BQ2 Yorkshire Manufacturers Going Global by We Are UMi

SPECIAL REPORT:

MANUFACTURERS GOING GLOBAL

JUST THE TICKET Bus firm’s journey into the export market FORGING AHEAD Steel makers set sights overseas JIVE TALKING Company hits jukebox jackpot

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CONTENTS

CONTACTS

06 NEWS

ROOM501 LTD Christopher March Managing Director e: chris@room501.co.uk Bryan Hoare Director e: bryan@room501.co.uk

A round-up of the region’s export happenings

14 OVERVIEW

EDITORIAL Andrew Mernin Editor e: andrewm@room501.co.uk

The region’s makers are bucking the national trend, but challenges remain

16 JUST THE TICKET How forward-thinking bus maker is leading the way on green transport

22 THE DEAL MAKER Santander’s Charles Garﬁt on the bank’s £500m lending pledge

26 FORGING AHEAD How steel makers Shefﬁeld Forgemasters are pursuing exports

32 BQ LIVE DEBATE Business leaders discuss overcoming the barriers to globalisation

44 WELCOME HOME Why manufacturers are bringing production back to the UK

46 HEALTHY TRADE Brandon Medical’s new visitor centre will grow employment and exports

JIVE TALKING WITH THE JUKEBOX KING

SPECIAL REPORT:

MANUFACTURERS GOING GLOBAL

WELCOME Rising costs in previously cheaper markets and an improving economy at home have helped to put UK manufacturing on an upward curve this year. And many of Yorkshire’s makers have also been in growth mode in 2014. Underpinned by an international reputation in key areas like food and drink and medical technology, the region continues to supply pioneering products across the globe. Meanwhile, world-leading research and development teams – particularly involved in healthcare innovation – are creating new opportunities for Yorkshire’s production lines to exploit. But challenges continue to hinder growth in the sector and common barriers remain standing between the region’s firms and potentially lucrative overseas markets. In this issue we seek to uncover how such challenges are being overcome and what the future holds for Yorkshire’s manufactured exports.

in association with

38 MANUFACTURERS GOING GLOBAL

DESIGN & PRODUCTION room501 e: studio@room501.co.uk PHOTOGRAPHY KG Photography e: info@kgphotography.co.uk SALES Hellen Murray Business development manager e: hellen@room501.co.uk t: 0191 426 6182 / 07551 173 428

room501 Publishing Ltd, Spectrum 6, Spectrum Business Park, Seaham, SR7 7TT www.room501.co.uk room501 was formed from a partnership of directors who, combined, have many years of experience in contract publishing, print, marketing, sales and advertising and distribution. We are a passionate, dedicated company that strives to help you to meet your overall business needs and requirements. All contents copyright © 2014 room501 Ltd. All rights reserved. While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. All information is correct at time of going to print, September 2014. room501 Publishing Ltd is part of BE Group, the UK’s market leading business improvement specialists. www.be-group.co.uk

BQ Magazine is published quarterly by room501 Ltd.

SPECIAL REPORT | AUTUMN 14

A helping hand into the wor ld of exports Have you ever thought about expanding your business overseas but didn’t know where to start? The Santander Group, one of the world’s leading international financial groups, is keen to support you in making that first step. With 14,000 branches – more than any other international bank – and a prominent banking presence in 14 major markets their expert, locally based teams are ideally placed to help your business international expansion plans. One of the tools that Santander have made available is the Trade Portal – an innovative, easy to navigate, online information platform available to both customers and noncustomers of Santander Corporate & Commerical. The Trade Portal has all the information you need in one place. It can help you to identify the most attractive countries for your

products and services. And, uniquely amongst the UK banks, the portal also oﬀers companies free access to a range of importer and exporter databases. You can also access practical tips to create, run and operate a company abroad.

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Reach business counterparts – identify new business opportunities using databases of importers and exporters worldwide.

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Manage international shipments – find out about customs procedures, costs, trade compliance, and information on calculating and optimising shipping costs.

6 key benefits ■

Analyse market trends – collect market information and target the most promising countries for your products and services.

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Using Santander’s Trade Portal, manufacturing businesses can quickly locate where the best international clients and trading partners are for their business. The platform is constantly updated and businesses can discover the top importers of the products they produce, as well as the fastest growing markets.

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Charles Garfit, Head of Manufacturing

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Currency analysis – analyse currency markets and manage currency exchange from our database of 147 international currencies.

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International banking solutions – make the most of your available capital and find secure solutions to trade internationally.

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Establish your business overseas – learn how to operate a business abroad and manage international investments.

Discover Santander’s Trade Portal The Trade Portal provides access to a wealth of information and resources to help you successfully manage and

succeed in your global expansion plans. It features: ■

10,000 pages covering 185 countries with information on the best trade practices by country; individual country business profiles and their local tax systems; local legal environments and useful country contact information.

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Up to date analysis on import and export flows to help you review trading trends.

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A database of over 40,000 trade shows by sector to help you plan your overseas trips to showcase your companies goods and services.

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Over 100,000 importers in some of the world’s leading import markets together with the contact details of potential buyers.

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Over 1 million public and private tender opportunities for you to review and consider.

Trade Portal Access You can access Trade Portal from www.santandertrade.com www.santandercb.co.uk/international Santander Trade Portal is provided and managed by Export Enterprises S.A. Santander provides access to its client companies but is totally unrelated to the database contents which are the responsibility of Export Enterprises S.A. You need to be an online banking customer of Santander Corporate & Commercial to gain full access to the trade portal. If you do not use our online banking service you can still use the trade portal, although some parts of the site will be restricted. Santander Corporate & Commercial is a brand name of Santander UK plc, Abbey National Treasury Services plc (which also uses the brand name Santander Global Banking and Markets) and Santander Asset Finance plc, all (with the exception of Santander Asset Finance plc) authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our Financial Services Register numbers are 106054 and 146003 respectively. In Jersey, Santander UK plc is regulated by the Jersey Financial Services Commission to carry on deposit-taking business under the Banking Business (Jersey) Law 1991. Registered oﬃce: 2 Triton Square, Regent’s Place, London NW1 3AN. Company numbers: 2294747, 2338548 and 1533123 respectively. Registered in England. Santander and the flame logo are registered trademarks. Santander UK plc is a participant in the Jersey Bank Depositors Compensation Scheme. The Scheme oﬀers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the States of Jersey website (www.gov.je/dcs) or on request. CCBB0511_SEP14HT

NEWS

AUTUMN 14

Region’s manufacturers growing in confidence, YouGov poll shows support for a stronger manufacturing base, Vickers looking to invest in staff, deal puts Tinsley on track for growth, Bentley snapped up >> Loan will aid expansion

>> Precision decision

Funding group Finance Yorkshire has backed a fast-growing ventilation firm based in Goole. LeighTec will use the £50,000 business loan to develop existing contracts and establish a duct manufacturing facility in-house. The firm, which specialises in commercial kitchen ventilation systems, counts Claridges, the Houses of Parliament and the OXO Tower among its clients. It also has a growing presence in the public sector, working particularly with schools and universities.

Rotherham-based Newburgh Precision has been selected as a strategic partner to the innovative automotive sector initiative The Proving Factory. The initiative being led by Productiv and Tata Steel is a unique manufacturing, assembly and validation organisation, bridging the market gap between technology developers making innovative, low-carbon prototypes and the needs of vehicle manufacturers for proving volume supply. The Proving Factory will use 1,000sqm of leased space at Newburgh Precision’s site in Rotherham on an interim basis to manufacture components whilst dedicated facilities are completed nearby.

>> Driving through safety Telematics group The Floow has appointed insurance expert Dario Aliotta to develop its international business strategy across West-Central Europe. The Floow, based in Sheffield, develops telematics solutions that capture and analyse data relating to driver behaviour. Collected through devices such as smart phone applications, this data can then be used by insurers to reward their customers for safer driving. The company, which works on behalf of leading insurers including AIG, NIG and Green Flag across Europe, Canada and North America, recently announced a 15% investment from Direct Line Insurance Group plc. With staff already based in Italy and France, Dario will deliver The Floow services to insurers, road side assistance organisations and fleet management companies across Switzerland, Germany and Austria.

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>> Take off for Westwood A new manufacturing facility is to be created in South Yorkshire on the site of a former World War II airfield on the back of a £1.7m funding package. Westwood Pipelines, which supplies polyethylene pipes and fittings to the utilities and construction industries, is embarking on an expansion programme that will see it develop a new hi-tech HQ and manufacturing facility, after securing a £1.7m funding package from HSBC. The Doncaster firm, founded in 2005, has acquired a former roof tile factory and surrounding land on the Sandtoft Industrial Estate, and plans to redevelop the 20,000 sq ft property – empty for the past 20 years – to create base to grow the business. Westwood is creating five new roles on the back of the expansion, bringing staff numbers to 19, with plans to add a further eight roles over the coming two years.

Work on the site, which is located on a former World War II air field, starts this month. The company expects to relocate from its current base at the start of 2015.

>> Acquisition saves 62 jobs One of Huddersfield’s oldest businesses, which exports across the world, has been acquired in a deal that saves all of its 62 jobs. A group of local entrepreneurs has teamed up with an Australian inward investor to buy Sellers Engineers, which has been designing and manufacturing machinery for the carpet industry since 1912, and is based on Trident Business Park. The deal sees Mike Shotton, former chairman of textile company Quantum Clothing, lead a group of Yorkshire-based investors to acquire the business alongside CTS Group. CTS is an Australian company which operates in the same sector, in a pre-pack administration deal that will safeguard the future of the business. The company, which will now trade as Sellers Global Engineers Limited (SGEL) and has customers in more than 60 countries including the USA, Brazil, China, Iran, Turkey and Saudi Arabia, had been hit by the loss of major contracts in Libya because of the civil unrest in the region. Chris Wood and Andrew Waudby of Clough Corporate Solutions LLP, which is part of Yorkshire-based chartered accountancy firm Clough & Company, acted as joint administrators.

The company had been hit by the loss of major contracts in Libya

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NEWS

The Areva European Pressurised Reactor (EPR) nuclear power plant currently being constructed in the Guangdong province of China

>> Yorkshire manufacturer lands major contract at Chinese nuclear power plant North Yorkshire manufacturer Ellis has secured a second major order for its components to be installed at a nuclear power plant in China. The company has signed an agreement for its Emperor cable cleats and ProTect cable straps to be installed in the Areva European Pressurised Reactor (EPR) currently being constructed in the Guangdong province of China. The order was placed at the commencement of the second phase of the Taishan Nuclear Power Project. The project is a joint venture between EDF and China Guangdong Nuclear Power Group. Ellis expects to ship the product from its North Yorkshire headquarters in the final quarter of the year.

>> Confidence takes root Manufacturers in Yorkshire are continuing to power on, reporting positives across every key indicator of business health and outperforming the UK average, research shows. The data, published today, reveals that despite a more difficult trading environment overseas business confidence in Yorkshire has firmly taken root, with this quarter’s findings showing that manufacturers’ strong first half of the year is being sustained in the third quarter. A balance of 32% of manufacturers in Yorkshire are reporting an increase in output in Q3 (compared to a UK average of 10%), with a further 27% seeing growth in order books and a balance of 33% looking to recruit. The figures come from the latest quarterly Manufacturing Outlook survey by EEF, the

MANUFACTURERS GOING GLOBAL

manufacturers’ organisation, and accountancy and business advisory firm, BDO LLP. One area of caution is in exports, resulting in EEF issuing a warning that the demand picture is now more uncertain than for some time. With the Eurozone economy flagging significantly, political risks increasing and a stronger Sterling exchange rate, export orders UK-wide are turning negative for the first time since the start of 2013. Andy Tuscher, Yorkshire and Humber region director at EEF, said: “Growth in manufacturing remains positive in Yorkshire, although it is understandably starting to return to more moderate and sustainable levels as the pent-up demand which built up during the recession begins to expire. “However, there are clearly risks overseas which could threaten the pattern of growth going forward. In the face of this, while

politicians may be focused on next year’s election it is critical that efforts over the rest of this parliament remain focused on sustaining growth across manufacturing and the economy.” The EEF/BDO Manufacturing Outlook survey shows that most sub sectors reported an increase in output with motor vehicles and non-metallic minerals especially strong performers.

There are risks overseas which could threaten the pattern of growth

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NEWS

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>> Priorities made clear Britain’s manufacturers have set out their priorities for the next Government to drive better-balanced growth, boost trade and investment and deliver long-term economic security. The priorities hinge on five key policy areas, ranging from skills through to staying in the EU, and are laid out by EEF, the manufacturers’ organisation, in its new manifesto – An Agenda for Government to 2020. The programme to rebalance Britain’s economy follows YouGov research showing that more than eight in ten voters (85%) want the next Government to promote a stronger UK manufacturing base, believing it will deliver more jobs, economic growth and prosperity. The manifesto challenges all three political parties to set out a clear vision for the UK’s economy over the next Parliament to provide certainty for business and help boost investment. EEF believes the priorities must also include a commitment to keep the UK in a reformed EU. The research by YouGov published last week indicated that 79% of people believe protecting and building on the economic recovery must be central to all parties’ messages. EEF says the current Government has made some positive progress with a generally supportive tax environment, particularly for research and development, and efforts to boost innovation and apprenticeships. The focus on boosting trade through agencies such as UKTI, which has received extra funding, should also bear fruit by the end of the decade. It calls for the introduction of ‘career aspiration’ in primary schools to get young people to think about their futures and ensure all young people have access to independent, face-to-face careers advice before making subject choices. EEF also suggests that the UK maintains an apprenticeship training system that is robust, long-lasting and resistant to shortterm change. Other recommendations

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include funding and incentivising businesses to research and develop new products and ensuring the UK is ahead of the curve in providing vital transport and digital capability as part of long-term planning. Energy and resource security and staying in a reformed EU are also areas which require more attention, EEF warns.

>> £4.6m to boost growth AIM-listed machine tools and laser marking firm 600 Group Plc is targeting growth at home and abroad following a £4.6m funding boost. The Leeds company will use its new funding from Santander Corporate & Commercial to build on recent strong performances in several markets around the world. The group sells into more than 180 countries worldwide through its brands of Colchester and Harrison machine tools, Pratt Burnerd and Gamet precision components, and Electrox laser markers, with operations in Europe, North America and Australia. It recently reported strong financial results, with net operating profit from continuing operations up by 141% to £2.35m, with revenues from continuing operations of £41.7m.

>> Backing innovation Investment in innovation looks to be on the up among the region’s businesses, HMRC figures suggest. The number of claims for research and development tax relief by SMEs in the Yorkshire and Humber region rose by more than 30% in 2012-13 versus the previous year. In total, there were 905 claims for R&D tax credits by SMEs in the region worth £30m in relief in 2012-13. This was up from 695 claims in 2011-12 worth £19m in tax relief.

>> Lift off for £43m factory Work is to start on a new £43m aerospace factory in Sheffield, with construction firm Interserve being appointed to the job.

Factory 2050 will combine technologies including advanced robotics, flexible automation, unmanned workspace and off-line programming in virtual environments linked to plug-and-play robotics. It is the latest development at University of Sheffield’s Advanced Manufacturing Research Centre (AMRC), which was co-founded by the University and US aerospace group Boeing in 2001. Gordon Kew, Interserve’s managing director for UK Building, said: “This is a truly world class project that will help ensure the region remains at the forefront of the advanced manufacturing sector. “Once completed, the facility will provide a fantastic environment for both researchers and engineers. “We plan to use as many small and medium sized local businesses as possible on the project and generate as many employment and training opportunities as possible to provide a real legacy for the surrounding area.“ Professor Keith Ridgway, executive dean of the University of Sheffield’s AMRC with Boeing, said:“Our ambition is for Factory 2050 to be the most advanced factory in the world. “Over the last ten years, our initial vision to create a centre where engineering research is translated into real practical applications for world-leading industries has been hugely successful.”

>> Family firm sold Family-run Elland Metal Spinning and Pressing Company has been acquired by a private investment company for an undisclosed sum. The firm, based South Lane, Elland, near Leeds, was established in 1946 and has been family-run for over 50 years, providing quality parts for a multitude of purposes such as domestic appliances, catering equipment, light fittings, dust extraction and filtration. The corporate finance team at the Leeds office of accountants Garbutt & Elliott and Giles Clegg of Leeds law firm Lupton Fawcett Denison Till, both helped to facilitate the acquisition deal led by an unnamed investor.

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NEWS

>> Better together – how two Yorkshire firms are clawing back manufacturing and creating jobs Two Yorkshire firms have conspired to bring manufacturing back from overseas, creating new jobs in the process. Otley-based campervan conversion firm Kiravans has brought production of its rotating seat product back from an overseas partner and handed the work to Sheffield-based PCT Metalmex. Kiravans had developed a design, but its overseas prototype manufacturer was unable to support production volume or manage sub-assembly processes. The Manufacturing Advisory Service (MAS) brought the two companies together as part of its supplier matching service. James Terry, managing director of PCT Metalmex, said: “Volumes have increased substantially and it’s worth about £300,000 per year to us. We have taken on new people to cope with demand, including three new engineering apprentices. “The overseas rival couldn’t match our hands-on approach and certainly couldn’t offer the ability to respond quickly to changes or volume increases.” PCT Metalmex, which offers pressed components, profiling and fabrication services, has taken on additional assembly work as part of the first contract and is now using its design skills to help Kiravans develop new products.

>> Turning ideas into reality Manufacturing and engineering firms in Yorkshire have the chance to bid for grants of between £400,000 and £2m to help turn ideas into commercial products. New product development firm Pera Technology has announced the second stage of its multi-million-pound innovation competition. The company is searching for Yorkshire engineering and manufacturing firms seeking finance to develop new products and process ideas. The chosen businesses will receive a

MANUFACTURERS GOING GLOBAL

fully-funded application to the European Union’s Horizon 2020 science and innovation fund. The fund, launched earlier this year, provides grants of between £400,000 and £2m (€500k and €2.5m), to turn new product ideas into commercial prototypes. To enter the competition businesses simply need to provide details of their new product idea on Pera Technology’s Horizon 2020 competition website www.peratechnology. com/h2020comp. Entrants will also be provided with a Non-Disclosure Agreement in

order to protect their intellectual property. The deadline for entries is Friday 21st November.

The fund provides grants of £400,000 to £2m to turn new product ideas into prototypes SPECIAL REPORT | AUTUMN 14

NEWS

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materials, their safe and efficient repacking or dissolution in water and subsequent storage and distribution. It is also able to offer a third party branded chemical logistics facility. While the firm’s primary clients include bluechip chemical and pharmaceutical companies, it recently invested in a new facility to support growth in the global contact lens market.

The firm has diversified into a chemical, packaging and logistics company >> Guten tag Humber

Graham Honeyman, chief executive, Sheffield Forgemasters

>> Forging links with key overseas companies Sheffield Forgemasters joined 20 British manufacturing companies on a trade mission to Norway in August. The UK engineering firm showcased its current and future capabilities through its offshore technology and project management specialist subsidiary Vulcan SFM. It was exposed to key players in the oil and gas sector at the ONS exhibition and conference in Stavanger. The trade mission, organised by Norway2UK, was designed to build on the UK’s highly-regarded reputation in the energy sector, and to assist UK companies in identifying and pursuing business opportunities in this high-growth market. Around 70,000 people attended the three day event.

>> Vickers seeks new staff Chemicals firm Vickers Laboratories is to launch a recruitment drive at its Pudsey HQ after securing £1m in new funding. The company, which specialises in chemicals manufacturing, distribution and logistics, is forecasting 10% growth this year, having recently purchased facilities it had previously been renting.

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Its growth will be fuelled by a new £1m facility from Santander Corporate & Commercial. Established in 1969, Vickers Laboratories moved to its current purpose-built site in 1995. The firm has since diversified away from being a purely chemical manufacturing company into a chemical, packing and logistics company. It specialises in the procurement of raw

Leading lights from Germany’s offshore wind and renewables sector visited the Humber recently in a bid to strengthen trading ties with their UK counterparts. Team Humber Marine Alliance (THMA) alongside local authorities, the Chamber of Commerce and the Humber LEP, organised the three-day visit. Delegates visited many of the region’s offshore wind and renewables facilities on the north and south bank of the river. Ronny Meyer, managing director of Bremerhaven-based WAB, said: “As the Humber is one of the leading regions for offshore wind in the UK it is an absolutely key market for us. “The mission will also allow us to share knowledge and come to a better, more transparent understanding of the issues that we both share, such as research, skilled workforces and the potential for business development. “The UK and Germany are probably the most significant markets for offshore wind in Europe, if not globally, and it is a win-win situation on both sides. “It will be interesting to see how the Humber is developing, as we have found that for wind energy to thrive it is essential to have a good political and economic support at a federal, but also at a local level.”

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NEWS

>> One deck Manufacturer Group Rhodes said it expects to create jobs at home and abroad on the back of its new Indian facility, which was officially opened by Deputy Prime Minister Nick Clegg. The Wakefield firm makes machinery for advanced applications in aerospace, metalforming, heavy ceramics, composites, environmental and deep-sea oil and gas sectors, and currently operates from four factories in the north of England. Managing director Mark Ridgway said: “We are confident that this investment by Group Rhodes in India will create new jobs and growth both at home and abroad.”

>> UTC will aid engineering

>> Success is catching for food brand as it lands second award Food manufacturer The Saucy FishCo, of Grimsby, has been named as a CoolBrand for the second year in succession. Co-ordinated by The Centre for Brand Analysis, the CoolBrand list is drawn from more than 1,000 brands and whittled down to a shortlist. The panel included the likes of musicians Labrinth, Laura Mvula and Reverend and The Makers, digital entrepreneur Jamal Edwards (pictured), and models Jodie Kidd and Sophie Dahl. Last year The Saucy FishCo became the first ever fish brand to make it on to the list dominated by premium fashion and technology businesses.

>> Loan will stimulate jobs The Leeds City Region LEP has agreed a £4m loan with developers, Aire Valley Land, which will kick-start work on the Temple Green site of the Leeds City Region Enterprise Zone and create thousands of new jobs. The LEP loan will be used to accelerate development on the 350-acre site by funding ground work and remediation, as well as the construction and installation of key enabling infrastructure. The investment will create 20 jobs on the

MANUFACTURERS GOING GLOBAL

initial phase of work, and is forecast to deliver a cumulative economic impact to the City Region economy worth £1.5bn by 2021. The Temple Green site – the largest on the Leeds City Region Enterprise Zone – will ultimately become a focal point for investment in sectors expected to make some of the biggest contributions to jobs and economic growth in the City Region in the years ahead, including health technologies, modern manufacturing and the supply chain, logistics and distribution.

The creation of a ‘University Technical College’ in Scarborough will be of enormous benefit to the many engineering companies in the area, according to one major manufacturer in the town. Globally successful tube bending machine manufacturer and software provider Unison is well known in the local North Yorkshire economy for its work as founder and principal organiser of the annual Scarborough Engineering Week event for schoolchildren, and has been a key supporter of the UTC campaign. “For as long as Unison has been in existence, we have struggled to find the technical staff we need to grow,” says Peter Wilkinson, its executive director and chairman of Scarborough’s Business Ambassadors Forum. “The same situation applies to virtually every other engineering company in this area. I know that most of our local engineering businesses could expand by 10% or more almost instantly if we had a pool of local engineering talent. The new UTC will lay the groundwork to help realise this ambition.” The new UTC in Scarborough will cater primarily for 14-18 year-olds with a focus on courses promoting careers in ‘STEM’ subjects of science, technology, engineering and maths.

SPECIAL REPORT | AUTUMN 14

NEWS

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>> Door firm expands Door manufacturing business Summerbridge Doors, of Analby, East Yorkshire, has announced expansion plans after securing new bank backing. Established in 1986, it employs 102 staff and turnover is expected to exceed £9m this year. New facilities agreed with Barclays include a commercial mortgage, development loan, asset finance and working capital. The company designs and manufactures MDF vinyl wrap doors and accessories for kitchens, bedroom and bathrooms, working across the leisure, contract and retail sectors.

>> Xeros leading the way

Mark Henley (3rd from right) and Mick Hollis (Far right) from Conflow, on a visit to the CI Milpa mine in Colombia

>> Mining industry supplier Conflow strikes Columbian deal Sheffield manufacturer Conflow, which services the mining industry, has won a new contract with a Columbian coking coal producer. The company, which makes dust and fire suppression systems for the mining industry, has landed a contract with CI Milpa. This is the first contract that Conflow has secured in Colombia, and was won through the support of its sister company Bretby Gammatech. A team from Conflow, part of the President Engineering Group, visited the CI Milpa mine in Bogota and fitted two dust suppression systems. They also fitted a Fire Suppression system on a roadway for Milpa in the other location in Bogota.

>> Encon secures its future Encon Group, which makes specialist building materials, has secured a £54m refinancing deal. The funding, which comprises facilities provided by funds and accounts advised by Farallon Capital Europe and Lloyds Bank Commercial Finance, will enable Wetherbybased Encon to continue building market share in the UK. The Encon Group started trading in Halifax in 1981 as a distributor of insulation products. It now has branches in 24 locations across the UK, employs more than 500 people and has an annual turnover of £200 million.

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In 2011, the business underwent a management buyout, which was led by the current chief executive, Stuart Moore, and financed by Lloyds Bank. Stuart Moore from The Encon Group said: “This funding transaction provides Encon with a stable financing base committed for the next five years and incorporates facilities both ample and flexible to provide for future growth and further enhancement of customer services. “I am pleased to be extending our existing relationship with Lloyds Bank Commercial Finance and to be entering into a new association with Farallon Capital Europe.”

Laundry cleaning technology firm Xeros has announced that it is now supplying four of the world’s top five hotel brands after its latest contract win. The Rotherham plc has developed a polymer bead laundry cleaning system. CEO Bill Westwater states: “Four of the world’s top five hotel groups have now agreed to use Xeros cleaning systems in the USA and we are actively contributing to their achievement of their CSR goals in relation to sustainability. “We’ve demonstrated how Xeros technology can bring lasting and meaningful benefits by way of superior cleaning, water and energy reductions and enhanced service through the commercial use of our technology for laundry.”

>> Garden firm is growing Manufacturer Kelkay has doubled the size of its HQ with a move into a new purpose built centre in Pollington, East Yorkshire. The firm, which makes aggregates, paving, fountains and garden features, has moved into a new 8,000 sq ft space. Managing director Antony Harker said: “The business continues to grow and the office move supports this. “Together with our new-look sales team and the introduction of sophisticated customer facing technology, the new offices are further evidence of our commitment to unrivalled service.”

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NEWS

four years, of up to a maximum of £6.4m based on future financial performance. Alan Wilson, chairman of Pressure Technologies, said: “We believe that this deal represents an excellent opportunity to expand the Group’s Alternative Energy division with the acquisition of a business, intellectual property, technology and employees that we know very well. “Our intention is to combine Greenlane’s proven patented technology with our commercial and management capabilities to capitalise on the significant global market opportunity.”

(L to R): ): Tinsley Bridge Group engineering development manager Russell Crow; Peter Edwards, director at Grant Thornton in Sheffield; and Mark Webber, managing director of Tinsley Bridge Group, with the new stretcher bars

>> First of many deliveries puts Tinsley on track for growth Sheffield-based Tinsley Bridge Group has shipped the first of its state-of-the-art stretcher bars from its newly formed rail division. Tinsley is one of just three suppliers to have been selected by Network Rail to manufacture the new design of tubular stretcher bar which is starting to be rolled out across the UK rail network this summer. The product is designed to give greater safety, improved performance and reduced whole-life cost. It keeps the switch rails in the correct position under the passage of a train. It is also simpler to install, requires less maintenance and is designed to better withstand the rigours of the 21st century rail network. The engineering group, which is over 150 years old, originally manufactured vehicle suspension springs and has developed to make anti-roll bars for truck producers such as Volvo and Renault, rolling stock parts for railways and suspension components for military vehicles. It has a turnover of £16m and employs 180 people. “This is the first time that we have successfully broken into the rail infrastructure market, but with our proven experience in the high-risk, zero-tolerance environment of truck suspensions, we have the perfect skillset to transfer to the safety critical rail project which demands the highest levels of quality and precision,” said Mark Webber, managing director of Tinsley Bridge Group.

>> Deal will aid expansion Pressure systems specialist Pressure Technologies, of Sheffield, has acquired New Zealand-based Greenlane Biogas Holdings, which supplied technology

MANUFACTURERS GOING GLOBAL

used in the upgrading of raw biogas to high purity biomethane. Pressure Technologies offered £12.4m, comprising an initial consideration of £6m with additional deferred payments, split over

We believe this deal represents an excellent opportunity to expand >> Bentley snapped up Development consultancy Mott MacDonald has bought the £120m-ayear Skipton-based engineering and construction firm JN Bentley. This follows a 15 year partnership between Mott MacDonald and Bentley Holdings and its subsidiary JN Bentley, which employs over 700 people. More than 80% of its business is derived from Mott MacDonald. Mott MacDonald chairman Keith Howells said: “We are immensely pleased to welcome Bentley into the Group as a natural next step for our partnership. “The delivery model we have forged with our water industry clients continues to help them maximise value for their operations and their stakeholders – now we’re looking forward to using our collective ingenuity to achieve ever greater benefits across the triple bottom line of social, economic and environmental value.”

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OVERVIEW

AUTUMN 14

GROWTH ON GO SLOW While the resurgence of manufacturing in Yorkshire continues to buck the national trend, despite a slow down, the route from factory floor to export markets remains as challenging as ever, writes Andrew Mernin

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Manufacturers were among the fastest out of the blocks when the UK’s recession gradually melted and gave way to recovery. So rapid was the growth being forged on factory floors that one report from the second quarter of 2014 found employers in the sector to be adding 10,000 new jobs per month to keep up. The mood has dampened slightly since then, with the manufacturing sector registering its slowest growth in August for 14 months. The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) dropped in August to 52.5 from 54.8 in July, with any reading above 50 indicating growth. “Sustaining the upturn is still a positive in itself,” said Markit senior economist Rob Dobson at the time. Meanwhile, a study from the EEF trade body also highlighted a slowdown in August. The results prompted the group to downgrade its growth forecast for 2014 for the sector from 3.5% to 3.3%. But EEF said the industry would still experience its fastest expansion this year since 2010 when output grew by 4.2%. It also expects manufacturing firms to increase their spending in the sector for the 17th consecutive quarter in Q3 2014. With Markit reporting that production was 7.2% below its pre-recession peak in August, however, global uncertainties remain a drag on the sector. Markit chief economist Chris Williamson said eased output suggested “jitters about the Ukraine had begun to hit trade flows and business confidence”. In Yorkshire, the outlook for manufacturers appears brighter than the national average. Almost a third (32%) of the region’s manufacturers increased their output in the third quarter of the year, EEF reported, compared to the national average of 10%. The same report showed that 27% of respondents saw a quarterly rise in orders and 33% are plotting a recruitment drive. Andy Tuscher, Yorkshire and Humber region director at EEF, cautioned: “Growth in manufacturing remains positive in Yorkshire, although it is understandably starting to return to more moderate and sustainable levels as the pent-up

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demand which built up during the recession begins to expire. “However, there are clearly risks overseas which could threaten the pattern of growth going forward. In the face of this, while politicians may be focused on next year’s election, it is critical that efforts over the rest of this parliament remain focused on sustaining growth across manufacturing and the economy.” Data suggests exports coming out of the sector in Yorkshire have been hindered by weak demand in the Eurozone. Manufacturing optimism fell from a score of 119.9 in July to 118.8 in August according to a report by BDO LLP in Yorkshire. Terry Jones, partner and head of BDO in Yorkshire, said: “With anaemic growth enduring in our key trading partner, the Eurozone, and external shocks such as the crisis in Ukraine further dampening confidence, no one should be surprised to see growth impacted in the second half of the year.” But despite an uncertain picture emerging ahead of the last quarter of the year, manufacturing generally remains on an upward curve. And, for all the global tension and European woe, Yorkshire remains a thriving centre of manufacturing with a global customer base. Age-old food and drink products through to cutting-edge medical devices continue to roll off production lines here, to be shipped off to Europe and beyond. And new ideas in the sector are prevalent here too, with innovative SMEs, NHS influencers and universities among those providing new manufacturing solutions. Further reasons for optimism come in the form of recently-launched initiatives to help manufacturers bolster their foundations and ease their path into overseas territories. Fresh from receiving their growth deal responses from the government in July, local enterprise partnerships are now moving at full throttle to realise their various plans of action. Among them are the incentive-driven enterprise zones such as that operated by Sheffield City Region’s LEP which offers manufacturers incentives to invest in plant and machinery.

OVERVIEW

Despite an uncertain picture emerging, manufacturing remains on an upward curve Leeds City Region’s LEP, also overseer of the manufacturer-friendly Aire Valley enterprise zone, is, like all LEPs, focused on helping the businesses it serves to access overseas markets. Its trade portal, through which expertise is shared on various countries and sectors by business leaders who’ve been there and done it, is one of several similar schemes dotted around the county aimed at boosting Yorkshire exports. Of all the challenges facing globally-trading manufacturers – including price fluctuations, poor infrastructure and red tape – a lack of skills appears to be the most commonly felt. The quick fix is to reward staff loyalty and entice the best available talent with higher wages, as evidenced by the 2.6% wages growth in the sector in the six months to July 2014 – compared to flat wages in other sectors. Longer term solutions are being found in Yorkshire, as our profiled businesses in this publication explain. The ability of manufacturers to continue to overcome such barriers is a crucial factor in ensuring new jobs, inward investment and opportunities continue to feed back into Yorkshire via its export routes around the world. n

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Having held key posts in several countries, it’s clear Enrico Vassallo is a a man of the world – and now he’s determined to share his world vision to meet bus maker Optare’s global aspirations. Ken Oxley reports Much travelled Enrico Vassallo has held down key positions in Australia and Brazil, as well as his native Italy. With such a cosmopolitan background, it is perhaps surprising that the suave-looking executive finds himself so at home in Yorkshire. It is just over a year since the 46-year-old took up his post as Chief Executive of bus makers Optare. Yet already he describes himself as one of the region’s biggest fans. “I’m an enthusiastic promoter of Yorkshire around the globe – I’m always telling people how beautiful the area is,” he says. “I live in Harrogate and find it wonderful there – the people are so warm and welcoming.” However, the homemade pasta-loving boss admits he’s not a huge fan of the region’s most famous delicacy. “The most difficult thing about settling here is eating Yorkshire Pudding,” he jokes, “that and getting used to the temperature. My previous job was in Brazil where it averaged 27 degrees a day.” But whatever his culinary predilections, there’s no suggestion that Enrico has bitten off more than he can chew at Optare. Indeed, his pedigree in the fields of vehicle manufacturing and international sales make him a perfect fit for the company’s global aspirations. Having worked as the Sales and Marketing Manager for Iveco trucks in Melbourne, Australia in 2004, Enrico was given his first taste of the bus industry the following year when he was appointed Iveco Irisbus Sales and Marketing Director for Africa and the Middle East. Two years later he became General Manager for Irisbus Italia, overseeing an operation employing 750 people designing and selling buses and coaches. That was followed by a stint in Brazil in 2011, where he was President of FTP Industrial, a division of Fiat Industrial, which manufactures commercial vehicle components at two

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plants and has 680 employees. Today, Optare is one of Britain’s leading bus makers with 400 employees and a turnover, last year, of £70.4m. It has a 14% share of the market and is 75% owned by Ashok Leyland, part of the Hinduja Group, which is among the top five global bus manufacturers. The Hindujas have invested heavily in Optare since taking a majority stake in 2012, consolidating all production in a new facility in Sherburn in Elmet, near Leeds. Around 90% of Optare’s supply chain is based in Britain, with 2,000 jobs created either directly or indirectly by the company. However, Enrico believes the company is now ideally placed to exploit lucrative overseas markets. It has already enjoyed some notable achievements in the export market, especially in Australia and South Africa, where its acceleration from a non-starter to a major player has been phenomenal. “In both of those countries we went from zero to capturing 10% of the market share in less than two years,” says Enrico. “The two major factors that enabled us to do that relate to the product itself and the distribution system.” What gave Optare the edge was its vehicle chassis system – known as a monocoque design – which made their buses more cost effective than those of rivals. That, according to Enrico, put Optare two

years ahead of the competition and enabled the company to gain a valuable foothold in both countries. Repeating that success in mainland Europe is one of the company’s next goals, but it’s one that is not so straight forward. The costs involved in manufacturing left-hand drive vehicles for a market where passenger capacity is much higher than in the UK must be taken into account. Enrico explains: “For vehicle manufacturers, the European market is a very different proposition. In the UK, every single bus is driving with passengers seated, so the capacity is somewhere between 60 and 70. “But in Europe passengers stand, so the capacity goes up to 110 people. “Vehicles have to be adapted and reinforced so they can carry more people, as well as drive on what I, as an Italian, would call the ‘wrong’ side of the road.” Even so, Optare has at least dipped its toes in northern Europe, with its buses operating in the Netherlands and Sweden. The next stage in the company’s expansion strategy will be to widen its reach and to further its understanding of the often complex public procurement processes involved in selling products in countries where public transport is, in the main, state owned. “It’s often a very different process from the way things are done in the UK and we have to adapt to meet those demands,” >>

The most difficult thing about settling here is eating Yorkshire Pudding – that and getting used to the temperature. My previous job was in Brazil where it averaged 27 degrees a day

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explains Enrico. “We will be attending trade shows and making connections, so we expect real growth in Europe over the next 18 months.” Meanwhile, another key area the business is focussing its attention on is the drive for greener public transport, something Enrico is passionate about. Currently, it is estimated that electric vehicles represent less than one per cent of the total UK market. However, London Mayor Boris Johnson says he wants all London single-deck buses to be zero-emission by 2020. It’s an ambitious target, but one that Optare fully supports. Indeed, four of the company’s electric buses are currently being trialled in the capital. The Optare MetroCity EVs were delivered in August and are operating between Hayes and Hounslow, partly funded by the Department for Transport’s Green Bus Fund. Closer to home, the company recently delivered a £1.5m fleet of six electric buses to the Poppleton Bar park and ride site in York, operated by First Group, and is in the process of making a further six for the scheme. And the vehicles have proven popular in Manchester and Nottingham too. For Enrico, getting behind the green revolution is a no-brainer. “The future of the industry will be based on an electrical solution,” he says. “It’s the only way to have no emissions in city centres.” He adds: “Not many people know that a company in the heart of Yorkshire is one of the leaders worldwide in terms of electric buses. “The cost of buying these buses is still expensive compared with diesel models, but running them is cheaper. “Potential customers are put off by the price, but after four or five years they pay back that initial outlay in terms of savings.” However, Enrico believes it’s not price alone that acts as a barrier to the sale of electric vehicles – what is required is a culture shift. He says: “Companies are often resistant to change. “They don’t want to leave the comfort of what they know. “They don’t know very much about electric buses and they prefer not to take any risks.”

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The future of the industry will be based on an electrical solution... not many people know that a company in the heart of Yorkshire is one of the leaders worldwide in terms of electric buses Enrico also points out that companies are aware the technology behind zero emissions public transport is evolving quickly. Because of this, he believes some are putting off a decision in the hope that prices are poised to come down sooner rather than later. Ironically, however, that hesitancy could be stifling progress. He says: “There is an awareness that the technology is getting better all the time, so naturally companies are unsure when is the right time to invest.” Whilst he acknowledges that the next decade will be critical in determining how widely the technology is adopted across the UK, he maintains those who have taken the plunge will reap the rewards soon enough. As well as the initial outlay being recovered within an estimated four to five years, Enrico points out that in terms of maintenance costs, electric vehicles are cheaper to service – and less likely to develop mechanical problems – than their diesel counterparts. This reliability was one of the reasons Optare’s Solo SRs were chosen to transport athletes around Glasgow’s Commonwealth Games village in August. But it’s not just the reliance on clean technology that sets these vehicles apart. Optare’s Versa model – which won the ‘Excellence in Technology’ category at last year’s National Transport Awards – takes the bus passenger experience to a whole new level. It features free 4G Wi-Fi, built-in USB sockets, a next stop announcement system, double glazing, and comfy seats with leather headrests. Whilst the long-term future is electric, football-mad Genoa fan Enrico hasn’t

taken his eye off the ball when it comes to other opportunities. And one of the key potential growth areas identified by the company is in the demand for double deckers, which account for 40% of the bus market. Earlier this year – after more than a decade of planning – Optare took the wraps off a completely new design for the double decker market. The result was its MetroDecker, a stainless steel framed vehicle weighing in at less than 10 tonnes, making it more fuel-efficient than its rivals. The first MetroDecker was trialled in London in May and Optare’s aim is to have the first vehicle delivered to a customer by early 2015 at the latest. The company has set its sights on selling around 100 of the buses in the next 18 months, in the UK and further afield. Enrico says: “We have worked hard to assess and evaluate every part of the vehicle to ensure it is as efficient as possible. “So we have paid particular attention to consolidating parts, reducing complexity and removing duplication.” In the second quarter of 2015 a hybrid model of the MetroDecker will be made available, followed in the fourth quarter by a full electric vehicle (EV). Enrico believes this approach will take Optare from strength to strength, repeating the success it has enjoyed in Australia and South Africa thanks to a “powerful, proactive and aggressive” strategy. He adds: “We are a local company but we have a global vision. And with that in mind, we must be brave and realise we have the capacity to be successful.” n

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MEET THE £500M DEAL MAKER >>

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The outlook remains bright for manufacturers with global aspirations, says Charles Garfit, head of manufacturing at Santander Corporate & Commercial. Here he tells BQ’s Andrew Mernin why confidence is king in the exports game and gives the inside track on the bank’s £500m lending pledge to the sector Growth-hungry manufacturers who’ve never heard of Charles Garfit may wish to take note of his name; for he could hold the keys to the funding they need to reach their global potential. Garfit was installed into a new role of head of manufacturing at Santander Corporate & Commercial in February. His appointment was bundled in with a commitment from the Spanish-owned bank to lend £500m to UK manufacturers within three years. “Manufacturing is a key driver of UK GDP and employment, and an important cornerstone of the UK economy,” the bank said at the time. Having now passed the halfway point in his first year in the role, Garfit says: “It’s been an intense six months. I can’t disclose how much we’ve lent to manufacturers so far, but I’m very happy with where we are six months into the project.” Garfit’s remit is to build relationships with manufacturers, and the bodies that support them, and is backed by a team of more than 320 regionally based ‘relationship directors’. “Internally I need to make sure we’ve got the right products and services and have our teams facing in the right direction to service the manufacturing sector,” he says. “Externally I have to make sure manufacturers are aware that we are in the market to work with them and help them grow.” In the months since leaving his previous post as head of Santander Asset Finance, Garfit has witnessed a sector in an upward spiral, despite lingering uncertainties around the world. “Manufacturing is a very exciting place to be at the moment. We’re seeing both confidence and profitability and there is a

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real belief about British manufacturing within the sector and externally.” Garfit meets BQ at the end of a busy day visiting manufacturers across Yorkshire. He reflects: “I’m greatly encouraged by the diversity of manufacturing businesses here, particularly in the advanced manufacturing sector. It’s something the region should be proud of, as it continues to be associated with quality products and quality manufacturers.” At the last official count in 2012, manufacturing accounted for 10% or £139bn of national economic output. With the industry growing continuously month-tomonth this year, this figure is likely to be even larger when 2014’s numbers are crunched. Today manufacturing makes up 54% of UK exports and directly employs 2.6 million people in the UK. But while Garfit is enthused by the positivity coursing through British manufacturing currently, he has also witnessed a worrying trend among those firms targeting exports. “My observation is a lack of confidence. I see many astute business people who become tongue-tied when you put them in front of

someone in a different jurisdiction. So giving them the confidence to do business outside of their jurisdiction is key. I also think it’s important to have somebody to hold their hand and help them through some of the more difficult aspects of international trade. But finding that person isn’t easy.” Through trade missions and its recently launched international trade portal, Santander is particularly engaged, as far as banks go, in aiding businesses in their export activity. Amid a flagging Eurozone, customers are increasingly aiming to tap into markets beyond the Continent. “We are working with customers exporting to what would normally have been associated with import. So we are seeing our customers exporting to China and into India. Of course Europe continues to be a very close trading partner despite current difficulties, and manufacturers still find it a great marketplace. But one of the great growth areas we are seeing is the Americas. We’ve got a strong presence in the US and a very strong presence in South America, and they are really starting to emerge as exciting marketplaces for our customers.” The Santander Trade Portal (www. santandertrade.com) helps small to medium businesses prepare their assault on export markets by accessing a vast database of information. Garfit says: “It gives businesses the ability to determine who’s going to buy their product, where they are and how to contact them. It also gives information about inhibiting factors and challenges. So they can then decide if a market is for them and, when they jump on the plane, they’ve got a list of

Manufacturing is a very exciting place to be at the moment. We’re seeing both confidence and profitability and there is a real belief about British manufacturing within the sector and externally

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people they can talk to and they’ve done an awful lot of groundwork before they leave the UK. “It lessens risk, but also gives businesses an opportunity to spread their wings wider than they would necessarily think to do. When you think about all the difficulties going on in Europe at the moment, this type of information enables firms to cast their net even further, perhaps to a market they wouldn’t necessarily have first thought of.”

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While clearly a helpful initiative, is it also a tool in the battle facing banks to repair reputations and restore trust of the banking sector among businesses? “I can’t speak for other banks,” says Garfit, whose employer was not among the banks bailed out by taxpayers in the recession. “But we think things like [the Trade Portal] are just the right thing to do. It’s something we’ve done since our establishment in the UK five or six years ago and it’s part of our DNA.

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It’s not just something we do just to try to please people.” He adds that Santander’s European roots also aid its customers in their pursuit of export success. “We have operations in Germany and Poland and, of course, substantial operations in Spain. Having real estate and businesses in those jurisdictions does make a difference. Having a slightly different flavour does make accessing European markets that much easier.” n

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INTERVIEW

FORGING AHEAD IN THE EXPORT MARKET Dr Stephen Price has played an important role in the resurgence of the UK’s only British-owned steel making firm. Now he has his sights set firmly on opportunities overseas. Ken Oxley reports

Despite his North East roots, a distinctive Wearside accent and an unshakable loyalty to Sunderland Football Club, Dr Stephen Price’s heart belongs to Sheffield. A keen cyclist, he waxes lyrical about the joys of taking to the hills on his bike along the desolate but beautiful Trans Pennine Trail, as well as his pride in seeing his little corner of Yorkshire beamed around the world when the Tour de France came to town in July. His greatest source of pride, however, is in the key role he has played in one of the region’s biggest success stories…the resurgence and ongoing development of the UK’s only Britishowned steel making firm. As managing director of sales at Sheffield Forgemasters, Price, 52, is leading the company’s bid to capitalise

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on emerging overseas markets. And he’s working from solid foundations. The company – which once faced a closure threat that went down to the wire – is now one of British manufacturing’s trailblazers, employing almost 800 people and enjoying annual sales revenues in excess of £110million.

What almost sank it, back in 2005, was a lack of focus by its then American owners, Atchison Casting Corporation, an organisation Price never saw eye-to-eye with and whose management of the company precipitated his departure in 2000, after five years as Technical Director. >>

During the era of American ownership there was very little spent within the organisation. I left in 2000, largely because I was pissed off with them in terms of their short-term view

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To this day, he makes no attempt to conceal his disdain for the way Atchison ran the business. He says: “During the era of American ownership there was very little spent within the organisation. They were basically raping the place for cash – and it was all going Stateside. “I left in 2000 to work for Bonds Foundry back in the North East, where I was director and general manager, largely because I was pissed off with the Americans in terms of their short-term view.” It was during Dr Price’s hiatus that things

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came to a head in Sheffield. Managing director Dr Graham Honeyman had long been at loggerheads with the owners over his preference to focus on high-tech, high-value products rather than cheaper production lines. Having been sacked in 1999 over his opposition to company policy, which made the relationship unworkable, he made a triumphant return three years later as a consultant when it was acknowledged that Atchison’s philosophy had failed. However, he had an immediate battle on his hands. The company was in dire straits and losing £750,000 a month. It took all of

Honeyman’s persuasive powers and business acumen to extract it from its parent company ahead of a deadline that would have resulted in certain closure. Having then gone on to oversee an ambitious Management Buy Out in 2005, Honeyman, now Chief Executive of the business, is rightly credited with rescuing it from the brink. Price came back into the fold as managing director at the beginning of 2006, with Forgemasters on the cusp of a new era – but whilst there was an unmistakable air of optimism about the place, it was to be far from plain sailing.

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The first challenge – following the MBO – was to undo the damage caused by the former owners. Price believes enabling employees to have a stake in the business boosted morale no end – the company is now 100% owned by its workforce, the shares split being roughly 70% management and 30% shop floor. Price says: “We spent an awful lot of time reinvesting everything back into the business. But the MBO has made a huge difference to the way people feel about their day-to-day work. “You achieve a lot more buy-in from people when they have a financial stake in the company’s success. There’s an element of goodwill you get that you wouldn’t from someone who was just getting a wage at the end of the month. “They are prepared to go the extra mile and that certainly makes life a little bit easier in terms of giving us the edge over more traditional businesses, where you wouldn’t necessarily feel a sense of ownership. “What’s interesting is that all of this goodwill exists even though we have yet to pay a dividend. Obviously there are mixed views about that, but in general people understand that we have had to re-invest in plant and equipment to get the company back to where it should be.” There have been other issues, too, that threatened to damage morale. Last December the company was ordered to pay £245,000 in fines and costs for safety failings following the death of an employee from carbon monoxide poisoning in 2008. And in 2010, a worker died after being crushed under a 75-tonne metal millhouse. An inquest jury concluded the incident was a “tragic accident.” Price is, understandably, reluctant to discuss such matters but insists progress is being made regarding health and safety. The big challenge facing Forgemasters now – and Price in particular – is to secure the long-term future of its workforce by opening up new markets. At present around 80% of earnings come from exports, with blue chip companies like Shell, Rolls-Royce, BAE and the US Navy among its clients. >>

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You achieve lot more buy-in from people when they have a financial stake in the company’s success. There’s an element of goodwill that you wouldn’t get from someone just earning a wage

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Price says: “Our products are used in a range of markets – we supply the nuclear and defence industries, marine, offshore oil and gas and renewables such as wind energy. “That’s strategic from our perspective because we don’t want all our eggs in one basket. Spreading the risk has been critical to the company’s success after the economic downturn that once again tested the nerve of senior management. Price admits: “The past two or three years have been difficult. If you go back to 2007/08, it was very much a case of not being able to make enough steel for the marketplace. Just about every possible market I could mention was at a peak. “Then we had the financial crash and you started to see the impact of that. We are just starting to see some emergence in certain market segments since that crash really.” Making savings was unavoidable but, says price, job losses were kept to a minimum. “It would be wrong to say we did not have redundancies,” he says, “but we have managed to retain most of our staff. We went from around 820 to about 780 – that’s not a huge number of people lost when you consider the size of the business. “We try to remain flexible so that if things go bad in a particular market you maintain your expertise – that way, when that market comes back you can take advantage of it. “You have to keep your talent on board – people are a major asset within Forgemasters and that has always been the case. And we are still taking on apprentices.” Indeed, for an industry that, historically, has had trouble attracting high calibre apprentices – “engineering isn’t generally seen as sexy,” admits Price – Forgemasters are bucking the trend. Typically, if the company advertises 15 places, it can expect around 300 applicants. Price’s youngest of two daughters – Jessica, aged 17 – is among this year’s batch of raw recruits, joining the commercial side of the business. His eldest – Jennifer, 22 – is pursuing a career in the beauty trade. The devoted family man, who has a degree in material sciences, a PhD in fretting corrosion and fretting fatigue and a Masters

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in business administration (MBA) to his name, says Sheffield has, over the past few years, become something of a hub for developing apprentices. “A few years back things were quite fragmented – we were relying on colleges and they weren’t always supporting the apprentices as they did not always have the right courses in place to take students in the direction we wanted,” he says. “Now it’s a lot more focused on what businesses need, rather than what the latest flavour of the month or year is.” Going forward, Price’s focus is to maintain the momentum the company is enjoying having come through the economic downturn relatively unscathed. He says: “Things are improving. We’re seeing a lot more big projects on the horizon in a

had a 70% rejection rate by his customer. “Obviously that was exceptionally high and could not be sustained. But with our help they have been able to reduce that figure to below 10% in less than four years…and the only reason it’s not less than that is because some of the other recommendations we suggested have yet to be implemented.” Another rich vein being mined by the company is in research and development – and its latest venture is producing some impressive results. Price explains: “We do a lot of R&D and we have pooled it all together to establish a new company called RD26, named after the 26 elements of the periodic table. “It has been going for about two years now and we are doing some quite innovative work. Normally, we are working with very large components and by the time you have got

we try to remain flexible so that if things go bad in a particular market you maintain your expertise – that way, when that market comes back you can take advantage of it number of sectors. The offshore oil and gas sector, for example, is starting to pick up again. Whilst price and his team are constantly looking to exploit new markets – and he is currently excited about opportunities in the Gulf of Mexico and Asia – he is all too aware that steel, as a commodity product, does not always travel well, especially when some castings can be up to 380 tonnes in weight. So in India, for example, the focus has shifted to technology transfer. Price says: “The price levels in the Indian market are exceptionally low and difficult for us to compete against, and the infrastructure, whilst it is improving, is still not brilliant. “What works best for us is to export our expertise. Effectively, we act as paid consultants and take royalties from sales. “We have had some remarkable results. One of our clients was making a product that

to the stage where you have produced and tested something, you have spent an awful lot of money. “Now we have the capability within RD26 to simulate the process from start to finish. For example, taking liquid steel from a furnace, pouring in into an ingot mould, watching how it solidifies, looking at the segregation patterns within the steel – this can all be done on software. “And when we have actually gone on to make these products and referred back to the simulation, the results have been very impressive, so we now have a very powerful tool at our disposal. “That’s an example of how we’re moving. We don’t work in what I would call the ‘clog iron market’. “We deal in a high-end, high-integrity and risk-averse environment. That’s why steel workers in Sheffield won’t become

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a dying breed.” n

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in association with

OVERCOMING THE HURDLES The issue: What barriers currently exist for manufacturers in Yorkshire that are preventing them from globalising and how can we tackle these? Delegates initially focused on some of the challenges preventing Yorkshire manufacturers achieving global success. Eric Hawthorn suggested conditions at home needed to improve to ease access to export routes. He explained that Yorkshire businesses needed a faster route to Manchester Airport, the closest long-haul flight hub, and backed the proposed ‘HS3’ high speed link from Leeds to Manchester. “Just think what a functioning transport system connecting Leeds, Sheffield and Manchester would do for us internationally and in terms of inward investment. We’d be selling the whole region and its strengths,” he said. Mike Maddock agreed: “If you had a PLC in

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which all the departments were competing against each other, it wouldn’t work. If you’re going to have this idea of UK PLC, you’ve got to invest in it.” Colin Glass: “The HS3 link is very important because, like it or not, Manchester is the international airport but it’s a pain to get there, so I think that link is very important.” Mike Pickles: “I couldn’t care less. The big issue is driving my business forward and it’s not worrying whether there’s a link here, there and everywhere. To me it’s just how I get more business.” Eric Hawthorn: “The point of connecting the region is how it will impact on bringing inward investment in.” Mike Maddock: “It’s about creating a strong platform so that we can trade with

TAKING PART Mike Pickles, owner, Really Useful Products Chris Lord, CEO, Bartuf Group Eric Hawthorn, founder, Radio Design Chris Black, managing director, Sound Leisure Enrico Vassallo, chief executive, Optare Group Colin Glass, founding partner, WGN / non-exec director of Surgical Innovations (amongst other firms) Mike Maddock, co-owner, Performance Engineered Solutions (PES) Stephen Foster, business development director, Mazars Neil Williams, regional director, Santander Corporate and Commercial Banking Charles Garfit, head of manufacturing, Santander Corporate and Commercial Banking In the chair: Caroline Theobald, for BQ Taking notes: Andrew Mernin, editor, BQ Venue: The New Ellington Hotel, Leeds

BQ is highly regarded as a leading independent commentator on business issues, many of which have a bearing on the current and future success of the region’s business economy. BQ Live is a series of informative debates designed to further contribute to the success and prosperity of our regional economy through the debate, discussion and feedback of a range of key business topics and issues.

the rest of the world effectively.” Chris Lord added that an element of tribalism might hinder the notion of an interconnected North that trades with the world. “If you look at the South, nobody gives a damn whether you live in Kent, Surrey or wherever because you just bleed into it. There is without any doubt whatsoever, this idea that ‘you’re from the other side of the hill and I’m from this side’. Another challenge, said Eric Hawthorn, is the time it takes to crack a new market against the size of support funding available to do so. He said: “My business can’t just pick up business from the internet as it’s business to business and I’m selling to global mobile phone companies. It’s a really slow process to enter new markets. It’s taken five years

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to make any progress in India, for example. So accessing the world is really hard but the financial support we can get from government for exporting is insufficient. So my challenge is how do I take my business to the world more quickly?” One of the main inhibitors to exporting Charles Garfit has witnessed among businesses is a lack of confidence. He said: “It’s all about giving people the confidence to actually go out there and do something. You can take the most erudite business people who trade extensively around the UK, and sit them down in front of somebody from overseas and it all goes horribly to pieces. So I think we can all help give people the confidence they need to trade internationally.” Eric Hawthorn suggested export networks, such as that run by Leeds City Region Local Enterprise Partnership, are a great source of market confidence and insight. Business leaders trading globally share their expertise with their peers and help others tap into territories they have already broken into. “If you’ve got experience of a particular country, and you had advisers that worked for you, you could introduce other businesses to the same advisers – which government bodies are not allowed to do.” Charles Garfit: “I’m a great believer that stories really do educate. I think when you understand what others have been through to get to where they are, and some of the horrors as well as the things that have gone wonderfully well, that is invaluable.” Neil Williams asked how businesses should assess which markets to target their products at in the first place. Mike Pickles: “It’s a simple principle of low hanging fruit. It can be any product from buses to jukeboxes to plastic boxes to surgical implements; it is simply about where the marketplace for your product is. I find it’s easy by just following the money. Which is the biggest GDP? Which is the most likely to want your product? Of course I do visit the country to get an understanding of what opportunities exist. But we find the easiest way to break into a new market is through international trade exhibitions.” Pickles also highlighted why a patient approach to exports is essential. “It’s all got >>

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Exhibitions are the best way to show off your products and you never know who might walk past. You might have been knocking on Marks & Spencer’s doors for years and then someone comes to your stall who’s a buyer for M&S to be long term so you are either into exports and building relationships or you’re not. I’ve just designed a product for Japan, which probably cost me £60,000 just to do, but why not spend that money? It’s all about the opportunity of going there and doing it and gaining the experience of that market.” Chris Black: “I’m trying to get into America at the moment but we first had to have our products tested to certain standards and I’m now waiting for inspectors to come to my factory. It’s cost me about £35,000 so far and I haven’t sent a single machine out there yet.” Mike Pickles: “But it’s all part of the business mix isn’t it? It’s all about allocating resource to build the business and it is about getting critical mass. As an example, I went to visit the largest wholesaler in the UK and they said ‘no’

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to me for three or four years. I then went to the same business in Belgium and the Belgian operation told the British operation to buy from me. So you’ve got to be tenacious. It’s about building a business for the long term and being committed. Mike Maddock: “But do you think we’ve lost that level of tenacity as a country? We are a very different breed from what’s out there culturally. I had a really interesting point made to me by a Canadian investor. He said he loved the UK because it’s the most innovative place in the world, but even better, we fail to invest enough. He said ‘you invest enough to fail and then we buy it out’. And that shouldn’t be the case. We should be driving our own innovations and be more risk averse to take the risk to grow.

It’s about having the right attitude.” At this point focus turned to practical ways manufacturers can boost exports. Chris Lord explained why trade shows could be so beneficial: “In the early days, the first exhibition I did was EuroShop, one of the world’s biggest retail trade fairs. Our exhibition stand was in a trailer behind a Range Rover and we drove it all the way to Düsseldorf. We came back with 90 enquiries from 40 countries. Exhibitions are the best way to show off your products and you never know who might walk past. You might have been knocking on Marks & Spencer’s doors for years and then someone comes to your stall who’s a buyer for M&S. “But in the UK we don’t seem to generate interest from enough foreign buyers to come

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One of my main concerns is the quality of skills available. Recently I was looking for a plant director – I had five candidates for the role who were close to their pension age. I want someone who’s fortysomething with high motivation... to shows in Birmingham or London.” Chris Black: “In our industry our biggest show of the year is in London and people fly in from all over. The problem we’ve got is trying to get them out of London. I’d love shows to happen here or in Birmingham but people want to go to London as it’s seen internationally as the place to be and they also often want to bring their families along for a bit of a holiday.” Mike Pickles: “If you look at the Düsseldorf Exhibition Centre it’s amazing and is a different world to anything we’ve got here, with every single hall sold out”. Inevitably, since manufacturing is suffering major skills shortages across numerous disciplines, the debate moved on to the issue of talent and its connection to global success. Enrico Vassallo: “One of my main concerns

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is the quality of skills available. If I’m looking for a finance director I can get one and there’ll be a long line of suitable people. But recently I was looking for a plant director, a new quality director and people for our engineering department. I was really struggling to get the right person. I had five candidates for the plant director role who were close to their pension age. No disrespect to their age, but I want someone who’s fortysomething with high motivation who can progress their career with us. I’m often going to universities for engineers and trying to promote the brand and what it means to work in manufacturing. I really need to bring in people who have the right level of passion to do the job. Although I’m really aiming for success abroad, I need to concentrate on success in the UK first

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and I need the right level of skills to do that otherwise I’m in trouble.” Mike Pickles: “For me it’s about selling everybody the concept of longer-term career growth and development and being in line with the customer.” Enrico Vassallo: “There is a gap between the generation of growth 40 years ago and the new one that is in the universities now. So the struggle is to get the 40-year-old manager who is able to meet the challenge and move forward with us.” Chris Lord: “The problem is that you have academics who go to university then go back into university so they never experience the real world. The necessity is someone in universities who can say ‘we’ve got this manufacturer, here’s an opportunity to have a look round the factory’, and go forward from there.” Mike Maddock: “Not only do we need to engage with universities, we need to challenge them because what’s coming out of them at the moment is no good for us. We are getting qualified mechanical engineers that have never manufactured and have no manufacturing skills. How can you design something if you can’t build it? They have no skills so we have to take them back to >>

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The majority of businesses in the UK are funded more on shortterm facilities with bank lending and supplier credit. If you compare that to German manufacturers of a similar size, they are taking a much longer-term view square one. They also come out with the attitude that they’re the finished product. It took us a year to get a senior designer, after 400 CVs and 35 interviews, because engineers are specialising far too quickly within a given field. We ask simple engineering questions to people who have seven years of experience in engineering and they can’t answer them.” He added that the recently launched University Technical Colleges (UTCs) – secondary school education facilities sponsored by universities and backed by business – might alleviate the skills situation. Chris Black: “With UTCs, you’ve also got people at the top pushing young people into a job or apprenticeship, compared to normal schools pushing towards A-levels and university.” Colin Glass: “When we took on apprentices we got parents in as well. It’s about getting into the schools to make them understand that going into manufacturing and engineering is just as important as being accountants, lawyers and bankers”. Mike Maddock: “Increasingly, people are taking apprenticeships instead of going to universities. So those people who have

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natural skills and abilities are now being pushed out of the apprenticeships system and have nothing. So it’s also about picking them up and pulling them in.” A crucial issue facing manufacturers alongside skills, is access to finance. David Smithson shared his thoughts on the current state of play gained through his experiences working with businesses across Yorkshire: “Manufacturing businesses are capital intensive, with high fixed costs and labour costs. It’s become apparent that the majority of businesses in the UK are funded more on short-term facilities with bank lending and supplier credit. If you compare that to German manufacturers of a similar size, they are taking a much longer-term view of the business and sourcing funding for the medium and longer term. More of them are happy to fund early-stage losses and firms in Germany have come out of the recession far quicker than UK manufacturing businesses have.” Eric Hawthorn explained that, while his firm uses an element of invoice factoring finance, larger funding options for growth remain in short supply. “When you start to look at the cost for me

to develop my business internationally and really start to push the boat out and grow internationally, it’s expensive. So I have to look at ways to fund that and there’s not an awful lot of it about. “I know eventually we’ll have to set something up in America and it’s going to be a big investment. So where do I find the funding to support that sort of rapid international growth?” Colin Glass suggested an approach to the investment organisation Finance Yorkshire, while Mike Pickles explained one of the clever ways he has overcome a lack of available finance. He said: “We use machines from Austria and the Austrian government actually has an export guarantee scheme where they will fund Austrian exports. So when I’m looking to expand into America, I can use the Austrian government finance to fund the equipment for the US.” Neil Williams said “Supplier Payment Funding” is an emerging mode of finance in the UK that could be used to help working capital alongside mainstream growth funding. Santander Corporate bank currently provides this. For example, if you normally pay your

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suppliers on day 30, we can pay your suppliers on day one which may help you to obtain a discount from them and also ensure that they always receive prompt payment which can also ease their cash flow needs. We have then effectively stepped in to the shoes of your supplier and you pay us based upon your credit terms which can be extended by mutual agreement.” Charles Garfit: “We’ve actually taken supplier payments and wrapped them together with invoice discounting and turned working capital into a profit centre in some cases.” Meanwhile, Mike Pickles said venture capital could be used to leverage global growth successfully by limiting equity to operations in a particular territory. “The opportunities for me in America could be enormous. So if I had an American business, what’s wrong with me giving some of my equity away just in America? If you want to fund expansion into America, why not share that risk?” Eric Hawthorn disagreed with this approach which he believed could cause problems years down the line when returns on investment are sought. Then Colin Glass reminded delegates of the gains to be had by listing on the AIM market. “This is the first time in 10 years that the AIM market has started to come back again. I know we all have different views about releasing equity, but if you look around there have been some enormous valuations on the back of it. It’s not for everybody but we are now seeing a repeat of what was happening 10 or 12 years ago.” As the debate drew to a close, delegates considered what advice they would give to budding exporters or manufacturers looking to expand into a new market. Eric Hawthorne repeated his earlier call for business leaders to look up the Leeds City Region LEP’s export network, which is run through Chamber International. “It’s a way of helping each other,” he said. Mike Pickles recommended talking to UK Trade and Investment (UKTI), while Mike Maddock said the British embassies abroad offered valuable assistance. He also advised manufacturers to: “Make sure you really keep a focus on technology and

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align the technology to the capability of the workforce that’s available to you. It’s really important to keep abreast of what’s out there.” Colin Glass: “I think all companies should be looking to innovate new products or new services into new markets.” Enrico Vassallo: “We have plenty of opportunities out there and lots of support, so we need to focus on resources, the quality of our products and the quality of our skills

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and build businesses for the future.” David Smithson: “My advice is for businesses to look at more long-term funding strategies.” Neil Williams: “Don’t be afraid of banks and don’t be afraid to make some mistakes as there is a lot of help and support around from people who tried things that you’re trying to do.” Chris Black: “My advice is to just get on and do it. Sometimes people just need to get on a plane and go and talk to people.” n

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JIVE TALKING WITH THE JUKEBOX KING SPECIAL REPORT | AUTUMN 14

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Innovation and new technologies have ensured the hits keep coming for jukebox maker Sound Leisure despite tough conditions. Andrew Mernin finds out how the family firm changed the record on a dying trade to become a flourishing Yorkshire exporter

In a darkened corner of Sound Leisure’s factory stands the lathe that built the bouncing bomb. Small holes peppering a giant wheel show where the Dam Busters’ weaponry was strapped in place. It came into the company’s hands after it acquired a local firm and managing director Chris Black says his team don’t quite know what to do with it yet. But it’s not entirely redundant, with a small section being used to make new feet for the firm’s globally successful jukeboxes. And it’s not just here where the old and the new are entwined as one under Sound Leisure’s roof. “When I come to work I never know whether I’ll be talking 1950s or 2030, looking at the next big thing in the industry,” says Black whose father, wife and brother all work in the business. The company makes 1940s and 50s style jukeboxes which sell around the world, and is one of two true traditional juke box manufacturers left in the world, alongside a firm in the US. Its 110-strong team is a mix of staff who’ve been with the company since its early days in the late 70s, and bright young minds working in areas like software, electronics and graphic design. While the body of the products are made as they’ve always been – drawing on traditional skills like French polishing and pattern design – the innovative technology within is enabling the business to expand into broadening markets. “A lot of what we do is looking backwards. We’re selling products that tap into what used to be popular, but at the same time we’re looking forward to bring them into

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the modern world. So with the classic jukeboxes, we’re using the iconic designs of the 40s and 50s that people love, but we’re putting modern technology into them so they’re still usable and people can have them in their homes.” Sound Leisure also produces Britain’s bestselling commercial jukebox. Having navigated through smoking bans and recession, it has revolutionised its pub-facing business by developing new digital based systems. Mobile apps, cloud-based content systems and social media, have all been embraced by the firm’s newly developed range of machines for public places. Recent years have also seen the company diversify into children’s play equipment for commercial environments, interactive sound installations, bespoke woodwork and certain projects which require a bit of everything in Sound Leisure’s skill set. The company was founded by Chris Black’s father Alan and his business partner Eddie Moss in 1978. It was originally set up to repair jukeboxes being imported into the UK from Germany and America.

In-house manufacturing soon followed, and by the mid-90s the firm’s jukeboxes were part of the furniture in pubs across the country. CDs gradually replaced vinyl and, until the smoking ban came in in 2007, the business was operating at around the £10m turnover mark and thriving. “We used to be about 90% pub-based, but we’re now probably at about 45%. For four years after the smoking ban it was like slowly trying to turn around a big liner. The main money earner was slowing down so we had to speed up our other divisions and this year for the first time we’re seeing a real uplift. Those other divisions which previously were the cream on the top, we are now depending on them and they’re growing at a strong rate.” The firm is currently turning over around £6m a year, but expects around 20% growth in annual sales by the end of 2014. Driving this growth in the UK and globally, is the ongoing surge in home entertainment spending. “More and more people are building entertainment centres at home. They are putting bars in and building man caves and the jukebox is the last piece of the jigsaw. More people are ordering jukeboxes for their big open-plan kitchens, and others so they c an store their CDs. A lot of our clientele are in their 40s, 50s and 60s and a jukebox may be something they’ve always wanted. People are ordering them in all different colours and we’ve also developed slim line versions for people with less space at home.” “Renewed appetite for vinyl is also generating new business,” adds Black. “In terms of exports, we’re still seeing >>

More and more people are building entertainment centres at home. They are putting bars in and building man caves and the jukebox is the last piece of the jigsaw

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the biggest growth on the classic side and if someone orders 10 jukeboxes I can send them anywhere with no problems. But if I’m exporting a digital system to France, I would have to pull French content onto it and make sure licences were in place. So there’s a lot more work involved in sending a digital machine abroad,” says Black. As well as making jukeboxes, Sound Leisure continues to carry out repairs. And, having been in business since 1978, it is beginning to take some machines which it built decades ago in for their first service. “Jukeboxes are being passed down from generation to generation. We hear all sorts of stories and they’ve become a real talking point in people’s homes. If people have parties, nearly every photo has the jukebox somewhere in the background. The jukebox is the star of the show.” The digital market, meanwhile, is increasingly opening up for the company as it unleashes a number of new innovations into pubs. While a traditional vinyl machine could hold around 200 tracks, and a CD one about 2,000,

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its latest digital model can effectively hold seven million+ tracks. With every chart track ever recorded since 1952 to the present day – amounting to somewhere in the region of 30,000 tracks – the machines also enable users to access the approximate million tracks available on music streaming sites. Sound Leisure is also trialling an app function which allows people to play jukebox tracks in pubs via their mobile phones. And it doesn’t stop there. “If I like the music in a particular pub and I’m at home, I can login through an app and there will be a radio

station based on what the pub is playing. So it’s an interactive system.” Such innovations are a far cry from Sound Leisure’s early experiences with downloadable music. “We started developing digital systems in the background, but the market wasn’t really ready for it until 10 years later,” says Black. “We developed the world’s first digital jukebox, which was video-based. The music company sent all the videos via a satellite to the jukebox, with each pub having a satellite dish.” Today, with an R&D team and software

Jukeboxes are being passed down from generation to generation...they’ve become a real talking point in people’s homes. If people have parties, nearly every photo has the jukebox in the background...it’s the star of the show

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developers based at the factory, Sound Leisure continues to evolve the traditional jukebox. Innovations include the use of LED lighting, enabling users to set the mood by changing the colour of their jukebox, and the integration of Bluetooth technology to play songs for mobile devices and computers, as well as vinyl and CDs. Alongside its 1940s round top style model – which is based on the famous Wurlitzer brand – the company has also developed a 1950s model akin to the type the Fonz might have banged his fists on in TV land. “We took a call from Doc Martens who wanted us to source some 1950s jukeboxes to go in stores around the world. We explained that an original jukebox would fall to pieces if it was put into a shop, just as a classic car wouldn’t last too long if you tore it up and down the motorway. So instead we found an old 1950s jukebox, reverse engineered it and remade our own version to match it. And it’s now been sent all over the world including to Morocco and Australia as well as London.” Sound Leisure is also working with the

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retro food firm Ed’s Easy Diner across the UK on a contract which might also have international potential. The fast-growing chain has aspirations to expand overseas and could take Sound Leisure with it, Black says. “They were using the old dime selectors which allowed diners to choose songs while they had their burgers. But they were getting sparser by the year so we made casts to match them and our electronics guys put digital technology into them. As far as I’m concerned it’s exactly the same as the vinyl one that would have been in diners 70 years ago.” The diversified nature of Sound Leisure today is highlighted on a quick tour of its factory. Two giant toy soldiers tower over one area of the plant. These will emit Christmas songs in a shopping centre this festive season. Nearby stands a six foot replica of a double-decker bus. This, explains black, is the latest example of Sound Leisure’s involvement in children’s interactive rides and amusements. In another corner, a small army of dustbin lidshaped speakers is rigged up to an amplifier.

This will be used to pipe sounds of a bombing raid into an historic site where children will learn interactively about the World War II. Elsewhere rooms dedicated to woodwork and metalwork perhaps look as they would have done 36 years ago when the company was first formed. But in another room we are back in 2014, with flat screens spread across the walls and rows of digital jukeboxes being uploaded with information before they are shipped to out to the world. Black says: “We are always improving our products and changing to make things better. We have the skill set of people who designed jukeboxes in the first place who are still here today, which is invaluable, but we also recognise that we need the new blood to come through as well. “We are on a constant innovation cycle and nothing stays the same for long.” And that cycle looks certain to keep on spinning for years to come, as the company continues to find new markets while keeping alive the old ones that made it great. n

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REVIVING GROWTH FROM WITHIN Mike Josypenko, director of special projects at the Institute of Export, on the driving forces behind the success of Yorkshire’s makers overseas Manufacturing in Yorkshire and in the rest of the United Kingdom is on a growth spurt – and in a strong position to harness the wealth of opportunities in international trade through exporting. Figures published earlier this year by Employers’ Association EEF revealed that one in six UK-based manufacturers surveyed had brought back production to the UK in the past three years – and a further 6% of respondents reported that they are planning to “reshore” in the next three years. This trend is set to continue further with the Government’s commitment to support the return of manufacturing to the UK through its “Reshore UK” programme, a one-stop-shop service intended to bring together sources of help for UK companies from various agencies. One of the main drivers for bringing back manufacturing to the UK is cost, with wage levels in China and other low cost manufacturing centres rising steadily, and

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approaching those in some European states. The decision, however, is not only financial. Many manufacturers are increasingly finding that they can produce goods at comparable price levels, but can offer a much higher level of customer service and agile response, which is increasingly valued by their clients, and allows them to take advantage of new business opportunities demanding shorter product development, delivery and production lead times. UK production can be boosted by a greater emphasis on exports, as the ability to respond quickly and flexibly to client needs is also important when entering overseas markets. Many overseas buyers have reduced levels of inventory in recent years, in response to economic conditions, and a fast response and flexible attitude to order quantities and delivery schedules can be a decisive factor in winning orders. The Institute of Export offers accredited

training courses in export, import and International Trade. Its free export helpline provides advice and practical tips on a range of international trading issues. Visit www.ioe.org.uk or call 01733 404 400 for more information.

One in six UK-based manufacturers surveyed has brought back production to the UK in the past three years MANUFACTURERS GOING GLOBAL

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CASE STUDY

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INTERVIEW

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NEW VISITOR CENTRE WILL BOOST TRADE Healthcare technology maker Brandon Medical is targeting further export and employment growth after opening a £2m state-of-the-art new facility that has more than doubled its production capacity. Andrew Mernin reports on the company’s global progress Brandon Medical’s new premises in Morley, Leeds, were opened by HRH the Princess Royal in July. The company, which develops manufactures and sells an innovative range of technically-advanced medical lighting, video and audio-video systems, earns around £2m of its annual £5.5m turnover from its export markets The business has ambitions to grow its overseas sales, driven by a raft of new

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innovative products and the extra capacity at its new base. Brandon’s key export markets include Europe, the Middle East, Asia Pacific, Latin America and Africa, and it is investing heavily to win additional business from new and existing customers. Brandon is the UK’s leading supplier of medical lighting systems but has a strong exporting history dating back to the 1960s, when it sold products originally developed for the NHS

to Commonwealth countries and traditional British overseas markets such as the Middle East and Malaysia. Ironically, in the early days Brandon found the NHS difficult to break into and exporting was an easier method of growing the business. Managing director Graeme Hall, who was part of the team that took over the company in 1993, says: “When I came to Brandon in the ’90s, we had just had the Gulf War, but the >>

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INTERVIEW

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INTERVIEW

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Middle East was still a reasonably good market, although not as good as it had been. “We expanded our sales into places in Asia that weren’t in the Commonwealth, like Indonesia and Thailand, and put a lot of effort into expanding the Asia Pacific region. After that, we expanded into Eastern Europe and Latin America which were virgin markets for Brandon.” In the last five years, the company has targeted further sales in the Asia Pacific and Latin American regions and pushed into Africa and the Indian subcontinent. The US and Canada are part of Brandon’s long-term export plans, along with China – both traditionally difficult export markets for UK healthcare SMEs due to their lengthy approvals and registration requirements. Malaysia and Korea, along with its traditional strong Middle East markets, are currently the company’s biggest export customers.

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Hall says: “The major political events in the Middle East region have created both threats and opportunities. Despite the upheavals, there is a lot of business in the region and we intend to invest even more effort here during the next 18 months. “We’re really just coming out of the recession and we export about a third of what we make. Two-thirds is still the UK market, which has been depressed for the last two or three years in the austerity years but we’ve managed to maintain our turnover in a smaller market. “We started building our exports up in the recession much more aggressively. However you look at it, the UK is always going to be a small market, and for us to grow substantially we need to sell more around the world. “It has been a worldwide recession, but the global market available for what we do is just so vast, it’s just huge. So you need to get your share of it.”

The new facility in Morley will play a key role in Brandon’s growth plans. The firm currently employs 50 staff and is recruiting four more, although the new premises has capacity for around 150 people. Once the building is filled, Hall forecasts that Brandon could effectively increase its turnover fivefold but the immediate aim is to return to the prerecession 20% annual growth rate, which will double its turnover every three years or so. He is confident of growth in home and overseas markets in 2015, with particularly good prospects from the Asia Pacific and Latin American regions. New products are helping to fuel Brandon’s upward trajectory. In addition to being the biggest supplier of medical lighting to GPs in the UK, the firm is also the top supplier in its sector to the veterinary industry, where it is also aiming to grow its international sales. Hall says: “Innovation is core to what we

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do. We are a much smaller company than our competitors but we offer more innovative products, with unique user benefits and high tech integration into digital operating theatres. If you compared us to the car industry, we are developing the sports cars and new electric vehicles compared to the Ford Mondeos.” Brandon’s research and development is carried out at its Leeds headquarters, where it employs an R&D team of six full-time and two part-time staff. It works closely with the top University Hospitals with research focusing on new techniques to improve the way surgeons see during surgery, to identify diseased tissue clearly and even to see through the body. The company successfully obtained a one million euro research grant from the EU to lead a major project into new lighting technology, in partnership with five other organisations including Cambridge-based technology specialists Sagentia and TWI, plus partners in Ireland and Spain. Project Hercules led to the development of a new high colour, HD LED lighting technology from Brandon’s existing ‘Fat Beam’, which will see its first commercial use in Brandon’s Quasar eLite operating theatre lights. “This is by far the best performing operating table lamp you can buy anywhere in the world. It gives fantastic colour rendition and it has a unique system for balancing the red light/red tissue more accurately,” says Hall. Other new products coming on stream include the Astra Max HD LED lighting system, which Brandon has developed to beat rival products from the Far East both on price and performance, again harnessing the latest technology. It’s successes like these that have helped Brandon to win the Queen’s Award, the European Business Awards, the Asian Business

Development Network and the Chamber of Commerce Awards – four times – for its work in innovation. The new building in Leeds will allow Brandon not only to increase its capacity but also showcase its developments to domestic and international customers. Hall says: “We’ve built a very nice visitor centre with an operating room in it, an intensive care bed, and a GP treatment area. So we have basically got a full range of demonstration facilities to show both UK and export markets. “Separate to that we’ve got a training centre, for sales staff and engineers, with a training workshop where they can actually install the product and we can put problems on them and they can try and solve them. “We have designed and delivered most of the new facilities for training surgeons in the UK and we design and build the latest digital operating rooms.” Brandon also plans to build flat pack operating theatres to be shipped to war zones. “They are going to parts of the world where there are some clever people but there’s no infrastructure for them to be able to build these things on their own,” says Hall. “We can not only provide them with the product and the training of how to do it, we are also creating jobs in those countries. So hopefully we can help stabilise those environments. We’ve partnered with another company which works in those regions to develop that.” These innovations have won contracts for Brandon with prestigious UK hospitals as well as overseas clients. It has worked on projects for Great Ormond Street, Alderhey, St Mary’s Hospital at Paddington and Guys, and here in Yorkshire, its projects include work with hospitals in Leeds, Bradford, Wakefield and Huddersfield.

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As a UK company, Brandon has a head start because UK medical equipment is ranked as the best in the world alongside products made in Germany and the US. Its Leeds base is also crucial. “In Leeds, we have one of the biggest clusters of medical companies in the country,” says Hall. “It is a well networked industry and we are good at working together to help each other. There’s also excellent support from Medilink, our regional association, from the largest hospital trusts in the UK at Leeds and Sheffield, seven universities, and we also have the major NHS departments based in Leeds at Quarry House, and NHS Supplies in Normanton. There’s a unique collection of industry, academia and the NHS in this area and a high degree of connectivity.” The major challenge now for Brandon is recruiting the staff it needs to continue its stellar growth. The company is keen to employ apprentices and graduate trainees – if it can find the calibre of people it needs to train the next generation of technicians. However, it is struggling to find recruits with the relevant skill sets. The issue has led the company to look overseas for talent, where Hall says it has found some “very good people” from Poland and Romania. “We work very, very hard to select people,” he says. “They probably haven’t got the skills that we need but they are clever and well motivated and trainable. “The people who would traditionally have become technicians are at the moment going to university. It doesn’t mean they’re any cleverer, but it means they are in an inappropriate place.” n

We’ve built a very nice visitor centre with an operating room in it, an intensive care bed, and a GP treatment area. So we have basically got a full range of demonstration facilities to show both UK and export markets

MANUFACTURERS GOING GLOBAL

SPECIAL REPORT | AUTUMN 14

CASE STUDY

AUTUMN 14

CLOSER TO 2020 VISION Yorkshire’s manufacturers must explore the full potential of emerging markets, argues EEF’s Andy Tuscher Manufacturing is shifting up a gear. Postrecession, confidence is high and companies are looking to grow. Across the region it is starting to feel like we’re already in a very different place to just a couple of years ago. This renewed optimism is starting to translate into the search for new markets – potentially taking us a step closer to achieving the Chancellor’s aim of doubling exports by 2020. And despite hurdles, such as the strong pound and an increasingly uncertain overseas market, it’s still fair to say that manufacturers are beginning to implement sophisticated strategies to boost exports. At the moment, the developed economies – lead by the USA - remain the top destination for UK goods. However, emerging markets are growing in importance with China moving from being the UK’s 11th largest market in 2007 to 7th last year. In fact, half of manufacturers’ priority target markets are emerging markets with Brazil leading the way. The World Cup nation is on the export hit list for almost a third of companies. What is clear is that manufacturers are becoming bigger and bolder in their export plans. Whilst the Eurozone remained the top destination last year, almost two thirds of companies are planning to increase their involvement in Asia, just over half in the Middle East and just over a third in both Africa and South America. Many are getting on the front foot by proactively targeting markets rather than reacting to potential opportunities. Others are building greater resilience by expanding the number and range of markets they sell to. However, this takes effort. The challenge is not just to secure one order, but to build sustained relationships with overseas customers. This approach takes longer to deliver results,

SPECIAL REPORT | AUTUMN 14

but will go further in helping the UK to sustain a stronger and more balanced recovery. This is why companies need support and why it’s worrying that there is an ongoing lack of awareness of the breadth of expertise and help available. The fact is that when firms do make use of Government support they rate it very highly. If we are to see exports rocket, the Government has to start shouting about the benefits of UKTI and driving more exporthungry firms through its doors. There’s also plenty of free guidance from the

banks, as well as organisations like my own, designed to take companies through the process of entering new markets and giving them tips to consider. There are no hard and fast rules about the best way to enter new markets. But what is clear is that it demands considerable time and commitment. However, those companies who generate results are ultimately rewarded with better performance and a diverse and resilient customer base. It is encouraging to see an increasing appetite amongst manufacturers to invest, export and grow their international footprint. We want to see the sector at the forefront of an export-led recovery and happily it appears that manufacturers are up to the challenge. Our region has a key role to play too. There’s scope for more of our firms to realise the benefits of exporting and, especially, of taking their goods further afield to faster growing emerging market economies where the export sales potential is even greater. And yes, it does require a lot of preparation and know-how, but with so much help around the good news for Yorkshire companies is that they don’t have to embark on their export journey alone. n Andy Tuscher is Yorkshire & Humber region director at EEF, the manufacturers’ organisation.

There are no hard and fast rules about the best way to enter new markets. But what is clear is that it demands considerable time and commitment

MANUFACTURERS GOING GLOBAL

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