The Manufacturer September issue 2011 by The Manufacturer

www.themanufacturer.com September 2011 Vol 14 Issue 09

Energy and sustainable manufacturing

I love it when a plan comes together When good intentions for CSR are not enough

Leadership, people and skills

Are UK manufacturing leaders shirking a responsibility to engage with government?

Apprenticeships get real A case study from Norbar Torque Tools

Finance and professional services

The commodity price challenge How is industry coping with rising input costs?

IT in manufacturing

Great expectations Out with Mystic Meg, in with sophisticated demand planning and forecasting

Interview David Shemmans CEO, Ricardo Plc

Manufacturing in Action

Factory of the Month The Royal Mint

In partnership with:

The new shape of corporate banking

Tony Fulton, Adam Flanagan, Mark Collings and NIcky Wilkins from the Santander Corporate Banking Team.

Honesty is the best policy So when we spoke to manufacturers about the challenges they faced and opportunities they perceived we didn’t just listen to their comments – we used their feedback to develop a strategy that would provide practical support where it is needed most.

and “banks are still central to all our funding needs and operations, but banks in the UK do not respond to SMEs”. Some reported overdraft facilities being withdrawn or converted to loans at higher rates and unreasonable security requirements.

Our willingness to support the companies that are the bedrock of the UK economy is borne out by lending figures for the first half of this year. We increased our lending to businesses by 27%, and have exceeded our lending commitments as set out in Project Merlin. Under this agreement, we committed to increase lending to UK businesses by £6.7bn and to set aside £4bn specifically for small and medium sized companies. In the first six months of the year, we have provided £4bn of new lending, of which £2.1bn was for SMEs.

So early this year, we approached the EIA to discuss ways that we could help manufacturers – particularly SMEs – access the finance and support they need. We believe this is crucial both for manufacturers and for the UK economy as a whole. In particular, we are helping manufacturers access all the funding available to them by making them aware of ways in which we can support working capital as well as Government-supported financing programmes, such as the Exports Enterprise Finance Guarantee Scheme.

“

As Sir Ronald says, “Many businesses are putting off expansion, which we believe is holding up exports. That is why we are working with Santander Corporate Banking, as our preferred banking partner, to help manufacturers get a better deal. The key thing banks must do is lay out their products and terms honestly and clearly.”

However, there are issues that are specific to certain sectors, which is why we have taken the time to talk to members of the EIA (Engineering Industries Association) about the challenges they face and what we can do to help. As president of the EIA, Sir Ronald Halstead is constantly talking to his manufacturing members about the problems they face and has conveyed their concerns to the Government, the Bank of England and the banking industry. Comments from members noted in the association’s latest report included “the absence of finance from banks is critical”

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we are working with Santander Corporate Banking, as our preferred banking partner, to help manufacturers get a better deal.

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we are helping manufacturers access all the funding available to them.

Mike Read, group treasurer of advanced materials group Morgan Crucible, agrees that honesty is the best policy. He believes keeping the bank well informed about how the business is performing is key to maintaining a healthy relationship.

Greg Croydon, treasurer of engineer solutions provider IMI also believes that honesty is the key element in a good banking relationship. “Companies are spending more time on managing bank relationships than before the credit crunch so the most important element for IMI is the relationship with the Relationship Director. We need to be able to pick up the phone and have an open and frank discussion, which really benefits both parties.” Since SMEs deposit more money with UK banks than they borrow, this point about the symbiotic nature of the relationship between bank and customers is absolutely crucial. “There are many things banks can do to help manufacturers,” concludes Sir Ronald. “The way Santander is working with us to reach SMEs is a good example.” If you would like to understand more about our approach to building long-term, mutually beneficial relationships with our customers contact your local Business Development Director today. They’ll be happy to have an open and honest discussion about the solutions we could offer your business. Tony Fulton North 07809 493827 tony.fulton@santander.co.uk Adam Flanagan Midlands & Wales 07809 493841 adam.flanagan@santander.co.uk Mark Collings London & South 07809 493865 mark.collings@santander.co.uk Nicky Wilkins Thames Valley, Solent and South West 07850 640622 nicky.wilkins@santander.co.uk

www.santandercb.co.uk

NM AUG 11

Strong relationships are built on honesty, communication and a willingness to adapt, a philosophy that is central to Santander Corporate Banking and our drive to support SMEs.

Editor’s comment

Busman’s holiday TM’s editorial team had been looking forward to the traditional August lull in the manufacturing industry to take stock, plan for the next few months and perhaps even get a bit of R&R for ourselves. But despite, or perhaps because of, challenging economic conditions and disappointing growth figures globally, manufacturing business activity seems to have driven relentlessly forward through the normal August hiatus. Investment and product development stories this month have come from companies large and small. McLaren Automotive, Abraservice UK, Beagle Technologies, Cobra UK, Schaeffler, Stadco – just a few of the manufacturers who announced big investments this summer.

www.them anufactu rer.co m Sept ember 2011 Vol 14

www.them anufactu rer.co m Sept ember 2011

Issue

Vol 14

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In addition, while market reports and surveys are always prolific, there seems to be a new urgency behind collecting industry data which might help make sense of the complex business of manufacturing today. In this issue of TM, we take a look at an interesting assessment by Royal Bank of Scotland and EEF of possible ways to mitigate the affect of inexorable rising input prices (see p60). But other key topics have been addressed by the research teams at legal firms, accountants and trade bodies too. Examples include; tax structures for employee incentive schemes, trends for director culpability and dispute resolution in emerging supply chains (see our Legal Supplement starting on p71).

From research reports to another kind of publication entirely. I would like to take this opportunity to congratulate Gary Summers, the immensely successful MD of window frame-maker turned solar energy systems manufacturer Alumet, on his excellent interview in The Sunday Times on August 21.

Energ manu y and sus

I love facturing tainable When it when a pla are not good intentio n comes eno togeth ns for CSR er Leade ugh Appren rship, pe A cas ticeships ople an e stud y from get real d skills Finan Norbar servic ce and pro Torque Too es ls fessio The com nal modity How is rising industry copprice cha input llenge costs? ing with

Are UK manuf leade acturing rs a resp shirking to en onsibility ga gove ge with rnmen t?

IT in ma

nufac Great Out withexpectatioturing demand Mystic Me ns planning g, in with and fore sophist casting icated

The interview was a shining example to the general public of the rewards that can be attained through hard work and clever business nous in the manufacturing industry. A deserved recognition of Mr Summers’ leadership qualities.

Intervie David w Shem CEO, Ricardo mans Plc Manu Factory facturing The Roof the Mo in Actio n yal Min nth t

In par tnershi p with :

We look forward to welcoming Gary and his team at The Manufacturer of the Year Awards in November, where the go-getting firm has entered five different categories (surely you’re running out of cabinet space, Alumet?). We wish them, and all our other hopefuls, the best of luck.

Cover image: The manufacturing industry’s struggle with the Red Tape Challenge (see page 16)

Jane Gray, Editor The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing.

In order to receive your monthly copy of kindly email c.woollard@sayonemedia.com, telephone 0207 401 6033 or write to the address below. Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors. Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

EEF is dedicated to the future of manufacturing. Everything we do is designed to help modern manufacturing businesses evolve, innovate and compete in a fast-changing world. www.eef.org.uk

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News and features 04 News and dates for your diary 08 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

10 The legal low down

Thomas Eggar’s commentary and advice. With 2.4 million working days lost to injury in manufacturing companies in 2009-10 Andrew Jackson considers some of the biggest health and safety legal concerns for the sector

12 The big picture

Thought leadership from the Institute for Manufacturing, Cambridge University. This month asks how companies can avoid organisational inertia by fostering innovation

13 Economics

EEF’s director of policy, Steve Radley, gives his critique of access to finance for manufacturing firms

16 Lead story

Not me Gov! Jane Gray reviews the manufacturing industry’s response to the Red Tape Challenge and asks whether UK manufacturers are shirking a responsibility to engage with government

22 Interview

Yes we can Will Stirling talks to David Shemmans, Chief Executive of Ricardo Plc, the British engineering company chosen to supply the engines for McLaren Automotive’s radical new sports car

30 Energy and sustainable manufacturing I love it when a plan comes together

Jane Gray discusses the whys and wherefores of corporate social responsibility plans with UK manufacturers

36 Lean enterprise Lean with IT

While most lean practitioners remain deeply sceptical as to the usefulness of IT systems in supporting their programmes there is no doubt that so called lean IT offerings are on the up. But can they really magnify lean potential?

Leadership, people and skills

40 Apprenticeships get real

54 2

The ideal of setting up an apprenticeship scheme can meet with harsh reality checks for many SME companies. Norbar Torque Tools show that with dedication and strategic care, it can be done.

44 The final countdown

WorldSkills London 2011 is due to take place in October. As the competition finale approaches, WorldSkills UK’s CEO Aidan Jones finds it hard to contain his excitement

Contents 45 Employee of the month

Richard Onions, internal sales engineer at Kingfisher Industrial

48 Finance and Professional Services The commodity price challenge

Input prices have been the bane of manufacturing this year as commodity prices soar and margins diminish. How is the industry attempting to cope with this trend? Tim Brown reviews recent research

54 IT in manufacturing Great Expectations

Mystic Meg forecasting may have had its day as demand planning and forecasting systems grow in sophistication. But will there ever be a failsafe formula for pre-empting demand? Malcolm Wheatley investigates

60 Special feature: the crocodile goes IT Roberto Priolo visits Lacoste to see how enhanced forecasting capability has allowed it to snap up growth opportunities

62 IT News

Keeping you abreast of what’s new in manufacturing IT

64 Logistics and materials handling Special feature: greening the pipeline

What should a good logistics partner be doing to ensure environmental transparency and show they are hunting for maximum efficiencies in your supply chain? George Archer asks DHL how high they set the bar

68 Inside, Outside

Are your materials handling solutions up to date? TM finds out what can be gained from new developments in this area

60 71

Legal Supplement

The essential guide to the legislative framework that governs every aspect of UK manufacturers’ operations, from Health and safety to the Bribery Act.

Manufacturinginaction

Factory of the month

84 The Royal Mint A sterling effort The world’s largest export mint shares its secrets for best business practice in, literally, making money

110 Howard Hunt Group The communication revolution 118 Aimia Foods Aiming high 123 Zarlink Semiconductors Competitive conductor

Newsinbrief FINANCE

Norton Motorcycles plans to double its workforce from 30 to 60 and increase production to 1,000 units a year using the Export Enterprise Finance Guarantee Scheme (ExEFG) to secure a £625,000 loan from Santander. The facility is designed to help companies, specifically SMEs, to increase export markets. The loan is also expected to benefit companies within Norton Motorcycle’s supply chain, 80% of whom are located in the UK. The ExEFG scheme is a pilot study and will be reviewed in early 2012.

AWARDS

Metrology group Renishaw has been presented with its 14th Queen’s Award for Enterprise, for the development of the TRS2, a laser-based, non-contact broken tool detection system. Dame Janet Trotter, Her Majesty’s Lord Lieutenant of Gloucestershire, presented the Renishaw with the award, describing the company as “the jewel in Gloucestershire’s crown”. “Renishaw is a consistently high achiever with the highest number of Queen’s Awards in Gloucestershire,” she said. The company recently announced record turnover and profit with revenue for the year totalling £288.7 million, up 59% on 2010.

INVESTMENT

Birmingham-based steel stockholders and processor specialists Abraservice UK invested £250,000 in a new CNC machine, the 3-axis Hartford Block Buster. The company is facing increasing demand for specialist steel components from OEMs and companies in the maintenance sector. The investment will provide it with a better range of capabilities so they are able to meet the extra demand. Abraservice UK manufactures finished and semifinished steel components. The newly commissioned and fully operational CNC machine allows faster machining times, leading to a higher throughput of work and increased production capacity, capability and efficiency. The company is now able to produce batch components more accurately and with a faster turnaround time.

INDUSTRY

First manufacturing sector contraction in two years The first contraction in the UK manufacturing sector since mid-2009 took place in July, the PMI reveals. The Markit/CIPS manufacturing purchasing managers’ index (PMI) fell to below 50 in July for the first time since the tough recessionary days of 2009. A score of 49.1 on the PMI reflects predictions made last month that the manufacturing sector is suffering from a decline in confidence after a robust 2010. In addition to this traditional measurement of industrial buoyancy, the report also recorded the biggest job losses in the sector since March 2010. Since then, optimistic recruitment patterns had been shown as a

sign of sector resilience. New business for manufacturing also declined sharply due to weak domestic demand, according to Markit. “Very weak domestic demand has effectively stalled any momentum that had built in the UK manufacturing sector over the past two years,” said Mark Lee, head of manufacturing at Barclays Corporate. “Manufacturers that export continue to see some upside in ongoing sterling weakness, but for those companies focused on the domestic market, there is very little relief in sight at present,” he added.

SKILLS

Semta launches free online skills needs tool for SMEs Semta, the sector skills council for science, engineering and manufacturing technologies, has launched an online diagnostic tool to help businesses become more competitive by identifying and helping to fill skills needs. Business 2 Skills is an online tool designed explicitly for small and medium-sized companies. As 96% of employers in Semta’s sectors have fewer than 50 employees, the new cost-free tool has been specifically designed to help smaller businesses that may not have resource to tackle skills issues. The tool, available at www. semta.org.uk, takes businesses through an online assessment, then provides an immediate industry benchmark reference and a breakdown of training priorities with guidance on what to do next.

Philip Whiteman, chief executive of Semta, said: “With smaller businesses making up such a huge proportion of the 132,000 employers we support, we designed the Business 2 Skills diagnostic so that they can explore skills needs and training options quickly and easily and with no initial financial outlay.” One company that has already benefited from the Business 2 Skills tool is galvanizer and coating firm Highland Colour Coaters, which has subsequently implemented a training programme to ensure customer demands are consistently met and exceeded.

ManufacturingNews I P and P A T E N T S

Pilot scheme eases patent process The Intellectual Property Office has launched a new pilot scheme aimed at relaxing the requirements for patent applications submitted through the Patent Protection Highway. The Government has increased the flexibility of the PPH in order to reduce application times and costs. In the past, patent applications have only been eligible to use PPH if they met requirements relating to the order in which they were filed and the priority which they claimed. The new scheme aims to provide support for UK businesses operating in the US and Japan. Minister for intellectual property Baroness Wilcox said: “The Patent Prosecution Highway can speed up the often lengthy process of gaining a patent and help minimise the associated costs to the applicant. It also helps to reduce patent backlogs.” The pilot programme will involve the Intellectual Property Office’s PPH agreements with the Japanese Patent Office and the US Patents and Trade Marks Office.

AEROSPACE

New Rolls-Royce facility likely to be built abroad In another blow to Derbyshire’s economy following Bombardier’s snub over the Thameslink train contract, Rolls-Royce has announced that a new testing facility is likely to be built in Germany or the US. Derby’s local economy is closely linked with development projects, and although the announcement will not affect the existing 11,000 jobs at Rolls-Royce’s plant, people are concerned about the long-term effects of the decision. Adrian Axtell, Unite regional secretary for the East Midlands, argued: “A significant number of jobs in Derby are linked to development projects.” He added: “Rolls-Royce, with the support of the Government, needs to do everything possible to maintain its development projects in Derby in the long term.” In Rolls-Royce’s defence, a spokesperson confirmed that the company planned to double production of the Trent engines it produces to power the next generation of wide body planes. In a specific reference to the company’s Derby operations, the spokesperson confirmed that it will continue to produce and test its Trent XWB engines for the new Airbus A350 aircraft – launching in 2013.

Datesfor yourdiary September

Lean Management Journal is holding a one day seminar focusing on lean office solutions at Kenilworth, Warwickshire. For information and booking contact Benn Walsh on 0207 401 6033

The SMMT is holding an open forum at the University of Warwick, covering supply chain issues and the work of the Automotive Council. For information contact cbalch@smmt.co.uk

Castle Precision, in association with The Manufacturer, is holding a one day seminar giving insight into Castle’s working practices and systems, and how they helped the company win the Manufacturer of the Year award in 2010. For information and booking contact Benn Walsh on 0207 401 6033 or b.walsh@sayonemedia.com

The CBI is holding a conference focusing on the upcoming changes to company pension schemes, due in October 2012. The event is being held at The Royal Society in London. For information visit http://cbipensions2011.eventbrite.com/

29-30

EEF are holding health and safety and environment update seminars to keep industry abreast of changing responsibilities. Seminars are being held at EEF branches at Hook (29th) and Cambridge (30th). For further information and booking call 0845 293 9850

October Throughout October - EEF is holding seminars focusing on getting your training budget back and gaining senior management support. For further information and booking call 0845 293 9850

The Lean Business Systems’ annual conference is being held at the Marriott hotel, Forest of Arden, near Birmingham. Highlights include a keynote sessions from Professor Peter Hines. For further information contact Jo Maniatt at jo.maniatt@LeanBusinessSystem.com

11-12

Energy Solutions, Total Workplace Management and M&E - The Building Services Event is being held at London Olympia. For further information visit http://www.buildingservicesevent.com/

ERP Connect, hosted by The Manufacturer, is being held at Haydock Racecourse. Connect with like-minded manufacturing professionals looking for growth through exploitation of their IT systems. For further information on the event contact Jon Tudor at j.tudor@sayonemedia.com

Closing date for EEF’s Heroes of modern UK manufacturing competition. Running for the second year this photography competition puts a prize of £5000 of Canon equipment up for grabs. See www.eef.org.uk/photo for imformation

Newsinbrief CHARITY

The 6th Brompton Bicycle World Championship was held in London on Sunday 21 August as part of the Breast Cancer Care Bike Blenheim Palace Festival Of Cycling. 750 competitors registered and 673, representing 31 nationalities, riders took to the track. The fastest male category was taken by Commonwealth Games competitor Michael Hutchinson, completing the course in 21 minutes 15 seconds. “We’ve set new records for the event including the biggest ever turnout and the fastest time ever set, 30 seconds faster than the previous record,” said Katharine Horsman, the event organiser.

INDUSTRY

Ray Anderson, founder of Interface Inc, the biggest manufacturer of modular carpet in the world, has died in Atlanta, aged 77. The entrepreneur was a local hero in Shelf, West Yorkshire. Mr Anderson received many accolades for his work promoting corporate social responsibility and industrial sustainability, including the Ernst & Young Entrepreneur of the Year award. Steve Martin, manufacturing and operations director for Interface UK, said: “He often used to visit Shelf – he had a genuine interest in people and could communicate with them at all levels.” EMPLOYMENT

The Federation of Small Businesses claims that 46,000 jobs can be created in the UK by extending Work Trials. UK unemployment currently stands at 2.45 million (mid-August). The FSB has used this figure to claim that government isn’t doing enough to create jobs and get people back to work. A survey panel – ‘Voice of Small Business’ – has shown that nearly a quarter (23%) of small firms think Work Trials, voluntary programmes that allow employees to try a role before taking on a permanent position, would act as an incentive to taking on staff. The programme is only open to those who have been on Job Seeker’s Allowance for at least six months.

AUTOMOTIVE

BRICs fuel car production, up 1.3% in past 12-months The Society of Motor Manufacturers and Traders has reported an overall rise of 1.3% in the production of cars in the UK compared with the figure for July last year. While there was an overall increase in production of cars to 98,094, there was a fall in the production of commercial vehicles of 5.9%. A total of 183,513 engines were made in the UK last month – 0.7% fewer than in July 2010. Engine production for the year so far, however, is up 4% at more than 1.5 million. Vehicle manufacturing as a whole is predicted to grow steadily, with a consistent focus on emerging markets.

SMMT chief executive Paul Everitt said: “Economic growth remains fragile but thanks to a strong export market, automotive manufacturing continues to outperform the broader economy.” He added: “We expect vehicle and engine production to continue to rise fuelled by demand in the fast-growing BRIC (Brazil, Russia, India and China) economies, as well as mainland Europe and the US.”

SUPPLY C HAIN

“Ticking timebomb” under manufacturing supply chains A PricewaterhouseCoopers report suggests that manufacturing supply chain strategy will soon be dominated by concerns about the financial security of suppliers, as confidence is shaken by a year of disruption. The consultancy group warned manufacturers against a “timebomb” of financial instability that is threatening supply chain security, following the publication of a report. Achieving excellence in production and supply identifies five priority action areas for manufacturers in the immediate future. These are: skills and talent, addressing lifecycle opportunities, linking demand planning with the rest of the supply chain, identifying and acting on supply chain risks, and stronger collaboration between suppliers and customers.

The urgency of global supply chain risk issues have been highlighted this year as the disruption caused by Japan’s Fukushima earthquake and the political turmoil of the Arab Spring take their toll on global supply predictability. Barry Misthal, the new head of PwC’s global Industrial Manufacturing group, said: “This report asks manufacturers if they have the right tools in place to adapt and prepare for potential future risks. The reality is that many do not know who their high risk suppliers are or where the loose chinks are in their supply chains.”

ManufacturingNews Advanced Manufacturing News

Sheffield Uni completes £10 million hi-tech centre A new £10m, high technology manufacturing centre has been completed by Sheffield University. It is expected to make big contributions to the development of advanced manufacturing technologies, such as surface treatment, in the UK. The new centre is a redevelopment of the Mercury Centre, situated within the university’s Department of materials Science and Engineering. New equipment for a range of advanced manufacturing technologies has been installed, including facilities for 3D printing, functional coatings and surface treatment. 3D printers have been used for more than a decade, but they are increasingly being used to make final products rather than prototypes. While mass-production is unlikely to be replaced by 3D

printing on a wide scale, factories are already using 3D printers alongside milling machines, foundries and plastic injectionmoulding equipment. Sheffield University works with British manufacturing giants Rolls-Royce, Boeing and Airbus, but hopes to work with other companies wanting to take advantage of the technology and explore the benefits it can offer. Dr Iain Todd, director of the Mercury Centre, said: “We are helping companies to adopt these technologies by offering them access to our research facilities and the opportunity to explore the business benefits.”

Industry collaboration: 3D printed plane set to soar 3D printing technology has taken another leap forward with the flight of the first ‘printed’ aircraft. The innovative new concept model took to the air in Southampton where University of Southampton academics Professors Keane and Scanlan have been working on the project, assisted by 3T RPD, an additive layer manufacturing specialist based in Berkshire.

Newsinbrief AUTOMOTIVE

German manufacturer Schaeffler has invested millions of euros in new plant and machinery at its automotive engine component plant in South Wales. The equipment, including surface coating machines and a 66-tonne deep drawing press, will enable the company to produce relatively repeatable but high quality mechanical tappets and other automotive engine components. Using the new deep drawing press, that covers 35m2 of floor space, Schaeffler UK will be able to manufacture a more cost effective alternative to the traditional forged and turned design.

Cobra UK, the West Midlands-based manufacturer of car parts, is looking to recruit 50 new staff after securing contracts worth £20m for its new mass load floor. The Manufacturing Advisory Service in the West Midlands supported the development of the product, which reduces emissions by lowering the weight and therefore fuel consumption of the vehicle in question. Hybrid car manufacturer Fiskar and General Motors are the first vehicle manufacturers to place orders with Cobra UK. GREEN ECONOMY

Secretary of State for Business Vince Cable visited Applied Superconductor in Northumberland in August as part of a tour to promote the growth of a low carbon economy. He spoke about the advantages the region has in this sector, due partly to the National Renewable Energy Centre’s location in Blyth. The centre assists the renewable energy industries in developing technology and networks to accommodate the changing characteristics of energy resources and usage in the UK.

SKILLS

The company contributed their nylon SLS (Selective Laser Sintering) technology which was used to build the plane’s four part structure. These sections formed of main fuselage and rudder fins, the nose cone and two outer wings, all fitted simply together in a snap fit assembly process. Engineering design work for the Southampton unmanned aviation project was carried out

on Solidworks CAD software. Jim Scanlan said: “The entire structure of the aircraft has been printed including wings, integral control surfaces and access hatches.” He spoke of the immense potential for 3D printing technology within industry and said it would allow aerospace engineers to re-visit and challenge conventional wisdom on the manufacturability of designs.

Toyota Material Handling UK teamed up with North Warwickshire & Hinckley College to recruit and develop new apprentices to work within Toyota in the UK. North Warwickshire & Hinckley is one of only two in the country to offer specialised forklift truck apprenticeships. It hosted an apprenticeship recruitment event, where candidates were invited to meet members of the training teams from Toyota and the college. The new recruits will study at the college in two-week blocks five times a year.

ManufacturingAppointments UK Appointments Tim Abbott, Ralf Speth, Robin Woolcock The Society of Motor Manufacturers The Society of Motor Manufacturers has appointed Tim Abbott, managing director of BMW UK; Ralf Speth, CEO of Jaguar Land Rover and Robin Woolcock, managing director of Volkswagen Group (UK) as vice presidents of the society this week. Commenting on the new

Bill Spencer Exova Group

Exova Group, a global provider of laboratory testing, advising and assuring services, has appointed Bill Spencer as a non executive director with immediate effect. Spencer joins the board bringing with him 18 years experience of the testing, inspection and

certification industry, including 15 years spent as chief financial officer of Intertek Group plc. Spencer has spent 28 years in senior financial roles with a variety of companies including Centrica, Rexam and Olivetti.

Martin Concannon Frazer-Nash

Engineering consultancy Frazer-Nash has announced the new appointment of Martin Concannon as business manager for the recently created industry sector. Concannon brings more than twenty years engineering experience to Frazer-Nash and

will be responsible for driving forward new business for a diverse range of sectors including conventional power generation, medical and pharmaceutical, automotive to downstream oil and gas, and the chemicals industry.

CTC, the renewables division of international specialist heating and combustion manufacturer Enertech, has appointed Cliff Arnold as its general manager. Arnold brings with him a wealth of experience of the UK renewables sector. His arrival reflects company expansion plans for product development and marketing. Commenting on his hopes for the new role at CTC Mr Arnold said: “We’re in the process of building upon the success already achieved by the CTC business in Sweden over the last 20 years, which undoubtedly can be attributed to the product development, design and overall manufacturing quality.”

SAP has appointed Steve Winter as managing director of SAP UK and Ireland (UKI) effective immediately. He replaces Tim Noble who was recently promoted to head of Emerging Markets in Europe, Middle East and Africa (EMEA). In this role, Winter will be responsible for working closely with customers in supporting them to achieve their strategic goals as well as executing SAP’s UKI’s business strategy. Previously, Winter served as chief operating officer (COO) of SAP North America.

The Council for Industry and Higher Education (CIHE) announced that industry leaders, including Alberto De Benedictis, chief executive of Finmeccanica and Sir Roger Bone, president of Boeing UK have joined their council.

appointments, SMMT president Nigel Stein, CEO of GKN Driveline, said: “Automotive is a sector with incredible growth potential and I am delighted that our new vice presidents have committed to supporting SMMT in its efforts to maximise the opportunities for all its members.”

Manchester-based Nuba Cocktails announced the appointment of new chairman, Jules Hydleman, formerly chairman of Innocent. Hydleman commented: “I’m really looking forward to working with such a dynamic business and particularly with a fantastic and energetic management team!”

International Appointments Pricewaterhouse Coopers has appointed Barry Misthal as the new global head of its Industrial Manufacturing industry group. He will be responsible for leading and co-ordinating PwC’s services to the industry across the world and brings 25 years experience of the sector to the role. Misthal, who is based at PwC’s Philadelphia, Pennsylvania, USA office, will take up the post with immediate effect.

e2v, the leading global provider of technology solutions for high performance systems has appointed Paul Brown into the role of president for the e2v Asia Pacific region. Brown will be based at e2v’s Hong Kong office, from where he will lead the expansion of e2v’s business in the Asia Pacific region. Brown joins e2v from Ultra Clean Technology, a contract manufacturer and systems integrator, where he held the role of senior vice president Asia.

To notify The Manufacturer of your company’s appointments, please contact Roberto Priolo at r.priolo@sayonemedia.com and 0207 401 6033

Thelegallowdown Health and safety update Manufacturing accounts for 9% of the British workforce but it also accounts for 21% of all work related fatalities. Corporate manslaughter As we reported in our column earlier this year, Cotswold Geotechnical Holdings Ltd was the first company to be convicted under The Corporate Manslaughter and Corporate Homicide Act 2007. That case together with the prosecution of 3 fire service mangers for gross negligence manslaughter following the deaths of 4 four Warwickshire Fire Service fire fighters in November 2007 highlight the potential catastrophic consequences facing companies (and senior managers) where serious management failures result in a gross breach of duty of care. Lion Steel Equipment Ltd is now the second company to be charged under the Corporate Manslaughter Act. A preliminary hearing was held at Tameside Magistrates Court on 2 August 2011. This prosecution follows the death of an employee who fell through a fragile plastic roof panel at the company’s headquarters in 2008. In addition, the company is also being charged under sections 2 and 33 of the Health and Safety at Work Act (HWSA) 1974 for failing to ensure the safety at work of its employees. Three company directors have also been charged with gross negligence manslaughter. These directors appeared at the preliminary hearing at Tameside Magistrates Court and will return to court on 8 December 2011 to enter pleas. The trial is likely to take place next June. We will be watching this case carefully as will probably all Health and Safety specialists. This case will hopefully provide a better indication of the courts’ approach to the Corporate Manslaughter Act and the level of fines if a conviction is made. The first case brought under this Act was against a very small company, whereas Lion Steel is listed as a medium sized enterprise employing more than 100 employees.

Workplace injuries The additional health and safety charges that Lion Steel Equipment Ltd face are also a salient reminder that employers are under a legal duty

under the provisions of the Health & Safety at Work Act 1974 to ensure (as is reasonably practicable) the health, safety and welfare of all of their employees. All manufacturers, arguably, want to create an environment where an outstanding health and safety regime is at the heart of a successful factory floor. However, with other pressures on a business, an erstwhile outstanding health and safety regime can experience some degree of neglect. Beginning with an audit of existing practices, directors should continually ensure that their company’s health and safety regime is embedded into company culture so that HSE investigations are a formality, not a cause for concern. With 2.4 million working days lost in the manufacturing industry to workplace injury and ill health during 2009-10, the need for employers to assess the relevant risks to which they are exposed while at work and implement adequate systems to ensure their safety has never been higher.

For more details contact: Andrew Jackson, Partner, Thomas Eggar LLP on: 01635 571077 or: andrew.jackson@thomaseggar.com

EEFInsight

Strategic responses to volatile pricing trends Peter Russell, Head of Manufacturing, UK Sector Coverage at Royal Bank of Scotland, looks at what the findings of a recent industry-wide survey mean for UK manufacturers.

Manufacturing

represents a key growth area for the UK economy. Yet over the first five months of 2011, commodity prices have risen by as much as 30% – in stark contrast to 2009, when costs tumbled. A new report, Manufacturing Focus: Managing Materials Prices, produced by EEF and sponsored by RBS, says that nearly half of UK manufacturers regard the cost of raw materials as a major barrier to growth. Only skill shortages appear to concern them more, (see page 48). Smaller firms are especially struggling, with concerns over availability (especially for metals like titanium and copper) and lead times exacerbating obstacles to forecasting, capacity and cashflow. The sheer diversity of materials, sources and usage involved means that UK manufacturers are not alone in having to combat pricing challenges. However, those who purchase raw materials are more likely to face challenges than those further along the supply chain relying on simple or complex components. Many of those challenges have different implications for manufacturers of different sizes and business models, and who export to different overseas markets. These findings present important questions for manufacturers looking to stay competitive and agile.

Finding the right solutions As materials prices have soared – to as much as 80% of overall costs in some companies – manufacturers have been forced to take action on a scale that for many has been unprecedented. Although some have sought to identify alternative sources of materials, greater attention is being paid to internal price monitoring and modelling and to redesigning products or processes, depending on the nature of each company’s business and supply chains. Many also report working more collaboratively with suppliers on design, development and testing, especially if capital expenditure is involved. Others have successfully renegotiated their supplier contracts, although buying

in bulk or substituting cheaper materials have been less popular among procurement chiefs. Unsurprisingly, many manufacturers have sought longer payment terms with their current suppliers, as part of a suite of finance-related strategies to protect market share and enable growth. Those with sufficient resources have held onto higher cash reserves or used financial instruments to manage increased costs, while fewer than one in five investigated alternative sources of finance. Improving productivity and adding value for customers represent actions taken so far by more than half of UK manufacturers wishing to stay competitive and agile. The survey indicates that manufacturers are taking an increasingly strategic approach to pricing, especially when negotiating contracts. A greater appetite is emerging for incorporating and enforcing contractual ‘trigger points’, allowing price increases to be passed on automatically. However, the usefulness of trigger points is often limited to only moderate price fluctuations. There are large differences in the extent to which manufacturers have sought to avoid dumping rises on their customers, instead trying gamely to withstand the squeeze on their own margins. For those who have no option but to pass costs on, managing client relationships takes on a heightened importance; future business with long-standing customers may suddenly rest on the outcome of uncomfortable conversations and delicate subsequent negotiations.

From threats come opportunities Growing order books are likely to be accompanied by materials prices continuing to climb steeply and unpredictably. For exporters, much may depend on how successfully emerging countries stabilise their economies and manage inflation. While commodity prices may not surge with the velocity and impact of recent months, the survey indicates that seven in 10 manufacturers expect ‘moderate or significant’ increases, now and over in the coming year. Question marks over the cost, availability and timely delivery of supplies are already prompting UK-based manufacturers to build significant price increases (for inputs and outputs) into next year’s budgets. Indeed, planning alone is making a substantial call on management time – illustrating the degree to which pricing strategies dismissed as drastic or unnecessary only a year ago are now being given serious consideration in the boardrooms of UK plc. To download a copy of the report please visit www.rbs.co.uk/insight or to find out more about how RBS supports manufacturing companies in the UK please contact: Peter Russell Head of Manufacturing UK Sector Coverage Corporate & Institutional Banking Tel: 020 7672 1007 Email: peter.russell@rbs.co.uk

Have your say at www.themanufacturer.com

The big picture Newtonian laws of innovation Dr Simon Ford Institute for Manufacturing

Conventional wisdom says radical innovation only occurs in new and small entrepreneurial firms. Nonsense says Dr Simon Ford of the University of Cambridge’s Institute for Manufacturing - with a little help from Sir Isaac Newton.

Just

down the road from where I am writing stands Trinity College, former home of the Sir Isaac Newton. As any schoolboy will tell you, Newton ‘discovered’ gravity, worked out a way of understanding the world through calculus and came up with a theory on how established businesses fail to radically innovate. Don’t remember that last one from school? Actually, the theory he came up with is better known as the First Law of Motion, in which Newton described inertia – the resistance to a change of state in physical objects. Newton’s inertia concept is a pretty good metaphor for failure to radically innovate in a business – of any size. When we talk about breakthrough innovation, we’re talking about the game-changing technologies and products. The iPod, the video cassette and the catalytic converter, all breakthroughs and all produced by established firms – not hi-tech start-ups. If the likes of Apple, Sony and Johnson Matthey can churn out these world-changing technologies, why can’t everyone? Back to Newton and inertia, or in this case, organisational inertia. This can be a crippling barrier to a firm’s ability to innovate and it afflicts the vast majority of established companies. These organisations have embedded routines and processes which govern the way they work. Initially these will have been implemented to achieve efficiencies, but over time they stagnate, reducing the ability to adapt to change, identify new opportunities or take on board new knowledge. It’s a case of this-is-the-way-we-do-things-round-here syndrome – OK in a stable business environment, but not so great when agile responses are needed to face rapid change.

Be alert, not inert Unlike Newtonian inertia, there are ways to circumvent the institutional variety. Firstly, firms must encourage more risk-taking. Disruptive technological change is never far away and for established firms, it is only a matter of time before market-leading competences are challenged. This might mean allowing employees the freedom to develop ideas informally. At semiconductor developer ARM, a pair of engineers brought their

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

CTO an idea for a product outside the usual remit of the firm. Initially rebuffed, they continued to work unofficially, within ARM, for almost 18 months before being awarded formal resources. Facilitating this kind of creative enthusiasm can have benefits, even if the work doesn’t come to fruition and management need to be flexible in sanctioning unofficial innovation. Secondly, companies need to understand that failure is an option. Failure of some radical innovation projects is a natural part of the learning process and companies need to factor this in. Technology incubators can provide a safe environment for trial and error and can be a great way of gaining engagement in idea generation. At some point however, an ‘all ideas welcome’ mantra will need to be given more structure and the incubator model, once recognised and trusted by employees, can be progressed. The Dutch consumer electronics firm Philips, established its own technology incubator around 2000. The intention was to exploit unused IP that didn’t fit neatly into existing business units. By adopting a set of entry criteria similar to those used by venture capitalists, Philips ensured that the projects entering the incubator were aligned with its strategic objectives and had the potential to become revenue generators. Finally, companies can develop innovation incentive programmes that give employees ownership of radical projects. The VentureFest competition at mobile technology firm Qualcomm, created the infrastructure for employees to contribute their ideas and to assess those of others using ‘the wisdom of the crowd’. Popolur innovations are progressed to ‘boot camps’ and employees have ownership throughout. What is clear from research is that a combination of these approaches, as well as developing an internal entrepreneurial culture, is key to overcoming organisational inertia. Newton may have written and studied the fundamental laws of nature, but his he has a lot to teach us about innovation as well. Dr Simon Ford is a researcher at the IfM’s Centre for Technology Management. His new report Organising for breakthrough innovation is due to be published this autumn.

Economics Access

to finance Steve Radley, Director of Policy, EEF

Last month data for the second quarter showed banks hitting their Merlin targets for lending to business. But with recovery stalling, investment weak, and net lending still negative, all is not well with access to finance.

This

is not for want of trying. Manufacturing, and business in general, has come out of the recession leaner and looking for new markets, particularly in fast growing emerging economies. Recognising the need to support investment and growth, government has been vocal about lifting access to finance. The banks have been more active; setting up a Taskforce, agreeing to a new Lending Code and introducing a new Business Growth Fund. But while there has been some action, is it sufficient and focussed on the right areas? Manufacturing is a good test of whether the financial sector is set up to support the recovery that our economy needs. Compared with other sectors, manufacturing is more capital intensive, invests more in research and development, and is more exposed to the ups and downs in world markets. Its need for working capital and finance for growth is considerable. However, for three years since the end of 2008, EEF’s regular survey has shown the cost of credit getting worse not better for manufacturers. And only in the last quarter did the availability of finance improve after ten quarters of decline. Across the whole economy, the Business Monitor survey last month showed discouraged demand is very real – 15% of all companies say they would like finance but have not approached the banks for fear of rejection – or worse. Both surveys also show that the problems are worse for smaller companies who have fewer options than larger firms and rely more on the banks for their external finance. Reversing these trends is not easy and business itself as a customer of the banking industry has a role to play. But there are areas where it is vital that we see change. First of all, we need to see the availability of finance, on reasonable terms, improve, both within and outside the banking sector. The cost of credit also needs to at least stabilise. In particular we need to see the cost of terms and conditions attached to credit come down and there must be a clear focus on improving the situation faced by those hardest hit – our smaller firms. To achieve this we need to see concerted action. The government must act on the recommendations for raising competition in the banking sector that the Independent Commission on Banking will set out shortly.

Beyond banks we need to see the emergence of more alternative sources of finance. One of the laudable actions of the banks’ Business Finance Taskforce has been to create a £2.5 billion Business Growth Fund (BGF) to provide equity capital to SMEs. However, the BGF doesn’t take stock of SMEs’ reluctance to give up a stake in their business and their preference for high-growth debt products. Banks also need to understand their customers better. We are encouraged by some institutions trying to learn more about manufacturing but we need to see the learning flowing through into lending and investment decisions. Finally, for those frustrated with banks we need to see service improve. The Taskforce has

15% of all companies say they would like finance but have not approached the banks for fear of rejection – or worse launched a reinvigorated Lending Code and lending principles for SMEs setting out standards of communication and transparency businesses can expect from banks. This last point is an area where government needs to push harder. Transparency is urgently needed on new management fees, how banks are enforcing loan covenants and tightening the application of terms and conditions. With growth faltering, we need to capitalise on all our strengths. Government can help and so can the banks. Our world-class financial sector must support our world-class manufacturing base.

Have your say at www.themanufacturer.com

Regulation Regulation

alert! Increasing regulation may be a burden to employers but failure to comply will undoubtedly bring worse consequences. Forthcoming changes to Agency Worker Regulations are likely to cause significant disruption for manufacturers. Is the sector prepared?

October 1 new Agency Worker Regulations are due to come into force. The new legislation, which will make major changes to the responsibilities of employers using temporary staff, has been expected for some time. But as we approach the ‘go live’ date there is growing concern among recruitment agencies that employers have not prepared themselves appropriately. Greg Latham, managing director at industry recruitment company Encore Personnel told TM: “It’s becoming increasingly apparent that an alarming number of businesses are ill prepared for the AWR and we would strongly advise that businesses should be preparing for this now.” Carmen Watson, managing director of Pertemps Recruitment, though largely positive about the forthcoming legislation, has also expressed concerns over the level of understanding among employers and potential temporary employees about the new terms of their engagement. Ms Watson observed: “In what is an already fragile economy where businesses are doing everything possible to maximise profits and cut costs, failure to prepare could add additional costs to their business and undermine their credibility as good employers... irrespective of attitudes towards it, the legislation is almost here and we need to embrace it.” According to EEF figures for 2011 at least 50% of manufacturers in the UK use agency workers to some degree and Encore Personnel say manufacturing employers are showing that they will be looking to increase their use of temporary workers over the next 12 months. The reason behind this is often a desire for flexibility in the face of a difficult economic climate and unpredictable markets. According to Mr Latham the intention to increase the use of agency workers has been particularly strongly expressed by the automotive sector. Danny Wheldon, Operations Manager at PAB, a tier 1 automotive supplier and one of Encore Personnel’s clients, commented: “Agency workers give our business the flexibility to cope with peak periods and we will continue to use them after

The automotive sector is expected to be one of thos most heavily effected by the Agency Worker Regulations which come into force on October 1

October. The AWR means we just need to be more strategic in how we use agency staff.” Information from recruitment agencies working with manufacturing companies shows that many employers are underestimating the administrative hoops they will have to jump through from October in order to be compliant with regulation. For instance there is an onus on employers to provide accurate information to agencies about comparative permanent jobs. Failing to do this could lay an employer open to the risk of an employment tribunal. The responsibility for compliance does not

It’s becoming increasingly apparent that an alarming number of businesses are ill prepared for the AWR and we would strongly advise that businesses should be preparing for this now Greg Latham, Managing Director at Encore Personnel lie solely with the agency as some manufacturers seem to believe. The Agency Worker Regulations will require myriad rights for temporary staff after a 12 week employment threshold. But, warns Ms Watson, applying the terms of the new regulations to an employee’s temporary contract in time is not as simple as counting calendar weeks. She advises that companies should look to engage with an agency supplier who has the expertise, resource and technology solutions to provide the monitoring and tracking of flexible workers. Though some have said that government issued advice is insufficient, guidelines on employer, agency and employee responsibilities under the new regulations has been issued by the Department for Business Innovation and Skills and is available at: www.bis.gov.uk/policies.

Have your say at www.themanufacturer.com

Gov! Not me

Business Secretary, Vince Cable, at the launch of the Red Tape Challenge in April this year

If you want something done right, do it yourself. Itâ&#x20AC;&#x2122;s a common phrase for those of a pragmatic turn of mind, which might have been assumed to include the manufacturing and engineering community. But perhaps not. Jane Gray asks why so few manufacturers are willing to take on the responsibility of engaging with government despite identifying regulation as a hindrance to business.

Read this article to: Learn what the Red Tape Challenge is and how to get involved Understand why engagement with government is a responsibility for SME leaders in the UK Understand possible reasons why industry representatives do not engage with government Read a selection of the advice already given to government through the Red Tape Challenge

Leadstory Not me Gov!

The

Red Tape Challenge, a concept mooted by the Coalition almost immediately on its accession, was launched in April 2011 with a reasonable splash in the mainstream press including television and radio networks. Inevitably though, the short attention span of the national press and indeed the general populace quickly moved on. This does not mean that the Challenge itself disappeared. The initiative, which asks for advice from individuals, lobby groups and businesses on ways to reduce regulatory red tape in business and enterprise, has been steadily rolling on with its mission to identify and remove unnecessary barriers to flexible business and growth in the UK. To rationalise this agenda and show that government acknowledges the individual requirements of different sectors, the Red Tape Challenge has been electing specific groups for ‘spotlight periods’. The retail community was the first to have its turn (April 7-May 10). The sector submitted around 9000 suggestions for reform or abolition across 257 pieces of retail legislation. In July, the fruits of this interaction with government were revealed as Business Secretary, Vince Cable announced that government has now committed to removing around half of this legislation. By sad comparison the spotlight period for manufacturing contribution to the Red Tape Challenge has, so far, been a flop. By August 4, the day marking the official closing period for the manufacturing spotlight, just one manufacturer, Ian Benton of Merseyside-based electronics company, Electrovision, had contributed any comments across the four manufacturing specific areas of regulation. For manufacturing and engineering trade bodies, industry spokespeople and the trade press this response has been baffling. If approached by any one of the above, owners and leaders within UK manufacturing firms will readily identify lists of regulations which they feel limit their ability to be competitive, yet when invited by government to take action on removing these, they have fallen silent. Mr Benton, though he describes himself as a ‘troublemaker’, made clear to TM that he feels it is the responsibility of manufacturers to interact with government – if only for self preservation. “The industrial strategy of government seems to revolve around

Despite the fact that the spotlight period for manufacturing closed on August 18 EEF will still be accepting contribution from manufacturers throughout September

encouraging it to move to China,” he says. Indeed Mr Benton’s own company has itself been compelled to move its manufacturing to the East, though he did share hopes of repatriating some of these operations in the near future – perhaps a desire which spurred him to make his direct appeals to government. For Andrew Churchill, managing director of SME engineering firm JJ Churchill, the attitude of the silent majority of his peers is frustrating, but unsurprising. He speaks of deep scepticism among business leaders as to the value of initiatives like the Red Tape Challenge. “Every government administration has had some scheme like this,” he says. “The simple fact is that most smaller companies think that life is too short to engage with government .” This is not an attitude which Mr Churchill himself shares. As MD of a thriving business with around 120 employees, Churchill is also an active manufacturing spokesperson, participating in both local and national debates on the role of industry in society and the barriers to industrial wealth creation in the UK. His opinion on the necessity for such engagement is clear cut. “Cynicism aside,” he says, “if we do not engage

in opportunities [like the Red Tape Challenge] to mitigate the impact of regulation on our sector, we can have no expectation of a future for manufacturing in the UK.” Churchill’s standpoint is echoed by Terry Scuoler, CEO of EEF and also the man asked to act as ‘sector champion’ for the Red Tape Challenge. Speaking to TM about the manufacturing community’s participation, or lack thereof, in the Red Tape Challenge Mr Scuoler says: “There may well be wariness out there. There is certainly cynicism and scepticism. But this a relatively new administration. The initiative has come from the Prime Minister. It is administrated by his Cabinet and I, as manufacturing sector champion, will be in the Star Chamber when the decisions around what legislation should be cut are made. Unless we [the manufacturing community] can get examples of bad regulation in front of this group of very senior politicians at this juncture we have no chance of getting that regulation changed.” The session in the Star Chamber, to which Mr Scuoler refers, is due to take place in October although the date is yet to be confirmed. Driving home the urgency for manufacturing contributions to the Red Tape Challenge, Scuoler concludes: “At the end of this process if government does not respond then we will have sound reason to be highly critical of the process.

In defence of reticence The message is clear. Cynicism is no excuse for apathy. But are there other barriers to participation in the schemes such as the Red Tape Challenge which are designed to bridge the gap between industry and government?

There was obviously a view from government that there was no point in cancelling regulation which was going to be reinstated by the EU Terry Scuoler, Chief Executive, EEF

Roger Salamone, chief energy advisor at EEF, suggests that the delivery of the initiative may be a blocker for some manufacturers. “The idea of submitting this kind of advice through a website will seem like a gimmick to some people. They might doubt the seriousness behind the initiative” he says. To try and combat this preconception EEF have set up a dedicated e-mailbox for manufacturing contributions. EEF will then compile the submissions given to them through this route and present them to government for review (see box). This route also resolves an identity concern whereby some larger organisations expressed fear of being lambasted by activists if they suggested changes to environmental, energy or health and safety regulation on the Challenge’s main site. Above and beyond any reluctance to engage with web based government interaction, there is a question as to how well the site has been designed and how relevant the manufacturing specific legislation areas are felt to be. While manufacturing was in the ‘spotlight’, a dedicated page was created where manufacturers could submit comment on

Sector Spotlight period

Number of Number of sector specific sector specific regulations comments under review

Retail

257

9000

Hospitality, food 110 and drink

567

Road transportation

110

2074

Manufacturing

120

regulation relevant to: products and equipment, weights and measures, intellectual property and export controls. According to Mr Salamone this falls wide of the mark for key manufacturing interest areas which are more likely to centre on health and safety or environmental legislation. For this reason EEF have once again pushed for greater flexibility in the Red Tape Challenge process and have made clear to government that EEF’s submission of advice in September will cover a whole raft of legislation which impacts on the business of manufacturing. For Andrew Churchill however, the main reason to doubt the realistic potential of the Red Tape Challenge lies in the fact that so much UK regulation actually originates in Brussels. Scuoler admits that this is an issue. “In my discussions with the civil servants and officials responsible for [the Red Tape Challenge] about which regulations ought to be protected I have been shocked by the number of regulations which were either EU directives or EU proposals likely to be enforced within three years. There was obviously a view from government that there was no point in cancelling regulation which was going to be reinstated by the EU.”

Can’t think what regulations you would comment on? Here are some extracts taken from current submissions on the manufacturing spotlight page:

Products and equipment John Chubb said on August 14, 2011 at 10:10am I ran a small company manufacturing electrostatic measuring instruments up till February 2009. While never a large company about 60% of the business was exports...The WEEE regulations required us to analyse and report the quantities of materials used in our instruments and to have arrangements to dispose of our products at the end of their life. It was quite impractical for us to know where our instruments might end up or to expect customers to return them at the end of their life… My recommendation…[is] that WEEE regulations should not be applied to companies making less than a defined quantity of product in a year.

Lead story Not me Gov!

Ian Benton said on July 21, 2011 at 8:51 pm Repeal the legislation concerning lead in solder. The research on which it is based has subsequently proven to be flawed. Lead does not leach out of landfill into the water supply…The mandatory use of lead free solder reduces reliability (if it didn’t why would there be an exemption for aerospace)…and due to the reduction in reliability results in more EEE in landfill.

WORLD CLASS MANUFACTURING AWARD

Weights and measures Matthew Lucking said on August 8, 2011 at 12:55 pm

Export controls Barry Fletcher said on August 6, 2011 at 11:45 am There are numerous areas of the current UK/ EU export legislation which I believe are no longer fit for purpose in today’s International Business Community. [Current legislation] means that some UK companies are struggling to obtain export licenses, whilst others exporting the same goods to the same end-user believe (rightly or wrongly) they can apply the de-control and are exporting without licenses… Companies are struggling to determine if they have licensable Technology… Whilst I fully understand the reasons, the intention of the UK Government to impose charges for Export Licenses could potentially force many UK based companies who make large numbers of low priced exports of controlled goods, in say support of servicing aircraft, move their export warehouses to other parts of the EU where charging will not exist.

No comments were made under the Intellectual property section of the Red Tape Challenge Website before August 18. See www.redtapechallenge.cabinetoffice. gov.uk to read all comments in full and to submit your own. If you are unsure of where to position your comments on the Red Tape Challenge website try sending an email to the EEF mailbox: redtapechallenge@eef.org.uk

Calling for entries: Is your company making quantified, sustained progress towards being world class? This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it is trying to achieve world class manufacturing standards – generally understood as scoring a minimum score (from 95%-98%) on an absolutely true measure of efficiency. Judges will look for evidence of benchmarking against best practice and will examine measures like lead times, customer returns, work content, labour minutes per unit, inventory levels and cycle times, checking that action has been taken to improve these. Such improvements cannot be achieved overnight, but we are looking for companies that have already made quantified, sustained progress towards being world class, and those who have made an impressive start in this commitment.

Sponsored by Palletline

nation, Germany, have been powered by renewable energy since 2009 and on a global scale, one third of buildings owned by the group use renewable energy. But of course it is in the company’s inherently carbon hungry business of transporting goods that the best opportunities for emission reductions lie. In this area DHL is investing in upgrades to its fleet of aircraft by fitting more aerodynamic winglets and shifting, where possible, from road to rail.

www.themanufacturer.com/awards www.themanufacturer.com/awards

One way to reduce energy consumption within a supply chain is to modify the behaviour of those that actually make the deliveries. Limiting the top speed of lorries and ensuring that drivers do not brake too hard have formed part of DHL’s GoGreen programme. Companies in the UK are starting to promote fuel efficient behaviours through other means as well.

In the UK we already operate 11 full electric trucks, and have done so for more than two years A TFC Fuelcard being used at a pump

emissions of all its divisions, sites, customers and products. This data is then published and used to prove all claims of energy efficiency the group makes. Importantly, this data is then used to demonstrate transparency for DHL’s customers.

The practical actions Taking a holistic view of its environmental impact and seeking to make efficiencies wherever it can, DHL is moving its office infrastructure over to renewable energy sources. The company’s sites in its home

Michael Lohmeier, senior expert on the GoGreen programme, DHL

Plugging in But, of course, the opportunities to eliminate road transport for a logistics firm will always be finite and DHL is keen to find the best ways of increasing the efficiency of its remaining road fleets. Once considered an expensive pipe dream, electric vehicles (EVs) are fast becoming more advanced and more economically viable. Governments in developed and developing countries are paying more attention

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Supply chain, Logistics and Materials Handling

EV infrastructure In preparation for the growth in use of EVs on Britain’s roads, green utility group Ecotricity has partnered with motorway services chain Welcome Break to pioneer the use of low-carbon transport routes across the entire UK. In late July, Ecotricity announced that it aimed to have launched 12 ‘top-up’ points at Welcome Break branches across the UK. It also stated that within 18 months, the company expects to have charging points at all 28 of the motorway service station operator’s branches. Founder of Ecotricity, Dale Vince OBE, said: “Until now, charging posts have all been in city centres like London, but this is where you need them the least. Statistics show that it’s not in towns and cities where electric cars need to recharge, but on longer journeys between cities – that means motorways.” Mr Vince added that his company is “creating the infrastructure to get Britain’s electric car revolution moving,” and that it “marks the beginning of the end for the old combustion engine.” Ecotricity’s new partnership deal may help allay widespread doubt over the long distance capabilities of EVs – often referred to as ‘range anxiety’.

ISO 14064 This is an integrated set of tools aimed at measuring, quantifying and reducing greenhouse gas emissions. They allow governments, businesses and organisations to participate in emissions trading schemes by giving them a globally recognised standard. Dr Chan Kook Weng, convenor of the ISO working group responsible for developing the standard explains: “ISO’s goal is to provide a set of unambiguous and verifiable requirements or specifications to support organizations and proponents of Greenhouse Gas (GHG) emission reduction projects. ISO 14064 will provide clarity and consistency between those reporting GHG emissions and stakeholders.”

Statistics show that it’s not in towns and cities where electric cars need to recharge, but on longer journeys between cities Dale Vince OBE, Ecotricity

to the potential cuts in carbon emissions that EVs vehicles can bring, and not just as a consumer facing popularity stunt. According to DHL, some of the opportunities for emissions and costs reduction will be achieved in the migration of commercial fleets over to electric power. DHL is clearly proud of its progress in introducing EVs. It currently has 100 projects piloting the use of electric and hybrid vehicles, alternative fuels and electronic and aerodynamic modifications. A third of these projects are taking place in Germany but it is also taking big steps further afield. In April this year, DHL carried out a large scale trial of EVs in the Manhattan area of New York. On April 1, DHL said that it aimed to convert its ‘entire fleet of commercial delivery vehicles in Manhattan to electric and hybrid electric vehicles’ by the end of June 2011. This project is a classic demonstration of the value being put on stakeholder engagement through carbon efficiencies. DHL has openly stated that it does not expect its investment in Manhattan to ‘pay off’ in terms of fuel savings. Rather, according to chief executive of Deutsche Post DHL Frank Appel, it is an opportunity to match rising environmental expectations from customers. Evidently the benefit brought about by satisfying these expectations, or other associated benefits, must be sufficient to form a business case for similar schemes. When asked about plans to extend trials to other parts of the world, in particular the UK, Lohmeier said that DHL certainly has plans to do so. “Especially in Asia we currently see the respective driving profiles that allow a deployment of electric vehicles, thus we are in negotiations with manufacturers. In the UK we already operate eleven full electric trucks and have done so for more than two years.”

Have your say at www.themanufacturer.com

Toyota Hybrid Forklift. Environmental characeristics are a focus point for future TMHE developments

Inside, outside Materials handling solutions for manufacturers are thick on the ground. But in this area of operations it can be difficult to distinguish the mundane from the truly innovative. It is also true that many manufacturers are complacent with [about] traditional solutions (is it true?) while technology and opportunity leap ahead without them. Here TM looks at some of the newest logistics support available for both within and without your factory walls.

Read this article for: A review of the latest warehouse materials handling technologies to be released by Toyota Material Handling Europe Insight into developments in pallet system logistics for small consignments and the new requirements that increased handling brings.

Inside: Automatic for the people Peter MacLeod, editor of SHD magazine, a leading publication for logistics and materials handling professionals, lends TM his expertise for a review of recent product releases from the world’s largest manufacturer of forklift trucks.

Earlier

this year Toyota Material Handling Europe (TMHE) launched a number of new warehouse trucks under its BT brand, completing the renewal of its product range. Two new product families – BT Optio order pickers and BT Vector VNA trucks, as well as the fourth-generation BT Radioshuttle – help customers drive down costs in order picking and high density storage while contributing to safe and efficient operations. The all-new BT Optio H-series of high-level order pickers offers picking heights of up to 12 metres – the highest level in its class. High-level picking allows optimisation of available storage locations, and BT Optio H-series helps companies maximise space utilisation in this way. The Optio H-Series was revealed to the public for the first time at the recent CeMat trade fair in Hannover, where TMHE also staged the world premiere preview of its new BT Optio L-series of low-level order pickers. Designed for all types of first-level and second-level order picking, the BT Optio L-series is scheduled to be launched in the latter half of 2011. Among a raft of technology recently unveiled by TMHE is what it describes as its “ground-breaking” BT Automated Order Picking solution. By revolutionising the order picking process, TMHE’s automated order picking concept delivers productivity increases of up to 40%,

Supplychain Logistics and Materials Handling

substantially reducing labour costs and supporting safe operations. Henrik Eriksson, a member of TMHE’s Logistic Solutions and Development Department, explains how this works: “The solution is built on a standard truck working together with a pickby-voice communication system resulting in the human order picker only undertaking tasks where he or she adds real value. The order picker can focus on the order picking and the automatic truck handles the other tasks, such as despatching full pallets and picking up empty ones.” Continuing the focus on reducing storage space costs, the new BT Vector R-series is the latest ‘man-down’ VNA range for full pallet handling. Based on the acclaimed BT Reflex reach truck platform, the BT Vector R-series offers either turret head or shuttle fork configurations. Transitional Lift Control (TLC) assures smooth lifting and lowering at all speeds, reducing the risk of load damage and related costs. The new BT Vector C-series is the latest family of ‘man-up’ VNA combi-style trucks, for both full pallet handling and order picking. The tiltable mast design allows the trucks to be transported on conventional road vehicles and driven on to site, rather than requiring heavy lifting equipment during installation. This dramatically reduces installation time and cost, and also increases flexibility. Over the past decade, the BT Radioshuttle set new standards in ultra-high-density storage. Loads can be stored in deep storage tunnels, being placed and retrieved by remote-controlled shuttle units. This allows exceptional economies in the use and cost of storage space. The new fourth-generation BT Radioshuttle offers additional safety features, more on-board intelligence for stock control, and is fully sealed for protection against spills. Toyota, the largest manufacturer of forklifts in the world, remains at the forefront of technological design, pushing out products to satisfy today’s demands as well as tomorrow’s. Automated picking capabilities were a central them in the latest product launch, in response to a heightened need for cost base efficiencies, such labour cost reduction, post recession. Håkan Dahllöf, president of TMHE, has stated that the development of automation technologies for picking will continue to be a focus point for the company over the next three to five years.

TMHE’s automated order picking concept delivers productivity increases of up to 40%, substantially reducing labour costs and supporting safe operations

Asked about what else lies in store Mr Dahllöf, replied: “The Toyota Group is active in researching new technologies with environmental benefits such as lithium ion batteries, hybrid technology and fuel cells.” Moving on to address TMHE’s customer offerings around their warehouse equipment Mr Dahllöf commented: “We will continue to expand and fine-tune our customer offer both before and after the sale. Service and maintenance are at the heart of our business, and we will continue to develop our Toyota I_Site fleet information system as well as our used truck and rental offer.

Outside: Good-s things come in small packages Austin Duffy, marketing manager at freight operator Redhead International explains how lead time compression and demand for flexibility in supply is prompting innovation in pallet system logistics.

Speed

is of the essence in the freight world. And speed is the reality in the swiftly evolving area of pallet system logistics – an area which is prompting significant and wide ranging changes in the way goods are transported throughout the UK and Europe. Recent improvements in the logistics chain - from recording to tracking the goods - mean that moving small consignments of 1 to 4 pallets has become efficient, flexible and more cost effective. The changes allow customers to scale their orders according to need, while accessing a service that sees their goods transported throughout the UK in 24hrs and Europe in 48hrs, all at a price point more in line with standard freight than courier or special delivery charges. Such advances do however, come with additional considerations linked to the packaging, palletising and storage of freight. Conventional transport service goods are only handled twice, when loaded onto, and then unloaded off, the vehicle. However, utilising the pallet system means that consignments are often handled 5 to 6 times during a typical journey, and considerably more when crossing into a European system. This means the quality of packaging is a key consideration to ensure safe delivery. Allied to this is the need to clearly and correctly label all goods, as they will often be travelling through at least one hub and sharing vehicles with other consignments. The more clearly identified they are the less chance there is of an ‘airport luggage moment’. To meet this growing demand warehouse space has also needed to adapt by optimising storage for pallets. This principally means the installation of racking. An expensive development, but one which maximises the use of available space. Health and safety considerations are also inexorably driving these changes through. However, as with most things in the logistics world, one size doesn’t fit all and there will always be goods that don’t conform to the pallet’s dimensions, for these consignments the carrier will be able to advise on the most appropriate course.

Legal Supplement Welcome to The Manufacturer’s Legal Supplement The essential guide to the legislative framework that governs every aspect of UK manufacturers’ operations, from health and safety to the Bribery Act. All manufacturers need a working knowledge of the legislation affecting their businesses – but without a mountain of paper. Read on for commentary and advice.

Legal Supplement

TM legal

supplement

were fined for breaches of good practice that resulted in death; today, directors can be held personally responsible and even sent to gaol. How many reading this were aware of this additional layer of responsibility and are insured against potential financial consequences?

Manufacturers could be forgiven for simply turning to anyone who wants to talk about rules and regulations and saying ‘just let me get on with my business’.

The Bribery Act was enacted in April 2011. It forbids payment of bribes (obviously), ‘kickbacks’ and even some of the more generous and informal forms of corporate hospitality that have been part of business for decades. It also applies to a company’s activities overseas – whoever is carrying them out, whether an employee or someone acting

Would that things were as simple as that.

on the company’s behalf. The intention is laudable

However, compliance guidelines in Britain are far he reality of manufacturing in 2011 is that companies are affected by legislation from

– to create a level playing field – and it is matched by the Foreign Corrupt Practices Act in the USA. from definitive. The rub is this: directors of companies that

the moment the directors arrive in the

engage in corrupt practices can be held personally

morning until they go home at night. And

responsible for them, and subject to criminal

beyond – the law does not sleep while the night

prosecution. And this is a case where ignorance is

shift is on duty.

no excuse – it does not matter if you did or did not

Various areas of legislation are familiar simply

know that an agent in a far-off land was greasing

because they have been around a long time – or we

palms, putting the money down on expenses, or

like to think so. But how many companies are truly

even fattening their commission. You, the company

aware of all the regulations that appy to their business?

director, are responsible.

Take the COMAH (Control of Major Accident

Holding directors and company officers

Hazards) regulations. While many companies will

personally responsible is becoming very much

know that a large installation will be subject to

the norm. The Health and Safety Offences Act

various stringent rules and legislation, the question

2008 makes individuals liable for up to two years

is: what is a ‘large installation’? It is easy for the

imprisonment for a breach of duty, for example,

number of propane tanks held on site, for example,

which means that reportable incidents are not just

to simply drift upwards, as the company needs

an annoying interruption – they are potentially

them or even ‘just in case’ there are problems with

expensive, both financially and in terms of

delivery, say, during a severe winter – as we had last

personal liberty.

year. The problem is that an additional one or two

Legal firm Nabarro contributes an article to this

per cent in storage capacity takes a business over

supplement relating to what will, potentially, be

the line to ‘large installation’, and the need to meet

the largest series of construction contracts ever let

many more requirements.

in Britain. Nuclear new build will be big business

The law on Corporate Manslaughter has changed, dramatically. Ten years ago, companies

and the supply chain will be far-reaching – one nuclear power plant project includes a multimillion pound contract for hairdressing? Nabarro

The reality of manufacturing in 2011 is that companies are affected by legislation from the moment the directors arrive in the morning until they go home at night.

discusses the extent of these contracts, dispute resolution, and lessons from previous major construction projects such as Wembley Stadium, the Jubilee Line Extension and the Olympic Games. Whatever sector of manufacturing your company is in, and whether it operates just in the UK, Europe or further afield, this year’s Manufacturer Legal Supplement is essential reading.

There's no alternative to experience As an international law firm we have been helping manufacturing companies achieve their objectives for years. Put our experience to work on your behalf by calling Alison Bond on 0121 625 3261 or email alison.bond@pinsentmasons.com

www.pinsentmasons.com ÂŠ Pinsent Masons LLP 2011

Marking out the field worth taking the time to listen to

The Pinsent Masons’ 2011 Manufacturing Report will soon be published. Based on the results of an extensive online survey and in-depth conversations with Legal Counsel the report makes sense of the evolving legal landscape for manufacturers. Here some of the key findings are previewed for TM’s readers.

legal advice and ensure that your 5S practices and production procedures are not just in place, but being adhered to, rigorously. The serious nature of these issues was further compounded earlier in the year with the first prosecution under the Corporate Manslaughter Act, which concluded in February and resulted in a fine of £385,000

against Cotswold Geotechnical year of mounting

the world, auditing suppliers,

compliance legislation

negotiating contracts or setting up

and unforeseen global

joint ventures under legislation in

issued by the Sentencing Council

events has thrown up new

territories that were not even open to

and represents something of a

free trade a quarter of a century ago.

departure from historical sentencing

challenges for manufacturers in the UK. The annual Pinsent Masons’

The fine was in line with guidance

practice. Normally, fines take

report gives insight into how the

Losing everyday focus?

legal landscape in the UK is evolving

One potential problem arising

judgement indicated that it would

in response to this environment.

from the global scale of Counsel’s

be acceptable to fine a company out

responsibilities is the danger of

of existence if a breach was serious

manufacturers have to endure a legal

losing sight of ‘bread and butter’

enough. In this case, the company

burden that is far heavier and more

issues. It can be easy to ‘de-prioritise’

was given 10 years to pay.

extensive than our forebears would

areas that could be thought of

have dreamed of, even as little as 25

as routine when attention has

survey, health and safety (and for

years ago. But that was before the

been focused on investigations by

that matter environmental issues)

era of globalisation, the extension

competition authorities and other

featured much higher up the radar of

of supply chains across the world,

regulatory issues.

FDs and MDs than of Legal Counsel,

One thing is certain –

and before EU harmonisation of

A good example of this is

ability to pay into account but the

Interestingly in the Pinsent Masons

reflecting perhaps reactions to trend

standards across a range of areas,

health and safety, which is a

for the increasing personal liability

from food traceability to Restriction

real concern with very real

and recent high profile cases.

of Hazardous Substances (RoHS).

consequences for businesses. If

Today’s senior Legal Counsel now

the employing company is found

People business

spend a lot of time flying around

to have had inadequate practices

The survey also looked at the

and procedures in place then the

problem of talent – attracting it,

ramifications can go a long way

retaining it and incentivising it.

beyond discussions with insurers

There has been a great deal of

on workers’ compensation, early

commentary in the press around

retirement and a visit to the

the immigration caps introduced by

Magistrates for a fine, a telling off

the government.

The Arab Spring uprisings and the tsunami in Japan brought the global nature of supply chains under the spotlight

Holdings, a single-director company.

and some adverse publicity. Directors can now be held

The results showed that although 12% of respondents had been unable

personally responsible for breaches

to recruit skills needed by their

of health and safety legislation,

business because of the immigration

which can extend to heavy fines

cap, three quarters of businesses had

and even imprisonment. It is well

not been impacted by the cap at all.

In terms of abolition of retirement age in October, half of the respondents were uncertain of its

Undertaken an anti-bribery and corruption audit in the last 6 months Put in place a plan for such an audit in the next 6 month Put in place a new anti-bribery policy

44.7% 44.7%

36.8% 34.2%

Had active board level involvement (eg training) in relation to the Act

26.3%

Pi n s e n t M a so n s

The shock reduction in corporation tax will give Britain the lowest rate of corporation tax in the G7. Perceived as a way in which to kick-start economies, it is hardly surprising that it was welcomed by respondents.

In the light of the Bribery Act 2010 have you implemented any of the following

21.1%

Undertaken new more widespread training either face to face or by way of e-learning Don’t know Source: Pinsent Masons’ Manufacturing Sector Survey 2011

impact while the other half were evenly split between it being a net

The Arab Spring uprisings and the

redress in the courts. Russia, on the

opportunity and a net burden.

tsunami in Japan brought the global

other hand, still presents a potential

The prevailing theme amongst

nature of supply chains under

IP minefield.

our respondents however, was

the spotlight. Thirty two per cent

that the impact of the abolition of

of respondents said they had to

A budget for growth?

the default retirement would not

delay deliveries; 36% experienced

The shock reduction in corporation

be felt immediately; rather a long

shortages in supply and 11% were

tax will give Britain the lowest

adjustment period would be needed

forced to change supplier at short

rate of corporation tax in the G7.

before the impact became clear.

notice. All of these problems would

Perceived as a way in which to

have found their way, one way or

kick-start economies, it is hardly

another, onto Legal Counsel’s desk.

surprising that it was welcomed by

The global marketplace: bribery, corruption, supply chain disruption and IP

An ongoing global market

respondents – an overwhelming

concern is that of Intellectual

84% indicated that it was this

Property (IP) protection. China used

measure that was most likely to

to be a country of great concern in

help their business grow. Thirty

The global nature of manufacturing

the area of IP but things seem to be

per cent cited the increased rates of

continues to present a range

changing – although traps for the

R&D relief as a measure that would

of issues and these have been

unwary remain.

assist growth.

reflected in the results of the

In stark contrast, the other

Loss of ownership of IP was a concern for 25% of respondents

suggested measures (enterprise

down from 35% last year. Strong

zones, the 10% rate of corporation

law this summer, has taken up

contracts that include swingeing

tax for patents and the reform of

a lot of Legal Counsels’ time in

penalties for breach of IP help to

taxation of foreign profits) barely

implementation and training, from

concentrate the minds of suppliers

received any recognition.

the boardroom to the shop floor.

and joint-venture partners –

Thirty per cent of respondents have

especially now that it is possible for

published in the Autumn of 2011. We

undertaken a bribery and corruption

foreign-owned companies to obtain

hope you will find it food for thought.

Pinsent Masons survey. The Bribery Act, which became

Pinsent Masons’ report will be

audit in the last six months; 43% of anti-bribery policy; 30% have been

For further information please contact Alison Bond, Head of Manufacturing Sector, Pinsent Masons or visit:

involved with new more widespread

www.pinsentmasons.com

respondents have introduced a new

training this year.

Ev e rsh e ds

Health and safety culpability be done to grab the attention of directors and senior managers in a way that resolves these long standing issues?

Corporate manslaughter Many ‘captains of industry’ watched with interest the trial of Cotswold Geotechnical Holdings Limited, who were convicted in February 2011 of corporate manslaughter in the first case of its kind to be heard in England. This

Paul Verrico, associate and solicitor-advocate at international law firm Eversheds gives insight into important developments around health and safety law including corporate manslaughter accountability and sentencing trends.

of corporate criminal liability were tested in a courtroom; the jury in the case returned a unanimous verdict in less than 90 minutes. In the Cotswold case, the court heard that the deceased was left working alone in a 3.5 metre deep trench to ‘finish-up’ when the company director left for the day.

ealth and safety

Many of the fatal incident cases

About 15 minutes later there was a

issues are not new to

which Eversheds defend on a

muffled noise and a shout for help. A

the manufacturing

regular basis in the sector share

rescuer found that a surge of soil had

sector. Many of the

depressingly similar characteristics.

fallen in and buried Mr Wright up to

leading reported cases which

Typically, they fall into 4 categories:

his head. The rescuer climbed into

historically define this area of law

guarding - either missing, not

the trench and removed some of the

arise out of horrific incidents in

updated or corroded; interlocks

soil to enable Mr Wright to breathe.

bakeries, rolling mills, pet food

- bypassed, or missing; failure to

At that point, more earth fell so

factories and machine component

segregate – forklift trucks or lorries

quickly into the pit that it covered Mr

manufacturers. Yet the Health

from pedestrians or falls from

Wright completely and, despite the

and Safety Executive’s (HSE) latest

height due to fragile roofs or lack of

rescuer’s best efforts, Mr Wright died

statistics show that there were 27

restraint devices.

of traumatic asphyxiation.

fatal incidents at UK manufacturing sites in the last 12 months.

was the first time that the new tests

If so many incidents are on this set of characteristics, what can

There is well established industry guidance prohibiting entry into

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. Peter Halpin Head of Industrial Engineering Sector Group Direct: +44 845 497 4743 Main: +44 20 7497 9797 peterhalpin@eversheds.com

Robin Johnson Chair of Industrial Engineering Sector Group Direct: +44 845 498 4860 Main: +44 20 7497 9797 robinjohnson@eversheds.com

www.eversheds.com ©Eversheds LLP 2011. Eversheds LLP is a limited liability partnership.

Ev e rsh e ds

excavations more than 1.2 metres

which have been publicised since

Third, there is a real interest in

deep. In convicting the company,

the guidelines were issued. Our

pursuing cases against senior

the jury found that their system of

research from the period 15

managers and directors where the

work in digging trial pits was wholly

February 2010 to 21 December 2010

regulators believe that an act or

and unnecessarily dangerous and

spans a wide range of penalties for

omission materially contributed to

ignored guidance by requiring

incidents, none of which involve

the incident.

employees to enter deep trenches.

corporate manslaughter.

Sentencing Guidelines released

Our research shows that the

Fourth, the pressure on both individuals and the company

in February 2010 suggest that

average fine for a fatality over that

during an investigation should

a starting point for sentencing

period was £114,285.

not be underestimated. My fatality

corporate manslaughter should

Personal fines imposed upon

cases that are currently going

be £500,000 – Cotswold were

directors following fatal accidents

through the system mainly date

fined £385,000 to be paid over 10

over the same period averaged

from 2007/2008 – a long time to

years. That was an extreme fine

£10,667. Both organisations and

wait for your ‘day in court’.

which represented over 200% of

individuals may be expected to

the company’s turnover. A second

contribute towards costs on top of

more aggressive stance on costs

corporate manslaughter case, that

any fine.

recovery than in previous times.

Finally, the HSE has taken a far

In a recent case in the Magistrates Court which was dealt with on the

Sentencing Guidelines released in February 2010 suggest that a starting point for sentencing corporate manslaughter should be £500,000 – Cotswold [Geotechnical Holdings Ltd] were fined £385,000 to be paid over 10 years

first occasion, the court awarded costs of nearly £80,000 for a relatively minor set of incidents – those costs dwarfed the fine.

The way forward? It can appear that the total fine and costs are disproportionate, particularly for smaller companies. For instance, following the

of Lion Steel Equipment Limited,

What does this mean?

had its first hearing in August

Firstly, any large manufacturing

of £7 billion was fined £3.5 million,

2011 – a full trial is listed for the

company which is involved in

the MD of a manufacturing client,

new year.

a workplace accident in which

who was waiting to be sentenced

somebody dies can expect that the

for a non-fatal health and safety

Sentencing Trends

defendant with a turnover in excess

police will investigate, first and

guarding offence, noted that if

The February 2010 guidelines

foremost, the offence of corporate

the same formula was applied to

are intended to create a structure

manslaughter. If the company

his company, the size of the fine

to enable a sentencing judge to

is ignoring established industry

should be £17.50. It is difficult not

consider minimum thresholds, to

guidance at the request of senior

to sympathise in

assess the seriousness of the offence

managers (as was the case in

those circumstances.

and any appropriate mitigation

Cotswold) then charges

before deciding on the size of

may follow.

penalty for fatal accidents where an

Second, in any fatal case

Directors and senior managers of manufacturing companies therefore need to think carefully

employer is seen to have materially

judges are now very reluctant to

about likely penalties in health

caused the death. While the

fine below £100,000 when the

and safety cases when considering

guidelines specifically state that a

organisation has any size - fines of

cutting back on health and safety

simple correlation between turnover

£200,000 plus are becoming the

budgets. Common sense suggests

and profit is not appropriate, it is

norm. This may come as a surprise

that even on a simple cost/benefit

the case that the court will look at

to some company directors, who

analysis, the risks are simply not

both and the defendant’s net worth.

envisaged fines of that nature

worth taking.

We have followed with interest fatal incident sentencing cases

Buncefield case in which a

being mainly reserved for corporate manslaughter.

Postscript: the client noted above was fined more than £17.50.

MANUFACTURING MATTERS DLA Piper is one of the world’s largest law firms, with 4,200 lawyers in 30 countries. Our global network means we can support our manufacturing clients, whatever their interests and wherever they are working, to grow their business. Our offices are located at the heart of some of the UK’s most vibrant manufacturing regions and are at the centre of our drive to provide continued support to the industry. We understand that manufacturing is vital to the UK’s economic success. Whether you want to grow your business overseas, protect your cutting edge ideas or make your business more energy efficient, our lawyers have the knowledge and expertise to help you achieve your goals. Our expert teams have experience working with some of the UK’s leading manufacturers in areas including: ■

Navigating international markets

■

Protecting your intellectual property

■

Safeguarding your commercial contracts

■

Dealing with Health and Safety and Environmental regulations

■

Assisting with employment issues

■

Managing disputes and litigation

■

Advising on your real estate needs Delivering “tremendously sound, pragmatic advice that is always presented on time,” this “hardworking practice” wields an impressive roster of top industrial clients, who are impressed with the team’s ability to “really understand what makes us tick” Chambers UK To find out more about our services, contact manufacturing@dlapiper.com

The UK’s £20 billion challenge About the author

Martin McKervey has more than 25 years’ experience in all facets of dispute resolution in the construction and engineering industry. He is now at the heart of the nuclear new-build debate, working closely with leading energy suppliers. Martin’s experience has been built across international boundaries. Now he works at the heart of the close-knit business community that is developing the UK’s first new nuclear energy plants for 20 years.

Despite setbacks in the global nuclear sector, the UK looks set to commission a major nuclear newbuild programme, creating a £20 billion supply chain. Martin McKervey, partner at national law firm Nabarro asks if the UK supply chain is ready to deliver a programme that could benefit UK manufacturing for decades to come.

ukushima aside,

The programme would be

nuclear power looks set for

a massive boost to a UK

massive global expansion

manufacturing sector already

with around 30 countries

delivering hi-tec engineering and

positioning themselves for huge

manufacturing projects globally,

investments in new plants.

though many concede that the UK

The UK alone is set to launch a

has lost a generation’s worth of

£20 billion nuclear supply chain

nuclear expertise due to our

and manufacturers must

stalled programme.

prepare to benefit from the

to UK manufacturing’s ability to

Manufacturing with relentless predictability

provide the quality and quantity

Although overseas operators

of manufacturing required. Alan

may have more specific nuclear

Cumming, procurement director of

experience, indigenous companies

EDF (Nuclear New Build), summarises

are predicted to deliver up to 70%

this best when he says: “we’re

of the proposed £20 billion project.

embarking on a journey but we’ve

But how can we act now to ensure

not packed our rucksack yet.”

manufacturers are fit for purpose?

contracts available. Currently there is hesitancy as

corporate structure is equally

the product, the certainty of costs

important to the energy giant, as

and delivery, health and safety

much of the work will be founded

and - for manufacturers -

on the sharing of risks

£20 billion budget in UK, $300 billion internationally

relentless predictability.

and incentives.

There is also a wider incentive for UK

Already, energy giants are actively

Addressing up-front key

manufacturing to address, which is

engaging potential key supply chain

matters such as FIDIC and NEC

the fact that the 30 other countries

players and manufacturers can

contracts, dispute resolution

pushing forward their own nuclear

ready themselves by exploring the

tools, health and safety issues and

programmes will spend around

formation of JVs and partnerships.

environmental policies will be just

$300 billion in the coming 20 years.

In this way, they can present to the

as important to the manufacturer

With standardisation playing a

energy sector a coherent business

aiming to target the nuclear sector

central part in the next generation

entity with clear roles and contractual

as will machining capacity or a

of power plants, the UK can be a

relationships in place.

skilled workforce.

central provider of manufactured

This brave new world of

Nabarro is currently working with

NA B A R R O

The key drivers are the quality of

parts if the above issues are addressed properly.

commercial opportunity brings

manufacturers to resolve these issues

fresh risks unlike those in other

in tandem with securing funding,

areas and a clear understanding of

so that UK manufacturing really

programme remains the subject of

the legal framework is vital. Some

can approach the energy giants

much political debate, the growing

forward-thinking manufacturers

with the confidence that the offer,

demand for energy globally and

are already forming strong, mutli-

the structure and the capacity are

fears over energy security all point

disciplined and organic partnerships

perfectly aligned to ensure that the

towards the delivery of the next

where skills and capacities are

much-vaunted 70% of the £20 billion

generation of UK-based nuclear

well-balanced, but the supplier’s

budget does stay in the UK.

energy plants.

Although the nuclear new build

Lawyer speak not spoken here. From helping to bring businesses and investors together to advising on how best to grow regionally, nationally and internationally - we’re proud to play our part in backing the UK’s manufacturing sector. Great challenges and opportunities are out there in the sector and we are committed to helping our clients make the most of them. To this end, we focus on giving clear, client-focused advice that talks the language of manufacturing, not lawyers. If you’d like to discuss how we could help, in words you’ll understand, please contact Martin McKervey, Partner on +44 (0)114 279 4053 www.nabarro.com

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Manufacturinginaction Putting UK manufacturers under the spotlight Factory of the month The Royal Mint 84

A sterling effort

The Royal Mint operates 24 hours a day for 52 weeks a year It can produce 90 million coins a year The factory is to produce the 4,700 victory medals for the London 2012 Olympic and Paralympic Games A number of changes to the supply chain have been implemented over the past few years

printing services

Howard Hunt Group 110 Howard Hunt specialises in personalised mass marketing The company has adapted from being an offline printer into a modern multi-platform marketing business Heavy focus on improving efficiency and company culture: six sigma and a weekly Operator Preventative Maintenance session

food and drink

Aimia Foods 118 Company achieved the much coveted BRC A* accreditation after an unannounced audit Heavy focus on process improvement, sigma six and kaizen Daily hour where production is halted and ideas are put forward by the whole team

semiconductors

Zarlink 123 Part of a global company, Zarlink UK has sites in Monmouthshire, Swindon and Plymouth Key customers are those in the communications and medical industries, requiring line circuits, network timing and medical wireless applications

All companies featured will be entered into the MIA Award 2011

The Royal Mint can produce 90 million coins and blanks a week. It employs over 800 people

Factory of the month Royal Mint

sterling

effort

Perhaps more than any other product, currency makes an important contribution to the very fabric of society and exudes prestige in its manufacture. The prevalence of coin usage around the globe means that the process of literally making money is big business. Tim Brown talks to Gail Roberts and Martyn Smith about the processes and development within one of Britain’s greatest industrial legacies, The Royal Mint.

The

Royal Mint is a government owned company and was officially vested as The Royal Mint Ltd on 31 December 2010. Committed to providing a financial return to the UK government, last year it turned over more than £172m with a total operating profit of £3.6m. The Royal Mint is the world’s leading export mint, making coins and medals for around 60 countries every year and employs over 800 people. However, The Royal Mint’s first responsibility is to make and distribute United Kingdom coins and it has an exclusive contract to do so from HM Treasury, as well as official medals for the MOD. Ministry of Defence Police oversee the security of the 35-acre site, which operates round-the-clock for 52 weeks a year. The Royal Mint can produce 90 million coins and blanks a week, a total of close to five billion coins a year. The scale and continued growth of the operation has meant the site has frequently undergone improvement and development. Over the last 24 months the business has undergone some of its most significant changes in recent history.

Factory of the month Royal Mint

Supply and demands A great number of the changes have taken place in the area of procurement and supply which has culminated in the development of a new supplier initiative and awards programme. Head of supply chain at The Royal Mint, Gail Roberts, has overseen many of these strategic transformations which she says have mainly been driven by a desire “to maximise value”. Ms Roberts joined The Royal Mint in 2009 and, in the two years since, has worked to increase the contribution and control of the supply chain department.

The Royal Mint will produce 4,700 victory medals for the 2012 Olympic and Paralympic Games. It will also release a special series of 50p coins into circulation

By increasing the skills and understanding of her staff as well as developing a clearer set of criteria for supplier management, Roberts has assisted The Royal Mint in improving the efficiency of both its purchasing and operating strategy. “If you look at standard purchasing models,” says Roberts, “best practice’ tends to dictate that 80 per cent or more of purchasing activity should be of a strategic nature delivering ‘best value’. Circa 20 per cent should be tactical delivery. However, this ratio can vary depending on the business and commodities purchased. Two years ago at the Royal Mint that ratio was probably inverted. Talking through exactly how this transformation was achieved Roberts explains, “I have changed the focus of the team and implemented a development programme that embraces a more strategic and category management

IES and what we do for our clients At IES we work with our clients to provide a solution that meets with the clientsâ&#x20AC;&#x2122; needs. We work from first principles without any fixed ideas of how the problem should be solved. The first step of this process is to listen to the client, establish their requirements and tailor a solution. In our laboratory we are able to analyse the effluent and carry out treatability trails.

produced can be re-cycled through a reverse osmosis plant; this allows the effluent to be converted into de-mineralised water which can be used in the plating process. The filter cake produced by the process has been classified as non-hazardous and the options for the re-use of this are currently being explored. This will reduce the Royal Mintâ&#x20AC;&#x2122;s waste management cost and carbon footprint.

We are building on the sulphate technology we developed by sponsoring a pHD student at Northumbria University. It is our intention that the pHD student will join the company as an employee at the end of their studies. The research includes filter cake re-use, advanced oxidation, improvements in biological treatment efficiency.

As a technology focused company we use the latest technology and innovation where possible.

We are involved in other treatment projects on site including cyanide oxidation, carbonated recovery and improvements in electroplating efficiency.

IES is a forward looking company who provide state of the art techniques that allow process optimisation whilst delivering environmentally sympathetic results.

The solution provided to the client varies from supply of chemicals or bacteria, to upgrade of existing treatment plants, to design and supply of new treatment plant. In addition to providing the solution we provide ongoing technical and engineering support including service contracts, training and monitoring of effluent plant performance. We establish long term relationships with our clients so that we are the first port of call for any issues connected to their effluent treatment. The Royal Mint The new effluent plant at the Royal Mint adopted the sulphate removal technology from Integrated Effluent Solutions. In addition to supplying the technology, we have designed the treatment process. The plant has been designed so that a large percentage of the effluent

We have been involved with the HAZOP studies for the new effluent plant including any process modifications. The effluent plant project has involved working with Royal Mint personnel and other companies in order to deliver a plant which met the design specification which we developed with the Royal Mint. Investment in technology We have invested heavily in our laboratory facility and analysis instrumentation includes state of the art ion chromatography and trace analysis for metals and other contaminants using voltammetry, this allows analysis down to parts per billion. We have a team of chemically qualified personnel that has been expanded with the addition of an experienced graduate chemist and a laboratory technician.

What our clients say.

We continue to use IES as an essential source of information, products and equipment for all our waste water treatment for the current facilities and future projects. At IES we are committed to providing our clients with innovative, technically advanced, tailored solutions with ongoing support. We deliver improvements in environmental performance and optimize efficiency.

Contact details: Integrated Effluent Solutions Ltd

Unit 32 Enterprise City, Meadowfield Avenue, Spennymoor, County Durham, DL16 6JF

T: 01388 827395 E: info@effluentsolutions.co.uk W: www.effluentsolutions.co.uk

Factory of the month Royal Mint

Olympic endeavour In December 2010, the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) announced that the Royal Mint would be responsible for the production of 4,700 victory medals for the London 2012 Olympic and Paralympic Games. The gold, silver and bronze medals, which are awarded to athletes in the London 2012 Victory Ceremonies watched by a worldwide audience, have been designed by a UK-based artist. The contract between LOCOG and the Royal Mint was signed following a competitive tender process, with the opportunity originally advertised on the business opportunities portal CompeteFor. For the first time in its 1,100 year long history the Royal Mint is releasing a series of coins, designed by members of the British public, into nationwide circulation. Depicting the power and passion of the world’s greatest sporting event, the 50p coins showcase each of the 29 Olympic and Paralympic sports to be contested during London 2012. Almost 30,000 designs were submitted to the Royal Mint following the launch of a public competition in January 2009. After months of debate and consultation the final 29 coin designs were chosen anonymously by a panel made up of independent experts, representatives of the Royal Mint, London 2012 and the International Olympic Committee. The winning designs feature images of all the official Olympic sports of London 2012 such as Athletics, Gymnastics, Sailing and Swimming, as well as Paralympic sports such as Boccia and Goalball. From the speed of the Velodrome to the excitement of the athletics track, from the grace of beam, bars and vault to the sweat of the coxless fours, the drama of each sport has been captured on millions of coins released into pockets and purses across the UK. There are also uncirculated collector options available via the Olympic product range.

approach. The team now understand at all levels the commodities they purchase and the markets they operate in. They are far better informed and more able to establish a platform on which they can attain and manage ‘best value’. They

Best practice in today’s environment tends to dictate that 80 per cent plus of purchasing activity should be strategic. Circa 20 per cent should be tactical Gail Roberts, Head of Supply Chain understand the importance of engaging with stakeholders at all levels across the business, and are able to offer commercial acumen wherever revenue is expended”. Looking back over the last two years of change Roberts reflects: “Purchasing

On June 30 2011 The first Royal Mint Supplier of the Year Awards were held

Factory of the month Royal Mint

was quite disseminated when I joined and extremely decentralised in terms of controls. The first 12 months in role was very much about understanding the capability, skills and development of the Supply Chain team, it was about implementing and building a structure that was able to facilitate, encourage and support both the individuals and team growth.” “The infrastructure and system changes have now allowed us to take back full control of all revenue expended and through a consultative approach offer best practice procurement solutions, improving efficiencies and bottom line results,” says Roberts. “Once the structure began to take shape we were able to better engage with the wider business, our stakeholders and our key supply partners in a more strategic manner.”

We are extremely vigilant with regards to the environment and the impact we have and have already been awarded recognition by adopting the best available technology for our new effluent treatment plant Gail Roberts, Head of Supply Chain

In 2010, The Royal Mint introduced its ‘Working Together’ supplier relationship management programme to take this progress forward in a more concerted manner. The initiative is based around open communication, clear objectives and strategic alignment with all the key stakeholders in the supply chain both internal and external. Through a number of workshops, The Royal Mint has clearly outlined its expectations, in meeting the business objectives in the short, medium and long term to its supply base and has where appropriate offered to share and support in any technological development as necessary. “In the current economic climate, many commercial operations

The Royal Mint has two operational excellence teams: one in circulatory coins and one in commemorative coins

Zenith Print & Packaging Ltd Zenith – a ‘virtual arm’ of the Royal Mint As an international leader in promotional print and packaging, Zenith is a natural fit as a major supplier for the Royal Mint. They are trusted to provide prestige presentation packaging for heritage products exported round the world and take pride in showcasing the Royal Mint name and reputation. This year the Royal Mint awarded Zenith two accolades in its first ever supplier awards. Not only did they achieve Best Performance as a Direct Materials Supplier, the company was also named overall Supplier of the Year. At the awards ceremony, the Royal Mint’s supplier development manager Martyn Smith said: “Zenith is without doubt a shining light as a supplier. Innovative and

cost focused, they offer the latest concepts and added value services to our sales teams and support them in key pitches – they are to all intents a virtual arm of the Royal Mint.” The Zenith team allowed themselves just one evening to bask in this warm praise because they know that complacency won’t keep them at the cutting edge. Constant improvement is the motto, whether it’s installing the last word in print and finishing technology, achieving global social accountability standard SA8000 or developing green packaging solutions to meet clients’ environmental concerns. It is this swift reactivity to customer need that keeps Zenith ahead as a global supply partner for a global market player like the

Royal Mint, supporting the latter’s goal to ‘make money for everyone’. The Royal Mint is their most prestigious customer, but Zenith has the flexibility and capacity to offer a personalised service to all clients, big and small. Zenith is the world’s leading commemorative coin and medal packager, exporting to over 60 countries but also supplies retailers and manufacturers of thousands of other products with packaging solutions to meet their practical and marketing needs. Zenith’s managing director Ken Bell says: “Building and sustaining a great supplier relationship with the Royal Mint is a source of pride and satisfaction to everyone in the Zenith team and it meant a lot to have it recognised with a double award this year. We look forward to many more years of change and challenge as the ‘virtual arm’ of a vibrant British institution. “At the same time, we are always keen to welcome new customers and our sales team are on hand to informally discuss ideas and requirements from potential clients.”

Published in association with: Zenith Print & Packaging Ltd Gellihirion Industrial Estate Treforest, South Wales CF37 5SX

Tel: 01443 841166 Fax: 01443 841327 Web: www.zenpak.com

Factory of the month Royal Mint

have price as their number one priority,” says Roberts. “Whilst price is and will continue to be important, we on the other hand are very much interested in the ‘long game’. Total acquisition cost, sustainability and continuity of supply are key.” The Working Together programme has a number of facets including: ensuring security of supply; achieving a competitive price; ensuring best practice; social and ethical responsibility; and environmental compliance. Through this initiative The Royal Mint through actively encourages its suppliers to adopt and align themselves to best practice in terms of sustainability and ethical sourcing. The Mint leads from the front on these issues setting a demanding example. The supply chain department at the Royal mint is now seen very much as the linchpin for the management of all supplier relationships. The department is responsible for providing

The Royal Mint – then and now Steeped in history, The Royal Mint originated more than a millennia ago during the reign of Alfred the Great. In 1279 The Royal Mint, was housed at the Tower of London , and remained there for 500 years. By the 16th Century this was the sole site for the production of coins in the realm. In readiness for the introduction of the decimal coinage, The Royal Mint moved away from London to its current headquarters in Llantrisant, South Wales. The first phase was opened by Queen Elizabeth II on 17 December 1968, and production gradually shifted to the new site over the next seven years until the last coin, a gold sovereign, was struck in London in November 1975. The institution of The Royal Mint is symbolised by a modern logo. The design is a depiction of the crowned Royal Arms surrounded by a repeating pattern, the inspiration for which was found in the Tudor rose design of the first gold sovereign struck in 1489.

The Royal Mint make coins and blanks for 60 different nations

Factory of the month Royal Mint

commercial support from concept through to implementation and beyond. Previously, the supply chain team had been engaged very much in a processing capacity. Changes are not over and done with however. Like any continuous improvement programme Roberts considers this to be an ongoing task and continues to introduce specific expertise, infrastructure, systems and technological advancements. Roberts comments: “through the people development programme, there are now firm roles which are accountable and responsible for engaging fully with the business, roles that understand and, interpret the needs of the business and

through robust category management techniques bring concepts & ideas to the table that offer customer solutions that ‘delight’.

We’ve now re-established control of ‘spend’ that had been disseminated throughout the company back into the procurement function Gail Roberts, Head of Supply Chain

The success of the Working Together programme 2010/11 prompted the inaugural Royal Mint supplier awards on June 30, 2011. Recognition was given to suppliers that had

Best practice in the ethical sourcing and efficient use of raw materials is at the core of the Mint’s business plan. In 2010 The Royal Mint achieved the SGS SA8000 accreditation

Royal Mint on the money with Neutralac W

ith the treatment of trade effluent increasingly coming under the spotlight, the Royal Mint has taken exemplary steps in building a brand new multi-million pound effluent plant to replace two existing treatment lines. This will permit the business to discharge 100% of its trade effluents to the sewer. The new plant, soon to be commissioned, boasts state-of-the-art ultra sound techniques that deliver environmentally considerate results, while offering an optimized and cost effective treatment process for the removal of both unwanted metals and sulphates from the effluent stream. Lhoist UK Ltd delivers a unique liquid lime reagent, Neutralac® SLS45. It has only been available in the UK for 18 months yet during this time Lhoist UK has worked closely with The Royal Mint’s consultants to make best use of this ground breaking lime product. Operating all year round and with such high prerequisites, the new effluent plant requires reagents of equally high caliber to comply with environmental discharge regulations. Neutralac® SLS45 is such a reagent; an innovative high strength liquid lime born from research and development in Belgium. As an alkali product with proficient metal precipitation capabilities, it is an ideal pH corrector that already has a strong portfolio in metal treatment

sectors across both Europe and the UK. It was the first and only choice for a plant that would be treating waste water containing nickel, copper, zinc and iron. Its performance in treating effluent carrying heavy metals is strongly supported by case studies showing reduction levels of 93% and 70% for Cr and Co respectively, whilst also minimizing the risk of redissolution of trace metals. Neutralac® SLS45 widens the standard pH range for the removal of metals overall and thus allows for the concurrent precipitation of most metals, with both chromium and zinc for example being removed within a single treatment step. Developed and manufactured by Lhoist, the worlds leading lime manufacturer, Neutralac® SLS45 represents a high reactivity reagent (KIWA T90 < 5sec), that is optimized for rapid acid neutralization and pH adjustment. Its high performance is matched by Lhoist UK’s commitment to offer a service that is in line with the Royal Mint’s stringent requirements and continuous operation. By monitoring stock levels via telemetry, Lhoist UK will further participate in reducing money and labour costs. Along with its multiple functionalities, Neutralac® SLS45 has proved it will minimize the consumption of additional flocculants by displaying flocculation functionalities itself. Indeed, the uses of Neutralac® SLS45 have spread beyond the metals industry to include the treatment of organic wastes with uses in the food and dairy industries. Adept at removing sulphate, phosphate and FOG, Neutralac® SLS45 has yielded positive results across many market sectors particularly in instances where alternatives to caustic soda are sought on

grounds of its corrosive nature, or when magnesium hydroxide slurries have proven themselves to be incompatible with existing processes and a drain on maintenance resources. Neutralac® SLS45 has proved itself to be an ideal substitute to more traditional reagents. It is ideal in operations where sludge is treated on site. The resultant filter cake undergoes a higher rate of dehydration, offering some customers a 30 percent reduction in the volume of dewatered sludges, improving filtration capacity and decreasing disposal costs. Neutralac® SLS45 is only produced on demand, with a guaranteed secured supply and always available at predictable prices. Whatever you require, IBC-sized loads or bulk loads exceeding 20t, Neutralac® SLS45 can be delivered to site along with relevant storage solutions. For further information on this product contact Derek Thompson, Product Manager, Lhoist UK Ltd, 01298 768670 email: derek.thompson@lhoist.com

Published in association with: LHOIST Tel: 01298 768 670 Email: derek.thompson@lhoist.co.uk Web: www.lhoist.co.uk

Factory of the month Royal Mint

helped the Royal Mint take a step closer to achieving its own business objectives while also celebrating the achievements of the suppliers themselves. Introducing the awards, Gail Roberts, head of supply chain and procurement, said: “I have hosted many events of this kind but none have made me feel as proud as I do now because of the sheer scale of the transformation and journey we have undertaken as a business and a supply chain team. Suppliers are integral to the success of this journey. We still

have some way to go, but this is about recognising our achievements to date.” Zenith Print and Packaging was named Supplier of the Year for the outstanding achievements in all of the categories within the Working Together programme. Other winners included: Cliden Consultants, Contractor of the Year award TATA Steels, Most Innovative award Cooksons/Sempsa, Working in Partnership award Zenith Print & Packaging, Best annual performance (Direct Materials) award The Royal Mail, Best annual performance (Indirect Materials) award. Adam Lawrence, chief executive of the Royal Mint, said: “The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate. Our suppliers are our partners in this and we firmly believe that a strong Supply Chain can add real value to businesses such as ours. It therefore gives me

A Royal requirement The Royal Wedding, earlier this year, saw a number of projects undertaken by The Royal Mint. Most impressively perhaps was the creation of forty 22 carat gold ‘kilo’ coins, featuring a traditional portrait of Prince William and Miss Catherine Middleton. Made from a kilogram of solid gold and selling for £40,000, it is the first time in the Royal Mint’s 1,000 year history that kilo coins have been made to celebrate a Royal Wedding day, making them amongst the most expensive, rare and exclusive items to commemorate a Royal Wedding. Each kilo coin is 10 centimetres in diameter, nearly four and a half times the size of a standard £1 coin. Produced individually and finished by hand, the Alderney coins have a face value of £1,000, which is five hundred times greater than the highest value coin in circulation – the £2 coin. In addition, 200 pure silver kilo coins have also been produced, selling for £1,650, the silver kilos also have a diameter of 10 centimetres. With such limited numbers of each being produced, they are destined to be added to the collections of royal enthusiasts around the world, by those looking to commemorate the special day with a genuinely remarkable souvenir. The only official UK coin being struck to commemorate the wedding of Prince William to Miss Catherine Middleton went into production in March at the Royal Mint. Approved by the Royal Household and the Government, the coin features relaxed, modern portraits of the couple, an approach also evident in the informal use of their names and the date of the wedding circulating their portraits. The obverse bears a portrait of Prince William’s grandmother, The Queen. The coin has been designed by Mark Richards, Fellow of the Royal Society of British Sculptors, following an invitation- only tender process involving a handful of British sculptors. His submission was selected by the Royal Mint Advisory Committee, a panel made up of experts in art, design, history and heraldry, chaired at the time of the decision by Sir Christopher Frayling, former Rector of the Royal College of Art. In addition to the coin to commemorate the royal wedding, The Royal Mint also produced a £5 Alderney coin commemorating the engagement of Prince William to Catherine Middleton. It is the first Royal Engagement coin ever to be produced in the long history of the Royal Mint.

Delivering best in class MRO management T

he purchasing and management of spares for the maintenance repair and overhaul (MRO) of production plant and equipment is a complex and time consuming area – but one that’s critical to maintaining continuity of production and avoiding costly downtime. Such complexity often means that internal purchasing and engineering maintenance teams find the bulk of their time is taken up dealing with the immediate requirements to keep production lines running. This has a significant impact on productivity and effectiveness, meaning that time to focus on proactive and strategic projects to improve their MRO procurement, or to maximise their production output and efficiency, can be scarce. However, taking a proactive approach to optimising maintenance spares management will often deliver significant operational and financial benefits for manufacturing companies. Recognition of the complexity and

opportunity for improvements is leading an increasing number of companies to outsource this function - freeing up in-house procurement, maintenance and engineering teams to focus on other value-adding projects. Outsourcing maintenance spares procurement and management to Brammer, the leading pan-European MRO distributor, is delivering improved operational and financial performance for manufacturers such as the Royal Mint. Brammer has established a dedicated site-based service (or ‘Insite’) at the Royal Mint’s premises in South Wales. The Insite is geared entirely to meeting the customers’ needs in terms of maintenance spare parts sourcing and inventory management. Total component acquisition costs are significantly reduced as the company is now dealing with only one supplier for all its MRO requirements and inventory is minimised, and working capital reduced, through the process improvements and technical

support that are provided with this partnership approach. The Royal Mint also benefits from Brammer’s extensive purchasing leverage with the leading MRO spares manufacturers - guaranteeing competitive rates for all components without the need to shop around. Meanwhile, the range of additional support available can help identify opportunities for improvement in all areas of production and spares management – whether this be collating complementary components into kits and delivering to line-side, identifying the best product for a particular application that can deliver efficiency benefits - such as extended life, faster changeover, increased maintenance intervals or reduced energy consumption - or providing real time analysis of spares demand patterns to enable stockholding to be optimised. Indeed, the independent support available from an Insite – observing existing processes and then recommending and implementing more efficient and cost-effective solutions – is critical to delivering best practice in MRO spares management. Stuart Mitchell of the Royal Mint explained: “The Brammer team operates as an extension of our own – working closely with the production engineering department to identify in advance where assets may be problematic, and proposing technical solutions from their own specialists. “The original MRO supplier selection process determined that we needed the resources of a pan-European organisation and scale to support our corporate objectives. Brammer are fulfilling that role and the partnership between the Royal Mint and Brammer is being further extended with a second Insite being established.”

Published in association with: Brammer Tel: 0870 240 2100 Web: www.brammer.co.uk

Factory of the month Royal Mint

great pleasure to formally recognise the achievements of our best suppliers through the awards programme.â&#x20AC;? The award ceremony took place at the Vale Hotel in South Wales, close to the Royal Mintâ&#x20AC;&#x2122;s own home in Llantrsiant

Where orders for raw materials were once labour and administratively intensive, stocks are now managed on min/max footprint and ordering is fully automated and followed a charity golf tournament attended by Royal Mint employees and suppliers. The awards programme will be replicated on an annual basis. The Working Together programme is about driving value, ensuring we attain

Eagle Engineering Barrel Plating Equipment Specialists E

agle Engineering is a UK based family business, with 25 years experience designing and supplying electro-plating barrels and plating equipment worldwide. Our innovative designs and use of high-quality materials result in longer lasting, electroplating barrels with highest quality performance. Advanced precision engineering processes ensure the supply of highest quality plating barrels for consistent plating results and our unique designs are focussed on the elimination of production wastage. We design and manufacture customised plating barrels for specific requirements (e.g. coins, nails and fasteners, pins and electrical contacts).

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Specialists in coin plating, Eagle Coin Plating Barrels have been working closely with Royal Mint for over 25 years and recently provided barrels for their new nickel plating plants. Product features include: • Superior Design which ensures efficient and cost effective plating • Accurate Manufacture for trouble free installation and ongoing production with minimal downtime • One piece wrap-around cylinder skin (avoiding joints and potential chemical traps) • Plating barrels manufactured from Ultra High Molecular Weight PE1000 Grade Polyethylene U.H.M.W with maximum perforated open area for more

efficient solution and electrolytic transfer – which means faster processing time and power cost saving • Perforation chamfers and corrugation patterns designed to eliminate surface tension and adhesion

Published in association with: Eagle Engineering Eagle Engineering (Telford) Limited Unit D3 Haybrook Industrial Estate Halesfield 9 Telford TF7 4QW

Tel: +44 (0)1952 586478 Fax: +44 (0)1952 586252 Email: info@platingbarrels.com Web: www.platingbarrels.com

Factory of the month Royal Mint

the best product for the price paid and is a platform for injecting innovation into the company. The establishment of an awards scheme is a demonstration of the progress which the company feels it has made both in these areas and in the engagement and conditioning of its supply chain. There has been a strong focus on ensuring understanding and compliance with good corporate and social responsibility throughout the supply chain and The Royal Mint is certainly leading from the front.

The Royal Mint is set tough performance targets by government but thanks to a strong operational excellence programme the company has been able to deliver 99% on time delivery

In 2010 the Royal Mint achieved the SGS accreditation SA8000 which is the â&#x20AC;&#x2DC;goldâ&#x20AC;&#x2122; standard and a globally recognised accreditation of ethical and social responsibility. The Royal Mint was the first mint in the world, and one of the largest manufacturers in Europe, to achieve SA8000 accreditation

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Analytical Technology Inc T

he Royal Mint recently began to seek an alternative pH system in order to improve the quality of its effluents and to better comply with Environment Agency regulations. The organisation also required a system that would eliminate the need for everyday cleaning and operator maintenance, and improve efficiency in a cost-effective way. To overcome the problems caused by conventional pH monitoring systems, Analytical Technology Inc. (ATi) have implemented Auto-Clean pH controllers. ATi is a US and UK-based supplier of gas and water monitors for use in a wide range of applications. The differential pH/ORP sensors in ATi’s Q45P monitor consist of a sealed refer¬ence system with a second glass pH electrode as the reference element in the sensors. The glass reference system protects the sensor from chemical poisons such as sulphide, cyanide, chlorine and bisuphite, which can destroy conventional pH sensors.

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Since installing the ATi Q45P monitor, the Graham Hartry, Environmental Manager Royal Mint has experienced significant (Blank Processing) at the Royal Mint, benefits in terms of increased productivity, comments: “Ensuring compliance with reduced costs and regulatory compli¬ance. environmental regulations is extremely By using the Auto-Clean Q45P monitor, important to the Royal Mint, and we the Royal Mint can ensure that it achieves take our commitment to controlling our compliance with consent to discharge effluents seriously. When looking into regulations while eliminating the need for improving our pH systems, we found that regular and costly sensor cleaning. most sensors required cleaning either To meet the particular circumstances manually or by installing a separate of the Royal Mint, the pH controller’s cleaning system. By supplying the ATi Auto-Clean air wash function operates Q45P Auto-Clean monitor, IES has every two hours. As a result the provided us with a stand-alone solution monitors can operate for six months or to pH control challenges, enabling us to more without any maintenance. This reduce operator intervention at the same has led to greatly reduced operator time as improving effluent control.” intervention as well as a marked improvement in Published in association with: the pH control of the plant. ANALYTICAL TECHNOLOGY INC. The application of this Tel: +44 145 783 2800 technology has also enabled Email: sales@atiuk.com the Royal Mint to eliminate Web: www.analyticaltechnology.com costly replacement pH electrodes.

Factory of the month Royal Mint

The Royal Mint at a glance Location

Llantrisant, Wales

Revenue

£172.8m

Profit

£3.6m

Employees

Over 800

Industry

Coins and medals

Customers

Supplies coins, blanks and medals to around 60 countries every year

Points of interest

The Royal Mint can produce 90 million coins and blanks a week. Recently The Royal Mint held their own supplier awards to develop their supplier relationships, which included entries and attendance from over 40 companies predominately from the UK, Europe, US and China.

History

The Royal Mint originated more 1000 years ago during the reign of Alfred the Great and from 1279 The Royal Mint was housed in the Tower of London. The Royal Mint moved to its current headquarters in Llantrisant, South Wales in 1968 in preparation for the move to decimal coinage.

Roles and responsibilities The Royal Mint is under strict directives to be compliant in regard to ethical and sustainable standards set down for procuring goods and services. Compliance with ethical sourcing of materials has been an extremely important goal for The Royal Mint and it has recently undertaken to have the commitment to this endeavour officially recognised. In 2010 The Royal Mint achieved the SGS accreditation SA8000 which is the ‘gold’ standard and a globally

recognised accreditation of ethical and social responsibility. The Royal Mint was the ﬁrst mint in the world, and one of the largest manufacturers in Europe, to achieve SA8000 accreditation. Social Accountability 8000 is the primary ethical standard through which organisations can demonstrate their commitment to social responsibility.

The Royal Mint’s Llantrisant site. The Mint moved here in 1968 in anticipation of decimalisation

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Serfilco SERFILCO INTERNATIONAL â&#x20AC;&#x201C; GLOBAL PODUCTS, LOCAL SERVICE & ADVICE YOU CAN RELY ON

ERFILCOâ&#x20AC;&#x2122;s mission is to be a proactive partner for our customers and a leader within the industries we serve. To that end we continue to develop and manufacture state-of-the-art filtration, liquid handling and waste treatment equipment to help achieve the product integrity, quality and cost savings necessary for our customers to be competitive in the global marketplace. When the Royal Mint required some pumps for their new effluent treatment plant, they naturally turned to SERFILCO, who have been a trusted supplier of pump and filter equipment to their on-site surface treatment engineering applications for over a decade. SERFILCO 1inch and 2inch air operated diaphragm

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pumps have now been installed across customers and solving problems with the new effluent treatment plant and will products that are the benchmark of our undertake a wide range of high and low industry. Today at the start of our next pH, aggressive and dirty, chemical and half century we are looking forward to effluent transfer duties. For the Royal continuing in this role and continuing to Mint it is a convenient choice as these contribute to the growth and satisfaction pumps can be serviced along with the of customers such as the Royal Mint, so multitude of SERFILCO centrifugal pumps they can meet the challenges presented and cartridge filtration systems that are by the global market. commonly found across the Llantrisant plant. Published in association with: For SERFILCO our SERFILCO INTERNATIONAL first 50 years have been a learning experience Tel: 0161 775 1910 during which time we Email: sales@serfilco-international.com have accumulated two Web: www.serfilco.com generations of experience in meeting the needs of

Factory of the month Royal Mint

The accreditation offers proof of The Royal Mint’s code of practice for good labour conditions and allows consumers to be conﬁdent that the goods they are buying have been produced in accordance with a recognised set of international standards. The Royal Mint in turn encourages its key supply partners to also fully embrace this standard and recognised the achievement of two of its key partners as recipients of this standard at the 2011 awards dinner. The Royal Mint is also dedicated to the protection of the environment. It has recently expanded its manufacturing capacity with the design, construction and implementation of two new NickelPlating Plants which were opened by the Chancellor of the Exchequer and Master of The Royal Mint, the Rt Hon George Osborne MP, in March 2011. The company considers these plants to be critical to its future growth plans, particularly with the growth of its aRMour range of plated coin products

which deliver many customer beneﬁts including lower lifetime cost and improved durability. The process adopted to make plated coins requires the use of a number of chemicals which can be potentially harmful to the environment. The Royal Mint has always and will continue to take its environmental obligations seriously and as part of the capital investment undertaken in 2010

The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate Adam Lawrence, Chief Executive of The Royal Mint the company invested in and is at completion stage of the installation of a new effluent treatment plant, one that uses best available technology and is able to support its increased production capacity from two new nickel plating lines. The combined cost and investment of the project was £16.5m.The bold new project marks an acceleration in the

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Boxability - Performance Packaging Specialists

oxability, established in 1937, manufactures numerous types and styles of conventional glued and stitched corrugated cardboard boxes. Single and double wall corrugated cartons are made to order and are available in plain, one colour or two colour printing to customer specifications. Boxability specialises in the manufacture of corrugated packaging. With more than 100 standard FEFCO packaging styles and hundreds of possible variations, boxes can be manufactured for virtually any need - packaging design is limited only by imagination. Boxabilityâ&#x20AC;&#x2122;s specialist team are happy to produce designs and samples using CAD based systems combined with excellent quality control measures. The Boxability team prides itself in creating high quality, cost effective

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and safe packaging solutions. Through years of experience and with the help of cutting edge machinery goods will be fit for shipment once completed - no matter how difficult the project may be. The materials used for heavy duty packaging include environmentally friendly, triple wall performance corrugated fibreboard, foam inserts as well as timber. Boxability provides specialist packaging for the following industries: Automotive Industrial Aerospace Scientific Medical Boxability is committed to excellence and is accredited to all European based standards and have won numerous awards for packaging, design and

manufacture. Boxability operates from a 56,000 sq ft manufacturing and warehousing facility and provides full logistical services that cover the whole of the UK and Ireland. Boxability are pleased to be a major supplier to the Royal Mint of conventional and heavy duty corrugated products. Boxability are accredited to ISO9001 and ISO14001.

Published in association with: Boxability Tel: 0845 643 9875 Email: sales@boxability.co.uk Web: www.boxability.co.uk

Factory of the month Royal Mint

Royal Mint’s five year growth plan – a decision it has made to capitalise on significant opportunities in the nickel plated coin marketplace both at home and abroad. The new treatment plant, which is expected to be fully operational in the coming few weeks according to The Royal Mint will signiﬁcantly reduce the amount of effluent discharged and will allow for an important increase in recycling. The construction represents The Royal Mint’s most significant investment in over 40 years. “We are extremely vigilant with regards to the environment and have already been awarded recognition from widely recognised bodies for our new effluent treatment plant,” says Roberts. “We are registered to tier 1 level as per the Control of Major Accident Hazards Regulations which means we are managed extremely vigilantly on how we receive, store and process chemicals on and off site. We are audited by the highest authorities in the management and disposal of chemicals and part of what the new effluent plant allows us to do is control the use, recyclability and disposal of those chemicals utilised in a far more efficient way.

Operating to potential The Operational Excellence programmes at the Royal mint have, according to the company’s annual report, delivered great results by shortening customer lead times and improving visibility of production output. The Royal Mint has two operational excellence teams: one in circulatory coins and one in commemorative coins. The UK circulatory coin contract performance was exceptional with the company achieving its Ministerial target of 99% on time delivery. According to The Royal Mint, its service to its commemorative coin customers has also improved over the last couple of years with the team demonstrating it is capable of performing under pressure during peak periods and increased volumes while delivering high level support to its customers. The delivery of coins for circulation overseas is still an area where the company expects to make considerable improvement and will be a key focus point over the next year. Off the back of the Working Together programme, The Royal Mint has also introduced a new streamlined ordering system which it refers to as the ‘Ping’ system. Where orders for raw materials were once labour and administratively intensive, stocks are now managed on min/max footprint and ordering is fully automated. Steel consumption, for example, is communicated in ‘real time’ to the supply base and managed logistically in 25t replenishment batches. According to Roberts, the benefit of this system is that physical deliveries now reflect the operational requirements every time which improves, stock management, cash

The winning design for the official commemorative coin in honour of the Royal wedding features a relaxed portrait of Prince William and Miss Catherine Middleton

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General Waters (UK) Ltd is a Welsh based company that offers a water treatment service from initial design through to installation and servicing. The water treatment services provided supports varying types of water qualities within many industries from healthcare to the semi conductor industry and the design of the systems utilise the best available practices. The specialised plants can be for producing high-quality process waters in many industries, including: Food and brewing industry Pharmaceutical Microelectronics Energy Chemical Automotive Effluent systems and effluent recovery systems and support is generally provided by operational or maintenance contracts which are tailored to suit individual site requirements.

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Each of our customers requires and Recent projects that we have undertaken receives our care and attention to detail. with the Royal Mint include an effluent Due to the companyâ&#x20AC;&#x2122;s total commitment recovery system which, working in to water treatment and advanced partnership with the Royal Mint, we have technology all our resources and developed a two pass RO system to recover personnel are totally committed to the 50% of the waste water effluent which further improvement of water sources would normally run to drain. In addition to world-wide. this a mobile renal dialysis system currently With our experience, in the Semi is operating in Welshpool. Conductor Industry, Industry and Hospitals all Published in association with: of which have all been undertaken satisfactorily, General Waters (UK) Ltd Unit 4 Tram Road Industrial Estate any size of maintenance Pontllanfraith, Blackwood, NP12 5JF contract or project that we find ourselves involved in Tel: 01495 220020 has been successful. Fax: 01633 810883 General Waters (UK) Email: service@generalwaters-uk.co.uk Ltd is ISO 9001 and CHAS accredited.

Factory of the month Royal Mint

flow, invoice accuracy and insures prompt payments. The system was trialled initially with our steel suppliers and the plan is to implement across our entire commodity supply base. Without the SRM (supplier relationship management) programme, this initiative would have been far more difficult to achieve.” The company’s CEO, Adam Lawrence, has made clear that he wants The Royal Mint to continue to be the world leader and through innovation in business processes as well as production processes, The Royal Mint is certainly making every effort to be the best in everything it does. Its dedication to its suppliers has been matched only by demonstrated commitment to development on site. Its inward investment in its new nickel plating plant as well as its effluent treatment facility has already garnered important recognition and further expansion is planned. With over 1000 years of expertise and production experience housed on site, The Royal Mint is certainly class leading.

The Royal Mint is the world’s largest export mint

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The communication

revolution

Shopfloor mistake proofing session

Ten years ago, Howard Hunt Group simply put ink on paper. Today its fourstrand, £56 million business provides multichannel marketing solutions, from direct mail to social media, and is continuously restructuring in order to become a more integrated, multi-platform marketing company where printing is just one activity to deliver its clients’ communications. Paul Kemp and Philip Perrin tell Will Stirling how the new Howard Hunt Group, its processes, people and KPIs have adapted to meet the needs of clients who invest millions in getting to know their customers. 110

When

marketing mail from a travel company or big retailer next lands on your doormat, take a closer look. It’s likely that the letter will have a date reference, like a birthday, that is personal to you, and it may be printed in your favourite colour. It may even display an image of your holiday destination last year and refer to places you like to visit. Welcome to personalised mass marketing. Using the latest technology, myriad variants can be printed in direct marketing campaigns to appeal more directly and personally with the individual customer. This can be done across all media channels, not only print, reflecting the different ways people select their communication channels for different purposes. The stakes are high, as choosing the correct combination of marketing channels can determine the success or failure of a campaign. Highly targeted direct mail and email – customised individually, using personal hooks like images and sent at the optimum time of year, or even on a specific day – can have a huge influence on consumer spending behaviour. Formed in 1990 in London and now in Dartford, Kent, Howard Hunt Group was originally a ‘plain vanilla’ litho printer. By the late-1990s most of its work was for direct marketing clients, a portfolio it has nurtured to include big brands including First Choice, TUI, Vodafone, Pizza Hut, British Gas, Virgin Media and Love Film. Direct print marketing, or DM, is in decline. About eight years ago Howard Hunt Group realised two things. Not only would demand for DM wane over time, but also that to survive and prosper in a fast changing marketing industry, the company had to turn risk into opportunity. It began to

Printing services Howard Hunt Group

offer more mailing contracts to expand its service beyond printing, and established a data management business, Celerity, to assist customers clean their databases and ensure that marketing material was reaching existing customers more accurately. Today, Howard Hunt Group comprises four separate businesses which support each other to fulfil cross-channel, high volume marketing campaigns. They are: Howard Hunt – core printing business Howard Hunt Mail – a mailing agency, established in 2009 Celerity Comms – a digital marketing company specialising in variable digital print and cross-media communications Celerity IS – a data company that builds databases, improves their integrity and integrates specialist marketing and CRM software In 2010, digital spend in the $368bn global marketing industry surpassed print media spend for the first time. “The world is changing,” says Howard Hunt Group’s operations director, Paul Kemp. “The way we communicate is changing – social media, SMS, web, phone, emails and letters. We have to react with that.” Is it a concern to a printer of this size that the DM market is declining? “Our response has been: we shouldn’t see this as bad news but as good news because of where we’re positioned,” he adds. “The strongest [marketing] results come from using all channels of communication and we are set up as a business to do that.” Adapting from being an offline printer into a modern multi-platform marketing business is a complex ambition. Large printing businesses traditionally operate a ‘top-down’ management system. A few years ago at Howard Hunt Group there was little formalised shop floor training, no 5S or continuous improvement activities and little internal communications between departments. The answer was to get lean by cultivating a culture of continuous improvement and a ‘bottom-up’ management style where machine operators and fulfilment personnel would truly own their departments, providing management with the best solutions to efficiency problems.

Bhurs Enclosing M/C

Last year was the first year that digital spend in the $368bn global marketing industry surpassed print media spend

Howard Hunt Group at a glance Sector

Multimedia marketing service provider with print, finishing and direct marketing capabilities.

Location

2 Masthead Close Crossways Business Park Dartford DA2 6QF

History

Company founded in 1990 in the Old Kent Road.

Headcount

2009/2010 – 350 2010/2011 – 360

Turnover

2009/2010 – £50,880,632 1st 6 months 2010/2011 – £26,381,919

Output

2009/2010 – 30050 Tonnes of paper 2010/2011 – 31788 Tonnes of paper

Points of Interest

Revolutionising direct mail production through investment in world first technology through the Kodak Prosper variable image Inkjet printer Investment in new technologies to provide marketing automation and a complete multimedia marketing solution. Increased capacity created by investments in staff development and empowerment.

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In September 2009, Howard Hunt Group (HHG) hired Philip Perrin, a lean six sigma master black belt who had worked for BAE Systems and GlaxoSmithkline and had trained more than 1,200 people globally. Along with Paul Kemp, newly appointed to the board of directors, and aided by other members of the management team such as business development manager Fergus McManus, they devised a programme of procedures to tackle several areas: to improve manufacturing processes, to be better aligned with group business goals; to introduce a weekly Training Hour, 5S, Operator Preventative Maintenance and other ‘job ownership’ activities; provide far

If [an engineer] needs to order parts he can write this on the T-card, so the operator has visibility so that he knows something is being done about it Philip Perrin, Lean Six Sigma BIM

better internal communications – using weekly team meetings, T-cards and group performance presentations; and to empower the staff to direct their own projects and improvements. Phil Perrin, who spent 30-years honing business improvement methods at BAE Systems, began by demonstrating the inverted pyramid, where shop floor operators advise team leaders who tell middle managers and finally the managing director what needs to change to effect true improvement. This diagram may be familiar to many but at HHG, this was a sea change from common practice. Crucially, the overhaul of operations was executed in tandem with a group-wide restructure where HHG laid out its transformation plans to a market-leading, multichannel marketing company. This involved identifying underperforming areas of the company, making some redundancies, ramping up the Celerity data businesses and investing in plant to fulfil more personalised marketing. The overhaul was, by admission, overdue. “As a business we’ve always wanted people to improve, but as a company we’d never given enough time to it,” says Mr Kemp. “We’ve always expected staff to turn up, ‘press a green button’ and just get better. But we’d not scheduled enough time to let them step back from their job and give them the time to do it.”

Performance metrics and the training hour

Kodak Prosper – Prosper Digital Printer

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Factory visits were arranged for site manages to see best practice first hand. “The first thing they saw when they entered [one factory] was a big improvements board,” says Perrin. “It really made an impression on them.” “We had something similar but no PCDA, ours were scattered around the factories and there was no focal point,” adds Kemp. HHG now has a large, central Improvements Board at each site, covering quality checks, PDCA, suggestions, 6S audit, metrics and health and safety. One of the early changes was to introduce a training hour. Partly an introduction of tighter Standard Operating Procedures, and partly a chance for teams to brainstorm issues, this additional hour of work began once every three weeks at one site but is now

Printing services Howard Hunt Group

The print finishing area

weekly, across all sites. While the hour is paid, several employees had initial reservations – many time-served staff at this East End London printers were not used to added duties beyond their normal shift pattern. Over time, however, attitudes changed. This is partly because the training hour has cultivated projects led by junior staff (see later). With training, HHG now does weekly Operator Preventative Maintenance or OPM. “We actually shut the factory at each site for an hour, some do OPM and the other group go for the Training Hour,” says Mr Perrin. Why run the two concurrently? “Because TPM and OPM were being done at different times, management teams were being stretched to do the training hour because they were focusing on busy shifts,” he says. Staff were staying on for an hour to fit in OPM. “They preferred to come in an hour earlier, so we switched this around to suit them. Aligning the training hour with OPM meant that management can focus on that fully with no distraction from the shift.” Alongside the Training Hour came 6S – standard lean 5S with safety added. Simple things affected improvements;

specialist tools were supplied at point of use and shadow boards reveal when key tools are missing. Defunct areas have been cleaned up and made fit for purpose once more, included a roller cleaning station that had become a redundant waste of space. Press lines now use a T-card system to record issues. “An engineer can take a duplicate copy away,” Perrin says. If he needs to order parts he can write this on the T-card, so the operator has visibility so that he knows something is being done about it.” Staff have really noticed the changes. Francis Jackson is a senior operator on Press 1 at H1 (HHG has three sites, H1, H2 and H3). “We use special inks. Now we have an ink board which tells you where the ink is – it avoids me walking all over the factory,” he says. “TPM [Total Preventative Maintenance] has been a massive improvement. Perhaps it’s not as regular as it could be, but about once a week we do basic maintenance – so instead of the press breaking, we’re getting in there first. Its scheduled so you need to complete it in that slot, that’s the discipline.” He adds that white boards that show messages and request maintenance actions creates accountability, where now operators have recourse to engineers if something has not been fixed or reported. “A lot can happen in a 7.5 hour shift. If I forget something or have an issues I can write it down, the next guy can get it or respond to it. With maintenance, you can now prove the request and tell the engineer ‘you’ve had two weeks, where is it?’” There is now a monthly 6S audit at each site and 6S audits are performed in the offices too.

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Energy Services Partnership T

he UK energy markets now operate at the levels of volatility and unpredictability routinely seen in other, more developed commodity exchanges. Therefore, purchasing at the wrong time, for an inappropriate duration and with a Supplier who cannot deliver on service promises can have disastrous consequences on an end users bottom line. As energy costs are a significant consideration for most manufacturers, ESP believes that a key element of any energy strategy must be to ensure that it is fully integrated into an organisationâ&#x20AC;&#x2122;s risk management and control structures. ESPâ&#x20AC;&#x2122;s intimate knowledge of traded markets means we can deliver independent,

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unbiased, and experienced support to even the most sophisticated energy purchasers. Every concluded ESP contract is constantly benchmarked against published data and since 2005, we have purchased over 3.2 TWh of electricity and gas at 15.78% below the average market price.

initiatives reducing our clientsâ&#x20AC;&#x2122; costs and by working alongside National Grid we can help our clients earn significant revenues from their existing electrical infrastructure. The breadth and depth of our service delivery is key to providing certainty and predictability through the most uncertain of times and in the process enhancing our clients bottom line, corporate valuation and management reputation.

Our dedication to providing our clients with innovative solutions has resulted in us being asked to manage an everincreasing array of Published in association with: their utility related The energy services partnership challenges. During the last year, we Tel: 0871 230 1824 have introduced Email: d.dixon@energyservicespartnership.co.uk a wide range of Web: www.energyservicespartnership.co.uk load management

Printing services Howard Hunt Group

Projects work The changes at HHG have encouraged junior staff to devise and lead their own projects. This is a big shift for a company who used to dictate solutions from middle management who had far less daily experience of certain procedures and machines. Barry Davidson’s double insertion project is a good example. He is a team leader in the enclosures department at H3, where personalised printed material is folded and packed for despatch. This section was recording too many doubleinsertions, where more than one insert was being packed – unacceptable when preparing packs customised to the individual. Barry wrote a set of SOPs, an operator manual and a presentation. Knowing that where change was being

The strongest [marketing] results come from using all channels of communication and we’re set up as a business to do that Paul Kemp, Operations Director, Howard Hunt Group

resisted, an operator’s voice would ring more truly than a manager’s, Paul Kemp asked Barry to present his project to a group of peers from H2. He explained the project’s purpose:

1. 2. 3.

Minimise error rate in enclosed items

Increase customer satisfaction from doing this, and

Reduce wasted time in tracking blame and fire-fighting the issue

The root cause was ineffectual checking of sensors designed to filter and place the inserts, and lack of finetuning of

Francis Jackson Press No 1

the machinery mechanics. He developed a standardised checking procedure, and standardised the settings on the sensors. “It used to be that the managers would show you a solution to a problem. We might say that’s not right, but we’d have to do it,” says Barry. “Now they tell us the problem and we devise the solutions, which works best.” The bottom-up exercise had worked: “It was an eyeopener for them [H2 staff] to see this young guy owning a project, thinking ‘I need to be doing that at my site and I want my employee to be up there’. This was our buy-in to the management team,” says Kemp.

Only as good as your tools As retailers seek to differentiate themselves, there is a growing demand for higher levels of personalisation, also called targeted marketing. The problem has been the capacity of the manufacturing process. A traditional offset litho press can print huge volumes but cannot apply variants in a print run, while a typical medium-sized digital press can print variants in up to 25,000 items per day. Enter Kodak. The print technology company’s latest digital press, the Prosper 5000XL, is a variable image inkjet printer capable of printing up to 1.4 million completely variable and personalised items a day, revolutionising high volume direct mail. HHG is a beta test site for Kodak Prosper in Europe, where Kodak has an in-house team at Dartford testing and colour-balancing the machine for the type and scale of print runs HHG will make. At £2.5 million, Prosper is one of HHG’s potentially their single biggest digital investments to date, but it is absolutely integral to the restructured company’s designs on becoming an inclusive Marketing Service Provider. Luke Piggot, CEO of HHG, explains Prosper’s potential. “Last year we did a big end-of-year campaign to 250,000 people, where the customisation was based on deep rooted analysis: which holiday resorts customers visited, how many times, long haul flights, spending preferences etc,” he says. “We produced 250,000 small brochures that had the potential

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First Call Contract Services F

irst Call Contract Services have worked in partnership with Howard Hunt Group for over 10 years. During this time we have developed a strong understanding of the direct mail, print and web offset industry. This has enabled us to assist Howard Hunt Group in their aim to achieve business excellence and to reach their Quality objectives every step of the way. First Call Contract Services supply Howard Hunt Group with a dedicated On Site Managed Service Solution delivering:

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· 100% Visibility · Streamlined processes · Reduced client management time · Improved performance and delivery of strategic goals · Flexibility · Training and development · Added value · Management Information to direct and guide the supply · Financial savings

Due to our experience and proven expertise, within the print sector, we have become a partner of choice to some of the UK’s largest print organisations.

Published in association with: first call Daniel Mankelow

Mobile: 07980 239 885 Email: dan@firstcall-headoffice.co.uk Web: www.yourfirstcall.co.uk

Printing services Howard Hunt Group

of 850 creative and contextual million variations. It was exciting but took a very long time to put together and deliver. Prosper is able deliver such a project in hours.” HHG is planning to invest in a second Kodak Prosper. HHG invests upto £5m p/a on capital equipment and business improvements. In the enclosure department, a new CMC9000 enclosure machine has greater capacity and is more accurate than the incumbent machine, and the company expects to take delivery of a second 9000 this autumn. In finishing, in the last 12-months HHG has bought a customised MBO 1020 and a Heidelberg 82 finishing machines. For IT to match the new equipment and processes, the group has invested in a new manufacturing information system (MIS), Imprint, which was first rolled out in the estimating department. Further investment in Customer Relationship Management (CRM) tools and a Salesforce database are integral to the new MIS. Customer feedback suggested that HHG’s website wasn’t informing people about everything it does as an integrated Marketing Services provider (MSP). Assistant managing director Lucy Edwards was asked to overhaul the site and the new revamped website now presents HHG’s business more clearly to both clients and prospects alike, and is reaping the benefits of an underlining Content Management System (CMS) to keep its content constantly up to date and relevant to its clients needs.

The last word When touring factories to witness evidence of business improvement, The Manufacturer reporters usually speak to one or two senior people. At HHG, I spoke to eight different people, three or four of whom worked on the shop floor. Phil Perrin made a point of making these introductions. Change sounds impressive when presented in a tabular series of KPIs. Invisible change is more compelling when it comes from those doing the job. So are the myriad changes at this fast-adapting company actually making real improvements? Dennis Williams is site manager at H3, the enclosure handling facility which also houses the Kodak Prosper. The new TPM and project work, he says, has made tremendous improvements. “For example, last week we did 10.6 million packs in a week. Three to four months ago we’d have achieved about 9 million packs maximum. The increase is down to the reliability of machines, the training we’ve had and the results of some projects. And we have the stats to back it up.” With testimonials like this, high levels of investment such as the Prosper and enclosure machines, and a group-wide, pulltogether approach to serving multi-channel marketing needs efficiently, Howard Hunt Group is well positioned to be a leading player in the new, super-personalised marketing industry. For a complete list of Howard Hunt Group’s business improvements and 2011 KPIs, measured since the main changes were initiated in 2009, go to www.themanufacturer.com/profiles

Luke Pigott – Managing Director

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Aiming

high

If you are looking for an example of how to run a first class manufacturing operation, your search could, in many respects, be over.

Aimia

Foods is a privately owned £50m turnover business based in Haydock close to both the famous race course and the equally infamous M6. The company was founded in 1981 and now employs 250 people over three sites. Aimia Foods specialises in the hot and cold drinks market in addition to providing full outsourced production and distribution facilities for major blue chips. It also has the exclusive rights to sell a wide range of household name goods as well as their own range of products that are mainly for the vending and foodservice markets. Aimia Foods runs a business that is measurably beyond world class in both quality and consistency. The dedication to ever improve what it does borders on the obsessive, in the nicest possible way. It has won numerous awards and accolades most impressive of which, is the awarding of BRC A* accreditation following an unannounced two day audit, one of only a handful of food companies to have reached such a standard and the only beverage company in the UK to have done so. The Aimia Foods client list is made up of the great and the good of the food world, chances are very high that you have numerous Aimia Foods

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products in your kitchen cupboards. That list is growing every week yet the management of the business, led by MD Rob Unsworth, continues to strive towards raising standards even further. Aimia’s reputation is of the very finest and for very justifiable reasons. So how is all this achieved? The best way to describe it is to explore the two key areas on which Rob Unsworth and his team focus the most: process, quality and people.

Process At Aimia Foods, using the undoubted skill of operations director Patrick Mroczak, the management team have intelligently and logically taken the six-sigma, lean and Kaizen ways of thinking to create their own, very effective system of continued improvement. This powerful tool has allowed management to eradicate non added value streams, increase capacity through streamlining and keep processes under much better control. Mr Mroczak explaines the various different systems in use: “Lean principles tackle the wastage elements by removing non added value streams in our processes. This is where we utilise techniques such as Kaizen which are improvements, 5S which is a work place organisational tool, TPM which is based around productive maintenance, SMED which reduces change over’s and all measured through OEE. OEE is a world class measuring KPI derived from the plant availability, its machine performance and product quality outputs.” A veritable smorgasbord of control and management systems then, but paying lip service to a thousand such systems wouldn’t make the slightest difference to your operation; it’s the consistent and rigorous application of them that brings the results. Combined with a program of substantial investment over the last few years, the results are astonishing, as is the

Food and drink Aimia Foods

attention to detail in the way that the principles and findings are applied. It means as mentioned at the beginning, that processes here have been honed and tuned to the point of being above world class. Aimia Foods prides itself on setting standards above and beyond the very exacting standards of their clients, enabling the management of each line to measure the performance of their equipment within very fine tolerances. Given that a lot of the packing carried out by Aimia Foods is placing measured amounts of powder into containers, the dilemma faced is that; too little and you are illegal, too much and you are giving money away giving a very fine error margin. Traditionally this has been an area of concern for the company but thanks to the introduction of the new way of thinking, it is pretty much a thing of the past.

powders during blending meaning that they simply mix better when you apply liquid. Think of that next time you are making your favourite hot chocolate! More accurate measuring and better management controls have seen one major line go from three shifts to just one because of the efficiency increases.

People The staff are a cornerstone of any successful business and how you nurture and support them is of utmost importance. An investor in people for more than ten years, Aimia Foods also recruits the very best specialists from around the food industry to head up various departments. The implementation of six-sigma and lean relies on staff knowledge so a lot of time and energy is spent on coaching and mentoring. For those of you not familiar with six-sigma, Mroczak describes it quite succinctly as: “Six-sigma is the application of problem solving and statistical analysis techniques in working through the Define, Measures, Analyse, Improve and Control cycle of process improvements with the aim of eliminating process defects and process variation.”

A daily quest Every working day at Aimia Foods begins with an assessment of the previous day’s work. As Mroczak explains, “The aim is to clear up any issues, set priorities for the current shift and remove potential pressure points.” The planned down time allows everybody to take a step away and look at areas for improvement. Weekly there is a management meeting to discuss details in greater depth. Slightly more unusual though is the use of a regular Kaizen hour where each area of the business has a planned stoppage and everybody has the chance to throw their ideas forward. This then allows small changes to be implemented quickly and efficiently with no unplanned down time. Once the lines are running there is then an hourly quality check over and above the impressive automated checking that includes cutting edge x-ray technology. This is where the idea of being above world class comes from. Each line is constantly measured for accuracy, quality and output and compared with previous days, current priorities and the world standard. Most lines are operated at that high level continually. In the newest site which is dedicated to one of the biggest brands in the world, they are running at 100% for fulfilling orders on time and in full. The investment in state of the art agglomeration equipment has also allowed Aimia Foods to add value to its products by being able to granulate

The aim is to clear up any issues, set priorities for the current shift and remove potential pressure points Patrick Mroczak, Operations Director “At Aimia Foods all staff are empowered to learn and get involved in process improvements. Lean six-sigma operates on a colour belt structure starting at yellow belt following onto green belt and finishing at black belt. Master black belt is the highest accolade and awarded when evidence of multi projects and ranking structure are demonstrated and in operation.” Mroczak is the Aimia Foods master black belt and at the moment there is one black belt, two green belts and eight yellow belts straddling different areas of the factory such as quality, production and engineering at both operator and management level. It is a very clear demonstration of the level of commitment to quality and manufacturing best practice. All this also means that Aimia Foods is a very safe place to work and the company has an exemplary safety record. Complacency can be the enemy here so great care is taken to ensure everybody looks after themselves and each other. As well as going out of their way to make staff feel wanted, the list of benefits given to Aimia Foods employees is enormous. It ranges from ice lollies in hot weather through to free holiday homes dotted in Spain and the UK and pretty much everything in between. The management go out of their way to make life comfortable and rewarding for the staff. Whilst touring the facility with Rob and Patrick, the warmth with which they were greeted by their employees was a wonderful thing to see. Everybody we met was comfortable having a quick friendly chat with the boss. The walls of the factory and its corridors are covered with photographs of staff on any number of activities from

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Success with food-focused ERP Aimia Foodsâ&#x20AC;&#x2122; success has been supported with specialist food manufacturing and supply chain software from Sanderson.

esigned specifically for food and drink manufacturers, UnityF8 is the latest Enterprise Resource Planning (ERP) solution from Sanderson which integrates business operations â&#x20AC;&#x201C; including production, inventory management, new product development, sales, procurement and business analysis. UnityF8 is developed in line with food and drink industry changes and addresses issues such as traceability, quality control, customer service, production inefficiencies and rising raw material costs. Aimia Foods uses the Sanderson solution to support their business and to increase efficiencies in all areas, while providing accurate information at every level on which to base business decisions. Using

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a food-focused ERP system has delivered many efficiency benefits to Aimia Foods: Improved company profitability by identifying profitable and non-profitable products and processes Provided better control of distribution costs by reporting on actual cost per case of any product being despatched to any customer Reduced data entry and removal of duplicate activities, thereby reducing errors Improved stock management â&#x20AC;&#x201C; including the use of automated warehousing software with bar code scanning across all sites Advanced traceability by providing a visible trail of data, including ingredients,

purchase orders and customer information Increased management control through the provision of accurate, real-time business information Enhanced customer service levels

Published in association with: SANDERSON Tel: 024 7655 5466 Email: info@sanderson.com www.sanderson.com/food

Food and drink Aimia Foods

There are more than 25 production lines – this one produces stick sachets – e.g. hot chocolate, cappuccino mix or malted drinks

evening functions to football matches. Arguably the most important thing is that all members of staff are actively encouraged to improve the business. All production lines are run with dedication and care by the workers on the shop floor, each taking pride in the cleanliness and working efficiency. Different areas and lines are encouraged to audit each other and time is built in for cleaning, and maintenance. As Mroczak explains, “The people working on the line are given time to carry out cleaning and so on during the working day rather than at the end of shifts. That way it is always done well and not rushed.” Emotional support is given equal thought and there is a quarterly “How Are We Doing” meeting with Mr Unsworth where any matters of concern can be discussed directly with him rather than via line managers. Unsworth explains that it was an incredibly powerful thing: “Sometimes people have issues that they don’t feel they can discuss with their managers for whatever reason, this allows them to come straight to me instead. We have a policy of fully listening to and supporting staff at all levels as well as improving all areas of everybody’s working life.” Another big part of working for Aimia Foods is the spirit of competition. There are quarterly prizes for: Outstanding Employee, Customer Service Excellence and Best Innovation. There is then an annual award and an overall winner. Last year the lucky person chosen won a new car! The biggest winner of course is the company itself, happy, proud staff will go the extra mile unbidden.

The future A few years ago Aimia Foods won a major contract with one of the biggest food brands in the world to package and distribute cereal across a range of markets including Europe and the Middle East. The deal was done because unlike their competitors Aimia Foods did not offer to build a production line into the existing factory, they offered to build an entirely new, state of the art facility. Said new facility is now seen as one of the most efficient of its kind in the world and went from concept to completion in just 6 months. Overseen by plant manager Anne Kirkland, it represents everything about

the incredible ability of the company and its people. Another huge success for the company is that over the last ten years they are also entirely responsible for creating, developing, and taking to market, what is now the second biggest hot chocolate brand in the UK, for another household name brand. Moving forward Unsworth sees development coming from essentially more of what has made them successful so far. Taking the best practices from the best companies and adapting them to the Aimia Foods way. Mroczak for example recently undertook a kaizen tour of Japan. Aimia is all about building long term outsourcing contracts for major blue chips and over a £1 million is invested in the plant each year to make sure that it keeps itself at the very cutting edge of their industry. Aimia Foods prides itself on being able to provide a full service to clients yet be capable of instigating changes and updates extremely quickly. As you might expect, each new client is given a bespoke project management service and the Aimia team work hand in hand with them to ensure that all expectations are reached and indeed exceeded. As Rob Unsworth put it, “It’s the combination of Aimia’s manufacturing capability and product development intelligence combined with excellent customer service that mark us out as an ideal partner for any company looking to outsource in confidence and in a way that allows them to focus on their core business.” Aimia Foods is a deeply impressive outfit and a formidable player in the food industry worldwide. As the company blurb quite rightly says, the combination of manufacturing, brand management, innovative product development and intelligent out sourcing is unique. The bulging trophy cabinet proudly on display in the main reception speaks for itself. For me though it is the fact that it has managed to achieve that position while remaining true to its loyal staff and its guiding principles as a business that is the most impressive.

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Semiconductors Zarlink

Competitive conductor

Zarlink has 900 active profucts and ships 100 million integrates circuits per year

Ask

anyone you like on the street where semiconductors are made and it would be safe to bet heavily that they would not pick the UK. China perhaps, for high volume consumer conductors, and California’s Silicon Valley too might leap to mind. But Monmouthshire? Yet despite the general lack of awareness of electronic manufacturing capability in the UK, Monmouthshire is exactly where the UK headquarters of Zarlink Semiconductor, a highly successful ‘pure play’ semiconductor company, is based. The Caldicot plant has existed for nearly 30-years and has been called Zarlink, under Canadian ownership, since 2001. Zarlink has another manufacturing facility in Swindon, a specialist analog foundry that survived severe flooding in 2007. A third site in Plymouth is devoted to research and development, supplementing the design work which is mainly carried out at Caldicot. These are two sites of just seven Zarlink R&D centres across the 100 countries in which the company operates. Part of a global family, Zarlink has prospered in recent years. Semiconductors are materials with electrical conductivity somewhere between that of a conductor and an insulator and are important in many products like computers and radios. Global demand for high-end semiconductors has increased and the company’s strength in mixed-signal chip technology for the communications and medical appliance markets have allowed it to thrive. Demand alone has not been enough, however. Competition in the semiconductor business is intense and Zarlink has had to work hard to protect its intellectual property, innovate and diversify its products. The company now has 900 active products and ships a staggering 100 million integrated circuits per year. With this product proliferation, however, Zarlink has focused innovation on key areas; timing and synchronisation products and ultra-low power devices for on-body and inbody applications, where the Caldicot site has specialised

It might surprise some to know that semiconductor manufacturing in the UK is alive and kicking, with Zarlink a particularly good exemplar. How has the company managed to defy the eastward migration of much electronics manufacturing, and has its strategy secured its future in the UK?

Turning heads Zarlink’s success in creating an enviable product portfolio and innovating with intelligence has provoked more than simple admiration from peers or a competitive industry benchmark. On July 20, Microsemi Corporation, a rival US semiconductor company, made an offer of $548.7m to acquire all outstanding Zarlink shares. It wasn’t the first offer that Microsemi has made to Zarlink and although previous offers have been rejected, James Patterson, Microsemi’s president and CEO said, “We are committed to building and strengthening [Zarlink’s] business and believe our proposal provides a superior outcome for Zarlink’s shareholders, employees, customers, and the local economy. We believe this proposed acquisition provides considerable growth opportunities, and greatly benefits the shareholders of both companies.” Microsemi specialises in manufacturing semiconductors for the aerospace and defence industries and its bid for Zarlink shows an aggressive expansion strategy in non-core markets, as Zarlink’s strengths are in synchronisation products and medical applications. Microsemi has acquired seven new companies since March 2010. In an official statement Zarlink said that Microsemi’s offer, “significantly undervalued Zarlink and its future prospects.” in the latter. Overall the medical device segment accounts for 13% of all company revenues. Zarlink has had to respond to some strong market trends in the medical sector to create products that enable new wireless medical applications and

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Zarlink therapies to improve patient care and lower healthcare costs. This trend has been pushed in part by the aging populations of many developed countries and the consequent demand for “always-on” home-based wireless health monitoring. An important innovation for Zarlink in 2010 was a new ultra low power wireless radio platform used by new and

Zarlink at a glance History

Founded 1971 as Mitel Corporation Caldicot plant opened in 1983 Became Zarlink 2001

UK locations

Manufacturing: Caldicot, Swindon. Research and design: Plymouth European sales: Swindon

Employees

530

Key products

Semiconductors. Areas of specialism include integrated circuit solutions, timing and synchronisation systems and wireless in-body medical applications including pacemakers and cardiac monitors.

Key markets

Communications and medical industry customers who require line circuits, network timing and medical wireless applications.

existing customers for wirelessly enabled in-body communication systems, including pacemakers, implantable cardiac defibrillators, and new devices such as cardiac monitors and neuromodulation systems. The beauty of this new technology is its extremely low power consumption and length of life. Over a typical operational lifespan of seven years, the new radio consumes the same amount of energy required to power a 40-watt light bulb for just 10 seconds. This has obvious benefits for the end user

ZL30117 SONET/SDH line card synchroniser provides timing and synchronisation for network interface cards

by minimising the chance of repeated invasive surgery, but also benefits healthcare providers by circumventing expensive operations and freeing up care capacity for new cases. The decision made by the company’s board of directors to turn down a bid by US competitor Microsemi to acquire the company shows that Zarlink is confident of its market position and its ability to exploit new prospects. For Zarlink’s employees and suppliers in the UK, the rejection of the significant Microsemi bid will be a welcome confirmation of the company’s stability, both in terms of financial security and strategic confidence – the latter often being related to the strength of a company’s geographic presence. For the time being at the least it looks as though the UK, and Monmouthshire specifically, still has a big part to play in the silicon age.

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EEF PhotograPhy ComPEtition 2011 Heroes of Manufacturing. At EEF the manufacturers’ organisation we want you to capture the essence of what makes manufacturing great – its people, products, processes and places of work. Show us how you would capture the image of manufacturing heroes before October 31, 2011. Entry is free and open to everyone. For information and to upload your photograph visit

www.eef.org.uk/photo or contact Stuart Biddle on 020 7654 1501

Snap up your chance to win £5000 worth of Canon photo equipment.

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Asset finance wasn’t the only area opened-up to innovation in 1861

The pin-tumbler lock patented by Linus Yale Jr in 1861

It’s fitting that we should feature a lock to celebrate Lombard’s 150 years of innovation in asset finance. Because Lombard started life in 1861, the same year that Linus Yale Jr patented his pin-tumbler lock – the forerunner of the modern lock. We’ve also pioneered new approaches, throughout our history, in business finance – helping companies from every conceivable walk of business to build for the future. We have funded everything from IT to production lines, heavy plant to agricultural equipment. And we have helped businesses to expand, to modernise and to update their technology, often enabling them to release working capital at the same time. To find out what we’ve been up to over the last 150 years, visit 150years.lombard.co.uk Security may be required. Product fees may apply.

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