The Manufacturer - December 2010 by The Manufacturer

www.themanufacturer.com December 2010 Vol 13 Issue 12

Supporting Manufacturing

Are bigger companies vital to the success of UK industry?

Fighting for Jobs AND

Safer & Healthier Workplaces

Interview Andrew Churchill

Managing director, JJ Churchill Engineering

Regional focus

Collaboration key to Midlandsâ&#x20AC;&#x2122; revival

Finance

Access to capital roundtable

www.unitetheunion.org

Risk management Special report by Zurich

Tur pag n the fur e for det ther ail s

Editor’s comment

Growth the driver as industry basks in the limelight At the CBI manufacturing dinner on November 29, outgoing director-general Richard Lambert set the tone. “For the first time in 30 years, UK manufacturing is leading the economic recovery.” He was referring specifically to the Office for Budget Responsibility’s November Economic Outlook, which predicted medium term growth to accelerate to 2.6% in 2012, and 2.9% in 2013. The crucial line for manufacturers was that the OBR economists “continue to expect a rebalancing toward business investment and net trade, with private consumption growth more subdued.” Then on Dec 1, the Purchasing Managers Index emphasised this, showing manufacturing at a 16-year high as exports surged. Of particular importance was hiring, with employment rising at the highest rate since records began in 1992. And EEF/BDO’s Q4 Manufacturing Outlook confirmed that industry is powering ahead, showing strong positive output and order balances for the third quarter running. Growth and trade are the keystones of this recovery, but with looming public sector cuts so much expectation rests on the shoulders of manufacturers – surely policymakers have taken notice? Growth is the theme of this edition of TM. A report by EEF and Royal Bank of Scotland, “The Shape of British Industry”, identifies the importance of large companies to the UK. They anchor supply chains and drive cooperation within them and it says, for example, large manufacturers are twice as likely to collaborate fully on product development and forward planning with their customers and suppliers as small companies. BDO and corporate clients discuss the options for accessing finance for growth in a constantly repricing capital market – the signs are that there are more choices for corporate funding and credit conditions are easing (page 56). And Lloyds Banking Group and TM will conduct a survey of manufacturing companies in January to discern whether growth in 2011 will drive changes to existing funding needs. The Manufacturing Framework is due out on December 6. Not a true strategy, this will lay guidelines for how the Government plans to assist companies to grow, compete and increase exports. While it was feared the document would be lightweight, my spies tell me it is in fact quite impressive. Committing to a more long term regulatory and taxation structure, beyond just a five-year parliamentary term, and demonstrating that policy will be made with BIS joined-up with Treasury, are two main points that we hope the Framework will reveal, and deliver. Will Stirling, The Manufacturer The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing. In order to receive your monthly copy of TheManufacturer kindly email c.woollard@sayonemedia.com, telephone 01603 671300 or write to the address below. Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors. Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

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News and features 04 News

Manufacturing news

10 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

12 The big picture

Why it’s still good to talk IfM’s Amy Mokady says communicating with customers is at the base of a good go-to-market strategy

13 Economics

A framework on which to build Steve Radley discusses why size matters in UK manufacturing and what the Government can do to help

14 The legal low down No questions asked

A Q&A with Thomas Eggar on pre-employment health questionnaires under the Equality Act

15 Business as unusual Giving back

Anand Sharma explains says the sky is the limit for charitable organisations that focus on efficiency and process thinking

16 Lead story

UK business must go large to exploit the recovery

A report by EEF identifies the challenges manufacturing is facing and explains how the sector can grow. Roberto Priolo investigates

22 Interview

A family affair Edward Machin meets Andrew Churchill, MD of engine components manufacturer JJ Churchill Engineering, and hears about his plans to grow the company

26 How do they make that?

The eight stages behind the construction of a glass-made rendition of an F1 racing car

28 Special feature TM Awards

A night to remember, as Castle are crowned kings Roberto Priolo reports on a morale boosting night at last month’s sellout The Manufacturer of the Year Awards ceremony

31 TM Conference write-up Masters of our fate

Jane Gray reflects on the presentations and discussion at The Manufacturer Directors Conference 2010

32 Regional Focus The Midlands

62 2

UK manufacturing’s spiritual home bounces back from the downturn

38 Leadership and lean

The dangers of Lean = Mean Anthony Bennett talks about the risks of a short-term, workforcedisrespecting approach to lean

Contents EEF Insight 41

Edward Machin investigates the range of occupational health & safety courses at Woodland Grange, an EEF training centre

Sustainable manufacturing 44 Accounting for energy

Operations, maintenance 76 and repair Slaying the downtime dragon

New software, developed by a university team, might be what manufacturing needs to beat downtime. Mark Young investigates

IT in manufacturing 80

Tim Brown reports on the growing energy costs and areas of potential savings

Innovation, design and the 50 product lifecycle Finders keepers

ERP for the next decade

Anticipating the future of the business. Malcolm Wheatley explores long-term investment in IT as an enabler of growth

IT News 86

Edward Machin investigates intellectual property, an area UK manufacturers can no longer neglect

Keeping you up to date with the latest developments in industrial IT

Finance and Professional Services 56

Special feature PLM 90

Hitting the right buttons

TM reports on a roundtable debate on access to finance with BDO LLP and clients

People and skills 62

It’s all a bit technical

Bringing mainstream technical education back can play a big role in restoring British industry

JCB Academy diary 65

Rhys Bradbury updates on the latest engineering challenge facing the JCB Academy

Primetime for PLM

Jane Gray explains how interest in new capabilities in PLM technologies is growing, and how TM’s upcoming PLM Connect will be a chance to know more

Risk Management Supplement 93 sponsored by Zurich

Supply chain and logistics 68

From basement to boardroom: procurement re-engineering

Tony Lockwood of Xynergie explains how the redesign of procurement processes can bring major improvements to a business

Running the risk Businesses taking risks is not news, but the current scale and complexity of markets and supply chains hide dangerous pitfalls. A TM guide on how to avoid them

Manufacturinginaction Sponsored by TBM Consulting Group

Factory of the month

100 Nestlé Sweet victories

Nestlé’s plant in Fawdon, Tyneside, is well underway with a major programme of improvement. TM hears about its aims, structure and progress. Will Stirling and Ruari McCallion report.

119 Synseal Seal of approval 130 Spirax Sarco United we stand 139 Ahlstrom Optimising global performance with aPlus 144 Caparo Group Steely eye on global growth 152 Mars Drinks Excellence in execution 156 FFEI Going to print 161 Alcoa Fastening Systems UK Getting a grip on new markets 166 Thorntons Deliciously innovative

Newsinbrief SKILLS

The National Audit Office has published a report showing improvement in the take-up of A-level maths and GCSE science. The National Audit Office (NAO) report (published on November 12) on the progress being made by the Department for Education (DoE) in boosting STEM subjects has returned positive results for A-level maths and triple award science at GCSE level, a trend which lays necessary knowledge foundations for bridging the skills gap between British industrial ambitions and current skills capacity.

ADS, the UK AeroSpace, Defence and Security trade organisation, has launched the 2011 UK Schools Aerospace Youth Rocketry Challenge which will allow students aged 11 to 18 to apply the notions they learn in class to a real scenario. The Aerospace Youth Rocketry Challenge aims to harness the interest of students in science and maths and to inform them and their teachers about the careers available in the UK aerospace sector and in wider high-tech engineering industries.

Chairman of PP Electrical Systems, David Fox, has accused industrialists of inertia and complacency as UK manufacturing languishes in 17th place on the international skills league table. Fox believes competitiveness is being damaged because companies are failing to invest in building fundamental workshop skills. He says: “Despite years of effort by government, trade organisations and business, most generally available training programmes will never live up to expectations. And it is even sadder that so many business leaders still expect the Government to pay to train their employees instead of realising that it is their own responsibility.” AEROSPACE

The British space sector has grown over 10% on average over the past two years, despite the recession, and is estimated to be worth £7.5bn, according to a UK Space Agency report. The document was produced by the Oxford Economics Foundation, and highlights the potential of the industry, which already contributes £5.9bn to the UK economy.

AWARDS

Castle crowned king at TM Awards Lord Digby Jones inspires and Castle Precision Engineering triumphs at The Manufacturer of the Year Awards 2010. Castle Precision Engineering was crowned The Manufacturer of the Year at one of the biggest nights in the manufacturing calendar, TM’s annual award ceremony on November 18th. The family-owned Glasgow precision engineering firm, which was established in 1951 by Polish immigrant Jan Tiefenbrun, beat off strong competition by other category winners such as runner-up, motorsport engineering company Xtrac, and third placed cleaning product manufacturer Robert McBride. The Manufacturer of the Year Award was judged by Joe Greenwell, chairman of Ford of Britain, and Allan Cook, chairman of engineering group Atkins, and was lead-sponsored by Royal Bank of Scotland for the fourth consecutive year.

The gala event was a sell-out with over 450 people, mostly manufacturers, attending the dinner. Both big and small names were rewarded, many of whom were debutant entries. Winners ranged from big companies like Constellation Europe, part of the largest wine company in the world, Worcester-based Joy Mining and Michelin Tyres UK, to successful Sheffield-based SMEs Gripple and DavyMarkham.

AUTOMOTIVE

Xtrac wins biggest order Double-triumph for motorsport engineering company Xtrac, who wins biggest order shortly after being judged for The Manufacturer of the Year Awards. The application of technology from motorsport to hybrid and electric engines helped Xtrac to reach second place overall in its first ever participation in The Manufacturer of the Year Awards. The transmission technology specialists also won the Advanced Manufacturing category and was shortlisted as a finalist for the Innovation and Design, Leadership and Strategy, and Best Small and Medium Enterprise awards. The competition winners were announced at a prestigious black tie event held on November 18th,

following the annual Manufacturer Directors’ Conference. “Xtrac is a world class manufacturer of a high performance product,” said Ed Lambourne, technical director at Delcam, a partner in the European Factories of the Future project, who co-judged the Advanced Manufacturing category. “The company has a continuous programme of collaborating with universities in order to develop their capability and to attract and develop the skills that they need to maintain leadership in their field. We were particularly impressed with their manufacturing thinking at the product development stage.”

ManufacturingNews RAIL

New £8bn rail plan boost Transport secretary Philip Hammond has announced an £8bn investment package in rail projects that will reduce overcrowding, speed up journeys and modernise the network. As part of the scheme, the Government plans to buy 2,100 carriages by 2019 as well as funding the Bedford to Brighton Thameslink project and the £600m electrification of the Great Western line connecting London with Oxford. “At a time of severe pressure on public spending, it would be tempting to cut back on investment in our railways,” said Hammond. “But we cannot afford not to invest in Britain’s future. We have already committed to the Crossrail project and to £14bn to support capital maintenance and investment in our railways over the next four years. I can confirm

that the Thameslink project will go ahead in its entirety and I can announce 650 further carriages to reduce overcrowding.” Bombardier and Siemens are competing to win a contract for the supply of 1,000 trains for Thameslink. Securing it would represent good news for Bombardier, which employs about 3,000 people in the last train manufacturing facility in the UK, and is reported as having a gap in its order book for 2011.

The Aventra train that Bombardier is bidding for Thameslink

AEROSPACE

Rolls-Royce lands dual China deals Rolls-Royce has secured a $1.8bn (around £1.1bn) order from Air China – the second major deal for the engine company in November. The Air China order follows the $1.2bn deal with China Eastern that concluded a high-profile British trade mission led by the Prime Minister, David Cameron, earlier this month. The two large orders come against a backdrop of concerns over safety after two separate incidents involving RollsRoyce engine failures. RollsRoyce has said that a mid-air engine explosion during an A380 super-jumbo jet flight to Australia resulted from a single faulty component. Rolls said it is correcting the fault, which is specific to its Trent 900 engine

model and is not an issue on other engines. The Chinese invested around £27m in UK goods and services last year, which constitutes 10 per cent of its total investment in the European Union. The current delegation has been set a target of doubling UK exports, in terms of value, to the far East nation.

The RollsRoyce Trent 700

Newsinbrief AEROSPACE

The North West Aerospace Alliance has signed a contract with logistics supplier Unipart to provide regional aerospace companies with cost-cutting shared services. The £1.3 million two-year contract will officially start early next year, with NWAA members cooperating to improve their purchasing power and secure better deals. The project will be supported by a purpose-made, ‘one-stop shop’ website, through which companies will be able to order goods online from a number of suppliers, increasing purchasing efficiency. research

The 8th Annual Manufacturing Report (AMR), produced by The Manufacturer magazine in association with Barclays Corporate, is now available in printed copy and online. The report revealed many interesting industry trends in 2010 including an increase in manufacturers requiring ROI over a longer term. According to figures, there has also been a major jump in investment intentions for 2011 despite two thirds (64%) of respondents remaining pessimistic about the economy. To view the AMR, click on the Research & Reports tab at www.themanufacturer.com. FOOD AND DRINK

The Norfolk turkey produce baron Bernard Matthews, who built Europe’s largest turkey farm from the ground up, died last month aged 80. Mr Matthews, famous for personally appearing in television adverts since the 1980’s presenting the firm’s ‘bootiful’ branding, died on November 25 after a long illness. He reportedly suffered from Alzheimer’s disease in recent years.

The efforts of Coca-Cola Enterprises to instigate recycling at UK music festivals this summer have been rewarded with a Best Sponsor Activation award at the UK Festival Awards 2010. The company beat the likes of Orange, Bacardi and Virgin Media to the prize. Its volunteer-led recycling programme, Keep it Going, involved a ‘Recycling Garden’ where festival goers could swap used plastic bottles for ponchos, caps and T-shirts made from recycled PET.

News Newsinbrief AUTOMOTIVE

An all-electric taxi, E Vito, was among the winners in the UK’s first Future Car Challenge, during which over 60 lowemissions vehicles travelled non-stop from Brighton to London. The prototype was developed in the West Midlands by a corsortium that included automotive engineering specialists Zytek and technology expert Penso. Neil Heslington, managing director of Zytek and driver of the E Vito during the race, said: “This is the biggest challenge that we’ve given the E Vito to date. It was a very smooth ride and all partners are incredibly proud of how it performed”.

The Cosworth Group F1 engine and electronics was announced as a components supplier to the 1,000mph Bloodhound SuperSonic Car. The Bloodhound Project is a World Land Speed Record attempt aiming to inspire young people to pursue careers in Science, Technology, Engineering and Mathematics. Cosworth Group’s advanced electronics and high performance engine technologies will feature in the world’s ultimate racing car, which is powered by two engines and a rocket, to reach a top speed of 1050mph. AWARDS

Former Labour spokesman and communications strategist Alastair Campbell hosted the 2010 annual Manufacturing Forum and Awards Lunch held by Brammer, the supplier of maintenance, repair and overhaul (MRO) products and services. Over 100 senior delegates from all sectors of UK manufacturing attended the event, entitled ‘Manufacturing our Future’. The awards recognise the importance of sustainability, product and service innovation in delivering improved operational performance. The Award winners were Unilever (for Sustainable Manufacturing), Rio Tinto Alcan (Reduced Maintenance), TATA Steel (Increased Production Uptime), Michelin (Business Process Improvement), and Festo (Supplier Management).

GROWTH STRATEGY

Public and private join forces Government has released a report identifying the actions necessary to tackle barriers to growth for UK business and invited firms to join a review for holding individual state departments to account. Presented by Chancellor George Osborne and Business Minister Vince Cable, The Path to Strong Sustainable and Balanced Growth report outlines the Government’s four key commitments: Providing the stability business needs to plan and invest; Making markets more dynamic by removing barriers to growth; Focusing the Government’s own activities on providing the conditions for private sector growth and investment; and Ensuring strong growth is fairly shared and sustainable in the long-term. Businesses will contribute to the review, from which the criteria for Action Plans Government departments will have to file to

an ad hoc Ministerial group, by the 2011 budget, will be set. The plans will reflect what each department can do to remove structural barriers. Another measure to aid growth, released alongside the report, is corporate tax reforms, including new Controlled Foreign Company (CFC) rules which should entail more intellectual property and tax remaining on British shores and a commitment to the introduction of a Patent Box which will see only 10% corporate tax payable on profits from UK patents. Additionally, companies will not be liable to pay corporate tax at home on money earned from foreign branches through an opt-in scheme commencing next year.

SKILLS

Cable presents new skills strategy Secretary of State for Business Vince Cable and Skills Minister John Hayes have launched the Government’s strategy for skills, Skills for Sustainable Growth. The plan to reform Further Education and the skills system was presented at the annual Association of Colleges conference in Birmingham. A subsequent document, Investing in Skills for Sustainable Growth, explains how the Government intends to achieve its goals by investing strategically, knowing savings are going to have to be made. Cable said the Government is determined to address current failings in skills training, a necessary step towards sustainable growth. “We are not in a position to throw money at the problem, but even against

the backdrop of reductions, resources will be found to expand the apprenticeship programme for adults and support more people undertaking an increasingly respected form of vocational training,” he added. The reform of the skills systems includes: A £650m investment in adult apprenticeships Protected investment of £210m in adult and community learning Replacing Train to Gain with a different programme, specifically focused on SMEs A reduction of bureaucracy Training to help those seeking a job

Datesfor yourdiary Manufacturing December

7-8

The Manufacturing Technologies Association will be present at Technology World, to be held at ExCel in London. For further information visit www.technologyworld.uk.com

The Midlands Aerospace Alliance is holding a free workshop focusing on their technology plans at Loughborough University. For more information contact 024 7643 0250

The Institute of Operations Management is holding a seminar focusing on understanding Lean within the public sector. For further information call Leonie Edwards on 01536 740 105

MAS South East is hosting a best practice visit to Herb UK, covering sustainable issues within the company. For further information contact info@manufacturinginsights.co.uk

EEF is holding an Equality Act workshop which provides the opportunity to gain experience of responding to allegations of discrimination in a risk free environment, to be held in Warrington. For further information contact 0845 293 9850.

MAS South West are featuring at the UK Sustainable Manufacturing conference, to be held at IMECHe headquarters in London. For further information contact sustainablemanufacturing@glasgows.co.uk

ADS Group is holding a Capability Ground Manoeuvre Industry Day and Dinner, focusing on the role of Brigadier Mike Riddell-Webster. For further information please contact Kelly Wyatt on 01428 602615 or kelly.wyatt@adsgroup.org.uk

January

The SMMT are attending the MIA’s 5th European Cleaner Racing Conference, to be held at the NEC in Birmingham. For further information contact Tracy Dewhirst - tracy.dewhirst@the-mia.com

The Manufacturing Technologies Association are attending Autosport International, to be held at the NEC in Birmingham. For further information contact Christel Moustacas on 020 7298 6400

The Manufacturing Institute are holding a How2 Problem Solve seminar. For further information contact Emma Holt at emmah@manufacturinginstitute.co.uk

The Aerospace, Defence & Security Industries’ annual conference and dinner is being held at the Park Lane Hilton in London. For further information contact Kelly Wyatt on 020 7091 7815

MAS are to hold a Low Carbon Vehicles Supply Chain day at MIRA in Nuneaton. Major players within the low carbon vehicle sector will explain their business needs and companies that have made the move will speak on how they did it. For further information contact 0845 658 9600

output

New orders mixed with financial pressures could be fatal for unprepared businesses Business planning and forecasting specialists Numeritas has warned manufacturing companies that 2011 may prove to be “a dangerous year”. The company warned that the cumulative effect of a whole range of financial issues hitting manufacturers in 2011 will push many profitable, but unprepared, businesses into insolvency. These financial pressures include: Employers’ national insurance up 1% VAT up from 17.5% to 20% Variable costs, particularly raw material costs, increasing Customers taking longer to pay (if customers take just a few more days to pay on average, this marginal increase can have a particularly major effect on cash flow) Customers becoming insolvent and their debts being written-off (this has a particularly devastating effect on both cash flow and profitability) Problems caused by exchange rate movements (on exports orders and imported items) Increased orders Stephen Aldridge, managing director of Numeritas, said: “It may sound odd that in the current environment increased orders could be bad news when, of course, they are the lifeblood of a business. However, it is well known that more companies go insolvent once a recession is passed its worst and orders are picking up. This is because manufacturers overstretch their working capital through spending too much on inputs such as raw materials and labour, but do not have the working capital to last until payment is received. This is a particular danger area in 2011.” He recommended scenario planning for all possible funding gaps and pay particular attention to cash flow, working capital and aged debtors. Price increases are also likely on raw materials so negotiating on price or on longer payment terms will be key. “Cost pressures may make once-profitable prices now loss-making,” he said. “Profitable sales to robust companies that pay on time with upfront deposits are clearly fantastic. Keenlypriced sales to shaky companies that will pay late or not at all are going to prove fatal.”

ManufacturingNews HEAVY EQUIPMENT

New model for Army JCB has won a contract to supply 236 construction vehicles to the British Army, the largest order of diggers for the Armed Forces in over 25 years. ALC, a joint venture between Amey plc and Babcock International Group plc, which is the service provider to the Ministry of Defence for plant and mechanical handling equipment, awarded the contract for 138 4CX backhoe loaders and 98 436eHT wheel loading shovels. The backhoe loaders are manufactured at JCB’s World Headquarters in Rocester, and the wheeled loading shovels at JCB Earthmovers, in Cheadle, Staffordshire. JCB CEO Alan Blake said: “JCB has now become the primary supplier of plant and mechanical handling equipment to the British Army. As a British company it is fantastic that we have been awarded the opportunity to support our armed forces in this way and help ensure they are successful on operations, training and in their many other tasks around the world.” The company was selected after extensive user trials, during which the compatibility with other machines already used by the Army were a key deciding factor. The machines will feature minor enhancements, such as NATO green livery, personal JCB’s 4CX backhoe loader weapons stowage inside the cab, convoy lighting and increased wading ability.

FINANCING

Fewer firms paying more Industry may be past the worst of access to finance problems, says EEF survey. The manufacturers’ organisation EEF’s latest credit survey shows the first appreciable improvement in the overall cost of credit in 12 months. Over the past quarter, 20% of companies reported an increase in the fees and interest rates on both new and existing credit facilities (compared to 30% in Q3 and 34% in Q2). However, the percentage of companies actually seeing costs fall remains unmoved. EEF’s chief economist, Lee Hopley, said: “Industry might be past the worst of the problem, but we are not out of the woods yet. Banks, Industry and government need to push ahead with efforts to bring down the cost of borrowing and get credit flowing more freely to those companies that need it.” In recent weeks Banks, government and Industry have moved towards a broader agreement on what needs to be done to address these challenges. This must now be taken forward with action. In practice this means improving access to finance through greater competition between banks, alternatives to equity finance, and a restructuring of government-backed schemes into a single access portal.

Newsinbrief AUTOMOTIVE

Iconic British car brand Jaguar Land Rover has made a strong contribution to a big rise in profits and revenues for its Indian owner Tata, the latter’s half year results reveal. JLR’s profit after tax for the second quarter in Tata’s current financial year was £238m – a healthy contribution to an overall £3.1bn consolidated profit. This compares to profits for the group of just £30m in the same quarter in 2009. Tata’s revenues for the period were £17.4bn – an increase of 36.5 per cent, year-on-year.

EMPLOYMENT

With organic measures to appease the situation having seemingly failed, gender equality could soon be imposed on UK boardrooms. Lord Davies of Abersoch – a business minister under Gordon Brown in 2009 – has been tasked by the Department of Business Innovation and Skills (BIS) with investigating why there are so few women in directorship roles in the UK. According to Cranfield University, only 12.2 per cent of FTSE 100 and 7.3 per cent of FTSE 250 directors are female. FOOD AND DRINK

High street chocolate maker Thorntons has announced the appointment of former Caffe Nero and Dixon’s Group MD Jonathan Hart as its new CEO. Hart takes up the role from January 4 2011. As managing director of Caffe Nero, Hart led the company to doubling its number of outlets and he is credited with building the brand equity significantly and increasing company profits. He has also held senior positions at Abbey, Woolworths and ITM Communications. FINANCE

Almost 50% less manufacturing companies fell into administration in the first nine months of 2010 compared with the same period last year, according to business advisers Deloitte. There has been 252 manufacturing administrations so far this year compared with 439 at the same conjecture last year and this 42.6 per cent decline has been topped only by the retail sector (50.2%) and financial services (47.1%). This compares with a 36% drop when taking all companies across all sectors into account.

ManufacturingAppointments UK Appointments Luci Widdowson, Jason Williams and Sue Brinson Elta Group Mick Holloway The British Manufacturing Plant Constructors Association.

The Elta Group has extended the team with the announcement of three new appointments. Luci Widdowson joins the Elta Group marketing department as marketing assistant, providing administrative and clerical support, while Jason Williams joins

Sheffield Forgemasters’ senior sales manager Mick Holloway has been appointed chairman of The British Manufacturing Plant Constructors Association. Holloway has more than 30 years experience in steel and engineering

as a web-developer. He will be liaising with the marketing department to design and build existing and new company websites, bringing all Group sites up to the latest standards and functionality. Sue Brinson completes the trio, joining the company as group administration assistant from Extracare Charitable Trust.

sectors and has been a member of the association since 2008. He takes over the reins from Kevin Parkin, who stepped down as chairman this autumn after serving a two-year term.

International Appointment Phillip Wittke American Welding Society

The American Welding Society and WEMCO have named Lincoln Electric’s director of marketing Phillip Wittke to serve as chair of its Image of Welding Committee. The committee is part of the Welding Equipment Manufacturers Committee (WEMCO), a standing committee of AWS.

Business secretary Vince Cable announced that Charlie Mayfield, chairman of the John Lewis Partnership, has been appointed to lead and reform the UK Commission for Employment and Skills. UKCES is the Non-Departmental Public Body tasked with helping to improve employment and skills provision across the UK.

The name of the new president of the Society of Motor Manufacturers and Traders was announced at the association’s recent Annual Dinner. Nigel Stein, chief executive of GKN’s global automotive business, will take Joe Greenwell’s place as president of SMMT starting January 2011.

Luxury British car maker Aston Martin has created a chief financial officer role and appointed Hanno Kirner to fill it. Kirner has spent the last five years serving as director for finance & IT at Rolls-Royce Motor Cars and he has previously had senior jobs at BMW Group.

SAP has announced the appointment of Roger Bellis to senior vice president of global talent, leadership, and organizational development. In this role, Bellis will lead a newly formed global HR function, responsible for driving organizational, talent and leadership development throughout the organization. Sheffield Forgemasters’ Peter Birtles has been appointed chairman of the Special Metals Forum. The Special Metals Forum is the membership arm of South Yorkshire-based NAMTEC (the National Metals Technology Centre) which seeks to improve the global competitive advantage of special metals manufacturers.

The Image of Welding Committee serves as a catalyst and thought leader in driving industry efforts to raise the overall profile of welding as a career and communicate to potential candidates the numerous opportunities that exist.

High street chocolate maker Thorntons has announced the appointment of former Caffe Nero and Dixon’s Group managing director Jonathan Hart as its new CEO, taking up the role from January 4, 2011. As managing director of Caffe Nero, Hart led the company to doubling its number of outlets and he is credited with building the brand equity significantly and increasing company profits. He has also held senior positions at Abbey and Woolworths.

Thales has appointed Victor Chavez as UK CEO, with effect from January 1, 2011. Chavez has been deputy CEO of Thales UK since October 2008 and he is also the Industry co-chair of the National Defence Industries Council (NDIC) Acquisition Group, chairman of the Defence & Security Board of Intellect and a member of the NDIC.

Dr. Ralf Speth, CEO of Jaguar Land Rover, has been appointed as a non-executive director on the board of Tata Motors. Speth was appointed to the post of chief executive officer at Jaguar Land Rover in early 2010. He is on the board of Jaguar Land Rover Limited, UK and is also the chairman and chief executive officer of the two wholly-owned subsidiary companies, Jaguar Cars Limited and Land Rover in the UK.

Jerry Shanahan has joined business improvement specialist Oliver Wight and becomes the third new recruit for the company since April 2010. Shanahan has extensive experience in both the electronics and medical device industries, where he has held a number of senior positions, including managing director of Cabletron Ireland and chief operating officer of Enterasys Networks.

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

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The big picture Why it’s still good to talk Amy Mokady Institute for Manufacturing

A common question for businesses involved with new products is what are the important elements of a go-to-market strategy? Amy Mokady, director of the Institute for Manufacturing i-Teams programme, says the answer is more straightforward than you might think.

Thomas

Edison was a man who knew a thing or two about taking products to market. He once said: “Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success.” This is pretty good advice. Who wants to invest time, money and effort into products that won’t sell? This then poses the question: how can you tell whether your new gizmo or widget is going to find a market? I’m going to let you into a secret. There is no mystery formula, there’s no off-the-shelf solution – it’s as simple as talking to your customers. It’s something that is at the core of the work we do at i-Teams. The programme is designed to analyse the commercial potential of an emerging, breakthrough technology. We can’t do this without talking to the end-users of this new knowhow. Edison hit the nail on the head with his observation that if something won’t sell, people won’t want it. Despite the simplicity of the premise, it’s something that often gets overlooked. History is littered with examples of products that consumers did not understand, need or want. I’m not going to talk about the process of generating a winning idea, of the trials and tribulations of product creation. Instead I will focus on how a company can connect with its customers. To do this, I’m going to borrow some more pearls of wisdom from Mr Edison.

Discontent is the first necessity of progress Being dissatisfied with the way something works often suggests a problem that needs solving. James Dyson and his bagless vacuum cleaner and Trevor Bayliss and his clockwork radio are two wellknown examples. A product will be accepted more readily if it successfully tackles a perceived problem. A good example is Abcam, a web-based business which manufactures and sources antibodies for the medical research community. Its founder Dr Jonathan Milner was part of a team researching a newly discovered breast cancer protein. Work progress was slow due to difficulties in sourcing the antibody reagents needed for research.

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

Dr Milner developed a search engine to find these antibodies, to assist his own work, which was swiftly adopted by the wider research community. At this point he noticed that most searches were for a relatively small number of antibodies. Feedback from the search engine’s users led to the next step reselling those popular antibodies direct. The lesson was clear: dissatisfaction with a system led to the creation of a potential solution. Engagement with users led to the formation of a successful business. Not a radical new technology, but a common sense approach to solving a real world issue. Another element of success is remembering that it’s about the actual product rather than the underlying technology. In other words, the best solution usually wins. Probably the best known example is that of the video tape format wars of the 1970s which pitched Sony’s Betamax against JVC’s VHS. Betamax was considered a technically superior product, yet VHS dominated the domestic video market. VHS had the features that the consumer wanted, being inexpensive and able to record up to four hours of television.

The value of an idea lies in the using of it Finally a good go-to-market strategy is the ability to recognise that the initial vision for your product might need to change. Edison may have talked about the ability to transform ideas into tangible products, but I think it applies equally to deciding which market best suits your product. None of this is possible without having an excellent product in the first place but even then, as shown, there is not always a guarantee of future success. By engaging directly with their customers, manufacturers, innovators and entrepreneurs have a better chance of success. In the end, go-to-market strategies can best be summed up not by Edison, but by Bob Hoskins: “It’s good to talk”. A version of this article was originally published in the handbook of the Cambridge Phenomenon 50th Anniversary Conference. www.cambridgephenomenon.com

Economics A framework on which to build Steve Radley, Director of Policy, EEF

With

plans to restore shattered public finances the public sector will now take a lesser role, with private enterprise filling the void by investing and creating jobs. This will mean a stronger role for manufacturing as a major driver of future economic growth. New EEF research shows that it is up to the task. It is increasingly sophisticated, innovative and able to exploit emerging export opportunities. Being more evenly spread around the country than industries like financial services means it can also help also address regional inequalities. The key issue now, for government and manufacturing itself, is how to turn this potential and improved performance over the past decade into growing a new generation of manufacturers in the next. Industry is demonstrating it has the capability, but government now has a big role to play in providing the right framework to support and catalyse private sector investment and growth. The previous government’s preferred approach to manufacturing was overly focused on industrial champions. The coalition’s attention to start ups and young businesses is helpful but is in danger of swinging too far in the opposite direction and ignoring the considerable benefits that more larger companies bring to the economy.

Size does matter The largest manufacturers, those employing more than 250 people, account for half of employment and two thirds of turnover. But, their importance goes well beyond headline numbers. They are at the heart of the collaboration that makes the sector tick. They anchor supply chains and work more closely with customers and suppliers. By doing so they are the vital catalyst for product development and create markets for innovative, agile suppliers which are crucial to attracting large multinationals to the UK. But, strikingly, the UK has half as many larger manufacturing companies with more than 250 employees, compared to Germany. The proportion of large manufacturers is also significantly lower in the UK than in Germany – 1.2% compared to 2.1%. The disparity with the USA is even greater with firms employing 500 or more people accounting for 0.6%

In his first major speech after taking office this year, the Prime Minister warned that the UK’s economy had become too unbalanced, with its fortunes too dependent on the public sector, ballooning consumer credit hitched to a few industries in one corner of the country.

of manufacturing companies in the UK compared with 2.9% in the USA. Addressing this disparity and growing a generation of larger manufacturers that will expand year on year will be vital to creating a more resilient and balanced economy. This will involve attracting new investors to the UK, while ensuring small and medium-sized manufacturers overcome the barriers that trap them. Currently, the limited availability of affordable finance traps small companies in a Catch-22: struggling to get the necessary finance, their plans for growth are constrained, yet unable to demonstrate clear ambitions for growth, they cannot get the appropriate finance. When they do grow, they are caught in the thicket of tax and red tape that make mid-sized firms cautious about planning to become truly global in scale. Government has an important role in addressing this. In particular, it must create a partnership between industry and government that makes the UK the investment location of choice, with an internationally competitive business environment and, a strong highly visible industrial base. It must also be open-minded in its approach to the future shape of manufacturing and not limit its vision to a narrow one of just R&D in so called ‘high tech’ industries. We also need a tax system that encourages innovation and capital investment. Finally, to maximise the impact of public resources government should target its strategy at high growth industries where the UK has a competitive advantage, as well as leveraging the crucial multiplier effect of large companies. The Prime Minister has challenged industry to commit “to create and innovate; to invest and grow; to develop and break boundaries”. To meet this challenge the UK will need to grow more small and medium size companies into truly global companies. A failure to do this could prevent the sector realising its potential, leading to a hollowing out of supply chains and placing a speed limit on the rate of growth across the economy overall. To ensure our economy pays its own way in the future the UK does not need a handful of big manufacturers, we need hundreds of them.

Have your say at www.themanufacturer.com

Thelegallowdown Pre-Employment Health Questionnaires under the Equality Act – a reminder After more than five years in the making the Equality Act 2010, one of the most anticipated pieces of employment legislation in recent years, came into force on 1 October.

One

of the most talked about changes, which was not in the original draft of the Act but was introduced following pressure during consultation, is the ban on the use of pre-employment health questionnaires except in very limited circumstances. This is of particular relevance to manufacturers whose working conditions are typically quite different from those in an office environment. Q. So what does the Act actually say about pre-employment health questionnaires? A. In a nutshell, a company who receives an application for work cannot ask about the health of the applicant before work is actually offered, unless specific criteria are met. Q. Why does the Act ban pre-employment health questionnaires? A. To eliminate the potential for discrimination at the application stage where it was felt that all too often unjust assessments were made based on disclosed medical conditions (especially mental health conditions) that unfairly prevented suitable applicants progressing to interview. The Act also aims to encourage those with health conditions to apply for jobs (whereas they may have previously been put off from doing so by pre-employment health questionnaires). Q. Can pre-employment health questions be asked at all? A. Yes, but only in limited circumstances. The questions must be asked with a view to establishing whether the applicant will be able to carry out a function that is intrinsic to the work concerned. The explanatory notes to the Act give the example of an applicant who applies for a job in a warehouse that requires manual lifting and handling of heavy items. As manual handling is a function which is intrinsic to the job, the employer may ask the applicant questions about their health to establish whether they are able to do the job (with reasonable adjustments for a disabled applicant, if required). The employer would not be permitted to ask the applicant other health questions until they were offered the job. It will also be possible

to ask whether an applicant has a disability that would require reasonable adjustments to be made to the recruitment process. Q. How should pre-employment questions be phrased under the Act? A. Unfortunately this is still not clear and the explanatory notes are of little help. Using the example from the explanatory notes, suggested approaches vary from the narrow approach of asking a specific question (e.g. “Do you have a medical condition that will prevent you from lifting heavy objects”) to a much wider approach of sending an applicant a long list of medical conditions that might prevent heavy lifting. Given the uncertainty employers should take a cautious approach by reviewing the core duties of the job on offer and focusing the questions accordingly. Once again, the Government has left a possibly contentious issue to be decided by case law. Q. What are the risks if inappropriate preemployment health questions are asked? A. If inappropriate questions are asked (i.e. questions about an applicant’s health that are not permitted by the Act) and an unsuccessful applicant brings a direct disability discrimination the onus will be on the employer to show that no discrimination took place. Q. What do I do if I offer a job but a subsequent condition is revealed that means the candidate is unable to perform the job? A. Once a job has been offered employers may, if they wish, ask additional medical questions (although care still needs to taken with how that information is used). If a condition is revealed that causes the candidate problems in performing the job then reasonable adjustments must be considered. If there are no reasonable adjustments then the job offer may need to be withdrawn and so the offer should be conditional on the applicant providing satisfactory answers to any health questions. There is clearly scope for claims here and as such any adjustments must be very carefully considered and if none are viable the employer must have an objective business reason to withdraw the role.

For more details contact: Andrew Crudge, solicitor and member of our Manufacturing Sector Group at: andrew.crudge@thomaseggar.com or on: 0870 160 1300 for further advice.

businessasunusual Giving back Anand Sharma, Chairman and CEO, TBM Consulting Group

For

charities in the United Kingdom the lack of confidence in the economic recovery and the government spending cuts outlined in the Chancellor’s Comprehensive Spending Review could make this a very bleak and desperate fundraising season. Like the market forces that have shaken up the private sector, declining revenue sources will further separate charities that are able to grow or at least keep up with inflation from those that shrink and ultimately cease to exist. Donors generally want the money that they give to be spent as efficiently and productively as possible. Likewise, charities want to make the greatest possible impact with the donations that they have at their disposal. From a marketing perspective, maintaining financial stability and healthy programs is largely the result of an organisation’s ability to foster systemic change and thereby demonstrate long-term effectiveness. Operational efficiency and excellence is therefore just as important—if not more important—in the charitable world as it is in the commercial one. Unfortunately, the process-related expertise and operational improvement tools that have been successfully applied in the business world have passed most non-profits by. One of the non-governmental organisations that I’ve had the privilege of working with has proven both its ability to transform people’s lives and effectively use resources. The Watershed Organisation Trust (WOTR, www.wotr.org) works with villages in drought-prone regions of India to restore the water supply and reduce the need for people to migrate to the cities during the dry season. The idea is simple: Increasing plant cover, cutting fewer trees, diverting runoff and slowing the flow of rainwater allows the soil to absorb more moisture when the monsoon season comes. As a result erosion is reduced, soil nutrients are retained, the water table rises, crops grow better, and wells are less likely to run dry. The social benefits flow down from there. WOTR managers have learned that the technical knowledge required to reshape the land and improve the watershed is only the beginning. For any changes to remain in place from season to

Another year has flown by and the holiday season is upon us once again. It’s the time when many of us consider the less fortunate and express our appreciation for the success that we enjoy. Many charitable organisations rely on this period of annual bonuses for the bulk of donations that will sustain their work in the new year. season requires cooperation and careful attention to the social dynamics of the farming villages. For this reason WOTR will not begin a project without the agreement of everyone in the village, including women and others ordinarily excluded from such decisions. In addition, every family is required to contribute free labor to the project. To give plants the opportunity to grow, the villagers must agree to stop free-grazing cattle and not cut down any trees for firewood. Getting everyone to commit to a program that disrupts social hierarchies and ways of life can be a challenge, to put it mildly. But many of WOTR’s representatives speak passionately from personal experience having once lived in other villages that have been transformed by the rain harvesting practices. Not unlike touring a factory where they’ve implemented cutting-edge technology and best practices, the real understanding and buy-in comes when villagers visit other successful projects and see the results of such work for themselves. In any organisation, for profit or otherwise, there are always opportunities to do more with less. To increase the assistance that they can provide without incurring any additional expenses, we worked with WOTR managers to create value chain maps and process flow maps for administrative processes. Starting with fairly disciplined processes, they used these tools to identify wasteful steps that could be eliminated without having any impact on the end results. The non-profit world needs more process thinkers who can help improve discipline and effectiveness, and who also have the patience to navigate governing committees and support fundraising. As subsidised revenue streams dry up, charitable organisations like WOTR that take process thinking seriously, that don’t confuse activity with results, and that exhibit professionalism and a commitment to delivering services better and more efficiently, will continue to grow. I encourage you to donate your time to help identify opportunities, communicate benefits, educate staff and institutionalise best practices within your favorite charities. It could ultimately have a far greater impact than simply writing a cheque.

Have your say at www.themanufacturer.com

UK business must go

to exploit the recovery

Concept car seat design, Morgan Motor Company. An industry report says more large SMEs need to grow into big companies for UK manufacturing to fulfil its potential

Manufacturing is riding the recovery well, according to economic and confidence data. But as all countries try to manufacture and trade their way out of the slump, competition requires UK industry to get in shape for a new set of post-recession challenges. A report by EEF and Royal Bank of Scotland identifies the specific challenges for manufacturers and what the sector needs to do to grow. Roberto Priolo reports.

The

last decade brought profound changes to the global economy, to which all industries, including manufacturing, have had to adapt in order to remain competitive. Early on in the decade the challenge rose from emerging economies like China and India, who exercised a more aggressive approach to accessing markets and have a low cost labour advantage. Asian competition has been present for decades, but the millenium brought the internet, better access to Asia and more mobile ‘global businessmen’, while relatively cheap oil made distances between countries a less costly supply chain barrier. Then came the intensified debate on global warming and the deeper acknowledgement by companies that structural changes were needed in order to become more responsible and, simultaneously, more competitive. Finally, one of the biggest recessions in history pushed some economies to the brink of depression. UK manufacturing was badly hit by the economic meltdown, but it never stopped showing resilience.

It is now experiencing a promising recovery and, provided it effectively tackles some serious issues, the sector will have a chance to participate in, indeed drive, badly needed growth in the economy. In November EEF, the manufacturers’ organisation, and Royal Bank of Scotland published “The shape of British industry” (SoBI), which examines the main issues threatening manufacturing in Britain. The report says that UK manufacturing has grown 5.3% in the 12 months since September 2009, its highest growth since 1994. Manufacturing is described as an innovative and diverse sector, that is facing new challenges, from competition coming from developing economies to the rising cost of raw materials and protectionism.

Wanted: More big companies The central point EEF makes is that the UK needs more large manufacturers, in fact “hundreds of them” in the words of chief executive, Terry Scouler, to be able to fully benefit from the recovery. The report uses the number of employees as the

Leadstory The Shape of British Industry

criteria to determine a business’s size – defining large manufacturers as those with more than 250 employees. Large companies have a number of advantages over smaller ones, the main one being that their size allows them to make investments in new market opportunities that can bring benefits to entire industry sectors. Commenting on the need for the country to support the development of more large manufacturers, Justin Levine, managing director at geared motor manufacturer Parvalux in Bournemouth, says: “From common sense and experience, I say this is the right thing to do. Smaller companies concentrate on making products, as they don’t have enough funds to finance research. Without this, it is not possible to achieve innovation, which then powers wealth creation.” Levine says there is a pattern in UK manufacturing: once companies grow too much, they go from having opportunities to becoming wasteful and inefficient. “It’s a balancing act. Companies that reach a certain size and reputation stimulate interest and attract business. A £50m to £100m turnover will allow a company to finance its development, without the risk of inefficiency,” he explains. Before running Parvalux, Levine was the European managing director for Schneider Electric, Compared to some countries like Germany or the US, Britain has fewer large manufacturers. The report identifies that large manufacturers account for half of employment and two thirds of turnover, despite representing a mere 1% of the companies within the sector. Larger companies collaborate more with customers and suppliers, the report claims, in areas of business such as product

development and forward planning. This virtuous behaviour has a multiplier effect, generating benefits that will reach all members of the supply chain. Not everybody agrees with the idea that the UK needs larger manufacturers. Charles Morgan, managing director of Morgan Motor Company, the last British-owned car manufacturer, believes that SMEs can innovate with less effort, provided they receive help from the government. “Growth areas tend to be in high tech and innovative manufacturing,” he says. “Customers don’t want mass production anymore, they want more diversity – in our case, this means that some want a hybrid car, while others order a traditional vehicle. I see a big opportunity for SMEs to be innovative and responsive. Of course, we need a bit of help from government if they want us to create jobs,” he says. Xtrac is a motorsport engineering company with operations in the UK and the US, with a turnover of £30m and is growing. The company employs 247 people, so technically it is still an SME, according to the EEF/RBS criteria. Managing director Peter Digby, however, believes that within the motorsport industry Xtrac is already a large manufacturer. Does he agree with the need for more large companies? “In any industry there is bound to be a hierarchical supply chain whereby a few dominant companies are supported by a myriad of smaller companies.” Digby also maintains that a strong SME base is important for the economy. “Often the smaller companies have the most innovative ideas and the flexibility to respond quickly to new market trends. What we really need is a system whereby large companies help incubate new technology and support innovation by providing real, practical

Large companies make a major contribution to the sector

Tax and regulation are major concerns for mid-size firms

% of companies by number of employees and their share of sector employment and turnover

% balance of companies citing UK strengths by company size

1-49 50-249 250+

Source: BIS Enterprise Directorate, 2008

Small Medium Large

Source: EEF/GfK NOP Shape of British Industry survey, 2010

support such as development contracts and by helping to commercialise new ideas through sales contracts,” he adds.

Going abroad, and coming back Many UK manufacturers devise growth strategies based on developing new products and increasing productivity. Foreign countries are still very appealing to UK companies both for cheaper outsourcing and for export markets. The report, however, highlights how many British companies that were initially attracted overseas by the promise of lower costs are now returning to the UK, having experienced many problems with outsourcing including reliability. EEF and RBS present the case of laboratory equipment manufacturer Seward. The company is trying to repatriate as much of its production as possible from China, having realized that product quality was suffering and that the true cost of materials was much higher than expected due to supply chain management and logistical problems. Other companies, less vulnerable to their suppliers’ performance, fully reap the benefits of having production facilities abroad. One such company is construction equipment manufacturer JCB, which has 18 manufacturing facilities worldwide, seven of which are located outside the UK. John Kavanagh, group communications director at JCB, explains: “We have always successfully opened factories abroad. Each time it is a learning experience, but being a highly vertically integrated company we make a lot of our own key components, through our internal supply chain. This business model works quite well.” Although there will be a shift in the proportion of manufacture and sales worldwide, as demand from emerging markets such as India, China and Brazil grows, JCB will continue to invest in the UK.

Manufacturing is a highly interconnected and collaborative activity % of companies collaborating with customers and suppliers Suppliers Customers

Source: EEF/GfK NOP Shape of British Industry survey, 2010

“JCB can compete with the best in the world by manufacturing in the UK,” Kavanagh confirms. Many British manufacturers are now working to keep production in the UK – to hedge against supply chain risk – and export more of their products, as exemplified by a recent spike in exported goods (November’s PMI data). Some companies are building nearly their entire growth strategies on exports.

The role of government The SoBI report urges the Government to enforce policies that reflect the diversity within UK industry, while creating a stable business environment for manufacturing to grow. There are so many parallel business models, strategies and types of company that an approach that only promotes a single aspect of industrial activity, like R&D, or only certain sectors, like high tech industries, simply won’t support the crosssectoral growth the economy requires. EEF says the Government needs to adopt an approach that focuses on infrastructure and innovation. Backing for those manufacturing sectors in which the UK has a global competitive advantage should be accompanied by targeted and wellcoordinated support for small companies with the potential to grow and mid-sized businesses that can become large players in the economy. JCB’s John Kavanagh says: “The Government should put in place a long term industrial policy, which makes the UK an attractive and easy place to operate a manufacturing business. This needs to be about less bureaucracy, a better tax system and providing appropriate skills.” All sizes of companies surveyed identified the British tax system as an obstacle to growth, creating particular problems for mid-sized companies that face the same challenges of small businesses but the same tax regulation as big ones.

Skills and finance for growth There is another area in which the Government should intervene: skills remains one of the biggest concerns for manufacturers. Securing appropriate manual, technical and IT skills is more than ever essential to be competitive and to grow a business. Small companies have trouble funding their training, and often turn to government to find the money necessary to launch skills programmes. The Morgan Motor Company, for example, used a Knowledge Transfer Partnership, a programme creating relationships between academic institutions and companies, to help them make better use of the knowledge, skills and technology resources that were not yet available to them in-house. “We train a lot [of people and in rigour] in proportion to our size, and we are given support to do so,” says Charles Morgan. “The Knowledge Transfer Partnership is a great way to get a graduate into a company, giving you the benefits of university knowledge. We took on each of the five people we had in the last three years after the subsidised period.”

Lead story The Shape of British Industry

Larger manufacturers, are more likely to invest directly in skills development that, given the collaborative nature of many large companies, generate benefits that will ripple down the supply chains. In some cases, big companies even develop large scale training programmes or training infrastructure (like the JCB Academy, a state school sponsored by JBC). BAE Systems has pledged to overtrain staff under an iniative called Apprenticeship Expansion pilots, spearheaded by UKCES, the Employment Commission. The company trains more people to NVQ Level 3 than it needs, so that when employees leave they are adequately trained to secure another job and feed overall industry growth. JCB’s Kavanagh says: “Every piece of the jigsaw has a role: Government has the responsibility to prepare people for work or further education in areas that support the real economy, while industry has to make manufacturing and engineering as attractive a career option as it can possibly be. The JCB Academy has been a flagship project that shows what can be achieved by the education world working co-operatively with the industrial world.” Some believe there should be a different system altogether. Power Panels Electrical Systems’ chairman David Fox thinks that the approach to recruitment should be focused on social skills rather than only academic achievement, because teamwork is important to the success of every manufacturing process. “Especially with workshop operators, it’s likely that each employer will need to teach the necessary skills simply because each factory is unique. It has its own layout, its own selection of equipment and machinery, its own leadership style and its own collection of operators. If people are likeable, possess a ‘good attitude’ and enough selfconfidence to allow communication with their fellow workers, and have had only a good basic education, almost anything can be achieved,” he says. Accessing funding necessary to start a business or to invest for growth is another serious challenge for UK companies, particularly smaller ones. The SoBI report says almost 90% of companies surveyed intend to use internal financial resources to fund their growth (see table). Less than half that number plan to use finance from elsewhere within the group, such as bank loans, with larger firms more likely to do so. External funding is still a frequent choice. Over one in three manufacturers plan to use mediumterm debt to fund their plans and just under a third long-term debt. Small companies will tend to opt for specific products such as overdraft facilities, invoice financing and trade finance, while young businesses are more than twice as likely to use asset-backed finance, because they may lack sufficient trading history to access unsecured lending. Commenting on the difficulties a company can meet in accessing finance, Parvalux’s Justin Levine says: “Obtaining funding has become increasingly

So just what is Britain great at?

Stephen Boyle, Head of Group Economics, RBS ”We don’t make anything in Britain nowadays,” is a depressingly familiar refrain. It is also untrue. Manufacturing is not as big a part of the economy as it was. That’s not unique to Britain, it’s a feature of all rich economies that as we grow, services account for an increasing share of the cake. Yet we make a great deal in the UK, and much of it is world class. Britain exports close to £250bn worth of goods each year, more than £4,000 for every person in the country, while services chip in around £160bn of exports each year. In the drinks industry, the UK claims more than 10% of the world market. So, cheers to warm beer and Scotch whisky! We also score very well in power generation equipment – 8% of world exports – and drugs and medical equipment is more than 7%. Not bad for a country that accounts for 3% of world output and 1% of the world’s population. Yet we can’t rest on our laurels. If the UK is to continue its recovery from the worst recession since the 1930s, manufacturers have a central role to play, particularly exporters. The challenge is to keep doing what we do well, but to do it in more places. We export more to Ireland than we do to fast-growing Brazil, Russia, India and China combined. The first three of those countries had average import growth of more than 10% per year between 2005 and 2009, with China limping behind at an annual rate of 8%. It is in these nations that the prize lies. The key to success will be leveraging our undoubted quality in sectors like drinks, pharma and power engineering and taking them to more parts of the world. It will not always be easy, but we start with many strengths. We do, after all, still make things in Britain.

difficult. An SME will go to banks, which are highly reluctant to bet and only finance when it is risk-free. If this is the status quo we have to live with, then government is the best source to stimulate funding. We are getting buffeted by countries where access to finance is easier, either through government initiatives or lending.” For more on manufacturers’ access to finance, see the article on page 54.

Have your say at www.themanufacturer.com

17TH FEBRUARY The Belfry, West Midlands, 09:00 to 16:45 Are you considering Product Lifecycle Management (PLM) for your company? Have you heard about PLM but don’t know whether it is right for you? Do you want to know how PLM can alter the way your organisation competes and innovates? If the answer is yes to any of the above, then attending this one day event will provide you with essential knowledge and insights you need. You will discover why manufacturers of all sizes and in all sectors are embracing PLM, making it the fastest growing market for enterprise software. PLM Connect is a fantastic, FREE* one day event for end users in the manufacturing industry. The event will bring manufacturing professionals together to further knowledge about the benefits and potential of a mature approach to PLM.

Who should attend PLM Connect? • Engineering • New Product Development • Operations and manufacturing • Supply Chain • Design & Innovation • Project management • Marketing and brand leaders • IT and systems professionals • Business leaders and owner managers

Key Event Benefits::

Key Event Features: Programme specially created for manufacturers who have yet to use PLM software but want to know more

• Discovering how to improve product development processes across all value chains

Access to high quality conference content including the latest insights from technologists, academic research and industry

• Solving key business problems through a better understanding of PLM and the software capabilities

Practical, informative and relevant case studies delivered by professionals in NPD, design, engineering, manufacturing, supply chain, IT and marketing

• Developing your innovation capacity and exploiting opportunities for innovation in both products and processes

One-to-one meetings between delegates and PLM professionals to uncover the potential it can have in your business FREE to attend, including free parking, lunch and conference pack*

CONNECT FORMULA One to One focused meetings

The connect element enables each attending company to meet vendors across the spectrum in short one to one meetings. Delegates from companies participating in the one to one meetings receive free entry to the PLM Connect conference programme, free parking, lunch and delegate pack.

• Unlock the potential and value within your product development , getting your products to market quicker than the competition

ho nd s w ngs te ate eti at eleg me to d ne * ring -to-o EEfactu one FRanu r for m e r st fo egi r

PLM CONNECT PROGRAMME – 17TH FEBRUARY 2011

PLM Connect is an ideal first step for any manufacturing company who has yet to use PLM software but want to know more about the tangible and measurable benefits achieved through its application. Danny McKendry

Type 26 Combat Ship Information Management and Technology Manager, BAE SYSTEMS Surface Ships Limited.

From Product Lifecycle Management Vision To Implementation – how PLM can make a difference BAE Systems Surface Ships adopted their Product Lifecycle Management strategy early in 2000. The business has witnessed continuing evolution of PLM and the presentation will highlight improvements in the design, build and through-life support of our products by using PLM. This presentation will outline why the company embarked on this PLM journey in the first place and will give examples as to how projects and processes are effectively managed on a day to day basis, as well as the vision of how PLM will support the Surface Ships programmes of the future. The impact on the business of technological and cultural change will also be discussed including how those involved in PLM have changed their perceptions over the years. Additionally, you will hear how important it is for the success of any company to have the utmost control over the elements in their development process and its lifecycle.

SPEAKERS ALSO INCLUDE: James Harris 1

Head of New Product Development, PZ Cussons (UK) Ltd

Steve Nevey

Business Development Manager, Red Bull Racing 4

Nina Dar

Managing Director, Cheeky Monkey Business Solutions

John Stark

What is Product Lifecycle Management? Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise A major part of PLM is the co-ordination of and management of product definition data. This includes managing engineering changes and release status of components; configuration product variations; document management; planning project resources and timescale and risk assessment. Today, manufacturing companies must address a variety of complex challenges: frequent design changes, disparate systems with incompatible data, regulatory compliance, and more. At the same time, globalization and changing workforce demographics are driving new demands for optimized product development processes, more effective collaboration, and distributed data management. PLM is increasingly helping manufacturers to solve these problems, saving money, time, resources and materials, while making better products, quicker.

President, John Stark Associates (JSA)

To view all the speakers and case study presentations visit www.themanufacturer.com/plmconnect

FREE* to attend for UK manufacturers *Delegate fees are £295+VAT per person, manufacturing delegates who register for one-to-one meetings can attend for free.

THREE WAYS TO REGISTER: 1: Book online by visiting: www.themanufacturer.com/plmconnect 2: Telephone Ben Walsh on: 0207 401 6033 3: Email: j.tudor@sayonemedia.com PLATINUM SPONSORS

A family

affair Man on a mission: Andrew Churchill is determined that government ‘gets’ manufacturing

Meet

Andrew: he looks like you, sounds like you, and probably thinks similarly, too. Andrew holds the position of managing director for a manufacturing SME, JJ Churchill Engineering, a company founded by his grandfather in 1937 to produce parts for the Spitfire engine. And, like you, he’s focused on a single, driving objective for his company: to remove the ‘s’ from SME. A chemist by degree, Churchill began his career with a Birmingham-based subsidiary of Burmah Castrol before moving to China to undertake joint venture opportunities in the steel industry. Transferring to the group’s screen printing division as an Asia/Pacific marketing executive, and responsible for strategic planning, he found himself stationed in Hong Kong and Australia, respectively. With the globetrotting bug beginning to wear off after eleven years, Churchill returned to the UK, intent on

Having produced components for aircraft including Concorde, Boeing’s Dreamliner, the Harrier jump jet and any number of RollsRoyce and Cummins engines, things appear to be going well for JJ Churchill Engineering following a tough recession. The company’s MD, Andrew Churchill, is thinking bigger, though. He speaks to Edward Machin. continuing his career within the conglomerate. Until an otherwise unremarkable family meal changed everything, that is. “I came home with the objective of taking a position in Europe, and popped in to see the folks one evening,” he begins. “‘I don’t suppose you’ve ever thought…’ said my mother, and, no, I hadn’t actually. My father and I agreed fairly early on that I wouldn’t come into the business; I’d no direct experience of engineering, after all. But the sales and marketing manager had just moved on to pastures green, and it was all somewhat serendipitous.”

Growing pains? Family businesses, though, can be fraught with danger — just ask the Corleones. How, then, did Churchill avoid sleeping with the fishes? “Anyone moving into the running of a company, as I did,

Interview Andrew Churchill

wants to be able to see opportunity to make a difference,” he says. “If everything’s running perfectly you may enjoy it for a week or two before the intense boredom sets in. We enjoy a fantastic quality record with Rolls-Royce of zero escapes; our diesel engine customers have come to expect 100 per cent ontime delivery. The product portfolio, many of which we’ve been supplying for decades, is stable. We’re paid on time and have almost no staff turnover, so why do anything different? Glass half full: JJ Churchill is here 73 years after its founding. Glass half empty — we’re still an SME.” The company doesn’t struggle on quality, delivery or cost, nor the ability to take on new technology — an increasing percentage of JJ Churchill’s equipment is, in fact, the first of its kind in the UK. Makes for pretty good reading, right? “Strategic mass,” he says; “that’s the Achilles’ heel. Thirty years ago a blue chip OEM dealing with a plethora of SMEs wasn’t seen to be a problem. But increased globalisation means that if Rolls-Royce, say, wanted to divide a tender because it was too much for a single SME to manage, the cost of that account is doubled. So we need to grow from the £20 million turnover company that we are today to one of approximately £50 million. That, in essence, is the challenge.” Churchill’s plan is to ship out low-cost work while maximising high-value, high technology-based engineering. “Our entire strategic vision starts with the premise that we’re in a high labour cost economy,” he says. “Could we move overseas? Perhaps, but it’s not something I’m particularly interested in doing. From my experience in Asia, yes, you can get a cost reduction, but it doesn’t take long for the local industry to pick up on what you’re doing and find a way to do it cheaper.” So how can, and does, his company compete? Very simply, by selecting niches where the cost of labour isn’t as substantial; hightechnology manufacture, in other words. In the gas turbine market, to name one, JJ Churchill seeks out the most difficult material to machine, the most obtuse geometry and prototyping where an eye-wateringly fast response time is required.

and bank; if you’ve got that firm underpinning then a recession is actually an incredibly good time to buy. This aggressive, counter-cyclical investment might be seen as slightly odd to some, but the ability to purchase equipment at a much enhanced price, greatly reduced lead time and when our competitors weren’t doing so meant that the turnaround was incredibly sharp for us.’ While the common thread remains low labour cost, JJ Churhill nonetheless continues to undertake manufacture which doesn’t fit within so forward thinking a remit: ferris exhaust manifold work cast out of iron, for instance. “This type of work shouldn’t be with us; it should be in China, where it can be sourced and finished cheaper than I can buy the casting,” says Churchill. “We’ll work with the customer to manage an exit, communicating to them our strategic plan and why some packages fit and others don’t. The other flavour is that we get a huge number of enquiries each month, the vast majority of which we could machine — the question is whether we should. Because we’re looking at sustainable, profitable growth for all our stakeholders, and thinking about the next 73 years, I’m looking for work which will give us the opportunity to drive

Fix up, look sharp This willingness to go beyond the comfort zone has led to what Churchill calls, “An exciting recession, with a number of interesting characteristics. It was both the sharpest and deepest we’d experienced in our 73 years. Pleasingly, however, the returns were sharper.” His company’s problems concerned not cash flow, JJ Churchill has no net borrowings, but supply chain management. “Getting our casting and forging houses to respond as quickly as we needed to the upswing,” he explains. “At the same time, we doubled our capital investment to £2 million during a period when turnover halved, purchasing state-of-the-art machinery in line with our ten year strategic plan. Crucially, it has resonance with both our customers

Interview Andrew Churchill

process improvement and minimise the labour cost component. Doing so means we can compete on a global stage, because the high value-add niches — whether this means product or process — we’ve chosen make sense in the UK.” Indeed, Churchill believes that high value-add — with its faster load and unload times and increased

cycle rates — must be adopted within Britain as a matter of course. “Whether we choose to recognise it or not, we are increasingly choosing to compete on the cost of labour,” he says. “And it’s a battle we can’t win. JJ Churchill can’t win, nor can Britain. The Manufacturing Framework — published on 6 December — is all about driving very positively towards high value-add, high technology sectors in which the UK can lead globally.”

You’ve been Frameworked

Biography Andrew Churchill 1995:

Graduates with MA in chemistry, University of Oxford

1993:

Joins Foseco International (subsidiary of Burmah Castrol Group) as JV negotiator for China

1994:

Responsible for joint venture partner prospecting and negotiation, based in China

1996:

Moves within Burmah Castrol Group to Sericol International. Responsible for China/SEA strategic planning, based in Hong Kong

1998:

Sericol Regional sales and marketing manager, based in Australia

2002:

Joins JJ Churchill as sales and marketing director

2005:

Becomes managing director of JJ Churchill

Churchill is a trustee director of Midlands Group Training Service — an education charity focused on the development of engineering-associated competences — and sits on EEF’s board, as well as Chairing the East Midlands Regional Council. He was a member of the previous government’s Ministerial Advisory Group on Manufacturing. He is married with two children, and enjoys running, singing, cooking and swimming.

“I don’t mind admitting that I was nervous,” he says of the Framework document. “We hadn’t seen a change of regime for a number of years, so we weren’t used to a fairly fundamental judder in policy. I was getting concerned around September time that there might have been some policy stasis; what I didn’t know was there was a lot off paddling beneath the surface. Having now seen a number of drafts, I’m a lot more positive and really rather impressed, actually. “There is an awful lot of detail to come, but I can now see the fundamentals in place for the first time.” Churchill cites an example: if he ran JJ Churchill without a business plan or vision stretching at least five years, he’d run it into the ground — or be sacked before it got there. The same, he says, goes for our economy and manufacturing’s place in it. “Traditionally we haven’t had a view that extended beyond a Parliamentary term. If the economy is working beyond, as it is, then we need policy which matches it. The document is going to lengthen it for a period of ten years, which is a change — a gutsy one, at that. Of course, it’s not yet a strategy at this stage, but what’s really positive is that there’s an understanding that in business we expect our progress to be measured from a baseline, which now appears to be the case with Westminster.” He is forthright when he says he will work with anyone in creating policy who has a passion for manufacturing and recognises that it is one of the core drivers of our economy. “I don’t care what political flavour they are, either, so long as they have manufacturing at their heart,” he says. “There’s a quid pro quo here, though: we can’t whinge that we haven’t influenced policy or that Whitehall doesn’t ‘get us’ if, when the opportunity to influence comes around, we wait to be invited in. We should be battering down their doors. “At JJ Churchill we are, like the majority of manufacturers in this country, an SME. We wear a variety of hats, and could spend twenty four hours a day at work and still not finish, so it’s a question of prioritisation. If a statistically significant proportion of those in manufacturing spend a little more time talking, educating and getting the MPs, ministers and civil servants out to our businesses then we really can make a difference. The corollary is that if we don’t, we’re reaping the future that we haven’t bothered to sow.”

Have your say at www.themanufacturer.com

Glass car A Manchester-based firm has manufactured a glass-made rendition of Lewis Hamilton’s F1 racing car to raise money for charity. Roberto Priolo reports on the eight steps behind its construction.

Clive

Sparkes, a designer at Go Glass Limited, decided to create this unique piece of artwork and then auction it to raise money for children’s charity Clic Sargent after losing his brother-in-law Ben Davis to leukaemia. The F1 car will feature at Clic Sargent’s “Formula 1” charity auction early next year. It took Sparkes over 100 hours to make the Mclaren MP4-25 out of a single panel of glass. The finished product weighs in at 100 kilos and is 3.6 metres long. The process to create the rendition included surface sandblasting and shading using airbrushing techniques. Mr Sparkes said, “The combination of our design and manufacturing skills has been critical in accomplishing this. It is important that we continue to appreciate traditional skills and encourage talent within the glass trade.”

Stage 1: The glass is CNC cut and polished from a single panel of 12mm glass and toughened.

Family-run Go Glass specialises in high quality glass and mirrors. Through its dedicated design department and the latest computer-aided automated machinery, it produces a large range of standard and custom-made items, from furniture to shower enclosures. The company, established 32 years ago, showcased the glass car at the international glass exhibition Glasstec in Germany in September. It had previously created a replica of World Superbike racer Carl Fogarty’s Ducati 996 motorcycle.

Stage 2: The panel is laid flat and covered with a low tack removable vinyl.

Stage 3: Individual sections of the image are enlarged, traced and then rubbed through onto the vinyl.

Stage 6: The vinyl is weeded in over 100 stages and sandblasted to give the 3D effect

Stage 4: The full image is cut from the vinyl and the first stage of the design is peeled away

Stage 7:

Stage 5:

Stage 8:

The first stage is sandblasted to reveal the brightest white areas of the car.

Areas which appear black in the final image are left masked and remain clear

Finer details for areas such as the wheel and helmet are achieved by airbrushing with aluminium oxide.

Have your say at www.themanufacturer.com

A night to remember The annual Manufacturer of the Year Awards brought the best firms in the industry into one place, and what a celebration it was. Roberto Priolo reports.

Hosts

can rightly deem an evening a big success when the room is so packed with their guests that they have to eat their meals themselves in the corridor. This is what SayOne Media staff had on their minds on November 18th at The Manufacturer of the Year Awards ceremony at the Chesford Grange in Kenilworth. The gala event was a sell-out, with over 450 people, mostly manufacturers, attending the dinner. Both big and small names were rewarded, many of whom were debutant entries. Winners ranged from big companies like Constellation Europe, part of the largest wine company in the world, Worcester-based Joy Mining and Michelin Tyres UK, to successful Sheffield-based SMEs Gripple and DavyMarkham. Castle Precision Engineering was crowned The Manufacturer of the Year. The family-owned Glasgow precision engineering firm, which was established in 1951 by Jan Tiefenbrun, beat off strong competition by other category winners such as runner-up, motorsport engineering company Xtrac, and third placed cleaning product manufacturer Robert McBride. The Manufacturer of the Year Award was judged by Joe Greenwell, chairman of Ford of Britain, and Allan Cook, chairman of engineering group Atkins, and was lead-sponsored by Royal Bank of Scotland for the fourth consecutive year.

Castle Precision Engineering also collected the award for the Kingston Smith-sponsored Best Small and Medium-Sized Enterprise. Owner and CEO of Castle Precision Marcus Tiefenbrun said: “We were absolutely delighted to win both the SME and Manufacturer of the Year Awards 2010. These awards are the culmination of many years of effort and recognise the excellence we aspire to. It is a great honour to win these highly prestigious awards, and this year we won in the face of intense competition from some of the best companies in the UK. “We have been judged to be the very best manufacturer in the whole of the UK. We must thank our customers for the valuable contribution they have made to our advancement as a manufacturer. Their assistance, commitment and partnership have been instrumental in our success. This is a tremendous achievement for Castle and once again a tribute to each and every person working here.” In previous years, the judging was made on paper, while this year a judging day was introduced, during which 108 manufacturers presented their entries. Three categories were so closely contested that runners-up were given Highly Commended awards. Case New Holland UK of Basildon was only just pipped by Joy Mining Machinery in the World Class Manufacturing category and the UK division of Swedish oncology machine group Elekta was unlucky

Specialfeature The Manufacturer of the Year Awards

not to have scooped the Supply Chain & Logistics award, although Kent brewer Shepherd Neame was, overall, a worthy winner of this category. Shepherd Neame’s production and distribution director, Tom Falcon, said: “We are extremely proud to have won this Award – it makes a big difference to a company of our size and history and it provides Shepherd Neame with the recognition I feel it deserves. To transform the supply chain and improve our customer service we have had to make very significant changes at Shepherd Neame.” Joy Mining Machinery’s operations manager, Paul Burton, commented on the award. “This very prestigious award is a great endorsement of the significant effort and progress made to date at the Joy facility in Worcester. As a team, we are taking the company forward and we should all be very proud. We need to use this in the challenges we have to face going forward and use it as a springboard to really kick on with our Operational Excellence program. We also acknowledge the support and leadership given by the Joy Eurasia board and corporate leaders in the US,” he said. Other winners included Willerby Holiday Homes (Chairman’s Award), Michelin Tyres UK (Manufacturing in Action Award), Ultraframe (Financial Management Award) and Permastore (IT in Manufacturing Award). Lord Digby Jones of Birmingham delivered a knock-out speech, driving home the importance of manufacturing in the UK to an acquiescent audience with characteristic wit, intelligence and a deft common man’s touch. Receiving several rounds of applause for emphasising the importance of business as the sole real wealth generator and originator of all tax revenue, he humoured the packed house with patriotic anecdotes on subjects from Winston Churchill to the Austin Allegro. He made a plea that it was time for industry to stop bashing the banks and to work together. He said that a prosperous future UK economy relied on growing both manufacturing and the financial sector in parallel, without mutual exclusion, adding that there is evidence that access to finance for companies is improving. Lord Jones is a non-executive director of a high street bank, but his strong links to Jaguar Land Rover and background as director-general of the CBI gave gumption to his views that it was time to bury the hatchet with the financial sector. Reserving his most emphatic message to the end, Lord Jones tackled the UK skills gap which many believe needs urgent action, and focused on basic education deficiencies as a barrier to global competitiveness. He warned of spurning the gifts of a good education, saying: “In the UK we are entitled by law to 11 years of full-time, compulsory and free education, but we take it for granted.... If manufacturing is going to sing, it’s going to happen off the back of constantly improving and putting knowledge into what we do and then selling it at a premium price around the

Castle Precision Engineering, winners of the SME Manufacturer of the Year and The Manufacturer of the Year awards

The Manufacturer of the Year Awards aim to raise the profile of UK manufacturing and celebrate the achievements of some truly world class companies. All those nominated should feel extremely proud of their achievements; the competition this year was tough, though it is exciting to see the success of so many manufacturers in the UK. RBS has, as part of our broader commitment to the sector, sponsored these Awards for the past four years and we are delighted to add our congratulations to those short-listed and the overall category winners - achievements to shout about. Peter Russell, Head of Manufacturing, Corporate & Institutional Banking, Royal Bank of Scotland

Joy Mining Machinery, winners of the World Class Manufacturing category

world. But we won’t do that if half the kids can’t get a grade C or above in English or maths.” Dancing and manufacturing are two pasttimes not commonly associated, but when the band struck up the guests demonstrated clearly that the two are by no means alien to one another. There was even a couple of routines of the more romantic variety (at least that’s what we’ll call it) which had one or two of us here at SayOne turned a little crimson! Beyond the ceremony itself, the whole evening was great entertainment. Aaron, part of the Willerby Holiday Homes party, was apparently in training for the 2012 London Olympics, taking a flying long jump out of the conference centre doors and nearly flattening The Manufacturer’s editor. No harm done Aaron.

Have your say at www.themanufacturer.com

Special feature MDC 2010

Masters o f o u r f at e Jane Gray reflects on the presentations and discussion at The Manufacturer Directors Conference 2010 and what the conclusions mean for industry responsibilities and behaviours as we emerge from recession.

session, which included advisors in the creation of the governmental Manufacturing Framework document (published on Dec 6th) such as Prof. Mike Gregory, head of the Institute for Manufacturing at the University of Cambridge and Andrew Churchill, MD of advanced engineering firm, JJ Churchill Engineering, offered a particularly direct opportunity for delegates to get closer to policy formation and express desires for certain changes to regulation. These included a tax regime more sympathetic to manufacturers with a more sensitive appreciation of manufacturing needs, i.e. capital investment, and the export duty on certain goods, particularly, as Richard Lloyd a delegate from Constellation Wines expressed, on alcohol. But aside from these assertive requests, conversation on routes to growth was marked, not by calls on government, but by ways in which industry can function independently, with better planning, collaboration and strategic investment to secure a future which does not rely on government intervention. As Mr Churchill expressed, the age of organic growth in the number of UK SMEs must come to an end and be replaced by more macroscale ambitions.

Pragmatic conference programme

The

Manufacturer Director’s Conference 2010 (MDC) had all the hallmarks of a great industry conference. Case studies and keynotes, the expected representation from academia and trade associations, but this year the standard business lexicon of efficiency and effectiveness was supplemented by a somewhat more evangelical tone. Giving context for the rest of the day’s presentations, the event kicked off with a frank appraisal of the economic outlook for British industry from Mark Smyth, senior economist at RBS. The message he conveyed was clear cut. Private enterprise must shoulder the expectations of the nation and expand to fill the vacuum created by public sector cuts, for every one per cent of which 0.5% is slashed from the UK’s GDP. How can manufacturers hope not only to effectively plug this gap but to stimulate growth and avoid the widely feared double-dip recession? This was the central subject for investigation throughout the remainder of the MDC’s cross sector presentations. Given the hardships of the last two years, the scale of the challenge and the competitive global environment in which it must be met, there was a surprising show of confidence. Of course speakers and industry spokesmen at MDC took advantage of the chance to voice dissatisfaction with government support for industry and suggest routes towards a more hospitable investment environment in the UK. The panel debate

Lessons in how to achieve this independent resilience under a host of operational conditions were showcased in presentations that covered, among others: how to align with environmental developments for long term sustainability; how to organise strategy through a management buyout; what to consider for future skills needs and succession planning, and what changing market characteristics mean for service offerings and relationships with customers. Delegate feedback found the presentations to be pragmatic, mapping matters of policy against the real challenges of running a successful enterprise, as well as giving directors and senior executives insight into how, by engaging with lean development programmes, interacting with their community and innovating the product and the process will help them work towards tangible business goals for productivity and sales. One attendee commented, “Going to The Manufacturer’s conference is becoming a fantastic addition to the resumé for manufacturers,” while another simply stated, “it is a focused manufacturing event with pertinent topics of real interest.”

TM is keen to encourage readers to continue the debates raised at our 2010 conference so that we and the wider manufacturing community can keep making relevant contributions to industry challenges. If you would like to comment on any of the themes mentioned here or highlight other key areas for best practice or improvement, please contact our editorial team at press@sayonemedia.com. Have your say at www.themanufacturer.com

RegionalFocus In association with:

The Midlands UK manufacturing’s spiritual home bounces back from downturn

Summarise manufacturing in the Midlands they said. Pull the other one. You would need to write 10 books, let alone five pages, to do the story justice. So don’t waste words with this claptrap and get on with it man, as they might say in Staffs.

Midlands Makers – News in brief David Fox, chairman of Power Panels Electrical Systems in Walsall, is on a mission to reform the way skills are delivered to people training in manufacturing firms. In November he said competitiveness is being damaged because companies are failing to invest in building fundamental workshop skills, and is calling for companies to develop in-house training and not rely on government support. PP Electrical Systems is an Employer Champion for SEMTA. Yamazaki Mazak will showcase its new INTEGREX j series multi-tasking machine at Autosport Engineering 2011, January 13-14. The INTEGREX j can reduce a two-machine process down to one machine and reduces programming time. Mazak’s European headquarters in Worcester employs about 600 people and has the capacity to make 160 machine tools a month. Bissell Homecare, a manufacturer of vacuum cleaners and other household cleaning products, on December 2nd signed a three-year contract with East Midlandsbased 3PL provider RCS Logistics for full warehousing services for Bissell’s UK operations.

Birmingham,

Derby, Coventry, Leicester, Stoke-on-Trent, Wolverhampton. Place names that resonate with industrial heritage and power. Many consider the birthplace of the Industrial Revolution is the Arkwright Mill in Cromford, Derbyshire, which is now a World Heritage site. It was here that engineering pioneer Sir Richard Arkwright built the world’s first successful water-powered cotton spinning mill, a big step towards large scale factory technology. Telford in Shropshire can also claim to be the spiritual birthplace of British manufacturing, where the nearby Ironbridge Gorge Museum is a superb preservation of the Midlands’ contribution to British industry, housing bygone mills, engines, furnaces, and workshops. Combining the West Midlands and East Midlands, this is by far the biggest region for manufacturing output in the UK, generating some £27.5bn of gross value add a year (East Midlands is £13.6bn and West Midlands £14.9bn). Manufacturing employment here tops 500,000 and the biggest sectors by output are automotive, including the vast components engineering industry of the Birmingham conurbation, food and drink, construction equipment, aerospace, and transport including rail. Several sectors and companies are world class manufacturing exemplars. Staffordshire and Leicestershire, for example, make more construction

RegionalFocus The Midlands

Manufacturing partnership: Derby and Rolls-Royce

equipment than any European country, the nucleus of a sector worth over £8.5bn in the UK with over 80% of production exported to more than 200 countries. JCB’s global headquarters and backhoe factory in Rocester and Caterpillar Leicester, which employs about 1,400 people, are the prime movers here. The Midlands is the UK’s epicentre for certain types of food and drink manufacturing, especially for food such as processed meat. The Leicester to Melton Mowbray corridor forms the nucleus for a vast meat products, chilled and frozen food industry, including companies like the £650m Samworth Brothers group which helped Melton Mowbray to achieve protected status for its eponymous pies. Walkers, Iceland Foods, Golden Wonder, Claybroke Mill and a host of family-owned SMEs dominate this sub-region’s employment. Ginsters located a factory in Leicester partly for its central UK location but also to take advantage of local food manufacturing skills. The Food and Drink Federation says that food and drink makes up 19% of manufacturing output in the East Midlands (West Midlands 11%) and 17.75% of manufacturing employment, the highest in England and Wales.

JLR lives on in Birmingham Jaguar Land Rover in Solihull, Castle Bromwich and Gaydon, and Toyota in Burnaston dominate the Midlands automotive sector. Modec, founded by Lord Jamie Borwick, is an upwardly mobile maker of zero emission commercial vehicles in Coventry. It is finding success with a US joint venture with Navistar and with some of the big retailers and courier firms like FedEx and Tesco. Manganese Bronze, makers

Derby is the HQ for the Civil Aerospace business of Rolls-Royce. The company is the largest private sector employer in Derby, employing over 11,000 people directly and has been manufacturing continuously in the city for over 100 years. Over the last 10 years Rolls-Royce has developed an entirely new large civil engine product range, the Trent series, which has been both designed and produced in Derby. The Sinfin site (Derby) includes the main module and engine assembly lines, engine test beds as well as manufacturing facilities producing a range of components including turbine blades and rotative components (shafts and drums). It is also home to the Gas Turbine Services business, with a modern engine repair and overhaul facility on site. Derby is also home to the company’s nuclear submarine activities, based at Raynesway. Rolls-Royce has more than 50 years experience in nuclear engineering and has the largest nuclear skills base of any UK business. Derby has the highest export value per head of population in the UK. The proportion of skilled employees in Derby is 2.4 times the national average.

The Rolls-Royce RB211-542H powers the Boeing 747-400

Key people – The Midlands

tuart Fell is chairman and owner of Metal Assemblies in West Bromwich and chairs the EEF West Midlands Regional Council. As an automotive supplier his company had a very tough recession, where he attributes a four-day week, in part, to saving the business. He has been interviewed in several national newspapers. On government policy he told The Guardian in April: “They really, really, really have to do everything they can to encourage people to invest. Without investment we are not going to get out of it at all. We need a tax regime or capital allowances regime that allows me to see that when I make an investment I can get a return quickly.” Stuart Fell, chairman Metal Assemblies Andrew Churchill, managing director, JJ Churchill Engineering Andrew Churchill is a board member of EEF, chairs the EEF East Midlands Regional Council and is a trustee director of Midlands Group Training Service (see Interview on page 22). Sue Kirby, head of external affairs, EEF Sue Kirby is head of external affairs for EEF in the Midlands. She is responsible for member engagement, managing EEF’s relationship with local, regional and national stakeholders, supporting the development of EEF’s national policy and liaising with the media. She started her career in manufacturing and before joining EEF was director of policy and communications at East Midlands Development Agency. Simon Griffiths is the chief executive of the Manufacturing Advisory Service

One to Watch – Metal Assemblies

etal Assemblies in West Bromwich specialises in the production of presswork and assemblies for the automotive industry. Over the last 10 years, the company has trebled in size and invested heavily in all parts of the business. In August 2010 the company took delivery of the latest model 400-tonne Aida roll feed press which complements the company’s existing production facilities.

CAD image from Metal Assemblies

In recent years numerous robotic assembly and welding cells have been put into production and Metal Assemblies has developed its own automated optical inspection process. The company has also worked closely with the Warwick Manufacturing Group at Warwick University to strengthen various parts of the business. Current production includes components for the BMW Mini and various Nissan, Honda and Jaguar Land Rover vehicles, among others. “In today’s fast changing automotive industry, it is becoming more and more important to compete by being cleverer than the low cost economies. Metal Assemblies believes it is winning on that count,” says chairman Stuart Fell, who is regional head of EEF in the West Midlands. of the Hackney cab, is also based in Coventry, while commercial vehicle maker LDV, formerly Leyland DAF Vans, went into administration in October 2009. Toyota faced a public relations crisis in 2010 with product recalls of the accelerator pedal on some models. However Burnaston will be best known to many in the UK car sector as being particularly adept at implementing short-time working and pay freezes on a largely compliant workforce, when the recession bit. Thousands of jobs were saved at Jaguar Land Rover’s West Midlands plants in October. JLR said in September 2009 that one of its factories, either Castle Bromwich or Solihull, would close within 10 years. But the Unite union reached a new pay deal with management to secure the jobs of about 7,000 Midlands workers – 5,000 at Solihull, 2,000 at Castle Bromwich. Managing director of Jaguar Cars UK Geoff Cousins said the news was a “shot in the arm for the whole region”, the BBC reported. “Our plans stretch out five and 10 years,” he said. “We just have to prove ourselves as we move through that period and be successful. JLR and Toyota between them support hundreds of engineering and fabricating businesses in the region (see boxout, Metal Assemblies).

Midlands aerospace roars Rolls-Royce is the biggest private sector employer in Derby with 11,000 employees, and one of the biggest in the region. The engineering group needs little introduction, nor emphasis of its importance to the Midlands aerospace supply chain, providing long term contracts to many local engineering firms such as Caparo Accles & Pollock (see page 146) and JJ Churchill Engineering (Interview, page 22). The BBC reported in October that RollsRoyce Derby contributes £3.1bn directly to the local economy with a further £1.5bn generated indirectly from the aerospace firm’s factories and offices. The company has had a difficult autumn, troubled by a faulty Trent 900 engine on a Qantas A380 aircraft that became a headline aviation incident. Rolls-Royce’s investigations concluded that the fault was specific to the Trent 900, and that the failure was confined to a specific component in the turbine area of the engine. This caused an oil fire, which led to the release of the intermediate pressure turbine disc. Rolls-Royce stated that safety remains its number one priority. Despite a big order book of $54bn, Rolls-Royce said it has started consulting unions about 140 proposed job losses at its jet engine assembly and test facility. But local newspaper Derbyshire Evening Telegraph reported that joint chief negotiator for the Unite union at the Derby plant said he believed that between 500 and 600 positions could go in Derby, although no timeframe was given. In spite of difficulties imposed by the Trent 900 furore, the global engine maker continues to secure huge orders for its world class products, including one in November worth $1.8bn to power 20 aircraft for Air China. Derby is a bastion of manufacturing, with Rolls-Royce, Bombardier at Litchurch Lane (3,000 employees) and Toyota Burnaston (about 3,500) dominating the private sector. Centre for Cities, a think tank, in October said the city was over reliant on large employers. Derby is placed among the bottom 20 UK cities for firms with new VAT registrations between 1994 and 2007 and the report recommends that the city focuses on its strengths like advanced manufacturing and encouraged it to be more outward looking. But it remains a

Regional focus The Midlands

very highly skilled city (see box-out). The Midlands Aerospace Alliance was formed in 2003 to support and represent the aerospace industry across the Midlands region, with help from the regional development agencies Advantage West Midlands and the East Midlands Development Agency. Under Dr Andrew Mair’s stewardship, the body has built up a membership of over 300 companies in the Midlands, with 14 outside the region, most of which are manufacturers or servicers to manufacturers. It collaborates with academia – including Loughborough, Coventry and Leicester universities – and trade groups to facilitate knowledge transfer, and has 15 meetings and events scheduled until the end of February.

Bioscience hub Nottingham has long been a hotspot for bioscience and medical research and development. BioCity in Nottingham provides business support, finance, labs and offices to bioscience, pharmaceutical, medicine technology and healthcare companies. Launched in 2003, the 129,000 sq ft awardwinning site hosts nearly 70 companies and has over 525 employees. Several companies are making and selling pharmacy products commercially. “12 of 70 companies are manufacturing and about 2/3 are R&D based companies, the rest are patent agents and ancillary service providers,” says Miranda Knaggs, marketing manager at BioCity. The facility is self-funding now, having had funding from the local RDA and EU. “It now has its own investment fund, Mobius Lifesciences, which can invest up to £100,000 in viable projects,” says Knaggs. BCM (formerly known as Boots Contract Manufacturing) has been present in Nottingham since 1933, but divested as a standalone company within Allliance Boots in 2009. It makes 5,000 product lines and variants, from healthcare to dental care and baby products, and employs 1,200 people with more factories in France, Germany and Poland. One of the biggest recent improvements at BCM was its new IT system that provides total visibility of its customer stock levels and forecasts. “It allows us to respond to customers’ fluctuations in demand and takes away any chance of unexpected demand shift coming in to us,” says general manager

Delcam FAW signing

One to Watch – Delcam looks East

onald Welborn, a director of Cambridge University, started a company to develop CAD and CAM software in 1965. Today, Delcam plc is a market leading supplier of machining software with 230 UK employees and 550 globally, and forecast turnover for FY2010 of £35m. Last month, Delcam’s chief executive Clive Martell (pictured right) was chosen as an industry delegate on Prime Minister David Cameron’s first official visit to China. The delegation included senior UK Government representatives and industry delegates from leading UK manufacturers including Rolls-Royce, GKN and Doosan Power. Martell was a member of the Advanced Manufacturing panel at the Business Summit organised by the China-Britain Business Council and UKTI. He also concluded a long term agreement covering software support and maintenance with First Auto Works, Delcam’s biggest Chinese customer. “I was extremely honoured to be chosen to take part in this important visit,” Martell said. “It provided a huge boost to Delcam’s profile in China, especially among larger companies and government officials.” Sales of software and supporting services in China have increased by more than 50% in the first three quarters of 2010, compared with the first nine months of 2009, and China is now the firm’s biggest market for new sales.

Phil Lund. “This means we can flat-line our production and improve our efficiency and that we can manage our customers stock volumes for them so that they can concentrate on their core business” (see TM November for a profile on BCM).

Train and rail industry gets £8bn boost The Midlands is home to the UK’s biggest rail and transport manufacturing base. Bombardier in Derby, with about 3,000 employees, is a front line candidate to build some or all of the new Thameslink carriages, part of the Transport Ministry’s £8bn budget to improve the rail infrastructure that was announced in November. Hundreds of other SMEs making parts for rail infrastructure will benefit from the investment, many of them in the Midlands. Representing some of these firms is The Rail Alliance, which claims to be the fastest growing rail networking organisation in the UK. Like the Midlands Aerospace Alliance, EEF and the MAN group (see box-out), it is a sound example of Midlands’ business collaboration. Spanning all aspects of the railway sector and its supporting industries, The Rail Alliance taps into both existing

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Flying Probe, as used by a MAN group company

Collaboration in action – MAN finds safety in numbers The spirit of collaboration has helped a unique manufacturing group in the West Midlands shrug off the effects of recession and post encouraging results in 2010. MAN is made up of 10 independent companies that have joined forces to share capabilities, pool skills and pursue new contracts both at home and abroad It is an approach that MAN believes is unique, and one that is already reaping dividends with the combined force picking up £10m of orders in the automotive, medical and white goods sectors. Its success lies in ‘capability compatibility’, where each member offers a complementary engineering discipline. Founding members Alucast, Barkley Plastics, Brandauer, FW Cables and Westley Engineering have now been joined by Advanced Chemical Etching, Excalibur Engineering, Note UK, PP Electrical Systems and Wrekin Circuits. Together the group, which employs more than 600 people and has combined sales of £60m, can offer existing and potential customers technical excellence in every aspect of mechanical, electrical and electronic engineering. “MAN was originally set-up to secure contracts that could be shared around the members and we’ve enjoyed significant success in doing this,” says David Spears (left), chairman of MAN and managing director of precision pressing and stamping company Brandauer. “When the recession struck in 2009 it served a different purpose. Every company saw sales drop, some by 50 per cent. Being part of a group meant I could pick up the phone to a fellow MD and we could share issues and tackle problems together. The end result saw members work together to reduce costs and increase efficiencies and this gave us a decent platform when the upturn arrived.” And arrive it has. In the last 12 months, every MAN company has reported increased sales and some are now in the process of recruiting more people to cope with demand. A new identity is also being used to spearhead a big sales push in potential new markets including, medical, micro machining, rail and renewable energies. www.man-group.co.uk

and aspirational business opportunities, providing companies with opportunities to network, collaborate and innovate with suppliers and customers, to help maintain and grow the prosperity and sustainability of businesses. Headed by Colin Flack, The Rail Alliance is supported by the Manufacturing Advisory Service West Midlands, UKTI and the European Regional Development Fund.

Recession in the Midlands – First response While it is futile to try to summarise one feature common to all manufacturing in the Midlands, one important point is the positive way in which companies here responded to the recession. “Midlands businesses reacted rapidly and efficiently to the economic downturn by putting in place measures to reduce redundancies,” says Sue Kirby, head of external affairs for EEF Midlands. Companies across all sectors in the Midlands were swift to recognise the need to retain skilled workers so they could hit the ground running when the recovery came, Kirby says. At the same time the recession triggered an appetite within businesses to become even leaner; reducing inventories, reevaluating processes and implementing cost saving measures, for example, energy saving. “Nevertheless the region, especially the West Midlands, was hit particularly hard with significant job losses. While many businesses have reported they are starting to re-recruit some of those they laid off, there is still a long way to go before they recover to pre-recession levels,” says Kirby. How did the Midlands fare in the recession? Official HMCS figures of insolvency and bankruptcy petitions filed in the High Court and county courts of England and Wales, show that in the last period of true negative economic growth, Q4 2009, the Midlands region as a whole had 323 company winding up petitions filed, which was 7% fewer than in Q4 2008, the first recessionary quarter. This is quite robust compared with the South East, which had a much higher rise in insolvency petitions in 2009. It is interesting to note that, in this 12-month period, government figures show there were more manufacturing job vacancies (in job centres) in the Midlands than other areas of the country. With thanks to Tim Foden at EEF for government statistics.

FUNDING FOR GROWTH the corporate funding needs of manufacturers in a recovery cycle

An industry wide survey conducted by Lloyds Bank Corporate Markets in association with The Manufacturer.

With last month’s UK Manufacturing PMI at a 16 year high and wider economic indicators showing that manufacturing is bouncing back from the recession well, all eyes are now on growth. The Government’s Growth Review published on November 29, EEF’s ‘The Shape of British Industry’ report making the case that the UK needs more big companies (see page 16), pending large public sector redundancies and the budget deficit all point to the urgent need for UK companies to grow. But growth needs funding, and it is fair to say that the appetite for borrowing in the last 18 months for many companies has not been strong. Cost of capital has been high and companies have been more focused on replacing depressed orders and restructuring balance sheets than borrowing for organic expansion and acquisition. Acquisitions for mid-caps have been very rare in 2009 and 2010, with smaller bolt-ons being the more common means of expansion. “Companies have been involved in corporate restructuring to lower their cost base, looking at their balance sheets with respect to inventory levels, debtor collection and creditor terms,” says Chris Chambers, Relationship Director, Diversified Industrials at Lloyds Bank Corporate Markets . “The focus has been on better working capital management and deleveraging to an extent. “Leverage has fallen, with many boards now focused on maintaining leverage below two times, where as historically many were comfortable up to three times. Corporates are now also more willing to fund expansion, through a combination of equity and debt.” In early 2011, the test is whether, funding needs are changing to reflect the economy’s needs for growth. Or are companies still waiting for better visibility in their markets and return of economic confidence to start growing again? Will this retrenchment lift during the next phase of the recovery to drive growth forward?

Confidence returns Chambers colleague and fellow Relationship Director, Stuart Apperley comments: “There is currently less shareholder pressure on companies to do share buy-backs. In a previous cycle, for companies that had done nothing meaningful in M&A for 18 months with very low balance sheet leverage, there was pressure from shareholders to return some value. With shareholders now valuing strong balance sheets is this beginning to change?” “I believe that will change in 2011 as confidence returns and shareholders will want to see some return on their investment,” adds Apperley. In January, Lloyds Bank Corporate Markets and The Manufacturer will conduct a survey aimed at Finance Directors from manufacturing companies to assess growth opportunities in the market and the implications for funding. The anonymous survey will gauge the appetite for growth over the coming year, both in the UK and internationally, as well as considering the associated challenges with respect to funding and more generally. The results of the survey will be published in The Manufacturer in April 2011. Stuart Apperley Relationship Director, Diversified Industrials Lloyds Bank Corporate Markets +44 (0)207 158 2929 stuart.apperley@lloydsbanking.com Chris Chambers Relationship Director, Diversified Industrials Lloyds Bank Corporate Markets +44 (0)207 158 6609 Chris.chambers2@lloydsbanking.com

The dangers of Lean = Mean In his 2010 budget, George Osborne outlined the need for considerable cuts across the public sector

Anthony Bennett draws on his experiences of lean implementations in the defence sector and public service to illustrate how lean can go badly wrong when the focus is flawed and respect for people is forgotten.

The Author Anthony Bennett was involved in lean implementation and wide ranging continuous improvement initiatives following an extensive career in the UK defence sector. He is now an independent consultant and lean and leadership trainer.

Lean Tools

both the private and public sector, recession has created a renewed drive to reduce costs through headcount reductions and other ‘efficiency’ savings. ‘Lean will solve that’, consultants will tell you. ‘We are going lean’, reflect state managing directors, expecting a quick return for the bottom line. ‘Oh great’, say the workforce, wondering which priority of the latest ‘top priorities’ this one falls into! But is Lean the answer and, by implementing it for such short term gains, what damage is caused? I would argue that lean has to be considered for the long term improvement strategy and needs to be separated from the negative implications of economies and head count efficiencies if it is to gain traction or achieve results.

Lean = mean? In 2006, a major public sector organisation required to immediately reduce costs and, with limited options available to the organisation, difficult decisions had to be taken. With the assistance of external consultants it was decided to utilise ‘lean thinking’ in order to reorganise and find the savings required. Board Members were handed the headcount reductions they had to find within their own departments and, with the assistance of the consultants, workshops were organised to teach the five principles of lean thinking along with the eight wastes: transport; inventory; movement; people elements; waiting; over production; over specification; and defects. The ‘success’ of these

Management Directed Solutions

Fake Lean

Leadership and Lean

workshops was based on the application of these ideas to the targeted headcount reduction. During the average workshop, process maps were established and green dots were used on Post-It notes for ‘value add’ activity, red dots for ‘non-value add’ activity. But with the focus of the workshops being to find and implement the required headcount reduction, employees in the workshop were soon dismayed to see their own activities being covered with red dots, their outputs being ‘non value add’ by consultants. To those individuals, lean was mean and threatening. In the first year of these workshops the headcount reductions were identified and while most were absorbed with no ‘real’ jobs lost, the experience of lean among the workforce left some devastated. Their engagement with ‘improvement’ was tainted and their willingness to engage in future improvement disappeared. Womack and Jones in their excellent book Lean Thinking warn of the dangers of this approach. They advocate that successful lean implementation is a five year strategy, so lean is for the long term. They also state that they would not involve themselves in organisations using lean for purely job cuts and that promises should be made to employees that jobs would not be lost through lean implementation. However, the latest government spending reviews have given clear warnings that real jobs will be lost as the public sector leans-up and it is expected that manufacturing and other private sector companies will recover such job losses in order to achieve growth and avoid massive increases in unemployment. But how does this ambition for growth sit with an industry strategy of ‘doing more with less’ and the necessary downsizing for a smaller but higher skilled workforce? This is where a realistic approach has to be taken. Ideally where waste in the process has been removed, the additional capacity can and should then be utilised for further value creation and the business can explore new opportunities to grow. When this approach is adopted, employees will be far more willing to participate in lean workshops, find the waste themselves and then focus on flow and finding value for the customer. At times roles do have to be amalgamated and jobs lost. This makes any promises of ‘no job losses from lean’ hard to keep. The important principle to adhere to in this, and all areas of lean, is the preservation of trust. If trust is eroded, your chances

Lean Tools

of achieving long term gains will also diminish. This is why the benefits of creating a ‘real lean’ culture cannot be underestimated.

Respect for People Many of the respected commentators on lean advocate respect for people as being the central tenet behind ‘real lean’. Clearly this was not demonstrated in the lean implementation described above. Of course there is a place for tools and techniques, the unemotional and analytical side of the lean methodology, but on their own, they will not bring your workforce with you. Respected employees, with a deep and extensive knowledge of their work should be fully involved in designing any improvement to their departments. For those embarking on their lean journey this can, at times, be difficult to accept but a successful leader must both accept this for themselves and encourage others to understand what it means for their day to day roles. Give them the requirement

By giving clarity to the ‘what’ and ‘why’ explanations at the beginning and, leaving the ‘how’ to the employees, bottom up ideas were allowed to develop and, importantly gain the required buy-in for change for improvement (the what), explain the need for change (the why) and take on whatever discussions necessary to ensure that both elements are understood. Crucially, however, the ‘how’ should be left to the workforce to devise. This was a steep learning curve for managers in the early stages of the particular public sector lean programme I have described. To start with, proposals were offered by employees in workshops for the redesign of organisational structures and outputs were amalgamated with those from other sections only ideas to be rejected as unacceptable to management! Sometimes whole days had been assigned for these so called improvement workshops but ‘political sensitivities’ and ‘lines not to be crossed’ had not been exposed to the workers at the start. The how of improvement will only be

Management Directed Solutions

Real Lean

Leadership and lean

Andie Hallihan, founder of lean training specialists Applied Angle, reviewed ‘The dangers of lean = mean’ for TM and has the following comments to contribute on the experiences it shares and the topic as a whole:

We work with some fantastic lean organisations. Take Delphi. Delphi Diesel Systems has developed management infrastructure so that new entrants to the business are immediately supported in terms of controlling and learning – whether they realise it or not. This way, the right candidates grow into the business in ways that are obvious (the Delphi Standard) and not-so-obvious. This helps differentiate Delphi in their rate of productivity growth in a competitive sector.

“The issues raised here are relevant to any sector. We know that lean can provide high performance results in a short period of time. However, it is narrow minded to think that short-term lean can produce long-term results, and this is effectively what gives lean a bad name. Short-term lean is likely to produce unsustainable performance, low motivation, and resistance to further improvement.

Another example is the Siemens facility in Newcastle, a service organisation to the power generation industry, which adopted a lean approach to business improvement back in 2006. This facility runs advanced power generation projects of national importance requiring a huge amount of collaboration across the site. Lean tools and techniques have been integrated into the business to handle the complex systems but more importantly company culture is being changed for better collaboration, conflict resolution and acceptance of new thinking. In this way, the company achieves a better balance between controlling and learning.

In our experience at Applied Angle, the ‘thinking people solutions’ part of Anthony’s equation for real lean is about controlling and learning. Robust lean is not achievable in a number of weeks. It is about the long haul and sound management of lean requires the same people to control and learn. When individuals start lean processes, for the most part they bring their biases with them and it is unlikely that they will be able to both control and learn effectively. The management styles for each of these elements require very different approaches, and this is what takes time to get right.

Robust lean is not mean. Anyone suggesting this is simply confessing their limited understanding of the principles. The meanlean concept and language should be banished and replaced with a focus on transformation and unlocking potential for long term growth. Just what UK manufacturing needs for the next twenty years!

uncovered if respected workers are given known parameters by the leaders at the start.

Three years on After the first year of the lean programme discussed here and the headcount reductions had been identified, a new approach was taken using a team of internal consultants from the workforce. Trying to recover from the first experiences of employees was extremely difficult but, with a renewed purpose of ‘continuous improvement’ with no threat of job losses, momentum for improvement workshops developed. By giving clarity to the ‘what’ and ‘why’ explanations at the beginning and, leaving the ‘how’ to the employees, bottom up ideas were allowed to develop and, importantly gain the required buy-in for change. This was a complete step change in approach and the wider benefits of the lean implementation could then be developed with a more involved workforce. In this article, I have given a flavour of how some aspects of one organisation’s lean journey were undertaken in order to define how lean can be

approached wrongly and help others avoid making the same mistakes. There is no doubt that the approach taken in the above implementation was destructive, undermining teams and doing nothing to encourage improvement. Today there are still senior managers, who, because of this experience in the early stages of transformation, now resent the term lean. They experienced lean as mean and it took a long time for some to see the benefits that continuous improvement could bring. Although lean leaders in sectors where the approach has been longer established than in public sector, such as manufacturing, may feel that their maturity of lean understanding would avoid the kind of insensitive waste focus I have described, current economic and efficiency pressures in all businesses mean it can be easy to become complacent about the focus of lean programmes. By focusing on value as seen by the customer and, continually improving our processes, through the full utilisation of people, real lean culture can be realised by both employees and the business.

EEFInsight Good

health! Edward Machin investigates the range of occupational health and safety courses at Woodland Grange, an EEF training centre located in the heart of England’s rolling fields.

Widely

held as one the UK’s foremost training providers, the chalk and talk approach taken by all-too many professional awarding bodies is nowhere to be seen on courses offered by the EEF/Woodland Grange partnership. “As a result, our pass rates remain second to none,” says Pav Randhawa, an EEF services adviser at the Leamington Spabased venue. “It’s not uncommon for us to achieve one hundred per cent and, at a very minimum, low eighties.” As a residential training centre, things don’t get much better than Woodland Grange, either. Located among 16 acres of bucolic Warwickshire countryside, attendee networking remains very much the order of the day — during lunch breaks and evening free-time alike. Indeed, first-class restaurant, catering and leisure facilities ensure that it remains the ideal location to share and develop global best practices, whatever your tipple. National Examination Board in Occupational Safety and Health (NEBOSH) courses take pride of place for those at EEF/Woodland Grange. Thanks to its range of globally recognised qualifications designed to meet the health, safety, environmental and risk management needs of both private and public sector employees, manufacturers from around the globe travel to this little corner of middle England in search of core health & safety awards. As such, the majority of courses — NEBOSH included — held at Woodland Grange are built around a programme of highly interactive, classroom-based learning; death by PowerPoint this is not. Given their considerable industry backgrounds, moreover, “Tutors have their own, relevant experiences to impart, so it’s not an overly textbook-heavy experience,” explains Randhawa. “That said, and while there are numerous syndicate exercises and the continual opportunity for discussion, we do so within the syllabus framework. There is no going off piste here, which some providers can, on occasion, be guilty of.”

All work and no play… The latest addition to Woodland Grange’s course portfolio is the NEBOSH International Certificate

in Construction Health & Safety. Launched this September in pilot version, the two-week course was attended by supervisors and managers from as far afield as Canada, India and Eastern Europe. Following a syllabus outlined by NEBOSH, EEF’s trainers — led by Mark Bush — ensure the schemes of work, lesson plans and practical activities are in line with the former’s aims and learning outcomes. “And the initial feedback has been, frankly, brilliant,” says Randhawa, an EEF/Woodland Grange employee since 2003. “Attendees are fully trained as construction design management coordinators, and come away with a leading qualification which they can put to use in a global context.”

Increasingly we’re finding that businesses — manufacturers especially — are crying out for internationally-themed health and safety training Pav Randhawa, EEF/Woodland Grange

“Increasingly we’re finding that businesses — manufacturers especially — are crying out for internationally-themed health and safety training,” she emphasises. “Yes, we’re a training provider, but ultimately all of us are here to save peoples’ lives. Employees should go home in exactly the same condition they set out and, pleasingly, this safety-centric approach is now filtering into international waters.” Delivering single day awareness training courses to fully-formed MScs, then, what of the future for Randhawa and EEF at Woodland Grange? “We are, in particular, looking to expand into ever more international training and all the permutations therein,” she says, “coupling it with the high-level behavioral safety market that we currently lead.” Manufacturing-based health & safety training with a lager chaser; doesn’t sound too disagreeable, now, does it?

Paving the road to recovery During an economic downturn, a reduction in revenue must be countered by cost savings. The decisions regarding where those cuts are to be made can have a considerable impact on companies as they travel the road to recovery. Danny Boeykens, partner at MÖBIUS Supply Chain Consultancy, explains to Tim Brown that often the most obvious ways to balance the books are not the best.

During

inventory,” says Boeykens. “Any company though that has made these reductions will likely find that when the recovery ensues, it is not easy to catch up.” MÖBIUS refers to such savings which may result in poor market positioning at the time of recovery as “blind savings”. According to the supply chain experts, the beginning of the recovery is one of the most crucial phases of the economic cycle where “supply chain does not provide a supportive role Crisis can lead to a reshuffling of but a crucial role the competitive landscape in developing market share 13% (volumes) and later, profitability.” A recent study 49% by McKinsey showed that an economic recovery can 87% change the landscape of an industry 51% sector. For example, before an economic crisis 25% of the Leaders 25% Followers 75% market might be leaders and Pre-recession 75% followers.

Post-recession Followers Leaders

an economic recession companies have trouble safeguarding their revenue because the customers are not ordering. As a result companies try to accommodate for this without structural changes by reducing working capital components such as the purchase ledger. “We see that many companies have made some savings in their working capital, particularly in their

After the economic crisis, often only half of the leaders stay as such while a number of the followers become leaders. This results from customers often being unable to purchase from their normal provider during a recovery due to a lack of stock. If this occurs, previously loyal customers may establish new relationships with new suppliers. Boeykens says that to emerge strongest from a downturn, businesses need to be ready so as to supply existing customers and uncover potential new opportunities. Anticipating the upturn is of course paramount to optimising the extent to which a company is able to take advantage of the economic improvements. However, the demand forecast at the moment of an economic downturn will not be of much use if it is only based on historic information. Forecasts should be organised through collaboration with customers but also through the use of indexes such as the housing index or the consumer confidence index.

Segmentation If a company is unable to supply to all its customers at the point of recovery when there is a related increase in demand, then it will have to be selective. The customers that are chosen should be those that are likely to offer a strong long-term business relationship and are able to provide a combination of potential for increased volumes, improved profitability and be likely to support the future plans for the product portfolio. This exercise is known as “segmentation”. It documents the guidelines that master planning and order promising must apply during the recovery period, where scarce resources should be assigned to

MÖBIUS

the prioritised market segments. The segmentation is not only to be defined, the plan must be disseminated so that employees know what customers the management would most like to serve. After determining those customers that are the most important, Boeykens says companies must try to deliver the level of service expected from those customers. Compiling a service profile of the customers expectation will ensure this is achieved.

Correct decisions According to MÖBIUS, laminate flooring manufacturer Quick-Step is an exemplary company that made a number of important decisions to ensure it emerged from the economic crisis with a strategic advantage. In addition the company used the opportunities offered through its supply chain to maximise this advantage. Quick-Step’s marketing and service profile is such that it is able to ask a premium price for its products. During the recession, management made a point of not reducing these prices. Rik Blanchaert, Director of Supply Management at Quick-Step explains: “We did not drop prices in order to try and catch volumes, because when there was no demand dropping prices simply cuts your earnings but does not deliver any significant extra volume. If there are no customers, cutting prices will not help and trying to raise prices when we come out of the crisis would likely hurt us much more. Many of our competitors tried to do it and are still suffering.” The company also took measures to preserve working capital and managed its accounts receivable to offer responsible flexibility to those customers that needed assistance. However, Quick-step resisted making any significant reduction to their product inventory so as to maintain their high level of service. “One of the most important aspects of our business is that we offer the best service in the market and stock

availability and quality are keys for this,” says Blanchaert. “We wanted to maintain our image as being a top supplier in the market and deliver the best product. We did not reduce the finished goods inventory to the point where it would hurt our service. Despite that we did scrutinise other areas such as raw materials to reduce our other working capital by 20-25%”. In addition, the company made a timely purchase of raw materials at the inception of the recovery which meant it did not suffer a disruption in its supply. “When the crisis started we cut back on the purchases of some of our raw product such as laminate floor prints. In early 2010 when we saw the crisis easing, we ordered a large amount of those raw materials because the prices of those commodities went down considerably. In addition, the capacity of the printing industry was cut back significantly. We anticipated that the recovery would result in a shortage of capacity for those commodities which would increase the price. As a result, we placed big orders so our raw materials costs did not increase, which has delivered a lot of cost benefit this year. Because of a shortage of this raw material, some companies have experienced a large increase in their lead times. We have been able to take

market share by continuing what we are doing and did not have to drop prices.” Quick-Step also made the important strategic decision to maintain its level of spend on marketing; increased its efforts in terms of innovation and R&D; did not cut back on the quality of its raw materials; incorporated more lean philosophies to reduce waste; and also streamlined its product portfolio. Through the clever combination of its purchasing, marketing and sales strategies, Quick-Step managed to not only survive the downturn but emerge in a significantly stronger position within the market. As MÖBIUS expressed, a period of economic recovery offers the greatest opportunities for market gains. To become an industry leader rather than a follower, companies must be able to recognise and take advantage of the opportunities that are present and make the correct decisions to facilitate growth.

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

Accounting for energy Increasing energy costs are a concern for every manufacturing plant in the UK and around the world. Tim Brown investigates a number of areas for potential savings for intensive users of the most important resource we have, power.

Industry

is being forced to look for energy savings via two major avenues: reducing energy consumption and/or adopting better energy purchasing strategies. Plant managers can take the first tactic, to reduce energy consumption, in two basic areas — the manufacturing process and facilities. This is undoubtedly the most desirable outcome as it takes into account both the bottom line and the environment. However there is a perceived inherent risk associated with making the large cuts to energy costs simply through usage reductions as it may result in reduced productivity and quality. The dual pressures to reduce energy consumption while not disturbing output have forced managers into a difficult position: reduce energy costs but do not sacrifice output.

An opportunity to flex The second tactic for realising energy savings, adopting best practices for energy purchasing and utilising information technologies to inform better decisions, requires no compromise in the manufacturing process. In addition it can be used in collaboration with an improved efficiency strategy. Dan Parsons is a risk management account manager for EIC, a leading energy consultancy. He says that recently, the number of large and mediumsized energy users opting for flexible energy supply contracts has increased. “When actively managed, a flexible contract enables the consumer to work to a budget with a high degree of confidence, a defined level of risk, and to take advantage of falling prices at a later date, should that opportunity arise.” According to Parsons, historically, electricity and gas was procured via a fixed-price contract for a period of one, two or three years, allowing the buyer just one purchasing decision made on the date on which the contract was signed. In contrast, flexible procurement enables several purchasing options over the course of the contract. “For larger energy users,” says Parsons, “flexible contracts can even

provide the opportunity to ‘refloat’ energy already procured, with a view to re-purchasing it at a future point. The commodities markets are traded like any other and this means that when prices are rising a company may decide to buy up to 100 per cent of its energy. However, if the market turns, a company can review its ‘fixes’ and sell back or ‘refloat’ the purchased energy, enabling you to re-purchase at lower levels, should the market allow.” Of course there is an element of risk involved if purchases are made prior to a fall in the market. To avoid a loss, decisions on market purchases should be made using expert risk management and not on hunches.

What are suppliers offering? Together with the ability to buy and refloat energy in various sized blocks, suppliers are always looking for new ways to entice customers with their flexible contract offerings. An important issue is the volume tolerance level. Following the credit crunch, suppliers began to tighten up their terms and conditions in order to recover costs for any change in consumption. Parsons says that EIC “have seen some suppliers begin to offer a volume tolerance of plus or minus 20%, which may be positive news for those clients that are unable to accurately forecast their consumption prior to the month of supply.” To clarify, some contracts employ a ‘take or pay’ stipulation meaning that if a company falls below its minimum consumption volume tolerance it will be charged for the unused energy. According to head of risk management at EIC, Jon Ferris: “A flexible contract can be used to manage that risk to delay purchasing until more certainty is achieved regarding predicted consumption levels.” Major energy users are able to purchase volumes by seasons, quarters or months, up to three years in advance. Suppliers are also beginning to show a willingness to offer a wider outlook beyond three years for organisations that require increased budget certainty. Most suppliers will also offer to fix volumes to ‘day-ahead’ prices for a month at a time, often

Sustainable manufacturing

Consumption reduction is still key While significant savings are possible from implementing a well timed purchasing strategy, manufacturers must remember that long term reductions are best achieved through a lowering in energy consumption. Simple actions can save energy and reduce

bills. Businesses can save between 15% and 20% of the energy used for heating, lighting and ventilating manufacturing premises. The following are some ideas from Apollo Enviro and Carbon Trust for tangible reductions in energy consumption.

1. LECs and ComECs Simply increasing the efficiency of existing processes can yield some fantastic savings. The Lighting Energy Controllers (LECs) available from Apollo Enviro are prime examples of this. The unit optimises the voltage delivered to lighting load reducing the lighting consumption by up to 35% – a direct saving off your energy bills. But there are also indirect savings made – supplying the ‘right voltage’ to equipment reduces wear; reducing subsequent maintenance and replacement costs. The similar ComEC units we have do the same thing across the entire load, saving money on all connected equipment. Obviously this technology pays for itself very quickly, going on to save money for years afterwards while also considerably reducing a company’s carbon footprint and bringing environmental benefits.

Lighting Energy Controllers can reduce educing the (delete) lighting consumption by up to 35%.

ComEC units can optimise voltage usage for all connected equipment

2. Heating

4. Lighting

Up to 10% of heating costs can be saved through simple measures, such as: checking all time switches regularly, making sure that the heating is off when the building is unoccupied, changing to radiant heating, efficient steam generation and distribution can save between 10% and 30% of the energy used in high temperature boilers and steam systems

Lighting can be up to 7% of energy consumption for some manufacturing companies. This can be cut by: Switching off lights when they’re not being used Using poster campaigns to increase staff awareness Making the best use of natural light Considering skylights Ensuring windows are not obstructed

3. Ventilation Energy can be saved by turning off unnecessary ventilation, consider automating controls and localising ventilation

Sustainable manufacturing

Consumption reduction is still key Continued 5. Industrial process heating and cooling (including drying) The waste heat generated by heating systems may be recovered and re-used for applications; such as preheating water, or as space heating in a workshop In some manufacturing sectors, dryers can contribute up to 30% of total energy use - check air filter damage and leaks out of the dryer to increase efficiency

For really substantial energy savings, manufacturers need to look at core processes and how they can be re-engineered to use less energy. Heinz is one company that has made changes to its production lines to cut with the facility to fix the ‘balance of month’ if prices begin to spike.

Management mitigates risk After a flexible contract has been arranged, the end user will need to decide and agree on an acceptable level of exposure they are willing to assume for the length of the contract. The degree of risk will depend on their individual strategy but will be used in conjunction with the view on market prices over the budgeted time period. A risk management strategy will differ between businesses; therefore setting pricing strategies and purchasing objectives may be restricted by varying corporate governance and accounting requirements. Aside from energy risk management, consultant experts such as EIC can also provide: energy market information, energy procurement services, energy information management solutions and strategic energy planning services.

energy use. Heinz UK has saved 17,600 tonnes of CO2 across its two biggest sites - at Kendal and Kitt Green near Wigan. Kitt Green is Heinz’s largest factory worldwide and produces around one billion cans of food every year and savings over 2008 and 2009 at this site equate to 13% of its energy budget for 2010.

their costs by purchasing over a number of months or even years. In a flexible contract, the supplier transfers the pricing risk to the customer, but whatever contract type is preferred — the timing of purchases remains the key success factor.

How does fixed-price measure up? Fixed-price contracts have the virtue of allowing the consumer to buy their energy with the knowledge that all costs are defined, providing budget certainty for the length of the contract. There is also a less significant administrative burden, with no time required to monitor the market throughout the contract, reducing costs. The level of volatility in the commodities market has made prices difficult to forecast. Therefore, the risk of a fixed-price contract becomes one of choosing the right day on which to purchase. The reality is that today we are armed with perfect hindsight, but tomorrow is a completely new day. Therefore, choosing the optimum day on which to purchase becomes one of chance, which is why major energy buyers have largely abandoned this approach. The risks of choosing the wrong day are significant in purchasing terms, with buyers looking to smooth

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Under lock and IP: DLA Piper’s top tips for patents and registered designs: Keep it secret – If you disclose the invention or design to anyone — other than your legal advisers — too early, it will no longer be “new” and your application will be invalid. Hold on to your documents – If there is a question about the originality of your specification, design, et cetera, it can be very useful to show an audit trail of where the idea originated and how it developed. Use your rights – You can work the patent or design yourself, and/or you can licence it to others to create alternative income streams. Warn others – Mark the product and packaging with the patent or design registration number to warn competitors that it is protected. Look out for infringements – Keep an eye out for anyone stepping into your territory or unauthorised copying. Seek legal advice before taking action.

Edward Machin explores the world of intellectual property, finding a reticence among UK manufacturers to value the cost/benefit analysis of product protection. When China gets on board, after all, you know it’s time to act…

You

must lose a fly to catch a trout, said George Herbert, that 17th century poet, priest and unwitting advocate of manufacturing rights protection. Regarding the tendency to baulk at the cost of fortification rather than appreciate the value IP brings, however, he could not have been more prescient. “For those in the manufacturing space, the crux of intellectual property protection is, very simply, to avoid getting sued for products that infringe third party rights,” explains Barlow Robbins LLP’s head of IP, Nick Phillips. “Of course, this issue becomes more important in recessionary or nearrecessionary times.”

Innovation design and the product lifecycle

Rather critical, then, you would have thought. And yet it remains an area ignored by many in the sector, with manufacturers in Germany and the U.S. significantly more alive to the commercial benefits inherent in protecting their designs. “When commissioning new machinery, having artwork designed or implementing innovative process control software, manufacturers in the UK wouldn’t dream of proceeding without a contract or, at the very least, an exchange of emails detailing the commercial terms,” says Lyndsay Gough, an intellectual property specialist at Keystone Law. She goes on to highlight perhaps the most common misconception surrounding IP: that payment to a supplier for original, creative materials — whether machinery blueprints or moulds, photographs for packaging or computer software designed specifically for a single business — will automatically result in the customer owning the

Emerging economies such as China are paying more attention to protecting and enforcing intellectual property rights…so it is an area that can no longer be ignored Paul Gershlick, Matthew Arnold & Baldwin LLP

underlying intellectual property rights. “This is not the case,” says Gough. “Ownership usually stays with the supplier, unless there is a transfer of those intellectual property rights in writing.” Worried yet? Intellectual property, in essence, encompasses a range of rights aimed at protecting intangible assets such as brands, inventive concepts and original designs. These include: Patents for new inventions – A patent can protect products such as finished items, component parts, machines used in manufacturing or a process such as a way of engineering an item or an automated method for assembling a product, provided they are new and are not obvious. Copyright for original written and artistic works – Copyright can protect almost anything put down on paper, including product descriptions and specifications, design drawings, sketches, photographs and software, provided they have not been copied from anything else. Design rights for the shape and appearance of products – Design rights generally protect the appearance of a product or a component based on its shape, texture or materials, and in some cases from its colours or surface decoration. The design does not need to be complex or highly advanced, provided it is new and has individual character.

Ignore at your peril Where patents were once the sector’s goto method of protection, manufacturers are increasingly looking to design rights as a means to safeguard their new products and technologies, says Megan Jones, a solicitor in Hill Dickinson LLP’s technology team. “While not a new form of protection, the simple and cost-effective nature of design rights means that their use has taken off in industries where the product needs to get

Kelly and Chui v GE Healthcare Limited As a general rule, an inventor is the owner of the subsequent patent. There is, however, an exception. Under the Patents Act 1977, where an employee is the inventor the patent will belong to the employer if the invention was made in the course of the employee’s normal duties — provided an invention might reasonably be expected to result from his duties. Per section 40 of the Act, an employee who invents something may be entitled to compensation where the patent belongs to the employer. This is the case if (i) the invention or patent for it is of outstanding benefit to the employer, and (ii) it is just that compensation is awarded. While compensation under this section is rarely awarded, the judgment in Kelly and Chui v GE Healthcare Limited is the first time that an employee has successfully sought compensation under the Patents Act 1977. Mr Justice Floyd awarded the two employees, Dr Kelly and Dr Chui, £1,000,000 and £500,000 respectively, for the “outstanding benefit” that their invention conferred on their employer. The doctors played a key role in the first synthesis of a compound which formed the basis of a patented radioactive imaging agent. The imaging agent became a commercial success for the defendant employer, and was sold around the world under the brand name, Myoview. The judge recognised that Dr Kelly and Dr Chui’s contributions involved significant thought and creativity. While a new development, it remains unclear whether this decision could lead to a number of employees claiming compensation for their inventions from their employers. It is clear, though, that a high threshold of “outstanding benefit” remains.

At EIC, we understand that no two clients are alike. By getting to know your business inside out, our experts deliver a service thatâ&#x20AC;&#x2122;s as unique as you are.

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Innovation design and the product lifecycle

IP case study Late last year Strix, one of the world’s largest producers of controls for electric kettles, successfully sued two Chinese manufacturers over patent infringements. Zhejiang Jitai Electrical Appliance Manufacturer and Leqing FaDa Electrical Appliance were ordered to pay a total of 9.1m yuan (£0.85m). China, the largest exporter of manufactured merchandise, is also one of the world’s largest counterfeit and piracy markets. Strix chief executive Paul Hussey said the hearing was a landmark case that showed the rule of law was being upheld in China and would encourage investment in new technologies. “Copies have lower prices, which are achieved by cutting corners on safety,” Hussey said. “It is unfair to a company like us, which spends millions of pounds a year developing new technologies.”

to market quickly and/or its aesthetic qualities make it a differentiator,” she explains. “We are also finding that businesses are looking to exploit their design rights, typically by licensing the rights to manufacture and distribute products using their designs — which opens new supply chains and revenue stream opportunities that were not previously viable.” While intellectual property rights are not, as yet, uniform around the European Union, the laws will continue to merge and develop, according to Paul Gershlick of Matthew Arnold & Baldwin LLP. Crucially: “Emerging economies are paying considerably more attention to protecting and enforcing intellectual property rights,” he says — the corollary being that IP systems in such territories are rapidly becoming as sophisticated as those in the West. According to Gershlick: “It is an area that can no longer be ignored.” Laura Ramsay, an associate at Dehns Patent and Trade Mark Attorneys concurs. Contrary to popular belief, “Officials in China are particularly keen to

Strix sued over patent infringements

We are finding that businesses are looking to exploit their design rights, typically by licensing the rights to manufacture and distribute products using their designs — which opens new supply chains and revenue stream opportunities that were not previously viable Megan Jones, Hill Dickinson LLP

ensure that IP rights are upheld — even if one of their own manufacturers is the culprit,” she says. “British companies should not underestimate the potential for exploiting their IP rights in a global market.”

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White collar insight Last month, Harvey Nash, in conjunction with TM, published its Manufacturing Leadership Survey 2011/11. Here, Will Stirling and Edward Machin consider the report’s key findings.

Completed by almost 300 senior executives, the survey takes in the gamut of UK manufacturing businesses: from £500m turnover — one fifth — to those with sales of less than £30m — approximately one third of respondents. With manufacturing output up 4% compared to the service sector’s 3%, albeit tempered by somewhat more conservative forecasts, in what mood do we currently find the industry’s leaders?

Like a rolling stone… On initial reading one cannot help but be struck by the degree to which there now exists a willingness by senior management to change roles with some regularity (see figure 1), especially given manufacturing’s historic image as an industry defined by a ‘stay for life and receive your carriage clock on retirement’ culture.

With over half of respondents having been with their employer for less than three years, and 63% expecting to stay no longer than a further three, the data makes for particularly interesting, and clearly concerning, food for thought. Such top table churn brings with it challenges in both continuity of strategy and succession planning that ought to raise serious questions among those readers who, perhaps unlike their colleagues, are in it for the long haul. Intriguingly, however, once respondents pass ten years service the retention figure shoots up to over 20%. When conflated with the fact that over two thirds of participants felt either ‘secure’ or ‘very secure’ in their current role, the statistics appear rather incongruous. So, while ‘only’ one quarter of senior executives are actively seeking and applying for new roles, virtually every

respondent surveyed would at least entertain a headhunter’s call. Why such high levels of potential transience? Well, it isn’t bonus levels: only 4% of respondents changed employer for financial gain. Indeed, while less than half of the senior functions surveyed received a modest increase in salary (+1 – 5%), 70% of respondents were awarded a bonus of some description; for a quarter this amounted to 20 – 40% of base salary. Given the continuing opprobrium leveled at City fat cats, manufacturing bosses appear to have escaped somewhat unscarred from the public ire over pay packages. Whether this is due to the sector’s relatively unglamorous, criminally underrepresented nature remains to be seen. Those charged with steering their companies through the choppiest trading waters in living memory may well argue, however, that some sort of compensation isn’t overly unreasonable in the circumstances. And would you blame them? Fig 2. How actively are you seeking a new job

Fig 1. Length of job tenure

Actively seeking and applying for roles Keeping an eye on the market Would entertain a call from a headhunter Would not consider any role presented to me

Getting better all the time Not all is doom and gloom for the sector, though; far from it, in fact. Despite an unforgiving recession

increase during the next twelve months, too, especially in light of the Strategic Defence and Security Review, such sentiments chime with wider market expectations. This, clearly, will ensure a good deal of Christmas cheer for many who have had little to celebrate over the last eighteen months. Fig 4. Do you think your business will perform better or worse than last year during the next 12 months?

admired, what remains especially striking is that one fifth of those surveyed actively listed ‘no one’ as a response. If those at senior level cannot identify beacons of light within an industry renowned for its forward thinking, robust management, what hope for those at school and university looking towards manufacturing for inspiration?

Harvey Nash

for many in UK manufacturing, it is hugely encouraging to read that almost 80% of those surveyed felt the measures implemented by their organisation have made it more competitive in the last 18 months (see figure 3). Time and again The Manufacturer meets companies — from SME to household name and back again — with exactly this story to tell. That the statistics reflect such upbeat sentiments is particularly pleasing for an industry that must play a critical role in rebalancing the national economy. With the Manufacturing Framework now published, however, and pointing the way to a long-term thinking, engaged Government, the pieces are very much starting to fall into place.

Fig 5. Do you think manufacturing has become a more attractive industry to work in?

Fig 3. Have the measures implemented by your organisation made you more or less competitive?

Better Same Worse Don’t know

Take me to your leader

More competitive Less competitive No change

More encouraging still is the fact that four fifths of respondents believed their business would perform better than last year, or, at the very worst, continue as it had done in 2010 (figure 4). Management hubris? Naïve company loyalty? Possible, of course. That those with any meaningful contact with the sector can attest to manufacturers’ often brutally realistic view of both company performance and future prospects, however, means that such figures should by taken as an objective and considered barometer of the positivity felt by individuals at the coalface. With export sales expected by respondents to

In contrast to the immediately above, manufacturing continues to struggle with an image problem for many of the respondents. Only half believe it has become a more attractive place to work (see figure 5). Those at every level of industry, including many TM speaks to, understand the need for greatly increased representation at national level, together with a joined up approach to developing the next generation of apprentices, engineers and business leaders. That said, when asked (i) whether there will be a resurgence in science graduates choosing manufacturing as a career and (ii) if your company offers adequate career progression, the responses weren’t encouraging: 35% and 47%, respectively. Is this a question of leadership? Perhaps the malaise goes deeper. While participants highlight figures including Stuart Rose, Terry Leahy, Kevin Smith of GKN, Richard Branson and Lord Digby Jones as being their most

Yes No

Given the levels of positivity concerning vital company performance itself, this must change if the sector is to continue flourishing. In the meantime, our thanks to Harvey Nash for providing a much needed snapshot into the sentiment felt by manufacturing’s senior figures. And so, the verdict: shows ambition and motivation and a high level of confidence which is not misguided. Though output is encouraging and consistent, there is still room for improvement and knuckling down to hard work next term will be essential if full potential is to be realised. I’ve had worse school reports.

For more information please visit: www.harveynash.com

Hitting the right buttons A roundtable debate on access to finance with BDO LLP and clients

As credit conditions for industry begin to improve, companies and financial institutions still need to perform an intricate dance to access the capital that businesses need to grow. TM finds that pricing precision, transparency and diversity of finance mechanisms are the themes for accessing capital in a new, more austere era where private sector growth is so important.

David Blackwood, Finance Director, Yule Catto & Co Ewan Lloyd-Baker, CEO, Specialist Energy Group plc Ian Plunkett, Audit Partner in Manufacturing and Industrial Markets, BDO and other participants joined the debate

With

less cash in the economy and tighter criteria applied to both lending and equity finance, how will companies fund themselves in the post-recession economy? Post-credit crunch, the constant theme has been higher costs of capital. But EEF’s November Credit Survey says that in the past quarter, the proportion of companies reporting an increase in interest rates and fees on both new and existing credit facilities has continued on a downward trend. The percentage of companies seeing costs fall remains static, however. Necessity is the mother of invention and the recession has not only caused companies to exercise tighter financial management than before 2008, but has spawned some novel sources of finance. In 2009 the Labour government launched the Enterprise Finance Guarantee scheme. This is aimed at small and medium sized firms (SMEs) with no credit history or collateral, where the government is the guarantor for loans of between £10,000 and £1m taken from three months to 10 years. Initially take-up was subdued but it has since proved popular, where a total of £1.1bn has been tapped. Royal Bank of Scotland and NatWest alone have drawn loans worth

more than £450m from the fund and in October the EFG was extended by a further four years with another £2bn. Banks have been active in trying to lend money to manufacturers. RBS launched a £1bn special fund for manufacturers in July 2009. Again initial take-up was slow, reflecting companies’ natural aversion to borrowing of any kind after the crunch – RBS cannot disclose lending details, but the fund has helped several companies, while falling short of being fully tapped. In late July, International Innovative Technologies in Newcastle was the first UK company to receive funding from a corporate sukuk, a bond that complies with Sharia law arranged by private equity company Millenium Partners. And companies including King of Shaves and Ecotricity have raised money through privately placed bonds, with a fixed rate and term, issued to customers and ‘supporters’. At a roundtable debate hosted by international business advisors BDO LLP in October, finance directors and financial advisors examined options for corporate finance open to UK companies in 2011.

Adversity and opportunity BDO and their guests discussed several serious challenges to business at this important stage of the recovery, which sits between a potential golden age of opportunity – the low carbon economy, a weak pound, a strong manufacturing base in sectors like aerospace, defence and pharmaceuticals, innovative start-ups – and a possible double-dip recession. Central to the health of the economy and the liquidity available for corporate finance are the pending public sector cuts. John Nicholas, a director of actuator and gearbox manufacturer Rotork, felt that the magnitude of the public sector squeeze will be very big, predicting civil unrest and potentially strikes in the winter. This was prescient, given that it pre-dated the November student demonstrations in London. BDO’s Jamie Austin, a corporate finance specialist, highlighted that the UK faces the near term challenge of managing foreign competition, the higher cost of all forms of capital and the lack of time for the private sector to soak up 490,000 redundant public sector workers over the next five years. “We have a country that is relying on Dragon’s Den-

Finance and professional services

type entrepreneurs coming out of the regions where the cuts will be greatest, a banking environment that is still pretty tough really, and an equity capital market where the bar has been raised. It’s a tough equation to reconcile,” he said. The problem is regionally disproportionate, where some regions more reliant on the public sector, such as the North East, will struggle more than others to plug the gap. “The Government has talked a little about cuts, a little about growth but not really about its own role in driving and supporting growth,” said Lee Hopley, EEF’s chief economist. “The Growth Review will give a clearer picture on how the private sector will be able to fill the public sector gap.” [The Growth Review is now published. One key message is that companies are being asked to contribute to the Review by holding government departments to account – see TM.com for more information]. David Blackwood, finance director of chemicals group Yule Catto & Co, said that bank lending has been available right through the downturn; it is just a question of the price you are willing to pay, and the banking sector has moved the bar on credit quality and conditions. “Capital is a commodity – so it’s cyclical like any other commodity business. At ICI I briefly sat on five and seven-year loans priced at 13bps over Libor. Recently it would have been three year loans at 200 bps over Libor. It is a cycle, and as more competition returns, this cycle will reverse, like any commodity business.” While banks were willing to lend in 2009 and 2010, and indeed they did, with LloydsTSB having provided £35bn of corporate to November 2010, many large companies preferred to avoid borrowing at any cost, finding the cost unappealing or unaffordable. Meanwhile small companies often found the bank loan terms incompatible with their needs. Ian Gold of the British Turned Parts Manufacturers Association told TM in July that in his members’ experience, banks were often not willing to lend for ordinary working capital purposes, only for a business plan that demonstrated growth. Many small engineering firms just needed a loan to ‘get going again’. This has perpetuated a negative view of banks in 2009/10 across much of the engineering sector.

Options for big companies Given this distrust, Ian Plunkett, audit partner in Manufacturing and Industrial Markets at BDO, said: “We have to make sure the political, not just the economic, environment is right to get banks lending in the market again, as left to their own devices banks are currently in the business of risk averse lending and re-building balance sheets to improve capital ratios.” David Blackwood added that the last 18 months has exposed the difficulty banks have in finessing their societal function to both fund and facilitate capitalism and the economy, while also being capitalist entities whose chief purpose, as they see it, is to make profit. “We may find that more companies will maintain

more cash balances alongside other forms of term funding, rather than rely heavily on undrawn bank facilities for liquidity cover. If this was to become a trend then banks will ultimately have more lending capacity – which may stimulate more competitive pricing.” A private sector that funds itself more, internally, without a reduced need for banks or government may sound like a post-credit crunch utopia to some CEOs. But Ewan Lloyd-Baker, CEO of Specialist Energy Group plc, says that it’s counter-productive to avoid working with banks and the state. “The cost of capital and access to capital is still a big issue for UK companies competing in a global market place. While for a company like our subsidiary, Hayward Tyler, we are able to compete globally based on the strength of our IP and the quality and reliability of our products the export opportunities could be enhanced given a more supportive funding environment, particularly given the significant state involvement in some of our domestic banks. Those businesses operating in countries which receive direct state backed finance or export led support will often have a lower cost of capital and/or greater access to capital thus giving them a competitive edge in winning and funding new business. If the government is serious about its stated intention to support export led manufacturing it must make that support tangible to enable a more level playing field.”

Equity capital markets Companies need to access finance for growth. Mergers and acquisitions for mid-caps and larger companies dried up in 2010. If M&A activity is a barometer of recovery, Roger

FINANCENIBS Corporate tax reforms revealed Government has published the first details of its Corporate Tax Reform programme, consisting of a series of measures designed to make the UK a more competitive place to do business. The document — ‘Corporate Tax Reform: delivering a more competitive system’ — was released alongside the new growth strategy in late November. It includes new Controlled Foreign Company rules which should entail more intellectual property and tax remaining on British shores, and a commitment to the introduction of a Patent Box, which will see only 10% corporate tax payable on profits from UK patents. UK companies will, further, not be liable to pay corporate tax at home on money earned from foreign branches through an opt-in scheme, which will commence next year. The new measures follow the Coalition’s commitment in the June ‘emergency’ budget to lower the main rate of Corporation tax from 28% to 24% over the next four years. The Exchequer Secretary to the Treasury, David Gauke MP, said: “In recent years, too many businesses have left the UK amid concerns over tax competitiveness. It’s time to reverse this trend. Our tax system was once viewed as an asset. And it needs to be an asset again.”

Finance and professional services

Lambert, chairman of corporate broking at financial advisory firm Collins Stewart, says it’s hard to tell where the recovery is, with newspapers reporting conflicting stories on the state of M&A transactions (in October the Daily Telegraph reported that there was £1.7bn of UK M&A deals in the pipeline, against the FT reporting a fall in M&A activity as a result of a lack of business confidence). Rights issues have been thin on the ground this year but funds are available if the issuer, the buyer and broker can agree terms. Like David Blackwood, Lambert says that money is there, but with a paradigm shift in pricing and participants’ expectations compared with pre-2008. “In 2009, investment banks were very clever at building confidence against a shaky backdrop. If someone had mispriced a rights issue and the thing had failed, you’d have been back to square one – like snakes and ladders.” “Rights issues are priced differently now. A 30% to 40% discount to the theoretical ex-rights price (TERP) is now the standard – at that price everybody tends to say ‘of course we’ll come in’. When I started work, one-for-fours were often done at a 13% discount on the TERP. Try to get someone to underwrite that now and the OFT would say ‘how much’? But that’s what you’d probably pay.” Raising capital through an initial public offering (IPO) is also available but again companies need to be prepared to price sensitively. Collins Stewart was involved in the IPO of AZ Materials, whose products go into the manufacture of integrated circuit boards and flat screen displays. “It’s got a fantastic record, about 30% margins, huge growth and its management was very effective in the downturn,” he says. “The [investor] book was 50% full on day one. Why? It is a great business and the bookrunners advised the owners not to be too greedy on price. Compare that to New Look [retail] last year coming to the market at a premium to Next – totally unrealistic. For a successful IPO today you leave a little on the table.”

Destination UK Money is there, then, but the bar has been raised to access it. And as jurisdictions like Singapore subsidise foreign businesses for setting up, what hope does UK plc have with a cash-strapped government more interested in a Happy Index than the Purchasing Managers Index? Don’t despair, says John Fulford, president of Dytecna, an engineering and through-life support company serving defence and commercial clients. “Go anywhere in the world in my sector and people want products manufactured in the UK. We [the UK] are the centre of excellence, and I’m amazed to hear so much talk about manufacturing in China. At any global aerospace conference, people want to do business with Britain because of our manufacturing capability, innovation, processes and lean manufacturing techniques – other countries are crying out for this expertise.” Peter George of Clinigen Group, suppliers of

unlicensed and specialist medicines, agrees: “The British often win international prizes for chemistry – Brits and British institutions are leading the way here. For new carbon technologies, like the use carbon for power transmission, as well as pharmaceuticals, the global IP is here. In my business I see that a UK plc commands a high degree of kudos and trust and is a good company to partner with, particularly in Asia and in Commonwealth countries. This is important and an area we should exploit going forward.”

Funding for growth If access to finance was the key theme for manufacturing in 2009/2010, 2011 is all about growth. Manufacturing’s recovery through 2010 was impressive – according to EEF, while the UK economy has grown by about 1.2% since the January 2009 recession nadir, manufacturing output grew by 4%. And several manufacturing sub-sectors are in robust shape. A report by EEF and RBS, The shape of British Industry, says that the key to ensuring future growth in UK industry appears to be the size of companies (see page 16). Large manufacturers – those with >250 employees – drive collaboration in the sector, make investments benefiting entire industries and have the scale to invest in new opportunities. They can more easily sustain supply chains, while attracting new investment, and influence policymakers. With evidence that credit conditions are improving (EEF) as banks and financial institutions keen to secure business have at least stopped increasing fees, the range of types of finance widening to include small bond schemes and even sukuks, and a government that is talking up the importance of growth, the climate seems to be getting better for manufacturers looking for finance. With thanks to Ian Plunkett and Jamie Austin at BDO, Lee Hopley at EEF and all the participants, and apologies to those whose comments were not used.

FINANCENIBS RBS upbeat despite loss The part state-owned Royal Bank of Scotland revealed a £1.4bn loss for quarter three 2010 in its interim statement released last month, compared with a £1.1bn profit in the previous quarter. Without an £825m cost of insurance through government’s asset protection scheme and an £856m payable on its debt — charges which chief executive Stephen Hester says “obscure our underlying story” — the bank had operating profits of £726m for the third quarter. This is up by £250m on the previous three months. The bank says it is on well on its way to meeting its government set target of lending £50bn by next March, having lent £30.9bn so far.

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Equipped for growth Capital goods financing With investment by UK manufacturers set to grow1, spending on capital goods looks likely to rise. Rob Keller, Head of Commercialisation at RBS, examines the financing options available.

Whether

in response to increasing demand, new technology or new markets, investing in machinery and equipment is an important way for manufacturing firms to maintain competitive advantage. Yet in a high value, high technology industry it is almost inevitable that any purchases will represent a significant financial commitment, which cannot usually be financed through cash flow or existing borrowing arrangements. Add to that the uncertainties and risk involved in any large purchase. Will the supplier deliver on time and on spec? Will any requirement for upfront payments threaten your cash flow or borrowing arrangements? With many suppliers and buyers of specialist equipment being relatively small companies, both parties to the transaction may need assurances before the deal can proceed and complete. And when a trading partner is based in another country the

potential problems can multiply, from transport delays and currency risk to customs requirements and differing legal systems. Of course it is in the interest of both buyer and supplier to complete a deal successfully. But they often have different priorities in relation to the payment terms. Generally, it is in the buyer’s interest to delay payment as long as possible, while the supplier, having already funded the manufacture of the equipment, wants to be paid as soon as possible.

Creating solutions Here banks can provide a number of different solutions that can be used singly or in combination to manage the payment and delivery of capital goods. Essentially, banks can act as guarantors and intermediaries. As a result, the supplier will know that, provided they meet the agreed requirements, they will get paid quickly and on a fixed date by the bank.

1 According to a survey by the Manufacturing Technologies Association in September 2010, 35% of respondents indicated investment would be higher or much higher in comparison to the previous six months, and only 5% said investment would be lower or much lower. Also in a recent report by the EEF manufacturers’ federation and Royal Bank of Scotland manufacturing output is growing at its fastest rate since 1994 and companies are poised to step up innovation, investment and exports.

Conversely, the buyer can use trade finance tools to extend their payment terms to suit their cash flow and borrowing requirements. This is commonly achieved through a Letter of Credit (LC), issued by the bank and guaranteeing payment for the supplier. The bank, happy with the buyer’s ability to pay, and with clear sight of the underlying asset (the capital goods), will often be able to offer a cheaper route to financing than an unsecured or longer term loan. Banks such as RBS, a top five trade finance provider globally, will also be able to bring into play their experience and resources, both nationally and internationally, to help the buyer secure the best solution and support them all the way through the process. In certain cases a lease purchase agreement may be appropriate. This can be structured in a number of ways, but generally provides a way of spreading the cost over a three- or four-year period, at the end of which the leaseholder makes a final payment and takes ownership. By combining this solution with a letter of credit, the arrangement can be set so that the lease company meets the buyers’ payment obligation when it falls due under the terms of the LC.

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RBS

Financing growth for AIM Engineering When Derbyshire-based AIM Engineering Ltd wanted to drive growth by acquiring new machinery, RBS helped to create a financing solution that satisfied the needs of both buyer and supplier. As a result, AIM Engineering’s new machine is booked out well into next year, supplying customers with products that they may previously have bought from competitors.

AIM

Engineering specialises in the manufacture of jigs and fixtures for the motor and aerospace industries. The privately owned company has seen impressive growth in the last five years, with turnover increasing rapidly as it built a strong client base that includes some of the world’s leading manufacturers of aeroplanes and cars. Its products include hightech tooling designed to fit on the end of robotic arms used in production lines, specialised products for holding goods during transportation, and general machining services. They also provide high-value all-year, round-the-clock inspection and maintenance services. Wishing to build their capacity and win more business from their clients, they decided to acquire a highly advanced five-axis milling machine from Spanish-based Nicolás Correa SA, one of Europe’s leading industrial groups, at a cost of £830k. However, the terms required by the supplier presented some challenges for AIM Engineering. With a great deal of both components and labour involved in building the bespoke machine, the supplier needed to be confident that the buyer had everything

in position to proceed with and complete the deal. They also required a deposit of up to 25% upfront – difficult to achieve from working capital.

Strong relationships Already having a banking relationship with RBS, AIM Engineering was introduced to our Global Transaction Services team. We suggested using a deferred Letter of Credit (LC), set up so that the supplier would be guaranteed to receive upfront payment at agreed milestones, but AIM would only need to pay 10% of the contract value in advance and 10% on completion. The remaining amount would be met through a lease purchase arrangement with asset finance specialist Lombard. The terms of the LC meant that the supplier, Correa SA, received a 30% payment upfront on proof

that the major components for the machine had arrived at their factory as per the contract. Then they received another 50% against shipping documents and a certificate issued by AIM Engineering following an inspection of the completed machine at Correa SA’s factory. Deferring the LC settlement date until after the equipment had arrived on site at AIM Engineering in Derbyshire, meant that Lombard’s lease finance agreement could pay off the outstanding amount. The feedback from AIM Engineering was excellent. ‘‘We found the RBS approach highly professional. They found the right solution and guided us through the whole process. As a result we have had huge benefits. The machine has been a fantastic purchase and, in terms of capacity, is fully booked well into next year.”

For further information please contact your RBS Relationship Director

www.rbs.co.uk

Itâ&#x20AC;&#x2122;s all a bit technical... Jane Gray finds out how the revival of mainstream technical education is shaping up and talks to key players about the potential they see in it for the rehabilitation of UK industry

Over

the last year apprenticeships have been at the centre of British education reformation discussions aimed at ensuring the connections between the real labour market and the qualification routes of young people marry with greater coherency. This has particularly been the case in manufacturing where apprenticeships, inherent in the history of the sector in any case, have been boosted by government recognition of the need for high-level technical skills if British manufacturing is to compete globally in the future. Apprenticeships are, however, only part of the story. There is a wider initiative afoot to restore respect in vocational disciplines, including engineering, to raise the quality of their delivery and give those that emerge from these

People and skills

qualification routes the respect that they deserve. A significant part in this initiative will be played by the establishment of a wave of new University Technical Colleges (UTCs) – specialist schools dedicated to supporting talent in science, technology, engineering and manufacturing (STEM) based subjects and driven in their curriculum delivery by close engagement with local enterprise and industry. Government will fund the establishment of 12 UTCs across the UK over the next four years.

The history Peter Mitchell, CEO of the Baker-Dearing Trust, the charitable body which has taken responsibility for supporting and coordinating Britain’s UTC system, explains the concept background and what it strives to achieve: “In 1941 there was a review of what post war education ought to look like and the initial proposal suggested a system of grammar schools, technical schools and secondary moderns which children would transfer into at the age of 13. As it turned out this age was changed to 11. “The reason this model failed is twofold. Firstly the youngsters were too young to make the specialist choice that a technical education requires. Secondly, everyone wanted to attend the grammar schools and the reality became that those individuals who attended technical schools were those who hadn’t made the grade for a grammar education. This weakened the status of technical education and when comprehensive schools were introduced in the early 1970s the idea was simply swept away. “Interestingly, Germany more or less adopted the English post-war education system and stuck to it. I believe this is a large reason for their better-balanced economy and healthier manufacturing base today.” With the need to rebalance the British economy now pressing hard on Government the importance of providing high quality, applied skills in areas relevant to manufacturing and engineering makes Germany’s retention of respect for technical schools extremely enviable. Mitchell clarifies: “Talking to manufacturers you always hear that the group of people they are lacking for growth are high quality technicians. An awareness of this prompted Lord Baker and the late Lord Dearing to pull together the concept for the new University Technical Colleges. This does not replicate the technical schools of the 50s but takes the best from them and adds college status and the involvement of universities in order to enhance prestige.” In simple terms, UTCs are non-selective institutions offering 14-19 year olds an education which focuses on STEM subjects and their application to real industry scenarios. The formulation of UTC curricula will be undertaken as a collaborative enterprise between academia and regional industry. While core subjects such as English and foreign languages will be taught up to GCSE level the bias will be towards subjects with potential for furthering and applying engineering

knowledge – such as the sciences, design technology and IT. Furthermore, each institution will specialise in certain forms of application ranging across mechanical, electrical, process engineering and more. The focus will depend on the requirements of the region.

Present and future The precedent for this new type of education has already been set and is proving extremely successful in the shape of the JCB Academy in Staffordshire. Originally inspired by the desire of Sir Anthony Bamford to foster the next generation of engineering and business leaders, the JCB Academy started out independent of the Baker-Dearing vision but is now a formal part of the UTC programme and playing an active advisory role in the establishment of the national network. Following a series of informative roadshows to educate and engage students and parents in the local area, the JCB Academy found itself heavily oversubscribed when it opened its doors this September. There was, however, some heavy

Interestingly, Germany more or less adopted the English post-war education system and stuck to it. I believe this is a large reason for their better-balanced economy and healthier manufacturing base today Peter Mitchell, CEO, Baker-Dearing Trust excavation of the industry-education landscape that had to be done before this triumph came about. The Principal of the Academy, Jim Wade, hopes this pioneering work will make progress smoother for the next wave of UTCs. “We were the first specialist 14-19 engineering academy and therefore every decision we took in terms of how we operated and interacted with industry partners had to be passed through the Department of Education. Things should be easier from here on in and part of our incentive in joining the UTC programme is that we share in the overall aims and there will be strength in being part of a group of schools that can have meaningful discussions about how policy should develop to enable our growth and success.” Next steps for the UTC programme are well under way. Peter Mitchell told TM that the Baker-Dearing Trust is currently looking at proposals from 43 groups interested in initiating a regional UTC and that there are definite plans for another five colleges to open in September 2011. One will be the Black Country UTC in Walsall. Amarjit Basi, Principal and CEO of Walsall College, a Further Education

People and skills

institution with a track record of excellence in delivering engineering and construction skills, gave TM some insight into the progress being made and the partnerships supporting the launch of the UTC. “It is so important that the Black Country UTC be established in this region which was once so strong in manufacturing but which has become disheartened by decline. Talking to employers there is a strong sense that the time is ripe for the

This is a really exciting and meaningful step toward finally achieving parity between vocational disciplines and academic education Amarjit Basi, Principal and CEO, -Walsall College

refreshing of local industry and for exciting young people about the opportunities that a modern manufacturing sector has to offer. “Walsall has had a strong engineering offering for many years but the nature of demand from employers, particularly the small and medium sized enterprises in the local area, has changed in recent times; for example, around the developing need for CAD CAM skills and knowledge of polymers. This resulted in an influx of students on Walsall’s product development courses but we saw the opportunity to do more and engaged with regional employers and with Sector Skills Councils like Cogent and Semta. Together we have developed an exciting curriculum offer around clean engineering, rapid prototyping and materials development.” Engagement with employers and professional bodies is essential to the credibility of the UTC concept. If the objectives of UTCs are to have integrity there must be clear links with a real labour market and real professional development for young people. Basi is confident the Walsall UTC will be able to deliver on this as the college plans to support the delivery of both young and advanced apprenticeships by providing a tailor made facility for the college-based part of those qualifications. Furthermore the Black Country UTC has partnered with the Royal Institute of Mechanical Engineers in order to provide professional accreditation to students. Basi states: “All the students enrolling with our UTC will be registered as Young Engineers, a programme which maps to the IMechE professional accreditation system. As a consequence our students will graduate at the age of 18 or 19 with letters after their name. This is a really exciting step toward finally achieving parity between vocational disciplines and academic education.”

Input, output As far as employers are concerned Basi is grateful to the pro-active core of companies, from SMEs through to large enterprises, that have participated in the progress of the Black Country UTC. Involvement has ranged from preliminary input into curriculum development through to more in-depth collaboration over curriculum delivery including the dedication of either financial, material or professional resources. While there is no obligation for this level of commitment an increasing number of UTC industrial partners are seeing that the expense of time and money in these projects should not be viewed as sponsorship so much as investment, both in the future resilience of their own companies and of their industry as a whole. Companies involved in driving the curriculum and delivery methods of the Black Country UTC include: Finnings (Caterpillar); Siemens; and Stratasys. Paul Gately, channel manager at the latter, a manufacturer of fused deposition modelling systems, explains how and why the company chose to get involved: “We became aware of the UTC after being contacted by Walsall College. The potential development of the UTCs throughout the UK was explained to us and we leaped on the chance to get involved in the local community and assist young people in becoming proficient at using key industry skills on equipment like the additive manufacturing machines we use in our business.” Walsall’s enthusiastic sponsorship of the Black Country UTC, together with Wolverhampton University, will hopefully act as an exemplar to other FE colleges around the UK, some of which have expressed concern that the UTCs will be in competition with FE institutions and detract from their funding potential. Basi says this does not need to be the case: “Walsall College will retain its engineering and construction provision of courses for mechanical and electrical engineering and other classical engineering crafts. The UTC will provide a far more holistic education to youngsters (starting at 14, rather than 16, which is the case for FE) and will be specifically focussed on the new types of engineering mentioned earlier. It is important to see that what we are doing is not duplicative. The aims and offerings are distinctly different.” The critical step now, if UTCs are to become embedded into the fabric of UK education and increase the number of young people pursuing engineering carers, is for UTC partnerships to communicate effectively. Parents and young people must be convinced of the UTC potential for providing British industrial stability, by streamlining appropriately skilled technicians into UK factories, and career security for individuals. For more information about UTC projects in your region visit www.utcolleges.org and find out how you can benefit and assist.

Peopleandskills JCB Academy

diary

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

Last

term, Harper Adams University College set us a task to design and build a remote control car in teams of five. We then had to race our car against other teams to determine the winners of that challenge. It was exciting having a lot of people there to watch, including the governors, the Principal and Sir Anthony Bamford – owner of JCB. It’s a shame that my team didn’t reach the final though; probably because the motor fell off our car! To begin this new term, a new challenge has been set by representatives from Network Rail who gave us a presentation about their company and told us about a project they are running from 2009 until 2014 which will cost £34bn. It was certainly interesting hearing about the scale of an operation which maintains and improves Britain’s rail tracks, signalling, rail bridges, tunnels, level crossings, viaducts and 18 major city stations. Our engineering challenge will be to design and build the control system for a level crossing. First, in preparation, we will work in teams on a project centred round

a traffic light junction, in order to build our understanding. We will then work individually to create the control systems. We are visiting the East Midlands Railway Control Centre in Derby on November 9 which will give us an opportunity to look at how the computer control systems are used on the railway infrastructure. This will hopefully give us some ideas for our project. As you can see, we do a lot of engineering at the JCB Academy. But it’s not just that; we engage in business studies too. Therefore, for the business part of the challenge, we will be looking at different aspects of business administration. This will involve organising and taking part in business meetings, performing various roles and duties and producing a range of business documents. In engineering, each of us has also been making a softheaded hammer on lathes in the workshops. As it is our first time using the lathes, we are making them from aluminium so that it is light and easy to work with. When we have finished making the hammers, we will then use them for

our practical work and they will be recorded in our portfolios for our diploma. At the JCB Academy, we have a house points system which is a rewards scheme that gives students something to aim for. Whether for impressive work or good behaviour, we are rewarded with house points. However, house points can be lost as well as gained! These points go towards an awards ceremony at the beginning of the next term. This term, an iPod Nano was awarded to the person with the most house points and a PlayStation 3 games console was awarded to a random student from the house with the largest number of points collectively. These are great prizes and next time our school council will be choosing the bounty. The engineering challenge looks like an exciting prospect that I’m glad to be taking part in. Along with everyone else, I am looking forward to visiting the control centre in Derby before buckling in to the tasks that Network Rail have set for us. I’ll let you know how we get on!

Have your say at www.themanufacturer.com

The role of maintenance and asset management in optimising plant performance Ian Ritchie Managing Director Brammer UK

As UK industry starts to recover from recession and demand starts to increase, manufacturers face an almost unprecedented set of performance improvement challenges in the face of increasing raw material and commodity costs, combined with extended lead times and continued tight controls on operating budgets, employment and capital investment. However, irrespective of the economic situation, the key drivers of manufacturing competitiveness and profitability remain the need to optimise production output and efficiency whilst reducing operational costs. If an efficient and reliable plant is the key driver of success, then the way

in which a company approaches its maintenance and asset management strategy is critical. A best-in-class approach to optimising manufacturing plant performance will align the strategies, goals and metrics of the production and maintenance teams, fostering collaboration between these teams to aid effective prioritisation and decision making. Common objectives should be standardised around typical metrics used by best-in-class manufacturing companies such as Overall Equipment Effectiveness (OEE) â&#x20AC;&#x201C; measured as a percentage by multiplying plant availability, performance and quality â&#x20AC;&#x201C; and asset downtime, measured as the

amount of time the asset is offline against total asset availability. In order to maximise OEE and minimise asset downtime, plant must be both well operated and well maintained, with vital spares available when needed and unscheduled downtime minimised. This is brought firmly into focus by the fact that unplanned production downtime can throw manufacturing schedule adherence into disarray. It can often cost many thousands of pounds per hour, and can be commercially damaging for companies in asset intensive industries. Lost production time can mean a failure to meet a tight order deadline and even the consequential loss of one or more highly valuable customers. It can also be further complicated by the issues brought on by ageing plant and equipment. This is becoming an increasingly important factor since the recent recession as economic and financial pressures have influenced a general reduction in capital investment in new plant and equipment. Many companies are instead focused on driving existing assets over an extended lifespan, frequently while working within reduced operating budgets. An effective maintenance and asset management strategy is absolutely critical to meeting these challenges while delivering on operational performance, service levels and overall company profitability targets.

Developments in maintenance strategy A best-in-class approach to maintenance and asset management strategy is to move from a reactive approach â&#x20AC;&#x201C; where plant is run to failure, often

Best practice in maintenance management supported with high levels of engineering stock and characterised by unreliable performance and frequent breakdowns - to proactive and condition-based maintenance management. A reliability-centred approach goes a long way in helping companies to avoid asset failure and to fix potential problems relating to production assets before they actually have an impact on unscheduled plant downtime. Making effective asset maintenance decisions requires organisations to equip their employees with the right data at the right time and in the right format. This may include the adoption of condition monitoring techniques such as vibration analysis, thermographics, oil sampling and acoustic analysis to assist in the monitoring of plant performance. While this approach requires a significant evolution in maintenance strategy and execution for many manufacturers, its impact is being widely proven in safeguarding production schedules, adding new efficiencies to operations, reducing maintenance costs, improving spares management and even lowering energy consumption. For example, scheduled maintenance to a motor or compressor whose energy usage has been monitored and identified as exceeding the level expected, can help identify the contributing factors and allow a programme of

Maintenance spares management also plays a significant part in achieving the goal of improving overall efficiency in manufacturing operations, helping to maintain continuity of production and avoiding costly downtime. A successful maintenance spares sourcing strategy should always focus on the total cost of ownership, rather than the initial purchase cost, with factors such as component lifespan, spares criticality, reliability, reduced maintenance and service intervals all contributing to the purchasing decision. Ultimately, the strategy should concentrate on identifying the most common and machinespecific spares, and ensure that critical spares are always available. Wherever possible, stock value and the number of stock-keeping units held should be minimised, with the number of suppliers minimised to reduce inventory and working capital tied up in maintenance spares as well as the transactional costs associated with maintaining duplicate suppliers of the same component. The maintenance management strategy should also focus on an engineering spares standardisation programme, which has the potential to significantly reduce inventory and the cash tied up in stock, while ensuring a consistent standard of components is used across the asset base.

The benefits of outsourcing The purchasing of spares for the daily maintenance and repair of production and manufacturing equipment is often a complex, time and resource consuming activity for most organisations. When well managed, however, this is an operational area that can provide considerable added value with major cost savings generated through demand reduction, reduced inventory, production and maintenance improvements. Where the procurement and spares management process is large-scale or complicated, there is much to be said for outsourcing part or all of the function to a specialist MRO partner. The right partner should be able to offer a strong combination of procurement and supply chain management expertise, combined with value-adding services such as condition monitoring, energy audits, drive system design and lubrication programmes to support the maintenance and asset management strategy. This enhanced level of support can free up valuable in-house procurement, production and maintenance capacity to focus on improvement projects to increase production output and efficiency. Outsourcing of some, or all, aspects of MRO spares management is consistently proven to reduce total acquisition costs and working capital, while the right partner can also add value to the engineering team to support the goal of optimising plant uptime and production output. In the current economic climate, where capital investment is being restrained, and therefore plant asset life is being extended, an effective maintenance strategy is the key to improved manufacturing plant reliability and higher operational and financial performance.

Brammer

corrective action to be developed and implemented - reducing both energy usage and future asset downtime. This is just one instance of how energy consumption data can be highly valuable in informing operational decision-making and contributing to OEE. Whatever approach to maintenance is adopted, its goals and metrics should always be closely aligned with those of production and procurement teams to ensure a consistent and collaborative approach to the spares purchasing and management process.

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

From basement to boardroom:

Procurement re-engineering While the recession was certainly not desirable, its arrival did herald the rise in prominence of procurement as a factor in business operations. However as the recovery has ensued, the question begs as to whether it will remain high on the management agenda. Tony Lockwood of Xynergie argues that the rightful focus on procurement in new economic times is a chance to truly transform its function through a total reengineering process.

With

clients and customers seeking better value, declining growth prospects and the impossibility of raising prices, many firms are being forced to find and focus on areas within their business that can save their eroding margins. But crises bring with them opportunities and, in the current business environment, a procurement function ripe for re-engineering offers organisations a last frontier in which to find hope and to seek opportunities. Rethinking and redesigning business processes can achieve dramatic improvements in critical performance measures. Procurement process re-engineering is the analysis and redesign of the procurement function of a business to mine hidden strategic value and to bring about dramatic improvements in performance. Far from an incremental approach, procurement re-engineering is a total reinvention aimed at improvements that are more likely to be 10 fold than 10 percent.

Who needs procurement process reengineering and why? Many businesses claim that they want to be an organisation flexible enough to adjust quickly to changing market conditions, lean enough to beat any

competitorâ&#x20AC;&#x2122;s price, innovative enough to keep products and services technologically fresh, and dedicated enough to deliver maximum quality and customer service. The truth, however, is usually far from that.

What does procurement process reengineering entail? Procurement re-engineering can be delivered in three key stages: Realising savings from a review of historic spend

1 2 3

Optimising existing contracts to create immediate saving opportunities Transforming future purchasing and procurement processes

Realising savings from a review of historic spend Usually a comprehensive review of historic spend will uncover profits lost to duplicate payments, over payments and VAT anomalies. It is also an opportunity to ensure that historic transactions took place at the correct price levels. Post-audit reports can help implement process improvements and eradicate future errors. A risk free way to forensically review The link between control and innovation

Supplychain and logistics

your account payable spend, the review begins with an audit of accounts payable in order to uncover system, process and human errors within the procure-to-pay cycle. Most businesses are surprised that the average error rate in the UK is around 67p per transaction. The typical firm can expect to recover in the range of 0.04-0.1% of their total spend over the last 5 years. On average the whole review process will take between two to four months.

Optimising your existing contracts Even when undertaking strategic improvements in procurement function, procurement reengineering can also reap immediate benefits just from undertaking the exercise. Quick wins can be obtained while reducing spending profiles and stopping leakages within the procurement function. Changes effected during the quick win process can include standardising supplier charge rates across all areas of the business, reducing maverick spending through implementing an e-procurement solution and improving the availability of timely management information. Engaging all levels of the business and its supplier network early in the process is essential for energising change. Typical savings generally average between 1-3% percent of the total spend and this stage can be completed within three to six months.

Transforming future purchasing and procurement processes Long term benefits are achieved through a programme of change that integrates structured procurement processes in the business and essentially includes setting up improved systems of governance and contract management. Implementing solutions will require significant change within the business but once the long term solutions are in place, the typical business stands to gain a cost saving of between 10-15% of the total spend. Significant direct and indirect cost savings can also be achieved through a partnering approach to supplier management. Usually, the integrated programme of change can be completed within 12 months. With the objective of implementing a programme of strategic change, the procurement function can be analysed along the dual axes of control and innovation. The typical “as-is” position is one where there is a large procurement function operating on higher cost options, there is both a low level of process control and low level of innovation. It is common to find a large number of suppliers and a high volume of ‘maverick’ spending when analysing businesses that fall within the low-control, low innovation quadrant. On occasions where there is a high level of control but low level of innovation, there is often a large procurement function, escalated costs due to ‘out of scope’ items with a strong governance focus around spending. There will, in most cases, be a large number of suppliers, potential for disputes and

If you’re wondering if procurement process reengineering could bring value to your business, you could begin by asking yourself these questions regarding your procurement function: 1 How big are procurement costs in your business, and in your industry? 2 Do procurement costs take up a significant proportion of your costs? 3 Have you benchmarked your procurement function against businesses operating in your industry? 4 Is your procurement function providing strategic value to your business? Do you even know? 5 Does management view the procurement function as a ‘necessary function’ within the business rather than a value added service? 6 Does procurement have board level representation within your business? 7 Does the procurement function appear disjointed and overly focused on internal efficiencies or getting the best price? 8 Do you occasionally end up with maverick spends due to poor controls over spending? 9 From your vantage point and experience, do you feel the procurement function is capable of making a better contribution, especially in terms of improving quality, lead time and a better level of service to both internal and external customers? 10 Do you believe your procurement function could contribute to achieve the same quality, lead time and service at a lower cost than at present? 11 How up-to-date and modern is your procurement function? 12 Is it bloated, clumsy, rigid, sluggish, non-competitive, uncreative, inefficient, disdainful of internal customer needs, and losing money? Obviously, there are no yes or no answers in relation to the above questions, but answering them honestly should naturally illuminate whether or not you are mining the value that is available from your procurement function at the moment. a culture of managing suppliers through contracts. In some cases procurement functions can be high in their level of innovation but with relatively low levels of control. In these businesses it is normal to see a large procurement function with high levels of maverick spending. They are more likely to have a small number of partnerships with suppliers. The ideal situation is where there is both a high level of control and high level of innovation and this is the position that can be strived for through procurement re-engineering so that the business will have a reduced procurement function with a strong governance approach and spend control mechanism capable of meeting business needs. This necessitates adoption of best practice in financial controls, putting in place robust processes and adopting consistent contract management with improved service level agreements.

How much is your company losing on international payments?

Charles Purdy Director, Smart Currency Exchange

continue to live in highly volatile times both in the world of currency and in the world of commodities. A recent survey carried out by The Manufacturer identified that 80% of companies were affected by the: a. movement in exchange rates, and the b. movement in raw material costs. The world of currency is where my expertise lies, but given that I have also been the Finance Director of a

listed mining company, I probably have a better understanding than most of what is affecting the price of raw materials, which continue to rise even though economic growth in the Western World is at best languid. So why have so many companies been affected by movements in exchange rates in the last few years? I think I will start with a simple example. Say you were importing US$1.5m worth of goods. If the exchange

rate was US$1.50/£1, the cost in sterling would be £1m. If the exchange rate was US$2/£1 the cost would be £750,000. A difference of £250,000 or a 33.33% increase if you had originally budgeted to purchase the goods at a rate of US$2/£1. And what if those goods made up 50% of the product you were producing to sell and you had budgeted to achieve a profit margin of 10%? The change in exchange rate would have turned the £150,000 profit into a loss of £100,000. This simple example is not that far from the truth as sterling became the pariah of western world currencies losing value across the board. If you look at the five year chart of the euro against sterling, you can see that it hovered around the €1.50/£1 level for a number of years - but

- and the banks wanted to see secure cash flow covering a number of years. In some cases as many as 20 years. Now we have seen a complete change as the prices of commodities seem to be going one way - which is up - and the miners want short term supply contracts plus a significant amount of sales being done at spot [i.e. on the day] prices. Nowadays, very few gold miners have any of their gold production being sold forward, whereas not many years ago, all of their production would have been hedged. So my belief is that UK manufacturers have to adopt the same approach to their currency exposure for purchases from overseas. Or, if they sell overseas to their exports, (because unlike commodity prices which seem to going one way) exchange rates can move either way - and can move very quickly. One of the simplest ways to do this is through the use of what is known as a “forward contract.” This is where an exchange rate is agreed for the supply of an agreed amount of currency at an agreed date sometime in the future. A small deposit will be required, but it is a very powerful tool in ensuring that you don’t get caught by an unexpected movement in the exchange rate!

So how does it work in practise? Let’s work with the above example where we were purchasing

US$1.5m of goods. As soon as the need for these goods was confirmed, the manufacturer should have “bought” the US$1.5m using a forward contract. Assuming the budget rate of US$2/£1 was based on the actual rate at the time, they could have known that their cost would have been in the order of £750,000. They would have had to state a date by which these funds were required, which for the sake of this example we will take to be in six months time. But the flexibility of a forward contract can be such that you can: 1. pay early for some or all of the US$’s, and/or 2. extend the period of the forward contract beyond the six months for some or all of the US$’s.

Smart Currency Exchange

then went into freefall in late 2007 following the Northern Rock bail out as pictures of desperate savers queuing outside their local Northern Rock branch were beamed throughout the world. Then HBOS and the Royal Bank of Scotland hit the wall in the final part of 2008 and we saw sterling push very close to parity against the euro and towards US$1.40/£1 against the US$ having been at the US$2/£1 level just over 6 months earlier. There has been a recovery in sterling since early 2009, but recent events have shown that this recovery can be somewhat fragile with the mere possibility of the Bank of England starting its programme of quantitative easing again, causing a sudden loss in sterling’s value against the euro and commodity backed currencies such as the Australian dollar. The only currency that sterling didn’t lose ground against was the US$ which was due to the Federal Reserve restarting its own programme of quantitative easing. This, of course, makes any planning somewhat difficult - and not just if you are importing from overseas. Say, for example, you were exporting into the Euro zone and had budgeted at say, €1.15/£1 for receipts in 2010; a conservative estimate, since at the start of 2010, the rate stood close to €1.10/£1. Now have a look at the €/£ chart opposite, since the 1st April 2010. Quite clearly, you would have been out of pocket for a large part of this year. So how can you save your bottom line? Let’s start with what the miners used to do. For many years, commodity prices were stable, but on the low side. This meant that producers needed to enter into fixed long term contracts with customers so they could forecast and maintain their margins and positive cash flow. This was especially important when negotiating the financing for their highly capital intensive project, as margins were tight

You will be required to a pay a deposit for this forward contract as clearly, there is some risk for the company selling you the currency but given the flexibility of a forward contract and the safeguarding of your profits, I would highly recommend this as an option to be talked through with an expert in international payments. As for protecting yourself to movements in raw material costs, there are instruments out there that can help, but even with my background, I would suggest you find informed experts to help. If you would like to remove one unknown from running your business please give me a call. I will do my very best to help.

Web: www.SmartCurrencyBusiness.com Tel: +44 20 898 0500

For more information please visit: www.smartcurrencybusiness.com

Custom assemblies

Computer says

yes

Sun Hydraulics needed an ERP system which could support its commitment to saying ‘yes’ to its customers whenever it possibly can. It chose Microsoft Dynamics 2009 delivered by vendor Technology Management.

Sun

Hydraulics is a US manufacturer of hydraulic valves with manufacturing and sales sites all over the world. Here in the UK it set up shop almost 30 years ago and has spent the last 23 of those at its production facility in Coventry. Here it makes either batch or one-off valves, weighing up to 250kg and costing up to £5,000 a piece, for industrial and construction machinery and renewable energy technology like tidal generators, wind turbines and solar panels. The site employs 68 people, has a turnover of £12m and exports 50 per cent of what it makes – predominantly to Central Europe and Scandinavia. Having implemented Microsoft Navision 2.6 around ten years ago, Sun Hydraulics upgraded to version 4.0 in 2008. Now, it has gone one step further and installed Microsoft Dynamics 2009.

Ian Callow, Sun Hydraulics’ IT director, explains that the IT system is used to orchestrate everything the company does. “Everyone in the company uses our ERP system every day at some point,” he says. “We use it for everything from sales ordering from the front end to manufacturing processes on the shop floor and issuing purchase orders and all of the financial reporting.” Whatever discipline it’s being used for, though, the main requirement is that the system enables ultimate flexibility and supports the company’s commitment to providing its customers exactly what they want, exactly when they want it. “We don’t want a ‘computer says no’ situation. We effectively assume infinite capacity and the application is our scheduling management. We never want to have to say we can’t do this, even if the computer says it is impossible, we want to be able to expedite

Specialfeature Sun Hydraulics

things and move them around and meet the requirement. Our customers determine our production schedules.” The system has to be able to cross check orders against supplies to ensure that the correct componentry is in stock and, if it isn’t, be able to order more. And, by having this information available at the point of order entry to front screen, Sun can respond immediately to customer requests rather than waiting to manually check stores. Management has to be able to easily and effectively rearrange production schedules at any given time. And, if the laws of physics can’t be bended quite enough to ship from Coventry, the management team has to be able to arrange it, via the ERP system, from one of Sun Hydraulics’ other global sites. Says engineering manager Steve Hancox: “Previously, lead time from customer order to delivery has been as high as 16 weeks; now we have set up a system whereby we’ll deliver by tomorrow, if we can. We will try to meet whatever the customer requires. It might be that they don’t want it for six weeks or it might be that they want it tomorrow. We will always strive to work with the customer and meet their needs.”

Making the shoe fit Some manufacturers opt for an ‘out of the box’ ERP package because they feel they will benefit from the standardised processes and because it is easier to implement, train employees on and maintain. Conversely, though, Sun Hydraulics chose Microsoft Dynamics because of the high levels of customisation that it offers. “We cannot operate by determining how we run our business by what the ERP system says,” says Ian, “it has to be the other way round. The IT must be tailored to suit how we work.” Critically, this has allowed the flexibility to be built in. It also allows communication links with sales operations in France and Germany which are too small to run their own systems and thus piggyback on the UK’s and enables the company to adhere to and illustrate security compliance which are necessary in the US. Microsoft Dynamics also ticks another of Sun Hydraulics’ principle boxes through customisation: simplicity for the end user. “We wanted to make it as simple and as error proof and as free for the user as possible,” explains financial controller Ray Glasspole. “For example, at the front end the sale steam can put a sales quote on the system, send it to the customer and the customer can see the price, lead time, any discounts and so on. If the customer then wants to go ahead it’s one button to turn the quote into an order. They don’t have to re-key it. “The shop floor employees see a list which is prioritised by the required date. They sign on to a Machining area and it tells them the numbers they need to process. They do it, go back to the screen, type in the output and move onto the next job. The idea is as much as possible is done for the user.” The vendor Technology Management’s proficiency in customisation along with its focus on manufacturing processes and a shared ‘can do’ attitude has been invaluable to Sun, Ian suggests.

“We’ve got a pretty good idea of what we want the system to be able to do so we’ve been able to intonate our requirements quite clearly and comprehensively,” he says. “Where the standard system didn’t do what we wanted it to be able to do, Technology Management were able to customise. They’ve always taken the stance of ‘if that’s what you want, we’ll do it’. “It’s quite clear from working with them that they have a lot of practical business experience which other vendors sometimes lack. Vendors tend to be computer geeks who don’t really understand the business need. These guys do and they have a high proportion of manufacturing companies on their books too; this is important as it means they better understand the requirements.”

Customer is king The pipe dream for Sun Hydraulics is to implement a system whereby online customer orders automatically feed into the production schedule. Says Ian: “At the moment, we run a production plan on a daily basis and whoever looks at the plan will cast an eye over it to ensure there isn’t anything ridiculous on there, based on their own experience. They can do manipulation on what the system suggests before it gets approved. We do that manual sanity check but at some point hopefully we can trust the automation.” The online ordering basket will eventually become the same as internal sales staff placing an order and will filter through to production in the same way. Customers will be able to select next day when an item is in stock or be offered available lead times. If what they require is not offered the system will prompt them to contact Sun by telephone who will manipulate the system to make it happen. Steve maintains that this approach to customer service gives the company a big edge over its competitors. “We get feedback that we are very easy to deal with,” he says. “Customers ask us if we can do something and they get an answer very quickly, usually a positive one. They, in turn, can be more responsive in their own business strategies. We’ve won business from our competitors because we can work to the customer’s production schedules rather than vice versa. Our deliveries are up there with the best in the business. Many of our competitors are double, triple or even quadruple on our delivery times. “Our main business strategy is to be completely responsive to our customer and this ERP system facilitates that.”

Have your say at www.themanufacturer.com

Gaining value from consultants Getting the most out of consultants

failure? How indeed can you select an appropriate consultancy

on time and in full but the added

October saw the National Audit

with the particular expertise you

stress damages employee morale

Office publish its report on “Central

need? That said, take care not

and readiness to take part in future

Governments use of Consultants

to be too prescriptive in how the

business improvement projects.

and Interims.” From 2009-10 the

deliverables should be achieved,

As companies are increasingly

government spent £789 million

and assumptive in the likely root

seeking a culture of continuous

on consultants, significantly more

causes of failure. Achieving the

improvement the last outcome is

than any private sector is likely to

outcomes you seek may prove to

potentially the most damaging over

spend on consulting. So what are

be more complex and far reaching

the long term.

the lessons you can learn and what

than you expect.

conclusions can you draw from this

Transparency of communication and leadership

recommendations would be heartily

Think carefully about the team you assemble both internally and externally

endorsed by any consultancy worth

How do the skills and personalities

overlooked or not considered in

its salt.

of your employees and the

enough detail. Don’t abdicate

consultants complement each

the responsibility for running

Clearly understand the outcome you seek and what constitutes success

other? Take care to ensure that

and leading the project to the

you have the best people for the

consultants. Mention the words

project, not just those who are

‘change’ and ‘consultants’ and

Think carefully about the

available or keen to take part. Have

employees can become fearful.

outcomes you seek and establish

you allocated sufficient resources?

They fear for their jobs, they fear

clearly what success will look

In the short term you may need to

they will fail, they fear uncertainty

like. To establish success you will

allocate extra resources because

about the future. If senior

need to measure the deliverables

your employees will presumably be

managers are highly visible in

that you care about, otherwise

doing their existing job and working

clearly articulating and effectively

how can you tell if anything has

on the project. In our experience

executing the communication

improved? Measures such as

failure to provide appropriate

strategy, most of the rumours and

savings, sales growth, productivity

additional resources is a common

unfounded fears are dispelled.

improvements, cycle times,

mistake which normally results in

This allows people to focus on

lower customer churn, waste

one of four outcomes.

achieving the desired outcomes.

vast expenditure? Well, for the most part it is common sense, and the

reduction, improvement in staff morale and lower staff turnover are just some of the measures that you could choose to adopt. The measures you opt for, of course,

The team achieve both objectives

The project succeeds but company performance takes a downturn. The project fails to achieve its objectives. The team maintain company

These are areas that are often

Effective leadership by both senior and middle management is a vital component. Use consultants to advise and support but it’s the senior managers who need to set

depends on the nature of the

performance whilst delivering the

direction, clearly establish roles

programme and the outcomes

project but take longer to achieve

and responsibilities and paint a

you seek. If the outcome is

the outcome and utilise more of the

picture of the intended future so

confused and the measures are

consultants’ time and resources,

that employees can see their place

not agreed and in place, how

leading to greater costs and longer

in it. It’s hard to work diligently

can you evaluate success or

return on investment.

for a future that you fear you may

and that resources are lined up

motivates the consultancy to go

show interest and attend all the

to replace any shortfall caused

for stretch targets. The dilemma

relevant milestone and assessment

by the consultants departure. It

for consultancies in going for a

meetings. Projects that are

would also be wise to ensure that

risk and reward structure is that it

instigated by senior managers but

effective processes and measures

requires a common understanding

then slip down or off their list of

are in place to enable you to

of what constitutes success,

priorities rarely go well. The project

monitor improvement, so you

agreement on what measures

team may get demoralised and

can see if the improvements

are going to be used, the scale

start to let it slip in their priorities.

are sustainable.

and quality of the resources the client is going to provide and most

“If it is not important to my

important of all, that the

manager why should it be

scope and focus of the

important to me?” Middle managers often feel most threatened and therefore need to work closely with the consultants to ensure key targets are met at each stage and that appropriate and sufficient resources are

Bourton Group

not be part of. Managers need to

Effective leadership by both senior and middle management is a vital component. Use consultants to advise and support but senior managers need to set direction

change once it starts. All of which are very difficult to accurately access before the project has started. The National Audit Office concluded that “the use

committed to the project

of management

to maximise success. Senior management need

project is not going to

consultancy by government can provide great benefit.” It is

project will have across the whole

Remunerate consultancies fairly

company and the impact it will

Most consultants are happy to

stretching back almost 30 years

have on the customer. Failure to do

accommodate the structure of

hasn’t therefore been a complete

this leads to a risk of the message

remuneration that the client wants.

waste of time! Second they

of positive change being replaced

Some clients prefer a time and

recommended more payments

with one of uncertainty and

materials contract because it gives

by results; which is something my

resentment, where the rumour mill

them certainty of expenditure,

consultancy, at least, welcomes

starts to determine the outcome.

others prefer some element

and would urge more of provided it

Regardless of how respected the

of risk and reward because it

is fairly applied and transparent.

to communicate the impact the

nice to think that my consulting life

consultants are by your team and the rest of the company, they can’t effectively replace senior and middle management leadership responsibilities because the consultants do not have executive responsibility.

Ensuring improvement is sustainable Many managers take the decision to hire consultants because there is a lack of skills and/or resources internally. To avoid becoming overly dependent on the consultants, it is essential that the relevant skills and capabilities the consultants have, are transferred to your own people

Stuart Smith is managing director of Bourton Group, a consultancy that specialises in delivering sustainable performance improvement for companies. Email: stuart.smith@bourton.co.uk Web: www.bourton.co.uk

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

Slaying the

downtime

dragon A team from the University of Portsmouth has created software which might just banish the tyrannical beast that is downtime. Mark Young explores.

You’ll

often find in fairy tales there’s a fire breathing dragon persecuting the mild-mannered village folk and it is the only thing standing in the way of the selfsustained serenity which will form their happily ever after. Manufacturing, of course, is no fairy tale. There isn’t just one tyrannical beast piling misery upon the masses, there are lots. The tax man is one, for sure; the unions, perhaps, are another; downtime, certainly, rivals them as a third. In the fables, a hero emerges to slay the dragon and liberate the rejoicing townsfolk who celebrate in joyful song and dance, coaxing yellow rays of sunshine through the storm clouds. Recognising vanquishing HM Revenue & Customs, would only land him in jail and that the unions, as much as they might disrupt, do actually serve a very important role in society, our dragon slayer – Dr David Brown, Head of the Institute of Industrial Research (IIR) at the

University of Portsmouth – chose downtime as the target for his lance. If manufacturers want to stay away from the dragon’s fire of unscheduled downtime at the moment, the best solution anybody has come up with is counting hours so that parts can be replaced before their expected end of life. Clearly, this is not an efficient model. It doesn’t take into account subjective things like machine overloading, which the company may not be aware of, and parts could well be replaced too soon, as well as too late. However, Dr Brown, backed by an 11-strong band of merry men comprising research associates and PhD students, has created a ‘virtual engineer’ – a piece of diagnostic software which informs companies when machines will need to be scheduled in for maintenance, instead of waiting for them to break down. It works by placing sensors on the machine which are prone to failure, such as

Operations maintenance and repair

motors and bearings, and picks up on changes in the algorithms of vibrations, temperature, humidity, frequency and sound. When there is a change, it means the part has deviated in some way and therefore poses a threat to the operation. Critically, the system detects change of less than one per cent – before it causes the machine to malfunction. The machine can then be booked in for maintenance at a time when the least disruption is caused, or when a back up can be drafted in. “The sensitivity of the system is the most important part,” says Dr Brown. “The whole point is that we pick up changes early so that ample time is given for the machine to be scheduled in for maintenance. There are already fuses on machines which detect faults but, of course, they force it to stop running. That’s what we want to avoid.” Sometimes, machine maintenance providers might send an engineer out to the factory to put vibrations meters on machines and try to analyse performance this way. This is prone to discrepancy in readings, requires skilled personnel and only identifies the general area of a machine which is out of kilter. The Virtual Engineer can diagnose the specific part which is affected, be that the gears, shafts, belts, bearings or anything else within the motor. And real engineers will never be out of a job because they’ll still need to perform the maintenance. “It just makes the job a lot quicker and easier,” says Dr Brown. Dr Brown credits his colleague, senior research associate Dr Farshad Fahimi, with the breakthrough for the Virtual Engineer with his work on image processing. Says Dr Fahimi: “It searches data like an intelligent and sensitive human, combined with the skills of a super engineer. It’s important for the operators to be alerted to a breakdown and to be able to estimate the break down time well in advance in order to check for availability of parts. This is one of the current trends in our research.” What is really impressive about the Virtual Engineer, says Dr Brown, is that, as an intelligent system, it ‘learns’ about the machine while it works. The software records what algorithms are produced while the machine is running normally without faults so that it understands what deviations are part of necessary processes away from the primary function – automatic cleaning, for example. This prevents the system from ‘crying wolf’ and also means that companies can learn from the way one machine handles a combination of different processes to make future models more efficient. The team are working on the project with food processing and filling equipment manufacturer Stork Food & Dairy Systems (SFDS) as a Knowledge Transfer Partnership. The importance of avoiding downtime for this company is clear. Their machines run for 24 hours a day, seven days a week, and what’s more they can cost up to £1.5m a piece so companies are unlikely to have a spare one sitting

around doing nothing. The team have been testing the Virtual Engineer on Stork’s machines and Luke Axel-Berg, Stork general manager has hailed the Virtual Engineer as “an entirely new way of looking at maintenance”. “An unplanned stoppage on a production line can be a total disaster,” he said. “It can spell chaos for a processing plant, especially a dairy plant where milk is literally arriving every single day. The cows don’t stop producing milk because a machine has broken. Instead the milk must be sent to an alternative location putting unexpected pressure on another plant. “Our customers are already calling for a ‘zerofault’ level on their machines. Until now it’s been impossible to guarantee that level of customer service but this new diagnostic system looks set to change all that by taking away the risk. “In the event of a major breakdown lasting several days we could even risk losing a customer – how do you put a price on that?” Dr Brown says the system is around 18 months from commercial roll out and between then and now his main priority is to make the user interface and

An unplanned stoppage on a production line can be a total disaster. It can spell chaos for a processing plant, especially a dairy plant where milk is literally arriving every single day Luke Axel-Berg, Stork Food & Dairy Systems reporting more accessible. “Currently the analysis provided is very technical but all that the user really needs to know is whether or not the machine is running OK and which specific part needs replacing,” he says. There could be a wide range of applications for the system outside of processing machines as well, including in electric cars and in renewable energy equipment. “It’s a very arduous environment, a car, with all the rain water and all of the vibrations. We know of a small development company that are producing electric cars and we are approaching them. There is even more scope now that companies are looking at putting hub motors into wheels. Wind turbines could be quite strong too. The ones out at sea are not easy to go out and analyse. We could place the Virtual Engineer on them and use radio devices or the mobile phone networks to communicate back a fault.” So let’s all hail the dragon slayer! There will be those who thought they’d never see the day, yet downtime’s reign of terror over manufacturers could soon be consigned to the stuff of legends. Now how about that tax man?

the line Making

Increasing efficiency and reducing costs is manufacturing nirvana. Even better? A system that can deliver nirvana accompanied by ROI in less than 12 months…

a brand that is recognised worldwide, Coca Cola Enterprises (CCE) needs little introduction. To whet your appetite for emulating success on their level however, consider for a moment the size of its operations. In Great Britain alone, it has seven manufacturing sites, 186,000 pieces of equipment and sold a massive 228 million cases of product in 2008. With production scales of that magnitude, anything that increases efficiency and reduces costs in production and processing amplifies on a substantial

Effective and efficient problem solving is dependent on good quality, timely data - and a thorough process to gather, sort, organise and analyse that information Martin Wing, Managing Partner, Europe at Kepner,-Tregoe

scale and over the next three years, CCE expect to see significant improvements in its European Supply Chain Division’s operations. In part, this will be thanks to the selection and application of LineView™, a diagnostic software solution that intelligently identifies the root causes of downtime, 24 hours a day.

Putting power into energy drinks LineView monitors the entire production process in real time. As a business that brings together over 400 suppliers to manufacture 80 different products, every second counts for CCE. Richard Davies, vice president operations Coca Cola Enterprises, said: “LineView is the single most powerful manufacturing tool I’ve seen during my 15 years in operations management”. Every aspect of the line’s efficiency losses is delivered in a format that helps target improvement activity – a process that is vital for helping technology and people to work in harmony. Martin Wing, managing partner for Europe at LineView’s consultancy partner, Kepner-Tregoe (KT) verifies this: “Effective and efficient problem solving is dependent on good quality, timely data and a thorough process to gather, sort, organise and

Specialfeature Kepner Tregoe

analyse that information. As LineView captures data in real time, this offers unparalleled advantages in the quality of data feeding into the logic of the problem solving frameworks we apply to our clients – allowing us to quickly and effectively turn this analysis into root cause identification, recommendations and solutions that bring lasting effect.”

Knowing where to start The graphics on LineView provides a visual simulation of the factory with updates in real-time on flow rates, stoppages and other variables through tabulated figures and colour changes. This enables both real-time OEE and periodic trends to be calculated. The way the information is displayed supports two fundamental steps in recognising problems: Separating and clarifying issues so that people do not get information from one issue confused with another Setting priority on issues so that the limited resources are able to focus on getting the biggest return for the investment of time Wing continues: “While it is common to hear people talking of ineffective root cause analysis around their workplace, what people often fail to understand is you only need to complete a root cause analysis when three conditions are true: set targets or expectations are not being met; the cause of these missed targets is not known; and, finally, we need to know the cause to take meaningful action. Separating and clarifying issues is fundamental to assessing these three conditions and then knowing where to start.”

Stimulating routine and discipline Deming established, and more lately six sigma has emphasised, that variation in the manufacturing process is not good for business. This is now common knowledge and it is therefore an easy stretch to assume too much variation in the management processes that control and guide operations is also not good. Getting people to think in a similar fashion can therefore increase the efficiency and effectiveness of the management routines and disciplines that are essential for any modern manufacturing operation. Removing thinking pattern variation will help in getting people aligned quicker. Ian Rowledge, director at LineView Solutions, emphasises: “Standard routines and disciplines are essential to ensure some predictability in the management systems that surround any LineView installation. Without this rigour people don’t always realise the full extent of the benefits that are available to them. The KT approaches undoubtedly stimulate the right thinking patterns in people to utilise to best effect the information captured by LineView.”

delivering the results to every PC in the factory. Such is its efficacy, a LineView trial can often generate enough benefit to pay for a full installation: usually achieving a complete return on investment in less than 12 months. “The power of LineView is in the speed with which teams can identify the real losses to efficiency, while providing the drill-down necessary for highly effective problem solving,” said Davies. “With the operational support of the LineView Solutions team, at CCE we’ve seen performance increases of up to 20% in less than 24 months.”

LineView is the single most powerful manufacturing tool I’ve seen during my 15 years in operations management Richard Davies, Vice-President Operations, Coca Cola Enterprises LineView is extremely effective in highly automated bottling and packaging environments, not just drinks production, although clients include Heineken, Diageo, Coca-Cola Hellenic and Heineken. For CCE, LineView has delivered: Efficiency savings of over 8% A return on investment within 12 months A performance increase of up to 20% over 24 months Achieving the perfect balance between technology and people skills will never be a perfect science. But with LineView Solutions providing cutting edge data analysis and Kepner-Tregoe ensuring learnings are transferred effectively into process improvement within the plant and the people running it, results would suggest that together they are providing a highly effective approach to edge CCE ever closer to that unobtainable holy grail.

For more information about LineView Solutions and Kepner-Tregoe, please contact: Tel:

+44 (0) 1926 623350

Email: enquiries@lineview.com Web:

www.lineview.com

Web:

www.kepner-tregoe.com

The taste of success LineView allocates the reasons for downtime into pre-defined categories, flags up problems and helps identify the principle causes of inefficiency –

www.kepner-tregoe.com

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Established James Norwood Vice-President Product Marketing, Epicor

Rajesh Dhekne Supply Shain Practice Head, Wipro Technologies

Steven Hargreaves Group Product Director, Solarsoft

Conrad Troy Partner, KPMG

1992

1993

in 1968, SAS International had grown and prospered ever since. Its products had found their way into many of the world’s most advanced buildings, including Chek Lap Kok Airport in Hong Kong, and 30 Saint Mary Axe (‘The Gherkin’) in London. But growth in the years to come needed a better ERP platform than the one that the company was presently using, realised Louise Evans, IT manager at SAS. The company opted for Infor’s SyteLine, a system especially designed for medium sized companies. Yet the project wasn’t just about replacing one application with another. Instead, SAS—described as ‘visionary’ by one Infor spokesperson—had very specific long-term objectives in mind, primarily relating to the customer-facing processes that would power its growth in the years ahead. In short, the new system would bring together, on a single transaction platform, the company’s three separate manufacturing plants; its head office; and a new business unit in Dublin. “The idea is that a customer can now place an order with us that involves work across several of our sites, and we can manage delivery time across the whole order,” said Louise Evans. “It streamlines the whole business process, and enables us to easily share information.” Yet, truth be told, surprisingly few businesses take such a long-term or strategic view of their ERP platforms. Many see ERP as little more than transaction ‘plumbing’, a way of generating the

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Back in 2008, as recession started to bite, Reading-based SAS International — a world leader in the design and manufacture of precision-engineered metal ceilings — took a far-reaching decision to invest in IT as an enabler of growth. Malcolm Wheatley explores. key documents and data points in their order-toinvoice process. But that long-term perspective is essential if manufacturers aren’t to find themselves saddled with a system that, a couple of years after implementation, simply isn’t up to the job. An overseas expansion, for instance, isn’t going to be helped by the selection of an ERP system that lacks multi-currency and multilanguage support. Likewise, manufacturers on the acquisition trail will find hoped-for post-acquisition efficiencies to be elusive if they are saddled with a system that makes it difficult to deliver a single global instance, or which lacks the breadth of functionality to support anything other than particular niche industry verticals. In short, then, manufacturers considering a new ERP system today have a difficult challenge to face. First, what will their own business look like in ten year’s time and, second, what will the outside world, and its technology paradigms, look like as well? Yet one thing is certain: there are going to be surprises, and not least in terms of technology. Manufacturers in 1990, for instance, couldn’t have foreseen the rise of e-procurement and e-commerce in the decade ahead. Today, technology is again redefining the art of the possible. “The decade ahead certainly presents new possibilities, with cloud computing, Software as a Service and enterprise application mobility emerging as the new frontiers,” says Rajan Nagarajan, CIO and global head of the competency solutions group at business consulting and IT services company Mahindra Satyam. “While ERP systems have come a

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ERP for the next

decade long way, they now have to contend with some very different emerging realities.” Advances in ERP functionality, for instance, are making a major impact on ERP’s return on investment. In almost every way, today’s ERP systems are a huge improvement on those that were around ten years ago: less expensive, easier and quicker to implement, and with a breathtaking range of functionality built-in as standard. In the decade ahead, this can only accelerate. Broader technology trends, too, are discernible. Some — even though seemingly strong — may not stand the test of time. Cloud computing, for instance, may well revolutionise the delivery of ERP, eliminating at a stroke the data centres that manufacturers today must invest in. Or it may not: quite apart from the tendency of promising-looking technology paradigms to wither and die — remember Application Service Provision? — manufacturers may, not unreasonably, regard ERP in the cloud as a step too far. Talk to those close to the ERP scene, though, and it’s possible to point to several broad areas of impetus that genuinely seem set to have an impact over the next decade. Not least, perhaps, because they are not solely technology-led: in every case, while technology has a bearing on them, there’s a genuine business requirement and benefit as well. Agility, enterprise application mobility and business intelligence, in short, all seem poised to become important in the years ahead — with the latter involving significantly greater connectivity to plantfloor systems than is presently the case.

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

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

www.columbusit.co.uk 0800 0433 054

IT in manufacturing

“Today’s businesses feature far more sophisticated and inter connected supply chains that span global boundaries, and require manufacturers to react quicker to change,” says James Norwood, vicepresident of product marketing at ERP supplier Epicor. “And as the last few years have proved, economic conditions can change rapidly effect, giving an edge to agile organisations that can respond quickly.” “‘Agility’ and ‘intelligence’ are two words which will drive manufacturing industry in the coming decade, and this will influence the demands that they place on ERP systems,” agrees Rajesh Dhekne, supply chain practice head in the manufacturing business unit at consultants Wipro Technologies. In terms of business intelligence, for example, don’t look for static reports or staid ‘drill down’ screens, suggests Steve Tattum, product manager for Sage’s ERP X3 and specialist manufacturing applications. Instead, look for dynamic ‘dashboards’ that help managers quickly see — and respond to — issues that are facing the business. Look, too, for intelligence drawn from deeper within the enterprise than is presently the case: plant-floor devices and applications, warehouse systems, and bulk storage raw material hoppers. “It’s far from unknown to see large expensive machines on the factory floor, with someone with a clipboard jotting down data to be typed into the ERP system,” says Steven Hargreaves, group product director at ERP provider Solarsoft. “And quite often, the challenge is under-utilisation of such machines, yet you don’t see this reflected in the ERP system, because the ERP system isn’t aware of it.” And look too for that intelligence to be two-way, as well. “We’ll see a much greater use of RFID and barcoding,” says Tattum. “Not just for data collection, but as a means of issuing instructions — the required colour of a product, for instance, or the test process that is to be followed.” Mobility is also set to become more important. There’s been an explosion in terms of the affordability and number of mobile devices that can meaningfully display whole screens of information, notes Conrad Troy, a partner with consultants KPMG Performance & Technology, a division of advisory firm KPMG. The result: mobile workflow, and mobile enterprise applications, are at last a genuine possibility. And they are likely to be genuinely addictive, too, reckons Rikke Helms, European vicepresident of Antenna Software, which has helped manufacturers as diverse as Coca-Cola, Ricoh, Carrier, Heineken and Toshiba extend ERP functionality to the mobile workforce. “Companies always start with functionality such as equipping field service engineers with mobile access to the ERP system while they’re out on the road at customers’ premises,” she says. “And then they start to see the broader possibilities: if a field

service engineer can communicate with an ERP system while he is on the road, why shouldn’t a chief executive be able to do the same thing from their iPhone or other similar device?” But if mobility, business intelligence and agility are individually set to be some of the drivers shaping ERP take-up and deployment in the years ahead, their impact is collective, as well. In short, they are also mutually reinforcing. Agility is enhanced though application mobility, for instance: through no longer being tied to a computer on a desktop, businesses can react more quickly. Likewise, agility and mobility influence the shape of a business’s approach to business intelligence. Similarly, business intelligence helps a business to identify where and how it needs to be more agile. Yet the reality for many businesses is that the journey will be uneven: sporadic leaps forward, punctuated by periods of consolidation.

If a field service engineer can communicate with an ERP system while he is on the road, why shouldn’t a chief executive be able to do the same thing from their iPhone or other similar device? Rikke Helms, European vice-president, Antenna Software Suffolk-based storage tank manufacturer Permastore, for instance, has seen its recentlyupgraded Epicor ERP system deliver a significant improvement in planning performance. But, going forward, while it certainly sees its priorities as agility, business intelligence and mobility, progress is very much on its terms, not the ERP industry’s. “We’ve been thinking about wireless technology a lot, in terms of getting feedback from the factory floor more quickly, enabling us to make decisions on the basis of that information sooner than we otherwise would,” says operations manager Stuart Ransom. It’ll happen, he says—but only when the time is right. “And next year, we’ll be barcode scanning parts as they come off the line,” adds planning control manager Ruth Joy. “We want faster information—but it’s got to be accurate.” Even so, Permastore will be well ahead of many other manufacturers. For it’s one thing to have functionality built into an ERP system and quite another to use it. The sober reality: many companies use just a small proportion of what ERP can offer. London-based consultants A.T. Kearney estimate that most businesses use only around 30% of the ERP functionality that they’ve licensed and paid for. No matter what the next decade brings, then, the challenge for many manufacturers will be making better use of what they’ve already bought.

Have your say at www.themanufacturer.com

Central perks Kevin Stacey, working for the UK arm of global fluid transport equipment manufacturers Aliaxis Group, takes TM through the multi site implementation journey of a new ERP system.

Aliaxis

is a multinational group of manufacturing companies which produce plastic products for fluid transport, supplying to its key market segments of building, sanitary, industrial and utilities. It has around 300 companies in its stable worldwide, including eight in the UK, the most recognisable of which is probably Marley – a manufacturer of plumbing and drainage products. With several of the UK companies’ separate IT systems coming towards end of life, or with a need for more functionality, the Aliaxis Group decided to take the opportunity to install one ERP system, centralise all the IT servers, and combine back office functions like the service desk, in order to benefit from the economies of scale that such a move would bring. In 2007, former corporate vice president Kevin Stacey was drafted in as IT director to facilitate the change. One of the problems, he says, of having disparate IT systems which couldn’t

communicate with one another was that the business couldn’t easily collate information, report on activity or share business intelligence with others both in the UK and at Group level. “Database extracts were put into spreadsheets and manipulated by different departments so it was inevitable that they were never consistent,” says Stacey. “Sharing information across business functions in a consistent manner was difficult. With this project, we’re moving into the new world, using IT to provide solutions that will support business processes and provide access to various business intelligence sources for reporting.” With the Group having already decided upon Microsoft Dynamics AX as a solution, the UK selected Columbus IT as the solutions integrator. Stacey commented: “Columbus IT was selected for a number of reasons. They demonstrated their expertise in both the product and the manufacturing sector which gave us the confidence

that they would help deliver a successful implementation. They also had the global presence to be able to deliver a project with multiple companies in multiple countries.” The first task of Stacey’s team was to analyse all of the companies’ separate business processes and determine what functionality was needed to support the organisation. “We were keen to keep everything as simple and as standard as possible,” says Stacey. “When you begin to bring in high levels of customisation for different processes at different sites, the training costs rise and you become reliant on outside help and ongoing support. You lose some of the benefits a centralised solution can offer, especially in the areas of cost, ease of support and access to information.” A UK Steering Board was created consisting of director level management who set the parameters around the project. They decided on scope and timescales of the programme, appointed a

Moving the goalposts Things were ticking along nicely with the roll out but, in early 2009, a strategic decision was made to centralise some manufacturing activity and the project goalposts were moved. This created a separate manufacturing company and turned the project scope from seven companies into eight. It meant a redesign of the solution to take into account the new company while maintaining business continuity for the individual brands. This development especially made Stacey glad Columbus IT had been chosen as a partner. “Columbus IT adapted to this change very easily,” he says. “The knowledge they gained of our company and their understanding of the production and logistic processes made them invaluable in supporting this strategic change.” After sign off of the redesign by the steering board the implementation began, including the training of the end users. The first phase of the program was up and running at the beginning of 2010 for the newly created manufacturing

company. While this was taking place the project team was already preparing for the next phase of the program, the implementation of the first three brands in the UK to go live on Dynamics AX. When the manufacturing site was put live onto Dynamics AX, the brand companies it manufactured for were still reliant on their legacy systems. Thus, the UK IT team had to create communication links between the new and the old systems. The high speed UK communication network implemented enabled all UK companies to be interlinked. This in turn enabled communication between different systems including Dynamics AX and existing legacy platforms. “This was all an immense undertaking but one

out the required functionality to manage the business process and provide meaningful and accurate information will be realised throughout the UK. “People are starting to understand the benefits of the solution and they see it as a means of working with IT to improve their operations,” says Stacey. “Through the system they are able to plan their business, analyse their performance and identify areas for improvement.” Moving forward, the goal is to continuously improve the service provided by the Dynamics AX platform to the business through enhanced functionality across the operation in sales, manufacturing, inventory management, customer services and finance.

Aliaxis Group

project manager, and identified who the ‘process owners’ – the key users – would be. Key users being the individuals at company level who were selected to be responsible for production, logistics, sales and finance deliverables to be implemented in the UK and who would report to the steering board. The first stage of the project was to analyse and define the requirement that would form the core model for the UK which could satisfy 80 per cent of the UK companies’ collective requirements. Meanwhile, a number of other activities occurred to support the project in the area of the IT infrastructure. This included identifying a partner to host and manage the UK servers and communications network needed to migrate the current environment from the ‘broom cupboards’ over to a professionally run data centre. Additionally a major program of data cleansing commenced in order to prepare for the move to Dynamics AX.

We were keen to keep everything as simple and as standard as possible. When you begin to bring in high levels of customisation for different processes at different sites, the training costs rise and you become reliant on outside help and ongoing support Kevin Stacey, Aliaxis Group which was critical for maintaining business process continuity during a period of major change in the way the IT services were to be delivered,” says Stacey.

Brave new world of IT There have been challenges along the way, reports Stacey, especially relating to change and the resulting business transformation. One area he wishes he’d tackled earlier was data cleansing and challenging some of the business processes to ensure there was a closer fit with standard ‘out of the box’ Dynamics AX functionality. But, overall, the benefits far outweigh the bellyaches. Many processes have largely been standardised to support all the business functions in the UK, meaning it is easier to train staff and support the platform. As the rest of the program is rolled

The programme in the UK is scheduled for completion by mid 2012 and Stacey is confident that with the help of Columbus IT everything is firmly in place to achieve this goal. “Before, IT was beyond Pluto at this company,” says Stacey. “Now it’s that much closer; orbiting earth and soon to land.” With this project well on the road to completion, Stacey is confident that other companies within the Aliaxis group will benefit greatly from the UK journey.

For more information please visit: www.aliaxis.com

ITnews... Intellectual property

Oracle wins massive payout from SAP in copyright case German software giant SAP has been ordered by a US court to pay its US counterpart Oracle $1.3bn in damages because its now defunct TomorrowNow services support system downloaded Oracle software without consent. Oracle was seeking $2.3bn but SAP, who admitted the charge, said the loss of income to its rival amounted to no more than $40m.

Evidence was shown in court that SAP executives, including, it was claimed, former CEO Léo Apotheker, were aware of the copyright infringement and disregarded cease and desist demands. SAP has intonated that it intends to challenge the award. A leading IT analyst has warned companies to take heed of the case and refrain from copyright infringement when developing software. “This case has demonstrated that software companies need to

Cloud computing

Vaizey has his head in the cloud Communications Minister Ed Vaizey told the third annual UK-China Internet Forum last month that cloud computers offers real economic benefits to businesses. Held at the Department for Business, Innovation and Skills, Vaizey told the forum that cloud computing could drastically reduce costs for new companies and transform the way storage is utilised, especially in light of a large uptake of portable devices. “Access to the networked resources provided by ‘clouds’ enables companies to enter markets without having to meet the capital costs of building their own computer infrastructure,” he said. “What they get instead is a sort of ‘pay as you go’ service tailored to their specific requirements. This is especially significant today, at a time when we are seeing an explosion in the number of portable devices with limited storage capacity. Access to clouds enables them to transcend that limitation and provide a level of functionality which would normally be associated with much larger machines.” However, Vaizey said issues remain around individual privacy and data security and a step-change in co-operation between industry, consumers and governments is required if the full benefits cloud computing offers are to be realised.

become less naive and blasé about their approach to IP generally,” said Thomas Otter, analyst at research firm Gartner. “The software industry is premised on IP, yet many software companies, even quite sophisticated ones, haven’t really tightened up their approach to IP in relation to how they treat other people’s products and how their products are treated in the market. This case will make people sit up and realise they need to think more about their IP practice.”

Mergers and acquisitions

Deal agreed for Novell buyout Corporate software supplier Novell is to be bought out by rival Attachmate in a deal worth $2.2bn.

Novell, which has turned towards open source provision with a number of acquisitions including SUSE Linux in 2004, made an operating loss of $213m, despite revenues of $862m in its latest financial year. “This acquisition will add significant assets to our current portfolio holdings and the Novell and SUSE brands will allow us to deliver even more value to customers,” said Jeff Hawn, chairman and CEO of Attachmate Corporation. “We have great respect for Novell’s business, its employees and its commitment to customers. Moreover, we look forward to maintaining and further strengthening Novell and SUSE solutions to meet market demands.” Ron Hovsepian, president and CEO of Novell, added: “Novell, SUSE, Attachmate and NetIQ have complementary product portfolios and many shared customers. We are pleased that Attachmate has committed to building on the strengths of the Novell and SUSE brands to address customer needs.” Attachmate deals primarily in terminal emulator and security and systems management products.

IT in

manufacturing

Computer operating systems

Get the best out of Windows 7 In the latest in its Tips for Engineers Screencast Series, Dassault Systèmes SolidWorks has created a guide for engineers to get the best out of the Windows 7 PC operating system. The online video offers seven tips for optimised use of its CAD software when used in conjunction with Windows 7, including the use of the taskbar; managing windows; integrating search functionality; working with various other applications; and using shortcuts or ‘hotkeys’. There is also a downloadable PDF which illustrates all of the Windows 7 hotkeys presented during the guide. The Tips for Engineers series is available at solidworks.com/screencasts

Field Service Management

Commerce solutions

EAGLE helps Haigh Engineering soar

hybris extends telecoms reach with appointment

Exel Computer Systems, a UK developer of the EAGLE Field Service Management (FSM) system, has installed the technology at Herefordshire based waste water management company Haigh Engineering. The Eagle system uses the internet to allow service providers extended visibility and control over their processes. It will allow Haigh to benefit through shortened response times which will result in minimal downtime of its equipment. The Haigh Engineering service team supplies and services Haigh Sluicemaster and Incomaster disposal equipment and deals with installations that can be over 20 years old. The installation of the Eagle system allows the company to correctly identify which customer is using which version of what product, improving response and delivery times. The Eagle system has been fully integrated with Haigh Engineering’s other computer systems, including the EFACS Enterprise Resource Planning system, also from Exel Computer systems. A direct link to the PDAs used by the service team removes any unnecessary re-keying of information as well as automatically synchronising information held across the company resulting in real time visibility within the business – from service engineer to the board room. Nick Dale, division manager at Haigh, says: “With thousands of sites using Haigh equipment across the UK, prompt support where the customer needs it most is of utmost importance. This development is delivering ever increasing levels of performance from the team here to the benefit of our customers.”

hybris, a multichannel commerce software vendor, has announced the appointment of Peter Conquest as Director of Business Development for Telco Solutions to broaden its market share in the telecoms arena. Peter brings to hybris over 25 years experience marketing Operational and Business Support Systems and eCommerce solutions among international telecoms operators and service providers. Based in the UK, he will be responsible for opening new international business development and sales opportunities in the telecommunications sector. hybris says the appointment will complement its launch of a solution dedicated to the needs of telecoms operators and service providers, and a fullscale sales and marketing campaign. Ariel Luedi, CEO at hybris, said: “Peter Conquest provides hybris with a level of industry knowledge that will help us to successfully expand our market presence to the telco sector. He has many influential contacts and a depth of expertise that we can utilise. We look forward to working very closely with him at this exciting time in hybris’s development.”

Courses for manufacturing professionals Exclusively postgraduate, Cranfield offers a range of Masters’ programmes, many accredited by professional institutions. Courses include:

• MSc Sustainable Manufacturing • MSc Operations Excellence • MSc Manufacturing Consultancy • MSc Management and Information Systems • MSc Knowledge Management for Innovation • MSc Global Product Development and Management • MSc Engineering and Management of Manufacturing Systems • MDes Innovation and Creativity in Industry We also offer PhD and MSc by Research opportunities and an exclusive portfolio of specialist short courses.

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

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IT in

manufacturing

ITnews.. Enterprise Resource Planning

SAP makes itelligence AG into managed partner itelligence AG is the latest SAP reseller to sign a global value-added reseller (VAR) agreement with the German software giant, upgrading it to the status of managed global partner. SAP is running a program of such agreements with its most high growth resellers. The aim is to provide customers with better value and service as a result of closer working relationships between the smaller specialist firms and the corporate muscle of SAP. The program is highly selective via invitation through SAP management only, and is targeted at partner candidates that must comply with certain programme entry requirements, such as geographic coverage, reseller and services practice coverage, as well as specifically defined revenue achievements for the SAP Business All-in-One solution. SAP says the agreement with intelligence will help to extend its offering to midsized companies, of which the latter provides SAP solutions to over 3,000. itelligence has grown from an organisation of 10 employees in 1989 to its current presence of about 1,800 colleagues in 19 countries. “Achieving global VAR status clearly emphasizes our unique selling point as a global partner of SAP for SMEs,” said Uwe Bohnhorst, COO, itelligence AG. “It shows that we offer a uniform standard worldwide. Our customers can rely on this, and will benefit from the very close collaboration the new global status shows. I’m very proud that we will be an SAP gold partner in every country in which itelligence complies with the global VAR requirements and subsequently joins the program.”

IT back office support

SABMiller toasts multi-million deal with HP Global brewer and bottling company SABMiller, headquartered in the UK, has signed an eight year $100m deal to outsource back office IT functions to Hewlett-Packard in a bid to standardise process across its regions and save money. SABMiller is the world’s second largest brewer in terms of revenues. It makes Grolsch, Peroni and Miller and is a major bottler of Coca-Cola. This deal will see the company use HP’s BladeSystem for its servers while the IT firm will also provide services for SABMiller’s helpdesks and emails.

The Wheatley angle Enterprise IT is notoriously prone to fads and fashions. And in a quarter century of writing about manufacturing IT, I’ve lost count of the number of new technologies heralded as truly game changing. Many crater spectacularly. But a few go on to be genuinely transformational. ERP, for instance, made respectable by SAP’s venerable R/3 release; client/ server computing, which killed the mainframe; and Ethernet: not perfect, by any means, but by golly it has stood the test of time. And I’m beginning to think that cloud computing will also fall into this camp. As reported elsewhere on this page, even the government is taking notice of it, with communications Minister Ed Vaizey enthused by the benefits it offers businesses. But the danger is that take-up will be constrained by worries over poor application performance. A recent survey

from Compuware claimed that as many as 58% of manufacturing businesses are slowing down or stopping adoption of further cloud applications until they can solve these application performance issues. And what’s at issue isn’t security or broken connections, as one might have thought. It is application speed — or response times, in other words. No one, in short, wants to go back to the bad old days of remote mainframe access. According to the Compuware research, over three quarters of those questioned wanted more rigorous service level agreements with cloud providers, including metrics focusing on speed and user experience, rather than simply availability. Uptime alone won’t hack it, although that is the metric that many cloud providers prefer to focus on. And that needs to change.

Have your say at www.themanufacturer.com

Primetime for Jane Gray considers the divided loyalties in manufacturing between a range of enabling technologies and talks to participants at TMs forthcoming PLM Connect about why the importance of product lifecycle management is hitting a new high.

Nina Dar Managing director, Cheeky Monkey

Steve Nevey Business development manager, Redbull Racing

Although

it has now been in existence for many years there is still confusion in some industry circles about the role of product lifecycle management (PLM) technology in business, its potential as a business enabler and its relative importance when compared to other IT cornerstones such as ERP and CRM. What cannot be doubted, however, is that as customer facing operations and agility in responding to subtle market changes become evermore the hinge for competitive advantage, so companies across sectors are looking with greater scrutiny at the ways in which they can exploit new collaborative PLM capabilities. Adidas is a case in point. The sportswear designer and retailer has recently undertaken an ambitious overhaul of its IT operations on a global scale with PLM taking pre-eminence over its ERP architecture as the backbone of the business â&#x20AC;&#x201C; not only across the design and sales and marketing functions but also permeating the companyâ&#x20AC;&#x2122;s outsourced manufacturing operations. This may be an extreme case. Of course ERP, CRM and S&OP systems will continue to be major enablers in manufacturing enterprise. But the scope of PLM is growing beyond being an enhanced or joined up CAD platform and at PLM Connect there will be an opportunity to find out more about what this means.

The software of champions Putting the competitive potential of PLM into clear context Steve Nevey, business development manager at Redbull Racing, recent victors in both the driver and constructor elements of the 2010 Formula 1 World Championship, explains how important their PLM software is to the business: â&#x20AC;&#x153;We are a very technical business and we are developing an advanced product which is constantly changing. We need to be able to rely on product data and have visibility throughout the design process for everyone who touches the product.

Specialfeature PLM Connect

For this reason we have made PLM the digital backbone of the company. It is the primary business tool that we use and our ongoing quest is to make sure that all our other business systems feed off the information held in the PLM foundation. We are a relatively large business, there are 560 staff, and we need to be able to communicate with each other through a system that supports consistency. We could not function with disparate systems or single system which did not stretch into all the most remote corners of the organisation. We cannot afford for so many people who are key to the success of the product, guys in manufacturing and engineering to be shut out from the development process because information is locked away in the design office in a complicated CAD CAM format only accessible to those with specialised knowledge of authoring tools. With PLM everything is freed-up and now there is a lot of very rapid turnaround. We are producing updates for the car at a rate that I have never seen before. I guess that’s how to win a World Championship.” Nevey makes clear however that he believes the benefits of PLM are not only for the low volume, design intensive environments of F1. “I do get the opportunity to meet people from a wide variety of industries and it fascinates me that uncanny similarities in business needs constantly spring up. The mobile communication industry is an interesting case; we met with Nokia a while ago and discovered that what they are doing is so similar to us. You’d never think so; racing cars and phones, the volumes and markets are so different. But the pressures are the same; innovation lead time, solving problems with materials, uncovering packaging constraints, the need for collaboration to optimise functional and aesthetic product qualities for different types of customer value. These kinds of parallels crop up all the time – we do a lot of work with aerospace and automotive.”

Let’s talk business Nevey’s enthusiasm for the technology capabilities that their PLM systems have supplied is almost tangible, but as any IT or business professional will tell you, technology is nothing without an understanding of its objectives and knowledge of how to exploit it. Nina Dar, managing director of boutique change management agent Cheeky Monkey says that their experience of supporting PLM implementations has made it very clear that the process is anything but an IT project. Dar talks about their project management of PZ Cusson’s PLM implementation, one of their leading manufacturing clients and a FTSE 250 company in developing a myriad of consumer products around the world. “PZ Cussons asked us on board to direct and manage the implementation of

their PLM software and when we realised what they had been sold and what they were expecting as a return we were quickly able to identify that the software itself was never going to do it all. Just think about the term product lifecycle. Any system which represents that is going to touch every single part of your business, whether you are involved in manufacture or service, and there will be a need to develop new ways of working for everyone. It is very easy for people to think of PLM as an IT project and to isolate it. What we need to do is think of PLM more as a concept.” Dar states in no uncertain terms however that enabling and learning to exploit that concept through all possible routes, including technology is a growing imperative for companies in all sectors. “Concerns over innovation and particularly how to engage with customers and consumers are at the forefront of everyone’s minds. If you’re not doing it now you are worrying about how you are going to do it. What does it mean for your business and how much risk is involved? These concepts, which are supported by ideas tabled back in 2003 for open innovation characterised by two-way flow in product development, are growing and becoming complex realities. The predicted breakdowns in the sourcing of intellectual property and R&D have started to materialise. This is absolutely key to product lifecycle and to understanding how your company can profit from ideas or from planting that idea somewhere else. A huge part of doing this is wrapped around learning how to exploit social media platforms both internally and externally. Integrating this kind of dynamic capability into product lifecycle management is exactly what we want to promote and it needs to be the way the software industry moves.” The extent to which software developers and designers are making progress towards this goal and many others will be discussed by technologists and vendors at PLM Connect in February 2010. There will also be a keen appraisal of PLM software’s status as a critical addition to the enterprise technology portfolio. All key vendors in the PLM market will be attending PLM Connect and there will be a rare opportunity to pin representatives down on how their offerings can answer the specific needs of your business.

Have your say at www.themanufacturer.com

Financial supplement Running the risk

TM DECEMBER 2010 MASTER FINAL.indd 91

12/7/2010 12:40:47 PM

Running the risk

Running risks in business is nothing new but the scale and complexity of today’s supply chains and global markets mean that it is easy to overlook potential pitfalls. The Manufacturer provides a guide to the more obvious areas, how to avoid them, how to plan for them and how to ensure that disasters don’t become crises.

If you don’t want to take a risk, don’t go into

liability within the EU, which it can pursue and

business. Commercial success is founded on

enforce.” That seems to be a basic principle

risk-taking but the skill is to assess it realistically

of product liability in the major trading areas;

and to put plans and structures into place that

the enforcement agencies go after whoever’s

will deal with the unexpected, with emergencies,

name is on the box, rather than the bits and

with obstructions and with plain bad luck.

pieces inside. They are judged to have the

Businesses have been brought down by failure to

deepest pockets and they are accessible – if

plan or to appreciate the potential consequences

you are doing business within the EU, you are

of seemingly minor occurrences — the cloud

going to have a presence and will probably

on the horizon, no bigger than a man’s hand,

want to continue. But if the problem is with a

that turns into a thunderstorm. Business people,

component sourced from an emerging economy

especially SMEs, may have a deep understanding

then things are not quite so simple.

of their product and their markets but you can depend on a legislature to throw all sorts of

The law is a jungle

legal spanners into a previously smooth-running

“If you are dealing with China, for example,

machine. Among the legislative challenges

enforcement of judgements is moving forward

identified by Sally Roff, partner, Beachcroft LLP,

but it is still a long way behind,” Roff continues.

are the Bribery Act, the prescriptive nature of

That could be something of a growing problem

health & safety legislation, food traceability,

because the People’s Republic of China (PRC) is

product recall, getting redress for intellectual

now the EU’s main import trading partner. And

property infringement. It’s all enough to keep a

the law, as Ms Roff says, is a bit of a hotch-potch,

good lawyer busy for decades.

not just in China itself but in the area of crossborder relations. There are formal agreements

“Long supply chains do present difficulties

in place, such as Rapex-China, but it is still

in recovery,” says Roff. “Even if a product or

impossible to enforce a judgement achieved

component is sourced from abroad, there is a

in the UK on suppliers in China. The legal

Bribery Act 2010 The Bribery Act 2010 will come into force in April 2011. There are four offences: the general offences of paying and receiving bribes; the bribery of foreign officials; and the failure of commercial organisations to prevent bribery. The corporate offence represents the most significant departure from the old law on bribery and will place the onus on the corporate entities to ensure that their anti-corruption procedures are robust. Key points: General offences • it will be an offence to offer or give a financial or other advantage with the intention of inducing that person to perform a relevant function or activity improperly or to reward that person for doing so. • it will be an offence to receive a financial or other advantage intending that a relevant function or activity should be performed improperly as a result. Relevant function or activity includes any function of a public nature and any activity connected with a business. Bribery of foreign public officials An offence will be committed if a person offers or gives a financial or other advantage to a foreign public official with the intention of obtaining or retaining business, where the foreign public official was neither permitted nor required by written law to be so influenced. Failure of commercial organisations to prevent bribery An offence will be committed where: • a person associated with a relevant commercial organisation (which includes employees, agents and external third parties) bribes another person with intent to obtain or retain a business advantage • the organisation cannot show that it had adequate procedures in place to prevent bribes being paid. Under this offence, the company may be guilty even if no one within the company knew of the bribery. Extra-territoriality The corporate criminal offence will apply to commercial organisations that have a business presence in the UK, regardless of where the bribe is paid or whether the procedures are controlled from the UK. Penalties Maximum jail term for bribery by an individual is 10 years. A company convicted of failing to prevent bribery could receive an unlimited fine.

framework remains patchy in the PRC, reliant

So things are improving. However, let us take a

on a combination of product-specific measures

momentary step back.

within the criminal law on the one hand, and a civil liability regime that is designed to be

China is not just a supplier and producer, it is

dependent on the will of the consumer. That said,

also a market and British companies want to sell

a Memorandum of Agreement signed in 2006

there, as well as source products, components

between AQSIQ (the General Administration of

and materials. The future success of developed

Quality Supervision, Inspection and Quarantine of

world economies is said to depend on

the People’s Republic of China) and the European

innovation. This brings us straight into the world

Directorate-General for Health and Consumer

of IP (intellectual property), including patents

Affairs (DG SANCO), established a number of

and design rights. In that respect, the PRC is still

protocols and lines of communication to increase

described as something akin to the Wild West,

and improve product testing and enforcement

although its government recognised a while ago

action against non-compliant manufacturers.

that it would only get real and sustained inward

investment if it gave investors better protection.

Spear & Jackson, the garden equipment and

But it still isn’t perfect.

tool manufacturer, has spoken about issues with counterfeiters and even its own suppliers, who

Mental power

advertise on the web what is clearly a Spear &

“Technology and IP are hard to protect. The

Jackson product. The explanation may be that

rules are unevenly applied – to think otherwise

an assistant did it without authorisation, coupled

is naïve,” said Jonathan Busher, vice-president

with an assurance that the advert and product

– international for Vivid Imaginations, a

will be removed immediately. The company

company that designs and licenses toys and

chooses to accept the explanation, regarding the

associated products. The toy industry is more

fact that the incident has been discovered and

mature in China than other industries and

raised as being enough to act as a ‘shot across

there is a recognised legal infrastructure but

the bows’. However, emerging markets remain

there are still traps for the unwary; protection

full of traps for the unwary, as Busher put it, and

is not absolute. China may be the world’s

it is a good idea to develop relationships

fastest-growing economy but it isn’t – yet

with people who understand the market and

– the biggest market for finished goods.

the environment.

Europe, Japan and the USA are each much, much bigger. Together, they outstrip all the

While IP is a critical area, legislation is another

developing world by orders of magnitude.

that bears heavy on manufacturers and especially so within the EU.

“Trade with the Far East is pretty much one way,” said John Emmett, MD of Swansea-based

Prescriptive legislation

High Torque Engineering Ltd, which makes and

“The health and safety legislation, especially, is

markets a unique labour saving fastening system.

very prescriptive,” said Ms Roff. “It involves red

“It’s almost a waste of money to act legally

tape, bureaucracy and affects competitiveness.

against the Far East but not if the West is in a

You must, for example, have a risk assessment if

position to place massive orders. If we can create

more than five people are involved in a task. There

demand in China, enabling them to make money,

is no balance of risk.” And the reach is getting

they’re happy. Essentially, we want to buy them in

further. “The Health and Safety Offences Act,

and bring them into the legitimate supply chain.

which was enacted in 2008, means that directors

And, in the fullness of time, China will develop

can be held personally responsible for health &

its own scientific infrastructure and will want to

safety violations and face fines and imprisonment.

protect it. Ultimately, they will have to play ball.”

The HAS in the UK is now directing charges at

He says that China is softening its stance and it

senior managers and directors, which it did not

is becoming easier to deal with Asia generally

do in the past.” This is part a response to public

but it is a lot easier if a small company, like his,

tragedies, such as the King’s Cross fire and the

is partnered with a larger multi-national. But

Zeebrugge ferry disaster, in which the existing law

even big organisations can encounter problems.

was found to be inadequate. But it is not unique

General Product Safety Directive The General Products Safety Directive applies, at least partially, to all products used by consumers. It contains specific requirements for suppliers including manufacturers, importers, retailers, distributors, those who rework, repair or modify, service providers etc. Personal transactions are excluded from the directive. In the UK the directive is primarily enforced by local Trading Standards Authorities and Environmental Health Officers. Authorities have the power to force a recall and replacement of faulty products. The regulations place an obligation on suppliers for their products to be safe. They are required to provide consumers with all relevant safety information for safe use and to keep themselves informed of the risks. Suppliers are required to inform the authorities when they discover that they have placed an unsafe product on the market.

to the UK – similar measures exist across the whole

not lead to an effective market economy; it led

of the EU, although there is a feeling that it is

to collapse and gangsterism. By 2000, Russia’s

maybe applied more rigorously in the UK than in

GDP was less than two-thirds what it had been

other parts.

in 1989 – and that was after a recovery. It took either a brave or a foolhardy business to venture

Beyond health and safety, legislation affects

to do business in Russia and there are still notes

things like tax regimes, including insurance

of caution to be struck, even after PM Putin’s

premium tax. If companies take out policies

reforms, because some of those reforms have hit

in one country, they may find they have failed

foreign investors pretty hard.

to pay the tax in another in which they are doing business, with potentially expensive

“Putin is ex-KGB,” said Jan Randolph, an

consequences. And there is the product liability

economist specialising in Russia with Global

issue to take into account, as well. It seems that

Insight, which supplies economic and political

hardly a day goes by without the announcement

intelligence and analysis to a client list that

of a product recall, and some of them for

includes governments and global corporations

apparently strange reasons. Toshiba and Dell

like Shell. “When he took the helm he was very

recalled thousands of laptops sold in 2006; in

much aware of the popular disquiet over the sale

Toshiba’s case, the number was over 1400 in the

of the crown jewels – oil and gas – and the way

USA alone. The reason was the grainy videos of

it was done. He sees it not just as economically

laptops exploding with overheating batteries. It

imperative but also politically imperative. Russia

did this even though there had been no reports

is probably now richer than it’s ever been – and

of its batteries overheating. The reality was

he’s set about rolling back some of the shadier

that there were a very few batteries out of the hundreds of millions on the market that had a problem and it was traced to some batches from one factory in the PRC. But reality is one thing, perception is another. Consumers are now very much more demanding and expect the highest standards from their products, regardless of the price they are paying. That may appear unfair, from one point of view; if you are paying £15 for a kettle, for example, it cannot be expected to be

Shell has continued doing business in Russia, when other companies retreated in the face of aggressive Gazprom acquisitions

as good as a ‘designer’ instrument costing several times as much. Indeed not, but the point is, noone should be killed or damaged by products on public sale and it is bad news for the company selling it if a photogenic child or sympathetic granny is pictured with overcurled hair and smoke wafting out of their ears, like a character from a Tom and Jerry cartoon.

Intellectual Property ‘Intellectual property’ (IP) is: • Original ideas

As if all that wasn’t enough, there is the question

• Developments of original ideas

of choosing your markets. That may seem a

• Novel combinations of existing ideas

strange idea to postulate – surely, everyone wants

• Identifiable designs and styles (e.g.,

to do as much business as they can with as many

original Apple iMac, trading styles

people as they can? Yes, but there are some

and logos)

places where caution is a good idea – and even worthwhile considering avoiding. In the past,

Protections:

trying to sell the proverbial coal in Newcastle

• Patents

would have been a waste of time and effort;

• Copyright

today, one of those markets could be Russia –

• Registered design rights

or, at least, the primary end of the oil and gas business.

The effectiveness of protections depends on the legal system in territories where

Embracing the Bear

infringement takes place. Protection is

The 1992 ‘100 day transformation’ of Russia,

very strong in, e.g., the EU, USA, Japan.

from communism to a market economy, was

It is less effective in East Asia and other

nothing short of a disaster. The manner in which

emerging markets.

it was done, under the guidance of the IMF, did

is to pick your

Problems in the World of

market, one that

Leather supply chain led

the Russian state

to the UK’s largest Product

doesn’t necessarily

liability class action

want to reacquire. NCR has established a plant in Hungary to make ATMs for Russia;

secure printers and cash handlers, DeLaRue, has established a cash-handling machine manufacturing plant near Moscow; it’s now the company’s largest such facility. The US Department of Commerce issues guidance to companies thinking of trading overseas. It doesn’t go anywhere near saying ‘don’t go there’ but it does highlight the more attractive sectors, which include consumer goods sector, from cosmetics, through processed foods to toys and games. The cost of doing business may be higher but there are opportunities. And if Russia is the highest-profile ‘difficult case’, the potential problems in other emerging economies, including India and Brazil, the ‘I’ and ‘B’ of BRICs, are present as well. Customs and practices Talking of Russia, when Lenin encountered a problem he prescribed a revolution to overthrow the Bourgeois state and install a dictatorship privatizations.” And renegotiating

of the Proletariat. In other words, change the landscape and put in a structure that will

some of the exploitation

enforce your rules and desires. Such options are

deals, too. One example that was

not generally open to businesses, who find that

very much in the news is Sakhalin 2, the oil and

governments, both here and elsewhere, put in

gas field in the western Pacific – Russia’s Far East.

the structure that they want. And sometimes

The initial production share agreement of 1995

that seems to dance around reality. Such is the

was very favourable to Shell. Pressure brought

Bribery Act, which becomes enacted in April

through actions on environmental breaches

2011. In some parts of the world, the odd

with potentially huge penalties, persuaded the

brown envelope changing hands is the normal

minority Japanese shareholders to sell up. Shell

way of getting things done.

took a different route. It’s an oil and gas company and it needs proven reserves – especially big

“Consultation finished in November and it will,

ones, as in Sakhalin 2. It renegotiated its contract

from next year, become a criminal offence for

with Russia, Gazprom to get 50% plus one vote –

a business to fail to prevent bribery and that

majority control. Shell decided it’s better to share

includes intermediaries that the business has

ownership on a project that is moving, rather

control over,” said Ms Roff. “There is similar

than have full ownership of something that isn’t.

legislation in the USA and other jurisdictions but

The commanding heights of oil and gas reserves

there is a question of enforcement. Payments

is a crown jewel; the supply industry is not and

that are made to ‘keep the wheels turning’

offers opportunities for outside investors. But the

are excluded from the US legislation.” Which

Law remains a problem.

they are currently not in the UK, and so British businesses look likely to be at a competitive

“In Russia, no foreign company has ever won

disadvantage. But better a disadvantage than

a case in the courts,” said Randolph. The trick

in gaol in foreign jurisdiction. After all, corrupt

officials and company officers don’t take

of changes,” he said. “EU Directives from 2001

up prison space in some parts of China, for

have been enacted since 2007 in the General

example, because they are executed.

Product Safety Directive. It introduced new responsibilities for producers.” The requirement

Product liability

on manufacturers is the need to be able to

This analysis ultimately comes down to a single

trace components from raw materials one step

sentence: be careful, plan and be aware. But

back and a step forward, as with food and

what if things go wrong and your product starts

pharma. “They have a responsibility to report

hurting people? It happened with the World of

products that might be dangerous to local

Leather, which is now one of the biggest class

Trading Standards agencies, who then report to

actions currently in the UK’s courts. In summary,

a central European database.” There is no place

it involved an anti-bacterial and fungicide

to hide; if a product has a problem, the whole

treatment for leather seating that turned

of Europe – and thus the world – will know

out to irritate and inflame human skin. The

about it within hours.

insurance cover was declared invalid because the company did not keep its insurer informed.

Product recall

Legislation regarding product recall is extensive

“The authorities now have the power to insist

and particularly effective in the food and

on a recall,” said Plumridge. And even if the

pharmaceutical industries. Track and trace is of

authorities were inclined to keep things quiet,

a very high level, due to the simple requirement

which they are not, consumer groups and the

for every producer, all the way down the supply

Internet will spread the news like wildfire. That

chain, to have full documentation on where

makes a good communications strategy an

a product or raw material has come from and

essential. They used to say that a ‘lie will be

where it is going. That much is widely known:

halfway round the world before the Truth has

what might not be is that it is possible to effect

got its boots on’; the Internet may accelerate

product recall insurance.

that, so it is essential to ensure the company version of events is as hot on the heels of lies

“It is a new line of business for us,” said Simon

and rumours as it can be.

Plumridge, head of product recall with Zurich Insurance. “Industries within our scope do not

“The third factor is globalisation of supply

include the auto or auto parts sectors but it is

chains,” he continued. “We now see the need

appropriate for pharmaceuticals, wholesalers,

to manage product safety issues in different

retailers and some manufacturers, so far, but

time zones, cultures and legal environments.

food and beverage are probably the largest

Global brands need to report product safety

segments. We also have electrical goods and

issues into the public domain. The issue has

clothing in our portfolio. “He said that there are

to be identified, quickly, as do the affected

some core factors to keep in mind.

batches and where they are. Distributors and retailers need to be contacted and a plan

“Throughout Europe and further afield,

is needed on how to physically remove the

product safety legislation has undergone a lot

defective goods, if appropriate, or structure

Product recall It is possible to effect insurance cover for product recall. Key points: Record keeping is essential, covering: • Identification • Location • Batch sizes • Coding • Other requirements will apply Recall plans must be in place and reviewed regularly, with rehearsals and simulations. Crisis management teams must be in place, structured and have the power to make decisions. Effective crisis management will include effective communications strategy

Planning Risk is a reality in modern business but the potential downside will be minimised if effective plans and strategies are in place. • Assess markets – how effective is the legislative framework, what are the political risks? • Taxation – is tax being paid in the right place, for the right things? • What are the risks inherent in the supply chain – intellectual property theft, physical theft, counterfeiting, traceability, enforcement? If problems arise: • What plans are in place to deal with problems and challenges, whether or not they become crises? • Is there a crisis management team in place? • Does it include a communications team? (Silence is not an effective strategy, nor is denial of a manifestly present problem) Insurance: “If I had my way, I would write the word “insure” upon the door of every cottage and upon the blotting book of every public man….” – Sir Winston S Churchill. It is possible to effect insurance cover for a wide range of risks, including product recall, business interruption and even ‘brand rehabilitation’. Insurers will also be able to provide advice on effective management, succession, product recall, communications and risk assessment strategies.

how to get them back.” Which all sounds

The right structure

rather expensive, and that’s before media

“We have a risk improvement/preparation

management, adverts in papers, the cost of

consultancy available to advise,” he said.

collection and disposal, design modification

“We have any number of risk engineers, who

and consultancy advice is factored in. Which is

specialise in recall, and they are available to our

why the insurance aspect becomes appealing.

policyholders.” There are currently relatively few

Zurich offers cover for business interruption,

insurers involved in product recall but it is one that

the direct costs and even ‘brand rehabilitation’,

is growing – if you go into your local supermarket

although it may not appear as exactly that item

tomorrow, you are quite likely to see a recall

– it covers communications, consultancy and

notice, prominently displayed near the tills.

even some level of marketing. But there are steps companies have to take on their own

In the introductory article to this series, we

initiative first.

covered a number of areas where businesses are exposed to risk, and how to insure against

“Record keeping is critical,” said Plumridge.

them. One of the key factors that was identified

It is critical in this and in so many other ways,

was the quality of management – how effective

in order to help businesses minimise risk, for

they are, how they work together, the decision-

preference avoid it altogether but enable itself

making structure and so on. It not only helps

to deal with it if the worst happens. “That

to reduce insurance premiums, it is regarded as

covers identification, location, batch sizes and

a good guide on the company’s planning and

coding. You need the administration to trace

preparation for risk, as well. That attitude will

products quickly. We will only underwrite

cover a wealth of other areas too – awareness

where recall plans are in place and it must be

of potential pitfalls, which can include tax

reviewed regularly.” The recommendation is

liabilities, customs and paperwork requirements.

that businesses should run recall simulations

In the next article we will summarise lessons

regularly and that the plans are effective and

learned and recommend structures going

fast. “You should have a crisis team in place

forward. Planning can help to ensure business

and it is crucial that they are fully empowered

heads do not find themselves in a US prison

to act and to work effectively. If everything has

for wire fraud, on the wrong end of a Russian

to go back to the MD for a decision, it is not

state resources renationalisation or in front of

an effective way to manage. Decisions must be

an emerging economy’s firing squad. In the risk

made quickly.” And there is no mistake that

business, it is better to be well-prepared even

cannot be learned from.

than well-resourced.

Manufacturinginaction Sponsored by TBM Consulting Group

Putting UK manufacturers under the spotlight Factory of the month

Nestlé 100 Sweet victories

Nestlé’s plant in Fawdon, Tyneside, is well underway with a major programme of improvement. The TM hears about its aims, structure and progress. Will Stirling and Ruari McCallion report.

FOOD AND DRINK

CONSTRUCTION

Mars Drinks 152

Synseal 119 Tim Brown visits conservatory and window systems manufacturer Synseal, after a change in leadership at the beginning of the year.

STEAM SYSTEMS

TM hears how Mars Drinks continually adapts its operations to improve performance and maximise productivity.

DIGITAL IMAGING

Spirax Sarco 130

FFEI 156

Consolidating its three facilities, steam and condensate specialist Spirax Sarco is improving its performance, Jane Gray finds out.

FIBRE MANUFACTURE

Roberto Priolo visits FFEI’s manufacturing facility, and hears how the company achieved success through diversification and communication with suppliers.

FASTENING SYSTEMS

Ahlstrom 139

Alcoa Fastening Systems UK 161

TM talks with Ahlstrom, and finds out the company’s emphasis on continuous improvement and building excellence in its worldwide operations.

D iversified I ndustries

Edward Machin talks to Alcoa Fastening Systems about staff training, global performance system and a revolutionary product.

FOOD AND DRINK

Caparo Group 144

Thorntons Chocolate 166

Will Stirling meets Caparo, the steel conversion company that has branched out into financial services and hotels, but has always kept manufacturing at heart.

Thorntons has made customer satisfaction its main focus since 1911. TM learns about its fresh approach to packaging, current challenges and material sourcing.

All companies featured will be entered into the MIA Award 2011

Construction Synseal

In early 2010 the baton of leadership at conservatory and window system manufacturer Synseal was passed from founder, Gary Dutton, to a select group of the companyâ&#x20AC;&#x2122;s management. Tim Brown visited the companyâ&#x20AC;&#x2122;s site, just north of Nottingham, to talk to members of the manager-owner team about the changing of the guard and their plan for brand development.

2009 opportunity came knocking for seven members of the Synseal management team. It was a chance to take a much greater interest in the company for which they worked and, after witnessing the companyâ&#x20AC;&#x2122;s successes first hand and having an appreciation of its future potential, none of the group needed a great deal of encouragement to answer the call. Due to the economic situation in 2009 the timing for the purchase of a multi-million pound company might have seemed, on the surface, less than ideal. In fact, according to production director Robin Byron, the industry perception was that the feasibility of the sale bordered on the impossible. However the perception of market volatility at the time reduced the final asking price and

119

AZO UK Ltd Successful Strategies in Automating PVC Dry Blend Production PVC - still the material of choice PVC remains to be the raw material with excellent properties and an exceptional priceto-performance ratio. Worldwide, more than 20 million tons of PVC are processed each year, and that rate is expected to keep growing. Over a third of PVC material is processed into pipes and fittings; the rest is used to make hard and soft profiles, cables and hoses. The basic ingredient for these products is dry blend, prepared in a heater-cooler mixer. Regardless of your end product, PVC has to be fed into the heatercooler mixer along with fillers, TiO2, stabilizers, additives, modifiers,

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plasticizers and colour pigments as a precise batch formula. Integrating all the raw materials into the automated process ensures processing in accordance with the exact recipe. In addition to quality assurance, other benefits include a high degree of flexibility and reduced material loss. The requirements to be met by a system for feeding a heatercooler mixer can vary substantially depending on the final product and each individual plant layout. We plan your specific system according to the number of ingredients involved in the formulation and the sequence of additions, batch frequency

and throughput, how often the formulation is changed, whether premixed compounds are used, and if the recipe calls for liquids additions. Another important consideration is the available space where the system is to be installed. AZO is the global market leader in the design and realisation of such systems, contact us to see what we can do for you!

Published in association with: AZO UK Ltd Tel: 0044 (0) 870 606 0642 Fax: 0044 (0) 870 606 0643 Email: ukinfo@azo.com Web: www.azo.com

Construction Synseal

assisted the completion of the sale. The management buyout took about nine months to orchestrate and was finalised in February 2010 with assistance from Catalyst Ventures and finance from private investment firm HIG. Following the completion of the management buyout and in recognition of the scale of the achievement, Synseal was awarded ‘Deal of the Year’ at The East Midlands Dealmakers Dinner. While flattered by the accolade, management admits that it is not the buyout of which they are most proud but the continued development of the company products and services throughout it.

A site to see Even with a stretch golf cart on hand for the site tour, a trip around the expansive Synseal manufacturing site takes a full hour. The cart first stops in the extrusion department beside an immense set of shelves housing Synseal’s 300 individual tools which are used to make its 200 strong profile range of window, door and conservatory systems. Synseal operates a 24 hour extrusion operation with small teams operating 38 high speed PVC-U extrusion lines. A high level of importance is placed on ensuring perfect consistency in quality, colour, and finish accross the site. It is said that a good craftsman never blames his tools. The level of attention paid to the maintenance of tools at Synseal ensures the company never need pass blame. “If you look after a tool and maintain, monitor and measure it, it will look after you,” says commercial director, Gareth

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Class leading brands N

orth eastern unit manufacturer Clayton Glass has a long and illustrious history. Having recently celebrated its 50th anniversary, the company is keen to ensure its products remain at the very forefront of technology, well into the 21st Century. This history, knowledge and experience is best represented by its two key brands, and whilst each covers a different discipline, they both provide class leading technical performance, with the quality to match. One of the companyâ&#x20AC;&#x2122;s prime commitments is in producing a range of highly thermally efficient sealed units, to keep pace with the ever more demanding market place. In doing do, it has been possible to drive the attainable U-Values of its sealed units from 2.8 W/m2/K

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back in the 80â&#x20AC;&#x2122;s, right down to a possible 0.5 W/m2/K with todayâ&#x20AC;&#x2122;s methods. Whilst this incredibly high performance is currently the preserve of the zero carbon and ultra green market, it demonstrates clearly what is achievable and many of the same technologies required can be commonly found in the windows fitted to everyday properties. With the recent tightening of building regulations, its flagship brand EnergiMAXTM is expertly poised to provide the glazing industry with everything necessary to comply and exceed current and future legislation. Alongside this, Clayton Glass boasts the largest dedicated conservatory roof factory in the country. SMARTGLASSTM is now available on a nationwide basis with enhanced lead

times, and offers the most complete glass roof solution available today. With capacity planned to increase further next year, the stage is set for Clayton to lead the way in terms of both technical ability and sales coverage across 2011.

Published in association with: Clayton Glass Ltd Tel: 0870 0053000 Email: orders@claytonglass.co.uk Web: www.claytonglass.co.uk

Construction Synseal

Synseal timeline 1980:

Gary Dutton founded Synseal as a direct sell and fit PVC-U window operation buying windows.

1981:

Thirteen showrooms are opened across the East Midlands. Synseal started fabricating, still operating purely as a direct sell operation.

1985:

A trade division is set up to supply the local trade. This soon expanded into a nationwide operation.

1992:

The first extrusion line is purchased and commissioned at our base in Sutton in Ashfield, Nottinghamshire. The extrusion company had been conceived, and profile was soon being sold directly to window fabricators.

1995:

The Trade Division it consistently selling over 2,000 trade window frames and some 50-60 conservatory roofs every week. The conflict for Synseal was selling trade windows to the same market that our profile customers were also seeking to supply. To avoid selling windows in to the same market as its customers the Trade Division was sold.

1996:

Synseal launches the revolutionary Silhouette window profile system. Within 6 months it attracted over 100 fabricators and formed the backbone of Synseal’s later growth.

2001:

Synseal’s patio door system is independently verified as the best system on the market. More fabricators in Great Britain use Synseal profile than any other profile available on the market – again independently verified.

2003:

Synseal had two primary conservatory systems on the market: the Complete Shield Conservatory and the Global Conservatory.

2004:

Synseal announces sales of conservatory roofs are in excess of 1,000 conservatories every week.

2006:

Synseal brings the manufacturing of Legend to Sutton in Ashfield and built an additional 100,000 square foot warehouse.

2009:

Synseal acquire the window manufacturing assets of Eagley Plastics.

2010:

CEO David Leng and his management team acquire Synseal, enabling Gary Dutton to retire from the business.

Edwards. “Not only do we specify new tools to a higher level than industry standard required but we carefully adhere to the service plan for tools which is dependent on how much work it has done.” Byron explains: “Maintenance means measuring the wear points and placing some carbide inserts on those wear points to bring them back up to original position. After 100,000 metres of use, the tool will have proven that it will deliver us the yield, output speed and scrap level that we require. At that stage it is surface coated to make its life longer. Our target is to achieve 2.5 million metres per tool and sometimes

If you look after a tool and maintain, monitor and measure it, it will look after you Gareth Edwards, Commercial Director we get even more. In addition we continually look at the water and vacuum channels to make sure they are clear and delivering the right amount of water and vacuum to the right areas.” According to Edwards, in the extrusion industry tooling can be targeted to try and take cost out of a business; an option which is feasible in the short term. However, he says, in the long term such short sightedness will inevitably see an operation finding itself in the compromised position of blaming its tools. “If one or more tools in a suite fails, it could be 6 months before that suite is operational again as it could take six months just to make the replacement tool.” Furthermore, Byron says that a well performing tool will assist greatly to minimise waste, an area of considerable cost for a company such as Synseal. “Our scrap level is low but even a 1% increase in scrap level could cost us £250,000 per annum. If you are cutting corners with tooling waste would be likely to increase. For the sake of trying to save money on tooling you quickly lose it on wastage of raw material.” The second stop on the Synseal tour takes in the conservatory manufacturing department which is a large open plan manufacturing operation with staff working on conservatory systems in

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SolVin S

ince its creation 11 years ago, SolVin has claimed to be”The partner in Vinyls” and “lived it!” We have just concluded our 4th PVC Innovation contest with a presentations evening at the K Fair which was a fantastic evening warmly appreciated by many of SolVin’s partners. Not just our valued customers, but with partners from all spheres of PVC influence: EU members, trade associations, trade press and universities and again we had a record number of entries, totalling 141! You see, SolVin has the vision to develop a sustainable PVC industry and for this to succeed we need support everywhere. With regards to innovation, we are particularly proud

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to have an active Technical Market Development team which is now driving through some very interesting product developments in Wood Plastic Composites, Long Glass Fibre Composites, Structured Composites and more, plus we are assembling very compelling evidence for PVC to be used in emerging markets and, of course, to continue to be the material of choice in a vast array of established products. PVC has long proved itself to be a fantastically competitive product and has, more recently, gained some impressive

sustainability credentials through the successful conclusion to the Industry’s “Vinyl 2010 Commitment”. But we are not finished there, continue to watch this space because we truly believe PVC is a competitive material yet to be fully utilised by the plastics industry. Thinking about products, why not think about what PVC can do for you?

Published in association with: sOLVAY PLASTICS Tel: 01925 651277 Email: advancedpolymers@solvay.com Web: www.solvayplastics.com

Construction Synseal

different states of completion. Synseal was the first systems company to create and manufacture a system which included a specific roof – the Complete Conservatory System was created. This system and its contemporary, the Global Conservatory System, have afforded Synseal with considerable success and the conservatory operation is a case where the figures truly speak for the scale of the operation. Today, one in four conservatories in the UK is fitted with a Synseal roof and despite the popularity of the company’s products, Synseal offers customers a three day turnaround from order to delivery on all roof kits. The next port of call is the in-house injection moulding facility which was added in May 2004 and is comprising of five impressive automated machines which stand side by side. As we watch, the operator monitors the progress as conservatory components are produced with impressive speed and accuracy. The idea behind the introduction of the injection moulding department was to provide Synseal customers with everything needed to produce a conservatory. Currently Synseal manufacturers 340 components with

all parts made from the same Synseal compound so as to provide both quality consistency and give a perfect colour match with the rest of a conservatory system. The final manufacturing area on the tour takes in the laminating facility. Combining the appeal of a wood grain window frame with the ease and maintenance of a plastic frame, extruded lengths of uncut window frame are passed through the laminating machine. Synseal offers a palette

We took a good six to nine months of understanding what people wanted and what were the best and most cost effective ways of achieving those desires Robin Byron, Production Director

selection of eight colours and four ‘real’ woodgrains with a grain so fine it’s almost impossible to tell the finished product is not real wood. Market research, carried out with Synseal customers, played an important part in developing the colour palette for the offering known as the Artisan Woodgrain Collection for windows.

Improvement and value Synseal has enjoyed a long term culture of continuous improvement which existed prior to the management

125

The dependable partner at your side

omprising of six different companies in five countries, Chemson Group is the world‘s leading manufacturer of PVC stabilisers for today‘s plastics processing industry. With headquarters in Austria, production sites in Europe, the USA, Brazil, Australia and China plus a worldwide sales and service network, we offer all the advantages of a global supplier with local support. Our principle aim is the market success of our customers. We use this as a yardstick for measurement of our own services. Marked by the values of innovation, quality and sustainability and oriented towards the customer, this company philosophy is an integral part of all divisions and processes of the Chemson

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Group. The best way is to find out for Facts & figures: yourself – by collaborating directly with 594 employees, including 235 in Austria, our employees! Turnover: 199 million EUR in the fiscal Customer orientation is much more year 2009. than just a phrase. We always endeavour to keep one step ahead of the market and provide our customers with today‘s solutions to meet the requirements of tomorrow. We don‘t just rely on new technical standards, but Published in association with: also on new cHEMSON GROUP ecological Peter Marchalek benchmarks Head of Group Marketing such as in the organic-based Tel: +43 4255 2226 390 stabilisers sector, Email: peter.marschalek@chemson.com for instance.

Construction Synseal

buyout. “We set ourselves very high targets and we achieve them but we do put ourselves under pressure,” says Byron. “Every year we set lower conversion rates, better delivery tonnages per vehicle and lower scrap rates. We measure delivery performance daily and anything below 95% at whole order level is unacceptable. We deliver several thousand order lines that make up deliveries to around 150 customers a day.” According to manufacturing director Steve Musgrave, Synseal has already undergone a considerable amount of improvement with regards to efficiency through automation. However, while the window systems are produced en masse, other areas of the business, particularly the conservatory department, operate a bespoke offering which doesn’t lend itself to automation. “We have automated to the extent that we feel we can,” says Musgrave. “However, we have processes that even if we put a machine in to do it, it still needs a man. In such situations, what we’ve done is part automate as well as poka yoke the process so as to mistake proof it against human error.” An example of this is a drilling solution which was installed where the drill only works if the correct material is placed in to the correct slot and pushed all the way in. The hole is always in the same position because if the material hasn’t been pushed all the way in and touched the stop, the drill will not engage. To continue to find areas of improvement outside of automation, Musgrave says that the teams are encouraged and indeed expected to make small improvements all the time without the influence of management. “Our employees are empowered to make changes where appropriate. We hold brainstorming meetings to keep everyone’s wheels turning. It is a whole company philosophy and recently it was introduced in to the non-manufacturing administration area which can traditionally be an area that is neglected.” The company claims that its continuous improvement efforts have afforded the company with industry leading standards that excel far beyond those of its competitors. “We have the best industry output rates per extruder,” he says. “We measure and monitor tool performance through its lifetime better than any of our competitors. We

have the best yield and scrap rates in the industry. We are significantly better than all of our competitors; much much better than the second best in terms production figures. We don’t do anything vastly differently from other manufacturers but everything we do we do well. We continually revisit what we do, why we do it and ask the question: ‘Can we do it better? We consider good performance to be a journey not a destination; you never get there.” While the improvement philosophy has been in place at Synseal for a considerable period, since the buyout the company has had more opportunity to put some of the bigger improvement processes into place. This has resulted in the introduction of new products and new markets. Throughout the course of this year the management team has worked hard to uncover previously untapped areas of value. These have included the development of new products and entrance into markets that were

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Synseal at a glance

128

Location

Sutton in Ashfield, Nottinghamshire

Sector

Construction

Employees

520

Turnover

ÂŁ73.1m

Key products

Window and door systems, conservatory kits

Output

38 million metres per annum

Productivity metrics

All areas within the business operate with measured KPIâ&#x20AC;&#x2122;s with each KPI being a meaningful performance measure dependant on departmental activity. These range from the admin cost of processing an order, to the production cost of converting 1T of raw material into finished product.

Size of facility

35 acre site with 600,000 square feet of factory, offices and warehouses

Key people

David Leng, CEO Robin Byron, production director Gareth Edwards, commercial director Steve Musgrave, manufacturing director Tim Armitage, sales director Brian Onions, finance director Leigh Daveran, mergers & acquisitions director

Contact

www.synseal.co.uk

Construction Synseal

not previously Synseal territory. “For instance,” says Byron, “the specification sector (councils, local authorities, government contracts, commercial) wasn’t something that Synseal was traditionally strong in as we were always stronger in domestic replacement and maintenance. That was one of the opportunities seen by the team doing the buyout which has allowed for expansion.” The company has also created a number of new product offerings including a vertical slider window system and a 60mm window system that were both designed to fill a market space from which Synseal had previously been totally excluded. Synseal has also recently introduced themally efficient profiles and inserts to its’ range, to help its’ fabricators deal with an increasingly energy conscious market. “We did a lot of work with universities and conducted many simulations,” says Byron. “We took a good six to nine months of understanding what people wanted and what were the best and most cost effective ways of achieving those desires. This was done while taking in to account operational sustainability and the future state of government standards. We underwent a massive period of learning and evaluating before we decided what we were going to make and how we were going to pitch it to the customer. We’re at the point now where we have the products and we’ve put them in to stock for market and we feel we are hitting the ground running.” Synseal management agree that the company will continue to grow and develop through process improvements, acquisition and product development. According to Musgrave, while Synseal will look to introduce further new products in the future, any new additions will only be considered in context of the needs of its customers. “For instance we don’t want to introduce products or services that directly conflict with them,” he says. “What we try and do is introduce products that impact our customers in a good way.” Work towards satisfying the needs of the customer first and success will inevitably follow is clearly a mantra that has resulted in tremendous success for Synseal and one to which the company will undoubtedly continue to adhere.

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United we stand

Project Unity represents a £25m investment at Spirax Sarco to realise cost savings through rationalising its operations from three sites in Cheltenham to one.

Jane Gray visits Spirax Sarco to witness progress on the company’s transformation initiative, Unity, and finds out how the restructuring of the organisation is bringing the company closer to its goal of minimising lead times for better responsiveness to customer demand.

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Arriving

at Spirax Sarco’s Cheltenhambased facilities on a bitterly cold November morning it was immediately obvious that the dynamic specialist in steam and condensate products did not share my own tendency towards winter hibernation – activity was rife. For the last two years Spirax has been undertaking an ambitious consolidation programme for its three Cheltenham sites. The project goes by the name of Unity and, as phase one comes to a close, I visited the site to see for myself how the changes in the company’s production, assembly and R&D arrangements are releasing hidden potential for efficiency and growth. Founded in the UK in 1956 Spirax Sarco has expanded over the years and is now part of a group of approximately 50 companies employing some 4000 staff worldwide. Despite this expansion, however, the UK has remained very much the hub of the organisation with new factories in countries such as China, Brazil and Argentina establishing

Steam engineering Spirax Sarco

stream valve or trap goes down out in the field the maintenance guy at that company wants the correct replacement straight away without consideration for the product complexity and variety that we offer across the board. This challenges us on speed and flexibility of manufacture.”

Boiling off the waste The need for this speed and flexibility has been the primary driver behind the £25m investment represented by project Unity. Gibbin, who sponsors the project at board level and was hugely influential in bringing the investment about, comments: “Before Unity the

Before Unity the way we were arranged across three separate sites in Cheltenham simply did not support our ability to meet customer needs Mike Gibbin, Divisional Director, Supply and North America at Spirax Sarco

local markets but definitely not detracting from the strength of the UK manufacturing base nor the positioning of the company’s research and development expertise. Spirax’s customer base is extremely broad as Mike Gibbin, divisional director, supply and North America at Spirax explained: “Anywhere that there is a boiler is a potential market for us. That includes public buildings, prisons, universities, hospitals. On the industrial side anywhere where there is heating and boilers involved in the production process also has huge value to us. That means beverages – for example Whiskey distilleries – processes for making pulp and paper, the pharmaceutical industry and so on. Renewable energy is an important new field.” Across this diverse range of customers, some of which require high levels of product specification (for instance pharmaceutical companies who must have systems which guarantee clean steam) there is, however, one unifying factor: the demand for very short lead times when new or replacement products are needed. Gibbin says: “If a

way we were arranged across three separate sites in Cheltenham simply did not support our ability to meet customer needs. We had machining, assembly and warehousing dispersed across different areas and that made it very difficult for us to effectively manage lead time.” As these different areas of the business move to the new site however, the location is not all that is new. An intense focus on the visibility of material flow and the elimination of unnecessary movement waste has necessitated stepping away from traditional cell manufacturing practises, specialising in particular products, towards the grouping of like processes for the flexible manufacture of a variety of products within a single material flow. This has demanded a cultural as well as logistical and ergonomic shake-up among many long serving employees who are now expected to work in more flexible teams and to take on opportunities to up-skill for more varied responsibilities. Largely speaking the exciting Unity project, including the re-mapping of material flow for newly integrated machining and assembly environments,

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Edwin Snowden & Co Ltd Over 100 Years of Professionalism and Quality from Edwin Snowden & Co Ltd

dwin Snowden has the knowledge, skills and capabilities to manage the most complex welding and fabricating projects. At our manufacturing facility based in Hull, we specialise in pressure vessel, heat exchanger and storage tank manufacture, pipework fabrication and access systems manufacture. In addition, we offer a full and comprehensive Turnkey Project Management service. Among the reasons for our success is an abiding commitment to the quality of work and service and a level of customer satisfaction that exceeds expectations.

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A genuine willingness to ‘go the extra mile’ can be found at every level of our organisation. These key imperatives motivate every aspect of our activities. This can be seen in the years of experience our staff have, together with a commitment to the apprenticeship system that has worked so well for us for over 100 years. We have a tradition of forging strong and enduring relationships with our customers, who have come to trust our assured and reliable workmanship as well as the consistently high standards of service that we believe, are essential to maintain and differentiate us from our competitors.

We are proud of the high standards that we operate to including ISO 9001:2000, ASME VIII, PD5500, and PED. We have become the manufacturer of choice for many of the UK’s leading, blue chip names in the engineering, chemical and food processing sectors.

Published in association with: Edwin Snowden & Co Ltd Tel: 01482 320143 Email: sales@edwin-snowden.co.uk Web: www.edwin-snowden.co.uk

Steam engineering Spirax Sarco

has been executed using internal expertise so as to exploit existing knowledge of processes and encourage buy-in across the organisation. The core team of eight experienced managers have iteratively refined the integration of processes as more machinery and staff move from the old sites into the new customised facilities. Leading the project team and coordinating Unity’s progress with the ongoing day-to-day operations of the business is Glyn Elsworthy who joined the company straight from school and accrued 43 years experience, primarily in assembly, before becoming Unity project manager. He explains that the new site has provided Spirax with a wealth of opportunity not only in the rationalisation of existing processes and material flow but also around new forms of efficacy: “Unity has provided a unique opportunity for the business to look at its internal operations but also at externally facing issues like environmental performance which can impact on the company’s reputation with customers and the local community. In refurbishing our building and in our new builds we have tried hard to be environmentally friendly – optimising the use of natural light and making heating and cooling systems self-regulating as far a possible. This has already saved the company more than the 10% and there will also obviously be huge savings in transport costs and cuts in emissions when all site moves are completed next year.” The impact that Unity is expected to have as it completes phase two in 2011 will increase output by 10 – 15% and cut make-to-order lead times from a current state of around 4-5 days to 4-5 hours. Gibbin says: “Unity has allowed us to quantify a massive improvement to customer service. The slashing of lead time and the creation of better flexibility in manufacture have been key to that. Furthermore we are now using our understanding from the reorganisation of UK production to rationalise the split of products between the UK plant and our sister plant in France which produces similar product lines. This will bring a more centred approach to manufacture where each site will lead on a certain product range – a very large proportion will be the responsibility of the UK plant.” Impressively all the improvements and integration activity that has been

Key People – Spirax Sarco Cheltenham

Glyn Elsworthy, Unity Project Manager, Spirax Sarco

Ian McDuff, UK Supply Director, Spirax Sarco

Mike Gibbin, Divisional Director, Supply and North America, Spirax Sarco

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Planet Property Development Planet professionals give seamless service

arious phases of the Spirax Sarco Unity project are being project managed by Gloucestershire-based company Planet Property Development. Planet’s team of design and construction experts has been focussing on the project since April 2009 and work is now well under way on the extension and refurbishment of three of Unity’s key buildings. The three buildings, the largest of 2,300sq m, are part of Spirax Sarco’s plans to merge and operate all its manufacturing processes and plant on one site. In addition Planet is also implementing a new 11kVa electricity substation and will be providing an underground power feed to supply all manufacturing processes on the site.

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Paul Wood, Managing Director of Planet Building Design and of Planet Property Development, said his staff worked in tandem with Spirax Sarco to obtain nine separate planning permissions on time and to brief. Paul said: “As project managers of this part of Unity, not only does our role involve building design, securing planning permissions and overseeing construction work, but also ensures all Construction (Design and Management) Regulations are adhered to. We work very closely with the Unity team on both project strategy and construction detail and we appreciate that our work is part of the overarching Unity project and timescales are critical.

With both Design and Development arms to our business, we provide a seamless, efficient and cost-effective ‘conception to completion’ service that is professional, timely and causes minimal disruption to manufacturing.”

Published in association with: Planet Property Development Tel: 01242 257080 Web: www.planet-build.co.uk

Steam engineering Spirax Sarco

achieved by the Unity project team has taken place without interruption to business operations. Ian McDuff, UK supply director at Spirax, attributes this success in maintaining continuity to the close co-operation across his entire UK manufacturing team. McDuff describes how each step in Unity’s progress is preceded by a rigorous planning stage “There have been so many people and areas of the business involved in Unity that it is very difficult to pick out one particular success story. A real milestone early on in the project was the temporary relocation of our warehouse off site. The move involved relocating some 350 tons of product equating to 2500 pallets, installing new racking, setting up new systems for warehouse management and the modification of all our supporting IT. It was a process which had a huge amount of inherent risk for the business and we were undertaking it early on in the project

before we had the benefit of the many experiences we have gained since. The outcome of the move was that we created a real benchmark. The planning that took place between the warehouse managers and the Unity team meant that the execution was absolutely flawless. It was a key success to have early on because it showed everyone that through detailed planning and working together we can achieve all the Unity objectives. It gave confidence.” But Spirax has not limited the scope of project Unity to only consider increased efficiency in current product lines. An essential aspect of the project and a major part of the new site investment has been given over to the establishment of a custom built research and development facility. The establishment of this new facility has been supported and guided by work Spirax is undertaking in partnership with the Lean Enterprise Research Centre at Cardiff University. This explorative study looks to use lean thinking to improve the efficacy of the end to end design-tomanufacture process. Gibbin describes the need for change in R&D habits at Spirax: “As with the other parts of the business our technical capabilities in R&D were split across three sites. You can imagine what this meant in terms of organising and aligning R&D activities! Having everyone on

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Steam engineering Spirax Sarco

the same site will bring greater value to the existing R&D skills and we are doing a lot of training and recruitment to further improve the scope of those skills. The new site will also greatly increase our testing capacity and this was very important in the initial Unity proposal to the board.” In addition to these skill and capacity gains however, Gibbin hopes that new rigour in adhering to properly gated processes in product development will encourage thorough communication with manufacture, which will of course now be close at hand in its entirety.

Money and mouth Walking around the new Spirax site with its cleverly refurbished structures and immaculate new-build additions it was soon obvious that the principles behind Unity were no mere lip-service for the purposes of our interview and a moment under the spotlight of the trade-press. Existing structures had been stripped back and re-clad for better insulation, no florescent lighting or synthetic air-conditioning systems marred the working environment which was undivided by cell clusters and had easy to see kanban boards which were in active use. McDuff says that the development of further visual management techniques and other lean principles will be a central part of the Unity programme throughout and beyond the completion of phase two as the project becomes a platform for a culture of continuous improvement. Other features installed during phase one of Unity which reflect dedication to the concept of flexibility include zig-zagging network of power facilities that run overhead in the workshops and assembly areas. This enables free standing equipment and work stations to be unplugged and repositioned in the eventuality of altered demand or the need for different process flows. In addition the assembly hall with its 10,200 locations for parts in shining new custom-made racking is particularly impressive to behold and the new picking system will play a major part in further reductions to lead times and on-time-in-full delivery to customers. Gibbin proudly expressed the new site as “Like Grand Designs for a factory”. Both Gibbin and Elsworthy say that the changes to working practice and location have largely had enthusiastic

A real milestone early on in the project was the temporary relocation of our warehouse off site. The move involved relocating some 350 tons of product equating to 2500 pallets, installing new racking, setting up new systems for warehouse management and the modification of all our supporting IT Ian McDuff, UK Supply Director, Spirax Sarco

feedback from employees once they have had a chance to bed-in and their positivity is spreading back to colleagues still waiting to join from the old sites. Critical in gaining acceptance for the move has been the ongoing involvement of all staff in the design of the new working environment including attention to detail with regards to the positioning of staff leisure areas and facilities. Employing just shy of 300 direct workers on its new site Spirax is by far the largest industrial employer in the Cheltenham area and the company takes this responsibility very seriously. This has been made apparent throughout the Unity project by the use of local contractors for all the building and renovation work and through close engagement with local planning authorities over site proceedings. Local suppliers who have made the project possible include Smith’s Demolition and Eesi who have provided the innovative power networking and cabling. As the project continues through phase two the need for plenty more services should be anticipated as the momentum builds toward the ambitious construction of a tunnel to avoid goods having to cross the public road which intersects the Spirax site and again cut out potential waste in waiting and any risk of disrupting flow.

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Northern Disposal Services Limited Northern Disposal Services - Caring for tomorrowâ&#x20AC;&#x2122;s environment today

stablished some 20 years ago, Northern Disposal Services has grown organically under the guidance of its owner, Geoff Dickinson. The family businessâ&#x20AC;&#x2122;s policy of employing highly trained, professional staff, investing in efficient, modern equipment and embracing emerging new technologies for the handling and treatment of wastes has seen the company develop into a premier operator in the waste disposal industry. Our high customer retention rate is testimony to our years of providing a professional, reliable and cost effective service. With in excess of 70 years waste industry experience, the Northern Disposal management team

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compliant service on a nationwide can provide the solutions to your waste basis for the treatment, recovery or problems. We seek to look outside recycling of all types of waste the normal parameters of traditional streams from solvent recovery to waste management to provide bespoke agricultural recycling. services to our customers. Regardless of the volume of waste material that our customers generate, we believe that the one to one relationship that we foster between ourselves and our clients gives us a unique insight which allows us to suggest alternative cost effective and ecologically beneficial methods of dealing Published in association with: with waste streams Northern Disposal Services Limited Hopton New Road, Mirfield, West Yorkshire WF14 8NF which might have been previously overlooked. Tel: Transport: 0845 3700 696 Northern Disposal can provide a fully

Tel: Sales and Admin: 0845 3700 697 Fax:: 01924 489666

Specialist materials Ahlstrom

Optimising

BioWeb™ Ultrasonic sealable teabag webs

global performance with aPlus

Many companies could tear off a strip from Finnish specialty fibre company Ahlstrom’s focus on continuous improvement and building excellence in global operations which span 39 manufacturing sites in 14 countries. Here in the UK, Ahlstrom runs two sites, one in Manchester and a large manufacturing plant in Chirnside, Scotland.

The

Finnish parent develops and manufactures highperformance fibre composites and specialty papers serving multiple industry sectors, including food and non-food packaging, filtration, glassfibre reinforcement materials for marine, windmill and transportation applications, coated abrasive materials, crépe papers, pre-impregnated décor papers, pressure-sensitive adhesive labels, fibre-based sealing papers and vegetable parchment for food wrapping, baking, decorative laminates, and medical wraps. The Scottish plant caters mainly for the food market, with four manufacturing platforms for non-woven production. Plant manager Stuart Nixon explains that machines 21 and 22 are inclined wire paper-making machines, making filter materials and fibrous casing reinforcement for food applications. Machine 23 makes medical nonwovens and wiping fabrics but is planned to close in 2011 as the line is currently under-utilised. Their latest investment is a specialised spun melt machine which has been designed and fabricated to make the next generation of beverage and infusion products. The €28 million investment is handling commercial orders already and is due to ramp up to full production next year. “The new machine is purpose-built to manufacture the next generation of infusion material, termed BioWeb™. Its principal raw material is PLA (polylactic

acid), a biopolymer currently derived from corn starch. This means that the raw material is based on 100% renewable resources, making it sustainable. It is also fully compostable by industrial composting,” says Nixon.

History The Scottish site was initially acquired by American company CH Dexter in 1970. But the history of papermaking on the site goes back far longer. “Part of the historic façade of the plant is actually listed and there has been papermaking at Chirnside since 1830,” remarks Nixon. In 2000, Ahlstrom purchased CH Dexter’s non-woven business and acquired the site.

Industry leaders The Chirnside plant makes heat sealable teabag filter tissue and fibrous meat casings for continental sausages, like salami and pepperoni. About 75% of the products are exported to more than 60 countries. “Nobody else can or does make casing reinforcements the way we do. We have in depth knowledge of the fibres used to make these products and unique technology,” says Nixon.

Continuous improvement Ahlstrom was floated on the Helsinki stock exchange in 2006. The company is a business which has an emphasis on building excellence in operations worldwide. Continuous improvement is considered paramount, and the Finnish group has rolled out a comprehensive programme called aPlus (Ahlstrom-Plus) which runs throughout the corporation. Continuous improvement manager Andrew Gorvett is responsible for coordinating the aPlus process in the UK and the rollout process in France, India, USA and other locations. Gorvett emphasises the importance of challenging established working practices and the benefit of working in teams to achieve lean improvement. “When you start challenging the old beliefs with a cross-functional team, there are real gains to be made,” he cites the example of a machine which was believed to have a certain maximum speed but,

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Brotherton Esseco Brotherton Esseco’s £4m investment scheme is now completed

fter more than two years of planning and preparation, Brotherton Esseco’s new £4m Sulphur burning plant has now been completed. The new plant will make a range of high quality ammonia and sodium-based sulphur products and will significantly increase Brotherton Esseco’s production capacity, whilst at the same time, reducing on-site storage of some hazardous raw materials. As well as bestowing self-sufficiency and an ability to respond quickly to any fluctuations in demand, significant gains have also been made through the reduction of onsite health & safety risks. One of the principal products - ammonium bisulphite - is used in the manufacture of caramel for cola drinks. Contrastingly, it is also extensively used as an oxygen scavenger in offshore oil wells.

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Another, sodium bisulphite, also finds its way into what we drink: both as part of the purification process at potable water treatment plants and also as a food preservative in some soft drinks. The plant also produces sodium sulphite which is sold into the pulp and paper industry.

“The selection process for our new additional operatives is now complete and this is a further tangible boost for the long term future and viability of our Wakefield plant.”

The plant was designed and managed by Italian-based company COVER although much of the work was carried out by local UK companies. Commenting on the project, Brotherton Esseco Managing Director, Roger Perry said: “We are very proud to have been working with one of the top companies in Europe with extensive experience in this sector. “Equally, we are delighted that they have chosen local suppliers to provide much of the plant and construction team.

Published in association with: Brotherton Esseco Tel: +44 (0) 1924 371919 Fax: +44 (0) 1924 290408 Email: info@brothertonesseco.com Web: www.brothertonesseco.com

Specialist materials Ahlstrom

when a lean team examined the system, was found to have drives that could actually go far faster. The key components of the aPlus process on the shop floor are: Focus on the key problems Document the improvement Work in teams to solve problems Solving problems based on data Use problem solving tools Have clear goals and a time frame for completion of teams Make improvement continuous aPlus deploys the full gamut of CI tools, which include total preventative maintenance (TPM), six sigma and lean systems.

PKE and PKL Training “We have two training programmes. One at a local level is called the Process Kaizen Leadership programme (PKL), which takes individuals on site through problem solving techniques and tools. The second programme, which runs at a group level, is called the Process Kaizen Engineering programme (PKE). This is provided in conjunction with a continuous improvement consultancy company. The programme involves a minimum of five weeks of training in seven modules, including: problem solving, process quality, industrial engineering, operations management, process reliability, early equipment management and training & education. Selected candidates take a year-long course, travelling to different Ahlstrom sites where they learn the particular modules and also learn about Ahlstrom’s different operations. After their year of training, the candidates graduate as Process Kaizen Engineers (PKEs). “At a group level the programme develops a pool of well trained problem solvers who have the skills required to improve our global operations in the future,” says Gorvett. Chirnside has seven PKEs including the plant manager, two production managers, the quality manager, regulatory manager and maintenance managers. Nixon stresses, “This is not just a training course where you turn up for three days and go home with a certificate. After each of the modules you go back to your respective site to run a specific project which demonstrates your understanding of how the module works. Then at the next module, participants are examined and make a presentation of the project they just ran.”

Like many change management schemes, initially there was some suspicion of the ‘unknown’. But good communication and a positive approach to education has encouraged take-up of the continuous improvement scheme. “Once the staff saw the benefits some of the early teams were achieving in terms of better working conditions, they wanted to take advantage of these projects for themselves,” says production manager Mike Jones. Detailed KPIs are monitored and maintained, including OEE, waste, safety i.e. accident frequency rate (AFR) and accident severity rate (ASR), quality, cost, delivery, innovation and motivation, as well as environmental metrics on water utilisation, energy consumption and waste-to-landfill. Waste-to-landfill has dropped year-on-year by 40% due to various team initiatives. “We constantly review our energy consumption and the new machine has a much smaller carbon footprint than earlier machines,” says Nixon. Ahlstrom runs energy teams to identify opportunities to manufacture products more sustainably.

Jumbo roll crane

Key pillars aPlus is run on a pillar structure along the lines of the TPM Temple. The key pillars are: safety; focused improvement (OEE); environment; process quality; planned maintenance; autonomous management; perfect value stream; training and education, “which is effectively the bedrock of the foundation we build on,” says Nixon; and early equipment management, which is focused on new equipment or new line introduction. “We believe it is important to assess the design of any new equipment from the outset to ensure that it works right first time.” Furthermore, aPlus encompasses lean flow and has had a particular impact on our supply chain operations, addressing the “perfect value stream to optimise supply chain management,” Nixon adds.

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Consequently, there has been significant water utilisation reduction amongst other improvements. “We analyse factory data and select areas for improvement using a cross-functional team, taking care to ensure that the target identified for the team is achievable. For example, optimising waste is a significant challenge in this business. So the team is encouraged to reduce waste for a particular single activity by 50% (say) rather than attempting across-the-board improvement initially.” Over the past couple of years, Ahlstrom has run about 90 teams a year in the UK, with major impacts on safety, productivity and the bottom line. Safety performance has improved at both sites; with reductions in waste; a rise in machine throughput; and improved on time, as requested, in full delivery. Strong visual management is utilised, with KPI summary boards for each of the pillars located at the entrance to each production area. The company also uses large format Kaizen sheets and traffic light forms to track the progress of teams in each production area. A screen saver system is also used to summarise information about each machine platform. This information is also displayed on large TV’s around the site. Care is taken to ensure ownership of performance improvement throughout the group. “The teams are not specifically management driven, but have six to eight team members to harness the knowledge of people actually doing the work to improve performance,” says Nixon. “We find there is an increased sense of ownership since deploying the

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Specialist materials Ahlstrom

Ahlstrom at a glance Sector

Non-woven and speciality fibre manufacturer

Employees

215 in UK

Sites

Chirnside, Scotland – non-woven materials and Radcliffe, Manchester - pulp production

Key products

Non-woven webs primarily for the food sector

Productivity

Machine OEE very high, 80%+; significant increase in machine throughput

Environmental

40% reduction in waste-to-landfill

CI Strategy

aPlus process for continuous improvement

Investment

€28 million spun-melt machine to make next generation of beverage and infusion products

World class

Ahlstrom are market leaders in fibrous casing reinforcement and tea bag filter materials

continuous improvement programme. People treat their equipment better and there has been an improvement in morale.” The corporation has an internal aPlus auditing team, and the Chirnside plant is one of the three sites worldwide which are termed World Class by these measures. “Improved quality goes hand in hand with improved process efficiency,” says Nixon.

Reward scheme

pressure to improve. Consequently, it’s a question of making sure we are at the top of our game in terms of safety, quality, efficiency and morale,” says Nixon. The corporation is now looking towards Asia as a major opportunity for expansion, along with Brazil, Russia and India. Ahlstrom recently signed a joint venture for medical materials production in China, producing medical papers and masking tapes, sterilization wraps and masking tape substrates. To maintain its leading edge in specialty composite fibres, achieving aPlus is a grade that Ahlstrom is committed to live up to.

There is also a reward scheme using tokens to encourage improvement. “But our commitment to continuous improvement is by no means a token effort!” quips Nixon. People who join a team get one token. If successful with a project, they receive a further four tokens. The tokens can be used to select gifts from a catalogue, which range from screwdriver sets to laptops. “Frankly, many people need no incentive to want to improve their working environment or a particular machine. But it’s important for us to recognise people’s efforts in continuous improvement,” says Nixon.

Training support Ahlstrom is an SVQ-accredited site and offers a variety of courses. Some are compulsory, such as the health and safety SVQ course. But employees working on the machines can augment their salaries by achieving the machine technical certificates. Ahlstrom also supports quite a number of employees through GCSEs, and Open University Courses up to and including Masters Degrees.

Growth plans Looking to the future, Ahlstrom expects to build on the strong foundations it has established. “We are always under

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New Welding Facility - Investment of ÂŁ75k (March 2010) in latest technology TIG welding sets ideal for welding titanium alloys and super alloys which are housed in a new temperature and atmosphere controlled clean environment

Steely-eye

on global

growth 144

Diversified industries Caparo Group

For 42 years Caparo has steadily built its business into a global empire, covering media and service sector companies but always with manufacturing at the heart. Its Chief Executive the Hon. Angad Paul, Group Finance Director David Dancaster and some of the people who run its companies tell Will Stirling what Caparo does in the UK and beyond, and why the spirit of Caparo is about people and human effort as much as business success.

Perhaps

the most diversified group of companies of its size in the UK, Caparo has businesses in markets from merchant bar steel to supercars, tubular components to finance. Caparo is an enigmatic beast; just when you think you’ve got the measure of it, new and interesting commercial tentacles pop up to emphasise its long reach. What began in 1968 as a small factory in Cambridgeshire making gas tubes is now a highly diversified, acquisitive business with forecast revenues for 2011 of about $1.3bn. With its roots in steel and steel conversion, Caparo – one of the UK’s biggest private companies – has branched out into advanced engineering for aerospace applications, financial services and even hotels. While the non-core businesses are important “and great fun,” says Caparo’s CEO the Hon. Angad Paul, these have been borne out of the company’s industrial foundations. Owned by the Paul family, Caparo is a private limited company with operations in eight countries spread over three continents, comprising 55 companies with 2,600 employees in the UK and over 7,000 in the rest of the world. It has 44 sites in the UK alone, manufacturing a large variety of steel, automotive and niche engineering products, including precision tubes for the Large Hadron Collider at CERN near Geneva. Labour peer Lord Swraj Paul of Marylebone is chairman of Caparo and very much the spiritual head of the company, while his youngest son Angad has been at the head of the business since 2003. The family are part of an Indian dynasty who have multiple business interests including shipping, hotels and which founded India’s renowned Apeejay Education Society. “Steel is the thread that runs through the whole company,” says Angad Paul. “We have some great UK businesses. For example, Caparo Merchant Bar in Scunthorpe takes hot rolled steel direct from the Tata Steel Europe (formerly Corus) site next door and processes it into high grade merchant bar for construction. Each month Caparo Wire produces enough wire to stretch around the world. Caparo Tubes Tredegar makes a range of specialist tubes and is the highest factory in Wales. Steel manufacture is the constant, but we have diversified greatly.”

Head turner – Caparo T1 Designed by ex-McLaren Formula One engineers, the extraordinary Caparo T1 is a 3.5 litre V8 powered, rear-wheel drive, two-seat supercar inspired by an F1 design. It entered production in late-2007 for a £235,000 price tag and about 25 cars are built per year. In November 2007 the distinctive car topped the BBC’s Top Gear Power Board leader’s time of 1:17.6 with a time of 1:10.6, although it was soon controversially, and temporarily, removed for failing to clear a speed bump. Caparo T1’s purpose was partly as a marketing vehicle for Caparo’s engineering capability – a case of ‘look what we can do’ – and partly the fulfilment of Angad Paul’s dream to build a supercar from scratch by his own company. More recently, Caparo has built and launched the ultimate version of its supercar – the Race Extreme. Powered by a 640 bhp derivative of the engine and carrying absolutely no nonessential equipment, it has mind blowing performance, also enhanced by the optional Aero Dynamic Pack. Discussions are ongoing with a number of clients who are considering adding this truly British extreme machine to their car collections.

Caparo T1

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KR Saws The UKâ&#x20AC;&#x2122;s Metal Cutting Saw Blade Specialist

Saws Ltd is the leading saw blade product and technical service provider to the UK metal and steel cutting industry and is a joint venture between World-leading, Netherlands based, Circular Saw Blade specialist Kinkelder BV and Roentgen GmbH & Co, the renowned German manufacturer of Band Saw Blades. Servicing the United Kingdom from its headquarters in Coventry - West Midlands, KR Saws is able to offer its customers a comprehensive range of steel cutting Band saw blades and Circular saw blades supported by expert advice and technical support.

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The Kinkelder/Roentgen companies have acquired a worldwide reputation as innovative market leaders in the manufacture of steel cutting saw blades. The KR Saws team has worked alongside the production specialists at various Caparo sites, analysing the sawing process and structuring improvement projects to maximise productivity and provide the most cost efficient saw blade solutions. KR Saws success to date is direct result of our business philosophy of always seeking to work in partnership with our customers and

our commitment to offer quality products with the best technical support in the saw blade industry. THE SAWING APPLICATION EXPERTS

Published in association with: KR Saws Tel: 02476 610907 Fax: 02476 610706 Web: www.krsaws.co.uk

Diversified industries Caparo Group

Recession and rebound

UK or India? Both, and beyond

Like any big company, Caparo has had mixed fortunes over its 40-year history, but it has grown consistently and at times rapidly, through organic growth and acquisition. In 2006, for example, Caparo acquired 22 companies in one year. Under Angad Paul, group turnover has increased significantly since 2003. “The strategy for growth has been partly market consolidation,” he says. “We’ve deliberately tried to consolidate in sectors where targets have been good fits with our existing businesses and those running in parallel. Caparo Accles and Pollock is an example. It makes bespoke, highly engineered tubular components for aerospace and power gen applications. By acquiring it and bringing it alongside Caparo Tube Components, we’ve created synergies.” Fabricating steel products for the construction and automotive sectors, among others, the recession was always going to bite Caparo hard. Global turnover fell as orders for steel products dried up. As the recession deepened, according to published accounts the company reported a turnover of £861m but pre-tax losses of £3m in 2008. But chief operating officer Douglas Dawson says the company moved quickly to implement short-time working and the staff rationalisation necessary to keep total job losses to a minimum. “We were very wary of being left at under-capacity when the recovery came,” he says. “At companies such as Caparo Vehicle Products when the big auto OEMs return, order volume can be high, all at once. You cannot get caught short if you want to remain a reliable supplier.” Lord Paul is a Labour peer and has at times attracted unwanted media attention. In July this year, several newspapers ran stories saying that Caparo’s accountants, BDO, had reported that some group companies had breached their banking covenants in 2008. Caparo hit back, Lord Paul claiming the newspaper reports were politically motivated. The company issued a statement saying that the accounts quoted related to only some of the group’s UK subsidiaries, which was standard procedure in the UK when a company underperforms against its banking agreements. Caparo was “alive and well”, it said, and the 2008 accounts were ancient history.

Having restructured the funding of the group, recovery has been brisk, and for some businesses, rapid. Caparo Precision Strip, for example, is very busy, exporting its full range of welded steel strip to up to 50 countries, and is one of the group’s most profitable companies. The group’s global revenue origination is crudely 50% UK and 50% the rest of the world. Angad Paul and chief financial officer David Dancaster say that, while the UK remains integral to the group’s core activities, the long term strategy is to have a more even worldwide split, about one third each in the UK, the US and the rest of the world. Looking ahead, India, China, Mexico and perhaps Australia – watch this space – are key emerging markets for Caparo. Several large investments in UK manufacturing sites in 2010 underscore Caparo’s commitment to its UK base. For example, both Caparo Tube Components and Precision Strip invested several hundred thousand pounds on new equipment from 2008 and 2010, including a new laser welder at Precision Strip (JB&S Lees) (see Caparo Precision Strip box on p151). Angad Paul saw the rise of Chennai as “India’s Detroit” in the late-1990s and began to develop Caparo businesses in India from about 2000. Today Caparo India comprises of 25 companies mainly involved in steel conversion/fabrication, but also a financial services company and the Ayatti Cultural Centre. Does the rise of India indicate a shift of manufacturing from the UK to low cost economies? “India

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CTC is the UK’s largest, multi-product supplier of tubular components to the automotive industry, producing high volume parts directly to Nissan, Ford and BMW Mini, and indirectly to Bentley, Jaguar Land Rover, Aston Martin and Honda. It’s onepiece flow manufacture with no room for variation. Caparo Accles & Pollock is niche, low volume work mainly for aerospace and power generation applications, including nuclear, supplying to companies including Rolls-Royce Canada. Today the site is busy and confidence is buoyant. “Recently more work is coming from the energy sector,” says the MD of both companies, Philip Begley. “For land power gen, we supply the necessary pipework to convert the inlet and outlet manifolds. The engines don’t fly so they’re a lot heavier and generally made of stainless steel. CA&P involves far more hand crafting than CTC. CA&P recently joined the SC21 programme run by ADS, the aerospace and security trade association. “Accles has grown quite rapidly recently,” says Begley. “It was the right time to look at our processes and supply chain for efficiencies.” Participants pay to join SC21 but Begley says the cost is justified. “In CTC, it’s easier to check production figures and output based on known standards. Accles is a more difficult environment to introduce data collection into. SC21 helps to put in systems to record what’s going on, and we intend to implement complimentary computer software upgrades.”

Training and lean

Caparo Wire is a world class manufacturer of wires for fasteners, bedding and seating, baling, ropes and other industrial and specialised applications.

is a very important growth market for us, we’re particularly excited about one or two new developments there,” says Angad. “But the UK is also important. I’m not in a position to comment on strategy regarding. factory locations but they are not mutually exclusive regions, indeed quite the opposite.” It is likely that India and the UK will develop stronger examples of Caparo’s vertically integrated business plan, where in one factory value is injected into simpler parts made in another location.

Caparo Tube Components and Caparo Accles & Pollock Caparo Tube Components (CTC) and Caparo Accles & Pollock (CA&P) occupy the same site in Oldbury, West Midlands. While being distinctly different companies, both manufacture tubular components, run in parallel and share certain synergies.

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CTC and CA&P are ‘Investor in People’-approved companies and have provided NVQs in computing and some engineering skills, mainly via night school. There is a training appraisal programme in place where employees are assessed for their professional development needs. “We’ve invested perhaps a little more on training than some of the other companies, partly to get the most out of two distinct parallel businesses,” says Begley. CTC operates skills matrices and an internal welding training programme. There is a degree of voluntary employee transfer between the two companies which disseminates knowledge. Three years ago the CTC factory was reconfigured and now operates a kanban system to reduce stock levels. And last year the engineering team led an internal lean manufacturing study. Designed mainly for one part, the power steering column, it used Pareto analyses and Boss charts to tackle root cause of inefficiencies. Where possible, the company sends operators to the manufacturer of a new machine to train on how to operate the equipment before it’s delivered on site.

Accles & Pollock in focus

Next door is the more discrete CA&P operation, with more handcrafting involved as skilled fitters work on tubular parts like aerospace ducts in titanium and inconel – a nikel alloy that operates at high temperatures – for aerospace and power gen markets. Precision welding is a big speciality for CA&P. In March, the company invested £75,000 in the latest TIG welding sets designed for welding super alloys (see page 151 for details). Trained welders can achieve super clean welds on small diameter tubes where, other than colour, the weld is

Diversified industries Caparo Group

Caparo Group sectors â&#x20AC;&#x201C; some UK group companies Caparo Tubes Tredegar

Caparo Wire

Caparo Tubes Tredegar specialises in the production of ERW mechanical steel tubes and sections, cold formed structural hollow sections, tubes for low-pressure applications and spiral welded tubes. The Tredegar site has recently completed a PROACT training programme, which has widened the skills base of the employees. Training has been for shop floor staff and has covered areas including: lean manufacturing; team building; motivational techniques for managers; manual handling; non-destructive testing; welding; and engineering workshop skills.

Caparo Wire is a world class manufacturer of wires for fasteners, bedding and seating, baling, ropes and other industrial and specialised applications. With the support of the Welsh Assemblies, European funded, PROACT training initiative, Caparo Wire has invested over 7,500 training hours across its 150 employees during 2010. In early 2010 Caparo Wire further extended its Baling Wire product range at their West Bromwich site, with the installation and commissioning of 2 Quiklink production lines. Typical Quiklink applications include the baling of cotton, synthetic fibres, tyres, plastics and cardboard, where high tensile strength, efficiency and safety are key factors.

Caparo Precision Strip Caparo Precision Strip is a market leading manufacturer of high quality precision steel strip with an established customer base in over 50 countries. In 2008 Caparo Precision Strip installed a brand new laser welder machine which is currently used in the production of bimetal strip. The equipment has improved productivity and the quality of this highly specialised product. In addition, investment in 2011 will see the installation of two high convection Annealing Furnaces, which will support growth in both bimetal and alloy backing strip sales.

Caparo Atlas Fastenings A leading designer and manufacturer of fasteners for the last 120 years, Caparo Atlas Fastenings has a reputation in delivering quality bespoke products, offering product design and development support for critical automotive applications.

Caparo AP Braking

Caparo Tube Components

Caparo AP Braking is the market leader in the design and manufacture of vehicle braking systems, clutch products and hydraulic actuation components. The companyâ&#x20AC;&#x2122;s focus lies in research, core product design and manufacturing excellence. These enable it to successfully target specific vehicle applications and support both original equipment vehicle manufacturers and major system integrators.

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Diversified industries Caparo Group

barely apparent. CA&P also uses an orbital welding process. “It’s done in an enclosed head with an argon backing gas,” says Simon Horton, technical sales manager at Caparo Accles and Pollock. “The optimum welding programmes are generated automatically by the software in the welding equipment, it will even take into account the gravity on the weld pull.” I’m shown a weld straight from the machine, no polishing applied, which is incredibly clean.” A little-known fact about this Black Country tube bending firm is its contribution to the European Organisation for Nuclear Research (CERN). Many of the beam screens used at CERN’s Large Hadron Collider in Geneva are made in CA&P’s specially commissioned, temperature and atmosphere controlled manufacturing cell. They are manufactured on tracks mainly in 16.5m sections. “Laser welding equipment is mounted on ABB robots which pass down a track, highly calibrated with laser CMM equipment when it was set up,” says Horton. “The lasers weld a smaller coolant tube to the main tube, which contains helium at -237° when it is fitted at CERN. When completed, the parts are ultra-precision leak checked, using a vacuum and helium, to test the integrity of the weld and the material.”

Caparo Precision Strip Caparo Precision Strip is an amalgam of three renowned strip steel companies bought by Caparo in 2004 – JB&S Lees, Firth Cleveland Steel Strip and Ductile Stourbridge Cold Mills. It is a high value-added, profitable company with a specialist product, processing rolled steel into more durable, valuable steel strip for mainly cutting applications such as saw blades, band saws, hole saws and industrial blades. “As a crude summary, we take a hot rolled, commoditised steel product and convert into bespoke, highly engineered products for our customers,” says the enthusiastic managing director Eugene Harkins. Each plant has a time-perfected speciality, in the case of JB&S Lees – which trades as the Lees brand, under Caparo, in the US where the legacy brand is strong – it is ‘product cutting’. Grades of strip can be simplified into five main types, distinguished by their properties and end-use; MCBS, Mild

The Paul Family – a contribution to British industry Lord Paul of Marylebone and the City of Westminster came to the UK in 1966 to find medical treatment for his daughter Ambika. He remained in England after she died and, he says, everything he has created in Caparo is a dedication to her memory. He started the company in 1968 as Natural Gas Tubes with a loan of £5,000. Since then the business has grown gradually and, at times, rapidly, through launching new companies and acquisition. Lord Paul was educated at Forman Christian College in Lahore and later obtained a master’s degree in mechanical engineering from the Massachusetts Institute of Technology, where his son Angad also studied. Lord Paul’s other sons Akash and Ambar are Caparo company directors while sister Anjli, also a Caparo director is closely involved with the newest venture, Caparo Medical Products. The Paul family established the Caparo Innovation Centre with the University of Wolverhampton in 2003, with the objective of turning innovative product ideas into business realities. The Paul family describe themselves as “100% English and 100% Indian”. With 2,500 UK employees, Angad says Caparo is committed to UK manufacturing as one important component of a global business strategy that has seen Caparo expand into the US, Poland, Dubai, Mexico, India and China.

strip, carbon strip, H&T, and the more advanced and valuable bimetal. This is an alloy steel backing strip welded to a high speed steel (HSS) edge wire, which together produces strip typically used for high performance band saw blades. In China – home of Precision Strip’s biggest customer – saw and blade manufacturers have skipped the lower grades and demand bimetal exclusively. Elsewhere, including the US, customers are set up for both bimetal and the well known ‘pink label’ grade products. Precision Strip’s vale proposition is that it makes product with very little finishing required. “For example, a hand saw blade is heat treated and a finish polish applied to it,” says Harkins. The customer just has to stamp it, tooth it and stick a handle on it – no further processing or finishing needed. It’s very highly engineered.” Caparo was attracted to this added engineering value that JB&S Lees was putting in, taking the steel outside the commodity sphere. In terms of investment, in 2008 Precision Strip moved from a conventional welding process to a laser welder machine for bimetal production. This produces higher weld integrity at higher speed (see page 149). All inspection is now conducted at every stage on the reconfigured line. “Using our in-house NDT inspection, we were screening out defects that would otherwise have gone to the customer,” says Harkins. “Stage inspection through the line is achieving a higher level of defect detection, and rejection count is reduced.”

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Excellence in

execution

TM hears how Mars Drinks is continually adapting its manufacturing operations in order to maximise its productivity and performance in an ever more demanding business landscape.

David

Scott, drinks and manufacturing director, talks about how his team has embraced the company’s challenge of continuous improvement. “Manufacturing is at the core of the Mars Drinks business” he explains. “We’ve had a factory presence in Basingstoke since the 1970s, so we have a real wealth of manufacturing experience. The people here are dedicated to delivering solutions across all aspects of our operations, and we’re really proud of some of the innovative ways we’ve been able to adapt our manufacturing approaches to meet business challenges.” In the current economic and social climate, these challenges are manifold. The entire Mars Drinks team has

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been working towards maintaining and developing the quality for which Mars is known worldwide while continuing to operate sustainably – and doing all this against an economic background that demands cost efficiencies. The manufacturing team in particular has played a key role in meeting all these challenges.

Cost efficiencies As smaller businesses close and working hours are reduced to help companies meet financial constraints, the demand for office drinks in the UK has declined, creating pressure on sales income. The increasing cost of coffee and polystyrene – core manufacturing ingredients for Mars Drinks – has simultaneously created manufacturing cost pressures. To combat the effects of this financial squeeze, the manufacturing team was tasked with driving big improvements in manufacturing unit conversion costs (MCCs). “A key Mars Drinks business ethic is ‘no department is a silo’,” says Scott. With that in mind the manufacturing team approached the finance department to help them. “Inviting a finance representative to work full-time on the manufacturing shop floor and ensuring that all manufacturing managers received financial training has helped all of us to understand where we can realistically make cost savings, and the part we can each play to achieve them.” “Each member of the team shares in the planning of any new initiative, which guarantees a high level of engagement,” explains Scott. “You have to take people with you on the journey. By being more open and engaged, the team is more motivated and the business gets a better solution: everyone wins.”

Food and Drink Mars Drinks

Examples of manufacturing initiatives include working with employees to create more flexible working patterns to better match factory capacity with demand; driving down material waste by chasing down any overspend in this area; maximising waste stream recovery for every waste classification; and finding creative ways to reduce operational engineering spend. With these and other initiatives, the team has already reduced MCCs by 15%.

Sustainable business ‘Excellence in execution’ is a foundation principle embedded in the manufacturing process at Mars Drinks. The manufacturing team is continuously balancing quality, cost and delivery (QCD) with safety, engagement and sustainability (SES). The initials QCD and SES are displayed all around the factory as a reminder of their importance. “Sustainable business practices are an essential part of providing value to customers,” says Scott. “Even in times of recession, it is still possible to be successful by keeping costs low and quality high – and maintaining a spotless environmental pedigree is a core part of this.” Reflecting this commitment to sustainability, Mars Drinks has recently reduced the amount of production waste sent to landfill by its drinks factories in Basingstoke from 600 tons per year to zero. Over the last three years the factories, which manufacture KLIX drinks vending machines as well as KLIX and FLAVIA drinks products, have been reviewing each stage of their manufacturing process to find ways to reduce waste. Mars Drinks looked at each step of its manufacturing process to find ways of either reusing or recycling materials – from the refurbishment of the machines to baling its cardboard for re-sale. The company also uses the Waste To Energy (WTE) process, generating electricity from incinerating waste and sending it back into the national grid for future use. Through WTE Mars Drinks saves enough electricity every year to power at least 30 homes.

Quality was, and still is, the foundation of Mars Drinks’ success. “Our goal,” says Scott, “is quality in everything we set out to achieve: the products we make, the services we provide and the people who make up the Mars Drinks team.” As part of the company’s drive towards achieving better quality, the Mars Drinks quality management system is audited against ISO2001, while its Environmental Management System Certificate is audited against ISO 14001. However, the company has also set its own internal standards that are far more demanding than either the legal or ISO requirements. To help the company achieve these standards, the manufacturing management team looked at the core areas that affect the standards, allocating tasks and responsibilities through discussions within the team. To help focus and motivate team members, the management team created a mindmap that shows how each individual’s focus helps to meet the team’s goals. “A good example of this is downtime,” explains Scott. “For the last three years, the manufacturing team has been focusing on reducing technical downtime. If a problem is encountered, such as raw materials not being delivered on time or not being of the correct quality, an abnormality report

About Mars Drinks Mars Drinks is a key business unit of the internationally respected and family owned company, Mars Inc. The organisation delivers a fantastic range of great tasting drinks to workplaces all over the world via its two industry leading brands – FLAVIA and KLIX. (statement submitted by Mars Drinks)

A question of quality Quality is one of the Mars Drinks Five Principles: a defining characteristic of the company and everything it does.

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Ripley Engineering Ltd Ripley Engineering has a proud tradition of engineering and operational excellence stretching right back to 1962. Our mission is simple: to always exceed the expectations of our customers by providing the very best quality of goods and services.

ur two side-by-side Basingstoke based factories house a large array of modern, efficient and expertly run production machinery. Combined with highly skilled and experienced engineers and operators, this allows us to offer both a top quality manufacturing service, and invaluable technical assistance. Our wealth of experience extends to areas including vending machine cabinets, medical and biological control cabinets, microwave chassis, equipment racks and panels, electrical/electronic equipment enclosures, and a wide range of general sheet metal components and fabrications.

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Our in-house processes include laser cutting, punch pressing, skilled & robotic bending, skilled & robotic spot welding, arc welding, inserting, cleaning and graining, powder coating and electro-mechanical assembly. We operate a capacious, selfcontained and high quality surface coating facility that can be used by our customers as a service in its own right, or as part of our extensive sheet metal fabrication service. Our portfolio now also includes a recently introduced fast-track laser cutting service, allowing customers to take special advantage of our renowned

Radan system and three modern and efficient laser cutting machines. The company operates a quality system accredited to ISO9001:2008. We always warmly welcome visits from prospective and existing customers.

Published in association with: Ripley Engineering Ltd Tel: 01256 473940 Email: service@ripley-eng.co.uk Web: www.ripley-eng.co.uk

Food and Drink Mars Drinks

is raised for that shift to investigate.” The Mars Drinks approach is to conduct Five Why analysis – asking questions to identify the route cause in order to remove the problem and ensure that it does not occur again. A dedicated space - the so-called ‘PRIMP’ room - provides a focus area for these investigations. It is a type of incident room, with magnetic sheets lining the walls, enabling action lists and planning documents to be displayed. “Since adopting this approach,” says Scott, “we’ve seen a considerable reduction in technical downtime, which is particularly important in an environment that operates twenty four hours a day, seven days a week.”

Continuous improvement Twelve years ago, Mars Drinks invested in a large amount of new equipment, marking considerable expansion of its FLAVIA brand. Since then, the factory has been on a journey to standardise its processes and equipment – the start of its continuous improvement programme.

“The team had been achieving 85% overall equipment effectiveness,” explains Scott, “but we felt that we could improve on this.” Scott and his team identified staff attitudes as key to implementing a successful continuous improvement programme. So, over the last year, a team of five staff – the continuous improvement team – has focused on changing the perception of how people view continuous improvement, aiming to achieve a 100% effectiveness rate. The team runs continuous improvement events for everyone linked to the manufacturing process. These involve taking a list of activities and encouraging fresh ideas for tackling challenges in these areas. Whoever has an idea sees it through with the support of a ‘champion’ from the continuous improvement team. “We’ve seen huge improvements in all aspects of our manufacturing processes over the last twenty-five years,” concludes Scott. “I believe we are unique in the way we approach the motivation and engagement of our people. Everyone actually sees the role they are playing in terms of helping the company achieve its goals – that’s good news for individuals and the company.” “Mars Drinks has an outstanding track record in manufacturing, but we’re not content with that. We keep having new ideas for ways to improve and there are plenty of people keen to play their part.” Mars Drinks will certainly continue to generate new ideas and innovative practices, and with manufacturing core to the business, it is sure to be playing a leading role in the company’s continuing success.

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FFEI’s expertise is used to develop a number of innovative products, from scanning systems for the medical market to industrial inkjet Caslon

Going to Product diversification, investment in innovation and communication with suppliers made FFEI a leader in the digital imaging market. Roberto Priolo investigates.

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When

John Mortimer talks about his company, the word “fantastic” comes up quite a lot. He has good reasons to be content. FFEI, the company he works for as operations director, has had its strongest first six months of the year in the last decade. A designer and manufacturer of digital imaging products and technologies, FFEI has 170 employees, a £20m turnover and a full order book. In 2008, the company spent £2.1m on new facilities and kept investing in its workforce, coming out of the recession stronger than ever. “We lost money like everybody else, but we didn’t lose sight of our goals. We believed in our technology and pushed on. The fact that we exported a lot also helped us when times were tough,” Mortimer says. FFEI exports to 65 countries, with 25% of revenue coming from China alone. Its ability to choose the right partners (it doesn’t directly take its products to market), inside and outside the UK, has proved pivotal to making the company such an important presence in the market of

Digital imaging FFEI

CTP, inkjet, life science, workflow software and technical support and spares. “They are like small businesses within the business. We created them to be able to track our progress,” Mortimer explains. Being extremely diversified requires a clear and wellorganised approach. FFEI manufactures products ranging from a scanning system that can magnify the cell 40 times (for the life science unit) to Caslon, an industrial inkjet solution that can print 25 metres of high quality digital images per minute (the production of this item has doubled this year and the order book is full till next spring). While FFEI’s CTP technology is a mature business unit whose products have been in the market for a long time, life science and inkjet are newer units within the company that are characterised by a very aggressive approach to market (life science was four times as strong this year as the company thought it would be). They represent FFEI’s longterm investment and vision for growth. The range of computer to plate products, which generate 42% of revenues, was the well-proven base through which FFEI was able to keep strong even when facing delays with the inkjet and life science technologies when the company’s R&D centre was devastated by the explosion of the Buncefield depot in 2005.

The internal relationships that are built through all areas of the business are critical for the development of our products John Mortimer, Operations Director, FFEI

New facility, new business

image digitalisation, management and reproduction. For CTP (computer to plate) technologies, for example, FFEI partners with Fujifilm. It also gained the number one market share in both China and India, partnering with Founder and TechNova respectively. To understand how the business achieved this level of success, it is important to analyse its two main growth strategies. Firstly, extending the life of products and leaning out processes to keep costs down and enter new markets such as China and India and secondly, investing in new technologies for longterm markets (like micro scanning and industrial inkjet applications). To better manage work, FFEI separated into five business units:

“We invested in the new facility and in the diverse technology we needed for our very different manufacturing environments,” says Mortimer. The new facility, Graphics House, is still located in Hemel Hempstead and the company relocated to the new site in December 2008. The move opened up an opportunity to introduce new thoughts and ideas to renew the way the products were conceived and the business was run. In early 2009, the business achieved ISO 9001, ISO 14001 and ISO 13485 accreditations (the latter being related to the medical market, an accreditation necessary to supply the micro scanning machines). Many of the employees have been working with FFEI for many years, allowing it to maintain a certain amount of core knowledge and retain business continuity even with the loss of the R&D department in 2005. New team members were also brought in over the last two years. FFEI boasts over 60 years of experience in the graphic arts (the original company, Crosfield Electronics, was started in 1947). This, together with a dedicated team and a well-devised working system, creates ideal conditions for the business to thrive in a competitive market. “The team we have here to bring the technology through from R&D into manufacturing are real innovators in their field.

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The internal relationships that are built through all areas of the business are critical for the development of our products,” Mortimer says.

The business is very diverse, that’s why it is so healthy: people here learn every day John Mortimer, Operations Director, FFEI

Working with suppliers To revise its performance and save money FFEI decided, in February this year, to send a survey to its main suppliers. Mortimer explains, “Managing materials is key, especially in a moment of economic uncertainty, because that is where a lot of the money is absorbed. The goal of the survey was to see what we could do to improve internally and to learn how to manage the expectations of our suppliers and customers by asking our suppliers what it is like to do business with us.”

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The surveys came back, and the data was analysed. In April, 50 representatives of FFEI’s top tier suppliers were invited to the factory for a full day. Mortimer describes the organisation of the day and its importance, “The day was designed to establish a clear point of contact that aligned our supplier base with our strategy for the next three years. We also understood the untapped potential that our suppliers offered and held workshops that generated more than 200 ideas for ‘easy to do business’ policies and procedures for future material management cycles.” FFEI also focused on in-house material management, asking its business project manager, Alastair Ferguson, to produce an inventory data pack that is reviewed month after month to make sure everybody is aware of their developing responsabilities. These measures have saved the company almost £500,000 worth of materials. Including the workforce and the ideas of everybody contributing to the organisation is evidently an important part of FFEI’s approach to running the business. Recently, for example, everybody (including Mortimer) took part in a relaying and painting weekend at the factory. Measurements are made on a regular basis to keep the plant efficient: every unit’s performance is measured against targets every month, while key performance indicators (including labour efficiency trackers, lost time, rework and overtime) are managed weekly. “We don’t measure for the sake of measuring, but only to add value,” Mortimer says. Other measurements include Production Order control, the tracking of scrap material and

Digital imaging FFEI

Innovation and communication with the workforce are some of the companies main features

FFEI at a glance Location

Hemel Hempstead, Hertfordshire

Sector

Digital imaging

Employees on site

170

Turnover

£20m

Key Products

CTP technology, micro scanning systems for the medical market, industrial inkjet, workflow softwares

Productivity metrics

Labour efficiency, lost time, overtime, rework, production order control, waste.

non conforming material (NCM) and On Time Delivery (OTD). “We have installations every month and installation reports are given to the guys here once a week in what we call a Q-UP meeting. We stop manufacturing across the facility, we have customer services, engineering, quality and production all together and we talk about the impact that we could be having on customer satisfaction and review the latest issues and improvements.”

Training and lean Skills are an important element to FFEI’s success story. The company

invests a lot in training, up-skilling and helping its workforce perform to higher standards (through both an in-house training centre and external support). As a result of government-funded activity with a group called Penmark, 12 operations based candidates are looking at business improvement training. There is also provision for leadership training, NVQ qualifications, CMI management training, health and safety training (especially in the manufacturing environment), an induction programme and Department of Transport training to name just a few of the up-skilling and professional development opportunies available to employees. To achieve growth and efficiency, FFEI has also built up lean understanding. In September 2009, the engineering team put together the ‘Lean Toolbox’, that was delivered to all operations teams in the business. This guide includes

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Digital imaging FFEI

FFEI continuously invests in innovation, using R&D to create high quality technology

information on how to run the facility efficiently and explains the reasoning behind layout changes, process mapping, line side material storage and team involvement. FFEI’s business strategy is based on 3-year planning, always keeping in mind the 4C model: customer (satisfaction), cash (management), certainty (of business strategy), capability (of the company). Performance in

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relation to these four principles is reviewed monthly at executive level to ensure targets are met and that teams are focused on the key issues, while managing director Andy Cook also provides quarterly updates to compound buy-in and integrity in the system. The company has proved strong on the sustainability front as well. The business, that is also considering turning to photo-voltaic generation, has far exceeded its corporate objective of 10% annual saving in its carbon footprint by achieving approximately 20%. Reducing lighting and heating, monitoring waste and switching off unused items were the simple means by which this result was achieved, together with the advice and guidance the company sought from government bodies. From many perspectives, from design to sustainability, to production and lean, FFEI’s story is one of endless reinvention, dedication and focus on always offering the best products and service to customers. “It took a lot of work and determination, but we are in a fantastic place today. The business is very diverse, that’s why it is so healthy: people here learn every day,” concludes Mortimer. Strategic partnering with ‘Blue Chip’ companies, investment on skills and innovation, attention to quality and a rigorous approach to policy are fundamental elements to the success of FFEI. The company has proved fully committed to “tapping into the potential” – of its workforce, facility layout and suppliers.

Fastening systems Alcoa Fastening Systems UK

Getting markets a grip on new

In the West Midlands a company has developed a product that will save hundreds of thousands of hours on fastening structures like panels to frames, for the energy generation and construction industries. Edward Machin meets Alcoa Fastening Systems UK to talk company-wide staff training and global performance systems, and gets to grips with the unique BobTail®.

Manufacturers

up and down the land boast about the revolutionary, one-of-akind nature of their designs and products. But talk can be cheap. For Alcoa Fastening Systems UK (AFS) — a subsidiary of Alcoa Inc, the world’s third largest producer of aluminum — however, the current mood is that of a company with legitimate reason to wax lyrical. The Telfordbased manufacturer of fasteners, lockbolts, blind rivets and installation tools may just have a sector-defining product on its hands. Launched to overcome the inherent weaknesses of standard lockbolts, the BobTail fastening system (see boxout) is designed without a traditional pin-tail, delivering the elixir that Alcoa’s industry has long sought: zero wastage. Stefan Biela, the company’s manufacturing manager, takes up the story. “Essentially, fasteners designed with a nut and bolt feature require periodic retightening. With the BobTail you do it once only — a process that takes two seconds maximum, with no waste material whatsoever,” he says. The BobTail is much quicker to apply and fasten than a conventional thread fastener, using the special applicator gun in an operation that takes seconds. “When you’re talking about solar fields [concentrated solar power, or CSP], which may require hundreds of thousands of these mirror devices, we’re saving the maintenance team a lot of time.”

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M&P ENGINEERING (Midlands) Ltd. Unit C5 Stafford Park 11 Telford Shropshire TF3 3AY

Telephone:

01952 201174

Fax:

01952 210072

Email:

sales@m-and-p-engineering.co.uk

Web: www.m-and-p-engineering.co.uk

ISO 9001:2008 accredited provider of quality engineered steel fabrications, machining, sheet metal processing solutions and allied development, project management and processing services. We offer a wide range of fabrication facilities and services and very much look forward to discussing your needs and requirements with you, be they a need for a single bespoke or specialised product which we are happy to help you devise and design if required, or small to large batch production work. With a wide range of diversity from the humble stillage, platforms, safety guards etc. right up to special purpose machinery and plant manufacture and design to a whole host of diverse industries. In house and at our disposal we have a very extensive range of machinery and skills, all of which are all adaptable to fulfil your requirements. In maintaining direct control of all steps in the production process from design, through development and finally through production to delivery, the facilities and services we are able to reliably offer are enviable within the industry. For a detailed look at the services we can provide and an overview of some of the products weâ&#x20AC;&#x2122;ve manufactured in the past, please take a look at our new web site.

M&P ENGINEERING (Midlands) Ltd.

The company was formed by the two present Directors, Paul Hodnett and Mark Buttery in 2001. Having worked in the industry for some considerable length of time, it was clear that there was a gap in the fabrication market that could be filled by offering the flexibility of the smaller company with the professionalism, quality of presentation and eye for details offered by the larger companies without the normally associated high prices. We pride ourselves on being very flexible in the products and services we offer, with the customer always leading the way. If itâ&#x20AC;&#x2122;s a simple welded joint, machined part, pressing, small fabrication or even a much larger fabrication, development of special purpose machinery or time specific contract supply of goods, or services, these are all well within our capabilities. A further range of professional services we offer are relationship based services. We will work with our customers as part of the development process and help them to understand and come to a solution to their needs by bringing to the table many years of experience in the industry in formulating and providing engineering solutions. We will happily provide guidance and inspiration to solving your engineering and production problems as part of a development package.

Having initially started our relationship with Alcoa Fastening Systems, through a series of small projects, it quickly became apparent that developing a relationship with Alcoa would be fruitful and productive for us all. Alcoa over many years with us, has proven to be a model customer, constantly driving to improve their production facilities, methods and practices to bring about the most efficient, productive and as importantly, safe and environmentally conscious method of working. Weâ&#x20AC;&#x2122;ve had the pleasure of building this relationship and working very closely with the many departments and teams within Alcoa Fastening Systems to help drive them forward through their constant evolution and development. Over the years Alcoa have become a very important part in our business and hopefully we have in their too.

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Fastening systems Alcoa Fastening Systems UK

With a single order of 300,000 devices being installed by a customer in mid-November, those at AFS are understandably energised by their new discovery. While not designed with solar power technology in mind, the company is registering interest in markets well beyond the BobTail’s predicted sphere of influence. “I’ve been told that you can see the solar farms from space, and we’ve got a fundamental component of this burgeoning technology,” says Alcoa Business System manager, Jonathan Griffiths. Purchasing both the raw materials and from within the UK and further afield, not only is the wider UK supply chain benefiting from a bona fide success story, but Telford — not immediately considered as a manufacturing hub — and the local community find themselves benefiting from AFS’s success, too. “If BobTail was based on nuts and bolts then, yes, the work might go to China,” adds Biela. “But we’ve got the technology, techniques and skills to sell — the result of which means that this industry-leading product is, and will continue to be, manufactured in the UK.”

Getting down to business improvement techniques “The first thing many companies do during recessionary times is cut back on staff training – we did the opposite,” says Griffiths. In 2009, co-funded with Telford College of Arts & Technology, AFS undertook a programme of NVQs for every employee on site: Level 2 in both Performing Manufacturing Operations and Warehousing, and Level 3 Business Improvement Techniques (BIT) for those in management roles. “Sixteen people finished the NVQ BIT programme in June, with another batch currently going through the course,” explains Biela. “All activities and learning are conducted on the job. It’s similar to a doctor’s surgery, where the assessors come to us once a week and staff update them as to how the previous week has gone.” Unlike standard NVQs, the Business Improvement Techniques qualification is considered degree-level study, centering on the methods and tools of lean manufacturing, based on the Toyota Production System. With all trainee engineers, deputies and cell managers being NVQ Level

BobTail® – The next step in LockBolt evolution Benefits: No pin-tail or pin-break Reduced material wastage Low installation noise Increased corrosion resistance Newly designed, compact, semiautomatic tooling Fastener installs in only 2 seconds, up to twice as fast as any other large diameter LockBolt on the market Consistent, high quality installation - 25 years experience or a novice makes no difference to the quality of the installation Smooth, shock free installation sequence – eliminates jolts to the operators arms and hands Unique helical lock groove (12 - 20mm diameter only) Holds pin and collar in place prior to installation Combined with all the benefits of using a Huck LockBolt Permanent, mechanically locked fastener: Installation process automatically provides fastener values No torque or re-torque required Unlike conventional nuts and bolts, they will not work loose, even during extreme vibration Easy visual inspection ensures correct installation 3-accredited, Biela and his cohorts are looking to roll out Level 3 qualifications throughout the manufacturing side of the business. Unlike the other NVQs, which are necessarily more focused on assessing whether the person does his or her job to a national standard, the NVQ BIT has a stronger focus on delivering back to the business, be that in terms of cost, quality, time, or health and safety metrics. Jonathan Griffiths says this focus on continuous improvement is a particularly pleasing aspect of AFS’s drive to combat what have been challenging times for British manufacturing. “We regularly receive visits from both management and engineers in the US, France and further afield, because the staff development work we do is looked upon favourably across the group,” he says. “In the US, for example, there isn’t any form of national qualification like the NVQ. They’d love to take the BIT programme and implement it in their plants, so we’re very much an exemplar in that respect.”

Lean on me Central to maintaining AFS UK’s global reputation within Alcoa is the Alcoa Business System (ABS), a group-wide performance standard. The integrated set of systems, tools and language is organised around three core standards: (i) make to use (ii) eliminate waste, and (iii) people are the lynchpin in the system. “We don’t always want to reference Toyota,” says Biela, “but every one of their global plants works along a single system. Where I see the strength for our location is that we very much attack the business in a

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Fastening systems Alcoa Fastening Systems UK

Alcoa Fastening Systems at a glance At a glance

Formed with the combined strengths of Huck and Fairchild Fasteners, Alcoa Fastening Systems serves the global aerospace, automotive and commercial transportation markets.

Products

Fasteners/lockbolts/blind rivets/installation tools

Location

Telford, Shropshire – other AFS plants in Australia, China, France, Germany, Hungary, Mexico, Morocco and the US

Annual turnover

£19m

Employees

Contact

www.alcoa.com/fastening_systems/en/home.asp

similar way. I mean that there is a huge difference between ordinary production and the ABS, the latter being focused on a multi-departmental approach to the way our business runs. It’s a complete shift towards lean manufacturing philosophies, in other words. “We conduct regular continuous improvement activities so as to achieve this holistic approach to manufacturing. Last week, we undertook an exercise with distribution and customer services around how to improve information flow. With ABS, things go from very production-heavy changes to the softer side of how an organisation runs. I’ve lost count of the times I hear about business failings due to inter-departmental communication blockages; for that reason ABS is heavily focused on people.” Because Alcoa sites are attuned to the benefits of the organisational approach, the AFS Global head office in Waco, Texas continuously benchmarks each business unit’s performance. “When we report to Waco, detailed discussion around our site’s ABS figures is expected. If it isn’t raised the inference is that we don’t consider it important,” says Biela. “A lot of companies that ‘do’ lean give it twenty minutes here and there. At AFS it’s fundamental to the fabric of our operations: health and safety; continuous improvement; quality – every single day. Yes, the acronyms and buzzwords have their place, but the big principles remain so much more important.” At the operations level, having recently recorded November’s ABS metrics, Griffiths reports an exposure rate of 65% — the percentage of employees on site who have been involved in ABS for any particular month. Measured both internally and by AFS’s external operational excellence audit, Telford was awarded three Best Practice grades on

the last review. These techniques are shared with the wider group. “The company is due another audit later this month, which we can’t wait for,” says Griffiths. “We’re sprinting into 2011, and relish each and every opportunity to both demonstrate and benchmark the advances being undertaken at Telford. To the future, then!” Meanwhile, quite how much the BobTail fastener will revolutionise the fastening applications market remains to be seen. Judging by the size of the single 300,000 unit order last month though, AFS is bullish that the solar energy market and other general engineering applications will take its company even further up the growth curve. Productivity will be essential, however, and the NVQ BIT programme is confronting that question with solutions.

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Food and drink Thorntons

Thorntons

A box of chocolates is emblematic of life’s attainable luxuries - the ideal accompaniment to any celebration, one of the first things that come to mind when making a kind gesture, and of course, a popularised metaphor for life itself. In 1911, Thorntons set out with their core focus to provide customers with what they expect to get from a box of chocolates. This focus has remained the same throughout new innovations and improvements; the only revision was to meet customer’s expectations of a box of chocolates with the name ‘Thorntons’ on it. 166

Now

approaching a century in chocolate making, Thorntons has focussed on keeping their customers happy with the chocolates they know and love, and despite the challenges faced on the high street, they have continued to focus on bringing new and innovative products to the market. David Proctor, Head of Operations at Thorntons Factory in Derby says “we have an incredible brand loyalty from our customers. They tell us what they like and don’t like, and we maintain our standards and make improvements”. Four new limited edition boxes are launched each year alongside the existing ones, and there are between 17-22 chocolate block ranges available at any one time. From boxes and tins

Creative Engineering from CPS Chesapeake Packaging Systems (CPS), formally Field Packaging Systems, is a leading supplier of cartoning machinery. For over 40 years, CPS has supplied a full range of machine systems to the food and confectionery markets and, more recently, to the personal care and pharmaceutical sectors.

PS offers the flexibility of both custommade or proprietary carton and product handling solutions. In support, CPS has supply agreements in place with Arenco (Packovation and Sprinter), Kliklok, Pack Service and Curti to provide a full range of options. CPS also specialises in the design and manufacture of carton forming changeparts including SKA and PCD as well as the supply of fully overhauled second-hand cartoning machinery. All equipment is fully supported by a professional spares and service department. CPS is proud to have supplied Thorntons for over 20 years. Originally supplying its Belper site with SKA glue erectors, size change

tooling and conveyors, CPS has also installed a glue erect and close top-load cartoning line plus six Arenco Texas Gift Box Forming machines at its Somercotes site.

driven adjustable tooling cavity which allows for very quick size change times and economical change parts. The Texas erector is also available as a glue erect machine with glue jetting.

The Texas Gift Box Forming machines are particularly suitable for the confectionery Machine systems to enhance production market. They erect turnover end wall and efficiencyâ&#x20AC;Ś frame wall carton styles with separate Published in association with: lid and base as Chesapeake Packaging Systems well as hinged lid carton formats in Tel: 01635 290514 a vast size range. Email: sales.cps@chesapeakecorp.com The machines Web: www.chesapeakecorp.com/packagingmachinery have a clever and compact motor

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

168

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

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

Food and drink Thorntons

to trays, pouches, and packets, (and now, time for a new advent calendar) each product requires its own special packaging. And with various products on hand for any likely occasion (as well as a personalised design option), their packaging fluctuates from the traditional chocolate boxes of the Classic and Continental ranges to hampers and gift boxes. At 35 years old, Thorntons Continental range is looking better than ever in its new and sophisticated packaging design.

Fresh Approaches to Packaging New and innovative products demand a fresh approach to packaging and design, and this is one of the main points of focus for Thorntons’ innovation. Six years ago Thorntons introduced their first robotic packaging

line at the factory in Derby, investing in a second line last year. “These robots pack around 900 chocolates a minute,” says Proctor. “They automatically sense the chocolate, measure it to make sure it’s the right size, pick it up and place it in the box at the correct orientation.”

These jobs on the shop floor packaging line are comprised of varied and interesting challenges, demanding high levels of responsibility, teamwork, management of highly complex technical equipment, and process of materials Introducing a higher level of accuracy, the robotic packaging line has significantly reduced levels of product wastage, and has encouraged better quality and faster and more efficient productivity all-round. “With this, we give the

169

consumer a better product and become more competitive in the market”, says Proctor.

New Challenges The introduction of the robotic packaging line has encouraged the development of roles within the factory. Before the introduction of Thornton’s first robotic packaging line, every chocolate in their assorted boxes was packaged by hand. “We wanted to increase the skills of the people working on the production lines, leading to higher quality jobs”, says Proctor. “And no longer is the monotonous task of moving hands backwards and forward across the belt and putting chocolate in the box the main responsibility”. Now, “these jobs on the shop floor packaging line are comprised of varied and interesting challenges,” says Proctor, “demanding high levels of responsibility, teamwork skills, management of highly complex technical equipment, and process of materials”. Long gone are the days where an employee would face constant temptation to devour the product as they worked a shift on the packaging line. But still, you can’t get away from the chocolate. “Like the statistic about the ratio of rats in a metropolis, you’re never less than ten metres away from a chocolate!” says Proctor.

Materials The company source their raw materials from every continent in the world (except Antarctica) but their main supplier for packaging is sourced within the UK. Thorntons have a close relationship with International specialist

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packaging supplier Chesapeake, whose facilities in the UK provide them with equipment and packaging materials. Chesapeake is focussed on optimising efficient production and they tailor-make production lines to suit every client. “Running a high volume production line, the automation for packaging is critical, and Chesapeake play a key part in supporting us with that”, says Proctor. “With the introduction of the robotic line there is a whole range of associated automation equipment and materials of which Chesapeake are a provider”.

Lean and Environment Working hard to reduce their impact on the environment across all areas of the factory, “we have a project team in the packaging area looking at reducing the amount of waste created by damaged packaging” says Proctor. And in terms of the packaging itself Thorntons are phasing out environmentally unfriendly plastics while sourcing more recyclable materials from sustainable sources. This is part of their Lean activities scheme implemented throughout the factory. Through project activities

Food and drink Thorntons

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

involving improvements to the Enrobing Line, the Robotics Packaging, and the Flow of Packaging material, they have so far identified over £700,000 of potential savings. With Lean initiatives and their production line efficiency they are reducing their waste, saving money and supporting environmental conservation. The improvements to the packaging line has ensured their place as a dependable premium manufacturer focussed on getting their customers the best deal while supporting the development of their workforce into higher quality roles. For Thorntons, it’s about maintaining their “wow!” factor and prolonging the finest standards at every level of their product. For those in favour of judging books by their cover, it goes without saying that the presented chocolate box has to reflect the excellence of the chocolates within it, and it seems that the boxes branded with the trademark Thorntons emblem on are still getting it right.

Thorntons at a glance Location

Derbyshire

Sector

Food and drink – confectionary

Key Products

Classics, Continental, Truffles, Fudge, Moments

Turnover

£215m

History

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

Contact

www.thorntons.co.uk

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Energy Services Partnership T

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

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

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

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

www.themanufacturer.com December 2010 Vol 13 Issue 12

Supporting Manufacturing

Are bigger companies vital to the success of UK industry?

Fighting for Jobs AND

Safer & Healthier Workplaces

Interview Andrew Churchill

Managing director, JJ Churchill Engineering

Regional focus

Collaboration key to Midlandsâ&#x20AC;&#x2122; revival

Finance

Access to capital roundtable

www.unitetheunion.org

Risk management Special report by Zurich

Tur pag n the fur e for det ther ail s