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Robert Milligan, TRW Automotive, Director of Risk Management

www.themanufacturer.com November 2010 Vol 13 Issue 11

www.themanufacturer.com November 2010 Vol 13 Issue 11

”With Zurich’s help we’ve prevented over 24,000 lost work days. Because, like us, they believe one injured colleague is one too many.”

Business insurance that protects your most valuable assets. Your people. We’ve been an insurance partner of TRW Automotive, one of the world’s leading automotive safety system suppliers, since the 1970s. We’re always looking for new ways of helping them and their employees, and today this includes accident prevention and rehabilitation services. Between 2004 and 2010, this partnership has helped prevent the loss of over £ 6.4 m worth of man-hours for TRW Automotive. It’s an example of how Zurich HelpPoint delivers the help businesses need when it matters most. To learn more about how Zurich can help you, speak to your broker or visit www.zurich.co.uk/expertise

Training provision shifts to the employee

Special 76 page Manufacturing In Action section featuring Soil Machine Dynamics and Thorntons

Interview Ivor Tiefenbrun

Chairman, Linn Products

Regional Focus – North East Industry: an angel in the North

Innovation and Design

Top 10 products designed in the UK Zurich Insurance plc, a public limited company incorporated in Ireland Registration No. 13460. Registered Office: Zurich House, Ballsbridge Park, Dublin 4, Ireland. UK branch registered in England and Wales Registration No. BR7985. UK Branch Head Office: The Zurich Centre, 3000 Parkway, Whiteley, Fareham, Hampshire PO15 7JZ.

Supply Chain and Logistics All clear for nuclear

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Editor’s comment

Big Society seeps into training as cuts bite As we go to press (late again – we need a lean production system; anyone know a good consultant?) the Department for Business Innovation and Skills is putting the finishing touches to the Manufacturing Framework, which will replace the incumbent Strategy. Or perhaps they’ve only just started? That may be unfair, but it is difficult to unearth any detail on even the general direction of the Framework, and I hear that as recently as late October the Framework was more scaffolding than a well-constructed edifice. If true, I would be amazed if BIS can release the document with the required vision and adequate detail by the due late-November date, which would be hugely disappointing. One thing is certain, there will be less money for business support. Jane Gray’s article on page 18 discusses the affect of a rationalised skills and training landscape, where employees at some companies are being told to arrange their own training but are being given paid leave to do so. Interestingly, the numbers show that this method is working. A BIS White Paper in October said that the Manufacturing Advisory Service will continue to serve manufacturers in more or less its current shape, with a national structure but delivered locally. This is good news, as MAS has proved itself as a successful support service to improve business efficiency and help companies identify new opportunities. One company really caught my eye last month, International Innovative Technologies (IIT) in Newcastle. Apart from the inventive financing behind the company’s new product – a £10m Islamic sukuk, which shows there are options beyond the banks – the products are really exciting. IIT’s milling machines use gravity and centrifugal force to reduce many difficult-to-mill materials to a fine powder. Their modular design and energy efficiency also seem to give them advantages over conventional ball milling. It’s great to see a British company virtually reinvent the wheel in a technology that is millennia old – see News on p5 for more details. The Manufacturer Directors’ Conference and Manufacturer of the Year Awards 2010 take place on November 17-18 in Kenilworth. The conference features an impressive line-up of speakers with a programme of three streams based on enabling excellence in practice and strategy. The Awards had another very high standard of entries and it has been a devil of a job to judge some categories. We hope to see you at either or both events!

Cover image: Courtesy of Dakin-Flathers, manufacturer of bandsaw and bandknife blades

Will Stirling, The Manufacturer

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1


News and features 04 News

Manufacturing news

10 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

12 The big picture

Supply chain service

22

IfM’s John McManus says SMEs should learn to judge others as they would judge themselves

13 Economics

The odd couple EEF’s Steve Radley questions the advantage of increases in carbon emission targets

16 The legal low down ROTten luck

Caroline Armitage of Thomas Eggar LLP outlines some best practice concerning retention of title clauses.

17 Business as unusual Armed and ready

Anand Sharma advocates cutting red tape to improve defence spending efficiency

30

18 Lead story

Ask not what your state funded skills agency can do for you In the age of austerity, the way training is funded will inevitably change. Jane Gray finds out how

22 Regional focus

North East England Will Stirling takes The Manufacturer tour to the North East, in pursuit of the local low-down on ultra low carbon vehicles, process industries, renewable energy and more

30 Interview

Sound innovation, sound business A man known equally for his innovation and his readiness to voice his opinions, Mark Young talks to Linn Products founder Ivor Tiefenbrun about creating wealth in Britain

36 How do they make that

The step-by-step production process of Naturepaint – a dry powder based eco friendly paint

40 Leadership and lean To lean or not to lean

45 2

Is there any place for traditional project management in a lean environment? TM explores

45 Sustainable

It’s a gas, gas, gas Lorenzo Spoerry examines the increasing use of biogas in powering manufacturing


Contents Special feature MDC 2010 50 Manufacturing matters

Three speakers from this month’s Manufacturer Directors’ Conference give us an early insight into their thoughts

Innovation and design 52

Top 10 products designed in the UK

Tim Brown celebrates British invention, from Aston Martin cars to Burgopak packaging with plenty in between

Special feature EEF training centre 57 Safety does it

A case study on a bespoke, interactive health and safety diploma designed by EEF and Oxford Brookes University for ABB

People and skills 62

A fair day’s work for a fair day’s pay Modern time monitoring systems should tell you more than how much wages you have to pay, TM finds

52

Employee of the month 67

Dean Battersby, production editor, Gripple

Supply chain and logistics 69 All clear for nuclear

Ed Machin looks at the opportunities for the burgeoning nuclear supply chain

IT in manufacturing

Head in the clouds 74

Malcolm Wheatley finds all isn’t white and fluffy in the world of hosted servers

IT News 77

Keeping you up to date with what’s new in IT

69

Manufacturinginaction Sponsored by TBM Consulting Group

Factory of the month

80 Soil Machine Dynamics Digging your scene Subsea engineering experts Soil Machine Dynamics have moved from telecommunications to the oil and gas and renewables sectors and is now devising complex flow production systems to cope with the swell in demand for its hi-tech subsea roving machines. Will Stirling reports.

100 Thorntons A Thorntons Moment 117 Terex Earth king gets a crush on lean 129 Michelin Tyre Treading ahead 134 Clyde Union Pumps A push in the right direction 139 BCM Get by with a little help from your friends 146 Carl Zeiss Under the microscope 148 Trend Marine Ship shape trend 3


Newsinbrief CORRECTION

In the October edition of The Manufacturer, the article “Spotlight on Six Sigma” implied that Opex Resources Ltd had developed a Lean Sigma and Minitab software product. This was incorrect. Opex Resources publishes a pocket guide for use with the Minitab software called ‘Lean Six Sigma and Minitab’. Minitab Statistical Software is developed and owned by Minitab Inc. We apologise for the error.

TECHNOLOGY

Thales UK has announced the winners of its third annual Thales Scottish Technology Prize for product engineering. The winner of the £20,000 first prize went to Dr David Burns and Dr John-Mark Hopkins at the Institute of Photonics, Strathclyde University, Glasgow, for research relating to improvements to eye-safe nanosecond pulse rangefinders. The pair were awarded a personal prize of £2,500. Second prize, and £2,000, went to Faiz Rahman also from the University of Glasgow with an entry on the subject of a hyperspectral imaging array.

Computer maker Hewlett Packard has announced it is to cut a further 1,300 jobs as it moves production overseas, bringing its total redundancy count in the UK to almost 6,000. Most recently, the firm announced 900 job losses in June. The union Unite labelled the firm’s measures as “butchery”, considering the US company is expected to increase turnover by 11% to $4130bn this year and operating profit by 14%. GOVERNMENT

Proposals for 24 local enterprise partnerships were given the go ahead by the Government last month. Ministers also declared the £1.4bn Regional Growth Fund open for business. This follows the confirmation of the closure of the Regional Development Agencies in the Budget. The RDAs are expected to cease activity by March 2012. The government hopes the Regional Growth Fund will support the creation of private sector jobs and support communities bracing themselves for a wave of public sector job losses.

4

GOVERNMENT

Osborne outlines cuts Chancellor George Osborne sketched out the details of the Comprehensive Spending Review and the breakdown of a total £81bn worth of savings from the public spend on 20 October. Most significantly for manufacturers, the Department for Business, Innovation and Skills is expected to find a 7.1% annual saving each year between now and 2015. The science budget is to be protected at £4.6bn with efficiency savings of £324m to be put back into other projects. There will also be more money for 75,000 extra adult apprenticeships over the term of spending review. Administration savings from BIS will total £400m. The £1bn Regional Growth Fund is to be extended by £500m, a move EEF’s Steve Radley labelled as “critical in funding important investments in our infrastructure.” He warned that clear guidelines are required on how funds can be accessed though. The Department for Energy and Climate Change will be making extra capital investments, Osborne declared, despite having to find an overall saving of five per cent per year. Up to £1bn is to be provided to develop carbon capture and storage systems although commentators have pointed out though that this would pay for just one demonstration unit where the initial plan was for four. Also, under the Carbon Trading Scheme, bonus incentives were going to be provided to the best performing companies. This will no longer happen, pocketing the treasury £1bn. Osborne put aside up to £1bn for a green investment bank and £200m for offshore wind turbine

George Osborne at the Conservative Party Conference in October

technology and port regeneration, dispelling recent rumours that a £60m competition pot for the latter would not survive the axe. According to EEF’s Steve Radley, the plans will “not deliver the private investment necessary and we still need greater clarity on the Bank’s remit.” The pension age is to rise to 66 from 2020 – six years earlier than planned but four years later than when Osborne had previously touted. Overall, EEF chief executive Terry Scouler said manufacturers will be relieved that the cuts were not as hard hitting as some feared they might be. “[The] statement showed the Chancellor understands the areas on which to focus,” he said, “we now need the detail of how we are going to get there. Further announcements in the next few weeks now assume a critical importance.” Commenting on the announcement Julie Hughes, finance director at Dawson Precision Components said: “The Comprehensive Spending Review was inevitably going to be tough for everyone, but there are some positives for UK manufacturing. With less money in the public sector, this will inevitably affect its suppliers in the private sector, from the people who make aircraft to the people who make the screws that hold aircraft together. Whilst budgets will be tighter for everyone, projects are still out there for those with the right capabilities...If skills are transferable, companies need to look at what else they can offer. If money is dropping out of defence, companies can transfer their capabilities to private aerospace or further afield to areas where there is expected growth, such as low carbon technology and green energy.”


ManufacturingNews GOVERNMENT

BIS on skills cuts The Department for Business Innovation and Skills has revealed where the axe will fall on skills provision. The results of the strategic spending review offer some optimism for industry leaders concerned about the development of relevant and robust skills for a strong UK manufacturing sector as Government sustains support STEM research and apprenticeship training. The Department of Business Innovation and Skills (BIS) is expected to make an overall reduction of 25% to its resource budget by 2015 and anticipates that 65% of these savings will be achieved through re-structuring funding and delivery systems for Higher and Further Education.

Despite this emphasis however BIS has committed to ring-fencing spending on STEM research. Key capital projects going ahead include £220m in funding to ensure the UK Centre for Medical Research Innovation goes ahead as planned. Funding will be provided for the Diamond Synchrotron worth £69m and the allocation of £1bn for the creation of a Green Investment Bank. BIS has committed to spending £250m on adult apprenticeship programmes over the next four years creating 75,000 new placements for individuals already in work during that timescale.

MACHINE TOOLS

Newsinbrief GOVERNMENT

EEF has outlined a ten point plan for creating a strategic partnership between government and industry. The manufacturers’ organisation says the private sector is ready to rise to the challenge of leading the UK back to growth but needs support from government in investing in production capacity, providing a supporting framework which addresses ‘broken’ areas, and identifying and investing in the areas which will support private sector growth.

The Government has announced the launch of a new partnership between academia and the health industry to boost the UK’s image as a viable investment location for emerging pharmaceutical production. Science Minister David Willetts and Health Minister Lord Howe last month launched an initiative to boost partnership between academics, clinicians and the life sciences industry in order to deliver the medicines of the future faster.

New generation in Milling International Innovative Technologies has developed the next generation in milling machines with the assistance of the first corporate Sukuk to have been offered in the UK. The technically advanced, patented powder milling process combines low energy consumption and a compact size with a centrifugal grinding mechanism for excellent efficiency. The m-series mills can grind soft, medium and hard particles (1 to 9.5 on the Mohs scale) to 90% passing 45 microns and below with energy consumption between 5kWh/t up to 10kWh/t; considerably less than tradition milling equipment. Aside from use in traditional markets, the m-series is versatile enough to be used for new green markets such as the recycling of glass reinforced plastic, glass and limestone. The new technology was financed with the help of a $10m four year Musharaka sukuk which is a loan structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. Tom Wilkinson, chairman of International Innovative Technologies, says he is confident that there is potential for other UK companies to access Islamic finance including sukuk as an alternative source of funding. The sukuk issue was placed privately with Millennium Private Equity and regulated by Dubai Financial Services Authority. According to Wilkinson, the agreement is based on certain performance milestones, George Ord and Tom Wilkinson of IIT with Juergen Maier of Siemens Industry UK subsequent to which Millennium would receive agreed equity interest. switching on the milling demonstration plant

AUTOMOTIVE

Aston Martin has confirmed that the Cygnet luxury city car – originally shown as a concept car in March - is to go into production in 2011 at the company’s Gaydon headquarters in Warwickshire. The company says the vehicle will set a new benchmark for compact luxury, building upon nearly a century of experience building high performance sports cars, luxurious long-range grand tourers, and extremely competitive racing machines.

E vent

On Thursday 18th November at the Chesford Grange, Kenilworth, The Manufacturer will announce the winners of the 2010 Manufacturer of the Year Awards. The prestigious black tie gala dinner and awards ceremony, which has completely sold out, will celebrate the successes of the awards finalists and raise a glass to the achievements of UK manufacturing.

5


Newsinbrief FOOD AND DRINK

Premier Foods the UK’s largest food producer could be set to sell its vegetarian foods business, including the Quorn brand, in a bid to cut its enormous debts. Quorn, bought for £172m in 2005, is now thought to be worth between £200m and £250m. After the deal was muted in the press, the Hovis and Mr Kipling maker responded by saying it remains “open minded” about such a deal.

Sainsbury’s and Coca-Cola were among the big winners at the World Juice Awards, held last month in Geneva. Sainsbury’s picked up the Award for Best New Juice Product for their chilled apple and boysenberry juice, packed by Princes in the UK under the Sainsbury’s brand, the Coca-Cola Company in Turkey won the Award for Best Innovation in Juice for their Cappy Ramadan Sherbet - a limited edition juice drink flavour launched only for the Ramadan period which is based on a traditional sherbet based drink.

RENEWABLES

Green light for UK turbine factories General Electric, Siemens and Gamesa have all confirmed that they will now press ahead with plans to build wind turbine technology factories in the UK after government retained an investment pot for ports regeneration. GE and Siemens, along with Mitsubishi, had said they would build plants to build offshore wind turbines in the UK which would employ up to 70,000 people but the commitment was dependent on government maintain a £60m funding pot for ports regeneration. After £200m was put aside for offshore wind in last month’s spending review, David Cameron launched a National Infrastructure Plan which includes the ports regeneration competition. That prompted GE and Siemens to confirm that they will build their plants while Spanish wind turbine

specialists Gamesa announced they will follow suit. Gamesa is to set up a research and development site on UK shores as well as basing its international headquarters in London. Trade organisation RenewableUK released a statement praising the Coalition’s decision to retain the funds. “We need thousands of offshore turbines in the next decade and beyond. To help secure private sector investment in this technology, we’re providing up to £60 million to meet the needs of offshore wind infrastructure at our ports.”

DEFENCE

BAE Systems has said that cuts announced in the strategic defence review would cost it £48m after the MoD cancelled a large number of orders, including some for the latest version of the Nimrod reconnaissance plane. The company said that it would see its annual earnings fall 1p a share from 2011 from 44p a share in 2010. This corresponds to a pre-tax profit of £2.1bn a year in 2010. Other major hits include the early retirement of the Harrier jet and the cutting back of orders for the Joint Strike Fighter.

FIXINGS

Wire joining devices manufacture Gripple has purchased a 12,000m2 industrial complex near the group’s headquarters which will enable it to greatly increase its production capability. The company says this is in response to an “impressive” growth in business. Following comprehensive redevelopment, the facility will bring together the administrative, production and hi-tech washing activities of subsidiary Loadhog and house a new 1,700 tonne injection moulding machine.

6

AUTOMOTIVE

All three JLR sites to remain Unions have agreed a pay deal with Jaguar Land Rover which commits it to a three plant strategy. JLR said last September that either its Castle Bromwich or Solihull plant would close. Now though, a deal it has agreed for the Castle Bromwich workers – a 5% increase in pay this year and the Retail Price Index plus half a per cent next year – secures the future of that site. Solihull says trade union Unite will stay because it is the “ancestral home” of the Land Rover. JLR has confirmed that all three plants will stay open now, despite the chief executive of JLR’s owner Tata Carl Peter-Forster saying at the Paris Motor Show that the company wanted one large operation in the Midlands rather than two separate factories. The company has said all along that merging the two would have a minimal impact on jobs but

unions have still pushed for both to remain open. JLR chief executive Ralf Speth has labelled this outcome as “a triumph for all concerned.” Castle Bromwich employs 2,000 people while 5,000 workers are based in Solihull. JlR’s other plant is in Halewood on Merseyside and was never under threat.

The hybrid XJ Jaguar Limo-Green concept car with a range extender engine


ManufacturingNews EVENTS

Manufacturing 2011 celebration The inaugural Sheffield Manufacturing Week has been launched and South Yorkshire’s engineering and manufacturing companies have been urged to join in with this “Festival of Manufacturing”. great opportunity to celebrate all that is great about manufacturing in Sheffield, and to show local people that manufacturing is still relevant to our economy, but also a tremendous occasion to showcase our manufacturing expertise to the world.” Sheffield Manufacturing Week will take place from Monday March 14, 2011 and promises to be a “Festival of Manufacturing”, designed to celebrate, promote and improve manufacturing in the Sheffield City Region. Key themes will include; education, involving schools, colleges and universities; celebration, showcasing achievements and capabilities with company open-house days; innovation, highlighting leading edge technologies; and business Attendees at the Sheffield Manufacturing Week launch growth, with opportunities in meet with key manufacturing included (from left) Alison Bettac, Adrian Allen, Kevin Parkin, Jon Stewart, Richard Wright, Rt Hon Richard organisations from both the Caborn and James Newman UK and beyond. Over 60 guests attended the launch event which was held at the AMP Technology Centre in Rotherham, to hear contributions from speakers, including the Rt. Hon Richard Caborn, who spoke about the key role of manufacturing in the area; “Manufacturing is as important to the future of the Sheffield region as it has been to its past. Sheffield Manufacturing Week is not only a

BANKING

EEF hails banking review EEF, the manufacturers’ organisation, has urged moves to rebuild trust between businesses and banks. Commenting, EEF director of policy Steve Radley, said: “The process of getting credit flowing again was never going to be quick or easy. But the task force’s recommendations should contribute to more positive dialogue on how to improve relations between banks and businesses, increase competition in the market and, ultimately, improve the flow of credit to companies that are seeking to invest and grow. “The rules have clearly changed for both banks and businesses and hopefully we will now see some common ground between

what the Taskforce is proposing and, the needs of businesses through the recovery. “We need now to progress quickly towards a consensus on how we can increase transparency around lending decisions for all businesses including small businesses if we are to rebuild trust and improve business-banking relations. Any new lending models must address the needs of companies with ambitions to invest and grow, as well as the Banks’ needs to rebuild and protect their balance sheets.”

Newsinbrief GOVERNMENT

The Department for Business Innovation and Skills has confirmed the Manufacturing Advisory Service (MAS) will be retained despite impending cuts. In a statement, MAS said it would “continue to provide specialist no-nonsense support and advice to manufacturers, helping them thrive in an increasingly competitive market place”. COMPETITION

The manufacturers’ organisation EEF has launched a national competition to find the most visually striking photography from the UK manufacturing sector and help improve its outdated image. The competition, ‘Capturing the Spirit of Modern Manufacturing’ is being launched with the support of Manufacturing Insight, the Department for Business, Innovation and Skills and The Digital Asset Lab. Anyone can enter, whether or not they work for a manufacturing company. IT

Say goodbye to ProE and CoCreate, used by 25,000 PTC customers worldwide, as PTC launches a new breed of applications-based CAD software. The new product, Creo, will supersede its well established brands. Looking to get the best out of all CAD approaches to design PTC has created a suite of applications that are driven by a consideration of the user’s role – including the ‘casual-user’. Usability across these applications is maximised by a common look and feel so that a single user can switch between 2D, 3D, parametric and assembly design modes with minimal adjustment.

IT and business must align for better solutions and deployment strategies. Delegates at The Manufacturer’s ERP Connect event shared discussion hosted at Old Trafford Stadium, ERP Connect North had an up-beat kick-off from technologist Simon Moores who put cutting edge developments in cloud computing into context for delegates. However, Moore’s prediction of a paradigm shift in thinking around business and IT looks to be still in its infancy; recent research from IDC revealed that less than 10% of manufacturing companies, have invested in software as a service.

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Datesfor yourdiary

Manufacturingoutput

November

Manufacturing marches ahead

Throughout November – EEF is holding seminars focusing on safe maintenance and Equality Act workshops across the UK. www.eef.org.uk/Safemaintenance or www.eef.org.uk/events/current/ Equality-Act-Workshop-a-practical-application or call 0845 293 9850 Throughout November – Eversheds is holding health and safety seminars throughout the UK. www.eversheds.com/training

17 17-18

The CBI is holding a summit on climate change at The IET in London. nicky.cox@cbi.org.uk or 020 7395 8208

The Manufacturer, is holding The Manufacturer Directors Conference and The Manufacturer of the Year Awards at Chesford Grange, Warwickshire. For information on the awards call David Alstin on: 01603 671 300 for conference information call Benn Walsh on 0207 401 6033

23 29

The CBI is holding its annual dinner at The Dorchester hotel in London. 020 7395 8012 or gemma.fisher@cbi.org.uk

The CBI is holding a manufacturing dinner at the Hilton Metropole in Birmingham. 020 7395 8150 or amy.mullins@cbi.org.uk

30-2

The SMMT will be present at INTERauto, to be held in Cologne. 020 8144 7731 or interauto@360gradisrl.com

Regional focus: North East events:

14-19

NOF Energy Oil, Gas & Offshore Wind Market visit to Denmark. A programme of meetings with key players visiting Copenhagen, Fredericia, Jutland and Esbjerg, including the OWIB – the Offshore Wind International Business2Business Event. jgray@nofenergy.co.uk or 0191 384 6464

24

Meet the UKTI Directors of Trade & Investment from China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam at the Doing Business in Asia conference held at Newcastle Racecourse and Conference Centre. www.businessinasia.co.uk

24

Teesside University’s School of Science and Engineering is holding the ‘Innovative opportunities for the speciality polymer sector’ Science 2 Business Hub event at the Hardwick Hall Hotel in Sedgefield. www.tees.ac.uk/sections/whats_on/

25

RTC North, Intelligent Formulation and Enterprise Europe Network is holding a one-day business networking and matchmaking event: Formulated Product Design: Kick-Starting Open Innovation, at The Old Swan Hotel in Harrogate. www.eventelephant.com/open-innovation

8

The UK manufacturing industry flourished in October, the monthly Purchasing Mangers’ Index suggests, contrary to analyst expectations of a second successive fall in the reading. September’s PMI from Markit and the Chartered Institute of Purchasing and Supply hit a 10 month low level of 53.5 and analysts had expected a fall in September month to 53.1. Instead, October registered 54.9 – the highest since July. Anything above 50 infers growth on the measure, which considers orders, employment, output, supplier performance and stocks of purchases. The Bank of England is now expected to use this, along with the 0.8 per cent rise in GDP from October, as evidence that further fiscal stimulation is not necessary for the economy at this current time. Production rose for the first time in seven months in October, with the intermediate goods sector weighing in with the biggest increase, accompanied by more modest gains in the capital and consumer goods arenas. This was underpinned by a marked increase in export orders and employment, which grew at its fastest pace since a 15 year high in June. However, manufacturers expect prices to rise sharply in the coming months and purchased enough stocks in October to put raw materials holding at a survey record of growth. In addition, vendor lead times increased to their highest in 2010 so far, with manufacturers anecdotally blaming shortages in materials. “Exports are very much the engine of growth within manufacturing at the moment,” reflects David Noble, chief executive of CIPS. “Whilst it is very positive to see the sector expanding strongly again, it’s difficult to predict the impact of fluctuations in export markets so the recovery may continue to be bumpy. What is clear is that manufacturing looks set to drive further GDP growth in Q4. In addition 18% fewer manufacturing companies went bust in Q3 of 2010 compared to the same period in 2009. The Equifax Business Failures Report revealed a sustained pattern of year on year falls in business failures for each quarter of 2010. Insolvencies among all businesses also went down for the second quarter in a row - a drop of 12.5% from Q2 to Q3. Looking at the UK picture, the number of failures at 6,646 for the quarter, brings the level of business insolvency closer to that experienced in late 2007 and early 2008 when the credit crunch first took hold of the economy.


Early last month, a group of Midlands-based manufacturers gathered around a table at Bank Restaurant, one of Birmingham’s finest eateries in the newly developed Brindleyplace. Over dinner, hosted by manufacturing ERP experts Columbus IT, the group discussed the challenges of implementing a successful ERP system.

Columbus IT

ERP over Burgundy A

wide variety of that choosing the right ERP Most of the participants agreed manufacturers - specialising system was crucial in this. “Our that thorough understanding in industries as diverse as fire and previous system was built around between supplier and customer safety, steel, cable assembly and a catalogue of products,” he said. regarding the level of support aerospace, agreed that choosing “It wasn’t suitable for controlling expected was absolutely crucial if the right partner was as important the stock levels and didn’t provide an ERP implementation was to be as choosing the right product, us with scope for customer successful. However, establishing and that both could pose some flexibility. Implementing the new the requirements of which was unexpected challenges. Despite ERP system allowed us to migrate often difficult in the initial phase. a wide divergence of views as to a make-to-order regime which Kevin Tamkin, manufacturing to how to ensure success in has proven far more effective.” manager at aluminium implementation, all the manufacturer Alcoa participants at the dinner Manufacturing (GB), were in agreement that said: “There are a lot of There are a lot of systems that ERP was an essential systems that do ERP/ tool which provides an MRP. I think picking do ERP/MRP. I think picking the important advantage the right consulting right consulting partner is every over competitors. partner is every bit as bit as important as choosing the There was general important as choosing agreement that conflicts the right system.” right system between finance-driven The sophistication and production-driven of the arguments Kevin Tamkin, manufacturing manager, Alcoa Manufacturing (GB), were being ironed out by presented over the modern developments dinner table suggested in ERP technology, but that beyond the wide All participants believed that clarity that such conflicts potentially disagreements over the ‘How?’ of communication between ERP continued to be a significant and the ‘Who?’, there was source of problems for businesses. systems providers and their potential no doubt as to the ‘Why?’ of customers was absolutely crucial. Simon Charlton, sales director choosing an ERP system. All Steve Turner, director at CHH at Columbus IT said that such assembled had experienced, Connex, said that he had been problems remained an impediment in their own way, the financial disappointed by the level of support for many businesses, but that trials and organisational which some ERP providers offered the relationship between financetribulations of the initial stages after a system had been purchased. driven and production-driven of implementation. But all were “I don’t think we, as a company, systems was a lot tighter than it in universal agreement that understood what our ERP system used to be, adding that modern such technology was one of the was capable of delivering. In my ERP systems provided visibility most effective ways of gaining experience, many companies are across all areas of a business with extremely valuable visibility over not satisfied with the implementation operations, reducing costs, and considerable benefits. or the level of support they receive.” For Andrew Steel, managing helping a business thrive. director at Savekers, a small metalworker with around 30 employees, maintaining low stock levels was crucial to ensuring that costs were kept low. He agreed

For more information please visit: www.columbusit.com

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ManufacturingAppointments UK Appointments David Robottom and Andrew Manahan Cosworth

As Cosworth continues its growth strategy, the company has recruited two key industry experts to join the management team. David Robottom has joined Cosworth as managing director for UK and Europe bringing with him more than three decades

of experience in the energy business. Andrew Manahan has joined the team to head up this section of the business. Manahan has spent his career working in manufacturing in the defence sector and holds degrees in economics and mathematical science.

Michael McCarthy and Alan Kennedy 3M

Diversified technology company 3M has further strengthened its industrial adhesives and tapes team with two key appointments. Michael McCarthy has been appointed as general sales and marketing manager for

the Industrial Adhesives and Tapes Division. Meanwhile, Alan Kennedy joins 3M as a senior sales representative covering Scotland. Kennedy has more than two decades of experience in business-tobusiness sales.

Richard Hardy Alumet Systems

Specialist façade contractor Alumet Systems has expanded its health and safety department with the appointment of Richard Hardy as health and safety officer. Hardy will be assisting the company’s H&S manager, Frances Eatough. Hardy will also

assist Eatough with the health and safety requirements for the company’s divisions of solar shading, permanent access and their latest expansion, EOS Energy, which provides renewable technologies including photovoltaic solar panels.

Chris Rowlands Siemens Industry Division

Siemens Industry Division has appointed Chris Rowlands as value stream manager. Rowlands previous experience covers some 20 years in manufacturing, working in automotive, electrical, and building

products sectors before taking a role with Bosch. Rowlands has had previous roles in publishing and most recently, head of manufacturing at the Northwest Regional Development Agency.

Chemring Group has announced that Peter Hickson has succeeded Ken Scobie as chairman of the board following his retirement on October 1, 2010. Scobie joined Chemring as chairman in June 1997. Under his leadership the Group’s sustained growth over the last five years in particular has established Chemring as a prominent international defence business and as a market leader in its field. Frazer-Nash, the engineering consultancy, has announced the appointment of a new principal consultant to its power and energy team. Neil Beveridge, a chartered mechanical engineer, will be focusing on providing safety assurance and risk management services to a range of oil and gas, and nuclear clients. Drawing upon a wealth of previous experience, he will supplement a growing power and energy team at the firm. Peter Lumsden has joined Achilles as the new global scheme manager for automotive. Lumsden brings with him 22 years’ experience in the automotive sector having worked for Land Rover, Mercedes-Benz UK, Daimler Chrysler and more recently, Chrysler. Lumsden’s focus will be on building a collaborative supplier risk assurance system for the automotive industry, specifically risk assessment management of Tier 2 and 3 suppliers as well as nonstrategic automotive suppliers.

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Kimberley Clark Professional, the global supplier of hygiene and safety products, has appointed Stephen Kerr as its new regional sales leader for the UK, Ireland, the Netherlands, Belgium and Luxemburg. Kerr will be responsible for overseeing the KimberleyClark Professional workplace, safety and washroom businesses. He will be based out of the UK offices at Kings Hill in Kent. Leading print and flexible packaging specialist Roberts Mart & Co has announced a new addition to its team. To meet the increasing demand for its products, especially from within the food and drink industry, Andrzej Kukula has joined the family-run business as technical manager.

International Appointments Electric carmaker, THINK, has appointed Barry Engle as CEO. Engle brings a global track record of success with extensive senior level experience in marketing, sales and general management. Prior to joining THINK, he was President and CEO of New Holland Agricultural Equipment S.p.A in Turin, Italy. He has also served in a variety of senior positions with Ford Motor Company, which he joined in 1992.

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


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A limited time offer to help you get started* With the release of Microsoft Dynamics NAV 2009 R2, Microsoft is extending a special offer to new customers to help them drive their businesses forward in this challenging economy. For a limited time, businesses can buy three users of Microsoft Dynamics NAV for £1. Effective Friday, October 1, 2010, and available until end of business day Thursday, December 23, 2010, all new customers that meet the eligibility criteria can take advantage of this special offer.

Offer details With the initial purchase of Microsoft Dynamics NAV, customers will be allowed to buy up to their first three (3) users (foundation pack user and two additional users) for £1. •

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The big picture Supply chain service – you be the judge John McManus Institute for Manufacturing

Many small companies place quality and customer service at the heart of their business, but as John McManus of the Institute for Manufacturing’s dissemination arm says, SMEs should learn to judge others as they would judge themselves.

Small

and medium-sized manufacturers (SMMs) often set out to compete with larger rivals by offering superior quality or delivery performance, correctly assuming that in most cases they don’t have the financial muscle to compete directly on price alone. But many firms are undermining their position by not holding their suppliers to the same high standards. Ask an SMM what criteria their customers value highly and the most popular response is quality, closely followed by delivery. Price comes a distant fourth, marginally more important than a firm’s green credentials. Yet when it comes to providing the things that customers appear to value the most, companies seem to find it difficult to really deliver. A number of factors appear to be involved. Firstly companies don’t measure their performance in these areas. At first directors might be able to keep track of quality and delivery, but as the company grows, more formal management is needed which it simply doesn’t implement. Another factor appears to be the importance that businesses place on managing their supply chains. Again, ask an SMM about the issues which will limit growth and supply chain issues come close to the bottom. But for companies that place quality and delivery of service as their main value proposition, this could be a costly mistake. Put simply, a company with a strong service and quality ethos must place the same value on these attributes in its supplier base. The Institute for Manufacturing (IfM), which through its dissemination arm IfM Education and Consultancy Services has worked with more than 200 SMMs over the last year, has seen several common problems caused as a direct result of ignoring this issue.

Demand best practice from suppliers Firstly, companies can fail to deliver the customer service and quality to which they aspire. Given poor delivery and quality from their supplier base, they find it impossible to make a silk purse of a sow’s ear and can find their own businesses under pressure as a consequence. Secondly, firms put in place a buffer stock, either in materials or finished goods, to shield them from

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For more details visit: www.ifm.eng.cam.ac.uk

the effects of a poor supply base. This can result in a poor cash position and the need for costly additional storage and administration costs. Finally, firms need to develop their own goods inwards inspection function, again adding cost to the business. Performance in this area is often compounded by the fact that purchasing is often seen as a “clerical” function and dealing with suppliers is often seen as a task to be given to the youngest and least experienced member of staff. The lack of even simple forms of measurement of suppliers’ performance only makes matters worse. Staff are often unclear about which suppliers regularly leave them in the lurch, and react only to “the final straw” type incidents. As smaller businesses, they are often very conscious that they may have limited leverage with larger suppliers and so appear grateful to be supplied at all! The combination of the lack of appreciation of the importance of a reliable supply chain and the consequent failure to invest in the right level of supply chain skills and practices can lead to huge internal pressures. An example is that of an electronics manufacturer that boasted an innovative product, backed by superb service. The firm had a customer list to die for, made up of prestigious organisations around the world and a loyal, committed workforce – an enviable position. But because the firm never appreciated the complexity of the supply chain that was necessary to assemble a product from hundreds of diverse components, it was constantly at risk of failing to deliver against customer expectations. While it is difficult to generalise given the diverse nature of the SMMs, a significant number of SMMs can’t grow in the way that we need for a successful manufacturing-led recovery unless they understand how to make their supply chains work properly for them. Developing an understanding of how a supply chain can support your own strategy, measuring how your key suppliers are performing and managing the supply base to support your business are key points of securing business growth. A final point, if you can’t change your suppliers, change your suppliers!


Economics The odd couple Steve Radley, Director of Policy, EEF

In

December, the world will head to Cancun for the next summit on climate change. Ahead of the summit, Denmark has recently joined the UK, France and Germany in urging the EU to raise its 2020 target for reductions in carbon emissions from 20% to 30%. This call is based on the need for the EU to speed up progress in the rest of the world. Supporters also claim that by sticking to the lower target, the EU risks losing out on low carbon business opportunities to countries such as China, Japan or the US which are looking to create a more attractive environment for low carbon investment. To some degree, the call for a higher target has merit. As a collection of some of the world’s most advanced economies, Europe has an important role to play in reducing global carbon emissions. Demanding targets can help to galvanise action and it is essential that we maximize the opportunities to create new low carbon technologies, industries and jobs. But on closer inspection, the assumptions behind the call start to look a little suspect. Europe will only be able to show effective leadership if it can demonstrate that it is making progress on two fronts – reducing carbon emissions and strengthening its economy. The experience of the United States illustrates the perils of failing to achieve both these objectives. Even its fairly mild proposals for a cap and trade scheme have floundered on the fears that it would impose increased costs on consumers and destroy jobs. Before moving to a higher target, policy makers therefore need to answer a number of questions. In particular, they need to ensure that Europe remains an exporter of low carbon technology, rather than an importer of carbon emissions from regions of the world that have not taken on similarly tough targets. This means recognizing that the recession has made it harder in some ways to achieve these targets – supply chains in manufacturing have been disrupted and finance for longer term and riskier investments in low carbon technology is significantly harder to get and more expensive. This increases the importance of getting the business environment for low carbon investment

Proposed increases in carbon emission targets have been touted on the back of a proposed economic imperative but the question remains as to how economically and environmentally advantageous such reforms would be for the UK. right and learning from the rest of the world what drives low carbon investment where a wide range of policies, from tax incentives to relative targets have proved successful in creating markets and stimulating investment in low carbon technologies. It must also mean taking seriously the fact that, despite not having binding targets, China and the US have the largest low carbon sectors in the world, accounting for a third of the global market for low carbon goods and services. The UK has made a good start on this front in the recent Spending Review with funding for a commercial carbon capture and storage demonstration plant, the establishment of a Green Investment Bank (GIB) and public investment in offshore wind and shipyard sites. Yet there is still some way to go – in particular, the initial funding for the GIB is inadequate and its remit remains unclear. Other areas that need attention include improving access to finance, the use of public procurement to stimulate innovation in low carbon technologies and establishing certainty around the carbon price that would send the right signal to potential investors. At a time of strained public finances and household budgets, cost effectiveness of government policy becomes ever more important. So the UK government’s recent refocusing of feed-in tariffs on the most effective carbon technologies and reducing support for lower value options is a welcome step in the right direction. But at the EU level, we need to take a hard look at its expensive and arbitrary target to raise the share of energy coming from renewable sources to 20% to 2020. Government must also take serious account of their proposed actions on the competiveness of industries that are major energy users and subject to intense international competition. Arguments about carbon leakage, as domestic manufacturers lose market or decamp to less regulated regimes, are sometimes overplayed but still point to a serious issue. At a time, when the government is looking at how to rebalance the economy, it must take care that it and the rest of the EU doesn’t become the greenest economic bloc in the world but only by importing more of its manufactured goods from elsewhere in the world.

Have your say at www.themanufacturer.com

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Innovation and design

On Thursday 18th November at Chesford Grange, Kenilworth, we will announce the winners of The Manufacturer of the Year Awards 2010. Thank you to the following award sponsors:

Financial Management

Leadership and strategy

People and skills

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18/11/2010

It’s one of the biggest nights in the manufacturing calendar. Book now to be part of it. World Class manufacturing

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Reserve your place at the manufacturing event of the year, and raise your glass to the best of UK manufacturing! Join us at this prestigious black tie event, as we’ll be celebrating the success of our finalists. Guests will enjoy a drinks reception followed by awards ceremony, three course dinner and entertainment to the small hours. So come along for a spectacular evening of industry celebrations and networking.

Booking information: Tables of ten: £1,200 + VAT Individual tickets: £150 + VAT Contact Benn Walsh, telephone: 0207 401 6033 or email: b.walsh@sayonemedia.com

www.themanufacturer.com/awards


Thelegallowdown ROTten luck? Retention of title clauses One tool to help manufacturers when dealing with customers in financial difficulty is the retention of title (ROT) clause in their terms and conditions of business. But it is not only having the clause that is important – manufacturers also need to act very promptly and carefully if they want to rely on it, as this case shows. Bulbinder Singh Sandhu (Trading As Isher Fashions UK) versus Jet Star Retail Limited T/A Mark One (In Administration)[2010] EWHC 1936 (QB), considered what is called an “all monies” ROT clause, where the supplier not only tries to retain title to the goods, but also to any proceeds earned by the sale of them. Clothes manufacturer, Isher Fashions supplied clothes to discount fashion clothing store Mark One, which was part of Jet Star. The Mark One business failed, and Jet Star entered administration. Isher demanded payment in full but did not terminate the contract or ask the administrator to trace, identify or deliver up items of stock, or rely in any way on its ROT clause. Jet Star and its administrators continued to buy and sell stock as usual under the terms of the contract, but it wanted the right to receive all monies paid to Mark One and its administrators for the sale of its stock, and not just be obliged to share in the (much smaller) general insolvency dividend. The court didn’t support Isher’s claim. The fact was that they had continued to trade postinsolvency, and the contract clearly allowed for that to happen. In those circumstances the judge’s view was that in this case Jet Star was entitled to sell the goods to third parties in its usual course of business and pass title without having paid Isher in full.

Suppliers should consider this checklist:

- -

write to the administrator/liquidator expressly pointing out the ROT clause making it clear that you intend to rely on your rights. The administrator/liquidator should be asked to identify and secure any remaining stock immediately consider visiting the insolvent company’s premises to identify the stock

Make sure you also review and update your retention of title terms. A few pointers: make it clear that ownership of goods does not pass until a specified point, usually when payment for the goods is made, which should be relatively straightforward and risk-free a more aggressive “all monies” ROT clause (seeking to protect all of the debts owed to a business) will increase the risk of the clause being unenforceable as an unregistered security. It may be worth structuring the clause in a way that allows the clause to be severed from the remainder of the contract, if it turns out to be unenforceable it will be much more difficult to retain title if the goods are sold on before the original payment is received Does your clause need to be reviewed? Have you got a problem recovering stock where a customer has gone into administration or liquidation? Whatever your position, all manufacturers should be aware of what a ROT clause can do for them and be prepared to act quickly to enforce the clause when the situation demands it.

check your ROT clause is incorporated into the contract check your standard terms and conditions to make sure: - title to goods is retained until payment is made in full - on insolvency, there is an automatic trigger obliging a customer to identify any remaining stock and provide possession of it immediately if a customer becomes insolvent, immediately: - check the contract and establish your rights

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For more details contact: Caroline Armitage, Thomas Eggar LLP caroline.armitage@thomaseggar.com


businessasunusual Armed and ready Anand Sharma, Chairman and CEO, TBM Consulting Group

From

a business perspective, you have to admire any government that makes a pledge to balance budgets and reduce out-of-control spending, and then seems prepared to follow through on the promise. Perhaps dreams can come true. The recommendations of the coalition government’s Strategic Defence and Security Review were still under wraps as we write, but it appears all but certain that the UK’s Armed Forces will be heavily restructured. To what degree — which military branch will face the biggest budget cuts and what capabilities could be enhanced — will unfold in the coming months. After the military itself, the UK’s military suppliers will bear the brunt of this restructuring. The UK defence sector employs 300,000 people and representing 10% of UK manufacturing, one might argue, comprises the heart of the nation’s manufacturing base. I’d wager that politicians of all stripes, British citizens and Ministry of Defence personnel can all broadly agree that maintaining technically up-to-date manufacturing capabilities and capacity is essential to any defence strategy. But what’s missing from the political posturing and news reports thus far, as the commercial sector discovered during the recession, is the huge opportunity for eliminating wasteful practices that any restructuring process reveals. If there was a medal for making reasonable and accurate cost projections, no defence ministry would ever win it. Inflated costs and contract overruns are routine in the industry. This isn’t all due to material price changes, sophisticated technology, the costs of manufacturing the equipment or distributing supplies. Much of the waste can be found in the procurement bureaucracy and paperwork requirements that accompany every shipment. For every pound of equipment there is 10 pounds of paperwork, and I’m only exaggerating slightly.

Top gun costs spiral Here’s a pertinent example. Treasury’s budget hawks have targeted orders for 138 F-35 joint strike fighters at an estimated cost of £10bn. That order could be cut in half, according to news leaks. The US Department of Defense has reported that the average cost of each aircraft, manufactured in the US by Lockheed Martin, has ballooned from $50m to more

As the Strategic Defence and Security Review is announced, Anand Sharma says a war on bureaucracy and paperwork could greatly assist a more parsimonious defence contracting sector. than $90m since 2002. The DoD has even decertified Lockheed’s cost-tracking programme after giving the company three years to fix its system. In its defence, Lockheed cites lower than anticipated volumes, inflation, unexpected labour and other cost increases. Can you imagine being able to pass along an 80% price increase to your customers, in this economy, while maintaining double-digit profit margins? Who signs these contracts? Here’s another example. A company I worked for several decades ago provided some parts to military suppliers. We manufactured stainless steel valves sold to the chemical industry for around $2,000. We sold the same valve, manufactured to the exact same specs, for nuclear submarine applications for $25,000, give or take a few thousand dollars. In part the price difference was because of the paperwork and resources required to fulfill the orders, which nobody ever looked at and which added absolutely no value. There are hundreds of examples like these where a culture of collusion and bureaucratic stupidity doubles or triples the price of parts, equipment and supplies. Britain’s military realignment offers an opportunity to transform the inefficient defence supply chain to the benefit of both taxpayers and the military. Just by simplifying regulatory and procurement requirements, a cooperative effort between the MoD and military suppliers could cut spending by billions of pounds without having the slightest impact on the nation’s defence position or the troops’ combat readiness. And suppliers could still report respectable earnings. As an extra incentive, a portion of any budget saved by the MoD could be re-invested in new programmes that enhance military capabilities. Just as the shape of the military must change to fight a new type of enemy—elusive insurgent groups capable of disrupting global commerce, and cyber-terrorism—the military infrastructure must also change. The government will never completely outsource defence spending and manufacturing to China or India or even to close allies like the United States. But despite this buffer, UK defence suppliers should follow the example set by commercial industry, which has learned how to compete globally, and which had to restructure even more to survive the recent recession.

Have your say at www.themanufacturer.com

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Ask not what your state funded skills agency can do for you

George Bernard Shaw observed “We are made wise not by the recollection of our past, but by the responsibility for our future”. Jane Gray discovers how people and the companies they work for are both being asked to take responsibility for advancing their skills.

From

the formation of the coalition government through the austerity Budget and the Comprehensive Spending Review, the impression of hard times and the requisite adjustments in society is palpable. One of the most important issues for society pushed to the front of the queue by this zeitgeist for overhaul is the skills of the nation’s workforce. There is intense focus on the development and delivery of the skills that the UK needs if the economy is to rebalance and the deficit be redressed. Following a period of reviews and surveys of the UK skills landscape, including projections of what it

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ought to become, there is widespread uncertainty among employers and skills providers as to how their relationship will be affected. Two things, however, are certain. There will be less public money available to support skills development and policy will be driven by a consistent desire to complete the termination of command and control administration. The combination of these is driving the reorganisation of the skills landscape and prompted the Skills Minister John Hayes to declare in July: “The first and most important action [with regards to skills] is to secure a real transfer of power – and also of responsibility – from the centre to individuals and their employers.”

With great power comes great responsibility Chris Humphries, CEO of the UK Commission for Employment and Skills (UKCES), an organisation that advises government on the restructuring of the skills landscape and strategic skills priorities, explains what this means in practical terms for manufacturers: “The budget available for skills will be significantly less over the next four years than it has been in the past. Twenty five to thirty per cent cuts is almost certainly the territory we are in. We should be clear that this


Leadstory Employees’ contribution to training

refers to the total input of government spending over the next four years and those cuts are qualified by... a GDP deflator.” “There will be a number of priorities and concerns that drive the application of these cuts,” he continues. “The first priority is that, because there is not enough money for the volume of training needed, we will see a move to spread the costs between the state, employers and individuals. This is true for further and higher education and it is true for engineering and manufacturing, but there may be some sectoral advantages. These will be influenced by the clear evidence that both employers and individuals gain from all qualifications achieved at level three and higher. Therefore the proportion the state will expect the individual or employer to contribute towards those higher level skills will be less. Combined with this approach there will be a prioritisation of economically valuable skills.” The definition of these skills will be consistent with the National Strategic Skills Audit 2010, published in March. First and foremost, skills considered to be strategic priorities will focus on science, technology, engineering and maths (STEM) subjects at technician and apprentice level. In addressing the inevitable suggestion that prioritising certain skills routes will encourage people to pursue qualifications inappropriate to their talents and abilities, Humphries was clear. “It is really important to ensure that we get high success rates with apprenticeships. The last thing we want to do is what we did with university degrees – put far more people in by accepting lower grades and then see massive drop-out rates. This was a bad thing for the state and taxpayer but the most destructive consequence was the dashing of expectations for the individual.” To avoid this, Mr Humphries seeks a far greater focus being put on the diagnostic skills of careers advisers, employers and skills providers to help learners choose their qualification path and plan their progression. In order to incentivise care in this area he says that provider funding will soon become closely linked with outcomes. “This means that they will have an incentive to encourage as many people as possible to aspire to Level Three and higher skills, but also a disincentive to encourage individuals not capable of those skills from embarking on them.”

Prime Minister David Cameron’s views on skills strategy and deployment are heavily influenced by Richard Thaler and Cass Sunstein’s work Nudge: Improving Decisions about Health, Wealth and Happiness (Yale University Press, 2008). Read this book for greater insight into the principles behind the coalition’s skills policy.

Anne Watson, managing director of EAL, the UK’s leading awarding body for engineering qualifications, sees this as a positive move. “This is a very sensible approach. Attaching funding to the end of the training process will incentivise providers to give the learner as much help and support as possible throughout their education. Typically 25 per cent of those who start a qualification do not complete it. Often this is because they find midway through their training that the qualification isn’t right for them. Incentivising outcomes will mean far more care is taken both with the individual and the employer to make sure that the path is absolutely right.” Another key factor that is likely to increase the care with which training plans are devised is that new skills delivery structures will be characterised by financial responsibility of both employers and individuals, according to Humphries. In the same breath as they assume that responsibility they will also be empowered to ask for much more flexible delivery. For Humphries, this is likely to manifest both in more individual learning accounts accessed – which are repayable under similar income-dependant terms to

The budget available for skills will be significantly less over the next four years than it has been in the past. Twenty five to thirty per cent cuts is almost certainly the territory we are in Chris Humphries, CEO, UKCES

the student loans used by most university students – and in the personalisation of training modules by individuals and employers who will be able to demand that colleges and other training organisations tailor their offerings to ensure the best results for them. Bill Williams, CEO of the Centre for Engineering and Manufacturing Excellence (CEME), a Londonbased charitable organisation supporting business and skills development for engineering companies, has already seen demand for this begin to build and predicts that it will become the norm. But he also foresees that employer-employee relationships will have to build-in a greater level of negotiation so that mutually beneficial arrangements for funding contributions can be reached. “Over the last 10 years organisations in this country, firstly large ones and latterly also SMEs, have developed an expectation that their skills requirements will be subsidised by the government. That is not sustainable,” he says. “I don’t think there is anything wrong with employers or individuals paying for training. Like everything in life if you get something for nothing you do not value it.” This increased value on skills is resulting in more creative thinking around how time and money can be

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found to acquire them. Williams adds: “We work with a large manufacturing organisation outside London, which traditionally made much of its commitment to sponsor employees through engineering degrees. In the last three years they’ve changed that. They now give paid leave for completion of the degree but the employee self funds. Since that change was implemented, the numbers of employees participating in the programme went from less than 10 to more than 50. In the future I can see this happening on a much broader scale, including in SMEs.”

Incentives for skills linked to growth A natural observation would be that not all workers are lucky enough to have relationships with their employers where they would feel comfortable highlighting a current skills deficiency, and feel confident to ask for either time or money to help provide a qualification. Philip Whiteman, CEO of the Sector Skills Council Semta, is confident that the unions will play an effective and valuable part in protecting members’ professional development. “It is not a bad thing that individuals will have to take more ownership of their own development,” he says. “It will mean that in certain cases they are driving their employer to do more training and the trade unions can support that. As an SSC, we will try and tackle issues from the employer down, but it is useful that there is also a push in the other direction. The unions have shown more dexterity in understanding the skills needs of their members over the last few years and an advance in the way they manage their relations with employers over skills issues. They are

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now extremely skilful in this area and union members should be confident that they can look for protection and guidance for their professional development.” Beyond direct support, however, both individuals and employers will be able to take advantage of incentive schemes, according to UKCES’s Humphries. “Where there is a case of adequate provision for a qualification but not enough applicants, government will distribute support so that prioritised courses require less contribution from the individual. These financial incentives will send clear signals about which skills are considered to be linked to growth.” He adds: “Incentives for employers will be particularly important for apprenticeships as here there is typically no contribution from the learner. Support for these will likely go to areas where it is known there is a significant shortfall of skills.” The detail of how these incentives will work and who will have the responsibility of taking action to access them will largely be hammered out in the last quarter of 2010, however some pilot schemes are already running including a scheme to encourage big employers to over-train apprentices in certain strategic areas. “In Germany, large employers used to over-train apprentices as a natural part of their responsibility to help develop their supply chain. Even the Germans are no longer able to afford that, but the UK government has been piloting subsidies for each apprentice trained beyond company requirements.” (These overtraining initiatives are known as Apprentice Expansion Pilots.) This is positive news for enterprise employers and the manufacturing industry as a whole ought


Lead story Employees’ contribution to training

to benefit as the skills disperse throughout the supply chain and help emerging industries to grow. However what of incentives and support for SMEs? How will the demographic that makes up 96% of the UK’s manufacturing sector benefit, who are often cited as struggling to maintain training investments in the face of recession?

Small but perfectly formed On this point Humphries’ advice is controversial but informed. “The evidence is absolutely clear that SMEs do not need incentives.” Referencing data from the National Employer Skills Survey 2009 on which organisations provide apprenticeships in the UK, the same data that was recently assessed and submitted to government for policy advice, Humphries revealed that relative to company size, the vast majority of apprentice training in England, rather than the whole UK, takes place in the hands of very small organisations employing up to 24 people. Eighty per cent of apprenticeships are provided by firms with less than 100 employees. In contrast to this large enterprises (+500 employees), while providing 16% of overall employment in the UK, offer only 5% of available apprenticeships. Humphries eulogises: “This data shows that SMEs are providing five times the number of apprenticeships for young people that large companies are. I think that is hugely reassuring.” Confusion over the lack of apprenticeship provision from SMEs has arisen in the past due to measurements focusing on the number of employers in each size range providing any apprenticeships. As the table below show this has led to a misrepresentation of SME apprenticeship provision. Referring to government targets, to increase the provision of apprenticeships (Semta predicts that 10,000 per annum will be needed to replace higher level skills retiring from industry in their sectors alone) Humphries says this data will bring about “a strong

focus on SMEs, but they do not need incentives. They just need evidence of return on investment.” This information will almost certainly spur government initiatives to provide better intelligence with greater clarity of meaning to both employers and individuals about the job prospects to be gained through different training routes. This information has been gathered for years – largely by the Sector Skills Councils – and will include

This data will bring about a strong focus on SMEs, but they do not need incentives. They just need evidence of return on investment Chris Humphries, UKCES

clear statistics on average employment rates, wage increments and other labour market intelligence that has been lacking visibility in the past. The collated information will be made available from the Department for Business, Innovation and Skills as it establishes its long-awaited, age inclusive careers and employment advice service – the first stage of which, named Next Step and aimed at adult education, was launched in October. Summing up his feelings for the outlook on the manufacturing skills provision market, Chris Humphries was quietly confident. “The glass is half full not half empty. There is no question of the skills sector being exempt from government cuts, but if they sit at the lower end of 25 to 30 per cent [cuts] and are implemented over four years then they are achievable. We ought to be able to cover that 25 per cent with employer and individual contributions. This co-funding approach can work.”

Have your say at www.themanufacturer.com

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In partnership with:

RegionalFocus In association with:

North East

Industry: an angel in the North

Manufacturing stats in brief Manufacturing constitutes 19% of the North East economy, which compares to a national average of 12.4%. Manufacturing accounts for about 150,000 jobs in the region, some 14% of the regional workforce (10.1% nationally). Total investment in research and development within manufacturing in the North East is half the national rate (Source: One North East). Exports of physical goods in the region exceed imports by over 30%. 58% of the UK’s chemical processing industry is in the North East. The chemicals, chemical products and man-made fibres industry produced 22% of the total GVA of the manufacturing industries in the region in 2007. The healthcare and life sciences sector has an annual turnover of more than £4bn and employs over 170,000 people within the region.

Great

things have come from the North East of England. George Stephenson’s steam locomotives, the RMS Mauretania, Sir Bobby Robson, the Nissan Micra, Newcastle Brown Ale and Alan Shearer all call the North East their home. Durham’s rich coalfields, the Tyne shipyards and the steel and chemicals industry of Teeside produced a manufacturing-heavy economy and a strong skills base, fed by hard grafting local men and women with a world famous sense of fun. The demise of shipbuilding, coal and steel left high unemployment but skilled people, one of the attractions for Japanese car giant Nissan when it selected Sunderland for a car plant in 1984, which went on to become the UK’s biggest (see page 27). While those traditonal industries have fallen away, and some big companies like ICI and Swan Hunter (the design office remains) were taken over

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Symbolic: the iconic Angel of the North statue was built by Hartlepool Steel Fabrications

or left the region, the rise of other sectors means that manufacturing in the North East comprises 19% of the region’s economy, 6.6% higher than the national average. These include a very big process industries sector,representing 58% of the UK’s chemicals industry, automotive and now ultra low carbon vehicles, and new sectors like offshore wind, biotechnology, biofuels and a digital economy. Certainly Newcastle and the North East have a growing reputation as a world leading centre for ultra low carbon vehicles – both research and, with Smith Electric Vehicles and Nissan’s new battery plant and LEAF model on the horizon, manufacturing – as well as renewable energy, especially offshore wind (see page 29).

Business support Look at the North East and it’s hard to find another English region which has, or had, more support from


RegionalFocus North East

government agencies and trade associations. Regional development agency One North East has developed a hub for inward investment, investnortheastengland.co.uk, which details key sectors and opportunities for investment in growth projects in areas like low carbon vehicles, offshore wind and digital business. The RDA’s activities have been winding down for several months since the announcement of the replacement by a Local Area Partnership. Manufacturers’ organisation EEF North East moved to new, 10,000 sq ft offices in the Team Valley business zone in September. EEF North East is tasked with setting the regional policy agenda with the help of a body of 30 influential manufacturers and lobbying political figures independently, and collectively with influential business bodies. It also provides advice, training and consultancy to over 1,500 of the region’s manufacturers. The Manufacturing Advisory Service North East was formed in October 2008, combining the original MAS-NE and the North East Productivity Alliance or NEPA, and is now operated by PA Consulting. MAS North East has improved the competitiveness of hundreds of local business, and claims to have safeguarded over 3,000 jobs, trained over 8,500 people, saved companies over £50 million and reduced carbon emissions by 25,800 tonnes in the last five years. It is funded by One North East and the European Regional Development Fund, so there are question marks over its future funding, which will be clearer when the Manufacturing Framework is published later this month. “In the first quarter of this financial year, April to June, the gross value added of MAS North East was £4.5m compared with a regional average [across English MAS regions) of £4.2m,” says Neale Ryan, national network manager for MAS. “This builds upon MAS North East’s impressive year (2009/2010) which saw a 43% increase in the

number of manufacturing reviews conducted , an 11 per cent increase in ‘impact’ and a 16 per cent increase in GVA, year-on-year.” NEPIC is the North East Process Industry Cluster, see below, and several other sectoral business groups operate. Despite this support, total investment in research and development within manufacturing in the North East is half the national rate, according to One North East.

Key people Phil Kite, managing director Astrum and chairman, EEF North East Regional Council Phil Kite FCA was elected regional chair for EEF North East in 2009. He is the managing director of Astrum, a leading designer and manufacturer of track systems and running gear for armoured fighting vehicles, in Stanhope, Co Durham. Astrum also supplies to earthmoving and general engineering markets. From 2000 to 2006 he was a board director of the William Cook Group with operational responsibility for the Global Defence Sales and Group Health & Safety. In 2006, he led the MBO of the Group’s defence business and the company was renamed Astrum (UK) Ltd. Tony Sarginson, North East Region head of external affairs, EEF Tony Sarginson is head of external affairs for EEF in the North East, which provides professional services to around 600 engineering and manufacturing companies in the region. He supports the EEF Regional Council, is EEF’s regional spokesperson and works closely with regional media. Tony represents business on the European Programme Evaluation Group, the regional STEM Board is a member of the Manufacturing Advisory Steering Group in the region. Previously Tony worked for BT for 35 years and was the BT regional manager for the North East. He has served on the board of the Government Office (NE) as a non-exec director and four years on the board of NEXUS.

One to Watch – Caterpillar Peterlee Caterpillar’s Peterlee factory builds all Caterpillar’s articulated trucks, from 230kW to 350kW gross power. In early 2006 it was the first UK CAT factory to embark on Caterpillar Inc’s enterprise-wide site assessment scheme, the Caterpillar Production System (CPS). This assesses 15 core principles, which measures each on scales of safety, quality, velocity and cost. Before CPS, Peterlee had different versions of best practice measures, but these were self-certified. Operations manager Mel Curry says that to score ‘5’ on the scale, for customer shipment

delivery the site has to hit 98% OTD targets for five out of six months. “We are targeting a score of 60 over 15 principles on the assessment for 2011,” he says. “If we hit that, Peterlee will be the only site in the UK and probably Europe achieving this score.” Peterlee employs 800 people, 600 in manufacturing, but is not operating at full capacity (>1,000). The factory has doubled

its output in the last four months since the global construction industry recovery has worked through.

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Process industries

The process and chemical industries form the most extensive manufacturing sector of North East England. More than 1,400 companies, generating over £26bn in annual sales, are involved directly or in the supply chain within the North East. Employing

One to Watch – Aesica Created in 2004 by a management buyout of BASF’s Northumberland site, Aesica offers primary and secondary contract manufacturing services with the capabilities to develop products from early-phase clinical stages to commercial supply. The company tripled its sales to £100m and employee headcount to 700, from 2004 to 2010. It was recently placed 50th in Deloitte’s Buyout Track 100, a league table of the fastest growing, private equity-backed British companies, measured by Ebitda. The survey praised Aesica for raising profits 49% yearon-year. Between 90% and 95% of Aesica’s product is exported.

North East economy – At a glance Manufacturing, business services and the public sector are the dominant sectors of the North East region. There are approximately 4,000 manufacturing companies in the North East. Manufacturing excellence is at the heart of the region’s economic growth with North East England producing one in every five cars made in the UK. Nissan’s Sunderland plant has been the largest car plant in the UK for the past 12 years, and the largest exporter for 10 years. The world’s largest offshore wind turbine has been developed in the North East, at the New and Renewable Energy Centre (NaREC). A third of all the country’s pharmaceutical production is carried out in the area One North East has invested £30m in the new MASNEPA programme. The North East has relatively fewer people working in the higher skills and knowledge groups. Universities in the North East act as net importers of students; graduate retention in the region is close to the national average. The North East has the highest per person emissions of carbon dioxide of any English region. There are more high technology start-ups in the North East than anywhere else in the UK outside London.

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around 190,000 people, the sector exports products worth about £12bn a year. The NE is home to 58% of the UK’s petrochemical industry.

Petrochemicals Contributing to over 30% of the region’s industrial economy, the sector attracts some of the chemical and process industry’s world leaders, including Sabic UK Petrochemicals, Dow global chemical processor Dow, bio-diesel producer Petroplus and pharmaceutical manufacturer sanofi-aventis which has two locations in the North East. At the heart is Wilton International on Teeside, one of the few sites in Western Europe with special development status that enables it to be used for chemical processing, the region is home to several innovative projects such as SABIC’s world-scale Cracker plant and the UK’s first large scale biomass power station of its kind developed by Semcorp Utilities UK.

Biofuel and bio-refining The North East’s reputation as a green manufacturing hub has gained further momentum with its growing biofuel industry. NEPIC has nine members in the sector including Ensus, which opened a £300m bioethanol processing plant on Teeside earlier this year. NEPIC – The North East of England Process Industry Cluster (NEPIC), based at Wilton at the site of the old ICI plant, is a stand-alone company that was created and is owned by its member companies to represent the companies and supply chain of the Process Industry in the region. It represents over 500 companies in process manufacturing, which directly employ about 40,000 people, by promoting collaborative development between businesses and helps identify opportunities to compete in the global market or build supply chain relationships.

Pharma A third of all the UK’s pharmaceutical production is located in the North East. Big names Glaxo SmithKline, Procter and Gamble and Sanofi-Aventis have sites in the region. SSL International, one of the biggest pharma companies in the area, has just completed its sale to Reckitt Benckiser. The site currently makes a large range of products including Scholl footcare.

Food and drink Scottish and Newcastle was bought by Heineken and Carlsberg in April 2008 but still brews Newcastle Brown Ale at the Newcastle Federation Brewery at Dunston. Other big food companies based here include bakery group Greggs, Findus and Marlow Foods, which makes Quorn and KP Snacks in Billingham.Nestle, which manufactures several confectionery lines at its Fawton site. Nestle Fawton is three years into a rigorous internal business improvement process, NCE (see profile on page 108).


Regional Focus North East

Automotive and engineering Low carbon revolution The North East’s stand-out automotive company is Nissan Motor Manufacturing UK (NMUK). Established in Sunderland in 1984, NMUK grew to become the largest car factory in the UK and at one time the most efficient plant in Europe. In August it switched production of the award-winning Micra for the Juke. Line One, which also makes the Note, now runs on two shifts, while the hugely popular Qashquai (Line Two) runs three shifts a day. Production is running at about 330,000 cars per year, and headcount at the plant is 4,900, up from 2009 levels when it had to shed about 1,200 mainly temporary workers. Touring the plant is an education in lean manufacturing. The kanban system for fitting out the car bodies using sloping racks runs like clockwork, as fleets of material handlers race around the plant delivering stock in a relentless chain. Since 1984, £2.68bn has been invested in NMUK. This excludes the new battery factory being built, which is using £420m of Nissan, BIS and European Investment Bank money, and will be in production by 2012. Batteries will be used for the new LEAF electric model. In March NMUK won the contract to manufacture LEAF from other European plants. NMUK takes on about 30 to 35 apprentices a year, maintenance technicians and admin staff. Its Fast-track programme trains local long term unemployed people who are either offered a job or put on a waiting list at the end of training. Over 1,000 apprentices and 374 graduates have been recruited to date at NMUK. Other automotive and mechanical engineering companies in the region include Caterpillar (Peterlee), Cummins (Darlington), Rolls-Royce, BAE Land Armaments and Astrum, which operates in the defence, earth moving, intermodal and general engineering sectors under the stewardship of MD Phil Kite. A key supplier to the British Army, Astrum exports around the world including track systems for Main Battle Tanks and Armoured Personnel Carriers. Exports have grown to over 25% of turnover and the company sees further overseas sales growth in 2011, targeting Asia, Europe and the Middle East. In 2009, Astrum became one of only a handful of companies to receive an award under the A|D|S SC21 supply chain improvement programme. The North East is to have the first comprehensive network of electric vehicle charging points in the country and its vision is to become a world leader in research and development for the industry. It has the status of being the UK’s first Low Carbon Economic Area for Ultra Low Carbon Vehicles and when the LEAF rolls off the lines in 2012, some of the cars will join the region’s ULCV test programme.

One to Watch – Smith Electric Vehicles There seems little that this company can do wrong. From humble beginnings designing milk floats in 1920, Smith Electric Vehicles has become the world’s biggest manufacturer of road-going, zero emissions commercial electric vehicles. It fits electrical powertrains to proven chassis cabs like the Ford Transit. Headcount rose to 50 this summer, which is expected to reach 100 by early 2011. The company owners, the Tanfield Group, set up a Smith US venture in 2009, which President Barrack Obama visited in July. Smith is ramping up production at the moment after recent big orders, including 176 orders from for Frito-Lay for the 7.5T Newton electric truck, and 41 Newton trucks for office stationer Staples. Growth in the US was helped by a $32m US Department of Enterprise grant to fund the deployment of 500 Newton electric trucks in national fleets. President Obama said of Smith US: “You are doing more than just building new vehicles. You are helping to fight our way through a vicious recession and you’re building the economy of America’s future.”

Useful contacts EEF – www.eef.org.uk MAS NE – www.mas.bis.gov.uk/north-east One North East – www.onenortheast.co.uk Inward investment – www.investnortheastengland.co.uk Newcastle University – www.ncl.ac.uk/careers.

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Regional Focus North East

SME Nibs In June subsea equipment manufacturer Soil Machine Dynamics won a contract from i-Tech to supply 20 QX-Ultra work class remotely operated vehicles, with options for a further 10 units. The contract is SMD’s single biggest ROV to date (see profile on page 88). JDR Cables is a global provider of subsea power cables, offshore umbilical systems and specialised marine cables. In September it was awarded the contract to supply subsea power cables for the first phase of the London Array offshore wind farm, which will deliver enough power for approximately 470,000 homes.

Delegates attending The Future of Offshore Wind conference

Energy and renewables

“Huge offshore wind farms planned for the North Sea have placed North East England in an ideal position to manufacture large numbers of turbines for these farms,” says One North East’s investor portal. But this has been a long time coming. The North Sea is a natural resource, and the region’s technical skills base is also a given. What has been missing is an industrial strategy and nucleus of investment sufficient to tempt the big wind turbines OEMs to set up shop. However, the infrastructure for large wind systems in the NE took a big step forward in 2002 with the creation of the National Renewable Energy Centre, NaREC, in Blyth. The centre develops prototypes, tests renewable devices to international standards, and is involved in installing low carbon technologies. In October NaREC held the The Future of Offshore Wind conference, bringing together companies from across the region, the UK and from countries including Japan, the USA and Norway, to discuss the next actions to establish offshore wind research and manufacturing in the North East (see News on pp4-10). The region’s wind industry got a shot in the arm in October when the Government confirmed the £60m port development fund to upgrade sea ports to handle the biggest offshore wind turbines. The fund had been languishing in limbo pending the Spending Review, but Prime Minister David Cameron went on to endorse the money as central to the UK’s low carbon economy strategy. Following the pledge, Siemens, closely followed by GE, reinforced their intention to build wind turbine factories in the UK, and Spanish wind developer Gamesa also got in on the act. Siemens confirmed it has a number of preferred sites on the East and North East coastline under consideration. US company Clipper Windpower has a factory on the Tyne which is soon to start manufacturing prototypes of the world’s biggest wind turbine

In October, International Innovative Technology (IIT) launched a new patented milling technology which is capable of grinding soft‚ medium and hard materials to 90% of the material passing 45 microns and below. The m-series features an advanced modular design and low energy consumption in a compact body. See News on pp4-10.

blades. In September, Clipper released a trading update that raised concerns about its ability to continue in business amid a slump in the wind turbine market, which said that alternative funding streams needed to be explored for the company to remain a going concern. Since then the word from Clipper UK is that it is ‘business as usual’ and production is due to start before year end.

Teeside – a haven for green power A flurry of green energy manufacturing broke out on Teeside in the summer. Sembcorp announced £200m of green power scheme plans for Wilton in August, and MGT’s £500m Teeside Renewable Energy Plant is due to come on-stream in early 2011. Two examples in a pipeline worth an estimated total £4bn of major green energy projects determined to make Teesside their home. Last year SITA UK invested £70m expanding its energy-from-waste plant at Haverton Hill.

Don’t forget oil and gas Business turnaround specialist Contitech Beattie, which makes hose assemblies and systems for offshore oil and gas applications, has a message about the North East energy market: don’t write off oil and gas. In the North Sea there is somewhere between 11bn and 24bn barrels of recoverable oil reserves, says managing director Andrew Esson. “Whether or not the 24bn upside is reached will depend on taxation regimes and the technology availability. However, encouragingly, the DECC currently sees oil and gas as a key part of the energy mix, and are actively working with the industry to formulate a plan to maximise hydrocarbon recovery from the North Sea,” he says. “This augurs well for the strong cluster of specialist oil and gas equipment suppliers based in the North East, which collectively employ around 10,000 in the region.”

Have your say at www.themanufacturer.com

27


The Risk Business

Ahead of the publication of a special supplement and report on Risk Management, Ruari McCallion sets the scene in conversation with Steve Green, of global insurance company Zurich.

Manufacturing has always been a risky business

environment, the day-in, day-out trading

but it is, arguably, even more so today. The

situation. The second is the legal environment in

emergence of low-cost sourcing from remote

which the business is operating.”

locations increases complexity in the supply chain. That complexity is increased by the emergence

However, one of the first questions that will

of source countries and regions as markets in

be prompted is: what does an insurance

themselves – and increased complexity inevitably

company have to do with the broader operating

leads to increased risk. The geographical distance

environment? What does it have to offer beyond

and its effects on control and monitoring is

the obvious – fire, flood, other physical threats

one obvious issue but there are others. Many

and traditionally insurable events?

companies have failed to get a handle on the increased complexity. Numbers of suppliers are

Increased complexity

rising, rather than falling, and responsibility is

“When we talk to businesses, we appreciate

being pushed further down the supply chain.

they have complex issues. There are the

That change which increases risk to customers –

operational risks of fire, flood, earthquake,

and, of course, the logistics side becomes much

or product liability claims, for example,” said

more difficult to control. But you don’t have to

Green. “There are also the financial risks. Fraud,

look overseas for threats and opportunities – they

for example, is a major area and one that is

are in plentiful supply right here at home.

on the increase, whether from employees, the public or others. There are people risk issues,

“There are two aspects to risk that we look at,”

including health and safety; recruitment risk;

said Steve Green, who is Head of Corporate

and corporate governance. And there is market

for Zurich’s UK General Insurance business.

risk – your competitors, barriers to trade and

“The first aspect is the business operating

patent and intellectual property (IP) issues.”


The emphasis, Green says, is that as the risks

organisation and control. It is helpful for us to

are getting more and more complex, the supply

understand business’ environments. As a basic

chain is getting more and more interdependent.

feature, it’s important for us to talk and listen to

Which is well and good and probably generally

each other.” The single biggest influencer on a

accepted but the question is: what is a company

company’s resilience, its ability to avoid problems

like Zurich able to do about it?

in the first place and to plan effectively for crises is the quality of its management. “It’s a critical

“We see ourselves as helping customers with

factor and difficult to assess remotely. It is easier

planning, organisation and control,” he said.

to gather evidence when we are able to meet

If that is the case then it is far removed from

our corporate customers face-to-face.” This is a

the old days, when contact between a business

whole new ball game for most businesses, one

and its insurers was largely limited to a policy

that goes way beyond confirmation that good

schedule and annual renewal notice. Green

locks are in place and the security system works.

agrees – things have indeed changed, a lot.

But there is method in the company’s approach – apart from encouraging wider-ranging

“The business model in the UK, overwhelmingly,

thought, which can reduce premiums.

is that most businesses go to an insurance broker in order to buy their cover,” he said.

Broadening understanding

“Since 9/11 and the collapse of Independent

“The value of the relationship is tested when

Insurance, also in 2001, customers don’t want

there is a problem,” he continued. “Our research

their insurers to be ‘anonymous’ – we are critical

has found that customers with a turnover below

suppliers and they want to know who we are.

£20 million generally want to just ‘buy insurance’

Brokers are the critical conduit to insurers and

– they know they need to have it. Above £20

their facilitation of this kind of relationship is

million, the issues become more apparent. Legal

increasingly popular.” What Zurich is doing is extending its reach by accumulating expertise, both within and outside its own four walls.

“Customers don’t want their insurers to be ‘anonymous’ – we are critical

Gathering expertise

suppliers and they want to know who

“Zurich seeks to deal with as much as it can

we are.”

in-house,” he explained. “Where we don’t have

Steve Green, Head of Corporate,

expertise ourselves, we are increasingly partnering

Zurich UK General Insurance

with carefully-selected third parties. We have a panel of lawyers, who are experts in legislation and regulation, for example.” A growing area

risks, employment law, corporate manslaughter,

of concern is environmental legislation. While

corporate governance, brand value, reputation

there is a lot already in place it is not yet rigidly

and product recall all come into play. Those

enforced – but that is expected to change.

customers understand that they have increasingly

Whether that is in the face of international

complex businesses and that a ‘transactional

agreements, pressure from lobby groups or a

insurance’ approach is insufficient. What we do

desire to bridge the shortfall in public coffers with

at Zurich is to try and understand these issues,

fines and other contributions from the business

to assess threats and vulnerabilities, undertake

community does not matter – the impact is likely

supply chain assessments and, through a total

to be financial and could be reputational, as

risk profiling process, identify and develop a

well. Zurich is seeking to raise awareness among

business continuity plan to manage risk.”

customers that they are exposing themselves to risks of business failure and legal action across a

Zurich has developed a special website, which

much broader spectrum than may be generally

can be found at www.risk-engineering.com

realised. The complex supply chains of today

and has a lot of information. In the upcoming

increase vulnerability.

special supplement, The Manufacturer will take a broader and closer look at risk management,

“The Strategic Research Corporation claims

including potential liabilities in the supply chain,

that 43 per cent of businesses that experience

responsibilities, IP, customs and practices in other

‘disaster’ never reopen and a further 29 per

geographies, vulnerabilities and opportunities.

cent close within two years,” said Green. “We

We trust it will be a valuable contribution to

are seeking to help customers with planning,

understanding of an increasingly complex subject.


Sound innovation,

sound business The man whose innovative thinking has revolutionised the domestic hi-fi industry harbours a comprehensive ideology, both political and economic, of how to turn around Britain’s flagging economy. Linn’s Ivor Tiefenbrun tells Mark Young why the UK should be ashamed of its manufacturing record, why free market principles are essential, and why maybe – just maybe – there might be a silver lining to the storm clouds of recession.

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Interview Ivor Tiefenbrun

The

Tiefenbrun name is a famous one on the Glasgow business network. Jan Tiefenbrun, a Polish immigrant, set up an engineering company – Castle Precision Engineering – in 1951. That company is now run by his son Marcus, while Marcus’s brother Ivor is the founder of another Glaswegian company, Linn Products. It is this company which has completely revolutionised the hi-fi industry. Ivor Tiefenbrun, who has an MBE for services to the electronics industry, began working for his father’s firm in the 1960s. He soon found it was an opportunity that afforded him one or two extracurricular activities which combined two of his strongest interests: music and engineering. “I discovered as a music listener that the performance of products available at the time was degraded because the turntable was influenced by the output of the loud speakers,” he says. “Illicitly, since I was taking up the time of my father’s workers and using his materials, I developed a turntable that got more information from the groove.” His work showed the world that the most critical factor in the quality of sound recordings is the source of the music, rather than its amplification. Initially it was only a personal enthusiasm. Yet, “as my Dad used to say, one stupid thing leads to another,” he says. A company saw the turntable he’d made and told him they could sell them if he made more, which Tiefenbrun began to do. The problem was that he never got paid and this left him in “a real mess”. His hand was forced: set up shop or forget about it. “I decided to go into the hi-fi business,” he says with a smile.

Amps, labels and bye-bye to CDs Tiefenbrun then turned his attention into creating a loudspeaker, also very radical, which used very low frequencies with no audible bass resonance. “My ambition from the start was to make a complete system because I understood that you had to compare and monitor the signal at each stage to get a good result.” Next up was creating his own record label, Linn Records, which this year won Gramophone magazine’s Record Label of the Year. The label is home to many artists, including the Scottish Chamber Orchestra, and it recently released an album by renowned producer and electronic musician William Orbit. And herein lies Linn’s ambition: to control music from its capture all the way though to the output sound from the speaker, to reproduce in a living room exactly what is recorded in a studio. “That makes us unique,” says Tiefenbrun. “Although other companies do this – Sony Records and Sony Music, for instance – they’re not properly joined up.” Ivor is now executive chairman and all of the dayto-day running of the business has been passed over

to his son Gilad. But Linn continues to reinvent its industry. “We were the first to introduce solid state switching, micro processor controls and distributed multi-user audio systems,” says Ivor. “We were the first company with music servers and now we’re the first with high quality digital streaming. Innovation is fundamental at this business.”

All over the world people see the route to wealth creation is through manufacturing. No country can go from an agricultural economy to some elusive knowledge-based economy without manufacturing Linn decided 18 months ago that it would no longer make CD players or include them in products. This is not only because of its belief that digital music represents the only medium of the future, but because it insists that downloading tracks on a CD to a computer and then playing the tracks through a Linn system produces a cleaner sound than if the CD were played.

Political views The mention of Tiefenbrun’s name can yield a wry smile and knowing nod from other Glaswegian industrialists. He is highly respected for his innovation and the foundations upon which he has built his company, but equally he is known to be highly opinionated and even provocative. You don’t have to go far back to find evidence of this. Mr Tiefenbrun was going to stand for the Conservative Party in next year’s Holyrood elections. He has revoked his application, after a Scottish newspaper attributed some colourful quotes to him regarding the perception of Baroness Thatcher north of the border. For the record, Tiefenbrun denies the accuracy of the article. Whatever happened, public politics today is often about remaining ‘on-message’; saying anything other than his honestly held opinions is something a man like Ivor might not be prepared to do. Those who know him talk of a man who rewards hard work yet will suffer neither indolence nor fools gladly. His demeanour, age and stature are not unlike that of another famous Glaswegian – there are even some similarities in physical appearance to Sir Alex Ferguson. At a maximum cost of £140,000 per room, Sir Alex is in an elite group that could afford to deck out their houses with Linn Products’ best systems. For the consumer of more modest means, an entry level cost of £1,500 is more within reach. It is clear why the Conservative Party coveted Tiefenbrun’s leadership. Not only has he built

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one of Scotland’s best business success stories, attaining from scratch a £16m turnover, his views are completely aligned to the ideology that David Cameron and George Osborne have sought to promote. He believes in a small state and free market principles, emphasising the importance of transferring activities and jobs from the public to

private sector, he refers to the New Labour years as a “catastrophic experiment in government control”. “I don’t believe the Government can answer every problem,” he says. “We’ve seen the catastrophic consequences of the most profligate, imbecilic and destructive government in this country’s modern history, maybe ever. “One thing they did to cling to power was to try to please everybody. It became a PR exercise and the real needs of the economy were ignored. No central control can administer that kind of resource, the only mechanism that can do that constructively is the operation of a competitive, free market. The problem has not just been New Labour, he says. Since the industrial revolution, “Government has been the enemy of Britain – with brief exceptional periods,” he says. And manufacturing particularly has fallen victim. “The more that government distorts the market place, the more wealth destruction that occurs, the higher the tax burden, the more damage is done to the most price-sensitive and competitive sectors of our economy. Without a doubt, that is manufacturing.”

Tax regime stifles free market growth

Biography Ivor Tiefenbrun

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1946:

Born in Springburn, Glasgow

1972:

Established Linn Products

1992:

Awarded MBE for services to the Electronics Industry

1994:

Founder member of the Entrepreneurial Exchange

1995-99:

Member of Council of the Design Council

1999:

Honorary Fellowship received from Glasgow School of Art

2001:

Scottish Entrepreneur of the Year

2004:

Appointed a Visiting Professor at Strathclyde University by the Department of Design Manufacture and Engineering.

2006:

Established the registered charity, Cure Crohn’s Colitis, to raise funds for patient centric research into inflammatory bowel disease.

2009:

Handed the Managing Director post at Linn to his son Gilad. Ivor remains as Executive Chairman to Linn.

This has led to a shameful state of affairs in terms of British national interests, he says. “Since the Second World War, nobody in the UK has built a major [FTSE-100] manufacturing company from scratch. This is so pathetic and unique compared with the rest of the world. Tiny places that were swamps 50 or 60 years ago, like Singapore, are now great manufacturing powerhouses. Countries that didn’t exist or that are beset by warfare, like Israel, have created very large manufacturing companies. Britain has created none.” That, he says, is down to state interference and a corporate tax regime which is punitive. “It’s the effective tax rate which is important – tax after allowances. Because there are few allowances you have the strange anomaly where, especially in manufacturing, lead times are long, investment is high, its capital intensive, you’re exposed to global competition, and the rate of change is phenomenal. Companies are damaged by the very high rates of effective corporation tax and the tax instability, while our foreign competitors in effect pay no corporation tax or a maximum of 10% net He points to Germany as a country that is committed to maintaining its competitive position. “There is a clear focus on trying to be world leaders in as many areas as they can. You see the same drive in Japan, and now in China and it is emerging in India. All over the world people see the route to wealth creation is through manufacturing. No country can go from an agricultural economy to some so-called elusive knowledge-based economy without manufacturing.”


Interview Ivor Tiefenbrun

Linn Products at a glance Founded

1972

Products

Digital stream players, amplifiers, speakers, turntables

First product

Sondek LP12 turntable

Location

Waterfoot, Glasgow

Product cost range £1,500 to £140,000 Turnover

£16m

Notes

Awarded a Royal Warrant in 2002

We can prosper, he says, but we have to work harder than our low cost competitors in order to so. “I don’t believe that as wages increase you become less competitive. If that was the case Scotland and England could not have made the UK the richest nation in the world through the Industrial Revolution. Wealth can be created. The issue is productivity. If we earn ten times more than someone in India we have to be ten times more productive. That requires investment and that’s another reason why companies need to accumulate cash. High interest rates and an artificially strong pound don’t help.” Turning innovation into products with longevity must be the focus; at the moment we are too quick to sell ourselves short, he says, and there is inadequate infrastructure to support people with ideas. “Ideas are stymied by regulation,” he says. “Often people just cash in their chips and sell their intellectual property overseas. We’re the best country in the world at that. We squander our birthright and the productive output of generations of hard labour.” As for the quangos whose raison d’etre is to enable innovation yet face the prospect of the Chancellor’s axe? “I would get rid of them all,” he says, “certainly those with the power to regulate and tax other companies. I don’t think that a single one adds any value. In Britain we have a habit of tinkering with things but never scrapping anything. So much money is squandered that the good they do is not sufficient to compensate for the waste. Wealth can also be destroyed and the method of wealth destruction is redistribution.”

Every cloud... For all of the barriers to successful manufacturing, Tiefenbrun believes that recession itself could be the very catalyst for innovation and the chance for a fitter industry to emerge. “One of my favourite concepts is that people drove into the Great Depression on a stage coach with a petrol engine bolted on the front and they drove out of it in high tensile steel alloy cars with independent suspension and hydraulics, pneumatics, air conditioning and radios. Most of the features you associate with

modern cars emerged from the turmoil of this depression. Crisis causes a lot of destruction but it makes people realise that they want to buy things that add real value. They shop around and they look for advantage.” He points to Linn’s streaming product as an example. “At the very basic level it makes music more accessible and improves quality, and you can have all your music collection for you, and your kids, in two homes, three homes, on your boat, in your car and it sounds better but it also saves you a fortune,” he says. “Businesses must focus on productivity improvement and wealth creation – Adam Smith explained that a long time ago. That is not always understood, especially by our socialist brethren. But standards of living over the last 200 years have increased at one and a half per cent per

Since WWII, nobody in the UK has built a major [FTSE-100] manufacturing company from scratch. This is pathetic and unique compared with the rest of the world

annum, in line with our productivity. If we want to increase our wealth and the strength of our economy more in future we have to increase our productivity.” Were Tiefenbrun to have stood in next year’s Scottish Parliament election it would be difficult to see him winning except as a list MSP. Scotland is, by and large, resolutely red and Tiefenbrun is just about as blue as they come. But many will see the removal of his policy input as Scottish manufacturing’s misfortune. Visit www.themanufacturer.com for the video interview with Ivor Tiefenbrun.

Have your say at www.themanufacturer.com

33


Ephemeral management-speak or a new language for success? Martin Wing, European Managing Partner at innovative operational improvement consultancy Kepner-Tregoe, talks to TM about why manufacturers need to get comfortable with ‘thinking’ as a means to unlocking the real profit and productivity potential of their organisations.

Martin Wing, European Managing Partner, Kepner-Tregoe

34

Having

some familiarity with Kepner-Tregoe’s (KT’s) conceptual approach to problem solving and decision making, termed ‘rational process’ by the company, (see TM September 2010 for the original interview with Martin Wing) TM reporter Jane Gray, asked Wing if the company ever met with resistance from potential clients who saw their approach to business as ‘woolly’. Martin Wing (MW) – “Yes I think it would be fair to say that people sometimes see our approach as ‘woolly’ at first. The way we articulate our approach is conceptual. At first it has to be. We are framing the way that people think and it can be difficult to quantify the impact of this since thinking processes remain locked in people’s heads until they are acted upon. “Manufacturers and engineers are quite analytical by nature and can therefore be initially suspicious of some of the language KT use about thinking for improvement. However, in my experience they are ultimately less concerned with the process and more concerned with the end result. This combination of factors means that the majority of first time business we win is through recommendation. Clients refer other businesses to us after achieving great results.


Specialfeature Kepner Tregoe

From another perspective however our repeat business is undoubtedly founded on the fact that people come to believe, not only in what we can deliver, but how we deliver it. You might argue that that is the same for a lot of consultant companies but I do believe that there is something in the way we transfer capabilities to those we work with that is a little bit unique” Jane Gray (JG) – “Do you think the rational process approach, with its accompanying conceptual language, is the remit of leaders and managers in manufacturing organisations or do you see a broader scope for the use of KT’s problem solving techniques?” MW – “I think fifty years ago you might have a case for saying that having a rational approach to problem solving, decision making and process improvement was the responsibility of management. That was a time when manufacturing was low skilled and there was not a great deal of automation. Today, with the advent of new technology in manufacturing and increasingly complex value-adding systems you do not have that unskilled work force. This means that the nature of manufacturing in the UK demands that everyone in an organisation must be able to leverage their attributes and apply their skills in an appropriate way. They need to be confident about making important decisions within the boundaries of their role and appreciating the consequences. Just as technical skills related to key disciplines need to be grown for competitive strength in industry, so analytical skills for challenging and understanding new situations are needed. If there is one thing we can be sure of it is that nothing remains the same. Modern apprenticeships are starting to teach this kind of thinking. “Of course at the pinnacle of an organisation’s concerns when they are looking at techniques for improvement and decision making are tangible business results. At the next layer there is an interest in what activities this will involve, but the foundation of all benefits lies in the behaviours, attitudes, skills and knowledge of the people in the business. Without these there will not be the ability to enact the activities appropriately and the results sought by the organisation will not appear. For me, issue resolution, problem solving, the ability to make sound, robust decisions and confidence in being able to plan for what might go wrong, are the key behaviours which, coupled with appropriate technical skills and knowledge can ensure that foundation is secure across the whole business – be that in the procurement function, the maintenance team or with the line technicians.” JG – “In terms of applying this thinking and taking action on it can you give me an example of a significant breakthrough you have seen a client make recently?” MW – “I was with a client early this month, who had been scratching their heads for almost four weeks as to why a critical part in an assembly

process didn’t fit where it was expected to. The entire team had struggled. They were planning to make fifty capital intensive units and they had had to re-work the first four so it was critical the issue got resolved so that the expensive work-arounds that had been put in place over the previous weeks were no longer needed. We introduced and practised using some KT concepts about how to structure thinking so that the data was addressed in a much more disciplined way and within six hours the team had identified the cause of their problem which was revealed to be incorrect tooling. This had not been picked up because, with the best of intentions, the team had identified what they thought was the issue, broken the kit down and reassembled it, then tried to work around the recurring problem. They had not seen the true cause because they were analysing their data based on experience and jumping to quick rather than permanent solutions. They were trying to map what was going wrong against what had gone wrong before - when in fact this issue was entirely new. What was needed was

Just as technical skills related to key disciplines need to be grown for competitive strength in industry, so analytical skills for challenging and understanding new situations are needed a change in the kinds of questions being asked, an understanding of the different ways that people involved in the process were thinking and a means of aligning that thinking in a disciplined way so that all the available information was presented free from influence of assumptions.” This is just one of many examples where KTs approach to rational process has exposed faults in the way data is analysed and the misalignment of thinking around problem solving. In the next issue of TM Kepner-Tregoe will describe how robust data capture, through OptimumFX’s LineView System, and thorough data analysis, is essential to identifying the improvement opportunities for OEE performance in Coca Cola Enterprise’s bottling lines. For more information on Kepner-Tregoe, please email: european.enquiries@kepner-tregoe.com

www.kepner-tregoe.com

35


Organic paint Peter Harling, operations manager at organic paint manufacturer Naturepaint, describes how the company’s original product came into being and the steps involved in its manufacture.

Naturepaint

is a natural, non-toxic alternative to interior decorating paint established on a principle of being environmentallyfriendly throughout its lifecycle. The paint is supplied as a dry powder which the customer mixes in their own home with warm tap water. It can then be applied the same way as any other paint with the same covering power as a standard matt emulsion. Producing the paint in this way means it is the only paint that can be sent through the Royal Mail and that, crucially, the solvents and other toxins necessary to keep conventional paint in a liquid form can be left out of the product.

Stage 1: The process begins with the colour selection by the customer. Prior to their order they would normally have been supplied with a selection of ‘Big Chips’, painted colour cards that show the true colour of Naturepaint. The customer may then have ordered a 100gm sample pouch that produces around 250ml of paint to try out in different areas and light conditions around the home. If there are any questions they can contact the company over the phone or via the website which is staffed by experts who have applied Naturepaint in a broad variety of environments.

36

Further reducing the carbon footprint and increasing the environmental credentials of Nature Paint is the fact that the powder product weighs up to 60% less than other liquid paints. The packaging is 99.5% recyclable, the 0.5% being the sealable lining on the sacks that will soon be replaced by a recyclable type. This attention to detail results in a natural paint that is not only comparable in quality to tinned paints, but is so toxin free that it is safe to drink! Established in 2007, Naturepaint began as a two– man trial operation out of a small premises in Dorset. As business grew a joint venture with the Eden Project developed and a move to larger premises in Hayle at the west end of Cornwall followed. In recent months Naturepaint completed a trial with B&Q in two flagship ecostores and is branching out into international markets.

Stage 2: The bulk of Naturepaint is produced through a mixture of different types of locally sourced Cornish China Clay. This gives the paint a solid white base for the colour to work over and also adds to the toughness of the paint on the wall. Moving the company to Cornwall was partially motivated by the reduction in shipping miles on the main bulk of the materials that it uses. It also enables a more efficient production time when it is being produced only a few miles down the road.


Stage 3: To the bulk base a second mixture called a ‘binder’ is added. This is a combination of around twelve different natural proteins, gums and emulsifiers that acts as the glue to stick the paint to the wall. This ‘binder’ is the main chemistry of the paint which allows it to mix with the water as well as with small amounts of natural oil, such as sunflower or boiled linseed, to produce a soft sheen if required. The strength of Naturepaint rests in this binder which is a modern version that used in ancient Egyptian tomb paintings.

Stage 6: Once the powder has been mixed and milled a test sample is taken from each batch, mixed, and applied to lining paper. This allows them to check that the ingredients are mixing properly, that the paint is smooth and that once dried it has the required finish and quality. To assist in quality consistency the Naturepaint premises are fitted throughout with special bulbs that give an even white light. This ensures no colour variation can be attributed to differences in light quality.

Stage 4: The colour for a standard tin of emulsion is produced in the same way as a printer, from vats of three primary colours and black, mixed to varying degrees to produce the required shade. The Naturepaint approach is very different. Using around forty pigments in total, each one is natural or non toxic and all are of artist grade quality. They are sourced from a few select suppliers, one of which sold watercolours to the artist Turner. From these pigments Naturepaint produces a standard range of 97 colours ranging from soft pastels and off-whites to very bold and striking colours but they can also match almost any shade a customer requires.

Stage 5: To the raw mixture of clay base, binder and pigment a small quantity of food safe titanium dioxide is added to give body and coverage to the colour. Once the pre-mix is ready it is fed through flour milling machines that mix all the components together while grinding up any lumps or impurities that might be in the raw powders. This process gives each batch of paint a consistent quality and density that allows it to efficiently mix with water.

Stage 7: Once the batch has been tested the dry powder is divided into 1 kg sacks of 100gm pouches and heat sealed. The sacks themselves are dust and moisture proof and once sealed are also airtight. Labels are applied to the pack identifying the colour, giving mixing instructions and the ingredients of the paint plus and safety information.

Stage 8: The sealed bags are then put into recyclable cardboard boxes and stored ready for shipment. The boxes are necessary in order to give the paint pouches the protection they needs to withstand the rigours of postage and arrive with the customer in good condition. A further advantage to Naturepaints simple but innovative packaging materials is that it can be easily and flexibly branded enabling specification for a range of established and emerging markets.

Have your say at www.themanufacturer.com

37


Going for profitable growth – Why the focus? Suiko shares how operations can contribute to the challenge of driving up equity value through enhancing practices that control costs, generate extra profit and maximise cash. 1. Controlling costs For most organisations cost reduction has been the primary goal of recent times. A survival mindset has got many businesses through the depths of recession, but looking forward will require leaders at all levels to step out of a hand to mouth focus into a culture that listens to customers, makes the necessary investments and exploits the opportunities for growth. It should start by looking at cost from the customer’s perspective: what are they prepared to pay for and what do they value? The reason for cost being built into the system can be complex and numerous; from unnecessary processes and costs incurred through unplanned surges in demand to unexpected changes in staffing or variable quality of a process. Whilst it is not always immediately transparent, the great news is that in most processes there

are huge opportunities to take out the non value added work. How to exploit these opportunities will be influenced by many factors, but control must be a cornerstone of any improvement. Jim Godefroy, Suiko Principal expands “It encompasses robust operational basics – well executed standard work procedures, discipline and process and change control. Control is established through robust performance review; monitored by strong, simple measurement that is understood and immediately flags up the need for action when any limits are in jeopardy.” The development of capable, predictable and repeatable processes will give confidence in the ability to hit budget and deliver year on year improvements.

2. Generating extra profits When we innovate with new products or technologies, our ability

Focus on customer value through operational excellence

38

to understand and control costs makes it much easier to rapidly introduce change, commission it efficiently and for there to be the minimum of surprises. Operations should exploit opportunities to create extra value in support of the pursuit of greater revenues and/or increased margin. If we truly understand what our customers’ value, then operations can strive to deliver this and provide an improved and more highly valued service. This might be through exceptional service levels, quality, innovation, environmental credentials, flexibility and responsiveness. Godefroy continues “Value is not necessarily directly about money. It will often be time - time to market, time to deliver a product, time to respond to a service query, time to get paid. Lean teaches us to consider value in terms of time and this will pay dividends on the bottom line. Without striving for value we cannot attack the non value added activities that exist.” Stephen Cheadle, Senior Consultant builds “It is vital that we understand value from the customer’s perspective – the first and most important principle of Lean (often missed by many!) and acknowledge what this means for operations. We have to open our eyes to all the value streams that we can influence, not just the physical flow, but also the information flow, the new product development flow and the after


Control Costs

Generate extra profits

Maximise cash

Costs are controlled to ensure the direct costs to make the product and the overheads incurred to run the operation are always predictable, appropriate and consistent.

Create opportunity to increase revenue and margin, through reduction of non value added waste whilst providing a product and service offering that delights your customers.

Challenge all activities that tie up cash in order to use your cash as effectively as possible, maximising return on capital employed without putting your customers at risk.

Direct costs A direct cost is a cost that is directly attributable to the manufacture of a product or provision of a service. • Direct labour • Direct materials • Packaging • Utilities • Distribution

Product and service The way the provider deals with all the customer’s current and future needs ultimately measured by the customer’s perception. • Brand/quality • Lead time • Time to market • Innovation • Service experience

Current assets Flow in and out of a business in the normal course of its operation, as cash is converted into goods and then back into cash. • Material/packaging stock • Work in progress • Finished goods • Spares (engineering/maintenance) • Debtors and creditors

Overheads Resource consumed or lost in completing a process, but which does not contribute directly to the end-product. • Indirect labour • Indirect expenses • Central costs

Corporate social responsibility Consider the interests of society by taking responsibility for the impact of their activities on all stakeholders. • Health and safety • Staff well being • Environment

Fixed assets Are not consumed or sold during the normal course of a business and they are used to carry on its operations. • Production equipment • Land and buildings • Warehousing/ vehicles

product to enable us to hit the actual demand. Current assets are often an untapped resource left to the accountants or supply chain specialists, but are an area that all operations people can both influence and impact upon. Engaging people in a collaborative way to the importance of cash is key and ensure they appreciate how they can help free up cash.

Marsh concludes “It is vital that people understand how operations can make and lose money, not just what their variances are, but where value can be added along the value streams. Operations must learn to collaborate as business units and encourage all functions to move out of their silos!” If you would like to discuss how to address the issues above, then please call us.

sales service. This gives us a much broader pitch to influence and on which to create greater value for our customers and, as a consequence, create other avenues for increased revenue or margin.” These operational strengths can enhance customer loyalty and help open new doors for additional products or an extended service. Manufacturing is more and more about a service, not just producing a product. This gives an ideal opportunity to add more value, distinguish ourselves in the market place and generate extra profits.

3. Maximising cash Operations tie up cash through fixed assets (plant and machinery) and current assets (working capital, stocks and work in progress). A streamlined operation should constantly reduce the requirement for cash and any cash that it does have should be made to work hard. Fixed assets must be well utilised (but not at the expense of optimising the value stream) and therefore must be reliable, predictable and capable. We should maximise the effectiveness of our equipment and challenge all requests for more capital and look at how we can get more out of what we have and explore re-engineering the process or the

Suiko

The compelling business reason to change – leveraging the opportunities

Pursuing profitable growth Suiko’s experience is that there is still a vast array of untapped potential in all organisations and operational excellence can provide one of the critical levers to accelerate the pace of change for businesses. Andy Marsh, Managing Director expands, “The sustainable answer requires longer term strategic thinking - think Lean not mean. Pulling the right levers in operations will set the business on a path to profitable growth. Going for growth will create a positive mindset in the business, avoids restructuring costs and typically builds a momentum of its own rather than a negative downward spiral of cost cutting. In addition to this we have the opportunity to improve our cash. This will happen when people focus on value and time (lead time, stock turns etc) not just cutting costs.”

Building Operational Excellence Our mission is to help major companies achieve sustainable competitive advantage through Operational Excellence Andy Spooner Business Development Director Tel: +44 (01) 1225 852400 Email: info@suiko.co.uk Web: www.suiko.co.uk

www.suiko.co.uk

39


o lean

To lean or not to lean Project management versus Lean project management

John Homewood, continuous imporvement and safety manager, Cogent Orb Electrical Steels, instructs employees on lean management at the firm’s 2010 Conference

Does project management have to be lean to be effective? Darren Walsh, divisional lean manager for hydraulic filtration specialists Parker Hannifin and a graduate of Cardiff University’s Lean MSc programme, explains why traditional project management needs to be revised if it is to support lean enterprise.

40

“There’s

no place for traditional project management in mature lean environments.” Strong words when you consider that project management shares a similar success rate to implementing change, in that, it is believed that 70% of all projects fail or miss their deadlines and 70% of change fails to deliver the benefits within the planned timeline. This article will examine some of the key differences between traditional project management and progressive lean project management, where the change agents have learned from past problems and embraced a better understanding of what makes lean really work.


Leadership and Lean

The role of traditional project management versus lean project management Traditional project management

Lean project management

Focus on things (IE: tools and tasks)

Focus on developing people, discovery and mastery tasks

Do things right

Do the right things

Follows the plan

Refines the plan as tasks are implemented

Organise

Influence

Plan

Continuous PDCA (Plan-Do-Check-Act)

Direct

Motivate

Control

Build

Follows the rules

Shape the business, industry or the profession.

Listens

Hear what is being said and how it is said

Communication, project update emails

Effective communication and visual management Develops teams Develops alternatives solutions

Reliance on tools and IT systems

Use of proven technology

Source: Darren Walsh, Parker Hannifin, 2010

Firstly, let’s review a misunderstanding about what lean really is, which I believe is also a factor in why most organisational change programmes have underperformed in the past and are not sustainable. What really is “lean”? By now many people have learnt that it is not about the tools, or the five lean principles. Lean is a change in thinking about how we enable the organisation in adding value to the customer and to remove the barriers to flow when it breaks down; it’s about developing our people, processes and systems to continuously challenge the way the organisation works as a whole. Yes we will always need the tools, but we will only apply them based on the problems that we need to resolve and yes the five lean principles are still relevant but this needs the organisation to also change its structure, values and behaviour to be successful. Traditional project management includes: scoping out and Initiation of projects, planning, project execution, monitoring and budgeting. But how is lean project management fundamentally different? The four fundamental reasons why there is no place for traditional project management thinking in mature lean environments are:

2

1. The Shortfall of Targets

any cost. Plus if the tasks are challenging and have been incentivised, the problem will be multiplied as people become even more focussed on delivery of the target and can lose sight of what else in the environment is going on. What then happens is the team often achieves the target through either sheer hard work, sometimes by being inventive and sometimes through cutting corners thus making additional mistakes such as skipping a key step (for example a customer return from a missed inspection

Deming himself warned us of the shortfalls of targets in his System of Profound Knowledge, when he said: Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

1

a. Eliminate work standards (quotas) on the factory floor. Substitute leadership. b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership. When project managers follow up on whether specific activities are in line with their planned dates for gate checks or completion, they drive the very behavior that Deming warned us of (command and control thinking). The reason for this is that when an individual or a group or team of employees are measured on targets – whether it’s output or timeline – they start to focus on the delivery of that target at

When project managers follow up on whether specific activities are in line with their planned dates for gate checks or completion, they drive the very behavior that Deming warned us of (command and control thinking)

41


His name is John-Paul, but if you shout Brammer, he’ll come flying. Brammer people always aim higher. Because successful partnerships demand far more from an MRO distributor than prompt and competitive product supply.

That’s why John-Paul and his Brammer colleagues eagerly share their MRO expertise to improve your production output and efficiency. To understand exactly how Brammer can add value to your business at every turn, call 0870 240 2100 now or visit www.brammer.co.uk

John-Paul Smith Internal Sales

It’s the people that make Brammer work for you


Leadership and lean

in manufacturing, administrating the wrong drugs in the health service or bridge collapsing after it has just been built at the 2010 Commonwealth Games. Whatever the real reason for these mistakes traditional project management and its heavy focus on delivery of tasks to a set timeline, will and does lead to mistakes.

2. Human Factors and Motivation Probably the most important point within organisational change is that the people who do the work must feel that you have their interest at heart before they even consider the logic of the change. Douglas McGregor discovered theory X and theory Y back in the 1960s, where theory X managers fundamentally believe that people will do a bad job, shirk their responsibilities and need micro-managing whereas, theory Y fundamentally believe that people do not come to work to do a bad job and make mistakes. Theory Y is often good people working in a poor process or system. So support your employees in changing the system. Motivation theorist Dan Pink also adds that social sciences have proved that the carrot and stick does not work and that for motivating tasks that are inherently difficult and challenging we must use a different means of stimulus. Therefore let’s provide our project teams with autonomy of task, making them responsible for specific areas of the plan linking the task to the overall purpose, such as building a care home for the elderly, and measure them on mastering specific elements of the role, such as mentoring employees in problem solving or risk management etc.

3. Problem Solving and organisational learning First start with what is a problem; this requires a little thought but really is something that deviates from standard, once we understand this. Teach employees at all levels to: Set a standard Highlight variation to that standard Problem Solve Improve Lean environments will also use voice of the customer to capture what the customer really needs and use A3 thinking to peel back the layers of the onion, develop their staff to look deeper into what the problems are and seek to develop a deeper understanding of how processes actually work. This level of understanding is key otherwise the pressures of deadline can take over adding additional risk to the project. Project delays must never stop the best option for the project from being considered or problems being raised and resolved. Project plans suggest that tasks are all frozen in a ‘this is what we need to do and within this timeline’ approach but the reality is that as soon as a task has been implemented the system

has changed and the plan will need constant refinement. Lean project management uses the logic of the A3’s for this discovery constantly asking, what needs to happen, how should it happen, what alternatives have you considered and why have you ruled them out.

4. Visual management and communication Using visual management in the style of a war or project room the majority of report writing and email updates can be replaced by ensuring that all relevant documents, plans and data are then posted on the walls making all information easy

Motivation theorist Dan Pink also adds that social sciences have proved that the carrot and stick does not work and that for motivating tasks that are inherently difficult and challenging we must use a different means of stimulus for the team to see. Manual updates are also important to ensure immediate feedback and ownership but it is vital that this involves getting the project management team out from behind their desk, cutting down non-value adding reporting time whilst improving their engagement with the process and the team who own it. For gate reviews, set a standard for exit criteria that you must meet to move to the next stage, combine this with a presentation in the project room and you will get an instant response. How do you eat an elephant? One bite at a time – while following up on the progress of the project plan, breakdown the tasks into small doable chunks (selecting only the next four to five actions to be discussed at each meeting again this keeps focus on the priorities. The top level process can also be broken down into individual steps and sometimes these steps are challenged using value stream mapping, for example using value stream mapping of the development stage of the new product introduction process because of the lead-time problem, or installation of new equipment mapping the commissioning stage, here the team can establish the current state for the process and develop and future state. In summary, the skills and disciplines of project management are still extremely relevant even in a mature lean organisation. Project managers must, however, take on the role of the change agent and leaders of people. They must believe in their people, be there to develop them and adopt a learning mentality to improve how things are done each and every day.

Have your say at www.themanufacturer.com

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The world’s leading Microsoft Dynamics ERP provider for Manufacturers “Columbus IT is the leading Dynamics reseller in manufacturing with strong expertise in both process and discrete manufacturing.” Thomas Parbst Worldwide Industry Principal for Manufacturing Microsoft Dynamics

“The level of work that we do now is in the order of three times more product going through the factory, which has been absorbed by a similar number of people.”

www.columbusit.co.uk 0800 0433 054

Balfour Beatty Railtrack Systems Ltd. © Copyright Columbus IT. All rights reserved.


Sustainable manufacturing

It’s a gas,

gas, gas

An anaerobic digestion plant

Last June, a MORI poll revealed that 68% of respondents favoured spending public money on British projects designed to tackle climate change. The government has said it will generate 20% of all our energy needs from renewable sources. Lorenzo Spoerry looks at the manufacturers doing their bit for the environment through the use of biogas.

Anaerobic

digestion has been attracting a great deal of attention. Last year, the government made development of the technology a central plank of its waste reduction strategy, although few large-scale plants have been built as of yet. One of the problems is the size of the anaerobic digestion plant: a moderate-sized plant can take up around half an acre of space. Another is cultural; many manufacturers are reluctant to take on waste from larger producers. The production methods are simple, safe and well-understood. Methane extracted through the biological breakdown of organic matter can be concentrated to the same standards as fossil natural

45


Sustainable manufacturing

gas. Produced through a process called anaerobic digestion, it uses biodegradable materials such as manure, sewage, municipal waste, green waste, plant materials and crops. Compressed, methane can be used in vehicle transportation. This form of fuel is already widely used in Germany, Sweden and Switzerland for both vehicle transportation as well as in manufacturing sites. Coca-Cola Enterprises (CCE) are trialling, among some smaller vehicles, a 21-ton Iveco truck powered by biomethane extracted from a landfill site in Surrey. The site collects gas from decomposing organic waste before it is upgraded to biomethane. The biomethane arrives at the Coca-Cola depot as a liquid, which is stored on site and put into the vehicle as a compressed gas. Darren O’Donnell, CCE’s logistics asset manager explained why the company is looking at alternative vehicle technologies to reduce its carbon footprint. “If we want to meet our targets [CCE aims to reduce its CO2 emissions by 15% by 2020 against a 2007 baseline] it’s clear we should be looking at alternative vehicle and fuel technology,” says O’Donnell. “Biomethane is an attractive technology because of the significant cost savings available.”

and the University of East Anglia, sought to reduce the carbon footprint of its East Green beer brand by 25%. Their new distribution centre, incorporating solar heating, has allowed the brewer to reduce its electricity bills by almost £50,000 per annum. Now, it’s finished building a new anaerobic digestion plant, the first in the UK to use the waste product of the brewing process and local food waste to produce renewable gas. The company hopes to use the 4.8m kilowatt-hour per year the plant is expected to produce to power the Adnams brewery and run its fleet of lorries, while leaving almost 60% to sell back to the National Grid.

The methane game

The Adnams Bio Energy plant contains three ‘digesters’: sealed vessels in which bacteria break down 12,500 tonnes of organic waste every year, producing biomethane for use in the brewery or in vehicles, as well as liquid organic fertiliser. The plant was built partly using funds from the European Regional Development Fund, the East of England Development Agency and the Department of Energy and Climate Change. Andy Wood, chief executive of Adnams, says that for a number of years, the company had been investing in ways to reduce its impact on the environment. “The industrial ecological cycle is completed when the fertiliser produced from the anaerobic digestion system can be used on farmland to grow barley for our beer. This will have a major impact on reducing carbon emissions in the region and the production of renewable energy. The food waste would otherwise be destined for landfill, but processing it through the digester will save about 50,000 tonnes of CO2 equivalent from landfill.” Premier Foods announced earlier this year it was spending £5m to build a closed-loop commercial scale anaerobic digestion plant at its FR Brookes ready meals factory in Wales. The plant is expected to generate 300 kilowatts of energy when it becomes operational early next year, supplying around 6% of the factory’s energy consumption. Although technically feasible, biogas energy may have to make a stronger economic case for itself if it is to be more widely adopted. However, as consumers and the government become increasingly concerned with instituting policies to meet the UK’s targets for emission reduction, biogas could emerge as one of many possible routes to a greener future.

GENeco, a company that provides a recycling service for the production of renewable energy, is hoping that methane from sewage sludge could provide an environmentally friendly alternative for manufacturers to power their company vehicles. Its Bio-Bug car runs on methane made from anaerobic digestion, and collected from waste flushed down the toilets of the city of Avonmouth. The company is hoping that its Bio-Bug could appeal to CEOs looking for a way for their company to leave a smaller carbon footprint. In addition, the GENeco site in Avonmouth has already been producing biogas for a number of years for export to local businesses and the national grid. It uses state-of-the-art treatment facilities to accept a wide variety of commercial and food waste. A company spokesperson says, “Already successful in other parts of the world like Germany and Denmark, an increasing number of companies are favouring anaerobic digestion to recycle their waste as it reduces greenhouse gases and carbon emissions. Our principal site in Avonmouth, near Bristol, has easy access to the M5 and M4, allowing companies in the south west and much further afield to benefit from using our treatment services.” The company works with SMEs and multinational companies across the UK. GENeco has very deliberately targeted SMEs and larger businesses as customers, trying to provide a highly efficient, cost effective service. It is trying to reduce the costs associated with transportation by opening small, regional works. Adnams is a manufacturer with a tradition of environmental friendliness. Based in Southwold, the company has, in partnership with the Carbon Trust

The food waste would otherwise be destined for landfill, but processing it through the digester will save about 50,000 tonnes of CO2 equivalent from landfill Andy Wood, Adnams

Emission commission

Have your say at www.themanufacturer.com

47


Energising efficiency The CRC scheme means push is finally coming to shove in terms of energy reduction. Anthony Mayall of ENER-G tells TM how companies can lower the price they pay for electricity, improve their efficiency and get free heating with a bit of kit that they don’t even have to pay for.

In

last month’s Comprehensive Spending Review, George Osborne revealed that there will no longer be bonus payments made to the best performers in the CRC Energy Efficiency Scheme. Instead, government will keep the money and swell its coffers by up to £1bn per year by the end of the four year spending review period. This means the only way manufacturers can profit from the CRC scheme is through the cost reductions associated with using less energy. Naturally now, if it wasn’t the case before, they will be looking to maximize these reductions as far as possible above and beyond the levels the CRC imposes. To do this, Anthony Mayall, sales director at ENER-G, says companies must now embed energy reduction into the very framework of their cultures and top level buy in is a must. “I always liken it to health and safety,” says Mayall. “We’re on a similar journey. Health and safety is much more mature and it’s become part of the fabric of a business. Energy efficiency is at an earlier stage of the journey and we’re only now seeing some high level sponsors on the board. It’s CRC that’s helped that.” Mayall says companies should first explore ‘no cost/low cost’ options in order to pick off low

48

hanging fruit. The main tool here is communication. As well as appointing champions at every level, including the board, everyone within the company should be aware of the potential for energy reduction and buy in to its importance. And the key is keeping that drive going beyond the first phase. “Like many improvement programmes, companies find it difficult to maintain progress,” says Mayall. “You might have a flutter of activity but it isn’t necessarily continuous. Like, health and safety, this is a real long term, slow burn cultural thing, it needs to be sustained and reinforced. A great approach is to offer shared savings. An employee puts an idea forward and they get a chunk of the savings.” To truly engage with your energy requirements, though, you need to know what you are using. “Here, a consultancy can help by supporting you in mapping where all of the energy is being used and come up with ideas based on technologies, behavioural changes or process changes and prioritise those based on what the scope for energy savings are,” says Mayall. “Most of the time companies don’t have the resource to do it alone. They are all very busy doing their day jobs,


Electical Output kW

Typical Simple Payback

Typical Savings Capital Purchase

Typical Savings Non Capital Outlay

Carbon Savings (tonnes p.a)

ENER-G 230kWe

3.1

£89,548

£40,528

625

ENER-G 500kWe

4.1

£154,036

£64,432

1076

ENER-G 2MWe

2.4

£405,229

£274,758

2529

ENER-G

Typical Savings ENER-G CHP units

focusing on making widgets, availability and the trees. The installation was part of a holistic energy efficiency of the process itself. A consultancy reduction package, designed before the contract can give them the resource to look at energy was signed, which was based on analysis by more strategically.” ENER-G on activity on site, shifts in energy demand The next progression takes the form of a building patterns and future trends. energy management system (BEMS). This provides Peter Sanders, operations director for Tangerine, automatic control of the building environment and explains: “We are continually seeking ways to raise remote monitoring and reporting to ensure efficient our environmental performance and this move to operation. Targets can be set, per area of plant, on site generation of power is a key element of our and exceptions actively managed through carbon cutting strategy. We are very pleased to a BEMS. be partnering with ENER-G Perhaps the magnum which is able to provide opus, though, is ENERus with a total service, G’s Cogeneration from initial design to long Perhaps the magnum opus, system (CHP) which term care of the systems. though, is ENER-G’s Cogeneration delivers onsite power, This has required no heating and cooling. capital investment by system (CHP) which delivers onsite This consists of a gas the company as the power, heating and cooling. or biofuel engine based technology is being power generation system supplied by ENER-G in This consists of an engine based that can be installed return for us purchasing power generation system that can on site for free. The the generated electricity be installed on site for free. Under system usually operates at a very favourable rate.” to serve the building’s The savings a capital purchase payback is base power and thermal ENER-G advertises are typically 2-4 years demands and reducing conservative too, says energy, carbon and Mayall, “If you bear in costs. The CHP process is mind that energy prices are efficient due to recovering heat that would normally only going to go one way.” be wasted in a power station and removes losses “Costs associated with nuclear associated with transmission of electricity. decommissioning, rebuild, grid upgrades, and Where firms don’t wish to invest capital in a incentives related to wind and solar are bound project, ENER-G can fund the solution, typically over to find their way back to the electricity tariff. That 10 years. Under an “off balance sheet” scenario the means the savings we illustrate today on a solution, site purchase the electricity from ENER-G at a rate those savings are going to increase over the length less than the grid hence make savings and get the of a ten year contract.” heat for free. Under a capital purchase payback is Firms can no longer line their pockets directly from typically two to four years. Under either scheme, long the CRC. But they might be able to with CHP. term maintenance is provided to ensure customers get maximum benefit from CHP. Confectionary manufacturer Tangerine is one of around 1,400 organisations in the UK that are already reaping the rewards. With the installation of two CHP units at its Pontefract production site in West Yorkshire, one with the added functionality of water cooling, Tangerine will achieve cost savings of almost £200,000 per year and save 630 tonnes of carbon, the equivalent environmental benefit 63,000

For more information please visit: www.energ.co.uk

49


Manufacturing matters Jane Gray speaks to three Manufacturer Directors’ Conference 2010 speakers to gauge how their contributions to this year’s event are relevant to the wider manufacturing community and the future of the industry as a whole.

The

range and complexity of challenges facing UK manufacturing today is on the rise. IDC Manufacturing Insights recently showed that increasing complexity was a concern for ‘C level’ manufacturers in almost 60% of companies in Western Europe. Furthermore the research report exposes that worries over complexity and how to exploit it are just as great for small and medium sized enterprises as they are for large organisations. From three quite separate perspectives, three of MDC 2010’s speakers explain why they hope their participation at the event will shed light and provoke action on the challenges facing manufacturers.

Clifford Burroughs – Group CIO United Biscuits Looking into the characteristics manufacturing organisations will need to develop internally in order to thrive in the modern market place, Clifford Burroughs details the value of interdisciplinary lean architectures and the imperative of connecting front end product propositions to back end supply chain processes. “The key piece in United Biscuits’ (UB) progression over the last couple of years has been in understanding that lean thinking works outside production and supply chain and we have worked to create structure that allow that to happen cross-functionally, not just between the two doors of the factory. Success with this interdisciplinary approach has been a key win for us and has been achievable because of top down support from executive level. The strength of lean communications has

50

Design, conversion and distribution need to understand the two important parts of our product proposition, including the consumer and customer proposition, so that we can engage in what we have termed ‘proposition engineering’ undoubtedly contributed to the double digit growth the company has experienced since our Living Lean approach was initiated. “The next progression in our cross functional approach is to get the front end process to understand the back end process. Design, conversion and distribution need to understand the two important parts of our product proposition, including the consumer and customer proposition, so that we can engage in what we have termed ‘proposition engineering’. Beyond having a good product we need

to understand what drives added value throughout our supply chain.” Burroughs acknowledges that UB’s lean approach is very much driven by the highly competitive nature of the FMCG industry in which customers are fickle, have massive choice and are reactive to changes in brand equity. However, the pride in product and corporate responsibility that this drives in terms of community engagement is something that could be adopted by manufacturing as a whole to great benefit as Andrew Churchill explores.


Specialfeature MDC 2010

Andrew Churchill – Managing Director, JJ Churchill Andrew Churchill, MD of engineering manufacturer JJ Churchill (2010 Rolls Royce Aerospace Supplier of the Year), is a passionate advocate of UK manufacturing and an informed voice on the challenge of growing the UKs capability in high added value, high tech manufacturing. This challenge holds its own inherent complexities as new markets must be grown around emerging technologies and skills developed to support them. For Churchill however it is difficult to see headway on these challenges without first addressing the relationship of manufacturing with broader society: “It is incredibly important for manufacturers to realise that we do not exist in a microcosm. If we maintain the bubble that we currently function in, then the rest of society will not understand what makes us tick. That includes ministers and civil servants. We cannot

complain that policy does not support and enable us if we do not open our doors.” Churchill continues: “We have not passed the tipping point. There is always time for the UK to defend its position as a manufacturing environment where the cost of labour is not a key driver. However, the longer we leave it, the harder it will get. China is turning out 650,000 engineering graduates a year. It is critical we act now to attract the talent we need. For that to happen people need to see what happens on the ground and the variety of opportunities there are to pursue in UK manufacturing companies; for engineering graduates but also critically for craft and technician skills at apprenticeship level. These skills will have resurgent importance and value.

Chris Daffy – Founder of The Academy of Service Excellence One of the strongest and most irrefutable trends to have impacted the strategic priorities of companies across sectors is empowerment of customers and the focus on service as a competitive differentiator. The same IDC Research which showed complexity to be a growing concern for manufacturers also reflects that the top strategic priority is retaining and growing customers. Chris Daffy is a serial entrepreneur with his roots in engineering and he has observed with mounting frustration a constitutional reluctance among manufacturers to embrace customer service as an important part of their day to day responsibilities. “The manufacturers I have worked with are highly capable of designing products and processes which are perfect and which work right first time but they seem to have difficulty doing the same with service. Having spent some time researching this I can see that part of this is due to the fact that,

quite naturally, the approach manufacturers take to designing service is the same as that they take to designing a product or process. This will only go part way. Using techniques designed to remove waste from a process (Six Sigma, lean and so on) will not create excellent service and the reason is this. The opposite of bad is not good. It is not bad. This is merely neutral service; a beginning but not the goal. “Manufacturers and engineers tend to be very analytical in their approach to improvement. This is a natural outcome of their training, their skills and the environment they work in. They are therefore broadly uncomfortable with beginning a conversation that starts with ‘how do we make customers feel good’ – it is not something they see as being within the remit of their job role. “The final part of manufacturing’s difficulty with service lies around the following myth. While

maintaining a belief that it is possible to improve a process and simultaneously reduce costs, manufacturers have a misconception that service improvement costs money. This is not so. It is quite possible to improve customer experience and expectation from bid to delivery without increasing the cost of delivering that service.” In order to fully understand the importance and potential of service and how to innovate around it in the best way for an organisation Daffy says manufacturing leaders will have to take the time to look at their roles from a new perspective. “Getting away from day-today pressures and breaking our usual thinking patterns is essential. I am very hopeful that the conference will prompt manufacturing leaders to examine the possible new facets, from many different perspectives, that could add value to their businesses and strengthen them.”

51


Top 10 products

1

Government’s commonly touted statistic that the UK is the world’s sixth largest manufacturer clearly flies in the face of any suggestion that UK manufacturing is obsolete. While this is an interesting statistic, part of negative public opinion of manufacturing stems from the commonly publicised growth in offshore production, particularly in Asia. This article lists some of the most influential products which have been designed in the UK. To illustrate that important products are still not only designed in the UK but also engineered here, only one out the following top 10 products do not have a related manufacturing site in the UK. Can you guess which one? The answer is at the bottom of the article.

It is no secret that the public perception of manufacturing in this country is that it has been in a perpetual state of decline since the early 1970’s. While the demise of Leyland was representative of a significant decline in UK operations, the UK manufacturing sector remains strong.

DB9 by Aston Martin

Launched at the Frankfurt Motor Show on 9 September 2003, the Aston Martin DB9 became the first car to be produced at the company’s modern facility in Gaydon, Warwickshire. The innovative DB9 began a new era for Aston Martin as it took on a fresh direction with new models. Using a radical new aluminium bonded frame, the DB9 remains one of the most sophisticated and technically advanced sports cars in the

2

world. It successfully balances the attributes of a sports car with features normally found in luxury cars. The Aston Martin DB9 is a modern interpretation of a traditional Aston Martin sports car, representing a contemporary version of classic DB design elements and characteristics. In true Aston Martin tradition, the DB9 reflects the company’s reputation for superb styling and continues a long history of beautiful sports cars.

System on chips integrated circuits by ARM

ARM licenses its technology to a global network of partners, such as Research in Motion, makers of the Blackberry (pictured), Samsung, Nokia and Apple, to create smart, low energy chips notable for the fact that their low power usage does not compromise performance. By designing once and licensing many times, ARM spreads the R&D costs across the industry,

52

d e n desihge UK in t

The

saving an estimated $20bn a year and helping make digital electronics cheaper. Over 95% of all the world’s mobile phones contain ARM technology. Furthermore, 70% of digital cameras, 60% of printers, 50% of hard disk drives and nearly all cars contain at least one ARM-based chip. This does not account for the other digital products, whether video game controllers, washing machines, TVs or heart rate monitors, that also contain ARM’s patented designs. Although ARM is headquartered in the UK, almost all its customers are based overseas, with over 95% of revenue attributed to international sales and billions of ARM-based chips worldwide. Since 2002, ARM has brought £1.7bn in revenues to the UK.


Innovation design and the product lifecycle

3

Tracked Excavators by JCB

5

Predator 130 by Sunseeker

6

Oyster by Aquamarine Power

JCB (formally J C Bamford Excavators) is a construction, demolition and agricultural equipment company headquartered in Rocester, United Kingdom. It is the world’s third-largest construction equipment manufacturer. There are 17 models in the JS Auto tracked range, with options of undercarriage and work equipment, so it comes as no surprise that JCB can supply excavators for virtually any task. The excavators offer consistent productivity, superb durability and excellent fuel efficiency. Whether it’s the heaviest digging work at the quarry face, or versatile performance on the construction site, JCB tracked excavators are designed to cost less while making more. Reliable, economical and durable, these machines also offer a high resale value... if you can bear to part with them.

The Predator 130 is the latest and largest in the Sunseeker Performance Motoryacht range, and has been designed with true blue-water cruising in mind, featuring the company’s well proven hardchine hull and trademark high deck design. The deep ‘V’ hull design offers exceptional handling and seakeeping qualities, making this model easy to handle in all sea conditions. The Predator 130 also has all the features expected on a luxury ocean-going vessel, such as the latest navigation and communication equipment. Built to the most

4

P&G Gillette is a part of the shaving and razor manufacturing giant. The Reading business unit is an R&D laboratory responsible for the front end innovation for new razor products that are used across the world. For the past 50 years, the Reading Innovation Centre has created, prototyped and tested every new Gillette razor product that the company has launched such as the Mach 3 and Fusion blades. Gillette Fusion Gamer has five blades on the front, and a single sixth blade on the rear for precision trimming. The Gillette Fusion Gamer Power is a motorized version of the Fusion which emits micropulses that help to reduce friction.

stringent criteria, computerised engine management coupled with touch screen monitoring provides crew with information that is literally at their fingertips, which not only improves efficiency and safety but helps prevent malfunction. Advanced use of hydraulics, computercontrolled generators and electrical systems add to the Predator 130’s reliability. The sleek design houses a two and a half deck layout along with an exceptionally large flybridge that provides plenty of seating

Aquamarine Power is a wave energy company, with head offices in Edinburgh, Scotland, and further operations in Orkney and Northern Ireland. The company is currently developing its flagship technology, an innovative hydroelectric wave energy converter, known as Oyster. Aquamarine Power’s goal is to develop commercial Oyster wave farms around the world. Oyster wave power technology has been designed to capture energy found in nearshore waves and convert it into clean sustainable electricity. The Oyster wave power device is a buoyant, hinged flap which is attached to the seabed at around ten metres depth, around half a kilometre from shore. This hinged flap, which is almost entirely underwater, sways

Gillette Fusion Gamer by P&G Gillette

and sunbathing space along with a full bar layout and spa tub. The hardtop with opening sunroof provides shelter over the flybridge helm and seating/dining areas.

backwards and forwards in the nearshore waves. The movement of the flap drives two hydraulic pistons which push high pressure water onshore to drive a conventional hydro-electric turbine. In essence, the Oyster wave power device is simply a large pump which provides the power source for a conventional onshore hydro-electric power plant. In 2013 Aquamarine Power in association with SSE Renewables will use the Oyster to implement a 200MW wave farm at Brough Head, Scotland.

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Bring together systems, information, and people. Distance yourself from your competition.

Secure, global IT and Communications solutions for better outcomes. People and machines create, collect, and disseminate petabytes of information every hour. But perhaps more staggering than this volume is what it can make possible—especially with Verizon as a partner. We’re discovering game-changing patterns in data, creating more meaningful collaboration, and erasing barriers between information and people. As a result, we help our clients turn their ideas into better outcomes—from new energy resources to personalized entertainment, from financial efficiency to healthcare efficacy. No wonder so many of the world’s largest global companies partner with Verizon. Discover more at verizonbusiness.com/better. ©2010 Verizon. All Rights Reserved.

altogetherbetter


Innovation design and the product lifecycle

7

Axial Flow Turbine by Bladon Jets

Bladon Jets has developed the smallest axial flow turbine in the world – just four inches in diameter and 4lbs in weight. Its patented breakthrough technology enables the production of highly-efficient, small gas turbine engines that are ideally suited for use in hybrid electric vehicles, providing a lightweight and multi-fuel alternative to the engines used in the majority of cars today. The turbine is only made possible at such a small scale due to the patented process of cutting the multi-stage compressor blade disk – aptly named the ‘blisk’.

8

It is hoped that this technology will help to overcome range anxiety associated with electric cars. The skilled engineers at Bladon Jets have worked closely with Jaguar in developing the C-X75 concept car that is being unveiled at the Paris Motor Show this year. At the heart of the C-X75 two-seater supercar are two mid-mounted micro gas turbines that can either charge the car’s batteries, allowing it to travel 560 miles (enough to drive from London to Berlin on a single tank) between fill-ups, or automatically provide supplementary power

RealitySeven simulator by Thales

Thales has been designing and manufacturing flight simulators in the UK for the last sixty years. In 2009, the company launched its latest model, the RealitySeven. Although the launch was in the middle of a major downturn for the aviation industry, the simulator has been a success. The RealitySeven simulator will be used for all civil aircraft types produced by Thales UK. Customers for the new simulator already include Airbus, Sukhoi, Turkish Airlines, the Tunisian Aircrew Training Centre (ATCT); the Russian carrier S7. The RealitySeven simulator includes many innovations including a new motion system that uses 80% less energy than previous motion systems. The system also uses 10% less hydraulic oil than the previous system, and this is biodegradable synthetic oil rather than the mineral oil used in the previous models. The simulator is modular which means that a customer could have two different aircraft cockpit modules that could be swapped, allowing training on two different aircraft types on the same simulator.

10

9

directly to the electric motors allowing the car to reach a top speed of 205 mph. Tata has agreed to become a minority shareholder in Bladon Jets.

Medium Girder Bridge by WFEL

Based in Stockport, Greater Manchester for 75 years, WFEL is a global manufacturer of tactical military bridges use by armed forces in combat or civilian disaster relief operations. First built in 1971, its Medium Girder Bridge (MGB) became a world famous design that would sell more than 500 units worldwide and be used by almost 40 different armed forces across the world. WFEL still manufacturers MGBs to this day at its site in Stockport, with nations including the UK and Turkey being among the most recent customers. MGB’s can be built to span gaps of anywhere between 10 and 50 metres or more by a small trained team in under ten minutes. A world record time of 7 minutes and 12 seconds set in Germany by the Army’s Royal Engineers in 1992.

Burgopak Packaging by Burgopak

The Burgopak design was thought up by 34-yearold designer and entrepreneur, Burgo Wharton 12 years ago. Its innovative patented sliding mechanism has since been used to package CDs, DVDs, gift cards, SIM cards, confectionary and mobile phones all over the world. Burgopak employs 60 people in four offices on three continents and has supplied over 90 million unique, desirable and innovative boxes using his patented sliding mechanism. In more recent years, the Burgopak design has moved into the

pharmaceutical industry and is now being used by leading pharmaceutical companies, Bayer and Sanofi-Aventis. The innovative pharmaceutical packs incorporate Burgopak’s patented sliding mechanism, keeping the patient information booklet, blisters and outer carton conveniently connected at all times.

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MSc Sustainable Manufacturing Developing future manufacturing leaders Developed with leading manufacturing organisations, this innovative course will enable you to become a future business leader, able to apply state-of-the-art manufacturing theory and expertise to sustainable manufacturing projects and initiatives. There is growing evidence that the manufacturing sector is responding to the challenge of sustainability. Increasingly Cranfield’s manufacturing research projects are focused on the promotion of renewable material use, remanufacturing, lower energy use and the minimisation of waste. With an acknowledged skills shortage in this area, graduates from the MSc in Sustainable Manufacturing are highly sought after by industry worldwide. For further details, and an application form, please contact:

T: +44 (0) 1234 754086 E: appliedsciences@cranfield.ac.uk W: www.cranfield.ac.uk/sas/msustm

|

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|

Register for our next open day: www.cranfield.ac.uk/openday


EEFinsight

Safety does it

When power and automation specialist, ABB, sought to standardise its global health and safety professional development training, an interactive, bespoke diploma was required. Enter EEF and Oxford Brookes University…

Sustained

engagement between academia and industry has long been touted as manufacturing’s Mount Olympus. But while many appear content to admire the view from base camp, one EEF member — ABB, the multinational supplier of power and automation services, with turnover exceeding £31bn in 2009 — packed its rucksack and began the slow, steady ascent to increased international efficiency. Robin Bloodworth, programme manager at EEF’s Leamington Spa training centre, takes up the story. “In 2007, Mark Slater, ABB’s group head of health and safety, came to us with a challenge: given that his company operates in over one hundred territories, it wanted to create a professional development program that focused on international best practice and standards. Could ABB work with the EEF to develop an international graduate diploma for its health and safety advisors? Since 2000 EEF, in conjunction with Oxford Brookes University have successfully led a range of health and safety programmes including IOSH, NEBOSH and IEMA, among others. In light of its previous achievements, Slater’s request was decided to be a mountain worth scaling; the Diploma in Health and Safety Management (international option) was born. Divided into four modules — (i) legal (ii) health and safety technology (iii) occupational health and safety, and (iv) integrated health and safety management — and based on internationallyrecognised ILO, ISO and IEC standards, the course welcomes students from Brazil, Columbia, China, the States, Middle East and EU nations alike. In line with ABB’s organisational language, all modules and assessments are conducted in English. “This is a benefit that is perhaps overlooked initially; because attendees are with us for an intensive five weeks, often speaking a language that is not their first, everybody’s English improves — even mine,” laughs Bloodworth.

Going global Given the international flavour of the course, each module is undertaken on a different continent:

the UK, Barcelona, Dubai and Beijing for ABB’s inaugural group. Together with classroombased learning, moreover, students visit ABB sites in the aforementioned territories, enabling critical evaluation of ‘real-time’ health and safety management within a global context. Debates concerning both good practice and any areas for improvement often follow long into the night. “A diploma, by definition, involves not only the practical side of things, but a great deal of discussion between attendees and course leaders. To ensure that ABB’s employees are being taught by those who have walked the walk,

Because the course is attended by practitioners from every corner of the globe, both exams and practical challenges are structured around things we know you’ll come across in your dayto-day work Robin Bloodworth, programme manager, EEF

our policy is to only use tutors with engineeringbased backgrounds,” explains Bloodworth, a dairy industry alumnus who joined EEF in 1993. “For that reason, and because the course is attended by practitioners from every corner of the globe, both exams and practical challenges are structured around things we know you’ll come across in your day-to-day work.” The company’s first class graduated in 2009 — enjoying a pass rate of over 90% — and ABB’s next cohort of health and safety advisers are currently undertaking the course. The academic/industrial axis is proving invaluable for one international manufacturing powerhouse and, taken step by step, the mountain proved not to be overwhelming after all.

Have your say at www.themanufacturer.com

57


A structured Government approach to manufacturing? manufacturing sector in the

The spending review has been casting its gloomy shadow over most of the economy in recent months….

Greater investment in low carbon technologies

……and manufacturers have

manufacturers and longer term

The £1bn funding to establish

not been exempt from an

manufacturing strategies:

a Green Investment Bank and

understandable nervousness about the review and its direct and indirect impacts on the sector. However, manufacturers were also hopeful that the review would help to provide some valuable insights into how the Government intends to “rebalance the economy” towards manufacturing and perhaps give

Renewed commitment to science and innovation Greater investment in low carbon technologies Changed emphasis on building skills

additional significant funding to support carbon-capture projects, low carbon technologies and vehicles and support for households and businesses to invest in renewable heat measures

Renewed commitment to science and innovation The plan to safeguard the

should provide a significant boost for “cleantech” manufacturers. However, a number of economists

more clues as to the general

science budget, at £4.6bn per year,

consider that the promised £1bn for

direction of the manufacturing

is a boost for general innovation

the Green Investment Bank falls far

framework, expected to be

and R&D as well as to “hi-tech”

short of the £4bn to £6bn needed

released in November.

manufacturing companies. The

to effectively deliver green projects

£200m per year additional funding

and are calling for more clarification

The spending review

to support high growth businesses

as to how additional required

As expected the review was

and the commercialisation of new

funding is to be leveraged from the

severe and will have a direct

technologies, including the R&D

private sector.

impact on a few manufacturing

technology centres, should be a

sectors, with defence and its

tangible gain for R&D intensive

have been clearly flagged by the

supply chain being the most

SMEs.

Government as an area of potential

obvious example, and an indirect

58

years ahead.

Whilst more clarity is needed

Low carbon technologies

growth and market leadership for

impact as the spending cuts

to spell out all the implications

UK manufacturers. In theory it does

feed through changing public

and how the spending on

suit our skills in innovation and

sector contracts into the sector.

science will connect to

research and development – and

But generally it has to be said

business / manufacturing, these

the windy, sea surrounded island

that manufacturing seemed to

announcements must be regarded

on where we live should provide

come out ahead of the game

as good news for the sector.

a base for UK developments

overall. In the context of what

However, there was limited

at least. But it is important that

was a comprehensive and wide

mention of R&D support for the

UK manufacturers are given a

ranging review we noted three

medium to large manufacturer,

“fair opportunity” to take part in

themes of particular relevance to

arguably the key drivers of the

the supply chain for any large


the funding requirement for these

access. And in a global economy

that are awarded to overseas

major projects.

with huge emerging economic

manufacturers.

Changed emphasis on building skills

The manufacturing framework

/ manufacturing superpowers we need the UK to be seen as a “place to do business” to continue

It is now absolutely clear that

to encourage overseas investment

One of the problems faced by UK

public sector spending will provide

in our manufacturing companies

manufacturers is the lack of skilled

less support to the economy

and skills.

staff and engineers. Therefore

than in the past and that the

the announcement that the

private sector will need to take

we hope that the manufacturing

Government will increase funding

the lead on generating growth,

framework provides the strongest

for apprenticeships by £250m a

employment and infrastructure

foundations possible in not only

year (an increase of 50%) came

within the UK economy. We

making it clear that manufacturing

as good news to manufacturers.

believe that UK manufacturing is

is fundamental to the UK economy

Whilst the extra apprenticeships

up for this challenge but even in

now and in the future but also

will not be reserved only for

the changed philosophy of where

in providing a strong, sustainable

manufacturing, the scheme is

we are now the importance of the

and supportive platform for

designed to particularly benefit

Government in establishing a long

UK manufacturers.

areas where there is an adult skills

term stable framework to assist

gap, such as manufacturing.

and support manufacturers should

Tom Lawton,

not be forgotten.

Head of manufacturing at BDO

Whilst Train to Gain will be missed by a small number of

We believe that the Government

It is not an easy task – but

LLP,

manufacturers, the apprentice

should use the manufacturing

Accountants and Business

scheme should help to bring a

framework to articulate its

Advisers.

new generation of skilled staff to

ambitions for UK manufacturing

the manufacturing sector in an

over the next ten to twenty years

industry currently dominated by

and how it intends to develop a

an aging workforce. However, the

realistic and sustainable support

reforms to the support of higher

structure to help manufacturers

education must be viewed with

achieve these ambitions. In

some caution in an economy that

the medium to long term

will increasingly be knowledge

we should not forget that the

based in the future.

Government is hugely important

The CSR also noted that

Email: tom.lawton@bdo.co.uk

to manufacturers in many “macro

investment in infrastructure would

level” matters such as education

be a key aspect of Government

and skills, regulation, training and

policy. At the CBI annual

apprenticeships, taxation policy

conference a few days after the

and establishing / supporting

spending review announcements

large scale infrastructure and

the Prime Minister announced a

environmental projects. There

“National Infrastructure Plan” which

needs to be clarity or the

will invest £200bn of public and

development of clarity on these

private money over the next five

matters in the framework.

years in infrastructure projects.

BDO

scale UK based developments

In the short to medium term

This should be good news for

manufacturers need national

manufacturers but it is important to

and regional initiatives that work,

note that the private sector will be

are “joined up” and are easy

expected to find around £160bn of

and practical to understand and

For more information please visit: www.bdo.co.uk

59


Finance and professional services

Financenews... Enterprise Finance Guarantee extended, export credit to end The Enterprise finance Guarantee scheme ahs been extended by a further four years with another £2bn added into the pot. Aimed at SME firms with no credit history or collateral, the scheme sees government act as guarantor for loans of between £10,000 and £1m over a three month to ten year period. “Ensuring that viable businesses have access to suitable and diverse sources of finance is crucial for helping to get the economy growing again,” said Chancellor George Osborne. “The government is dedicated to creating the conditions for strong, sustainable growth, by ensuring the UK has competitive, dynamic and efficient markets that provide the right support to business. Meanwhile, the Export Credits Guarantee Department (EGCD) has announced that its fixed-rate export finance (FREF) scheme will close on March 31 next year. The scheme was first introduced in 2005 and was intended to run until 2008 but it was extended when firms began to struggle to achieve export funding because of the downturn. Its function was to allow banks to offer fixed rate finance for overseas buyers with the EGCD acting as guarantor. Government has now announced the scheme will end, following a public consultation. If all of the funds allocated for the scheme run out before the end of March, the scheme will be curtailed early.

Debut TM Finance Management award TM has introduced Financial Management as a new category for The Manufacturer of the Year Awards 2010. The shortlisted entries this year are: Steel component engineering firm DavyMarkham; Ferranti Technologies, the Oldhambased aerospace components manufacturer; and conservatory makers and winners of the 2009 Shingo Prize, Ultraframe. All three companies have been through transformational change in recent years and have been recognised within their industries for either strong recovery from a weak position or target-beating sales performance. The winner has been decided and will be announced at the 2010 Awards gala ceremony at the Chesworth Grange in Kenilworth on November 18.

Lloyds TSB sticks to lending targets

Investment in tooling on the up

Lloyds TSB, which is 41 per cent owned by the taxpayer following 2009’s recessionary bailouts, has announced that it is on track with its government imposed business lending targets having provided £35bn worth of corporate funding so far this year.

The past six months have seen investment stabilise or increase in manufacturing technologies, according to the Manufacturing Technologies Association.

In its third quarter report the bank said it expected “a good financial performance” this year, having earlier announced half yearly pre tax profits of £3.95bn – up 44% on the same period in 2009. The Coalition has set Lloyds and its partnationalised bed fellow Royal Bank of Scotland a combined target of £94bn net lending to businesses for the year. RBS is expected to announce that it too is on track to meet its targets when it announces its results on November 5.

Looking forward over the next six months, 35% of respondents indicated investment would be higher or much higher in comparison to the previous six months, and only 5% said investment would be lower or much lower – hinting at a positive start for 2011. The September survey also showed a high level of inquiries, following a seasonal dip over July and August. Although invoiced sales were unchanged compared to the August results, the majority of respondents reported a month-onmonth increase in orders in September.

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A fair day’s work

for a fair day’s pay More than simply collecting data and tracking people, modern time and attendance and shift monitoring systems are about making your workforce more productive and seeing that your customers are well-served says Chris Buckley, service director, Workforce Management at RedPrairie.

The

subject of payroll is an emotive one. From the employees’ point of view, a fair day’s pay should automatically follow from a fair day’s work, taking into account any shift allowance or overtime. On the other hand, from the employer’s point of view, a fair day’s pay should guarantee a fair day’s work. Payment of staff is a critical business process. Getting it wrong leads to grievances, wasted administrative time and increased operating costs. Getting it right starts with an effective time and attendance (T&A) system.

All present and correct Whilst gradually being replaced by more sophisticated systems, traditional card-based ‘clocking in’ systems are still in use in many manufacturing organisations, especially in the heavy industries. Although cheap and reliable, such systems carry a high risk of abuse from opportunistic employees who may habitually clock in early and clock out late or even take turns with colleagues to clock in and out on each other’s behalf – a practice known as ‘buddy punching’. Increasingly therefore, companies are investing in T&A software in order, not only to monitor, record and manage workforce attendance but also manage employee absence, operate flexible working schemes, store employee records and automatically transfer attendance data to their chosen payroll software. The simplest systems use swipe cards to electronically capture T&A data. Whilst automating the process, like with punch cards, there is nothing to prevent an employee from swiping another employee’s card. As a result, many T&A systems now use biometric technology which ‘recognises’ individual employees by something which is unique to them – commonly a fingerprint. In most cases, time and attendance systems also interface directly with payroll systems, automating the mundane payroll processing and eliminating errors. Of course, knowing who is on site and when is one thing. Making sure that you have

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the optimum number of people with the right skills and qualifications is another.

Right people, right place, right time Poor shift scheduling on the shop floor can lead to under or overstaffing, resulting in increased costs or missed targets. Production managers can spend countless hours on scheduling, trying to get their shifts just right. Overstaffing wastes payroll pounds while understaffing results in late deliveries and lost sales. In particular, manufacturing shift scheduling presents many challenges. Many production facilities operate around the clock with a wide range of job positions to schedule and multiple shifts to cover. Within each shift, employees must also be assigned to various tasks or work orders. Union and legislative regulations may place restrictions on work hours, overtime compensation, and the types of shift rotation that can be implemented. The schedulers must also consider time-off requests, labour rules, skill sets and personnel availability. Automated forecasting and scheduling systems allow manufacturers to balance workload in order to match demand while reducing the need for overtime or temporary workers. Optimised scheduling begins with an accurate forecast, ideally based on actual customer demand. Using labour standards the system then calculates the workforce required by category for a given time frame, e.g., peak hours, a shift, a day or a week. This allows demand to be accurately evaluated against employee skill sets, availability and preferences, as well as legislative and union restrictions and company policies to arrive at an optimal schedule down to 15 minute increments.

Watch and learn But, although critical, neither T&A nor labour scheduling systems guarantee the employer ‘a fair day’s work’. In order to achieve this, manufacturers must monitor and manage what their employees do during their shift. This is where workforce management systems come into their own, combining time and attendance monitoring and optimised labour scheduling with performance management functionality to monitor employees’ productivity throughout the day. The ‘Hawthorne Effect’ states when an activity is observed or measured, the performance of that activity is positively influenced merely by the fact of being monitored. However, the greatest value of workforce management systems comes from improving the methods used to complete each task


People and skills

to be as efficient, accurate and safe as possible. This is a step-by-step process involving detailed job analysis, creation of preferred methods for each task, defining the associated performance standards and training of both workers and supervisors on these methods and standards.

All change However, whilst proven to improve productivity by up to 35%, many organisations shy away from such systems for fear of being seen as a ‘big brother’ figure. However, in RedPrairie’s experience, such fears are usually unfounded. Unions and staff are fully consulted during the change process and welcome the benefits that workforce management systems bring. These standards also provide management with objective performance measurement data, supporting the introduction of performance-related incentive programmes for individuals and teams which consistently achieve their targets. This can increase overall productivity by an additional 20-30%.

The UK’s traditional workplace environment has undergone radical change in recent years. The ‘nine to five’ culture of most offices and factories has long gone and flexible work patterns are now a feature of many businesses. Add to this increased employment legislation which has transformed the rights and conditions of most employees. In this context, the use of technology to manage the complexities of time and attendance, shift scheduling and performance management is increasingly essential in the pursuit of ‘a fair day’s work for a fair day’s pay’ for workers and employers alike.

Systems can solve workforce worries Managing a workforce can be problematic but the right systems can provide efficient and effective support that will make it much easier, especially for businesses managing complex shift patterns. Time and attendance systems provider Amano UK has identified the most common time and workforce management problems facing many manufacturing businesses today, and how important the right systems can be in helping to tackle them. Lost track of your team? Recording hours and who’s done what, when and where is crucial for managing resources and planning ahead. A simple and flexible time management system will put you back in control of your staff’s working hours.

Wrong tools for the job? Time and workforce management shouldn’t be hard work but using the wrong tools can waste crucial hours of the working day. The right solution can provide instant value and practical benefits to improve productivity, something manual and complex systems just can’t do.

Feeling under pressure? Don’t panic, systems such as Astrow Suite store data, reports and absentee requests so information can be accessed quickly and efficiently. Such a system enables teams to spend more time analysing workforce data rather than chasing for it.

Built your own system? Don’t DIY when it comes to workforce management systems. A reliable and consistent system provided by experts means you won’t have to waste time managing issues or fixing problems.

System too complicated? Simple and effective time management systems mean you don’t need to worry about dealing with complicated solutions filled with unnecessary and complex features that waste time.

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People and skills

Perfect attendance...

monitoring Time and attendance software and devices can make easy work of the tedious task of monitoring staff. Tim Brown talks to solutions provider Kronos, about the benefits and how to allay any privacy fears associated with biometric data capture.

The Benefits 1. Control Labour Costs Employees are your most valuable asset — you see it reflected in the size of your labour budget. You get the most from this important resource when you automate time and attendance. Learn when an employee is late for work — in time to react. Get a handle on time-off balances and timecard approval. Make sure the hours you approve were really worked. You need to be able to see the time and attendance trends and activities that could be costing you money. So you can control labour costs. Employees are sure to tell you about underpayments, and large overpayments are easy to find and correct. But it’s the errors you don’t catch that can cost you — nearly three percent of your payroll.

2. Minimize Compliance Risk The dreaded audit. If you can’t maintain compliance legislation, union regulations, and work and pay rules, an audit could be in your future. Not to mention time-consuming, costly, morale-busting employee grievances, complaints, and litigation. You need to be able to effectively manage your time and attendance policies.

3. Improve Workforce Productivity In a business environment in which you’re being asked to do more with less, repetitive manual and

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administrative tasks strain your resources and slow day-to-day operations. You need to be able to optimize time and attendance and data collection and reduce the administrative burden on your managers. So you can improve worker productivity and strengthen your organization’s bottom line.

Tackling privacy concerns associated with Biometric data Employees in some organizations are concerned about how the introduction of biometric technology might affect their privacy. The Kronos 4500 Touch ID finger-scanning option is specifically designed to safeguard that privacy.

No fingerprints captured or stored Unlike Integrated Automated Fingerprint Identification Systems (IAFIS) used by government agencies for forensic and law enforcement purposes, Kronos Touch ID technology does not store hard-copy fingerprint images. In fact, no images are stored at all with the Kronos system. Instead, the Kronos 4500 terminal equipped with the Touch ID option scans the employee’s finger, then converts the fingerprint image into a mathematical representation, which it stores in an encrypted format. As a result, it’s practically impossible to reproduce the original image — a fact that greatly promotes the cause of employee privacy.


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People and skills New TA recruits get put through their paces at 4 Division Regional Training Centre, Aldershot

Reservist Jane Gray finds out how manufacturers playing their part in the UK’s military Reserve forces are also strengthening their employers with key transferable skills and selfmotivated development.

Since

2003 and the invasion of Iraq, over 19,000 volunteer Reservists, have supplemented the UKs regular armed forces in their military operations around the globe. In total there are now around 34,000 volunteers working across all the different reservist forces (Territorial Army and Royal Naval, Marine and Air Force Reserves) making up 25% of the UKs defence capacity. However, when they are not on active service Reservists are part of the everyday workforce in approximately 20,000 British companies including hundreds of manufacturers. There are some misgivings among employers about the negative impact of dual responsibilities but an appreciation is steadily building that supporting Reservist employees can bring unique benefits to businesses. Tim Corry, campaign Manager at SaBRE (Support for Britain’s Reservists and Employers) explains: “There are important soft skills that reservists learn and develop during their training; things like team work, motivation, communication skills and leadership. On the other hand there are also hard skills like health and safety, first aid, IT skills, driving skills and so on.” The development of these skills can be of great benefit to individuals in their civilian work according to David Williams, PMO Manager of the Corus1Programme at Tata Steel and a Major in the Territorial Army. “When I was on operations in Iraq I was working in a multinational, multiagency, multifunctional environment,” he says. “The experience of being exposed to that all be it in the heat of military operations was absolutely first class in preparing me for work on the Corus1Programme which has all the same qualities.” Reservist generally

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Have your say at www.themanufacturer.com

develop and demonstrates a pro-active attitude on the part of employees that suggests they will go above and beyond the norm in order to get their work done. Of course with increasing demands being put on UK defense personnel in the field, the possibility of extended periods of absence by reservist employees will inevitably be a concern for employers focusing on business continuity. Corry however, reassures that help is at hand. “There is something called Financial Assistance available to employers and there are three parts to that. Firstly an employer can chose to receive funding to cover the costs of employing someone temporarily to fill the reservist’s place. The second option is to receive what is essentially an administrative grant that covers the costs of retaining the reservist on the company’s books. Lastly there are retraining allowances, particularly available to employers in hi-tech industries, where the employer can cover any costs of retraining an individual when they return from service should technology and skills requirements have altered.” Corry says it is important for employers to overcome their concerns and show support for individuals thinking of participating in Reservist activities. “If an individual is keen to participate in the Reserves, it speaks volumes about the motivation of that person and their tendencies to go above and beyond. Employers should also think about how supporting volunteer activities reflects on their corporate responsibility profile and their recruitment capabilities.” For more information about Reservist opportunities and support available to Reservist employers visit www.sabre.mod.uk


Dean Battersby Gripple Gripple’s production director Dean Battersby is accredited with facilitating a switch from a one site to a two site operation while achieving impressive increases in key performance metrics.

Sheffield

based manufacturer of wire joiners, Gripple, opened up a new manufacturing facility in August – a mile and a half from the firm’s original iconic Old West Gun Works – where a large range of its agricultural and industrial fasteners are to be manufactured. Instrumental in the success of this development has been production director, Dean Battersby. He has overseen the seamless switch to the two-site operation by focussing on people empowerment and process efficiency. Perhaps the biggest measures of his success are that, despite the disruption, in the period during and directly after the move, overall equipment effectiveness has improved by 10-15% and right first time direct deliveries has maintained 98-99%. In other companies, Battersby played a key role in product development and ERP implementation. Now he has a wide responsibility remit, covering manufacturing, supply chain, learning development, quality and health and safety, and he is active member of Gripple’s executive board. However, he sees his role as essentially a support function – enabling the talent all the way throughout the business to flourish as well as it can. “My job is to be facilitator; to challenge our operations and find a better way of doing things. The best way to do that is to give people the tools and the coaching to empower them.” The majority of Gripple members have shares in the company, buying a minimum of £1000 worth in their first year of service. This way, everybody is essentially working for themselves, to a much higher degree than if they had no stake. It is essential therefore that everybody has ownership in the company’s strategy and the move to the two-site system is no different. “It’s a big change for the people who are going across to the new factory – different jobs, different roles and a new location,” he says. “The Old West Gun Works is an old refurbished building with plenty of character and it feels like home so we have to create that same atmosphere at the new place. Part of what we’ve done is to give people a big hand

in the new set up. They’ve been involved in the aesthetics, the lay out, creating the rest areas, and all of the finishing touches. ” Gripple won five Best Factory Awards last year but Battersby sees his and Gripple’s track record in people development as a bigger achievement. “The most rewarding part of my job is seeing people develop within the organisation, helping talented individuals move from the shop floor to high management positions in just a few years, and seeing people enjoy working for this company,” he says. For this, visibility CV in brief – around the factory Dean Battersby floor and good communication are Employment: critical. “You have to be good at listening, 2008 – Present - Gripple Ltd: Production Director negotiation and persuasion,” he says, 2007 – 2008 - Tecconex Ltd: Manufacturing Director “You have to get to know everybody within the 1983 – 2007 - Dormer Tools organisation and find out (Sheffield) Ltd/Sandvik Tooling: Operations Manager, Logistics what motivates them.” Manager, Product Manager, Gripple managing Production Manager, Quality director Mark Edmonds Engineer says a production Education: director is pivotal to a company’s success and, B Eng(Hons) Degree in Engineering and Business in Battersby, there’s no better man for the job. Management Certificate – Henley “This has never been HND, HNC & ONC in Mechanical more the case than and Production Engineering now, as Gripple’s latest Interests: and most extensive Hill walking, scrambling, camping, expansion reaches its cycling, football, squash and badminton culmination,” he says. “True to form, Dean has played an exemplar part, leading a fabulous team, who will see us grow into 12,000m2 m more manufacturing space, with zero business interruption.”

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Peopleandskills JCB Academy

diary

The new £22m JCB Academy in Rocester provides a new concept in education offering 14-19 year old students the opportunity to take a highly regarded, full time, technically-oriented course of study. Each month, a student from the academy will contribute a diary entry to The Manufacturer. This month’s entry is by Rhys Bradbury.

Rhys Bradbury, student at the JCB Academy

The first time I heard about The JCB Academy was on a brief radio advert. The advert stated that it was a brand new academy, the first of its kind, and was to open in September 2010 for year 10 and sixth form students. It also mentioned the engineering and business diplomas which each student would undertake, as well as all of the core GCSE subjects like English, maths and science.

In

June 2009, the academy held an open day and provided more information about the facilities, the lessons, and the projects that would be undertaken. The presentation was led by Mr Wade, the Principal, and went into depth about the diplomas, lessons and optional extracurricula activities that were to be available. Shortly afterwards, it was decided that I would attend the JCB Academy. Starting a new school with new teachers and new classmates is normally challenging enough, but the first day at The JCB Academy was even more so and entirely different to any other school. There were photographers, camera crews and radio stations inspecting the building and wanting to capture the first day at The JCB Academy. Some students had already been asked to be interviewed by the radio presenters to give their views and opinions about the academy. Firstly, the building. Wow. That is possibly the only word I can think of to describe the £22m JCB Academy building. Even when you approach the building, the glasscovered front side of the Academy is extremely impressive and even

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more impressive when you get inside. Each room is industrially themed with exposed piping and wires in the ceilings. In the Tutbury mill, there is a 3D room, prototype workshops, productive engineering workshops, meeting rooms and business enterprise classrooms along with the more traditional classrooms in the Bamford wing for subjects such as German, I.T. and various other lessons. The first full week of the school year consisted of a trip to Harper Adams University College in Shropshire to begin our first of several challenges over the course of the year. The task was simple – in teams we were to design and build a remote-control off-road vehicle. Simple for an engineer that is! The five day trip consisted of a range of lesson-based activities, including traction, chassis, steering, suspension, power and transmission and vehicle configuration. Also, every student got the chance to experience Harper Adams’s offroad track in one of their many off-road vehicles. The lessons were new to everyone and involved a lot of practical work in our boiler suits. These included: assembling the

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steering mechanism for a go-kart; constructing models of a number of different chassis designs; investigating different types of suspensions; and looking at how different surfaces affect how a vehicle performs. In addition, we also had the chance to view the track that our vehicle had to navigate in order to succeed in the challenge. Since returning to the Academy, we have been revisiting the challenge in engineering lessons whilst attending all of our other subjects. Staff from Harper Adams attended the academy and each of the teams gave a presentation of our progress and had the opportunity to ask them any final questions prior to commencing construction of the vehicles. We are now in the process of building our vehicles and will test them on the 4x4 track on October 13. Before coming to the Academy I had never studied engineering and I feel that I have already learned so much whilst at The JCB Academy. We have been told that our next challenge will be lead by Network Rail, so I hope to continue improving my engineering skills and hope that it will bring great success for the future.


Supplychain and logistics

All clear

for nuclear

With £40bn investment in new nuclear plants expected by 2025, just how far down the rabbit hole will UK manufacturers have to venture before they come up grinning like Cheshire cats? Edward Machin reports on access to nuclear industry procurement contracts

A

Nuclear Industry Association report into the UK supply chain’s capability to deliver a new nuclear programme, updated in 2008, concluded that 70% of the scope by value of these reactors could be supplied by UK companies — and more, given further investment. Aye, thought that might get your attention. Lies, damn lies and statistics, though, right? Judge for yourself: EDF Energy has committed to delivering four new plants: two at Hinkley Point, Somerset and a further two at Sizewell in Suffolk. Horizon Nuclear Power is set to build at Anglesey

Case Study The clean up guys With many focusing solely on future supply chain cash cows, managing the maintenance process once nuclear power stations reach the end of their working lives remains an equally vital area of opportunity for UK based companies. One such example is industrial service provider Hertel’s work at Calder Hall, Sellafield, which stopped generating power in 2003.

An immediate impact of stopping generation was the effect on the asbestos insulation and lagging. Previous inspections had shown that the asbestos was safe; once power generation stopped, however, the subsequent loss of heat meant the asbestos soon started deteriorating. Neither economical nor practical to repair or replace the insulation, a

decision was taken to remove all the asbestos from the heat exchangers. The specialist asbestos removal division of Hertel, which had been providing maintenance services to Sellafield for a number of years, was appointed. More than 2,300 tonnes of asbestos was stripped and removed from site in one of the largest asbestos removal projects in Europe to date.

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and Gloucestershire while a joint venture of Iberdrola, GDF Suez, and Scottish and Southern Energy has acquired land ready for new build in West Cumbria. And while the first new nuclear plant is expected to come online in 2018, commercial arrangements to deliver new builds — including partnerships and joint ventures — are already emerging. Orders for the bulk of plant and services can be expected to start developing within two years, with construction of EDF’s Hinkley Point plant beginning as early as 2011. Unsurprisingly, then, “The UK nuclear industry is gearing up for the challenges and opportunities of nuclear new build, placing British companies in a prime position to take advantage of the opportunities which will develop,” says Keith

Parker, chief executive of the Nuclear Industry Association. “The industry already directly employs some 45,000 workers across the UK, with decommissioning, waste management and ongoing operations all providing huge opportunities for UK businesses.” But what of those on the ground? Is the outlook as promising for SMEs not directly engaging with the Avevas and Westinghouses of this world — or not yet, at any rate? “The nuclear supply chain is not a ‘here today, gone tomorrow’ business activity for manufacturers,” explains Graham Balshaw of Assembly Solutions, a Bolton-based contract manufacturer of electrical cable assemblies. “The current economic climate, coupled with current thinking on energy supply and the environment,

Forging ahead Peter Birtles, director at Sheffield Forgemasters International, considers the future for large civil nuclear forgings. While there are numerous factors affecting the manufacture and delivery of the latest generation of civil nuclear power plants, arguably the most apparent is the lack of capacity for manufacture of the large and ultra-large forgings required for reactor pressure vessels and steam generators. Compared to civil nuclear manufacture’s halcyon days — when as many as 21 stations were built per year during the period from 1979 to 1990 — there are far fewer companies operating in the sphere. The net result of this is that, out of maybe a dozen large forging plants across the globe, only seven or eight presses are physically large enough to manufacture products of the size required for first and second generation power plants such as the UK’s Magnox reactors, PWR and DWR design reactors, AGR reactors and Russia’s RBMK stations. Additionally, these critical forgings are increasing in size for the third generation

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of nuclear power plants: the Westinghouse-designed AP1000 stations and Areva’s EPR designs, for example. To put the market’s civil nuclear supply and demand into context, there are 370 stations approved for build across the world over the next 25 years, with an average build rate of around 13 stations per year — but only capacity to supply forgings for seven or eight per year under current supply. This includes third generation reactors, which are likely to be the choice for the UK’s future provision. So far, the first of the third generation of reactors has yet to come online, highlighting the fact that the entire international civil nuclear programme is behind schedule. We are now witnessing another market requirement which has to be met within a constricting time-frame from the second generation PWR stations in operation, many of which had a fundamental boiler design weakness, resulting in an inconsistent flow rate and causing premature corrosion. Those components now need replacing, and this will tap into the same sparse supply

chain for large civil nuclear forgings. An additional market to new-build, this is significant, with some 20 stations in France alone each requiring replacement of three or four steam generators — only a portion of the global requirement for this remedial work. If we also consider that the same nuclear-accredited manufacturing companies are responsible for producing the components needed by the world’s defence industry, notably for nuclear-powered naval vessels, it becomes evident that this lack of supply is not simply a problem for the world’s power requirements, but a vast opportunity for the top-level heavy engineering sector. Japan Steel Works will increase its capacity with the addition of another large press in the near future, but this only increases its monopoly of the market without completely solving the shortage of global supply. What is urgently needed is another player to enter the market to free up supply and create an element of competition. The opportunity will be lost if the market is capitalised on by other nations, resulting in a significant loss to the UK.


Supplychain and logistics

indicates that supplying the nuclear industry will be quite long-term.” Sensibly, though, he tempers the excitement of those fixated solely on the riches lining any potential supply chains. “It must be said that while the longterm outlook for manufacturers thinking of entering

While the long-term outlook for manufacturers thinking of entering the nuclear supply chain is extremely promising, one must remember that the industry is not ‘order today and invoice tomorrow’ Graham Balshaw, Assembly Solutions Limited

the nuclear supply chain is extremely promising, one must remember that the industry is not ‘order today and invoice tomorrow’.”

Go (North) West Balshaw’s note of caution aside, when the lawyers get involved you know something must be afoot. One of an increasing number of legal service providers seeking to exploit the nuclear environment, Hammonds LLP recently hosted a Warrington-based event advising businesses in the North West as to how they can become part of the ever growing supply chain. The region currently enjoys one of the world’s largest concentrations of nuclear facilities and expertise, with over 25,000 skilled professionals — equating to half of the UK’s total nuclear workforce — employed in 300 companies across its counties. With a number of stations earmarked for local build, and the utilities spending an estimated £810bn on each, manufacturers in the area look to be sitting on something akin to a goldmine. The opportunities do not stop there, though: there are also considerable prospects arising from the UK’s legacy decommissioning programme. West Cumbria is home to the Nuclear Decommissioning Authority’s (NDA) headquarters, responsible for overseeing safe decommissioning at UK sites, while nearly 60% of the NDA’s annual £2.8bn budget is expended in the North West — primarily at Sellafield, which accounts for £1.5bn of expenditure. Neil Burns of Croft Engineering Services is one manufacturer alive to the possibilities of nuclear sitting on his doorstep. “The industry needs to engage with small specialists across the supply chain who know what they’re talking about,” he says. “A small redevelopment or refinement by an expert can save thousands, or often hundreds of thousands of pounds, not to mention countless

working hours.” Based in Warrington, Croft Engineering Services supplies to VT Nuclear (Sellafield), Nuvia (Dounreay), Strachan & Henshaw (Sizewell decommissioning), Babcock International and NSG, among others. With so enviable a portfolio, the company’s focus must surely exist entirely around nuclear and its permutations. Not so, says Burns. “The amazing thing is that, like us at Croft, manufacturers don’t have to be nuclear specialists in order to seize a nuclear opportunity. The nuclear industry is another ‘specialised’ area of work for us in the same way that food or automotive industries require specific understanding of the manufacturing challenges they face. “There is great capability out there to prove that the British manufacturing and engineering sector is the best in the world, and if the nuclear industry purchases locally it further reduces the carbon footprint. There are plenty of opportunities from every conceivable British manufacturing sector to supply to the nuclear industry, and these opportunities can be seized if companies use the guidance provided by organisations such as the Manufacturing Advisory Service, as well as putting a little professional effort in themselves.” Better get moving then. Not to do so? Well, you’d be mad as a Hatter.

The Manufacturer.indd 1

19/05/2010 13:43:19

Have your say at www.themanufacturer.com

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Going from chaos to order For many, the inability to align sales, production, supply chain, and company strategy is causing money to haemorrhage fast. Gay Sutton talks to Prof Dr Bram Desmet of supply chain consultancy MÖBIUS to discover how alignment can be made a reality by applying the marketing concept of segmentation

Does

this sound familiar? Your sales team is doing a great job at winning new orders, your demand and supply management processes are reliable and efficient, yet your profits are eroding fast. Perhaps most telling of all, the shopfloor is increasingly under pressure to deliver orders that have individual requirements and higher levels of customisation causing inefficiencies and costs to build up in the system. “The key issue here is that different functions in the organisation are trying to optimise their part of the equation, without optimising the equation with respect to the company,” explained MÖBIUS consultant, Prof Dr Bram Desmet. The upshot of this mismatch between sales, production and company strategy is that companies are finding themselves increasingly dictated to by high volume customers who deliver little or no profit, and are consequently jeopardising delivery to customers with a high value to the company. “We need to redress this power balance,” Desmet said. Supply chain consultancy MÖBIUS has been working with companies to address this issue for a number of years, through a process known as segmentation. Many companies have tried this in some form, but getting it right is the challenge. The rewards are enormous. It involves dividing the customer base into

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segments according to the profits they deliver, and then defining the levels of service that each segment will receive. The resulting definitions then form the basis for all company activity and decision making, from the sales teams who deal directly with the customer, through to demand planning, production and the supply chain. As a consequence, high value customers receive full priority and top service levels, while customers who deliver little or no profit may, for example, receive standard specification goods by full truck load, or with a long lead time allowing production to be scheduled conveniently around higher priority orders. “We believe that by implementing this more strategic marketing view,” Desmet said, “much of the complexity on the manufacturing side can be reduced while costs and inventory can be brought under control. Moreover, this can be done without necessarily limiting the service to the customer.” Customer service is paramount in manufacturing. Dissatisfied customers have a habit of going elsewhere and perhaps taking future customers with them. Any reduction in the customer service offering is therefore viewed with misgiving. However, in depth analysis has shown that by differentiating customers by their value, and focusing the greatest efforts on

those that deliver the highest value, service levels tend to improve rather than decline. This leads to stronger performance in the higher earning marketplace, higher growth and increased profitability. Johan De Wilde, supply chain manager of European carpet manufacturer Associated Weavers, a company that has gone through this segmentation and change process, would agree. “Before we began the process our on-time delivery was around 73%, and today we’re achieving an average of 96%.” Moreover, until the recession knocked consumer confidence, the company had been increasing its market share significantly because of the increased reliability. Rolling out such a transformation is not for the faint hearted or for the poorly organised. It requires considerable planning and supply chain maturity. If integrated business planning processes are not in place – and these incorporate elements such as good demand planning, supply planning and an S&OP process to ensure the executive team signs off decisions that have financial implications – then these capabilities need to be embedded first. The segmentation process then begins with analysis of the customer and product portfolio: evaluating variables such as the volumes produced, services provided, inventory held, costs incurred and profits achieved. Finally, the overall profitability of each customer to the company is added to the mix. By contrasting costs with profits across each of these variables, it’s possible to arrange customers and products by their profitability, and then to derive a set of criteria by which customers and products can be allocated into segments. Using this data, the next step is to define the level of service that will be offered and the reliability that will be promised to customers in each segment. Highly profitable customers may continue to warrant the full range of services and customisations, less profitable customers may have a service offering tailored to reduce costs and inventory, and to be scheduled


Mobius - Market driven supply chain

easily around the needs of more profitable customers. These rules are then rolled out across the company, providing stable and strategy driven criteria for decision making. The rules drive sales and inform the shopfloor with regard to priorities for scheduling and allocation of inventory. They provide reliable data on which to tailor the supply according to the segmental needs, and are incorporated as an additional dimension into forecasting, demand planning and supply planning. Finally, should further prioritisation and investment decisions need to be made at S&OP level, these too can take into account margin impacts. Segmentation is by no means a new idea, but getting it to work is the challenge. The team likely to face the greatest culture shock and present the greatest resistance is sales. Where previously most account managers focused on sales volumes, they will be faced with completely rethinking their approach to the customer – renegotiating and redefining the services and prioritisations on offer, and resisting the pressure to return to old habits. During the transformation at Associated Weavers, the company completely reviewed and changed its entire demand cycle and planning logic, right down to how stock was allocated to the customer. “For our sales team, it was ultimately a convincing process,” De Wilde explained. “We began recording our KPIs at the outset of the process, and used them to demonstrate improvements in our business performance. Initially we achieved small increases. But then the KPIs started to seriously reflect the positive impact of the new rules.” For most departments, it is a relief to receive clear and concise rules for prioritisation and service levels. And ultimately sales becomes a strategic function – creating value for the company rather than volume. Desmet believes, however, that this level of segmentation is just the first step in achieving true maturity. “We call this the ‘defensive mode’,”

Desmet said, “where products and clients with a higher profitability justify higher service levels. The next step is the ‘offensive view’ which entails obtaining a better understanding of what customers really require, and what they are willing to pay for those services.” The offensive view therefore includes an in depth analysis of customer requirements. And the resulting segments are likely to be rather different, some of them incorporating a more proactive and collaborative approach. By better matching requirements and service in this manner, volumes and profitability can be grown in each segment. Many challenges face companies embarking on this process, one of the biggest being how to sustain the improvements. For Associated Weavers, the secret to sustainability “is down to the way you measure progress, follow it up, preach it and convince everyone,” De Wilde said. “Once everybody is convinced, it continues with almost no effort although, it is important to continue monitoring the KPIs.”

“None of this is rocket science,” Desmet concluded, “but it involves formulating fundamental questions which can also be very sensitive, and this has to be handled with subtlety to ensure people realise that they’re not working optimally across functional boundaries of the company.” The rewards for getting it right are very clear. “I would say we have migrated from total chaos - where the customer who shouted loudest received priority – to a situation where we have predictability and order,” De Wilde commented. “Now, when we promise something to our customer we stick to that promise.”

For more information please visit: www.mobius.eu or contact joanna.holmes@mobius.eu

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Head in the clouds Will we live in the cloud rather than on the desktop?

Source: Pew Research

www.penn-olson.com/2010/06/25/the-rise-of-cloud-computing-infographic

Malcolm Wheatley investigates cloud computing, finding that all is not all white and fluffy in the world of hosted servers.

At

first glance, Workington-based Pentagon Chemicals seems unremarkable: a privately-owned manufacturer of speciality agricultural chemicals with 200 or so employees. But take a closer look and you’ll see something rather less ordinary: an ERP system housed not on in-house servers, but in the ‘cloud’, accessed over the internet. There is, undeniably, a great deal of hype surrounding cloud computing. Through accessing applications hosted remotely in giant server farms, so the argument goes, companies can significantly lower their IT costs and also benefit in other ways. Cloud computing is becoming a reality that more and more of us touch each day — whether as businesses or individuals. Rentokil Initial, logistics provider Deeset and automotive manufacturer Jaguar Land Rover, for instance, are all users of Google Apps, cloud-based substitutes for

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Microsoft’s familiar office productivity tools: e-mail, spreadsheets, contact managers, word processing and the like. “We switched our entire global organisation of over 15,000 users to Gmail, Calendar and Contacts in one weekend in December 2009 as we separated from our former parent company Ford,” says Jaguar Land Rover’s chief information officer, Jeremy Vincent. “Now, almost one year in, we have a truly enterprise-wide common critical business application which is delivering benefits continuously — especially as we turn on more Google applications.” CRM specialist Salesforce.com, to choose another popular cloud-based offering, claims some two million users, including the sales forces of British manufacturers such as David Brown Engineering, Invensys, IndigoVision and Coventry-based flooring company Amtico


IT in

manufacturing

International. Edinburgh-based CCTV security system manufacturer, IndigoVision, openly credits Salesforce.com with helping it to grow revenues 15-fold in just six years. And other manufacturers are contemplating joining such pioneers.

The perfect host? Take South Wales-based subcontract manufacturer Axiom Manufacturing Services. “There’s a lot of hype out there, but the cloud does need to be carefully considered,” says Mike Doyle, Axiom’s IT manager. “We don’t have any applications on the cloud right now, but we are certainly prepared to think about it as opportunities emerge.” Leeds-based street lighting manufacturer, Harvard Engineering, has done more than think about it: an on-line power consumption utility that it offers its municipal customers was hosted on the cloud — closely followed by other applications such as e-mail and Microsoft Exchange. “It wasn’t part of the original plan,” says finance director, Martin Baum, “but our experience has been really positive. Now we take the view that it doesn’t matter where such applications are hosted.” In one sense, of course, cloud computing is simply one step on from a more familiar notion: software as a service (SaaS), where businesses subscribe to externally-hosted applications that can range from niche transportation planning offerings through to full-blown ERP systems. And many of the same benefits apply. Fewer IT support staff are required, no costly servers to buy and house, no server capacity constraints to worry about, a lower software maintenance overhead — it’s not difficult to see the attractions. It’s also not difficult to see the risks, and the dangers. With applications hosted in-house, manufacturers have control over the physical and digital security, as well as control over the network that connects users to systems. But with applications located in the cloud, and accessed over the internet, fewer assurances apply. Quite apart from security concerns, slow response times — ‘latency’, in the jargon — could impede efficiencies. And while that’s also true of SaaSbased applications, there’s one critical difference between SaaS and the cloud: with conventional, externally-hosted SaaS applications, manufacturers know exactly where their systems — and valuable data — are operated from. They can visit, and audit, the data centre in question. They can ask questions about its physical and digital security, and physically touch ‘their’ server. With the cloud, there are far fewer specifics: servers — and even data centres — are shared, and can be widely geographically dispersed, with manufacturers accessing different applications from potentially divergent locations. In short, a manufacturer with Google Apps, Salesforce.com and a handful of other typical cloud-based applications, is a very different

proposition from one where everything is hosted in-house. And certainly, despite the much-hyped flow of companies such as Jaguar Land Rover moving away from in-house, server-based versions of Microsoft’s popular Office and desktop tools towards cloud-based versions such as Google Apps and Zoho, there’s a small-but-persistent flow of traffic in the opposite direction, having tried the cloud, and found it wanting. One 1,100user American company, for instance, apparently found that slow response times could be traced to the fact that its data was stored at a Google data centre in Berlin — rather than a centre in California, close to its location. “Manufacturing plants require instant access to data at the process automation and control level,” argues Timo Brueggemann, director of business development at ultra-high availability computing specialist Stratus Technologies. “Critical data has to be accessible on-site, not out there somewhere, hosted on somebody’s cloud.”

By moving less essential and peripheral applications to the cloud, IT staff can actually focus on missioncritical systems that truly make a difference to the business Christopher Barnatt, Nottingham University Business School

“Cloud-based applications never really get put together until they hit the user’s we browser,” warns Richard Stone, cloud solutions director at Compuware. “They’re pieced together from potentially multiple data sources — which makes measuring and monitoring their performance very difficult. A performance that is acceptable at one time of day might be less so at other times of the day, and at other locations.” There are potential regulatory dangers, too, warns Srinath Murthy, a vice-president at consulting firm ITC Infotech: “If a company does not have control over where data is stored, it could unknowingly lead to a breach in compliance.”

Splitting the difference What has emerged, then, is a twin-track approach to the cloud. Axiom’s IT manager, Mike Doyle doubtless speaks for many when he notes that he draws a careful distinction between non-core applications that the company might source from the cloud, and mission-critical applications such as ERP, which seems a step too far. “As things stand, I wouldn’t feel comfortable putting our ERP system on the cloud.” It’s a sentiment that many IT insiders openly acknowledge. “Where we are right

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IT in manufacturing

now — taking a typical manufacturing company — is that there’s a distinct tendency to differentiate between peripheral applications such as expense management and CRM, and core applications such as ERP,” says Phil Lewis, business consulting director at ERP vendor Infor. “Companies regard ERP as the jewel in the crown, and many manufacturers are uncomfortable seeing that jewel located remotely in the cloud.” “There’s a huge difference between putting generic mass-market applications such as e-mail systems on the cloud and locating mission-critical core applications there as well,” agrees Mac Scott, associate director of Manchester-based IT consultants, Xantus Consulting. “The risks of service interruption and resource contention are simply too great: a half-second delay in calling up your e-mail is one thing — posting business-critical transaction to an ERP system in the cloud quite another.”

Smaller manufacturers have realised that they don’t need ERP-skilled IT staff, don’t need IT infrastructure and can implement proven best practice out of the box — without having to discover those best practices for themselves Schalk Viljoen, SAP

Indeed, some proponents of cloud-based computing positively encourage manufacturers to consider such a distinction. Christopher Barnatt, associate professor of computing at Nottingham University Business School, and author of a recent book, A Brief Guide to Cloud Computing, points out that cloud computing offers manufacturers the opportunity to focus anew on their core competencies. “By moving less essential and peripheral applications to the cloud, IT staff can actually focus on mission-critical systems that truly make a difference to the business, instead of spending time on e-mail servers and things like that,” he says. Even so, both vendors — and users — are slowly but surely paving the way. Vendors are gradually making cloud-configured versions of their ERP applications available. And users, undeniably, are adopting them. ERP vendor Netsuite’s offering, for example, is only available as a cloud-based solution. “We guarantee our customers 99.5 per cent uptime — and promise them refunds if we don’t hit it,” says Roman Bukary, head of industries marketing at Netsuite. “And we say to customers: imagine the costs that you would have to take on in order to achieve that level of uptime in-house.” “There’s more ERP cloud demand than you’d think,” adds Bruce Richardson, chief strategy

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Have your say at www.themanufacturer.com

officer at Infor, and a former highly-respected analyst at analyst firm AMR Research. The idea has distinct appeal, he explains, to small manufacturers looking for full function ERP at the lowest cost of deployment, as well as to larger global firms who can’t afford the initial implementation fees and ongoing operating costs of on premise deployments. At Pentagon Chemicals, for instance, it turns out that it is market leader SAP’s cloudbased offering, Business ByDesign, that the business is using, for precisely the reasons that Richardson articulates.

Box fresh “We’re finding that a growing number of smaller manufacturers want to leverage cloud computing, says Schalk Viljoen, SAP’s director of business development for Business ByDesign. “They’ve realised that they don’t need ERP-skilled IT staff, don’t need IT infrastructure and can implement proven best practice out of the box — without having to discover those best practices for themselves.” Nicholas Lindop, Pentagon’s general manager, concurs. Moving to Business ByDesign on the cloud, he says, “standardises our business processes, supports scalable supply chain processes, delivers complete visibility of inventory and increases the transparency and efficiency of business operations. All this, and a reduction in IT support overheads as well.” Pre-configured with best practices for managing areas of the business such as accounting, CRM, projects, procurement, and supply chain management, Business ByDesign is now available in Germany, UK, France, US, India and China, says SAP’s Viljoen. “SAP takes care of installation, maintenance and upgrades — so you can focus on your business, not on IT.” Epicor is another vendor seeing strong demand — albeit once again from manufacturers at the smaller end of the scale. Epicor Express, the company’s on-demand cloud-based version of its flagship system Epicor 9, was written purposely for the cloud, says James Norwood, vice-president of product marketing at Epicor, and as such has won the company customers that it wouldn’t previously have targeted. “It’s not just a piece of legacy code hosted in a data centre,” he stresses. “All that manufacturers have to do is subscribe to it and use it.” The cloud, he adds, “is just another deployment option — and we take the view that performance has to be just as good as on-premise software, with the cloud offering the added benefit that computing resources are be able to be scaled as required.” The cloud, in short, seems here to stay with manufacturers gradually becoming more sanguine about its risks and dangers. While the true level of the benefits that it offers have yet to be proven, initial worries over the cloud’s downsides certainly seem overstated.


IT in

manufacturing

ITnews... ERP

CAD and Illustration

K3 AX conducts an ERP HEADtoHead in a European first for Microsoft Dynamics AX

Autodesk Expands SketchBook Line

K3 AX has been showcasing Microsoft Dynamics AX at an event pitting ERP products against each other.

CAD vendor Autodesk will be issuing a series of updates that provide a new look and feel to the Autodesk SketchBook product line, spanning both the desktop and apps for iPad, iPhone and iPod touch.

The company took part in the two-day ERP HEADtoHEAD event in Dublin where six products were demonstrated using a single script, allowing for a true like-for-like

Participants at the ERP HeadTo-Head 2010 event in Dublin

CAD

New Femap software released Siemens PLM Software has announced the latest release of Femap, the PC-based finite element modeling component of the Velocity Series portfolio of PLM solutions.

Siemens has said that Femap 10.2 makes it faster and easier to create the meshed models used by engineers to simulate and analyse product performance using finite element analysis (FEA), and to determine the structural, dynamic, and thermal performance of complex engineered parts. The latest release includes features to help ensure model accuracy and to visually evaluate analysis results. “Femap is recognised throughout the global engineering community for its in-depth finite element modeling functionality and its best-in-class integration with the industry leading Nastran solver,” said Bill McClure, vice president of product development for Velocity Series, Siemens PLM Software. “Today’s announcement builds upon the usability of Femap with extended interactive modeling and analysis capabilities, and increased program performance. The combination of Femap with the industry standard solver NX Nastran software, delivers a world-class, easy to use analysis solution, or what we call ‘real FEA made easy’.”

comparison for finance and IT executives. Basil Fenton operations director Ireland for K3 AX, said: “It provided a ‘timeeffective’ and ‘costeffective’ event format for senior management, including finance and IT executives and members of their ERP selection teams to review the leading ERP products and to learn how to manage their selection process so that risk is reduced and benefits are maximised.”

“Millions of professionals and consumers rely on the unparalleled sketching capabilities of the SketchBook products for all kinds of creative processes,” said Robert “Buzz” Kross, senior vice president of the Manufacturing Industry Group at Autodesk. “The latest releases mark an important step forward, offering a complete suite of sketching and illustration products that address a more complete spectrum of form factors and capabilities.”

The Wheatley angle

IT Correspondent Malcolm Wheatley sums up October IT news. ERP is often regarded as mere plumbing: necessary, but not something that confers competitive edge. That’s not the view at Stockton on Tees based Nifco, a supplier of plastic injection-moulded components to Ford, Nissan, Toyota and Honda. The company’s investment in an Infor System21 Aurora ERP system, made just before the recession, provides it with two unusual claims to fame. First, it allowed it to respond rapidly to the severe downturn in the automotive industry that hit in late 2008. Using the system, Nifco quickly identified surplus resource, stripped-out waste, and precisely aligned resources to production requirements, says Nifco’s IT manager John Tinkler. While revenues fell by a third, the business was still able to record a profit—a remarkable feat in the lean automotive world. More remarkably still, the system

is credited with enabling the business to produce components more cheaply than a sister plant in Poland. My question to the ERP vendor community: why we don’t hear more such success stories? And moving on, one success story that I do think we’ll hear much more of in the next couple of years is Google’s open source Linux-powered smartphone operating system Android. It seems it is rapidly finding favour among corporate buyers. Gartner and other analysts say corporate demand for Blackberrys and iPhones is softening, while demand for Android-powered smartphones from vendors such as HTC is accelerating. Quite simply, cost is what prevents manufacturers pushing more ERP workflow out onto smartphones—and increased take-up of Android can only lower the price-tag.

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IT in manufacturing

ITnews... CLOUD

BT warns of ‘cloud washing’ at symposium At the Gartner Symposium/ITxpo in Orlando, Florida in October, BT outlined its vision for cloud services for large enterprises. The company said CIOs and CTOs are being confronted with a deluge of information about everything cloud, and unhelpfully, many technology companies are simply re-branding products and services as cloud – a phenomenon that has been described as ‘cloud washing.’

Neil Sutton, vice president, Portfolio, BT Global Services, said: “Large organisations want to realise the benefits of cloud computing – such as flexibility, more reliable services, reduced financial risk, and lower costs – but they first need to get beyond the confusion surrounding cloud terminology, focus on deliverable business results and look at what they have to do to make cloud solutions work Neil Sutton, vice president, for them.” Portfolio, BT Global Services

Business Wins

NEC chooses Microsoft NEC Display Solutions of America, a provider of commercial LCD display and projector solutions, is using Microsoft’s enterprise-ready software platform to support its VUKUNET digital signage ad-serving engine. Microsoft is supporting NEC’s VUKUNET through its enterprise software platform, including Windows Server, Microsoft SQL Server, Microsoft.NET, Microsoft Silverlight, security and mapping software, and user interface tools. Project Leadership Associates, a Microsoft Gold Certified Partner, provided development services for the rollout of the platform.

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Have your say at www.themanufacturer.com

CAD

Siemens launches Solid Edge update Siemens PLM Software has announced the release of its latest Solid Edge ST3 software, enabled by synchronous technology. The company says that this enables accelerated product design, streamlined revisions, and makes importing and reusing third-party CAD data easier. “We believe Solid Edge ST3 marks a major milestone in advancing the technology while still catering to customers’ specific needs,” said Dr. Ken Versprille, PLM research director, CPDA. “Synchronous technology has the capacity to perform a wide variety of design tasks in a fraction of the time it takes with a traditional approach. This could provide engineers with more time for creativity and innovation, resulting in better product designs produced faster.”

PLM

Irkut chooses Siemens PLM software Irkut Corporation, a Russian aircraft maker, is expanding its deployment of NX software and Teamcenter software for the design and development of the MC-21, the company’s new mid-range passenger jet. The MC-21 mid-range passenger jet development program envisages three aircraft versions for 150, 180, and 210 seats. The aircraft are designed for flights up to 5,500km in any climatic zone, day and night, in easy and complex meteorological conditions

Enterprise Mobility

Epicor unveils latest app The company has launched the Epicor Mobile Sales Assistant, an enterprise mobility solution that provides sales and fulfillment workflow processes. The applicatiom is designed for sales and distribution field workers who require immediate visibility of inventory, pricing, stock availability and customer-specific data to fulfill customer orders while on the road. It is fully integrated with Epicor enterprise resource planning solutions. James Norwood, senior vice president, worldwide product marketing for Epicor said: “Mobile devices are continuing to trend up as companies are viewing enterprise mobility solutions as a viable means to maximise field staff productivity and increase customer satisfaction. Epicor Mobile Sales Assistant joins Epicor Mobile Field Service as a true extension of the enterprise that synchronises seamlessly with Epicor ERP ensuring sales and service opportunities are not lost to travel and customer needs are taken care of on-the-spot.”


Manufacturinginaction Sponsored by TBM Consulting Group

Putting UK manufacturers under the spotlight Factory of the month

Soil Machine Dynamics 82 Digging your scene

Subsea engineering experts Soil Machine Dynamics have moved from telecommunications to the oil and gas and renewables sectors and is now devising complex flow production systems to cope with the swell in demand for its hi-tech subsea roving machines. Will Stirling reports.

FOOD AND DRINK

HEALTH AND BEAUTY

BCM 139

Thorntons 100 Visiting the Thorntons factory in Derbyshire, Lorenzo Spoerry is like a kid in a sweet shop, gorging on chocolate and manufacturing prowess in equal measure.

Mark young hears how a commitment to comprehensively aligning its business strategy with that of its customers is proving a successful strategy for BCM

MICROSCOPY

MATERIALS PROCESSING

Terex 117

Carl Zeiss 144 Lorenzo Spoerry how the mobile crushing, screening, washing and recycling industry specialist has created an lean, mean manufacturing machine at its Omagh base.

TYRE MANUFACTURE

Multinational microscopy manufacturer Carl Zeiss provides the perfect example of low volume, high value, advanced manufacturing which the UK is looking to base its future economic prosperity upon. BOAT BUILDING

Michelin Tyre 129

Trend Marine 148

From bicycle to space shuttle, global tyre manufacturer Michelin has been building tyres to fit every application since the turn of the 20th century. Glen Jamieson drops in on the firm’s factory in Dundee.

Glazing specialist Trend Marine is the partner and principal supplier which helps many prestigious boat builders keep their heads above the water. Tim Brown explores.

PUMPS

Clyde Union Pumps 134 Built on a foundation of solid business practice but with a commitment to innovation, Richard Bott finds a blend of old and new manufacturing thinking at Glasgow’s Clyde Union Pumps.

All companies featured will be entered into the MIA Award 2010

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Digging scene your

Felled by the dotcom bust, where its telecoms customers evaporated, subsea engineering experts Soil Machine Dynamics have steadily gained market share in the oil and gas and renewables sectors. Peter Imlah tells Will Stirling how a company founded by three university lecturers hired an extra 100 people this year and is now devising complex flow production systems to cope with the swell in demand for its hi-tech subsea roving machines.

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Factory of the month Soil Machine Dynamics

Imagine

the scenario: you go to university, you study engineering. You leave university, apply what you’ve learnt and build some machines. You set up a company and sell those machines. The product develops into new applications, the company grows into a multimillion pound business. For some engineers it’s the dream outcome of their hard study. And it’s precisely the kind of applied engineering, high valueadd export-driven company the UK needs more of. This is the interface of science, engineering and good business. Welcome to Soil Machine Dynamics.

Company history Soil Machine Dynamics (SMD) is a very good example of commercialised British ingenuity. A 40-year history with deep experience in telecoms and offshore subsea engineering helps. But it is the company’s flexibility and will to make one-off special projects like trenching machines, more standardised remotely operated vehicles (ROVs) in quick series, and entire cable and pipe handling systems that is the reason behind its success. Newcastle-based SMD has grown year-on-year since 1997 to a turnover of £65m today. The now part private equity-owned company was founded in 1971 by three engineering lecturers from the Agricultural Engineering department at the University of Newcastle upon Tyne who developed a pipeline protection system that had some similarities with existing agricultural technology. Subsea pipes and cables are prone to snagging by anchors and fishing gear. Their two main inventions were trenchless cable burial and plough steering.

RT-1 is the world’s largest and most powerful subsea rock trenching vehicle for the burial of pipelines

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Wandfluh UK Ltd – for Hydraulic and Electronic solutions

A

s part of the Wandfluh group, we supply hydraulic and electronic solutions around the world. We specialise in proportional technology plus standard and miniature hydraulics for the majority of industries. In particular, Wandfluh offer explosion proof solenoid op. valves for the Offshore market Zone 1 etc plus NG6 / NG10 solenoid spool valves for the intrinsically safe Zone 0 areas too, with working pressures up to 350 bar for these products. We manufacture and supply valves and manifold assemblies for numerous applications throughout the marine, gas, oil, industrial and mobile sectors. Wandfluh UK also supply Flucom, HBS & Lu-en products which allows our company to offer the complete valve solution.

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Also available are the new Digital smart valves (DSV) for cartridge + Cetop mounted valves with their integral electronics. They improve response/performance and compactness of products. There are options for CAN Open and Profibus DP interfaces on request. The New MD2 mobile power amplifier / digital enhanced control module is available with four or eight proportional or on/off solenoids and plug-in connection suitable for mobile applications - certified to protection class IP67. At Wandfluh, we design and produce high-quality hydraulic valves assemblies in aluminium, steel and stainless steel with different finishes, according to customer specific requirements.

Wandfluh’s hydraulic and electronic solutions, with our special corrosion protection for the Offshore and Chemical market sectors, demonstrate our commitment to continual investment in developing innovative and essential valves for challenging working areas.

View full details of all our products online at www.wandfluh.co.uk

Published in association with: Wandfluh UK Ltd Tel: +44 (0) 1926 810081 Fax: +44 (0) 1926 810066 Email: sales@wandfluh.co.uk Web: www.wandfluh.co.uk


Factory of the month Soil Machine Dynamics

SMDs Andrew Hodgson

‘Trenchless’ burial of cables involves minimum seabed disturbance that reduced towing forces and replaced the spoil from the cut trench directly back over the buried cable, leaving no open trench. Plough steering, a patented technique, allows the subsea plough to follow a cable laid on the seabed in front of it in a simultaneous lay and bury operation. The operation enables cables to be laid at lower tension. The techniques and the prototype machines built to execute them proved successful and SMD was born. During the mid-1980s the company built and sold several machines, mainly to telecoms companies. Many of the employees in the early days of the company were graduates from the same university department. Alan Reece, the founder, MD and majority shareholder, went on to bequeath money to the University of Cambridge Engineering Department and in 2009, the Institute for Manufacturing at Cambridge opened its new building in his name.

One-offs to turnkey systems SMD continued to build the main electro-hydraulicmechanical equipment used on the seabed, but it realised that full vessel systems were viable for manufacture. As each contract progressed, another piece of the suite of equipment was added. “The control system for the first machine built was outsourced, for the next machine we designed and built the control system ourselves,” says joint managing director Peter Imlah, who has been with SMD since 1986. “Subsequently we designed and built the handling equipment, the launching system to deploy it from the ship, the towing winches, umbilical winches, then that built up into supplying telephone cable laying equipment which are linear cable engines – tension devices to hold on to the cable as

Andrew Hodgson, Chief Executive Andrew Hodgson joined SMD as CEO in 2008 in a private equity backed management buy-out. He was previously Finance and Strategic Development Director Spirit Aerosystems, where he was responsible for the Finance, Procurement, Business Strategy and Sales and Marketing teams. At Spirit, he created a standalone business unit in Malaysia that improved operating profit by £7m per annum, and delivered a business improvement plan increasing margins from 7% to 15%.

it was laid in the water.” Over time the company developed a turnkey solution to convert the whole aft deck of a ship into a cable laying system. During this time, SMD expanded its subsea vehicle fleet into cable maintenance ROVs. These are big, post-installation, free swimming and neutrally buoyant machines, which carry out repairs and reburial inspections, propelled in some cases by 10 thrusters. The power size starts from 180kW, but in the boom telecoms era the biggest one made was 900kW, for Global Marine Services. “We have since made a 2.1MW pipeline trenching machine, but this is exceptional,” says Imlah. “These are water-jetting devices with multiple thrusters and cameras, quite

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Factory of the month Soil Machine Dynamics

sophisticated devices.” The basic technology of these is comparable to workclass ROVs used in the oil and gas industry, although they generally deal in lower power, smaller machines. In 1999 SMD acquired Hydrovision, a small ROV company, in Aberdeen, primarily as a way of getting into the oil and gas market. During the 1980s and 1990s the expansion of the telecoms industry fuelled SMD’s growth. “For 10 years we were making just one unit a year, then suddenly we made 10 in a year,”says Imlah. “About 95% of our business was in telecoms then and turnover had peaked at about £50m in around 1998. And we had won a Queen’s Award for technology and export.”

Hercules ROV in Workshop

That type of diligence and version control is essential. Before it wasn’t so critical for the type of equipment we were building Peter Imlah, managing director

By 1999, SMD had developed a broad suite of equipment for a range of subsea maintenance and engineering applications. Then the dotcom bubble burst and the good times came to an abrupt halt. As SMD’s growth was linked directly to the growth of the telecoms industry, sales dived. The product is hard-wearing and the requirement for new equipment had been driven by the expanding number of installations. “Although the bulk of the work was in telecoms, we had maintained a presence in oil and gas, mainly in trenching machines, but it was for less predictable requirements.” Imlah adds: “But this one-off work often fuelled technical developments, like mechanical trenchers, chain cutters, wheel cutters, jetting technology – so it was important to keep that.” The emergence of this oil and gas business coincided with the decline of the telecoms market, and SMD shifted its focus more exclusively into oil and gas ROVs. “We had a very quiet year or two [2001-2002], and reduced our headcount from about 150 down to 40,” says Peter Imlah. “Turnover dropped from £50m to £10m until

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Transformers For Industry C

arroll & Meynell Transformers Ltd have excelled in the manufacture of transformers for over 35 years enabling us to become a market leader in the UK and abroad, providing power solutions to a wide range of industries including construction, transport, mining and power distribution. Our own product portfolio covers from small panel transformers up to 1MVA three phase power transformers, with emphasis on bespoke design to meet our customers’ specific requirements, achieving the best and most

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cost effective solutions. Our engineering team is available for consultation. Our product design emphasis is for long term operational life. In addition to our own extensive range, we have a close partnership with Tesar SRL of Italy who manufacture cast resin and oil filled distribution transformers, and instrument transformers. Cast resin transformers provide maintenance free, low loss operation and high reliability.

Tesar SRL have recently increased their production facilities considerably with enlargement of their works, and an additional factory.

Published in association with: Carroll & Meynell Transformers Ltd Tel: 01642 617406 Email: enquiries@carroll-meynell.com Web: www.carroll-meynell.com


Factory of the month Soil Machine Dynamics

business started to pick up in oil and gas, supplemented by some renewable energy work.” In 2002, SMD built a lay and bury tractor – or LBT1 – for installing inter-turbine array cables for offshore wind farms. These cables link turbines in an offshore farm in a gridpattern and the machine was designed to carry, pay out and bury the cable. “Many of our customers in the telecoms sector have shifted focus into the renewables sector.”

Brave new world – Workclass ROVs

Peter Imlah, Joint Managing Director Peter joined SMD in 1986 as a project manager. He became operations director in 1997 and joint managing director with Mike Jones in 2010. As operations director, he was responsible for the management of company project and engineering teams through a period of unprecedented growth, as well as the increase in the number and diversity of simultaneous projects, which saw turnover increase from £22m to £45m in 12-month period. His skills include building international customer relationships from the identification of need through solution development, specification and negotiation to delivery and support; and experience in developing technical specifications for complex products covering a wide range of disciplines including software, control, electrical, mechanical and hydraulic systems.

The company broke into the workclass ROV market for oil and gas, a much more competitive area with several global providers. SMD were the new kids on a very big block. “In the early days we had a very niche product, the telecoms cable plough, and by the time anyone else had figured out it was a lucrative market we had become the preferred supplier,” Imlah says. “Moving into ROV was a big challenge, there were well-established players. We sold our first workclass ROV to Qinetiq for military range maintenance work. Subsequently we won a contract to build vehicles for Subsea 7, a large oil and gas construction contractor which has the second or third biggest ROV fleet in the oil and gas industry.” The Subsea 7 contract proved a turning point – by deciding it should focus on operating not manufacturing, Subsea 7 effectively removed itself as a competitor and became a customer. The first contract was to build four Subsea Hercules vehicles, which led to a real coup for SMD. A subsidiary of Subsea 7, drill support division i-Tech signed a frame agreement with SMD to build up to 20 new generation ‘Centurion QX’ ROVs to i-Tech’s specification. “That was a big step for us in the market – in four years we built 18 of those vehicles,” says Imlah. At the same time SMD developed its own range of drill support and construction ROVs.

Rock Dump ROV

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PDQ Engineering Founded in 1986 PDQ Engineering had grown steadily in size until a management buyout in 2004 which resulted in substantial investment in the latest advanced, high performance machine tool technologies. Extensive developments of existing services and increased machining capabilities have enabled PDQ Engineering to offer a complete range of specialist services to its customers. Employing modern CNC Machine Tool Technology PDQ Engineering has the capability to produce very small to large component parts on multi-tasking CNC lathes and a comprehensive machining centre section and can compete favourably on prototype to full production quantities.

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With the ability to manage the diversity in size, geometry and batch quantity PDQ Engineering has extensive experience in machining most metals, exotic alloys and all types of engineering plastics. PDQ Engineering offers an adaptable service, employing flexible shift patterns where necessary, giving continuity of production and minimising lead times and has the in-house capability to manufacture component parts from raw materials to finished article and assemblies. PDQ Engineering employs a continual improvement strategy; we constantly review and develop our existing policies and working practices.

The company has a total commitment to quality and this is reflected in our continual investment in people, training and technology.

Published in association with: PDQ Engineering Industrial Road Hertburn Industrial Estate Washington Tyne and Wear NE37 2SA

Tel: +44 (0)191 417 2343 Fax: +44 (0)191 416 5518 Email: sales@pdqengineering.com Web: www.pdqengineering.com


Factory of the month Soil Machine Dynamics

A more standardised production system From a standard telecom plough, SMD’s product range has grown into a diverse subsea machine portfolio. The challenge now is to finetune a production system that reduces build time using cells for a standardised specification, while keeping flexible enough to produce one-off machines to any specification. “We’d like to standardise the range as much as we can, to bring costs down. At the same time we believe we have a competitive advantage by providing all the supporting equipment for the machines – the deployment systems and control units,” says Imlah. “Some competitors are less able to do this We regularly provide turnkey solutions to match the deployment systems to the available space and layout of the vessel or rig.” Today the company has repositioned itself as a major ROV player in the global oil and gas industry, while still sustaining some telecommunications and renewable energy business. Its oil and gas credentials were endorsed in July when SMD signed a new contract with Subsea 7 for 20 ROVs – with an option of a further 10 – to a new SMD design, to be delivered over the next 18 months.

It is a challenge and has required a large change in approach from bespoke, one-off engineering activity to a more standardised production system of identical product – but we’ve still had to maintain flexibility Peter Imlah, managing director A few years ago this delivery schedule would have been impossible, but the firm is developing a standard production process which can deliver two machines a month, which it intends to expand to three a month. It has also hired 100 people this year, bringing headcount to 260. Can SMD hit 20 machines in 18 months? “We’re contractually committed to do it, so we will,” says Imlah. “It is a challenge and has required a large change in approach from bespoke, one-off engineering activiy to a more standardised production system of identical product – but we’ve also had to maintain flexibility.” The frequency and variance in the order book has forced SMD to adjust the way it builds its product.

Soil Machine Dynamics at a glance SMD is a highly successful engineering company based in Newcastle upon Tyne specialising in the design and manufacture of complex engineering systems, combining integrated networked optical control and highly reliable electro-hydraulic systems with unique mechanical design. Its products and capabilities have made it a world leading supplier of subsea vehicle and support systems to the telecommunications and offshore markets with customers in the UK, Europe, USA, Japan, Singapore, Korea and the UAE. In 1986 SMD had an annual turnover of £2m and employed 10 people. In 2001, turnover was £45m with permanent staff of 75, at times up to 120 additional temporary and contract staff. Today it employs 260 people, 100 of which were hired in 2010, and turnover is £65m.

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JMH & SMD: Engineered to Work Together John M Henderson is a long established and progressive engineering company, specialising in the complete manufacturing of a wide range of subsea and offshore equipment.

A

fter more than a century as a market leader and innovator in the Steel sector, John M Henderson’s world class engineering opened up to a new momentum: the Oil and Gas industry. The cutting edge engineering design, advanced machine shop, reliable Hydraulic, Pneumatic and Electrical installation and complete fitting, assembly and testing facilities have enabled JMH to experience a constant growth, from simple manufacturing projects to complex subsea and offshore equipment. SMD is one of the strong partners JMH has gained throughout its Oil and Gas journey.

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Since the first project together in 2005, when JMH manufactured several Hercules A Frame systems until today, when SMD and JMH are working together as manufacturing partners for SMD’s reliable Rock Trencher RT-1 and several other projects, SMD has increasingly demanded JMH for the reliability, performance and security of its manufactured equipment. JMH’s commitment to providing “turnkey packages” (complete manufacturing solutions from the basic drawing right to the finalisation, including function testing, so that the customer receives equipment ready to install and operate) has proved to be highly valuable to SMD throughout the

whole partnership that has included numerous other orders for over thirtysix A-frames assemblies and twenty winch frames. Today, John M Henderson is a committed manufacturing partner. Professional. Reliable. COMPLETE

Published in association with: John M Henderson & Co Ltd

Kirkton Industrial Estate, Arbroath, Scotland, DD11 3RD

Tel: +44(0) 1241 870 774 Fax: +44(0) 1241 875 559 Email: info@johnmhenderson.com Web: www.johnmhenderson.com


Factory of the month Soil Machine Dynamics

Bespoke and new products Trenching machines and tidal The Special Purpose Vehicles business stream covers trenching machines for pipeline telecoms cables, power cable and renewables’ cable burial. These are more variable, customised. SMD designed a tidal turbine for which it received a BERR (now Department for Business, Innovation and Skills) grant which it had not been able to do leverage a prototype. “We recently entered into an agreement with a company called Atlantis Resources Corporation to build their design tidal turbine, a twin-prop system. It was agreed with BIS to transfer the grant to Atlantis in a working partnership to build their device, which has just been installed at the EMEC [test centre] in Orkney. We have the right skills to take that type of equipment and put it in a subsea environment.” “The one-offs are still very important, interesting, and they maintain the design engineering focus in the company, which was founded on sound engineering principles.”

Aluminium frame covered in a quickrelease skin of polypropylene

Subsea roll call – special one-off projects made by SMD A 2.3MW, 180 tonne chain cutting tracked trencher for pipeline burial A 2.1MW, 65 tonne free swimming jet trenching machine Prototype twin prop tidal turbine developed with Atlantis and BIS grant Three subsea mining machines for mining copper deposits at 1,700 metres

Diversification – Subsea mining SMD nearly got its fingers badly burnt by the telecoms sector in the late 1990s. It realised that over-dependence on one market sector was too risky and that, as with many engineering companies today, diversification is essential. A recent new area for SMD is subsea mining, a brand new application of ROV technology. Northwest Mining in Australia has pioneered the technique for mining offshore deposits in Papua New Guinea and SMD has a contract with them to supply three machines, deployed off the same vessel, where each performs different parts of the mining operation. “It’s based on mining copper but there are a lot of other minerals in deposits which can add upside to the process,” Imlah says. “It’s a huge technical challenge – the first site is in 1,700m of water, and the economics depend on getting a certain amount of output. The deposit is created by smokers, small volcanoes, so its a hostile environment, with high temperatures, and corrosive chemicals .” Water pressure, however, is not an issue for the machines. Workclass ROVs are routinely rated to a depth of 3,000m.

Syntactic foam to reduce weight in water

Vertical Curvetech thrusters mounted on the frame and located either side of the ROV

Seven-function manipulator

Extensive free space for mounting tooling

Electric pan/tilt camera

Lighting. Six 120VAC250W lights with six optional LED lamps

Horizontal vectored Curvetech thrusters. The Atom has four in total giving a bollard pull of up to 480kg weight in water

5-function heavy duty Grabber

Two multiplexers (one on each side)

Hydraulic system. A total of 60hp (45kW) or 100hp (75kW) is available. Up to 36hp (27kW) of tooling power is available as standard

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Pin Point Recruitment P

in Point Recruitment is proud of its track record in recruitment, supporting businesses throughout the North East and the wider UK from its three regional offices. Our business has continued to grow even in a global recession, by providing a multi-disciplined recruitment service covering a wide range of sectors including manufacturing / automotive / oil and gas / subsea/ power generation and renewable energy. The key to our success is building long lasting relationships with our clients allowing us to deliver a quality service. This has allowed weekly growth of our temporary headcount, and the development of a strong permanent order book. The North East has always been a global leader in developing Engineering

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staff. Over the years this pool has diminished with people leaving the area and not enough new talent moving through the ranks. By working with leading companies like SMD we help reverse this trend by creating long term employment opportunities. The North East can be proud of SMD’s innovative engineering achievements and commitment to the area. In difficult conditions it is paramount to align your business with the right recruitment partner to attract the highest caliber of staff. We have supported SMD for over two years providing engineering and blue collar staff. We also support a wide range of manufacturing companies from SMEs to major multinational corporations, providing high volume unskilled and

semi skilled staffing solutions. We handle single contracts of up to 200 temporary workers and can offer a cost competitive service with a proven track record and dedicated onsite account managers. Our aim is to work with new and existing clients to understand your business and deliver service levels unrivaled by any other recruitment company. To learn more about our services please contact our head office on 0191 2615205

Published in association with: Pin Point Recruitment Tel: (0191) 261 5205 Web: www.pin-point.co.uk


Factory of the month Soil Machine Dynamics

A workshop view of ROVs in production

“We’re building two at the moment rated at 4,000m.” The recent Deepwater Horizon oil spill in the Gulf of Mexico broadcast footage showing most of the main ROV operators, including SMD’s machines. The company has never had such mainstream publicity, while sadly in a such an unfortunate context.

Testing, testing The scale of some of the one-off machines makes onsite testing impractical.. Over the years SMD has made a number of prototype vehicles to prove trenching equipment concepts and developments. The mining machinery has few options for operational tests. “We will do some sub-assembly testing and have conducted analysis and cutting trials on the mineral material that will be encountered at the mine site,” says Imlah. “Our approach is to look at the established land-based technology out there and adapt it for our purposes.” So SMD has gone to the mining industry and looked to make technology work in a different environment.

Imlah says there will be a bigger, worldwide move into subsea mining. The company has talked to Joy Mining, a US mining machinery group with UK operations, and Sandvik. Caterpillar too has been very helpful. “They’re interested in this application and they may see us as a potential partner. It’s a fascinating project to be involved with. The advantage could go either way but we’re obviously going to learn a huge amount on this development.” Delivery of the three mining machines for NorthWest Mining is to Singapore in February 2012.

Headcount and growth John Reece, the son of co-founder Alan Reece, was the majority shareholder but in 2008 sold a 60% stake to Inflexion Private Equity in a management buy-out involving new chief executive Andrew Hodgson. Mr Reece retains 25% and management own the remaining 15%. While its chairman is interested in the engineering activity, Inflexion’s primary interest is financial. New ownership, says Peter Imlah, has galvanised a more professional focus on productivity. With 100 new staff joining in 2010, is SMD’s story unique for a company of this size and type in the North East? “It’s partly come about because of private ownership, “ he says. “We’ve always been a successful, profitable company but we only needed to meet the needs of the owner. Clearly under private equity ownership growth and diversification

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Hägglunds wins a significant order for launch and recovery systems from SMD

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he order from SMD is for 20 hydraulic drive systems for launch and recovery of ROV’s (remote operated vehicles for subsea use). The £870,000 order includes drive systems for the umbilical winches and “A” frame systems which SMD are supplying to Subsea 7 vessels for the Petrobras operations off the Brazilian coast. Each drive system has 75 KW of installed power and utilising a Hägglunds Viking 64 series hydraulic winch motor, known for its great tension control characteristics

on umbilical cable handling operations. Also included is a Hägglunds DNV type approved band brake assembly to the motor for the winch. Each one will be assembled into the winch module complete in Hägglunds new power unit build facility in the UK. The customised marine power unit, utilising Bosch Rexroth pumps and valves, will also be integrated into the module and designed and built in the facility as well. All units are designed to meet the tough marine certifications and some units are of ATEX explosion proof design as well. The order placed in July was taken on a short delivery time for the first two systems which were delivered on time in September and the rest are scheduled for deliveries towards the end of 2011 with hopefully more to come

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later. Lee Hinchcliffe, Hägglunds Sales Manager said: “This order was won in quite a tough competitive situation and we were very pleased to have succeeded”. SMD is one of the world’s leading subsea engineering companies designing and manufacturing Work Class ROVs, trenching systems, subsea mining machines and tidal generation devices. They have a worldwide customer base operating in oil and gas, telecoms, mining, salvage, renewables, defence and scientific markets. SMD has offices in UK, USA and Singapore. Hägglunds Drives is now owned by Bosch Rexroth, the drive and control company.

Published in association with: Hägglunds Drives Ltd Tel: +44 (0)1924 200100 Email: sales@uk.hagglunds.com Web: www.hagglunds.com


Factory of the month Soil Machine Dynamics

is of huge importance. That has been a catalyst for some very good changes in the company.”

The manufacturing process – sea change needed As it was then: Through the 1980s and early 1990s, the company employed mainly graduate engineers who did everything; sales, design, build, test and in some cases operation of the equipment. Fabrication was outsourced to local company, Pearson Engineering. Some field testing would be done in-house. Peter Imlah says: “We grew beyond the ability to do it that way for all units but we retained the function – it became a very good training ground for graduate engineers to operate the machinery in the field and solve problems. The management of the company were in favour of this approach – to use bright engineers to do everything, meaning at any point you could make key decisions – you could modify it, adapt and fix it. It could be very flexible but at the same time less controlled than a routine production environment.” Today, to deliver the high throughput demanded, the manufacturing process has needed to become more standardised. Manufacturing staff are now skilled fitters and electricians, and while the engineers come into the factory to consult on assembly, they are based mainly in the design offices. Making more standard ROVs plays to a more ‘process- flow’ manufacturing operation. When all the products were bespoke, the focus was primarily on the function of the machine – achieving critical trenching criteria. “Moving into the ROV market, the function of the machine is taken as a given. The

focus is different – they’re used by people throughout the world often operating multiple systems, so they need to have consistency across the fleet,” Imlah says. The basic operational movements of ROVs, while not accredited, are established industry norms. These are hard machines to differentiate technically. All this makes for a more standardised, cell based manufacturing operation. Now SMD’s factory is organised, a little crudely while in transition, into cells. Factory manager Tom Turnbull shows how the factory will eventually look, with designated zones for ROV build and flexible areas for trenching machines and the one-off heavy projects. “This is gearing up for true production line type assembly,” says Turnbull. “We plan to have specific teams doing specific tasks – a chassis build team, a hydraulics team, piping and cable team. Each ROV will be manufactured in exactly the same way.”

Logistical gains Factory and supplier delivery organisation is key to the next phase of growth, and the 20 vehicle order from Subsea 7 is a big driver of this. “It’s the biggest batch of identical machines that we’ve ever built. This is a real opportunity to explore some of our supply chain options, to reorganise the logistics to make that as efficient as possible,” says Imlah. SMD has started line side delivery on its electrical systems. It is now using one supplier for 90% of its control systems’ electrical components. “Rather than placing purchase orders for all components individually, we buy a number of kits from one supplier and they’re delivered directly to our assembly site,” Imlah says. “These are not handled in our stores, we’re not booking them in and out, these are delivered in four different kits through the build process. The system has been developed both internally and with Routeco, the supplier. They looked at our bills of materials and told us the proportion of it they could deliver. It’s mainly an advantage in logistics, but it’s significant.” There is a modest price advantage because Routeco will buy in slightly bigger bulk than SMD. “We’ve tried to deploy this new system to parts where its most appropriate. If it works well, we may apply it to our hydraulics components. We’ve had to restructure our bills of materials to facilitate that kind of production, which has required an education process to focus on attention to detail.”

From left to right – Simulation system, a remote operated vehicle and the Quasar Workclass ROV

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Parmley Technologies ELECTRONIC CONTROL PANELS AND PCB’S FOR HARSH ENVIRONMENTS

P

armley Technologies Ltd specialises in the provision of Electronic Control systems to industry & the military. Our modern, purpose built factory, in Newcastle-Upon-Tyne, provides design office & manufacturing space to ensure that we can provide a complete one-stop manufacturing service to our customers. We are close to offshore operations in the region which includes one of our major customers, SMD, for whom we provide electronic control systems for their ROV’s & other platforms. Parmley Technologies Ltd has a proven record in both

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applications in harsh environments. Military & Industrial fields. Our We produce high quality products, harsh environment electronic on time & at competitive rates. control systems have been used successfully worldwide. We offer rapid prototyping of new designs & full on-site support throughout the design & development phases including environmental & EMC type testing. Published in association with: Parmley Edwin Snowden & Co Ltd Technologies Ltd has over 20 years experience Tel: 0191 2900132 in designing & Fax: 0191 2802324 manufacturing Electronic Email: info@parmley-technologies.co.uk Control Panels & PCB’s Web: www.parmleytechnologies.co.uk for industrial & military


Factory of the month Soil Machine Dynamics

In the past, the engineers and technicians building the equipment and would just resolve assembly problems at point of discovery, placing ad hoc parts orders. “We could not apply this methodology to multiple unit assembly and we now use a range of production technicians, electricians and wiring specialists – so we must try and present the information accurately so they can build efficiently, without having to refer back to engineering all the time.” The old way – making several one-offs – meant that correcting mistakes was done per unit, because they were probably never going to have to build that same unit again. Volume orders for serial build means that this approach is redundant – the process now requires the manufacture of 20 or 30 systems identical across all machines. “We’ve had to develop a system of capturing build standard faults and rectifying them, and if necessary making sure this is delivered across fleets of already delivered equipment,” says Imlah. “That type of diligence and version control is essential. Before it wasn’t so critical for the type of equipment we were building.”

Procurement alignment Procurement used to be done on a project by project basis, controlled by individual project managers. SMD saw that it didn’t make sense to purchase for each project individually. And scheduling has also improved. Tom Turnbull adds: “We now have a formal schedule rather than ordering all components in one go and delivering to the shop floor in one hit, which has the potential to damage or lose components. Forward planning, we have longer lead times but we also kit certain assemblies, where we pre-order that for Week 3 of Build A we need kit X for a specific bay and we’re at that point now.” Availability of key parts is key to efficient production, so cross-project, joined up procurement was essential to the new production system. “It’s worked well on the control cabins, where kits come in from a single third party supplier who provides a whole kit. We used to stock them all on our shelves, then restock them all again for production. Now they arrive in three to four kits direct to the production area.” Better scheduling is essential for the new way, not least because the lead time on some parts are several weeks. Typically the delivery time on an umbilical cable, which connects the ROV to the ship, is 16-18 weeks. “Our delivery schedule on the first of the new Subsea 7 units is 19 weeks from contract; that puts scheduling in perspective. You can’t do anything without the umbilical.” These parts come from Nexans, a Norwegian company, but the vast majority of components are sourced locally, says Turnbull. “We try to keep the supply chain very local, partly to support local industry, and also to control supply chain risk and keep delivery costs down.”

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Factory of the month Soil Machine Dynamics

Engineering principles, not software UT1 ROV

Well established designs form the basis of SMD’s intellectual property. The company has no simulation software. Instead, Mr Imlah and the team prefer to rely on fundamental engineering principles. “Although we have Inventor and Ansys CAD packages we want to engineer something fundamentally correctly to begin with,” he says. “I don’t believe that the packages can do that for you; you have to put the right information in. If you don’t design a structure correctly and then use a analysis package to make it strong enough, rather than taking good design and optimising it you’re taking a poor design and making it heavier. If the fundamental structure of what you’re designing is not correct, the analysis package will tell you where to strengthen it, but it will really just cover up the flaw.”

North East subsea cluster The North East region has developed a specialisation for subsea engineering and offshore oil and gas companies. Wellstream, Duco, oil and gas construction group CTC and SMD are all local and all occupy different parts of the subsea engineering chain. SMD has one direct competitor in the region, Engineering Business, a business formed by two ex-SMD founder directors. “They were taken over by IHC, a Dutch shipping and engineering company, and their focus has changed though they do still compete with us in some market sectors ” says Imlah. Another potential business link is taking shape a few miles up the Tyne. The North East’s links with offshore wind are well known, with the NaREC national renewable test centre at Blyth and the proximity to the Greater Gabbard wind farm. US firm ClipperWind has built a factory at the old Neptune yard and will be installing plant soon. Wind turbines need cables to connect them. The SMD team may have to find room for more orders soon, this time from customers in their own back yard.

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Food and drink Thorntons

A Thorntons

moment

In the high-pressure world of business journalism, subject to the authority of the smartphone and the inflexible tyranny of the presses, seldom do we hacks wish for our contacts to arrive late. Lorenzo Spoerry finds that at the Thorntons factory in Derby however, visitors – even journalists – soon find themselves wishing precisely that.

The

lobby of the largest premium chocolate manufacturer in the country is, like its signature boxes of chocolate, replete with the best this country has to offer in the way of sugary treats. Chocolate ganaches infused with Marc de Champagne and bite-sized Valencia chocolates are piled high among the low tables. Plates of bright white vanilla truffles compete with small mountains of hazelnut slices for our attention.

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W

ith more than 30 years of experience, Awema has developed the production machines and lines to meet the requirements of small and larger customers across the world. Specialising with one shot for chocolate, robotic development of decoration and spinning of hollow goods, Awema has worked with Thorntons to produce a complex plant, install the equipment and train the staff to get the best result. Combining all the techniques, and taking care of a large range of products, has given Thorntons a significant increase in production. By supplying the largest depositors manufactured by Awema, output is up to 3 times their existing plant

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per hour, enabling the production line to support a market which has improved substantially. The flexible plant makes efficient operation within a tight space by using the cooler tunnel as a two layer unit- this allows the different production to be carried out on either side of the plant, to maximise the variety of products being produced. The same technique can be used to shorten the plant if only one side is required for manufacturing. A plant with this level of production needs the advantage of the Awema automatic demoulding system, which vibrates and loosens products made on a single or double mould before placing on the belt.

A programme of product development has been backed by the Awema laboratory which supported with fully trained specialists, working with Thorntons for new results. The co-operation has extended the skills of Awema staff and allowed Thornton product development to move forward quickly and effectively. Published in association with: AWEMA AG Tel: +41 (0)43 288 7000 Email: info@awema.ch Web: www.awema.com Tel agent in GB: +44 (0)1323810049 Email agent in GB: petern@petrian-marketing.co.uk


Food and drink Thorntons

Sadly for this reporter, David Proctor, Thorntons’ head of operations, was right on cue for our interview. Ushering me past the sales section (itself amply stocked with plates of chocolate) and into his office, he explains how Thorntons has succeeded in weathering the recession to maintain its position as the UK’s favourite boxed chocolate manufacturer, with a growing market share of 50%. “It’s not easy for a manufacturer to make a truly excellent range of boxed chocolates. Our ability to get that right puts us apart from the crowd. We have a huge range of products. One of our typical boxes will have milk, plain and white chocolates. It’ll have a huge range of decorations. It’ll have moulded chocolates and enrobed chocolates requiring different manufacturing techniques” “Each chocolate will have a different centre, too. Some will have pralines,

New Thorntons CEO found Thorntons has announced the appointment of former Caffe Nero and Dixon’s Group managing director Jonathan Hart as its new CEO. Hart takes up the role from January 4, 2011. As managing director of Caffe Nero, Hart led the company to doubling its number of outlets and he is credited with building the brand equity significantly and increasing company profits. He has also held senior positions at Abbey, Woolworths and ITM Communications. Hart replaces Mike Davies who announced his retirement in May. John von Spreckelsen, chairman of Thorntons, said: “Jonathan brings a wealth of relevant experience to Thorntons from the retail and consumer goods sectors. He has an impressive track record in successfully running a number of multi channel businesses, including concessions, and a proven track record in the development of retail format strategies, as well as new product development and launches. We are delighted that Jonathan has agreed to join Thorntons.”

Thorntons has a growing market share of 50% in th boxed chocolate market

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Puratos Puratos has, for many years, been supporting bakers, patissiers & chocolatiers develop & grow their businesses.

T

he partnership we have with Thorntons demonstrates this perfectly. When Thorntons approached Puratos with the idea of developing a new branded concept of chocolates using their one shot technology we were ideally placed to offer the solutions they were looking for. As “Experts in Taste & Texture� we are always looking to use our technology, passion & expertise to develop products that not only meet the needs of industrial customers but delight the end consumers. Their experience of a product is the most important thing & how the

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product tastes & melts in the mouth are crucial.

delivering innovation to the market place together.

Belcolade offers a wide range of products ranging from Dark, Milk & White references, through specialty chocolates such as no added sugar, sugar free, Organic, Fairtrade, Rainforest Alliance & Origins, fillings including our new innovation Cryst-o-fil (which is a precrystalised based for fillings using Belgian chocolate) & nut pastes for the manufacture of pralines.

If you would like more information contact customer services.

We are very proud to be associated with Thorntons, look forward to their continued success & working on

Published in association with: Puratos Tel: +44 (0) 1280 822860 Email: info_uk@puratos.com Web: www.puratospig.co.uk


Food and drink Thorntons

Thorntons’ Chocolate Block range is boosted by four new limited edition flavours a year

mousse, nougat or fudge. Some will be foiled. We use the very best ingredients, excellent craftsmanship and well-proven recipes. It’s a complex process; it takes a great deal of experience, expertise and technology to be able to do what we do here.” he said Founded in 1911 by Joseph Thornton, the company started life as a small chocolate shop in Sheffield. His vision – to create the best chocolate in town - has served the company well for 99 years. Thornton senior eventually left the company to his two sons, Norman and Stanley (the two main facilities at Thornton’s Derby site are called Norman House and Stanley House). Today

Thorntons owns 377 of its own stores and sells its products through 200 franchisees, through its thorntons.co.uk website, through supermarkets and duty-free shops for a net turnover of £215m. “We try and remind ourselves that what worked for Joseph Thornton is more or less what works now,” explains Proctor. “We focus on our core values and what our customers expect from a box of chocolates with the Thorntons name on it. We want to give our customers that ‘Wow!’ factor when they walk into one of our stores. What we can provide through our branded stores is one-to-one time with someone who’s an expert on chocolate. We can provide a bigger range and a personalised service and personalised products.” In the late 1980s, Thorntons moved production to Alfreton, Derbyshire, where the company produces, packages, stores and from which it distributes its products.

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Food and drink Thorntons

“We have all of our business functions here too, our own fleet of vehicles and our own drivers. We’re a highly vertically integrated company,” says Proctor; “We want to make sure we always have our products in our stores, at the right times and in the right condition – agility is key. Having control over every aspect of the business is the best way to do that.” Six years ago, the company bought a new robotic packing line and brought in another one a year ago. This has helped ensure a much greater level of quality control. “These robots pack around 900 chocolates a minute. They automatically sense the chocolate, measure it to make sure it’s the right size, pick it up and place it the box at the correct orientation. That’s one of the ways we’ve managed to differentiate ourselves from other manufacturers.” Thorntons has also recently invested in a new £2m moulding line which allows it to make moulded chocolates and hollow spun products like Easter eggs and models. Recent fluctuations in the price of cocoa have put many chocolate manufacturers in a very precarious position. Thortons has, by and large, successfully weathered the storm, something that Proctor credits with a focus on keeping control of costs. “A lot of the rise in the price of cocoa was driven purely by speculation rather than underlying factors. This year’s harvest has been good, so we hope that the price will return to a more stable, lower level.”

Cappuccino truffles ready to devour - Thorntons’ standard boxes include a diverse range of white, dark and milk chocolates

Innovation and tradition Faced with the challenge of declining sales on the high street, Thorntons has sought to preserve its market share through constant innovation whilst keeping its core customer base loyal.

Thorntons at a glance Location

Derbyshire

Sector

Food and drink – confectionary

Key products

Classics, Continental, Truffles, Fudge, Moments

Turnover

£215m

History

Founded in 1911 by Joseph Thornton, the company started life as a small chocolate shop in Sheffield. His vision was to create the best chocolate in town. Thornton senior left the company to his two sons, Norman and Stanley. Today Thorntons owns 377 of its own stores and sells its products through 200 franchisees, through its thorntons.co.uk website, through supermarkets and duty-free shops.

Contact

www.thorntons.co.uk

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Food and drink Thorntons

To this end, one of the main points of focus for innovation has been its packaging. “Some customers want to come in and buy a box of Thorntons Continental (35 years old, it’s one of Thorntons’ best-selling brands). They don’t want us messing around with it. Other customers want us to experiment. They want to know what the difference is between chocolate made with cocoa from Venezuela versus chocolate made with cocoa from Madagascar. They want to experiment with flavours such as balsamic vinegar, they want chilli, they want orange and cardamom. People want to discover new experiences. This is what our Chocolate Block range is all about.” Thorntons’ Chocolate Block range boasts 21 different products. Each block retails at £1.79 and the company frequently includes these in special offers at £5 for three. Four new limited edition boxes are brought out every year. “If any of these prove especially

popular, we might keep them in the range for good,” explains Proctor. “Chilli, for example, came in as a limited edition and became one of our best selling chocolate blocks. People loved it.”

Lean programmes, communication and training The company has focussed in a few key areas in its lean improvement programmes and has sought to overhaul its communications strategy. Hanging on the wall of David Proctor’s office is a massive board detailing the owner of every single process undertaken in the factory. It looks a bit like an eye testing chart. “It looks a bit strange, but it’s been very valuable to us in improving quality and driving waste out of the business. We examine how much waste we’re created in each four-week calendar period,” says Proctor; “and then compare it with the same four-week period in the previous year, which focuses us on improving performance year-on-year. We go through this each month and it helps us drive other projects. For example, in our enrobing area, we’re working on a weight-control project. In our packing area, we have a project team looking at reducing the amount of waste created by damaged packaging.” Thorntons has engaged in a number of training and continuous improvement programmes and currently has

Thorntons’ packaging robots pack 900 chocolates a minute

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Food and drink Thorntons

almost 100 staff undertaking Level II NVQs in Business Improvement Techniques. In October 2009, in association with delivery partners CQM Training & Consultancy, the company also invested in a significant 24 month programme involving groups of cross functional teams working on specific improvement projects. Three projects involving improvements to the Enrobing Line, the Robotics Packaging Line and the Flow of Packaging material have so far identified potential savings of over £700,000 of which over £200,000 of savings have been embedded during the project activity. The teams involved in these first projects will continue to embed their improvements and lock in the savings with CQM’s and the operations management support, whilst the three more teams are prepared for the commencement of three more improvement projects in May 2010. “Another area that we’re trying to concentrate on at the moment is improving communications between all areas of the business. This was something that emerged as an obvious gap when we spoke to our employees. Now, we’ve introduced daily cell reviews where we look at key performance metrics like safety, cost, quality, delivery performance and new products. These reviews, although not unusual in a business like ours, have been absolutely crucial in driving Thorntons forward.” Thorntons also conducts quaterly plant briefings and distributes a fortnightly newsletter. In addition, the company has introduced a fortnightly newsletter and a rumour board. “The rumour board is something which some thought a little controversial at first. The basic rules are as follows: If anyone has a question they might think is of interest to a wider audience, such as whether the company is moving to 24-hour shifts in packing, or whether working hours might change, they can write it up on the board. Our commitment is that, within 24 hours, a senior manager or someone with expertise in that particular field will reply with the answer. It’s a little daunting at first because you don’t know what people will write, but I’ve found that the communication has been very positive. Experience has taught me that if you leave a void in communications people will fill it, and we’ve worked hard to address that here.”

Production of Thorntons’ moulded and hollow spun products has recently benefited from the purchase of a £2m moulding line

Energising efforts In line with the scale of the operation, Thorntons has a considerable energy cost, particularly relating to electricity useage. This consumption takes in to account not only what is used at the factory level but also includes the hundreds of Thorntons stores from around the country. To assist with its energy needs, the company consulted the help of Energy Services Partnership (ESP) to develop an improved buying strategy. Combining its financial, capital markets and energy trading expertise ESP was able to help Thorntons more proactively manage its energy exposures. “Energy is obviously quite a specialised subject so we decided to go outside of the company for some extra help to ensure we

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Simply Thorntons As a supplier of high quality printed cardboard packaging SIMPLY CARTONS LIMITED of Nottingham has built a close working relationship with Thornton’s the Derbyshire based Chocolatier. We regard ourselves as fortunate to have developed a close working relationship with Thornton’s, whereby both companies have an open and honest policy in their business dealings in the pursuit of the excellence required to succeed. They have been a major part of our development over recent years and we like to think that we have had a positive effect on their business as they strive to reduce packaging waste whilst retaining and developing innovative and attractive packs that appeal to their customers. We use our talented Cardboard Engineering Design skills, coupled with the use of the latest high speed machinery to bring innovative cost saving solutions to the Chocolate Confectionery Market. The packaging we supply has to be of the highest quality to meet Thornton’s exacting standards but at a price that allows them to compete in a highly competitive market. The process usually starts with us being briefed by Thornton’s Packaging Development Team on what they are aiming to achieve with a particular range of products, for example Easter Eggs. Factors that must be taken into account include innovation, cost

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effectiveness and environmental issues. Negotiations with Thornton’s Purchasing Team are undertaken to ascertain feasibility and provide cost control. In addition of course the package has to have shelf appeal, be economical both to produce and to erect for the loading of Thornton’s products. The market Thornton’s supply requires a mixture of machine erectable and hand erectable packaging. Once the design engineering has been agreed, Thornton’s provide us with the often highly coloured graphical design information that has to be printed on the pack After the receipt of this information and quantities have been agreed we source material prior to commencing the production process. We print, cut and crease and glue to the required often complex shapes that are the norm for the innovative packaging market. Supplementary operations undertaken by us include metallic foiling and the application of acetate and pick and place windows. These latter two processes are required when vision of the product within the pack is appropriate at the point of sale.

Over the years we have come to recognize that if Thornton’s lose a sale then so do we. It is this sobering thought that drives what we do. We believe one of our major points of difference is that we actively engage with our customers and have a genuine interest in understanding the requirements of supply in their respective sector. This has never been considered as interference, it only enhances our ability to supply the right product, on time, in full. This enables ourselves and our Customers to thrive in exciting and highly competitive markets.

Published in association with: SIMPLY CARTONS LIMITED Tel: 0115 9422112 Fax: 0115 9422102 Email: sales@simplycartons.co.uk Web: www.simplycartons.co.uk


Food and drink Thorntons

were getting the best advice available” says Proctor. “With regards to buying, by pooling some of the knowledge and part of the expenditure with other manufacturers and other organisations, we reduce our costs and get access to important information which assists us in our decision making in this area. We observed that we were not necessarily able to buy electricity and gas cheaper than the next person but that we were able to make better decisions as to what coverage was appropriate to reduce our financial risk and provide more certainty around our budgeting process. To assist the company to also reduce its energy useage, Thorntons engaged the assistance of energy consultants Camco to provide support on policy, regulations and project development for both clean energy and energy efficiency projects. With a view to generating cost savings while reducing the financial impact of carbon risk and regulations, Camco attended the confectionary manufacturing site to perform an audit. “The outcome,” says Proctor, “was a range of options in terms of how to improve efficiency. We have converted those suggestions into a project plan and are working our way through it.” Thorntons created a graduate position to assist the company with its energy reduction and sustainable aims. According to Proctor, the assigned graduate proved to be very passionate about the field, driving the sustainability topic to the top of the company’s agenda. “We are actually doing a lot right now in the environmental field,” says Proctor. “We have scaled up our recycling program, working alongside Biffa, and are currently investigating the implementation of combined heat and power as well as a solar energy program. We see such projects as good business practice even when there is not an immediate financial return.”

A source of relief Thorntons recognises it has social, ethical and environmental responsibilities arising from its operations and is committed to the welfare not only of its staff and customers but also of its suppliers and the wider community. The company ensures ethical, social and environmental standards are maintained through the supply chain by auditing and visiting over 95% of

These robots pack around 900 chocolates a minute. They automatically sense the chocolate, measure it to make sure it’s the right size, pick it up and place it the box at the correct orientation David Proctor, head of operations

its suppliers on a regular basis. The primary concern is for food safety but audits are also conducted to review ethics, health and safety, employee pay, employment conditions, use of child labour and environmental policies and practices. Thorntons buys all of its cocoa from suppliers which actively support the International Cocoa Initiative and World Cocoa Foundation (“WCF”) programmes to improve livelihoods of cocoa farm families and promote responsible labour practices. This ensures the ethical sourcing of cocoa and, in particular, minimises the risk of purchasing cocoa from sources which illegally use abusive or enforced child labour. Thorntons is also itself a member of the WCF which encourages responsible sustainable cocoa farming amongst small family-run farms. In addition, Thorntons has registered as a member of GreenPalm which aims to promote certified sustainable palm oil and prevent the destruction of rainforest.

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Boxes Prestige B

oxes Prestige, a Clondalkin Company, has worked with Thorntons for over ten years. Throughout that period the relationship has developed to a close working partnership where Boxes Prestige have provided a number of complex packaging solutions, drawing on the vast experience in all aspects of the manufacturing process. In a market where image is vital, confectionery cartons need to create visual impact as well as representing value for money and environmental sustainability. Boxes Prestige has worked closely with Thorntons over the years on a number of initiatives including Thornton’s own selfimposed environmental targets to reduce total packaging.

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Recently Thorntons re branded their Continental Range. In order to maintain that “luxury feel” the range portrays, Boxes Prestige, working with Thorntons Packaging, Purchasing and Scheduling Teams brought the new design to the market providing the highest level of innovation. Working within the confectionery industry presents Boxes Prestige, a Clondalkin Company, with many challenges to provide value for money and shelf appeal whilst also providing environmentally viable packaging. Boxes Prestige experience in this market gives them the ability to constantly innovate, providing the customer with the complete packaging solutions.

Published in association with: BOXES PRESTIGE Tel: +44 (0)1604 811 971 Fax: +44 (0)1604 811 978 Email: info@boxesprestige.co.uk Web: www.boxesprestige.co.uk


Food and drink Thorntons

Thorntons uses over 300 different raw materials, which are sourced from every continent in the world except Antarctica. “Because Cocoa trees can only be grown 10° either side of the equator, much of our cocoa comes from the Ivory Coast and Ghana but we have ranges coming out of Madagascar, Venezuela, Ecuador and Paupa New Guinea. After Christmas we are about to launch a chocolate bar which is made using Haitian Cocoa. Funds raised from sales of that chocolate will go towards assisting with the Earthquake relief in Haiti and we are hoping to raise in the region of £20,000.” The interest in charitable work is well ingrained in the Thorntons’ culture with staff last year raising in excess of £50,000 for its lead beneficiary, children’s charity NSPCC. Every year the company’s charity committee co-ordinate a range of initiatives including sponsorship from suppliers and staff for runners in the London Marathon, the arranging of collection points in stores and the organisation of a charity football day for Thorntons’

suppliers at Derby County’s football ground. Proctor says the company has also recently had 20 teams from across the country compete in an adventure challenge up in Coniston, in the Lakes District, which raised just over £10,000.

Driving the business forward Keen to compensate for a seasonal lull in chocolate sales during the summer months, Thorntons has launched a range of ice cream parlours. “We’re very excited about this,” says Proctor; “It builds on our excellent existing range of ice creams. We think there’s a lot more we can do in this area. The other thing that we’re looking at is developing international markets. This year we’ve increased international sales to approximately £4m, which is still quite small by Thorntons’ standards, but we’ve had a good deal of success in Ireland, the Middle East and in Poland.” It’s a fairly cautious, committed approach looking very much towards the longer-term. At one end of the Derby site’s cafeteria there is a Thorntons shop selling cut-price chocolates to the company’s workforce. It’s identical in every way to one of the company’s high street shops, the italicised Thorntons name cast against the familiar dark-brown background. Inside, brightly coloured chocolate boxes are stacked from the wall to the floor. Proctor notices my interest and hands me a giant box of Thorntons Continentals. “For the girlfriend,” he says. “She’ll love it.”

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Materials processing Terex

Earth king gets a crush on lean

Terex manufacturs 33 Crushers are primarily used in quarrying applications but also for recycling asphalts and concretes

With more than 15,000 employees and over 50 manufacturing facilities around the world, few would argue that Terex was not true to its name, coined in 1968 from the Latin words “terra” (earth) and “rex” (king). Martin Dummigan, operations director for Terex Omagh, tells Lorenzo Spoerry how the mobile crushing, screening, washing and recycling industry specialist has created an lean, mean manufacturing machine at its Omagh base.

Terex

has two manufacturing sites in Ireland, with a combined workforce of 1000 people. It sells its heavy equipment to industries as diverse as construction, quarrying, surface mining, shipping and refining. Initially selling its products mainly in the UK and Ireland, Terex Omagh now sells its products around the world in South Africa, Australia, Europe, North America and, increasingly, the Far East. Mobile equipment of the kind that Terex manufactures is much friendlier to the environment and much more flexible than competitive offerings, enabling the machine to be brought to the material rather than vice-versa. This can save the customer a great deal of money.

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Putting the customer first Perkins Engines is the world’s leading supplier of off-highway diesel and gas engines in the 4 – 2000kW (5 – 2600 hp) market. The company’s key strength is its ability to tailor engines precisely to meet customers’ requirements, which is why its engine solutions are trusted by more than 1000 leading manufacturers in the industrial, construction, agricultural, materials handling and electrical power generation markets.

A

s an engine manufacturer for OEMs worldwide Perkins is constantly facing the challenges of designing, manufacturing and supplying engines that have to meet a number of tough criteria. These might be emissions-, performance- or cost-related but one thing is certain there is no margin for error. As part of this engine development process Perkins works extremely closely with its OEM customers to identify key issues and put forward possible solutions. This starts with an extensive “voice of the customer” research program which questions customers on the relative importance of each of their different requirements – e.g. durability vs. cost vs. fuel economy. It also provides an opportunity for direct input into future engine design concepts. When an engine design concept has been defined Perkins works with its customers in what are called ‘Integration Workshops’. A team of design engineers, together with the customer, looks at how engines can be installed into the customer’s machines to minimise costly re-engineering and machine redesign. OEM customers typically

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visit the Peterborough Engine Centre, where they are given the detailed information so they can understand the challenges ahead. Both parties then work closely together on 3D models exploring the best way of integrating an engine into a machine. As this process evolves, Perkins designers gain vital experience and get better at optimising machine design, so helping customers find improved ways of integrating new power systems.

inviting open discussion about the challenges, and this openness is certainly appreciated. By collaborating closely with Perkins now, machine manufacturers are able to understand and resolve installation difficulties in good time to meet any manufacturing deadlines. Solutions identified early are the least expensive, and result in more productive, more fuel efficient and more reliable machines.

This intense phase of collaboration has made it possible to concurrently develop both engine and installation design, saving time, money and man hours. Importantly feedback from customers has been excellent. They believe this process is saving them many months of engineering effort, and offering a service that is far above that offered by other engine manufacturers. It is possible that some competitors tell their customers “don’t worry, it’s only a minor change”, whereas Perkins is

Published in association with: Perkins Engines Company Limited Annette Johnson Frank Perkins Way Peterborough PE1 5NA

Tel: +44 (0)1733 58 3000 Fax: +44 (0)1733 58 2240 Email: johnson_annette@perkins.com Web: www.perkins.com


Materials processing Terex

Terex manufacturs 33 different product types

Its 400,000 sq ft facility in Omagh, County Tyrone manufactures for two brands of crushing equipment: the Terex Powerscreen and the Terex Finlay. The company has a full, broadline spectrum of crushing equipment which fall into three main categories: ‘jaws’, ‘impactors’ and ‘cones’. These represent about 99% of the business in Omagh. Within these three categories, the Omagh site manufactures in the region of 33 different product types. Crushers are primarily used in quarrying applications, although there is also a large market for recycling of asphalts and concretes. In a typical train of machines a jaw crusher inputs into an impactor which in turn inputs into the cone. This results in primary, secondary and tertiary crushed materials at each stage and the rock is reduced to the required grade for the application. The machines can also work in isolation and, in addition, they can often be found feeding one of the Terex range of screening machines where the components are graded by meshes and conveyors into the resulting classifications.

In the Terex office

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Euro Springs Limited are proud to be a key supplier to Terex supplying High Quality Springs and Camber Bars as well as giving full technical support including design when required.

E

uro Springs Ltd was established in 1997 as a privately owned coil spring manufacturing company and very quickly developed its niche in its market place servicing a comprehensive customer base. In its early stages it gained ISO 9001 certification boosting customer confidence and encouraging new business. The company ethos is to provide a quick turnaround of customer orders whilst maintaining the highest level of quality, service and product integrity. Euro Springs Ltd are situated in a modern 1050 square metre factory floor space with 250 square metre office accommodation. Euro Springs

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have a highly trained and skilled work force with vast experience, undertaking demanding and sometimes the impossible tasks that only the “Elite� could attempt. Euro Springs has a very positive attitude and even with economic climate of today we continue to grow by maintaining a strong customer focus. To do so we view keeping up to date with the latest spring technology as an aspect of paramount importance and this is afforded to us by our membership of the UK Spring Manufacturers Association (IST) A large range of products are available on demand and we are comfortable with using an array

of different materials from the Super alloys to the basic Spring steel for example, thus providing the customer with choice and so ultimately enabling them to obtain their ideal product to suit its function. Euro Springs Ltd are committed to providing the best standards of customer service and satisfaction and strive to do so in each and every aspect of company organization. Published in association with: EURO SPRINGS Tel: +44 (0) 2887 789200 Email: +44 (0) 2887 784963 Web: www.eurosprings.co.uk


Materials processing Terex

The jaw crusher functions like a crushing mandible where the material enters the inlet and is gradually crushed smaller and smaller, exiting at the bottom of the chamber. An impactor, on the other hand, uses kinetic energy to strike the rock with hammer bars. The material is flung at high speed against crushing faces where it shatters into the required grade. A cone crusher can be thought of as a mortar and pestle; it produces the finest grades. Supporting all of this technology is a tracked chassis platform with screening decks, conveyors, closed loop

functionality, PLC and CANbus technology. The diesel and electric/hydraulic powertrains are also designed in-house and use state of the art engines. All of the equipment is designed using the latest suite of ProE 3D CADCAM technology.

The Terex Business System The Terex engineers in Omagh pride themselves on their high speed-to-market-entry. “We’ve got an excellent research, design and development component on this site,” explains Dummigan. “Beyond that, we invest a great deal of time and energy into manufacturing engineering, where engineers examine the design and break it down into the most efficient necessary processes. The Terex Business System (TBS) is crucial to this process. “It’s not dissimilar from the Toyota Production System. A generic name for it is lean manufacturing. We are very

Terex has invested heavily in design and engineering, which is key to the Terex Business System

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D

avid Brown Hydraulics is a global provider of products, systems & services to the Transport & Mobile hydraulics industries. The range includes a comprehensive selection of products, providing complete hydraulic solutions to just about any construction machinery, trucking, marine and industrial hydraulic application. Consistently setting the industry standard for innovation, performance & reliability, David Brown Hydraulics products provide you with value

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added, high quality, leading edge solutions. We believe that true value is measured by superior performance, unmatched reliability, excellent service & expert advice. As a continuation a comprehensive development program is ongoing at David Brown Hydraulics, therefore always take the opportunity to look for news either on our web sites or by contacting us directly and we will be happy

to assist you in any hydraulic system need.

Published in association with: David Brown Hydraulics Unit 32, Factory Road Poole Dorset BH16 5SL

Tel: +44 (0) 1202 627500 Fax: +44 (0) 1202 627555 Email: info@dbhsl.com www.davidbrownhydraulics.com


Materials processing Terex

Terex Omagh’s strongest IT areas are inventory data bills of materials and process management

strong believers in it and we aspire to be better than what we are. We’re not yet as far along this path as Toyota, but we have an excellent groundwork in place in that everyone has knowledge of the processes. At the moment, I’d say our strongest points are inventory data management, bill of materials management and process management.” Terex employ a manufacturing engineering manager at their Omagh site, who works alongside its lean promotion officer. “The lean promotion officer has responsibility for training the operators and teaching them the fundamentals of lean. These fundamentals include 5S (a workplace organisation methodology that emphasises sorting, setting in order, systematic cleaning, standardising, self-discipline and safety), workflow and identification of waste. We define waste to include waste of potential, waste of talent, waste of work in progress. In effect, the lean promotion officer acts as a kind of mentor to the factory.” The manufacturing engineering manager, who is proficient in lean techniques too, takes the concepts as handed down by Terex and applies

them to his work. “This includes a whole host of measures” says Dummigan. “It could be implementation of Kanban, it could be process waste elimination, it could be operator training or it could be new product introduction. Primarily one of the things we focus on is new product introduction.” Terex develops new products at such a fast rate that the workforce spends a significant majority of its time integrating

We’re not yet as far along this path as Toyota is today, but we have an excellent groundwork in place in that everyone has knowledge of lean processes Martin Dummigan, operations director, Terex Omagh

new products into the plant. “At the moment on my floor, we’re launching a new product – a large cone crusher for our Finlay brand – and a new impactor. We’ve just launched a very large jaw and we’re actively working on a few new crusher developments which will be launched in 2011. For every new product, we need to set up the processes, cost the build and materials, cost the labour and cost the processes themselves. We then add up a combined total to get the true cost of the product. Because there are so many new products coming out all the time, we try and do lean in tandem with that, which is something of a challenge to say the least.”

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total control... J

MG Systems Ltd specialise in the design and manufacture of Engine Control and Radio Remote Control solutions, exporting worldwide with market distribution covering quarry and recycling, airport support and construction sectors. Their customers include many leading OEMs, including the Terex group. Ideally located close to the Terex Finlay facility in Tyrone, the company has been a dedicated supplier since 1985 and the relationship has evolved over time with JMG providing optimal solutions across the complete Terex Finlay range. JMG design a wide range of control systems, harnesses and associated products to provide fault indication and operational capabilities across many applications. With 65 staff across manufacturing, development and support, the company ethos is based around continuous enhancements and product developments, applying safe

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and operable solutions to meet customer expectations. The R&D department offers a wide range of experience and capability to work closely with customers to help develop concepts, using the latest technology available whilst adhering to our ISO9001 standard. The M-PROS system used on the Terex Finlay 1160, I-130 and I-130RS machines, is very popular within the quarry and recycling sector providing real time analysis and feedback to the user with full fault history capability. It can collect multiple levels of performance and operational data.

JMG Systems offers product support for all their customers and are committed to delivering the highest standard of customer service. “As part of our company strategy and ethos, we provide an excellent back-up service and offer our customers training in the operation and technicalities of our products.�

Published in association with: JMG SYSTEMS Tel: 02882 244131 Email: info@jmgsystems.co.uk Web: www.jmgsystems.co.uk


Materials processing Terex

Terex at a glance Address

Drumquin Rd, Omagh, Co.Tyrone, Northern Ireland, BT78 5PN

Contact

+44 28 82418700 sales@terexfinlay.com

Core geographical markets

UK and Ireland

Products

Crushing, screening, washing and recycling equipment

Points of Interest

Company-wide focus on lean techniques Undertakes four day Terex Improvement Process events to quickly and efficiently solve problems 400,000 sq ft facility in Omagh, Northern Ireland

The development of TBS The Aerial Works Platforms division is one of Terex’ largest. It manufactures mechanical devices used to provide access for people or equipment to inaccessible areas. Faced with severe difficulties in the late 80s and early 90s due to competition in the North American market, it was one of the first of Terex’ divisions to take on board the concept of lean manufacturing. “They really ran with it, to the point where they became true experts” says Dummigan. “The concept really drives their business. We use it as a training ground now, with lots of resources, lots of training materials and lots of criteria to gauge ourselves against.” “We don’t need to go and visit Toyota per se, or indeed any other global manufacturer. We’re capable of doing lean for ourselves. The challenge for us is implementing lean - which I feel we should be thinking about morning noon and night - at the same time as bringing in new products. It’s tough doing both of those to the standards that we set ourselves.”

Employee engagement with TBS Terex operates a top-down approach called Hoshin Kanri whereby its objectives - defined in terms of market share, market segmentation and so on - are set at the divisional level. From there it filters down to all the various factories. “I receive those objectives here in Omagh and, along with our general manager, break them down into performance targets, quality targets, build schedule targets, ontime delivery performance targets and inventory targets.” “At present we’re finding new ways of achieving these targets. We spent many

years training a large component of our workforce. What we’re doing now is training people to be Terex Improvement Process (TIP) leaders. We have TIP events where we focus on a specific problem - be it quality, delivery or inventory problems - and form a team of about eleven people to solve it. Over four days those eleven people step away from their normal nine-to-five responsibilities, go onto the factory floor and fix the problem.” A TIP leader will gather around him or her (Terex have a significant number of female TIP leaders) about eleven people and they go to a particular trouble spot - be it a bottleneck, a supplier problem or a quality, process, or layout issue. This TIP team will define the problem and, during the course of the first day, produce a ‘Situation-At-

We have TIP events where we focus on a specific problem - be it quality, delivery or inventory problems - and form a team of about eleven people to solve it. Over four days those eleven people step away from their normal nine-to-five responsibilities, go onto the factory floor and fix the problem Martin Dummigan

A-Glance’ overview. They then assess whether the problem can be fixed in four days before spending the remainder of the time available tackling the problem. Each day is measured according to strict targets set for each individual day. By using such a system, Terex insures that a great deal is usually achieved by the end of the fourth day. “TIP events are the manifestation of trying to make an immediate improvement on the shop floor. Beyond that, there are important structural improvements you can make in terms of basic factory layout or factory process flow. All of these are important, but when you’re trying to do a lot of different things and you aren’t working at 100% efficiency these events are vital in making improvements quickly” says Dummigan. Terex typically do one such TIP event a week. The company’s target this year is to do 46 TIP events. The

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Materials processing Terex

program started when Terex took 18 people out of the business and trained them to be TIP leaders. These can be described as being the equivalent of Kaizan Black Belts in other companies. “Our entire industry suffered a very significant downturn during the recession,” explains Dummigan; “unfortunately we lost a lot of our junior members of staff and, as a result, some of our training skills left with them. We were forced to manage the business for cash and for survival. We’re come through it, so now we’re going back and revisiting old territory by rejuvenating TBS, which means retraining everybody once again. We expect to be doing a very great deal of that in 2011 and to be getting back into TBS in a big way, because we recognise how much it did for our business before, and how the company improved by using the system. We’ve retained the core competency at all times - that never left us. What left us were the time and the space to do it during the recessionary period.”

Raw materials, shedding the light Terex Omagh’s raw materials are sourced primarily within the UK and Ireland, with some of its build materials coming from the sister Terex plant in Malaysia. Steel weldments and fabrications are sourced primarily from within the UK. Fiftyfive Terex employees work in a subsidiary factory in Coalville, Leicester. They manufacture products specifically for the Terex site in Omagh.

Energy efficiency Terex has embarked on a company-wide safety and environmental roadmap. “We’ve got a facility manager who’s been in the business for about two years now. He’s come up with a bunch of great ideas to make our energy use more efficient. We’ve set ourselves some initial targets above and beyond the laws and regulations that we, as a multinational organisation subject to a variety of different jurisdictions, have to abide by. In Omagh specifically, we’re committed to reducing our electricity spend in lighting. We’re now using LED, for instance, and other forms of energy-efficient lighting. We’re also disposed of diesel-generation of electricity on site. Computers are on idle-timing so that everything shuts down if left alone for a period of time (with the exception of safetycritical systems). We’re not yet world-class when it comes to energy efficiency, but we’ve definitely embarked on a journey in that direction. We have aspirations to be better each and every year. That’s the Terex way”.

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Tyre manufacture Michelin Tyres

Treading

ahead From bicycle to space shuttle, global tyre manufacturer Michelin has been building tyres to fit every application since the turn of the 20th Century. Currently ranked number two in the world, the tyre manufacturer employs approximately 109,000 people with a global turnover of Eu 15bn. Its plant in Dundee is one of its finest assets, Glen Jamieson finds.

For

the last few years Michelin Dundee – the UK’s leading car tyre manufacturing site – has been fighting towards an uncertain future, without much luck in its favour. Along with the economic crisis came competition among a European network of 18 of the 72 Michelin factories across the world to avoid a position in Michelin’s restructuring firing line, considering cuts had already been made to a fifth of the workforce. Amid the austerity of a city losing many of its major companies to the crisis, the 800-strong workforce at Dundee’s plant fought with dedication to stage an immense recovery. Already 10% ahead of this year’s forecast, the plant is working solidly towards a brighter future, and as factory manager John Reid says, “We continue to strive for excellence”.

The roads are paved with green The plant has been in Dundee since 1972. Its core focus on environmental issues in recent years has been one of the company’s greatest virtues. With an ecologically directed work ethic, it

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M

ichelin Tyre Company established their manufacturing centre in Dundee in 1972 and installed Atlas Copco Model ER8 Reciprocating air compressors at day one to power this facility. Thirty five years later as the units were approaching the end of their useful life and also as Michelin were looking to reduce their energy costs; they contacted the Scottish Atlas Copco Distributor BRE Ltd and requested a site audit and the presentation of a proposal to replace their compressed air equipment. A reduction in their Carbon footprint while also improving the quality of their compressed air were also essential components in the remit given to BRE Ltd. The contract to supply and maintain the equipment was awarded in 2004 and since that time BRE has been a round the clock service partner looking after the compressed air plant comprising:-

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1 No Atlas Copco GA315 Variable Speed Drive Silenced Rotary Screw Packaged Air Compressor. 4 No Atlas Copco Model GA250 Fixed Speed Silenced Rotary Screw Packaged Air Compressor. The compressed air plant is supported by the installation of Atlas Copco Model FD1000 Variable Speed Drive refrigerant air driers and filtration to an ISO 2 Class 2-4-2 standard across the plant. This combination of fixed and variable speed drive equipment ensures maximum energy savings throughout which aided by the installed Atlas Copco ES130 Compressor Control system, monitors and controls the requisite number of duty compressors required. A project to replace some of the original factory

pipework with Carbon Trust approved TRANSAIR pipework is also in place and will be accomplished by BRE installation personnel during the 2010 Christmas shutdown. BRE also supply Michelin with a range of Atlas Copco Precision Torque LTV Nut Runners which are used extensively in the production process assuring constant fastener torque repeatability.

Published in association with: BRE Ltd Fowler Road West Pitkerro Ind Est Dundee DD5 3RU Scotland

Tel: 01382 739848 Fax: 01382 739849 Web: www.breuk.com


Tyre manufacture Michelin Tyres

has reduced its own C02 emissions and energy expenditure greatly and its timely energy efficient products have taken key importance to an automotive market that has put environmental performance at the heart of its bounce back. At Dundee, the company specialises in the manufacture of 13, 14, and 15inch car tyres. Reid says they have been working on environmentally friendly products for some years now and these products are now spreading into a broader range. “Our ‘low-rolling resistance’ tyres have two impacts”, says Reid. “They reduce the amount of fuel that the driver uses, and they help the car manufacturer reduce their CO2 emissions. Typically, a car manufacturer would spend hundreds of millions of pounds on engine developments to dip under the CO2 legislation, but now they can make a significant saving by choosing to use Michelin tyres. So our original equipment business is picking up, as tyres go straight to the manufacturer”. This is 15-20% of output; the other 80-85% of the six million tyres they make every year is to distributors and wholesalers for the replacement market. As the plant operates 24 hours a day, six out of seven days per week, the company has taken a holistic undertaking towards reducing its carbon footprint. “The first goal has been to reduce our energy consumption, for both the environment and our own costs. Efficiency programmes within the plant have reduced our consumption by about 40 per cent in the last 10 years.” Reductions have tackled the simple things first: better operation of the boilers which are required to generate steam and compressed air compressed, and procedures to diminish leaks. Actions like these have an immediate impact on energy consumption. But the foremost cost reduction and contribution to the environment is made through two operating wind turbines that were installed on site four years ago. These 2-megawatt-hour turbines cut energy taken from the grid by approximately 25-30% - this means a saving at the point of production on our electricity of around 6000 tonnes of carbon emissions, as well as a reduction in the energy bill. “It makes sense from both an environmental and business point of view,” says Reid.

“The energy being used is dependant upon the ebbs and flows of the wind – if the wind is up the turbines power the entire plant, and if the wind is down then energy is supplemented from the grid. If the plant is shut down then the energy produced from the turbines goes back to the grid.” To further improve the factory’s environmental footprint there has been extensive work on improvements in the production process that has allowed the plant to reduce scrap by 40%. In terms of the disposal of waste from the plant, the factory has achieved zero landfill through sourcing other outlets for their scrap. “This is a major step forwards for us as a manufacturing unit,” says Reid. “On a wider scale Michelin as a company works very hard on end-of-life solutions for tyres, including power and heat generation for a range of users and material re-cycling for things like fillers for road construction.”

Reinventing the wheel There are four basic production lines at the plant running simultaneously, and the plant is currently operating at full capacity with an output of 22,000 tyres a day. “We used to have five teams running seven days a week 24 hours all year and we took one of those teams out because the volume in Dundee wasn’t needed. This cost us about 1.2 million tyres and then the global crisis took another 15 per cent out of orders in the last couple of years - we were hit big for a manufacturing plant.” Michelin has its own version of lean manufacturing, using special tools and equipment to make the site as efficient as possible. Reid says: “There’s no magic trick to it, its just basic bottom-line manufacturing performance.”

Coming into 2010 our workforce’s morale and confidence was low. The Michelin restructuring has been completed and we’ve started the year on a much more positive note – more aggressive in our strategies, and now we are no longer trying to survive but are striving for success The truth about tyre making is far removed from the perception of most customers – tyre making is a complex assembly process working to very tight tolerances. The many different pieces for assembly are made mostly from rubber imported from Northern Ireland and steel and textiles imported from central Europe – with the range of materials needed to create different characteristics in terms of flexibility and wear. Meanwhile, 95% of Dundee’s produce is exported outside of the UK – the two biggest markets in central Europe are France and Germany, and a large number of tyres go out to North America. Based up to 1500 miles from market, one of the main challenges is to be cost effective and productive to compensate for logistics costs. During the economic crisis, the plant worked hard to improve the process of supply chain

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outsourced services such as cleaning, Through an extensive range of essential security services, front of house staff, car services for the manufacturing industry park management and window cleaning from security, cleaning and hygiene to the in specialist areas across the private supply of production labour - resource can and public sectors. The company has a not only free management to concentrate unique footprint across the UK and Ireland, on their core activities but can also help to with offices in London, Manchester, drive efficiency and productivity in Birmingham, Leeds, Edinburgh, Cardiff, daily operations. the Isle of Man, Belfast, Dublin and resource’s focus on partnership has Limerick. Every day our 10,000 people helped clients to address very specific help our clients to deliver better requirements through innovative solutions customer services and release value to for example, by providing an energy officer their businesses. to work proactively to reduce daily energy consumption in support of the company’s Published in association with: energy-saving strategy. RESOURCE GROUP About resource resourceTM delivers and advises on key

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Tyre manufacture Michelin Tyres

performance. “For a tyre plant like ours flexibility is absolutely fundamental so we have tripled the level of dimensional flexibility within the last 18 months,” says Reid. And now, for delivery to market, Dundee is top within Michelin’s European network of 18 factories – ahead of its sister companies who have the advantage of being situated within the market. This positive achievement has come out of some difficult years at the plant where it has been in constant internal competition. Reid says within Michelin the Dundee plant is renowned for its fighting spirit and it is testament to the character of the people of the region that the plant has flourished despite the difficulties it has faced. It is by no mistake or luck that that they are the only tyres manufacturer remaining in Scotland, and the biggest in the UK, he insists. “Coming into 2010 our workforce’s morale and confidence was low,” Reid reflects. “The Michelin restructuring has been completed and we’ve started the year on a much more positive note – more aggressive in our strategies, now we are no longer trying to survive but are striving for success. “Our approach in Dundee has always been to be open and honest with our workforce and we communicate the good, the bad, and everything in-between. In this context our people have been exposed to a lot of uncertainty. But the more our people are aware of the business context then the more they are able to understand why we need to perform and make difficult changes.”

routine decision-making. Only if it’s a big problem will a manager need to step in. “It makes them think differently”, says Reid, “they’re not just a cog in the machine. It’s about giving them the confidence and support to make decisions at the right time and as a team.” With the progression made this year in terms of improved morale and dynamics Reid says the factory is in decent shape. But there is no time to rest on laurels. “In the future there is no place for good factories; we have to be an excellent factory. We want to become benchmarked in Michelin and in tyre making. Our main challenge is growth. “It used to be put your tin hat on, get in the trenches, and dig to keep ourselves in the game. Now we’re digging ourselves out of the trenches and we can see a more ambitious future for ourselves. Michelin won’t put money in this plant unless it’s at the top of the tree.” Accordingly, Reid describes his three-year development plan as “offensive rather than defensive.” Having come through these difficult years positively, and making a significant contribution to the environment, it would not be fanciful to expect the Dundee plant to achieve its desired excellence, flying the flag for Scotland’s manufacturing industry. A slight adjustment to the company logo should surely be worth considering for Michelin’s bosses. The image of the Michelin man flying a blue and white flag in the attire of a highland hero with windswept locks would be a more than fitting emblem.

Power to the people For its own part, where the staff are concerned, Michelin dedicates around 6% of its time and resources on training and development to get the understanding, ability, and business literate workforce that the company has become known for. “We don’t have manager presence 24 hours a day so a lot of time is focussed on work methods, flexibility between posts, operational management and on the empowerment of self-managed teams.” Now, the workforce has developed to a level where they can run the plant themselves and handle eight out of ten problems through

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ClydeUnion Pumps Glasgow facility specialises in highly engineered multistage pumps for the oil & gas and power industries. Best in class operational and lean manufacturing policies ensure these complex pump skids can be offered with class leading deliveries.

A push Glasgow based ClydeUnion Pumps is a leader in the field of industrial pump design and manufacture. Richard Bott spoke to managing director, Frank Barrett, about the company’s global presence, extensive training and development programme and its blend of old and new manufacturing thinking.

in the right direction ClydeUnion

Pumps, while being a relative new entity in its own right, is an amalgam of two very proud, successful, long standing and innovating manufacturing businesses from either side of the Atlantic. For over 135 years, Glasgow based Weir Pumps built a reputation for invention and first class, high end manufacturing of pumps and valves. Founded in 1871 as G & J Weir, the business was acquired from Weir Group PLC and its diverse knowledge and expertise were used as the cornerstone for the formation of Clyde Pumps in 2007. In 2008 Clyde pumps acquired USA counterpart Union Pump, another heritage rich, century plus old success story, to create ClydeUnion Pumps. The combination created a very fast moving organisation that has grown rapidly year on year. The last three years have seen growth of between 25% and 40% with revenue increasing 68% in 2008/2009. This has been achieved by both acquisition and by stand alone ventures.

A force to be reckoned with As befits a truly global company, ClydeUnion Pumps has number of sites located around the world in which

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Pumps

ClydeUnion Pumps the innovation, knowledge and expertise they are renowned for is used to manufacture pumps for six key markets. These include: upstream and downstream oil; nuclear power; conventional power; water; industrial; and aftermarket. Most of those are well established markets and ClydeUnion Pumps sees itself as being at the higher end of the market. They continue to push the boundaries upwards for performance and capability, and downwards in terms of cost and lead time. They have a presence on every continent that is either wholly owned or is a joint venture with a local organisation. Their biggest manufacturing plant however is still Glasgow, an impressive 76,000m2 site. The Scottish base manufacturers a range of centrifugal pumps but specialises in the upstream oil and nuclear market place. It employs some 650 people on this one site and has been there for over 120 years. Managing director and the man responsible for heading up the Glasgow site as well as overseeing global operational development, is Frank Barrett. Barrett describes ClydeUnion Pumps as a company that while being risk averse, is a place where entrepreneurial spirit is very much alive and well. As an organisation they embrace the cultural differences of the locations in which they operate and while growth at ClydeUnion Pumps has been massive in recent times, it has been focused on one principal: being at the customer face. All of ClydeUnion’s sites are built in areas where there is an immediate need for their products and it is a strategy that has worked extremely well for customers. The result, alongside good operational and lean manufacturing practices, has meant that there is no lost time in responding to the needs of those customers. With industry leading lead times, Barrett confidently claims that ClydeUnion Pumps prides itself on the fact that they will never lose a job on lead time. “Nobody will do things to the high quality that we do, at the

speed that we do, anywhere else in our field,” says Barrett.

Pump people Arguably the thing that ClydeUnion Pumps is proudest of is its extensive investment in staff. The company operates its own, global academy founded on two fundamental

Nobody will do things to the high quality that we do, at the speed that we do it, anywhere else in our field Frank Barrett, managing director principles that run through the very fabric of the business. In order to be successful you need the right type of assets to be able to support your strategy and you also need the right type of human assets to back that up. Barrett explains how the ClydeUnion Academy has become almost an inhouse university. While there are no first degrees available, the academy does run a number of masters in conjunction with various universities including MSc programmes in project management, leadership and quality management as well as MBAs. Alongside that, the ClydeUnion Academy have their own stand alone program called the Alchemy High Performance Management System, aimed at developing both

ClydeUnion Pumps’ HPRO ranges were developed specifically for reverse osmosis and clean water applications. They offer superior efficiency and through life cost than comparable pumps.

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Bodycote Bodycote is pleased to support Clyde Union Pumps as a key supplier

W

herever there is a need for optimising product performance and reliability, the role of thermal processing is often vital. It can have a substantial effect on the performance and lifetime of many component parts and provide many hours of extended lifetime, saving material wastage and cost. Bodycote offers a variety of surface engineering processes. Ongoing development of existing and new technologies has enabled Bodycote to offer manufacturers thermal processing solutions which make a positive contribution to their production. A network of fully accredited facilities enables Bodycote to support both the

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original manufacturers and their supply chains. Together with the shared expertise of the Group, Bodycote is a world leader in all these areas, and its process portfolio is synergistic to the needs of the modern day manufacturer. Bodycote is committed to excellent customer service, demonstrated by the achievement of award-winning key supplier status to companies such as Clyde Union Pumps. By offering a single source solution for processes such as HVOF and ceramic slurry coatings, gas or plasma nitriding and full manufacture including machining and finishing, Bodycote is able to deliver a flexible, value-added service which improves component performance.

So whether you operate as a component manufacturer or specialise in the aftermarket sector, contact Bodycote to talk about your thermal processing requirements and find out how Bodycote can make a difference to your business.

Published in association with: Bodycote Email: infotp@bodycote.com Web: www.bodycote.com


Pumps

ClydeUnion Pumps individuals as well as the teams in which they operate within the business. The investment in maximising the intellectual capability of the business is massive. As Barrett explained, “For a machine tool to run 24/7 you just have to feed it with the information it needs for what you want it to work on and provide the power to do it; for people, you need to feed them with knowledge and create the environment. That is a big part of what we do.” ClydeUnion Pumps also actively avoids imposing European or UK culture on its global facilities. How each area individually manages itself, what they look like and how they deliver training is done culturally within core principals, optimising assets and people. There is no top down mandatory process. With bases in Scotland, England, France, Canada, USA, Brazil, India, China and the Middle East, the diversity of cultures is too wide for a one size fits all approach. Leadership, instruction and guidance are given but how that development occurs is up to each area as long as there is increased performance. Most of ClydeUnion’s sites manufacture but some are more service or testing led, so the needs of each are fairly unique on different levels as well. Excluding acquisitions, ClydeUnion Pumps plans to invest upwards of £25m in factory expansion, machine tools and test equipment this year. That represents a massive complimentary increase in capability outside of the extra capacity gained in other ways. The Glasgow facility alone is having three new production lines built as well as a new steam testing facility, one of only two in the world capable of testing nuclear steam-based systems which is about to come on line soon. Barrett believes that at present the word entrepreneurial is thrown about too much in the business world. What he believes makes ClydeUnion Pumps different and makes it a truly entrepreneurial company is its balance between capability, excellence, processes and people. It is these differences and the universal dedication to increased performance that has seen the company experience such high growth over the last three years, a legacy destined to continue in line with the company’s impressive investment in infrastructure and personnel.

Over 20 new product ranges have been developed within ClydeUnion Pumps in the last two years

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Heath and beauty BCM

Get by with a little help

from your friends

Complete visibility of customers stock levels allows BCM to offer the highest levels of efficiency and service

Mark Young hears how a commitment to comprehensively aligning its business with that of its customers is proving a successful strategy for BCM.

With

a 1,200 strong workforce at its Nottingham factory, BCM makes health and beauty products. Although over half of its products are purchased by sister company Boots UK, BCM also supplies to some of the world’s biggest pharmaceutical and healthcare brands. Until last year, BCM was the manufacturing arm of the retail chain. Now it is a completely standalone business within Alliance Boots. Boots opened its historic D10 ‘wets’ factory on its Nottingham site in 1933, and quickly set about building an output level of 800,000 units per month. Almost three quarters of a century down the line, that output has increased to around 26 million per month. The company has further sites in France and Germany which make colour cosmetics, employ around 300 people each and have a combined output of around 120 million units per year. There is also an associate assembly plant in Poland. BCM makes a huge range of products – over 5,000 different ones in all – across healthcare, skincare, personal hygiene, cosmetics, dental care, baby and toddler, fragrances and sun cream. The flag bearers among these include Boots’

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Randstad Randstad Inhouse Services has been based onsite at the Boots Contract Manufacturing (BCM) factory in Nottingham since 2006, working strategically to provide a flexible work solution, managing a workforce of over 600 flex workers.

B

y operating a dedicated team of recruitment professionals, Randstad Inhouse Services is able to work together with BCM to ensure their workforce is both highly productive, and agile enough to meet the changing resourcing requirements of a contract manufacturing environment. The service focuses on maximising BCM’s staffing efficiency and productivity, thereby reducing the organisations total labour costs. This is achieved through: Aligning services to BCM’s business objectives Providing an agile and flexible workforce to meet changing demands Having a consultative approach to truly understand business needs and identify process efficiencies and cost down solutions Maintaining high levels of engagement with flex workers to drive market leading retention Being employment specialists, advising on optimal solutions in line with legislative change and risk mitigation. The team is committed to meeting the requirements of the BCM business, this is achieved by working closely with just one customer. The account team truly understands every element of the BCM business, from its skills

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supplying Boots Shared Service Centre and boots.com

requirements to its values and culture. They act as much more than a transitional supplier of services, they are a true business partner aligned, and integrated, with the BCM business strategy. To ensure constant improvement a Randstad Inhouse Services Process Improvement Manager concentrates on the development of services to BCM. Working in partnership they identify process and operational efficiencies for both the short and long term. They provide ongoing advice on the conditions of the labour market and legislative changes and solutions. They also have a specialist team working solely on continuous innovation, removing layers of administration with innovative management tools and also a new workforce management and rostering system. It is this type of advice and innovation that underpins Randstad Inhouse Services’ position as a trusted advisor and employment expert. Following the success Randstad Inhouse Services has maintained working with BCM it has been recommended across additional parts of the business and is now

Randstad Inhouse Services provides clients with efficient and effective solutions for the management of a large volume, high-quality, temporary workforce and work with a wide variety of clients, from FTSE 100 blue-chip corporations to medium sized privately owned companies. They are dedicated to providing recruitment solutions to the manufacturing, production, supply chain, commercial and call centre sectors. They have helped save individual clients over £1 million per year and could help you and your business shape your world of work.

Published in association with: Randstad Inhouse Services Suite 4, Quillgold House Kingswood Road Hampton Lovett Droitwich WR9 0QH

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Heath and beauty BCM

own brand cosmetics and skincare line, No7; its own brand sun care range, Soltan; and a huge range of products which it makes for famous designer labels including Ted Baker and FCUK. The company operates 52 manufacturing vessels, where it mixes up formulas for its products in batch sizes between one and nine tonnes. It has 40 packing lines which support a vast array of packaging types, including tubes, jars, bottles, cartons and pumps. The company has its own dedicated team of packaging developers too, working primarily with fine fragrance products.

Stars are aligned Since The Manufacturer last spoke to BCM, the business has implemented a number of measures to reinforce its commitment to quality, cost and service. These are overseen by general

BCM has introduced an employee recognition system which rewards its people on a monthly basis

manager Phil Lund. Having previously held the role of operations director, he is now responsible for all business activity in the UK, including commercial. Previously, he spent a number of years working in the automotive industry and this has placed him in good stead to drive the efficiency programmes at BCM – bringing many of the lean initiatives usually confined to car makers into the fast moving consumer goods environment. One of the biggest initiatives which BCM has implemented is a new IT system which allows it complete visibility over its customer’s stock levels and forecasts, allowing the company to initiate an automated replenishment service which is known as Vendor Managed Inventory. “We look into their portal or warehouse and we keep them in stock within a minimum and maximum stock level,” explains Lund. “It allows us to respond to our customer’s fluctuations in demand and takes away any chance of major unexpected fluctuations in demand coming in to us. This means we can flat-line our production and improve our efficiency. For our customers, it means that we can manage their stock volumes for them so that they can concentrate on their core business, making sure forecasts

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The company has invested in new technology on the production lines which puts the responsibility for efficiency in the hands of the staff

are accurate and that they understand the dynamics of the markets.” By having a better insight into what its main customers are going to need, BCM can schedule its production better to take advantage of economies of scale – producing for multiple customers’ markets from one batch for instance – and it can then benefit from less changeovers, lower inventory levels and plan its own supply of raw materials more effectively too. “It gives us far greater control and we can plan better than if we were relying on fluctuating demand signals,” he adds. The IT system provided by Orchestrate was brought into service in three years ago, and the facility is now offered to all of BCM’s customers. In fact, this initiative can be viewed as emblematic the very thing that Lund says gives BCM the edge over its rivals. “Our growth is completely in alignment with our key customers and we pride ourselves on not only being able to deliver on a day to day basis in line with their expectations but also embodying their future project work as they begin to expand themselves,” he says. “We have a great focus on innovation throughout our supply chain and the customers really value that – almost as a niche offering.”

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Its service levels are testament to the success of this approach. “We align our value chains in the business completely with our supply chain. It’s exactly what the car industry did two decades ago, align the supply base with manufacturing to take waste out and working capital and inventory out.” The new IT system has undoubtedly contributed heavily to an improvement in Overall Equipment Effectiveness around the plant. Three years ago, OEE was 45%, now its up to the mid sixties. BCM will continue to invest in its infrastructure to drive productivity and offer great cost benefit to its customers.

Time is of the essence BCM prides itself on its speed to market as one of its key services, and a key point of differentiation between itself and its competitors. Most of its briefs come with predefined product concepts and packaging requirements, though, and where this is the case the company can turn the job around in as little as four weeks. “This is hugely beneficial to both us and our customers,” says Lund. “We can convert raw materials very quickly and the quicker you can get them through the facility and get the product packed, right first time, the less cost you incur. It means we don’t have cash tied up in work-in-progress. It also means that our customers can react to trends very quickly. It also means customers can come to us when they’ve been let down by another company and still get their order supplied on time. We are very adept at stepping in and getting them supplied at very short notice.” Essential to this way of working is an engaged workforce that shares the vision of the company, knows what is expected of it and can respond quickly when the goalposts


Heath and beauty BCM

are moved. BCM ensures through complete transparency, communication and employee empowerment. “We have dedicated communication channels including quarterly briefings for all of our people and we’ve just introduced our own intranet,” says Lund. “We have a staff council and committee in place and we see regular face-to-face meetings between every operative with their line managers as vital part of our first line communication. Cross functional working groups are used to consult on anything from what’s on the menu in the canteen to major efficiency programmes on the lines. We see being completely transparent with our employees as a key way of engaging our force in our shared ambition.” The company has also invested in new technology on its production lines which puts the responsibility for efficiency in the hands of the people that actually make the products. It’s a system which shows in real time how efficiently the line is running, when and for how long any downtime has been, what shortages there has been, and what compliance measures need to be adhered to. “It’s very visual; there’s computer screens on the line and it drives real time improvement by putting the responsibility and the awareness with the operator,” says Lund. “It also helps us react much quicker. It gives us the ability to see how each line has performed, what some of the issues are and implement immediate corrective actions where needed.” The management of the production facility is organised by value stream and value stream leaders look after a shift of anywhere up to 200 people. Local production managers oversee the day-to-day running of the line and the mixing vessels and serve as a link between management and the line, communication the continuous improvement initiatives up as well as managing their teams on the line. The company has introduced an employee recognition system called BCM Stars through which it rewards its people on a monthly basis when they go above and beyond their role. The annual employee bonus scheme is based on a range of quality, cost, safety and service targets. This commitment to open communication isn’t confined to

suppliers and employees either. BCM has recently initiated a programme to create a network of suppliers of major equipment so that it can consult them what the latest additions to the market are and how they can become even more efficient. “We are absolutely resolute in the concept of getting product through our facility right first time and being competitive on price and we’ll always search out ways to stay ahead of the game,” says Lund. “Given the value of our products to our customers, it’s massively important that we keep these values front of mind.”

The right environment Lowering its environmental impact has also been a key consideration for BCM over the last few years and chief among its achievements is the fact that it now sends less than 1% of its waste to landfill. Two years ago this was 37% – enough to fill eight Olympic sized swimming pools. Its primary charity is East Midlands’ children’s hospice, Rainbows, to which it donates both cash raised by charitable events and product which it manufactures. BCM also holds fund raising activities. In all, £300,000 worth of stock was sent to different charities and good causes last year, and BCM employees clocked up over 600 hours of volunteering including manning phones for the BBC Children in Need appeal and participating in reading programmes at local schools. The business reduced its carbon dioxide emissions by 9.5% in 2009/10, in real terms, taking into account its growth. Initiatives to this end included the introduction of ‘X Block’ technology which recycles compressed air, and using ultrasonic equipment to find leaks in pipes, installing thermal imaging equipment to identify and reduce thermal and water waste. Collectively, these three initiatives saved over 1,500 tonnes of CO2. Water waste from cleaning tasks has been reduced by 20%, an achievement Lund says is extra meritorious given the prescriptive conditions imposed by the Medicines and Healthcare products Regulatory Agency (MHRA) in this area. Safety of its employees is paramount. “People don’t come to work to get injured,” he says. “The safety and wellbeing of our people is crucial and everyone has a part to play in ensuring the workplace is safe, as such one of the key performance indicators for our annual bonus is ‘Safety’. The company’s attitude toward rewarding its workers along with the success of the initiatives to make the business more efficient are no doubt enough to make BCM’s employees content in their vocational endeavours. However, it is the culture of care in BCM which is most rewarding. The benefit to BCM of being closely linked to a health & beauty retailer that has the presence and magnitude of Boots, Lund says, is that the organisations can share in their growth strategies and commitment to exacting standards of quality. The benefit to Lund on a personal level is that he, because of that unwavering commitment to quality, is proud to say that BCM is instrumental in making products that help people feel better about themselves and which can be found on almost every major high street and local community across the UK.

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Simon Coombes, systems engineer doing final checks on an EVO Scanning Electron Microscope, produced on the recently established one piece flow line with a one day takt time in Cambridge factory.

Under the

microscope Multinational microscopy manufacturer Carl Zeiss provides the perfect example of the low volume, high value, advanced manufacturing which the UK is looking to base its future economic prosperity upon. Glen Jamieson takes a closer look at some recent initiatives at the company’s site in Cambridge.

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In

1964, Cambridge Instruments (now Zeiss) introduced the first Scanning Electron Microscope to the commercial market. Operations manager Daren Sheward started at the company some twenty years ago as an apprentice and has seen the business and its products evolve. Unchanged by recession, the division has introduced new cost saving, quality and service improvement strategies with lean activities, and for the first time since Daren began, it has employed three apprentices in an attempt to blood new young talent into its development. It is clear that the company takes enormous pride in the quality of their products, which is faithfully mirrored by the care the company provides for the people who make it happen. There are six different types of microscopes manufactured at Carl Zeiss’s Nano Technology Systems Division in Cambridge, all with different ranges of applications within the area of imaging and flexibility. These are large industrialsized Scanning Electron Microscopes, weighing up to 500kg a piece, costing from £60,000-£200,000, which are used in fields such as Materials Analysis, Life Sciences, Semiconductor Technology and Quality Assurance. Its most powerful products can pick up items up to a nanometre in


Optical equipment Carl Zeiss

size – that’s a billionth of a metre to you and me. Things that are that big tend to be DNA or atoms. “Our products get used for a huge range of applications,” says Daren. “Most of the products are used within Life Sciences and Material Analysis but that can mean anything from looking at brain tumours in mice to particle scanning surfaces to look for diamonds and identifying areas to drill.” The turnover for the Cambridge site last year was £24m and they expect £25m or £26m this year. As a large proportion of its customer base is made up of University research departments and laboratories, Daren says that the company “didn’t really suffer too much” from the recession. “Academia was funding lots of research laboratories in universities around the world and their budgets didn’t really go down,” he says. “We picked up lots of orders from these fields but we lost some orders as industries closed down, dropping around 10-15% in 2008 and 2009, but nothing massive.” In fact, things are now better than ever for Zeiss and this year the company expects a 30% increase on product output. Two years ago the site would make around 15 microscopes each month; last year, in the recession, it got pegged back to 13. Now it’s making between 15 and 20; next year it will be 26 plus. “That’s a massive growth over a short period of time,” says Daren.

Lean on me The company’s lean activities – led by a decision to outsource parts of the manufacture – are accredited with enabling this progression. “Several decades ago we would build everything on site in batches of 5, 10 or 15. But now we’ve introduced this one-pieceflow system throughout the factory. We’re trying to build one machine a day, so we’ve outsourced a vast majority of the assembly activities to make room for new products.” The company decided to outsource fundamentally 50% of the assembly – the electronic and vacuum systems. This decision has certainly proved valuable, both in terms of cost reduction and speed of output. In the first year of outsourcing, the Cambridge division saved 4%, the second year an additional 8%, and the third an

additional 12% - saving a total of 24% over the three years. “So, quite an aggressive saving,” says Daren. “Although it wasn’t just the best price but also the best fit.” And it is not just Zeiss which benefits: “We helped the suppliers achieve huge cost reductions within the design and manufacture of the product so that they profit as well as we do.” There are a few supply issues that need to be ironed out though. “It’s been difficult sometimes getting the suppliers on board to understand our requirements and demand,” says Daren. “At the moment I’ve got more late supply than on-time deliveries.” Hence, a number of measures are now being implemented which should ensure consistency. “We’re working very hard at the moment to improve our relationship with suppliers and we are looking at the possibility of rewarding and punishing good service through our cost structure where necessary. We have production engineers who visit and train the suppliers, keeping in contact with them weekly if not daily. We arrange quality workshops in the suppliers’ site, so they can rectify the source of a problem before we even know about it. Major suppliers from Europe and the UK also join us for workshops at our site, where we discuss ideas to be implemented within their own plant”.

Most of the products are used within Life Sciences and Material Analysis but that can mean anything from looking at brain tumours in mice to particle scanning surfaces to look for diamonds and identifying areas to drill Zeiss has also begun diffusing further problems by outsourcing to multiple suppliers, spreading the risk of late deliveries. “If we have a major component that we know is on a long lead time and we need lots of them what we tend to do is split the volume, give half to one and half to another”. By outsourcing the non core activities, Zeiss can concentrate on ensuring the best possible quality on what it calls “the Crown Jewels” – the building of the electron beam column, the final testing, and the configuration of the machine to customer order. “This is the high-end assembly part of it,” says Daren, “and this is where you couldn’t give it to someone else to do. We have to be in full control of our own standards so we will always keep this in-house.”

The next generation Carl Zeiss has very high staff retention rates. The average employee service across the company is 25+ years and the average age is 50. “I’ve got an ageing workforce, but on the plus side I’ve got lots of experience,” says Daren. “We are very good at realising employee potential, and we rarely lose any employees, except to natural attrition, which I am very pleased about it. We re-train and re-educate staff and move them across departments as required, it’s a good news story all round”.

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Design Partnership G

TK is a global provider of electronic solutions including: Mechatronics, Optoelectronics, Connectors and Cable Assemblies. For over 20 years we have provided our customers with high quality, high performance products. This combined with our excellent customer support has ensured that we enjoy long term relationships with our customers. All of our products are RoHS compliant and our organisation is both ISO 9001:2000 and ISO14001:2004 certified, ensuring the highest possible level of service to our customers. We work closely with our customers to assist them with their product designs and our technical staff are able to add value in terms of component selection, production processes and supply chain

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improvements. Our measure of success is the high number of customers who return to us for their next generation product design support. We have offices in the UK, Germany, China and Taiwan and are well positioned to support global customers who design and manufacture their products in different locations. Our branch office in Taiwan enables us to provide value added resources in terms of design and production engineering support, prototyping, and manufacturing quality control. All of these elements help to ensure that product time to market is minimised. We appreciate the need for flexibility and agility and recognise that each

customer’s requirement are different. Our business model is organised around the needs of our customers and we are confident of our ability to provide bespoke levels of service. Whether it’s a simple component you require, or a complete turnkey solution, we pride ourselves on providing excellent service to our customers.

Published in association with: GTK UK LTD Tel: 01256 472000 Fax: 01256 473000 Email: sales@gtk.co.uk Web: www.gtk.co.uk


Optical equipment Carl Zeiss

But there are problems with an ageing workforce of course – principally, inevitably, retirement will threaten your numbers. To counteract this, the division has employed three apprentices for the first time since Daren himself was an apprentice twenty years ago. The young apprentices are students from electronics and engineering courses, short-listed by their local college. They are under a fiveyear plan where they each work in one of the four main areas of the business Production, Engineering, Spares, Logistics and with mentoring they will gain great knowledge and experience that will set them up suitably for a long successful career within the company. They get qualifications too. They are sent back to college one day a week for three years through which they’ll earn Advanced Apprenticeship status, and then they have the option to stay on for another year to attain a degree. Daren anticipates that the apprentices will be destined to become Technical Engineers in Operations, and wants to later take on apprentices to eventually

employ in R&D. “It’s a big investment and it really pleases me. They’ve been here for four months now and it’s working really well. There are seven of us on the management team and many of us were apprentices, so clearly we see it as a valuable route to ensuring we get the right sort of talent, trained our way.” In fact, it’s the attitude of the company to its workforce and the talent they hold which Daren attributes much of the company’s success. Primarily, the managers ensure the whole team is actively involved in the forward thinking and developing of the business. “Involvement”, Daren says, “is the key. We have a great atmosphere here, and the working relations between everybody are great. Some of the older guys might struggle with change but we talk early on and come up with ideas together”. Team bonding sessions are seen as so important that every once in while they’ll even take precedent over production. It should come as no surprise, given their industrial prowess, though we’ll still say it quietly: if the UK is looking for a light to lead the way towards an economy based largely on high value advanced manufacturing, a German company could be the answer – albeit one that’s based in Cambridge. Carl Zeiss’s forward thinking improvements integrated within a positive working environment, will undoubtedly enhance their abilities to continue providing a high quality product at a fast and efficient output and this is something other UK companies would do well to follow.

Bob Taylor - managing director and Chris Warner - lean manufacturing manager with an EVO Scanning Electron Microscope used extensively in Material and Life Sciences applications, selling well in the competitive low cost Chinese market.

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Trend Marine produces a range of glass products for boat builders across the world

Ship shape

trend

Trend Marine is a partner and principal supplier to many of the most prestigious boat builders around the globe. Tim Brown talks to technical and sales director, Robin Thatcher, about the company’s recent investments and its commitment to quality and customer satisfaction.

When

it comes to prestige, few manufacturers rival that of the luxury boat building industry. With a customer base that reads like the front page of a Forbes rich list, the likes of Sunseeker International or Princess Yachts are among some of the most envied companies in the world. The expectations of such a high calibre clientele are, of course, sky-high. As a result, suppliers to the industry must adhere to the highest standards of excellence. Formed 37 years ago and operating primarily in the leisure industry, Trend Marine manufactures large glazing solutions — windows, doors, sunroofs

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— for luxury and leisure boats. Trend is a part of the Taylor Made Group, the largest marine glazing group in the world; Trend itself is the largest supplier of marine glazing systems in Europe, and delivers 70% of the windows used by Britain’s best known luxury boat builders including Sunseeker, Princess and Fairline. The company has also developed a remarkable export business, designing and manufacturing items for boat builders in Europe, USA, Canada, Australia and Asia. The company’s success is founded on its ability to produce in-house complex glass bending, dramatically curved toughened glass, and its renowned ability and expertise in metal forming. For stainless steel, this has been achieved through the development of customised forming and bending machines. The company also offers short production runs at competitive prices: an ideal solution for the semi-production/ customised sector of the leisure boat market.


Boat building Trend Marine

sag-bending furnaces and chemical toughening systems. The considerable investment allows the company to produce not only larger curved glazing units but also tight curves and conical shapes in matched pairs for laminating, in a single operation. With the addition of this plant to the 12 acre manufacturing facility, Trend’s customers will be able to specify a complete boat-set, shipped as a turn-key package including the fitting team to complete the job. Despite already having extensive expertise in forming and thermally toughening glass, Trend needed to develop a greater understanding of the procedures involved in chemically toughening glass. Prior to taking delivery of the large chemical toughening bath, the company manufactured a small pilot plant to do some experimentation and development work alongside an academic partner. “We wanted to make a big investment to allow us to gain further strength in the market,” says Thatcher. “That investment is the platform to allow us to move further in to

Whether it is technical innovation in the manufacturing environment or technical innovation in terms of products, we endeavour to work very closely with our customers in order to find ways to better serve them. That is the vision Robin Thatcher, Technical and Sales Director

According to Trend, new yacht designs, both power and sail, are conceived to make the whole experience of yachting even more enjoyable. Along with drop-down beach-clubs and fold out en-suite balconies, there is a quest to make a connection between the marine environment even closer with the use of products such as large windows, doors, deck lights and movable glazed windbreaks. A modern yacht is full of light, with sight-lines to the sea from every part of the yacht.

Rising above Using partial asset-backed finance, Trend recently purchased the latest in

the super yacht industry. We have been moving in to that industry effectively by invitation through our existing and new customers and that investment will allow us to offer a far more flexible and complete offering than we have previously provided. It is a big strategic investment for us and we have spent quite a bit of time preparing for it. As well as working with academic institutions in order to ensure we have all the technical risks covered, we have also been working with strategic industry partners to provide products and services.” In September, Thatcher and other members of the Trend Marine team attended the Monaco Yacht Show. The level of interest at the show provided a strong indication that the European shipbuilding market has stabilised and, indeed, is improving in some sectors. According to Thatcher, there was also considerably more interest in super yachts at this year’s show than there was 12 months ago and, with the company’s increased capacity due to recent investments, he expects that to mean more business for Trend. “We really see that the key to drive the business forward is technical innovation,” says Thatcher. “Whether it is technical innovation in the manufacturing environment or technical innovation in terms of products, we endeavour to work very closely with our customers in order to find ways to better serve them. That is the vision.”

In the market Trend considers itself to have a fantastic capability and understanding of glass which allows it to manufacture the benchmark glazing products for the marine market.

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Trend uses a wide array of metal forming techniques

Digital printing on glass

The company is a niche, low-volume manufacturer with a strong range of technologies deployed in the production of glass related products. Of course the marine market is not the only industry requiring such expertise, and Trend are more than aware that there are opportunities to exploit their knowledge and technology in other industries. While marine is the primary focus for the company, Trend is also currently pursuing bespoke non-marine opportunities. “We have a big focus on marine currently, but are very aware that many of our technologies are applicable to other industries. We have, for example, been working on developing bullet resistant glass. That has applications outside of the marine industry for vehicles in conflict zones and also for military vehicles. We expect demand for the sag-bent glass in to architectural arenas for niche applications. There are also opportunities for highspeed transportation vehicles such as helicopters and trains which we perceive there will, in the future, be an opportunity to sell the glass in those directions as well. We do however expect the marine market to remain the core of the business.”

Continuously improving

Sag bending of glass

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In 2003, Trend initiated a lean programme. Seven years later and the company has thoroughly leaned all its factories, and is now looking at individual improvement projects within the factories for cost savings such as quicker tool changeover times and improved manufacturing methods. Thatcher says the company is currently completing value stream mapping right across the site which will better integrate the manufacturing activities with the office based activities engineering, ordering and despatching processes. “We are hoping to reduce unnecessary activities which don’t add any value and are expecting to simplify the interfaces between manufacturing and the order intake process such as the material ordering process and the engineering of products. During the recession, our customers also had less visibility of the requirements of their customers so we have had to adopt some flexible approaches within our material ordering and our manufacturing planning in order to cope with their needs. Our customers have worked


Boat building Trend Marine

hard to better manage the order intake process so we have seen demand become progressively more stable.” In order to satisfy the high expectations of end customers, the continuous improvement of quality is always a big focus of the company. Trend measure the number of defects, sets targets and implements plans in order to achieve those targets. “Customers that take delivery of an expensive high-end yacht will expect exemplary quality and we are achieving those standards and planning to improve on them,” says Thatcher. “The big issue for the strength of the glass is the hydrostatic pressure that it has to meet in service and the other issue is the customer expectation that it is going to be completely defect-free. We have to be very exacting in terms of our specifications.” The buoyancy of a vessel is reliant on the glass used in its construction remaining intact. Trend work closely with classification societies which includes Lloyds Register to ensure the glass being used can resist the specified pressures. By performing its own inhouse hydrostatic testing, Trend is able to provide a thinner piece of glass that still meets the safety requirements and thereby saves weight and enhances the performance of the vessel. The reduction of waste is another area that Trend is constantly trying to improve. To produce its products, Trend buys float glass, annealed glass (stress free flat glass) in various thicknesses. Using a CNC scribing table, the glass is etched and the bits off that which are not required are removed. The company is certified to the environmental standard ISO14001 which requires Trend to continually reduce the amount of waste it produces. One of the recent improvements at the company was the introduction of software that nests the desired cut glass shapes in the most efficient arrangement possible so as to maximise the use of the glass and minimise waste. With a consistent focus on innovation across all aspects of the company, Trend Marine is not only seeking to improve its business operation but also the experience of its clients. By diversifying its portfolio to provide a holistic approach to marine glazing, the company has not only extended its range but also simplified the process

of acquiring the necessary glass products required by ship builders. Looking to a future focussed on the marine industry while also looking for opportunities to expand beyond ship building, this is a company that will continue to set the trend as an innovator in its field.

A motor yacht fitted with Trend glass

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Recruitment


www.themanufacturer.com/uk/jobs

Relax . . . we won’t insult your intelligence with glib statements extolling the virtues of “our client”. . . here at Dudley Child, we just give you the facts. Consider these:

l Winner of the coveted U.K. Excellence Award l Recipient of multiple Queens Awards across many and varied categories l Noteworthy funding to support the development of young talent to sustain the future of Engineering

l Industry leading service levels l £multi-million re - investment in Research & Development l Consistent compound sales growth

Fuelled by customer demand and corporate growth objectives, these appointments are high priority: Ref: JRP/670

FIELD ENGINEERS

£35,000 upwards

l U.K. & Overseas

Providing rapid response to installed customer base in oil exploration, extraction & refining, petrochemical, gas transmission & chemical processing. Technically competent across commissioning trials, full installation, and trouble-shooting encompassing fault/wear diagnosis test and maintenance.

Must demonstrate record of working in demanding environments. Experience relevant to Off-Shore applications where foreign contaminants and alignment problems are an issue, would be a distinct advantage. Current working knowledge of Dry Gas Compressor Seals is an absolute pre-requisite.

PRINCIPAL APPLICATIONS ENGINEER

Ref: JRP/673 Any organisation with such accolades in the trophy cabinet is a serious contender in c£60,000 Large Company Benefits its Sector, and will secure increased This key position is to take the lead in the consolidation and phased expansion of our service offerings into the highly specialised area of Dry Gas Compressor Seals. Your opinion will be market share sought at the pinnacle of technical engineering, and you will be the “go to man” for all technical accordingly. queries associated with in-situ wear failure reduction and application led product development. That’s It will be natural for you to accept an advisory stance on product integrity and performance, in line with where you application and specification, and steer your team in the pursuit of excellence. come At ease in consultation and the provision of technical management throughout commissioning, design and in . . . test procedures, Quality Assurance and Compliance regimes, credence will quickly be established across all

l

external relationships and internal departments.

We expect to hear from seasoned individuals who are seen as an authority on technical matters and whose depth of practical experience is supported by relevant academic qualifications.

Ref: JRP/672

£70,000 plus

HEAD OF TECHNICAL

l Large Company Benefits

Undoubtedly a challenge, this newly created role is pivotal to the company’s continued growth pattern and therefore the appointee will display the credentials to reflect the importance of this position. Prime focus will be the assessment of commercial viability for customer bespoke requirements and optimising the flow of current and future NPD programmes. Your abundant experience around rotational equipment and associated components will span the full range of engineering disciplines to provide the critical interface between customer and internal functions. These will include front-end feasibility, design, prototyping and test, materials and FEA, Patent and I.P. technicalities, via Compliance and Approvals processes, through to final product release. Managing a highly competent team of 40 specialist engineers will call for a dynamism in leadership style to be the catalyst for improvement and Champion of Best Practice. Innate ability to translate conceptual thinking into real engineering practice will be the key to success. Chartered Engineer status is preferred and a realistic directorial pathway exists. Other opportunities exist within this organisation, so if you’re ready to join a company that is going places because of the people within it, but the role you seek is not listed above, please register your interest quoting reference JRP/674.

Apply quoting the relevant reference to: mailbox5 @ dudleychild.co.uk Royal House · 28 Sovereign Street Leeds · West Yorkshire · LS1 4BJ tel. 0113 246 8882 · www.dudleychild.co.uk

DCR004_245x178.indd 1

04/11/2010 15:06

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Recruitment

www.themanufacturer.com/uk/jobs

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The Eversheds global industrial engineering sector group

Precision engineered legal advice Eversheds is a law firm that gives you more than legal expertise. You receive expert advice combined with an in-depth knowledge of the industrial engineering sector. Our seamless worldwide service covers organisations in areas such as: automation, hydraulics, connectors, seals, advanced engineering, process, motion and flow control and diversified industrials. We understand your issues and look out for your interests, wherever you are based. The comprehensive range of products and services we offer is designed to tackle the challenges you face on any project of any size. With clear costs and real added value, this is a service engineered precisely to your needs. Robin Johnson +44 113 200 4860 robinjohnson@eversheds.com

www.eversheds.com ŠEversheds LLP 2010. Eversheds LLP is a limited liability partnership.

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Wow, how can engineering be this intuitive?

SHARPEN SHARPEN YOUR COMPETITIVE COMPETITIVE EDGE. Boost your your business business intelligence Boost intelligence with withours. ours.And Andjoin jointhe the thousands of of British British manufacturers thousands manufacturers who whobenefit benefitfrom fromour our unique business business services, unique services, insight insight and andinfluence. influence.Not Nottoto mention training, training, consultancy mention consultancy and and more. more.

Because engineering has been redefined. It’s time to take intuitive operation in engineering to the next level – both for experienced and newcomers. Siemens, the world’s leader in automation products, has developed a new generation of engineering software for industrial automation that redefines the entire engineering process. You will benefit from outstanding efficiency and usability that lead to unrivalled profitability and sustainability. The key to success will be announced worldwide in November 2010 – a significant date that has the power to change your world. www.siemens.com/engineering-redefined

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At EEF, we believe that modern At EEF, we believe manufacturing is thethat heartmodern of the real manufacturing heartyour of the real economy. Andisbythe adding voice to ours, weAnd canby help keep your it there. economy. adding voice to ours, we can help keep it there. Join us at www.eef.org.uk or call us on 0845 1333 to find out more. Join us at 250 www.eef.org.uk or call us on 0845 250 1333 to find out more.


Robert Milligan, TRW Automotive, Director of Risk Management

www.themanufacturer.com November 2010 Vol 13 Issue 11

www.themanufacturer.com November 2010 Vol 13 Issue 11

”With Zurich’s help we’ve prevented over 24,000 lost work days. Because, like us, they believe one injured colleague is one too many.”

Business insurance that protects your most valuable assets. Your people. We’ve been an insurance partner of TRW Automotive, one of the world’s leading automotive safety system suppliers, since the 1970s. We’re always looking for new ways of helping them and their employees, and today this includes accident prevention and rehabilitation services. Between 2004 and 2010, this partnership has helped prevent the loss of over £ 6.4 m worth of man-hours for TRW Automotive. It’s an example of how Zurich HelpPoint delivers the help businesses need when it matters most. To learn more about how Zurich can help you, speak to your broker or visit www.zurich.co.uk/expertise

Training provision shifts to the employee

Special 76 page Manufacturing In Action section featuring Soil Machine Dynamics and Thorntons

Interview Ivor Tiefenbrun

Chairman, Linn Products

Regional Focus – North East Industry: an angel in the North

Innovation and Design

Top 10 products designed in the UK Zurich Insurance plc, a public limited company incorporated in Ireland Registration No. 13460. Registered Office: Zurich House, Ballsbridge Park, Dublin 4, Ireland. UK branch registered in England and Wales Registration No. BR7985. UK Branch Head Office: The Zurich Centre, 3000 Parkway, Whiteley, Fareham, Hampshire PO15 7JZ.

Supply Chain and Logistics All clear for nuclear

In partnership with:

The Manufacturer November 2010  

The November issue focuses on a regional focus with the North East, along with articles focusing on nuclear supply chain and celebrating the...

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