Celebrate Manufacturing for a Better Britain Having emerged from the recession stronger, leaner and with many new initiatives in place, UK Manufacturing is ideally placed to make a better Britain! Established over 10 years ago, The Manufacturer of the Year Awards competition is specifically designed to celebrate the strength and diversity of UK Manufacturing. So enter today and showcase your achievements. For further details visit www.themanufacturer.com/awards
www.themanufacturer.com May 2010 Vol 13 Issue 05
EntEr nOW
www.themanufacturer.com May 2010 Vol 13 Issue 05
What manufacturing wants from a new government
The categories this year are: Leadership and strategy Innovation and design World class manufacturing People and skills IT in manufacturing Supply chain and logistics Operations and maintenance Sustainable manufacturing SME manufacturer of the Year Export manufacturer of the Year Financial and professional services Advanced manufacturing And the winner of winners category: The Manufacturer of the Year For further details contact Alexis Catchpole on 01603 671300 or email a.catchpole@sayonemedia.com The winners will be announced at a black tie gala dinner and Awards ceremony at Chesford Grange, Kenilworth on Thursday 18th November 2010. if you are interested in sponsoring an Award, please contact David Alstin on 01603 671307 or email d.alstin@sayonemedia.com
Interview David Fox
CEO, Power Pannels Electrical Systems
Finance and Pro Services Pensions: life after defined benefits
www.themanufacturer.com/awards
People and Skills Modern apprenticeships reviewed
Supply Chain and Logistics Demand forecasting methods
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Answers for industry.
Editor’s comment
Who will have the courage of their industrial convictions? By the time you read this we will likely have a new government. As I write the Conservatives are ahead in the polls, Cleggmania has gripped the nation and change is in the air. Even if Labour retained government, big changes in the Cabinet are expected, and a hung parliament looks increasingly likely. In the final Prime Ministerial television debate last night, held in Birmingham, a woman asked: “What will your government do to encourage manufacturing? We can’t all work in shops and offices.” In their opening addresses, both David Cameron and Nick Clegg referred to the need for the UK to make more things, Mr Cameron saying that it’s not right or sustainable that we spend so much money buying goods made in China while the country borrows money from China. Times are changing, gradually, and given the right tax relief for buying capital equipment, many small and medium-sized manufacturers can make components and goods that might have been sourced in Asia in the last 20 years – see the article Location, location, location on page 29. All the party leaders rose to the subject of manufacturing with apparent feeling. But did what they say convince you? Terry Scuoler, chief executive of EEF, said manufacturers wanted evidence of how the next government will think and act differently. “Instead, what we heard was a sterile debate that failed to give reassurance that they understand the immense economic challenges the UK faces and, the vision as to how they will tackle them to create investment and jobs here in the UK.” Mr Cameron was guarded about his policy on corporation tax cuts – help for all businesses, he said, not just large banks – being funded by a scrapping capital allowances and business tax relief. Many SME companies will be disappointed with this stance, and if he becomes prime minister, they will be keen to show his party how important business tax relief is if you really want to encourage more British manufacturing independence through investment. Time and again on this question in the debate, the three PMs-in-waiting returned to bank lending as the silver bullet to get manufacturing moving. How difficult is it for SME owners to access bank finance in mid-2010, without securitising their homes? This question needs thorough investigation so the new government can apply pressure on banks to lend at low rates, if and where it is needed. Our Lead article attempts to summarise what manufacturing wants from a new government. Let’s all look forward. Will Stirling, The Manufacturer
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Editor’s comment
News and features 04 News
Manufacturing news
11 Manufacturing appointments On the move
Find out who’s heading where in manufacturing
12 The big picture
16
In need of growth? Break glass… Peter Templeton of the University of Cambridge’s Institute for Manufacturing gives some pointers
13 Economics
Glass half full… Steve Radley discusses the UK’s ability to sustain economic growth
15 Business as unusual
Standard work is anything but standard Anand Sharma discusses sustaining the results of business improvement
16 Lead story
What manufacturers want Tim Brown investigates the post-election issues that UK manufacturers want addressed
29
25 Interview
Fox unearths a golden goose Will Stirling interviews David Fox of Power Panels Electrical Systems
29 Leadership and lean
Location, location, location West Sussex-based Lamina Dielectrics is something of an export success story, as Malcolm Wheatley discovered
34 How do they make that? Brompton Bicycle
TM investigates how foldable bicycles are manufactured
34
38 Innovation, design and the product lifecycle Unlocking knowledge and understanding
Tim Brown investigates a number of university collaboration schemes for manufacturers
Finance and Professional Services 42 Don’t be shy in retiring
What went wrong with defined benefit pension schemes and which schemes are replacing them?
47 Are insurance premiums set to increase in 2010? Stuart Roothan of RK Harrison comments
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Contents Editor’s comment
55
H e a lt h a n d S a f e t y S u p p l e m e n t
H&S is now a hot issue, high on the boardroom agenda, as Colin Chinery reports
People, skills and productivity
Employee of the month 50
Max Willcox of Alumet Systems
Education and industry: manufacturing the links 49 Mark Young explores apprenticeships
Supply chain and logistics 64
Demand forecasting reduces guesswork in supply chains
An efficient and responsive supply chain is essential for competitive advantage, says Brian Davis
IT in manufacturing
ERP Connect 2010 69
Post-match analysis of The Manufacturer ERP conference
IT news wrap 75
Keeping you up to date with what’s new in IT
81
Special feature From spaceship to electric car 81 Red Dwarf actor Robert Llewellyn discusses his involvement in the CABLED electric vehicle programme
Manufacturinginaction Sponsored by TBM Consulting Group
Factory of the month
84 Torin Sifan The air apparent Edward Machin meets the manufacturer of air movement products for whom the introduction of ‘green’ energy legislation has proven anything but restrictive
92
Auto Windscreens At the cutting edge
98
Talley Group Talley ho
105 Remploy Furniture Sustainable sustainability 109 Aesica Pharmaceutical The best medicine 117 UYT Core strength 123 Covpress Developing resilience 126 Fort Vale Executive ambition
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Newsinbrief
AUTOMOTIVE
Promising Q1 for Rolls-Royce
AUTOMOTIVE
Japanese car giant Toyota has taken a Lexus four by four off the market in the US because there are fears it could roll. US consumer group Consumer Reports said that when it put the GX 460 model through emergency handling risks the back end of the vehicle was prone to sliding to the point that the vehicle was liable to roll over before the car’s electronic stability control system acted. Toyota said it believes the model is safe but suspended sales as a precautionary measure.
A grand total of 372,401 new cars were registered through the recently concluded car scrappage scheme. Introduced in the 2009 budget, the scheme provided a £2,000 discount on the cost of a new car when one over ten years old was scrapped. Government provided half of the discount while the rest was footed by the manufacturer. An £300m budget was provided but late last year the scheme was extended by a further £100m after the industry voiced concerns.
DRB-Hicom has signed a memorandum of understanding with Potenza Sports Cars, manufacturer of the Westfield and GTM brands sports cars. The parties will undertake a joint technical and commercial feasibility study to look into the possibility of manufacturing Potenza sports cars for the Malaysian and extended Asia Pacific market. DRB-Hicom believes this collaboration paves the way for the company to become the exclusive importer, manufacturer and distributor of Potenza sports cars in the Asia Pacific region. STANDARDS
The British Standards Institution has released a new standard which provides a best-practice guide for remanufacture, to provide a more “environmentally acceptable” alternative to recycling. The BSI said recycling is often bad for the environment in the context of the energy used to melt down products and then create a new one from the raw materials garnered. Instead, it said worn out products should be remanufactured into as-mew reconditioned items. The standard – BS 8887220:2010 – has been developed by developed by a committee of volunteer experts.
Rolls-Royce Motor Cars has announced that the company has enjoyed a successful first quarter in 2010, with sales increasing by 60%. Sales in the Asia-Pacific region were double the same period in 2009, with sales in Mainland China more than trebling. Sales in the United States, Europe and the Middle East also showed substantial growth. Torsten Müller-Ötvös, speaking in his new role as Chief Executive Officer for Rolls-Royce Motor Cars, said: “This is an excellent first quarter result and demonstrates the confidence that our customers have in our company and our products. The interest in our new model, Ghost, is growing and is bringing a significant number of new customers to the RollsRoyce brand. Rolls-Royce Motor Cars
continues to operate as the world’s foremost ultra luxury car manufacturer.” The new Rolls-Royce Ghost was successfully introduced into a number of global markets following its international launch in California, including the largest market for Rolls-Royce, the United States. It is notable that Ghost has not yet been delivered to China and that the surge in sales in this market during the first quarter was generated solely by Rolls-Royce Phantom models.
Rolls-Royce Motor Cars 2010 range
LEGAL
Cig firms fined over pricing The Office for Fair Trading has fined 12 cigarette manufacturers and retailers £225m for fixing prices. The group includes manufacturers Imperial Tobacco and Gallaher and retailers Asda, the Cooperative, Somerfield and Shell. The offences relate to deals between the manufacturers and retailers between 2001 and 2003 that were made to ensure products were priced relatively to rival brands. Imperial Tobacco has been fined £112m for its misdemeanours while Gallaher –
maker of Benson & Hedges – has been fined £50m. The latter’s fine is less because it admitted its involvement when allegations were made two years ago. Morrisons will have to pay over £20m – £8.6m which it has been fined itself and a £10.9m fine levied upon Safeway which Morrisons bought in 2004. Similarly, the Cooperative has to pay £18m made up of its own £14m fine and a £4m fine given to Somerfields which it now owns. Asda has been fined £14m.
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ManufacturingNews AUTOMOTIVE
Decreasing UK car market The number of cars on UK roads has fallen for the first time in 64 years, bucking the trend for year-on-year increases since WWII. According to SMMT’s analysis this is the first peacetime decline since vehicle records began in 1904. Growth in the UK has slowed during recent years, and now sits at 31,035,791 cars, representing a 0.7% fall compared to 2008. “The recession is the most obvious factor impacting on the number of cars on the road,” says SMMT chief executive Paul Everitt. “The Scrappage Incentive Scheme has also removed a large number of older and more polluting vehicles. Alongside these economic factors, tough enforcement has helped remove unlicenced vehicles from UK roads.”
Analysis of vehicles currently in use reveals an increase in the proportion of low CO2 emitters and an average 1.7% reduction in CO2 emissions across the 2009 parc, compared with 2008. In the last three years, the number of vehicles which emit less than 120g/km of CO2 has risen dramatically, by over 90%, and now accounts for 936,117 vehicles on the road.
The original Mini was produced from 1959 to 2000
Newsinbrief fOOD AND BEVERAGE
Exports of food and non-alcoholic drinks continue to buck the recessionary trend and are at a record high, having grown 4.4% to £9.65bn in 2009. Based on research by the Food and Drink Federation, the performance constitutes a fifth consecutive year of growth. Ireland remains the UK’s biggest export market for food and non alcoholic drinks with sales of £2,589.0m. Vietnam is the fastest growing market having experienced a 68% rise to £20.8m.
The Women and Work programme is to be relaunched and will offer grants of £650 for training women in the food and drink industry. It will fund training through a matched contribution arrangement. Training programmes will have to cost a minimum of £750 to be eligible for the subsidy, with employers asked to fund the difference. Training funded under the scheme falls under three strands: Women in Industry, Women in the Lead and Women in Business.
AUTOMOTIVE
Renault, Nissan and Daimler combine forces Construction of the Renault-Nissan Alliance’s first European plant for the production of advanced lithium-ion batteries began in Sunderland this month. Toshiyuki Shiga, chief operating officer of Nissan Motor Co., Ltd., carried out the ceremony at Nissan’s Sunderland car plant to mark the beginning of the £210m project. The 25,000m2 facility will be operational in early 2012, with an initial annual production capacity of 60,000 units, and will supply batteries for both Nissan and Renault electric vehicles (EVs). The plant is expected to create 200 new Nissan jobs and a further 600 across the UK supply chain. The Alliance has previously announced that a second battery facility will be located in Cacia, Portugal and has also announced plans to produce
batteries at Renault’s Flins plant in France. Last month, Nissan confirmed that Sunderland will also become a production location for the Nissan LEAF electric vehicle – the world’s first affordable mass-produced zeroemission vehicle. Nissan LEAF will be launched in 2013 on the plant’s ‘Number 2’ production line alongside the recently unveiled JUKE compact crossover car, which enters production in August 2010. In other news, the RenaultNissan Alliance and Daimler AG have announced a broad strategic cooperation to generate wide-ranging project benefits. The two groups also announced an equity exchange that will
give the Renault-Nissan Alliance a 3.1% stake in Daimler, and Daimler a 3.1% in Renault and a 3.1% stake in Nissan. According to Dr. Dieter Zetsche, chairman of the Board of Management of Daimler AG and head of Mercedes-Benz Cars, “Daimler and the Renault-Nissan Alliance are combining common interests to form a promising foundation for a successful, strategically sound cooperation that is based on a number of very concrete and attractive project cooperations.” Specific projects have been agreed upon, and will be implemented with immediate effect, including a new common architecture for small vehicles. The successor to the current smart fortwo, a new smart four-seater and the next-generation Renault Twingo will be engineered on the basis of a jointly developed architecture.
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AEROSPACE AND DEFENCE
£690m win for Rolls-Royce Rolls-Royce has signed a service contract worth £690m with the MoD to support the Royal Air Force’s fleet of Tornado aircraft. Under the terms of the new RB199 Operational Contract for Engine Transformation (ROCET2) contract, which runs until 2025, RollsRoyce will provide the RAF with a guaranteed level of availability for its RB199 engines, spares and ground support equipment. The new agreement includes additional support elements, such as the development of engine health monitoring techniques designed to improve operational capability. Rolls-Royce has been contracted to support the RAF’s RB199 engine fleet since December 2005, consistently meeting 100% of the performance requirements from the outset. Chris Awde, Rolls-Royce sales and commercial director, Defence Aerospace, said: “Over the four-year period of the ROCET contract we have
developed a partnership approach with the UK Ministry of Defence and met every engine availability target that has been set. “The frontline Royal Air Force Tornado squadrons now enjoy a guaranteed level of engine availability and significant savings in their engine support costs. ROCET 2 will enable us to deliver an even higher level of support for the next 15 years.” Rolls-Royce undertakes all aspects of RB199 engine support, including the provision of replacement engines to meet customer demands, and technical support both on-base and from the Rolls-Royce Operations Centre in Bristol. Rolls-Royce support operations are centered at the Tornado Propulsion Facility at RAF Marham,
but extend to cover two other Main Operating Bases at RAF Lossiemouth and RAF Leuchars where the RAF’s Tornado squadrons are also based. From RAF Marham, a team comprising both Rolls-Royce and RAF personnel manages the engine support for aircraft operations in the field and also carries out some engine repairs. This will be augmented in 2010 by the transfer of the RB199 engine strip, build and test capability to the RollsRoyce facility in Bristol.
A fleet of Tornado aircraft
AEROSPACE AND DEFENCE
Lockheed watches UK wind Lockheed Martin will deliver a long-range air surveillance radar system to the world’s largest offshore wind farm, based along England’s east coast. The advanced electronics of Lockheed Martin’s TPS-77 radar mitigate interference, or “clutter,” that commonly obscure radar targets in and around wind farms. The new radar system will provide air defence surveillance capabilities for the MoD and allow the UK to move forward with its plans to install
Lockheed Martin’s TPS77 radar
some 924 turbines along England’s east coast. The radar will provide surveillance over five planned wind farms in the Greater Wash Strategic Area — Sheringham Shoal, Race Bank, Dudgeon, Triton Knoll and Docking Shoal — that are expected to generate more than 5,500 megawatts of sustainable power. Under contract with Serco, Lockheed Martin will deliver the TPS-77 system by November 2011. In the UK Serco has served as Lockheed Martin’s in-country Contractor Logistic Support partner for the MoD’s FPS-117, or Type 92 radars, delivering greater than 98% operational availability. The TPS-77 radar system supports the goals of the
Department of Energy and Climate Change to reduce fuel consumption. In 2009, the UK established the Low Carbon Transition Plan to reduce emissions 34% from 1990 levels by 2020 and an 80% reduction by 2050. With more than 200 operational offshore wind farms, wind power is the nation’s biggest renewable energy source. In 2008, the UK surpassed Denmark as the largest offshore wind generator in the world. “Lockheed Martin continually incorporates state of the art technology into its TPS-77 and FPS-117 family of ground-based radars,” said Carl Bannar, vice president and general manager of Lockheed Martin’s Radar Systems business. “This investment allows us to provide new capabilities and enhanced performance for customers while leveraging the field proven architecture and 30 years of operational experience with our family of long range radars.”
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ManufacturingNews RENEWABLES
Offshore wind reaches 1GW
Newsinbrief fOOD AND BEVERAGE
The landmark first gigawatt of installed offshore UK wind energy capacity has been achieved by two wind farms off the coast of Britain. The two farms, which began generation in April, are Robin Rigg operated by EON and Gunfleet Sands operated by DONG Energy. One GW, now comprising of 11 wind farms, or 336 installed wind turbines, cements UK’s world-wide lead in the sector. “The UK offshore wind industry has come of age,” said Maria McCaffery, RenewableUK Chief Executive. “In the last ten years we have built a brand new world-leading industry sector that will create long-term value for this country. In the first quarter of this
year alone half a billion pounds of private investment has been invested directly into offshore wind in the UK.” There are over 40GW of offshore wind farms at various stages of development, with over 4GW in construction or with planning consent. The sector is set to provide 150+ TWh of carbon free electricity a year, compared to the UK’s total electricity consumption in 2009 of 374 TWh, creating up to 70,000 ‘green collar’ jobs and attracting billions of pounds in investment.
ELECTRICAL
Dyson ups numbers by 350 Dual Cyclone Vacuum cleaner pioneer Dyson has announced plans to expand its engineering headcount by 350 at its Malmesbury, Wiltshire headquarters. The recruitment drive will double the number of engineers and bring the total staff at the site to over 1,600. Dyson says many of the new recruits will come straight from university and will fill positions including graduate design engineers, mechanical engineers and acoustic engineers. “I am extremely proud of the new technology developed by our engineers in Malmesbury,” said Sir James Dyson, the company’s founder. “It is vital that Dyson and the UK continue to invest in the nation’s engineering talent if we are to stay ahead.” “With excellent young aspiring scientists and engineers in our schools it falls to companies such as Dyson to encourage this future
generation. As our need for good design and technology increases so does the need for creative and adventurous designers, engineers and scientists.”
Following the release of the UK Commission for Employment and Skills’ (UKCES) National Strategic Skills Audit for England, the food and drink sector responded with concerns. Sector Skills Council, Improve felt that the audit had created a detrimental skills league table that underplayed the economic importance of the UK’s largest manufacturing sector. Today Improve pressed for a re-assessment from government of the role of food and drink, which employs 500,000 nationwide in over 7000 companies, in future political strategy. E N er G Y
Manufacturers are welcoming a period of relative stability in the supply of gas, electricity and oil, following a volatile quarter in which commodity price changes added further pressure on manufacturers recovering from the economic downturn. Despite a relative calming of electricity and gas prices, oil price trends are more complex. Although wholesale oil prices continue on a steady upward trend, they remain 40% below their July 2008 peak.
The Nuclear Advanced Manufacturing Research Centre has signed a lease for two units at the Advanced Manufacturing Park (AMP) in Rotherham. The deal includes a 13,500sq ft workshop unit and a 3,000sq ft office and research and development suite. R&D work will focus on precision machining, welding and inspection processes for the nuclear new build industry. The Nuclear AMRC, a joint initiative between the universities of Sheffield and Manchester and industrial partners, hopes to employ 25 people initially, with a final total of 100. sKILLS
EEF is helping employers transition from the sick note to the ‘fit note’ system, after the Government introduced the new measure to encourage work attendance. Using its expertise in Occupational Health, Employment Law and HR, the manufacturers’ organisation is offering seminars and guidance to businesses in an attempt to help them improve their sickness absence management and gain benefits from the new system. Dyson Airblade hand dryer
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Newsinbrief sKILLS
The Institute for Manufacturing (IfM) announed a new programme to support small businesses in the West Midlands. The Manufacturing Business Transformation Service (MBTS) will be carried out by the IfM’s Education and Consultancy Services together with government-funded Business Link West Midlands and the Manufacturing Advisory Service (MAS). It will deliver workshops and one-to-one support, and offer advice to regional companies through manufacturing-themed events. The programme builds on the IfM success in providing support and advice to companies in the East of England in the past months.
The Scottish Manufacturing Advisory Service contributed over £16m to Scotland’s economy in the last financial year. Carrying out 150 improvement projects and 365 manufacturing reviews (free diagnostic visits that assess the company’s performance and identify growth opportunities), SMAS, which was established four years ago by Scottish Enterprise, has experienced unprecedented demand over the last year. The service provides support as companies try to improve productivity, cut costs and become more competitive. Since it was established in 2006, SMAS has brought £50m in added-value to the Scottish economy.
MANUFACTURING ACTIVITY
Stella industry performance at 15 year high UK manufacturing activity grew at its fastest for 15 years in March, according to the purchasing managers’ index (PMI). The PMI rose to 57.2 from 56.5 in February, making it the best monthly growth figure since October 1994. The PMI is calculated from data on new orders, production, employment, and purchasing. An index reading above 50 indicates that activity is rising. Anything under 50 shows contraction. Commenting on the PMI numbers, EEF chief economist, Lee Hopley, said: “These figures are further evidence of a more broad based recovery in manufacturing in the UK and across the globe. As well as an improving domestic market, they should dampen criticism that manufacturers are failing to take advantage of a competitive currency and a more sustained upturn in export markets.” Graeme Allinson, head of Manufacturing, Transport and Logistics at Barclays Corporate, said: “There is a renewed momentum to manufacturing recovery evidenced by the large
growth shown in these figures. This is an important confidence building affirmation that production levels are moving in the right direction following a few months of flatness in the sector, and these numbers are a far cry from the heavy declines of last year. “Orders are steadily increasing as the effect of re-stocking becomes apparent. Exports too have shown signs of picking-up but rapid growth in this area is unlikely as 60 per cent of UK exports head to Europe where growth rate is muted. This leaves the performance of UK manufacturing inextricably linked to European demand.” Export order growth fell from February’s high, but the survey found that sterling’s weakness was still benefiting UK exporters. The Office for National Statistics revised up its forecast of economic growth for the final quarter of 2009, saying that the economy grew by 0.4%.
EXECUTIVE
Reckitt Benckiser record £92m payout The bulk of a £92m share payout to the CEO of British household brands company Reckitt Benckiser has been given to a charitable trust. Bart Becht, chief executive of the company responsible for brands such as Cillit Bang, Vanish, Finish, Air Wick and Nurofen last year exercised share options worth more than £70m and performance-based shares valued at around £13 million. News of the bumper payout comes following the release of the company’s annual report. The stock
bonanza, which has been built up over his tenure at the helm, came on top of a pay and bonus package worth nearly £5 million in 2009. But Mr. Becht has decided to transfer the majority of the stock options to a charitable trust, which supports organisations such as Save the Children and Medecins Sans Frontiers.
A small proportion of the shares will be sold to cover costs, with Mr. Becht donating three of his total £4.1m in share options to the charitable trust – worth more than £110m. The group’s annual report revealed he was paid a basic salary last year of just under £1m and a bonus of £3.5m and other benefits, including a pension contribution of nearly £400,000. He was also granted new share options worth more than £30m that he is entitled to in future years.
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ManufacturingNews Manufacturingoutput Costs take the gloss off growing orderbooks Orders are picking up both at home and abroad but profits are threatened by cost pressures, according to the Confederation of British Industry’s latest Industrial Trends Survey.
For the three months to April, 34% of 439 UK manufacturers said total orders rose, while 23% said they fell. A rounded balance of +12% is the first growth in this area since January 2008. Exports are leading this resurgence with a balance of +20% the best since 1995 – although a balance of +5% for domestic orders means this finally appears to be picking up too. It’s the first growth balance for home orders since October 2007. However, average unit costs were up for +20% of companies, putting a strain on the bottom line and manufacturers report that they will raise their prices over the next three months to as a result. “Manufacturing appears to be on an upward trend,” said the CBI’s chief economic adviser Ian McCafferty. “After eight consecutive quarters of falling domestic orders, homegrown demand is slowly starting to recover.”
He pointed to the weakness of Sterling and the ongoing recovery of the global economy for the increase in exports and said that with many firms now having completed destocking periods, demand should only increase over the coming quarter. “Given the improving picture, manufacturers are feeling more optimistic about the business situation,” he added. “However, sharply rising raw material prices are pushing up costs, and firms plan to raise prices over the next three months to alleviate some of the squeeze to profit margins.” A balance of +20% is expected for orders between April and July and a balance of +14% expect to up production. Employment is still falling (-12%) and the trend is expected to continue at a similar rate during next quarter. 62% of firms are working below capacity.
Newsinbrief AWARDS
The winners of the Queen’s Awards, the most prestigious honours for business performance in the UK, have been announced. The number of companies awarded this year was 143, with the majority of them (95) winning the awards for the category International Trade, followed by Innovation and Sustainable Development. Manufacturers winning the Awards this year include Brompton Bicycle Ltd, Parker domnick hunter (a division of Parker Hannifin, a specialist in motion and control technologies) and Vinten (a Vitec Group brand and provider of camera supports).
DEFENCE
Rolls-Royce has reached two milestones for the Royal Navy’s new aircraft carriers, with completion of the first propeller and the successful testing of the vessels’ MT30 gas turbine. Each propeller, which has completed acceptance tests, will deliver around 50,000 horse-power — the highest power Kamewa propeller ever developed by Rolls-Royce. The first of four MT30s for the two 65,000 tonne vessels also passed a programme of stringent tests and certification. GLOBAL TRENDS
Acording to an EEF report, the world demand for steel is expected to return to 2008 levels, confirming fears of raw material cost increases. The document from UK Steel, a division of the EEF, comes after Beama’s Steel Products Group warned about the possibility of “turbulent times” for steel prices last January.
Business advisors KPMG said global mergers and acquisitions in the manufacturering sector are set to rise this year, based on market metrics and analyst statements. KPMG’s annual Global M&A Predictor found that forward price to earnings ratios – the price firms pay for shares compared to company performance – are 5% higher globally and 9% up in Europe compared with last year’s figures. This suggests a bigger ‘appetite’ for deals within the sector, the company said.
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Datesfor yourdiary May Throughout May The Energy Services & Technology Association will be holding workshops regarding CRC Energy Efficiency Scheme. For further information visit: www.esta.org.uk/2020vision
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TBM Consulting will hold a Leveraging Lean for Growth workshop in Manchester. For more info email Donna Hopkins at dhopkins@tbmcg.com
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ADS will be present at SOFEX 2010, to be held in Jordan. To book contact Christine Gomm on 01428 602 645 or christine.gomm@adsgroup.org.uk
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The British Safety Industry Federation (BSIF) will attend the Safety & Health Expo to be held at NEC Birmingham. For further information visit: www.safety-health-expo.co.uk
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The Process & Packaging Machinery Association is holding a seminar on changes to the New Machinery Directive at the Marriott Hotel, Nottingham. For further information contact Christine Jordan on: 0208 773 8111 or christine.jordan@ppma.co.uk
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The National Manufacturing Debate is being held on 14 May at the Cranfield University campus. A full programme and booking information is available online at www.cranfield.ac.uk/sas/manufacturingdebate
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The Institute for Manufacturing will host PRISM – a conference with advice on sustainability issues, see: www.ifm.eng.cam.ac.uk/sustainability/2010/
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The Manufacturing Institute will hold a Lean Awareness workshop at the Marriott Hotel in Preston. Contact Emma Holt at emmah@manufacturinginstitute.co.uk
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Lean Management Journal, in association with Suiko, is holding Inspiring Operational Excellence at Chesford Grange in Warwickshire, focusing on operational excellence and its methodologies. For further information contact Lou Abourachid at lou@suiko.co.uk
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(June) – Consultancy Goldratt is holding a Thinking Processes workshop. See www.toc-goldratt.com
Total Processing and Packaging 2010 is being held at the NEC in Birmingham. Visit www.totalexhibition.com.
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The Manufacturing Technologies Association will be featuring at the European Society for Precision Engineering and Nanotechnology conference, to be held in Delft in the Netherlands. For info see www.mta.org.uk/events/2010/05/31/81 or email info@mta.org.uk.
SECTOR TRENDS
Exports on the rise A new EEF report has revealed that manufacturing exports are improving, leaving the UK better placed to take advantage of the global economic recovery. ‘Re-thinking growth - the building blocks of an export recovery’, published in April by EEF, the manufacturers’ organisation, shows that manufacturers have been making good inroads into export markets. However, EEF believes for exporters to continue to take advantage of recovering world markets trade support must be protected as part of any spending review by a new government. The report comes on the back of the latest trade figures showing UK exporters saw a return to better form in February according to National Statistics, which should put an export-led economic recovery back on track. A rebound in sales meant that the value of exports of goods (excluding oil) was up by 6% in the latest three months compared with a year ago, while imports grew by 4.4%. “Exporting has become the lifeblood of UK manufacturers and we are now seeing more signs of an export-led recovery,” says EEF director of policy, Steve Radley. “But exporting is a team game requiring ambition for manufacturers, a collaborative approach from banks to provide the finance, the right foreign exchange risk management tools and world class export support services. According to the survey, more than 90% of manufacturers are involved in exporting. The survey also shows that manufacturers rely heavily on overseas markets, with over 40% of companies deriving more than half their turnover from exports. Moreover, during the past four years further progress has been made in tapping into new, emerging market opportunities, especially in the Middle East and Asia, with even the smallest companies making progress into overseas markets. Looking forward, the long term ambition for the vast majority of manufacturers (80%) is to continue to extend their reach into new export markets. This is critical given that many of the traditional markets in Europe are grappling with many of the same economic problems as Britain and are likely to grow slowly. Exposure to a diversity of export markets cushioned the blow of the global recession for some manufacturers. Despite very tough trading conditions, half of manufacturers expanded their exports in the previous 12 months and around a fifth increased them by more than 10%. Firms selling in to a wider range of markets tended to do much better. Just over two fifths (43%) of firms exporting to nine markets or more showed an increase in sales compared with just over a quarter (26%) of those selling to one to four markets.
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ManufacturingAppointments UK Appointments Lanner Eric Gaury
Lanner, the business process improvement company, has announced the appointment of Eric Gaury as director of operations, Lanner China. This has been made as part
of a strategy of aggressive growth and global expansion that is set to capitalise on the progressive changes taking place within Chinese industry.
QinetiQ Group plc James Burnell-Nugent
QinetiQ Group plc has added Admiral Sir James Burnell-Nugent KCB, CBE, ADC, as an independent non-executive director to the QinetiQ Board.
During a 37 year career with the Royal Navy, Burnell-Nugent commanded the aircraft carrier HMS Invincible which culminated in his appointment as Commander-in-Chief Fleet.
Siemens Standard Drives Matt Byrom
Siemens Standard Drives in Congleton has promoted Matt Byrom to the role of business excellence leader. He will lead a team of five in delivering productivity improvements across the site using a range of lean tools. He will also be responsible for training
programmes and will lead the company’s current bid for European Foundation for Quality Management accreditation.
Kookaburra Foods Lyndsey Castle and Christine Dunn Barclays Corporate has announced the appointment of Chris Forrest as head of manufacturing for the Northern Region. Forrest will be responsible for the delivery of corporate banking services to the manufacturing sector across the North East, North West and Yorkshire, leading a team of 30 manufacturing specialist relationship directors looking after more than 25% of manufacturing corporates in the region. Peter Hines, respected author on sustainable lean change and cofounder of the Lean Enterprise Research Centre (LERC) at Cardiff University, is to step down from his role as chairman. Hines will continue to be an honorary professor at the research centre but his move has been prompted by a desire to focus more on his work encouraging the teaching of lean principles in other universities and business schools around the UK. Kam Kunar has taken on the role of Marketing and External Communications Manager for the National Skills Academy for Manufacturing (the Skills Academy) as well as continuing with her existing duties in the same capacity for the Sector Skills Council Semta (science, engineering and manufacturing technologies). Emma Mulligan has moved from the Skills Academy for Manufacturing to become operations manager for the new National Skills Academy for Power.
Byrom was The Manufacturer’s Employee of the Month in October 2009.
Peterlee-based meat and poultry supplier Kookaburra Foods has appointed Lyndsey Castle as its new business development manager and Christine Dunn
as its new head of technical. Castle spent 13 years at poultry firm 2 Sisters Food Group while Dunn has more than 20 years’ experience in food manufacturing.
Jon Tudor has been appointed as the Head of Events of SayOne Media, publishers of The Manufacturer and Lean Management Journal. Tudor spent five years promoting manufacturing best practice at The Manufacturing Institute, as well as running the MAS North West events programme, UK/US Summit’s and launching and managing the Shingo Prize for Operational Excellence in the UK.
International Appointments NOV Mono has expanded its operation in Germany with the appointment of two new area sales managers as part of the company’s continued investment into the growth of its Mono Universal Parts range across Europe. Svetla Laskova will be located in Berlin and Werner Potrafke will be located near Bochum. Both have excellent language skills and extensive experience in sales and business development in the industrial and engineering sectors. Christian Gras has been named within the Eurocopter Group as executive vice president, customers. He will be reporting directly to Eurocopter CEO Lutz Bertling. Having begun his career as product engineer with the helicopters Division of Aerospatiale, Gras has served in many roles including as managing director of EMSA, a Eurocopter subsidiary in Mexico, before becoming CEO at American Eurocopter Corporation in the United States.
To notify The Manufacturer of your company’s appointments, please contact Daniel George at d.george@sayonemedia.com and 01603 671300 TM MAY 2010 final.indd 11
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The Big Picture In need of growth? Break glass…
Peter Templeton Institute for Manufacturing
Manufacturing is back in the spotlight, and for the right reasons. It’s seen as a means of driving economic growth, and so it should be a good time to be in business. But a rapidly changing business environment brings new challenges and it’s not always obvious to SMEs how to respond, Peter Templeton of the University of Cambridge’s Institute for Manufacturing gives some pointers.
The
country is facing the biggest economic slump for decades and, for once, all the political parties recognise the need for a more diverse economy. Growth in manufacturing is seen as essential. The reported rise in output for March – the biggest monthly rise for 15 years – is an encouraging start. The future may well be bright, but first we face the challenge of rebuilding a manufacturing landscape battered by the storms of the recession. Much has been written and said about the problems businesses face in accessing finance, but there are other important consequences of the recession: major changes to the structure of key industries, changes to customer behaviours and changes in Government Policy. The automotive industry is a stark illustration of the effects of the slump, and the subsequent impacts on SMEs. As customers cut back on spending, the industry experienced a rapid decline in demand. Global manufacturers like Ford and General Motors were forced to restructure and reduce capacity; Volvo was sold to Chinese firm Geely and SAAB to Dutch Spyker. Responding to consumer demand for more economical, ‘greener’, small cars Nissan developed the Leaf. Projects like the Leaf are strongly supported by policy-makers and backed by government funding – from the Technology Strategy Board and others – and this has had an impact throughout the industry’s supply chain. It has left many SMEs feeling like they’ve hit a ‘glass ceiling’, the invisible and unforeseen obstacles which hinder progress. Changing conditions have affected order books, slashed margins and left senior managers fire-fighting rather than having the time to develop strategy or build capabilities. But activities at the IfM have shown there are some simple steps which can help you smash through these barriers.
Ceiling your success Firstly, re-visit your business strategy. Changing times may mean you need to adapt. It will take
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time, but will be the key to creating opportunities from the challenges your business faces. The good news is that strategy development processes are available for manufacturing SMEs, designed to help save time and effort. The processes start by focusing on the needs and wants of stakeholders, then evaluate the opportunities and threats created by the changing external conditions, and identify the key capabilities and core competences of the firm. The next step is to generate and appraise alternative strategies in order to select the one that best meets the needs of your business. This includes considering how your business should compete: is it on providing the best price and delivery? Or is it by providing distinctive customer value, perhaps based on product leadership, or a service-based business model? Having selected the strategy, the next step is to develop an action plan to make it a reality, consisting of discrete, executable projects – and supported by performance measures to keep you on track through the hurly-burly of industrial life. Finally, identify a manageable number of appropriate criteria to measure business performance. Regularly reviewing performance against these targets is key to ensuring successful achievement of business goals. This needn’t be done alone, however. You can find a business mentor to help plan strategy, guide capability and maintain focus. No one knows your business better than you; however, getting someone with the right experience and knowledge of the issues affecting your business can make the difference between achieving real growth and just hitting your head, once again, on the glass ceiling. The election has just ended; to borrow from an earlier campaign mantra – the thing to remember is to ‘focus, focus, focus.’ If you focus on the right business strategy, the right capabilities and the right execution, the only problem you’ll have with glass ceilings is sweeping up the competition after you’ve smashed your way through. end
For more details visit: www.ifm.eng.cam.ac.uk
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Economics Glasshalf full...
Steve Radley, Director of Policy, EEF
EEF’s
last quarterly survey suggested that this might be about to change, however, with a large increase in the number of manufacturers expecting export orders to increase in the coming months. But can this be sustained? Our research shows some reasons for optimism, but only if manufacturers and policy makers play their full part. The starting point is a positive one: despite the worst downturn in world trade since the 1970s, a third of manufacturers reported an increase in exports over the previous 12 months. Looking ahead to the recovery, nearly three in five firms expect sales to increase in the next 12 months and over the longer-term four in five are seeking to expand their presence in export markets. But the make-up of our export markets will need to change. Currently, half our exports are destined for eurozone markets. And many firms are not expecting this to change significantly in the near future. Companies that expect to see sales increase mainly see this coming from established markets such as the eurozone and North America rather than emerging economies. However, many of these markets are likely to experience slow growth in the coming years, increasing the importance to UK manufacturers of looking beyond them if we are to see a sustained export-led recovery. For this to happen, manufacturers, government and finance providers all have an important role to carry out. Over the last decade, the UK has retained its position as one of the world’s largest manufacturers in the world on the back of an increasing focus on quality, high-value goods and services and the creation of niche markets and products. Exports to fast-growing emerging markets have grown rapidly in recent years, outperforming other markets as manufacturing has moved out of recession. However, the recent recession must be a catalyst for companies to extend their reach into global markets and to develop long-term strategies to achieve this. This includes remaining open and responsive to the opportunities that will come as emerging economies continue to industrialise, and working with policymakers to promote the UK’s considerable strengths in these markets.
This year there has been a lot of talk about the need to rebalance our economy with exports playing a greater role. But until recently, the evidence suggested our hopes would not be realised; official statistics had shown trade making a minimal and sometimes negative contribution to growth.
In addition, manufacturers should take advantage of all available channels of information, guidance and brokerage. Exploiting new opportunities can be challenging, but the right information and intervention will help companies to succeed. And it is therefore important that the new government ensures that this support is available. Our research shows that UK Trade and Investment services have delivered tangible benefits for experienced exporters as well as for companies that are new to exporting.
Capital punishment? The next Spending Review will be a tough one, but it must provide both sufficient resources for export services which match companies’ ambitions and the support they need to make further inroads into export markets, particularly the more difficult emerging ones. But, at the same time, we need to see an increased focus on value for money. In particular, moving to national sector strategies rather than a regional approach will help to address much of the current duplication and waste. Finally, the villains of the last recession have an important role to play. In the recovery there must be closer cooperation between manufacturing and the financial sector if exporters are to access the finance and other financial products that allow them to invest and minimise some of the risks of operating in international markets. The need for finance for working capital will continue to grow as demand returns, and it is vital that banks and manufacturers communicate and work together to ensure that opportunities are not missed because of a lack of finance. Companies also face significant risks from volatile exchange rates. A shortage of foreign exchange management options can pose a considerable threat to profitability and dissuade companies from entering new markets. Banks must work with exporters to make sure there is a wellfunctioning market for foreign exchange products and tools that cater for a broader range of exporters – not just the largest. An export-led recovery can be achieved, but only if manufacturers, government and the finance sector all pull in the same direction. end
Have your say at www.themanufacturer.com TM MAY 2010 final.indd 13
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Businessasunusual Standard work is anything but standard Anand Sharma, Chairman and CEO, TBM Consulting Group
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45-year old manufacturing company in the Midlands employs some 450 people. It makes a variety of components and systems for military aircraft and medium range missiles. Several years ago the factory couldn’t meet production targets despite huge amounts of overtime and was missing its delivery date promises. With several Ministry of Defence contracts coming up for renewal, and a large new contract on the horizon, the owner hired a new operations manager with lean manufacturing experience and a Six Sigma black belt in the hope that he could turn things around. The new director of operations – we’ll call him John – found a factory that many of you would recognise. Protected by long term, cost-plus contracts, little effort had been made to eliminate unnecessary activity or streamline workflow. Batch production methods generated stacks of work-inprocess inventory all over the factory floor, which was also littered by unused equipment and fixtures. Ultimately, overruns and excess materials simply disappeared into a vast spares warehouse. To move forward quickly and speed-up learning, John brought in outside consulting assistance, devised an implementation plan and launched a crash course in lean for senior leaders and managers. To better understand the potential and methods, they toured several companies that had varying degrees of success with their process improvement efforts. Fast forward three years. Although John is the first person to admit that plenty of opportunities remain, the factory has made a tremendous amount of progress. Applying lean and variation reduction tools through project work and week-long kaizen events, employees at all levels have transformed the look, feel and culture of the factory. The owner proudly “walks the gemba,” as he is fond of saying, where visual status cues abound. The factory’s delivery rates are better than average for the aerospace sector, and customer quality is vastly improved, though not quite at world class levels. The work is simpler and less strenuous, the workers have become evangelists for lean methods, and the company now lead factory tours for customers and others interested in what they’ve accomplished.
Losing momentum But now that most of the “low-hanging fruit” has gone, the company is losing momentum. The key metrics that managers track and that supervisors review with
Are you having trouble sustaining the results of your business improvements? Do the same problems keep popping up over and over again? The solution could be good old-fashioned discipline. their teams before every shift — safety, quality, delivery and productivity — are no longer trending so sharply upward or downward, and occasionally fall back to unacceptable levels. To renew everyone’s focus, John has launched a back-to-basics training programmeme. Oddly enough, John’s team drew much of their early inspiration from a nearby confectionary operation. In addition to their total productive maintenance (TPM) and 5S practices, John’s people adopted the candy company’s standard work programme. Or at least they thought they had. When his team took another look at the candy factory, they realised that they weren’t nearly as disciplined at following standard work as they could be. During improvement projects, the teams regularly used capacity sheets, work charts, job instruction sheets and related tools to identify the precise sequence in which tasks should be performed. But once the tasks were standardised, printed out and put in binders, they were rarely reviewed, and most had not been updated for 18 months or more. This time, when they watched the work on the candy production lines they noticed how team leaders continually observed and verified that standard work was being followed, and corrected any deviations. Through these daily corrections they began to understand that the gains from process changes were being sustained, providing a steady foundation for subsequent process improvements. Far from being static documents, the work standards were constantly stabilising and evolving as changes were tested. John accompanied the candy company’s leadership team on their daily rounds, starting at 8:45 a.m. every day. They visited each work cell, reviewed the previous day’s performance, discussed any issues and checked progress on individual projects. They also visited support departments and administrative areas. The CEO told John how they too had struggled with sustainability until they began to apply the discipline they learned through standard work to the daily activities of supervisors. The daily status checks now catch any potential issues. Standard work isn’t just for the factory floor. Managers and executives who have the discipline to adopt it find that it stops a lot of firefighting and frees up their time for longer term initiatives. Standard work for leaders can separate those businesses that continue to move forward from those that are just spinning their wheels. end
Have your say at www.themanufacturer.com TM MAY 2010 final.indd 15
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What manufacturing wants from a new government
The manufacturing sector was referenced a total of 12 times in the three main political parties’ 2010 election manifestos — three times by the Conservatives, four by the Liberal Democrats and five by Labour. A little low, if one considers that all three parties have committed to the need to rebalance the UK economy in favour of a stronger manufacturing sector. Tim Brown investigates the postelection issues that UK manufacturers want addressed.
In
the 2000 film What Women Want, Mel Gibson’s cross-dressing character gains the ability to hear what women think after dropping a hairdryer in the bath and being electrocuted. Perhaps politicians should undergo a similar process to more comprehensively understand the manufacturing sector. The recipe for a clearer insight might involve: dressing as a steel worker, placing a foot in a bath of Blue Keld mineral water, before sipping on a bottle of J&B Scotch and dropping a live Roberts clock radio into the tub. Far-fetched perhaps, and such action would achieve little other than reducing the budget for MPs. In the absence of any Mel Gibson-type insight, The Manufacturer canvassed the comments of several manufacturers and industry groups to gain an understanding of the issues facing the sectors and the manufacturing industry as a whole. Participating organisations include Caparo Vehicle Products
Group, Bentley, Comau Estil, Cobham, JJ Churchill Engineering, EEF the manufacturers’ organisation, the Chemical Industries Association, Nuclear Industries Association, Food and Drink Federation, Institute of Mechanical Engineers and RenewablesUK.
A competitive tax regime As certain as death and taxes is that the latter is a frontline issue for industry. With government facing the huge task of reducing the budget deficit, expected to be £167bn for 2009-10, the private sector is naturally concerned that it will be asked to foot a substantial part of the bill. Until full details of how the Government will reduce the deficit are revealed, manufacturers cannot start making investment plans with any solid degree of confidence. Manufacturers want a tax system that is transparent, internationally competitive and has a clear sense of direction. A lack of understanding about what
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Leadstory What manufacturers want
makes modern manufacturing competitive in the UK has left the corporate tax system tilted against manufacturers, according to EEF. The creation of a tax system that supports investment, innovation and global competitiveness is therefore essential. Industry suggestions 1. Modernise the capital allowances regime 2. Make the R&D tax credit easier to claim and reflect a wider range of costs 3. Create a more sustainable capital gains tax regime 4. Reduce the headline rate of corporation tax over time 5. Signal that the 50p rate of income tax is a temporary part of the tax system 6. Reduce the number of hard choices on public spending by increasing VAT 7. Improve relations between the Treasury and Revenues and Customs and businesses 8. Prioritise areas for simplification which will genuinely reduce burdens on businesses This list is taken from EEF’ March report ‘Tax reform for a balanced economy’ “Given that the economic cycle and return on investment periods for manufacturing are generally longer than the length of a parliament, we should have a vision for manufacturing that reflects what, for us, is a reality,” says Andrew Churchill, managing director of JJ Churchill Engineering.
Skills The UK manufacturing sector has inherent strengths in innovation – the ability to convert ideas to tangible products. These strengths require a sufficient pool of skilled workers, academics, scientists and engineers to be able to conduct quality R&D while continuing to produce products of high quality. An apparent skills shortage and ageing workforce is an issue which has been highlighted by every manufacturing sector and a definitive strategy is needed to expand the skilled work force. Industry suggestions 1. The establishment of coherent and consistent work-based learning progression routes 2. Improve access to funding for employers to provide vocational training places 3. Continue developing workforces during the economic downturn and prepare adequately for recovery 4. Rectify a lack of understanding of careers like engineering among parents and educators. 5. Emphasise science in the education sector 6. Demonstrate a higher appreciation of the importance of technical skills “The availability of highly skilled engineers is a crucial factor in the long-term future of advanced manufacturing in the UK but British companies are becoming increasingly dependant on international recruitment,” says Martin Kinsella, engineering manager at Comau Estil.
Energy The availability of secure and competitively priced energy is a fundamental requirement for business and society. The combination of this with the requirement for the sector to develop as a part of the low-carbon economy is undoubtedly going to prove challenging. As a typically high user of energy, the manufacturing sector requires commitment from government that the necessary steps will be taken to ensure the energy industry can meet its obligations. Industry suggestions 1. Provision of support to the nuclear, renewables and fossil fuel industries for the construction of necessary new infrastructure 2. Assistance for the related manufacturing sectors to help build infrastructure 3. Provision of a simplified system of incentives to stimulate business while preserving the competitive position of UK industry 4. Develop competitively priced feed-in tariffs 5. Ensure that the price for carbon becomes strong and stable in order to encourage low carbon generation The risk to supply and cost of energy is one of many factors hindering investment in manufacturing in the UK,” says Fiona Ferguson, media and government relations manager, Chemical Industries Association. “How will it be ensured that manufacturers will have access to competitively priced, reliable baseload energy supplies, when many proposals for schemes such as feed-in tariffs subsidies to wind power add greatly to energy costs but little to reliability of supply?”
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Lead story What manufacturers want
Sector-specific issues
]
Automotive
With the drive to a low carbon economy, continued investment in low carbon vehicles (LCV) and related technology is a vital concern for UK-based car manufacturers. There is a strong industry feeling that more is needed to ensure that the UK stays at the forefront of these emerging technologies. Low carbon technology powered by renewable energy can be implemented to greatly reduce carbon emissions in the transport sector. Employing 850,000 people, with a turnover of £50bn and producing some 1.5 million cars annually, the UK’s automotive sector has a global reputation for research and development, design engineering and manufacturing. The UK also has a world-class science and research base and a superb reputation for innovation. The Government has introduced several legally binding targets that aim to reduce the nation’s CO2 emissions by at least 80% of 1990 levels by 2050. The UK’s transport sector accounts for almost 24% of the nation’s CO2 emissions. Of this total, road vehicles (cars, HGVs and LGVs) account for nearly 80%, so there is an urgent need for alternative methods to power them, a message voiced strongly by the Automotive Council, jointly chaired by Lord Mandelson and ex-Ford boss Richard Parry-Jones. A range of incentives to encourage the consumer to purchase electric or hybrid vehicles have been announced in the last 12 months. The latest will see the Treasury foot a 25% discount up to a maximum of £5,000 on the cost of a new ultra low carbon vehicle from next year. These, combined with the introduction of a limited electric-car charging network, suggests the ways and means of how to generate power for the nation’s new nonfossil fuel fleet needs urgent attention and joined-up government thinking. According to Richard Butler, CEO, Caparo Vehicle Products Group: “There is a strong industry feeling that not enough is being done to ensure that the UK stays at the forefront of these emerging technologies, and that ‘investments’ or ‘support’ from the government thus far has been little more than gesture investment.” Industry suggestions 1. Current EU emissions targets for average emissions (95g/km by 2050) fall short of what is actually required, according to the Institute of Mechanical Engineers (IMechE). IMechE considers that a maximum of 30g/km by 2050 necessary and achievable
2. Government should introduce a policy framework linking the increased use of low carbon vehicle technologies with an increased generation of electricity from renewable sources 3. Continued development of incentives for the consumer to adopt low carbon vehicles in conjunction with a long-term education campaign of LCV technology 4. Set targets and a policy framework, in line with EU regulation, for an electric car charging network throughout the UK, including battery replacement stations. A standardisation of batteries would enable this network to have a viable, long term future 5. Government and councils should adopt a policy of only purchasing low carbon vehicles where there are clear emission gains
Aerospace
The UK supply chain of some 3,000 aerospace companies forms an important part of most of the world’s biggest international aerospace programmes. According to Ian Godden, chairman of ADS, the aerospace, defence and security industry trade body, technology investment and upskilling are the way the industry plans to stay ahead and government investment in early stage research is the lifeblood of the industry. The aerospace industry needs continuous partnership and support from the Government to enable it to compete for work on future programmes estimated to be worth $3.1 trillion globally. Industry suggestions 1. Investment in collaborative research and development to drive down risk and enable technology transfer 2. Support for an Aeronautics Research Institute to coordinate national research programmes and provide a stronger voice for the industry in Europe 3. Investment in skills and training to provide a workforce that attracts international investors 4. Cabinet level support for big programme campaigns and UK aerospace exports 5. Recognition that aerospace provides ‘green collar’ jobs
Chemicals and pharmaceuticals The products and services of the chemicals and pharmaceuticals industry deliver clean water, medicines, nutritious food, clothing, housing and transport, modern communications and leisure activities. Raw materials developed by the chemical industry are utilised by the rest of manufacturing including aerospace, automotive, electronics and environmental technologies.
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Lead story What manufacturers want
Chemical and pharmaceutical businesses comprise a £60bn industry in the UK. Every day for the past decade the sector has improved the UK balance of trade by £20m, according to the Chemical Industries Association. Industry suggestions 1. Government should promote the value of the chemical industry and include it in the definition of advanced manufacturing 2. Tackle the ever growing burden for businesses of regulation compliance while enabling businesses to predict the cost of compliance 3. Support innovation through investment in an academia sector with strength in key science disciplines both in teaching and research 4. Government should benchmark itself against competitor nations to maximise UK opportunities for business 5. To encourage investment across the UK, planners, regulators and policy-makers need to present a joined-up approach
Defence
An investment of £100 in defence yields a total return of £277 for the economy and one job created in defence delivers 1.6 jobs elsewhere, says ADS. The sector employs over 300,000 in its extended supply chain with people working in the industry across all regions of the country, generating more than £35bn per year. The industry is concerned by the possibility of government spending cuts in light of the ballooning budget deficit despite its considerably high return on investment and significant export earnings. Industry suggestions 1. Increased research funding to feed the pipeline of new ideas that makes Britain competitive in defence 2. Integrate an industrial strategy with the strategic defence review 3. Support from the Prime Minister, the Foreign Secretary and the Business Secretary, as well as the Defence Secretary 4. Debate regarding the efficiency of UK MoD procurement in comparison to other countries 5. Increase our bilateral co-operation between trusted nations to be able to afford our full security needs in the future without giving away crucial sovereignty over key technologies According to Andy Stevens, CEO, Cobham: “The Strategic Defence Review which has held back the long term planning of so many SMEs in A&D at a time when they are working hard to manage the effects of the economic downturn.”
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Food and drink
Food and drink production is the UK’s largest manufacturing sector, employing 440,000 people and generating exports of £9.65b in 2009. A common industry perspective is that, despite its massive contribution to the domestic and export market, it is taken for granted by government. The industry is hoping to not only continue its sustainable development but is also hoping to be placed at the core the government strategy for economic recovery. However the sector is also facing continued pressure to produce more food sustainably to respond to mounting environmental challenges and help provide food for a growing world population. Industry suggestions 1. Government make a public commitment that a successful food manufacturing sector will become a strategic priority 2. A coherent strategy for food, and an economic and regulatory environment that allows the sector to prosper while ensuring future food security against the combined effects of climate change, higher global demand and increasing pressure on finite resources 3. Protect innovation through investment 4. Assistance for the industry to become more sustainable.
Renewable energy
As one of the most publicised emerging markets in the UK and potentially one of the most important, the renewable energy sector has enjoyed considerable government support. Approximately 5000 people are currently employed by the wind, wave and tidal energy sector. If capacity is rolled out to satisfy 2020 renewable targets, the number of related jobs are estimated to rise to around 70,000. The industry boasts a host of prospective future benefits including a comparative decrease in energy bills when balanced against a continuation of oil and gas consumption as well as a strong future export market. However considerable investment will be required to realise the aspirations of the market with Ofgem estimating in its report ‘Project Discovery’ that the industry would require around £200bn worth of investment by 2020. Industry suggestions 1. Development of a strategic plan for the delivery of key energy infrastructure including super hubs around strategically positioned UK ports. 2. Introduction of a ‘Green Bank’ to encourage investment 3. Reform of the regulatory regime to ensure delivery of low carbon measures and enable investment for a significant expansion of renewable energy by 2020 with a plan for expansion to 2050. 4. Introduction of a streamlined and properly funded accreditation scheme for micro generation and small systems technologies 5. A commitment to the roll out of a smart grid network by 2030 end
Have your say at www.themanufacturer.com
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04/05/2010 11:31:24
Interview name
Thursday 20th May 2010
Inspiring Operational Excellence Chesford Grange, Kenilworth, Warwickshire
Leading Organisational Change
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Sponsored by
Listen–Observe–Challenge–Action Have your saywww.leanmj.com at www.themanufacturer.com To book online please visit: TM MAY 2010 final.indd 21
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04/05/2010 11:31:27
Inspiring Operational Excellence AGENDA 09:00
Coffee, registration and networking
09:30
Welcome and house keeping
09:40
The need to change the way we change
Credit Suisse will expose the compelling need for innovative change and strong leadership in today’s business world. Focusing on the responsibility of leaders to constantly question methodology and search for the next step improvement, Harder will show that a passive approach and complacent use of tools will leave an organisation vulnerable.
11:10
Coffee and networking
11:40
Creating a true win:win on cost and performance
A live case study with insights into the BT Global Services’ ‘Billing Plus’ programme, involving the outsourcing of a complex operation and IT support function across the globe. The session explores the challenges they faced and the approach they used to overcome obstacles.
Brenton Harder Credit Suisse, Vice President Operational Excellence
10:10 Understanding the compelling reason to change
Expert panel members will give Biography ???????? personal insights into leading ????: ????: ????: ????: ????: ????: ????: ????:
major change transformations and ??????????????? will explore how the context and environment surrounding their projects ??????????????? impacted on the way change was ??????????????? realised. The session explores the ??????????????? critical success factors to making change happen and will culminate with ??????????????? questions to the panel. ??????????????? Peter Watkins ???????????????GKN, so what the hell Global lean happens when you have tyrp htd enterprise and business sjhjhfjhdj excellence director ???????????????Fernando Navarro
Bill Bird Moorhouse Consulting, PMO Director, Billing+
12:25
Morning conclusion
12:40
Lunch and networking
13:40
Work stream A: One Team — Leading everyone, everywhere, everyday
LINPAC Packaging share organisational and individual learning from the roll out of a global way of working LPOS (LINPAC Packaging Operating System). Key players will share the highs and lows of the journey so far and outline their strategy and vision to engage their people to optimise processes by 2014. The second half of the workshop will involve a facilitated table discussion to explore how to tackle the key blockages to change.
BNP Paribas, Business transformation leader UK
Ann Essain Warwick Medical School, Associate School Professor
Andrew Board BT Global Services, Delivery Director, Billing+
Rhian Hamer Head of Lean, Ministry of Justice
Chair - Andy Spooner Suiko, Business Development Director
Chris Horton LINPAC Packaging, Vice President Operations Mike Salkeld LINPAC Packaging, Head of Lean Enterprise Garry Trotter LINPAC Packaging, Best Practice Share Manager
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Interview name
13:40
Work stream B: Leading through change: in charge but not in control Research has shown that 70% of all change projects do not realise their project objectives because they fail to win the hearts and minds of the people involved. During this thoughtprovoking and interactive workshop delegates will: Gain practical insights into how organisational change really happens Explore the human and messy side of change Learn to engage with these hidden dynamics in order to lead change more effectively
Tea and networking
14:55
Work stream A: Achieving profitable growth and sustainable change
This work stream is a hands-on workshop to explore the use of the Suiko How™ change assessment. The assessment will enable you to get others to better understand the execution gap and guide you to the next steps in delivering effective change. Get involved and gain access to a tried and tested assessment process which you can take back to your live projects.
14:55
Andy Marsh Suiko, Managing Director
Work stream B: Realising the benefits from organisational change.
In 2009, the Financial Times and Moorhouse Consulting undertook the UK’s largest and most comprehensive, survey into the benefits of organisational change. The findings have led to the development of ‘Balanced Benefits
TM MAY 2010 final.indd 23
Dom Moorhouse Moorhouse Consulting, Managing Director
16:00 Insights into gaining competitive advantage
Question time panel - An opportunity to grill a panel of experts, each have a viewpoint and are exponents to a range of different methodologies. The session gives you a chance to question the panel on a range of challenges today’s leaders nonse Lit, sendremthat velent amcommy face when seeking to gain ming esequis eu faci bla augiamet competitive advantage.
Dominic Mahony Lane4, Europe Practice Director, Olympic Bronze medallist and current Team Manager for GB Modern Pentathlon
14:40
Realisation Management’ – defining thought leadership on this topic. During this informative session, in addition to hearing the key survey findings, delegates will learn how a benefits-led approach to programme definition can make the difference between success and failure.
nonumsa ndipit augiam et veliquis Dr Keivan Zokaei nostrud magnim quam, sisl Lean ute venim irilit Director of MSc praessi tat duntOperations, Lean Enterprise Research Centre
Name, company jhjhjhjhjhjhhjhjhjhjhjhjhjhjhjhjhjhj
Dr Andy Wood Managing Director, Adnams and Cranfield Alumnus Mike James-Moore Senior Fellow, WMG
Nigel Newman Master Trainer, Edward de Bono foundation Chair - Brenton Harder Credit Suisse, Vice President Operational Excellence
16:45 Drinks reception, networking and discussion. Sum up the day with your peers over informal drinks. Sponsored by eBECs In association with Have your say at www.themanufacturer.com
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Inspiring Operational Excellence
It’s the manufacturer
Despite the continued uncertainty in the business world, the proactive are continuing to seek out opportunities to improve. For many businesses that are in the process of implementing new ways of working there will be the STANDFIRST Oborperillam etwhether dui tis el ilit vel ing ectet, inevitable challenge around wisfollowing nis adit luptatum ex erat wisim zzrilla theveliquamet business is the rightzzril path. augait nonse ea augait iustrud duis accum digna faci Join other leaders, key stakeholders blamet, quisit luptat. Wisisit, qui eril eugait dolorper iure ea and implementers of change for a day facilis niam, sustie magna at. of listening, observing, challenging and Esto commolorpero od modignim volorperit vel ent irit am taking action. Together explore the iniat at prat lum zzrit, quiswe alitwill at iriure moluptatum del ullan topic by asking 3 questions: velis nostrud dolor sis ecte del enisi. WHY is the pursuit of operational excellence valid? WHAT are the principles and methodologies that need to be in place? HOW do you approach the change process to maintain the necessary pace and ensure sustainability of the solution? Our explorative programme will include a variety of interventions to inspire you not only to look at what you already have achieved but to also look at things differently with a fresh pair of eyes. The day will draw on from a balance of nim dolenit, senit exer expert practitioners, facilitators and alis accum numsan eugait dolor inim zzrit augiamet la faciliquat lut lorper thought leaders from both business si. Bor ilit luptat. Ut velendre min utpatum eros esse andcommy academia. nullam iureros ea at lut ea facil euguerat,
Loreros
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To book online please visit:
www.leanmj.com Or call Benn Walsh on +44 (0)207 401 6033 Email: tin hent lum at. Ignit lut lut dolor sequipit ametums b.walsh@sayonemedia.com andionullaor aut prat acipsum dolor iusci eril dio consecte dolore ming el dio odiatin ullandit lorper sumsan ea augiam eetuero essequisl Costquat pernullaor delegate is exer sed do odip eugiat, si ting euis eugait augait ÂŁ345.00 inc VAT. praesectet ilisim vel doloreet wisl erostin heniscilisi. Fee one dunt dayadit la Et, quipit erit velitincludes utat. Alis nonum feu feu feugueconference, vero odit aut augait, quatet lunch vulputat aut num vent nulput ipsusto eu feuis nissit, velenit and refreshments. augiam nonsequisit autet illaorem ex eu feugait enim delesto exerit auguer sequatum del ilit, quate enis ad te faccum digna facin velesto del will iustie exer Multiple bookings ing ex euiscip esed delisi bla con heniamet iurero recieve preferential rates. odipsus cipsusci bla facilis sequis ad tionsenim zzrit prat, sim nulla faci blamcon et iustrud molobor percin henim quat. LMJ subscribers benefit Velit atisi. Ercidunt dolobor eriustinim nulluptat
from a 25% discount off the prevailing rate.
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04/05/2010 11:31:43
Interview David Fox
Fantastic Mr Fox: Power Panels Electrical Systems is posting 99.97% quality under Fox’s stewardship. Now he hants to tell the world about PP Business Improbement
Fox unearths a
golden goose David Fox has taken Power Panels from a small electrical systems business floundering in obscurity to arguably the best company in its market in the world. Part of that success is due to the conviction that applied workshop training is at the heart of business improvement, a message he wants to take to the world through his business improvement consultancy. Will Stirling reports.
David
Fox looks me in the eye and delivers his next punch line. “We’ve just saved 170 hours. We can put all that into training to save another 170 hours. It’s a selfgenerating solution,” says the chairman and chief executive of Power Panels Electrical Systems. The boss of the Walsall-based manufacturer of electrical and electronic assemblies and systems is on a mission to convert UK manufacturing to his training school of thought – staff training is not a cost but, if done correctly, an investment. “On a recent project, it took us 30 hours training to save 200 hours, so the investment was almost 7 to 1. Do that continuously, and you more than pay for the cost of the training. This is my strongest conviction that people don’t understand. Training is not a cost.” Fox is talking about his newer company, PP Business Improvement, a value-add training and manufacturing process analysis consultancy launched in 2000. Before then, his main focus for 20 years was Power Panels Electrical Systems (P.P.E.S), the larger company which has grown rapidly from a turnover of £4m in 1990 to about £20m in 2009. Much of that growth has come since the launch of PP Business Improvement, and the
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two companies are a perfect fit, one identifying savings in and leveraging the productivity of the other. The consultancy, which has delivered some impressive results based on time savings for clients such as the MoD’s Defence Support Group and energy generation firm ENER-G, was borne out of P.P.E.S’s relationship with a key customer in the early 1990s which helped accelerate the company’s growth via raising its quality performance. Fox himself recounts the story in a direct style, a man who has total conviction in what he is doing.
Biography David Fox Leaves school aged 15. Studies electrical engineering at technical college for four years 15-17yrs
Trials for Warwickshire County Cricket Club and West Bromwich Football Club
1955
Five year apprenticeship at George Ellison, plus two years as a draftsman
1961
Internal sales engineer, Chamberlain & Hookham, part of GEC Group
1963
External sales engineer, Square D Ltd
1973
Regional sales manager, Simplex GE
1980
Buys Power Panels (P.P.E.S), a company in a depleted condition
1993
P.P.E.S becomes supplier to Yamazaki Mazak who focuses them on achieving the highest achievable quality through a demanding supplier development programme
2000
Launches PP Business Improvement, a consultancy
2005
P.P.E.S. wins three Best Factory Awards
2006
Wins two IMechE Manufacturing Excellence Awards
2008
Wins four Best Factory Awards
David has learnt to fly both fixed wing aircraft at 40, and later helicopters, which he describes as his greatest achievement. Enjoys reading business books, particularly those by Jack Welch, Eli Goldratt and Tom Peters.
The Yamazaki way In 1980, while working in senior management for Simplex GE, Fox took an opportunity to buy and run his own company. Power Panels then was little more than a name, the company had few assets of real worth. Then, as now, it manufactured electrical control systems, specialising in systems for equipment used in automotive parts factories to control, for example, oil mist and fume extraction plants, or paint spraying lines. In the 1993, Fox says he was “blessed” with meeting Yamazaki Mazak, a leading Japanese machine tool manufacturer. Yamazaki Mazak (Mazak), established in the UK in 1987, had a reputation to protect and had high expectations of its suppliers. It helped that P.P.E.S was working for Toyota and Mazak was using the Toyota Production System, and when Mazak tendered to 11 companies in the UK for its electrical systems, it chose P.P.E.S. The cigars remained in the box, however. “The feedback that returned with the first order was “you’re OK, but the best of a poor bunch”,” says Fox. In 1993, Mazak expected its suppliers to deliver quality standards above 90% – over 90% products with no defects of any type, which took into account on-time delivery. At the time, its minimum requirement for suppliers was 85% quality and delivery, a benchmark it advertised proudly on a suppliers’ performance league table in the reception of head office. P.P.E.S’s quality standard was 94% but Mazak wanted more. The two companies worked closely together. “We’re a company that tries to develop suppliers,” says Richard Smith, group production director for Yamazaki Mazak Europe in Worcester. “When they started they weren’t up to the necessary quality level, but we worked with them to lift this and to solve their problems.” What made P.P.E.S special? “They’re always striving to improve and are never arrogant enough to think they’ve achieved that,” Smith adds. “They listened and took on board what people told them to do. David is a dynamic leader of the company and has set a tremendous example.” By 1998 P.P.E.S had lifted its game to 98% quality, claiming Yamazaki’s Supplier of the Year in 1998 and 1999. “Quality standards in Japan weren’t as good as 98%, so they saw us as doing a first-class job. Everybody at that time thought 98% was world class.” But Fox identified that the big automotive firms were often achieving higher than 98% quality, and also that the Japanese system focused entirely on the process, not the people. In 2000 P.P.E.S opened its own in-house training school, “the best decision I ever made,” says Fox. It had two objectives: copy the automotives on quality and introduce six sigma to the process; and develop and improve the culture in the business.
Training to gain, and again PP Business Improvement, a subsidiary company, started life as an extension of P.P.E.S’s own staff training scheme. Fox hired two six sigma green belts from the automotive industry and embarked
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Interview David Fox
on a thorough cultural improvement journey. “We spent lot of time trying to improve the culture by looking at the people, like the Jack Welch ‘ABC’ approach, which weeded out those who were the worst fit,” he says, in reference to the mercurial boss of General Electric whom Fox had worked for while at Simplex GE in the 1970s, and who had been a big inspiration for him. From 2000 to 2003 they analysed and assessed the staff. “It’s fair to say it was tortuous, a horrible period. But it had to be done.” P.P.E.S weeded out about 25% of the headcount in this period, in many cases because people were dissatisfied and in the wrong job. “When you focus on culture change you see things more easily,” Fox adds. “We’ve spent an awful lot of time lately helping other companies to embrace this sort of logic.” Since 2003, PP Business Improvement has evolved from an in-house advisory department to a formal external consultancy, which works with companies on business improvement methods who visit P.P.E.S’s factory and see the theory being applied on the factory floor. The P.P.E.S consultants visit the clients’ plants, often for long periods, to see that the improvements are being applied by people in the manufacturing process. It’s the focus on training in the workshop not the classroom that gets the enthusiastic Mr Fox even more animated. “My belief is that all workshop-based training has got to be done in the workshop, in the arena that people are operating in. You cannot do workshop training skills entirely in a classroom.” Training for manufacturers, he maintains, is often too generic and is “not designed to improve a business, but more to satisfy some sort of mandate from a quango.” His favourite example of this is learning to drive. “You cannot learn to drive a car from theory any more than you can learn a series of workshop skills. Fundamentally I think the Government is wasting our money by trying to teach skills like this in a classroom,” he says, referring to some state-funded training schemes which, in his view, do not spend enough time in factory environments. This point raises the intriguing question of how effective manufacturing training is delivered by non-manufacturers – if every factory and each product is different, broad-brushed skills training is hard to deliver to companies from single bodies that devise training programmes for entire sectors. “We give every person we employ about 200 hours of training a year. A minimum of 60% of this is on the shop floor, learning to use the skills you’ve been taught the theory of.”
Unearth the hidden factory In 2003-4, it occurred to P.P.E.S that they could develop their own suppliers in the same way Mazak had helped develop them. Gradually their suppliers joined the P.P.E.S training sessions and it progressed, so that suppliers to their suppliers came on the courses. Why do they come? Eleven of P.P.E.S’s
Doesn’t our country need a boost? I want to share what we’ve learned with everybody in the country David Fox, chairman and chief executive of Power Panels Electrical Systems customers are the best in the world at what they do, Fox says. “We don’t have that sort of customer profile by accident – we have to keep investing in new technology and people, to keep up with these top companies and stay ahead of the game.” PP Business Improvement worked on a cross-site improvement programme with Defence Support Group (DSG), a large defence equipment support provider. Called Operational Excellence, it involved audits of current working practices from sales and operations, to planning and improving staff morale which involved a training roadmap. Over six months, much of which was spent at the sites, DSG saved 17,415 process hours, equating to more than £113,000. It’s an example of what Fox calls the hidden factory. “The problem we have to convey to people is there’s so much going on in factories that nobody records, so much waste. My absolute contention is you must unearth what in six sigma language is called the hidden factory, you can more than pay for the cost of training and gain on top by reducing waste.” Perhaps the best endorsement of the consultancy’s efficacy can be found at P.P.E.S itself. “Since we’ve had the training school we’ve grown P.P.E.S to about £20m in 2009 [£11m in 2005 when it won the Best Factory award], but more interestingly profitability has grown from 2%-3% in 2000 to between 12% and 15% this year,” says Fox, who adds that P.P.E.S is extending the factory with a two storey block and will not need to borrow from the bank, because of the cash freed up from uncovering the hidden factory. The National Skills Academy for Manufacturing recently agreed to endorse the consultancy as an accredited body to award NVQ Level 2. “We want to up the ante to Level 3 and 4, or even 5. Level 2 is only an awareness level. The politicians keep pushing it but it won’t make your business better,” he says. All staff
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Interview David Fox
at P.P.E.S – factory, administration and sales – are trained to NVQ Level 2 Awareness. All management staff in any department are trained to NVQ3, equivalent to six sigma green belt at the company. A big Training Roadmap is displayed on the shop floor, which shows staff the level they can reach with certain training grades, linked to a pay range. “For anyone who’s motivated they can get further. We’re now working on the first, second and third levels being compulsory.”
A promising talent David Fox, a tall, imposing man with a strong West Midlands accent, began his career with a five-year apprenticeship at George Ellison, a manufacturer of electrical distribution systems, and had trials for Warwickshire County Cricket Club and West Bromwich Albion FC. After working for Chamberlain and Hookham and then Square D Ltd, he was headhunted by Simplex GE and became the regional sales manager for the Midlands, under the supervision of mentor Jack Jameson, who taught him selling skills beyond the industry-standard “features and benefits.” In this period, he worked for Jack Welch, who would go on to run GE for 20 years. Fox was inspired by Welch and has applied some of his management techniques within the Power Panels group. The opportunity to take on Power Panels as a concern arose in 1980, beginning a 30-year chapter that has
turned P.P.E.S into a world class company operating at 99.97% quality, “which is approaching six sigma levels of quality,” says Fox. “That is an extraordinarily high percentage when compared with other countries, and much better than they’re doing in Germany, the US and Japan, within our marketplace.” Fox’s drive to improve extends beyond his company. The business is open to anyone to look at and learn from, he says. Is there a risk that direct competitors could copy P.P.E.S’s trade secrets? “Competitors can come if they want to; having a look doesn’t mean they can do it. And doesn’t our country need a boost? I want to share what we’ve learned with every manufacturer in the country.” A sceptic might add the consultancy will make a nice earner en route. But Fox says with real conviction: “This doesn’t sound genuine but it is – I don’t want to make any money out of this, I want others to benefit from what we’ve learned.” David Fox has spent his working life in the electrical control systems business, but the last 30 years has been devoted to seeking continuous improvement. Now, with a proven formula at P.P.E.S Business Improvement, he says it’s not about making money but about sharing their knowledge with the manufacturing sector and beyond. This is a Fox who has found the golden goose but is happy to have everyone over to try his world class omelette. end
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28 TM MAY 2010 final.indd 28
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Leadership and Lean
Location
location location A manufacturer of spiral-wound tubing used in specialist electrical insulation applications, West Sussex-based Lamina Dielectrics is something of an export success story. Over 90% of the company’s output is shipped overseas. Malcolm Wheatley investigates.
Formed
from materials such as polyester, polyamide and fluorinated ethylene propylene, the company’s products can be found in loudspeakers, refrigerators and air conditioners, as well as in more esoteric applications — the particle detectors used in highenergy physics, for instance, with the recently-built Large Hadron Collider at CERN in Switzerland being a case in point. Yet despite the potentially lower costs — and greater profits — available from shifting output to low-
Specialist tube manufacturer Lamina Dielectrics manufactures in the UK to protect its skills base and IP
cost overseas economies, Lamina Dielectrics remains firmly wedded to its two-acre site in Billingshurst, just south of Horsham. Moving overseas, says Patrick Hester, the company’s chairman, “Is just something that isn’t up for debate.” Yes, he concedes, going overseas could reduce costs. But, he insists, for several reasons it’s simply not going to happen. Indeed, the idea hasn’t been discussed in years, so firm is the belief that far from creating opportunities, an overseas move could in fact critically damage the business. Welcome to the complex new world of supply chain network design — a once-predictable field where decisions about where to locate manufacturing operations were formerly based on a well-understood handful of clear-cut variables that hadn’t changed in years. Go back to the 1970s and 1980s, for example, and just a handful of factors weighed on companies’ decision processes. Transport costs; relative wage rates; government subsidies; tariffs; currency exchange rates. There weren’t, at the end of the day, that many factors to consider. Admittedly, ‘postponement’ and economies of scale strategies sometimes added to the mix, as did
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decisions about where — and at what stage in the manufacturing process — to hold inventories, but the resulting calculations weren’t complex. ‘Hard hedging’, where businesses tried to match the currency mix of their purchases with the currency of their sales, was another popular strategy of the time, pursued by, among others, mainframe computer manufacturer ICL. But very often it often turned out that just one or two variables would effectively carry the day. In the case of bulky or heavy products, for example, transport costs were front of mind. With perishable goods, it was transport time that ruled the roost. And with process industries, especially in the petrochemical sector, it was transport mode that mattered: rail, sea or pipeline as appropriate.
Europhiles In other instances, government subsidies of various kinds played a significant part in the decision process, especially where the manufacturing process was labour-intensive and thus job-creating. When Ford built its massive engine plant in Bridgend in the late 1970s, the plant that now produces a huge percentage of the company’s worldwide engine output, government subsidies through tax breaks and regional development aid heavily influenced the decision. Similarly, government inducements saw companies such as Dell, Intel and Microsoft set up manufacturing facilities in Eire. In the 1990s, especially in multi-plant businesses, following the establishment of the Single European Market in 1992, economies of scale began to play a greater part. The name of the game? “Consolidate to scale, and work fixed assets more and more efficiently,” explains Alan Braithwaite, chairman of Berkhamsted-based international supply chain strategy consultants LCP Consulting. Unilever devoted considerable resources to optimising a significant proportion of European manufacturing operation, centralising Europe-
wide production of each major product group on a handful of sites, balancing economies of scale against increased inventory holding and higher transport costs. Ford, meanwhile, began a Europe-wide consolidation exercise that is still ongoing, and which would eventually see vehicle manufacturing centred on plants such as Köln in Germany, Valencia in Spain, and Genk in Belgium — leaving only Transit van production carried out in the UK, in Southampton, and with a portion of output being shared with Kocaeli in Turkey.
Going global Come 2000, and the ground rules began to change yet again. The creation of the euro wiped out, at a stroke, choices between individual European countries on the basis of currency considerations. European lawmakers, too, began to impose limits on the ways in which member states could provide incentives and inducements to manufacturers moving there, eliminating some of the games of ‘musical jobs’ that had seen manufacturing operations uprooted from one European country, just to be plonked down in another, simply to attract a higher level of subsidy. ‘Globalisation’ became the buzzword, with manufacturers looking longingly at the low wage rates on offer in Eastern European countries — especially those inside the European Union — as well as at emerging Far Eastern economies such as India and China. Yes, some of the old considerations remained. Transport costs, tariffs, wage rates: these were the critical considerations. But over such extremes of distance, they took on disproportionate importance. “What businesses didn’t understand, as they did the calculations, was that you need to factor in the impact of uncertainties and longer lead times,” says Charles Davis, a partner with London-based consultants A.T. Kearney.
Specialist tube manufacturer Lamina Dielectrics has over 30,000 square feet of manufacturing space in rural West Sussex
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Leadership and lean
Off-shoring up Because to truly establish the extent to which offshoring really made sense, companies needed to build such factors into what has become known as a ‘Total Landed Cost’ calculation. The idea: compare the cost of domestic production with the total cost of bringing the same item onto UK soil; the overall ‘landed’ cost, in other words. The fly in the ointment: include in your calculations factors such as additional inventory holding required by overseas manufacturing, and the lack of responsiveness brought about by longer lead times, and it turned out that for many manufacturers, off-shoring wasn’t the goldmine that they had anticipated. “The drive towards off-shoring has been very powerful over the last ten years, but there are now some challenges to the value proposition,” warns Mike Bernon, a senior lecturer in supply chain management at Cranfield’s School of Management. And those challenges, he adds, are starting to overshadow long-established considerations such as relative wage rates and other cost-based offshoring inducements. Reputational risk, for instance, is increasingly giving manufacturers cause for concern. Such concerns used to be centred on quality issues — think of China’s various quality-based scandals, for instance. No more. Child labour, health and safety abuses, pollution: increasingly, having seen manufacturers such as sportswear firm Nike get their fingers burned, companies are wondering how to evaluate the potential dangers of bad publicity in their location decisions. Sustainability, too, is moving centre-stage as a reputational risk, as lobby groups — and consumers — become increasingly aware just how far goods are being transported to reach them. “Sustainability is undeniably increasing the pressure for local manufacture,” says Bernon. “It’s not a pressure that’s going to be seriously affected by a 30% cost difference, but some production will undoubtedly come back.” Responsiveness, too, is another factor that is increasingly focusing manufacturers’ minds. China might be cheap, goes the logic, but it’s an awful long way away. The result: a growing number of manufacturing business specialising on satisfying the demand for quick turnround and short batch run manufacturing. And the government isn’t complaining, often helping to fund such ventures, in a throwback to the subsidy largesse of the 1970s and 1980s.
Taking it back? Take Warrington-based United Electronic Manufacturing Services, established late last year, which received funding through the government’s Enterprise Finance Guarantee scheme — as well as loan funding from Royal Bank of Scotland’s
Lambert division — to provide low volume contract manufacturing services, when established. And the surprise, says director Craig Helm, has been just how successful the business has been, even at winning higher-volume business. “With sterling getting cheaper, we are winning business back from the Far East,” he says. “Companies are definitely getting better at understanding Total Landed Cost.”
We’ve a highly skilled workforce, our own tool room in which we develop or adapt our own production machinery and if we moved abroad, that technology would inevitably leach outside the company Patrick Hestor, chairman, Lamina Dielectrics
And they are also getting better at understanding the difficulties posed by intellectual property right protection, adds Jayne Hussey, a partner at London law firm Pinsent Masons. Especially when combined with legal systems in which the notion of intellectual property is either poorly defined or poorly enforced — and when it is foreign companies that are making a complaint. And that, it turns out, is one of the most significant factors keeping West Sussex-based Lamina Dielectrics in the UK. “We’ve a highly skilled workforce, our own tool room in which we develop or adapt our own production machinery and if we moved abroad, that technology would inevitably leach outside the company,” says chairman Patrick Hestor. “It really is all about intellectual property protection.” In short, concludes Paul Christodoulou, senior industrial fellow at the University of Cambridge’s Institute for Manufacturing, when it comes to location decisions, “there isn’t a single right answer.” The Institute has made a study of how a number of leading manufacturers — including Cisco, Philips, Zara and GKN — have approached the question of location, and has come to the conclusion that the calibre of the decision process itself is the critical factor to get right. “Companies have tended to approach location decisions opportunistically, and in a short-term ad hoc manner — which can lead to the wrong decisions being taken,” he says. “Taking a more systematic approach provides huge benefits.” In short, as companies presently relocating from China back to the UK — or from China to Eastern Europe — can confirm, location decisions conform to an age-old rule: decide in haste, repent at leisure. end
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Telepresence l makes distance immaterial
Were you grounded by volcano dust recently? Or were you among a growing band of IT savvy manufacturers who avoided the travel chaos by using video conferencing services to stay in touch with customers, suppliers and colleagues? Campbell Macfarlane at BT talks to The Manufacturer about the need for a telepresence.
Audio
conferencing is widely used in UK manufacturing and has become accepted as part of the fabric that holds supply chains together. Less familiar is video conferencing, increasingly positioned by IT vendors as a way to avoid the expense and drudgery associated with travel. The Manufacturer spoke with BT’s Campbell Macfarlane, responsible for providing communications infrastructure and services to globally active UK manufacturers. “Video conferencing has come a long way in the last three years. The jitter and delay associated with early services is largely a thing of the past,� he says. But is video conferencing a real substitute for physical meetings? The answer depends on the video conferencing service. There are dozens available, most of which are easy to use and deliver very acceptable
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Specialfeature Telepresence
performance. They range from free or inexpensive desktop-based ‘point to point’ video systems that enable communication between people in just two physical locations, to ‘telepresence’ systems that enable people to communicate from purpose-built conferencing suites with high resolution, life-size video and rich audio, creating a realistic and immersive environment for a conversation to take place. And in between, there seems to be a solution for most budgets and requirements. There is little doubt that video adds an extra dimension to conversations that makes information easier to interpret, enhancing collaboration and making the conversation more natural for those involved. But watching your interlocutor in a palm-sized window on your laptop, or on a large flat screen in a meeting room, or on wraparound screens in a ‘telepresence’ suite that provides lifesized images are all very different experiences. Campbell Macfarlane says a one-to-one video conversation on a laptop is certainly more rewarding than a phone conversation but it is more tiring too, demanding that participants divide their concentration over two media rather than focus on just one, and also requires that they actively filter out visual stimuli in the background, such as passers by, that are easy to accommodate in a phone call but which serve to distract on a video call. Convening with colleagues — or better still sitting alone — in a quiet meeting room to converse with others in another location on large screens is less demanding and far more rewarding. Still, such solutions with their smallerthan-life images projected onto a central screen do not impart the ‘really there’ experience of meeting others in person, no more than television gives the impression that one is no longer sitting on one’s sofa. The can’t–believe-you’re-not-really-here experience is, for now, the domain of the telepresence solutions alone. These typically require participants to sit in identically configured meeting rooms — often thousands of miles apart — furnished and designed to lull participants into thinking they are actually sitting around the same physical table as their colleagues in say New York or Singapore. Their large screens fill the peripheral vision of participants and give a sense of immersion, in principle similar to that of IMAX cinemas. It is often said that a technology becomes ‘magical’ when it disappears into the background, allowing the customer to do whatever he or she wants to without noticing the workings behind it. If this is true, then telepresence has indeed become magical and made the impossible possible. Macfarlane is certain that telepresence solutions can slash travel budgets as well as improve carbon footprints. “It’s not what customers tell me about the impact that telepresence and other high end video conferencing solutions have had on
Video conferencing has come a long way – the jitter and delay associated with early services is a thing of the past Campbell Macfarlane, BT
Has immersive videoconferencing rendered distance irrelevant?
their travel budgets. It’s what I see. When I see someone in a meeting room in London, instinctively and without a second thought, reach out to stop a pen rolling off a meeting table in Singapore, I realise that these solutions have rendered distance irrelevant and geography — as a barrier to communication — immaterial.” end
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y e h t o d w o H e that? k a m Foldaway bicycles Brompton Bicycle has manufactured its famous folding bikes for over two decades. Roberto Priolo investigates the eight stages behind their construction.
Its
Brentford, west London factory employs 100 people, including brazers, assemblers, engineers and designers, and these highly skilled employees ensure each step in creating a Brompton bike is characterised by attention to quality. It is labour intensive and complex work; a Brompton consists of around 1,200 parts, three quarters of which are unique to the Brompton. Due to the bicycle’s unique design, Brompton manufactures and builds almost entirely in-house, relying on just a few suppliers such as a wheel-building company in Wolverhampton and foundries in the Midlands. The bikes are completely hand-built, requiring high levels of training and expertise, and take six hours to put together. The only assembly stage outsourced is painting. By using brazing methods instead of welding, frames are stronger, a feature that is at the heart of the Brompton’s longevity and quality ride. Rigorous quality checks are carried out throughout the entire process and only after a final inspection to ensure it complies with the order specification does the bike receive the company logo.
Stage 1: Design A team of designers works on the Brompton models using CAD software. With 80% of the bikes’ components specifically designed and made by the company, the importance of design and R&D is crucial: half of the management resource goes into this area. Designers also create the tools and the equipment necessary to manufacture the unique parts a Brompton is made from 500 different purpose-built press tools, moulds, braze jigs and assembly fixtures have been produced already.
Five years ago, the factory produced 10,000 bikes a year. Today, its 26,000 and plans are to raise output to 35,000.
Stage 2: Engineering – Hinges In the engineering phase, design and manufacturing meet. Tube and extruded metals are formed and worked into the raw assemblies that will be combined by hand to make up the orders. CNC machines are used to make the hinges. They finish off the cast blanks ensuring the faces of hinges interface correctly with other parts of the bike.
Stage 3: Engineering – Steel tubes bending Tubes are bent using specially-adapted hydraulic presses. Almost all the manipulation of materials is done in Brompton’s factory, although in the company’s early years everything was done in-house, because no other company made what was needed to build the bikes. In time, Brompton was able to outsource some of the engineering work. The quality of raw materials is monitored throughout the building process.
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Stage 4: Brazing The bicycle goes through brazing rather than the more common practice of welding. Highly skilled and labour intensive, this method introduces less heat on the metal, keeping the frame stronger with less distortion. It also allows the company to keep using high tensile steel alloys which deliver a rigid frame. Only joints around the hinges are made by a machine: the rest of them are made by hand, and each Brompton part can be traced to the person who made it. Brazers become competent enough to work on every kind of joint only after 18 months on the job.
Stage 6: Sub-assembly of components Due to the unique design of the bike, many components are assembled in-house, such as pedals, bells, lighting and gear brake calipers. Every bicycle is made to order: different characteristics apply to bikes for different customers. For example, in some countries brakes are installed the other way around.
Stage 5: Painting This phase of the production is outsourced to a company in Cardiff, because it requires a large plant area and specialized expertise. Brompton has never relocated from West London, feeling this would jeopardise the quality of its hand-built bikes. Steel frames are rumbled (to smooth their surface), before they are sent off for painting, where they are phosphate pre-treated and then given a polyester powder coat finish. Once they are back at Brompton’s factory, the parts are inspected before being assembled.
Stage 7: Assembly of bike The actual Brompton bike takes shape now. The company doesn’t have an assembly line: bikes are hand-built by bike builders, who take responsibility for the work they do (a faulty bike will be returned to its assembler to be fixed).
Stage 8: Final inspection Every bike leaving the factory is given a final check by inspectors. They made sure previous inspections didn’t miss anything and that the product complies with the order specifications. Only after this, the logo of the company is put on the bike. Every little detail needs to be right, if the machine is to ride and fold properly. The inspection takes 30 minutes. The finished Brompton bicycle is now ready for dispatch.
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EntEr nOW
Celebrate Manufacturing for a Better Britain Having emerged from the recession stronger, leaner and with many new initiatives in place, UK Manufacturing is ideally placed to make a better Britain! Established over 10 years ago, The Manufacturer of the Year Awards competition is specifically designed to celebrate the strength and diversity of UK Manufacturing. So enter today and showcase your achievements. For further details visit www.themanufacturer.com/awards
The categories this year are: Leadership and strategy Innovation and design World class manufacturing People and skills IT in manufacturing Supply chain and logistics Operations and maintenance Sustainable manufacturing SME manufacturer of the Year Export manufacturer of the Year Financial and professional services Advanced manufacturing And the winner of winners category: The Manufacturer of the Year For further details contact Alexis Catchpole on 01603 671300 or email a.catchpole@sayonemedia.com The winners will be announced at a black tie gala dinner and Awards ceremony at Chesford Grange, Kenilworth on Thursday 18th November 2010. if you are interested in sponsoring an Award, please contact David Alstin on 01603 671307 or email d.alstin@sayonemedia.com
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PRS
Turn up your volume of productivity with music Playing music at work can lead to a happier and more motivated workforce and could increase the productivity of your business as a result.
That’s
according to research by MusicWorks, which surveyed 2,000 people working across various industries and found that: 82% said staff morale improves when good music is played at work, and 77% said that they are more productive when good music is being played. Other studies have shown an increase of up to 35% in productivity when fast-paced music is played to teams carrying out routine activities. This is clear evidence that playing good music can make a real difference to the working atmosphere and help boost the productivity of your employees. If your business also involves day-to-day contact with customers, you can use music effectively to influence their perception of your company. Whether it’s music played to callers on hold, or a TV in your reception area, there are many small ways that music can help you make a great first impression.
Make sure you’re licensed to play Many people are unaware that playing music for staff and 1. 2. 3. 4. 5.
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customers at work does come with a small upfront fee, as any business that plays music needs clearance to do so from the owners of that music. A licence from PRS for Music gives you the legal permission you need to play the music you want, however you wish to use it.
What it costs We know that times are tough for many businesses at the moment and every penny counts. So last year we introduced a new Music Licence for workplaces with four or fewer workers that costs as little as £44 a year . Larger businesses pay a tailored price depending on the amount of music they play and the size of their premises. So getting a music licence doesn’t have to break the bank.
We’re waiving our higher rate - for a limited time only You may be using music already, but do not have a licence. If this is the case, a higher rate normally applies in the first year of your licence. The good news is we’re currently waiving this rate – a reduction of 33% – if you call us today. We regularly contact
businesses across the country to assess whether they play music, so it’s worth contacting us first to avoid paying the higher rate. Factory owners are increasingly aware of how music can boost staff morale and positively affect their business. With 20% more factories in the UK buying a licence from PRS for Music in the last two years, using music in the manufacturing sector has never been more popular. PRS for Music collects royalties on behalf of songwriters, publishers and composers. Nearly 90% of our income goes to them so they can keep on making music.
For more information or to buy a Music Licence, call us on: 0800 694 7338 quoting ‘The Manufacturer’ or visit www.prsformusic.com
Music Works survey of 2,000 people, conducted in March 2009. Visit www.musicworksforyou.com for more details. Joint PRS for Music/PPL report into the Value of Music, A. North (2009). A Music Licence gives you the right to play our copyright music. If you use a TV, you also need a TV licence. Applies to Tariff I for the use of background music in staff-only areas, at work and during breaks, in workplaces such as offices, factories, staff canteens and rest rooms where music can be heard by four or fewer workers. VAT not included. Prices are correct at the time of going to press. Terms and conditions apply. Offer does not apply if we have previously contacted you about a licence. Terms and conditions apply.
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Unlocking
knowledge and understanding
The application of academic knowledge and expertise to industry through the Knowledge Transfer Partnerships scheme has enjoyed a long and prosperous history. Tim Brown finds out the latest from one of the most successful government sponsored programmes and investigates some other collaborative options.
The James Leckey Early Activity System
Knowledge
Transfer Partnerships (KTP) is a UK-wide programme enabling businesses to improve their competitiveness, productivity and performance through the forming of partnerships with an academic institution such as a university, further education college or research and technology organisation. According to KTP, the scheme is the best performing government-funded programme in terms of jobs generated and demonstrated performance.
An update Over the past three decades the KTP scheme and its predecessor the Teaching Company Scheme (TCS) have facilitated the completion of more than 10,000 such collaborative projects. At present there are 1000 partnerships operating in the UK. The Technology Strategy Board which operates the
programme for government now wish to double the number of partnerships and are putting increased funding in place. The knowledge sought through a KTP is imparted to the business through a project, or projects, undertaken by a recently qualified person (known as the associate) who is recruited to work on that project. KTPs can vary in length from one to three years (classic KTP) and from 10-40 weeks (shorter KTP), depending on the needs of the business and the desired outcomes. According to William Morris, senior KTP adviser, the reason for the success of the programme is that it is ensured that the academic and company partners are completely aligned in what they are trying to achieve before they start. “For quite a lot of very small companies, they have never done anything strategic before. What this programme
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Innovation design and the product lifecycle
does at the early stage, is force a company to present its business case as to why it should be undertaking this programme and demonstrate the likely benefits. The whole activity is then focused on delivering those business benefits. The programme obviously evolves as it moves forward but a KTP cannot be commenced unless [a company] knows exactly where it is trying to get to.” Following the commencement of a KTP, the associate is encouraged to get involved with the day to day operation of the company. “It is very important that the graduate engages with the company and that can be right down to the shop floor level,” says Morris. “There is a constant balancing act between achieving the strategic goals and actually fixing the day to day problems. However, the management structure that actually comes with a KTP helps the person not to get engulfed and simply become another ‘fire fighter’ within the business. However, in order to understand the problems the associate needs also be engaged in the day to day operations, certainly in the early stages, to ensure they are producing valid solutions. The review process ensures the balance.”
Investigating KTP Companies interested in investigating a KTP further can access a wealth of information on the scheme’s website – www.ktponline.org.uk. The site includes over 300 case studies and lists the local advisors who are there to assist people in getting started. If a company is aware of a university or further education facility with a capability in a particular area then they may make contact directly. Many learning institutions have KTP officers who can actually start doing the brokering and help identify which academic might be suitable for the company’s particular problem. There is a standard budget allocation for a KTP although the full economic costing of each university and learning institution is marginally different. On average, a KTP is likely to cost a company somewhere in the order of £18,000 to £20,000 which is actually slightly less than the actual cost of hiring a graduate. The actual complete cost of a KTP is somewhere in the order of £60,000. For the majority of SMEs, the gap in the cost is covered by government funding and covers costs including half a day a week of the supervising academic’s time, the management costs, expendables, travel and the development of the associate.
Collaboration in practice In March, KTP awarded the 2010 Best UK Partnership to special needs equipment manufacturer James Leckey Design for its association with the University of Ulster. The company, which was started by namesake James Leckey in 1983, produces products which primarily serve children, young people and adults with cerebral palsy. However the company’s equipment is used to assist in the care of a range of conditions requiring postural support. The
equipment falls in to different categories and covers 24 hour postural care including: sleep systems for night time support; seating systems which can be on used on a static basis (such as a seat in the classroom) or on a mobility basis (such as a wheel chair); toileting and bathing equipment; and mobility equipment such as walkers. Seven years ago the Leckey board undertook a strategic review which revealed that the company’s manufacturing process was very much engineering led. Following the review, it was decided that the design of equipment should be led from research and that achieving that would give them a competitive edge. The company wanted to be known for using evidence based practice and for having clinical in-house knowledge and research knowledge. To achieve that goal it was decided that an occupational therapist was the profession from which they could gain those skills. They worked then with the University of Ulster to put that proposal together. The company accepted the application of clinical occupational therapist Clare Wright who became the associate for Leckey’s project. KTP allowed clinical input to be introduced into product development and testing phases of Leckey’s early activity system, a floor based product for early intervention used from birth to two year old to help with developmental problems. Since its launch in 2007, it has been the fastest selling product for the company, trebling predicted volumes in the product’s first year. “The combination of accreditation and an evidence based focus in the training programmes has provided Leckey with unique selling points that set it apart from competitors in the market,” says Wright, now clinical research manager at Leckey. “The imbedded research skills within the business have been used to develop a case history programme which objectively measures the clinical effectiveness of the company’s products with a complete range of supporting documentation to systematically record case histories. The programme has received attention from national and international customers and business partners.” Since completion of the KTP the company has seen revenue increase by 80% from £4.4m to £8m. Pre-tax profits have increased by over 300% from £245k to £1m. Needless to say it has had a profound impact on the company with an impact on research, design, sales and marketing.
The associated university The vision of the University of Ulster is very much about having a national and international reputation for excellence, innovation and regional engagement. The university places a large degree of emphasis on linking with the community and the institution has a long history of collaboration with local industry. “KTP has allowed us to help to develop some small questions into really good solid robust pieces of work,” says Jackie Casey, lecturer in occupational therapy at the University of Ulster and academic
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supervisor to the Leckey KTP. “The University can really bring credibility to the research because the companies are not bringing bias. The feedback from industry has been very positive and all of our KTPs have all gone through to successful completion. Ulster can collaborate between faculties to bring expertise from different areas into the one project that is actively encouraged within the university. We have a dedicated KTP office which includes a team of staff who can meet informally with companies to investigate ideas and guide and develop projects into a successful partnership.” Caroline McCabe is University of Ulster’s KTP manager. Contact her at c.mccabe@ulster.ac.uk
Currently engaged Solo Cup Europe is part of Solo Cup Company, one of the world’s largest manufacturers of single use foodservice packaging products. Close to 18 months ago in association with Teesside University the company engaged product design graduate Alex Brown as a KTP associate to help develop environmentally sensitive and innovative products and introduce the processes to produce them. At the time Brown was part way through his masters in sustainable product design which has since been completed. With the majority of the two year KTP now complete, Brown says the KTP has already achieved significant improvements for the company. “The team now have a can do attitude as ideas, which
previously didn’t necessarily have an outlet, are now able to be fully investigated. We are now developing long term strategic projects which are market led. This means we have a better understanding of the market and are no longer just reactive to customer requirements and competitor developments.” With the aid of KTP, Solo Cup Europe is looking forward to continued success and further innovative achievements. The next period in the company’s operation promises to be exciting with Brown helping to design stylish, useable and patentable products which the company hopes will be market leading.
Alternatives to KTP Foundation Degrees Of course, a KTP or indeed strict university collaboration is not the requirement of every organisation. Indeed, many companies simply require a more enlightened workforce so as to develop the business further. Enter foundation degrees, which include engineering and manufacturing specific qualifications, which are university level qualifications designed in association with employers. The degrees combine academic study with workplace learning to equip people with the relevant knowledge, understanding and skills to improve performance and productivity. The foundation degrees are designed for people that didn’t see higher education as a direct route when they were at school. The foundation degrees
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Innovation design and the product lifecycle
KTP Awards winners James Leckey Design
mix vocational with higher education in a work based situation. So the practical application is much stronger than perhaps a vocational degree. The foundation degrees allow for the combination of learning and earning and could be considered simply just a different route to higher education. While the popularity of foundation degrees continuing to increase (in 2008 there were more than 70,000 foundation students), access to the degrees are still limited to those with an already reasonable standard of scholastic ability. Due to a request from employers to find a progressive route to up-skill employees from a basic engineering qualification to the foundation degree, group training organisations have developed a range of bridging courses. One such organisation, the Hull Engineering Training Association (Heta) has combined with the University of to develop a qualification to test the academic capability of the learner, which if completed allows the student to continue on to the foundation degree. The four foundation degrees available through Hull are: mechanical engineering; electrical and electronic engineering; plant engineering; and chemical and process engineering. The next foundation courses commence in September The James Leckey with enrolments Mygo product now open.
Higher Education Institution (HEI) Collaboration One of seven HEI Collaboration projects supported by the East Midland’s Transport iNet in 2009 saw the University of Nottingham team up with Loughborough University for the first time. They enlisted the technical expertise of Loughboroughbased M. Wright and Sons Ltd, skilled manufacturers of high technology 3D woven textile products, to research new manufacturing processes for multi fibre architecture composites. Professor Nick Warrior from the University of Nottingham, says the 12 month R&D project proved successful in producing next-generation composite materials. “The successful collaboration received £223,000 from the Transport iNet for research and development to determine mechanical performance of novel multi-architecture processes and identify new manufacturing technologies for lightweight materials, for use in a variety of transport sectors including automotive, aerospace and marine. Cranfield University The Manufacturing Department, under the direction of Professor Rajkumar Roy, has a highly active programme of industry sponsored research across the areas of manufacturing technology and manufacturing management. We are a major contributor to Cranfield being third in the UK for the impact of its mechanical, aeronautical and manufacturing research. Of particular interest within the department is The Centre for Competitive Creative Design (C4D) is a £5.5 million partnership with the University of the Arts, London. At University-level it is a major contributor to Cranfield’s Innovative Manufacturing Research Centre which is central to the university’s manufacturing expertise. end
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Don’t be shy in retiring The defined benefit pension scheme is a dying breed. Manufacturing as a sector has traditionally looked after the retirement needs of its employees well, but even paternalistic companies cannot fight the reality of big pension fund shortfalls. In the first part of a two-part article, Will Stirling asks what happened and what employers should do about it.
Do
you remember the final salary pension scheme? Many under-30s working today won’t have heard of this exotic concept, and by the time our children are working it will be consigned to the scrapheap of extinct financial vocabulary along with the gold standard and sub-prime mortgages. With the majority of final salary schemes, a type of defined benefit (DB) pension schemes, now discontinued, it is widely acknowledged by accountancy firms and organisations including the Department for Work and Pensions and EEF, the manufacturers’ organisation, that any remaining
Table 1 Survey respondents by company size Number of respondents
Percentage of total respondents (%)
Small (1 to 100 employees)
221
44.3
Medium (101 to 250 employees)
171
34.3
Large (251 and more employees)
107
21.4
Source: EEF/CPH Consulting Employment Survey 2009 schemes will be wound up. Employees, or more accurately members of existing schemes, are also becoming more aware that accruals on existing DB schemes are being frozen. This means that members who joined a DB scheme will have their covenants – benefits – protected up to date, but going forward the benefits will not match those offered at the time of joining.
Richard Farr, a pension partner at business advisors BDO, who has experience with mediating pension deficit issues during IPOs and restructuring for both companies and pension fund trustees, says freezing the future accrual is likely to be a bigger concern for employees than the demise of remaining DB schemes. He says: “Some defined benefit schemes, Sixtieth schemes, worked like this: you work for a company for 40 years – unlikely today – and your pension would be based on two thirds of your final salary. You work there for 20 years and it’s just one third; but work for 20 years and the pension fund freezes your accruals after 10 years, your future benefits will be worth no more than a promise. And you find that once one big company starts this, they all do it.”
Actuaries struggle with C21st problem Pension deficits are a serious problem for employers and employees. David Yeandle, head of employment policy at EEF, says the implications of switching pension schemes and freezing DB scheme accruals are profound. “For many companies the problem is more significant than any other issue – it directly effects employees’ planned retirement dates, and in many cases whether they stay with or leave their employers,” he says. BDO’s Richard Farr was involved in revealing the scale of the mismatch between DB and other pension scheme assets and liabilities and has worked with the Pensions Regulator. “There, I helped create the concept of employee covenants; how strong is the covenant to pay your pension promises. In previous work experiences, I was able to understand the employee covenant as a key feature of pension risk. If you look at the cash-flow and pension liability of a business, it is a 60-year projection until the last person’s widow or offspring dies”. Dissecting that cash-flow pipeline reveals four types of pension risk:
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Finance and professional services
Table 2 Type of pension arrangements for different categories of employees Executive
Management
Manual
Non-Manual
Answers in % of firms
Defined benefit
28
30
26
27
Defined contribution
30
33
28
29
Combination of defined benefit and defined contribution
4
4
4
4
Group private pension scheme
27
31
30
29
Stakeholder with employer contribution
22
30
33
31
Source: EEF/CPH Consulting Employment Survey 2009
Chart 1 Defined benefit schemes in decline for executives … % of firms offering type of pension scheme
1 2 3 4
The scheme’s liabilities - what the scheme promises them The employer covenant - what the employer can pay The scheme’s assets – what has been paid into the fund so far The governance – how it operates, how it can expand and move, based on the changes and the rules.
Farr devised a pension risk quadrant that illustrates where these four factors overlap and affect, in turn, the trustee, employer and employee (this will be discussed in the follow-up feature). This overview is the crystallisation of a complex subject – company pension liabilities – where the component parts have been developed more or less in isolation from each other for several decades, by actuaries, accountants and the Government, who never had the full picture. “Until recently CFOs would not have been exposed to these risk quadrants at all – the actuarial profession has its own skillsets, so you are either an actuary or an accountant,” says Farr. The point for employers, he says, is that they are stuck in the middle of a complex mess trying to make sense of the disparate components of their pension liabilities, with sometimes conflicting advice coming from the leftfield.
Your accounting deficit on your balance sheet is almost certainly wrong Sources: EEF/CPH Consulting Survey 2009 EEF/Aon Consulting Pensions Survey 2002 and 2004
Chart 2 … and for management % of firms offering type of pension scheme
Sources: EEF/CPH Employment Survey 2009 EEF/Aon Consulting Pensions Surveys 1998, 2002 and 2004
Richard Farr, pension partner, BDO
The picture today should be clearer but for many CFOs is by no means transparent. “The only instrument that overlaps the quadrants is the Accounting Standard FR17, introduced in 2003, which imposed for the first time an estimate of the true pension liability on balance sheets.” The lack of cohesion between the professions and parties involved has detached some people from the bigger problem, engendering a laissez-faire attitude that sees this as a long term problem to defer. “The long term view is fine, if you think the long term employer covenant is strong but as soon the company goes through a restructuring or a major transaction, the fundamental premise – the employer covenant that was there to underwrite the promises – is fundamentally altered.”
The HR issue and new options A pension fund that has trouble honouring its obligations, where accruals are frozen, is bad for
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Finance and professional services
any company. From the employee’s and employer’s perspective, an important secondary effect of poorly managed pensions is that, with little direct recourse for employees to claim frozen benefits, the situation breeds employee dissatisfaction and lower morale. “In the old days,” says Farr, “a company could say ‘no’ to a pay rise this year but we will increase your pension benefits. Now there are no pension benefits, people say they want more pay. Either way it is a big HR issue.” In March the Department for Work and Pensions published a useful report, Risk taking: information for employers considering making changes to defined benefit pension schemes. It outlines a range of options of DB pension scheme variants available to companies who discontinue final salary schemes under current legislation, which sit within the spectrum between final salary schemes (most employee-friendly) and defined contribution schemes (in simple terms, least employee-friendly). Case studies from companies including John Lewis, Barclays and Morrisons illustrate how companies are employing different schemes, including cash balance/hybrid, career average and longevity adjustment factor schemes (see the link below). “The practical case studies show the issues that employers need to consider when making changes to their DB scheme, including the very important role that comprehensive communications plays in gaining the positive engagement of members to new pension arrangements,” says EEF’s David Yeandle. As a sign that the DWP is on top of the issues and potential solutions to what some people refer to as the pension crisis, the report has been endorsed by Brendan Barber, general secretary of the TUC. “There are a range of options both for those who want to improve a standard DC without going to full DB, and for those trying to ensure the sustainability of defined benefits,” Barber says.
Take action now For CFOs of manufacturers who are reviewing their DB pension scheme, who have not reviewed the risk quadrant thoroughly, BDO’s Farr has a key message: “Your accounting deficit already on your balance sheet is almost certainly wrong. That was calculated using overinflated discount rate spreads. Under accounting standards as a rule you have to use double-A bond rates, which with the 2008 credit crisis have gone through the roof. This means the liabilities have been artificially understated.” The new Scheme Specific Funding rules, introduced in 2005, mean that the funding negotiation between the employer and trustees is invariably going to lead to a higher target funding level than accounting. The next article in this series will explore the accounting nuances of pension deficits in more detail. Farr’s advice is to take advantage of the current distressed economy and the banking market. Manufacturers are asset heavy, they also tend
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to be bank heavy and since 2008 banks have taken more security over the assets. “The banks have to understand the pension liability is an important partnership, they have to recognise the need to share the security – which they dislike,” says Farr. “But in the current market environment the Government is telling the banks to be more business-friendly, so now is the time for the banks to help you.” So, the message is, use the depressed banking market as leverage to get the trustees on a better footing with both the bank and the company. And companies should be able to get their banks to back off slightly and accommodate the trustees.
For many companies the [pension] problem is more significant than any other issue David Yeandle, EEF
EEF’s Yeandle says: “Whatever you do you need a very clear communication exercise with your employees, and now. Take time over it and provide as much information to them as possible.” He says the time is right as the European Commission will soon weigh in to the compulsory retirement age arena. It is publishing a green paper on the sustainability of pensions in Europe in June where, like the UK, member nations may be required to extend the mandatory retirement age from 65 to 68. The EC may impose rules on the time horizon for extending the retirement age, and the Conservative Party has said it is keen to accelerate that process to a shorter time frame than the Labour Government has committed to. “If you’re a manufacturer, sort it out this year, because the market should be more accommodating than usual,” says Farr. “The Government is supportive, the Regulator is supportive, banks are having to be supportive – so at least get a plan.” Defined benefit pension: A traditional pension plan that defines a benefit for an employee upon that employee’s retirement is a defined benefit plan. The DWP report is available at: www.dwp.gov.uk/ docs/risk-sharing-db-pension-schemes.pdf Advice on retirement and pension options is available from your regional EEF office: www.eef.org BDO LLP: www.bdo.co.uk
Have your say at www.themanufacturer.com
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Finance and professional services
Are insurance premiums set to increase in 2010? The insurance industry has experienced turbulent times over the last 18 months and, as the economy slowly moves back into recovery, insurers are under increasing strain to return their income to sustainable levels. Stuart Rootham, director of RK Harrison Insurance Services Ltd comments.
As
the economy moves into a more stable position, insurers are experiencing increased pressure to deliver acceptable returns on capital. The dramatic impact on their investment returns; continuing claims inflation in personal injury; an increasing incidence of fraudulent claims in times of recession; and an empty barrel in terms of past reserves will surely mean that they will look to increase prices over the next 12-24 months. There was talk from some of the major insurers in early 2009 about the need to increase rates but in most cases that has generally not occurred. Moreover, as the economy starts to show fragile signs of recovery, there is increasing talk of mergers and acquisitions amongst insurers. Any significant acquisitions would potentially reduce competition and capacity within the market, increasing the likelihood of premiums rising.
For the moment though, there are still many deals to be had. Directors’ and officers’ cover is still reasonable at a time when it’s needed most. Commercial Combined cover – the principal insurance purchase for most businesses – is experiencing static rates, with the few examples of increases being no more than 5%. However, if a business has a poor claims record or is deemed ‘high hazard’, the resultant reduced competition to win that business means there is a greater risk of more significant rating increases. If rates do begin to harden, the well-run businesses with good claims history and a robust risk management programme in place should have less to fear. So now is the time for all firms to consider whether their risk management procedures are as robust as they could be.
FINANCENIBS Insolvency fears abide
Costs take gloss off orders
The number of manufacturers facing ‘significant’ or ‘critical’ financial problems rose 12% to 6,820 in the first quarter of 2010, according to the latest Red Flag update from insolvency firm Begbies Traynor. ‘Significant problems’ refers to court action and very poor insolvent or out date accounts. ‘Critical problems’ include County Court Judgements totalling £5,000 or more or Wind-Up Petition related actions. Around the country, companies were worst affected in the South West (up 46%), West Midlands (up 16%), the North West (up 12%) and the North East (up 12%).
Orders are picking up both at home and abroad, according to the Confederation of British Industry’s latest Industrial Trends Survey, but profits are threatened by cost pressures. For the three months to April, 34% of 439 UK manufacturers said total orders rose, while 23% said they fell. A rounded balance of +12% is the first growth in this area since January 2008. Exports are leading this resurgence with a balance of +20% – the best since 1995 – although a balance of +5% for domestic orders means this area finally appears to be picking up too. It’s the first growth balance for home orders since October 2007. However, average unit costs were up for a balance of +20 per cent of companies, putting a strain on the bottom line. Manufacturers report that they will raise their prices over the next three months to as a result.
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RBS
RBS Group £1 billion fund In support of UK manufacturing sector £1 billion fund dedicated to UK manufacturing businesses Competitive fixed rate loans to stimulate investment for growth as sector looks to recover Fixed rate loans which are interest only for two or three years
A
ccording to most industry observers, Britain’s manufacturers are looking to the future with greater confidence reports Peter Brotherton, Director in RBS’ Manufacturing & Infrastructure Sector Coverage team. With improvements in output and orders over the past three months together with a broad-based return to confidence across manufacturing, companies seem to be the most upbeat since the start of the financial crisis in mid-2007. The sentiment was shared in the National Purchasing Managers’ Index (PMI) for manufacturing industries which increased 0.7 points in March to 57.2 from February’s index of 56.5. This was the sixth consecutive month of expansion and the strongest gain in over fifteen years. Typically, a score greater than 50 indicates an expansionary economy, while a score below 50 forecasts a sluggish economy for the next three to six months. Peter Russell, Head of Sector, Client Coverage London commented on the findings of the latest PMI report: “It is very encouraging to see some positive data emerging for the sector, particularly noting that the recovery is broad based with some evidence of new order growth alongside the already anticipated re-stocking activity. We’re seeing other signs that point towards sector recovery, including activity surrounding our own Manufacturing Fund. Investment for growth is back on the agenda and we are determined to play our part. ’’ To help manufacturers take advantage of these improved conditions, RBS Group launched a £1 billion fund specifically for manufacturers in January this year with loans being offered on competitive fixed rates and with the option to defer capital repayments for up to three years. The fund will provide loans designed to help those businesses finance investment and ensure they are poised to take advantage of any opportunities that present themselves.
Manufacturing Fund – Fixed rate loan details Our flexible loans are specifically designed to support growth and are available for a range of purposes. Whether your loan is to fund capital expenditure, acquisitions or increase working capital, hopefully we can help.
Fund availability The Fund will be made available on a staggered basis up to the total Fund amount of £1 billion. Each release of funds will be available for either a two or three year term at a quoted interest rate, for amounts between £250 000 and £25 million. If the full amount for a particular release is allocated earlier than its stated expiry date, no further funds will be made available as part of that release and customers will need to apply for funds in a subsequent release. The second release is available for drawing between 1 April 2010 and 30 July 2010. However customers must apply for this release no later than 18 June 2010.
Loan options: Option 1
Option 2
Loan term
2 years
3 years
Arrangement fee
0.75%
0.75%
Capital repayment holiday
Two years
Up to three years
Option to repay capital during No the term of the loan
Yes, but only in year three
Interest rate
Fixed rate 4.30%
Fixed rate 3.40%
The overall cost for comparison is 3.8% APR for 2 years, 4.6% for 3 years Amounts available for drawing, interest rates and drawing periods for subsequent releases will be announced in due course. The £1 billion fund is available across the Royal Bank of Scotland Group. Terms and Conditions
Available to eligible UK manufacturing companies of any size. Lending is subject to demand, status and borrowers satisfying our credit criteria. Loans must be drawn no later than 10 business days after the date the Agreement is signed by the Customer, and no later than the expiry date of the relevant release. You will be required to pay interest quarterly throughout the term of the loan. Early repayment charges may apply during the fixed term period. Upon maturity of the borrowing, any amount outstanding will need to be refinanced. If you choose to defer the capital repayment in the third year you will still be required to pay the interest accruing over the deferred period. Security may be required. Over 18’s only.
For more information please visit http://www.rbs.co.uk/corporate.ashx TM MAY 2010 final.indd 47
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vent
Max Willcox Alumet Systems Three years ago Warwickshire-based façade manufacturing firm Alumet began developing a new line of technology. The bomb-blast ABLE Façade System is a counterterrorist lightweight walling system that can withstand explosions from improvised devices, and the product won the company a Queen’s Award for Enterprise in 2009. Brought in as engineering manager for the project, Max Willcox was instrumental to its success.
The
ABLE Façade System (AFS) was originally designed to be used by the Ministry of Defence for research into the effect of nuclear weapons. The product is now suitable to be used by law courts, embassies, airports and other politically-sensitive buildings. The project was running before Max Willcox joined the company but there were flaws in the design and the logistics and it was falling behind schedule. The company needed someone who could spend 100% of their time and effort on it and get it back on track. Max was pulled out of a career in quality assurance and warranty management within the automotive industry to take control of AFS. He refined the design of the system, recoordinating the logistics of staff and materials at both Alumet’s and the MoD’s sites, and introduced traceable checks to the work cycle to ensure quality and provide fallbacks in case of errors. As the company was charting completely new territory with the project, in terms of both technology and scale, Max says one of the key issues he had to manage was dealing with problems quickly as they arose, before they could escalate. “The system had never been made before so there was lots of uncertainty and many snags along the way,” he says. “The trick was to preempt the problems where possible and find solutions before they became problems.” Aside from his engineering knowledge — including understanding technical plans, understanding material reactions with fixings and adhesives, and metal pressing and welding — he says planning and coordination were the most important personal attributes that he employed in the project. “That is the same with a lot of jobs: you have to break large jobs down into lots of little components and tick them off,” he says. As well as overseeing a range of different projects, Max is a key member of Alumet’s Green Team, a group of managers who are developing sustainability standards. He’s also an active
fundraiser, having generated over £1,000 to Alumet’s chosen charity in 2009. In May, Max will follow in the tyre marks of The Manufacturer editor Will Stirling by CV in brief – Max Willcox cycling the approx 900 miles from Land’s End Age: 47 to John O’Groats. He will be raising money Employment: for the Motor Neurone Apr 07 – present – Engineering Disease Association. Manager, Alumet Systems Dean Walton, Apr 04 – April 07 – Manager, director at Alumet, Service & Aftermarket, DENSO says: “We’re really Sales UK Ltd proud of Max’s Apr 00 – Mar 04 – Senior development within Engineer, Service & QA section, DENSO Sales UK Ltd Alumet. We initially hired him because we Feb 97 – Apr 00 – Engineer, wanted to have the Service & QA section, DENSO Sales UK Ltd engineering viewpoint of someone outside the May 91 – Feb 97 – General Builder, Self employed construction industry so that our designs Dec 89 – Sep 90 – Works Engineer, Cannon Rubber Ltd could be evaluated from a fresh perspective. Mar 88 – Nov 89 – Project Engineer, Cannon Rubber Ltd Max was ideal as he had a mechanical and Apr 87 – Mar 88 – Management trainee, Cannon Rubber Ltd production engineering background from the Education to date: motor industry. 1984-86 HND Mech and Prod Eng “Since then he Plymouth Polytechnic has been instrumental 3 Distinctions 9 Merits in the development 1982-84 B/TEC OND Mech and of our ABLE Façade Prod Eng bomb-blast resistant Plymouth C of E 5 Distinctions 5 Merits walling system and he is also very proactive Interests: within other areas of Adventure racing, canoeing, cycling and the company including surfing. Member of the Territorial Army our sustainability and Royal Engineers. fundraising drives.” end
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Education and industry: manufacturing the links Apprenticeships have been touted as having a key role in our skills strategy but firms say a sense of apathy towards manufacturing continues to hamper progress in attracting young people into the industry. Mark Young investigates the problems and uncovers some initiatives that are taking place around the country that are providing solutions.
Skills
gaps are rife throughout many areas of manufacturing; in the advanced and emerging industries, around which the UK wants to centre it’s ‘new economy’, they are in severe deficit. The situation looks set only to get worse as an ageing work force fetches its pipe and slippers throughout this decade. The Government thinks apprenticeships are a good way to remedy these problems but a sense of unease continues to surround vocational skills provision in manufacturing. Fortunately there are a number of initiatives around the country seeking to help.
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People and skills
Apprentice Success Alan Dunn
Operations Director, BAE Systems Submarine Solutions, Barrow
Alan Dunn has worked his way from the shop floor to the boardroom of Britain’s biggest defence company. He is now responsible for overseeing 2,000 employees. He began his working life as an apprentice caulker at Govan on the Clyde in 1977. His current position involves overseeing all production and manufacturing activity associated with the Astute submarine programme.
Jim McColl
Now reportedly the richest man in Scotland with an £800m fortune, Jim ‘Mr Manufacturing’ McColl began as an apprentice at Weir Pumps in 1967. As a 16 year old he earned £4.75 a week. Forty years later, he bought the company and incorporated it into Clyde Blowers – the company he bought into as a loss making family-owned £4m turnover business in 1992 and has built into a multi-national firm which owns over 80 other companies and with revenues of more than £1bn today.
Anton Barrick
Perkins Engines fourth year apprentice Anton Barrick, was given the Outstanding Achievement by a Final Year Apprentice award at EEF’s National Future Manufacturing Awards in February. Anton works within an elite team working on Perkin’s newly built crank line facility in Peterborough and the EEF awards judges said they were won over by his enthusiasm, ingenuity, problem solving and “quite simply, by the pleasure he takes in his work!” Anton has also been involved at careers fairs to try and entice more young people into apprenticeships. “I’ve wanted to be an engineer since I was a child,” said Anton. “I plan to progress through the part time academic route through college to university and to achieve a degree that’s recognised by IMechE. Then I’ll work to become a fully chartered engineer.”
“There is a crazy administration system between government and end users whereby funding is soaked up by worthless bureaucracy in the form of training advisers, intermediaries and moderators,” he says. “I would go for a system where funding is given to employers directly and just takes out all these middle men who are providing nothing – no single service which is useful to anyone.”
If kids come on our Workwise course they may choose to come into manufacturing and could then be sponsored through university. It’s a much more sustainable route – for kids and for industry. For us it’s a good way to identify potential apprentices and potentially, it will lead on to a young person gaining a degree at the age of 22 having earned money along the way and leaving with no debt Kevin Parkin, managing director, DavyMarkham
The training for 16 to 18 year old apprentices is paid for by the Treasury through the National Apprenticeship Service. A 50% subsidy is available for 18-25 year olds and contributions can be made towards tutoring for anyone older. However, all of the costs associated with onsite supervision, support, mentoring and any necessary equipment must be footed by the firm. The employer must also pay wages of course; £95 per week is the minimum, although NAS research finds an average of £175 per week is actually paid. A ten week scheme called the Apprenticeship Grant for Employers (AGE) which offered grants of £2,500 where the apprentice was a previously unemployed 16 or 17 year old concluded in March. Meanwhile, the Conservative manifesto for the upcoming general election includes a £2,000 bonus for any company taking on a new apprentice.
The education business Costly business For small businesses especially, apprenticeship programmes can carry considerable cost. Kevin Parkin, managing director of Sheffield based heavy engineering firm DavyMarkham, estimates that his company’s total spend on its 18 apprentices is £300,000 a year. He’s unperturbed and is now set to take on a further five but he thinks the money that goes into running apprenticeship based quango operations would be more effectively spent if provided directly to employers. He says hype is built up around support and funding systems but they “just doesn’t reach the employers”.
Mr Parkin highlights a bigger issue though; the fact that there is still an underlying culture in the UK of promoting academic rather than vocational career progression routes as a more attractive option to young people. “There are too many kids going to university on a full time basis with no prospect of a job at the end of it,” he says. Mike Ottolangui is managing director of Milltech Precision Engineering Limited – a specialist machining company based in Norwich, Norfolk that employs 31 people and takes on two apprentices a year. He agrees with Mr Parkin; the problem, he says, is his company can’t attract talent because the school system is detached from the needs of industry.
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“The schools don’t encourage people to look at opportunities within our industry,” he says. “They tend to direct them towards building societies, banks and insurance companies. The teachers and careers advisers have no knowledge of industry these days so they don’t send them this way for work experience or anything like that. We’ve tried on a number of occasions to form relationships with the local schools to encourage young people into this area of business but the schools don’t seem to have any interest whatsoever. “So we then advertise for young people who are looking for work and they invariably tend to be the ones that haven’t been successful in other more fashionable industries and therefore they are generally a lower quality of candidate.” Jackie Freeborn, chief executive of Business & Education South Yorkshire (b&e), says at a recent business breakfast set up for local firms to discuss apprenticeships, two manufacturers reported that their 20 year strategies include potentially moving production to Asia. This is not because of any perceived cost benefits but because they feel there will not be the necessary skills in this country to support their operations. “It broke my heart to hear that,” she said. It is views like this that have led to the formation of a scheme called Workwise, developed by b&e and local companies. DavyMarkham is among the
Jackie Freeborn at AESSeal demonstrating the work of the apprenticeship programme
sixty employers from the region that are involved. The initiative will be promoting the values of vocational learning routes, including the new diploma in manufacturing, as well as developing the skills and attributes needed for a future in the sector. This will allow children from the age of 14 to carry out work placements on a part-time basis over two years and earn a qualification. Learners will spend up to 25 days a year with a company and will gain experience and units towards a qualification in various business disciplines including technical manufacturing, quality assurance, accounting and office disciplines. “The Workwise scheme also aims to give teachers and parents a better understanding of the opportunities available in manufacturing too,” says Jackie. As well as providing its matching service, b&e holds events for businesses, including the aforementioned breakfast discussions, and supplies information on career pathways to schools. It has made part of its mission to break down commonly held misconceptions of a career manufacturing. One way it will do is through the Made in Sheffield challenge which will see groups of school children working to find viable solutions or improvements to real companies’ operations. In addition DavyMarkham is working with local colleges to provide HNC and degree courses which would take a similar time to complete – one year and three years respectively – but would be completed part time while the student works at the firm. “If kids come on our Workwise course they may choose to come into manufacturing and could then be sponsored through university,” says Kevin Parkin. “It’s a much more sustainable route – for kids and for industry. For us it’s a good way to identify potential apprentices and potentially, it will lead on to a young person gaining a degree at the age of 22, having earned money along the way and leaving with no debt.” Mr Ottolangui’s situation in Norwich could be made easier this year by the launch of the Open Academy – a new college for which engineering is a key focus and which will also be offering the Engineering Diploma. Milltech is in the process of developing a relationship with the academy but this is still something traditional schools need to get on board with, he maintains.
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People and skills
Unlocking opportunities
that don’t traditionally offer them. The Merseyside based organisation runs an initiative funded by the local council, offering disadvantaged youths a 12 month employment contract and pays their £95 per week wages while seeking an apprenticeship place at a company in the candidate’s chosen field on their behalf. The Chamber continues to pay the wages until the company deems the match suitable and takes over full employer responsibilities themselves. When a candidate first enters the scheme there is a three week initiation period during which they earn qualifications in things like health and safety and manual handling, while St Helens Chamber finds the work placement. There have been 87 young people enter the programme with successful employment gained for 73%. Christine Barton, training services manager at St Helens Chamber, says: “Our school leavers’ employment programme has been a huge success, Apprentices from cold-roll forming company Hadley opening employers’ eyes to the benefits Group share their views on their chosen training route: that young people can bring to their business, as well as helping to tackle Does manufacturing have a problem with its public image and youth unemployment in the Borough. does this matter? “By facilitating the apprenticeship D. Kemp & T. Worley (first year): programme, both from a training “Yes, we believe it has a negative image to the public due to the delivery and administrative point of likes of global warming and pollution. People have a restricted view, we have been able to remove view when it comes to manufacturing and engineering.” any barriers that may have held employers back in the past from Do we need to attract more people into manufacturing in the investigating apprenticeships as a UK? Why? A. Maiden, S. Mullins & S. Brown (second year): way of expanding or developing “We feel that manufacturing in the UK needs more British their workforce.” workers as manufacturing in the UK is decreasing and moving to John Lucas, skills adviser for other countries due to cheaper labour. Manufacturing offers great the British Chambers of Commerce, career opportunities and would be good to bring back home.” agrees that there is still a certain level of bureaucracy involved in the How did you hear about your apprenticeship and was it support systems for apprenticeships. competitive to win your place? However, “the situation has got a lot R. Connell: better over the last couple of years “I heard about the job through the Job Centre and to be honest and will continue to improve,” he had no idea what the job entailed. I was one out of 101 and there asserts. Some of the initiatives in this were only three places so it was competitive. I think the problem article – whether public or private and is that there are too few applicants of a certain quality.” administrative or industry led – would suggest that he is correct. If you are a small company that would like to get Level Two before transferring to an SME firm to involved in apprenticeships but have misgivings continue their development. owing to obstacles there’s a good chance that Ian Eva, manager of apprenticeship programmes there’ll be schemes similar to the ones described and external networks at Jaguar Land Rover, says: above available in your area to help. If you’re a “It is a great opportunity for large organisations like larger manufacturer, why not look to partake in ourselves to help overcome some of the difficulties and schemes yourself that could help your supply chain concerns SMEs have in recruiting apprentices. This and your industry to up skill? A smarter stronger UK pilot is based on providing, in very practical terms, core manufacturing workforce can only be of benefit for engineering skills with the emphasis on developing not the industry in the long run. end only competencies but employability.” The St Helens Chamber is another organisation helping to bridge the gap between learners and To find out more about the initiatives in this article contact: businesses with its school leavers’ placement Workwise: BE-SY 01709 336700 programme. This places teens that wouldn’t usually Open Academy, Norwich: 01603 435178 have access to an apprenticeship with companies In Mr Ottolangui’s opinion cost is not an issue; as long as a decent apprentice is sourced and managed properly the money spent is offset by the value-add the apprentice provides by actively participating in operations. However, some smaller manufacturers contend that in fact they do not have the resources or the infrastructure to give a new apprentice the base level of knowledge they need to begin contributing operations. The Apprenticeship Extension Programme, open to firms with less than 250 employees, has been set up in the West Midlands to counter this objection. It will see apprentices trained initially at either Jaguar Land Rover or Warwickshire College to Apprenticeship
Apprentice’sviews
Apprenticeship Extension Programme: rita.davey@nsa-m.co.uk St Helens Chamber: 01744 742000
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H EALT H AND S AFETY S UPPLEMENT
Health and Safety is in the headlines, with a major corporate collapse and three firms denying breaches at a court hearing into the 2005 Buncefield oil depot blast that injured 43 people. Unsurprisingly, as Colin Chinery reports, H&S is now a hot issue, high on the boardroom agenda.
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H e a lt h a n d S a f e t y S u p p l e m e n t
N
etwork Rail’s 30% cutback in track renewal is arguably the biggest contributor to the collapse into administration of rail contractor Jarvis. But while the future of 2,000 jobs hangs like a sagging overhead line, another suggests itself; health and safety – reputation and brand implications of corporate failure. Ever since 2002 the name of Jarvis has been associated with the Potters Bar tragedy in which seven people died and more than 70 were injured in a 100mph derailment. A Health and Safety Executive (HSE) report found the main cause of the accident was poorly maintained points. Jarvis, along with Network Rail, later admitted joint liability for the accident. “PLCs are now spending huge amounts, building brand images and trust. And any breach of health and safety can have a very significant impact on the reputation of that business,” says Lee Pickering, Sector Sales Manager, Manufacturing at Arco, Britain’s largest safety distributor with expertise in safety products
and work wear. With 32 work-related deaths in manufacturing in 2008/9, the impact could be described as ‘significant’ for life and limb too, needless to say. In Lancashire an employer was fined £10,000 after a worker narrowly escaped being killed in an autoclave machine explosion that shot a five foot iron girder across the factory. The worker escaped serious injury only because he had taken an early coffee break. The company said an HSE inspector had “failed to service the machine for more than a decade, after cancelling its annual shutdown for routine maintenance. It also ignored its legal duty to make sure a routine inspection was carried out by a qualified inspector.” In Cornwall an equipment manufacturer was fined £3,000 for repeated safety offences that exposed workers at risk of serious injury. An HSE inspection found machinery without safety guards or automatic power cut-off devices and, despite initially complying with a previous improvement notice, the firm then committed further breaches of safety.
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H e a lt h a n d S a f e t y S u p p l e m e n t
Boardrooms on alert Management, says Pickering, quoting business guru Peter Drucker, ‘is doing things right; leadership is doing the right things’. “For me that is key to how manufacturing companies and UK PLC boardrooms now operate.” Twelve months ago reports were claiming that health and safety was slipping down the corporate agenda, part victim of manufacturing’s recessionary pressures. The charge still lingers but as a general indictment it is now hard to stand up. “There’s been a concern that health and safety might suffer in tough economic times when manufacturing resources are hard pressed but we have found no evidence,” says Neal Stone, British Safety Council’s Head of Policy & Public Affairs. “Have we got an underlying concern that health and safety has slipped down the business agenda? No we haven’t.” An EEF survey reports health and safety moving up the boardroom agenda, a regular item for 81% of boards compared with 58% in 2006. And over this period 80% of companies are now spending more time on H&S. Leadership of health and safety is very much a hot topic, with companies exposed to prosecution for corporate manslaughter, and individuals found guilty of health and safety offences facing imprisonment. “Our survey confirms there’s been a sea change in director involvement – active leadership is now very definitely the norm, not the exception.” says Steve Pointer, Head of Health & Safety Policy at EEF. This is a view endorsed by Pickering. “We’ve certainly seen a massive shift over the past two years,” he says. “I’d be surprised if you could attend any board meeting in any significant organisation now and not see health and safety as an important agenda point and a significant discussion point.”
Forgemasters show the way Sheffield Forgemasters offers an exemplary case study. With the largest forging and foundry facilities in the UK, covering a 64 acre site, Forgemasters has secured international accreditation, further underlining its commitment to optimum standards in health and safety. The award of BS OHSAS 18001:2007 – the world’s most widely recognised health and safety management standard – enhances Forgemasters impressive health and safety record. “This standard is highly sought after, so obviously the criteria were tough. But we were
determined to achieve it because we believe it’s fundamental to have a health and safety management system that is top class,” says Forgemasters group health and safety director, Malcolm Collins. “It’s taken nearly two years to gain accreditation, and the award confirms we have a system that is mature and productive, with highly effective working practices.” Forgemasters is one of just 14 large scale open die forging companies in the world and the only one of its kind in Britain. And as the world’s only independently-owned forgemaster it continues to supply an increasing global demand for high quality engineered products to key industries such as defence, nuclear, oil and gas exploration, power generation, marine and construction.
Neal Stone, British Safety Council’s Head of Policy & Public Affairs
“Health and safety is very important,” says Collins. “This is a very high risk industry and the systems and procedures have to be exact to match the risks.”
Good for business “We were assessed over a two year period and it was two years’ hard work,” Collins continues. “Before this we spent six to nine months preparing, so it was getting on for three years from starting work on accreditation to getting it. But of course there were benefits along the way.” Effective health and safety management is self-evidently good for business. “But at the end of the day an employee ought to be able to come to work secure in the knowledge that he is not going to be maimed or injured,” says Collins. “And the more systems in place to ensure this the better.” But putting the actual engineering solutions into place is not the most daunting of the challenges. “The most difficult – and the one always on-going – is getting the people to follow the systems and understand the need to follow the systems.”
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Even so – and unsurprising in view of SFM’s exceptional workplace culture – employee response was excellent. “We have a history of engaging employees in projects to improve performance, so they are used to working with management.”
The costs of failure But managing health and safety effectively comes at a very high cost. “There’s no doubt about that,” says Collins, “but the price of not following H&S procedures and not getting it right far outweigh the costs of doing it.” Aside from obvious operational, staff retention and morale issues there is the cost of compensation – now potentially very high.
“Insurance costs are reflected by the accident performance as well, and these can be tremendous while the costs of litigation are absolutely astronomical. And it’s not just the fines. The costs of engaging a solicitor and a barrister these days are very very high.” Lee Pickering concurs. “At the PLC level especially, where the size and scope of what they are doing means the impact is significant, there’s now a real and increasing focus on how the health and safety environment can help drive costs out of the business. Reducing insurance premiums and the impact of legal costs is an area coming increasingly under the spotlight.” It goes without saying that managers do not want to see their staff harmed during the course of work, says Steve Pointer. “But good health and safety
Following widespread calls from companies for more advice and support on monitoring health and safety performance, EEF has launched a health and safety tool.. Almost half of all respondents to EEF’s latest health and safety survey said they would welcome help on setting and monitoring key performance indicators. The new health and safety scorecard will help company boards manage health and safety in a pragmatic way. The scorecard is freely available to all EEF member companies in a pilot scheme launched last month. And if the pilot proves successful it will be offered to all companies later this year. “We believe that this kind of initiative will make a real difference,” says Steve Pointer, EEF’s head of health and safety policy. “The tool is loosely based upon the structure of a balanced scorecard and helps boards set and monitor meaningful targets without the need for them to get into the minutiae. “Having identified the key performance indicators, the scorecard shows how to use these to measure and monitor improvements in health and safety performance.”
Steve Pointer, head of health and safety policy EEF
is also good for business. It can reduce the £13bn lost each year to sickness absence, constrain insurance premiums, improve quality, and protect that most valuable asset – reputation. “It also defends the company and its directors against the threat of prosecution. New penalties for health and safety offences mean that offences committed by an individual – including a company director – can in serious cases be punished by imprisonment. Companies need to cut through the bureaucracy and take practical action to protect their business and their employees.” Pickering says he tend to classify the H&S culture of manufacturers in five distinctive ways: Pathological. “These approach H&S from the point of view of ‘Who cares, so long as we don’t get caught?’ Such cowboy businesses are thankfully rare these days.” Reactive. “Typically H&S is seen as important, but the only time action is taken is after an accident.” Calculative. “A business that has the systems in place to manage workplace hazards. Many businesses, both small to medium sized and also
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Arco
125 years of value, choice and keeping people safe at work Arco is the UK’s leading safety company, founded in 1884 and with a heritage spanning 4 generations. Arco distributes quality products and training and provides expert advice helping to shape the safety world and make work a safer place. Arco is widely recognised as the leading provider of expert advice, services and safety solutions for businesses in every market sector including manufacturing. Celebrating 125 years in business, Arco was recently awarded the J P Morgan Family Business Award for its pursuit in innovation and for its commitment to employees and the community at large.
A world class range of products - one Big Book With 924 pages and a worldclass range of 22,000 branded and own-branded products, the Big Book catalogue includes the latest in safety equipment, personal protective products, workwear, footwear, gloves, tools and workplace safety and hygiene products. The latest edition features new safety glove designs from Marigold, specialist hearing protection from Sonomax and the revolutionary superbug control products from Byotrol, as well as a new range of workwear from Carhartt and security wear from Dr Martens.
Getting close to our customers Arco’s network of 39 trade counters across the UK each carry a core range of 3,000 essential safety products. Customers can go into their local branch for
immediate expert advice and guidance on product selection, fit and compliance. As well as the comprehensive catalogue, Arco aims to develop close working relationships with all its customers. For bigger enterprises, the customer account management team offers the benefit of personal contact with an Arco expert who can offer practical business solutions including standard or electronic billing options, a range of payment methods that are in step with your business process and accurate and easy to use management reports. As well as being able to check stock levels and prices in real time, customers who register on the award winning Arco website www.arco.co.uk, can get the latest product news as well as health and safety updates. A comprehensive set of product fact sheets are available to download offering advice on product conformity and technical specifications.
responsibility means that Arco only sources products from manufacturers that adhere to its principles of fair trade and respect for workers globally. Arco is a member of the Ethical Trading Initiative (ETI), an alliance of companies, non-governmental organisations and trade unions seeking to improve the welfare of people throughout the world. In 2009 it was awarded a Big Tick by Business in the Community for its supply chain management. The award recognises companies demonstrating innovation, creativity and a sustained commitment to corporate responsibility. Arco’s supply chain and ethical programmes help to create significant benefits for its suppliers and support its working relationships both locally and internationally. Whether a leadingbrand or Arco own-brand, all Arco products are ethically sourced and represent not only quality but exceptional value for money.
Delivering Excellence
A solution for every challenge
Arco’s National Distribution Centre (NDC) based near its head office in Hull is at the hub of its distribution network. The NDC is 236 metres long, 80 metres wide and 33 metres high with a storage area of 27,796 square metres. Each week Arco delivers an average of 70,000 order lines in 36,000 parcels and 1,000 pallets. The introduction of its centralised supply chain has enabled the company to reduce the environmental impact it has on society. As part of Arco’s CSR policy, all packaging from the NDC is recycled.
Putting people first Its policy of social corporate
Arco acquired Arc Associates in January 2010. This team of Chartered Health and Safety Practitioners offer training, consultancy and auditing services to enable first class health and safety management for all businesses within all market sectors Arco has a depth of product knowledge, industrial practice and working experience that is unrivalled. Partnering with a specialist supplier like Arco, is beneficial in terms of expert advice and guidance, particularly for companies requiring a range of safety solutions across different applications and sites.
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ADV 3382
H e a lt h a n d S a f e t y S u p p l e m e n t
large PLCs come under this heading. They will have a robust management system and probably feel this encompasses all the risks in their workplace.” Business that take a pro-active approach. “These recognise that they have captured the significant risks but continue to work on every problem they come across.” “Finally, companies such as BAE Systems, Northern Foods, Saint-Gobain Glass – businesses really striving to achieve what’s referred to as an exemplary or generative approach. And there’s a real shift in our customer base towards attaining these exemplary standards within their businesses.” A key here says Pickering, is director awareness of personal liability for any involuntary manslaughter of an employee. “Boards are now cascading down to their management teams a requirement to have health and safety at the forefront of their minds. And where plants are unionised we are increasingly starting to work - and successfully so – with trade unions. It’s very important at every stage to get their buy-in.”
4
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Say ‘Yes’- Say ‘No’ Already the trade union Unite and paper industry employers, the Confederation of Paper Industries (CPI), have come together in a campaign to improve health and safety in the industry. Paper related industries continue to see an unacceptably high level of serious machine accidents, says Unite, and over the last two years there have been several deaths and a number of very serious accidents in paper mills, corrugating plants and recovered paper operations. This despite a fall in minor accidents. Now Unite and the CPI have launched a ‘Say No’ and ‘Say Yes’ campaign. Saying ‘No’: not taking risks, not doing dangerous work, not cutting corners and not putting production before safety. ‘Saying Yes’: acting on health and safety complaints and queries, working together
on risk assessments and safe systems of work, reporting near misses, conducting joint accident and incident investigations, and undergoing joint health and safety training. And with 2.5 million working days lost through work-related injuries and ill health, recognising that good health and safety is good for business, says Unite.
Achieving an edge Now more than ever businesses must not lose sight of the importance of keeping their workforce safe and healthy and all risks properly managed, says Neal Stone. In a very competitive climate those businesses that manage their health and safety issues effectively will have an edge. “In some ways our concern is for the future. When the economy picks up there may be an increase in the workforce and it’s crucial that those coming in are made aware of the risks and given the training and the competence. And this will have to
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ADV 3382 Manufacturer Ad:Layout 1
20/4/10
15:02
Page 1
The UK’s leading distributor of safety & workwear products Visit us at the Health & Safety Expo, NEC Birmingham 11th - 13th May 2010
www.arco.co.uk Arco Limited, P.O. Box 21, Waverley Street, Hull, HU1 2SJ
Tel: 01482 222522
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(JN???
H e a lt h a n d S a f e t y S u p p l e m e n t
be done very quickly. For us this is a bigger concern than the current H&S state.” Meanwhile EU regulations are the major issue for the EEF, and are likely to remain so for a long time. “The basis of the start out law is good, but now EEF is saying the EU is ruining it by coming out with many layers of complexity,” says Steve Pointer. “This is confusing the picture. We are getting some really bizarre directives and we are trying to influence that. One, which came into force in April, is on optical radiation – essentially a ‘bright lights – don’t look at them!’ type of regulation. This is going to produce problems for manufacturers in areas like welding flash and related issues. “There’s another on electro magnetic fields which will again affect welding, as well as areas like plastics and metals processes. And we are just going to be getting more and more. It’s what you get with all policy makers – if you leave them to it, they keep producing legislation.”
No more gold plating Is this another case of implementation driven by a singular British bureaucratic zeal? “There are differences between member states about the way the laws are enforced, there’s no doubt about that. Some countries do implement very strongly and it’s not just the UK – Germany notably does,” continues Pointer. “But some of the more recent accession states are at a very, very different stage. So it’s not a case of Britain does it and others don’t, to nearly the same extent. “I think we’ve got away from the gold plating of legislation where the directives said such and such and we’d add a whole bunch of stuff on top and pass it into UK law. That’s not happening now, but there’s no doubt we are enforcing it far more strongly than some member states.” According to Malcolm Collins there are some “daft things in the system, but by and large I don’t think we should be too frightened of health and safety legislation. If it’s phrased clearly, and people understand what they have to do, it can only make the workplace safer in the long run.”
Clarity please And here is a core issue. Explanatory clarity – or rather the want of it – is a recurring criticism on H&S as in others involving manufacturing/government agency interaction. “There is a great deal of guidance, much of it freely available on the web. And this is both
a good thing and a problem at the same time because there’s so much to wade through to find the specifics you need,” says Steve Pointer. “This is particularly challenging for an SME. If you’ve got the time to sit on the web and work your way through everything, it’s all there. But, most SME’s simply don’t have the time to do this. “This is a big issue; cutting to the chase and saying,
Malcolm Collins, Sheffield Forgemasters, group health and safety director
‘OK you’ve got me. I know I’ve got to do this, what do I do, and quickly?’ It’s needing someone to talk to. There are Government helplines and these do indeed help to an extent. But they only go so far. Otherwise it’s going to consultants, and there are some good consultants and some pretty shoddy ones. “It’s very difficult for an SME to access this area, knowing what to ask, getting the right answers and getting value for money out of it. This is the core issue.” Lee Pickering agrees. “There’s far too much legislation for everybody to understand. The HSE has a fantastic web site that carries a lot of information, but we feel it could be simplified. And we’d like to see the HSE within in the market place and being seen as more approachable for advice. “I suspect that at the moment most SMEs and maybe some of the PLCs see the HSE as enforcers of legislation rather than consultative type people with whom you can share a problem. We’d like to see a shift in this.” His point is taken up by Neal Stone. “Small business can find it very difficult to identify where they should go for accessible, reliable, proportionate and affordable health and safety advice. The signposting needs to be improved immeasurably. If manufacturers are spending a disproportionate amount of time trying to manoeuvre through complex health and safety rules it is not good for their business or their workers. “And arguably it does not add one little bit to promoting health and safety.” end
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(JN????) The Manufacturer A4 Advert
28/4/10
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Supporting Manufacturing
Fighting for Jobs AND
Safer & Healthier Workplaces www.unitetheunion.org TM MAY 2010 final.indd 63
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Infor SCM helps boost manufacturing productivity and capacity utilisation by between 10-14%
Demand forecasting reduces guesswork in supply chains Faced with volatile markets where consumer demands shifts ever more quickly and costs need to be controlled, improved forecast accuracy is paramount. An efficient and responsive supply chain is essential for competitive advantage, says Brian Davis.
Traditional
demand planning systems give an indication of average sales of products for this time of the year, but don’t necessarily leverage current information in the supply chain — including customer inventories, point of sale and other information. Companies like Unilever, Proctor and Gamble, Kraft and others are exploring new ways to forecast demand because consumer purchasing habits, retail and internet ordering processes and promotions are changing so frequently. Terra Technology’s demand sensing system enables companies to gain supply chain visibility and improve manufacturing planning. “Demand sensing sits between demand planning and distribution planning, predicting customer shipments,” explains Robert Byrne, CEO of Terra Technology. “By getting this data more accurately, the supplier’s deployment, stock transfers and manufacturing schedules are in turn more accurate.” Demand sensing utilises pattern recognition mathematics to decipher daily demand signals and
generate more accurate forecasts based on real world events in near real-time. Unilever’s Personal Care business managed to reduce forecast error by 25-40% using Terra’s Demand Sensing solution. Kraft Foods reduced forecast error by 40%, cutting costs, improving service levels and reducing inventory in North America, and P&G cut forecast error over 30% globally.
Making plans Commercial demand planning systems have been around for about 25 years, and were supposed to solve the forecast error problem. But forecast error got worse because of many factors, including line extension in retailers, increasing product diversity, innovation, more promotions, special packs and evolution of consumer taste. Admittedly, forecasting is as much an art as a science. Traditionally manufacturers have put in buffers of inventory to cope with demand variations. The majority rely on statistical analysis using Microsoft Excel spreadsheets. “Depending on the business, margins of error can be process driven,” says Andy
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Supplychain and logistics
Killick, business consulting manager for EMEA at Infor. “Spreadsheets are simply not designed for a collaborative multi-user process. Statistical analysis from spreadsheets tends to be general rather than fit for purpose, as each industry has a specific demand planning challenge.” Infor addresses the planning challenge with a series of end-to-end supply chain solutions for demand planning, advanced planning and scheduling, warehousing and transport management. Infor’s supply chain software is ERP agnostic, which is important as many suppliers have undergone acquisition and utilise numerous ERP systems, and it is vital to have total visibility of the supply chain. In many cases, the manufacturer is not concerned with replenishment of the stores, but replenishment of the distribution centres. Consequently, manufacturers supplying the retail space operate from two dimensions. They are market driven from a customer perspective, as handled by the account manager, and also manage from a logistical perspective. “Infor offers a demand forecasting system that allows the manufacturer to map the customer dimension, driven by sales, mapped onto their logistical structure in warehouses which often don’t have a one-to-one relationship with customers,” says Killick.
Collaboration stations Infor SCM Demand Planning uses advanced statistical techniques based on Bayesian time series analysis. As an umbrella system that operates across multiple ERP systems, this offers a single collaborative business process for higher customer service and less inventory, closer to real-time. AB World Foods has deployed Infor SCM, Infor SCM Demand Planning, Infor SCM Inventory Planner and Infor SCM Replenishment Planner as a foundation for managing its global supply chain. Prior to implementing Infor’s SCM solutions AB World Foods relied on a spreadsheet based on retrospective performance over the previous two months. This process provided a flat forecast of demand and did not take into account different demand patterns for various types of products. Given that 75% of AB World Foods’ costs are supply chain related, phased implementation is having profound benefits across the business. “Our service levels for inventory planning have increased from 91-96 per cent, and stock holding of finished goods has been cut by about 20 per cent, saving over £2 million,” says Gary Brookes, head of supply chain. Collaborative input has also improved across the business due to better demand forecasting. “Sales and marketing used to be out of step with the supply chain department. By integrating demand planning with our stock plans, we have significantly improved sales and risk reporting,” comments Brookes. Looking to the future, AB World Foods now plans to develop strategic demand forecasts for the next 12 and 24 months to guide stock replenishment action.
“During the downturn there has been increasing variability in demand,” says Tim Lawrence, lead of the supply chain team at PA Consulting. He cites the impact of the scrappage deal on the auto-industry and how supply actually outstripped demand. “Consequently, the ability to forecast has been brought sharply into focus.” He suggests there are a number of ways to improve demand forecasting. “First, get closer to demand.” In the retail sector access to point of sale, RFID, and online purchasing data, means information is able to be fed more rapidly up the chain, so real demand is reflected more accurately. For example, when an Apple iPhone is activated, the information is relayed immediately to Asian suppliers who can gauge which models are favoured and react rapidly.
Demand to supply Similarly, in the pharmaceutical sector there has been a big focus on authentication to ensure counterfeit goods don’t get into the supply chain. Products are bar coded by the manufacturing plant, and bar coded again when dispensed by the pharmacist. A database behind the system, checks it was the same product as prescribed. This data also gives early warning to the manufacturer for a better view of demand than ever before. Secondly, “Good collaboration is vital between parties in the supply chain,” says Lawrence. Internet and cloud technology such as the One Network Enterprises can play a useful role. As soon as demand is triggered at the retailer, the information flows through to a supplier portal for higher visibility, i.e. using One SAP or Oracle supply chain, for example. Thirdly, there needs to be more focus on sales and operation planning, balancing supply and demand, using algorithm-based tools such as SAP Demand Planning. Constraint-based planning can help assess order requirements for individual plants based on variables such as demand, consumer preferences, trends, lead times and distribution patterns. “Sales and operation planning is a business process where a manufacturer pulls together key supply and demand data, reviews it on a weekly or monthly basis, then decides what action to take,” says Lawrence. “The trend is to extend it outside the organisation to retailers and manufacturing suppliers.” Finally, there is a need for flexibility of supply. Leading companies like Philips are looking at much later customisation of products, healthcare for example, doing final customisation of modules and assembly closer to market to shorten lead time. This approach needs to be supported by design of products into modules for later stage configuration.
Ready for casting Oliver Wight partner, Les Brookes, also suggests that getting closer to real consumption demand is more important than ever — “This demands more collaboration with trading partners up and down the
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Supply chain and logistics
extended supply chain.” He stresses the importance of principles like demand flow costing, where systems (from companies like Red Prairie) utilise EPOS point-of-sale data to assess demand patterns over the short-term. But he warns against the potential for amplification in this scenario, “As sales at a remote location can be misinterpreted further down the line, like a Chinese Whisper, resulting in significant overstock.” Historically, demand in the auto-industry, for example, was fairly predictable. But in the recession there is a real need for consensus-based demand planning rather than just using OEM forecasts. “There is a need for suppliers to have their own intelligence to factor in true demand, as amplified demand can lead to overstocking,” says Brookes. He points to the Forrester Effect, which says the further you are from forecasting real demand in the supply chain, the greater the potential for amplification. Consensus-based demand planning, rather than a statistical based forecast, allows companies to factor in market intelligence, customer intelligence, economic and market share assumptions. Systems including JDA Demand Planning, SAP APO Demand Planning and Oracle’s Demantra, all support consensus-based demand planning. Nevertheless accurate demand forecasting also requires culture change, as the process demands higher visibility throughout the supply chain. “Optimisation requires improvement in the accuracy of demand plans, moving more intelligence around sales and marketing activities. But this results in improved service, minimises costs and reduces working capital.”
Worst case scenario? ERP vendor Epicor has introduced a statistical forecast system from Business Forecast Systems, called Forecast Pro in Epicor 9. The system can generate multiple ‘what if’ scenarios. Epicor also features a fully embedded multi-constraint optimisation for taking forecast demand, actual sales and optimising production plans. “Historically companies have had to balance what they need to make with what’s most efficient based on confirmed sales orders or available capacity,” says Adam Prince, senior director of product marketing at Epicor. “Companies used to make finished goods but are increasingly creating components or semi-finished goods for completion when the order is confirmed. Their best guess comes down to demand forecasting.” Previously, Epicor incorporated Smart Forecasting for this purpose, and still offers it on the Vantage product line. More recently, Forecast Pro has been introduced on the Scala line. Prince suggests: “For manufacturing highly configured items, manufacturers will need a strong intermittent demand capability. Whereas for commodity or CPG suppliers, where there is only minor configuration of the product, such as the packaging, a statistical
algorithm such as Holt-Winters exponential smoothing is useful for demand forecast.” “Organisations that have multiple sales and production plants also need different multi-level statistical models, with aggregation capabilities. So historic demand can be compared with plant availability using APS or a supply chain optimisation engine to smooth out demand and utilise manufacturing capacity effectively,” he says.
Straight to the source Daylight Supply Chain Services has developed a web-based supply chain engine which automatically balances demand and supply. According to managing director, Tony Hardy, Daylight middleware will integrate with any ERP system, so suppliers can truly see what clients demand and then make empowered decisions on how to service that demand, driving critical mass production for supply optimisation. “In some cases we’ve managed to reduce client stock by 70 per cent in the confectionery industry, reduced pipeline stock by 30 per cent in the pharmaceutical sector, and reduced supplier made readies by 35 per cent, as well as improving logistics delivery frequency by 25 per cent,” he says. Latest developments include a supplier web connect and demand management vehicle for small suppliers and a new interactive price variation dimension in the core Daylight system.
Sales and operation planning is a business process where a manufacturer pulls together key supply and demand data, reviews it on a weekly or monthly basis, then decides what action to take Tim Lawrence, head of supply chain, PA Consulting Daylight originally developed the system to manage supplies to Chesapeake, a paper board and packaging supplier with 40 operations worldwide. The company’s suppliers deliver on a cycle of up to three months, while its customers demand products within 10 days. Consequently, material needs to be sourced quickly and cost effectively in a complex supply chain. The internet-based middleware integrated with Chesapeake’s existing sourcing and stock systems, analysing behaviour patterns and anomalies within the supply chain, and recommending actions to avoid stock shortages or overstocking, saving the company £1m in the first 12 months. Better integration of demand forecasting and supply chain modules promises to reduce the guesswork in planning, cut costs and overstocking for many industries, not simply those involved in CPG. end
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Do you want to improve Operational Efficiency? Columbus IT specialise in providing Microsoft Dynamics to Manufacturers and Distributors. One of our core objectives is to improve the operational efficiency of our customers in terms of:
Effective Scheduling and Planning Streamlining Material Handling Processes Effective Stock Management Improving Supply Chain Collaboration Balancing with Environmental Pressures
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World of Knowledge for Manufacturers and Distributers For more information and to receive your free guide,
“Improving Operational Efficiency with Microsoft Dynamics” please visit:
www.columbusit.co.uk/discrete www.columbusit.co.uk/process www.columbusit.co.uk/distribution or call freephone: 0800 0433 054
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IT in
manufacturing
ERP Co nne ct
0 1 20
Despite the looming volcanic ash cloud, 60 UK manufacturing companies gathered in the Warwickshire countryside at the first ERP Connect conference to listen to industry speakers talk about ERP selection and implementation, network roundly and discuss with vendors their issues and concerns.
The
conference was chaired by Simon Holloway, research director of Bloor Manufacturing. So what did we learn? Holloway, in his summing up of the conference, listed the key topics discussed as: Return on Investment The do’s and don’ts for implementation Understanding your business: type, complexities and real requirements. Simon Moore, managing director of Zentelligence and the author of the Conservative party’s Digital Plan for Britain, opened the conference by discussing the changing ways in which we do business. Moores highlighted that ICT drives half of EU productivity, but still hasn’t met Lisbon Agenda goals of 2000. Accordingly, he expanded on how Europe was falling behind Asia and the US: In a world of ‘hub’ economies, our networks remain narrower and slower than those of our main overseas competitors Our high technology businesses are being held back by over regulation and compliance costs. Our workforce is falling behind in the skills needed today, let alone tomorrow
Our public services are victims of countless expensive failed transformation projects Moores went on to explain that the greatest productivity growth has occurred in those business sectors that either intensively use, or produce, information technology. That said, greater productivity is not always a consequence of the introduction of new technology in the workplace. While business needs to evolve to exploit new models, the danger remains in managing the technology life cycle rather than its uptake.
Quest to invest Return on Investment (ROI) is almost always at the forefront of a finance director’s mind when approached to sanction any CAPEX expenditure. But what should you focus on? Matt Eckersall, industry lead, Microsoft Dynamics UK, stated that, “It is the management of this change that determines the ROI,” which could be any combination of the factors shown in Figure 1. This means that to determine ROI we need to set measures to ascertain how the project we are involved in has performed against our original
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expectations. Tyronne White, head of purchasing manufacturing and logistics with the Talley Group, said, “We had taken advice and planned the ROI for over two years. We achieved this within the first seven months, and with reduction in resources: 14% in administration in the supply chain, manufacturing and logistics, for example. We are still looking at the effects on the other functions within the business, and are forecasting this to be closer to eighteen months.� White, with a wry dig at financial directors, said that gains in the management decision making process are more difficult put a financial twist on, but the progress of the business and the feedback available to customers has seen opportunities reached and new business being made available. The key is to keep monitoring the changes you have made. Iain Fox, general business practice lead at IBM Global Business Services, examined those considerations driving companies to take the leap from the frying pan of an aging Application Framework to the fire of a new EPR/Application Framework. He looked at the factors to be considered when weighing up ERP compared to best of breed, and the pitfalls be avoided. Unfortunately, there isn’t a simple answer, as IBM
TM MAY 2010 final.indd 70
Figure 1: ROI Factors (Source: Matt Ekershall, Microsoft Dynamics, 2010)
Innovation Putting your customer first
Ageing workforce
ROI SCM agility and insight
Embracing Green issues Increased service revenue
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IT in manufacturing
has found. It can thus depend on a number of factors, including: The existing landscape across which business processes are executed Complexity of the business model Availability of solutions to address specific problems Level of complexity you can handle going forward Appetite for change/cost Where you want to take the business in the future Recent investment profile What this means is that you have to fully appreciate your processes and what needs to change, as well as understanding your requirements and the associated return on investment(s) you are looking for. Fox’s advice was that you should not be constrained by what your competitors do, instead being thoroughly honest as to the needs and capabilities of your organisation. Nathan Bailey, operations manager UAV Engines Ltd, when talking about their objectives around reducing complexity, increasing productivity, reducing costs and risks whilst promoting compliance, said, “This only works if business processes are inter-connected.”
Strategy building Dominic Oughton, from the Institute for
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Manufacturing at the University of Cambridge, opened his talk with the following challenge: “ERP is necessary, but not sufficient; you need the right strategy too.” Successful strategies are developed with enterprise-wide involvement, clearly communicated and visual, and driven by the external environment and/or customers. In The Holloway Angle: Making Business Strategy, Ian Holloway wrote about the problems with business strategies, in that very often a strategy just becomes a piece of paper and isn’t actually used or even updated. Oughton went on to describe a new way to derive business strategy called ‘road mapping,’ which uses visualisation and collaboration techniques to get over involvement issues. Validating strategies today is difficult, and Oughton described the use of scenarios to counter the problems inherent in traditional methods for forecasting and planning where they were failing due to complexity and uncertainty, as well as change and discontinuity. Strategy needs to start by looking outside the company. It is best developed by a multi-functional group, with input from all stakeholders to achieve buy-in. It must be tested against future scenarios, as well as being communicated widely, openly and visually. It is necessary to facilitate all stakeholders
04/05/2010 11:34:44
Seeing old IT challenges in a new business light. Disruption or deliverance? Seek out the business opportunity within the challenge. Business change is inevitable – but how you adapt to it dictates how competitive your manufacturing operation can be. That’s why the most progressive CIOs partner Avanade: delivering new levels of innovation and agility to help them reduce costs and deliver global supply chain advantage. With our joint Accenture and Microsoft heritage, Avanade is uniquely placed to help you keep your eyes on the horizon, and your feet on the ground. Using the Microsoft platform as a springboard for delivering business results, we’ll help you adopt a pragmatic approach that makes change less daunting, combined with a visionary attitude that puts real triumph within reach. For more information visit www.avanade.com
Be IT progressive
From Accenture and Microsoft © Copyright Avanade. All rights reserved.
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IT in manufacturing
to define objectives in relation to their contribution; the role of leaders is to support delivery of these objectives. Lastly, you need to align performance measures with strategy. AMR Research identified that the top business priorities for Europe in 2010 were the reduction of operational costs and increased profitability. So, nothing new there, it seems! Andrew Kinder, EMEA director of solutions marketing for Infor, saw that the largest productivity gains through the use of applications software were in the following areas of business: Manufacturing assets, including both equipment and people Warehousing assets, particular involving space utilisation and people Transport assets, where good management could result in a 5-15% reduction in transport costs, with improved fleet utilisation
IT Strategy IT and business move at different speeds. Kinder stated that an evolving architecture whereby your IT infrastructure becomes adaptable is therefore key in responding to business demands. Strategies that support business agility include: Component-Based Applications; Service-Oriented Architectures; and Open Standards. Kinder identified the following IT Strategies as having a positive effect on cost and risk reduction: Hardware Strategies, particularly those involving virtualisation Buy and pay for software in different ways, such as hosting, subscription based or software as a service (SaaS) Different agreements with ERP vendors around the implementation contracts, industry templates and licensing IT investments are following the economy out of recession. Indeed, there are new IT buying preferences emerging which provide more flexibility and choice on how to buy, pay for and own software, as well as lower risk through vendor selection, implementation agreements and open standards.
Complexity Holloway introduced the final plenary session by saying that while many small and medium businesses might associate ‘complexity’ with large enterprise, the ecosystem that any company operates in can be seen to be full of complexity. Jeff McGowan, sourcing manager of Lifescan Scotland Ltd, part of the Johnson and Johnson group, discussed how to conquer complexity based on his own company’s experience. How do you know if your company faces complexity? McGowan suggested that you look for these factors: Cannot find the true cause of problems Change does not result in expected improvements
Without effort, things naturally get worse not better Lack of predictability Lack of transparency He suggested there were three main causes of complexity: Non-linear relationships – SKU proliferation, longer leaded times and product promotions which can skew demand; time delays; and the number of interdependencies These latter two causes McGowan referred to as ‘Dynamic Complexity,’ as there are many variables and causes/effects which are subtle and separated in time and space. Complex systems consist of a number of interconnected parts. Emergent properties arise from the way a system is organised, and even if the parts could be separated out, emergent properties may get lost. The dynamics of your business system will be influenced by a small number of simple policies. Often simple rules govern complex behaviours. Every company is different, and its business system will therefore have its own unique conditions. McGowan stressed that systems can recreate themselves unless we change the policies and process of the company. It is systems thinking that help you to unravel the mess of complexity.
Implementation In the past, enterprise-wide implementations were typified by large amounts of customisation, but this resulted in increased levels of complexity being introduced for the project. Fox stated that often these cycles perpetuated themselves leading to further levels of customisation driving up TCO and making future innovation more challenging or, as he put it, “Applications can become the business if we are not careful and hinder progress”. What has changed is that now packaged solutions are more developed and verticalised than ever before. Additionally, companies now recognise that the core process of the applications are common among 80% of like businesses, and it is the final 20% (not always in terms of cost, though) that drives differentiation. So what should we do if we are faced with implementing an ERP package? John Haslam of FreeConsult described the process he takes his clients through. The first step is to set a realistic budget; this depends on the size of the company and complexity, as well as industry regulations and future growth plans. Haslam saw the next step was to identify the potential ROI of the new ERP system — he did add, with tongue in cheek, “That is if an ROI case is necessary or possible,” the 4 steps were: How to decide which vendors and many vendors to include Should you do an RFI and what level of detail to ask for at what stage? How long should the process take? How do you structure the process? end
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We HAD A loT of VAluAble inforMATion - We JusT neeDeD A WAy To finD iT
“We needed to bring our different companies together under one system to ensure we remained competitive, maximising the opportunity of being a multinational company,” explains Jim Butz, AMCOL’s global IT Director. AMCOL replaced their many and disparate systems and processes with one Enterprise Resource Planning (ERP) application Microsoft Dynamics NAV, which was implemented in 22 locations accommodating nine different languages and the needs of their sales, finance and manufacturing staff - by one company - Tectura. To see how a Tectura solution could help improve your business call us on 0845 084 0152 or visit our website www.tectura.co.uk builT onon MicrosofT DynAMics nAV nAV A TecTurA TecTurAsoluTion soluTion builT MicrosofT DynAMics
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manufacturing
ITnews
Dimensions - 130mm(H) x 103mm(W including 3mm bleed)
ERP
Maxima to halve ownership cost for legacy ERP/CRM systems Maxima, the IT business systems and managed services company, has launched a next generation suite of MAXcel specialist integrated business applications that leverage the power of the Microsoft Dynamics platform to help take the cost, complexity and risk out of enterprise software projects. The company will extend its activities from core construction and maintenance solutions to support all aspects of the business management lifecycle. MAXcel also offers specific applications for construction,
contract management, service management and manufacturing. Graham Kingsmill, Maxima’s chief executive officer, said: “Initial feedback for our MAXcel family of applications has been extremely positive, particularly from those organisations that have witnessed how they can unlock significant business benefits by migrating from their legacy ERP systems to a next generation solution based on Microsoft Dynamics AX.” Maxima recently won a contract from Hill & Smith Ltd, the safety barriers and workzone protection
Epicor launches new ERP release Epicor introduced a new ERP suite in more than 50 countries, representing 65% of the global economy. The offering, Epicor 9.05, builds upon Epicor 9 and delivers capabilities focused on cost reduction, process improvement and customer responsiveness (which, reports have found, are the main priorities for small and medium businesses now that recovery is on its way). Every new capability was considered in terms of the industries Epicor serves, and their need for better expense management and heightened customer responsiveness and service. For instance, for manufacturers and distributors the introduction of lean performance metrics, enhanced quality assurance and a real focus on both inbound enterprise asset management and outbound aftermarket mobile service management are just a few areas that were introduced. James Norwood, senior vice president, worldwide product marketing for Epicor, said: “As we begin to emerge from the economic challenges of the past two years, we’re seeing a conservative ‘maximise efficiencies, minimize expenses’ philosophy in the markets we serve. Our new release is designed to enable customers to target these often competing mandates.”
systems provider, whose multidivision operations will be supported by the new MAXcel ERP solution. The specific requirements of the company include improving user productivity, delivering increased insight for financial management, and helping to reduce costs in sales order management.
PLM
HP and Siemens PLM software team up HP and Siemens PLM Software, a business unit of the Siemens Industry Automation Division, announced a global agreement allowing the companies to accelerate client adoption of software and services that reduce the time needed to implement PLM projects. With these projects increasingly sophisticated, companies often require a single prime contractor to take full responsibility of the deployment and financial transaction. The agreement expands the existing relationship between Siemens PLM Software and HP, enabling clients to source PLM software products, hardware and services directly from HP, thereby freeing up resources to focus on the core business. Joe Barkai, program director, IDC Manufacturing Insights, said: “More than ever, manufacturers must align their product development efforts more closely with their business strategy. This means teaming with global partners who can combine the PLM technology and business process expertise to get the job done.” The agreement allows HP to expand its ability to directly sell PLM products and services globally, in addition to designing, developing and deploying complete Siemens PLM Software solutions for enterprise businesses.
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ITnews... Business wins
Presspart turns to SAP Blackburn-based Presspart, the manufacturer of precision formed metal components, has started using the SAP Allin-One solution. In December 2008, Presspart (part of the Heitkamp & Thumann Group) decided to look for another software, after the one it was using, an old version of Sage, was found no longer adequately maintained. The selection
process was extensive, because the solution had to be usable in a way that would allow the company to meet the regulatory requirements of a pharmaceutical supplier. In one configurable solution, SAP Business All-in-One helps companies manage everything from financials, human resources, procurement, inventory, manufacturing, logistics, product development and corporate services, to customer service, sales and marketing.
Dietmar Schmitz, finance director at Presspart, said: “Our products are used in life saving devices and our customers depend on us to keep them supplied. It was therefore imperative that the system worked from day one. When choosing a new technology vendor, we had to be absolutely certain we were making the right choice both with the software, and also the implementation partner as we couldn’t afford for anything to go wrong.”
Preactor provides tech solution for Saudi company Preactor International, the planning and scheduling software company, announced a business win with Adada & Kabbani, a Saudi Arabian specialist modular furniture manufacturer. Adada & Kabbani, which had a 2009 turnover of SAR 70m (about £12m), needed a technology solution that could integrate its ERP system to enhance its planning and scheduling performance. The company’s general manager and cofounder, Yahya Adada, said: “Our biggest challenge is capacity planning and our own ERP system cannot deal with the capacity planning complexities of our business processes. What we
required was a dedicated standalone solution that had been developed specifically to manage the complex planning and scheduling challenges that manufacturers like ourselves require.” The implementation was handled primarily by Preactor India. P J Yogesh, general manager of Preactor India, said: “Most ERP systems cannot provide the level of control and flexibility required, even those with built-in planning modules. Preactor not only provides the planning and scheduling capabilities required but because of it’s proven ability to seamlessly integrate with ERP, it can actually extend the usable life of ERP system in question saving a huge amount of time, money and disruption.”
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Preactor
On Time and In Full rates doubled Wellman Hunt-Graham double ‘On Time and In Full’ delivery rates with Preactor. Wellman Hunt-Graham was formed by the merger of Hunt Thermal Engineering Limited and Wellman Graham Limited in 2005 and is now the largest manufacturer of shell and tube heat exchangers in the UK with a turnover of almost £11m. Even the smallest orders have lead times of 6 weeks and these can extend to 18 months with a typical order comprising around 110 different tasks, each of which is meticulously tested and recorded, with the shortest measured in hours and the longest measured in weeks. To add to the complexity of planning the effective utilisation of the company’s 9 primary resource groups, there can be up to 50 live orders physically in production at any one time. According to Operations Director Chris Clarke, “accuracy of delivery date is the primary concern of our customers as this often has to coincide with having a skilled team of installation specialists on site and the planned shutdown of very costly equipment. Failure to do so can incur cost penalties of up to 10% of the order value which on a multi-million pound order are understandably very significant!” Prior to investing in Preactor, the company had used a highly be-spoked, UNIX based, infinite capacity planning package which required a large amount of human resource to generate a plan which was of no use. Clarke estimates On Time and In Full (OITF) rates were around 50% so within his first month he recommended the company urgently look elsewhere for a better solution. Initial investigations proved
less than positive, being either too narrow in approach or very expensive containing a large excess of redundant functionality. In June 2008, Wellman had a very different experience with Preactor Reseller RMS which didn’t spend time trying to sell the company a system but spent a lot of time learning to understand what it did, and what its problems were. RMS’ flexibility was central to arriving at what has proved to be a highly successful system as Clarke explains. “RMS provided us with the essential Preactor framework that would work with our business and left us with full control over the development of the spreadsheets and associated reports. Because of this, we have a system we can tailor very quickly for our business and one we implemented in a matter of weeks.” The benefits became evident in an equally short time and were initially “a real eye opener.” For example, Preactor flagged up orders which according to the old system were progressing on time that in reality were weeks late.
These were not isolated examples and there was an initial period of time when people simply couldn’t believe what Preactor was telling them. Yet time and time again, the information from Preactor proved itself correct. So much so that the company’s OTIF delivery rate has risen to 8590% since implementing Preactor. Not only does Preactor generate what needs to be done next for every order across the entire production floor, it can also quantify the reasons why as well showing the impact of not doing so. “In this sense, Preactor is very much a management tool for us”, explains Clarke, “because it allows us the flexibility to do what we need to do for our customers.” Furthermore, it has freed up half of the planner’s time and helped reduce bottlenecks by around 20% which in turn has reduced Work in Progress (WIP) on the plant floor. Hence Clarke concludes, “Preactor hasn’t helped us work harder, but it has helped us work a lot smarter and this has helped benefit the way the company as a whole performs.”
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ITnews... E-Commerce
INTTRA introduces the electronic invoice INTTRA, the global provider of e-commerce solutions, launched the first ocean freight invoice transmitted via eInvoice, the electronic invoice presentment and payment platform specially designed for the ocean freight industry. The transaction processed by INTTRA eInvoice was submitted by CMA CGM (America) LLC to Golden Bridge International, Inc., a Non Vessel Operating Common Carrier headquartered in City of Industry, California. Philippe Salles, director of eCommerce at CMA CGM, said: “Our experience with the INTTRA team has been very positive and CMA CGM
has already seen significant potential cost savings and process improvements to our accounts receivable operations. The electronic invoice was the next improvement we wanted to provide our clients.” “Being able to automatically reconcile payments to specific invoices will help improve our service to customers, is much more environmentally friendly and will save considerable time,” he added. INTTRA works with over 30 carriers and their customers to streamline and standardise their shipping processes worldwide. More than 300,000 container orders are initiated on the company’s platform each week, representing more than 10% of global ocean container trade.
Industry trends
Survey finds mobile apps use in businesses on the rise A survey commissioned by Sterling Commerce found companies increasingly use mobile applications as part of their long-term success strategies. Between 86% and 90% of respondents identified increasing worker productivity and responsiveness and customer satisfaction as key factors for deploying mobile applications. The survey was conducted by Forrester Consulting, and
focused on companies in the UK, US, France, Germany, Brazil and Canada working in different industries, from manufacturing to retail and communication. Nearly 95% of respondents are deploying mobile devices for executive management and IT professionals; 84 to 87% of enterprises for sales professionals or administrative professionals; 75% provide them to field service personnel and 60 to 65% of enterprises use them for employees
in supply chain, building security or customer service functions. Ken Ramoutar, vice president, product and industry marketing, Sterling Commerce, said: “Enterprise Mobile applications can be used for so much more than m-commerce. As smart devices become more ubiquitous, companies need to find ways to maximise the benefits of these devices to help employees drive more productivity and improve customer service.”
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Ant Telecom
Communication solutions – made for manufacturing ANT Telecom provides tailored, integrated communication solutions making your business processes more efficient and improving your productivity for a justifiable investment.
I
mplementing an effective call-handling procedure that enables employees to contact customers, suppliers and each other, seamlessly, is more easily said than done in most markets. However, in environments such as manufacturing whereby high percentages of staff are mobile across large sites this task is even more complex! A highly mobile workforce isn’t the only issue. Due to the nature of work, specialised equipment is required as mobile communication devices need to be robust and durable. For instance engineering and maintenance staff work alone and in some cases require intrinsically safe or ATEX approved equipment. As a result end users tend to carry multiple communication and safety devices. ANT Telecom have been supplying mobility systems to manufacturing markets for over 25 years and have built a tremendous amount of experience and knowhow within the market sector. Our mobility devices are designed to work in tough environments, yet are light-weight, small and ergonomic. ATEX approved handsets are available and various options for lone workers (panic buttons, mandown alarms) can be provided.
Our highly trained engineers can integrate new equipment with existing PBXs and building or process-management systems. This means that suppliers, customers and back office staff can talk with engineers directly. It also allows engineers to receive up to date building and process alarm information wherever they are on-site. As a result, ANT Telecom mobility solutions have helped companies generate further revenues by reducing the down-time of machinery onsite by improving site-wide communication. Our portfolio, that includes Contact Centre, IP Telephony and a host of mobility systems, allows us to be well positioned to help manufacturing companies overcome communication issues across all departments. Product Portfolio IP and Digital Telephone Systems Contact Centres
ANT Telecommunications Limited Swift House Peregrine Business Park Gomm Road High Wycombe Buckinghamshire HP13 7DL
DECT systems Private Mobile Radio Paging Systems
Telephone: 01494 833100 Fax: 01494 833101
ATEX Approved Equipment
For more information please visit www.anttele.com TM MAY 2010 final.indd 79
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ANT Telecommunications Limited, Swift House, Peregrine Business Park, Gomm Road, High Wycombe, Buckinghamshire HP13 7DL Telephone: 01494 833100. Fax: 01494 833101. Email: info@anttele.com www.anttele.com
Home working
Click to conference
UNIFIED COMMUNICATIONS
Check presence status
Shared whiteboards Find out more online For more information about conferencing and collaboration technologies, please visit:
www.anttele.com/instant
Problem solving in an instant Avaya brings everyone together
W
herever key people are located, they can now, instantly, come together to solve problems, make decisions and reduce development times. By using conferencing and collaboration technologies from your desktop, employees, partners, suppliers and even customers can communicate effectively thanks to Avaya’s suite of tools.
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Check the ‘presence status’ of a colleague, then ‘click-to-conference’ and bring in others if needed–even if they are mobile. Escalate the call to web or video conference and ‘click-to-collaborate’ to instantly share documents and ‘whiteboards’. Why not have a coffee and call us on 01494 833100 or visit www.anttele.com/instant
04/05/2010 11:35:23
Specialfeature From spaceship to electric car
Robert Llewellyn in a Mitsubishi iMiEV
From spaceship to
electric car Mark Young speaks to Red Dwarf actor and car enthusiast Robert Llewellyn about his involvement in the CABLED electric vehicle demonstrator programme.
Featuring
at the recent Sustainability Live conference at the Birmingham NEC was professional services company Arup which is managing CABLED – the largest of eight electric vehicle demonstration projects currently ongoing around the country. CABLED (Coventry and Birmingham Low Emission Demonstrators) involves a collaboration between car manufacturers, councils, electricity companies and universities to research the logistics and infrastructure of operating electric cars in the UK on a mass basis. It is funded by the Technology Strategy Board. There are 110 drivers from all warps of life driving various electric cars around on their usual day-to-day endeavours over a 12 month period. Robert Llewellyn is one of them. The British television personality and writer who first found fame
as the robot Kryten in hit 90’s sci-fi comedy Red Dwarf before becoming the first presenter of DIY engineering show Scrapheap Challenge is one of 25 drivers of the Mitsubishi i MiEV, having been invited to take part after surprising himself by enjoying driving one for his internet show Carpool. TM had the pleasure of speaking to Robert inside an i MiEV at Sustainability Live. “It’s just such a fun car,” he says. “Without a doubt I am a reformed petrol head. You look at a car like this and you think it is a little bubbly smart city car type of thing, but you get in and you realise it’s actually a lot roomier than you’d expect. Yet it is still a small car – it’s very narrow – which makes it great for parking and so on.” Robert is tall gentleman, well over six foot, but this isn’t an issue – he clearly has headroom to spare. The backseats are included for more than just aesthetics as well. Though somebody of Robert’s size would certainly feel cramped in the rear, a child or small adult would be far comfier here than they would in the average 4-5 seat sports car. “A lot of this is to do with the fact that you haven’t got gear boxes and clutches and engines and things taking up space,” he explains. “It’s very comfortable, its roomy, and there’s very good visibility. It’s got very good handling because all of the weight is very low down. This means you go round roundabouts a lot quicker than you’d expect. And it handled the snow very well too.”
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Special feature From spaceship to electric car
Cars involved in the CABLED project:
Robert lives in the countryside; – produces 90g, a typical family not a typical place you’d expect saloon produces 150g, and a 4x4 to find electric cars, which is can produce up to 500g. “If all of 25 x Mitsubishi I MiEV good for the research side of the us were driving these electric cars project. And it doesn’t hinder nobody would be mentioning 25 x Tata Indica Vista EV his use of the car everyday, global warming,” says Robert. 40 x smart fortwo electric drive “dropping the kids off at school, The personal benefit, except for 10 x micro:cab urban car trips to town, going to the DIY any moral high ground garnered, shop to pick up the annoying is that it costs under a pound to 5 x Land Rover Range-e hinge that’s fallen off the door – fully charge the i MiEV, making it 5 x LTI electric TX4 not from the car of course!” under a penny a mile to drive. But it does mean he has to For those that just can’t get be careful. He’s done 72 miles on on board with the size of the i one charge, but admits to a certain “range anxiety”. MiEV, never fear – there are five electric Land Rovers He’s done longer trips during which he recharged being trialled within CABLED as well. However, Robert using Mitsubishi’s fast charger at its UK headquarters suggests there should be a debate within society as to in Cirencester, Gloucestershire, and feels the key whether anyone needs to drive a car that weighs three to mass market adoption of electric vehicles in this tonnes anyway. country is making that technology widely available. “Is it really necessary?” he asks. “Is your ego “That’s the game changer – if that technology so fragile and the fear of the size of your genitals so was at every motorway service station people could overwhelming that you need to have something that recharge their cars in 20 minutes and easily get a good big to prove you’re a man?” 60 or 70 miles out of it no problem, meaning they What does meet Robert’s approval is electric could then take these things on longer trips. It only taxis, five of which are set to be rolled out for trials takes 30 minutes from absolutely empty and you can around Birmingham and Coventry soon as part of get it charged to 80 per cent in 10 to 15 minutes. the CABLED project. Electric taxis “makes the most “You have to plan ahead – you don’t use it for sense,” he says. “They only drive in towns and taxis everywhere you’re going to – but the big difference typically do around 150 miles a day. This is well within is every time I get in it it’s fully fuelled. The other day I the (logistical) capacity of an electric car.” got in my petrol car and the fuel gauge was flashing. Robert is currently making a dedicated electric I won’t blame anyone, except for my wife, but we live vehicle programme called Fully Charged which will 15 miles away from the nearest petrol garage so I was consider the whole argument, from where we get the sweating a bit.” electric from to the technology behind the cars. He Range might not be so much of a problem in doesn’t need any more convincing himself though. the foreseeable future. “New battery technology in “The next car I buy without question will be an electric laboratories are keeping mobile phones running for car,” he says. For the rest of us, Fully Charged will weeks, so I think within five years you’ll see electric be broadcast on the internet in the next couple of cars doing 300 miles,” predicts Robert. months and on TV from the end of this year or the The big benefit to the environment is that an i beginning of next. MiEV is responsible for around 40g of carbon per km Arup will produce an interim report on the CABLED if coal is burned to produce the electricity. The best project shortly after the general election. Check back petrol car – a Toyota Prius, which Robert also drives for details.
Robert Llewellyn helps Arup’s low carbon ideas flow at Sustainability Live
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New battery technology in laboratories are keeping mobile phones running for weeks so I think within five years you’ll see electric cars doing 300 miles
Have your say at www.themanufacturer.com
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04/05/2010 11:35:37
Manufacturinginaction Sponsored by TBM Consulting Group
Putting UK manufacturers under the spotlight
Factory of the month
Edward Machin meets the manufacturer of air movement products for whom the introduction of ‘green’ energy legislation has proven anything but restrictive
84 Torin Sifan The air apparent
92 Auto Windscreens At the cutting edge
One year short of its 40th birthday, the company has the unique advantage of being the only UK replacement windscreen specialist
98 Talley Group Talley ho
Mark Young hears how a commitment to UK manufacturing is helping the Talley group… make the world better
105 Remploy Furniture Sustainable sustainability
Reducing market share while increasing revenues: an oxymoron, surely? Not so, says Simon Stott of Remploy Furniture
117 UYT Core strength
UYT continues to build upon its core manufacturing principles in order to achieve class leading performance, as Tim Brown discovers
123 Covpress Developing resilience
Tim Brown discusses the impact of the recession with one of the largest independent UK stamping companies
126 Fort Vale Executive ambition
Edward Machin meets the Fort Vale group at which three former trainees currently sit on the Lancashire-based manufacturer’s top table
109 Aesica Pharmaceutical The best medicine
Since 2004 Aesica has more than tripled both sales and employee figures. Edward Machin is all ears…
All companies featured will be entered into the MIA Award 2010 TM MAY 2010 final.indd 83
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air
The apparent
Edward Machin meets Torin Sifan, a manufacturer of air movement products for whom the introduction of ‘green’ energy legislation has proven anything but restrictive. The company’s commercial director, Paul Kilburn, explains how overseas expansion and technological breakthroughs have been possible during the recession.
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Factory of the month Torin Sifan
Founded
in the early 1900s as the Connecticut-based Torrington Fan Company, for the better part of nine decades Torin Sifan’s product offerings centered around the manufacture of light commercial/industrial centrifugal metal fans and AC technology motors. During the 1990s, however, “We witnessed the introduction of a significant body of legislation relating to carbon reduction, energy efficiency and similar environmental compliance measures; all designed to reduce the consumption of energy” says Kilburn. For Torin Sifan, technology that it — and the wider industry — had been using for decades was suddenly deemed persona non grata, and highly inefficient to boot. With regulations, both at European and national levels, directing manufacturers towards brushless DC/ EC (electronically commutated) technology, “We had to develop a new generation of energy efficient variants of our various fan ranges,” he says.
There are a limited number of companies with the skills needed to lead advancements in the evolution of these types of products, ourselves included Paul Kilburn, commercial director, Torin Sifan
Plastic now plays more of a part in conjunction with metal, for fan cases and, more predominantly, impellers. Similarly, whereas the latter has conventionally been forward curved, an increasing number of impellors are being produced with backward facing trajectories. While no doubt a game-changer, “By far the most significant area of expertise we have needed to develop for the business in this new climate was the skills — both technically and production-wise — to develop a range of electronics to drive the fan blades,” says Kilburn. Very simply, customers no longer want a fan that operates at a single speed and nothing more, especially given the drive in industry to optimise energy efficiency wherever possible. Citing the example of devices that change speed and power depending on the number of occupants in a room, with a heat or CO2 sensor activating the fan, “It can be seen that our industry has undergone a huge transformation in the products that we need to provide and the skills required to deliver them,” he says.
A sterling job “There are a limited number of companies with the skills needed to lead advancements in the evolution of these types of products, ourselves included. Indeed, while the wider building industry is suffering from the worst effects of the recession, and this has affected demand for our products significantly, the move from AC to Brushless DC/ EC technology has added increased value into the products we are producing. As the energy efficient models can be some 50% more expensive than their AC equivalents, this has helped offset some of the volume decline caused by the economic slowdown.”
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A.O. Smith Electrical Products Ltd A
. O. Smith Electrical Products Company produces a broad range of AC and DC electric motors. Our motors are used in a number of different applications in various industries including air conditioning, refrigeration and leisure water. Key applications for our motors include fans, pumps, semi-hermetic air conditioning compressors as well as garage door openers and other general purpose equipment. A. O. Smith EPC has been involved in the manufacture and supply of electric motors since 1940. Our global manufacturing organization currently consists of 18 manufacturing facilities. Our first facility in Europe was set up about 35 years ago, and we have seen the market grow and develop here over the intervening years. Our global operation now also includes three facilities in China where we have seen a
dramatic increase in activity and interest over the past 10 years in particular. A. O. Smith Electrical Products Company have their European HQ at Gainsborough in Lincolnshire UK. This location serves primarily as a centre for the manufacture of AC fractional horse power motors but is also a logistics and administration centre for our company in Europe. We can thus utilize our global operations organization and are able to supply product sourced from A. O. Smith in North America, Asia or Europe depending on the particular requirements of our customers. Torin is a key customer for A. O. Smith in the UK market. In fact, one of the first motors manufactured at our factory in Gainsborough 35 years ago was for Torin, and we are very proud that this cooperation has continued to grow and prosper ever since. The product
supplied to Torin includes a range of fractional horsepower motors for their air moving applications. A. O. Smith Corporation, with 2009 sales of $2.0 billion, is a global leader applying innovative technology and energyefficient solutions to products marketed worldwide. We look forward to using this platform for continued success and growth with important customers like Torin for many more years to come.
Published in association with: A.O. Smith Electrical Products Ltd Marshall Way, Gainsborough, DN21 1XU, UK
Tel: +44 (0) 1427 614141 Web: www.aosmithepc.co.uk
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Factory of the month Torin Sifan
That Torin is trading healthily above financial base camp in such otherwise dark times can be attributed twofold, says Kilburn. Because a significant portion of sales are export-based, sterling’s weakening against the euro means that the company’s ability to compete in Europe has increased significantly. Furthermore, Torin’s embracing of Brushless DC/ EC technology — which has increased value associated with it due to its involved electronics — ensures that it has been able to offset some of the negatives that many businesses are experiencing in the current climate. Indeed, and putting things in perspective somewhat, Kilburn says that, “Were we not selling products outside the UK or only offering a portfolio of AC technology, our business would be under severe pressure.”
Passports at the ready Given the pound’s weakness, Kilburn would be forgiven for putting geographical expansion plans at the top of his agenda alongside the development focus on new products. “While in continental Europe you can get as far as Turkey quite easily, commercially speaking, we see it very much as a bridge to the Middle East,” he explains. “For that reason, Torin will continue to put a significant amount of time and effort into further developing our relationships in the area — one for the near future, if you like.” With a territory boasting sun, sand and Sheiks not the worst place to do business, granted, has Torin considered looking west: namely to an America obsessed with its air conditioning culture? “Absolutely,” confirms Kilburn. “However, the considerable growth in energy efficiency we have seen in Europe has not, as yet, translated to the US. That said, the Obama administration’s increased focus on a green agenda will, hopefully, play in to our hands when things are pushed through.” Constitutional deliberations aside, Kilburn highlights the American product approval system being specific to its territory as being a further point for consideration. “If a company is going to invest both time and money into getting its product range certified, you want to be as close to certain as possible that the market is at the right stage to ensure healthy ROIs across a sensible
time period,” he explains. “We therefore have to consider any investment on infrastructure before taking the plunge, given that the company can service all of continental Europe from the UK.”
Plastic fantastic With its genesis in a sleepy New England mill town, in Kilburn’s American plans there almost seems to exist a degree of reverse symmetry for the company. Indeed, as the Torrington Fan Company grew during the twentieth century it was decided to establish a number of global subsidiaries to capitalise on the industry’s rapid expansion — one of which was Torin UK, founded in 1964. Formed on the site in Swindon that Torin Sifan operates from to this day, the company’s focus was largely on the production of light commercial and industrial centrifugal metal fans, and with no little success. As was not uncommon in the early 1980s, however, Torrington underwent various changes in ownership, during which its subsidiaries were broken down and sold off.
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Factory of the month Torin Sifan
Torin changed hands a number of times during this period: initially through the BTR and Hawker Siddeley groups, ultimately finding itself sitting within the Smiths Industries Group in 1997. “Smiths purchased Torin so as to dovetail with another company in its portfolio, Sifan Systems Ltd, the UK market leader in the supply of AC combustion fans to the gas boiler production sector,” says Kilburn. “Sifan’s industry was going through significant changes, both in terms of product development and the types of fans that were going to be needed going forward, and it became clear that the expertise required was moving away from traditional AC and into what we call brushless DC technology.” While Sifan wasn’t utilising such capabilities in its product range at the time, Torin was heavily involved in the manufacture of brushless DC technology — supplying business machine manufacturers such as IBM and Rank Xerox, among others. “As a result, Smiths identified an opportunity to take Torin’s DC capabilities into the wider Sifan portfolio, thus strengthening its experience in the industry from a technological evolution point of view,” says Kilburn.
This remained the case until 2002, when a management buyout was conducted of a number of Air Movement businesses from within Smiths Industries. The resulting entity, Volution Holdings, remains Torin Sifan’s home today.
Lean on me As the companies developed their respective businesses — Sifan as a leading UK brand, with Torin having a greater international presence — it became apparent that the former’s boiler production sector was gaining increasing global traction; a Torin specialty. By leveraging Sifan’s historic UK reputation, so the thinking went, the familiar Torin name would make smooth its sibling’s transition into worldwide markets. Finally, given that the location of Sifan’s facility was little more than spitting distance from Swindon, it simply made sense to merge the businesses onto a single site, says Kilburn. “As a united organisation that shared a joined infrastructure, we also felt that a significant aspect of growing our business was in retaining the cultural values that existed within both entities — a commonality that has paid dividends in the long-term.” “As such, Lean is critical to us due to the fact that as a component manufacturer we operate on limited margins; we don’t have high trade prices with similarly large discounts, in other words,” he says. Trading from a standard cost structure, and a selling price based from it, once the structure is established there is little opportunity for price changes outside of known trends in raw material commodities. From a purely fiscal point of view, for Torin Sifan to maximise its turnover, profitability and run a tight financial ship, it remains crucial that the company’s manufacturing
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processes are as efficient as possible — especially once a given contract is secured. Intriguingly, while it operates as a highly process-driven, ISO9001 accredited organisation, Torin chooses not to use the seemingly endless variations of Lean terminology in the company’s day-to-day workings. “We look towards total simplicity,” says Kilburn. “For instance, if there is common sense way of saying ‘look at that flowchart and go from A to B’ then we use that every time; logical and straightforward is what we strive for.” With a permanent staff of 200, not to mention the 25-30 strong flexible workforce employed for seasonal shifts, Torin places particularly high value in its staff relating to any process or procedure undertaken on the shop floor — communicating in process-driven maps, for example.
Spoke when bespoken to Similarly, the company has identified that their business naturally involves an increasing degree of client customisation around products, never more so than with the introduction of an EC portfolio. Separating customerspecific activities from general market norms thus becomes vital to maintaining flexibility of both offerings and production, says Kilburn. “As a major advantage to customers, we want to retain such bespoke offerings. Sitting alongside it, however, the business looks to create products which are considerably more standardised: the only difference being the size of the impellor, for one.” As more of Torin’s time is used to
establish high volume, productionoriented lines, not only do quality control, consistency and efficiency spike, but investment in the company’s manufacturing processes realises yet further cost savings. With integrity of production understandably high on the company’s agenda, Kilburn confirms the installation of a new line on the Swindon facility’s shop floor. Accommodating the manufacture of a common product range for a significant European contract, installation of the line is close to completion. Rather than integrating the product into the company’s standard manufacturing platform, however, Torin has developed a series of automated production lines — with high concentration end-of-line testing and holding the capacity for a significant increase in the volumes the line can handle. “When we get to capacity on the line, we will simply extend the production process by adding another replicate line,” says Kilburn. “In this way, the transformation of skills, techniques
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Factory of the month Torin Sifan
and supervisory knowledge remains consistent throughout our manufacturing. We simply build it up as we go. Kind of like a Meccano set, you might say!”
Pick ‘n mix “Indeed, for those projects which require EC-driven technology, the market is demanding more of its products as we go forward. Energy efficiencies and noise levels must be lower, to name two. That Torin has developed in our new generation platform products that are very competitive while retaining industryleading quality advances means that we can offer both a technological and commercial edge for our customers.” Not one to rest on its laurels, Torin Sifan — strapline: ‘The partner of choice’ — conducts an annual customer satisfaction questionnaire so as to ascertain value, sector or purchasing differentiators. Of particular interest to Kilburn and his management team was one trend in particular: that a number of those taking market share were the international conglomerates offering fairly standard product ranges from catalogues. The approach Torin takes, on the other hand, is to sit down with customers and work to understand exactly their drivers and technological needs. The company then design and build the products around its client’s requirements, offering a cost basis for sensible, competitive pricing — and manufacturing the technologies to sit alongside their current set-up. “In that sense, people choose to engage with us” says Kilburn. “This is particularly important for SME customers, who quite rightly expect the same level of personal service that a much larger customer may take for granted. We consider the smaller operators to be of great value, as they offer strong loyalty and help us reduce our financial risk of being over exposed due to the larger, more global organisations representing too high a share of our turnover.”
Going global “Similarly, Torin is looking to expand our EC technology platform across a much wider range of products,” says Kilburn. So, although the company has been successful in supplying these products into the residential sector
and light commercial applications, it is seeking to leverage its technological expertise into closely-related markets: commercial and industrial buildings, for example, with the necessary investment in machinery soon to follow, he confirms. With regards to an overarching development strategy, “Expansion is similarly on the agenda; this time on a global scale.” In taking a large number of its existing products into as yet untapped markets, however, Kilburn and his cohorts will look to consider the impact of, and potential for, new distributor and agency agreements — as well as the alwayspopular partnership route. “The fact that opportunities for partnerships may present themselves with strongly positioned brands in those territories means that we have some fairly hefty decisions to make going forward,” he says. Indeed, moving beyond the shores of continental Europe is relatively new ground for Torin Sifan. Traditionally the company has handled similar expansions directly or with minimal agent support, something that will become less practical the further its moves from Europe. The fact that such endeavours may require a sizeable shift in thinking is not lost on Kilburn. “The business went through some pretty choppy waters going back twenty years or so, the upside of which means that we have undertaken a journey of completely re-understanding our marketplaces, business and customers, among others,” he says.
Consistent consistency “There are still a number of sizeable challenges to overcome in achieving our long-term goal, and it would be pointless to pretend otherwise,” confirms Kilburn. “That said, we are confident that our vision is the right one.” Indeed, this is reflected in both the company’s healthy financial results and the ever-increased acceptance Torin Sifan is having in its marketplaces — both traditional and otherwise. He continues, “We don’t see there being anything wrong in having tweaks to make here and there, given that we are unwavering as to our ultimate direction. Pleasingly, the business as a whole has bought into where we are going as, especially during a recession, people are affected by any signs of instability.” “For that reason, and when the wider markets take a turn for the better, our consistency in both people and strategy will mean that we can react positively to the surge in demand, further cementing Torin Sifan’s reputation as a leader in our respective markets.” end
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cutting edge At the
In 2011 Auto Windscreens will celebrate its 40th year in business. It has certainly come a long way since it was first established.
The
company offers a complete automotive glazing repair and replacement service, its main markets being the motor industry, fleets and, in smaller proportion, private motorists. It recently secured a contract with Lex Autolease (with a fleet of 320,000 vehicles), and is the preferred supplier for many of the UK’s leading insurers, offering them a number of tailor-made solutions. Auto Windscreens is a national company, with a comprehensive network of fitting centres, a fleet of over 700 mobile service units and a 24/7 contact service and employs 1,500 people. This efficient system makes assistance available to customers at any time, wherever they are (also thanks to a central distribution facility located in Birmingham). But according to PR manager, Anna Melton, the real “jewel in the crown” of the business is its state-of-the-art factory in Chesterfield, Derbyshire, which opened in 1982. Thanks to the cutting edge technologies and manufacturing
equipment it uses combined with a highly skilled team, the facility has the capacity to produce 250,000 windscreens a year (more than 1000 different lines in total). In 1983 production numbered 15,000 windscreens. With the unique advantage of being the only UK replacement windscreen specialist with its own manufacturing facility, Auto Windscreens has become the country’s leading company within the automotive glazing industry. John Hutson, head of supply chain and manufacturing, says: “A huge advantage for us is that some of the larger manufacturing companies of automotive glazing are not interested
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Glass
Auto Windscreens
in producing parts until there is a significant volume, while we can manufacture from an OE (Original Equipment) screen, re-engineer it, make the tooling and produce a batch and have then available for sale within 10 working days.” At the end of 2008, Auto Windscreens was established as an independent brand. The company redesigned its logo, appointed a new senior management team and introduced strict cost management measures. In December 2009 majority shareholder Moguntia Invest GmbH which is controlled by Christian Daumann acquired Auto Windscreens. “He saw the opportunity in our
business. Now we are totally independent, and we also have total control of our supply chain,” Melton says. When Moguntia Invest took over, the company completed its transition towards independence. This represents an important advantage to Auto Windscreens, giving the company the opportunity to make quick decisions. As an example, Hutson explains how the company needed to upgrade its furnace software from Siemens Step 5 to Siemens Step 7, at a total cost of over £85,000. “I had a conversation with Peter, convinced him with some facts that the upgrade would give us better quality and that we needed this investment. It was installed within two months,” he says. John Hutson adds: “The current technology has enabled us to produce more complicated windscreen shapes with added value, more functionality - Rain, Light and Moisture sensors along with Heated, Solar, Heat Reflective and Heat Absorbative properties, and Encapsulation, Mouldings and Trims.”
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Crown Operations International Ltd Crown Operations International, Ltd. was established in 1988 to assemble or “prelaminate” and convert safety glass interlayer, including anti-solar, for the automotive and architectural markets. Our expertise in these areas has made us a valuable partner to glass laminators, PVB and anti-solar film manufacturers the world over.
T
he interlayers we handle yield two primary benefits. One, anti-solar interlayer helps ease the demand on air conditioning systems, reducing fuel costs while screening IR and UV rays to protect occupants and preserve textiles. Two, they become the key safety and security component in laminated glass, while also aiding in sound absorption. Crown’s ability to tailor Prelam® assemblies and/or convert to the specific needs of glass manufacturers has proven advantageous. Comprised
of anti-solar film and PVB, Prelam® is typically assembled in either a bi-lam (film + PVB) or tri-lam (PVB + film + PVB) configuration. These can also include precut patterns windscreens, for example - in the anti-solar film layer only, an obvious advantage to our automotive clients. All of these assemblies are provided in roll form, providing optimal efficiency and protection of the interlayer while in transit and storage. Crown is committed to achieving customer satisfaction by continually
improving its processes, including infrastructure, inspections, etc to ensure that our products consistently meet or exceed customer expectations. Crown is an ISO 9001:2008 certified company. Published in association with: Crown Operations international Ltd Tel: 00-1-608-837-7771 Email: info@crownprelam.com Web: www.crownprelam.com
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Glass
Auto Windscreens Paul Lockwood is the factory development manager; he has been with the company through its entire life. His expertise and experience and a team of trained technicians allow Auto Windscreens to concentrate on very specific areas within the glazing market, setting itself further apart from the competition. For example, the team recently designed, created and installed a front and a rear windscreen for a rare 1962 Aston Martin DB4 GT Zagato, in about six weeks. Glazing for limos, replicas and vintage vehicles and screens that are specific to the police, represent a niche in the market the company has the ability to focus on and fill: Lockwood and his team also have the unique advantage of being capable of manufacturing one-off pieces from scratch in a very short time. Auto Windscreens also has the skills necessary, through its in-house Innovation and Training department, to fit specialist screens once they have been manufactured. Many older cars use the rubber gasket system, which hasn’t been produced since the beginning of the 1980s. The in-house expertise of Auto Windscreens makes it possible to work on virtually any type of vehicle. In particular, the company boasts a well-trained technical team, always kept informed on the most recent technologies and the latest innovations and methods in the world of glazing. Auto Windscreens’ Innovation and Training department produce regular Technical Information Reports, which are guides to fitting procedures, and testing new materials and equipment (like a new lifting system that was recently introduced). Last year, the factory closed a deal with Eagle Specialist Vehicles to build some of the windows for the new Vauxhall Insignia hearse. Melton says: “Auto Windscreens’ factory UK location and short lead times meant it was an ideal choice to manufacture the windows for the hearse range. Paul oversaw the design and production of the screens, which involved making the moulds from which jigs and silkscreens were then made.” Hutson comments on the elements that make the company so competitive: “The whole manufacturing process, from design to shipment, is within our
hands, and you can only achieve that through having good integrated manufacturing systems.” Windscreens are made by the company using the same specifications the Original Equipment manufacturer follows, but the finished product can reach the customer in ten working days, faster than it would if it was delivered from other UK’s automotive components suppliers in Mainland Europe or Asia. “Nobody else does it in that sort of time,” Lockwood confirms. According to Hutson, one of the company’s priorities is not to stop at just making windscreens but to offer the customer a wider range of produces and services. “We are starting to use our manufacturing capability, our design capability and experience on the more addedvalue products and leave the less niche products to mass producers,” he says.
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ORIBAY O
ribay continues totally involved all around the autowindscreen: mirror buttons, rain and light sensor holders, camera holders, optical couplers, new plastic parts for fixing elements,
night vision, new adhesives.... this is what we are. Our main goal and force continue being our creativity and view for future components. For this Oribay Group around the world will continue giving the best support.
Published in association with: Oribay Tel: +34 943 310415/316787 Fax: +34 943 219931 Email: oribay@oribay.com Web: www.oribay.com
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Glass
Auto Windscreens
Auto Windscreens actively uses 5S in its plant in Chesterfield. Hutson, who’s been with the company for a year, says he was very impressed since the first moment he walked into the site. “I’ve been working in manufacturing and distribution my entire life, especially automotive. In my view, you can measure any manufacturing operation on the first sight of the housekeeping and layout. Clearly 5S is giving us a significant advantage in terms of quality and productivity,” he explains. Lockwood adds, “We started by looking at what other companies had done and the benefits they got in return. Our use of 5S is drawn from there.” The management keeps the plant on track using key performance indicators, the primary ones being productivity (the output produced per man) and measurement of scrap of a percentage of output. As Hutson explains, “We measure performance not only as a factory in total, but also at individual stages of the windscreens production process, i.e. on the cutting line, when we apply the silk screen print on the windscreen, at the bending furnace, the laminate stage where we join two pieces of glass and, lastly, when we package and do a final quality and performance check.”
Higher levels of productivity and a reduced level of scrap are achieved thanks to performance-based bonuses offered to workers. The monitoring of absenteeism and inventory levels is also in place. The success of Auto Windscreens was confirmed last year when the business was awarded the Automotive Glass Manufacturer 2009 title by the Institute of Transport Management (ITM), for its contribution to the industry and its attention to customers’ satisfaction.
In my view, you can measure any manufacturing operation on the first sight of the housekeeping and layout The company also has solid green credentials. It reduced waste by enforcing its “repair before replace” policy by urging its customers to frequently look for repairable chips on their windscreens. The recycling of 95% of the replaced windscreens and the use of energy-efficient processes within the factory also contributed to the creation of Auto Windscreens’ strong green approach by the entire business. Auto Windscreens is preparing to celebrate the beginning of its fifth decade in the glazing business, focusing on the delivery of high-standard services and the manufacturing of niche products. The company’s facility in Chesterfield will keep playing a fundamental role in taking the business forward. “The factory is an intrinsic part of the future of the company,” Melton confirms. end
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Talley ho Mark Young speaks to Talley Group manufacturing manager Tyrone White to find out how a commitment to UK manufacturing is helping the company maintain its dedication to providing world healthcare with cutting edge innovative medical technology of the very highest quality
Talley
Group is the largest family-owned pressure area care business in the UK. Founded in 1953 by Henry Talley, the firm is today resided over today by his director grandsons John and Chris. A specialist in pressure ulcer relieving mattresses, cushions, pillows and bed frames, negative wound therapy and sanitising products, the company supplies the National Health Service, private hospitals and care homes. Its entire manufacturing, research and administration operations are vertically integrated on one site in Romsey, Hampshire which is home to five manufacturing factories and 185 employees. Talley Group prides itself on its devotion to providing cutting edge technologies and services of the utmost quality to the health industry, as well as its unwavering commitment to UK manufacturing and a commitment to permanent, ongoing innovation. “This is a sector in which the UK leads the world,” says manufacturing manager Tyrone White. “To be at the forefront of that is something we are very proud of and something that is reflected in our growth. We’ve had five straight years of ten per cent growth, culminating with a turnover last year of around £14m.”
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Medical devices Talley Group
And the world is taking notice, too. Exports now account for 50% of Talley Group’s sales, with the lucrative US market joining Europe as the main destinations for goods sent overseas. The company’s products fall into four categories: pressure area care, concerned with the prevention and care of pressure ulcers, or bed sores, in layman’s terms; negative pressure wound therapy, which is a pump that draws exudates from open wounds, helping the wound to close quickly and lessening the risk of infection; sequential compression therapy, alleviating risks of deep vein thrombosis and lymphedema by compressing parts of the body from the toe up, allowing fluids to get round to the kidneys to be processed; and broad spectrum antimicrobial sanitising, a highly effective sanitising treatment for surfaces, equipment and hands which forms Talley Group’s latest product range under the trademark TECcare. Released 18 months ago in the UK, TECcare was developed as a new technology platform to provide a solution to a problem – the growing issue of microbial contamination and resistance in medical products in hospitals and care homes. The task was to replace existing NHS-approved products that through their historic use had caused significant damage to surfaces and presented a danger to the staff that had to use it. To alleviate the risk of cross contamination and the destruction of the surfaces like the Talley products themselves, the company invented a platform to develop class-leading disinfectants which were used to develop to achieve outstanding levels of efficiency against a broad spectrum of harmful pathogens on both hard and soft surfaces. The big benefit of TECcare products over competing ones is that they continue to protect for prolonged periods after they’ve been applied or treated – up to four weeks for the surface based products and up to four hours for the hand sanitisers. There are a range of products under the brand: TECcare ultra is an ultra high level disinfectant used in high risk areas or outbreak situations for the safe and rapid elimination of pathogens; TECcare control is an everyday top up product in the form of sprays and wipes with long lasting microbial protective
This is a sector in which the UK leads the world. To be at the forefront of that is something we are very proud of and something that is reflected in our growth Tyrone White, manufacturing manager, Group properties; and TECcare personal protect hand sanitizer which disinfects the hands as a dry foam. This product also deviates from competitor products in that it is alcoholfree and solves an eye-opening problem that has arisen – deaths caused by human consumption of sanitizers. Tyrone White explains that the company worked closely with standards agencies to develop better testing systems when creating TECcare. “The current test, EN13-704, which is a dilution protocol used to test products against potentially lethal spore producing bacteria like clostridium difficile or ‘c.diff’, has long been an inadequate test because they test it to kill the flora. This means it hits the aftermath rather than the spores which is the beginning of the bug. Were offering a better test whereby we do it dry on the spores so you can kill the bugs while they’re in the hospital before they’ve started reproducing, rather than killing them after they’ve polluted that atmosphere. The agencies love the fact that they can come up with a better test and give everyone a better environment to work in. It’s a completely proactive product and its prevention rather than cure.”
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eBECS and Talley Group with Microsoft Dynamics AX - Lean ERP In early 2009, Talley Group implemented Microsoft Dynamics AX with a lean manufacturing module and a rental module developed by eBECS; a Microsoft Dynamics AX and CRM partner specialising in the design and delivery of solutions for manufacturing, distribution and the extended supply chain.
T
yrone White, manufacturing manager at Talley Group, has 15 years experience of Lean manufacturing and had overseen the transition of Talley in to a lean business. The time came to consider changing its incumbent ERP system, Epicor’s Vantage, and Tyrone and his team explored the options rigorously. “We looked at different applications and Microsoft AX really fitted all of our functional requirements for the business. Its familiar with the office interfaces because its MS, it also offered the Lean principles that we were looking for.” He continues: “We needed the benefit that a modern Lean system would offer the business. So finding an organisation that had experience with Lean to help us introduce a Lean system was really important. Then there was the opportunity of having AX that would give us full end-to-end visibility on the reporting side that we needed to go that little step further with our customers and improve the business.” Other strong features of the Microsoft AX product were: Mobile-based system – eBECSdeveloped handheld devices. “These scan products delivered in the field, that feeds data
back into the system with the installer’s details and where he is. A real-time record of what’s going on,” says White. A strong front end CRM system – eBECS had some CRM experience the other vendors didn’t. Reporting and ROI – more analysis enables customers to see more clearly what they’re paying for, especially when renting equipment. Has freed-up time so key people can get on with business growth. Cost was very competitive. “All ERP solutions are ferociously expensive in isolation, but factor-in the measurable return on investment and MS AX came out on top.” Good usability –“Among all the packages we saw, MS seemed to have what we were looking for regarding operation”
Why eBECS? Lean expertise eBECS has a background in Lean manufacturing ERP solution implementation, as well as experience in the medical equipment market. In 2007, Microsoft bought Lean Enterprise for Microsoft Dynamics AX from eBECS, whereupon the partners created the Lean Centre of Excellence www.leanceo.com. “That in itself
shows to us their commitment to Lean manufacturing,” says White. The Centre, a virtual resource for the Microsoft partner community, serves as an educational outreach and training facility for companies that need training on Lean capabilities within MS Dynamics AX so as to further Lean projects within their companies. This venture and eBECS’ experience of Lean manufacturing was a big draw for Talley Group. Its lean module has fulfilled the main waste identification and removal criteria that Talley had specified. White is delighted that the leanenabled MS AX solution has perfectly matched the company’s needs and sees several more business benefits in the future including enhanced reporting and quicker invoicing. “It has actually been a really interesting experience because I think it is the first time I and the company have had this much commitment from a provider to get a programme off the ground,” he says. eBECS contact details: Stephen Wilson Tel: +44(0)1246 888555 Fax: +44(0)1246 888558 Web: www.ebecs.com www.leancoe.com
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Medical devices Talley Group
In addition, TECcare is a lot more comprehensive than many of its contemporaries. “You hear about products boasting a 99.9% sanitisation rate. TECcare kills 99.9999% of pathogens which means any reproduction rates are extremely limited,” he says. Talley Group sells its equipment outright as well as providing a full rental and after service, including installation, operational instruction, maintenance, disinfection, delivery and recovery. At any one time its rental fleet is around 10,000 items strong and, with service bases around the UK, it is never more than 40 minutes away from any piece of equipment that it is required to facilitate. At the same time, it has around 60,000 individual sold items on two year warranties; the fact that it typically receives only four to six queries on warranties per month is testament to the dependability and fit-for-purpose of its products. The rental service is actually one of the key enablers of this extraordinary level of reliability. All products go through rental fleet first to give an indication of the lifecycle which therefore acts as development tool which flags up areas for improvement that are fixed before the items go on sale. “Our customers know that the machine is going to have had the hardest time possible before they buy one,” says White.
And though the commitment to UK manufacturing is partly based on faith in the capability that resides here, another reason is the quality assurance it provides. “Being a fully UK-based company gives us a massive edge over our competitors,” says White. “We have absolute control over design, material, development and manufacture. We are fully committed to using UK suppliers. We don’t buy proprietary items from abroad and
Our customers know that the machine is going to have had the hardest time possible before they buy one Tyrone White, manufacturing manager, Group
put them in products and we don’t outsource production so we have absolute control over design, material, development and manufacture. You can’t have the same control if operations are in China or Poland as you can in house. Our product must work first time, every time in front of the patient so we can’t compromise on anything but absolute quality. “It also helps with our customer relationships as we’re able to invite customers to come see every part of the process. When they see us manufacturing from raw materials with skill and attention it inspires confidence in the warranty, quality, functionality and they know nothing is coming from abroad so there’s no potential risk over lead times.”
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Fascia Graphics Fascia Graphics and Talley took a partnership approach to getting UL approval...
I
n 2006 Fascia Graphics, the market leader for the production of membrane keypads in the printed graphics industry and Talley Group had experienced many successful years working together, but when Fascia required UL approval on its processes and materials, they took a more collaborative approach. Achieving the UL Mark is highly important when exporting to the US as it is the most accepted safety certification mark. It was an opportune time for both companies as Fascia already had a number of customers who were considering exporting products to the US, and Talley wanted to increase its presence in the US.
The approval process was completed in just four months. Their partnership approach saw Talley contribute to the cost of the process and materials approval, whilst Fascia paid for company registration. Paul Bennett, Managing Director and Founder of Fascia Graphics commented: “This was a significant achievement for both companies as UL has been a product safety leader for over 100 years. With the growing emergence of the global marketplace, the UL mark has opened up new opportunities to sell our products in many new markets.” Tony Lee, Purchasing Manager from Talley Group concluded: “Talley has developed the partnership with Fascia
Graphics over a period in excess of eight years, and by using the basics of fair pricing quality and delivery, Fascia has proven that they have the necessary capabilities to enable them to stand out from the competition.”
Published in association with: Fascia Graphics Tel: 01249 460606 Fax: 01249 460404 Email: sales@fasciagraphics.co.uk Web: www.fasciagraphics.co.uk
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Medical devices Talley Group
The company’s recent lean initiatives and investments and its R&D structure and employee policies all feed into the quality commitment too. Tally promotes a comprehensive knowledge among all employees of its processes and the industry it works in. All staff are given clinical training to build an understanding of patient’s needs. The R&D employees – accounting for 16% of the workforce – spend as much time on the shop floor understanding where the manufacturing operations as they do designing new systems and products. “It’s a proactive approach that allows engineering to push the ideas into manufacturing before they are firmed up as design ideas,” explains White. “We therefore get a product that was designed to be manufactured rather than a product that was left to be manufactured.”
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Talley Group The company has standardised the materials used in the product brackets it makes so all items are based on a standard platform. The same components are used for high and low end products, they go through the same machines and they are dealt with by the same people. Technical firmware is then used to give the discrete functionality. “There is a high level of repeatability through standardisation,” says White. “The net result is customer gets something that works every time.” In terms of equipment, £600,000 has been invested in three Negri Bossi injection mould machines that replaced six older machines that are twice as efficient in terms of both output and energy consumption. A further £80,000 was spent with Gerber Technologies for an automated cutting system which is fully bespoke to meet the company’s lean programme, in terms of the range of products, materials and pulse to be processed. Talley was also the first company in the world to go live with Microsoft Dynamics AX Lean ERP system which provided real time
data collection, reporting, management from point-of-sale through to manufacturing, inventory management, cash flow, accounts, logistics, dispatch and monitoring after service collection, decontamination and maintenance. All five factories have been re-laid to optimise and naturalise materials flow into an ergonomic system whereby items are not being picked up and carried, they are growing as they are put together in size up until they are put in a box and shipped out. All of this has fed into a reduction in lean time from 11 hours to 32 minutes, which in turn has huge benefits on inventory and work in progress and means the company can offer a just-in-time service with pull to order for same or next day delivery. Overall, White attributes his company’s success to a commitment to UK manufacturing and says if everybody adopts the same attitude the benefits will come full circle. “As an industry we don’t sell ourselves enough, we don’t praise ourselves enough, we don’t shout loud enough and we don’t make people listen to how good we are and what we have to offer. We come up with good ideas then sell them off to someone else but there is another way – look at yourself and give yourself competitive edge with innovation and make that edge profitable by being smarter in the away you manufacture, smarter in the way you get your products to customers and smarter in the way you treat your customers – you can’t have that if you’re importing products or outsourcing manufacturing.” end
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Furniture
Remploy Furniture
sustainability Sustainable
Reducing market share while increasing revenues; an oxymoron, surely? Not so, says Simon Stott of Remploy Furniture, a part-government-funded employer of disabled people. TM is all ears…
Remploy
was established in 1945 to provide work for people injured during the Second World War. Fast forward more than half a century and Remploy Enterprise Businesses remains the largest specialist employer of disabled people in the country, with 3,000 employees at 54 sites across the UK. Remploy’s diverse portfolio of businesses includes automotive, electronics, healthcare, e-cycle, packaging and the manufacture of specialist protective clothing for the police and armed forces. Remploy Furniture, with factories in Sheffield, Neath and Blackburn, has been undergoing a period of modernisation since 2007 to ensure that it continues to carry through the company mission — i.e. to provide sustainable employment for people with health conditions and disabilities.
Show me the money Stott says: “The industry has suffered in the past from being poor at introducing new products to market: over-budget, late or off-spec. As part of our drive towards sustainability, therefore, we have now budgeted for a significant amount of R&D expenditure. We haven’t had this before, so it means that we can begin to review all aspects of our original product base, and also those that we buy in at a margin.” Remploy’s business model is built around two central features, says Stott: development and delivery. “While facets of a commercial operation such as bids, quotes, installation or delivery might seem self-explanatory to management, we sought to include our staff in the company’s journey from the outset to help them understand exactly how Remploy is aiming to reach our goals.”
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Given that the company is placed to create a considerable number of new jobs, such investment is not necessarily limited to Remploy’s manufacturing requirements; there will be a need for increased parking and general facility space, for example. With monies budgeted for the next three years, however, Stott urges a degree of caution. “We mustn’t get too far ahead of ourselves, and continued spending is very much dependant on the volumes of work being won. That said, if the sales continue to come in I will be absolutely delighted to secure more expenditure, thus helping the business grow towards our dream of true independence,” he says. As a leading supplier to the UK’s largest school investment programme, Building Schools for the Future (BSF), and with one in three school children sitting on the company’s chairs, Remploy justifiably targets this programme as representing the key feature of its sustainability drive. While the downturn saw capital projects grind to a virtual standstill during last year, “Government
and the financial institutions are once again releasing money to major contractors within our industry, hence the pick-up,” says Stott. Indeed, Remploy’s pipeline for 2010 shows a 400% increase on 2009, with a raft of contracts set to ‘drop’ imminently, including a £5m project in north Larnarkshire, the New Line Learning Academy in Carillion and Balfour Betty’s Park View Academy. 1200 schools are ring-fenced for BSF until 2014. Says Stott: “Remploy aside, there are but a handful of manufacturers capable of supporting BSF’s furniture needs. So, while our market share will decrease initially, such is the size of the playing field that Remploy can both enter profitability and position ourselves to accumulate a greater share of the pie as we go along.” Although these are exciting times for those at the company, “The guys in the factory often question what will happen after 2014, and we have to say that honestly we can’t set promises in stone,” says Stott. “However, there are not many businesses which can speculate that far in advance, and we have a host of contingency plans to ensure the work continues to flow.”
Safety first Given the nature of Remploy’s mission, health and safety considerations remain its number one priority. “Absolutely, the business — both at corporate and local levels — is driven by a safety culture that includes a greatly heightened appreciation of the potential risks that manufacturing can
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Furniture
Remploy Furniture entail. Indeed, while our drive towards sustainability remains fundamental to the business going forward, to do so without ensuring the safety of the guys and girls on the floor would be wholly improper, and running counter to the principles upon Remploy was founded,” says Stott. Driving to reduce and eliminate accidents, near misses and affiliated concerns, the company runs a comprehensive safety management system which undergoes auditing on an annual basis. In looking at the gamut of work safety issues, and increasingly environmental processes, dedicated health & safety officers are employed on-site, ensuring that the company’s
The business, both at corporate and local levels, is driven by a safety culture that includes a greatly heightened appreciation of the potential risks that manufacturing can entail Simon Stott, operations manager, Remploy Furniture audits are continually being driven by risk assessment, work-time lost and operational safety reviews. To further ensure a working environment which emphasises employee wellbeing, Remploy enjoys a burgeoning culture of Lean in the factories. “Since our drive towards sustainability in the business we have sought to implement best practice wherever possible — a great deal of visual management and 5S principles around the sites, for example,” says Stott. The foundations in place, Remploy was ideally placed to introduce business improvement training to its teams, with the mantra of ‘work smarter, not harder’ very much the over-arching theme. A dedicated CI (Continuous Improvement) team was established to track the company’s progress on a monthly basis. “We are beginning
to see the ‘real’ benefits of a Lean culture in Remploy Furniture, rather than improvements being directed by fiscal considerations alone,” confirms Stott. “When Lean is introduced to manufacturers, regardless of sector, many struggle to get their heads around these seemingly abstract concepts. However, and especially for our guys, when you break it down to housekeeping, health & safety and KPIs they suddenly say ‘well why didn’t you explain it like that before!’”. Ultimately, says Stott: “When Remploy quotes for business I cannot charge premium rates simply because we are providing important social value in our manufacturing. Commercial viability is paramount, given that when dealing with building contractors, money is seldom anything but extremely tight — quality, cost and delivery are the languages they speak.” “As long as we are competitive on costs, our history of industry-leading quality and delivery means that the CSR aspect of what we do offers a unique selling point that is truly distinctive.” end
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Pharma
Aesica Pharmaceuticals
The best
medicine Since its formation in 2004, pharmaceutical manufacturer Aesica has more than tripled both sales and employee figures while successfully wooing the industry’s biggest hitters. No spoonful of sugar required, either, as Edward Machin discovers.
As
a supplier of active pharmaceutical ingredients, formulations and custom synthesis solutions to the global pharmaceutical and biotechnology industries, Aesica’s product portfolio reads like a roll call of modern medicinal offerings: anti-infectives; cardiovasculars; anaesthetics; haematinics; anti-inflammatories; anti-virals; hormones; and potent drugs, among many others. It was, however, not always the case. “Created in 2004 by a management buyout of BASF’s Northumberland-based site, what we acquired was a small business which produced three pharmaceutical ingredients, primarily supplying to generic companies,” says Aesica’s CEO, Dr Robert Hardy. “The first step in our expansion strategy was, therefore, to grow the company’s custom manufacturing business so as to enable contract manufacture for big pharma.”
Acquire to inspire In seeking to place itself squarely on the radar of global pharmaceutical giants, emerging life science companies and leading generic manufacturers, many of which Aesica now enjoys relationships with, Hardy and his cohorts
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Inenco As the UK and the manufacturing industry recover from the economic downturn, the need to manage and reduce overheads has been highlighted as a priority for businesses everywhere.
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anufacturing is a highly energy intensive sector; in some cases, energy costs - often subject to severe market volatility - can be second only to staff in terms of overheads. In order to compete under adverse economic conditions and protect the bottom line, manufacturers must address the issue of controlling their gas and electricity costs. Many manufacturers are turning to Flexible Procurement in order to bring energy expenditures under control and manage the risks posed by purchasing large quantities in such a volatile market. This is because Flexible Procurement is not just about achieving the ‘best’ price – an impossible goal in a market characterised by its unpredictability. Instead, the goal of Flexible Procurement is to achieve an ‘acceptable price’, within a set range of parameters, in order to mitigate the very real risks of market volatility. In partnership with Inenco, leading pharmaceutical manufacturer Aesica is one company that has been able to benefit from a managed Flexible Procurement strategy. Troubled by the difficult purchasing decisions posed by traditional fixed price energy contracts, Aesica have implemented a programme to
manage their significant energy expenditure without exposing their bottom line to unnecessary volatility and risk. Rather than purchasing their energy requirements all in one go when the price seems right, Aesica procure in smaller blocks and at strategic times, spreading out the risk inherent in energy purchasing. Flexible Procurement allows Aesica to control their energy overheads hands-on, mitigating the impact of price peaks whilst taking advantage of savings when the market is falling. Real time market information is essential in identifying the most advantageous times to procure. Working alongside Inenco, Aesica track energy prices in real time, supporting this information with up-to-theminute evaluation of market data from a range of sources. By outsourcing Flexible Procurement, Aesica are able to compete without having to resource the tasks of tracking market prices and managing day-to-day energy purchasing decisions in house. Instead, their strategic procurement and risk management goals are translated into a tailored Flexible Procurement strategy that is continually evaluated by a dedicated team of FSAaccredited traders.
Aesica take advantage of a range of initiatives to drive down their costs. Through outsourced invoice validation and processing, they can ensure that they are not being overcharged by their suppliers whilst also minimising the administrative burden of processing invoices in house. A recent exercise to review Meter Operator agreements has resulted in a 70% cost saving for Aesica. In addition to this, as part of a retro audit of Aesica’s invoices Inenco have been able to identify potential savings of over £16,000 in capacity charges. It is through the management of several parallel initiatives that comprehensive control of energy expenditure can be achieved.
Published in association with: Inenco Petros House St Andrews Road North Lytham St Annes Lancashire FY8 2NF Tel: 01253 785 000 Email: enquiries@inenco.com Web: www.inenco.com
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Pharma
Aesica Pharmaceuticals looked to acquire a range of sites from the very companies whose business they sought. With the purchase of manufacturing facilities from Merck Sharpe Dohme in 2006 — including a six year supply agreement — and Abbott at Queenborough, Kent a year later, the company is now placed to offer both primary and secondary contract manufacturing services with the capabilities to develop products from early-phase clinical stages to commercial supply. “At the same time, we looked to broaden our offerings into formulated products — away from chemical and into tablet manufacturing and packaging,” says Hardy. Such prescience is reaping continued rewards: in 2004, for example, the company was turning over approximately £25m in sales and employing a workforce of 150. Leaping
fourfold in little under six years, Aesica currently boasts a staff of nearly 700, with sales figures totaling £100m. Unsurprisingly, the company’s startling expansion has not gone unnoticed, both within pharmaceuticals and the wider business community. Recently placing 50th in Deloitte’s Buyout Track 100, a league table — published in The Sunday Times — of the fastest growing, private equity-backed British companies according to EBITDA, the Newcastle-based Aesica was praised for raising profits by 49% year-on-year.
The American dream And the secret of the company’s considerable success? When Aesica acquires a site, while it may be under capacity the company can sell any excess space to other businesses, thus increasing efficiency across the gamut of facility operations — a modus operandi since the buyout, says Hardy. Given the global nature of the modern pharmaceutical industry, the majority — i.e. 90-95% — of Aesica’s products find their home in bodies outside the UK. “While our biggest markets are, perhaps understandably, the US, western Europe and Japan, there are very few territories in which we don’t supply,” says Hardy. “That said, to
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Biffa Biffa provide an Integrated Waste Management (IWM) service for Aesica Pharma Ltd.
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his IWM service is built upon key philosophies of: Shared objectives Legislative compliance Continuous Improvement Shared information and joint planning Investment Environmental stewardship, provided by the in-house expertise and experience of Biffa supplemented by strategic alliances with key end processors and recycling specialists. Biffa and Aesica work closely together to continually explore improving waste management performance, relative to cost, environment, health and safety and operational process. All materials produced from site are
thoroughly assessed and targeted for processing via the Best Environmental Option with recycling, re-use and re-sale a key focus for the contract. To deliver the service Biffa provide a Contract Manager (who is physically based from Aesica’s manufacturing site for 2 days per week) and 4 full time supervisory and operative staff, who perform on-site management of all recyclables and waste material, produced. These materials include hazardous chemical wastes, scrap metals, card, paper, plastics, glass and residual wastes. Biffa provides similar bespoke waste and resource management solutions for significant manufacturing companies including Unilever, Premier Foods and Cadburys and across the widest range
of industrial sectors including banking, chemicals, pharmaceuticals, healthcare, food, automotive, aerospace and steels/ engineering sectors. Biffa are at the forefront of the focus upon diversion of waste from landfill with state of the art materials recycling facilities, the largest green energy production in the waste industry and a UK wide service and collection capability.
Published in association with: BIFFA Email: iwminfo@biffa.co.uk
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Pharma
Aesica Pharmaceuticals complement the global supply of our products we feel it particularly important to establish manufacturing facilities outside the UK.” As such, he expects to complete two manufacturing acquisitions — in the US and continental Europe, respectively — before the year’s end, together with a contract development organisation to further increase Aesica’s presence in the formulated product space. With an ever-increasing American client roster, “While being based in the UK hasn’t stopped us winning US-based business by any means, it would be fair to say that companies do perhaps feel more comfortable with the knowledge that they can speak to somebody in the same time zone, should it be necessary,” admits Hardy. “Although Aesica operates a sales office on both coasts and in China, it’s not quite the same as making contact with a physical asset, which the acquisition of an American manufacturing facility will seek to address.
Relationship gurus With the company’s spending set to continue in the face of perilous economic conditions, does the pharmaceutical sector — and Aesica — perhaps know something the rest of us don’t? “Our industry is generally not as cyclic as some within manufacturing,” explains Hardy, “so we don’t tend to experience inflated booms during the good years and particularly bad times when the rest of industry is struggling.” While a more bankable proposition, undoubtedly, Aesica continues the aggressive growth drive employed since its founding largely through acquisition but, says Hardy, organically too. “For instance, while we have overseen a number of excellent business wins during the past year, the majority of our expansion remains due to the purchase of like-minded organisations, and we wouldn’t expect that to change in the next two or three years. As such, within three years of an acquisition the company has targeted 25% of our business to come from the nonoriginator, with half of new growth thereafter made up by new business wins compared to the originator.” Furthermore, says Hardy, Aesica is concentrating on maintaining its key strategic partners within the industry. “While this is clearly not to say that we won’t seek to supply anyone with whom
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we do not enjoy such a relationship, we believe that for a company growing at the rate Aesica is six partners represents an ideal number at this point in time.” While it amounts to merely a facet of the company’s customer portfolio, however, that the level of business provided by
of pharmaceutical production. Concentrating — as with every relationship it holds, partner or otherwise — on how to maximise the benefits of such endeavours, moreover, the company looks to integrate its industry-leading manufacturing capabilities into partners’ supply chains, thus ensuring an ever-increasing presence of Aesica-produced formulations in its targeted markets.
All creatures great and small
To complement the global supply of our products we feel it particularly important to establish manufacturing facilities outside the UK Dr Robert Hardy, CEO, Aescia
its partners regularly exceeds £20m means Aesica is cementing industry partnerships with those organisations seeking to remain at the forefront
Indeed, that the company currently holds a number of strategic partnerships with the industry’s leading players reflects, “Very positively on what we have built here, especially so given the relative youth of our business,” says Hardy. Equally, however, Aesica maintains — and seeks to develop new — relationships with manufacturers regardless of size. Such is particularly significant going forward, given that more than 50% of new chemical entities come from small pharma; a fact not lost on Hardy. “We must, and do, recognise the importance of the market’s smaller operators,” he says. “While the pharmaceutical industry is relatively stable, general lending conditions mean that some of the smaller companies are not seeing credit lines being extended to them in the current climate; something that the sector’s giants aren’t experiencing so markedly.” As a result, 75% of Aesica’s business results from dealings with those in the upper reaches of its industry — a group which is currently both outsourcing and increasing its formulated product offerings as never before.
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Pharma
Aesica Pharmaceuticals Confirms Hardy, “The top ten players in the market are merging at unprecedented rates, the result being that the contract manufacturing space has become very fragmented; a rippledown effect, so to speak”. For example, the largest three manufacturers in pharmaceuticals only own 3% market
share each, with no other company owning more than a single percentage. “We expect to see continued compacting both in the wider sector and its supply chains,” he says. “Given Aesica’s history, the company is ideally placed to lead in any consolidation, thus continuing one of the defining aspects of our business well into the twenty-first century. After all, people will not suddenly stop needing their medicine!” end
Aesica at a glance Location
Q5, Quorum Business Park, Benton Lane, Newcastle upon Tyne
Contact
www.aesica-pharma.co.uk +44 (0)191 218 1960
Sector
Pharmaceutical products
Employees
700
Turnover
£90m
History
Aesica was formed in September 2004 through a management buyout of the former BASF site at Cramlington, Northumberland. The deal was funded by LDC, the private equity arm of Lloyds TSB Group, which took a significant minority stake in the business. Since 2004, the company has more than trebled in size, becoming a global player in the supply of active pharmaceutical ingredients, formulations and custom synthesis solutions. It operates from three manufacturing facilities in the UK, as well as offices in Newcastle upon Tyne, North America and China.
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The Capability Transfer Process Industry Forum has developed a portfolio of products and services which can assist its customers achieve sustainable improvements in their businesses.
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e have invested in the skills of our staff to ensure that we can deliver what we term ‘The capability transfer process’, so that our customers can subsequently sustain and maintain the improvements made during the time we work together on joint programmes. The activities we have done with UYT are typical of the close working relationship we establish with our customers, the implementation of an integrated plan to improve Quality, Cost and Delivery and which focussed on Press, Weld and Production Material Control functions. The plan was underpinned by the incorporation of the National Vocational Qualification (NVQ) in Business
Improvement Techniques for the members of the UYT team, either at Level 2 or Level 3 as appropriate. As the Industry Forum staff delivering the programme at UYT are also all qualified assessors for this NVQ, the UYT employees can be confident that the improvement projects they complete as evidence towards their qualifications complement the core programme and that there is a ‘Common Approach, Universally Applied’. On the successful completion of the programme UYT has achieved ‘bottomline’ improvements, and the individual team-members have gained a valuable and transferrable qualification.
The capability transfer process, facilitated and supported by Industry Forum, has been successfully carried out and UYT has a team of people able to take forward the application of continuous improvement tools and techniques.
Published in association with: SMMT Industry Forum Tel: 0121 717 6600 Email: enquiries@industryforum.co.uk Web: www.industryforum.co.uk
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Press and assembly UYT
Core
strength
Background
UYT continues to build upon its core manufacturing principles in order to achieve class leading performance. Whilst the economic downturn has had a dramatic effect on the organisation, Tim Brown finds out from Head of Operations, Graham Staley, how UYT has endeavoured to ensure that they emerge from the recession in a position of strength
As Body-in-White (BIW) manufacturer, UYT produces car body sheet metal (including doors, hoods, and deck lids) which has been assembled or designed prior to the addition of other components (chassis, motor) and trim (windshields, seats, upholstery, electronics). Operating from a 24,000m2 facility in Coventry supplying directly to Honda, and through a Toyota first tier supplier, a range of components that includes safety critical underbody structures. UYT has experienced explosive growth since its inception in 1996, both turnover and workforce swelling from £5m with 50 associates in 1998 to £70 million and 516 permanent employees, 10 years later. A joint venture between the two founding companies – the highly respected Unipart group and an equally formidable Japanese manufacturing company, Yachiyo – provided the origin for the UYT company name. With subsequent changes in shareholding, UYT is now the UK subsidiary of a manufacturing group, represented by 32 plants on 3 continents. Considering purely the BIW segment of the business, the main shareholder of the company is now H-One. The global giant had turnover in 2009, although down by 25% on the previous financial period, of £1.26bn, 61% of which was generated outside Japan. The H-One customer base includes Honda, Nissan, General
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Covpress Holdings Ltd Covpress Holdings is one of the UK’s largest independent stamping suppliers. Comprising of Covpress Ltd and NCJ Pressings Ltd we specialize in the manufacture of pressed and welded assemblies for the automotive industry, both as a direct supplier to the OEM’s and to other Tier 1 suppliers.
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orking in partnership with some of the world leaders in the automotive industry is testimony to our capabilities. Our unique blend of engineering and manufacturing disciplines underpins our status as a worldclass tier one supplier, as well as having the flexibility to offer excellent service at second tier levels. Operating from an eight-acre site with 33,000 square metres of manufacturing area the company’s core strength is automated presswork with transfer press capacity to 2500T, progression press capacity to 630T, and tandem press capacity to 1000T all of which is complemented by robotic and manual weld assembly
cells. Our automotive customers include GM, Nissan, Renault, Toyota, Peugeot, Jaguar Land Rover in addition to Honda’s Tier 1 supply base.
equipment makes Covpress Holdings the perfect supply partner for both automotive and non automotive pressed and welded assemblies.
Our association with UYT extends over ten years originating with tandem outsourcing through NCJ Pressings Ltd but developing to include transfer, progression and tandem presswork, following the acquisition of NCJ by Covpress Holdings. Our expertise extends through 440W – 1180Y tensile steels as our comprehensive press range is ideal for stamping high strength materials. This expertise combined with our range of
For further information please visit our website at: www.covpress.com
Published in association with: cOVPRESS hOLDINGS Tel: +44 (0)2476 691000 Email: sales@covpress.com Web: www.covpress.com
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Press and assembly UYT
Motors, Mazda, Isuzu, Daihatsu, Renault and Ford. The UK facility has been subject to significant investment in both weld and assembly areas with three extensions to the original plant providing press capability from 200 tonne to 1800 tonne. This has included a 600 tonne four stage tandem and 600 tonne blanking line. Weld and press processes manufacture a range of materials from 270 to 780 high tensile steels, including laser welded blanks. Like many manufacturing organisations, UYT has been severely affected by the global downturn, with turnover falling by more than 50% from 2008 levels. Recognising both the widespread effects to the economy and specifically the impact to UYT, associates have been engaged in revolutionising the companies approach to manufacturing product.
Innovation In its drive to improve equipment utilisation, the press department has introduced a cartridge concept which allows the production of smaller parts than the constraints of the machine would normally allow. Already a fully automated process, the cartridges which provide registration for the smaller blanks are automatically ejected by the robot, the innovation has allowed for greater ‘in sourcing’ and was deemed sufficiently technical as to warrant merit at Honda’s annual Engineering Festival. Cost savings have also been achieved through the introduction of standardised tips and parameter settings on thin gauge materials, yielding electricity savings in the order of 10%. Most significantly, UYT has been able to reduce supply chain costs in excess of £600,000 per year, to its principal customer, through the elimination of their
intermediate warehouse. Whilst the principles of lean have always been practiced within UYT, with an internal ‘kan-ban’ system used to control production including: inventory turns of 23 between press and weld; highly concentrated supply base allowing for minimum incoming stock holdings; and storage space limited to half a day for finished production units. The move to sequence build requires the direct delivery of all 148 parts supplied to the Swindon customer. To guarantee the process, a high level of stable efficiency is required from the press hall and 37 final production weld cells. This has been in addition to the creation of a technically skilled, flexible and responsive workforce which is able to react in the unlikely event of a significant stoppage. Development of the IT systems infrastructure was also key to achieving sequence delivery. Department Manager, Chris Foster, tasked his team with the ambitious project of developing an internal production delivery system, further underpinning the JIT philosophy. The outcome, which builds on the existing IFS ERP software, was not only a highly integrated solution, but was far in advance of anything currently available within the market. Also thinking holistically has provided functionality far beyond that of the initial scope. The implementation of cell based thin clients, not only provides the cell leader with accurate stock data and visibility of re-order points, but can be expanded to provide data input for cell performance; confirm production associate attendance and holiday planning; as well as a host of other features. UYT also worked closely with Codeway to track and trace materials and control every process: from registering goods in, to parts manufacture, finishing, storage, and shipment. Highly intuitive handheld scanners are used to read barcodes on Kanbans, materials, products, and stillages. The scanners are wirelessly enabled synchronise data with the ERP system and automatically feed records into UYT’s business intelligence applications. Decision-making about stock requirements and production is much more efficient, enabling UYT to hold less inventory. The priceless business benefit lies in the fact that UYT, which supply JIT to Honda’s production line, has never missed a Honda schedule.
Investment People are seen as key to UYT’s long-term success, and one highly influential group are the first line managers, referred to as cell or team leaders, depending on discipline. Without their ongoing commitment, support and growth “we are unlikely to realise our ambitions”. Working with the SMMT’s Industry Forum, carefully selected from a host
UYT at a glance History
Established in 1996 as a joint venture between Japanese and British manufacturers, UYT Limited is an automotive component manufacturing facility producing Body-inWhite (BIW) components and sunroof assemblies
Staff numbers
330
Key customer
Honda (UK) in Swindon
Key products
Metal pressings and safety critical, high accuracy assemblies – front end, rear frame, under frame assemblies for automotive
Niche over competitors
Technical proficiency with high strength steel
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Press and assembly UYT
of available training bodies because of their ‘hands on’ approach which is considered to be key to sustained improvement, 22 associates from within the organisation have embarked on an NVQ in business improvement techniques – a significant proportion of whom are now cell leaders. The 12 months of training commenced during the enforced four month shutdown at the beginning of 2009. Performance has been carefully monitored throughout the three projects focusing on Q, C and D, with presentations by the five teams to senior management. All business improvement teams will showcase their activity at the company’s annual Quality Circle Convention, with the prospect of the winning circle travelling to Japan to compete in a global convention. Changes within the organisation have also required that the company revisit many of its core manufacturing principles, establishing a manufacturing focused 5S regime which requires the participation of all associates regardless of department or grade. At the equipment level, with the increasing pressure on vehicle manufacturers to achieve high body accuracy, UYT has invested in an Optigo non contact measurement system. With UYT’s purchase taking the total number of units sold in the UK to three, two of which are applied commercially and one owned by Warwick University, this white light scanning system is at the forefront of measurement technology. The system was selected following a thorough evaluation of available scanning technologies. The Optigo demonstrated high levels of accuracy whilst also being the quickest, with a good level of technical support, provided by Hexagon Metrology.
of high value added, safety critical components and whilst diversification out of the automotive sector is one solution to resilience, UYT feels that it must first capitalize on the benefits of being part of a global manufacturing company. “With sister plants in China; India; and Thailand; mother in Japan; there is an opportunity to supply components on a global scale and having established unified standards across all plants for press tools and weld processes, should be able to achieve consistent global quality and process costs.” One barrier to a broader automotive customer base has been the absence of accreditation to TS16949. Again, working with Industry Forum, UYT has developed an implementation plan which comes to fruition in July 2010. In the pursuit of improved productivity and consistent with nomination to supply Jazz to Honda from January of 2011, UYT Engineering has worked with Japan to develop their ‘innovation’ line. The ‘blue print’ will serve as the first manufacturing global standard process, for the group. Rigorous planning combined with benchmark evaluations against plants in North America, Japan and the UK, have resulted in a concept which will return a 10% increase in efficiency and 32% improvement in productivity. UYT continues to grow its technical support functions, an aspect often overlooked by companies, resulting in significant quality and efficiency losses in the long term through failure to innovate. Broadening ‘engineering’ capability is pivotal to developing self sufficiency, recognised as crucially important to building a sustainable manufacturing operation. end
The Future A significant challenge is to improve organisational resilience; volumes from the existing customer base are unlikely to recover to 2008 levels until 2014. This has prompted UYT to commence preparations for its next evolutionary phase, approaching new customers, which it does with the support of its shareholders. “It is important to acknowledge that recent events are only likely to occur every one hundred years, and we should not therefore overreact,” says Staley. “We recognize that our core competence lies within the manufacture
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Harper and Simmons Press tool manufacture – total pre-production solutions to the pressing industry. High tech solutions to aid the manufacturing processes from design, to prototype, to production.
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radical change from the normal approach to toolmaking with facilities including ABS rapid prototyping, high pressure three axis waterjet cutting machines, cnc spark erosion, large capacity wire erosion, flamecutting, machining centres, turning centres, surface machining and solid modelling. Our extensive wire erosion capacity including eight large bridge type Hitachi machines cutting to 1,000 x 800 x 500mm facilitate our tool designs to make the best use of this internal facility. Our high pressure waterjet facility with two machines cutting in three
Our facility combines advanced axis produces a radical approach to modern machining techniques with a the manufacturing process with the highly skilled and hugely experienced ability to cold cut virtually any material. team of press toolmakers, designers This process supports all aspects and machinists. We offer a single of our facility from the production solution under one roof for all aspects of prototypes to numerous tooling of press toolmaking. components to low volume production. The advanced CADCAM solutions cover Published in association with: solid modelling, surface Harper and Simmons machining, four axis Tel: 01527 518 121 wire erosion, flat blank Fax: 01527 518 123 development and press Email: enquiries@harperandsimmons.co.uk simulation - data Web: www.harperandsimmons.co.uk networked to directly drive the CNC machine tools.
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Press and assembly Covpress
Developing resilience
Members of the automotive industry were some of worst affected by the economic downturn. Tim Brown discusses with members of one of the largest independent UK stamping companies, Covpress Holdings, the impact of the recession and the need for strategic diversification.
Covpress
Holdings is comprised of two companies on the same site — Covpress Ltd and NCJ. Covpress acquired Stratford based NCJ in 2004 and relocated the company to the Covpress site in 2005. At present, Covpress Ltd is 100% automotive and generally performs high-volume automated presswork and assembly using transfer and progression presses supported by robotic welding and assembly cells. NCJ generally produces niche products for automotive and non-automotive industries using manual tandem press lines with robotic assembly. “We can offer our customers the capabilities of either company on the same site,” says managing director, Mike Gillett. “A low volume customer might utilise NCJ whereas a higher volume customer requiring robotic welding or transfer or progression presses will use Covpress Ltd. We have certain customers such as Perkins and
UYT that deal with both because there will be some low volume and high volume parts.”
Automotive opportunities Within the automotive market, NCJ has traditionally been a tier two supplier whereas Covpress Ltd is predominantly a tier one supplier. The company produces automotive engine parts for Caterpillar and Perkins and is a tier two supplier to Honda and a direct supplier for air reservoirs to Land Rover. NCJ is also heavily involved with the gas industry, producing gas meter case work assemblies. One of the most notable Covpress projects is the Body-in-White (car body sheet metal) work for General Motors on the X83 model van. The Vauxhall Vivaro, Renault Trafic and Nissan Primastar share the common infrastructure of the X83 model. “Over the last several years, we have tended to concentrate on high-strength materials with up to 1180 mega-pascal strength steel. You can significantly reduce the weight of steel but maintain the same strength. This is what the automotive OEMs are looking for. We have the equipment and are proficient in this material and therefore it is one of our biggest opportunities. “One of the issues with high-strength materials is that it is not easy to form as it has spring back problems, splitting problems and can be very hard on tooling. A number of
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companies have struggled either with their equipment because they don’t have high enough tonnage or enough technical knowledge of how to cope with high-strength materials and that has given us an opportunity in the market place as we have a several large bed, high tonnage presses including a 2500 tonne transfer press that is able to easily manipulate most high strength materials.”
Impact of the recession As with most companies, 2009 was very difficult and Covpress Holdings experienced a reduction in turnover of 38% to £34m when compared to total sales of £55m in 2008. According to the company, during some periods last year, there was up to a 60% reduction in automotive production. The company is now starting to show an increase in 2010 of 18% and is this year forecasting turnover in excess of £40m. Gillett and his team admit that the diversity offered by NCJ customers provided a “cushion” as the company’s
non-automotive work, comprising about 15% of the company operation, remained quite steady during the period. “That fact made us start thinking a little bit about our future strategy,” says Gillett. “We realised we were too dependent on the automotive industry. So we have actively, over the last 12 months, pursued more non automotive work than we have ever done before. We are diversifying in to new markets such as satellite dish sets and are trying to specialise more and more into the gas metering supply chain. With the introduction of smart metering in the UK and Europe, following legislation changes, there is substantial growth in that market place and we see that as very strategic for this business. Our primary customer has just signed a contract with the UK’s largest energy supplier to support commercial smart meter deployment.” As a result of diversifying product offerings, the company is particularly interested in further developing the Covpress Ltd client book. The ability to adapt tooling from manual presses to their automated transfer presses has allowed this to become a reality. “If you can put tooling from a manual press into a transfer press, you can save up to 70% of your labour costs. What we’ve been doing with a number of our customers is initiatives over the last few years to adapt the tools to go in to our transfer presses and then share some of the cost savings with the customers.” With the increase in demand for the gas meter case work, much of the work has
Covpress Holdings at a glance Employees
350
Turnover
£40m - Projected 2010
Key products
Body-in-White automotive infrastructure, gas meters Niche over our competitors: First-class facilities in terms of the use of large transfer presses and progression presses. Specialises in high-strength and low weight materials.
Contact
www.covpress.com
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Press and assembly Covpress
been transferred from the manual press lines to automated presses.
Downturn not down tools In addition to strategic developments, the company undertook a considerable leaning process and managed to find huge excess, cutting overheads by £2m in areas Gillett says the company never thought were possible. “We looked at rates, rent, security and every small detail to see if we could reduce the costs. We utilise the Toyota Production System (TPS) and were already very lean but the recession showed that we weren’t as lean as we thought. We didn’t like the recession but it made us look at things differently and we feel stronger and leaner for the future.” Gillett says that the company has always employed TPS through every facet of its operation as well as having commenced six sigma programs. The company has also put a total of 42 people through the NVQ qualification for business improvement techniques. “During the recession, whilst we had to make some cutbacks, we also put some
investment in to our people,” he says. “We are an investorin-people company and we were open and honest during this recession even though there were redundancies. We had a decrease in production of 50% and had about 25% redundancies. We have recently taken on about 40 people, including some of those that were made redundant.” When demand, particularly the van market, became very intermittent, the company was confident that the market would bounce back. During that time the company offered staff a guaranteed three day pay week which, once work returned to normal, any owed time would be paid back. “At the end of summer last year, most of our people were back on fulltime work and by Christmas 99% of people were back to normal,” says Gillett. “That gesture was well received on the shop floor. We are proud that during difficult times we’ve still kept a good relationship with the work force. The staff also took voluntary pay cuts during that period which wasn’t something we forced on people but they quite willingly volunteered to have reductions until we saw better times. We are very pleased at how our people have reacted to an immediate cutback.” Gillet says that “during a recession, it is really about working together to get through.” Covpress Holdings appears to have done just that and is now looking ahead with infrastructure investments and acquisitions both on the company’s radar. While remaining cautiously optimistic about the immediate future, Gillett says the mood is very positive and he is confident of a strong emergence from the downturn. end
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ambition Executive
Apprentice to board of directors: the stuff of manufacturing dreams, surely? Not for the Fort Vale Group, at which three former trainees currently sit on the Lancashire-based manufacturer’s top table. Holding 80% of the global valve sector for tank containers doesn’t seem altogether bad news, either. Edward Machin reports.
Founded
in 1967 by Edward Fort OBE to manufacture fuel oil delivery nozzles, the twenty-first century finds Fort Vale as an acknowledged leader in the manufacturer of components for the safe transport, storage and process of hazardous liquids, foodstuffs, powders and compressed liquefied gases — including manways and hatches, airline valves, safety relief devices, top and bottom discharge valves, and secondary closure valves. Exporting the majority — i.e. 85% — of its portfolio, Fort Vale’s valves and fittings are to be found across territories as diverse as the US, Continental and Eastern Europe, Australia and, most prominently, China. Explains the company’s associate innovation director, Andrew Bryce, “While we have always exported a significant percentage of our offerings, it is to a large degree dictated by shifts in the global industry. Where tank containers were once manufactured in Europe, then moving to South Africa, the trend towards low cost markets means that China is now a primary location for our products.”
Currently holding 80% of the global tank container industry, Fort Vale is nonetheless, “Loath to stand still; still means backwards to us,” says Bryce. Indeed, given the export-driven nature of the company’s remit, it remains vital for the business to operate as close to its customers as possible, wherever they may be on the map. Having established a production plant in Shanghai — a short distance from its largest customer — Fort Vale can ensure that not only is it close in a physical sense, but that the operational culture is the same: Chinese customers engage primarily with the Fort Vale’s Chinese employees, thus enabling a greatly enhanced user experience for all concerned.
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Valves and fittings Fort Vale
One stop shop Further afield, he says, “We are conscious that as previously untapped markets emerge — India, for instance — Fort Vale will have to wait for their ports to develop capabilities in offloading container tanks. Once they do, however, and leveraging our history of unrivalled success in the sector, the company is in a fantastic position to pick up that business almost automatically, we would like to think.” Like most within the industry, whether they hold eight or eighty per cent of market share, cost reduction remains critical for Bryce and Fort Vale. Accordingly, the company’s immediate agenda is a consolidation of its manufacturing facilities at Calder Vale Park: a 74 acre, state-of-theart site located in Simonstone, Lancashire. With the foundry currently situated in Nelson, 10 miles from Calder Vale, “We are seeking to eliminate certain logistical issues that this situation naturally presents,” he says. “By getting castings onto the machine shop immediately, for example, lead times are reduced by a factor of one day. Because our entire UK operations — bar the foundry — are on a single site, my current project is to ensure that by late next year we remove those transportation requirements altogether, further increasing efficiency in all that we do as a result.”
The door is always open… Indeed, Fort Vale’s capacity to offer a range of turnkey solutions while designing its own products from a vertically-integrated manufacturing facility guarantees both greatly reduced times to market and the competitive edge needed to remain ahead of the chasing pack. As Bryce says, “We can take an idea or concept, however complex its requirements may be, and turn it into reality. Is the competition doing striving to do the same? Of course. However, we simply do it better, and have done throughout the history of our business.”
While continually seeking to develop new product ranges, Bryce highlights the fact that due to Fort Vale’s extensive expertise in a variety of manufacturing solutions, customers are increasingly coming to the company with a specific product development request. He takes up the story: “If a customer comes on site today with even the genesis of an idea, we have, among others, the R&D, rapid prototyping, CNC turning, milling and fabrication capabilities to see the project through from initial design to casting to final production.” Because the vast majority of production is kept inhouse, complete prototypes can be produced within a week at Fort Vale’s Simonstone facility. Although Bryce accepts that they are not wholly unique in seeking to implement manufacture in such a fashion, “If you are buying or commissioning equipment, and one company quotes you a lead time of eight weeks as opposed to our four weeks, where would you be going?” Ultimately, he says, “It is a fantastic situation for us, in that customers are actively seeking Fort Vale out and asking for our help. Rather than tendering for any given product, they are knocking on the door and saying ‘we want to develop this bespoke solution with you’ because of our reputation in the industry. It doesn’t get much better than that, does it?”
If you are buying or commissioning equipment, and one company quotes you a lead time of eight weeks as opposed to our four weeks, where would you be going? Andrew Bryce, innovation director
Top of the class World class. What’s it all about, really? “While as a company we have striven to lead the industry since producing parts for the fuel oil delivery market in the 1970s, ‘world class’ is a term that has only come to light in the last decade or so in relation to manufacturing,” confirms Bryce. With striving to be world class, almost inevitably, comes Lean. Fort Vale began its ‘journey’ in 2007, working with The Manufacturing Institute prior to moving to its purposebuilt site at Simonstone. Having jointly targeted a number of areas for improvement — three shop floor locations and one office, including toolroom, turning, press shop sales and purchasing advances — the company rolled out a workplace organisation programme shortly after arrival, with its operations for 2010 falling under the banner of ‘What we want! Where we need it! When we need it!’ “While there is no debating that Lean has done some wonderful things for the company, we are particularly keen not to get caught up in a situation where buzzwords become more important than results,” says Bryce. “For example, I believe that the concept of process efficiency can be traced back to Henry Ford and the innovation of his manufacturing methods. Lean, to me, simply amounts to the sum of the production advances seen in the last century.”
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Fort Vale Having won The Queen’s Award for Export Achievement twice in the 1980s, in 2008 Fort Vale was again presented with Her Majesty’s most prestigious award for UK business, this time for the company’s work in international enterprise. With seemingly every manufacturer and his dog claiming world-class credentials, however, what has enabled Fort Vale to maintain is virtual monopoly of the tank container industry? — after all, market share doesn’t lie. “Quite simply,” he says, “both our chairman, who was awarded an OBE in 1987 for his services to industry, and managing director, Ian Wilson, well into his third decade at Fort Vale, have always looked to embrace those things which will advance the long-term health of the business. And while we are hugely fortunate to have leaders who are not afraid to dip into their pockets when needed, our philosophy of re-investing the rewards of such endeavours back into the business is one that has served us particularly well.”
Glass ceiling? Not here… Speaking of well served, arguably the most striking aspect of Fort Vale’s success is the degree to which its foundations are built on a culture of internal progression seldom seen in UK industry; catering for the wider Pendle community in the process. One such is example is the company’s procurement director, Peter Staveley. Joining Fort Vale in 1986 as an apprentice, Staveley currently sits on the company’s board of directors.
“Because we want to develop a skill base specific to the industry-leading work that Fort Vale engages in, the company can — and does — take individuals as they are leaving school or college and integrate them into our culture from a young age,” he says. “That this extends to the highest echelons of the business reflects the fact that we offer opportunities for staff to go the whole way, so to speak.” Set to become fully-qualified operatives upon completion of their training, the 27 apprentices currently on Fort Vale’s books represent 10% of total workforce — an impressive ratio, whichever way you slice it. Perhaps more remarkable yet is that fact that some 28.5% of staff have served an apprenticeship at the company, including three board members, 33 employees engaged in skilled and supervisory roles and those trainees currently going through the scheme.
You’re hired! While companies up and down the land seek to entice staff with the carrot of career progression, “Fort Vale is delivering on opportunities in a way that we see as virtually unique,” says Bryce. “Apprentice to board member is not, I think it is fair to say, the experience for many who enter the industry in their teens, and yet it has been the reality here. We are also taking on a further eight apprentices this year for a staff of around 250, whereas many of the largest players in UK manufacturing take the same number in a staff number of 5,000. That, we feel, speaks volumes.” “Without wanting to sound trite, Fort Vale very much operates with a family feel: everybody knows each other, it is a great team to work for and, crucially, your apprenticeship doesn’t stop when you reach the age of 21,” adds Staveley. “Indeed, there are always new learning opportunities, with staff going on to degree — and even MBA — level education.” For those apprentices with dreams of one day flying the executive flag, therefore, how do messrs Bryce and Staveley see Fort Vale’s future — with its competitors unlikely to stop snapping at the company’s heels? Says the former, “We try not to overly concern ourselves with the competition; after all, they haven’t been the ones driving our success. If the business is running fast enough, continuing to reduce costs and keeping our eighty per cent share of the global market we couldn’t be happier.” end
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Answers for industry.
Celebrate Manufacturing for a Better Britain Having emerged from the recession stronger, leaner and with many new initiatives in place, UK Manufacturing is ideally placed to make a better Britain! Established over 10 years ago, The Manufacturer of the Year Awards competition is specifically designed to celebrate the strength and diversity of UK Manufacturing. So enter today and showcase your achievements. For further details visit www.themanufacturer.com/awards
www.themanufacturer.com May 2010 Vol 13 Issue 05
EntEr nOW
www.themanufacturer.com May 2010 Vol 13 Issue 05
What manufacturing wants from a new government
The categories this year are: Leadership and strategy Innovation and design World class manufacturing People and skills IT in manufacturing Supply chain and logistics Operations and maintenance Sustainable manufacturing SME manufacturer of the Year Export manufacturer of the Year Financial and professional services Advanced manufacturing And the winner of winners category: The Manufacturer of the Year For further details contact Alexis Catchpole on 01603 671300 or email a.catchpole@sayonemedia.com The winners will be announced at a black tie gala dinner and Awards ceremony at Chesford Grange, Kenilworth on Thursday 18th November 2010. if you are interested in sponsoring an Award, please contact David Alstin on 01603 671307 or email d.alstin@sayonemedia.com
Interview David Fox
CEO, Power Pannels Electrical Systems
Finance and Pro Services Pensions: life after defined benefits
www.themanufacturer.com/awards
People and Skills Modern apprenticeships reviewed
Supply Chain and Logistics Demand forecasting methods