www.themanufacturer.com July 2011 Vol 14 Issue 07
www.themanufacturer.com July 2011 Vol 14 Issue 07
Energy and Sustainability Japan’s affect on the nuclear supply chain
Finance and Pro Services PE houses target Manufacturers
Supply Chain and Logistics BAE Munitions is reborn with MASS agreement
SPECIAL SUPPLEMENT Lean Supply Chain
SPECIAL OUTBOUND REPORT Round-up of Cranfield’s National Manufacturing Debate 2011
Interview Charles Morgan
Managing director, Morgan Motor Company
Manufacturing in Action
Factory of the Month – Husqvarna
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Answers for industry.
Manufacturing bursts onto the public stage Firstly, I would first like to say what a great pleasure it is to step into Will Stirling’s shoes as editor of The Manufacturer. Working for TM and its sister publication Lean Management Journal over the past two years, I have found myself becoming increasingly invested in the fortunes of UK manufacturing and humbled by the dynamism and sheer cleverness of the many people and processes which support it. I take on the editor’s job at a highly optimistic time for manufacturing. Despite some glitches last month, where the Purchasing Managers’ Index hit a 21-month low, trainmaker Bombardier’s review of the future of its UK operations (see p4) and the disappointing decision by the Department for Business to scrap the job of director of manufacturing and materials, there is much to be celebrated. The hard nut of public perception is beginning to crack. June brought the BBC2 documentary Made in Britain to our screens, highlighting to an audience of millions the innovative manufacturing and research activities being carried out under their very noses, of which so many are unaware. Adding to this splash, the Government launched the ‘See Inside Manufacturing’ initiative. This scheme, which throws open factory doors to pupils, teachers and careers advisors (see p4), has prompted a flurry of comments in TM’s Inbox, all expressing warm support. Developing the perception theme, the National Apprenticeship Awards, held on June 29, was a raucous success. Sir Alan Jones, ex-chairman of Toyota Motors UK and sector skills council, Semta, was bestowed with a lifetime achievement award and it was gratifying to see formal recognition of the trajectory that an apprenticeship can put someone on. The area where manufacturers really shone at this celebration was in the Employer of the Year categories. Importantly, this identification of the critical part played by employers in delivering apprenticeships was not confined within the walls of the Mermaid Theatre venue, but was put into the hands of every reader of The Times and The Sun newspapers in the form of a Top 100 list of Apprenticeship Employers. This upward swing in awareness can only be a positive step. As Yan Tiefenbrun, director of Castle Precision Engineering, winners of the 2010 Manufacturer of the Year Award, (see p30) told TM, the slowdown in manufacturing growth we are experiencing was only to be expected after the glut of late 2010. By capturing public interest and young ambitions, however, the future of sector will be safeguarded for the longer term.
Cover image: Gravity diecasting at Alucast; castings specialist and member of the collaborative group, MAN
Jane Gray, Editor The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing.
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News and features 04 News
08 Manufacturing appointments On the move
Find out who’s heading where in manufacturing
10 The legal low down
Thomas Eggar explains why manufacturers have to be cruel to be kind in asserting strong appraisal procedures
11 EEF Insight
EU chemicals regulations Susanne Baker of EEF warns of new ECHA to ban and restrict chemicals
12 The Big Picture
A challenging opportunity Profitability means sustainability for next generation manufacturing; Stephen Evans at the Institute for Manufacturing explains
A perfect storm threatens UK recovery Steve Radley at EEF considers the impact of combined foreign events on Britain’s prospects for economic recovery
14 Lead story
Greater than the sum of its parts Collaboration is nothing new but manufacturers can gain big benefits from networking and forming clusters, as the Midlands’ MAN Group exemplifies
An individual approach From ITN cameraman to manufacturing leader, Charles Morgan shares his career highlights and his passion for the family firm, Morgan Motor Company
26 Energy and Sustainable manufacturing Nuclear fallout
After the crisis in Japan earlier this year, what are the prospects for UK manufacturers who invested in joining the nuclear supply chain?
30 Special Feature: TM Awards Castle Precision Engineering
After winning Manufacturer of the Year in 2010, Castle’s director Yan Tiefenbrun talks about the benefits his company has experienced
32 Lean Manufacturing Dumbed down lean?
Has the pendulum swung too far? After years of neglecting the people element in lean success do we now face a hard skills vacuum as the focus switches to engagement?
39 Leadership & people and skills A question of leadership
Harvey Nash’s Rob Lanham considers changing attitudes to employment in manufacturing and the importance of industry data in guiding training and recruitment strategies
Contents 44 JCB Academy Diary
Catching up with what students at the JCB Academy have been up to this month
IT in manufacturing 62 PLM maturity
The ambitious promises of product lifecycle management systems have not always lived up to the expectations they have set. Is the technology now ready to deliver the PLM dream?
45 Employee of the month
Carol Meddings work with Power Panels Electrical Systems has gone from simply being a way to pay the bills to a vocation she is proud to excel in
65 IT News
Keeping you abreast of what’s new in manufacturing IT
46 Supply chain and logistics Advantages of government procurement
Mark McIntyre of BAE Systems talks to Will Stirling about a new precedent for supply chain management which is making waves in the defence sector
68 Special feature: Microsoft Dynamics ERP ERP AXelerates
Microsoft’s Rakesh Kumar talks to Malcolm Wheatley about the launch of AX 2012. Is this new release any different from the others which crowd the market?
49 Finance and Professional Services An appetite for investment
Equity firms are placing manufacturers within their sights in the post-recession economy
54 A closer look
Corporate finance – Asset based lending John Jenkins of GE Capital UK talks about Private Equity firms’ increasing interest in funding SMEs
Lean is usually associated with manufacturing and the hands-on aspects of production. But today, the argument is that lean is applicable right across the ‘Big Five’ of manufacturing, warehousing, transportation, design and procurement.
60 Manufacturing technology special
Making sense of MEMS Jesse Bonfeld of Sherborne Sensors explains that the rise of MEMS technology has been accompanied by a string of misconceptions about their capabilities
Manufacturinginaction Sponsored by Applied Angle
Factory of the month
84 Husqvarna Where the grass is greener Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions.
94 100 107 113 120 125
Waco UK A structured approach Actavis A better pill MTL Group A steely ambition Seven Seas Calm under fire CPM Group Concrete capabilities P&B Metal Components Precious commodity 3
Government has trumped its own targets for the provision of adult apprenticeships providing reassurance that the up-skilling of older workers is not to play second fiddle to young recruits. New statistics show that government has far exceeded its own targets for the provision of adult apprenticeships. In May 2010 government committed to providing 50,000 more adult apprenticeship placements in the UK, however, the most recent figures show that over the 2010-11 financial year 103,000 places have already been taken up
According to a GE survey, engineering students are confident in the sector but the future competitiveness of the UK is in danger as the nation risks losing its engineering talent to fast growing countries such as India. The GE Young Minds Monitor survey gathered the opinions of almost 1,000 lecturers and students from several UK institutions. It found that 92% of students stated the sector has a positive image compared to other disciplines and a similar number were confident they will find a job in the industry after they have completed their studies. However lecturers are concerned about a brain drain of talent towards growing economies. LEGISLATION
With the Bribery Act in force as of 1 July, prosecutors now have a better legal framework to prosecute bribery. The new Act makes it a criminal offence to give or receive a bribe in the public and private sectors and introduces a corporate offence of failing to prevent bribery. The new law also makes Britain the first country to ban commonplace ‘facilitation’ payments made by companies or their agents to foreign officials to speed up business decisions. Individuals found guilty will face up to 10 years in prison and an unlimited fine and companies face unlimited fines. Industry representatives and legal experts have voiced concerns that the Act will create obstacles to foreign trade in emerging markets at a time when export growth is important to economic rebalance.
See Inside Manufacturing The launch of the new government campaign ‘See Inside Manufacturing’ has prompted excitement in industry. The Department of Business Innovation and Skills devised the scheme earlier this year but fully launched the open days initiative in June. CBI and EEF both issued statements praising the programme which will encourage pupils, teachers and careers advisers to see firsthand some of the UK’s leading automotive facilities and research centres. The intention behind this initiative is to increase understanding of the career opportunities in high technology industries in the UK. McLaren hosted one of the first events for ‘See Inside Manufacturing’ on June 30. A group of head
teachers and careers advisors were treated to an exclusive tour of the McLaren Technology Centre, which were also recently showcased on BBC2’s Made in Britain documentary. Johnson Matthey, a speciality chemicals company and catalyst manufacturer within the automotive supply chain has also been among the first to host an open day in conjunction with ‘See Inside Manufacturing’. Business Secretary, Vince Cable, attended this event on June 29.
Bombardier to review its presence in the UK After the loss of a £3.5bn contract to build trains for a new rail infrastructure upgrade, Derbyshire-based Bombardier has said that it will now review its business presence in the UK. The contract to manufacture 1,200 train carriages was instead awarded to Siemens which the government said had offered a better deal for the UK taxpayer but which will place production in Germany. Derby North MP Chris Williamson said the decision was ‘crass’, and called it “economic vandalism”. In a statement to the BBC he said: “You can’t say you support manufacturing industry, want to help rebalance the economy, if you’re going to allow a company like Bombardier potentially pull out of this country
Bombardier is reviewing its business presence in the UK
as a result of a crass decision that was announced last Thursday.” A spokesman for Bombardier told the BBC: “I can confirm that Bombardier will be conducting a full review of its operations. We have told our staff that we realise that this is a period of uncertainty and we will try to ensure that the review is conducted as soon as we can.”
China’s Premier promises boost to UK trade During a three day visit to the UK last month, China’s Premier Wen Jiabao pledged to take measures to increase trade between Britain and China saying he wanted to welcome more UK products into China. Speaking to the BBC’s business editor, Robert Peston, he also said he would like to see more enterprises based on the China-owned model used by the MG car plant at Longbridge. China’s leading automaker the Shanghai Automotive Industry Corporation became the owner of MG Rover’s Longbridge plant after a merger in late 2007 with its smaller rival, Nanjing Automobile Group. Mr Wen visited the plant for the launch of the company’s new sports sedan the MG6 Magnette. Up to £1bn worth of business deals were signed during Mr Wen’s three-day UK tour which follows the $1.2 billion Rolls-Royce deal made when a UK delegation led by Mr Cameron visited China last November.
National Apprenticeship Awards This annual award ceremony, run by the National Apprenticeship Service to honour the achievements of apprentices and their employers, was held this year at the Mermaid Theatre in London on June 29. Manufacturing was well represented at the cross sector celebration of vocational skills. With Airbus apprentice, Lucinda Dancer, coming runner up in the Advanced Apprentice of the Year Award while Sheffield Forgemasters and BAE Systems took the Large Employer of the Year and Macro Employer of the Year prizes respectively. This event also featured the official announcement of Team UK in the WorldSkills 2011 competition, to conclude in London in October this year. (More details on p39) A final accolade for Manufacturing Skills which added to the festivities was the bestowal of Lifetime Achievement Award from the National Apprenticeship Service and the Apprentice Ambassadors Network on Sir Alan Jones, former CEO of Toyota UK and of Sector Skills Council, Semta.
Datesfor yourdiary July
EEF is holding workshops focusing on Agency Worker updates throughout the UK. For further information and to book call: 0845 293 9850
The Institute of Operations Management, in association with Amnis, is holding a masterclass focusing on successful running of various Lean events. For further information contact Leonie Edwards on: 01536 740 105
Alumet, in association with EOS Energy, is holding an open day at their headquarters in Warwickshire showcasing their range of products with a range of exhibits and presentations. For further information contact: email@example.com
EEF is holding a one day seminar focusing on the new legislation Bribery Act 2011 and making sure companies are compliant with its regulations. Seminars are being held in Warrington (19th) and EEF HQ in London (21st). For further information and to book call: 0845 293 9850
The final deadline for submission of entries for The Manufacturer of the Year Awards. Contact Laura Williams on: 01603 671323 or firstname.lastname@example.org for further information on how to enter.
Castle Precision, in association with The Manufacturer, is holding a one day seminar focusing on Castle’s working practices and systems, and how it guided them to the Manufacturer of the Year overall award in 2010. To find out more information or to book contact Benn Walsh on 0207 401 6033 or email@example.com
EEF are holding Health, Safety and Environment update seminars, focusing on the ongoing changes to the sectors. Seminars are being held at EEF branches at Hook (29th) and Cambridge (30th). For further information or to book call: 0845 293 9850
ERP Connect, hosted by The Manufacturer, is being held at Haydock Racecourse. Connect with like-minded manufacturing professionals looking for growth and opportunity through the advancement of their IT systems. For further information on the event contact Jon Tudor at: firstname.lastname@example.org
Leaders from the UK automotive industry met in London last month for the SMMT annual summit. The atmosphere at the conference was optimistic with robust figures on UK automotive success reported. Ian Henry, director of AutoAnalysis, a firm recently commissioned by SMMT show cased some impressive statistics. AutoAnalysis measures UK automotive turnover at circa £50bn, with £25bn accounted for by exports. This export business represents around 11% of total UK exports.
McLaren Automotive last month opened the doors to its first dedicated McLaren retailer, McLaren London, based in Knightsbridge location. By the end of 2011, McLaren will have 35 bespoke retailers in 19 countries worldwide. The opening was hosted by Vodafone McLaren Mercedes drivers, Jenson Button and Lewis Hamilton, and McLaren Group and McLaren Automotive executive chairman, Ron Dennis. The first offering from the commercial McLaren business will be the ground-breaking McLaren MP4-12C.
A partnership aimed at bringing a new range of electric vehicles to market by 2015 moved a step closer last month with the unveiling of the design and technical specifications of the i-Mav. i-Mav (short for ‘I must have’) is the result of electric vehicle (EV) technology company GEVCO’s partnership with engineering firm MIRA, following an intensive six-month programme of work that has harnessed their combined EV expertise to engineer a ‘clean sheet’ solution to personal low carbon urban transportation. AEROSPACE
A triumvirate of companies have joined forces to support a UK aerospace business in reducing its machine run time on a project by half. The expertise of Dormer Tools, Heller Machine Tools and Open Mind has benefited Midland Aerospace in turning a 40-hour run time for a component to less than 20 hours. Midland Aerospace was working on a high-end structural component for a leading aerospace organisation, but needed to make the project more efficient. Using Heller’s Cutting tools and Open Mind’s software, Midland Aerospace was able to halve its production time.
HEALTH AND SAFETY
Workplace fatal injuries up significantly in 2010/11 Health and Safety Executive has published the 2010/11 workplace fatal injury statistics for Great Britain. It noted that the underlying five-year trend for workplace fatalities continues downward however, concern was raised by the fact that workplace fatalities rose from 147 in 2009/10 to 171 in 2010/11. While the number of workplace deaths in the agriculture sector fell from 38 to 35, there was an increased number of deaths in the construction, manufacturing and service sectors. Construction sector deaths rose from 41 to 50, manufacturing sector deaths rose from to 24 to 27 and service sector deaths rose from 42 to 47.
Julie Nerney, the chief executive of the British Safety Council, expressed her concern at the announcement, “We pride ourselves on the strength of our health and safety regulatory framework, our competence and our commitment to keeping our workers healthy and safe and yet avoidable deaths are still occurring.”
BCE awards Two manufacturers won awards at the BCE Environmental Leadership Awards in June. Top honours went to glass manufacturer Pilkington UK in the Process category, and to office equipment manufacturer Ricoh UK Products Ltd (RPL) in the competitive Management for Resource Efficiency category. RPL received the award for its Sustainability 2050 Plan, a six-pillar strategy to reduce waste and improve sustainability including zero waste to landfill. The plan has established integrated environmental targets of 30% by 2020 and 87% by 2010, compared with 2000 levels. British Gypsum Robertsbridge received a major commendation
for re-use of landfill leachate in manufacturing. The Pilkington UK5 float glass line, featured in the BBC’s Made in Britain, is the largest glass furnace in the UK. It won the Process award for upgrading the plant’s pollution control system, reheat burners and furnace and for developing an on-line glass coating system which improves performance of solar cells and double-glazing. Artisan bakery The Thoughtful Bread Company received a major commendation in the SME category. Founded by Sir Peter Parker in 1975, the BCE Awards is one of the world’s longestrunning awards judging environmental performance. It recognises businesses judged by independent panel to meet present day commercial demands without compromising the environment.
ManufacturingNews Advanced Manufacturing News
Le Bourget brings Airbus record sales figures Airbus has reported record sales at the 49th Paris Air Show, with orders and commitments worth $72 billion. The plane maker has agreed to make 730 aircraft for 16 different customers. Orders for the A320neo aircraft family were the most notable. Since its launch in December 2010 this new Airbus offering has received order amounting to 1,029 units making it by far the best selling airliner in the history of commercial aviation. The biggest order so far has been from AirAsia for 200 of the A320neo aircraft. As well as the A320neo, 34 orders worth US$2.8bn for the standard A320 Family showed that the older aircraft also continues to be popular. Tom Enders, Airbus president and CEO said: “Le Bourget 2011 is a The A320neo aircraft proved to be a big drawcard at strong confirmation of our the Paris Airshow product strategy.”
This success sets a new record for any commercial aircraft manufacturer at any air show, ever. The commitments comprise Memorandum of Understandings (MoUs) for 312 aircraft worth $28.2bn, and concretely agreed purchases for 418 aircraft worth around $44bn
Government’s £20m just “a drop in the ocean” Trade association RenewableUK has welcomed the Government’s announcement of £20 million funding to develop the wave and tidal energy industry, but warned it isn’t enough. According to RenewableUK, the sum is insufficient if Britain wants to secure its position as the world leader in marine energy. Other measures that are urgently needed in order to achieve this goal include a further £60m funding from the Green Investment Bank, support from new regional enterprise zones, and a guaranteed 5 ROCs per MWh, to ensure this nascent industry is financially viable. Maria McCaffery, chief executive of RenewableUK, said: “We want
to work with the Government to ensure that the extraordinary innovations Britain has achieved in this dynamic new industry are not lost to our foreign competitors. “Overall, the first generation of marine energy projects is likely to cost £80 million per 10 MW scheme, and we need at least three or four projects to drive costs down and achieve the best technical solutions solutions to maintain our premier global position in this field. So £20 million is a good start – but it’s only a drop in the ocean”.
Newsinbrief FOOD AND BEVERAGE
Derbyshire-based chocolate maker Thorntons has announced that it will close 120 stores over the next three years across the country as part of a strategic review of the business. The Thorntons PLC Strategy review, released last month, states that a further 60 could also be closed as the leases expire. The move comes two months after the company suffered a like-for-like sales decrease of 12.6% in the first quarter of 2011, where unusually hot weather was blamed as well as Ice-cream sales failing to offset fall in demand for chocolate.
After the pharmaceutical giant Pfizer announced that it was to close its facility in Shanbally, Cork last year, BioMarin Pharmaceutical has announced it has bought the plant. US-based biopharmaceutical firm BioMarin is to buy the facility at a cost of EU34m. It will create 100 jobs over the next five years; this will lead to a net gain of 35 jobs. BioMarin’s work is concentrated on the treatment of rare diseases. Ireland’s Jobs Minister Richard Bruton said increased investment in the pharmaceutical sector was crucial to lifting the country out of the economic crisis
BAE Systems has completed and delivered the 50th rear fuselage, plus vertical and horizontal tails, on the F-35 fighter to Lockheed Martin in Texas. Tim Boness, production director for the F-35 project commented on the small but arguably important milestone: “It sounds like a drop in the ocean, but we’ve come a long way since we started manufacturing back in 2004. We are ready to manufacture thousands more sets at our state of the art machining and assembly centre.” The Samlesbury site has been heavily invested in over the past five years, and Boness explains that this indicates BAE Systems are very much interested in making the site a real investment for the future.
ManufacturingAppointments UK Appointments Paul Willcox Nissan
Nissan announced on June 17 that Paul Willcox has been appointed senior vice president, sales and marketing for Nissan in Europe, effective July 1, 2011. Paul is currently managing director at Nissan Motor GB Ltd (NMGB) – Nissan’s UK national sales company based in Maple Cross. He will
replace Simon Thomas, who is leaving the company after 20 years, to pursue a career outside Nissan. Since joining Nissan, he has held a number of key positions in Pricing, Marketing, Sales, Corporate Planning and Fleet Sales both at European level and in the UK.
Alistair McPhee Thales
UK’s transportation systems business Thales has appointed Alistair McPhee as its new vice president. In August 2010 Alistair joined Thales to lead the rail signalling part of the business, with a
specific focus on various large Transport for London contracts, and in particular, the Jubilee and Northern line upgrade programme and key Docklands Light Railway upgrades for the Olympics.
Neil Fowell Yamato Scale Dataweigh
Yamato Scale Dataweigh, the world’s leading manufacturer of multihead weighers and checkweighers, announced earlier this month the appointment of Neil Fowell as the new managing director of its UK,
Scandinavian, Middle East and South African operations. Neil will take charge of the Leeds-based business, replacing Mr Watanabe who has returned to the group headquarters in Japan.
Professor Paul Shore euspen
The European society for precision engineering and nanotechnology – euspen – has named Cranfield University’s Professor Paul Shore as president effective July 2011. Euspen provides an entrepreneurial platform that enables companies and research institutes
to promote their latest technology developments, products and services in precision engineering and nanotechnology and keep up to date with those in the field. Professor Shore moves up to the role from the vice presidency, replacing current president Henny Spaan.
Chris Leonard, formerly of Hydratight, and Clive Lunn, formerly of Trelleborg, have been appointed as business development managers for transport and aerospace at Icon Polymer, both core markets for the group. They bring extensive product knowledge to the sales team. Briggs Equipment is investing in its future with the appointment of Mark Murfet, VNA and warehouse product manager, who along with five regional specialists will deliver Briggs’ bespoke warehousing solutions across the UK.
SAP AG announced the appointment of Dr. Christoph Kollatz to executive vice president, SAP HANA, in the Technology and Innovation Platform Board Area, effective June 6, 2011. Prior to joining SAP, Kollatz was CEO of Siemens IT Solutions and Services, leading a EU5bn organization with approximately 38,000 people. He began his professional career at Siemens in 1989 in internal management consulting. The Dow Chemical Company (NYSE: DOW) announced on June 24 that Andrew N. Liveris, chairman and chief executive officer, has been appointed by U.S. President Barack Obama as co-chair of the newly formed Advanced Manufacturing Partnership.
CMA CGM Group reinforced its financial organisation with the appointment of Michel Sirat to the position of group chief financial officer. Michel Sirat began his career at the French Treasury Department, followed by a posting at the International Monetary Fund in Washington D.C.
Michel Sirat CMA CGM Group
Liveris will be joined by Susan Hockfield, president of the Massachusetts Institute of Technology, in heading the Partnership. The Partnership includes other major U.S. manufacturers, several top U.S. engineering universities, and key government technology leaders.
Dr Eli Goldratt, a physicist turned business management guru, died on the 11th of June. Seen by many as one of the great business thinkers of the 20th century. He was also claimed by his followers to be a great promoter of thinking about improvement of systems and outcomes through teamwork.
To notify The Manufacturer of your company’s appointments, please contact Daniel George at email@example.com and 01603 671300
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Answers for industry.
Thelegallowdown Cruel to be kind why manufacturers need to tighten up their appraisal procedures.
At the UK Manufacturing Summit 2011 the shared view was that it was people issues which would be the cornerstone of the rebuilding of UK manufacturing. The need to recruit and retain good people is the key. Each of the words in that previous sentence is relevant. It is not just about ‘recruiting and retaining’, but it is about ‘good’ people.
much emphasis needs to be given to weeding out ‘bad’ people as to getting and keeping the good ones. It must be remembered that you cannot recruit ‘good’ employees if ‘bad’ ones are blocking their way. It used to be that if you waited long enough at least a ‘so-so’ employee would eventually be obliged to retire. But even that is no longer the case. Of course, an employee can opt to retire, but an employer cannot insist that an employee leaves on their 65th birthday. The government’s view on this is that ‘if you’re good enough, you’re old enough’ and the natural corollary of this is that ‘if you’re good enough, you’re not too old’. The attitude is ‘keep the good uns working for as long as they are doing the business’ because the state cannot afford to pay top up welfare payments for those with inadequate pensions.
Default retirement age Actually, the scrapping of the default retirement age in April this year has given added incentive for manufacturers to put into place rigorous appraisal procedures. Properly utilised appraisals and performance plans will weed out underperforming employees of whatever age.
Since this is now realistically the only method of removing elderly employees (and to only subject older employees to appraisals would in itself be age related discrimination), appraisals are clearly something that must be undertaken. Moreover, if you are going to put into place an annual appraisal procedure, you might as well do it right.
Training The usual drawback with appraisals is that those giving the appraisal feedback want to be nice and encouraging. To give a faltering employee a good appraisal does not address the business’s concerns and does not give that employee the opportunity to put right those matters which give their manager cause for concern in the first place because the employee doesn’t know about it. Appraisals are often used to give encouragement and a pat on the back. Human nature suggests that we want to work harmoniously with our colleagues and telling them that they are lacking in a certain area of work is difficult. Not many people naturally take to this type of confrontation (but we all know people who are, frankly, a bit too keen). It is for this reason alone that training is essential. The standards need to be consistent across the business and people need to be trained to give the correct assessment and feedback in a way which does not lead to employment tribunal claims.
What next? The advice has to be that if you have an appraisal procedure already, you should review it for effectiveness. Perhaps give appraisers top up training. If you have not got an appraisal system in place, get one, train people to use it, monitor it and make sure it works. Recruiting and retaining the right people in manufacturing depends on removing the wrong people.
For more details contact: Simon Fenton, Partner, Thomas Eggar LLP at: firstname.lastname@example.org or 01635 571038
EEFInsight EU chemicals policy still a risky business The first registration deadline for the European Union’s main chemicals regulation, REACH, has passed. But powers given to the authorisation body ECHA to ban or restrict specific chemicals could disrupt manufacturers’ supplies and affect their reputations, says Susanne Baker, senior environment and climate change adviser at EEF.
the panicked commentary that accompanied the first registration deadline under REACH last year, you may have thought that concerns about business continuity were over. However this would be a foolhardy position to adopt as risks for manufacturers, connected to chemicals regulations, are far from over. Under the EU’s flagship chemicals policy REACH – the Registration, Evaluation, Authorisation & Restriction of Chemicals – chemicals that are considered particularly hazardous or risky are being slowly identified and prioritised, for either restrictions in certain uses or are being put forward for authorisation. This means you will only be able to use the substances with explicit permission from the European Commission, with only one opportunity to apply. Therefore you could see substances used by you or your supplier banned in the EU. The process is convoluted. First substances are listed on the European Chemicals Agency’s (ECHA) “registry of intentions”. This signals to industry the authorities’ interest in a specific substance. From here there are two potential routes; “authorisation” or “restriction.” If the intention is to ban the chemical unless otherwise authorised (“authorisation”), following a 45-day consultation it may be added to the so-called “Candidate List” of substances of very high concern. This places new legal obligations if you use, or place on the market, products containing that substance. If you use that substance in quantities greater than 0.1% in a finished product you have a legal duty to inform your customers. For industrial customers this must occur at the point of supply, along with sufficient information to allow for its safe use. For products supplied to households, manufacturers must provide substance declarations within 45-days of being asked. And, from June 1, you are also required to notify ECHA six months after a substance is included on the Candidate List under certain circumstances. Currently there are around 50
substances on the list. However this is expected to swell to over 900, possibly more.
Eu50,000 bill per chemical At least every other year, ECHA reviews this list and recommends to the European Commission which substances should be prioritised for authorisation. The Commission, in collaboration with member states and the European Parliament, will then decide which recommendations to take forward. Those substances that will be subject to authorisation will be set a date, after which use of that substance will be banned. A deadline for submitting applications for use will also be set. Applications to use these substances come with a Eu50,000 price tag. Not only that, but you’ll have to demonstrate that you have plans to substitute that substance with a less hazardous alternative in the future. Even if permission is given for a particular use, it will be time-limited. If that wasn’t bad enough there’s an entirely different process for restricting chemicals in certain uses. This time, ECHA will hold a six-month consultation on proposals before its Committees for Risk Assessment and Socio-Economic Analysis form a draft opinion, which is then adopted and sent to the European Commission. Within three months, the Commission prepares an amendment to REACH and, providing there are no objections by the European Parliament or the Council, it is adopted. As soon as this happens, manufacturers, importers, distributors and retailers must comply. In short, for manufacturers there is the potential for disruption to supplies if substances, or components reliant on those substances, are withdrawn from the market. Companies will have possible reputational risks as a result of NGO and media responses to new disclosure obligations. And there is potential loss of business and the threat of fines if companies are prosecuted for failure to comply. EEF recognises these risks and we recognise that your ability to track developments is difficult. That’s why we are launching a new free service to do it for you, and it’s free. Just sign up on our website at www.eef.org.uk, and we’ll keep you posted on developments and will let you know when you need to get involved.
Have your say at www.themanufacturer.com
The big picture A challenging opportunity Sustainability will be the greatest manufacturing challenge and opportunity of the 21st century, says Professor Steve Evans, director of a new national research initiative in industrial sustainability. Stephen Evans Institute for Manufacturing
will have read within these pages about the launch of the 12 new EPSRC Centres for innovative manufacturing. These projects represent a £51m investment into manufacturing. The aim is to drive new ideas and findings to help support and grow the UK’s manufacturing base. In the UK, as in most developed countries, a great deal of research effort is now being exerted on meeting the challenges posed by the need to make industry more sustainable. The latest is the new EPSRC Centre for Innovative Manufacturing in Industrial Sustainability. By creating 88 PhDs the centre will equip future leaders of manufacturing with the knowledge and tools necessary to encourage innovation in industrial sustainability. Finally the centre will offer policy-makers industry relevant support and guidance. For many people the objectives of this new centre may seem overly worthy and the centre itself simply a talking shop. That couldn’t be further from the truth. The EPSRC Centre will be investigating what may be the greatest manufacturing opportunity since the age of steam. Manufacturers who are quick to learn how to create more value using less energy and less material will be rewarded. The centre is a consortium of four universities and 13 founder industrial partners investigating new ways in which business can: Make current products in a low-carbon, resource efficient manner Transform factories and products Explore changes to the entire industrial system The centre will seek to understand how far sustainability needs to go when sourcing suppliers, and materials, it will carry out research into new business models, and test the latest thinking relating to local manufacturing and production processes. What this work will do is to create opportunity for UK plc, creating new products, services and processes and should lead to a real competitive
For more details visit: www.ifm.eng.cam.ac.uk
advantage for manufacturing activities here and in the rest of the developed world. We’re working with leading companies such as Toyota Motor Europe, Marks & Spencer, Unilever, Adnams and GM. All of these companies believe that sustainability is good for business and are leading the way in implementing measures which reduce resource consumption and benefit the bottom line. Other collaborators are asking new questions about what the future shape of production should be? For example if you supply frozen food, how much of the manufacturing or production processes can be located at the site of origin (e.g. the farm) to cut down on transportation of raw materials to a central production plant? Working alongside these companies will help accelerate our understanding of the challenges facing manufacturing and the dissemination of best practice. We can’t manufacture in the way we used to. We need different manufacturing processes and supply chain configurations to develop a new 21st century industrial system which is fit for purpose. Thirty years ago, production focused on making sure machines never ran out of work and hence operated ‘efficiently’. The emphasis then shifted to leaner models of production, focussing on business and production network efficiency and quality rather than machine level productivity. To each subsequent generation the previous paradigms must appear naive and primitive. We are now embarking on the next generational step change. Factories and production networks can no longer be viewed solely as the engine of industry but as transformative agents translating natural resources into valuable goods. Sustainability is not simply about the desire to mitigate the effects of 200 years of industrial development and to address the environmental damage that has been caused. It’s about ensuring the continued development of a successful industrial base, about improving the way we source, make and distribute products and services.
Economics A perfect storm threatens UK recovery Steve Radley, Director of Policy, EEF
economic data have borne this out. A 0.5% contraction in GDP at the end of 2010 was followed by a weak 0.5% expansion of output in Q1 of 2011. Temporary factors like the weather have played a part but domestic demand has proved weak. However, throughout 2010 manufacturing output picked up steadily and the rebound proved remarkably broad based. Industry has had to contend with the disruption to global supply chains, following the earthquake and tsunami in Japan, but that impact is starting to unwind and should prove largely temporary. External demand has been an important factor in driving recovery in the first half of this year. Emerging markets have been the major boost, but in early 2011 European markets also provided some strength. More recently, headwinds to growth have picked up. Some of these, including government spending cuts and weak consumer spending, have been factored into forecasts. Others, particularly those risks from abroad will be more difficult to quantify and it is those international challenges that could most significantly impede progress towards balanced growth, generated from exports and investment. The most noteworthy known unknowns are; the outcome of the EU debt crisis, a potentially stagnating US economy and increasingly frothy emerging markets. The global recovery could have shouldered any one of these problems, but together the economic issues in the EU, US and China might prove a perfect storm. All eyes have recently been trained on the unfolding events in the eurozone. While the Greek parliament has pushed ahead with austerity measures, the prospect of default has not diminished. The current solutions rely on following through with EU and IMF funding to tide Greece over until 2014/15 and on voluntary private sector debt restructuring. If any of these pillars fails, the Greek economy could run the risk of a disorderly default. Under this scenario, Greece would be unable to borrow from the ECB, sending its economy into tail spin. A Lehman-esque contagion and crisis of confidence could follow.
This month is a good chance to take stock of the recovery and what the rest of this year might hold. A year and a half ago when the green shoots of recovery were emerging economists reached a consensus that any recovery would be choppy one. In the US, a vote to extend the cap on public sector debt, the 17th since 1993, is typically a foregone conclusion. Yet for political reasons, there is the potential for stalemate, which would trigger a global reassessment of risk. The sluggish US labour market is also a concern. It is currently generating just under 100,000 jobs per month, below the 150,000 jobs needed to signal a strong and sustained recovery, but a drop below 75,000 would signal a more worrying, deep-seated stagnation.
Emerging markets navigated the 2008-09 recession and have rebounded strongly on the back of rising commodity prices and the return to risk in financial markets Emerging markets navigated the 2008-09 recession and have rebounded strongly on the back of rising commodity prices and the return to risk in financial markets. The challenge for China, Brazil and India is to negotiate a soft-landing. For China, the problems are particularly acute. Although the authorities are raising interest rates, informal lending and loans guaranteed against stocks of copper and soybeans have fuelled a credit bubble. With the number of bad loans already on the rise, further build up in credit could presage a jolting touchdown for the Chinese economy. The extent to which these events pose a risk to the UKâ€™s recovery will become clearer in coming months. In the meantime, the Bank of England will continue to sit on its hands and the question for parliamentarians during their summer break is whether the challenge of generating sustainable private sector growth in the UK will become harder as a result of events beyond these shores. This makes it ever more important that the governmentâ€™s efforts are clearly focused on sweeping away the barriers to more balanced and sustainable economic growth, in which manufacturing plays a key role.
Have your say at www.themanufacturer.com
David Spears (Brandauer), Adrian Haller (Bruderer UK) and Rowan Crozier (Brandauer)
Greater than the sum of its parts
Companies that work collaboratively are showing that there is more to the practice than just safety in numbers. Time and effort is needed but with minimal investment, company ‘clusters’ can benefit from increased orders, shared leads and better visibility. There are few downsides, chairman of MAN Gerry Dunne tells Will Stirling – just try to remain non-competitive.
is nothing new – companies are, after all, a collaboration of people working together. Big manufacturing companies nearly all trace their roots back to mergers of several smaller firms. UK manufacturing is particularly characterised by smaller companies seeking competitive advantage by forming groups, without giving up equity to a dominant partner. Recent evidence shows that, for little individual investment, even small collaborative groups can generate big benefits from simple activities. Take the Midland Assembly Network, or MAN, for example. This 10-strong group of companies in the West Midlands offers a range of compatible, mostly non-competitive, production disciplines. Formed in 2006 with two tranches of £25,000 funding from Accelerate, a closed government agency linked to MASWest Midlands that funded projects in the automotive sector, MAN was set up to improve service to OEMs in the automotive industry through sharing best practice. Today MAN has diversified into aerospace, medical equipment, renewable energy applications and more. Its chairman Gerry Dunne, managing director of foundermember Westley Engineering, says that bottom line benefits amount to about £10 million of orders secured directly from MAN activities.
Giving a presentation at Subcon 2011, Mr Dunne, who in January took over from ex-chair David Spears of Brandauer, is convinced that the consortium benefits both member and customer. “A customer has access to a single source service of multiple manufacturing disciplines,” he says. “Working together, there is better security of supply. Also production costs are down. Companies within MAN who purchase from each other do not markup goods.” Design – designer and IT – resources are shared and the group shares best practice knowledge. Networking activity and monthly Friday meetings convey business leads and also helped the members get through the recession, says Mr Dunne.
Group behavior pays off Advantages: “It is still mainly a marketing tool,” says Mr Dunne. “We have stronger first-up recognition as “MAN” now, but each member company tends to introduce MAN to their own customers. It’s not strong enough to stand alone as a true brand yet.” Group members exhibit at more events now than they used to, visiting eight exhibitions since 2010, which is far higher than the members would visit individually, Mr Dunne says. The litmus test, however, is tapping new markets and increasing sales. Because subcontract manufacturers are constantly winning and losing
Colaborative groups see bottom line benefits
orders, attributing sales growth before and after MAN is not an exact science. Customer requirements change, as their assemblies might need fewer subcomponents – the business is still large but volumes of specific parts can fall. While it is impossible to disseminate how members’ sales are directly attributable, Dunne estimates between 10%-20% of Westley’s sales are as a result of being part of MAN. While the recession took its toll on business, sales across MAN are mostly back up to pre-2009 levels and two members have reported that orders are up between 30% and 40%. In June, two members – PP Electrical Systems and Brandauer – landed a contract that is likely to increase to £5 million, supplying parts to companies in LED lighting, wind and solar power and alternative fuels. More than 50 new jobs, 45 jobs at PPES and five at Brandauer, have been created from these contracts, a figure that could treble over the next year if the pipeline translates into firm orders. Examples of how the MAN network is working include: Nearly one third of the work for an alternative fuel specialist won by MAN was originally produced outside the UK. The development of solar panel products, where PPES is benefiting from techniques to print special photovoltaic inks onto semiconductor substrates used in solar cell manufacture. A small volume, high value tooling project for a tier 1 automotive customer. A high volume pressings contract for an aerospace customer, secured from two main rivals with the help of MAN.
Best practice is better to share Collaboration has helped facilitate best practice. One member uses slow and medium-speed presses while another’s are high-speed and teams shadowed each other at each site to find optimising techniques. In another example; founding member PPES has a renowned, superlean manufacturing system. While third party companies can find it difficult to witness the company’s system in practice, MAN members get the full tour. Is there much cross-pollination where one new enquiry benefits all? “With 10 members, there are lots of separate sectors where we can offer services,” says Dunne. “We have plastic moulding, sheet metal work, pressings, electrical assemblies, cabling – within this you get natural clusters within the group of two to four companies working together.” The whole group may benefit from a big contract that is waiting to drop from an existing customer. This could be worth £1m-£2m per company per year. The group is not a free-for-all. Its newest member, Lightning Aerospace, joined in June following a three-month vetting process. It is democratic and all members must be convinced the recruit can offer something new and is satisfactorily accredited.
More examples of manufacturing clusters working The Isle of Man Aerospace cluster David Hester, deputy chairman of the Isle of Man Aerospace Cluster, explains how IOMAC benefits his companies: “The cluster provides frequent opportunities for members to build relationships that lead to direct business benefits. “For example, members have together been able to negotiate more favourable deals from suppliers of manufacturing consumables. Members have also joined forces to jointly quote work packages that are too big or technically diverse for any single company to manage. Quarterly cluster forums also provide an opportunity for guest speakers to present a longer term view of the industry-wide challenges ahead, allowing cluster members to adjust their long term strategy and direction to keep ahead of the competition. “Cluster members also support an apprenticeship scheme which was not only designed with input from all the companies involved, but also allows apprentices the opportunity to work in each other’s manufacturing facilities, providing a broader education. All of this happens in close collaboration with the IoM government’s Department of Economic Development, which provides both political and financial support.”
Made in Sheffield Founded in 2005/6 like MAN, the Made in Sheffield brand is adorned on companies all over the city, and has over 150 members. Chairman Charles Turner of DurhamDuplex says the phrase resonates with potential customers, especially overseas at shows. In Germany at the Practical World Trade Show, for example, 8 of 10 companies in the UK pavilion carried the Marde in Sheffield marque and the groupd received heightened attention due to their evidinet collaborative relationship and the international reputation of Sheffield quality. Charles states that, regarding his own company, he believes 10% is added to the bottom line through being part of Made in Sheffield.
Costs and marketing The cost of being in MAN is mainly the contribution to marketing and branding activities, and exhibitions. “The group spent between £115,000-£120,000 in the last 12-months, divided equally. Most of this is on exhibitions, so a show costs one tenth of doing it alone.” The managing director of one member acts as the pro bono group finance director and other administration is shared, although Dunne and predecessor David Spears will tell you the chairman’s job is busy. MAN says it gets genuine enquiries at every exhibition. “Subcon [in June] was the first time when [Westley] got an enquiry within two weeks of the show that led to a large order. The chap, who watched my presentation, said if the order wasn’t placed this week that he will definitely order next time. It’s the first time in 15-years that’s happened,”
In the club – who are MAN? Alucast: Offers manufacturing source of sand, gravity and high-pressure aluminium castings. Barkley Plastics: Manufactures plastic moulding solutions to customers globally. Brandauer: Specialises in the manufacture of complex stamped components, in difficult materials, for a wide range of industry sectors. FW Cables: Manufactures custom cable assembly harness and wiring accessories. operates a Quality Management System. Westley Engineering: Designers and manufacturers of press tools and suppliers of both pressed and precision-machined components. Advanced Chemical Etching: Promotes the technology of photo etching to electronics, semi-conductor, telecoms, aerospace, automotive, precision mechanics and medical markets. Lightning Aerospace (ex-Excalibur Engineering): Design, manufacture and assembly of high quality sheet metal fabrication work. Uses mild and stainless Steel, aluminium, zintec and more. PP Electrical Systems: Design and manufacture of electrical, electronic, electro-mechanical and electropneumatic assemblies and systems, used in a wide variety of industry sectors.
Wrekin Circuits’ Andy Morris (centre) talks with potential customers at Subcon 2011
Note UK: Swedish firm based in Stroud, Glos, specialising in surface mount production capabilities with top range placement equipment for PoP, BGA, flip chip assembly and devices as small as 01005.
Inflation and challenges Keeping the idea on track in the early years seems to have been the biggest challenge, but natural momentum now keeps it going. Other than rising input prices – which collaboration can barely mitigate – the complexion of business is changing, with some winners and losers. While automotive still makes up 65% of all Westley’s business, most of the new enquiries are coming from outside this sector. “OEMs like to deal directly with one company or one activity, like pressings or mouldings, not a consortium. They like to see [your] complete exposure to products and how you make it.” There are signs, however, that inflation is being accepted more readily. “In previous years we’ve fought tooth and nail, but this year it was easier to get customers to swallow small price increases. Perhaps customers are more informed about raw material inflation, but it is easier.” While independent of MAN,
Wrekin Circuits UK: Provides the electronics industry with printed circuit board manufacturing services.
one problem that has arisen in the recovery cycle is product recall, Gerry says. Generally, there is evidence that OEMs are looking to pass on the blame to subcontractors, as product recall events become more costly and the world follows the US-inspired claim culture.“The insurance implication is big – we are looking at a sizeable premium of many thousand pounds on top of our existing insurance, to cover adequately against the additional liability.” The biggest problem for collaborative clusters is if members compete. “We are non-competing, that’s the secret,” Dunne says. “We hand-pick members. A group of us visited our newest member more than once and vetted the application over three months.”
Lead story Colaborative groups see bottom line benefits
Subcontract manufacturers tool up for recovery Are manufacturers investing? You bet, as exhibitors at Subcon 2011 testify
a brutal two years of expenditure clamp-down, companies are investing again. But are they investing enough to remain competitive? Some quarters say ‘no’, but is this true? It’s difficult to capture absolute levels of investment in real time, as some investment programmes
happen over months or years and even robust surveys like those conducted by the CBI and EEF only pool 300-500 companies out of 133,000 manufacturers in the UK (Source: EEF). Pressing the flesh at a well-attended trade show can be as good a barometer of investment as any. Subcon 2011, subcontract manufacturing’s
annual trade show, this year attracted 3,726 core visitors (more as crossover from the adjacent Logistics show), a 7% increase on 2010. The Manufacturer talked to some of the exhibitors about investment programmes and whether, in their opinions, the economic recovery is more than a brief spike before a double-dip.
Arnold Engineering Plastics productivity up four-fold
Arnold Engineering Plastics is near the end of a £350,000 investment programme. It has bought three new pieces of equipment: a new 3/4-axis CNC router, a CNC lathe with a bar feed and a Cannon Forma vacuum forming machine, which has increased its vacuum forming capacity greatly. Why invest? “There have been a few capacity and delivery issues with the existing equipment,” says Robin Oakenfull. “A fire on one of the routers put that out for six months – shift work helped, but that didn’t help with delivering extra capacity.” Arnold’s new CNC router is four times faster, in speeds and feeds, than the existing one. “The piece price is much more competitive, it makes a big difference,” says Gary Vanderhoeven, vacuum forming manager. “The vacuum former came along at the right time and price.” The company financed the investment from profits made in last two years. “We wouldn’t have been confident to make the latest purchase before now, but also we wouldn’t have got this new work without this machine,” adds Mr Vanderhoeven.
Laser Process makes biggest investment to date
Subcontract laser cutting business Laser Process used to invest in new machinery every 18-24 months, but until now had not bought new equipment for four years. “We had to do it – to catch up with the latest technology and just replace our older machines. It was either that, or go backwards,” says managing director David Lindsey. They bought two new Trumpf laser cutters, delivered on June 29, the biggest investment the company has made at once. The investment was paid for with a approximately 20% deposit plus finance on the balance over three years. On borrowing conditions for subcontract manufacturers, he says: “Even though we’ve had a bad two years and our balance sheet took a knock, we’ve bought a lot of expensive capex in the last 20-years and have never reneged on a payment. This helps.” Investment is about confidence as much as access to money and Mr Lindsey says: “Now is the earliest time we could have done this and had the confidence that we were doing the right thing.” Linsey adds however, that nobody in the industry has confidence that it’s going to be the same next month or the month after; about 5-6 more months of this demand is needed first.
Company size: £3 million. Headcount up 15% since December. Investment:
Homag 3 / 4-axis CNC router, Haas SL30 CNC lathe with automatic bar feed, new Cannon vacuum forming machine (approx £75,000) and a Minaki JV33 large format digital printer.
Two-year programme totalling £350,000 to June 2011.
Company size: Circa £5 million turnover, 40 employees Investment:
Two new Trumpf laser cutting machines, L3030 and L3040, installed in July 2011.
Close to £1 million including implementation costs
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Lead story Colaborative groups see bottom line benefits
Aerospace powers investment at Benham Manufacturing
Totton-based Benham Manufacturing has grown continuously since 2008. The company mainly produces parts for the aerospace sector, one reason why managing director Paul Benham says that the company “didn’t really see the recession.” He says: “As [industry has] come out of recession, manufacturing appears to be very busy throughout the UK. Perhaps there are fewer players now. Customers appear to be struggling to find capacity and this gives us a chance to diversify our customer base.” Three new machines Benham bought in late 2010 will assist the company’s strategic growth and has helped it secure a big new contract. “It’s nice to have a strategic relationship with a customer so you can make these investments,” says Mr Benham. This year, the company bought its first horizontal work centre, a Mazak MTN 6000. In May it bought a new 5-axis mill turn which is quicker and allows manufacturing of more complex features. “We invested after assessing our position in the market, and what we need to do to fulfil our strategy, which won’t happen without the right tools and people.” The company models its training on the Investors in People toolset, it was awarded the SC1 Bronze Award in 2009 and is now going for SC21 Silver. On the availability of bank credit, Mr Benham said they visited several banks two years ago to assess what risk the company presented, and were offered secured lending with acceptable terms but decided not to take it.
What recession? WEC Group keeps growing
A group of nine engineering businesses based in the North West, WEC Group barely noticed the recession. The 32-year old large metal fabrication and engineering group recently acquired two businesses – a second machine shop and a fabrication workshop – and has increased headcount from 230 to over 300 in the last 18-months. A new 10-metre milling machine will allow WEC to undertake more specialist work like decompression chambers and aerospace components. “We’ve been investing in new equipment and growing for the past five years,” says business development manager Jean-Yves Dziki. “During the recession we started manufacturing large components for the rail industry, and we have been growing through that period. On the back of a big order, we opened a dedicated facility for rolling stock with 20 full-time staff.” Mr Dziki says. Where are the new business prospects? Rail is strong and WEC is working on its aerospace accreditations. Despite Ministry of Defence cuts, Mr Dziki sees good growth opportunities in defence. He adds: “We already make parts for the nuclear industry and we’re watching that sector. We’re very proactive in bidding for that kind of work.”
Company size: £7 million turnover, 66 employees. Turnover doubled in three years. Investment:
2010: x3 Mazak Integrex Mill-Turn centres and one Mituyo co-ordinate measuring machine (CMM). 2011: One Mazak Horizontal Milling machine
2010 and 2011 investment to date = >£1 million.
Company funding and some non-bank borrowing.
Company size: £27 million group-wide, 300 employees. Investment:
Correa Axia 10-metre milling machine (10,000mm by 1500mm by 2500+450mm 3-axis travelling column), with automatic rotating heads and automatic tool change capable of 5-sided machining. Enables machining of much larger components than the previous capability.
£600,000. One of several group-wide investments including acquisitions. borrowing.
Have your say at www.themanufacturer.com
Charles Morgan, managing director of Morgan Cars, speaks to Ruari McCallion about his varied background, the state of British manufacturing and prospects for his company.
Charles Morgan and the shell of the superformed Aeromax
is entirely appropriate that Charles Morgan’s background is decidedly individual. Born into the family that makes the very distinctive Morgan cars, his early career was a long way from a manufacturing shop floor; he spent a number of years as a cameraman with Independent Television News. “I joined ITN because I wanted to work in the film industry,” he says. “The late 1970s was a very creative time at ITN. I went all round the world and spent time in the African bureau and covering the Middle East from Beirut.” We then spent a few moments trying to decide whether it was the Europa in Belfast or the Commodore in Beirut that held the record for being the world’s most-bombed hotel. Whichever it was, the bombers never managed to catch Charles Morgan and the experience as a news film cameraman gave him a really good insight into modern communications. His jobs shift pattern also gave him the chance to indulge his core passion for racing cars.
Interview Charles Morgan
Racing certainties and culture clashes Although he did not join the family business until 1985 Charles Morgan was always interested in cars, both building and racing them. Joining the firm, he brought with him the passion and commitment he had shown in filming in the world’s trouble spots and driving on the racetrack. Mr Morgan was also behind the decision to bring in Sir John Harvey-Jones, from the BBC’s Troubleshooter programme to the company. The show exposed not so much a meeting of minds as a clash of cultures; a conflict of ideas and backgrounds. The contrasts made it riveting TV. During his career with ICI, Harvey-Jones made many necessary redundancies with genuine regret but Morgan Cars has never made anyone redundant, a record that Peter, Charles’ father, cited as his proudest achievement. Harvey-Jones did not understand Morgan culture or its niche market. He certainly did not understand why it worked as a business – but at the same time Morgan had room for improvement in manufacturing techniques. After the programme Charles returned to university part-time to study for an MBA in Manufacturing at Coventry University. “The course was part time but there were long weekends of intensive activity,” he says. He worked with other middle managers from the motor industry but from larger companies, such as Jaguar and Peugeot. One had to ask what sort of common ground there could be between employees of behemoth corporations and someone from a specialist, family-owned organisation. “I found we had exactly the same problems,” he replies, “High work-in-progress, lack of consistent
quality and so on. Our factory visits tended to be to companies like JCB who were becoming super-efficient. It was the time when manufacturing planning systems were being transformed, when the Toyota Production System was being taught.” Charles Morgan brought his enhanced knowledge and understanding to bear at the factory in Great Malvern, and the company now has shorter cycle times and better quality than ever before. It also builds more cars – over 1000 are scheduled in 2011, including the new Three-Wheeler.
The UK is the world leader in the construction of Formula One racing cars – in fact most of the foreign F1 teams are based here With prices ranging from £25,000+VAT for the Three-Wheeler to £120,000 for the latest Aero SuperSports, Morgan is in the specialist, luxury end of the market. And it is in the specialist area that Charles maintains the UK has its greatest industrial and manufacturing strengths.
Engineering excellence “The UK is the world leader in the construction of Formula One racing cars – in fact most of the foreign F1 teams are based here – and in luxury cars. As well as ourselves, we have Bentley, Rolls-Royce, Aston Martin and Jaguar. With Ford Bridgend and
Biography Charles Morgan Managing Director of Morgan Motor Company. Grandson of H.F.S. Morgan, company founder, son of Peter Morgan and the third generation to hold the position of managing director.
News cameraman for ITN working in locations including Afghanistan and the Middle East
Won the British Racing and Sports Car Club and British Racing Drivers Club production sports car championships driving a Morgan Plus Eight
Joined the Morgan Motor Company working in partnership with his father and then managing director, Peter Morgan
Graduated from Coventry University with an MBA in Engineering and Manufacturing Management
Competed in the FIA International GT series driving a works Morgan Aero development car
Collected the Sir Henry Royce Award from the Guild of Carmen
Received the annual President’s Trophy from the Guild of Motoring Writers
Appointed to the Automotive Council Technology Advisory Board
Received an honorary doctorate from Birmingham University in recognition of his outstanding contribution to British automotive engineering
BMW Ham’s Hall engine plants, the UK is a major centre of excellence in engine manufacture,” says Morgan. “Ford makes over 2 million engines a year at Bridgend. Another area where we do very well is powerboats. We have about 10 manufacturers in this country, including Sunseeker, Sealine and Princess.” He also points out the design and engineering strengths at UK Universities and Colleges, which has spread the country’s influence across the world. “If you look at a lot of companies you will find their top designers and engineers are British,” he says. A few moments of ‘spot the British designer’ identified Peter Horbury at Volvo; Moray Callum as his successor at Ford in Detroit; Martin Smith at Ford Europe, Ian Callum and Julian Thomson at Jaguar and others at various large organisations across the world. He also mentioned companies including GKN and Riccardo as examples of excellence in advanced engineering design in the auto sector. But all is not perfect in the UK, as he readily concedes.
A modern volume production car factory is a huge investment and the manufacturers tend to put everything in one place. If it was cheaper to establish factories here, we could have more “Our biggest weakness in the UK is investment; we don’t tend to support our own,” Charles says. “The culture in the City is to invest globally. Also the UK customers stopped buying British cars. The French buy French, the Italians buy Fiat but we stopped buying Morris, Triumph and Rover.” However, more cars are made here than ever before and Morgan is now the largest domesticallyowned company – but he queries whether foreign ownership is of much concern so long as the research and development is done here in the UK.
Opportunities and challenges “A modern volume production car factory is a huge investment and the manufacturers tend to put everything in one place. If it was cheaper to establish factories here, we could have more,” says Morgan. “The advantage to building overseas is labour costs, yes, but also the local government support to set up factories. Those things make other places attractive.” Furthermore, overseas economies are growing and are markets in their own right. But there are still potential attractions to doing business in the UK; and Morgan sees some moves in the right direction.
Interview Charles Morgan
MANUFACTURING IN ACTION AWARD
“Our corporation tax rate is low and we have R&D tax credits which make the environment in the UK attractive,” Charles explains. There is also the high skills base of the workforce and the educational infrastructure. “A lot of Chinese, SE Asian and South Asian students come to engineering schools in the UK. I think we’re second only to the USA in terms of the reputation of research departments at universities like Imperial College, Warwick and so on.” There’s also the British culture of innovation which, he believes, comes from the best examples of our education system. Morgan believes this gives us an advantage even Germany cannot match. “Germany produces good cars but their university research is not as highly rated as ours,” he says. What we have to do is to convert this wealth of talent into world-leading companies. “The thing to do is to back winners. We have pockets of excellence but the Germans have a good overall level of competence. The Germans engineer consistency and quality better than us. If we are to turn the UK back into a manufacturing centre we have to pay general engineers at least as well as lawyers, for example, so that talented people will be attracted.” The government has made support for manufacturing a talking point and has turned some of this talk into a kind of action with, for example, R&D tax credits – but there is still a lot of work to
Entries for the TM Manufacturing in Action Award are shortlisted from companies that were profiled in The Manufacturer magazine from September 2010 to August 2011. The criteria are a combination of key business excellence criteria covering: the product, the customer, growth and leadership, the manufacturing process, people and sustainability. This award will go to the company or site that, in the opinion of the judges, best demonstrates an efficient, modern, profitable business, which can show examples of product excellence and innovation, customer satisfaction, investment in people and training and effective management. The entry will ideally demonstrate a high level of manufacturing process efficiency, whether through a Lean or other business efficiency methodology, which demonstrates hitting target KPIs. The company will ideally invest in training and staff communications, show efforts to become more sustainable by reducing its carbon footprint and, preferably, demonstrate investment in R&D that has generated good ROI. do and the inspirational leadership is not there yet according to Morgan’s front-man.
Taxation and investment “The Revenue is, of course, desperate to get as much money in as possible to clear the deficit. But I think the will is also there to revive manufacturing. That said, we have to move to backing future winners, not just creating jobs.” Morgan mentions MG Rover as an example of the latter. “The government lost £650 million overall, trying to keep those jobs. If £600 million had been put into hightech start ups then jobs might have followed and we would also have growing companies. “I go to the Milan Design Week every year and it’s fascinating how far ahead the Italians are in modern design,” Charles says. “But the quality of the manufacturing is not as good as it should be. Now if all those things were ‘made in Birmingham’ the quality would be there. We may not have quite got the mix right yet in the UK but if we can combine design skills, craftsmanship, lean manufacturing and our quality standards, we could come out the winners in Europe.”
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Events in Japan earlier this year have sent policy shock waves around the globe as governments react to the nuclear disaster at Fukushima. George Archer gives an overview of these reactions and considers what they might mean for British manufacturers who were wooed by promised riches in supplying UK nuclear new build. Fukushima Dai-ichi after March 14 explosion in reactor No. 3. Photo from Digital Globe
Nuclear fallout In
the wake of the devastation wreaked on the Fukushima nuclear power plant by the earthquake and subsequent tsunami in Japan, opinions on nuclear power all over the world were thrown into disarray. Germany, Switzerland, China, Thailand, Malaysia, Italy and Japan have all announced either a complete halt to the building of new nuclear power plants, or initiated major reviews of nuclear new build plans. In Britain, responses to the Japanese disaster have been somewhat muted. While government statements and attitudes expressed by industry bodies have confirmed a commitment to the growth of Britain’s nuclear industry, manufacturing companies which have taken strategic decisions to invest in supplying new build in the hope of capitalising on a promising new market for advanced manufacturing, have reported a freeze on procurement activity and a lack of clarity on possible changes to market prospects. So just what is the lay of the land for British nuclear policy post-Fukushima?
Targets, deadlines and more targets The reasoning behind Britain’s nuclear strategy prior to the Fukushima disaster is clear. While renewable energy sources such as wind and wave will play their part in the move to a low carbon economy the demand for power both on a consumer and commercial front, far exceeds the capacity of such methods. In addition, potential investors seem unconvinced about the returns they might see from the significant spend on infrastructure these power sources would require. Nuclear power has been identified as the solution
as the dust settles
to this shortfall, offering a way out from reliance on ‘dirty’ fossil fuels while still supporting large scale power supply for the national grid. Björn Stigson, president of the World Business Council for Sustainable Development, said in early June that there is the possibility of a feasible scenario in which 77% of the worlds global energy needs could be met by renewable energy (not including nuclear power). “Such an ambitious path isn’t unattainable but would require countries to commit to significant new infrastructure investments and major policy shifts away from traditional sources of power, particularly fossil fuels,” he commented. Mike Saunders, president of AMEC Power and Process Europe said in an interview with John McNamara, editor of Industry Link, the Nuclear Industry Association (NIA) magazine, that politicians in the UK “should not lose sight of the drivers which will dictate future UK energy policy.” “By 2025 the forecast increase in UK electricity demand combined with the reduction in capacity due to retirement of coal and nuclear plants means that we need to find alternative supply equating to more than 50 per cent of today’s capacity, at the same time as also meeting our commitment to reduce our carbon footprint by 34 per cent... doing nothing is not an option,” he adds. NIA have expressed concerns that nuclear energy proliferation will be shelved after the events in Japan. In an attempt to restore confidence they have pointed to evidence, like that of scientist and Guardian columnist, George Monbiot, which claims the play of events in Japan supports the idea that nuclear power is relatively safe; The loss of life
and Sustainable Manufacturing
as a direct result of the disaster was minimal and Mr Monbiot said in a statement to Industry Link: “Every energy technology carries a cost; so does the absence of energy technologies. Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”
SUSTAINABLE MANUFACTURING AWARD
International knee-jerk reactions: counter-productive?
Calling for entries: Does your business deliver a sustainable manufacturing strategy that does more than simply reduce 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; re organising the shop floor to save energy; powering down equipment that will be dormant for periods of time; reducing packaging and designing recyclability into its products.
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In mid-May this year Mike Weightman, the UK’s the nuclear chief inspector said that there was absolutely “no need to curtail the operation of nuclear power stations in Britain.” Weightman was asked by the Secretary of State for Energy and Climate Change, Chris Huhne, to produce an interim report into British nuclear prospects and the need for regulation. This report was published in May and another will be due within the next four months. At the Nuclear Development Forum (NDF), Mr Huhne announced to delegates that government would consider the Nuclear National Policy Statement stabled by industry representatives in light of the emerging nuclear crisis in Japan before proceeding with the ratification process. The NIA praised Mr Huhne for commissioning the report from Weightman. Keith Parker, chief executive of the NIA said: “We applaud the Government’s committed leadership in this difficult time, and welcome their continued support for the UK’s existing nuclear fleet and plans for new nuclear build.” Parker said in a statement in May that “we must recognise that nuclear energy is a controversial issue, and requires a high degree of political and public acceptance for its licence to operate. Positive statements by the Prime Minister and Energy and Climate Change Secretary Chris Huhne about the need for nuclear to be an integral part of Britain’s future energy mix demonstrate that political support remains strong.” Germany’s reaction to the Japanese disaster has been a provocative talking point across the EU. The country is home to an active nuclear industry however the equally sizeable anti-nuclear power lobby recently congratulated Chancellor Angela Merkel’s decision to entirely phase out nuclear power generation by 2022. The German cabinet also approved the action despite a situation in which Germany currently gets around a quarter of its electricity from nuclear power. Plans have been drawn up by the German government to double electricity sourced from renewable sources such as wind power. Commenting on the proposals to the Financial Times, Mark Lewis, managing director of commodities research at Deutsche Bank, said: “No advanced industrial country in the world has decided to generate so much electricity from renewables and,
These large Nuclear specification fans are of a fully welded ‘gas tight’ construction, and are used for extracting from an potentially nuclear active area
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remember, Germany is still the world’s largest industrial exporter.”
The future of nuclear power in the UK Parker says he is aware of the sensitivities regarding nuclear power in Germany but underlines his organisation’s strong view that nuclear is necessary for supporting a modern low-carbon economy. He said in early June: “Of course we agree that we should conserve energy wherever we can. We also support a major increase in renewables as the Germans do. However, nuclear power supplies the essential base-load electricity needed to power an advanced industrial economy, and it is key in protecting the UK from becoming too reliant on imported energy.” Parker added: “Nuclear is the only low-carbon base-load source we have. It currently gives us 80% of all our low-carbon electricity in the UK. It offers security of supply which puts Britain in a good position, and it helps us lead the way in delivering a low-carbon economy.”
Post-investment problems One West Yorkshire-based manufacturer that has invested in preparing to supply the UK nuclear
we must recognise that nuclear energy is a controversial issue, and requires a high degree of political and public acceptance for its licence to operate Keith Parker, Chief Executive, NIA
industry is Halifax Fan, a company that has expanded to China and has established a sales office in Bangkok. Malcolm Staff, managing director of the company says to companies facing post-investment problems in the UK and elsewhere: “Get on your bikes like Halifax Fan has done, and go sell to those countries and contractors who have seen the future and are actually building nuclear power plants. Don’t rely on the UK government or you’ll wait a long time while they prevaricate and procrastinate.” With emerging economies like China and India seemingly much more focused on providing constantly increasing energy demands, moving operations elsewhere seems like the sensible thing to do. However, in a Financial Times article in early June, Staff commented on the fact that many foreign customers still want their fans made in Britain. “We tend to forget that Brand Britain is worth shouting
Norfolk’s nuclear island In mid June this year, a partnership of Imperial College London, Constructionarium, Cogent Sector Skills Council, Engineering Construction Industry Training Board (ECITB) and Construction Skills, received funding from the National HE STEM Programme and the Royal Academy of Engineering to develop a ‘nuclear Island programme’. In this programme, 25 engineering students from Imperial College London construct a scaled down nuclear core reactor, in a simulated highly secure environment. The programme will be run from the established Constructionarium facility at Bircham Newton, Norfolk. Cogent CEO Joanna Woolf said: “The prospect of replacing the current fleet of nuclear power stations represents a multibillion pound private sector investment, but one which is dependent on a highly skilled workforce. Cogent’s research shows that the industry will require a thousand new recruits every year to ensure that power generation meets projected demand to 2025 and beyond.” Jean Llewellyn, CEO of the National Skills Academy for Nuclear said: “This is an exciting time characterised by growth and development for the UK nuclear Industry. Also, it offers a range of exciting careers and development opportunities.”
Skills shortages in the sector Of Course the events in Japan earlier this year are only the most recent blocker to come in front of nuclear proliferation in the UK. A longer term and trickier challenge is how to create a skilled workforce to build and maintain the new plants as well as decommissioning those outdated sites. Cogent, sector skills council for science based industries, published a report in March 2010 underlining the need for a huge workforce if nuclear power is to be retained as a prime source of energy for the UK. The report says: “Job creation on the scale of three London Olympics would be generated by a significant nuclear new build programme. Thousands of training opportunities, new apprenticeships and new jobs will be needed in the construction, manufacturing, operation and maintenance of anticipated stations over the next 15 years.”
about,” he says. “It is so disappointing to go to trade fairs and find just one or two British companies but dozens of other Europeans. Italian and French companies, in particular, are much better supported [by their governments].” Staff’s comments should be a comfort to those companies worried about wasted investments in nuclear supply preparation. The global market is full of opportunity for UK advanced manufacturing.
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It is a very British weakness, in the post colonial age, to fear backing winners or differentiating between the outstanding and the mundane. However, it is a weakness which must be overcome if the success stories of British manufacturing are to be allowed to shine and myths about the industry dispelled. Castle Precision Engineering show they know how to play the role model game.
year Castle Precision swept to victory at The Manufacturer of the Year Awards, not only stealing the headline prize but also taking the award for Best Small and MediumSized Enterprise. Bolstered in confidence by this accolade and others from SC21 (an aerospace and defence supply chain programme) and the Scottish Engineering Awards, the Glasgow-based company has gone on to enjoy a successful year, and is now hankering to throw open its doors and showcase the way things are done inside the company. On September 22 this year, in partnership with The Manufacturer, Castle will be doing exactly this. Manufacturers from across the UK will have the chance to experience the winning qualities which have carried
Castle through the recession and set it apart from so many competitors which have fallen by the wayside. Castle’s director, Yan Tiefenbrun, looks forward to the tour. “It’s going to be great!” he told TM. On further questioning as to just what he hoped to show, it must be said that it is hard not to empathise with his enthusiasm and anticipation. Tiefenbrun shares responsibility for leading Castle Precision with his brother Marcus and both are exemplars for SME manufacturing executives; they are committed to their business, investing readily whenever an opportunity is seen for further differentiation and improvement. Above all however, they are sincere in passing credit to the workforce on whose shoulders the success of the company stands.
Specialfeature Castle Precision Engineering
About Castle Precision Engineering Established: 1951 as the Textile Engineering Company. Changed company name in 1963 to Castle Precision Engineering Location: Glasgow Employees: 150 (4 open positions currently in interview process) Turnover (up to July 2011): £14m Sector activity: Aerospace 78% Defence 11% Automotive 2% Electronic 2% Energy 1% Miscellaneous 6% Products: Castle produces a variety of critical components for its markets. Components, manufactured in materials ranging from aluminium to titanium, include fan discs for aero engines, disk brakes and axle components, valves and, in electronics all the metal work associated with the Linn CD12 CD player, Linn Klimax Control PreAmplifier and the Linn Klimax Power Amplifier.
This respect for the work of the individual within the organisation was learnt the current Tiefenbrun leadership from their father who founded the company in 1951, and it has formed a foundation for company culture ever since. But this is not a culture which can continue if it is not sustained, and a key motivator for Castle in entering The Manufacturer of the Year Awards was to give momentum and a boost to employee morale during difficult times. Yan Tiefenbrun comments: “Winning an award like The Manufacturer of the Year cannot do anything but good. It recognised [employee] efforts, but it also added a hell of a lot of pride. Employees can [and do] go home to their families and say ‘I am part of one of the best manufacturing companies in the UK’. That is something they are proud to be part of, and it is something usually reserved for large enterprises.” Castle has set itself the target of winning, not merely entering, two industry awards each year. The importance of taking action on employee engagement and not merely paying lip-service to management clichés should not be underestimated in the current climate. A recent employment trends survey from CBI and recruitment firm Harvey Nash, titled Navigating choppy waters, surveyed 335 companies operating in the UK and showed that the current focus of management, particularly in the private sector, has overwhelmingly swung away from cost reduction towards methods for increasing employee engagement.
Making links between employee engagement and productivity may prompt sceptical utterances from some more hard-nosed and traditional quarters, or simply be seen as insignificant in relation to capital investment and OEE monitoring. The Tiefenbruns, however, are not so dismissive. In February this year, just a few months after the company’s night of revelry at The Manufacturer of the Year Awards’ ceremony, Castle Precision turned over £1.5m, the largest monthly turnover the company has ever achieved. Of course it would be glib to attribute this success solely to any award or accolade but Yan Tiefenbrun says the November award played its part, and furthermore he believes it has helped to publicise an impression of industry which is helping Castle recruit the right staff for the future. “When we ask September 22 Castle people at interview, ‘why Castle?’ Precision Engineering the first thing they mention is will welcome reputation, and part of that is delegates into the company for down to our awards,” he says. a day which will showcase its Having the right reputation award winning culture, skills and draws in the right employees, the application of technology. right suppliers and wins the right customers. It is a differentiating During a tour of the factory, factor and differentiation is a delegates will be able to question watchword for Castle. It drives a senior management and frontline culture of investment which defies staff on the factors which set Castle news stories about penny-pinching apart and the challenges still to be UK firms and while Tiefenbrun overcome in the race admits that the pressure to foster to differentiate. balance sheets for the comfort of Castle precision is playing its part share holders is not relevant for as an SME fighting to dispel the his family owned enterprise, he is myths about the decline of British nevertheless decisive in putting manufacturing and the lethargy of investment for the future at the top investment activity in the UK. At this of any company’s priority list. factory tour peers can gain insight For Castle, he expresses into how they too might join the the philosophy as the “need to fray and make their contribution be a moving target, if you’re to altering the perception of not moving forwards you are manufacturing in the public eye. moving backwards because nobody else will be standing still.” Please note that delegate places for Tiefenbrun says that Castle is this tour are limited to 30. For more currently investing harder than information on this opportunity or ever as the manufacturing sector to book a place on the tour please experiences a slowdown from the contact Benn Walsh robust growth of 2010. For him, (firstname.lastname@example.org) the current climate is prime time on 0207401 6033. for capitalising on differentiation opportunities; but he is realistic about the immediate returns and his modest expectations for year end show that Castle is not beyond the concerns of its peers in sector and size. “In the current climate we are doing all the right things, but we are not going to take away a massive profit this year. What we are doing is setting ourselves up stronger and stronger, and differentiating ourselves again and again. To do that and come out of the year positive is a win enough for us at the end of this year.”.
TM factory tour
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lean? Dumbed down
After years of concentrating on tools conversations about lean success have recently been dominated by ‘softer’ subjects. Is this swing now risking the creation of a hard skills vacuum in some lean programmes? Jane Gray collates a few opinions and experiences.
Lean Management Journal’s recent annual conference a presentation was made by Justin Watts of Burton Foods. In an agenda that was dominated by presentations focused on engagement and winning ‘hearts and minds’ for lean success Watts’ title of ‘Factory Physics’ was decidedly the elephant in the room. At LM Connect (another event from Lean Management Journal), held in March 2011, a
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speaker commented: “I come to events like this and seem to hear nothing but presentations on people engagement nowadays. That is very important but it would be dangerous to forget about tools. We need them.” Why? The explanation from Watts, opposite, makes the case for lean leaders with strong technical knowledge of the methodology’s tool kit. Of course to get the kind of success which Watts’ Factory Physics application eventually reaped, you have to have people on board and Watts recognises this saying: “To get such a success right throughout the programme it was absolutely essential to break these seemingly “complex” principles down to basic understandable concepts. To do this many workshops were run using Goldratt’s dice game simulations tailored to that business. Hands-on sessions were run on the effects of the rules showing production operatives, planners, and senior managers how counterintuitive thinking can actually yield far greater results for a reduced operational expense, less inventory and improved service and lead time. Watts added, “without this ability to make the concepts easier to understand the chances of success are reduced dramatically when dealing with these complex concepts.” Having acknowledged the need to engage those responsible for execution however, let’s return to a consideration of the level of technical understanding at a leadership level which Watts’ factory physics programme required. How important is it to have academic pedigree in your lean project? Jeff McGowan, an alumnus of Cardiff University’s Lean MSc and sourcing manager at Johnson & Johnson Lifescan says: “This is an interesting topic. Many MScs and MBAs can reinforce the wrong behaviours driving short term thinking. There are others, however, that are positive such as the Lean MSc with Cardiff. An MSc or MBA helps individuals to get to grips with how to manage much of the complexity they will have to deal with. It is also an essential ‘qualifier’ for
Factory Physics for lean success; a case study by Justin Watts of Burton Foods The factory physics frame work may seem daunting and if you pick up the text book you may be freighted by the formulas and maths. Nonetheless the fundamental principles are essential to have in your tool box for a successful lean implementation.
variable flow. Without understanding key principles it would have been easy to get lost in applying other lean tools without improving flow. Armed with this knowledge it was much easier to show the plant team a higher attainable level of lean implementation.
There are some core rules from factory physics that should be in the forefront of every lean practitioner’s mind, as they approach the goal of creating flow. Hopp and Spearman state: “A production system is optimised at maximum throughput and minimum cycle time.” But what does this mean? The simple rules are: 1 Lead time or cycle time = work in progress/throughput
2 Increasing variability always degrades the performance of a production system
c2a + c2e 2
Source: (Hopp and Spearman, 2000, p.282)
3 If a workstation increases utilisation without making any other changes, average WIP and lead time will increase in a highly nonlinear fashion 4 Variability in a production system will be buffered by some combination of inventory, capacity or time .Variability, utilisation and time are interrelated (basic version of Kingman’s equation) called the VUT equation i.e. if you increase utilisation without reducing variability cycle time will increase By understanding these and applying these rules my team and I were able to help transform an already excellent business. By using the core factory dynamics we could prove that even though the plants previous lean efforts had maximised throughput and reduced process variation, the variation caused in their production system by scheduling policies and business choices driven by cost was sub-optimising the system and creating
individuals being able to influence the policies within organisations which create complexity. “I think that in the West we have created such complex organisational systems that senior people often need these qualifications to help them make sense of their environment. However, if lean is our goal then our main focus should be on the thinking of the whole organisation, not a select few.” With this in mind McGowan went on to say that Western organisations still have a long way to go in emulating the sensei teaching and development approach exemplified by Toyota. He clarifies: “In
Elsewhere in the same organization a plant had already ‘leaned-up’ and was being used as an exemplar for other sites. The Factory Physics project was able to show that a plant was on a level footing with a plant with lower levels of throughput and higher levels of variation when you measured flow time. By using the formula below we could explain that one of the most influential factors on their flow time through the plant was the effect of arrival variation caused by batching.
Inevitably the variable flow time through the plant was being buffered by a safety time and stock buffer (Rule 4). There was an opportunity to reduce lead time by 50%. It was interesting that no extra work was needed to improve changeover and the EPE (Every Product Every scheduling interval). This was simply done by choosing to run differently; by having a constant cycle time (manufacturing lead time), it allowed the time buffer to be reduced thus reducing total customer lead time and increased their responsiveness and competitiveness. These changes to the physical and policy choices were supported by measures and performance management in the scheduling department. Contact – justin@mjw-leansigmasolutions. co.uk for more information on this case study
the West we don’t place much emphasis on the philosophy behind how we operate and the way that we want employees to think. For example, Toyota defines how they want the business to operate through policies such as the TPS which defines how their supply chain should work. They defined the focus areas in the Toyota Way, 2001. People are then taught how all this works in practice through their sensei who helps them to see what each element means. This results in the desired way of thinking. Adding another perspective on the importance of hard skills and technical confidence behind
forward thinking and engaging lean programmes Richard Lloyd, general manager at Accolade Wines comments: “I have recently been around our Australian Wineries leading the launch of lean in this region. “For groups taking these primary steps it is crucial in my opinion to acknowledge the significance of culture and employee engagement. Caution needs to be taken though to ensure sufficient technical content is included in the early
Without understanding key principles it would have been easy to get lost in applying other lean tools without improving flow. Armed with this knowledge it was much easier to show the plant team a higher attainable level of lean implementation Justin Watts, Burton Foods
stages as there is a danger of not achieving employee buy-in if the technical substance is insufficient. Without some scientific method and hard skills to back culture up, lean culture building runs the risk of looking like a lightweight fashionable fad.
A fine balance needs to be reached to ensure engagement is realised; remembering that part of this needs to be achieved through the creditability of lean techniques.”
So what should the focus be for lean practitioners? Peter Hines formerly of Lean Enterprise Research Centre and chairman of SA Partners asked this leading question to delegates at the consulting company’s workshop in Manchester last month. Hines gave a revealing presentation highlighting the sustainability and ROI of lean initiatives and tracking the attention given to tools and techniques against that given to culture-building. He then asked delegates if they thought his statistics showed companies ought to concentrate more on culture building. Around 75% of those in the room gave confident affirmative answers while the remainder waivered, unsure of their ground. Surprisingly Hines went on to side with the minority saying: “The answer is that it depends. It depends on where your natural strengths as a company initially lie.” SA Partners’ chairman and founder went on to clarify that, while most manufacturing companies he had worked with tended to neglect the softer lean skills at first, since they are not inherent in sector traditions, organisations in other sectors, such as retail, struggled to build the technical know-how. What was made clear was that lean leaders need to be aware of the natural inclinations of their organisations and to adapt the focus of their programmes to answer fluctuating needs. While lean implementations without people engagement may be unsustainable, a vacuum of hard skills can be equally damaging.
Furtherreading Goldratt, E.M. and Fox, R.E. 1986. The Race. Great Barrington, USA: North River Press. Hopp, W.J. and Spearman, M.L. 2000. Factory Physics: Foundations of Manufacturing Management. 2nd ed. Singapore: McGraw-Hill Book Company. O’Donovan B, Seddon J and Zokaei K 2011. Systems Thinking: From Heresy to Practice: Public and Private Sector Studies. Palgrave Macmillan Seddon, J. 2005. Freedom from Command and Control: A better way to make the work work. 2nd ed. Buckingham, England: Vanguard Education.
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Much has been written about the UK’s ageing population and the impact that it will have on employees, employers and the economy. According to the Office for National Statistics, over the past 25 years the size of the population aged 65 and over has increased by 1.7 million people. There are now more people aged 65 and over, than those under 16 and the gap is widening.
response to the possible consequences of having an ageing population, a range of employment-prolonging measures have been introduced over the years including extending flexible working regulations and introducing age discrimination legislation. An increase in the State Pension Age to 66 for both men and women by 2020 has already been proposed by the Government. So how are organisations planning to manage an ageing workforce and are they seeing the changes as a challenge - or an opportunity? Some of the issues that companies need to consider include retaining and motivating older workers, providing flexible working and monitoring their skills and performance.
Retaining and motivating older workers Skills shortage is already a headlinegrabbing issue across the world. In a survey conducted by EEF, the manufacturers’ organisation, the ‘loss of specialist skills’ was cited by over three quarters of companies as a concern, with 60 per cent describing it as significant. Manufacturers are leading the way in embracing the employment of older workers and are prepared to
adapt working practices to continue fully utilising their skills – often by using skilled, older workers as trainers on the company’s apprenticeship scheme.
Monitoring skills and performance The survey also showed that older workers are highly valued in this sector for their productivity – with over a third of employers reporting that older workers were more productive that their younger colleagues. Technology has a role in tracking training, recording employee qualifications and highlighting skills-gaps, enabling a manufacturer to schedule employees based on their skill set and highlight which employees need to up-skill in order to create the most efficient schedules, or transfer to a more suitable role.
highly effective way of monitoring absence trends and enable employers to spot patterns of absence that might be early indicators of a more serious health problem. Early identification and intervention can then lead to discussions with employees about changing working patterns or reducing hours, in order to support them and to keep them in work.
A Challenge or an Opportunity?
Managing an Ageing Workforce
Opportunity for change The workforce in future years will look entirely different to that of today and older workers will hold the ace cards like never before. The job of managing people who demand a more flexible working environment will require a shift in attitude, which needs to start evolving right now. Technology will play a vital role in facilitating the changes required by monitoring skills and performance, identifying absence trends and supporting flexible working. However, it is the employer who needs to put aside any prejudice that still surrounds this group and recognise the ageing workforce as an opportunity for change, rather than a problem.
Absence tracking and flexible working In order to retain older workers, employers need to look for early signs that an employee is struggling with ill health, as early intervention has been identified as helping to prevent problems associated with long-term sickness. Sickness-absence monitoring systems can be a
Simon Macpherson Senior Director Operations EMEA Kronos Systems
Come and see the very best in UK manufacturing
THE MANUFACTURER OF THE YEAR FACTORY TOUR Thursday 22nd September 2011 | 9:30-15:00 | Castle Precision Engineering Ltd, Glasgow
LEADING THE WAY Are you looking for practical ways to improve competitiveness? Are you seeking to boost innovation, quality, change and continuous improvement?
This exclusive one day tour for manufacturing and engineering professionals is an excellent opportunity to see and hear the working practices and systems of the 2010 winning Manufacturer of the Year. Castle Precision Engineering will be opening their doors for just 30 delegates to share the latest tools and techniques that have helped them achieve world class status. Castle Precisionâ€™s team of over 150 highly trained personnel, operate an advanced, fully-computerised manufacturing facility based in Scotland. Castleâ€™s exceptional facilities, machinery and systems sets it apart as one of the most advanced in the sub-contract machining sector.
Castle Precision Engineering was crowned Manufacturer of the Year 2010 after beating over 150 entrants, winning both the Best SME and overall Manufacturer of the Year awards. Delegates will have the opportunity to speak to the senior management team and see just what it takes to become The Manufacturer of the Year 2010. You will hear their approach to innovation, IT and the manufacturing systems they have developed as well how they are creating a culture of continuous improvement across the site. Further insight will be provided on the following areas: the approach to staff training and development, apprentice programme, lean and operations improvement programme and SC21 partnerships.
› MDs, CEOs looking to benchmark themselves against the UK's Manufacturer of the Year
› Operations, HR and Finance Directors seeking inspiration and insight into becoming a world class manufacturer
› Companies entering this year's awards programme looking for advice and tips to help them along their journey
At this event, you will: › Understand what it takes to become The Manufacturer of the Year
› Share knowledge and explore new ideas and opportunities for your company
› Learn best practice from the factory tour
› Meet other manufacturers who share many of the same challenges and issues you face in daily operations and decision-making
› 150 employees › £15million turnover › The Manufacturer of the Year 2010 and Best SME award winner
› First sub-contractor in Scotland to be awarded SC21 bronze status
Despite being one of the most difficult years for industry in living memory, we can look back on 2010 with great pride. It will be remembered for the demonstration of our strong culture that took the downturn not as a hindrance, but as an opportunity, to make step change improvements in the company through investment in capital, training, our own continuous improvement programme and involvement in industry change programmes. Marcus Tiefenbrun
Who should attend?
MD, Castle Precision Engineering EARLY
To register a place, please contact Benn Walsh at: T: 0207 401 6033 E: email@example.com
Delegate fees: £295 +VAT per delegate Early bird offer: £245* + VAT per delegate *if booked by 31st July 2011
The Manufacturer magazine reserves the right to preclude delegates from participating in the tour due to the nature of information released. Please speak to Benn Walsh if you have any queries regarding conflicts with the host site.
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Leadership People and Skills
better Could do
Jane Gray reports on the progress of WorldSkills London 2011 and the state of employer engagement with skills provision in the UK.
is touted as the ‘Olympics of skills’. An international competition which pits the best talent of each participating country against one another, it is designed to discern which nation is supporting the development of the most adept young minds across a multitude of vocational subjects. This year, for the first time in decades, the WorldSkills competition is being hosted in the UK. The timing could hardly be more relevant as the government – particularly the Department of Business Innovation and Skills (BIS) and the Department of Education – vocalise their support for vocational skills and apprenticeships. “Real skills for real jobs” and “The foundation for economic recovery and growth” are regular buzz phrases heard from ministers in the coalition. Preparations for WorldSkills London 2011 have been underway for quite a while now. Teams have been training and regional heats have whittled down hundreds of hopeful entrants in categories from floristry to pastry artistry. As well as web design and
Ryan Sheridan Team UK represenative for Mechanical Engineering CAD category
landscape gardening, there is a definite relevance to manufacturing skills – from CAD engineering through to robotics, CNC Milling and more. The result of these heats will be the selection of ‘Team UK’; who will compete against teams from 50 other countries in an intense event in October at the O2 Arena. This year TM is privileged to be playing a part in WorldSkills as official media partner of the manufacturing team challenge. It is a slightly different category to many of the others in WorldSkills. This is because it combines a range of skills and involves relatively more team members; the manufacturing team challenge is extremely demanding and a pertinent reflection of the challenges inherent in modern manufacturing. At one of the selection days for Team UK (14-17 June) TM spoke to Matthew Bell, director of CAD Skills UK. Bell is an adjudicator for the manufacturing team challenge and he described the demands of the competition: “The manufacturing team challenge demands skills in manufacturing, fabrication, CNC, assembly and design. It really represents the multidisciplinary nature of advanced manufacturing.”
Sam Andrews of BAE Systems will be joined by his two team mates from the same organisation in representing Team UK at WorldSkills London 2011
Team UK for the manufacturing and engineering WorldSkills categories.
June 29th the National Apprenticeship Service hosted the 2011 National Apprenticeship Awards. This event, which has increased in profile exponentially in the last three years, was held this year at the Mermaid theatre in London. Keynote speakers included Skills Minister John Hayes, who formally announced the WorldSkills Team UK selections at the event. The qualifying teams in the manufacturing and engineering categories for WorldSkills London 2011 are as follows:
The manufacturing team challenge: Kai Burkitt (23), Rachael Carr (23), Sam Andrews (23); BAE Systems CNC milling: David Nicholl (22); Schlumberger CNC turning: Philip Spowart (22); Rolls-Royce Electronics: Andrew Fielding (21); MBDA Mechanical engineering design (CAD): Ryan Sheridan (20); a student at Motherwell College, North Lancashire Mechatronics (team event): Chris Downey (23); Michelin Tyre and Mark Maginty (23); Russell Electrical Contractors Mobile robotics (team event): Puja Varnsani (22) and Darren Lewis (21); students at Middlesex University. Welding: Jake Rambaldini (21); Doosan Babcock Energy Services The rigour employed in the WorldSkills selection processes is evident in the fact that none of these team qualified by default. For instance, while the mobile robotics team had no direct competitors in the final rounds of Team UK selections they still had to complete all the challenges completed by other national team while clearing the high bar set for performance. Categories where Britain was unable to put forward successful representation include; Sheet metal technology, mould making, polymechanics and automation. For more information on what all these categories require of competitors go to: www.worldskillslondon2011.com/skillcategories/manufacturing-(and-engineering)-technology
In previous years the time allowance for completion of the manufacturing team challenge has been 22 hours. Projects have included the design, manufacture and assembly of: power generating exercise equipment, battery powered vehicles and mobile solar tracking units. This year the final contestants left to battle for a place within Team UK in the manufacturing team challenge category were from two household names for British manufacturing; Bentley Motors and BAE Systems. After a hard fought contest it was announced on June 29th at The National Apprenticeship Awards in London that it will be the BAE Systems team who will have the chance to say, as COO of the National Apprenticeship Service David Way put it: “I was best in the world at ‘X’ in 2011.” The cloak of glamour and celebration which WorldSkills places around vocational skills is a crucial contribution to changing the perception of vocational career routes, including manufacturing. The current perception of the industry is a blocker to manufacturing prosperity which is constantly complained about at industry events and forums, yet one which few have really taken meaningful and intelligent action on. There seems to be a reluctance on the part of manufacturing leaders to accept that changing the public perception of manufacturing means the sector must pander to what broader society finds attractive and present manufacturing careers in those terms. While comment from figures like Alan Sugar on The Apprentice last month about the inability of engineers to perform as business leaders are unhelpful, the fact remains that manufacturing leaders have done relatively little to parade their successes and it is therefore unsurprising to hear such statements from business celebrities. WorldSkills provides an opportunity to change this, and outside of Britain many nations seem to understand this far better. One representative of the WorldSkills organisation told TM that in South Korea and Japan the WorldSkills contestants are household names in the way as our XFactor and Britain’s Got Talent participants are. The organisation behind the competition is committed to a process of spreading this understanding and embedding it in the relationship between companies, educational institutions and educational structures for the long term. WorldSkills has always collected a following of industrial partners for its biannual events. Many of those partners have been consistent. Some have changed from year to year, but until now there has been little quantitative research into the change effected within education systems or curricula as a consequence of company interaction with events such as this. WorldSkill’s contact with schools, colleges and universities has traditionally been very close. These institutions are often the sources of competition entrants and the venues for trials and competition heats.
Leadership, People and skills
The cloak of glamour and celebration which WorldSkills puts around vocational skills is a crucial contribution to changing the perception of vocational career routes, such as manufacturing Representatives from Hinkley College, one of the venues for the Team UK selection competitions, gave some valuable insight. Dr Michael Motley, vice principle of corporate and business development at Hinkley, identified the recent closure of the Connexions recruitment and advice service as a disappointment and a challenge to FE institutions trying to understand labour market needs. The college is being proactive in filling this gap however, and is gathering information by looking at local vacancies as well as labour market intelligence
PEOPLE & SKILLS AWARD
Calling for entries: Is your company delivering the highest levels of workforce development and focusing on engaging with the wider community? 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, they have 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.
Sponsored by Kronos
For the 2011 event, the interaction between competition organisers, education bodies and industry partners is being tackled with more intelligence and more attention to highlighting action points and benefits. The goal is to create robust relationships which outlast the duration of each competition and which have relevance to everyday thinking, work and systems. At the WorldSkills selection event for Team UK held on June 15 John Hayes, Minister of State for Further Education (FE), Skills and Lifelong learning, commented on this objective: “I have always said when talking about WorldSkills that its success will be tested by its legacy.” “From an employer’s point of view this event is about supporting the one-off, the show case if you like, for what we do best [in Britain]. But it is also about considering what those skills mean for their business in the long term.” The minister continued: “Productivity and skills are closely linked and I think there is a growing realisation among businesses that by working with FE colleges and other training providers they can gain the competencies they need to succeed.” For those on both sides of the training fence however, this statement may seem somewhat glib. It is the perennial complaint of manufacturing employers that training providers over complicate access to skills and misunderstand needs when developing course structures. Meanwhile education and training providers have long been stuck in quandaries of contradictory league table performance indicators, a constraining national curriculum and lack of effective information as to labour market requirements.
from sector skills councils and the Office for National Statistics. In addition Hinkley is acting as a role model for other FE institutions in pursuing round table events with staff and local employer participation as well as hosting guest lecturers from local business figures for students and staff. These events are designed to keep the college community engaged with the outside world while sustaining the development of a flexible curriculum which answers the needs of the local and national economy. The enthusiastic attitude shown by Hinkley in engaging with employers is leading to practical action. Motley told TM that he had not previously appreciated the wealth of manufacturing activity in the region or the technical requirements of the businesses. In response to the enlightenment of the business development team, a £1.5m investment has been made in a new engineering building, which will specialise in engineering design skills and the delivery of an engineering design apprenticeship. Motley says there is a damaging lack of provision in this skills area with just three centres in the UK. What is palpably obvious in the activity at Hinkley however is that engagement works both ways. For the kind of responsive education this college is now aiming to provide, the input from employers must be consistent and considered. Occasional school visits and sponsorship of one-off events is not enough.
Have your say at www.themanufacturer.com
A question of leadership The mainstream press is smattered with dismal reports of failing job markets and mass unemployment. But is this the reality for all and can it make a difference to organisations to get a more meaningful insight into the confidence of their industry? Jane Gray talks to Rob Lanham at Harvey Nash to find out.
recruitment company Harvey Nash first teamed up with TM in 2010 in order to conduct a UK manufacturing leadership survey which would provide real insight into the confidence of the sector, the dynamics of the manufacturing job market and the opinions of professionals working within it.
The outcomes were thought provoking. Some confirmed assumptions about the attitudes of manufacturing professionals but others were more surprising – as with the unexpected appearance of job mobility (access the survey results online for more analysis). But aside from providing academic interest, how can such information help companies?
The Leadership Survey 2011 explained Summer 2011 sees the arrival of the second annual Harvey Nash & The Manufacturer Leadership Survey aimed at establishing the sentiment, key trends and outlook of the UK manufacturing industry as we continue to attempt to climb out of the global recession. The inaugural survey published in October last year was completed by nearly 300 senior executives from the whole spectrum of British business, including multinational corporations right through to niche SME’s and their responses threw up some fascinating results. Not least an overwhelmingly positive sentiment towards the future performance of sector and a lack of truly visible leaders within the sector, something the retail and technology sectors have in abundance. In addition to the traditional questions on executive remuneration, market sentiment and job security, this year’s survey will
focus on the skills agenda by seeking to identify the reasons behind the skills shortage that threatens to derail the recovery. Numerous articles have been written of late bemoaning a lack of suitably qualified candidates on the job market and it is the aim of this survey to try and identify some of the reasons for this. Can this perceived skills shortage be attributed to the continuing decline of engineering graduates pursuing a career in the industry, a reluctance to change employer in the midst of continued market uncertainty or a change in work/life balance? Will the advent of tuition fees make the issue even more acute? Alternatively, could it be that employers themselves are lending credibility to this theory with a reluctance to recruit individuals from outside of their immediate sector who have transferable skills rather than a career in one specific industry?
There is plenty of anecdotal evidence to suggest that employers are restricting the candidate pool available to them by insisting that only candidates from their respective industry have the ability to perform successfully in their organisation. Does this need to be the case? Is it possible to transfer functional expertise in HR, sales, finance, operations and general management from one sector to another? And even if employers were more open to transitioning candidates from one sector to another would this solve the issue or is there genuinely a dearth of talent across the sector as a whole? By completing this year’s survey you will be able to share your experiences and offer your opinions around these challenges, contributing to the process and being the first to receive the full report giving you visibility into the views of your peers and commentary on the results.
Leadership People and Skills
Rob Lanham, a senior consultant with Harvey Nash and a closely involved partner in the promotion of the Leadership Survey explains: “The survey gives a true spectrum of opinion from a variety of participants across sectors and ranging from CEOs to general management and more.” In addition to providing discreet analysis of survey responses, the Harvey Nash research team also include quotes from participants who agree to have their views accredited. This more human touch gives further credibility to the statistical approach and this is important since the survey is designed to give manufacturers confidence in their HR, recruitment and training strategies. Since the completion of the Leadership Survey just over a year ago, Harvey Nash has tracked the employee turnover and recruitment behaviours of certain participating companies in order to measure responses to the results. Those who have utilised the survey results as a reference point for business activity and personal professional development have stated an increased level of assurance in their actions since leveraging the Harvey Nash data for decision making. Such confidence can however, only be maintained if survey results are frank. As we approach the launch of the 2011 survey, Lanham is keen to reiterate the message that all online responses are strictly anonymous and confidential. “It is important that participants are completely honest about the way they are thinking and their organisations are behaving. We do hear concerns that responses will be traced back to companies and individuals but that is not the way our system is set up. It is vital that responses reflect the true sentiment of the industry in order for meaningful actions to be taken on the back of the survey,” says Lanham. As Lanham details inset, the focus for the 2011 survey has moved on from the immediate concerns of a nation emerging from recession and this year focuses on skills issues. Bringing a different flavour to the discussion of industry skills, which seems to dominate much of the political debate around the need for a manufacturing resurgence in the UK, Lanham explains that Harvey Nash have observed some influential trends which it hopes to understand in greater depth following the 2011 survey. These trends relate to recruitment behaviours and the opposing forces of recruitment for best practice and low risk recruitment for industry knowledge. Lanham says: “In the early 2000s we saw a lot of recruitment for best practice. Companies sourced talent from a diverse pool in order to get the best skills in supply chain management, marketing and so on. Today we increasingly see an approach which is aimed at avoiding making the wrong recruitment decision rather than making the absolute right recruitment decision. In my own opinion this runs the risk of being extremely limiting for the manufacturing industry’s talent pool.”
Reflecting Lanham’s view that being willing to think in terms of transferable skills instead of sector specialism is a positive step for industry skills resilience, Bill Thurston, CEO of Langmead Farms and previously managing director at Vion agreed to comment in advance of this year’s Leadership Survey. Thurston says: “In both my past industry and my current one we are actively looking to bring skilled staff from alternative industries for two reasons. One, the current level of skills I believe is low and processes and procedures are quite tired. And two, because fresh eyes bring in new ideas and regularly better ways of doing things – how many times have we heard ‘we always do it this way in this industry’ and they think it is the only and the best way to do something. Opening minds has allowed step changes to be made and advantages taken over the competition.” Of course knowing where to look for skills which will allow an organisation to lead in their field and yet be supple in the face of shifting markets, technologies and economic or political environments, is easier said than done. For Lanham this is where Harvey Nash steps in. By displaying the Leadership Survey Results and analysis the company provides context but it can provide more practical services. Lanham is aware of his responsibilities. “It is down to us as head-hunters to find relevant skills,” he says.
Ella Pilsworth and Alice Trotman, students at the UK’s first University Technical College, reflect on their past year at The JCB Academy near Rochester; the change it has made to their lives and the skills they’ve learnt along the way
a year has gone by, it is time to reflect on the footprints that we have left at The Academy. Whether it has been a fantastic achievement in the workshop or academic progress in the classroom, this year has been a rollercoaster, full of ups and plenty of downs. But on a whole, everyone achieved something and is proud of themselves. Throughout the year we have had many memories and
The JCB Academy opened in September 2010. The school’s remit is to provide an education to 14-18 year olds which focuses on developing them for roles in industry (specifically mechanical engineering in this case). A template for the new University Technical Colleges which are opening across the UK this year and in years to come, The JCB Academy has instigated a step change in the way educational institutions think about developing curricula and communicating with local enterprise.
made many new friends that will stay with us for the rest of our lives. We have had to get used to long hours that drain all our energy, but it’s worth knowing that we will get the grades and the education we want and deserve. Even though it was hard leaving our old school and leaving the environment we knew, everyone is glad they took the risk and took a chance on this new school, where everything is so different and we are consistently pushed out of our comfort zones. Even though we sometimes say we don’t like school, we know it’s for the best and we know that we are getting an education unlike any other. We have had plenty of opportunities to make ourselves known; from Prince Charles to Sir Anthony Bamford and from Network Rail to Alton Towers; the JCB Academy has
Have your say at www.themanufacturer.com
been out and about around some of the best engineering institutions, business institutions and trade organisations in the country. Looking back on our first week when everyone was fresh faced and excited, much has changed since then: we are now wise to the world of work and safety conscience in the workshop. Everything is not as daunting as it was to start with and we now know everything is a lot harder than it at first seems, but if you keep working at it you will succeed! We are The JCB Academy.
Carol Meddings Technical training leader, Power Panels Electrical Systems A long term career was not on Carol Meddings’ mind when she joined Power Panels, a West Midlands-based manufacturer of electrical assemblies back in 1990. The work she took on during the twilight shift was just another job; it helped to pay the bills and support growing family, but was hardly a vocation.
remembers her attitude to the job when she first joined Power Panels: “It slotted around my children nicely. I did unskilled factory work and although I didn’t see it as my future I enjoyed the process side of it.” Then times turned hard. Carol’s husband was made redundant and, refusing to turn to benefits she decided to take on a full time role to make ends meet. As it happens however, this misfortune for the Meddings family turned out to be a blessing in disguise for Carol. Working as an operator she picked up and retained a knowledge of Power Panel products and processes which impressed her superiors. A natural eye for quality and conscientiousness also started to develop into a professional skill. Carol’s aptitude in these areas allowed her to progresses up to the point where she was to become team leader. But here she came up against a hurdle; green belt 6 sigma training. Carol explains why this was a problem for her less than self-confident character: “I didn’t want to do the training. I didn’t think I was clever enough so I fought it all the way.” In the end however her desire to progress as a team leader won through and all reticence to expose herself to failure quickly slipped away. Carol says: “I was shocked to see how easy it was once I followed the process. I took it step by step.” Furthermore, Carol proved herself so adept at the green belt training and so confident in her ability to explain the principles to her team that the decision was taken to make her the technical trainer. Now she writes technical training manuals for operators using her 6 sigma training to go through root cause analysis of any problems in production. Speaking about the experience and the personal qualities that enable her to do her
work successfully, Carol reflects: “I’m a good communicator at shop floor level. I understand the operators as I’ve been one myself. I’m approachable because I am always ready to help. The most rewarding comeback from my work is seeing the success of quality improvements. Also, by learning more myself I can train other people and I enjoy seeing them get it right.” The personal fulfilment and value that she has been able to bring to the company have now made Carol ambitious for her future: “I’m moving from being CV in brief – Carol Meddings the technical trainer to becoming the training leader. Age: 51 We’ve recruited two Education: more operators into Left school with no formal technical training qualifications positions and they’ll report to me. Progression with PP: Eventually, I’d like 1990: Operator to train people to be 1992: Team Leader 6 sigma green belts, 2009: Technical Trainer but that would 2011: Technical Training Leader mean becoming a Interests: black belt. I’d like to try.” Teaching Amber, her 12 year old A long time has granddaughter how to use her computer. Playing cards and draughts passed since Carol and going for long walks with their dog. started out with Power Panels and a lot has changed in her expectations for what her working life would involve: “All of my other work before this was just jobs, but this is my career. I love my work at PP, the environment is different and I’m a big part of it.”
Have your say at www.themanufacturer.com
MASS contract gives BAE Systems more
firepower The Ministry of Defence’s MASS contract with BAE Systems Munitions has enabled security of supply, investment in plant, better long term visibility for the entire supply chain and has in effect saved the UK munitions industry. BAE Systems’ Mark McIntyre tells Will Stirling why it should be adopted in other areas of government procurement.
2008 BAE Systems Munitions signed a procurement contract with the MoD that proved a watershed for munitions manufacture in the UK, a sector that has been underinvested for years. The Munitions Acquisition-Supply Solution (or MASS) gave Britain’s largest defence contractor long term information about orders, in some cases up to 15 years. This information can be relayed directly to the company’s suppliers, giving them security and the ability to plan, invest and retain skills. The first MASS contract to one of BAE System’s suppliers was given at the start of 2010. BAE Systems Munitions’ main customer is the UK MoD. Under MASS, the MoD gives BAE Systems a 10-year fixed procurement contract, but on top of this the MoD flows down five-year requirements to the company ahead of making the contract ‘firm’. This in effect provides BAE Munitions with a 15-year rolling contract (10-years fixed plus five years rolling). “For me, there’s nothing else in UK manufacturing that does this,” says Mark McIntyre, procurement director at BAE Systems Munitions business in Glascoed. “It gives us the visibility at GCSM [Global Combat Systems Munitions] to invest in technology and plan our business ahead, and we can flow that down to key suppliers.” Prevailing procurement strategies within civil aerospace, automotive and defence have been driven by competition, says Mr McIntyre, who has a background in civil aerospace. Contracting companies are geared up to move work every few years to a cheaper source, which drives value. But the uncertainty in the supply chain causes problems; some suppliers go out of business and skills are lost. Skills retention is an important element, with the threat of losing skilled labour to cancelled or phased
MASS procurement Munitions manufacture had suffered a long period of neglect and low investment. Ministry of Defence (MoD) and BAE Systems Munitions undertake the Munitions Acceleration Supply Solution programme in 2008. MoD gives BAE Munitions a 10-year fixed contract with a five year rolling contract, enabling the business to plan better and provide its supply chain with long term, secure orders. BAE Systems puts £206m into updating munitions production, mainly through three tranches of investment, to build and upgrade three factories, including Washington, Tyne and Wear (£75m). BAE Systems Munitions’ supply chain now have long term visibility out to 15-years, giving MoD and the supply chain supply security (which is better for national security), more confident investment and retention of skills.
Specialfeature Defence procurement
It’s a great platform for us to do some value engineering work together on the bill of materials Mark McIntyre, BAE Systems
SUPPLY CHAIN EXCELLENCE AWARD Calling for entries: Is your supply chain delivering quantifiable benefits across your organisation? This award will go 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 reduces cost and increases efficiency or customer responsiveness. 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.
out programmes like Nimrod and Harrier. Some of these skills are sophisticated and very scarce; they can take a generation to replace. MASS shows evidence that the MoD recognises this. BAE Systems Munitions’ suppliers are on various contracts but all are now long term, from five years to 12 years. The MoD order is flowed down to suppliers in three year blocks – suppliers can see precisely what the MoD has ordered from BAE up to three years ago. This allows more confident investment. One UK supplier, AF Aerospace, has invested over £2 million in capital machinery to
support BAE Systems Munitions on the back of a 10-year contract. “It gives them the ability to work with us to take cost out of their bill of material in the medium to long term,” says Mr McIntyre, “previously they wouldn’t invest time or effort because they were expecting us to move our contract to someone else.”
Price concession All contracts have some form of discount in return for the security. For example, on some there are discount clauses for volume increase. “Some suppliers with no contract at all might make 12% profit on the bill of material from us,” says McIntyre. “I’ve suggested reducing that margin by 2 per cent in return for a long term contract, so they get 10 per cent year-on-year, rather than 12 per cent in one year. The suppliers have been willing to do that.” The arrangement is easier to make with the SMEs than some bigger companies.
Drivers BAE Systems is contracted with the MoD via MASS to produce continuous savings. Benefits are shared so that BAE Systems keeps a proportion of the savings and the MoD takes the balance. The MoD is keen to make the savings ethically with minimal impact on supplier companies, and the other main drivers for MASS are to ensure supply chain reliability and minimise risk. MASS has required more collaboration between the two partners. The MoD is more involved with value engineering within the procurement process. An example is in the use of more commercially
Paint and coating line at BAE’s new Washington factory
Special feature Defence procurement
available raw materials to reduce costs, where the end-line customer has to qualify that and approve it – here the MoD has collaborated. MASS has reduced paperwork, “by reducing the number of orders we’ve had to place – we can now put schedules out rather than individual orders each year,” says McIntyre. “The MASS approach is particularly relevant to munitions, where many suppliers are almost unique,”
Munitions move on
says Mr Sweeney. “There are many specialist processes and materials – you can’t just go out to the market to procure these goods. It’s important that we protect our supplier base in these key areas.”
Savings and further adoption The MoD has saved over £30m on cost avoidance in two years from MASS. “£30 million has been saved by meeting the MoD’s demands when they downsized volumes following the SDSR [Strategic Defence Review],” says McIntyre. MASS provided a controlled easing of capacity. “We were able to smooth that reduction over a longer period of time, from a position where a supplier had lots of work and then nothing, the order flow, while reduced, is more consistent. This has minimised redundancies, severance pay costs etc.”
This approach is particularly relevant to munitions, where many suppliers are almost unique Mike Sweeney, L&A, BAE Systems
Munitions have been manufactured in Birtley, Newcastle since 1915, when the Royal Ordnance Factory was built in reaction to the ‘Great Shell Shortage’ of World War I. The Times newspaper report that the British frontline in Flanders was running short of munitions eventually brought down the Liberal government under H. H. Asquith. Years later, in the First Gulf War, the MoD needed to buy more 155mm ammunition at short notice but the UK didn’t have sufficient capacity. The government asked Belgium, who refused. Following this, the key driver of the MASS was the retention of UK sovereign capability in munitions manufacture. “It is a virtuous circle,” says BAE Systems’ Mike Sweeney. “Once people recognised that this was a specialist capability, and it was too low volume to compete [internationally], the situation is created which is good for frontline services, good for the taxpayer because it’s cost-effective, and good for jobs. Long term planning means not hiring and firing or stopping and starting production lines.” From employing 15,000 people at its height, Birtley’s future is in doubt. Last year BAE Systems opened a £75m purpose-built 33,000m2 factory a mile down road in Washington which replaces the old Dunlop Tyre factory, where production will be migrated. The company is investing in two other munitions factories at Radway Green (bullets) and Glascoed (filling and assembly).
Have your say at www.themanufacturer.com
The procurement profession inside GCSM has changed as a result of MASS, says McIntyre. New people have been retained, training is up and new skills are taught. “Before MASS, we bought goods on a very tactical basis, it was very price-driven and competitive. Now we’ve created key strategic partners in the supply base. How you manage those and drive value into their bill of materials, it’s a very different job to what we had the capability to do before.” There are similar long term partner agreements in other BAE Systems programmes, such as the fast jets Tornado and formerly Harrier. The National Audit Office reports that the Tornado partnering arrangement has saved £1.4bn over five years.” And MASS could become a benchmark model for other defence – or non-defence industrial – procurement. For example, it is being examined by BAE’s Armoured Vehicle Support.
Potential downside? There is consolidation in the munitions supply chain, and with gaining long term visibility there are likely to be some suppliers who lose. “The supplier base had to be consolidated anyway,” says McIntyre. “This is just a catalyst to affect that change.” Birtley has faced an uncertain future for a few years. But the purpose-built factory at Washington exists because of the MASS contract, McIntyre says. “The new factory is more automated with far superior equipment and is much safer,” says Sweeney. “There may be a small reduction in headcount at the new site but it will be a more modern, efficient and pleasant place to work.”
Insurance and Professional Services
appetite for investment
After two years of capital stockpiling, private equity firms are cashed up and looking to talk turkey. The question begs however, in this post recession economy, has the market re-bounded so strongly that it has created a sellers’ market? Tim Brown talks to the private equity houses about their investments and whether or not UK manufacturers are on the shopping list.
image of private equity (PE) has not always been a good one. The Michael Douglas portrayal of corporate raider Gordon Gekko typified the perception of PE in its 1980’s reckless hay-day of hostile takeovers, asset stripping and major layoffs. As time has passed, old wounds have healed and despite the bump in the road that was the global financial crisis (GFC), the private equity landscape is now considerably different. “Twenty years ago,” says Mark Porter, a partner with Bain Capital, “it was all about financial engineering and gearing up the balance sheet and using the operating cash flow to pay down debt and sell the business as soon as possible. These days, that doesn’t work. These days, private equity firms have to find some way to add value to the businesses that they acquire...and get involved in the business.” Simon Keeling, joint chairman of corporate finance advisory firm Corbett Keeling says that if you believe in the virtues of capitalism then you will likely agree with the Porter philosophy that building the value of a company is “an inherent part of business life”. “But,” says Keeling, “business is not just about building value. If you are one of the owners of a company, you also want to be able to turn that value into cash.” So of course some elements of the PE process still remain – the need to cut costs and the need to sell...eventually. “Private equity owners are very good at rolling up their sleeves and getting their hands on the operations of the business and figuring out
The general view is that there is more interest in UK manufacturing than there has been for some time Neil MacDougall, Managing Partner, Silverfleet Capital
how to run it better,” says Porter. “Typically they will get involved in all aspects of the company including the commercial management (customers, pricing, identifying opportunities) or the more traditional areas of costs and capital.”
The private equity landscape According to the Centre for Private Equity Research (CMBOR) at Nottingham University, the UK PE 2010 market value recovered to £19.1 billion from
There has been a huge political interest in manufacturing and there will be for the next few years as politicians have finally realised that the UK can’t be solely reliant on its service industries and that manufacturing is important for our growth Mitch Titley, Partner, Gresham Private Equity the 2009 figure of just over £6bn. The beginning of 2011 has also showed promise with £3.5bn in investments recorded in the first quarter. In 2009, the 257 exits completed represented the lowest total since 1995. The 2009 total also
included 166 creditor exits which was the highest number ever recorded by CMBOR. In 2010 the exit market improved with total exit volume rising to 275 while creditor exits fell to 115. In the first quarter of this year 74 exits have completed but, according to Grant Thornton UK LLP’s latest Private Equity Barometer, UK private equity firms are planning to exit a dramatically higher proportion of their portfolio investments this year than previously. Manufacturing stands to be involved in its fair share of this market movement. In terms of sector preference, more than a third (36%) of UK Private Equity firms see manufacturing as a key investment focus over the coming twelve months (see table). The reason for this is largely due to a collection of macro-economic forces. “The general view is that there is more interest in UK manufacturing than there has been for some time,” says Neil MacDougall, managing partner with Silverfleet Capital. “I can’t help but feel that it has a lot to do with the exchange rate. I think the devaluation of the Pound against the Euro has made the UK, from a cost perspective, a lot more competitive than it has been for a decade if not longer.” Mitch Titley, partner with Gresham Private Equity, says that even though Gresham has had a long standing interest in the manufacturing sector, the impact of the recession has meant that the sector has become more attractive. “There has been a huge political interest in manufacturing and there will be for the next few years as politicians have finally realised that the UK can’t be solely reliant on its service industries and that manufacturing is important for our growth,” says Titley. According to Porter, the financial crisis has also presented new opportunities to the PE market with distressed corporate companies consolidating business interests. But there has been a polarisation in the corporate environment. Richard Skinner, director at PwC, says that cash rich corporate companies have been able to pick up weaker competitors meaning they need to divest certain parts of their business which are not core to their strategy or because of competition concerns. Porter says that corporate businesses that have accumulated have to do something with that money. “They either have to give it back to their shareholders, do some acquisition, or they make themselves a very attractive takeover target,” he says. “I do see some increased level of interest in these public to private acquisitions where private equity owners are looking to takeover a publicly listed company because they are sitting on a balance sheet that isn’t being properly used.” Not only is there fierce interest but, compared to 2007, there are considerably fewer deals available. “Our biggest issue is that we have to compete more this year than for the past three,” says Silverfleet’s
Most active sectors 2011
Business support, infrastructure and logistics:
High technology including software and IT
Consumer retail and food
Industrials, manufacturing and engineering
Healthcare, pharmaceuticals and medical
Media and communication (incl. telecoms)
Energy, extractive, utilities
Travel, tourism and leisure
Materials and chemicals
Real estate, property and construction
MacDougall. “This is particularly with corporate buyers as an alternative buyer. Corporate balance sheets are pretty strong and US corporations in particular have had access in particular to a hot high yield market to refinance some of their liabilities. Quite a few corporate balance sheets have quite significant amounts of cash which they would prefer to deploy back into their companies rather than doing special dividends.” PE firms collectively hold approximately one trillion dollars in capital for investment. “For every company that comes up to be bought,” says Porter, “there are often five or more private equity firms competing for it. In order to be successful in acquiring the business, the private equity firm has to find some way to add value that the other firms do not have.” Jonathan Sherry, head of M&A and private equity at Zurich says that the unused capital is known in the industry as ‘dry powder’. According to him, “the industry is not remunerated for unutilised investments and hates to give money back so there is a pressure to ‘use it or lose it’.”
Private equity in practice So what it is that PE firms are looking for? Primarily PE houses look at businesses on an individual basis but there are sectors of specific interest including:
Finance Insurance and Professional Services
renewables; security (home land security or cyber security); oil and gas; mining; food and beverage; agriculture production; and products related to an aging population. All these popular sectors have been driven by high prices and a view that the long term demand is strong.
For a business looking to sell or for investment capital, private equity may indeed be the solution. The simplest route into the private equity market is for either the shareholders or management to approach a private equity investor directly, and they will then usually get a first meeting. The second route is through an introduction via an agent, who is often an investment bank.
These days, private equity firms have to find some way to add value to the businesses that they acquire...and get involved in the business Mark Porter, Partner, Bain Capital
If private equity is the desired direction, it is important to realise that there are several different ways of skinning the PE cat. According to Keeling, between debt and equity, “there is a whole spectrum of hybrid funding products such as junior debt, mezzanine and preference shares”. Consulting with a corporate finance advisor can make the decision easier. Despite the variety of options, a majority of private equity firms will want to take equity in a business. Mitch Titley of Gresham says his company will always take equity but it is not always a majority stake. One of the Gresham’s current investments, Worcestershire-based PET plastic bottle manufacturer Esterform, is an example of this. According to Zurich’s Sherry: “The general model for PE investment in the larger buy-out arena is to utilise both equity and debt which may not fit with owner-
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According to Skinner of PwC, the characteristics PE firms look for include: A good aftermarket presence Niche technologies that can be defended (not just through patents) Supplies to a variety of end use sectors Solid emerging market presence Interesting part of the supply chain, with the ability to pass on raw material prices Strong management team
managers’ appetites or the current financial position of the company.” Aside from cost cutting, the exit is most likely to cause concern for management but, according to Porter, it is usually management that instigate the sale. In a private equity backed deal, the PE owners very often set aside a portion of the equity to the management team. This means that if the exit is successful then they are rewarded for that. “What we’ve always found is that the shareholders sitting alongside us are the management team. If the investment is going very well then the management’s shares have gone up in value significantly in that period of time. After five years, most management teams may decide it is time to bank and they want to take some money off the table: that is usually what triggers an exit.” With fewer prospects in the market, and with PE firms hungry for equity, now may be the time to seize opportunities with new investors or owners. However, even though there is interest, businesses must still meet a high standard in order to be attractive to investors. The choice to enter into private equity is a big decision and one that requires research and, in the end, the choice needs to come down to who can develop the best relationship and add the greatest value to the business.
Have your say at www.themanufacturer.com
Made in The repatriation question
with the rising costs of transport, labour and materials, many British manufacturers with overseas operations are increasingly exploring the benefits of re-establishing a manufacturing base in the UK. It’s a phenomenon which few would have predicted prior to the recession, but which today is becoming a commercial reality for a growing number of companies.
Changing commercial realities
For many of the CEOs and heads of finance I talk to within the UK manufacturing sector, repatriation isn’t an either-or issue. While it might make financial or logistical sense for some companies to bring the production of certain goods or components back, there may also be markets where it makes absolute sense for manufacturing to continue taking place in (or close to) the country where the products will end up. For some organisations, the significant risks and cost differentiators – for instance, around currency exchange rates, taxation and labour – that made manufacturing overseas attractive in the first place are disappearing. For others, the gap has narrowed to the extent that other advantages are outweighed by the net benefits of returning to the UK, especially as so many of our manufacturers are today much more lean and efficient.
For some manufacturers, a return to UK production is already a reality. But it’s not as black-and-white for everyone else. Peter Russell, head of manufacturing sector at RBS, examines the issues at stake. Those advantages often centre on quality and reliability, issues which influence the feasibility or desirability of repatriation; where cost alone might dictate remaining overseas. Some manufacturing chiefs say it’s the complexity and volatility of managing a global supply chain that has forced them to consider ways to shorten those chains and gain more control in some cases by bringing production all the way back to the UK. The difficulties associated with penetrating emerging markets have also compelled some manufacturing firms to reverse strategies that made perfect sense prior to the global economic downturn. Expanding into those countries enjoying accelerated growth – to capitalise on appetites for their products amongst local businesses and consumers – was a worthwhile risk for many companies. But fierce competition from strong domestic organisations (and from British companies with a more sure-footed presence in some territories) has proved more challenging in some cases and prevented them from achieving the growth they originally anticipated. And, of course, pulling manufacturing or supply chain operations out of certain overseas locations doesn’t necessarily mean transferring them to the UK; other countries may be more effective in the long term, and many are certainly promoting an ‘open for business’ message on the world stage.
Environmental considerations, which are inextricably linked to energy consumption, will continue to gain increasing prominence. Manufacturing will continue its transition to ‘greener’ practices driven by the propensity of large organisations – end-users or retailers of manufactured goods – to push carbonreduction imperatives down the supply chain. By exerting pressure on manufacturers or distributors who seek their business, multinationals can more easily meet their own substantial sustainability targets. This too has led to some manufacturers repatriating some of their operations, in return for demonstrable reductions
in energy consumption and ‘carbon miles’ that satisfy the demands of existing customers. The bonus (indeed, sometimes the deciding factor) for many is that they also gain access to fresh opportunities with the growing number of multinationals which – alongside conventional factors such as price, quality and logistics – now apply strict carbon-reduction criteria when appointing suppliers. Without the green credentials earned as a result of repatriation, many UK-based manufacturers might rule themselves out of consideration for those supply contracts Repatriation may be justified on logistical or financial grounds – but some manufacturers will need to factor in the availability of labour. A perceived scarcity of high-calibre people with technical and professional skills (and who want to work in manufacturing) has been on the agenda in boardrooms for some time. Government-backed initiatives to improve the skill set of UK plc – such as the provision of seed funding, announced in the Budget, for engineering and science research centres – have been warmly welcomed, alongside already flexible labour laws. A number of companies have, of course, already taken matters into their own hands; just one such example being an aerospace business I met recently that’s been employing school-leavers for a number of years now and taking them through its own extensive apprenticeship scheme. The culture of that company is built around investing in its people and the results so far speak for themselves. The extent to which bringing some or all of its activities back to the UK will become a commercial ‘must-have’ will always be highly dependent on each manufacturer’s specific supply chain, customer portfolio and risk philosophy, as well as its broader corporate objectives and long-term strategy. The job for the executives leading those organisations – and for their advisers – will be to accurately forecast both the benefits and risks of any such moves, in the context of a global economy that remains unpredictable.
Where manufacturing companies with overseas operations are themselves part of larger supply chains, including those which exercised extensive due diligence before off-shoring those operations, face risks that might be mitigated by resuming domestic production. In a significantly transformed macroeconomic climate, overseas investments made in more bullish times are, in some cases, falling for review. Company executives who once accepted the financial and supply chain risks, of manufacturing overseas in exchange for competitively priced products are finding that wider supply chain, quality and financial pressures are driving them to reconsider. For instance, one British manufacturer, which supplies components to the automotive sector, discovered that, despite a considerable initial investment and the cost of subsequent remedial measures, the quality it could obtain was insufficient to meet the standards required by its customers in Europe who depended on those components. Like many in its industry sector, this company was already operating under lean manufacturing principles, meaning that any impediment to the overseas supply chain represented a major disruption. For its CEO, bringing that part of its manufacturing process back to the UK was more than simply a quality-control solution: it was the only way to preserve a valuable contract. An emphasis on innovation amongst the British manufacturing sector means the issue of where products or components are made adds another dimension to the debate. In the UK, there are relatively fewer mid-sized or larger manufacturing companies than in many similarly-sized economies in Europe. A perceived lack of supply may prompt larger manufacturers to look to overseas suppliers, elongating the supply chain, adding to working capital requirements and extending delivery timelines – all of which can significantly add to costs. Yet that focus on innovation increasingly demands that manufacturers work collaboratively with both suppliers and customers. If the UK is to attract and host a new generation of manufacturing companies – whether in high-tech or more traditional areas – then links with the designers, engineers and entrepreneurs who have the ideas and create an impetus may be more easily forged closer to home.
Looking to find out more about the banking and financing implications of your organisation’s repatriation options? Collectively and individually, Peter Russell’s team of manufacturing sector focussed directors have the experience, expertise and insights to help inform and support your decisions.
Contact Peter Russell, Head of Manufacturing at RBS on: firstname.lastname@example.org
borrowing Born out of one of the world’s biggest manufacturers, GE Capital should understand asset-based lending. John Jenkins, chief executive of GE Capital, explains to Will Stirling how asset-based finance helped their manufacturing customers through the recession as the value of core assets held up when finance linked to other, cash-flow or covenantbased terms crashed. Some GE Capital corporate finance deals in Q1 2011 Cross-border: IACG Europe: A Eu125million pan-European asset-based lending facility to a global supplier of automotive components and systems. It will support production of the new Land Rover Evoque.
UK: Fogarty (Filled Products) Ltd: £10.75 million of working capital facilities, comprising invoice discounting, trade finance, inventory and plant & machinery. Hanson Springs: Financing facilities of £4.1 million to help finance future growth plans in export markets and assist with working capital.
credit was cheap, asset-based lending (ABL) was shunned for a time by certain cohorts of manufacturers, keen to avoid betting the farm when the cost of borrowing might become unaffordable. But some financiers say that ABL has always worked, if the needs of the business are correctly matched to the facility. John Jenkins runs GE Capital UK, which lends about £10bn to UK SMEs annually and is a corporate finance player with a strong track record in lending to manufacturers, especially the automotive sector. TM: Is asset backed lending suitable for smaller companies? “Although we don’t, with some forms of accounts receivable financing, some lenders go right down to start-up companies. Trade finance, a technique we sometimes uses, can work well for small and early stage businesses. We tend to look at mid-market companies which are most suited to the ways we build solutions. TM: Are mergers and acquisitions back? Some private equity (PE) houses will say they were busy right through the the recession. If you scratch that a little, you’ll probably find they didn’t do very much. Activity falls into three brackets now. Firstly, you have more hands-on houses – Endless and Sun Capital Partners, for example – who actively look for opportunities that they can assist to the next stage of development. Other, more passive firms are looking to cycle portfolio, and we’re seeing a fair amount of secondary activity going through, e.g. on change of ownership. Finally you’re seeing global expansion business, where overseas companies are looking at UK companies as good acquisition targets. Here, weakness of sterling and the inertia in public capital markets are factors, where people are struggling get a return. There is more optimism in M&A across Europe, we’re working on more private equity deals now than we were 12-months ago. TM: British SMEs are largely family-owned and often shun private equity. When does that change? I think it’s when you move from owner to manager. As you’re giving away part of your business it becomes slightly emotional. Once you break into
Acloserlook Corporate finance – Asset-based lending
the bigger end of the market where there is a more independent shareholding, they can often see the value in bringing in investment capital to enable them to grasp opportunities such as new markets, a form of acquisition of their own, investment in a new factory etc. We’ve had some very nice stories where taking private equity was the shot in the arm that the business needed. To go out, and in some cases acquire a rival, who might have originally refused a merger, and in so doing consolidate into a much stronger business. But if you’ve built up a business over many years, the prospect of giving a chunk of it away is tough to swallow. For example, family-owned Hanson Springs was exporting more and needed capital to support output growth. We did a deal recently with quilt and pillow makers Fogarty linked to a commodity cycle. They needed working capital because of the affect rising cotton prices were having on their business. TM: Is it perhaps easier, or cheaper, for companies to financing against the value of assets now than 12-months ago? The majority of financing we do is receivables, factoring and inventory, either lending or in the distribution finance business. These are near cash assets, they are predictable. If you export or import, there is some currency fluctuation but they are fairly stable assets. Some of the hard asset classes suffered a lot more, like commercial property, which saw a massive fall in value between 2008 and 2010. If you are asset-based and the asset class is holding through, you’re able to be more forgiving on current financial performance than a cashflow, covenant-based facility which suddenly sees performance crashing and all the triggers get flipped, which might point to reduce your exposure at the very time the business needs you to increase exposure. Having that predictable financing core really helped a lot of our customers get through 2009-2010 because their asset base held up. TM: Are companies more or less willing to borrow against plant and capital machinery? On new asset leasing, our appetite is as high as it has been. We’re up to 80% approval rates for SMEs wanting to invest in all forms of plant and machinery. Second-hand plant and machinery has suffered, it has been less predictable. Looking over the last 18-months and talking to auctioneers my sense is that values have hardened now. We closed a plant hire deal last week (early June) where we spent a great deal of time with auctioneers on asset value; now, 12-months ago and forward valuations, how values are moving on a range of yellow plant-type items. It has become more predictable.
TM: You’ve helped finance Jaguar Land Rover, Triumph Motorcycles and car parts company IAC Group. Did the first help set up the others by association? In fact, you tend not to pick up the deals further down if your customer is the prime. In the case of IAC, it probably helps that there is some association. Many of our lending opportunities come from accountants who secure these deals, who will recognise that we understand car
Looking over the last 18-months and talking to auctioneers my sense is that (used) plant and machinery values have hardened now manufacturing. Therefore it’s more likely that we understand the automotive supply chain and, for example, why there will forward commitment contracts, and minimum stock holding levels, and why they need to think today about what they will produce in 18-months time because there is a forward commitment under some sort of pricing contract. This applies equally to other sectors like aerospace and healthcare. We recently debated how much we get out of being part of a manufacturing group. There are certain industries that we have a good insight into, but there are also certain mechanisms that we “get” because we [GE] are a manufacturer. We understand that the supply chain can be very, very long. And we apply Six Sigma to our financial processes. TM: Do you think the UK is an attractive place for large companies to come to, or are high energy costs, taxation and bureaucracy turning inward investment away? I think we’re in a good place. Around the introduction of the euro, people said it would be the death-knell for any British manufacturer because no-one would invest, and we talked about relative wage costs. What it comes back to, is ‘Are we good at doing this?’ I think we are good at this. Attitudinally we’re better, where more factory workers understand there is no birthright to a job, that we have to work with management and customers and suppliers. People choose to use the UK not because we’re cheap but we understand this labour relations cycle better now. For how long that might overcome any future disadvantage is less clear. But some Indian and Chinese outsourced operations are becoming more and more expensive.
The rest of this interview, covering factoring, how Six Sigma is applied to finance and more detail on GE Capital’s manufacturing customers, can be found at www.themanufacturer.com
Rise & Rise
of apprenticeships Eric Burrow, Principal Consultant, HR Insight
University fees increasing, young people are looking at alternative routes into careers, and apprenticeships are becoming increasingly important in helping UK organisations succeed in closing the skills gap. Whilst apprenticeships are traditionally seen as being relevant to young people, they are in fact open to workers of all ages, as people look to re-train or improve their skill levels. Apprenticeship schemes are developed by the 22 Sector Skills Councils, (six directly related to manufacturing and processing) to improve standards and relevant qualifications. Within the engineering and manufacturing sector, there are currently 38 different apprenticeship schemes. These programmes are continually being developed to suit needs; an example of which is a recently reported scheme for funeral apprentices, announced by the Co-Operative Group as part of their new Apprenticeship Academy. Apprenticeships bring a number of benefits to manufacturers:
One of the key reasons for our stagnation as an economy, when compared to France and Germany, is reported as our national skills shortage. If we are to trade our way out of this recession, the manufacturing industry needs to produce value-added products to sell overseas, and we need the skills base to do that. Manufacturing growth is now seen as fundamental to UK plcâ€™s recovery.
they can be more cost effective than trying to hire skilled workers and reduce recruitment timings they can offer a reduced overall staff turnover. Research by the Learning Skills Council* showed that 74% of companies with apprentices believe they were more loyal and remained longer at their company in the same survey, 66% of respondents said their apprenticeship programme made them more competitive in their industry 92% of respondents said they believe that their apprenticeship programme resulted in better motivated staff and increased job satisfaction it helps when tendering for contracts, particularly within the public sector, if you can show how you diversify your workforce and provide local opportunities. Transport for London operates a points system in its tendering process, whereby potential suppliers are assessed on their investment in developing skills within the company.
Before hiring an apprentice, firstly identify where its skills gaps exist, what type of programme would be needed, and how many apprentices it can support. Secondly, it should find a suitable learning provider that can deliver the off the job support and qualifications linked to the apprenticeship. This could be a local college or an independent training provider, with training and assessment taking place on the job, as well as in classrooms. Finally, managers should look internally to identify any current employees who could be developed into skilled workers. They should then look outside and start recruiting by developing relationships with local schools and employment agencies. The National Apprenticeship Service (NAS) was created to bring about significant growth in the number of employers offering apprenticeships, with ultimate accountability for the national delivery of targets and co-ordination of the funding for apprenticeship places. It provides
The core purpose of an apprenticeship is training over a fixed period and therefore an employer has restricted freedom to dismiss. Even if an apprentice is underperforming, the employer assists the apprentice in order that they achieve the required standards. Dismissal for capability is the very last option and the employer will have to show that they have gone well over and above what is required to bring the employee up to standard.
The National Apprenticeship Service (NAS) was created to bring about significant growth in the number of employers offering apprenticeships, with ultimate accountability for the national delivery of targets and co-ordination of the funding for apprenticeship places job should also be factored in. Encouragingly, research by the University of Warwick in 2009* highlighted that the costs of an apprenticeship could be recouped relatively quickly. If you are uncertain about committing to a three to four year programme, then you could consider an Apprenticeship Training Agency. These organisations take over much of the administration burden of apprentices by acting as the employer, with the manufacturer acting as a host for the apprentice. This means that, if circumstances change, you should be able to find an alternative employer for the apprentice, allowing them to continue with their training. Fees can be around 15% of the apprentice’s wages, plus
Employers are also precluded from terminating a contract of apprenticeship solely on grounds of redundancy, where the business has not closed down. If a company is closing/facing a redundancy situation, employers have an obligation to look for an alternative training provider to transfer the apprentice’s on-the-job training to another organisation. Case law has shown awards of up to £50,000 and therefore dismissal could potentially prove to be a very costly decision. Dismissal is not impossible where an employee is guilty of gross misconduct or behaviour which made it almost impossible to continue the apprenticeship or teach them the trade. In these cases, it could be legitimate to dismiss.
Summary In conclusion, there are many benefits to taking on an apprentice; some short term, others longer term, based around improved productivity and bottomline results. The National Apprenticeship Service provides not only funding, but can also help identify the right learning providers and the apprentices themselves. Apprentices are special people – they have better protection than many other employees, so they need to be trained and managed properly. In taking on an apprentice, you, as a manufacturer, will be contributing to the improvement of UK plc’s competitiveness, by enhancing the country’s skills base.
National Insurance payments. If you then decide to offer the apprentice a permanent contract of employment, there will not be a charge from the Training Agency. Potential pitfalls with an apprentice relate to the additional protection their employment status brings they need to be treated differently from other employees, placing greater responsibilities on employers.
free support wherever needed. its website, www.apprenticeships.org. uk, hosts a raft of information on all aspects of apprenticeships. The organisation NAS provides funding to cover 100% of the costs of the mandatory training required to complete an apprenticeship for all young people aged 16-18. For apprentices aged 19-24, it will contribute up to 50% of such costs. Funding for those 25 and over is not usually available, but there are exceptions depending on the industry sector involved. The National Minimum Wage for apprentices under 18, and for apprentices aged 19 in the first year of their apprenticeship, is £2.50 per hour and applies to time working and training. Many employers do pay more, with the average wage being around £170 per week. The costs of supervising and training the apprentice on the
References: 1 *Populus on behalf of the Learning Skills Council January 2009 2 *Hasluck, Hogarth and Adam, Institute of Employment Research, University of Warwick 2007
To watch our recent webinar on how an apprenticeship can help your business, please visit our website http://www. kingstonsmith.co.uk/ sectors/Manufacturing Eric Burrow is a principal consultant at HR Insight, who are part of the Kingston Smith group. To find out more about Kingston Smith or HR Insight and how we can help your business, please contact us on 020 7566 4000 or visit our website www.kingstonsmith.co.uk.
Global showcase of manufacturing innovation Defence & Security Equipment International (DSEi), the world leading exhibition for air, land and sea applications of defence and security products and technologies, takes place at ExCeL London from 13th - 16th September 2011.
DSEi visitors in the boulevard at ExCeL
event will demonstrate how the global defence and security industry is responding to the diverse portfolio of threats facing the majority of nations today. While maintaining its focus on platforms and equipment, DSEi will also provide a highly influential forum for advances in critical technology areas such as intelligence gathering and communications.
Bringing global markets to London DSEi provides companies in the manufacturing sector with a highly valuable platform for presenting their products and technologies to customers not just in the UK but also key markets around the world. The last DSEi, which was held in 2009, was visited by 70 official delegations from 49 countries, with the Middle East and Asia Pacific regions strongly represented as well as western nations. The official delegations programme is organised in conjunction with the British Governmentâ€™s UK Trade & Investment Defence & Security Organisation. The DSEi organisers, Clarion Events, anticipate another high level attendance by official delegations this year, one reason being that the visitor programme has been expanded to include gendarmerie, border patrol and military police forces, reflecting the increase in exhibitors displaying solutions to counter such threats as organised crime, piracy and terrorist activity.
A world of ideas Visitors to DSEi 2011 will be able to view systems and equipment from more than 30 leading manufacturing nations, including Brazil, France, Germany, India, Italy, Poland, Russia, South Africa, Sweden, Turkey, UK and the USA. Institutions such as the NATO Maintenance and Supply Agency (NAMSA), the US
New equipment demonstration areas
SMEs to the forefront A record number of UK SMEs have booked stand space at this year’s event. At the last count 320 SMEs had signed up, representing some 25 per cent of the total number of companies from around the world that have committed to the event. Drawn from all parts of the UK, they will be displaying a broad
demonstrations. Plans for 2011 also include demonstrations by high speed craft, unmanned underwater vehicles and underwater devices. One of the major attractions will be an antipiracy exercise.
Increasing significance of security For many nations defence and security issues are becoming increasingly integrated. Under the umbrella of the DSEi 2011 security showcase and demonstration zone, international agencies, government organisations, industry and academia will be sharing awareness of threats, building relationships and displaying their latest innovative products. The zone will consist of a security focused theatre encompassing strategic presentations, thought provoking panel debates and informative product reviews. The international security industry will be well represented by large prime contractors, research organisations, manufacturers and service providers, such as BAE Systems, Finmeccanica, Thales, Northrop Grumman, Lockheed Martin and Qinetiq. However, many of the small and medium sized enterprises that play a distinctive role in innovation in the security domain will be present in strength.
DSEi 2011 will provide an unprecedented level of opportunity for exhibitors to demonstrate their equipment to visitors. New features will include an indoor unmanned vehicle and robotics demonstration zone; land, sea and air static displays, including the Wildcat helicopter and a full-size model of the Joint Strike Fighter. Also new is a security focus area featuring a broad spectrum of products, technologies and services, and which will also host seminars. The presentation theatres will again provide a popular forum for companies from multinationals to SMEs to expose their latest ideas to influential audiences. Meanwhile, the UKTi Defence & Security Organisation will be mounting an impressive display area featuring the best of British defence and security products and equipment. Visitors seeking the latest electronics solutions will find many of these grouped in the International Electronics Pavilion.
spectrum of capabilities and include specialists in electronics, metals and composites engineering. The organisers attribute part of this positive response to the measures they have taken to assist smaller companies. The First Time Exhibitor (FTE) zone has been divided up into separate focus areas for land, maritime, air and security. To enable visitors to locate exhibits of specific interest quickly and easily, each FTE focus area will be situated close to one of the high profile feature and demonstration areas. Thus the stands of companies specialising in air capability products and systems will be adjacent to the Unmanned Systems feature area, while the maritime capability stands will be located near to the entrance that leads out to the dock where the waterborne displays will take place. For many SMEs seeking to enter the defence or security markets, or to build on an established position, building relationships with the prime contractors or Tier 2 suppliers is of paramount importance. For 2011 the organisers are introducing a prearranged appointments scheme to bring SMEs together with targeted primes and other organisations with defence and security industry supply chains. The UK government is, of course, looking to the country’s manufacturing sector to help the economy recover from the serious downturn of the past two years. Head of the UKTI Defence & Security Organisation, Richard Panaguian, said: “The importance of SMEs to the UK’s export market is well documented. We are delighted to see so many companies committing to DSEi, which we view as one of the most important international export platforms for UK SMEs.”
Defence & Security Equipment International
Department of Homeland Security and the UK Ministry of Defence (MoD) will also have a strong presence at the event. Of particular interest to the manufacturing sector, the new products on display will include examples of crossover technologies, such as Force Protection Europe’s Foxhound Light Protected Patrol Vehicle, which features a protective pod made of advanced composite materials incorporating Formula 1 racing technology. The Motorsport Industry Association will be sending a strong delegation and member companies will be giving capability presentations.
Once again DSEi will provide the manufacturing community with a unique opportunity to present its capabilities to world markets and to witness the latest developments in the vitally important defence and security sectors. To learn more, visit www.dsei.co.uk
A major maritime dimension DSEi’s venue in London’s docklands attracts visiting warships from leading maritime nations which provide highly effective platforms for equipment manufacturers to give capability
making sense Manufacturing technology special: of MEMS MEMS technologies are the rising stars in the sensors market. However, there are a number of misconceptions surrounding their capabilities and conventional sensors are increasingly applicable to a wider range of applications. Jesse Bonfeld of Sherborne Sensors examines the technology’s evolution.
Electro Mechanical Systems (MEMS) describes both a type of device or sensor and a manufacturing process. MEMS sensors incorporate tiny devices with miniaturised mechanical structures typically ranging from 1-100 μm, while MEMS manufacturing processes provide an alternative to conventional macroscale machining and assembly techniques. MEMS devices have come to the fore in recent years with the widescale adoption of MEMS sensors by the automotive industry, and in the growing use of accelerometers and gyroscopes in consumer electronics. Perhaps the most well known consumer electronics incorporating MEMS motion sensors are a number of the leading smart phones and gaming consoles/controllers.
Rise of the micromachines MEMS sensors combine electrical and mechanical components into or on top of a single chip – i.e. they are electro-mechanical sensors. In this way MEMS sensors represent a continuum bridging electronic sensors at one end of the spectrum and mechanical sensors at the other. The key criterion of a MEMS sensor however, is that there are some elements with mechanical functionality, i.e. an element that is able to stretch, deflect, spin, rotate or vibrate. MEMS development stems from the microelectronics industry, and extends the conventional techniques developed for integrated circuit (IC) processing. The majority of MEMS sensors are manufactured using a silicon wafer, whereby thin layers of materials are deposited onto a silicon base, and then are etched away to leave microscopic 3D structures such as beams, diaphragms, gears, levers, or springs. This process, known as ‘bulk micromachining’, was commercialised during the
About Sherborne Sensors Sherborne Sensors is a global leader in the design, manufacture and supply of high-precision conventional sensors and MEMS sensors. The company also provides associated instrumentation and accessories for these products. For further information go to: www.sherbornesensors.com
late 1970s but a number of other micromachining techniques have since been developed.
Of MEMS and microsensors A microsensor is a sensor that has at least one physical dimension at the sub-millimetre level, and today can be used to measure an environment or physical condition such as acceleration, altitude, force, pressure, or temperature. Micromachining techniques have also enabled the development of microactuators, which are devices that accept a data signal as an input, and then perform an action based on that signal as an output. An example are microvalves used when controlling gas and liquid flows. Advances in IC technology and MEMS fabrication processes have enabled commercial MEMS devices to deliver perception and control of the physical environment. These devices are able to gather information from the environment by measuring mechanical, thermal, biological, chemical, optical or magnetic phenomena. The IC then processes this information and directs the actuator(s) to respond by moving, positioning, regulating, pumping or filtering. Demand for MEMS devices was initially driven by the government and military sectors. More recently, a maturing of semiconductor manufacturing processes associated with the microchips used within
Specialfeature Making sense of MEMs
personal computers, and the intersection with huge requirements in the automotive and consumer electronics sectors, has propelled MEMS sensors into the mainstream market.
Innovation & limitation Arguably, MEMS technologies are all too often perceived as being all-encompassing solutions made using standardised processes. In fact, they remain a largely one product; one process business. A number of companies develop and produce MEMS devices themselves, and are defined as ‘IDMs’ (integrated device manufacturers), whereas some outsource production (fabless), and others operate both models. Much of the confusion in the market can be attributed to this diversity, and the way in which the various verticals subsequently interface make the MEMS market notoriously difficult to define. At the point of fabrication, there are very few companies operating in the sensors market that offer MEMS together with another technology because of the high cost of market entry and the cost of packaging MEMS devices. Likewise, once a company has committed to manufacturing MEMS devices, it is difficult for that company to change its focus due to low margins, higher development costs and greater complexity. That said, MEMS do enable high-volume production due to the batch fabrication techniques employed, typically resulting in very low costs for each single device.
The shape of sensors to come
MEMS fabrication techniques Bulk micromachining: whereby the bulk of the Si substrate is etched away to leave behind the desired micromechanical elements Wafer bonding: permits an Si substrate (aka ‘wafer’) to be attached to another substrate, typically Si or glass, to construct more complex 3D microstructures such as microvalves and micropumps Surface micromachining: structures are built on top of the substrate and not inside of it, enabling fabrication of multi-component, integrated micromechanical structures not possible using bulk micromachining Micromolding: a process using moulds to define the deposition of the structural layer, and enabling the manufacture of high-aspect-ratio 3D microstructures in a variety of materials such as ceramics, glasses, metals and polymers LIGA: a micromolding process that combines extremely thick-film resists (>1 mm thick) and high-energy x-ray lithography, to enable the manufacture of high-aspect-ratio 3D microstructures in a wide variety of materials High aspect ratio micromachining (HAR): combines aspects of both surface and bulk micromachining to allow for silicon structures with extremely high aspect ratios through thick layers of silicon (hundreds of nanometers, up to hundreds of micrometers)
The advances in MEMS technologies and techniques means that manufacturers are now able to produce extremely capable MEMS sensors and devices, but many cannot be installed directly into an end application because they cannot survive the rigours of final assembly. Conversely, IP Research is a specialist provider of information and analysis on conventional sensors can survive just product and technology development decisions. about any assembly process and
IP Research reviews MEMS technology
application, but are often perceived as being too big and too expensive. The challenge for the manufacturers of MEMS sensors that are to be used in commercial products is to take the MEMS price and form factor, and package it into something able to withstand a harsh environment. With the MEMS market returning to growth during 2010, the agile OEMs will be those that determine how to integrate conventional sensor fabrication technologies and performance capabilities with the emerging MEMS trends to overcome the limitations in material needs and processes. If the latter issues are addressed, then it is conceivable that MEMS will capture a larger percentage of the overall sensor market.
Nanotechnology in MEMS have seen a rapid growth after year 2000. The number of inventions per year with regards to MEMS using nanotechnologies has risen from about 17 inventions in 1990 to 171 in 2009 which represents a tenfold increase in ten years. The total number of inventions since the 1980 is now nearly 1500. Many large corporations are active in this domain, with the most active being Canon, HP, IBM, Samsung, Sanyo, Hitachi, Bosch, Toshiba and Lucent technologies. Other specialist companies include Molecular Imprints Inc, Obducat and Infineon Technologies. The top universities for the study of MEMS globally include the University of California, Harvard, Stanford, MIT, California Institute of technology, Illinois and Cornel. The US universities are widely agreed to have total dominance of the nanotechnology market. China is an uprising force, but still lags behind. Further information on MEMS and other manufacturing technology developments is available at:www.ip-research.net. IP-Research is sponsor of The Manufacturer of the Year Awards 2011 Innovation and Design category. See www.themanufacturer.com/awards for more details.
Have your say at www.themanufacturer.com
PLM Product lifecycle management (PLM) software has been promising to make product development and ‘design for x’ integration easier for years. Uptake across manufacturing sectors however, has reflected scepticism among potential users. TM takes a look at PLM maturity.
Future perfect It’s taken a while, but the PLM dream of simultaneous engineering is finally here. Malcolm Wheatley reports. A few short years makes a lot of difference. Not so long ago, the buzz in new product development was simultaneous engineering—the idea of different functions in the business working on new products in parallel, rather than sequentially. The goal: not just shorter times to market, but less waste, too. Manufacturing engineering, for instance, should not have to recreate a design from a production perspective in order to boost yields or reduce costs. Quality shouldn’t have to make further changes in order to produce a product that can be tested. And issues like packaging, spare parts and instruction manuals are considered at the outset,
In PTC’s Windchill 10.0 search results for product data appear in user frinedly thumbnails. Most PLM vendors have given a great deal of attention recently to improving software usability and clarity of data display
rather than left until it is almost too late. These days, one hears less of simultaneous engineering as an objective, and a lot more of simultaneous engineering in the context of an attainable best practice. And the goal, too, has changed: doing it faster, rather than simply doing it at all. Much of the credit should not go the management consultants with their redrawn organisation charts and fancy project management theories. These gurus were supposed to herald the era of simultaneous engineering, but in the end it has been software advances that have enabled the realisation of the PLM dream. It may be boring, it may lack charisma, but there’s little doubt that PLM technology has delivered the design technologies, workflow and shared crossfunctional repositories of data that have made simultaneous engineering a reality. Granted, each of the major players has made that journey in a different way. For instance, while PTC is guided by its mantra of ‘a single version of the truth’ and a pick-and choose minimalism to match user needs, Autodesk has taken a more discovery driven approach in which diversity capability is the key to making the impossible possible. These differences in attitude extend into the future with different vendors showcasing a variety of technology roadmaps. But the overall extent of the journey taken—and its future direction—is unarguable. Simultaneous engineering is a reality and one still waiting to be leveraged by many.
Software or a state of mind?
New product development is getting harder. There’s increasing complexity at all levels - within products themselves, and as manufacture, design and test is outsourced globally. Collaboration must now be carried out in extended supply chains, with constant need for innovation and regulatory compliance. At the same time, costs are being forced down and time-to-market shrunk. It’s a big challenge, but Product Lifecycle Management (PLM) promises to resolve many of these issues. The idea, as software vendors PTC express it, is to have “one version of the truth” with an information management backbone, from concept, through planning, manufacture, test and in-service support, to end-of-life. A few hundred users and resellers were invited to Sutton Coldfield to see how PLM vendor PTC is tackling these issues in Windchill 10.0. PTC demonstrator Martin Greenhalgh claimed: “The latest version has a vastly improved user interface which is easier to use and tailored to individual needs for the casual and professional users.” Which begs the question - how difficult are earlier versions to configure! Windchill 10.00 offers dynamic web-based searching as a fast, powerful tool for seeking particular design and engineering content, requirements and documentation. New features include improved business process support for detailed design (for mechanical CAD and electronic CAD in a unified experience) and variant design, change and configuration management, requirements management and manufacturing process management.
Business process optimisation The key to PLM is improved information management. But unlike conventional product data management (PDM) which is mostly used within an enterprise, PLM offers a broader perspective; sharing knowledge across the entire lifecycle of a product. For example, PLM is particularly effective for handling compliance with safety and environmental regulations like WEEE (Waste Electrical and Electronic Equipment) and RoHS (Restriction of Hazardous Substances). “People want lower product and lifecycle cost, improved asset utilisation and to realise a price premium for their products,” says PTC business development manager Phil Fellows. The goal is to
IT IN MANUFACTURING AWARD Calling for entries: Have you shown ROI from a well designed, planned and implemented IT strategy or 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.
Brian Davies focuses on the most recent release of PTC’s PLM offering; Windchill 10.0 to create a snapshot of the technology behind a philosophy of product development.
optimise every aspect of the product development process, from strategic management, through sales and marketing, engineering, sourcing and manufacture, through to service. Fellows suggests companies need to think strategically about PLM deployment. “You have to understand your business processes and workflows and plan for the future.” It’s a bad idea to simply think of transferring legacy systems to a new PLM system. Experts will state that PLM should be thought of as philosophy before being considered as a technology and will advise significant business process re-engineering and change management before technology adoption. Indeed, PLM deployment can cover everything from document management, distributed collaboration, workflows, heterogeneous CAD data management, business reporting, embedded
User configuration is a key aspect of PLM software and a differentiating factor betwen competitiors who approach the problem with different perspectives
IT in manufacturing
visualisation of all documents, communities of practice, and the complete BOM management, with change and configuration management. “It’s a big vision, and you need to understand your current processes and where you want to be as a business,” says Fellows. Nobody suggests going for a big bang approach. “You need a clear roadmap and must prioritise bite sized chunks.” The PLM initiative must have board level buy-in with champions throughout the organisation to leverage success. “This is a scaleable model and all the necessary tools are available. But you have to keep re-evaluating where you are and where you want to go,” he says. Do you need deep pockets? PTC is very coy about the cost, but suggests solutions can be tailored to different needs. PTC reckons that 80% of their new customers (4000 + a year) are in the SMB space. The recent introduction of Creo, which allows users to purchase products previously sold under brands like ProEngineer, CoCreate, in the manner of apps also represents a sea change for the way modelling in the multi-CAD environment is sold. Furthermore, it provides an interesting strategic contrast to the Autodesk ‘suite’ approach. (See TMs online article ‘Suite’ on design, for more insight: www.themanufacturer.com
What users think Companies like General Dynamics (see box) and Cummins Engines are enthusiastic about the benefits of PLM. Chris MacAslan, director of global PLM at Cummins said: “We didn’t just look at the technology but the processes we wanted to move across. Windchill will allow us to best achieve our compliance and productivity goals, and to extend our global competitive advantage.” Dr Peter Rayson, associate dean at Birmingham City University, is one of the world’s most experienced PLM implementers, working closely with Rolls-Royce on electronic data definition, and subsequently with Airbus on the A340 programme, and Hughes Aircraft Corporation.
Users managing product structures in Windchill 10.0 can edit across multiple levels, easily reference which product uses a particular component and take advantage of embedded visualisation.
The key issue for Airbus was how to share engineering data in a secure collaborative environment between plants in Filton, Toulouse, Hamburg and Spain. At the time, Dr Rayson worked with Jim Heppleman, who recently became CEO of PTC, to develop Windchill as a PLM solution to manage the Airbus environment and its complex supply chain. Rayson considers that “The cost implications of good data sharing are enormous, because a single change in an aerospace part can cost millions of dollars.” Furthermore, as companies like Rolls-Royce realised that they weren’t in a product business but a service business, with ‘power by the hour’ contracts, PLM helps facilitate more effective use of data throughout the product lifecycle, including maintenance, repair and overhaul (MRO). Rayson believes many other companies will follow this service model. “The key thing is to see your data as an asset which must be leveraged to take costs out, or used as a source of revenue for all sorts of opportunities using the PLM environment.” He recommends using the Pereto 80:20 rule, starting with a couple of silos then rolling out PLM more broadly, as the early users become ambassadors for change.
PLM for special vehicle development Defence contractor General Dynamics UK, which employs 1600 people in the UK, took the bull by the horns in 2010 when it was bidding for the Future Rapid Effects System (FRES) specialist vehicle contract, which has 14 variants based on a single vehicle platform. The company is physically dispersed around the UK and needed to collaborate with partners in Spain and Italy. The vehicle was particularly complex and there was a need for concurrent design and engineering with the Madrid plant. The legacy PDM system was a repository for workflows but couldn’t scale up. Investment in PTC Windchill has brought significant benefits “that are many multiples of the cost,” says Chris Hunt, Engineering IS strategy manager at General Dynamics. The programme is being delivered in four over-lapping phases over 24 months, and has involved re-developing all business processes. The key guiding principles are: need for a common solution for all General Dynamics UK plants, a single source of the truth, use of best practice, and realisation that “to optimise the whole it will be necessary to sub-optimise some of the parts.” Hunt admits, “Some of this process is painful and configuration is certainly not out-of-the-box!” Estimated ROI is in excess of 10 times PLM investment but Hunt suggests it is vital to win people’s hearts and minds in order to implement the software effectively. “PLM is like a three-legged stool, if one leg fails - it all collapses.”
ITnews... BUSINESS INTELLIGENCE
SAP increases global availability of HANA Enterprise application software provider SAP has announced a global rollout of its new generation of analytics, business applications and IT simplification software. The basis behind the introduction of the new appliance software is a new paradigm of ‘real’ real-time computing that allows companies to re-think their existing business challenges while tackling entirely new ones. Dubbed High-Performance Analytic Appliance (HANA), the technology has been described as ‘a breakthrough’, enabling customers to analyse and explore data in real-time. As well as announcing worldwide availability of its HANA appliance
software, SAP also reported that Mitsui, the Japanese trading company, has selected SAP believes strongly in business intelligence SAP HANA. The company follows a long list of large firms and executive board member groups all over the world to adopt Dr. Vishal Sikka. the appliance software. “SAP HANA brings a fundamental Conceived last spring, HANA was transformation to the way companies delivered to select customers in late run their businesses and is at the 2010 and on June 21 was made heart of innovation across our entire available to all customers. SAP HANA product and technology portfolio has one of the fastest growing sales at SAP. I look forward to [reaching] figures for any new products releases the next milestones … building in the company’s history. breakthrough new applications “General availability is a major and building out the SAP HANA milestone for SAP HANA, but this application cloud to deliver them,” is just the beginning,” said SAP he added.
Infor reports annual growth in total license revenue of 28%
Aspentech releases technology to solve problems on the move
Enterprise application vendor Infor has reported that organic license revenue for Q4 2011 was 12% above 2010 Q4’s figure of $453.7m. The accelerated growth was driven forward by the introduction of new products, resulting in more than 650 new customers for the vendor in Q4 2011. Among the new products and releases that Infor has delivered over the past six months are: Infor ERP LN, Infor ERP SyteLine, Infor ERP VISUAL, Infor ERP Adage, Infor FMS SunSystems Enterprise, Infor EAM, Infor Performance Management (PM) and Infor Sales and Operations Planning (S and OP). Infor’s main drivers of growth in Q4 2011 were: 35% annual growth in enterprise resource planning (ERP), 84% annual growth in business
intelligence and performance management, 125% annual growth in the public sector, and 33% annual growth in distribution. “Our recently developed ION integration platform is generating excitement and momentum with our customers. Our slate of innovative new product and technology releases, combined with our industry-focused approach, is truly separating us from our competitors,” said Stephan Scholl, executive vice president of field operations at Infor. Infor’s president of products, marketing and support Duncan Angove added: “The new consumergrade user interface, enhanced and deep functionality in our target verticals and out of the box integration are proving to be a winning combination for customers in all geographies.”
Process manufacturing specialist Aspentech has released two new pieces of software for smartphones, as well as a new version of its aspenONE engineering software. Using Aspen IP.21 Mobile and the company’s properties mobile software, customers with leading SmartPhones are able to resolve operational performance issues on the go, providing access to accurate property calculations for over 24,000 chemicals via iPhone and iPad devices. “The application provides us with a tool to aid collaboration in process development and to support decision making in our scale-up facilities,” said Eric Cordi, senior principal scientist at pharmaceutical giant Pfizer. “With the latest release of aspenONE engineering software, our customers can address industry-specific challenges – complying with emissions regulations faster, accelerating time-to-value, and improving capital and energy efficiency,” added Manolis Kotzabasakis, Aspentech’s executive vice president.
Pegasus’ Opera 3 software release will enhance CRM Newly-released, the latest version of Pegasus Software’s flagship Opera ERP suite includes a large number of new applications and enhancements to evolve and strengthen its functionality for customers. With over 60 new enhancements, Opera 3’s CRM has been boosted to provide users with a new summary scheduler, designed to improve call management and resource planning. The software also incorporates a feature which enables users to consolidate planned maintenance calls for equipment items – eliminating the need to create individual calls and
and choice, and the latest version embodies these values through offering new applications, more functionality and over 60 enhancements to our CRM capabilities.”
Software released by SAP makes analytics easier
PTC launches Creo for CAD market
New releases of the Crystal Server 2011 software and of the SAP BusinessObjects Edge Business Intelligence (BI) v4.0 software are designed to help customers to get up and running quickly, in order to better understand all areas of their businesses and make confident, data-driven decisions as events unfold in real time.
Last month PLM vendor PTC launched the first fully functional collection of apps which will form Creo, the concept it launched last year to solve outstanding problems in the CAD market.
The software is aimed at helping SMEs make the most out of their IT investments, and maximize their available resources by giving analytics tools to the people that need them most in the company. SAP’s Crystal Server is an entrylevel BI solution for small companies and departments that will include self-serve data search and exploration in addition to the core functionality of report and dashboard viewing. The
increase the time required of staff. In addition to CRM improvements, Opera 3’s Supply Chain Management function has been enhanced, enabling product information to be extracted from Opera 3 Stock Control. On completion, management can run a cross-check, resolve discrepancies, make corrections and post adjustments back into Opera 3 – automatically updating stock levels. Pegasus sales and marketing director Stuart Anderson added: “Opera 3 has been built upon the principles of flexibility
BusinessObjects Edge BI software will enable companies to address reporting, visualization and ad-hoc analysis to data integration and data quality. With the 4.0 release of SAP BusinessObjects Edge BI, SMEs will have a quick insight into structured as well as unstructured information, such as data from social networks using new text analysis functions. The software will assist anyone within an organization to analyze data and collaborate to make informed decisions based on facts rather than instinct – all without resorting to IT specialists within or outside the company. “We are very excited about the release of SAP Crystal Server and SAP BusinessObjects Edge BI 4.0, thanks to enhancements around the semantic layer and the full integration across all products that will empower our customers,” said Ryan Goodman, CEO at Centigon Solutions.
Creo allows companies to pick and choose specific tools for users ranging in experience from occasional through to heavy and expert. This flexibility hopes to mitigate training and adoption as well as usability issues for businesses. Freestyle is one of the most exciting new tools within Creo’s parametric design app. Its sub-divisional programming for intuitive modelling has been welcomed as a step change for engineering design. Developing in tandem with Creo, PTC’s Windchill 10.0 also offers impressive new cost tracking capability. Information fed into Windchill from ERP systems will now highlight to manufacturers the moment when materials, location of manufacture or energy inputs put a part out of cost.
KMF chooses Epicor to overhaul IT systems Manufacturing sub-contractor KMF announced in June that Epicor Software Corporation will replace all existing company systems, and improve information visibility right across the business. Based in North Staffordshire, 40-year old KMF has grown into a £26m business with 315 full-time staff, and offers advanced sheet metal manufacturing, as well as value-added services – including an integration department to load manufactured metalwork with electromechanical hardware. “Across our history, we have developed many discrete systems for managing the business and providing information, but have no reliable way of linking those systems together to
Epicor’s new ERP installation will update a system currently ‘creaking under the weight of data’ at the factory
increase the value of their output,” explained KMF’s business improvement manager Keith Nicholl. Epicor will replace all of KMF’s systems, allowing information to seamlessly flow between business units and enabling better decision making. It could potentially allow KMF to further increase its competitive advantage nationally and internationally. Using Epicor’s solutions gives function owners much better visibility of their customer’s requirements, creates opportunities for greater efficiency in the supply chain and helps to alleviate manufacturing constraints.
Craig Stephens, director of product marketing at Epicor said: “One of the guiding principles at Epicor which is enabled through our True SOA architecture is to ensure information is available in real time, and can be pulled from across the business into dashboards and reports, to inform tactical or strategic company decisions.”
Dassault Systèmes launches version 6 in 2012 Inspired by objective of improve Lifelike experience in simulation and virtualisation.
The new launch is designed to complement last year’s strategic development of hybrid technologies with the company’s traditional PLM offerings. In particular the version 6 release will broadens the value of digital assets into new solutions such as immersive retail store experiences and global production system planning. Version 6 marks a step change for Dassault’s cloud offerings. New interoperability and faster deployment capability will be facilitated by a partnership with Amazon Web Services.
Have your say at www.themanufacturer.com
ERPAXelerates News about ERP implementations and upgrades seem to be ten-a-penny at the moment as companies replace legacy systems, experiment with cloud technology and generally invest for improvement in data management and operations. But is there anything genuinely new coming out? Malcolm Wheatley talks to Rakesh Kumar, global industry product director, Manufacturing at Microsoft Dynamics ERP, about the launch of AX 2012.
the grey Seattle skies, who now is the global industry product director of Microsoft’s Rakesh Kumar is manufacturing for Microsoft Dynamics ERP - is only too in a buoyant mood. And the reason isn’t difficult to see. keen to explain. The software giant is just weeks away from the launch “For a sizeable proportion of the customer base, of Microsoft Dynamics AX 2012, reckoned to be one of mixed-mode manufacturing and lean - and the the most exciting Dynamics releases for several years. combination of the two - is important, and something In short, with more than a thousand new features that they wanted better reflected in their ERP system,” and enhancements across its core ERP and industryhe says. “It’s what our partners, and our customers, specific capabilities, Dynamics AX 2012 boasts major were telling us. In industries as diverse as food and advances on a number of fronts. Admittedly, while metals manufacture, for instance, you start off with Dynamics isn’t just targeted at the manufacturing a process, continue into discrete operations, and industry, a number of those features are almost certain then want to involve lean principles at downstream to be of great interest to manufacturers. operations such as assembly, packing and shipping.” According to insiders, for instance, a ‘mixed mode’ capability will allow manufacturers to run process and discrete manufacturing models in a single instance of AX, and be able to better model lean manufacturing practices in a way best suited to their own individual circumstances. Throw in a host of improvements to scheduling, bill of material definition, kanban rules and product configuration, and you’re looking at a major upgrade milestone. So what, strategically, was the impetus and thinking behind the new release? Kumar, a former Unilever IT executive who has also run AX 2012 has enhanced scheduling capabilities for ‘mix mode’ manufacturing models manufacturing operations in Asia - and
Specialfeature Microsoft Dynamics ERP
Indeed, as Kumar sees it, the old familiar MRP of yesteryear is morphing into something that is much more complex - Advanced Supply Chain Planning (ASCP), as some people are calling it. “In the real world of the manufacturing shop floor and the supply chain that feeds it, life isn’t as black and white or simplistic as MRP often assumes,” he argues. “Materials, for instance, aren’t just accepted or rejected - they can be downgraded, and applied to other uses. And we’ve put a lot of effort into building algorithms that deal with such things.” And the priorities attached to such efforts, he adds, are arrived at through close collaboration with the company’s partner ecosystem— for even a behemoth of Microsoft’s size and deep coffers doesn’t have an infinite development budget. “Our key partners - in the UK, companies such as eBECS, Columbus IT, K3AX, Hitachi and Avanade - are our eyes and ears in the marketplace,” he explains. “They have a lot of traction with our customers, and we’re very serious about helping them to succeed, because that helps us to succeed.” And lean, he notes, is a case in point. Despite investments in lean-related intellectual property over the years - including an acquisition - Microsoft remained convinced that it could make improvements to its offering. “You can classify customers into three types,” he says. “First, there are those who have the ‘lean dream’, but who haven’t yet started. Then there are those customers who have tried lean, but who haven’t succeeded, due to differences between lean practices and their software. And then there are those more advanced customers who have succeeded, and who have made the software work with lean on the shopfloor.” And Microsoft has worked closely with these latter two groups, he relates, including hosting lean-specific workshops - the most recent in Copenhagen - where several dozen of its leading lean partners come together to pool insights and experiences. “What we’ve got are some very realistic inputs on what will work, and how it will work,” he explains. “And we’ve extensively re-written parts of the application as a result. It’s a big improvement - and it’s built on what works in the real world.” Lean and mixed-mode aren’t the only offerings of interest in Dynamics AX 2012, though. Business Intelligence, and Advanced Planning and Scheduling (APS) feature strongly too. With both, the underlying strategy is the same, explains Kumar. Namely, offer a rich set of basic capabilities, but don’t preclude the possibility of third-party applications - ideally from a Microsoft Dynamics partner - adding even further to the capability set. Take APS, for instance. “We provide standard shopfloor planning and modelling, as well as supply chain planning, and we do it very well,” he says. “But in the real world, we see that there can be a lot of planning-related data that isn’t captured by the ERP system, and what our third-party APS partners provide are solutions that extract and work with that data. But if the requirement is relatively simple, and the relevant data exists inside the ERP system, then customers don’t need third-party APS specialists.”
Algorithms to deal with real life scheduling and material aberrations are a major achievement of the new AX system
Similarly, a lot of Business Intelligence capability is built into the standard AX 2012 product. At the user interface, for example, there’s a lot of built-in contextual information available, explains Kumar: enter the details of a customer’s order, for instance, and data on past orders is just a click away. Likewise, senior-level executive dashboards are built-in. Plus, of course, the tight integration with desktop tools such as Word and Excel for which Dynamics AX is well known. “Open an Excel spreadsheet and it will be automatically populated with data from the ERP system, enabling you to run user-generated reports ‘on the fly’ and it’s built-in, as standard,” says Kumar. But, as with APS, if customers want more, then third-party business intelligence tools are there to pick up the slack. “There’s a growing reliance on real-time information,” sums up Kumar. “These days, people expect real-time instant information: they want the status of something now, and not as it was last night. And our job is to give it them.” In short, then, there’s a lot to like about Dynamics AX 2012. So when will manufacturers finally see it?
Open an Excel spreadsheet and it will be automatically populated with data from the ERP system, enabling you to run user-generated reports ‘on the fly’ - and it’s built-in, as standard Rakesh Kumar, Global Industry Product Director, Manufacturing at Microsoft Dynamics ERP Kumar laughs, not budging from Microsoft’s official stance of some time in the third quarter of 2011 – a loyal gesture to tow the part line, though we now know that a release date has been set for Sept 13. Unusually, in an age of rolling upgrades, it will be one worth waiting for.
Dynamics AX 2012 will be officially launched in the UK on 13th September 2011. The Manufacturer has secured 15 places to this invitation only launch. If you would like more information or are interested in attending please contact Henry Anson on 0207 202 7482 or email email@example.com
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LEANSuPPLYCHAIN The concept of lean has long been associated with production processes and the hands-on aspect of manufacturing. Today, however, many in the industry claim that lean is just as applicable to all parts of the supply chain: design, procurement, warehousing and transportation – known as the ‘Big Five’. Companies are increasingly looking to those involved in their supply chain that are accustomed to lean and incorporate the 5S mantra into their operations. Maintaining robust and professional relationships with suppliers and customers is essential for the creation of a supply chain that works. A culture of continuous improvement creates openness and collaboration. Peter Owens of ISIS explains the 5S mantra, while Mark Eaton of Amnis Ltd talks about the Big Five elements.
The complex made simple: towards a leaner supply chain Rather than businesses dismissing lean as a concept imported from the Far East for specific application to manufacturing processes, we should be implementing the concept into all areas of business. The rewards are potentially huge, says Peter Owens of ISIS.
large-scale out-sourcing has made raw materials, manufacturing locations and ultimate markets so geographically remote from each other. In making our understanding of manufacturing supply chains more comprehensive, and our attempts to improve their efficiency more effective, our task is far from simple. But if we leave out the graphs, equations and flowcharts, perhaps the confusion can be minimised. The particular theory of process re-engineering under consideration here is the lean concept. In brief,
he history of economic thought and the
it is the identification and elimination of waste from a
study of business process is littered with
given set of human behaviour. As most will recognise,
the strangest looking flow-charts, graphs
lean was originally developed to help manufacturing
of every description using multi-coloured
more efficient but by its very nature it is well-suited
columns and serpentine curves, formulaic equations
to an expansion of this role. The application of
and the occasional quote from Confucius or Aristotle.
lean is increasingly radiating out from production
Similar to so many other attempts to conceptualise
processes to entire supply chains, including logistics,
any type of human activity, explanations of the
warehousing and distribution activities.
inter-dependent actions, movements of material
This is because for lean to be effective in taking
and communication of data inherent within even
waste out of existing processes, it must focus not
the shortest of supply chains, share the same
only on the manufacturing activity but on the entire
characteristics of often bewildering diagrams,
supply chain. Optimising the components of a
baffling jargon and evermore refined theories.
single process does not necessarily mean that the
Imagine then if you will, those of you not yet
entire supply chain will be optimised as a result. So,
familiar with the varied theories of process re-
contrary to our aim, the â€˜simpleâ€™ is becoming yet
engineering, how complex it can be to not just
explain what goes on within a manufacturerâ€™s
taken effect over the last two decades and how
We might now be slipping into the all-enveloping
supply chain but then to attempt to illustrate how
tentacles of the management consultant, who
efficiencies within it can be made. Add to the
thrives on complexity, theory and integrated
confusion the results of globalisation which have
solutions. In many situations, of course the
L E A N S U P P LYC H A I N
expert skills of such consultants will be needed
these has a Japanese translation also beginning with
as a guide through the labyrinth change and the
the letter ‘S’ – lean can be neat as well as simple!
pursuit of efficiency. However, experience of some organisations in implementing lean has followed another modern trend, this time a social one: the concept of ‘self help’. In the retail world some fifteen or so years ago
Briefly, the 5S mantra can be implemented on a practical level as follows: Sort (Seiri) – eliminate all unnecessary tools, parts, and instructions Set in order / stabilise (Seiton) – there should be a
Tesco became noted for its adoption of lean. The
place for everything and everything should be in its
food retailing giant learnt from the concept’s
place. This phase is also referred to as simplifying
originator Toyota and the way it organised its
Sanitise/systematic cleaning (Seiso) – keep the
aftermarket parts distribution system. In the
workplace tidy and organised. No physical waste
supermarket chain’s retail world the first step, as a
Standardise (Seiketsu) – work practices should be
result of the lean implementation was to establish
consistent. Everyone should know exactly what his or
an infrastructure capable of feeding each of its
her responsibilities are in adhering to the first 3 S’s
stores from regional distribution centres. This system
Sustain the discipline (Shitsuke) – maintain and
improved the on-shelf availability of products as well
review standards. Once the previous 4 S’s have been
as the ease and cost of re-stocking shelves. It also
established, they become the new way to operate
made re-ordering from suppliers more continuous and accurate. Critically the examples of waste
At the Eindhoven facility Menlo’s staff became
elimination also proliferated; deliveries could be
engrossed in lean, volunteered ideas, formed a lean
efficiently timed; there was less waiting time to
team and documented measured and defined targeted
unload; no expedited shipments were necessary and
waste through a range of statistical tools. And, yes
much higher truck utilisation was achieved.
inevitably there were a few graphs and charts used.
So here we have examples of the results of lean in
CI then became the key to success because,
the supply chain but how are these changes to the
while a single lean process is capable of achieving
process initiated – and how simply?
productivity gains of 70 per cent in just one week,
To answer this, in part, we have another real
it is the small day-to-day incremental advances that
life example from a logistics company operating a
project value into the future. At Menlo a two-tier
warehouse in the eastern part of the Netherlands.
approach was taken: on the one hand there is a plan
Menlo Worldwide Logistics is a subsidiary of a US
detailing the improvements in efficiency required in
trucking company called Con-way. It manages
order to realise major gains quickly; on the other, a
the international supply chains for a number of
long-term commitment to find more waste.
manufacturers in the hi-tech, electronics sector.
Employee participation paid dividends and moreover,
It actually handles the goods in a number of
was essential. Although staff needed to be trained in
European warehouses including the Dutch one near
the Lean concept, to produce efficiency measures, cost/
Eindhoven, as well as organising and tracking them
benefit analyses, and in problem solving skills, Lean
along the supply chain from manufacturing site to
engendered an entrenched work culture at the Menlo
the customer’s ultimate destination.
facility. The staff’s contribution of ideas and suggestions
For Menlo, the identification and elimination
had multiple benefits. Not only does the customer now
of waste is achieved through three essential lean
enjoy smoother and smarter processes, but employees
principles: identification of value through the eyes
also engage - a valuable factor in securing and retaining
of the customer; empowerment of the workforce;
staff - while Menlo achieves impetus in the workplace
and focus on continuous improvement (CI). All
to observe what is happening and make immediate
three have a straightforward, perhaps simple,
changes. To have the scope to make one’s job role more
requirement – the commitment of people at all
efficient has universal appeal.
levels and at all points within the process. The
Simplicity is, of course in the eye of the beholder.
customer’s involvement is crucial to identify their
A detailed understanding of a concept at a practical
values; Menlo’s work force is pro-active and,
level can make the most complex of situations appear
crucially permitted to enact change and everyone’s
straightforward. It is not always that simple to
dedication to the cause is required to ensure on-
describe such concepts, in words or with the use of
going waste elimination.
graphs and formulae, but seeing is usually believing.
Menlo trains its staff in the 5S philosophy - Sort, Set in order, Sanitise, Standardise and Sustain – each of
Lean certainly has living examples and those that want to know more should study them first-hand.
@ L o g istics
Alarms Bells or Opportunity for Change? As Consumer Spending Cuts Hit Grocery Retailers Jez Tongue of @logistics Reply Explains why food producers need to review warehouse management processes.
The solution is a flexible warehouse management system (WMS), one that can be switched on or off in line with demand. This need not be a major capital investment nor require major day-today maintenance overheads. Following a simple, low-cost ‘connection to the grid’, or in this case ‘the cloud’, WMSs align warehouse needs to the number of
ntil last month the grocery
- whether retailer or consumer
functions activated on the system so
retail sector had largely
- want quality, value-for-money
only the capacity used is paid for.
escaped the tightening
and optimum service. Neither is
What makes a cloud-based WMS
of household budgets
prepared to accept mis-picked or
an even better option for businesses
poorly substituted orders any more.
is the bare minimum of IT system
with big ticket items, such as cars and electricals taking most of the hit.
However, this “threat” to
management or maintenance. This
However, the rising cost of
the profitability and survival of
is all done behind the scenes by the
ingredients and the utilities needed
businesses supplying the white-
solution provider. All the warehouse
to run production plants and
label food producers behind the
team needs to do is use the
delivery fleets has pushed the price
own-brand products of Britain’s
intelligence provided by the WMS
of essential food items and day-
retailers, should actually be seen as
to achieve an ultra-lean warehouse.
to-day consumables beyond the
an industry call to action; a time for
Shift patterns can be reviewed and
means of many people. As a result
the food production and distribution
picking accuracy improved with the
consumers are looking carefully at
industry to review its processes, and
introduction of RF or voice picking
the products they purchase and the
ensure that profit margins can be
applications that deliver fulfilment
retailers they buy them from.
maintained while quality and price
instructions and best picking routes
integrity for consumers are protected.
directly to the picker.
In May food sales fell by 3.5% according to the Office of National
At the heart of this potential
Automating a warehouse using
Statistics, the biggest decline in
efficiency lies an often inefficient
a Cloud-based WMS is low-risk and
grocery sales since June 2008. The
warehouse, usually a monolithic
low-cost. It guarantees financial
Retail Price Index paints a similarly
electricity guzzling building packed
simplicity and control and, with
gloomy picture and research
to the rafters with perishable goods.
minimal start-up costs, the return on
published by Kingston University
It is in the warehouse that the
investment is immediate.
this month revealed that consumers
greatest cost savings and efficiency
are no longer prepared to accept
gains can be had.
low quality goods and poor
Manual warehouse management
Automating a warehouse using a Cloud-based warehouse management system, such as Side-Up from @
customer service from retailers. As
processes no longer suffice. There
logistics, is quite literally fool-proof
an immediate result, online grocery
are too many suppliers; storage
and could be the root of change
sales have taken a major hit, largely
areas – dry, ambient and frozen - and
needed to save grocery retailers from
the result of failures in picking
distribution channels to be managed
the grip of the recession.
processes and missed delivery slots.
by pen and paper. Perishable stock
The warning signs are here.
and distribution schedules overseen.
items need to be rotated, seasonal
Without significant process reviews
items factored into put-away
along the supply chain, the next
processes, and now, with Next setting
big casualties of the recession will
the precedent for next day order
come from this market. Customers
guarantees, highly demanding picking
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Letting lean into your supply chain Through this, the activities that can be eliminated, reduced in size or impact or combined to gain efficiencies are modified – streamlining the whole process. Extending the value stream from a single organisation to encompass the whole supply chain gives us the concept of a lean supply chain that spans the so-called Big Five elements. These define a true end-to-end supply chain: design, procurement, manufacturing, transportation and warehousing.
Lean in the Big Five manufacturing. Many people are so used to hearing the term ‘lean manufacturing’ that they forget that without the extension into the supply chain, products would at best simply sit at the end of production lines and at worst not even existent,
The concept of lean is often primarily associated with the hands-on manufacturing processes. However, the extension of lean into ‘The Big Five’ – transportation, design, procurement warehousing as well as manufacturing is just as, if not more important. Mark Eaton, managing director of Amnis Ltd and fellow of supply chain strategy group IOM explains how.
because no raw materials would be available to begin the manufacturing process. The lean supply chain is therefore about applying lean throughout the Big Five elements.
Lean in design The incorporation of lean in the design area entails collaborative teams that often involve specialists from other organisations who provide technical input that is not available to a single design team. It also encompasses designing products that can be easily sourced and that minimise the part count. For some industries, it also includes design activities that lead to easy recycling or that minimizes energy usage. The incorporation of lean in design results in reduced product costs, shorter product
development times, easier supply and recycling ean is an approach to improving businesses
and lower input costs. The design phase makes
that focuses on the elimination of activities
up around 90% of the overall cost of a product,
that don’t add value to customers. In
and therefore has a major impact on the long-term
a commercial setting, this is normally
financial performance of the whole supply chain.
indicated by whether or not the customer would
be prepared to pay for the activity. The traditional
Lean in procurement
approach is to understand the end-to-end process
During the procurement phase, lean supply chains
within an organisation – the value stream.
come to life. Lean procurement is concerned
L E A N S U P P LYC H A I N
with important activities such as rationalising the
involves developing relationships with the bigger
supplier base so that meaningful relationships
transporters in order to reduce costs and improve
can be formed with suppliers. Also, changes are
implemented that reduce the time and cost involved supply so that the processes are neither starved
Challenges in the lean supply chain
nor flooded with stock. Procurement is a two-way
The first and most obvious problem that people
process â€“ it involves suppliers and customers.
face when attempting to make improvements
Making communication easier between the two,
across an entire supply chain is a lack of robust
combined with selective introduction of technology
and professional relationships with suppliers and
to improve ordering and the introduction of
customers. Another main problem is the chaotic
changes reduces costs and increases the flexibility
and undefined processes that are the driving forces
of the entire supply chain.
behind the wrong behaviours in every one of the Big
in placing orders, while introducing flexibility in
Lean in procurement leads to reduced
Five elements. This is often compounded by a history
purchasing costs, greater flexibility and fewer stock
of adversarial management styles that have created
emergencies; meaning that the rest of the supply
a supply chain culture that resists change, does not
chain is lean-enabled.
allow for open discussions and inhibits innovation.
Lean in manufacturing
challenges is not easyâ€?. There is no quick fix or a
Lean in manufacturing is extremely common.
magic wand. Instead, we propose that there are
What is less common is the consideration that lean
seven elements to a lean supply chain that build up
manufacturing can be applied not just to factories,
over time to deliver improved performance, reduced
but also to areas such as production engineering
costs and greater flexibility for all organisations that
We emphasize the phrase: â€œOvercoming these
When lean is applied in manufacturing, it has a positive impact on the lead-time of the whole supply chain, as well as on product costs and quality.
Lean in warehousing The lean concepts applicable to warehousing include reducing stock levels, increasing pick rates and accuracy and reducing damage, whether it be to staff or to products. The effective introduction of lean in the warehouse will incorporate concepts such as reducing movement distances and handling activities, eliminating delays in unloading and loading and focusing on delivering parts on time, in full (OTIF). Lean-enabled warehouses
1. Remain focused on the voice of the ultimate customer. Think about what they would say was value-adding, and then eliminate anything else. 2. Understand the true end-to-end supply chain using value stream mapping. 3. Create a supply chain that flows, with activities being triggered only when required. 4. Design processes that are able to respond to volatility. 5. Introduce a culture of continuous improvement that is based on measures that drive the right behaviours and create openness and collaboration. 6. Find the suppliers that you can work with and
tend to have higher pick rates, lower returns and
change or eliminate as many of the rest of them as
improved staff motivation.
Lean in transportation Counterintuitively, efforts to improve customer service can have a major impact on the quality
7. Build the capability of your team and those of your supply partners to enable them to understand how to get the benefits of a lean supply chain.
using multiple shipping channels and a tendency
How the Institute of Operations Management can help
towards expensive delivery options are symptoms
The Institute of Operations Management (IOM),
of poor communication between the manufacturer
in partnership with Amnis and Unipart provides a
and the transporter, and inefficiency in the
wide range of training and support options to help
you develop a lean supply chain. Examples of the
of shipping decisions. Failure to combine orders,
Lean transportation is about introducing concepts
workshops we are running in 2011 that will help you
like combined multi-stop loads, cross-docking, right
benefit from the seven elements of a lean supply
sizing equipment and packaging solutions. It also
chain are detailed below:
Inventory Control Techniques
This course focuses on stock control for bought-in items, finished goods and general stores stock control. It demonstrates ways to determine how to give the best customer service, reduce inventory investment, and assess and react to changing customer requirements. It also includes how to integrate the inventory effectively into the supply chain while maximising control without increasing workload.
Accelerated Lean Skills Programme
This three-day programme takes participants from beginner to Green Belt in lean. Participants are required to produce a short post-training project to gain accreditation.
This two-day course delivers the knowledge and understanding of the key elements of warehouse management practice that is fundamental to commercial organisations. It provides a greater insight into the role of the warehouse in today’s supply chain and how effective warehouse management can lead to increased profitability.
Advances in Inventory Management
The seminar will look at how inventory management has developed over the last five to ten years. One dimension of this has been to align inventory management throughout the supply chain – from suppliers, through a logistics network, to end customers. Another dimension is the integration of lean with functions of warehouse management, transport and purchasing. The seminar will examine which new ideas, techniques and approaches have stuck and which have not.
Developing a Culture of Continuous Improvement
This one-day introductory programme is designed to introduce participants to the things that need to be done to affect the climate of an organisation and entire supply chain to develop better relationships and a culture that supports a lean supply chain.
Coming soon: register to receive details. Email: firstname.lastname@example.org
Lean Supply Chain
This course serves as a detailed introduction to the value of using the principles of lean in the supply chain. It develops understanding of what businesses should commit to in order to implement lean processes in a substantive and valuable way.
Coming soon: register to receive details. Email: email@example.com
Operational Excellence in Manufacturingbased Supply Chains
This one-day introductory workshop is intended to help delegates increase the overall effectiveness and efficiency of their manufacturing supply chain.
Coming soon: register to receive details. Email: firstname.lastname@example.org Due to the nature of this workshop, delegates from organisations that Unipart deems to be of a competitive nature will not be allowed to attend.
Value Stream Mapping
Available as a one-day overview or two-day intensive practitioner programme, this workshop introduces participants to the practical aspects of mapping pathways, processes and entire supply chains.
Coming soon: register to receive details. Email: email@example.com
Efficiency and productivity from supply chain automation
Due to the nature of this workshop, delegates from organisations that Unipart deems to be of a competitive nature will not be allowed to attend.
The development of new technologies and the specialisation of organisations have driven the need to extend automation beyond the factory gates and across the whole organisation. The automation of supply chains is concerned with reducing the costs and effort involved in decisionmaking and management of design, production and logistics. To this end, the current state of automation in the supply chain can be grouped into four main classifications explored below.
he central theme in industry over the last 120 years has been to automate processes.
1. Material flow automation
Initially this was limited to the installation
The complexity of many production processes
of production lines within individual
and the distribution of production across multiple
organisations, such as the engine production
organisations creates a pressing need to track and
facility within the original Ford production factory.
manage the supply of materials, particularly around
L E A N S U P P LYC H A I N
bottleneck processes to ensure they are not starved of
accessibility through telephones, email and the internet
material. Material flow automation covers the flow of
has created the infrastructure for 24/7 customer service,
information relating to stock levels within the supply
whether that involves human beings or automated
chain and the increasingly automated processes
customer service interfaces where customers can place
involved in initiating a request, whether that is a
orders themselves without interacting with real people.
restock request or a logistics move request. The
However, this aspect of automation is also concerned
overall focus of this form of automation is to reduce
with partner-relationship management (PRM) tools that
inventories and avoid delays, ultimately contributing
help organise information on leads and orders, profiles
to shorter overall production lead-times.
of customers/suppliers, records of communications and
2. Information flow and decision automation
transactions between parties, and even assists in the
It has only been in the last 20–25 years that the
organisation of face-to-face or other forms of meeting are
technology has existed to allow design teams to
becoming part of everyday life for most organisations.
collaborate across multiple sites in the development of new processes and technologies. The ability
to share information, to undertake research and
Not every business needs every type of automation and
even to undertake trials remotely has led to a step
the art of success for most organisations is to have the
change in the way that design occurs. Activities
right level of technology required to meet the needs of the
that previously were linked together sequentially,
market in which they operate. Having said this, technology
massively increasing lead-times, can now occur
and the selective automation of activities can either be an
concurrently. In addition, this aspect of automation
order qualifier or and order winner.
covers operational activities, as well such as
Order qualifying automation is the minimum level of
production planning – including MRP/ERP systems –
automation that is expected by customers. For many, this
and the use of eMarketplaces to enable suppliers to
might be as simple as a website and an email contact;
access customers – and vice versa – more easily, all
for others, it might be the ability to undertake complex
of which are aimed at improving the procurement
design drafting projects remote from the site and across
of parts and the planning of production. The overall
multiple design teams. Without the minimum level of order
focus of this aspect of automation is to reduce
qualifying automation, businesses are unable to remain
delays and inventory costs, but also to assist with
within the market successfully.
improving the overall operation of the supply chain
Order winning automation leads to enhanced
by providing information to enable decisions to be
competitiveness. This includes automation that reduces
made, such as details of scrap rates and other rework
costs and lead-times, as well as that which makes it easier
costs and production bottlenecks.
to deal with customers. The problem with order winning
3. Management and control automation
automation is the arms race it creates as the development of
Factory automation and the introduction of robotics
order winning automation is rapidly copied by others in the
is a phenomena of the late 20th Century and has
market, and it therefore moves from being an order winner
had one of the biggest impacts on productivity and
to being an order qualifier.
the costs associated with production in the whole of
The successful automation of the supply chain is
human history. With the advent of networks, such
concerned with a focus on maintaining and enhancing
as local area networks (LANs), it is now possible for
your organisation’s order qualifying automation whilst
a single person to control multiple machines, whilst
selectively investing in order winning automation as
the improvement in sensing technologies means
appropriate, and at the same time avoiding investing in
that processes that previously relied on human
technology that does not ultimately lead to improving your
intervention have been completely automated. It
ability to compete and, more importantly, to win.
is not only in the production process where this warehouse management systems (WMS) focus
How the Institute of Operations Management can help
on improving warehouse efficiency and advanced
The Institute of Operations Management (IOM), in
planning and scheduling (APS) tools help to match
partnership with Amnis and Unipart, provides a wide range
demand to capacity more closely.
of training and support options to help you develop your
4. Relationship automation
supply chain training needs.
element of automation can be found, because
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three or more tiers of suppliers. Improving
C E LT R I N O
Ring-Fence Your ERP Attempting supply chain automation within an ERP system can be a costly mistake. There’s a better way, Celtrino’s Michael O’Brien tells Malcolm Wheatley.
more than that, it sharply reduces the time-to-benefit, and provides richer reporting functionality than the typical manufacturer would achieve on their own.” With Celtrino’s own on-line supply chain transaction platform, for instance, all of a manufacturer’s supply chain activity is located, transacted and logged in the cloud, and feeds the ERP system with data that is known to be
camel, they say, is a horse
already complicated environment
that has been designed by
when there’s something that’s
performance reports are available
a committee. And much
already out there, and it’s tried,
across a wide range of metrics,
the same can be said for
tested and proven?
providing a high level of control and
many ERP systems—especially those
That something, of course, is the
Better still, adds O’Brien,
accountability right across
ERP systems installed in mid-sized
on-line supply chain transaction
manufacturers, says Michael O’Brien,
platform. Simply put, such platforms
head of marketing at Dublin-based
are a means of securely exchanging
based processes, you push decision-
supply chain document automation
making authority closer to where
electronically: purchase orders,
the work happens—and there’s no
invoices, shipping notes, goods
more logging into disparate systems
inwards, received notes, statements
or trawling through reams of paper
and everything else.
to access time-critical KPI data,”
And it’s a problem that Celtrino frequently encounters, he adds. “Manufacturers have let themselves be painted into a
More to the point, perhaps, they
the organisation. “By automating these paper-
he explains. “Front-line managers
corner by regarding their ERP as a
don’t require manufacturers to
can get the metrics that they need
universal transaction platform,” says
re-invent the wheel. Already built,
in order to be more efficient, while
O’Brien. “And bolting-on even more
and designed from the outset to be
senior managers and the CFO get
functionality onto their ERP system
used by as wide a variety of trading
instant access to information to help
is time-consuming, expensive, and a
parties as possible, the providers of
with more strategic decision-making.”
heavy drain on internal resources.”
such platforms possess a deep bench
And when that bolt-on
And all without burdening the
of skills in the intricacies of system
ERP system with yet another layer of
functionality revolves around the
interfacing, supplier on-boarding
cost and complexity. The message
supply chain, he argues, the logic
and document transfer.
is even more tenuous. Adapting
Which are precisely the skills that
“Ring-fence your ERP system
and extending ERP systems calls for
manufacturers – and especially
– invest instead in supply chain
a specialised skill set—and it’s rare
mid-sized manufacturers – are not so
transaction automation where it will
for people with those skill sets to
richly endowed with,
deliver the greatest ROI, on a built-for-
be equally adept at the intricacies
purpose platform that specialises in
of supply chain management and supplier on-boarding. “You’re using an expensive
100% clean and validated.
“Doing the heavy lifting of the
such transactions,” sums up O’Brien.
hundreds of thousands of supply chain transactions outside the ERP
skill set for the wrong thing,” he
system sharply reduces the cost and
stresses. “Plus, times are hard: why
complexity of automating supply
add cost and complexity to an
chain transactions,” he argues. “But
Contacts: Tel: +353 1 873 990 Email: firstname.lastname@example.org www.celtrino.ie
Profitable. Secure. Paperless.
EEF PhotograPhy ComPEtition 2011 Heroes of Manufacturing. At EEF the manufacturers’ organisation we want you to capture the essence of what makes manufacturing great – its people, products, processes and places of work. Show us how you would capture the image of manufacturing heroes before October 31, 2011. Entry is free and open to everyone. For information and to upload your photograph visit
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In partnership with:
Manufacturinginaction Sponsored by Applied Angle
Putting UK manufacturers under the spotlight
Factory of the month Husqvarna 84 Where the grass is greener
Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions.
Waco UK 96
A structured approach
A better pill
A wide customer-base is just one of the advantages Waco UK (Premier Link) has in the construction industry.
Ruari McCallion takes a look around a factory that for him is close to home â€“ for more than one reason.
MTL Group 107
Seven Seas 113
A steely ambition
Calm under fire
With an impressive array of state-of-the-art steel fabrication equipment, MTL is as much a project manager as a contractor.
After a fire destroyed the finished goods warehouse in May last year, Seven Seas demonstrated its pragmatic recovery capabilities.
CPM Group 120
P&B Metal Components 125
Leader in its field, this manufacturer makes sure itâ€™s always ahead of the game with several unique concrete solutions.
After celebrating its 50th birthday, P&B Metals is now readying itself for the future with plant refurbishments and a 5S programme.
All companies featured will be entered into the MIA Award 2011
Factory of the month Husqvarna
Gardening equipment manufacturer Husqvarna has found a unique way to respond to abrupt changes in demand and to tackle its dependency on weather conditions. Roberto Priolo investigates.
lives are greatly influenced by weather patterns, particularly in Britain. When the sun shines on a spring or summer weekend, we immediately flock to parks, spruce-up our gardens and invite friends over for barbecues. For Husqvarna UK, a manufacturer of outdoor power products based in Newton Aycliffe, County Durham, a rainy summer can push sales down dramatically, just like a balmy spring can have them boom. The company is part of the Swedish group Husqvarna, named after the town of Huskvarna, where the company was founded back in 1689. Then the group produced muskets for the Swedish Army, but since it has become a strange beast: with 37 factories in several countries worldwide, its products range from construction equipment to chainsaws and robotic lawnmowers. In Britain, Husqvarna produces lawnmowers and gardenvacs, retaining a 45-50% market share. Its UK operations take place in two facilities in the company’s site in County Durham, where Husqvarna has been since the early sixties. One of the facilities is used for moulding and as a warehouse, while the other is used for the assembly of products.
The weather has been kind to us this year, with no snow since Christmas. We are very weather dependent as a company Caraline Robinson, Factory Manager
Every year, Husqvarna experiences the alternation of a busy and a quiet period: its peak production season is between January and June, to make sure products are available to the end customer by the beginning of the summer, when demand is higher. In response to this unusual working condition, the company has fluctuating levels of staff. With the exception of a supervision and technical team, workers are employed on temporary contracts. Caraline Robinson, factory manager at the Newton Aycliffe site, says: “This year we have employed our maximum temporary workforce, which has been up to 450 people. We have very good production volumes. The weather has been kind to us this year, with no snow since Christmas.
Factory of the month Husqvarna
Husqvarna does its own recruitment, using an agency on an ad hoc basis (when, for example, it has to hire staff for weekend shifts). In the moulding facility, work is organised in three shifts; in the assembly facility, it’s two shifts five days a week. “Our seasonal staff starts at the beginning of January, and from that point on we recruit about 50-60 people every week. It varies year on year, but we usually see about 30 per cent of people coming back to us,” Robinson explains. The output can reach 35-40,000 finished products a week. However, in quiet times it can go down to less than 5,000. In a bid to address the impact of such variation, Husqvarna has a parallel, external business: it supplies plastic components and tooling to companies in the automotive industry, and is a second tier supplier to car manufacturers. This way the company secures a contribution towards fixed costs, which is particularly important during the low season. There is little fluctuation in this external business and this is a testament to the skills of production
Hengdian Group Linix Motor Co.,Ltd L
inix Motor Co., Ltd.
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our company has earned a
ensure that we continue to
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Published in association with: Hengdian Group Linix Motor Co.,Ltd Hengdian Electronic Industry Zone Dongyang Zhejiang China 322118
Tel: 0086 579 86622113 Web: www.linix.com.cn Email: email@example.com
Factory of the month Husqvarna
planning staff. These indiviuals ensure customer satisfaction is guaranteed for two very different types of operations. “External work is stable business 12 months a year,” confirms Robinson.
Training temporary workers It is easy to think that having to train new people year after year to work on a wide range of products can be a labour-intensive, time-consuming operation, but Husqvarna believes it’s got it covered. “All the training is internal. The supervisors prepare people very actively as we go towards our busy period, making sure they are trained as quickly as possible and to the right quality standards,” says Robinson. She admits that in terms of actual work content, many tasks are relatively easy to learn and understand: on the assembly lines, all of them being one-piece flow, the average takt time for a standard product is around 30 seconds. Training is delivered to ensure that operators work safely, and that products are of a high quality standard. According to Robinson, a crew can be brought up to speed within two to three weeks. The company produces garden vacs, several models of lawn mowers and even robotic mowers. All these gardening tools are characterised by a smart design making them extremely appealing to the eye. Husqvarna UK sees two main areas of growth within its product range. The first is represented by the Gardena-branded products, which are sold solely to European customers and therefore constitute a great
opportunity in terms of exports. Husqvarna acquired German company Gardena in 2007, and has developed a range of Gardena and Flymo lawnmowers using a common platform approach: it can manufacture two different products from a standard set of tooling. The products are then tailored to appear very different but with small investment in specific tooling, and clever use of colour.
Delocalising the supply chain Husqvarna has seen static volumes over the past few years. It managed to keep them steady even through the recession, during which the company saw its customers trading down and going for less expensive products. We work very closely with our sales team in the UK to try and minimise the
errite is an independent thermoplastic compounding group with businesses in Warrington, UK, Lâ€™Arbresle, France and Johor Bahru, Malaysia. We specialise in the supply of compounded products to the injection moulding and extrusion industries and are a key supplier of high performance thermal insulation products for flexible, offshore oil pipelines. Perrite manufactures an impressive line up of standard and custom compounded polymers including Percom polypropylene, Perlex polycarbonate, Styralin polystyrene and Pertal POM. The product portfolio also includes the high performance Ronfalin ABS brand and prime quality polyamide Vitamide range. Our expertise also
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Factory of the month Husqvarna
amount of finished good stock hold. It’s about being more and more flexible every season.” The company holds an annual sales conference, during which all of the Husqvarna sales representatives have a chance to see what is in the pipeline. It’s also a chance for the product development teams to get some feedback and ask them which products they think are going to sell well.
The lean perspective Husqvarna believes innovation is what sets it apart from the competition. Robinson comments: “A huge amount of money goes into R&D. It is the foundation of the business to make sure we keep ahead of the competition. Products like Automower prove that we are achieving this as a business.” All the money the business invests goes into modifying production lines and developing new products. Early this year, three new products were launched, including Automower 305, a less expensive, smaller version of Automower.
Local Knowledge Worldwide Since 1963 Allport have been developing a network of offices, joint ventures and exclusive partners in more than 100 countries, spanning six continents. Five million kilos of freight move through the Allport network by land, sea and air every day. Global movements under the control of 400 branches, local teams, well positioned to safeguard Allport customers supply chains wherever they source from, or sell to. In the UK dedicated teams take responsibility for individual clients, micromanaging each shipment. Arranging prompt Customs clearance and rapid, cost-effective delivery direct by road or, when possible, by environmentally friendly rail services. Internally conceived, developed and supported, Allport’s supply chain management systems have been evolving since 1992. Originally designed for the
We’re proud that our customer largest most complex supply chains, relationships stretch back decades - that’s the same technology has provided the what sets Allport apart. Our attitudes foundation for the generic supply chain never change. Whether a client is a global tracking solutions that have cascaded corporation or a local entrepreneur, our down. Powerful management tools that people always do whatever’s necessary have previously been the preserve of only to deliver. the very largest. We’re proud to work closely with household names such as Siemens, Sainsbury’s, Next, ASDA and Rolls Royce, but we would Published in association with: never consider that we’ve ALLPORT outgrown anyone. Small businesses are our Tel: 0161 998 9722 lifeblood. The relationships we Email: email@example.com forged in our early years are the Web: www.allport.co.uk bedrock our business has been built on.
Factory of the month Husqvarna
Husqvarna also had to invest in new energy saving projects, especially over the last year. With a £1m annual energy bill, low energy lighting and inverters on moulding machines had become necessary measures. The biggest change the company is experiencing, however, is the one related to the Husqvarna Operating System, the manufacturing strategy Husqvarna is implementing in order to become a leaner business. As part of the programme, aiming to improve safety, quality, volume and cost, Robinson, and change agent Tony Day, take part in training sessions in one of the company’s worldwide sites every three to four months. In these sessions they are taught lean tools and techniques relating to standard operations, problem solving, and operating systems and material handling. Once back on site, they have the target of running workshops within the business to transfer their newlyacquired knowledge to all the 165 permanent workers. Robinson explains: “The target is to train all the permanent workers in these areas. For example, standard operations is about understanding waste, elimination of waste, 5S and
We respond to huge changes in demand Caraline Robinson, Factory Manager
basically the value of developing standard operations, in order to be able to improve.” During these one-week workshops, there are two days worth of theory but the rest of the time is spent on the shop floor. “We have selected areas that have specific problems we want the team to tackle during the workshop. They have to actively work on the improvement, which we capture. The supervisors then present back to management,” Robinson adds. “This is a program with permanent commitment; it is brilliantly supported by Husqvarna senior management and over time will result in a culture change in our business.”
approach TM talks to Premier Interlink (Waco UK), a modular buildings specialist whose focus on innovative, sustainable products has made it a leader in the off-site manufactured structures market.
March last year, at the Ecobuild event, Premier Interlink (Waco UK) won a prestigious award in the Prisons category for the HMP house blocks it constructed in a young offenders’ institute. BREEAM (Building Reseach Establishment Environmental Assessment Method) is the most widely used environmental assessment method for buildings worldwide. The company won it in conjunction with Wates Construction. With over 50 years of experience, Premier Interlink has gained a leading position in the niche market of multistorey off-site manufactured buildings. The method of manufacturing buildings away from build location and dropping them into place has been dubbed ‘the modern method of construction’, and it is a method at which Premier Interlink excel. Producing over 200 modules per month at its facility in Brandesburton, Yorkshire, the company designs and manufactures steel-framed modular structures. Tapping into varying types of demand, Premier Interlink both sells and hires its products and offers tailored solutions for a variety of markets incuding; custodial, healthcare, education,
Waco UK at a glance Established(as 1956 (merged with Waco in 2004 Premier Transline): becoming Premier Interlink
Brandesburton, East Yorkshire
Steel framed modular buildings
Custodial, healthcare, education, commercial, construction
Construction Premier Interlink (Waco UK)
The Premier Interlink factory in Brandesburton, East Yorkshire
student accommodation, construction and commercial. The company was formed by the merger of Premier Transline Group and Interlink Building Systems in 2004. It is a subsidiary of Waco International, a £400m group headquartered in South Africa, employing about 4,000 people internationally, with operations in Australia, New Zealand, Chile and Southern Africa. In the UK, Premier Interlink employs over 200 people and has a turnover of £60m. Production director Chris Walker says: “We manufacture the most diverse, robust and efficient range of modular structures currently on the market. Moreover, the company oversees one of the largest interchangeable hire fleets in the country.” This 5,000-strong hire fleet is utilised by, to name a few, Bovis Lend Lease, Mace, Westfield Shoppingtowns, Stansted Airport and Royal Bank of Scotland. According to Walker, the strength of the company is represented by its large product offering. The latest addition to this portfolio is the PremierClassic, a timber-framed structure manufactured off-site. It is built using sustainable materials (all timber is harvested from approved Forest Stewardship Council managed forests), in response to an increased customer demand for
Addenbrookes hospital, Cambridge
environmentally friendly structures. In a statement, the company said: “We have a growing number of customers asking for ways to improve the environment, and we are working collaboratively with our clients, now achieving BREEAM ‘Excellent’ wherever possible.” PremierClassic allows for the implementation of green energy solutions such as solar and wind power into designs but is flexible to suit customer needs.
It is this willingness of clients to advocate on our behalf which ultimately demonstrates the viability of the Premier Interlink product portfolio Chris Walker, Production Director
Another recently-developed solution is PremierOne; an economy class, single storey building currently being used in a number of schools to create extra classroom blocks on a temporary basis. Other successful products include PremierCell, a modular secure prison building which has received Ministry of Justice approval for use in Category B and C regimes and PremierPC, a steel framed unit for police custody suites and related uses. Clients include West Midlands Police, Trumpington Magistrates Court, the Scottish Prison Service and secure HMP sites throughout the country. Walker comments: “With both ISO9001 and ISO1401 accreditation, Premier Interlink manufactures each building to the highest specifications, meeting Part L2a, DDA, and all sector specific regulations, as well as providing a 40 year
Construction Premier Interlink (Waco UK)
Southmead hospital’s catering centre, Bristol
guaranteed warranty on our structural and external cladding materials.” The main advantages of building a structure off-site (80% of company’s construction is carried out in this way) are the opportunities to save time and limit traffic and disruption – something considered extremely important by customers in the healthcare and education sectors, who require a high level of installation efficiency on their ‘live’ sites. Premier Interlink delivers its modular buildings 75-90% complete. Construction and fitting out takes between four and 12 weeks, depending on the size of the structure. The stresses and strain on the UKs beleaguered health service are never far from the front pages of UK broadsheets, but Premier Interlink is doing its bit to help. Its strongest product has consistently been its PremierPlus offering: a multistorey modular building option which has been embraced by the NHS. Healthcare facilities in Addenbrooke, Haywood, Stoke, Leicester, Manchester, Norwich and Bristol all use this offering to build extra
quickly, with the flexibility to downscale if demand drops. Walker confirms that the company is “gaining traction in the healthcare sector”, and that it is winning the majority of its new business thanks to word of mouth recommendations between NHS trusts. “Together with repeat business from individual trusts, it is this willingness of clients to advocate on our behalf which ultimately demonstrates the viability of the Premier Interlink product portfolio and the expertise we have built up over the years,” he says.
New machinery, new systems Since 2007, following on the heels of a strategic decision to focus entirely on the production of modular buildings, Premier Interlink has undertaken a fundamental transformation of its manufacturing processes. “We implemented a flowlinebased approach to manufacturing, as well as incorporating work stations to ensure that the development of our new product ranges was done with optimum economy,” says Walker.
The company invested about £250,000 in new machinery, including crangeage equipment and CNC driven overhead routers and bandsaws, with the overall target to move products around the facility more efficiently. The number of forklift trucks was reduced, and tugs were introduced to move products: keeping them as close to the ground as possible helped increase workplace safety. Thanks to its commitment to health and saferty practices, Premier Interlink won the British Safety Council’s ‘International Safety Award’ in 2009. The company also focused considerably on product engineering, ensuring optimal efficiency and time to market are always at the heart of development activities. According to Walker, continuous improvement and lean principles are critical to supporting this drive. Kaizen and six sigma, are currently put into practice on site and there are strong initiatives to ensure that staff are on board. This engagement strategy includes monthly presentations by management executives on the factory floor, designed to create more direct communication channels between the front line and management. The effect of implementing these presentations has been a boost in interest and idea generation from frontline workers in every area of the business. Staff at Premier Interlink are proactive at all levels. The gains made within the production unit can often be directly attributed to the company’s operatives - something, Walker says, that “explicitly highlights the internal autonomy of our organisation.”
Construction Premier Interlink (Waco UK)
Premier Interlink is also committed to sustainable manufacturing, with the majority of materials selected from environmentally friendly resources (like, for example, the timber used for the new PremierClassic modules). A great number of the company’s clients are multinational corporations, for which the focus on the environment is fundamental. Many will only buy from manufacturers who keep sustainability at the core of their operations and product offering. Around 65% of Premier Interlink’s waste is recycled, a figure that is regularly monitored by the company’s clients.
We will undoubtedly continue to place great emphasis on R&D activities Chris Walker, Production Director
The future “Premier Interlink will undoubtedly continue to place great emphasis on R&D activities,” Walker says, “as it is a facet of the business which marks us out as a sector leader. Indeed, by remaining ahead of the competition in our product offerings, we will continue to win work on recommendation, arguably the most objective barometer of our company’s manufacturing strengths.” This product-focused approach helps Premier Interlink keep a position of competitive advantage. The company’s wealth of experience and ability to work to specific regulations is at the basis of the development, for example, of the PremierPlus Building System, a recently launched concrete flooring option for healthcare buildings, which increases the acoustic dampening qualities of the structure and also reduces vibration in high traffic, high equipment load areas, such as plant rooms or MRI and X-ray. Walker adds: “Given that we are a largely product-led company, our immediate future is concerned with ensuring that the Premier Interlink’s offerings are suitable for both current and divergent markets. We will remain at the forefront of developments in our sectors, while continually looking to transition into adjacent markets as and when it is considered appropriate for the business.”
A better pill Managing director Sara Vincent and operations director Keith Daniels showed Ruari McCallion around Actavis’ Barnstaple factory and discussed the reasons behind the site’s growing output and the impact of a large investment programme.
visit to the Actavis plant in Barnstaple, North Devon, was something of an eye-opener for a number of reasons – one of them close to home. As a sufferer of a condition called hypothyroidism (a non-functioning thyroid gland), I rely on a daily supply of levothyroxine. The Actavis plant is one of the UK’s largest manufacturers of that particular synthetic hormone treatment. “A further important generic drug for Actavis is thyroxine,” says Sara Vincent, the facility’s managing director. “It represents approaching seven hundred million of the five billion or so tablets we make every year.” Hypothyroidism is a fairly common condition across the world. The Barnstaple plant was able to step into the breach when a partner company in Japan was damaged by the earthquake earlier this year. It is supplying them until the partner returns to full output.
North Devon is in an area of the UK more noted for its tourism than manufacturing but after travelling along the road that borders the beautiful wilderness of Exmoor, Barnstaple strikes a strong, bustling contrast to its rural hinterland. Nonetheless, it is a surprising place to find an advanced manufacturing facility. The company’s origins are in Brighton, where it was established as Cox & Co in 1839. Its success can partly be attributed to the fact that Arthur Cox invented the sugarcoated pill. The company became Cox Pharmaceuticals and outgrew its cramped, four-storey building in the centre of Brighton and moved to Barnstaple in 1979, an area beloved of its owner, who had spent family holidays in the area. It was acquired by Hoeschst in 1984, was then taken over by Alpharma in 1998 and acquired by Icelandic company Actavis in December 2005. Its parent is active in 40 countries and employs about 10,000 people worldwide. Growth, investment and focused business improvement have followed the acquisition and the company now has around 650 people employed on the Barnstaple site, with 400 of them in operations. “We make generic medicines,” Ms Vincent says, which are therapies that have come out of patent. “We have a broad portfolio, totalling about 550 products and about 70 per cent of the volume we sell in the UK is made here. Eighty-five per cent of our production is for the domestic market. Our exports are either to support Actavis affiliates in other countries or to long-established connections, such as the Middle East and some European countries.” As well as thyroxine, it makes digoxin (which treats certain heart conditions); prednisolone (for inflammatory conditions and, at higher doses, against certain cancers); and analgesics (painkillers) such as co-codamol and tramadol. As its main products are generic medicines, it would be easy to assume that its range is pretty static – but assumptions often turn out to be wrong. “Being part of Actavis has given us great access to a really strong pipeline of new products,” Ms Vincent says. “Seven years ago, we were launching maybe nine or 10 products a year; now, we are launching 50-60 a year. They [Actavis] have things that we did not and a strong pipeline is very important.” To illustrate the point, consider aspirin; it is long out of patent and in the generic area. A company like Actavis needs the ‘next generation’ of aspirin, the next level of anti-inflammatory painkiller. “We either have to grow our product range or grow our market share – in fact, we need some of both,” Vincent explains. As the pharmaceutical industry develops, Actavis’s commercial and scientific challenges will continue and change. “The pipeline of the future will become more complex; many of the future patent expirations are in specialist areas and increased specialisation means less mass production.” It is expected that there will be a blurring of the lines between generics companies and patent holders, as more complex products emerge. Actavis will have to become more specialised but without abandoning the breadth of its range. Actavis has a growing over-the-counter (OTC) and ‘branded’ portfolio, which has grown over the years both organically and by acquisition from, for example, Roche. Barnstaple focuses on ‘dry’ products – tablets, rather
Being a part of Actavis has increased the product pipeline for the Barnstable site
The pipeline of the future will become more complex; many of the future patent expirations are in specialist areas and increased specialisation means less mass production Sara Vincent, Managing Director
than liquids. Its main customer is the NHS. It operates in a market that is both extremely competitive and highly regulated. It operates under Good Manufacturing Practice (GMP), the established procedure for pharmaceutical manufacturing recognised by many EU countries as well as Switzerland, Australia and New Zealand. Actavis competes with suppliers in traditionally low cost regions such as the South East Asia and South Asia.
Full lean portfolio Part of Barnstaple’s strategy has been to invest in automation and business improvement. “We have been running
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to the pharmaceutical and nutraceutical industries. Blister machines have speed ranges from low to super high speed (1,300 blisters/minute). Low speed machines are also manufactured by the subsidiary IMA-PG India. Tablet counting machine production includes IMA SAFE NOVA and IMA SAFE SWIFTPACK. Tube fillers are manufactured by IMA SAFE CO.MA.DI.S., while horizontal and vertical cartoners are manufactured by IMA SAFE division. It also offers a complete range of end-of-line equipment for the pharmaceutical industry manufactured by IMA BFB division, including over-wrapping, shrink-wrapping, case packing and palletizing solutions. A collaboration is also in place with UNIVERSAL PACK, one of the major experts in the field of stick-packing, shaped and heat-sealed on four sides.
Published in association with: IMA SAFE division (Packaging Solutions) Tel: +39 051 6514111 Fax: +39 051 6414743 Email: firstname.lastname@example.org IMA UK Ltd. Tel: +44 1789 767330 Fax: +44 1789 400780 Email: email@example.com For further information, visit our website: www.ima.it
a lean manufacturing programme for at least 15-years,” says operations director Keith Daniels, on the tour of the production area. “We began with TQM [Total Quality Management] and then moved into lean, then we adopted lean six sigma. We subsequently dropped the six sigma element.” Why would an organisation drop six sigma? “It was a bit too complex in terms of what we are seeking to achieve. We still have black belts and green belts on site and we adapt the methodology to our needs. We still use processes such as DMAIC (define, measure, analyse, improve, control) to achieve quick results in Root Cause Analysis (RCA).” Actavis also incorporates kanban and SMED (singleminute exchange of dies) methodology into its processes. “We do a huge amount of changeovers, from one product to another,” says Mr Daniels. “We have to be very flexible and agile.” With a range that covers over 300 products and five billion tablets a year, it is easy see his point. He indicates where a new mixing area had been added, which dispenses around 72 .5 tonnes of dry products a year. The room is fully enclosed and built to ATEX, or explosive atmosphere, standards. “We are mixing powders, industrial methylated spirits and other ingredients. We have to take precautions against explosions.” Personnel in these potentially dangerous areas wear complete protective suits, with breathing apparatus to protect them from inhaling medicinal molecules – but these are also to protect the product. Air handling units also help to keep the atmosphere clean and at the right humidity. “All our staff are completely protected by downflow booths,” Mr Daniels adds. “Any excess material is pulled out of the atmosphere into the Heppa filtration systems. The air-fed hoods are additional protection.” There is evidence of Actavis’ multimillion pound investment programme at nearly every turn. Sealed piping conveys material into large mixing hoppers, which are removed and cleaned at every product changeover. A soon-to-arrive new washing machine will reduce water consumption in cleaning and sanitation. The hoppers are square section – why not circular? “We use them on the basis that products have been designed to be blended correctly in them,” Daniels
explains. “If we want to change anything, any attribute of the product at all, we have to go through a lengthy – and quite cumbersome but necessary – authorisation procedure. All medicines are highly regulated, and those regulations cover batch sizes, the size of the tablets, and where we get raw materials from. Everything is subject to regulatory approval.” So even the slightest change is not undertaken lightly; a business case will include the cost of re-certification.
Deviation is not tolerated Blended material is moved by vacuum pipe to Courtoy compression machines and a sample is taken from each batch of tablets. They are tested for hardness, dissolution, friability and thickness, to ensure they all conform to the standard – the approved recipe. If there is any deviation then the batch run is stopped. Actavis uses two key suppliers for compression machinery, PTK and Courtoy tablet presses, which are in service 24-hours a day. A further two are ready to go into production which makes this the largest fleet of PTK machines on any production site in the UK. The packaging area has evidence of previous and continuing investment. It has 12 blisterpack lines and two bottle packing lines. “The operators are in charge of the packaging process, through touch-screen control panels,” says packaging manager Steve Coram. Machines weigh and check the materials and can detect fluctuations in individual tablets down to infinitesimal amounts – deviation from the
Actavis UK at a glance Location
Barnstaple, North Devon
Generic medications in ‘dry’ (tablet or powder) form
Over 5 billion tablets per annum, using 1.3 million lbs of raw materials/yr
Principal product lines
Levothyroxine; digoxin; prednisolone; analgesics
The National Health Service
standard triggers a quality assurance investigation. Blisterpacks have been adopted due to legislation – the drive was to ensure that every patient gets a leaflet, with usage instructions and contra-indications, with every prescription. Up until 1999, the majority of product was packaged in pots. “The packaging area was extended in 1999 to take on blisterpack production,” Mr Coram adds. “It was a huge investment, and it’s ongoing. We have been buying new machines about every eight months – the next one will cost around £1.8 million, but it will go twice as fast. We also keep around £2 million to £3 million of tooling equipment readily available. Since the switch to pots we have come to be seen as a centre of excellence for packaging. The quality of the site is, arguably, among the best in the UK – I have visited other sites and I can say that with confidence.” There is no boastfulness in his tone of voice; he is simply stating facts. Returning to the office, we discuss how the plant has changed with the improvement efforts and the impact of the investment programme that currently totals around £20 million, in existing facilities and planned upgrades.
Globally competitive “In terms of output, we’re probably producing around forty per cent more today than we were doing 15-years ago,” says Daniels. “We have gone from being a relatively small, cottagestyle industry to a highly efficient manufacturing site. That’s the key difference: we are very competent and up there with the best.” The site has to be. As I am continually reminded,
Actavis Barnstaple is in competition with low cost areas all over the world. “We have a separate purchasing team that deals with all our raw materials and packaging, both globally and locally. As part of a large group, we get the benefits of purchasing on mass, as well as having local relationships.” But if materials are sourced from the other side of the world, how does the company ensure its supply chain is not ‘pregnant with inventory’ – that it achieves the Goldilocks balance? “It depends on the molecule,” he replies. “We will want to have some overstocked, to ensure we always have adequate supplies. We dual-source other products, so that if one vendor goes down for any reason we have another supply available. It is all part of our BCM (business continuity management) strategy.” The skill is knowing where in the supply chain to hold inventory, says MD Sara Vincent. “The stock we hold depends on the product, the source or whether we are in a new product launch, in which case we could hold as much as six months supply of finished goods,” she says. This illustrates that for companies on this scale, purchasing and supply chain management is a discipline all of its own. Management of supply and distribution of finished goods is outsourced to DHL, who operate a warehouse near Banbury. They provide what Ms Vincent described as ‘elastic walls’ for inventory management. Actavis in Barnstaple was recently recognised as North Devon’s Business of the Year. The location may seem remote to some but it is a growing generics pharmaceutical company, with a strong pipeline and expanding market share. Its strategy is based on breadth as well as depth of product lines. It competes with other facilities within the Actavis Group, so it has to make a strong business case for investment and must be competitive. And the location has definite benefits, as well. “North Devon isn’t just about tourism,” Vincent says, inferring that the area is attractive to personnel. “We have not struggled with recruitment, and we have hired 200 people in the last two years. We are embracing apprenticeships, from technical areas to engineering applications. We haven’t found it a huge problem to recruit within the area, or to attract people from other parts of the country and even the rest of the world.”
Steel fabrications MTL Group
As a specialist in steel fabrications, MTL Group has carved out a successful niche as an approved supplier to some of the world’s largest manufacturers. Tim Brown talks to managing director, Dr Henry Shirman, about the company’s post MBO growth, its technical know-how, and its capacity to be considered a project management company rather than simply a contractor.
Group is a company big on technical capacity. Under the one roof at Rotherham lies a 300,000sq ft premises housing the latest in machine tools and stateof-the-art equipment to offer what Shirman refers to as an “enhanced value proposition”. The scale of the company’s machines are enviable and include: a 20 metre bevel laser; a 25 metre high-definition bevel plasma machine; the UK’s largest water jet machine; and the world’s largest press brake and robot system that combines a very large 640 tonne and 7.2 metre CNC press brake with a 600kg capacity robot. The company’s equipment is complemented with an in-house CAD design capability and a design-formanufacture service aimed at lowering customer costs and improving product integrity. In addition, MTL has strong affiliations with partner companies to allow it to take projects all the way from concept to completion. “Rather than call us a contract manufacturing company, we like to think of ourselves as a project management
company because we will project manage the entire job for the customer,” says Shirman. “We market ourselves as a one-stop-shop for everything that the customer needs and utilise all the processes that we’ve got in-house such as laser cutting, plasma cutting, bending, welding, machining, fabrication, and assembly. We can then project manage any processes that are not in-house such as surface finishing or painting. A customer can give us the job and then relax knowing that the project will be delivered on time and to the right quality.”
Background MTL Group was established in 1995 and underwent a management buyout, led by Shirman, in 2006. In just five years since the buyout, the company has trebled sales to £50 million through a combination of investment in people, equipment, facilities and a strategic targeting of both specific sectors and geographic territories. “Most of our new customers become known to us through our advertising and sales campaigns,” says Shirman. “We take part in a lot of international exhibitions and we promote ourselves aggressively on the Internet. So a combination of physical and online presence together with our growing reputation attracts new customers.” The company started with one factory in 2006 but over the next five years expanded to a total of four sites. In February this year MTL consolidated all four factories into one new site at Rotherham. In addition, due to the requirement of some its larger product orders, the company has now established an
Ruukki is proud to share in MTLâ€™s success by supporting them with a range of special steel products Ruukki is a global player in the Special Steels sector providing innovative solutions for individual applications to a diverse portfolio of customers.
t Ruukki our success over the last 50 years has been built upon two key principles; constant product development and investment in R&D coupled with the very highest levels of customer service with an unparalleled performance in quality and reliability. Our focus on innovation and process development at our manufacturing sites in Finland enables us to offer the very latest in product technology supporting a wide portfolio of products in sectors as diverse as mining and excavation, defence, automotive and Lifting, handling and transportation. Our global network of sales offices and service centres, operating in more than 30 countries, allied to strong and established relationships with selected independent distributors allows us to offer bespoke service solutions tailored to your individual customer requirements. Beside the Special Steel grades which provide the nucleus for our activities Ruukkiâ€™s Solutions businesses work in close cooperation with our customers to develop innovative products designed to improve operational performance and lower total
cost. Special solutions are used in a range of sectors, transport and lifting devices, in large infrastructure projects, commercial and residential buildings and in automotive, offshore and renewable industries. Utilisation of Ruukkiâ€™s range of special steels, Raex wear resistant, Optim high strength, Ramor armour and Laser, has been responsible for dramatically reducing the operating costs of our customers. Lighter constructions have been developed with higher weight bearing capacity and lighter vehicles with enhanced fuel efficiency and significantly higher payload are benefiting not only our customers but also the environment. At Ruukki we consider ourselves to be a Special Steels provider and our focus on creating value for ourselves and our customers through innovative solutions drives continuous investment in technology. In the field of wear resistant steels we are market leaders in hot rolled strip and possess the broadest product range in the sector. This position has been established through investment in the revolutionary
Direct Quenching process which Ruukki pioneered in Europe. Ruukki continues to invest heavily in Supply Chain Management in order to maintain our reputation for excellent customer service. We believe that our agility and flexibility sets us apart from our competition and when something absolutely has to be delivered on time customers choose Ruukki. We also hold stock throughout Europe to support those unforeseen fluctuations in demand and ensure continuity of supply to our end user customer base. In short, everything we do is focused on enhancing the value that we offer to our customers and making sure that our supply chain is as effective as can be. We continue to work closely with MTL and to strengthen and develop a relationship that has brought us so much success. Published in association with: Ruukki UK Ltd Suite 6, Cranmore Place Cranmore Business Park Solihull, West Midlands B90 4RZ
Tel: +44 121 704 7300 Email: firstname.lastname@example.org Web: www.ruukki.com
Steel fabrications MTL Group
off-shore fabrication facility in the port of Blyth. “We produce a great variety of products, from small items such as brackets that can be picked up by hand, to products with weights of up to 300 tonnes. The facility at Blyth has been established specifically to service the offshore wind energy business where we are manufacturing welded fabrications which are too big to transport by road. Some of the transition decks that we make are 17 metres by 15 metres when they are welded so they are actually wider than the M1. As a result they have to be transported by water. “We do all the main processing at our Rotherham facility and then we transport the parts by road to Blyth where they are welded together and then shipped out by boat or barge. The Port of Blyth is a centre for renewable energy and it was the first port in the UK to have its own offshore wind turbines and there are a number of renewable energy companies that are located in and around the Port of Blyth. We saw it as an excellent facility with a deep water port and the can-do attitude of the Port’s management gels very well with the same sort of attitude at MTL. “
Rather than call us a contract manufacturing company, we like to think of ourselves as a project management company because we will project manage the entire job for the customer At the same time that the company was moving into its new premises, the UK Government awarded seven grants to help improve the renewable energy supply chain. MTL was one of the selected recipients and the funding allowed the company to acquire two of its most recent technological purchases. “That allowed us to buy the high-definition plasma machine,” says Shirman. “It also allowed us to design and build our own robot plasma pipe cutting machine. We decided what we wanted and how we wanted to do it and then sourced the components and built it ourselves.
MTL Group at a glance Location
20% of sales to 33 different countries
Contract Manufacturing and Project Management
Government investment has helped to support capital investment at MTL
“We looked at the market to buy a machine like that and it was very expensive with a very long lead time. We needed it to be lower cost and quicker so we sat down and designed one ourselves and it works very well. We designed and built it for about half the market price and it is exactly what we want. From a clean sheet of paper to operating the machine took us about four months.”
A focus on defence and energy Defence and renewable energy represent two of the most important sectors for MTL. Defence is its biggest market accounting for over 30% of the company’s sales. In comparison, renewable energy is one of the company’s fledgling sectors but already the company has established itself as a key supplier. MTL counts as its defence customers companies such as BAE Land Systems, Lockheed Martin, General Dynamics, Rheinmetall, Ricardo and Force Protection. As a specialist in the
rightstar Shotblasting is a family run business which has been established for over twenty years. At our site, we occupy three work units with a combined floor area of 30,000 square feet, around 20,000 of which is a dedicated painting area. In the shot blast facility we can handle items that are up to 14m in length, 5m high and 5m in width. The primary paint shop is attached to our shot blast facility both of which are around 7000 square feet, our crane limits range from three, to twelve and a half tonnes. Our second paint shop is around 16,000 square feet and boasts a five and a ten tonne craneage, this paint shop is
mainly used for larger projects, or multi-coat systems that require more time to fully cure. As a part of our services we offer full and comprehensive technical assistance, paint and shot blast quality reports, which generally include: all information associated with the work, paint information, thicknesses, average thicknesses, analytical graphs, climatic information,
certificate of conformity and the shot blast profile. We pride ourselves in offering a specialised service and a speedy turnaround of work i.e just in time. Should you require further information about any of our services, or if you wish to view any of our facilities, please contact our Operations Manager using the information below.
Published in association with: Brightstar Shotblasting and Coatings LTD Tel: 0114 261 8532 Fax: 0114 244 1538 Email: email@example.com Web: www.brightstarshotblastingandcoatings.co.uk
Steel fabrications MTL Group
processing of armour steel, one of the reasons for the company’s strength in the defence market is down to the literal strength of its products. Currently, MTL is working on a number of important defence programmes including the armour upgrading of the Snatch Land Rovers as well as the construction the Snatch’s replacement, the Ocelot. “The snatch Land Rover which is being used in Afghanistan and has been used in Iraq, has been widely criticised because it is being used to do things that it really wasn’t designed to do,” says Shirman. “The armour protection level was not as good as it could be for the environment
We are a part of the supply chain that is busy gearing up to manufacture the quantities that are required to support the Government’s renewable energy target
turbine, when the boat arrives at a structure, the technician will transfer from the boat to a landing platform. There is then a ladder which leads to an intermediate deck and then a second ladder which leads to a large deck on which the turbine is mounted. That construction comprises the boat landing system which is what we manufacture.” Having just secured an order for 98 boat landings for a Norwegian customer supplying a German energy company, MTL is confident of the future strength of the renewables
in which it was being asked to operate. So there has been a big programme to increase the armour protection level by adding on additional armour. We have been heavily involved in cutting, bending and welding the add-on armour for the Land Rovers.” The Snatch vehicles are being replaced by a new vehicle, the Ocelot, which has now been renamed the Foxhound by the MOD. It is designed and built by Ricardo, a British automotive engineering company and Warwickshire-based Force Protection Europe. The vehicles are due to be ready for troop training this year. The Foxhound, partly designed by Formula 1 engineers, has a V-shaped armoured hull designed to safeguard those inside from IEDs. MTL is working very closely with Force Protection and is supplying the armoured hull. MTL has also been very active of late in the renewable energy sector and has established itself as the UK’s number one supplier of boat landing systems. Shirman explains: “When an engineer goes out to visit an offshore wind
market. “We think that this is an area of significant growth in support of the UK government strategy to install close to 8000 wind turbines around the UK coast over the next 10 years. We are a part of the supply chain that is busy gearing up to manufacture the quantities that are required to support the Government’s renewable energy target.” In addition to the defence and off-shore wind energy markets, MTL has developed expertise in other sectors including: Construction machinery, with customers including Caterpillar, JCB and Komatsu The rail sector, with customers such as Bombardier Recycling sector, with customers such as refuse vehicle manufacturer Dennis Eagle Quarrying sector, with customers including Sandvik and Terex. Wave and tidal renewable energy
Continued growth and improvement MTL Group is a six sigma company and has deployed six sigma throughout the organisation. With
three black belts (trained by Caterpillar) and six green belts (trained in–house), the company has a number of teams constantly running improvement projects. “We use statistical process control in many areas of our business and the six sigma system is being rolled out throughout the company,” says Shirman. “Our objective is to train every employee to at least yellow belt level. We are seeing significant benefits from a number of the projects that the teams have been running both in terms of quality improvement and cost reduction.” As well as continuous improvement and investment in equipment, MTL undertakes a considerable investment in its people through a well developed apprentice programme. “We will hire a significant number of about 15 this year for what we call a traditional engineering apprenticeship.” The company also encourages applications from engineering graduates as well as welders and machinists. While skill level is important, Shirman says what the company really looks for is the right attitude. “This is a very progressive and growing company and we need the right people who are keen to learn and who want to work hard.” And it is that exact mentality that has led MTL into its current strong position. With plans to continue to invest in the company in order to grow and support its customers, MTL is ensuring that it is not only able to satisfy current market requirements but is positioning itself well to take advantage of future opportunities.
Pharmaceutical Seven Seas
The Seven Seas warehouse after the fire
Just after The Manufacturer last spoke to Seven Seas, a catastrophic fire broke out at their finished goods warehouse, destroying all of its stock. By following an established emergency plan the company was not only able to establish effective short term solutions, but also seize long term benefits for the site. George Archer talked to Andrew Shaw, director of operations, supply chain and R&D at Seven Seas in Hull.
Seas is an iconic brand in the UK. Not only does the company have a large domestic market, it also exports around half of its consumer healthcare products abroad - to the Republic of Ireland, Middle East and the Caribbean. With a history spanning just over three quarters of a century, its brand possesses a clear aptitude for staying-power in the minds of British consumers and is successfully increasing its presence abroad.
Pharmaceutical Seven Seas
Assessing the damage The fire in May last year completely gutted the finished goods warehouse at the site, leaving the factory with virtually nothing in terms of finished products. “The production lines weren’t in operation at the time because it happened on a Sunday morning. No one was hurt - there were only security personnel on site at the time. However, we lost all of the goods in the warehouse. As well as all our domestic market products, a significant proportion of our export stock was also lost,” says Andrew Shaw. The finished goods warehouse was separate – but only just – from the factory, so the actual production facilities escaped damage from the fire. Shaw ruefully explained that prior to the fire Seven Seas had carried out a lot of work in terms of stock reduction, which meant that extra space was available in the finished goods warehouse for components. After taking advantage of the extra space and storing the components there, they were destroyed in the fire. This meant that resuming full production after the fire was potentially very difficult because of the lack of crucial components such as bottle caps. Every manufacturer, and indeed company needs to have an emergency recovery plan, and Seven Seas is no exception. “We had a plan, and we implemented it immediately. There are two parts to the plan; one is how to deal with the crisis on site, i.e. the question of who does what.” The second, Shaw says is how to manage the customers and other external stakeholders. “You have to manage the brand externally, all your customers and their expectations.” “We established a crisis team an hour and half after the fire, in the early
Seven Seas at a glance Group structure
Seven Seas is part of the technical operations division of the German-based Merck KGaA, a global pharmaceutical and chemicals group.
Seven Seas UK Location
Hull, East Yorkshire
A range of consumer healthcare supplements: cod liver oil products, pro-biotics, multi-vitamins and herbal remedies, along with a range of supplements aimed at children under its Haliborange brand.
John Redman, managing director; Andrew Shaw, operations, supply chain and R&D director; Grant Forbes, operations manager at Seven Seas; Barry Hilton, site engineering manager; Mark Bough, customer services and warehouse manager.
Boots, Tescos, Morrisons, Sainsburys. 50% of goods go to the UK domestic market, with an export market comprising 50%.
hours of Sunday morning. When you follow our emergency manual, you’re able to take control of the situation and you switch from your everyday managerial role to a command and control role. The extraordinary thing was that people responded to it, and I would go as far to say some of us actually enjoyed solving the various problems that constituted the crisis.”
On the rebound Arguably, the most positive thing to come out of the crisis was an opportunity arising from another Seven Seas owned site that previously housed another business. The site wasn’t far away, and had an empty storage and production facility. During the crisis meeting on Sunday morning the team decided that Mark Bough, the leader of the Customer Service and Warehouse team at Seven Seas would go to the site that day to see what was possible in terms of an interim storage solution. They concluded that they could use the warehouse on the site to store any finished goods
Seven Seas’ JointCare range
Pharmaceutical Seven Seas
produced by the factory. What was initially a severe problem was solved, and transformed into a long-term solution. The building was stripped and refurbished, and to this day serves as the new finished goods warehouse. Shaw proudly talked of the effectiveness of the crisis team at Seven Seas: “They were so successful on the rebound, that to this day we use the building as our main storage facility. What was an interim warehousing measure designed to keep the factory running at some sort of capacity turned out to be a really fantastic long-term solution. We’ve even consolidated a 3rd party storage facilty into the building, saving costs.” Following emergency plans rarely provides anything near solid answers to the various problems that a crisis throws at a company, but in this case the plan gave clear assignments and roles to different people on the crisis management team. After this, the team was able to go about their tasks and adapt to the situation. “It provided the basis for a pragmatic and comprehensive solution, based on the ideas of all members of the crisis team,” says Shaw.
Assuring the customer base It could be argued that one of the most impressive things about Seven Seas and its reaction to the crisis was the way in which they handled customer demands in the period after the fire. The company contacted all of their major customers to tell them that deliveries wouldn’t resume in that week. However, the customer services team at Seven Seas kept talking on a regular basis, updating them on the situation periodically, and ensuring they knew when the supply was likely to resume and what products would be available. The company had planned a major promotion for their MultiBionta product that was due to go live in store within a month, but the fire had destroyed the stock. However, the option to pull the plug was never considered. Instead the Seven Seas teams replanned resource, leveraged supplier relationships and used their strong business spirit to meet the launch challenge. Thanks to their efforts the promotion was delivered on time and in full.
The new refurbished warehouse
We’re seeing instantaneous results in efficiency after the implementation of the lean programme. We’re completing changeovers quicker than we’ve ever done them before Andrew Shaw
Ingredients for innovation When asked about the focus on innovation and R&D for product lines at the company, Shaw says that despite the crisis, the company has continued to develop its range. “With regard to our JointCare product range, we’ve reformulated the capsule ingredients, and we’ve changed the packaging.” “We’ve managed to reduce the size of the capsules, and we now have more attractive colours on the capsules, but, at the same time, we’re not taking away from the actual ingredients. At this point in time, no one else in the sector is doing this,” he says. Since TM last spoke to the company, they are now working closely with their parent, Merck on a 10-year capital investment strategy for the site. Commenting on this investment plan, Shaw says: “A really exciting thing for us at Seven Seas is deciding what areas our money is being invested long term, and over the next two years. We’re deciding how we’re going to become more flexible in terms of being able to handle new and more complex processes, so as to remain competitive domestically and internationally, while driving down costs.” Seven Seas has previously relied heavily on continuous improvement techniques and has demonstrated a great deal of success in this regard. Now however, the focus is on investing in the actual factory itself in terms of machinery and improved production line technology.
Getting it Right as a Supplier Partner G
walia packaging Group, which consists of closure manufacturer Dragon Plastics ltd. and container manufacturer Gwalia Plastics ltd, is the only independent SME able to produce matched closures and containers. This is very important, particularly for the pharmaceutical industry and even more so for child resistant packs. But, back to the beginning; Dragon Plastics was established in South Wales in 1968 where it occupies almost 100,000sq/ft of factory and warehouse space with surrounding land for expansion, all freehold. It is a family company and managing director Rod Parker is the third generation of the family to take charge. Early in its history Dragon espoused a business model that was centered on providing excellence in products, ideas and service to all its customers. Achieving these objectives has meant substantial investment in capital equipment, systems and accreditations as well as the creation of a large amount of intellectual property. It was, to a very great extent, this business philosophy that was responsible for Dragon, nineteen years ago, being appointed a
supplier to Seven Seas, an association that has lasted to this day. In June 2007 Dragon’s shareholders acquired the business and assets of container manufacturer Riverside Plastics and a new company Gwalia Plastics was formed, from this acquisition the group adopted the name Gwalia. Over the last four years Gwalia has demonstrated to the market the tremendous advantage of dealing with a combined container and closure manufacturer. During the period, four -squeeze and turn- child resistant container/closure combinations have been developed from scratch, accredited as child resistant under the international standard ISO 8317:2003 and adopted by two supermarket groups and a high street chain. As well as this, a small volume range of child resistant packs, using the Gwalia KidloK push and turn system, has been launched and successfully tested under ISO 8317. Also in 2007 the group acquired local toolmakers AMJ and now all blow moulding and 80% of injection moulding tooling is made on
site, with concomitant customer benefits. Gwalia attributes its market success in child resistant complete packs to the fact that all components are designed and manufactured effectively ‘for each other’. This ensures perfect fit, design elegance and use of minimum quantities of materials, with obvious concomitant environmental benefits. Better design and manufacture, superior systems and suitable accreditations are all very well, but what turns a supplier into a real partner? In Gwalia’s opinion it’s the willingness and ability to literally ‘go the extra mile’. In the case of the company’s relationship with Seven Seas an opportunity to prove this occurred last year. Disasters, in this case a fire at one of Seven Seas warehouses, make sad reading and recovery is all the more heartening. Part of that recovery was due to Gwalia’s ability to make several weeks supply of product in a matter of days and ship it to Seven Seas so no production was lost. And according to Gwalia’s Rod Parker; ‘It’s what we’re in business to do, that’s how we get it right as a supplier partner.
Pharmaceutical Seven Seas
Lean skills In previous talks with Seven Seas, the company was employing engineers to train operators at the plant to take on the various tasks involved in product changeovers. This training is now complete, and results are clearly evident. “We’re seeing instantaneous results in efficiency after the implementation of the lean programme. We’re doing changeovers quicker than we’ve ever done them before,” reports Shaw. “It gives the operators on the line the ownership of the changeover. With the operators leading more of the changeovers, the engineers are freed up to work on technical improvements. It’s about taking ownership – basically, now it’s our changeover. When the line is running well, operators on the production line have the satisfaction of saying; ‘I did that, I’m responsible for my line running efficiently and I’m getting good results’,” Shaw adds.
The green agenda As a manufacturer not classed as an energy-intensive user like those producing steel, ceramics and glass, one might jump to the conclusion that the focus on emissions might be low on the priorities list for Seven Seas. However, rather than see it as another legislative burden, it has begun to see it as a benefit rather than a curse. Shaw explains: “We’ve moved away from the position of seeing the government’s environmental agenda as a threat just because it’s complicated and legislative, and we’ve started to find some opportunities in how we manage waste. We are now recycling on a much bigger scale than I thought we would be at maybe two or three years ago. We’re heading towards eliminating any land-fill waste, which is an achievement of which we at Seven Seas are immensely proud.”
Capping issues A commonly discussed concept in manufacturing is lean. Seven Seas is no stranger to this, and on asking Shaw about lean initiatives in place at Seven Seas or in the pipeline, Shaw uses an example of a faulty capper device in the bottling section of the factory to demonstrate the company’s lean practices. For a period of months, the capper device was causing quality defects and dropping over 100 caps onto the factory floor every day, and hitting line OEE. Engineers were called in to fix the device, and a lot of the time the capper seemed to react positively to the repairs. However, it kept continuing to revert back to the same fault. “The lean team at Seven Seas came in and using systematic CI tools found the correct variables that were causing the performance issues,” says Shaw. “The team used lean techniques to separate myths and rumour from hard facts and evidence.” The team that solved the problem found that in the previous months even the equipment manufacturer
had been fixing the wrong problem. The end result was a capper with increased efficiency and quality and decreased waste. The fundamental thing according to Shaw is that three months ago, the team at Seven Seas were making initial plans to buy a new capper. But the initiative put in place transformed the capper, eliminated the quality defects, and the company saved money, as well as increasing the overall productivity of the machine. The downtime has dropped from around 90 minutes per day to 30 minutes per week.
Meet the parents In the past year the company has joined a Global network of factories in the pharmaceutical division of the parent company Merck Serono. This has proved to be hugely beneficial, according to Shaw. “Now that we are part of this group, we’re finding real opportunities, because there are a lot of things to talk about in terms of shared problems and shared solutions. In the past several months, the continuous improvement and operations managers have been on black belt sigma 6 courses, where lean practitioners from different manufacturing cultures meet and share best practice.” Seven Seas now has access to experts within the group, which they never had before. They can now bounce ideas off each other, and share the challenges and solutions they have experienced. Shaw dispels the common misconception that these groups just want positive reports and promising statistics. He says that through the group Seven Seas has actually found they now have access to the resources of a modern, global organisation.
Seven Seas’ Haliborange product range
Installing a sealed manhole in Springwell, Barnsley
Much of the UK is still relying on a beleaguered Victorian water drainage system which is no longer fir for purpose. Stepping into the breach CPM Group is tackling this mammoth infrastructure replacement challenge head on, and that is just a fraction of their activity. George Archer reports on an impressive operation.
Group has sites in Kent, Staffordshire, Yorkshire, Scotland and Somerset (Frome) where its head offices are based. Out of these sites the company transports vast volumes of products for a range of applications in the UK. Replacing the UKs outdated water drainage system is just one project; others involve work in the rail, security sectors as well as other infrastructure projects. Furthermore, CPM strategy in choosing its suppliers and investing in key equipment mean its products are unique within the UK.
Paying to stay ahead of the game Mark Dix, operations director at CPM makes sure TM knows about the new MasterFlex pipe machine straight away. Before showing the new machine, he points out the older, less efficient machine. It’s a rusty skeleton, but is still in perfect working condition. Moving over to another section of the building on site in Mells, Mark points out the new pipe machine. Over the harsh cacophony of various machinery inside the complex Mark says: “The new MasterFlex pipe machine can manufacture pipes in diameters from 375mm – 1200mm. It was bought from a Danish company called Pedershaab in 2008.” The MasterFlex pipe machine is impressive; the Zublin reinforced, it is a a sight to see. Sparks fly from it like fireworks and with just one person visible using it, it’s quite clear that within this department and in comparison to the old machine, the sizeable investment has been worth it. “Our old machine needed a lot of labour to operate it at any given time, and it didn’t produce many units. It also was very expensive to run, and due to it’s age, not very environmentally friendly. Because the machine is so new compared to our old one, our production has doubled and our changeover times have halved, this means we run the machine less often” says Mark Dix. “Whereas before we had two crews, we now have one crew running the new machine. We were able to naturally lose around five of our workers through retirement. Whereas before we had to work double shifts, we save time by running single shifts,” he adds.
Construction CPM Group
This new machine has cut costs across the board. The CPM site in Mells now uses less water, less electricity and employs less staff as a result of the MasterFlex. Consequently, it has also made the site more environmentally friendly.
Redi-Rock As the widely recognised leader in its field, CPM has to have some niche products on offer to customers in the UK. When asked about this, Paul Cartwright, commercial director UK at CPM says: “Our site in Pollington, Yorkshire is the leading producer of Redi-Rock™; this is a ‘Lego™’ style block with a decorative face that can be used as a retaining wall or force protection for anti-terrorism, or any other security installation.” CPM has an exclusive territory agreement from Redi-Rock™ international, and this is the pinnacle of their advantage over all other competitors. As Paul says: “RediRock™ has now been proven in every sector of the construction industry: including road, rail, water, housing and industrial applications.” “Most recently, Redi-Rock™ has been successfully tested by the Transport Research Laboratory to test standard PAS 68 – a test that provides assurance that vehicle security barriers will provide the level of impact resistance they are aiming for. As a result, Redi-Rock™ is now being used as hostile vehicle protection, guarding the perimeters of buildings and infrastructure of national importance,” he adds. The other Competitor products lack the Architectural finish and robust connection designs. As well as Redi-Rock™, CPM is one of only two companies in the UK currently purchasing and installing 1200mm – 1500mm diameter sealed manhole chambers from an Austrian company called Schlüsselbauer. Mark says of these “perfect” sealed manhole chambers: “These manholes stop the ingress of water. One of the problems in the UK when flooding occurs is that our old Victorian drainage system cannot cope. In Europe the manholes are sealed so no water can escape when flooding does occur. What goes in doesn’t come out. When the water does come out from the drainage systems and this type of
manhole is not installed, raw sewage can potentially leave the drains.” Obviously, the contamination of wastewater with raw sewage in the event of a flood is something to be averted, and in the UK it gives CPM a unique selling point. Also, the time taken and labour required to construct a sealed manhole is greatly reduced over the more traditional methods. This is due to the pre-formed base that can be made to any specification as detailed by the customer. Mark also points out that CPM are involved in bespoke concrete, producing to customers specific designs. “In this regard, we do a lot of work for the railways; there’s a product we make called Stepsafe, which consists of modular components which can be installed to lengthen existing platforms, or construct new ones, with minimal disruption to train services. We’re quite big on this,” he explains.
A stable workforce One of the well-known ailments of the manufacturing industry is the lack of young people choosing it as a career choice. Although CPM runs a maintenance apprenticeship scheme at its site in Leek, Staffordshire, management are looking in to running similar schemes at their other main sites in Somerset and Yorkshire. Mark comments: “Manufacturing isn’t attractive to younger people. It’s because the country as a whole hardly makes anything anymore – we buy it in – we’re a national importer of goods. To try and get young people into a relatively hardworking, noisy and seemingly dirty industry – which
CPM Group Redi-Rock(TM) retaining wall solution in Birmingham
many agree it isn’t so much now – they don’t want to know, unless its computers or banking.” Although this is a problem, one of the upsides is that the workers at the CPM site in Somerset are a stable workforce with a vast knowledge of the industry. This adds to CPM’s competitive edge in their field. With a relatively old workforce, experience and knowledge is high; even the younger employees have been working at the site for five years or more. Mark comments on the average age of his workforce at the site in Somerset: “I think the youngest person at this site is 25, and the oldest is 65. We’ve got one guy here who’s done 45 years of service. I’d say that over half the workforce here has done over 25 years of service.”
Looking after the crew Mark comments on his staff retention measures: “We are proud of paying our staff above average wages, and having a better health and safety environment. We now have less accidents and better housekeeping.” Deputy managing director Nick Gainsford has made a huge effort to make sure that NMHA (Near-Miss Hazard Alert) cards are placed around all of the buildings on the site, so that the employees identify risks and potential accident areas before they happen. CPM wants its employees to buy into health and safety and treat it as a priority. CPM treats behavioural safety as a high priority, and in effect they share responsibility for safe working to the shop floor. It amounts to investment in the factory environment, which subsequently benefits the workers at the company.
Adding to this, Nick Gainsford says: “Each factory has three monthly health and safety meetings, at which a director usually attends. The factory also has a ‘works committee’ that meet at regular intervals not exceeding six months, so that issues in the workplace and employee welfare are addressed and discussed. We have several Key Performance Indicators in place to monitor the efficiency of the machines; these are reported to the executive board on a monthly basis.”
The green agenda CPM is arguably well placed to claim it is extremely environmentally friendly. It does not emit carbon on its sites, as it only uses concrete to manufacture all the products. It uses electricity from the national grid to power all the machinery on site. This is the case at Mells, Leek and Pollington. Mark comments: “The only rubbish that leaves the site is the rubbish inside the wheelie bins. One other environmental asset we have is the employees’ on-site garden. They grow shrubs, flowers and various other vines, even vegetables. The whole team likes to do their little bit!” Nick Gainsford says: “CPM offers a large range of environmental products such as hydro-brakes, downstream defenders, weir walls and storm attenuation tanks. We have a strong approach to not just CPM’s effect on the environment, but to what our customers can do about their effect too.” All waste concrete aggregate is stored on site and crushed, so that this material can be used in the products. This replaces virgin aggregate; subsequently it helps to reduce CPM’s Carbon footprint. Also, all the sites are within a few miles of the aggregate source – this again helps our carbon footprint. CPM uses pulverised fuel ash where possible. This waste product from coal-fired power stations reduces the amount of cement that’s required in the concrete produced by CPM, and also helps it to meet the British Standard requirement for sulphate resistant concrete. “Our sites all recycle rainwater, which is used in our concrete mixes and also in dust compression sprays so that we don’t upset our neighbours. On-site buildings are insulated where possible so that we can contain heat to the greatest extent possible while reducing the impact of noise on our neighbours. Corporate social responsibility is something we take very seriously,” says Mark.
V12 at P&B Metal Components S
apphire Manufacturing Systems (SMS) supply and support P&B Metal Components Ltd with their ERP Business Solution. A key element of this overall package is the Design Manager, a multi-user rules based Bill of Materials Configurator. Design Manager ensures that consistent and accurate Estimates and Costings can be prepared based on rules and questions held within the system. By entering information about each new product, an estimate can be quickly built up based on the materials and labour/processes
required, but can also include other factors such as scrap allowances, tooling capital cost amortisation, refurbishment costs, packaging, fixed costs, margins and other allowances. The ability to provide a rapid costing in a make-to-order situation, to know that it is accurate and that it includes all extra cost influences is key to P&B Metal Components providing their first class service and rapid response to their customers. Once an order is received, Design Manager controls the release of the Bills of Material
to Production (including all relevant engineering control documentation). As Design Manager also holds all previous iterations of a design, it is possible to withdraw the current BOM from Production and replace it with an earlier version if the customer specifically needs it as a spares requirement for example. Written in the UK using the latest Windows technology, Design Manager is an essential and reliable estimating, costing and BOM issue control solution for all manufacturing companies.
Precious & Base Metal Components
commodity P&B Metal Components has just turned 50-years old. But perhaps the greater achievement is that more than 40% of its low cost contract assemblies are exported to Asia. Phil Penney and Colin Richardson tell TM how this manufacturer is futureproofing itself with a new plant refurbishment project driven by productivity needs, a 5S programme and the devotion to delivering prices that customers want.
Metal Components has come a very long way since its one-man beginnings in north London 50-years ago. Relocating to Whitstable in 1968, the company supplied contacts for switchgear and telecommunication relay manufacturers. Half a century later, the business is a global supplier of a vast range of contact assemblies. It operates three sites in Kent and Sheffield and employs 210 extremely loyal staff.
Today, with commodity inflation rife and new global business opportunities in a competitive market, the company’s key executives chose to invest heavily in plant to keep ahead of the game.
Investment – customised controls The company is about halfway into a comprehensive 2.5 year machine refurbishment project, where investment to date tops £250,000. “Working with Able Controls, our investment involves stripping all the welding and multiforming machines down and replacing all the electrical systems with Siemens and Omron PLC-controlled
Precious and Base Metal Components
P&B Metal Components at a glance Business
Manufacturing a wide range of contact assemblies, rivets, contact strip, pressed and turned parts.
Stamping and pressing; contact welding machines; multi-forming machines; heading machines; cold-bonding mills; added value operations inc assembly and screw insertions; new turned parts manufacturing services.
41% to Asia Pacific countries, 33% to Europe, 18% to the UK, 8% to North America
Turnomatic, October 2010
Welding and multiforming machines – upgrading all control system technologies. Warehousing restructure to improve product flow, storage capacity and access.
Phil Penney, Engineering Director Colin Richardson, Operations Manager
instrumentation, with cameras for quality checks and more,” says engineering director Phil Penney. These new control systems will be plug-and-play, allowing the company to move them between machines should a fault arise. “The cameras and sensors will improve quality and output and increase our efficiency. That’s what customers want,” says operations manager Colin Richardson. Precious and base metal prices have never been higher, with silver and copper peaking to historic highs this year. With such inflation, the pressure is on to manufacture efficiently. This investment was unavoidable, says Mr Richardson. “With rising metal costs, the margins are not there and everyone wants cost-down. There is an expectation for us to ‘engineer our way out’, and we invest a lot of time with large customers on cost-down exercises and developing best practices.” This encourages innovation, and P&B redesigns products to be manufactured differently. Value engineering exercises with customers are common. Part of the productivity mission is to get lean. P&B is in the middle of a new 5S and lean manufacturing programme. “What do our customers want from us?” asks Mr Penney. “On-time delivery, reduced lead time, reduced stock holding – the usual standards. Lean and 5S can help achieve these.” Colin Richardson adds: “There’s an expectation in the market when like-forlike manufacturers work with suppliers, many suppliers are very lean in their approach so they want to transact with
like-minded companies, especially in the automotive sector. We want to be in a place where any customer can talk and transact with us in the same language – this helps us to understand their business too, to be more responsive.” Working hard to reach price points that are mutually acceptable is important, but service and quality are equally so. Mr Richardson says the company has developed a competitive advantage in its knowledge of customers’ needs and their ordering patterns.
Employee loyalty, a zeal for making things There’s something about Whitstable – it might be the bracing sea air, or maybe the Kentish hops – that makes people very loyal to their employers. The reception at P&B Metal Components is adorned with long service awards – two employees’ have been here for 41-years and it’s not uncommon for staff to serve for 20 or 25 years. “People enjoy the culture and philosophy,” says Mr Richardson. “This is a fast-paced company, very responsive and progressive. We are all about manufacturing and the philosophy is about how the rest of the business supports that manufacturing.”
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Precious and Base Metal Components Diverse global markets Mr Penney is proud of P&B’s export record. “Forty one per cent now goes to Asia Pacific countries and just 18 per cent to the UK. It was more like 80 per cent to the UK 20-years ago. We at P&B are proud of this change; particularly having achieved this during difficult economic times.
There are plenty of problems associated with manufacturing, but you do get a buzz from it when something goes right Phil Penney, Engineering Director How can P&B Metals explain why the China region, as master of low cost manufacture, is such a big market? The answer: High automation, meaning 30:1 person ratio between Chinese competitors and P&B, as well as its consistent quality. P&B now has full-time sales representatives across the region and is constantly developing new customers. Growth can also be attributed to P&B’s responsiveness. Customers, says Mr Richardson, don’t always get it right. “It is not uncommon for the customer to say that they’ve experienced a stock loss or, they’ve had a big increase in demand,” he says. “P&B has developed a commitment to turnaround really quickly with new products. It’s common for us to work into the night and
work weekend shifts, to put orders on a plane. That differentiates us in this market.” Productivity is, as ever, essential in this area of manufacturing. “Clearly we can’t compete on labour with China, but we far exceed their productivity rates and I believe we get better quality as well,” says Penney. With the high cost of raw materials, customers don’t want to keep stock and there is pressure for P&B to be leaner and more responsive. That’s a science when operating in such geographically diverse markets. P&B operates locally managed stock policies in the region to overcome logistical concerns of its customers.
Your greatest asset While inflation is the visible enemy, in the long term the bigger risk to P&B could be access to experienced workers in both UK sites. The company has two teenage tool-making apprentices in their Whitstable tool room and another two in the contact welding section who are being developed. “It’s about getting people with the passion” says Richardson. “From agency workers who “get” our business values – customer service, responsiveness – we’ve got some really good new blood coming through.” P&B offers training possibilities to its entire staff. If they identify skills needs for an individual that they can’t provide in-house, P&B will source it. The company has offered a one-year placement to two or three local people struggling to find a job. “By the time they get an NVQ, if they chose to, and have our training boxes ticked, hopefully we will be in a position to keep them,” says Richardson. “There are a few programmes locally that P&B are involved with to get people out of the ‘can’t find jobno experience trap’. The company is now looking to develop a work-based NVQ and Train to Gain. Local Colleges have been in to review its needs, whether enhancing Basic English and Maths or trade-based NVQs.
Happy birthday Fifty years after its humble beginnings, P&B Metal Components is in a good place. With over a third of product exported to Asia, major new business projects, and a super-loyal workforce, confidence is high that this manufacturing company has a good future. “Our mantra is: total customerfocus, quality, high service levels and product knowledge,” says Richardson. “If the business can maintain those priorities, we will keep growing.”
Asset finance wasn’t the only area opened-up to innovation in 1861
The pin-tumbler lock patented by Linus Yale Jr in 1861
It’s fitting that we should feature a lock to celebrate Lombard’s 150 years of innovation in asset finance. Because Lombard started life in 1861, the same year that Linus Yale Jr patented his pin-tumbler lock – the forerunner of the modern lock. We’ve also pioneered new approaches, throughout our history, in business finance – helping companies from every conceivable walk of business to build for the future. We have funded everything from IT to production lines, heavy plant to agricultural equipment. And we have helped businesses to expand, to modernise and to update their technology, often enabling them to release working capital at the same time. To find out what we’ve been up to over the last 150 years, visit 150years.lombard.co.uk Security may be required. Product fees may apply.
Registered Office: 3 Princess Way, Redhill, Surrey RH1 1NP, Registered in England No. 337004
Published on Jul 5, 2011
July's Manufacturer contains an interview with Charles Morgan, MD at Morgan Motor Company, an article on the UK and their relationship with...