Business revealed that 69% of businesses have already taken steps to implement flexible working. in many cases maternity and part-time schemes often extend far beyond the statutory requirements. “The common perception of flexible working is still focused around public sector and ‘white collar’ office-based jobs, when, as this research shows, it is an issue affecting a far wider spread of businesses,” says Andrew McGrath, commercial director at nlt:Telewest Business.

More blue chip companies such as BT and accountancy firm KPMG — the latter widely praised for its dedication to employee relations, and winner of the Opportunity Now ‘City Award’ in 2007 — are implementing flexible working schemes as a means of increasing productivity, morale and staff retention, and not as an alternative to culling large numbers of its employees.

Conversely, the manufacturing sector is seeing more companies introducing short-time working schemes to avoid having to effect mass redundancies of its skilled staff, which would further lower both employee morale and public opinion towards an industry battered by the recession.

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Vauxhall’s model runs well

In line with the strategies of UK-based automotive firms such as Honda and Toyota, in January Vauxhall Motors, the subsidiary of General Motors Corporation and one of the UK’s most storied vehicle manufacturers, implemented a raft of short-time working arrangements.

Faced with the dilemma, choosing between redundancies and cost saving measures in the form of reduced working hours, Vauxhall decided on the latter. Staff at its Ellesmere Port and Luton plants were required to take an initial 5% pay cut. Coupled with a 10% reduction in hours, employees effectively worked a four day week, with the plant “dark” on Fridays.

Similarly, the firm implemented working time reduction days at both plants, whereby staff were permitted to take two extra holiday days per month. Together with its down days, which employees are entitled to take off upon agreement, with the plant banking the hours for a future date, Vauxhall had implemented a comprehensive scheme to offset the threat of worker redundancies.

Central to the company’s decision was to retain the technical and highly specialised skill sets of

People

its production line workforce. The car industry’s experience of past recessions — where the time and cost of re-training staff when the market bounced back was held as highly counterproductive — ensured that Vauxhall were anathema to making widespread staff culls. “As long as these agreements are in place, we will not go into forced redundancies,” assured Hans Demant, managing director and vice president of engineering at GM Europe at the time.

Vauxhall maintains that these implementations have been met with praise by factory staff. Given that the only viable alternative to a reduced hours scheme is to make redundancies, that seems reasonable. Faced with the option of unemployment on the one hand, and a reduced shift pattern on the other, many staff may feel fortunate to have work at all, given the climate.

Due to the success of its initial cost saving measures, Vauxhall floated the idea of a staff sabbatical, whereby plant workers were offered a six month period of holiday on two thirds pay. The scheme was met with widespread disinterest. To its credit however, the firm did not pursue the strategy in the face of staff apathy, continuing instead with its agreed programme for effective cost savings.

People and skills award

Calling for entries: Is your workforce contribution valued and improving?

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how, through recruitment, training, labour relations, HR systems or educational liaison initiatives, has increased productivity, while improving employees’ opinions of the value of their contribution. Judges will also factor in companies’ contribution to an improved public perception of manufacturing itself and the diversity of careers that manufacturing offers.

Such foresight has proven beneficial for Vauxhall, with production due to begin at Ellesmere Port — which employs 4,000 staff — on the next-generation Astra later this year. Crucially, staff will revert to full a three shift working model, validating the company’s decision to retain its workforce in challenging economic conditions, a lesson UK industry would be foolish to ignore.

Beyond car makers

Businesses across the manufacturing sector are employing flexible working arrangements, regardless of size or turnover. Those firms with a smaller revenue and staff base are arguably more in need of schemes to retain their core, highly-specific workforce.

One such example is Alexander Binzel UK, the Warrington-based subsidiary of Abicor Binzel, which provides dynamic welding and cutting technologies for automotive manufacturers, with clients including Ford and GM Vauxhall. Predictably, given the precarious state of the whole industry, managing director Steve Hallows was forced to decide upon a strategy of cost reduction, with one option being the implementation of a redundancy package for a number of the firm’s thirty staff.

However, consultation with David Readman, a specialist with Employment Practice & Law, an employment consultancy firm, led the company to retain its staff, but with the implementation of shorttime working arrangements. Hallows and Readman devised a proposal to enable Binzel to retain all its highly specialised staff, while concurrently making the needed budgetary reductions.

The proposal — a 10% decrease in both hours and remuneration — was put to employees in an open forum, with Hallows producing monthly reports thereafter, keeping workers aware of the company’s intentions at all times. Some months later, the required savings have been made and, coupled with – the

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and skills

seemingly requisite – high levels of staff morale, the short-time working implementations have ultimately proven successful.

With a big increase in flexible and short-time working models among UK manufacturers, a niche market for IT systems which facilitate altered and/or nontraditional shift patterns has emerged. One company catering to this need is Manchester-based K3 Business Technology Group, an SME which supplies Microsoft based business solutions for the manufacturing supply chain. In April, the firm released the latest version of its Equator human resource management system, designed to enable manufacturing and distribution companies with shrinking order books to maintain the nucleus of their skilled staff.

Equator’s Time & Attendance module allows for a plethora of shift patterns, including standard, rotational, flexi, continental, and night shifts. The software also supports flexible pay methods, annualised hours, time banking options, and flexi time.

“Businesses realise the value of the skills, knowledge, and experience of a local workforce, and that without them they will not be able to react fully to an economic upturn,” says Kevin O’Donnell, K3 HR development director. “With companies scrutinising their workforces to identify potential savings while balancing the need to retain skilled people, it is critical that they act on upto-date and detailed information.”

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People and skills

Flexible working – the future

Given the recession’s unforgiving global reach, flexible working is not a British phenomenon alone. Indeed, manufacturers across Europe have implemented reduced shifts. BMW has extended short-time working at its Dingolfing, Munich, Berlin, and Landshut plants, and the global technology and process partner Adval Tech Group has introduced similar patterns in the three manufacturing plants of its subsidiary Styner+Bienz FormTech in Niederwangen, BernBümpliz, and Uetendorf.

While numerous UK firms have not yet embraced flexible working schemes — Corus, Gowrings, and Johnnie Walker, to name three large manufacturers that might have a case to do so — there remains a trend in the market towards such strategies, according to research conducted by the CBI Business Group and Harvey Nash.

But in direct contrast to the IT, accountancy, and financial services sectors, manufacturing implemented short-time working largely as a protective measure borne out of financial necessity, and not an esoteric exercise in blue sky corporate thinking. Forcing flexible working mandates on certain manufacturing processes would often be counterproductive, or impossible – workers on factory production line simply cannot work remotely. It would be incorrect, nonetheless, to say

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Have your say at www.themanufacturer.com

that manufacturing cannot use many of the advances in flexible working being made in other sectors.

“Remote working, improved collaboration, and richer communication networks in the supply chain will feature centrally in the strategies of manufacturers seeking to protect their companies from the effects of future recessions,” says Brian Condron, business development manager at communications systems integrator, Affiniti. By highlighting manufacturers’ research and development processes, Condron asserts that the application of general flexible working principles can be used to minimise the product development cycle. And although the necessity for short-time working patterns indicates, in the clearest possible terms, just how hard Britain’s manufacturing sector has been hit by the global downturn, those firms that implement flexible working directives in more office based parts of the business like R&D will be placed at a distinct advantage, once the green shoots of recovery finally emerge.

While for many an imperfect compromise, flexible working has a future in manufacturing. “While pay and recruitment freezes should disappear as the economy recovers,” says John Cridland, deputy directorgeneral, CBI Business Group. “The spirit of flexibility and the willingness of many staff to engage positively with employers on these issues will hopefully be a more permanent benefit of the UK economy.” end

Craig Brewster BAE Systems Submarine Solutions Craig Brewster has come a long way in a short space of time.

Four years ago he was a rookie apprentice trying his hand at MIG welding for the first time. Fast forward to today and the 24-year old has risen to the position of temporary team leader, responsible for colleagues 20 years his senior and vastly more experienced.

He is our Employee of the Month for August.

Unfazed,

Craig has taken this in his stride with an air of confidence that saw him claim third place in this year’s prestigious Worshipful Company of Shipwrights Queen’s Silver Medal award – Liam Bibby, his colleague at BAE Systems Submarine Solutions, was the overall winner.

Previous jobs installing double glazing and children’s playgrounds taught him the importance of a steady hand.

This skill was something that proved invaluable when he began his welding career at the shipyard in Barrow-inFurness, Cumbria. However, his lack of formal training left him concerned about his career. “I was coming out of my teens, and I thought ‘wait a minute, I haven’t got a trade’. I had GCSEs but I didn’t have a trade, so if I was to leave that job I would be stuck for another one,” said Craig.

“My dad also works for BAE Systems and he told me they were taking on accelerated apprentices, so I jumped at the chance. “He’s worked here since he was 15 and he’s 54 now and he said because of the improvements made by the business over recent years he’d like me to work there.”

Within six weeks of starting his apprenticeship he had successfully passed a series of tests, demonstrating high quality skills in the art of down hand, over head, vertical and horizontal welding. He was soon transferred to the shop floor of the New Assembly Shop (NAS), which is the company’s main steelwork facility. In this capacity, he worked on critical welds for large sections of the Astute class of nuclear powered attack submarines BAE Systems is building for the Royal Navy. On one occasion, as the only apprentice in a team of 12 working on one of the forward domes for a submarine’s pressure hull, he was also the only one to complete his series of complex welds free from any defects.

After taking just two years to complete his three year apprenticeship, he has since gone on to work as a Weld

Database Coordinator, where he had to ensure that welds met the exacting standards demanded by the company. It was a far cry from his first foray on the BAE shop floor.

CV in brief – Craig Brewster “Everything is so much bigger,” said Craig.

“You are like a little ant alongside all the submarine’s units. It was a bit daunting and worrying, especially having previously been in the training school with a bunch of lads who were my own age.

I went into the NAS with all the experienced tradesmen and they were looking at me as if to say ‘who’s this guy?’

But I started passing big jobs and they were like ‘he knows what he’s doing’ and that helped me get more respect.”

Age: 24 Employment: 2001 – 2003 – Elegant Windows, installing double glazing.

2003 – 2005 – Playdale Playgrounds, installing children’s playgrounds 2005 – 2007 – BAE Systems Submarine Solutions, welding apprentice 2007 – 2009 – BAE Systems Submarine Solutions, weld database coordinator To June 2009 – BAE Systems Submarine Solutions, high-potential employee June 2009 – Present – BAE Systems Submarine Solutions, temporary team leader

Education to date:

5 GCSEs (grades A to C) NVQ Level 2 welding and fabrication HNC bridging course in engineering Institute of Leadership and Management Level 2

It’s also earned him high potential status, which means the company has Interests: earmarked him as a Following Liverpool Football Club possible candidate to Socialising with friends hold a senior position at BAE Systems in the future. Already he’s been on a leadership and management course, in preparation for what he hopes will be another forward step on the career ladder. “My aim when I came here was to progress, “ he said. “I’ll go as far as my potential will take me.” end

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37

Corporate statement BDO Stoy Hayward LLP

The changing global perspective UK manufacturers need to continue to look to the key emerging economies for market growth says Tom Lawton, head of manufacturing at BDO Stoy Hayward, accountants and business advisers. Here he showcases two recent events that indicate the growing confidence and power of these key emerging economies.

On

June 16, the first meeting of heads of state of Brazil, Russia, India and China (the BRIC countries) took place. They represent 40% of the world’s population, 15% of global GDP and averaged annual economic growth of 10.7% from 2006 to 2008. BRIC watchers estimate that these countries have contributed one-third of the world’s growth since 2000.

Except for Russia, the BRIC countries are powered by large populations and a low cost workforce that has helped build a big manufacturing infrastructure and export base in recent years. Russia often seems the odd one out of these great emerging economies and its massive dependency on oil and gas is plain to see. However, all of the BRIC countries continue to have significant potential and attraction to UK manufacturers, even if not for the same reasons. There are few manufacturers in the UK that do not have some kind of market or supply chain connection to China or India, while Brazil is increasingly seen as an important market, and Russia remains a tantalising prospect particularly for the hard hit automotive industry.

At the meeting the group discussed topics such as reform of the IMF, their demands for a bigger say in global policy-making and, in the case of all but India, a plan to switch some of their foreign currency reserves out of dollars and into IMF bonds. The group pledged to work together on political and economic issues such as energy and food security and set out plans to co-operate on policies for tackling the global economic crisis. In addition the group outlined plans for cooperation in science and education which would promote “fundamental research and the development of advanced technologies”.

Rising BRIC education

This focus on development is no surprise as both China and India have been clear in their desire to move up the value chain in recent years. However, it sends a clear warning signal to the UK and other developed country manufacturers that they need to keep their focus on innovation and service – and to expect more competition in these critical areas from what were previously just the “low cost” economies. Although these countries have significant problems and are coping with huge populations and the problems that these bring, the focus on education at all levels is impressive – there is no doubt that these countries have a growing well-educated and skilled workforce.

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This first meeting did not conclude with any concrete resolutions; this should not be a surprise as the countries are very different and there is almost as much that divides them as unites them. However, I believe that we can expect increased and more visible cooperation between the BRIC countries, both to show their power as key emerging economies and to act as a counterbalance to what is still seen as the dominant economic power of the United States and the G7.

At around the same time as the BRIC meeting the Shanghai Cooperation Organisation (SCO) comprising Russia, China and the central Asian states of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan met for the ninth time to discuss their continued cooperation.

Iran, Pakistan, India and Mongolia have observer status and the President of Afghanistan attended the summit as a guest. Although some of these countries are on the fringes of the economic world they are important to China and Russia, and have big energy resources.

China pledged $10bn in loans to central Asian countries struggling in the economic crisis, adding financial strength to its primary role in the SCO. In addition, the Russian and Chinese presidents signed an agreement for energy cooperation and Russian energy giant Gazprom will receive financial support from China to deliver fuel supplies. Given the almost unstoppable demand for energy from China it is clearly in its interest to build links with some of the worlds largest energy producers. It will be interesting to see how this develops – it is unlikely to signal a long term reduction in energy prices!

In this electronic and transport-connected age these countries are “not that far away” and important meetings and events are worth monitoring by UK manufacturers thinking of doing business in these rapidly growing emerging economies. end Percentage change in GDP 2008

2009

2010

Brazil

5.1

-1.5

3.8

Russia

5.6

-7.6

0.4

India

7.5

5

6.5

China

8.9

6.5

8.8

Source: Oxford Economics

IT in

manufacturing

ITnews...

CAD

Wootton School win Scalextric4schools Challenge The Product Development Company (PTC), in partnership with Hornby Hobbies Ltd - the makers of Scalextric – announced that Wootton School have won the first UK Scalextric4schools challenge, held in Sheffield on 10 July.

Scalextric4Schools is a partnership between Hornby and PTC, with the aim of inspiring students to consider Science and Engineering related

subjects for Higher Education and as a future career.

Ten school teams, with children aged between 11 and 17 brought the slot cars they had designed, manufactured, and developed over several months to pit against each other for the top spot on the podium.

PTC has developed a STEM (Science, Technology, Engineering and Mathematics) curriculum for the challenge, enabling students to design, manufacture and race their own Scalextric racing cars.

Autodesk

PLM

Autodesk offers 0% finance for new design software

Siemens PLM software announces Femap 10.1

Autodesk announced on July 9 that it will offer 0% finance – with nothing to pay for five months – for a limited period to help firms in the UK purchase new Autodesk design software or upgrades.

The offer is made in partnership with Syscap Ltd, the UK’s leading independent IT finance provider. It will mean that companies can purchase or upgrade to new software without spending valuable capital or putting their cash flow at risk.

Said Pete Baxter, senior director, Autodesk Northern Europe: “In today’s economic climate, it is more important than ever to listen to customers and react quickly to their needs. Businesses across our market sectors need to invest in innovation like never before - they need software capable of delivering productivity gains and competitive advantage.”

“This innovative finance offer from Autodesk gives us the ability to deliver our solutions to our customers in an affordable and flexible way, helping them to reduce costs and maximise creativity.”

Siemens PLM Software announced on June 14 the latest release of its Femap software, which provides new finite element (FE) modeling and visualisation tools for increased productivity.

Femap Version 10.1 enhancements add new functionality in model visualisation and post processing, as well as NX Nastran software integration and support, including: multi-group display; model display and visualization; load/constraint set

and analysis management; global ply composite post processing; improved efficiency of graphics database storage; 2D tensor force and stress plots; and NX Nastran analysis and job submittal management.

“Femap is known in the industry as a functionally rich finite element application,” said Bill McClure, vice president, Velocity Series, Siemens PLM Software.

“This new release significantly enhances the usability of Femap in many areas, including visualisation, modeling and analysis management, results processing, including increased program performance.”

General

MCP develops eTNA programme MCP, a provider of training solutions to the UK manufacturing industry, has developed its eTNA (Training Needs Analysis) database management programme, in order to plan and record training needs.

In essence, the software creates a record of (i) all employees in the organisation by department, shift team, and core skill (ii) all skills that are needed by employees, and (iii) all organisation-approved training courses, their cost, and provider.

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The Manufacturer half page AW.indd 1

29/5/09 13:03:31

Data Mining in the manufacturing industry – Your business a Mine of useful information

Do

you ever wish that your business had the ability to look into a crystal ball?

Seeing what are the main factors that are influencing your business and manufacturing processes, discovering and identifying patterns and current trends, and most importantly predicting likely outcomes for the future – welcome to the world of Business Intelligence Data Mining.

What is Data Mining ?

Data mining is a complex analytical process which explores large amounts of data to identify consistent patterns or systematic relationships between variables. Validating those findings by applying the detected patterns to new data sets allows us access our crystal ball the world of Predictive data mining.

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How can it benefit you?

Well established in market research and CRM, data mining is used to reveal likely buying patterns. This type of information is extremely useful when planning marketing campaigns, setting up cross-product promotions, or planning store layout and allocating shelf space, enabling businesses to direct resources and effort to produce the most effective results.

In Manufacturing, the concept is less well known although some areas of the industry have been developing this since the 1990’s.

Data-mining software is particularly relevant in complex manufacturing processes that involve many steps. Those manufacturing companies who have invested heavily in measurement and data-storage systems are well placed to gain benefit from data-mining and predictive modelling software. Sensors keep track of and store process parameters such as pressures,

flow rates temperatures, efficiencies and other variables that are needed to monitor the process. Thus huge amounts of data are already being collected and stored.

Data mining can exploit this rich source of information to show where cost savings can be made – identifying where components are over-engineered and where quality improvements can be made by optimising processes. Further areas for improvement include lowering equipment maintenance costs by predicting failure, and optimising packaging and goods handling. Current leaders in this field are the high tech Aerospace, Automotive and Semiconductor Industries.

Data mining is a valuable tool to help manufacturers control the processes of manufacturing to improve quality and assist in managing & using resources cost effectively.

Steve Tattum – Product Manager & Peter Williamson – Product Panel

At Sage, Business Intelligence, we work hard to give you insight into your business. Give us a call to find out what we’re doing and how we can help. Tel: 0845 111 5555 www.sage.co.uk

SAP

AkzoNobel to implement SAP throughout its Asian operation The world’s largest paints and coatings company, AkzoNobel, is set to introduce a major overhaul of its enterprise resource planning system by implementing SAP throughout its Asian decorative paints operation.

AkzoNobel will introduce SAP with the support of ABeam Consulting, in seeking to enhance its flexibility and business functionality, as the company continues to grow following a consolidation drive.

The scope of the project will cover key business areas, including sales; finance; manufacturing; and planning and procurement – it is expected be fully operational by 2012.

Calling for entries: Have you shown ROA from a well designed, planned and implemented IT project?

This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it has made significant progress in designing, implementing and successfully operating an information technology infrastructure spanning all its business processes, which is able to show returns on the investment it has made in doing so.

“AkzoNobel’s consolidation drive and growth has raised the need for enhancements to its business functionality,” said Alastair Clifford-Jones, managing director, Global Clients and Markets for ABeam Consulting.

“The project will help it achieve this by streamlining its processes and systems. This will ensure the company is poised for further growth.”

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ITnews...

IT in manufacturing award

User experience enhanced for SAP Business ByDesign customers Customers using SAP Business ByDesign can now access nine third-party web services, including leading search engines and wire services at the click of a button.

New collaboration agreements allow SAP Business ByDesign to be preconfigured to use Web services from Business Wire; Falk online; Google; GoYellow.de; Hoover’s, MapQuest; Morningstar; and Navteq/ Map24. Depending on their local reach, the nine complementary services are available immediately to customers in the six target

go-to-market countries for SAP Business ByDesign: China; France; Germany; India; the United Kingdom; and the United States.

“Including preconfigured third party Web services is a valuable enhancement to SAP Business ByDesign, as it improves user productivity and user experience,” said Hans-Peter Klaey, president of SME and corporate officer, SAP AG. “This is yet another step forward for SAP Business ByDesign in meeting the needs of midsize companies looking for an integrated and complete on-demand business solution for their entire operation.”

ERP

Hansatech EMS installs Epicor ERP system for enhanced financial visibility Hansatech EMS Limited, UK specialists in bespoke electronic contract manufacturing and assembly services, announced on July 7 that it has installed Epicor’s ERP solution, Epicor 9, at its Poole site.

Designed specifically for the EMS market, the system’s in-built

functionality, total cost of ownership and compliance with the latest standards were key selection criteria for achieving improved process efficiencies, manufacturing cost visibility and enhanced profitability.

Adam Prince, senior director of product marketing, Epicor, said: “Epicor has a distinguished track record of delivering the latest, flexible technologies at the

lowest total cost of ownership for its UK based customers.”

“With the Epicor 9 system, we believe we now have the optimum package to provide what customers want without increasing our overall cost base.”

Hansatech is the first manufacturer to go live with new Epicor 9 ERP software suite.

Have your say at www.themanufacturer.com

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Reaping the rewards of

efficient ERP

New erp system saves martin & partners ÂŁ40,000 per annum through better stock management Martin & Partners, the largest independent Builders & Plumbers Merchant in Northampton, is using ERP software from Solarsoft Business Systems to track 24,000+ product lines and manage stock levels more effectively, preventing an annual loss of up to ÂŁ40,000 worth of stock, and removing the time overhead of half a day per stock order processed.

In

addition, the new ERP system enables POs and invoices to be processed automatically instead of taking half a day to complete each one manually.

Company background

Martin & Partners has been supplying the light side building industry in and around Northampton for over 80 years, specialising in architectural ironmongery, plastics and plumbing & drainage. Established in 1935, the company has grown from occupying a small high street premises to now serving the trade and retail sectors from a 12,000 square foot warehouse and showroom.

Martin & Partners operates a seven-days-a-week trade counter, serving upwards of 900 account customers, of whom at least 30 visit the warehouse every day, and also a retail market, resulting in an annual turnover of over ÂŁ2 million.

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Specialfeature Solarsoft UK Ltd

Martin & Partners historically used manual invoices for customers – both retail and trade – but this soon became untenable as the company expanded.

Martin & Partners’ activity in the DIY, kitchen and bathroom and smaller scale building industry has grown exponentially, requiring an accurate and real-time picture of stock levels which could only be achieved through electronic invoicing and automated warehouse management.

The incomplete and inaccurate visibility of the stock levels resulted in an inability to track where stock was at any one point, leading to stock being unaccounted for, sometimes to a value of £40,000 per annum.

Marguerite Dickens, Company Secretary, explains, “With manual invoicing, basic accounting software and no automated warehousing system, it was impossible to identify where and when all the stock was being sold, pro-actively identify selling trends, or even pre-empt when we would need to re-order stock. We were at times identifying holes in our stock levels where as much as £40,000 worth of stock was simply missing. We therefore needed an ERP system which would allow us to track stock from the moment it entered the warehouse to when we sold it, whilst simultaneously processing the invoices of both our purchases and sales.”

One version of the truth

After a thorough review of the market, Martin & Partners soon established that Solarsoft’s xVP ERP system was the solution to meet its particular business needs. The software is designed for the specific needs of the Builders Merchants market and provides the ability to track every individual product item – of which for Martin & Partners there are over 24,000 – and how many of each item there are currently in the warehouse, on order or being sold, all reportable within minutes rather than days. The invoices and purchases are all managed through the same system, ensuring there is only ever ‘one version of the truth’ and only one set of data.

Dickens adds, “We have over 24,000 different products on sale, and for each one, there may be literally thousands of each one. For example, copper fittings for bathrooms are delivered by the box-load, but often sold individually. It was proving practically impossible to track precisely how many we should have, let alone how many we actually did have.”

Automated stock management

Following the implementation, Martin & Partners was able to take advantage of the benefits almost immediately. Dickens explains, “Prior to the

implementation, a single stock order would take us the best part of half a day to process, including purchase orders and other paperwork. However, now we simply input into the system how much of each item we want and we can immediately generate the purchase orders and update the stock records.”

Dickens continues, “The time difference is also seen when we receive the stock in – once we have verified the correct stock has arrived, we used to have to manually match this to the corresponding invoice. We cannot afford for errors at this point, as the value of a single delivery can often be in the region of £5,000 worth of stock. However, Solarsoft does this comparison for us automatically and flags to us if there is a mis-match.

This ensures that stock levels are kept up-to-date and prevents us from paying for stock we don’t receive and expect to see in the warehouse. We receive deliveries and submit orders on an almost constant, revolving basis, so the time saving overall is massive.”

therefore needed an ERP system “We which would allow us to track stock from the moment it entered the warehouse to when we sold it, whilst simultaneously processing the invoices of both our purchases and sales

“

Business pains

Marguerite Dickens, Company Secretary

Dickens says, “On an ongoing basis, Solarsoft has been there for us every step of the way. We have moved from next to no IT infrastructure and an almost entirely manual warehousing process, to now having one of the most advanced warehouse management systems available – this was clearly a huge culture shock! Nonetheless, they were able to guide us through the implementation, ensuring that each of our business goals and targets were met, and they have been constantly on hand to help us as our use and understanding of the system grows.”

Future

Looking to the future, Martin & Partners will be able to understand exactly what stock is in the warehouse, which items are most popular and why, and provide a heightened service to its customers, both trade and retail. Dickens concludes, “When we moved to our new site, we were at first concerned that being in a retail park alongside big DIY and builder merchant chains would mean heavy and powerful competition.

However, we have actually found that being in the midst of them has meant greater passing trade due to people comparing prices, service and product lines. As a result, we have had to make sure that we have 100% stock visibility and are able to tend to any customers’ queries accurately and reliably. The new ERP system provides us with this ability and we are therefore now fully equipped to manage further business expansion moving forward.” end

Have your say at www.themanufacturer.com

43

Danny Boeykens Partner at MÖBIUS,

The

Ann Vereecke, dean of operations and supply chain group, Vlerick Leuven Ghent Management School

Supply chain risk is rising but senior executives don’t know how to manage it, despite being well aware of it. Recent research by Möbius Consulting has produced a robust method to assess supply chain risk and demonstrate the effect of different risk scenarios on company earnings. Will Stirling reports.

recession has put more companies at risk of insolvency, with knock-on effects in the supply chain that the boom economic cycle was unaccustomed to. In February, BMW had to rescue its main supplier of sun roofs, Edscha, when the German company filed for bankruptcy. BMW had no Plan B – it would have taken six months to secure another supplier.

Several big manufacturers have been precariously close to delivery failures due to their key suppliers nearly going out of business. And there are many cases of expensive product recalls that will have disrupted business operations. Coca-Cola lost $60m in sales when forced to recall 15 million cans and bottles of its product in European markets after several consumers became ill, according to the consultancy Aberdeen Group.

fig. 1

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Supply chain risk has always been there but it takes a global recession to bring it up the agenda. Consultants Aberdeen, Accenture, McKinsey, and insurance company Marsh have all identified supply chain risk (SCR) as a top five factor in business planning for multinational companies. “Most companies lack a strategic approach to supply chain risk management, at a time when supply chain risks are increasing,” Aberdeen Group’s supply chain risk management (SCRM) benchmark report says.

And no less authority than the World Economic Forum 2009 named SCR as one of four key emerging risks that will shape the global risk landscape, including also financial risk, food security and the role of energy.

Möbius Consulting, with its academic partners at Vlerick Leuven Ghent Management School, spotted this trend. But it was only when they read the literature and surveys, which showed the prevalence of supply chain risk today, and saw that companies recognised SCR but were impotent to resolve it, that they decided to conduct a research project on how SCR can affect business management. Their research, co-authored by Ann Vereecke, dean of operations and supply chain group at the Vlerick Leuven Ghent Management School and Prof. Hendrik Vanmaele, managing director at Möbius, produced a thorough, effective model for analyzing SCR and its effects on earnings.

Supplychain and logistcs

Best practice increases risk

fig. 2

Möbius began by participating in certain confidence research groups. The initial aim was to modify the risk management part of companies’ enterprise resource management (ERM). From here the evidence that force majeure events (events beyond their control) were affecting companies far more often than was expected. Preliminary research revealed two stark facts to vindicate their efforts:

1

The typical company reports an average 12.9 supply chain disruptions or outages in the past year. “More than once a month – that’s not small, because we do not consider operational risk in the main equation, we only consider the bigger external and internal risks,” says Danny Boeykens, a supply chain partner at Möbius in SintMartens-Latem, Belgium.

2

73% of global industries experienced a major supply chain disruption in the last five years. Source: Accenture and Oracle.

“Why are we doing on one hand supply chain best practice consultancy, global sourcing, lean etc while by doing these things, ironically, we’re introducing more risk into the supply chain?” says Boeykens.

it’s 3-4 weeks plus three more weeks if the container doesn’t get on the ship. Yes, this has been a risk for the last 30 plus years of Chinese imports, but not at this volume and not with as many companies involved – the risk of delayed supply is growing.”

Companies have a trade-off with supply chain risk.

Does it want efficiency in the short term, where it assumes normal business practices and conditions, and therefore apply standard supply chain models and ignore SCR; or does it see the bigger picture, and consider that once every five years it will have a major disruption? The second scenario requires techniques that mitigate risk. Where do you apply them and how much will they cost? These questions helped shape Möbius’s SCRM methodology.

Companies using a Western European supplier that switch to an emerging country source are accustomed to the reliability of the first supplier and adjust their expectations for longer lead times. “But what they don’t take into account is the variance of the lead time allowing for plus two weeks,” Boeykens says. “We say forget that it can be plus four weeks, the SC effects are much bigger. Knowing this they might have chosen differently, e.g. a second European source.”

The research found that board members are aware of the gravity of SCRM, but are powerless to deal with it appropriately. The literature supported this (see fig 1). Most of the ‘C-level’ –boardroom level executives – surveyed between 2006 and 2008 consider supply chain risk to have increased significantly or slightly.

They admitted knowing SCR was a serious risk but they didn’t know how to tackle it. “Based on this there was something we needed to address,” says Boeykens.

Hard times drives SCRM

There is a strong correlation between the world economy and SCRM. “With globalisation since the mid-1990s there’s been a major wave to increase your supply chain risk, in the pursuit of lower costs,” says Boeykens. He says it’s typical for a company that deals in China to have lead times of four weeks. “But companies are not sufficiently taking into account that

The need for cash

The economic crisis is also a big factor driving. “People are trying to get less working capital – everyone is in search of cash. If retailers or suppliers feel their supplies are at risk, they want firm orders and cash, if its not in stock they say we’ll produce/order it when you place your order.” Small companies and bigger companies are the same, they’re more willing to jeopardize a supplier relationship to secure cash orders. “We know of a big steel company that is willing to change their major production process with a lot of set-up time if their next production will provide cash within a month,” says Boeykens. The search for more cash will further erode the buffers to risk that are already limited, says Möbius’s research. By decreasing risk buffers, the C-level senior management tends to be very glad because now they see more short terms cash sales.

But risks increase, and gross sales with traditional suppliers will likely fall.

45

Methodology 1 The risk list and classification Möbius and the Vlerick* Management Institute devised a supply chain risk list and classification from the available literature, the pre-research SC Risk survey, interviews with several companies and input from the study’s Advisory Board. This produced 60 of the biggest supply chain risks that companies will face (see fig 2). This list can be customised to a company, and added to with SCRs that are particular to that company.

Risks were then classified as: External risks – inc Demand, Supply (e.g a major supplier fails), and Environmental risks (such as recession, political risk) and Internal risks – inc Process risk on your own operation (your production line goes down), Control risks, i.e. those related to the system that control your operations, e.g ERP system failure.

Specific SC risks to that company – such as contamination in food manufacture. Risks are very subjective. “A potential customer in retail management said control risk was his major risk – if his computer system goes down he couldn’t tell what to supply to his local stores,” says Boeykens.

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2 Four steps to analysis (See fig 3.)

1 2 3 4

Map the SC that is being modeled. This identifies all the stages that risks might affect Introduce risk. This has been defined for that company by the List & Classification process Mitigation strategies. Identify the most appropriate strategies and map them on the SC risks

1, 2 and 3 feed into the SC Simulator Engine, the computer programme. The analysis summary is used to conclude the results and implement the best SCRM strategy.

Quantifying the effect in C-level language: EBITDA

Crucially, the method isolates each risk and calculates what contributions they would make to Ebitda earnings on a fiscal year basis. The Ebitda style KPI is essential, as it best reflects the terminology used by the board members.

The method focuses on strategic and tactical risks.

Operational risks, this is: those with an occurrence frequency of less than 3 months (the average master planning cycle) are principally not considered: they belong to the company’s operations management and should be treated accordingly.

An essential step is to determine the frequency of occurrence of certain risks, i.e. the probability of risks affecting the company at different intervals. This is guess work for most people, so typically the model would ask more than one person. ”Typically in our tool, if someone says ‘I think it’s every two years’, then we would at least simulate the same risk for an alternative frequency of once every year and another one for once every five years to see the sensitivity for each period. So if one assessment is wrong, we have an idea of the sensitivity of the assessment to the overall risk.

Evaluating risk in cash terms

Other supply chain risk management models exist. Möbius claims this is different in its use of simulation technology.

“Instead of using a static calculation in a spreadsheet, we actually model your supply chain and play it like it would actually happen. It’s software that allows you to map your project – here SCR – with building blocks.”

Calling for entries from companies embracing supply chain integration as a whole business process.

This will be awarded to the manufacturing company or site that, in the opinion of the judges, is making measurable progress towards realising a fully integrated network of supply chain partners that demonstrably reduce costs and increase efficiencies.

The judges will look for an integrated supply chain strategy that embraces the whole business process from raw materials or component procurement to customer delivery.

To validate the model of the supply chain matrix they feed it with last year’s actuals – the company’s accounts. “The Ebitda in the model should typically be equivalent to the Ebitda that the company realized last year. This validates the model.”

Three Ebitda figures are calculated to show and compare the affect of SCR on earnings.

Step

1 2

Normal operation – Ebitda without SC risk added. No risks were fed in, Ebitda should match actuals from last year.

Introduce a number of risks – shows impact of risk on Ebitda. It will impact it along the supply chain. Called a Delta Ebitda. That price difference in Delta is the fig. 3 cost of SCR.

enter at www.themanufacturer.com/awards

Supply chain and logistics award

Roll out

The research project is currently being finished and is being subsided by the Flemish government. Two of the corporate advisory board members, Barco, a Belgian electronics company and Saflex, have been the guinea pigs. They each invested 2-3 months of their own time. In return they receive an analysis of their SC risks for free. end

3

I n t r o d u c e measures that decrease the risk = Mitigation.

Compare this with the investment made on that mitigation strategy.

Repeat for a number of risk combinations and mitigation strategies The process is thorough – how many simulations does it involve? First it identifies a top list of relevant major risks to a company. “If there were 20 major risks, we’d typically do 20 sets of 50 simulation runs. Each one could take three minutes or more.”

A tested, commercial version of Möbius’s Supply Chain Risk Management method will be launched in September. Contact joanna.holmes@mobiusconsulting.co.uk

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Pharmaceutical manufacturing – working towards a cure for automation headaches Introducing bespoke automation means a commitment to a high capital value investment and facing up to some degree of technical risk. Fortunately, techniques borrowed from medical device and pharmaceutical product validation can help ensure the outcome is positive for all concerned.

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Few

would argue that automation offers compelling benefits in productivity, consistency, and cost effectiveness. That being said, engineering a new process or automating a previously manual operation requires both careful management and an understanding of the potential pitfalls in converting a user’s aspiration into a piece of machinery.

Automated assembly and on-line test machines are often designed for purpose, and specific to a product or process. As a result, each system is unique and invariably complex, carrying with it a degree of technical risk. In the extreme, the project runs the risk of escalating alarmingly in budget; indeed, we are all too familiar with the headlines when this happens to large public sector IT projects. Even when successfully implemented – and the automated process equipment installed and operating – the operator may still be required to undergo lengthy training so as not to press the wrong button at the wrong time. Similarly,

Operations and maintenance

Such problems are sadly all too familiar, despite tools being available to identify and control technical risk.

Indeed, the engineering industry is well acquainted with the process of a Failure Mode Effects Analysis (FMEA) to ensure product quality. One such example is the SAE J1739 standard used in automotive manufacture, which specifies a Machine FMEA in tandem with a separate process FMEA. At GB Innomech, we favour the use of Failure Modes Effects and Criticality Analysis (FMECA), which encompasses all aspects of the system.

However, the benefits such methodologies can bring about depend greatly on how they are implemented. To quantify, the nature of these analyses can encourage a very narrow focus on the detail of the machine’s operation, which can, in turn, divert attention from opportunities to improve processes and identify further critical factors. What is needed, undeniably, is a wider remit to identify and control all risk factors, and we shall argue for such in this article.

Pharmaceutical product development and manufacturing is an industry where risk management remains essential, with patient safety concerns driving product quality, and coupled with a rigorous documentation trail. In this arena, there are wellestablished methodologies and validation approaches, such as ASTM 2500 and GAMP 5, specifically applying to automated systems, and these can serve as a model for use more widely. Such processes provide a framework for system validation that encourages examination of fitness for purpose and assessment of risk at every stage in the design, implementation, and supply of equipment. Nonetheless, the principles inherent in such methodologies can equally be applied to a wide range of projects, and not simply those in the pharmaceutical sector.

Looking for trouble

The number of potential failure modes in a complex new system can be considerable, particularly when integrating new materials, technologies, and functions, and coupled with striving to meet demanding user expectations of performance. Consequently, every custom machine should be subject to an acceptance test that demonstrates its correct operation, a reality that, in the pharmaceutical sector, can be unduly onerous.

Indeed, it is not untypical to find much of the test and compliance efforts being addressed worryingly late in the project, with FMEA only applied to a finalised design.

In such cases, the aim is to confirm that any potential dangers to the quality of the delivered product have been identified, and, should the need arise, dealt with.

Whilst on the one hand, this approach allows the system specification to be met, any retrospective analysis is liable to overlook the intended purpose of minimising risk through design, given that even if valuable improvements are identified, it may be too late to incorporate them into what is delivered. Worse

yet, in narrowly focusing on the confirmation of tight statements of functionality, the risk analysis and testing strategy does not encourage a consideration of how a system might fail in practice, an oversight which may well have usefully informed the original design process.

For example, one function of an automated test platform for a medical device is to ensure that two similar mechanical components in the appliance have not been erroneously exchanged during the assembly process. If this had indeed occurred, the device would appear normal but, crucially, fail to operate effectively.

Whilst the test was feasible, and the testing machine worked reliably, a more efficient solution – if recognised earlier through a comprehensive examination of risk – would have identified a design modification to one of the components, thus making it impossible for them to be confused during assembly.

an enlightened approach to risk “Such management will lead to automated production systems that not only function to specification in producing output of the optimal quality, but equally, are robust in use and not solely dependant on having the right operator working the controls

“

systems can work effectively when nursed by their supplier, only to suffer recurring problems as soon as the maintenance engineer has relinquished control of the machine.

Scope for uncertainty can similarly be found in the assembly of optical tiles for large area video display panels, whereby a vast image is produced by tiling together numerous individual display units. Here, the quality of the displayed image relies on the precise registration of thousands of individual lightguide elements to the pixels of luminescent display units within each shoebox-sized tile, a process complicated by the fact that each line of lightguides in the tile is a different shape to the ones either side of it. Consequently, the assembly machine must thermoform individually shaped lines from stock mouldings and assemble them into a truncated pyramid to form the tile through the use of a specially developed adhesive. As is to be expected, registration accuracy can be unduly affected by both the thickness of glue dispensed and the precision of thermoforming process, together with the repeatability of placement of the parts relative to each other.

It was not difficult to identify that, for example, a vision system would be required to guide and verify positioning. However, only in a more detailed analysis of possible exceptions did it become evident that the part handling mechanics would need to be repeatable to a few microns in order to ensure the necessary consistency of registration in the assembled product.

Understandably, this required exceptional design effort, but by accommodating this challenging requirement in the engineering specification from the process’ outset, the end result was an automated platform capable of routine production of units of superb quality.

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Conversely, if this analysis had been overlooked, the vision guidance would have proven to be inadequate and the quality of the resulting product vastly inferior, arguably to the point where a substantial redesign exercise would have been required in a machine that was already designed and constructed. By this stage in a project, there is a huge inertia to be overcome in updating design documents, revisiting testing specifications, and deciding what retrospective retesting might be involved after implementing the change, together with the cost of writing-off the wasted implementation. At best, the change adds cost and potential delay to the supply of the assembly system. At worst, however, the supplier loses money and the launch of the end user’s display product will be severely delayed.

Keep on looking

As projects develop, the aim must be to highlight and seek to resolve known risk factors. It is nonetheless recognised that focussing only on factors already identified runs the risk of degenerating into a reductive exercise, whereby items are simply ticked off one-byone. It is therefore important to accept that in the lifetime of a project, new risk factors may well emerge at any time, and similarly, the nature of previously identified risks will change. Taken as a whole, this means the risk analysis is ultimately an ongoing process through the life cycle of a project.

Calling for entries: Is your operation flexible, effective and efficient and well maintained?

This award will go to the manufacturing company or plant that, in the opinion of the judges, is making quantifiable progress towards having fully integrated factory operations that identifies and utilises to good effect the interaction between machines, processing steps and the tasks that need to be performed.

This may include use of flexible process and operations techniques, which allow for adjustments that are required to meet shifting manufacturing and demand scenarios and that implement effective maintenance programmes.

enter at www.themanufacturer.com/awards

Operations and maintenance award

We firmly believe that manufacturers will find their product cycle becoming exponentially more effective if this way of working can be shared between automation provider and the automation user. In many cases, whereas the automation engineers may be fully able to identify failure modes, the user may be better placed to determine the impact, and by working together, it is often possible to work out a mitigation that is simpler and more cost effective than either side would have developed working autonomously. Whilst this is easier said than done, the techniques and accumulated experience within an automation consultancy or by in-house specialists should provide a toolkit for addressing these issues.

Such an enlightened approach to risk management will lead to automated production systems that not only function to specification in producing output of the optimal quality, but equally, are robust in use and not solely dependant on having the right operator working the controls. Lastly, projects are much more likely to be delivered on time and to budget, further increasing the incentive to implement such processes, if indeed any were needed. end

Automated assembly and on-line testing machines are custom built, often extremely complex. Potential risk factors need to be identified early, not left until the project is nearing completion

About Peter Woods

Dr Peter Woods is an acknowledged expert in the development of advanced automation systems who has spent the bulk of his career in the pharmaceutical sector. In 2008 his team was one of four finalists for The MacRobert Award, from The Royal Academy of Engineering, for pioneering work on the Polar system for UK Biobank.

Peter has a PhD from University of Manchester; a first degree in physics from University of Bristol and started his industrial career developing image analysis systems for automotive production lines in Germany.

References ASTM 2500: ASTM Standard E 2500 – 07 is the Standard guide for Specification, Design and Verification of Pharmaceutical and BioPharmaceutical Manufacturing Systems and Equipment, published by ASTM International.

GAMP5: Originating in the UK, GAMPŠ stands for Good Automated Manufacturing Practice. The 5th version of the GAMP guidelines were published by the International Society for Pharmaceutical Engineering (ISPE) in January 2008.

Have your say at www.themanufacturer.com

51

Talent management could turn new page for paper manufacturers

Paper and pulp manufacturing has suffered heavily from the downturn, but it was already facing challenges, perhaps the greatest of which is a shortage of talent.

The industry faces an ageing workforce, the decline of printing in certain markets and a perception of being unglamorous. But it could capitalise heavily on the dour economy by investing in talent management, say Peter A. Frandina, J.F Fernandez Perdiz and David A. Rossi at Accenture.

During

the last economic cycle, many resource intensive manufacturing industries faced a human capital challenge caused by fast expansion. While the $600bn global forest product and paper industry experienced strong growth in emerging markets, its biggest issue has been to attract and retain talent. With 50% of the UK paper and pulp sector’s experienced workforce set to retire in the next seven years, in terms of recruitment, the industry is at a disadvantage compared with other sectors like chemicals, metals or construction.

The industry must be cautious before taking the instinctive step to cuts costs through attrition and redundancy measures. Research by consultancy Accenture shows that during the recovery after the last recession, high performers not only cut costs in the downturn but restructured human capital for the return to growth. In the research companies are placed in three downturn groups. Only the ‘survivor’ category requires aggressive cost cuts to repair seriously damaged cash flow. The biggest group is the ‘advantage’ category, where companies still generate profits in key segments and enjoy access to sufficient

52

capital to allow them to exploit their competitive advantages. The most fortunate find themselves in the ‘growth’ category where strong balance sheets and profits enable them to use the downturn to grow through consolidation and capital expansion.

An ageing workforce

What are the paper industry’s talent challenges? A declining workforce tops the list. Since 1994, the UK paper and pulp industry has lost 33% of its workforce due to consolidation, which has left the residual workforce ageing at a faster rate than other manufacturing sectors.

The number of people over 55 has increased since 2000 while the number under 44 has fallen. Most telling, the number of those under 35 declined from 34% to 27% of the workforce between 1994 and 2007.

The exodus of the young has compounded the affect of consolidation. The closure of paper mills has resulted in minimal career opportunities and middle ranking executives have switched into other industries where their skills have been in greater demand. The impact has

Sustainable manufacturing

Disparate trends, regional drivers

Like many sectors, the high relative costs of the European and North American markets has led to a shift in the industry’s supply base to developing countries with lower costs, primarily Latin America. This was compounded by the strength of the dollar and the euro, affecting the profit potential of companies buying or making pulp. Concurrently, the supply of wood from mature markets is decreasing, and there is heightened interest in the environmental agenda, an increasingly important factor in supply decisions.

In addition, the paper industry’s dominant market sectors are diminishing in key regions. Printing remains the largest sector but also has the lowest projected growth. Changes such as the media shift from print to the internet are reshaping market segments, driving down paper demand in some markets especially in North America. In other parts of the world the picture changes, underlining the power of local consumer preferences. For example, paper consumption in China is set for explosive growth, reflecting rising demand for packaging and printing in consumer products. As Figure 1 shows, each global region of the paper industry has its own separate and distinctive trends and drivers, which makes global strategies even more challenging.

Figure 1: In the paper industry, no two world regions share the same consumption trends and investment drivers

China

North America

South America

Europe

But these trends do not cover all developments in the industry. For example, the emergence of the growing consumer market for paper in China and elsewhere in Asia offers new opportunities. The growing importance of compliance, ethical concerns and carbon reduction efficiency in paper production provides strong appeal to that younger group of employees that has turned its back on the industry in recent years. Innovations in bioenergy will also draw in new specialist skills, as pulp and forestry product makers begin to enter new markets for energy generated from waste products.

paper and pulp industry is “Iftothe address its talent management shortcomings, it will also have to modify its culture to appeal to a ‘new millennia generation’ without pandering to it

“

been most severe in developed markets. The average age of a forest product engineer in the United States, for instance, is in the mid- to late forties. Half of the most experienced workers, mostly in mature markets like Europe and the US, are set to retire by 2014.

As the global paper industry faces the combined effects of the recession, its impending skills crisis and these new opportunities, it will need to prioritise effective talent management. Far from being a soft market for labour, the rapid changes in the paper sector indicate an intense period of competition to retain and attract the best skills. To help them exploit such opportunities, paper companies can adopt several new and more rigorous ways of attracting, developing and retaining talent, based on a strategic and holistic approach.

Trend

Driver

Will generate the largest amount of growth in wood pulp demand of any world region

Desire for higher-quality products

More focus on pulp supply versus paper supply

Overcapacity or paper, maturing markets

Specialised paper markets coming into focus

The need to compete with low-cost competitors with lesser focus on innovation

Becoming a major source of raw material investment

Abundant availability of virgin fiber

Wood demand is increasing as fast as wood supply

Demand for non-paper use of wood i.e.

Biofuels development

Focus on growth markets such as tissue

Most markets are maturing, following in the footsteps of North America

Limited play in paper trade

Strong euro limits profitability

Nordic region's diminished impact on the industry

Energy and labour costs, competition from Latin America (pulp) and China (paper)

Decrease in non-wood fiber availability

53

Whole business human capital strategy

To succeed, the talent strategy should be founded on a comprehensive evaluation of the capabilities, skills and headcounts that will be required across the business. This will guide new talent recruitment and development, performance management, succession planning and the retention of the most businesscritical talent.

is a time for investing in human “ This capital, retaining experienced staff and entering new markets by placing imaginative talent management at the heart of business strategy

“

Effective tools here include consistent enterprisewide competency and career development models, succession planning programmes and aggressive campaigns to secure talent from outside the industry.

Several economic and industry trends may serve to support these efforts. The downturn means paper companies can invest in new talent from industries that used to draw graduates away, but which are now struggling – for example chemicals, metals and construction. They can also attract young talent into exciting emerging areas of the paper industry such as paper and forest certification and sustainability. And the growth of paper product supply in South America, Africa and Eastern Europe can be used as a means to attract international talent.

Getting better use from people

Many managers view a downturn as a trigger to reduce headcount. Instead, paper industry executives should approach workforce size and productivity in a planned, systematic manner by looking beyond narrowly-focused, short term initiatives, and finding ways to change not only the workforce itself, but precisely what the workforce does. By re-evaluating how work gets done rather than just the number of people doing it, companies can create a solid base for lasting improvements.

Such a re-evaluation might reveal opportunities to invest in remote monitoring and control systems that make better use of skilled workers and drive process and cost improvements. The re-evaluation may also

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identify ways to prevent older employees’ collective wealth of talent from being lost when they retire.

Moving some of the company’s more experienced managers into project and mentoring roles enables the next generation of leaders to step up into tougher business roles while extending the value of those looking to retire.

Recruit consistently

While companies do have to slow down their recruitment engine when the economy stalls, they should still commit to recruiting consistently. Halting recruitment blocks the flow of talent that will be needed in the forthcoming recovery. Recruiting a mass of graduates every five years in line with the economic cycle can be less effective than recruiting a small number annually. Not only does it put the paper industry in costly competition when the labour market peaks, it also foregoes the consistency that comes with a steady intake of top talent.

Calling for entries: Are you reducing your carbon footprint?

This award will be given to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has improved its environmental performance and reduced its carbon footprint. This may take the form of a single highly effective initiative, or a wide ranging portfolio of smaller improvements. For example, switching to a renewable energy source, or increasing energy efficiency through simple but demonstrable methods such as minimising unnecessary lighting; reorganising the shopfloor to save energy; powering down equipment that will be dormant for periods of time; reducing packaging and designing recyclability into its products.

A consistent management culture

High performance businesses tend to continually grow and measure talent throughout the organisation.

But this must be matched by a commitment to stable leadership, a management culture of measured risktaking, and widespread adherence to accountability for performance and results. If the paper and pulp industry is to address its talent management shortcomings, it will also have to modify its culture to appeal to a new millennia generation without pandering to it. So while, companies will have to consider more progressive remuneration packages that suit modern expectations on work-life balance, for example, they will also have to put in place methods that restore the appetite for professional competition that many in the industry believe has been lost in the younger workforce.

in the past, the downturn offers it a rare chance to reverse that trend. While other industries suffer large job losses, never has there been such a pool of ready and available talent to help build competitive advantage for the paper industry. This is a time for investing in human capital, retaining experienced staff and entering new markets by placing imaginative talent management at the heart of business strategy. end

The paper industry faces challenges and opportunities that require vigorous and motivated specialists. If the sector has failed to retain and attract the best skills

The views and opinions in this article should not be viewed as professional advice with respect to your business.

Have your say at www.themanufacturer.com

enter at www.themanufacturer.com/awards

Sustainable manufacturing award

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How long until manufacturing sees its engines of growth return?

As the global economic downturn continues, has the UK manufacturing sector really bottomed out? David Noble, CEO of The Chartered Institute of Purchasing & Supply, urges caution to those predicting a smooth ride from here on in.

Trouble and turmoil

As with many businesses in the current downturn, it is proving increasingly difficult for manufacturers to know in which direction the economic wind is blowing with any great certainty. One day the talk is of green shoots, the next it’s of a w-shaped recession. The CIPS/Markit Purchasing Managers’ Index® (PMI®) continues to shed some light on this, but mixed signals nonetheless remain.

While June saw the UK manufacturing sector take distinct strides forward, with many of the components of the index showing strong signs of life, what is evident is that it will take more than a buoyant summer to see full recovery, let alone growth of any significance. The harrowing impacts of the economic downturn have battered firms across the sector, irrespective of size or turnover, and on the back of tight credit conditions, muted factory production, ongoing uncertainty, and diminishing workforces, UK manufacturing will inevitably take time to recover from the turmoil it is experiencing.

More positively, however, and whilst clearly still suffering, the manufacturing sector has shown monthon-month signs of improvements since hitting an unprecedented low in February. Most noticeably, June saw the first month in which the Output Index – measuring the volume of goods distributed from factories each month – edged above the no-change 50.0 mark since March last year. Even such – prima facie – positive indications come with a caveat, however, as purchasing managers across the sector urged that such trends reflected falling volumes of incoming new work – thus allowing companies to concentrate their efforts on output levels – rather than a growing demand for manufactured goods.

Indeed, although the latest CIPS/Markit Purchasing Managers’ Index® (PMI®) posted its highest reading since May 2008, June also marked the fifteenth month in which the manufacturing sector contracted. In spite of such trends, however, with slight improvements seen across capital, consumer, and intermediate goods categories, production rose for the first time since March 2008.

56

On the back of tough trading conditions, almost a quarter of companies were forced to slash their staff numbers further in a bid to tide over the slow summer period. As employment levels declined for the fifteenth consecutive month, the PMI reports are understandably drawing a bleak picture of the UK manufacturing sector.

More worrying still is that, even in such dire economic straights, the position is a significant improvement on the beginning of the year, when the sector unarguably hit its lowest ebb to date. Indeed, Q2 saw levels of output, new orders, new export orders, employment, and purchasing activity perform noticeably better.

Comparative performance

To ensure a reasoned analysis as to the manufacturing industry’s malaise, it is telling to compare its performance against those of the UK’s other leading sectors. On such a reading, it becomes clear that whilst manufacturing is not the healthiest sub-sector profiled, equally it is by no means the economic downturn’s most significant casualty.

After improvements seen in April and May, the construction economy retracted once more, with firms struggling to consolidate their position in an already perilous market. For example, where June saw manufacturing order books grow, the construction sector saw them enter freefall. Likewise, where there was a marginal easing in the rate at which jobs were cut for manufacturing firms, contractors actually sped up the rate at which they were forced to shed staff.

Having seen expansion for two consecutive months, UK services can rightly claim its position – for now, at any rate – as the healthiest industry sector. Realistically, however, such signs of life come too early to determine whether they truly mark the beginning of a full-blown recovery or simply a temporary upsurge. Tellingly, and mirroring the construction and manufacturing sectors, service providers have been forced to slash prices further in a bid to attract customers, despite the fact that their input costs continue to rise. With many company budgets representing a balancing act between prudence and the need to retain some semblance of market share, inevitably only the fittest will survive.

Specialfeature CIPS

Following the construction sector’s slight relapse in June, and coupled with the unexpected rate at which both the services and manufacturing sectors have rebounded, especially in the last quarter, large question marks loom as to how sustainable this expansion really is. Though the combined PMI reports suggest that there may be marginal GDP growth over the second quarter of the year, against the backdrop of so many globally dominating factors, it remains unlikely that we will see any of the UK sectors travel smoothly along on the road to recovery. Arguably, the UK economy – and manufacturing in particular – remains balanced perilously on the edge of a verge, with only pot holes, oncoming traffic and unexpected gear changes predicted for the journey ahead.

David Noble Chief Executive Officer The Chartered Institute of Purchasing & Supply

PMI

OUTPUT

PMI background

Purchasing Managers’ Indices, or PMIs as they are more commonly known, are globally recognised as key economic indicators of the UK business landscape for the manufacturing, services and construction sectors.

The PMIs track a variety of factors to give an overall view of business conditions within the UK manufacturing, services and construction sectors respectively.

For the manufacturing PMI, each survey questions over 600 purchasing managers comparing output, new orders, employment, prices and stocks, amongst other variables, within their organisation comparing conditions to one month earlier. The responses are converted into diffusion indices which vary around a “no change” mark of exactly 50.0. Diffusion index readings above 50.0 signal expansion on one month earlier, while readings below 50.0 signal contraction.

The greater the divergence from 50.0 the greater the rate of change signalled.

INPUT

Fact not sentiment

One of the key features of the PMI surveys is that they are based on fact, not sentiment, so the data report trends in real activity rates, not firms’ opinions on what might be happening in their industry.

What also offers additional reliability is that PMIs track actual events that are taking place rather than measuring confidence and expectations.

The PMI surveys not only provide important information along various stages of a typical business cycle, allowing economists to ascertain at what pace the economy is moving and to see whether demand and supply imbalances are starting to occur, but also provide this information well in advance of comparable official data – allowing actions to be taken much earlier to address particular issues.

Evidence provided by the surveys of sharply rising demand for staff and raw materials, for example, often highlights in advance the emergence of skill shortages and supply-chain bottlenecks that, in turn, may lead to rising wages, salaries and raw material prices. If these

rising costs are then passed on to the consumer – leading to increased retail price inflation – then central banks may react by raising interest rates in order to restrain demand. Policy makers are potentially much better placed to make informed decisions on issues such as monetary tightening, by the earlier availability of factual economic data provided by the PMI surveys.

In particular, close analysis of the output and employment series from any PMI surveys can be used to give accurate indications of an industry’s productivity performance, while the input and output prices indices give a very good indication of pressure on profit margins.

The Chartered Institute of Purchasing & Supply sponsors the PMIs which are produced by Markit – one of world’s largest specialist providers of original economic research. end

Have your say at www.themanufacturer.com

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China andIndia – What have you got to offer?

The many trade opportunities for British manufacturers in China and India can be obscured by the inability of companies to identify their true strengths and unique selling points. A local rep can help with this, to locate the UK firm’s place in the value chain and exploit the real local Asian needs, says UK Trade & Investment’s Paul Calver.

Kinky Boots.

That’s what first came to mind when I thought about UK engineering and manufacturing value chain opportunities in China and India. Strange you may think but those of you who have seen the British comedy film should know what I am referring to.

There is no need to present the statistics as you will all be familiar with the rise of the Chinese and Indian economies and the market opportunities they present.

The question is how you capture business in these markets and protect your position from future Chinese and Indian competition.

It is worth commenting on the effects of the downturn on the Chinese and Indian markets. Latest figures from forecasting consultancy company Oxford Economics indicate that while Chinese manufacturing growth fell in both Q3 and Q4 (+6.4%) last year it increased in Q1 this year and is forecast to increase in Q2. This is heavily

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influenced by domestic demand as the impact of the large fiscal boost and a surge in bank lending has started to come through. The RMB 4 trillion stimulus package from the Chinese government provides additional market opportunity particularly in the areas of airport developments; automotive; alternative energy vehicle technology; industry restructuring; innovative products; non-ferrous metal development; aircraft and manned space vehicle development; textile industry restructuring; and improving the steel industry. In India external trade remains very weak suggesting that domestic demand remains relatively subdued but there is still growth particularly in the defence sector where the Union Defence Budget 2009-10 has been increased by 34%.

In order to enter these markets you cannot compete on cost unless your manufacturing cost base is in a low cost economy. The labour cost difference between China and the UK is still very significant although labour costs in China are increasing. Closing this gap by increasing

Specialfeature UKTI

productivity would be a challenge especially if you have already implemented many of the productivity improvement tools.

Hidden strengths

What is important is to be in a position to offer something unique and something China and India lack. And, if necessary, you may have to be in the market place in order to establish a market based cost structure. So, what do you have to offer?

Many companies will look at their final deliverable services or products when considering what they have to offer. The problem with this is that they may miss their real opportunity which could well be a strength or unique capability embedded within their manufacturing and business processes, value chain or knowledge base. Finding these strengths is an important first step when looking at the Chinese and Indian markets both in terms of deciding an offering and protecting your company’s position as you enter the market.

The Cambridge University Institute for Manufacturing (IfM) has developed a number of tools to help companies identify manufacturing opportunities in the Chinese manufacturing value chain, following a study it has undertaken on the impact of globalisation on China’s industrial sector. The IfM’s report shows that the total value chain should be considered when looking at what to offer. For example, in the white goods sector, China’s R&D and design capabilities do not match the country’s traditional strengths in production, presenting potential opportunities for UK firms (see figure below).

In China specific programmes have been developed to encourage joint development of high potential ideas by entrepreneurs and scientists. Design capabilities

are seen as a major weakness in many sectors and importing high value components is seen as an important step to secure and develop manufacturing in general. There are manufacturing capability gaps in sectors such as aerospace and energy and there are big projects to improve capacity and efficiency in shipping ports, air cargo and road networks. As the domestic market grows, service, repair and training centres are expanding rapidly. A similar picture is emerging in India.

All of these offer opportunity to UK companies.

It is important to identify your strengths and unique capabilities throughout the value chain and match these with Chinese and Indian opportunities. For example you may be a product supplier with a strong casting design capability, or have specialist knowledge of using certain alloys. Delivering your service in the West may have given you expertise in branding or certain domain knowledge. You may have developed strength in establishing distribution channels and managing logistics. Within your IPR portfolio there may be a specialist technique or application knowledge that could be transferred across market sectors. UK Trade & Investment (UKTI) and organisations such as Cambridge University’s Institute of Manufacturing can help you undertake this process and identify matching opportunities in China and India.

IP protection plan

When you undertake this review you will often find that your real strength is not necessarily where you first imagined, which will open up new opportunities and possibly a new direction for your business. One of the main fears of companies entering China and India is that they will lose their IP. One advantage of undertaking the review is that a company’s understanding of its key strengths and unique capabilities will increase, supporting the development of an IP protection plan which will be part of its market entry strategy.

Establishing in-country capability is also an important consideration when looking at market entry. Apart from obtaining a market based cost structure, establishing in country capability allows you to gain an essential understanding of the market characteristics and is sometimes a prerequisite to trading. For example on the Chinese C919 aircraft programme it has been stated that preference will be given to suppliers who have formed relationships with Chinese companies and in India consideration is being given to expanding the defence offset regulations to the power generation equipment sector.

A representation of the Chinese white goods sector value chain – showing the sections of the value chain currently occupied by Chinese firms and highlighting gaps that might be exploited by UK companies.

(Source: ‘Understanding China’s manufacturing value chain’ published 2008 by University of Cambridge Institute for Manufacturing)

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UKTI

I am sure that many UK companies will have considered, if they are not still doing so, sourcing low valued added activity from China or India in order to increase global competitiveness. “Purchase, Establish Then Sell” (PETS) is an established approach to market entry.

Our man in Mumbai, Beijing

An essential aspect of this process is establishing a ‘man-on-the-ground’ at the first stage. This can be your own employee, an outsourcing agent or distributor, or a partner company or organisation. The ‘man-on-the-ground’ will be your trusted eyes and ears and help bridge the communication and cultural gap.

For those of you who haven’t seen the film Kinky Boots, it is inspired by the true story of WJ Brookes Ltd, Northampton, a company that made traditional, hand-stitched leather brogues. In 1993 Brooks faced closure, like many other small county firms that once made Northamptonshire the UK heart of footwear manufacture, as cheap fashionable imports flooded the market.

The film depicts a chance encounter with sassy, flamboyant Soho cabaret star and transvestite Lola, who provides a glimmer of hope and a surprising last chance for the factory and its employees. Lola’s quest for stylish, kinky women’s boots (for men) provided the

‘Understanding China’s manufacturing value chain: opportunities for UK enterprises in China’ J.S. Srai, Y. Shi, Cambridge University Institute for Manufacturing. www.ifm.eng.cam.ac.uk

UKTI and local organisations like the Chinese British Business Council (CBBC) and UK Indian Business Council (UKIBC) can help with identifying such a person or organisation.

As we are all aware, the value chain opportunities in China and India are vast. In order to capture these we cannot compete on cost unless we source from low cost economies; that in itself can be turned into market entry opportunity through a PETS approach. We have to review our value chains to identify our sometimes hidden strengths and unique capabilities and match these with real needs in China and India. The task is not easy, patience is required and there are risks but with the right approach the vast opportunities China and India offer can be captured and risks mitigated.

UKTI and associated organisations are here to help.

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answer to Brookes’ prayers. But was the traditional Northamptonshire workforce open-minded enough for the likes of Lola? After many humorous encounters, with Lola’s help, the factory designs and manufactures the “kinky boots”, relying on their unique technical expertise in strong heel design and — following a dramatic (and funny) catwalk scene — successfully created a new niche market thus saving the factory and the jobs of the employees. The company found out that its real strength and unique capability was in materials knowledge rather than their ability to efficiently operate sewing machines. While not forgetting the design skills of their new employee, Lola. end This article was written by Paul Calver BSc (Hons), MBA, global value chain specialist in advanced engineering, UK TI Sectors Group.

Manufacturinginaction Putting UK manufacturers under the spotlight Morgan Motors

Factory of the month

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Operations director, Steve Morris, on the process of making an automotive icon and how a 100 year old brand, famous for its traditions, is approaching the next bold step towards its future

GSM Graphic Arts Printing

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General manager, Rudy Pearce, explains how through fastidious investment in infrastructure and an ability to complete even the most ambitious client requests, GSM Graphic Arts has unlocked previously inaccessible niche markets

Aeroflex

Microelectronics

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Operations and engineering director, Ian Langley, discusses the company’s technological solutions for the wireless and broadband communications markets

Constellation Europe Food and beverage

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Manufacturing manager, Richard Lloyd, on how a recent capital investment by one of Europe’s leading alcohol producers has led to the development of and an environmentally friendly innovative transport arrangement

Pirelli Tyres

Tyre technology

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By proving their worth on the race track, Pirelli secured its position as the producer of one of the world’s most respected range of performance tyres.

Atlantic Inertial Systems Navigation technology

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Involved in some of the world’s most exciting industries, AIS has developed a range of specialised products which give them access to niche markets throughout the globe.

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100 not out

Morgan – makers of elegant, timeless motor cars, as English as strawberries and cream – has just celebrated its 100th birthday. Will Stirling talks to operations director Steve Morris about a famous brand, its process of business transformation and taking the next bold step towards supercars and hydrogen fuel cells.

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Factory of the month Morgan Motor Company

Who would not want to own a Morgan? The classic sports car marque – the flared wings, moulded bonnet, louvers and leather trim – that epitomises a bygone era of motoring. The Morgan Classic: at once the genteel, top-down country lane cruising two-seater and the white knuckle, teeth-gritting racing machine with an enviable winning pedigree. More recently, the seductive and sublime AeroMax and Aero8 series have extended the range, cars that have effortlessly transformed the essence of Morgan into a very modern sports car body.

In any guise, they are beautiful, hand-built quintessentially English motor cars.

Morgan Motor Cars is 100 years old this year. The company was founded by H.F.S. Morgan, a clergyman’s son, who opened a garage and workshop in Malvern Links in 1906 and started serious manufacture in 1909 Morgan’s long history is sprinkled with events; new model launches – from the famous original three-wheeler, now reproduced as a £2500 child’s toy, to the brand new Aero Super Sport set for launch in January 2010 – racing successes, stories, and famous people.

Mick Jagger joins Catherine Deneuve, Jean-Paul Belmondo, Richard Hammond and even Miss Piggy among an elite

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What is obvious, and very satisfying, is the factory has a very manual operation throughout – there are no robots at Morgan

alumni of Morgan owners. The cars have appeared in a host of films and TV programmes, including Moonraker, Monty Python’s Flying Circus, My Girl and The Trip. Several books have been published about Morgan cars. In April, Princess Anne officially opened the brand new Morgan Visitor Centre, a modern museum bedecked with memorabilia, photos, films and the inevitable gift shop, housing a remarkable range of merchandise for ‘Moggie’ enthusiasts young and old. Steve Morris, Morgan’s tireless operations director, is proud of the way the centre came together in time. “It was touch and go before the opening – let’s say we worked a few nights that week.” The entire visitor centre was shopfitted by Morgan staff, whose round-the-clock efforts Steve applauds – there are some clear benefits to running a business with in-house carpentry skills.

Redesigned, nimble production

Morgan Motor Cars Ltd is located in Malvern Link in Worcestershire, an area full of hilly, twisty roads perfect for testing the steering linkage on an open top sports car. The premises – 10 long purpose-built workshops built on a hill – evokes the image of UK manufacturing as it used to be, in old buildings using traditional crafts, hand-making products of great workmanship and high quality. Today these old skills are needed, but are married with advanced technologies, such as the use of superform aluminium moulded sections – for which Morgan was a car industry pioneer in using panel section moulds for its Aero cars –wood engineering techniques and technical paint formulation. This is a cottage industry that has grown up, from its humble three-wheeled roots to a company that can make over 700 cars a year and exports 65%-70% of product to over 30 countries. The business has changed a lot, particularly over the last 10 years, by implementing lean techniques, more training programmes, developing an inhouse styling team and a better arrangement of the site, “We

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Charged and ready to go Banner Batteries upgrades, setting new safety and performance standards.

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anner have introduced upgraded versions of two of their top selling batteries incorporating new advanced technology to further advance safety and performance features.

New Banner Starting Bull: The new style Banner Starting Bull range of batteries, including 12 top selling models with capacities of 40Ah to 100Ah, now incorporates advanced features including excellent leak protection, 4 chamber lid construction, central degassing and integrated flame – resister which combine to ensure superb operational safety.

Absolute maintenance free performance is guaranteed by Starting Bull’s new calcium alloy battery plates.

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With an eye catching modern design incorporating new terminal covers and labeling, this up graded version of Starting Bull represents a real value economy replacement incorporating many features inherent in OE batteries. Batteries come filled, charged and ready to fit.

New Banner Power Bull: The new upgrading to Banner’s acclaimed Power Bull is set to underline the company’s innovative supremacy in the OE market.

New, patented “Double Lid” technology ensures 100% leak protection up to 45 degrees. Power Bull mastered the rollover test and is suitable for SUV. Additional starting power is achieved by the use of extra calcium power in

Power Bull’s construction whilst improved on board energy supply is provided by increased cyclical endurance.

Extended shelf life is assured by a reduced self discharge rate. The Power Bull range includes 12 top selling models from 40Ah to 100Ah and is supplied fully charged ready to install.

Published in association with: Banner Batteries (GB) Ltd Tel: 01889 571100 Fax: 01889 577342 Email: office.bgb@bannerbatteries.com www.bannerbatteries.com

Factory of the month Morgan Motor Company

Life Car digital render

reconfigured the whole factory, to better use the gradient of the hill to move cars.

Now cars move downhill from the chassis stage to final fit-out. We used to have to push cars up and down the hill, with less thought to the site design,” says Morris.

All of this along with a very demanding push to achieve the ISO 9001 accreditation has enabled the people to be better equipped for the changing requirements in a innovative design led Business.

Satisfying strong demand for a growing model range has required leaner business practices, and there has been more production process analysis recently.

“We look at takt times to ensure better product flow through the business, constantly reviewing the balanced work stations to ensure we get consistent throughput.” Morris says. “The whole business model has changed to enable delivery of an expanded product range, to ensure we can still build 15 plus cars a week.” The two main model types, the Classic and Aero, have different assembly

processes but the company’s size means that products can move from one workstation to another, when orders favour one model more than another. There are no moving Assembly lines at Morgan, so reconfiguring a production line section is easy. A skills matrix has also been developed to show management an overview of the compatible skills available to switch to different lines, should orders dictate.

KTPs lead to in-house styling unit

Until recently, the company had outsourced car styling. Then managing director Charles Morgan received a letter from a Coventry University student who wanted to design a car. “We had CAD and design capability, but not styling capability,” Morris says. “Matthew Humphries is the designer who came from Coventry on a two year KTP [Knowledge Transfer Partnership]. Once completed, we took him on and we’ve gone from strength to strength, winning various awards like the Lord Stafford award.” Morgan now has another two KTP-derived students on the payroll. With KTPs and KBPs, knowledge based partnerships, while the programme lasts the students are employees of the university. Morgan has run KTPs on styling, production engineering and R&D. The design studio, which runs Dassault Systeme’s Catia V5 – widely regarded as the car industry benchmark CAD modelling tool – and Autodesk Alias for simulating finishes, was the last piece of the jigsaw for the firm’s in-house R&D and product design. “It’s given us product design capability evidently, but as a business we can

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CAI – adapt, create and customise Customised instrument display and control system solutions for the specialist automotive, agricultural and industrial markets.

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aerbont Automotive Instruments is an independent SME engaged in the design and manufacture of customised instrument display and control system solutions for the specialist automotive, agricultural and industrial markets; including cased instruments, instrument clusters, electrical senders, mechanical control cables, electronic body systems control and CAN interface units.

CAI has its roots in the Smiths Motor Accessories business and other corporations (Lucas/ VDO) before becoming independent in 1993. CAI retains many of the valuable disciplines introduced under corporate ownership but delivers its service with small company care and response. CAI has the skills and willingness to adapt, create and customise

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products for its customers such as custom information displays, special body controllers and CAN gateways.

CAI has developed the capability of producing low volume, high variety output whilst adapting to control input costs and improve responsiveness through international purchasing and vertical integration. CAI employs a modern lean approach to manufacturing within ISO_ BS_EN9001_2000 standard that delivers a competitive, flexible and responsive service to its customers.

CAI has a committed and experienced employee base with good in house engineering capabilities that include mechanical, electrical, electronic and software design. CAI also has close links with local Universities, manufacturing,

electronic and software consultancy partners to form a broader more comprehensive offering to prospective customers.

Since its formation the following customer list is indicative of the versatility of CAI as a supplier; Morgan, Caterham, London Taxis, Land-Rover, Leyland-Daf, LDV, Optare, Terex, Caterpillar, MOD, JCB, AGCO, CNH and Perkins.

Published in association with: Caerbont Automotive Instruments Contact: Neil Meakin, Commercial Director, Tel: 01639 732200 Email: neil.meakin@caigauge.com

Factory of the month Morgan Motor Company

look at everything from stand design, branding, merchandising and brochures. It’s helped us in other areas like producing shows – we were a featured marque at Goodwood, Villa Deste and Pebble Beach this year,” says Morris in reference to the three - world-class motoring festivals.

Customisation, critical supply chain

Life Car production shots

Morgan has its own particular headaches. Kitting 20,000 parts a month from goods in stores, most of which are outsourced, its supply chain is one. “Supply chain is critical to us. You can look at the typical SC philosophies, the manuals for running a business, that say ‘you should only have 50 suppliers for a business of this size’ but there are always realities that make it hard to enforce that,” says Morris. “You may not be big enough to demand these things. We do a lot of work within our supply chain. We have a lot of line side components, the number of components we kit has grown with the model variance.”

Making 15 cars a week, Morgan’s scale of business is such that it doesn’t always get the stock turn it would like, making it difficult to make standard orders across the board. “You might have one metre of seal per car, times 15 cars a week, so you buy an economic batch quantity and you don’t get the stock turn that you want because may end up with 12 months worth of that seal.” It’s an issue that needs constant review.

Component supply and storage has been complicated by the Morgan customisation model. Customers can choose from myriad variants of body, engine size, paint colour, dashboard and leather trim. But this has been simplified where possible to make it easier for the business to deliver product. For the entry level Classic 4/4, the choice is limited to six outer body colours, one interior and the car is standard. “There’s a pack of purely aftermarket fitments you can do, but it’s not through the line,” says Morris. A customised car range affects inventory. For example, four years ago the company had eight dashboard variations. Today it has 24 variations, when including left and right hand, MPH and KPH versions.

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Wire wheel specialists MWS International Ltd is Renowned Worldwide for the Manufacture and Restoration of Veteran, Vintage & Classic Wire Wheels

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otor Wheel Service International Ltd supplies Morgan Motor Co with wire wheels for original factory fitment the entire range of Morgan cars (except the Aero). Earlier this year MWS launched a brand new 6½” x 17” aluminium rim Morgan wire wheel as an option to suit the Morgan +4 and Morgan Roadster.

Since Motor Wheel Service & Repair Company was formed in 1927 it has been committed to providing a complete service encompassing all areas of wheel manufacture and restoration. MWS wire wheels are

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available in fully polished stainless steel, chrome (using chromed stainless steel spokes and nipples) and painted.

Our in-house specialised Workshop can restore, repair or remanufacture almost any wire wheel, including those with aluminium rims, using our comprehensive inventory of component parts and staff of skilled craftsmen.

MWS stocks a wide range of wire wheels accessories such as: hubs, knock-on caps (spinners), spinner spanners and cleaning accessories.

MWS can also supply, fit and balance your wire wheels with tyres.

To find out what fits your vehicle go to www.mwsint.com and select “Fitment Guide” from the menu on the left.

Published in association with: MWS International Ltd Tel: 01753 549 360 Fax: 01753 547 170 Email: info@mwsint.com www.mwsint.com

Factory of the month Morgan Motor Company

With a heavily specified hand-built car, suppliers are key and Morris singles out a few as being vital to Morgan’s success.

“Radshape Sheet Metal in Birmingham is a very good supplier to us, who’ve been with us for 10 years. They’ve turned themselves into a big spend, crucial supplier.” Glasurit, part of BASF, supply all Morgan’s paint either directly as custom colour formations or mixed on site in by in-house paint specialists. Superform Aluminium is another key account, supplying the carmaker with all its preformed SPF aluminium panels (see below). Is supply chain risk an issue in the recession? “Our biggest supply chain risk is mainly from the biggest people who supply the mainstream OEMs. We deal with people who are supplying JLR, Aston Martin and Bentley. If schedules have been cut sharply it affects these people, but we’ve not had as many problems as we envisaged. Forecasting last year we expected more.” Interestingly, supplies from Germany have been less reliable, with more interruptions than forecast due to more short-time working and extended holidays at some German companies.

Morgan has felt it could be left last on the list for some companies that supply to the bigger OEMs, which has been an issue.

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Aero front grille

The programme uses all the main lean techniques applicable to most businesses, tailored to Morgan, then they try to make it as interactive as possible Lean and professional development

Aero SuperSports interior

Morgan is operating a lean programme in collaboration with Birmingham City University where the aim is to have all factory-based employees trained in lean processes. It’s an interactive programme, Morris says. They take operators from different areas of the business, mix them up and put them in groups of 12 in the same training room. Staff run through the programme, finishing with a project that is certificated by the university. The programme uses all the main lean techniques applicable to most businesses, tailored to Morgan, then they try to make it as interactive as possible. “It’s not purely academic, they are looking at the real benefits of single piece flow, and team-building etc. At the end of it, they do a project which assesses the tangible benefits, so they can really apply the learning into something very relevant in the workplace.”

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Continuous product improvement MB Components (SW) ltd is a specialist in the design, manufacture, and supply of steel products specialising in stainless steel.

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ith products ranging from exhausts to horse carriages, MB Components prides itself on offering clients quality products at value for money.

MB Components formed in 1999 as a family run business to supply Morgan Motor Company stainless steel exhausts for their production cars. This first order was delivered on time and in budget. MB has since designed and supplied exhausts, water pipes and seat frames for their standard production cars as well as having great involvement of the Aero 8 and super car range.

MB Components is proud of its status as a top tier supplier to Morgan. A strong and successful partnership has been forged by continuous product improvement

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the product and commitment to value.

Despite this success, MB has retained its emphasis as a family run business, giving personalised attention and support.

Our skilled workforce operates from a 5000 square feet manufacturing plant in Devon and we can offer a range of products and services including CNC tube manipulation from 15mm dia to 76mm dia; inspection and measuring data; mig and tig welding; metal forming right; and powder coated finishing – with the product delivered direct to you.

Demonstrating our expertise in tube manipulation and fabrication for many diverse markets, MB also produces balcony railings, hand rails, ornate balustrade to customer

requirements. Attesting to our finesse, Fenix Carriages recently used an MB produced horse carriage while winning the 2009 British Open National Horse Championships.

All-in-all, MB Components prides itself on a truly complete service, from design right through to finished product.

Published in association with: MB components (sw) ltd Tel: 01884 35562 Fax: 01884 34251 Email: brownmbc@aol.com www.mb-components.com

Factory of the month Morgan Motor Company

How a Morgan is made Starting at the top

There are six main build stages: chassis, assembly, sheet metal, wood, machine, paint and Trim (Upholstery). The first stage, chassis assembly, is done at the top workshop near the site entrance and the build stages progress downhill.

What is obvious, and very satisfying, is that the factory has a very manual operation throughout – there are no robots at Morgan. Classics and Aero models have different build stations, but these can be switched at varying stages of construction. The Aero8, for example, has a bonded rivet aluminium chassis. When finished the completed car weighs just 1170kg – “the power to weight ratio is phenomenal” . At this bare chassis stage, everything is configured in the car – you can plug a laptop into the car and drive it away. Full configuration, including checks for fuel leaks, drivetrain and engine checks, is done at this stage as it is far easier to pick up here.

Every car is issued with a build book, containing a tracking document and quality document, where every build stage has its own page. “This follows the car right through the factory to the dealer, agent or customer who picks the car up – a full record of everything that’s gone into it.” This system was installed six years ago and is part of the continuous improvement and lean programme at Morgan.

The Classic chassis station has a totally different set-up, due to the fact there is a lot of configuration later on with the Classic, and it’s not as advanced as the Aero series cars at this stage – there’s no wiring for example – so there are more chances to access parts of the Classic as it is being assembled. As the cars go through the production line they start to jockey together at different stages, with some models overtaking others on lines.

Handbuilt coachwork

All the cars arrive at the body mount stage where the craftsmanship really kicks in. For the Classic body frame, an all ash frame is made in the wood shop, dip treated for rot outside, brought back in to be panelled by hand and then mounted to the body. “It’s a very timesensitive stage. It’s three days work here, as soon as they’re done they must be fitted to the cars,” Morris says. Nearly all the metal is aluminium – on the AeroMax and Aero8 apart from the wishbones and the discs the car is almost entirely aluminium. The Classic has a galvanised steel chassis, a stainless steel bulkhead and firewall, and inner wings – beyond that everything is the same, ash frame

Scheduling can be kanban “We don’t run MRP, but we run internal kanban and some external kanban, so it’s a pull rather than push system. This helps to bring up the parts you need at the stations when you want them, rather than lots of product you don’t need and not enough of those you do,” says Morris, adding that this kanban system works very well at Morgan.

Every operation has a takt time associated to it, and these are recorded in the build book to produce reporting that highlights bottlenecks and issues that can be monitored and addressed. “This feeds through into the cost of the vehicle – we’re capturing cost at every stage.”

Clearly Morgan tries to manage its build programme carefully, as any changes to this can affect work in progress. Because of the configuration of the workshops these changes can have a misleading affect. “It can start to look extremely busy, where it actually represents less than two days vehicles in the queue.” Engines are delivered weekly from Ford (from two sites in Germany and Bridgend in Wales), and once a month from BMW.

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Business improvements not just cost savings Eclipse Group is a UK owned business, specialising in I.T. systems development and support.

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e have been trading since 1996 and our model is based on provision of service led I.T sourcing and solutions.

The size of our clients covers a wide range: those with a turnover of greater than £1bn (in the case of TNT) to SME businesses with a turnover of less than £100m. We offer: Flexible IT services, for both infrastructure and applications that can be tailored to meet the business needs of any sized organisation.

A solution where your business can

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take advantage of low/no-capital expenditure IT delivery.

Operational costs can be tied directly to the number of people accessing the service or a ‘partnership of value’ where we share the risk and offer ‘outcome pricing’ Delivering from the UK and offshore resources at competitive prices, Eclipse will help you build the business case to discover if a service based approach to IT will work for you financially and operationally.

Contact Sue Liburd or David Gay on 0845 226 9093 for further information or visit our website www.eclipsegroup.co.uk.

Published in association with: Eclipse Group Solutions Limited Watling House, 1 Watling Drive, Hinckley, Leicestershire LE103EY

Tel: 0845 226 9093 Fax: 0845 226 8493 Email: sales@eclipsegroup.co.uk www.eclipsegroup.co.uk

Factory of the month Morgan Motor Company

Woodwork – or wood engineering – is a core strength at Morgan. Their ash frames are shaped using traditional wooden presses and more modern bag press techniques. “A bag press is essentially a vacuum bag. You produce a former, for the part, and the vacuum literally sucks the wood down

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There is no danger to the Classic model’s future, while legislation lets us build that car we will build it. But we have raised the bar with the Aero and AeroMax, and the Super Sport is really a big leap Steve Morris, Morgan

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panelled body and aluminium. The Aero series wings are made from super plastic-form (SPF) aluminium. “You take a sheet of aluminium, its superheated to 450°C, you blow it into a bubble and using air pressure form tools and heat it is stretched over the steel form. You can get some absolutely stunning shapes.”

The body shapes are designed in-house, cast steel forms are made and the panels are formed at Superform Aluminium in Worcester. Classics also use SPF for the wings and cowls, but not body panels.

Superform is expensive but has passed the cost / benefit analysis, in that it offers high quality and repeatability. This choice of metal is important to Morgan to deliver cars that match their ‘light and fast’ ethos, which Morris says also reduces CO2 emissions making Morgans extremely environmentally friendly. The Classic car uses a mixture of hand cut and Laser cut blanks which are then very skilfully shaped and panelled onto the body frame, which exemplifies the traditional skills of the workforce in contrast to Superform’s cutting edge technology.

onto the former. It produces laminates with immense strength – you could drive a tank over it,” says Morris as he asks me to try and break the moulded wooden piece. Not a chance.

It’s all about pressure, while some ambient heat is used to cure the glue. This and clamp pressure techniques can produce some extremely complex shapes. Morris shows me an AeroMax centre roof spine – beautifully moulded, super-

Historic Morgan Racers

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Innovative engineering Radshape are an innovative engineering company who offer sheet metal services to various companies throughout many industries.

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ased in Aston, Birmingham, we are at the heart of the motoring network and have been in business since 1967 manufacturing parts from small one off laser cut profiles to large plate fabrications.

We can produce components to your specifications, or with our design to manufacture input, and supply parts direct to the customer or in a fully finished and assembled condition.

With a workforce of 50 we have the latest laser-cutting machine together with CAD/CAM engineers operating Catia version 4 & 5 and Solidworks 2009. We have CNC capability in Punch Press and Press Brake machines, fully coded welders, with the

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capability to form and fabricate complex components. Approved to ISO 9001:2008 our systems and procedures are also in line with Environmental / Health and Safety standards.

Radshape’s team of innovation engineers means our pro-active approach to customer requirements enables a project to be controlled from concept right through to completion.

We have also worked on many military contracts on projects as diverse as armour plating to radar equipment and offer a fast turnaround on competitive quotes, quality parts and delivery times which are second to none.

Our expertise in Aluminium bonding is

highly regarded throughout the automotive industry for which we are proud to be supplying chassis structures to the Morgan Motor Company since 1999.

Please contact our dedicated commercial team for a reliable and quality service.

Published in association with: RADSHAPE Sheet Metal Ltd Tel: +44 (0) 121 242 3323 Fax: +44 (0) 121 242 3385 Email: c.dickinson@radshape.co.uk www.radshape.co.uk

Factory of the month Morgan Motor Company

Centenary Pitville Pump Room

strong. It’s based on an old leaf spring for carriages, and while it isn’t required as a structural part it has that structural property. “It gives us differentiation in the automotive world – no-one else is using wood this way.”

Life Car

Traditional seat detail

The next stage, after the body mount where the wings and ancillary parts are assembled, is where the Classic and Aero cars mix and jockey for work in the same area. A car is rolled in, where Aeros are fitted with the body and wings and go straight to paint. The Classics has the body and wings fitted then it has pre-drilling, wiring, a heater, oil pipes etc all fitted here before going to the paint line. Both models are painted after being assembled at the Body in White stage.

“We do this is because the quality is so paramount in new vehicles – I’d rather invest a little more time at this point to ensure the product looks perfect here.

But we’re sliding towards painting the panels separately and meet them up later without building body in white.”

Morgan can offer almost 250,000 colour combinations from its own paint division.

Post Paint, cars are fitted out with leather trim, windows, bonnets and other auxiliary parts such as lights are fitted.

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Factory of the month Morgan Motor Company

Aero

AeroMax. The Super Sport is really a big leap, a new phase.” The business model changed when they introduced the Aero8 and AeroMax, which has perhaps given Morgan the courage to enter uncharted territory. Both Aero models, intended for a production run of 100 units, were launched from rendered drawings, with upfront deposits of £25,000 per car required 12 months before build. They quickly sold 100 on plan. The new Super Sport has taken 50 deposits within three months of the concept launch at Geneva. Also, a crucial trick in this business, Morris says, is to secure regenerative business and repeat business has been very important to Morgan with strong owner loyalty. This has further driven invention and the new models.

Resilience and a bright future

Morgans are not cars that deliberately target the recession-proof super-rich, but the cars’ name and caché has made the marque resilient. “Yes we’re pretty resilient, but a lot of factors underpin that. Morgan’s business model has been robust. Firstly the cars have great residual value – an AeroMax that sells for £110,000 new can go on sale in Germany for Eu160,000 within a year.

The centenary festival has produced a groundswell of interest and we’re building extra cars at the moment.”

Morgan is going through a transformation.

The company, once synonymous with the flared wing and cherry dash Classic sports car, is set on expanding the range further and making the most of its heritage and brand name. With the Super Sport it will be on the verge of supercar territory. “Something that is close to Charles Morgan’s heart is raising the brand profile,” says Morris. “There is no danger to the Classic model’s future – while legislation lets us build that car we will build it. Dovetailed to that, though, we have raised the bar with the Aero8 and

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This [design investment] has given us product design capability, evidently, but as a business we can look at everything from stand design, branding, merchandising, brochures. It’s helped us to market the brand

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Upon completion of the build process the cars are all road tested, they then go through a full technical PDI before having an under body protection. When this process is complete the car then receives a full PDI in preparation for Despatch to either the Customer or Dealer.

The company’s whole business model is based on longevity and brand reinforcement. This is not a get rich quick business.

“If you just looked at the numbers, when you talk about investment in product, the scales are very heavily tipped in the long term – it’s not a quick payback. But 100 years on, we’re still here and there must be something right about our model.”

Looking ahead, this small 100-year old factory in the Malvern Hills has more plans to jump feet first into the 21st century, with the launch of the hydrogen fuel cell powered LIFE car. end Continue the Malvern story at www.morganmotors.com

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Factory of the month Morgan Motor Company

Morgan Motor Cars at a glance Location

Malvern Links, Worcestershire

Sector

Sports car manufacturer. Handbuilt in aluminium, and wood (ash)

History

Founded 1909 by H.F.S. Morgan

Employees

175

Turnover

£24m in 2008

Key products

Classic, Aero8, AeroMax, Aero SuperSport (Jan ‘10). Engine variants include AeroMax / Aero 8 4.8 V8 BMW Classic Roadster Ford 3L, Plus 4 (2.0L Ford) engine and 4.4 (1.6L Ford), Classic 4-seater with 3L or 4L engines.

Output

650 cars in 2008

Price range

From £27,250 entry level Classic to £127,000 for Aero SuperSport (Jan)

Key people

Charles Morgan, managing director. Steve Morris, operations director, Tim Whitworth F.D. Matthew Parkin Sales & Marketing

Points of interest

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All wooden frames made from ash Pioneered use of Superform aluminium wings for car industry n Company kits 20,000 parts per month n Over 250,000 paint options n Over 100 leather trim options n ISO 9001 accredited in Jan2009 n Build books track every car’s progress – complete build record from chassis to delivery n Plans to build hydrogen fuel cell LIFE car in 2010 n

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Graphics and printing is a notoriously fluid business requiring constant innovation. GSM Graphic Arts general manager Rudy Pearce explains to Tim Brown how the company’s continued development and careful understanding of the market has allowed it to develop its reputation as an industry problem solver.

As one component of the GSM Group, GSM Graphic Arts in North Yorkshire focuses mainly on printing for industrial companies and produces a wide variety of products that are continually expanding and improving. “Primarily we were a label and name plate manufacturer, such as sticky labels on the backs of machines or metal labels for rating plates,” says Pearce.

“That is where we’ve come from but we’ve moved in to designing and manufacturing a huge range of niche products. We got in to that through investment in technology.”

Over the last five years, the company has moved its printing production away from traditional silk screen printing to utilise several different digital processes. Specifically this investment has allowed GSM Graphic Arts to produce innovative new products for commercial applications. Such new processes have included Primodise, which involves digitally printing onto anodised aluminium. Similarly, the company spent four years researching graphic overlays. Pearce says the company finally felt confident in the available technology to make an investment last year and is now able to produce a new range of previously inaccessible products.

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“The new range that we’re able to produce has opened up new markets and we’ve also invested in laser cutting so the customer can have reduced origination costs.”

Innovation spurs machine development

In total, GSM Graphic Arts has invested over £600,000 in the last four years on lasers, a new computer system and five new digital printers with various capabilities. The output that GSM is now able to achieve has truly impressed clients and set the tongues of the machine’s manufacturers wagging. “Some of these machines are so new that there was no existing colour management systems,” says Pearce. “We worked with the Manufacturing Advisory Service and Leeds University and created our own colour management system. It was so good that I was talking to the machine manufacturer about packaging it and selling it back to them. One of the machine manufacturers has also asked us to help develop the next generation of the machine because we’ve done so much with the current one; more than any of their other customers.”

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GSM Group’s – the parent company of GSM Graphic Arts - consolidation of numerous graphic and printing companies under one banner has allowed the essentially independent companies to now work in more defined market places.

Through acquisition the group has moved from an original single site to now having six. As a result, collectively GSM Group has been able to enter into significantly more markets including white goods, automotive, aerospace and military.

According to Pearce: “If there’s graphics involved, we’re probably involved as well.”

If there’s graphics involved, we’re probably involved as well Rudy Pearce, GSM, Graphic Arts

The versatility of products now available due to the range of different processes in use at GSM Graphic Arts has allowed it to more easily satisfy customer requests, no matter how obscure their nature. Consistently creating bespoke solutions to commercial industries is now an attribute that Pearce says not only sets them apart from their competitors but also provides the opportunity to trial new innovations and potentially incorporate them into their product range. “If a customer phones up with a problem, that’s great for us,” says Pearce, “ that’s what we want to hear because we’re all about fixing problems for people and that attribute has created its own niches.”

Data matrix cracks the code

Another advancement that has been made possible by the shift to digital is GSM Graphic Arts’ ability to produce a revolutionary new bar code. This new innovation has generated a lot of interest

Printing

GSM Graphic Arts

within industry and defence sectors and GSM has already received much interest in this new product. “What we’ve been able to do is move into new areas and one of them is data matrix coding...It took us two years to develop but we can now produce data matrix coding to the highest standard.

“Everybody is familiar with the standard bar code. Data matrix coding is a series of dots formed into a square and what it does is allow so much more information to be held in a smaller area. For example, you can now have a product with not just a price on it but also information about where it was manufactured, where it is stored and when it should be sold by. It can hold a huge amount of data. We’ve done considerable work with the Ministry of Defence and Nato but we’re also seeing commercial benefits as well, such as for industrial rating plates or automotive plates.”

Knock-on effects of its digital investment have included environmental improvements which Pearce says have become an essential consideration for the company.

Now able to now get 15% average waste reduction, GSM Graphic Arts plans to continue to invest in hardware that permits

such saving opportunities. “A lot of these savings come from our interaction with the suppliers. We work with them where we can with feedback from the machines and the processors to try and make things more environmentally friendly.”

Team ethic

Aside from investment, other aspects of GSM Graphic Arts’ business management have continued to play an important role in the company’s success. A deliberate effort to maintain employee morale as well as streamlining its expenditure have generated considerable returns. “We’ve always concentrated on developing a team ethic and we work using flat management and team structures,” says Pearce. “We also invest a lot in internal training using skills matrices and we’ve done lots of cross-training and re-training to cope with the influx of the digital area.” During a visit from Nissan a number of years ago, GSM was introduced to the kaizen philosophy. The main element of kaizen is that any expenditure which does not generate value for the end customer is wasteful. GSM’s considerable investment in improving its capabilities for the benefit of its customers is a demonstration of the incorporation of this philosophy.

With a solid base of infrastructure being utilised by GSM Graphic Arts, its capability as a key player in the digital printing industry has been fortified. Innovations within its product range are now naturally occurring thanks to the improved capabilities of recent investments in – and in-house development of – the latest technology. Considering this, the continuation of their current operational trajectory is certain and, notwithstanding falls in demand, uninterrupted innovations and developments are likely to follow. end

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If it’s embedded, it’s Kontron Kontron has enjoyed working with Aeroflex on a number of programmes and Aeroflex are able to rely on Kontron to deliver products from our standard portfolio, or modified customer specific variants, with full revision control, life-time technical support and forward notice of changes and obsolescence.

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rganisations like Aeroflex value these services from Kontron as it enables them to focus on the relationships and value-add they provide to their customers, whilst maximizing their ROI by limiting changes through manufacturing, minimizing approvals testing and limiting support costs.

Kontron is one of the world’s largest manufacturers of embedded computer technology and supplies leading OEMs, system integrators and application providers in multiple market segments such as data and telecommunications, automation, test & measurement, military and medical technology. Our aim is to

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create a major competitive advantage for our customers through significant time-tomarket and cost reduction initiatives.

Kontron are leaders, designers and suppliers of; Processors boards – Intel® Core2Duo, ATOM, PowerPC....

Operating systems – Windows 2000/XP/ Vista/XPe, WinCE, Linux, VxWorks, QNX...

Form factors – PC/104, ETX, cPCI, VPX, aTCA/uTCA, PICMG 1.0-1.3....

Enclosures – 19”, Wall mount, fanless options....

Connectivity – Fieldbus, Ethernet, WLAN, USB, SAS/SATA, PCIe, SRIO.....

Kontron has enjoyed significant growth over the last 10 years and is well placed for future expansion. We provide solutions conforming to open industry standards are an Intel Premier ECA member and are extremely proud to have won the VDC Platinum Customer Satisfaction Vendor award 5 years in a row.

Published in association with: Kontron Tel: 01243 523500 www.kontron.com

Microelectronics Aeroflex Group

The Aeroflex Group, established in 1937, is a global provider of microelectronic test and measurement solutions for the aerospace, defence, wireless mobile, broadband communications, and advanced manufacturing markets.

Within its remit as a group, Aeroflex is split into two distinct operations. An industry-leading – i.e. Rockwell Collins Discreet Semiconductor Commodity Supplier of the year for 2009 – microelectrics solutions group, specialising in the design and manufacture of high-reliability integrated circuits, motion control, and microwave/RF devices, it represents the group’s predominantly North American operations.

Secondly, and encompassing the Stevenage-based Aeroflex Europe, is a test solutions group which targets the test and measurement instrumentation marketplace, with products including spectrum analysers, turnkey systems, stand alone boxes and related modular components.

In technology we trust

Given the complexity of Aeroflex’s high performance wireless and broadband manufacturing solutions, a dedication to those technologies which provide superior product performance and maturity remains fundamental to its success. Indeed, this commitment to advanced technological innovation has, without doubt, enabled Aeroflex to lead the sector in terms of intellectual property, manufacturing processes, and R&D advances.

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xLINK Low cost I/O for µTCA The new xLINK family of products developed by Meikon blends the reliability and speed of the Micro TCA (µTCA) format with the low cost input and output (I/O) boards found in PCI format.

µTCA’s

low cost, compact form, speed, flexibility, reliability and optional redundancy make it ideal for many industrial applications.

The only obstacle is the lack of low cost I/O board. xLINK answers the problem.

It links a µTCA rack to a passive PCI rack using a pair of boards connected via cable. Each xLINK board in the µTCA rack will drive up to 4 slots in a passive PCI rack up to 7 meters away, via cable, at speeds up to 2.5 Gbs. The board in the PCI backplane fits into the system-host

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slot and controls the slots and a bridge chip. Tens of I/O boards may be driven using bridged PCI backplanes and the I/O racks can be 14m apart. For ease of adoption, software drivers for all PCI cards are compatible with xLINK products.

Remotely connected I/O provides other advantages. Power for the I/O is removed from the µTCA rack which reduces cooling requirements and allows the I/O to be mounted close to the measurement or control nodes. Lastly, the PCI format provides the lowest cost of I/O among the architectures currently in use and allows the use of legacy I/O

cards even after changing to µTCA. The combination of two popular computer architectures brings advantages greater than the best features of both.

Published in association with: meikon ltd Tel: +44 (0) 1886 822208 Email: sales@meikon.eu www.meikon.net

Microelectronics Aeroflex Group

Coupled with outsourcing of a number of its technical processes, since the turn of the decade Aeroflex has sought to operate its UK-based manufacturing with an ever greater degree of automation.

Primarily, the firm has invested significant capital in products which are modular in construction, one such example being the PXI range of RF instruments, designed to expand speed and modularity in the realm of wireless testing. Central to reducing the degree of manual assembly, attended test time required, and overall labour

costs has been the company’s ability to implement ever more unique methods of operation, thus keeping it further ahead of its competitors within the sector.

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The company philosophy is top down, bottom up, and middle out. Of particular importance is the entrepreneurial ethos that has been cultivated at Aeroflex, in that it looks to surge that energy throughout the organisation, rather than being negatively restricted by rigid strategic goals from a distant boardroom

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While the company regards flexible manufacturing as central to its past, present, and future success, however, it has simultaneously undertaken a programme of global outsourcing so as to achieve those extendable solutions which are critical to retaining products of the highest possible quality. In doing so, Aeroflex seeks to leverage its established corporate buying power, ensuring that the supply chain is continuously generating solutions which enable the company to provide flexibility, creativity, and cost-effectiveness to its diverse range of customers.

Equally significant to the business as a whole is the fact that product lifecycles have been reduced almost beyond recognition, from an average timescale of five years in 2005 to a current capacity to bring products from cradle to market in less than twelve months. Such a transformation, is largely due to, and in spite of an annual turnover of $200m, its actively seeking to establish an organic, small company mentality, therefore allowing Aeroflex to avoid unduly cumbersome red tape when getting a product signed off. This sense of financial freedom allows it to control sector and third tier overheads, together with enabling a more nuanced analysis as to the risks

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Delivering cost-optimised solutions Since the Schroff Group was founded in 1962, our operational philosophy has been geared to one objective; to become a leading supplier of fully integrated electro-mechanical solutions.

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e have developed a wide range of standard and custom built products: from precision piece parts to fully engineered electro-mechanical assemblies; from specialised backplanes and PSU’s to thermal challenging Outdoor cabinets.

To our “solutions” we apply the same fundamental disciplines, whatever the project, and however large or small the volumes involved. We were amongst the pioneers of the value engineering concept in design and manufacture, and as such our procedures are focused on optimising cost effectiveness and quality at every stage of the product manufacturing cycle.

By applying the principles of design for manufacture and assembly (DFMA) from

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the earliest concept stage, Schroff is consistently able to deliver cost-optimised solutions within the shortest time frame.

The success of these techniques depends crucially on two factors: maintaining a close working relationship with our customers throughout the project and the commitment of every member of the Schroff team.

To achieve this, we invest in intensive company-wide training and in the promotion of a teamwork culture, which empowers our people actively to seek continual improvement of product and process. To ensure consistent project management and the continuity and confidentiality of customer contact, each major product development and

manufacturing programme is controlled by a dedicated project team.

With a global customer base that includes many of the world’s major providers of information, communication and security technologies, we pride ourselves on operating to the highest international standards of product quality and excellence of service.

Published in association with: SCHROFF UK LTD Tel: 01442 240471 Email: glenn.conlon@pentair.com www.schroff.co.uk

Microelectronics Aeroflex Group

associated with in-house development versus procurement.

Taken together, these processes – lean, by any other name – significantly reduce the product lifecycle, increase companywide agility, and, ultimately, is reflected in the scope of the firm’s global presence.

Coupled with the lean and Just in Time principles already in place, Aeroflex has been implementing other initiatives designed to refine space allocation on the shop floor. The result being that any phase of production being undertaken on the shop floor at any one time will be included in a solution delivered to the customer within four weeks.

“

The forecasts, backlog, and sales activity are thus subject to weekly review, meaning that the supply chain, manufacturing processes, and final shop floor testing come together to produce an industry-leading range of products within a greatly reduced lead time

and PDA operations, as its most critical strategic goal.

The company philosophy is top down, bottom up, and middle out. Of particular importance is the entrepreneurial ethos that has been cultivated at Aeroflex, in that its look to surge that energy throughout the organisation, rather than being negatively restricted by rigid strategic goals from a distant boardroom.

As has been painfully realized for many across industry in recent months, the market is not, and has never been, a stationary phenomenon. For that reason alone, Aeroflex has no intention of being such an organisation. Quite in opposition, the company is committed to the culture of agility which has positioned it as a world-class manufacturer across each sector of its portfolio, and through the continuation of such innovative corporate direction, research initiatives, and high performance manufacturing processes, the company is set to remain as the first choice for global test, measurement, and microelectronic solutions.” end

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To ensure such rapid turnaround cycles, Aeroflex uses a Manufacturing Resource Planning (MRP) programme, which provisions all aspects of its order book. To enable its delivery lead times to remain under four weeks, the company calculates material to a forecast, and runs processes that provision material in readiness for projected orders. The forecasts, backlog, and sales activity are thus subject to weekly review, meaning that the supply chain, manufacturing processes, and final shop floor testing come together to produce an industry-leading range of products within a greatly reduced lead time,

Top down, bottom up, middle out

While few – if any – businesses would argue that the global economic downturn represents a welcomed interruption to a decade of growth, one aspect of the recession that Aeroflex has been pleasantly surprised with relates to the changing face of recruitment. Whilst it would be wrong to say that the company has undertaken a company wide recruitment drive within the last eighteen months, given that it is positioned as a globally-leading provider in the sector, maintaining an awareness of the engineering talent available in the market is fundamental to ensuring that Aeroflex remain ahead of the chasing pack. As a result, where recruitment has been necessary, Aeroflex has found a sizeable pool of specialists from which to choose.

Unlike those companies which implement strategic plans ten or twenty years in advance, Aeroflex Europe resists such rigidity of operation. Indeed, given the nature and culture of its business, the company actively opposes setting goals for decades in the future. Indeed – and ultimately vindicated by present economic conditions – the company believes in setting shorter windows of two years at a maximum, a ‘live document’ which thus enables it to assimilate any unforeseen market or technological variables into its strategy. That being said, the company has targeted the domination of the wireless test marketplace, with regard to both mobile phone

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High-Performance Monolayer PET Containers Wouldn’t it be great if everything could be in DiamondClear?

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ell, almost everything. Designed specifically for shelf-stable foods and beverages such as juices, teas and functional water, Constar’s new DiamondClear technology for PET bottles and jars offer four compelling advantages over other competing packages: 1 Exceptional clarity makes other PET packages dim by comparison.

Some PET containers appear cloudy or opaque. DiamondClear’s clarity gives consumers an unobstructed view of your product, leveraging shelf presentation and consumer appeal.

2 Advanced barrier protection outperforms the competition.

DiamondClear incorporates

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sophisticated oxygen scavengers blended evenly throughout the PET. In a side-by-side comparison with other PET containers, a DiamondClear PET container keeps products fresher, more vibrant, and tasting better at 6, 12, 18 and 24 months.

3 Feather-light weight optimizes sustainability. A DiamondClear PET container can weigh one-tenth of a comparably sized glass package and less than a multilayer barrier PET container. This saves fuel, reduces the carbon footprint and earns high marks on sustainability scorecards. Plus, DiamondClear PET containers are easily recyclable.

4 Monolayer structure eliminates the threat of delamination.

Multilayer PET containers are subject to delamination, posing aesthetic and performance issues.

DiamondClear’s robust monolayer structure has no such issues, withstanding the bumps and bruises of the supply chain while allowing faster filling and labelling speeds.

Published in association with: CONSTAR INTERNATIONAL UK LTD Tel: 01977 882006 www.constar.net

Food and beverage Constellation Europe

Future proofing

Despite already being one of Europe’s leading alcoholic beverage producers, Tim Brown finds out from Constellation Europe manufacturing manager, Richard Lloyd, how a recent capital investment has facilitated an evolution of their manufacturing and supply chain processes.

Constellation Europe’s recently constructed purpose-built manufacturing and warehouse premises in Bristol has been the catalyst for a large number of operational changes at the company. The need for such an investment was instigated by the continued growth of its extensive portfolio of more than 100 consumer brands across the wine, beer and spirit markets. With major brands including Robert Mondavi, Hardys, Ravenswood, Corona and SVEDKA Vodka, the need for Constellation Europe to consolidate a number of sites into one streamlined manufacturing, distribution and storage plant became a necessity to improve efficiency and meet increasing demands.

According to Richard Lloyd, the new development in Avonmouth, named Constellation Park, has allowed the company to alter almost every aspect of its operational footprint. While the changes have been widespread, particular emphasis was been placed on improving Constellation’s supply chain and packaging procedures.

“One of the main drivers for the new site was to realise distribution and also environmental impact savings by actually bottling

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products within the country of sale,” says Richard. “Previously the majority of, for example, the Hardy’s range was bottled in Australia which obviously meant that the bottles and packaging were being shipped halfway around the world. It’s obviously a lot more cost efficient and environmentally friendly to ship the wine in bulk containers and actually bottle it at its final destination. There was a need therefore to increase the operational capacity within the UK so the business had the flexibility to be able to transfer the bottling of a number of its new world wines across to the UK.” The complexities and sheer volume of such a process is nothing if not impressive. In essence, the wine is loaded up at wineries around the world into sealed containers; a mixture of 24,000L bags and stainless steel containers. It is then shipped across the world to Bristol.

From the port, the wine vessels are delivered to the Constellation site where a 24,000L container can be unloaded in just under two hours. A storage facility of over 4 million litres exists within the site which equates to approximately two days worth of production.

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The wine is pumped directly from the 54,000 litre storage tanks to the two high-speed production lines and three bag and box lines. The bottling lines incorporate the latest in processing technology, not only with regards to the speed with which they operate but, according to Richard, they also ensure the optimum quality of the wine and packaging through advanced filtering and handling systems.

While the concept of country of sale processing was economically sensible and more environmentally viable, realising the dream was logistically complicated. Ensuring the building was constructed with the correct capacity to maximise packaging and storage efficiency for the bulk products was a careful balancing act. “One of the biggest challenges,” says Richard, “was to design a site that whilst large in scale didn’t then introduce other operational difficulties by the sheer scale of it and yet was large enough to accommodate future development. We needed to design it to meet current market demands but also with a view to what the future of the industry might require and not later constrain the operational benefits that we’re now gleaning.”

To reach the optimum scale for the new premises, Constellation kept lean operational principles at the forefront of their minds during the design process to ensure that the product flow through the site would be as efficient as possible. “We spent a lot of time modelling and working product flows, trying to understand where the constraints would be and removing those constraints...Because we are predominantly a new world wine business, the shipping routes and duration of

Food and beverage Constellation Europe

the shipping routes are extensive and therefore significant work had to be done looking at the amount of wine storage facilities we needed on the site so to ensure that any variability that happened in the supply chain, did not have a direct impact on the efficiency of the actual manufacturing unit.”

The Lean approach and consolidation of their various sites has also meant an improvement of the companies environmental impact. The ability to ship their wine in bulk as opposed to a finished goods state, has resulted in an impressive reduction of unnecessary packaging transportation. Constellation have also moved to a lighter weight bottle so therefore reducing the amount of glass they actually use within every bottle they package.

“

“

We needed to design it to meet current market demands but also with a view to what the future of the industry might require

completion of its commissioning period, which will mean the transfer of an even greater volume of bulk product from their other production sites around the world. In the first year, Constellation Europe envisages achieving an output of approximately 120 million bottles. However, the site has the capacity for that to increase to in-excess of 200million bottles a year, a target they are hoping to reach within the next few years.

Since the new plant began operation, key Lean principles have been adopted into almost every facet of Constellation’s operational philosophy. “We aim to achieve very much a standard way of operating to ensure process reliability and this is done through tools such as 5S and TPM. We have OEE as our key measurement which we use to drive our line performance on the site.

We use a problem solving structured technique called A3 which is out of the Lean philosophy. So in essence we operate with an objective to remove any variations in our process and we do that by trying to utilise 5S to have a standard workplace environment. We then have our OEE which tells us which direction our performance is moving and where we have variations. We then look at addressing our machinery variations and issues through the TPM nine-step model.

And where we do have ongoing variation that we are struggling to control, we then use an A3 problem solving technique to eliminate this variation.”

“We are constantly working with our supply chain to ensure that our deliveries of raw materials and bulk wine arrives onsite just in time for its production. Whilst we’re a large site, with our considerable through-puts involving filling in-excess of 65,000 cases of wine a day, holding large quantities of raw materials is not really effective. So the majority of our required raw materials arrive on-site within 48 hours of production.”

The site, which has only been operational for just over 6 months, is nearing the

Another considerable change to their operational component which has been initiated by the completion of the new building has been within the area of human resources. “There’s been a significant increase in the number of engineers within our operational workforce. Compared to our old site, our productivity levels per head have doubled and that is through more efficient manning structures within the site coupled with the higher machine speeds.”

“There has been a significant investment in all personnel on site, for instance every operator and engineer who operates the bottling line has spent a minimum of three weeks in Germany at a training academy. All of our roles within the industrial side are trained to a minimum of NVQ level 2. The new site has given us the opportunity to create a step change and to review all operational practices and to cement and build on successful ones from before but also then move away from practices that hindered the business and individuals.”

The level of improvements achieved as a result of the development of Constellation’s new plant have been extensive. By considering how the design of the construction would impact on the implementation of Lean principles within their manufacturing operation, Constellation were able to ensure the building was conducive to the most efficient production processes possible. And, with the full production capacity yet to be realised, the ability for Constellation to further consolidate and generate even greater sales figures is, most likely, only a matter of time. end

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Tyre technology Pirelli

Cutting edge tyre technology Proving their worth on the racetrack, Pirelli has secured its position as the producer of a world-leading range of performance tyres. In the general automotive market, the same resolve and pursuit of quality has ensured Pirelli’s representing the tyre of choice for discerning car enthusiasts.

An Italian job

Pirelli, the Milan-based tyre and cable producer, was founded in 1872 by Giovanni Battista Pirelli. With production focused initially on rubber and derivative processes, the design, development, manufacture, and market of tyres for motor vehicles, industrial vehicles, and motorcycles now represents the group’s core business, and has done for over a century.

Positioned as the fifth largest tyre manufacturer in terms of global turnover, and with consolidated revenue of EUR 4.6b in 2008, the company’s products are widely considered to be the standard-bearer in sport and racing vehicles.

Accordingly, Pirelli represents the control tyre for, among others: the World Rally Championship; the British Rally Championship; the Superbike World Championship; and the British Superbike World Championship.

Within its tyre remit, production is split into two distinct operations: consumer and industrial. The former, representing 70% of total revenue, manufactures tyres for motor vehicles, SUVs, light commercial vehicles, and motorcycles – the latter for heavy trucks, buses, and agricultural machinery. With twenty four plants in twelve countries throughout the world, and producing 12,000 tyres per day in its UK factory alone, central to Pirelli’s success remains the performance of its tyre ranges. Supplying treads for both the prestige – e.g. Audi, Porsche, Jaguar, Mercedes – and SUV markets, the company continuously seeks to innovate across its entire output. Resultantly, the construction, performance requirements, and commercial viability of any one tyre is subject to considerable R&D processes, before being manufactured with the company’s advanced suite of robotic technology.

Unsurprisingly, Pirelli is no stranger to its products being recognised as best in class. For example, the company won the Auto Express Tyre of the Year Award 2009, rewarding those tyres capable of high performance across several disciplines, including: braking/handling in both wet and dry conditions; aquaplaning; and rolling resistance. Similarly, at the Geneva International Motor Show 2009, Pirelli tyres were fitted to the ‘ichange’, the first sportscar in history to reach 220 km per hour without consuming fuel derived from petrol oil. Arising from a collaboration between Pirelli and Swiss company Rinspeed, the vehicle is the first zero emission supercar, powered by a lithium ion battery.

Industry experts at the Geneva Motor Show also named the group as Best Tyre Manufacturer 2008 for its commitment to innovative materials and the research and development of ecological solutions for the automobile industry, as evidenced by partnerships with research institutes including the Silvio Tronchetti Provera Foundation and China’s Shandong University.

A sustainable future

Sustainability is central to Pirelli’s longterm group strategy, enabling it to best manage the social and environmental impact linked to its products, processes, and services. Announced in its industrial plan for 2009-2011, the group’s three year target is a transformation that will include both a focus on core businesses – Pirelli Tyre and anti-particulate filters of Pirelli Eco Technology – as well as striving to be a ‘green performer,’ including activity towards the development of products and solutions in the field of green economy. At the end of this period, the accumulation of ‘green’ revenues is expected to increase to about 40% of the total, as compared to the 20% seen today.

Immediately making good on its drive towards sustainable production, the company received a double award at the 2009 China Tyre Enterprise Summit, an event focusing on an eco-sustainable theme of energy saving and protection of the environment. Pirelli was awarded both the Summit’s most prestigious honour, with the Cinturato P7 being voted ‘The Best New Tyre of the Year,’ while its high range P Zero tyre won ‘The Best UltraHigh Performance Tyre.’

Further highlighting the scope of its twenty-first century strategy, Pirelli recently launched the first in a series of European motorbike ‘e-shops,’ enabling its customers to review the company’s online catalogue; select the appropriate tyre for the make and model of their motorbike to ensure the best fit; check availability; and place an order with Pirelli to dispatch the tyres to the customer’s nearest dealership.

Despite nearing a century and a half of production, Pirelli shows no signs of slowing down – quite the opposite, in fact. Indeed, with production unities recently opened in Brazil, Turkey, Egypt, China, and Romania, the company is set to maintain another one hundred years of automotive excellence by embracing the challenges of new technology that have remained central to its success. end

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AIS –

GROWING TOGETHER

is a High Technology Electronics Contract Manufacturer specialising in the Defence and Aerospace Marketplace, in 2007 STI was recommended by one of its largest customers to AIS. It was from this initial meeting that a relationship started that has grown in one of strategic importance to both companies.

STI continues to successfully deliver complex products, under exacting lead-times, enabling AIS to meet customer demands and milestones. This is supported by close technical cooperation, dedicated on site support and a joint willingness to drive Continuous Improvement for mutual gain.

The future is bright with ambitious plans to mutually develop STI offering and to deliver efficiencies and improvements to both parties by working even closer over the next few months and years.

“We have seen immediate benefits of working closely with STI and more importantly we see a close working relationship as key to the success of our supply chain” Nigel Kilbourn- AIS Supply Chain Director.

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Navigation technology Atlantic Internal Systems

Moving uniformly forward

Developing and growing business in niche markets in some of the world’s most exciting engineering industries is the focus for Atlantic Inertial Systems.

Business Improvement Director, David Somerville, and Production Director, Kevin Pindard, talk to Tim Brown about their highly specialised company and its market leading technologies.

Atlantic Inertial Systems (AIS) is a global supplier of inertial measurement and navigation systems. Its range of products are used in a wide range of industries including aerospace, defence and automotive. Operating within 28 different countries and with 250 different product ranges, examples of AIS’s product portfolio are at the heart of the effective functioning of many, many different platforms types – ships, aircraft and unmanned aircraft, guided weapons, land vehicles, camera platforms and sighting systems . An Inertial Measurement Unit (IMU) is the main component of the inertial guidance systems used to track a platform’s position. An Inertial Navigation System (INS) is a navigation aid that uses a computer and accelerometers to calculate the position, orientation and velocity of a moving object without the need for external references. Among the list of defence hardware fitted with AIS systems is the Seawolf Rocket, the shoulder-launched Javelin rocket and the Apache Longbow attack helicopter and, most recently, the Excalibur precision guided missile. The effective operation of the NASA Space Shuttle also depends on AIS equipment.

In fact, AIS could be considered the UK’s oldest start up company. Its heritage goes back to early in the 20th century

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and includes pioneering names such as Singer, Plessey and Marconi and yet AIS was formed only in 2007. It was bought by b BAE Systems in 1999 and subsequently purchased by its current owner John F. Lehman and Company (JFL) in 2007. JFL has encouraged Atlantic Inertial System’s continued development in both the military and commercial markets and has brought increased connectivity and experience across European and US civil and military aerospace programmes.

“Under JFL, we have secured greater investment in product development which has improved our potential for growth. Despite the current climate there is an emphasis on continued technology investment and we continue to invest in the region of 10% of our turnover in research and development.” says Somerville “And key to our success also has been the significant investment we have been able to make in state of the art equipment to maintain our comprehensive product test facility. This has allowed us to comprehensively test product performance in any environment, however severe. Today, we have the only IMU on the market that will survive 20,000g and function perfectly and it is this proven performance that brought us our contract wins on the USA’s Excalibur programme.”

Using lean principles combined with the introduction of strategies to assist in the management of product performance such as Statistical Process Control and Six Sigma, AIS has made major improvements to its efficiency and productivity.

And to ensure the Company and its suppliers are working efficiently and in full support of customer’s needs in an effective supply chain, AIS is currently implementing the UK Government’s Supply Chain 21 initiative.

“For the aerospace and defence industry, the manufacturing techniques we have in place on this site are very much state of the art,” says Somerville. “We have very good control of inventory.

When we started looking at our product portfolio and at our five year target, we could see that the largest financial commitment was in materials rather than labour. By reducing our inventory, our cash flow within the business has improved by 40 per cent and we have seen a significant 20 per cent reduction in waste and yield loss. And the improvement programmes we have in place to streamline our business processes have had a critical benefit in significantly reducing our lead times to the customer.”

AIS’s Plymouth site offers a complete turnkey solution offering a full engineering and design centre, extensive test facility as well as a full manufacturing operation. The team undertakes every stage of the process from initial design and development, through performance and environmental testing into full production. There are very few operations in Aerospace and Defence industries where this is the case.

“We have a highly skilled workforce with an average of 16 years experience and the commitment of every individual is key to our success. Our process of continuous improvement encourages engagement with and contribution to our lean processes by everyone. We have clear displays of our key quality, cost/profit and delivery measures available for all our team.”

Pindard explains.

A.I.S uses the range of lean tools and visual management systems to ensure maximum efficiency and productivity.

Tools such as, 5S, Kanban, VendorManaged Inventory, Total Productive Maintenance (TPM), standard operating procedures, throughput accounting and theory of constraint tools are in everyday use at AIS. The Company deploys DFM (Design For Manufacture) within its new production processes and Poke-Yoke in developing fail-safe processes within production programmes.

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Sumitomo venture

AIS has also cornered more mainstream markets including in the automotive sector. Through a joint venture with Sumitomo of Japan - one of the oldest and most successful joint ventures between a Japanese and British manufacturing company, about to have its 10th birthday - a MEMs-based silicon gyroscope was developed for use in automotive applications. This product now equips the electronic stability system of over 15 million cars on the road today. And this versatile solid state gyro is also found equipping a diverse range of products, such as model helicopters, agricultural equipment and ship tracking systems.

AIS has detailed plans in place to expand the business over the next five years. The Company has a healthy re-investment scheme and extensive market research programme in place investigating new revenue streams “We are looking at adjacent markets,” says Somerville. “We will maintain and grow our aerospace and defence and automotive businesses and believe our products have real applicability in a number of associated markets.”

With its focus on targeted research and product development, its current technological lead and healthy order book and its strategic plan in place, AIS seems entirely likely to meet its bold business targets and to continue its success. end

Source of Supply

www.themanufacturer.com August 2009 Vol 12 Issue 7

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Morgan hits

Centurion sports carmaker is driving innovation

Leadership and strategy Banks quizzed on lending

Design and innovation

Rapid prototyping, 3D printing

Supply chain and logistics SC risk management model

www.themanufacturer.com August 2009 Vol 12 Issue 7

Interview Brian Stein

CEO, Samworth Brothers