The Manufacturer Feb edition 2009

in association with KPMG and the Lean Enterprise Research Centre at Cardiff University presents: www.themanufacturer.com February 2009 Vol 12 Issue 1

The Logistics and Supply Chain Report 09 This report will build on the research of our six previous reports to deliver an impartial assessment of the trends, techniques and issues in the international logistics and supply chain business. It endeavours to uncover new thinking in the sector and how the relative importance of key criteria such as fuel costs, time-to-market, inventory and storage capacity, customer service and ERP & SCM software is changing.

100%

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The report’s findings are compiled from both quantitative and qualitative primary and secondary research, combining analysis from supply chain professionals, case studies, interviews and existing literature.

The report will cover: Global supply chain Lean supply chain and logistics Outsourcing Risk management Transport

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40

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People and skills

Managing redundancy

Strategy - Electronics

A case for keeping production at home Expert academic partner The Manufacturer is teaming up with experts from the Lean Enterprise Research Centre at Cardiff University in writing the report, reinforcing its accuracy and credibility. The Centre has strong links to Cardiff University’s award-winning Manufacturing Engineering Centre. All experts are commercially independent of the report.

Sustainable manufacturing

As a global recession puts the squeeze on international supply chains, up-to-date commentary and analysis of global supply chain participants in the UK is an essential reference.

Top jobs in manufacturing

The Carbon Trust Standard

Appointments

For more information about unique advertising and sponsorship opportunities in this special report, please contact David Alstin, business development director on, Tel: 01603 671307 Mobile: 07918 125264 or email: d.alstin@sayonemedia.com.

“KPMG is pleased to be associated with the 2009 Logistics and Supply Chain Report from The Manufacturer.

We’re confident that this report will provide you with an in-depth look at how your peers are focusing on and managing every aspect of their supply chain—from planning and forecasting, to current and planned initiatives, and beyond. Ultimately, this report should prove extremely beneficial when looking inwards at your own supply chain to succeed in these turbulent times.”

www.themanufacturer.com February 2009 Vol 12 Issue 1

NOTE: The Manufacturer is also publishing several other special, manufacturing sector-specific reports in 2009 including: Sustainable Manufacturing, IT in Manufacturing, and the Annual Manufacturing Report.

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Editor’s comment

I am delighted to welcome you to the February issue of The Manufacturer January was a brutal month for manufacturing. Rarely has the sector received so many headlines, mostly for the wrong reasons. The car industry and its supply chains are being hit particularly hard, with heavy redundancies from many firms. Lord Mandelson’s rescue package of £2.3bn in loan guarantees, announced on January 27, will be welcome – but will it be enough? A focus on green vehicles and retraining for the skills to produce such cars in the future is a key feature of the package – we will be closely monitoring the application of this initiative.

The gloom is not confined to the car industry. Big, household manufacturing names in other sectors – Atkins, Bernard Matthews, Cookson, Corus, Dell, JCB, Vion, Waterford Wedgwood – all announced big redundancies last month, with Glaxo Smithkline mooting many job cuts soon. While national champions grab the headlines, thousands of small companies have laid off employees this year, the sum of which surpasses the blue chip firm losses. The Government reacted with a three pronged support package to help small and medium-sized businesses with different debt/equity ratios, and different finance requirements, of up to £500m turnover. The schemes were inevitably met with cries of ‘too little, too late’ from the Conservative party. Our lead story on page 18 investigates the efficacy of these schemes and we report on redundancy management on page 36.

Despite the punishing business conditions, manufacturers are resilient. Many, as we hear from several quarters, are well placed to withstand a recession. This month we speak to an electronics manufacturer resisting the allure of offshoring to low cost economies; a market leading maker of offshore wheels, which has seen demonstrable benefits from a lean initiative modified from the car industry and a laser manufacturer whose research has lit up the flat panel display market – British companies prospering in a recession. We also look at the costs and benefits of adopting the Carbon Trust Standard and carbon labelling.

I would like to thank Steve Radley, chief economist at EEF, for writing our economics column, and we hope his insight will be a regular feature of the magazine. I welcome your experiences in these challenging times. Please contact The Manufacturer with your views on government support, bank credit, the need for more training and skills in manufacturing and more.

Will Stirling – Editor

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1

News and features 4 News

News in brief

11 Just Jones

The three ‘Ps’ of lean action

Lean expert Prof. Daniel Jones explains why it’s all about problems, processes and plans

13 Economics

Batten down the hatches

Insights into the manufacturing business environment in 2009 by Steve Radley, chief economist at EEF

14 Interview

Driving force – Hilary Devey

Becky Done talks to Hilary Devey, founder and owner of pallet distribution company Pall-Ex, and subject of television documentary The Secret Millionaire

18 Lead story

Give manufacturers some credit

Credit is essential to replace falling revenues while firms restructure in the recession. What difference are the Government’s loan guarantee schemes making?

22 Leadership and strategy There’s no place like home

Electronics manufacturing ignores the allure of going offshore

26 Design and innovation

Lasers help to get the picture

A laser manufacturer explains how rapid laser patterning is affecting the flat panel display market

32 World class manufacturing Lean revolution

GKN Wheels tells us how the development of their Lean Enterprise has transformed production

36 People, skills and productivity The rough guide to managing redundancy

Lawyers and the EEF identify strategies to plan and manage redundancy fairly and professionally

40 IT in manufacturing Total protection

Protecting IT systems on the plant floor is equally as important as protecting office systems

2

Contents Logistics and supply chain 42

Get IT right – optimising supply chain performance TM discusses one IT option for optimising the management of a supply chain

Sustainable manufacturing 48 Green? Be seen

The benefits and costs of adopting the Carbon Trust Standard and carbon labeling to flag your green credentials

A diary of product development 52 The Evora journey

Lotus’s new Evora reaches the final stages of its VP build and the first ‘production’ car hits the production lines

A diary of a takeover 53

Kanban Sheet Metal – Surviving the recession

In the latest entry of the diary of Wigan manufacturer Kanban Sheet Metal’s takeover, the companies new owners consider how productivity improvements at the firm have bedded in.

Special feature 54

Why best in class beats the single vendor solution Martin Bailey discusses CAM software options

Appointments 86

Latest jobs in manufacturing

Manufacturinginaction Factory of the month Elekta 56 Taking care of business to help treat cancer – Jayne Flannery reports on a Crawley-based company that specialises in equipment for radiosurgery and radiation therapy

Vitamins, Minerals and Supplements –

Seven Seas 67 Suspension equipment – Gripple 73 Automotive – UV Modular 77 Aerospace and defence –

BAE Salmesbury 82

3

Newsinbrief Steel giant Corus has announced it is to cut 2,500 UK jobs and mothball a Welsh factory.

The firm also intends to begin short-time working and will scrap final pension salary schemes for new starters. The company said the measures will improve profitability by £200m. Corus currently employs 42,000 people worldwide, 24,000 of whom are based in the UK. An additional 1,000 redundancies are to be made in the Netherlands.

Members of European Parliament have voted to scrap individuals’ right to opt out of the 48-hour maximum working week.

Gordon Brown wanted to keep the ability to stay flexible but many of his own Labour Euro MPs voted against it. The resolution means the opt-out will be phased out by 2011.

The Design Council has created a new online resource to help businesses discover how design can help them in a downturn. It includes a free practical guide to finding and working with a designer, and case studies covering a host of small and large companies from different sectors who have bucked the recessionary trend through the strategic use of design. This is available at www. designcouncil.org.uk/designinadownturn.

Belgian beer producer InBev has announced it is to close one of the UK’s oldest breweries. The site in Mortlake, London dates back to the 15th century and hosts 182 employees. It will cease to operate from 2010. Stella Artois producer InBev acquired American firm Anheuser-Busch, maker of Budweiser, in the latter stages of last year in a deal valued at $52bn.

Three companies have publicly confirmed that they are pursuing the Shingo Prize, its UK organiser, The Manufacturing Institute, has confirmed. BAE Samlesbury (profiled on page 80), Nortel Telecommunications and Ultra Frame Windows will be attempting to convince the judges they are worthy of the award and The Manufacturer will be following their progress. The Shingo Prize has hit British shores for the first time this year, having been awarded in the US for 20 years.

It promotes use of world-class operational excellence strategies and practices to achieve world-class results in business.

For more info see www.shingoprize.co.uk.

4

Government help for stricken car industry Business Secretary Peter Mandelson has announced details of a long-awaited government support package for UK car manufacturers and suppliers to the automotive industry.

Speaking on behalf of his Department for Business Enterprise and Regulatory Reform (BERR), Lord Mandelson revealed the government will unlock £1.3bn worth of loans from the European investment Bank while guaranteeing a further £1bn worth of loans through its own funds.

In addition, financial support for retraining automotive workers is to rise from £65m to £100m.

Keen to discredit notions of a bail-out, Lord Mandelson said the measures do not entail a “blank cheque” and nor do they amount to “operating subsidies”. He maintained that any action through the scheme will offer taxpayers value for money.

The measures “will provide our leading automotive companies, their workers and suppliers with a significant boost. It will also ensure that the downturn does not derail the investment in innovation and change needed to make Britain a world leader in the development and manufacture of low carbon vehicles.

This is both an economic objective and an environmental imperative,” he summarised.

The announcement provided an uplifting end to what was the bluest of blue Januarys for the UK automotive industry.

Nissan made 1200 redundant from its Sunderland plant early on in the month and were followed closely by Jaguar Land Rover, which in cutting 450 employees also implemented further production breaks and shorttime hours.

Honda began a four-month production sabbatical at its Swindon plant at the end of January. During the period 2,500 of the factory’s employees – roughly two-thirds of the site’s total headcount – will not work.

They will be paid in full for the first two months, dropping to 60 per cent for the rest of the shutdown.

The CBI’s Industrial Trends Survey (see overleaf) found that 90 per cent of automotive plants are currently working below capacity, while the Society of Motor Manufacturers and Traders reported that production for December across all 27 UK-based

manufacturers was 47 per cent down for the month.

Yet there remains evidence of ongoing investment in UK automotive and one such example is the opening of Associated British Port’s new £7 million car-handling facility at the Port of Southampton for taking cars to and from the continent. The site was opened at the beginning of February

by MP Jim Fitzpatrick from the Department of Transport who said the European Vehicle Terminal “will help ensure the port remains a key vehicle ‘hub’ within Europe and continues to serve the British motor manufacturing industry.” The fact that it can store 2,500 cars at a time may be its most pertinent use at this time though, as surplus stock due to huge drops in demand is one of the main driving forces behind recently announced production breaks.

The announcement also received a fair reception among industry insiders.

“This is a long awaited and welcome package which recognises the unique circumstances affecting one of the key sectors of manufacturing,” said EEF chief economist Steve Radley. “It will also provide a degree of certainty for their important supply networks which are also integral to other manufacturing sectors. The next step has to include short term measures to help companies hold on to workers.”

Paul Everitt, chief executive of the SMMT, added: “This is an important announcement that recognises the strategic contribution of the motor industry and follows action in other EU member states, the US and Japan.”

ManufacturingNews Pharma support

Newsinbrief

The pharmaceutical industry becomes the next in line to offer its wounds to the state for ministerial dressing.

Accounting for 67,000 employees in Britain, the pharmaceutical industry contributes around £8bn per year to gross domestic product.

But the UK pharmaceutical industry is under threat from competitors around the world and industry insiders want government help to ensure Britain remains a leading force.

The Association of the British Pharmaceutical Industry (ABPI) took its case to Downing Street at the end of last month, for a meeting with the PM. Dr Richard Barker, Director-General of the ABPI, pointed out that UK scientists have discovered one in five of the world’s top 100 medicines and he highlighted breakthroughs to treat diseases like cancer, Alzheimer’s, obesity and rheumatoid arthritis.

“But the industry in the UK is facing increased competition from other parts of the world and we need to redouble our efforts to stay in the research ‘premier league’,” he said. “There is an opportunity to turn the NHS into a laboratory for healthcare innovation but if that is to happen, the UK Government needs to make the UK a more attractive place to discover medicines, make NICE a champion of innovation and speed up patients’ access to new medicines.”

One initiative to have emerged is the appointment of Alan Johnson and Peter Mandelson to the Ministerial Industry Strategy Group (MISG), with Johnson having been made chairman. Government presence in the group has historically been allocated to junior ministers. MISG will return to government in autumn with its report on the industry and further proposals for action.

Redundancies

New projects for Skills Academy follows six-fold return on investment The National Skills Academy for Manufacturing has enabled £12m worth of benefits from £2m investment in training last year, the organisation has announced.

The Academy’s achievement in progressing the financial fortunes of its manufacturing clientele was accomplished through its new systems-based five-step ‘analyse, prepare, deliver, follow through and evaluate’ Learning Engine – a development that has been two years in the making.

Alongside the new initiative the academy has launched a training supplement website called myskillsacademy. com. The website can be used by employers, employees and trainers to access training and skills material related to their schemes.

The Academy has revealed details of a partnership it has set up with the Warwick Manufacturing Group at the city’s university.

The partnership will circulate the knowledge from WMG’s £72m Premium Automotive Research and Development Programme. This worked with Jaguar Land Rover to help suppliers to premium car manufacturers in the West Midlands develop their skills, products, processes and market understanding to such a level as to be competitive in global markets. Through a focus on skills development, it recently helped to save some £4m in bringing Jaguar’s new XF model to market in a record 29 months.

January 2009 will long be remembered for a jobs cull that has affected almost all sectors of British business. Manufacturing sectors were among the hardest hit in a month when major industrial redundancy announcements mounted up by the day.

Staffordshire-based fine china firm Waterford Wedgwood is among the most high-profile to suffer cuts after it failed to find a buyer. The 250-year-old company is set to lose its 1200 UK and Ireland employees as a buyout has been mooted by a US ‘vulture-fund’ who will reportedly take production to the Far East.

Nissan announced a cut of 1200 from its plant in Sunderland while Jaguar Land Rover shed a further 450 in the Midlands. Digger maker JCB added further woe to the automotive industry and the Staffordshire region with the news that a further 684 will now join 400 from October on its own redundancy list.

The cuts at JCB come after the staff there agreed to go on to short hours in October in a bid to protect their jobs.

And this made the pill even harder to swallow for union official Joe Morgan, representing the staff on behalf of GMB. “Our members have done everything possible, including sharing the misery, to try to avoid further job losses,” he said.

Newcastle Production

– producer of Findus Foods in the UK – called in administrators and a dark cloud lingers over the prospects of its 420 staff. Meanwhile Tulip International, the Danish meat-producing firm responsible for the likes of Danepak, Stagg Chilli and Spam announced it will relocate production away from Merseyside to Lincolnshire and Norfolk, leaving another 300 jobs hanging on a fine thread.

Computer giant Dell is to move production to the low-cost economy of Poland. A workforce of 1900 in Limerick, Ireland, is among almost 8000 dependent on the business in the area for jobs.

Further announced cuts in the manufacturing sector include Bernard Matthews (100), Perkins Engines (450), Vion (820), Atkins (260) and Corus (2,500 – see opposite,) to name but a few.

Overall, the CBI estimates that 48,000 jobs were lost in the manufacturing sector in the fourth quarter of 2008 and fears a further 60,000 will go in the first quarter of 2009.

5

Newsinbrief SME food and drink producers in the East Midlands are being offered the chance to apply for grants of £10,000 to aid innovation in the industry.

The Food and Drink Innovation Network (iNet), funded by the East

Midlands Development Agency, is administering the grants. To qualify, firms must have a maximum of 250 employees and must dedicate a further 50% of their own funds or the equivalent in man hours to a new design project.

Manufacturing Technologies exhibition 2010 (MACH 2010) was launched last month at an event in the Cabinet War Rooms at the Imperial War Museum, Westminster. MACH organiser The Manufacturing Technologies Association (MTA) was keen to highlight the tremendous success of the 2008 MACH show, which saw visitor numbers up 21% on the previous event, bringing total levels to over 27,000. For info, see www.mach2010.com A team at Greenwich University has won a SPARK award, organised by an arm of the Technology Strategy Board, for designing engine parts which can work at over 1000 degrees centigrade. The university partnered with a firm called Oxensis to make sensors which measure things like pressure and temperature and can themselves work while “glowing yellow-hot”. They can be used for aeroplanes, cars and power stations.

The Institution of Mechanical Engineers (IMechE) has extended the entry deadline for its Manufacturing Excellence Awards (MX09). It will now continue to accept participants until mid-February, ahead of the paper-work deadline at the end of the month. There are 12 awards in total. Entry is free and all will receive a bespoke report on their business, independently valued at £20,000, which will include advice on how they can improve.

See www.mxawards.org for details.

6

Boost for apprenticeships Gordon Brown visited RollsRoyce’s aerospace training centre in Derby last month where he unveiled a new £140m apprenticeship expansion programme which will see an extra 35,000 people take up vocational-based qualifications.

As part of his three-day regional tour of the UK, the PM was in the Midlands to announce that the extra apprenticeships phased in over this year and next would bring the total level of participants to above 250,000.

Apprenticeships are vital, he said, so Britain can “train for the future.”

In related news, the Learning and Skills Council has announced the launch of its 2009 Annual Apprenticeship Awards.

Firms that offer apprenticeships are being urged to enter in order to

receive recognition for the work they have put into such schemes and the successes they have enjoyed. There are also awards available for the apprentices themselves.

It is hoped the Awards, now in their sixth year, will provide further illustration of the benefits in using apprentices and will inspire more firms to get involved.

Stocks of single malt running dry as exports surge

Middle class China has seemingly developed a penchant for single-malt whisky, a product synonymous the world over with the bonnie glens of Scotland. So much so that stocks of Scotch more than 12 years old are running low now because production wasn’t stepped up in line with a growing popularity in conventional markets in the 1990s. Now that the Far East is providing a further boom, the distilleries are beginning to run dry.

Sales have risen in the Far East by 75% in the last two years as its growing popularity there, along with a surge in expendable

cash, has coincided with a steady decline in the value of British currency.

John Campbell, distillery manager at Laphroaig on Islay, said: “It is a problem we have had even before the boom in the Far East.

We already ran low on stocks of 10year-old, because we didn’t forecast the growth.”

According to the Aberdeen Press and Journal, Scotch Industry Association bosses say “the industry is spending substantially to help double its production.” Reported estimates suggest the investment figure in distilleries this year to be at around the £500 million mark.

ManufacturingNews CBI figures underline industry’s discontent Uncertainty over what market conditions will bring in 2009, along with a massive plunge in demand, is leading manufacturers to cut jobs, halt production and crop investment, the Confederation of British Industry warned, as it published its quarterly Industrial Trends Survey for January.

The survey revealed a rapid decline in demand over the last three months and respondents believe this will intensify further still in the coming quarter.

Fifty-six per cent of companies reported a fall in new orders from October to December while only 14% said orders had gone up. The balance of -43% is the lowest since July 1991.

The balance last July was -3%, indicating just how steep the downward trajectory has been for UK manufacturing.

Domestic orders were the main contributor to the drop in order books, though a weak sterling failed to stave off a fall in the export market and it suffered too.

Overall, the CBI predicts there was a 4.3% drop in productivity from the manufacturing sector over quarter four of 2008 and that it will fall again by 4.5% over the next three months.

Ian McCafferty, the CBI’s chief economic advisor, said: “The survey shows that manufacturing in Britain, as elsewhere, is being hit hard by the economic

downturn. Demand for goods in the manufacturing sector has plummeted dramatically in the last three months.

“Sentiment and the outlook for the next three months are also very negative. Most firms expect conditions to get even worse with further falls in orders expected, leading to more job cuts.

Companies unsurprisingly plan to cut back investment sharply over the next year.”

The CBI’s release comes the day after official figures from the ONS revealed that 78,000 people, across all British business, were made redundant in the three months to November.

That brought 2008’s total redundancies up to that point to 101,000. The CBI predicts that the manufacturing sector alone lost 48,000 jobs in quarter four of 2008 and fears a further 60,000 will go in the first quarter of 2009.

When asked by The Manufacturer whether there was now a fear that a significant number of manufacturers could again now leave UK shores in favour of low-cost economies, McCafferty said there was nothing at this point in time to suggest that would be the case.

On the contrary, he said, certain conditions like the weak value of sterling may make it opportune for manufacturers who had previously moved abroad to return production to Britain.

in association with KPMG and the Lean Enterprise Research Centre at Cardiff University presents:

The Logistics and Supply Chain Report 09 For more information please see the back page of the magazine

Newsinbrief The British Safety Council (BSC) is offering its members 100 free examinations leading to the BSC Level 1 Certificate in Health and Safety at Work. Accredited by the Qualifications and Examinations Regulator in the National Qualifications Framework, the BSC Level 1 Certificate formalises health and safety induction training as a nationallyrecognised qualification. As part of the offer, the BSC provides free learning materials and free examinations to provide firms’ basic health and safety-compliant staff with a formal qualification. For more details, visit www.britsafe.org/exams.

The aerospace industry is backing the Innovation, Universities, Science and Skills Committee’s calls for “putting science and engineering at the heart of government policy”. Ian Godden, SBAC Chief Executive, said government must do more to boost the credentials of science and engineering in the public eye because as industries they provide high economic return for the country and will provide the solution to some of the world’s problems, such as climate change.

He also said jobs in science and engineering should be promoted because they provide personally and financially rewarding careers.

The CBI has published a report, ‘Reaching Further: Workforce development through employer-FE college partnership’, commissioned by the Learning and Skills Improvement Service (LSIS), which calls for closer links between employers and further education (FE) colleges to help firms plug future skills gaps, drive up productivity and improve the prospects of British businesses in the face of the global downturn. It warns that training programs need to closely address real skills shortages and not just be initiated for the sake of awarding qualifications.

The Government must focus on training workers for new industries instead of improving their current skill base, says a report released today from the Innovation, Universities, Science and Skills Committee.

Examining Lord Leitch’s 2006 review of skills, the Committee advises a radical overhaul of the government’s Train to Gain vocational training scheme and suggests the programs within it need to be restructured to enable people to move industries in the light of massredundancy in areas such as automotive.

7

Datesfor yourdiary The Manufacturing Institute is holding a series of workshops called Survive and Thrive which are designed to support and help steer manufacturing businesses through the recession. The workshops will take place over four weeks in March – held

Tuesdays in Manchester, Wednesdays in Lancashire and Thursdays in Liverpool. Sessions run from 8am to 11.30. Admission is free. Contact events@ manufacturinginstitute.co.uk for tickets.

The third annual Working Time Forum takes place at the Celtic Manor

Resort in South Wales on the 4th and 5th of March. Organised by Working Time Solutions, the event will cover cost reduction, operational change, and job retention through “working patterns fit for the future”. Speakers include Unilever and Constellation Europe.

Chemical Conference Live 09 takes place at Birmingham City Football Club, on Wednesday March 11.

Organised by REACH, the event aims to help employers and managers with their obligations in relation to protecting workers from workplace chemicals, highlighting the latest issues, regulations and solutions.

Speakers include Lawrence West QC of Henderson Chambers who will be talking on corporate manslaughter and Tim Harris of the UK REACH Compliance team, who will be highlighting the responsibilities on business brought by the new regulations and how they impact on COSHH compliance.

See www.chemicalconferencelive09.com.

Advanced Manufacturing UK, organised by the Manufacturing Advisory Service, is the new title for the series of co-located, hightechnology manufacturing events MEDTEC UK, Mtec, Machine Building & Automation, 3C, Practical Vacuum and IPOT/Vision Technology (VTX) and, for the first time, the new Green Manufacturing Exhibition & Conference. The event takes place on Wednesday 25th and Thursday 26th March 2009 at the National Exhibition Centre, Birmingham.

8

Government to underwrite small business loans The first round of government exploits in the name of fiscal stimulation last month took the form of a series of measures designed to encourage banks to resume commercial lending to small businesses.

The initiative will see the Government foot the bill when companies default on loan payments. It includes three directives as part of the package: • The Government will be guarantor for £20bn worth of short-term loans, using £10bn working capital, for companies with a turnover of up to £500m; • An additional £1.3bn of loans secured for companies with a turnover of up to £25m; and • A capital fund of £75m (£50m from the government, £25m supplied by the banks) for urgently required equity.

Peter Mandelson unveiled the scheme as Secretary of State for Business, Enterprise and Regulatory Reform. “UK companies are the lifeblood of the economy,” he said, “and it is crucial that government acts now to provide real help to support them through the downturn and see them emerge stronger on the other side.

“We know that some companies are struggling to secure the finance they need, not because of any failure in their business but due to the tougher

credit conditions.”

Under the first scheme, the government will make itself accountable for 50% of a business loan to a company while the bank will remain the underwriter for the other half. The second scheme makes loans of up to £1m available to companies over a period up to 10 years and the government will guarantee £1bn of £1.3bn of these.

This second facility includes the capacity to turn overdrafts into loans. “Viable companies” with high levels of existing debt can utilise the third scheme with a slice of the £75m.

EEF, the manufacturers’ organisation, called for the move as part of its six-point plan, revealed beforehand, which advised direct state action to kickstart the economy.

The move elicited a mixed response from the manufacturing community. “The scale of the problem goes well beyond what the government has announced today,” warned the Confederation of British Industry, while George Kessler, speaking of the third initiative, said: “If it’s used as a way of getting around state-aid in the same way as the French do and the Germans do then it will be one of the first cases when the UK government has been imaginative.” “£10bn buys us some time,” said Julian Wilson, director of Matt Black Systems, “we all need to use this time wisely to consolidate and get sustainable – not in the eco sense, but in the survival sense.”

ManufacturingNews Car registration figures for 2008 revealed The extent of the dire new car market here in the UK last year manifested itself as an 11.3% drop on new registrations compared with 2007, the Society of Motor Manufacturers and Traders has revealed.

Overall, 2,131,795 new cars were registered last year compared with 2,404,007 the previous year.

Of the major manufacturers it was the luxury brands that suffered the heaviest losses. Amongst them, Land Rover experienced a 30.04% decline, Aston Martin slipped 28.54% and Porsche, which increased its stake in Volkswagen to over 50%, dropped 30.65%. There were also heavy declines for the likes of Saab (-32.01%), Honda (-20.95%) and Renault (-29.37%).

Economy brands fared better but most still saw less new cars leave the forecourts than in 2007. Nissan, Ford and Fiat were down 0.14, 7.58 and 6.87% down respectively.

In two examples of infrequent growth, new registrations of Volvos were up 10.98%, while Jaguar’s 8.73% improvement provides consolidation for its Indian owner Tata as the latter licks the wounds inflicted by Land Rover.

More new Fords were sold in 2008 than any other brand and its Focus was the top-selling individual model for the tenth year in a row. Ford’s leading market share was 15.13%.

Poor exports increase Britain’s trade deficit The UK’s trade deficit widened by £600m in November from the previous month, bringing it to £4.5bn, the Office for National Statistics reports (ONS).

The figures provide damning evidence contrary to the notion that a weakened pound is industry’s saving grace by fuelling exports. At one per cent cheaper than in October, goods sent abroad fell by £1.2bn, bringing the deficit to £8.3bn. A trade surplus on services of £3.9bn was insufficient to counteract the demise. In terms of volume, exports were seven per cent down, though that figure excludes oil.

The deficit with EU countries was £3bn while with the rest of the world it was £5.3bn. There were falls in exports of oil, chemicals, aircraft, cars, semimanufactured goods other than chemicals, and basic materials. Britain appeared to tighten its purse strings in terms of luxury items; imports of precious stones, oil and consumer goods other than cars all fell.

Lee Hopley, senior economist at the EEF, told The Manufacturer: “If there is no demand, good conditions for sterling can only do so much to help. The economic crisis is a global situation with demand weakened in some places and completely fallen off in others and that’s clearly behind this bad news.”

Manufacturingoutput Manufacturing output suffers further fall The latest manufacturing figures from the Office for National Statistics (ONS) have left analysts fearing that the downturn has accelerated beyond the grim predictions that had already been forecast.

Manufacturing output, the ONS reveals, is now slipping faster than it has since 1981. It fell 2.9% in between October and November last year; far surpassing the 0.7% the City had predicted. That brought output for the year down 7.4%, its biggest decline since 1981.

For the three months to November, the fall in output was 3.3%. The ONS said the worst suffering subsectors in this period were the paper, printing and publishing industries (down 4.9%), the transport equipment industries (down 5.7%) and the basic metals & metal products industries (also down 5.7%).

It said no industry recorded a significant increase.

In a separate release, the ONS has also revealed that producer prices, which analysts had expected to fall, actually stayed the same in December compared with the previous month.

In response to the ONS figures, Ray O’Donoghue, head of UK Manufacturing at Barclays said: “The 3.3% fall in manufacturing output in the three months to November 2008, compared with the previous three months, is the most significant decline we have seen in recent years and reflects a general fall in demand for goods ranging from cars to household goods.

“In particular, companies supplying the automotive sector continue to feel the greater share of the strain as OEMs close their doors for significant periods in order to destock. In addition, the 5.7% drop in basic metals in part reflects the uncertainty created by the rapid decline in steel prices, causing many buyers to defer major steel-based purchases in the short term.”

But current trends do not paint an entirely grey picture, said O’Donoghue. “Despite the difficulties of the current climate, cash rich businesses with well capitalised balance sheets are now beginning to contemplate attractive acquisition opportunities that will add long-term value to their existing businesses.

The falling price in several key manufacturing inputs and a favourable exchange rate for exporters also offers some consolation.”

However, Paul Dales of Capital Economics did not draw on the positives in his summary: “It’s not a good time to be in industry,” he said.

9

Lean Enterprise Academy Thought Leaders in Lean Thinking

Essential texts on Lean Management

Join the free on-line Lean Community at:

www.leanuk.org +44 (0) 1600 890590

The Lean Enterprise Academy The UK non-profit associate of the Lean Global Network, founded by Professor Daniel T Jones

10

JustJones Dan Jones

The three Ps of lean action

If

any of these elements are missing then these actions are unlikely to be successful. Learning how to do all three things well are the core competencies for an effective lean leader. Many managers get stuck on the first — defining the right problems to tackle.

We have gone beyond the wide and shallow deployment of lean tools, or Six Sigma tools for that matter, across the organisation. This is unlikely to be sustained, or to deliver the ability to steal a march on your competitors through superior performance. It is like putting the cart before the horse.

The involvement of everyone in an organisation in continuous improvement activities only really produces results after the key value creating and support activities have been integrated into end-toend processes, not before. Toyota never uses lean or quality tools across the board, only to solve specific operational problems disrupting specific processes from delivering the necessary business results.

Spot the business problems

A good place to begin framing the business problems to be solved, or performance gaps to be closed, is by asking senior managers what keeps them awake at night. This is just the start of a process of digging down to the underlying causes. The common denominators behind, for example, budget deficits, missed access targets and recurring infections in hospitals are patient waiting times, staying unnecessarily long in wards and unnecessary post-treatment visits. Reducing the length of stay is a key problem to be tackled in most hospitals.

Identifying that your suppliers are bleeding because they are now sitting on mountains of unwanted parts as the market for your product crashes, highlights the folly of ignoring that lead times through your supply chains are typically 200 days or more. This is a great opportunity to rethink and compress your supply chains, so they can produce in line with demand, with maybe a 20 day lead time. Business problems will vary and change over time, but invariably a lean perspective leads to compressing time and helps to ensure that every step is performed correctly first time, on time.

If you are to engage your employees in your lean journey you also need to listen to the things that

Although purpose, process and people are the best way to summarise the core concepts of lean, the keys to effective lean actions are: solving the right problems through reconfiguring the right processes by getting agreement on the right plans.

frustrate them most in trying to do their work. Often these are incredibly broken internal support processes, like getting a change made to the IT system, hiring the right people or getting invoices paid. Tackling the most important of these will not only have a positive effect across the organisation but will also signal that senior management is seriously committed to using lean to do the right things.

Address the process, then plan

These business problems are only going to be solved by redesigning the processes that deliver them.

This means their scope must ultimately be end-toend from the initial trigger for action through to the end customer, whether this is an internal customer or the final consumer. Successful process design involves understanding the nature of the demand, identifying the products or tasks to focus on, mapping the process and selecting the right improvement actions to take with that type of process. There are now plenty of examples of every kind of lean process, from call centres and transactions processing, to healthcare, process industries and machining and assembly.

are to engage your employees “Ifinyou your lean journey you also need to listen to the things that frustrate them most in trying to do their work

“

Dan Jones, founder and chairman of the Lean Enterprise Academy Email: dan@leanuk.org

None of this will happen unless somebody, a value stream manager, is given the responsibility for getting all the players to agree on an action plan to close the performance gap. This means addressing and resolving conflicts between departmental goals and the needs of the process, and using visual project management to carry out the plan. But above all it is about using this opportunity to deepen the diagnostic and problem-solving skills of staff at every level by involving them in creating, implementing and reflecting on this ‘3P’ plan to improve this process and solve the business problem at hand.

Have your say at www.themanufacturer.com

11

Economics Batten down the hatches

As

the world economy heads for its most serious recession for close to three decades, now might not seem the most auspicious time to start writing a regular column about manufacturing. But at these times it is vital to have a good understanding of what is happening in manufacturing, what it contributes to the United Kingdom and what needs to be done to make sure that it is well placed to take advantage of the upturn when it comes.

In the coming months, we will look in more detail at different parts of manufacturing, how it has transformed itself and the industries that are set for growth in the future. But this month, we concentrate on the outlook for manufacturing this year and the prospects for recovery.

To get the gloom out of the way, we forecast that manufacturing output will decline by 5% this year, the largest annual decline since 1981. A combination of four factors are making life particularly difficult for manufacturers: the massive destruction of wealth with knock-on effects for household spending and banks’ balance sheets; the deep-rooted problems in the banking industry; the profound loss of confidence among business and consumers, and the fact that this is a global problem. None of the original G7 nations’ economies are forecast to expand this year and most are expected to post significant declines. And the idea that countries like China and India would be able to sustain their rapid growth and compensate for weakness in the rest of the world has proved to be hopelessly misplaced.

Foundation of recovery

But looking beyond the current very difficult situation, we can see the basis of a recovery.

Interest rates are now at historic lows across the developed world and though progress is slow there are some signs of money market rates coming down too as the massive intervention by central banks bears some fruit.

Looking to next year we should start to see some signs of life from the consumer. A massive loss in confidence and fear of job losses are major drags on

consumer spending. However, lower borrowing costs, a real improvement in affordability in the housing market and the boost to disposable incomes from the falling price of petrol, many high street goods and lower home heating bills will combine to stimulate a modest recovery in consumer spending.

The world economy should also come to our rescue.

Very big stimulus packages have now been put in place in most of the world’s biggest economies, particularly in the United States, China and Germany. Not all of this money will prove to be well spent, but the scale of government intervention is immense.

idea that countries like China and “The India would be able to sustain their rapid growth and compensate for weakness in the rest of the world has proved to be hopelessly misplaced

“

Steve Radley, chief economist, EEF

Steve Radley, chief economist at the Engineering Employer’s Federation (EEF), forecasts another tough year for British manufacturing but identifies how weak economic conditions create lower costs that can work in companies’ favour. Credit, meanwhile, must be restored for firms to avoid losses and the Government must support manufacturing to prepare for the upturn.

In the medium term, the cost of paying back all this borrowing will be a big drag on the world economy but we should start to see some benefits later this year. And when world markets start to recover, UK manufacturers will stand to benefit from the gains in the competitiveness generated by the pound’s slide against the euro and the dollar.

Brace yourself for 2009

There is no escaping the fact that this year will be the most difficult for manufacturing and the rest of the economy for close to thirty years. And that we face serious dangers in seeing key companies, which would be viable in normal times, contract significantly or even go under, and the effect of losing skilled workers from manufacturing. This is why it is critical that the government supports manufacturing throughout this year to ensure that there is sufficient capacity to take advantage of the upturn when it comes and to contribute to a more balanced economy.

Have your say at www.themanufacturer.com

13

Driving

force

Before September 2008, Hilary Devey was best known as the tenacious founder and owner of pallet distribution company Pall-Ex. But her persona has assumed a new dimension since her appearance last year on Channel Four’s The Secret Millionaire. Becky Done talks to her about her remarkable success in a maledominated industry and how she sees the future for manufacturing and logistics in the UK

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HILARY DEVEY

was in her late thirties when she single-handedly founded pallet distribution company Pall-Ex. Working around the clock to ensure it would be a success, she pitched relentlessly to hauliers nationwide in an attempt to sign them up to membership of her pallet network. She has since confessed that, at the time, she could not afford to count failure as an option – so she understands better than most the hard work and determination required to build a successful business.

Today, Pall-Ex is well positioned; but the challenge for many firms right now is survival in a crisis.

One of the biggest similarities between manufacturing and the transport industry is that they are both maledominated business environments. The immense success of Pall-Ex in this context has made Devey

Interview Hilary Devey

[which means that] some of the youngsters coming up now will think, ‘she did it, why can’t I?’” Devey would like to see more female entrepreneurs contributing to the changing face of UK plc: “I still don’t think there are enough female entrepreneurs in the country,” she says, “and if you compare it with our European counterparts, the figure is something like, [only] nine per cent of public board positions are filled by women in England, compared to the mandatory 40% in Norway. It comes from the cradle and it’s all down to education — in Norway they don’t differentiate between male and female. It goes right back to education and schools.”

Pall-Ex’s purpose built hub in Leicestershire

Devey takes honours at the everywoman Awards in December 2008

A regular award-winner in business, Devey was named Vitalise Businesswoman of the Year in October 2008.

What did the award mean to her? “I was immensely proud and it was obviously recognition for what I’d done. It was the second time I’ve won it so it was hugely unexpected. Some youngsters [are writing] to me saying, ‘we now feel we can do it because you’ve done it’. It means a lot to me.”

a shining example of business initiative and courage.

But it is clear there is still a lack of comparable role models to encourage young people into her industry.

Does she perceive this as a problem? “Yes, I do,” she says, “but I also believe that the fact it’s a maledominated industry shouldn’t prohibit women from going into it.”

She may be a role model for women, but it’s clear that her influence is not limited to women. Last year, PallEx’s commercial director Tony Mellor was shortlisted for Mentor of the Year at the Women of the Future awards for his work encouraging young women of potential. It is this culture of inspiration at Pall-Ex and beyond that Devey hopes will help to change the public perception of the transport industry.

Why is the line dividing male and female — including what they expect and are expected to do — still drawn so heavily in certain industries, including manufacturing? “I think probably more is expected from females because by human nature we have combined roles as wives, mothers and daughters, etc — so I think therefore we need to be more tenacious and make more sacrifices.

But hopefully, people like myself who are working in totally male-dominated environments are role models

Her appearance last year on The Secret Millionaire, Channel Four’s hit show featuring millionaire entrepreneurs going undercover to help disadvantaged communities, will have gone some way towards achieving that. But the show also revealed much about her personal life, including her troubled relationship with her son, who became addicted to heroin in his teens.

Does she think that more role models are needed for young people, as well as for women?

15

different. If that body is not there, then you are relying on the kind of functions like awards which, again, is penalising the private sector.”

The spotlight shone on Devey’s private life by The Secret Millionaire is oft-craved by celebrities, but seemingly far less so by business people. The latter seem happy to raise their profiles, often in the hope of boosting business, but they rarely allow such no-holds-barred access to their personal lives. The Manufacturer was curious to hear Devey’s motivation for taking part in the programme — and to understand why she chose this as a vehicle for publicity. A common criticism of the show is that the millionaires featured could easily donate to charity anonymously. Already a supporter of several charities, I wondered why she chose to broadcast the process?

people like myself “Hopefully, who are working in totally maledominated environments are role models

“

Biography Hilary Devey 1974:

1974: Starts full-time work, aged 17

1988:

Becomes national sales manager for TNT

1996:

Sells her house and car to found Pall-Ex

2004: Named Midlands Businesswoman of the Year 2007: Named Ernst & Young Entrepreneur of the Year for Business Services 2008:

Appears on Channel 4’s The Secret Millionaire

2008: Named Vitalise Businesswoman of the Year “Absolutely,” she says. “This is where she believes the government is getting it wrong. “We had a body called Skills for Logistics which was governmentsponsored, and it was highlighting the deficiency of human resources and the skills shortage in the logistics industry. This year, the government withdrew the grant, which has upset me greatly — really they ought to be ploughing [money] into it, not withdrawing it. The same goes for manufacturing. Obviously, this is not going to do any good is it? I think Skills for Logistics was doing some good work in attracting young people and women into an industry where there is a skills shortage — and manufacturing is no

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“Mainly because I am a philanthropist, and you never actually get to see the individuals or the benefactors; you never get to know them personally,” she replies.

“That had huge appeal to me because [when] you give to charities, you don’t know if you’ve made a difference to someone’s life. You get a newsletter that tells you that you have, but you don’t actually see it. Actually seeing it, first hand, was hugely satisfying.”

Did appearing on the show have a discernibly positive effect on business? She hesitates. “No, not really, because Pall-Ex didn’t figure prominently in the show at all. I think it’s probably helped some of our depots selling,” she adds, albeit cautiously, “because if they say ‘the owner is Hilary Devey, did you watch her on Secret Millionaire?’ they can identify [with us]. But I wouldn’t say it’s had a huge impact, no,” she says, her guarded response suggesting that she is not seeking celebrity for celebrity’s sake.

Millionaires participating in the show are required to completely immerse themselves in a back-to-basics environment for the duration of filming. For those used to luxury living — Devey calls the Edward VII wing of Rangemore Hall in Staffordshire home — this undoubtedly requires a certain fearlessness. Was it this quality that prompted her to risk everything to start Pall-Ex? She explains what led her to take her chosen path.

“In my twenties, I started to work for Tibbett & Britten, which was the only hanging garment carrier in the country at that time. I was selling transport to clothing manufacturers, and therefore it was perhaps not a male-dominated role like haulage is. From there I graduated into logistics and immersed myself in a transport environment. It’s fast-moving, I enjoy it and every day is different.”

Interview Hilary Devey

Pall-Ex handles up to 10,000 pallets per night

Devey advocates innovation as a survival tactic — take as examples Pall-Ex’s bespoke IT system and purpose-built hub; both the first of their kind in the industry. Has innovation and diversification been key to the company’s growth? “It’s hugely important,” she says. “We never become complacent, we never stand still, we’re a quality-driven business and we need to diversify. I don’t think we should diversify too much, but certainly positioning ourselves in Europe during

this difficult time will be good for us. I don’t think that people at the moment in time will be interested in investing in something totally different, but we are adding other services to our portfolio that we think engage with the current economic climate.” She agrees that manufacturing, because it is consumerdriven, seems to be suffering more than other sectors: “Yes, I believe that is the case, because people just aren’t buying.”

have monthly meetings now where “We we say to our people: ‘if you can find a cost saving of £100, we’ll give you £20

“

Fast moving can be a euphemism for unpredictable.

And surely one industry most vulnerable to spiking fuel prices and sporadic manufacturing patterns is the logistics industry. “The main challenges at the moment are keeping our heads above water and steering the business through very difficult times,” Devey confirms. “We’ve educated our people in the belief that we are experiencing a downturn, as is everybody. If manufacturers aren’t manufacturing and retailers aren’t selling, then it is common sense that we won’t be delivering. Thankfully Pall-Ex is a strong business; we own our property, it has a strong balance sheet and we will weather the storm. Even so, I think it needs careful monitoring and controlling of costs. We have monthly meetings now where we say to our people: ‘if you can find a cost saving of £100, we’ll give you £20’.”

If The Secret Millionaire proved anything, it is that Devey’s tenacity has equipped her with an ability to ride out the lows and capitalise on the highs in business.

Her knack, it seems, lies in embracing challenges wholeheartedly, and throwing every available resource, both personal and professional, into meeting them head-on.

Have your say at www.themanufacturer.com

17

As companies who face falling demand for their products restructure to survive the recession, access to credit is imperative to allow controlled downsizing and to minimize redundancies. Will Stirling examines which borrowing options are available to manufacturers and asks if the Government’s loan guarantee schemes have made credit as accessible as some companies hope

The

UK manufacturing sector is in the grip of what is arguably the worst business environment for 30 years. In the last quarter of 2008, the CBI’s quarterly industrial tends survey – a measure of the business optimism of 527 manufacturing companies – recorded a balance of -43, its lowest since July 1991 (56% of companies reporting a fall in new orders versus 14% reporting a rise). Demand for goods both at home and abroad has fallen sharply in the last three months, as consumers tighten their spending.

Growth domestic product fell by 1.5% in the last quarter of 2008, the sharpest fall in 28 years.

The recession is here. For many companies, across all sectors of the economy, the situation looks bleak, as in the months ahead demand is likely to fall further and unemployment is set to increase. The common denominator across the private sector – and manufacturing in particular – is access to credit.

Companies have had to restructure, sometimes quickly, to reflect new demand levels. “There is now huge overcapacity in many industries, they cannot be allowed to fail suddenly,” says Julian Wilson, director at Matt Black Systems, a defense industry manufacturer. “We must enter into a period of dramatic, but controlled, contraction. Not too fast, or supply chains and the economy will disintegrate.”

Slowing this process down will cost time and money, he adds. Money, however, is exactly what the banks appear to be short of.

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When banks closed the door

Towards the end of 2008 when the financial crisis was at full tilt, the FSA, the banking regulator, imposed new bank capital adequacy rules. This meant banks needed a greater proportion of cash on balance sheet.

Before, banks had commonly provided an overdraft to companies with the facility to extend the overdraft to a higher limit. Most companies drew down less than the total facility available. When the new capital ratio was applied, many banks reduced their overdraft facilities, forcing companies to draw down the entire facility, or take a smaller overdraft if they wanted to keep a portion of the facility in reserve. The net effect was to reduce the amount companies could borrow.

This coincided with a contraction in demand for most manufacturers as the recession deepened.

The Government has poured millions of pounds into the financial system to get banks lending again. And in January it announced a package of funds and loan guarantees for qualifying companies, targeting small and medium-sized businesses (SMEs), totaling over £21bn.

The assistance package is divided into three parts: 1) A Working Capital Scheme – provides banks with guarantees covering 50% of the risk on existing and new working capital portfolios worth up to £20bn = effectively £20bn worth of corporate lending. It is meant to free up bank capital that the banks must use for lending as a condition of the scheme.

Leadstory 3) A Capital for Enterprise Fund – a £75m equity fund, £50m of state funding and £25 from big banks. Provides longer term capital to indebted companies which have exhausted their conventional borrowing capacity but that are economically viable long term.

More than a bandage

The Conservative party criticised the proposals as being “too little, too late… a small bandage on a massive wound.” Indeed part of the scheme, the first £1bn tranche of the £10bn of guarantees for short term loans, will not come into effect until March 1.

Lord Mandelson, business secretary, defended it by saying the government was right not to rush into it, that it was technically complex and that it involved careful negotiations with the banks. The scheme has had a mixed response from the manufacturing community.

While most people The Manufacturer spoke to agreed any action to get money moving again was welcome, some were skeptical about the size, timing and terms of the schemes. “The first part of the plan to underwrite the loans will not help recession-hit firms who are in trouble, as the banks will still not lend to these companies even if the government promise to cover 50%,” says George Kessler, deputy chairman of Kesslers, a maker of pointof-purchase equipment. “It is still too much of a risk. It will free up some lending but it will be of limited help,” he says, highlighting that the Government’s common clause for all three schemes is ‘economic viability’. While it is sensible and right not to spend taxpayers’ money on rescuing companies with little future, it is those companies with turnaround potential but high levels of debt that are most urgently in need of funding.

For such firms, particularly SMEs, the Capital for Enterprise Fund could be the best remedy. The fund provides capital for highly indebted yet viable companies, for a 10 year period, “using equity finance to restructure their balance sheets and continue their growth.”

George Kessler comments: “It really depends how it is used. If it is used as a way of getting around state aid in the same way that’s used in France and Germany, then it will be one of the first cases when the government has been imaginative”. Under state aid rules, you can’t legally give companies money to write-off debt. “So if it is a true grant that eludes this problem it will be an extremely helpful initiative which will see the UK catching up with our European counterparts. If on the other hand it is used as a venture capital fund - whereby we only put the money in if we can get it out again and at a decent interest rate - it will make no difference.”

The fund, however, is not state aid and must be repaid, although the repayment period is 10 years.

Living on borrowed time

The issue that the most eligible businesses should have access to funding appears to have been addressed by the separation of the main scheme

into three parts, despite the absence of a portion that could be defined as state aid. But some manufacturing practitioners expressed concern that the bigger corporations with multiple suppliers would not directly benefit – the principle fund, the Working Capital Scheme, is eligible only for companies with turnover up to £500m. “This is a significant move forward to restore liquidity and addressing the immediate cash flow problems being felt by manufacturers,” says Adam Buckley, head of contracts and programmes at The Manufacturing Institute. “… [but] we also need to understand what, if anything, will be put in place to support large businesses as the impact here will be felt across the supply chain and the loss of large manufacturers could potentially remove the objectives and benefits of the business loan guarantee.”

Director general of the CBI Richard Lambert supported this view in a comment to the press following the scheme’s launch. “Although today’s package will undoubtedly help many hard pressed firms, it is silent when it comes to larger companies,” he said. “Those businesses at the heart of many vital supply chains face the daunting prospect of refinancing over £100bn of credit facilities in 2009. The sense of living on borrowed time is palpable.”

introduction “ The of the Enterprise

John Wright, national chairman, Federation of Small Businesses

Finance Guarantee in January should free up credit for loans and overdrafts to be lent to small businesses

“

2) An Enterprise Finance Guarantee – providing £1.3bn of new lending by banks for viable SMEs with working capital or investment needs. Open to businesses with an annual turnover of up to £25m, seeking loans of £1,000 to £1m, repayable over 10 years.

Government addressed this issue for the automotive sector later in January, announcing a £2.3bn package of government loans and access to European Investment Bank loans specifically for the car industry, which has a strong emphasis on developing greener vehicles.

Economists including the EEF’s Steve Radley were quick to acknowledge the value of the scheme as a kick-start to bank lending, but emphasized the risk to the wider supply chain, saying government needed to put in place support for credit insurance and measures to protect skilled jobs.

Letters of credit and credit insurance have dried up in the financial crisis making it much harder for UK companies to participate in global supply chains.

The weak pound has not improved exports as much as one might think, because in many cases exporters have kept the foreign currency prices charged unchanged, so in sterling terms the price they receive has gone up as much as the currency has fallen, providing much bigger margins but less benefit for foreign buyers.

19

Lead story

“UK plc has not responded to a weaker pound by chasing exports but has benefited enormously by seeing its profit margins improve,” says David Owen, chief economist, developed markets at Dresdner Kleinwort Investment Bank, London. “If it wasn’t for a weaker pound the recession would be a lot worse.”

Trade bodies respond

Since the guarantee schemes were announced, it is not surprising that attention has turned to real, branchlevel lending — is action matching the rhetoric? Two of the schemes have yet to be put in operation, but observers are expecting to see a change in bank lending soon, in the knowledge government guarantees are pending. EEF reports mixed reactions from its members, ranging from positive to fairly appalling.

Banks are trying to be supportive, it says, with some exceptions. In one example, a member of the organisation’s North East branch which had been with its bank for 99 years had its overdraft pulled overnight with no notice. The EEF believes that banks have to improve their communication to business across the board from the top down to branch level. It also says that government still needs to do more to help banks improve their balance sheets which will then enable them to step up their lending to business.

on the other hand it “ If[Capital for Enterprise

“

Funding] is used as a venture capital fund — whereby we only put the money in if we can get it out again and at a decent interest rate — it will make no difference

George Kessler, deputy chairman, Kesslers

The view that this measure is a good first step, though one that needs better communication on the high street, is backed by the Federation of Small Businesses. Latest research on members of the FSB shows that one in three small businesses have had trouble accessing finance. “The introduction of the Enterprise Finance Guarantee in January, which very closely mirrors a scheme that the FSB proposed in October 2008, should free up credit for loans and overdrafts to be lent to small businesses,” says John Wright, National Chairman of the FSB. “This is a welcome development but the onus is now on bank branch managers to actively promote these funds to viable small businesses to ensure that this sector can fulfil its role as the engine room of the economy and drive the UK out of recession.” Referring to the fact that the banking system is in the process of receiving a taxpayer-funded liquidity bailout to the tune of £500m, he adds: “There are no excuses left for bank branch managers not to offer credit to those small businesses that need it.”

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Have your say at www.themanufacturer.com

Open for business

Meanwhile some banks are bullish about their preparedness to help business and there are anecdotal stories of freer borrowing, as much as there are of discontinued overdrafts. “Barclays has been a key driver and supporter of the Enterprise Finance Guarantee, and we have played a key role in shaping it along with Government and other stakeholders,” says Ray O’Donoghue, managing director, Midlands Commercial, Barclays. “Since the EFG was announced, Barclays has already processed and evaluated millions of pounds worth of applications, and we are proud to confirm we have already approved loans for customers.

In the process, these loans are helping to provide the financial assistance for viable businesses to weather the downturn.” With historically low interest rates and the government bailout injection, more businesses will be keen to put this and similar claims by other banks to the test.

Plan B, and C

An alternative source of non-bank funding is the regional development agencies, which provide a variety of funds for companies that have not been able to secure bank funding.

The Northwest Regional Development Funding offers small business loans, a grant scheme for up to £100,000 and a new £140m venture capital fund launching in April, “a combination of loan, equity and mezzanine funding to support business growth for companies who have been unable to secure commercial finance and have a viable business plan”, for amounts from £50,000 to £250,000.

While rate details are only available on application, it is acknowledged (by NWRD) that the rates are higher than bank loans, to offset greater risks of default. For some types of smaller corporate finance, generally for smaller amounts than a loan and where specific projects (e.g expansion, or diversification of business) are intended, government and EU grant schemes are accessible. “It is no longer necessary for a company to restrict its location to one of the Assisted Areas to access grant support,” says Alistair Davies, a director in the regional development division of Deloitte in Cardiff. “Funding is now widely available to small and medium sized companies, regardless of location.” A company with below 250 employees may be eligible for a grant of up to 10% of the approved project’s costs, while companies with up to 50 employees might qualify for 20%. Criteria for the grants are tight, and “they will be tied into the investment plans of a company and won’t be available purely to serve the working capital needs of a business,” adds Davies.

Follow the market

Government and banks need to work hard to get finance to the companies that need it as the economy makes a painful transition. But while many rightly call attention to credit insurance and big company funding to protect dependant supply chains, some point out the simple truth that demand should dictate where funding should go. “There is little point giving money to motor manufacturers so they can send the workers back to build more cars that are going to stand on fields because people don’t want them,” said Professor Kevin Morley of Warwick Business School, a former MD of Rover, to the BBC in January. Long term, sustainable car manufacturing is essential to the UK economy, but Prof Morley has a point. The size of the global order book for a product will affect to some extent which companies see meaningful funding in the next 18 months.

Corporate statement BDO Stoy Hayward LLP

Surviving the recession Manufacturing output in developed and emerging economies has plummeted in the last few months as the impact of the recession has started to bite. There is no doubt that this is a very difficult time for the sector and the core objective for many manufacturing companies is simple — survival. By Tom Lawton, head of manufacturing at BDO Stoy Hayward LLP, accountants and business advisers

The

last quarter of 2008 saw a rapid increase in the number of manufacturing business failures as these pressures battered the sector. BDO Stoy Hayward’s most recent Manufacturing Industry Watch Report has indicated that the number of UK manufacturing failures will have risen to more than 1,800 by the end of 2008, a 37% increase from the 1,341 failures seen during 2007.

Unfortunately, worse looks set to come, with our research predicting that 2,413 manufacturers will fail in 2009, a 31% rise on the already increasing figure for 2008. Looking further forwards, insolvencies in the manufacturing industry are likely to stay at this high level throughout 2010 as a further 2,349 businesses are forecast to fail. It looks as if it will take to late 2010 to early 2011 before the trend starts to move downwards. These continuing failures will clearly have a knock-on effect on job losses in the sector.

Cash is king

In this climate, there is no doubt in my mind that the single most important key to survival will be cash — and manufacturers will need to optimise cash reserves through all possible means. This will mean curtailing capital and other non-critical expenditures, reducing

costs and focusing on maximising the cash available from working capital management. In this area management will need to be absolutely focused on managing debtor exposure, collecting debts as quickly as possible and reducing inventory. In addition, the immense problems in the banking sector means that manufacturers will also need to carefully and proactively manage their relationships with bankers and other funders as the liquidity crisis continues.

Manufacturing is fundamental to the UK economy

There is no doubt that this recession will be very damaging to the sector. We will lose a high number of manufacturing companies and jobs before we start to see an upturn. Unfortunately, there will be some very good businesses lost because of these market issues and the major difficulties in obtaining credit.

But the crisis has emphasised that manufacturing is an essential part of our economy. I hope the Government will be clearer in its intent to help maintain and foster a robust manufacturing sector in the UK.

Expected insolvencies in manufacturing compared with other key sectors

Source: BERR Insolvency Statistics and CEBR forecasts

21

An elevated shot across ACW’s 65,000 sq ft factory and headquarters in Hedge End nr. Southampton

There’s no place like home Contrary to some views, British electronics manufacturing has not been killed off by the cheap cost base of Asian and other low cost economies. Offshoring of UK competitors to Asia has presented opportunities to the companies that remain here, and a few well-placed firms now provide the essential high quality, low volume products UK customers want that are less feasible to produce in some countries. TM talks to David Taylor of ACW Technology about staying at home

In

recent years, doom-mongers have had plenty of scope predicting the demise of British electronics manufacturing. The accepted wisdom was that companies in Asia could make what was needed more cheaply, so why make anything in the UK? A steady flow of deserters ensued, and the prophecy seemed to be self-fulfilling.

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The grass isn’t always greener

With time, many of the early adopter companies that moved their manufacturing abroad now realise that doing so has not necessarily provided all the answers, nor the rewards, they had hoped for.

While customers were being seduced by the lure of cheaper manufacturing offshore, many of the big global tier one electronics manufacturers were also abandoning British shores, chasing the tails of their customers in a bid to retain their business. These companies had convinced themselves that they could not run a profitable business with a UK factory and workforce serving a high volume customer base.

The wages are lower, that is true, and on paper there are other savings to be made, but these advantages are often cancelled out when the inconvenience, lack of flexibility, intellectual property (IP) risk and culture are factored in. In fact, there have been many cases where western companies have experienced serious downstream problems. Examples are surprise deliveries, unauthorised specification changes and subsequent shipment price hikes, which have come about as a result of big cultural and communication barriers.

The offshore manufacturing bandwagon had talked itself into an unstoppable trend. It became the zeitgeist of the new millennium, aided by the strength of the pound against the dollar, helping to make the real cost of manufacturing abroad seem even cheaper. Many companies had naïvely jumped in feet first before the ‘low cost’ theory had actually been proven in practice.

This lesson only highlights that the grass is not always greener with low cost economies, and shows why there will always be a place for UK-based manufacturing.

There are advantages of English-speaking engineers in an NPI, an interface in the same time-zone and lead times of days rather than weeks made possible through proximity.

Leadership and strategy

Prudence in tough times

As we move tentatively into 2009 with a global recession coming, manufacturing considerations are changing even more. Many companies now have to audit and properly justify their manufacturing strategy as they try to safely navigate through the economic downturn.

With a tighter focus on prudence and real overall cost savings some companies are realising that their adventures overseas have not been as cost-effective as they had once thought. The weak pound, against both the dollar and the euro has, in a short space of time, has increased the cost of manufacturing offshore measurably.

As many companies survey their production options, the UK electronics manufacturing community is ideally placed to capitalise.

There will always be a “solid base of UK-based

Value, value, value

Companies that base outsourcing decisions entirely on potential cost reductions are certainly missing a trick.

Outsourced manufacturing service providers can offer customers more flexibility and reliability than they are able to achieve in-house, as well as an inherent desire to provide the best service possible. As specialists, they also provide investment in people, equipment and processes.

Customers are buying in to an ability to use a highly skilled and experienced workforce who can offer them a service they could not replicate themselves without additional investment and risk.

ACW Technology offers a service that includes product manufacturing, global sourcing, logistics and repair. The company has built a valuable bank of knowledge and developed systems and practices that deliver outstanding value services to customers.

Dave Taylor, sales & marketing director at ACW Technology

Instead of crumbling under the strain of cheaper overseas competition, an opportunistic group of UKbased manufacturing companies, with the means and mindset to invest in new services and processes, have managed to grow and prosper.

Global tier one electronics manufacturers that left the UK inadvertently created opportunities for the remaining smaller, yet savvy UK contract electronic manufacturers (CEMs) to pick up business from local companies who require local support, even if they had wanted to offshore.

Whatever the economic climate, there will always be a solid base of UK-based companies who want a local supplier that can fulfill their manufacturing requirements to a high standard. Companies they can visit regularly without having to fly abroad for a single meeting to check the progress of their latest printed circuit boards; companies that do not want the stress of dealing with foreign cultures in business; and companies put off by the prospect of putting their IP at risk.

There is also the UK’s buoyant aerospace and defence industry, which needs a reliable UK manufacturing source to keep national security tight. Even during the peak of the offshoring trend, the UK defence sector has offered a steady stream of guaranteed business opportunities for those CEMs prepared to invest in passing the relevant audits and accreditations.

Over the years there has been the inevitable weeding out of weaker members of the UK manufacturing sector, but this consolidation has helped the sector become stronger.

Companies like ACW pitch themselves as an extension of their customers’ business. In ACW’s experience, many companies in the UK electronics sector are moving up the supply chain – where they once produced their own electronics, they are providing other services. CEMs like ACW understand how to best manufacture these electronics and electro-mechanical units.

Making the right choices

Ultimately, the key to UK manufacturing’s cost competitiveness is about being selective about what to make here. There will always be times when the offshore path is economically a more viable option, but increasingly the UK can offer truly cost-competitive manufacturing.

UK can compete against Eastern “The European and Asian manufacturers on overall cost if companies make the ‘right’ products here

“

“

companies who want a local supplier that can fulfill their manufacturing requirements to a high standard

The CEMs that remain in the UK are now perfectly placed to support a growing band of potential customers in 2009, by showing where they can make cost savings and, more importantly, add value.

The UK can compete against eastern European and Asian manufacturers on overall cost if companies make the most suitable products here. The resurgence in the UK’s electronics manufacturing sector comes from low volume, high value designs. These are products that typically require high levels of complex engineering input, ‘hand holding’ products that are liable to change, products that can’t cope with six weeks at sea and products that require confidentiality or IP protection.

With low volume work, companies only get one opportunity to get it right. As they don’t have the opportunities to keep on enhancing their processes, they have to have a more rigid engineering approach. In many cases, offshore manufacturing simply cannot do these types of products justice.

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Leadership and strategy

When and how to offshore

But the choice between lower cost production (made in, for example, China) or higher quality and convenience (made in UK) does not necessarily have to be mutually exclusive. It is often the case that there are only specific elements within a product which would benefit from the intricacies of being manufactured in Britain.

Offshore manufacturing only really makes sense if you are dealing with stable, higher volume products that have a long shelf life and require little effort in terms of engineering dialogue and customer involvement.

ACW saw the value that could be added to the process by a British-based manufacturer with a wholly-owned offshore manufacturing plant, and decided to set up our own factory in China. Rather than running in competition to our two British facilities, it complements them. It allows us to offer customers a lower cost option for the established, higher volume and lower complexity parts of our customers’ manufactured products. Meanwhile, the highly skilled, new product introduction phase will always be done in the UK, with product moving to the China facility for manufacturing only when they are stable and running in volume.

Hand placement of components on a printed circuit board

the last rights that were read “ Despite for electronics manufacturing in this

“

country it has unquestionably stayed alive

In this way, customers can have the best of both worlds: the cost savings associated with offshore manufacture but without all the risks. Customers can benefit from dealing with only one supplier, face-toface, in their first language, and with the guaranteed deadlines and reduced lead times that result from ACW being the owners of the Chinese plant, rather than just the partners.

Some of ACW’s team in Tonypandy, South Wales working on electronics sub assembly

The UK’s the way

Even though, for some, the last rights for UK electronics manufacturing had been read several years ago, the sector has stayed alive and indeed prospered in places.

Its competitiveness lies in the realisation that often value is more essential than cost and for the right low volume, high value products, British manufacturing competence combined with UK design expertise will achieve the best results.

The UK will not always be the right choice, but over the next 10-15 years it will remain a viable source of manufacturing expertise.

David Taylor is the sales director at ACW Technology in Southampton

24

Have your say at www.themanufacturer.com

An ACW employee operates one of its Europlacer Vitesse pick-and-place machine capable of placing around 25,000 electronics components per hour

Essex is good for business In a recent survey 98% of Essex businesses said that if they had to relocate, they would move to somewhere else in Essex.

T

he county employs more than 60,000 people, making it the largest manufacturing sector in the region. Many world leading manufacturing companies such as GlaxoSmithKline, Ford, BAE Systems, Britvic, BT, e2v technologies, Olympus Keymed and Raytheon have all chosen Essex as a base not only due to its long earned reputation as a vibrant business environment but also because logistically it’s a gateway to dynamic markets in both the UK and in Europe.

“We’ve found Essex to be a very welcoming home for the company for over 60 years,” says Andy Bennett, Group Marketing Communications Manager, at Chelmsford based e2v technologies.

Great location

Thanks to its coastal location, Essex is a great place for exporters and importers.

Its excellent logistics network include major connections to the national motorway network; the international deep-sea container ports at Harwich, nearby Felixstowe in Suffolk, Tilbury and the new massive London Gateway Port (which opens this year); and Stansted Airport, the UK’s third largest air freight handler.

“With 50 per cent of our turnover exported, we benefit from our location in Essex,” says Neil Yule, UK Business Director for FläktWoods in Colchester. “The east coast seaports are just 30 minutes down the road.”

A bright future

Essex schools are also playing their part, laying the foundations for the knowledge workers of the future with the skills and attitude to make a positive contribution to manufacturing business. Many of the schools have won specialist status for the teaching of science, mathematics, technology, engineering, computer science and business and enterprise.

Chelmsford has two schools in the top 10 of the national league tables, while Southend hosts four of the top 10 schools in Essex for GCSE attainment.

Essex is at the heart of a thriving, knowledge-based economy with a highly skilled workforce, world-class universities and centres of excellence.

For Luke Calcraft, Executive Director, Industrial Business & Corporate Affairs at Olympus Keymed in Southend-onSea, it’s the workforce that makes the difference. As Calcraft says: “Thanks to the outstanding educational facilities in the county, the skills base is always growing and developing. We have everything we need.”

Further growth

Essex is also set to grow and is to receive a huge £5bn investment over the next 15-20 years into industry, infrastructure and housing, which will create over 100,000 jobs, adding stimulace to its already internationally competitive economy.

As you can see Essex is a vibrant county bringing production back home, it has an established business environment, a rich quality of life and an unsurpassed location. The scale of regeneration for Essex represents massive opportunities to business, making it an exciting place to live and work.

INVEST Essex can help get your business off to the best possible start, maximise your potential and take advantage of all the opportunities Essex can offer.

To get more information visit www.investessex.co.uk

Published in association with: INVEST Essex Tel: 01245 702480 Email: contact@investessex.co.uk Web: www.investessex.co.uk

25

Lasershelp to get thepicture The ability to innovate and modify existing products to react to new market needs is imperative in manufacturing. This is especially true for high technology products with high R&D investment, such as solid state lasers. Two executives at laser maker Powerlase discuss the manufacturing benefits of rapid laser patterning in the production of flat panel displays, and provide an opinion on why innovation only works when it addresses real needs

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Design and innovation

Since

appearing on the market in the late 1990s, flat panel display (FPD) televisions have become increasingly popular with consumer and business buyers. Initial uptake of the product was low, due to the high cost to the consumer.

Ten years ago, a 42-inch FPD could cost more than £4,000, making it a luxury for the average household.

However, improvements in manufacturing efficiency combined with less expensive components and rising incomes have meant units have been widely adopted for both entertainment and businesses use. Even larger size displays are up to a third of the price they were three years ago.

There are two main types of FPD: plasma display panels (PDPs) and liquid crystal displays (LCDs).

LCDs are more commonplace in the home due to their use for mobile phone and mobile device screens and televisions. PDPs represent a greater proportion of the large panel market (42 inches and above) and is the dominant technology for 50-inch-plus screens.

The cost benefits offered by PDP at large sizes has resulted in the technology becoming the choice for home cinema and public display use, while the home entertainment market is still hotly contested between PDP and LCD. Manufacturers have achieved this cost reduction by continuously examining and improving the production methods of FPDs. The employment of new technologies and techniques has enabled manufacturing processes to be streamlined, thereby reducing costs.

One highly successful technique involves replacing traditional wet-etch lithography with laser-based systems for patterning thin films on glass display screens.

Saving manufacturers millions

Most significantly, the use of lasers in the patterning of glass removes the need to use toxic chemicals in the process. As well as being a great advantage in terms of making the process environmentally sound, this also provides two major cost benefits. Firstly, removing the chemicals from the process instantly reduces costs as the chemicals themselves no longer need to be purchased, which saves several million dollars per month for a production line. Secondly it saves the cost of safely disposing of them, which is also very high.

In addition, the clean room environment required for PDP manufacture is very expensive, and any reduction in the physical space required for unit production reduces the overall cost of production.

While the initial cost of using laser equipment is higher than traditional lithography, the savings provided by RLP very quickly negate the upfront expense.

Increasing efficiency

In addition to this, the process of patterning with lasers has a yield greater than 99 per cent. This again compares favorably to the chemical counterpart, which achieves 80-85 per cent at best. When using the chemical-etch technique, between 15 and 20 per cent of screens are lost.

The manufacturing process is also streamlined with RLP. The glass patterning is reduced to a two-step process, the laserprocessing and water rinsing stage. It therefore only requires two process steps, whereas wet-etch techniques require between six and ten steps to achieve the same result.

Rapid laser patterning – best practice

The unique nature of Q-switched diode-pumped solid state lasers (DPSSL) has played an innovative role in streamlining the process by the RLP of Transparent Conductive Oxides (TCOs) replacing the need for multi-stage production equipment.

Due to the continued drive by manufacturers for alternatives to lithography, RLP has been investigated for virtually all commercially available short pulse lasers (nanosecond or below) for processing ITO - ranging in wavelength from the Infrared (IR) to the Deep Ultraviolet (DUV).

The sustained cost advantage of RLP makes the technique extremely desirable for manufacturers.

Q-switched diode pumped solid-state lasers (DPSSL), with higher pulse energies, offer an answer to the successful introduction of RLP in the flat panel PDP market. These high pulse energies allow the use of beam delivery techniques more commonly associated with excimer lasers. The beam is homogenized, imaged onto a mask and re-imaged on to the substrate. The high pulse energies allow sufficient energy density to ablate large pixels (>1mm2) with a single pulse.

Kilohertz repetition rates mean that thousands of pixels can be ablated per second – and by ‘stitching’ the pixels together large areas of active ITO electrode structure can be created very rapidly. To further improve throughput industrial systems, multiple lasers may be employed to achieve commercial throughputs that exceed those of conventional lithography.

The sustained cost advantage of RLP makes the technique extremely desirable for manufacturers.

When coupled with the capacity for greener, cleaner technology, particularly in the current industrial and environmental climate, it not surprising some of the world’s leading PDP manufacturers are adopting this technology with great speed and success.

The commercial potential of RLP does not stop with the PDP market. This technique is also employed for a number of other FPD and thin film applications.

Powerlase is now looking to deploy this technology in a number of other key industrial areas, such as solar cell and AMOLED manufacture, thereby helping to expand their markets and promote lasers for new industrial uses and processes worldwide.

Mike Mason is vice-president of technology at laser company Powerlase, based in Crawley.

27

real – Keeping it

innovation only works when it responds to real needs

Les Lockwood at Powerlase explains that customer-driven application innovation is key to successful laser product development

Healthy

business growth in highly competitive markets with small profit margins requires a great deal of innovation, research and development. Success often depends on a company’s ability to adapt to changes in existing markets, while looking for ways to identify, create and cater for the markets of the future.

(EUVL), a revolutionary process for semiconductor manufacturing. Still in the experimental stage, EUVL was not ready for mass-adoption by manufacturers.

As a result, Powerlase entered into collaboration projects with research institutes across the world to develop a workable EUVL solution that the laser industry truly needed.

The technology manufacturing industry is highly competitive but offers a great deal of scope for product innovation. Having an advanced technology is the first step but a crucial second is identifying where it can be implemented to improve or refine existing manufacturing processes. A company producing new manufacturing technology not only has rivals but also existing legacy manufacturing techniques to compete with.

Although being a market leader in one sector can be highly profitable, healthy growth and a solid business pipeline requires a company to address new and emerging markets.

Powerlase was created with the development of a high power, diode-pumped solid state laser range.

Yet while the lasers remain a leader in the market, the applications for which they were designed were not scheduled for adoption within high volume manufacturing facilities until 2012.

The original intention was to use the lasers for a technique known as extreme ultraviolet lithography

28

For Powerlase, one emerging market was display screen manufacturing. Over the last ten years, there have been big developments in the display market, taking the mainstream consumer away from older cathode ray tube displays towards modern day plasma display panels.

When PDPs were first introduced, they had limited take-up among consumers due to their exclusivity and high cost. Manufacturers soon began to seek new ways to reduce production costs to offer PDPs at a price more attractive to the mass market, while still protecting margins.

Design & innovation

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Let's help the creators keep on creating.

This was Powerlase’s opportunity to enter the PDP market and use laser systems to make real efficiency improvements to the manufacturing process. Working with potential customers and partners in Korea, the rapid laser patterning technique, described above by Mike Mason, was developed for patterning thin films on glass substrates used for PDP screens. As a result of this innovative technique, RLP has become the default choice of technique for PDP production. Samsung and LG Electronics are two notable manufacturers employing RLP.

For more information or to buy a Music Licence call 0800 068 4828 or visit www.prsformusic.com

It is essential that companies adapt to changing market conditions. Powerlase is developing a new green laser with a 400w output, ideally suited to organic light-emitting diode screen production. These have been tipped to be the next big thing in consumer display electronics, due to low energy consumption, a thinner design and the wide angle view that matches the quality of PDP or LCD screens.

World class customer collaboration programmes enrich the process of innovation, which has been essential to allow Powerlase to tap real world opportunities in global markets.

Les Lockwood is the chief executive officer of Powerlase

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Responding to the future Forecasting may present problems, but managing demand is what really counts, as TM finds out from MÖBIUS Business Redesign

T

here are no prizes for concluding that forecasting is difficult; but there are certainly prizes for getting it right and using it effectively. Unfortunately, the unknown factors can seem immeasurable. However the supply chain is configured, and wherever in the process you switch from estimating demand to meeting orders, there are uncertainties to contend with and predictions to be made. If that’s true of mature products, it’s doubly true of new products and products that are approaching the end of their life cycle.

Möbius Business Redesign has developed a unique understanding of managing the apparently imponderable, and it has applied this understanding to a wide range of industries, from those producing fast-moving consumer goods to those operating in engineer-to-order environments. Aware that current forecasting techniques work well for mature products but provide limited support for the introduction and obsolescence phases of the product life-cycle, Möbius is a prominent participant in ECLIPS. This three-year research project, funded by the European Commission, aims to extend the state-of-the-art knowledge in supply chain management and includes introduction and end-of-life forecasting in its areas of focus. Already, promising progress has been made on the introduction phase. “In the case of new lines, it’s possible to look at previous product introductions to understand how they behaved and to identify how the new product relates to earlier cases,” explained Möbius consultant Alex Waterinckx, who is a steering member of the ECLIPS project. “I admit I was a little sceptical at the beginning, but I’ve been very pleasantly surprised by what we’ve been able to achieve so far.” This sense of gratification is shared by Van de Velde, the Belgian lingerie producer who has been involved in the early ECLIPS analyses. But forecasting, however skilled, is just part of the story. It needs to be set in the broader context of demand management. To explain the Möbius approach, Waterinckx began with a reminder of basic principles. “A company has to safeguard its internal processes from the uncertainties – both internal and external – that are inherent in any business environment, whilst still guaranteeing the link with the market. You do that with the aid of three kinds of buffer: inventory, in the form of extra components and raw materials; capacity, by way of a reserve on lead times and production capability and information, supplied by accurate forecasts, visibility and planning systems. Inventory and capability are certainly important, but they represent capital investment. Sound information however, can help reduce the investment requirement of the other buffers and ensure they are used effectively.”

30

Forecasting, he continued, is a vital element of the information buffer. “If customer demand is the biggest source of uncertainty, it follows that you have to forecast. That’s a crucial part of demand management. But it’s only a part. What’s most important is what you do with your forecasts. It’s relatively easy to make forecasts, but using them effectively to deliver the value you require – that’s where the difficulty lies. Understanding demand involves more than predicting it, it involves managing it.”

By extrapolating from the statistics of the past, it’s possible to get close to an accurate sense of future customer requirements.

But sound demand management can further reduce the uncertainties (and so reduce the capital investment in surplus inventory and capacity). It works, in part, by integrating market intelligence. So a corporate agenda with a specific timetable is called for, where the planning department’s proposals are passed to other departments (such as sales and marketing) as the company works towards a coordinated plan of demand management. But statistics take the process only so far. There are also events to be managed. Forecasting can establish a baseline demand, which simply represents what’s required if the market stays as it is. Markets however are not static, and events such as promotions, product launches and the phasing out of obsolete lines are all part of a changing environment. Managing such events with full awareness of their implications can allow a better understanding of future demand. In addition of course, the demand plan needs to be regularly reviewed and adapted, and this can involve managing the volumes and specifications of the forecasts.

Customer management too, may form part of the programme. If customer demand proves higher than the plan has committed itself to, some temporary redirection of demand may be considered in an attempt to influence customer behaviour in a way that’s more consistent with the supply chain’s capabilities.

All this needs clarity of approach and purpose. There may, for instance, be some complexity of demand, where separate channels have to be envisaged. Consider the case of a manufacturer of construction material with sales representation across Europe.

Forecasting demand country by country might seem the logical step for them, but matters are not that simple. In each country there are two sorts of customer: do-it-yourself customers, whose requirements are small but repetitive, and large construction companies, who order for major projects as and when contracts are won. So it may be appropriate for some businesses to design and manage different (but interconnected) demand channels.

“It’s not a question of a company applying a simple rule, or of a consultant coming in to perform a magic trick,” insisted Waterinckx.

“What’s very clear is that in designing demand management, it’s necessary to be in very close contact with your customers – who are, after all, the experts in their own operations and markets. A demand management plan is the result of very rigorous analysis, and this is where a consultant – rather than just software – can

have an effect. Software can do all the right things as long as you press the right button, and it can be configured in many ways.

But we at Möbius can help with managing the software package.

We don’t build the car, but we can tune the parameters within its engine, and we can teach you to drive it.” Möbius assistance, however, is not just a matter of a few tutorials in the use of software. It involves working with the client on the full range of core processes of demand management. This entails focusing on customer and product portfolios; it entails setting up the structured communication and clear agenda that are needed to develop coordinated and committed forecasts and it entails establishing a coherent and ongoing cycle of sales and operations planning. It also follows through into actual performance, examining the relationship between forecast and hard reality and looking at the need to influence demand. This programme needs to be supported by the organisation as a whole as well as by the demand management team and the appropriate systems and algorithms, and here, too, Möbius can help in process design and implementation.

“We understand very well the basics of statistical forecasting, and we also know how it can be applied in practice,” concluded Waterinckx. “We know how to design the corporate agenda and communication channels that support effective demand management, and we work in close collaboration with the client company. There are step-by-step gains to be won in both increased customer service and increased inventory rotation.

In fact, a complete demand management redesign can lead to forecast performance increase of 30% and related safety stock reductions of 15%. You can see therefore, why I say that demand management has much more significance than just making next month’s forecasts.”

31

Lean

revolution GKN Wheels, the offshore wheel making division of GKN Group, has implemented several lean practices to streamline its operations including an electronic data interchange system and visual management systems. These have enabled faster order fulfilment, among other benefits. TM talks to company spokesman Colin Hales

One

of the UK’s most established engineering businesses — GKN Wheels — a producer of large, off-highway wheels for manufacturers of construction and agricultural plant and machinery, is adopting systems and quality standards previously only seen in the automotive industry, as part of its commitment to lean logistics. This drive for quality is helping to strengthen and add value to the customer and supply chain partnerships.

Colin Hales, plant manager at GKN Wheels Telford, says the introduction of lean logistics methodologies has been a crucial factor in helping to bring about efficiencies.

32

“My background in the automotive industry has been especially useful in helping to deliver lean logistics at GKN Wheels in Telford,” he says. “For example. automotive manufacturers have been familiar with the principles of visual management for many years but it is still relatively new to the off-highway wheels market.

By implementing some simple and effective visual management processes on site, we are delivering our customer orders more accurately, reliably and to a higher standard than ever before.”

Applying lean management processes has not been straightforward in an industry where customer demands have changed relatively little over the years.

Worldclass manufacturing

are plans to strengthen the company’s commitment to lean enterprise further by providing training for plant managers, which will enable them to actively support the take-up of lean principles across the business.

As part of its commitment to lean logistics, the Telford site is continually reviewing its automated electronic data interchange (EDI) system, which allows customers to share their production schedules with GKN Wheels, which means that orders can be processed automatically to ensure punctual delivery.

This streamlined customer interface is particularly useful in the production of off-highway wheels, which require a longer production lead time, largely because they are produced to a bespoke design and finished in the OEM’s preferred paint finish.

some simple “Byandimplementing effective visual management processes on site, we are delivering our customer orders more accurately, reliably and to a higher standard than ever before

“

Colin Hales, plant manager at GKN Wheels Telford

“This system gives us a real-time overview of our customer’s demands,” says GKN Wheels’ Hales, “and allows us to plan ahead to ensure we can fulfil their requirements in a reliable and timely way, while keeping finished stock inventories as low as possible. We can also provide customers with a regular analysis of their delivery schedule adherence, showing all variables, such as last minute order changes. It is potentially valuable information, helping customers to identify and address scheduling issues.”

Without the drive to significantly improve on delivery times or simplify ordering processes, there is less impetus to deliver process improvements. However globalisation of the off-highway industry, and the increased competition this is bringing is helping to accelerate change and encourage manufacturers and suppliers to look for ways to improve efficiency and deliver value to the entire supply chain.

The importance of leadership

With its experience of quality-driven automotive manufacturing, GKN Group has become very committed to lean enterprise — a set of best practice principles which has been adopted by GKN Wheels.

Underpinning the commitment to lean logistics, each GKN Wheels manufacturing site has its own Site Continuous Improvement Leader (SCIL) to help instil lean thinking locally. At the Telford site, the SCIL has guided a team to complete a value stream mapping exercise of its entire production process — from receipt of the customer order, through to delivery of product to the customer’s shop floor. In 2009, there

At GKN Wheels in Telford, most of the orders come from big producers of construction or agricultural machinery in the UK, Europe and beyond. With bigger production runs than some of the company’s other global manufacturing centres, the Telford site is wellplaced to trial lean initiatives. This is evident in the site’s pioneering approach to the introduction of visual management systems.

Seeing the difference

Since adopting lean enterprise principles in 2007, GKN Wheels Telford has adopted some simple visual management systems, which have helped to improve the accuracy of order fulfilment by optimising production line management to ensure sufficient stocks are available at all times.

Colin Hales explains: “Visual management systems are not complex and make good common sense.

We have introduced a lane painting system, which indicates the stock levels available on each production line in the number of production hours it would take

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World class manufacturing

About Lean Enterprise at GKN Wheels

to replenish them. For example, green indicates that four hours or more of stock remains, amber means just two hours of stock remain and red means there is just one hour of stock remaining. At the same time as avoiding production line downtime, we are helping to maintain stock levels for our customers and improving efficiency.”

Lean Enterprise is a global GKN initiative which sets out to deliver performance improvements across all the company’s manufacturing sites. To support its introduction, GKN Wheels has appointed a dedicated Site Continuous Improvement Leader, or SCIL, at each of its five global manufacturing sites.

Similarly in the area of dispatch, GKN Wheels Telford has introduced robust visual management systems, which allow workers to identify individual orders so they can be picked off easily and verified before dispatch.

The SCIL is centrally trained by GKN to support the implementation of lean practices at each manufacturing site by process mapping, applying lean principles and assisting work teams in sharing and adopting best practice.

To support the take-up of Lean Enterprise at GKN Wheels Telford, managers undertook a series of visits to leading automotive wheel manufacturers to benchmark best practice by examining the processes used by a higher volume wheel manufacturer.

Brett Griffiths, operations director at GKN Wheels, says: “We began our ‘lean journey’ at all GKN Wheels sites in 2004, with the exception of China, where the roll out began last year.

“As a global business with multi-national manufacturing sites it is vital that we all talk the same language when it comes to lean. GKN’s Lean Enterprise initiative has helped to standardise the implementation of lean principles and methodologies in a way that maximises value across the business.

“Since implementing Lean Enterprise at GKN Wheels Telford, the business has significantly improved productivity by ensuring quality products and service to our customers and reducing waste.”

Lean logistics is still a work in progress at GKN Wheels Telford and Hales is keen to extend the use of technology throughout the production plant. In particular, he believes there is scope for the use of bar coded production line systems, which provide realtime status information about each customer order at every stage of the production process.

“Bar coding systems can work well in any lean engineering environment, particularly where there are multiple production runs underway, delivering medium to high volume orders, at any one time,” he says. “This is something we would like to adopt at Telford in the near future.”

Preparing for the unexpected

Lean management is also enabling GKN Wheels to be more responsive to unexpected customer demands and this is helping to strengthen customer partnerships.

For example, one customer approached the company recently to ask if it could step in to fulfil a last minute wheels order after they had been let down by another supplier. Referring to accurate visual management systems, including online customer EDI information, it was possible to assess plant capacity quickly and commit to deliver the order in time for the customer to resume production on Monday morning (the customer approached GKN Wheels on Friday).

“While such order demands are exceptional, our ability to deliver on them makes a big difference to the way our customers view us and means they can see the benefits of working with a well-managed supplier, operating to highest best practice standards,” says Hales.

Lean leaders at GKN Wheels Telford remain focused on continuous improvement and believe that the efficiencies that such methodologies can deliver are especially valued during difficult economic conditions.

The globalisation of the off-highway vehicles market is driving quality standards throughout the industry and lean management practices are becoming a key differentiator. Colin Hales concludes: “We are stepping up our commitment to lean enterprise and see it as a key factor in maintaining and growing our market share. Our customers increasingly expect us to be in a position to deliver contracts to the highest possible standards, wherever they are in the world. Our objective is to be in a position to do this, every time.”

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Have your say at www.themanufacturer.com

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The rough guide to managing redundancies Redundancy is high on the agenda for many manufacturing companies. Mark Young explores the legalities firms need to consider when making redundancies and some effective instruments which can soften the blow to both employee and employer

After

many years of becoming fitter and more competitive, the UK manufacturing sector has been able to avoid large scale redundancies of late. But redundancies are making headlines again.

Recently released figures from the Office for National Statistics show there were 78,000 redundancies in the three months to November 2008, bringing the total to 101,000 for the year to date, the highest figure since ONS employment records began in 1995. Manufacturing has borne its fair share of the job losses. Big name firms to announce large culls last month include food producer Bernard Matthews (100 staff), Corus (2500), computer maker Dell (1,900), Jaguar Land Rover (450), JCB (674), Nissan (1200), Newcastle Production – producer of Findus frozen foods (420), Tulip International – maker of Spam and Stagg Chilli (303) and porcelain maker Waterford Wedgwood (367). Between them, these companies announced redundancies of well over 7,500 employees in just over a fortnight.

While there are legal obligations to limit redundancies, and the Government also encourages companies to do so, large scale redundancies are a hard fact of life in times of economic uncertainty. When in January Nissan announced 1200 workers at its Sunderland plant were being cut from the payroll, business secretary Lord Mandelson said: “Nissan have taken this decision today in order to secure its future success. The government stands fully behind that.”

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Although the Japanese car giant has suffered a freefall in new registrations in the UK – 26 per cent fewer in December compared with the previous month — and has slashed its production target by a quarter for 2009, from 400,000 units to 300,000, its contribution to the economy is still big enough for it to command recognition from Whitehall. Enough, in fact, that just days before Nissan’s cuts were announced the Prime Minister publicly commended the company’s policy to retrain workers during production downtime in the event they were made redundant. This forms part of the outplacement service which the firm is providing for the 1,200 axed.

The Law

The law relating to the process of making redundancies is complicated and the Advisory, Conciliation and Arbitration Service (ACAS), an independent government body, publishes guidelines on how businesses should conduct themselves when engaging with the issue. An ACAS reference, Redundancy Handling, is available as a free download (see bottom).

Hannah Strawbridge, a solicitor from NorthgateArinso Employer Services in Bury, which provides legal advice, HR services, personnel and recruitment to employers, specialises in defending companies against claims brought by ex- or current employees in employment

People skills and productivity

In a sign of the times, NorthgateArinso’s advice line to employers took 900 calls in December 2008; in January that year it took 400. Strawbridge outlines a synopsis of the measures a business must consider to prevent exposure to financial liability.

1. Efforts to avoid redundancy

A company must explore whether it can reduce the number of staff it is intending to dismiss, or whether it can avoid compulsory redundancies altogether. Such measures include: restricting or freezing the recruitment of permanent staff; reducing the use of temporary staff; retiring all employees at the normal or default retirement age; filling vacancies from among existing employees; reducing overtime by as much as production requirements permit; reducing hours of work, for example, by the operation of short-time working; redeploying employees for different work for which there is a requirement either at the same or at a different location, and initiating job shares.

employee cannot be selected for redundancy on the grounds that they have taken part in legal industrial action against the firm, for maternity related issues, because of their part-time or full-time working pattern or for tax reasons.

Acceptable selection criteria for redundancy include relevant skills or experience, standard of work performance or disciplinary record.

Offering voluntary redundancies before deciding who will suffer compulsory redundancy is a good way of preserving morale among the team.

study shows that organisations “Our recognise the value of outplacement support to help improve their reputation, increase their ability to retain key staff during times of change and support line managers to deliver the message with a clearer conscience.

“

tribunals. “Think about why you have decided to make redundancies,” she says. “Dismissal by reason of redundancy will only be ‘fair’ in law if it is genuinely due to a business closure, a workplace closure, or a reduced need for employees. If the real reason why you are looking to dismiss is for another reason — for example, poor performance, or misconduct — ensure that these issues are dealt with properly as these dismissals are unlikely to be seen as genuine redundancies and therefore may expose you to claims of compensation for loss of earnings from ex-employees.”

Stuart Lindenfield, head of transition services, Reed Consulting

The cost of getting it wrong

2. Consultation with staff

Employees with over 12 months’ service are able to bring potential claims for unfair dismissal where their employers dismiss without recourse to the law in this area. Furthermore, employees with over two year’s service also have the right to receive a statutory redundancy payment. This can be an area of contention if calculated wrongly “so it pays to get it right first-time,” says Strawbridge. This payment is calculated by taking the employee’s gross weekly wage (capped at a maximum of £330 rising to £350 for dismissals after 1 February 2009) and multiplying it by a number based on the employee’s age and by the number of year’s full service the employee has completed.

2. Duty to provide essential information

Also, it is recommended that companies make sure other payments are made. On being given notice of redundancy, employees are entitled to receive all contractual payments owing, for example notice pay (where the employee is not obliged to work the notice) and any accrued but outstanding holiday pay.

When these options have been explored and redundancy is rendered unavoidable, companies must enter a consultation period with the ‘at risk’ employees. Employers who are going to make 20 or more employees redundancy, at one establishment, over a period of 90 days or less, have a statutory duty to consult representatives of any recognised independent trade union, or if no trade union is recognised, other elected employees. During the consultation, ‘at risk’ employees’ own views on ways of avoiding the dismissals and mitigating their effects must be explored. Mandatory consultation periods are 30 days where 20 to 99 staff are to be made redundant, and 90 days if 100 or more staff will go; both must be within a period of 90 days.

The following information must be made available to the staff that are to be made redundant or their representative: the reasons for the proposals; the numbers and descriptions of employees it is proposed to dismiss as redundant; the total number of employees of any such description employed at the establishment in question; the way in which employees will be selected for redundancy; how the dismissals are to be carried out, taking account of any agreed procedure, including the period over which the dismissals are to take effect; and the method of calculating the amount of redundancy payments to be made to those who are dismissed.

4. Employees assessed fairly

Employers must be objective and fair in selecting which members of staff are to be made redundant. As well as race, religion, sex, age, disability and sexual orientation, the decision cannot be based on an employee’s trade union arrangements, representation or position as an elected representative of other members of staff with regards to things like health and safety, pensions or redundancies themselves. In addition, an

Companies also have a statutory duty to inform the Department of Business, Enterprise and Regulatory Reform (BERR) of their intentions if they plan to make more than 20 staff redundant. “One of the most important tips I can give is to deal with any grievances properly and in line with the law,” said Strawbridge. “It is likely to be a stressful time for employees as well as for the business, and grievances may be raised when emotions are running high. Ensuring issues raised by employees are dealt with promptly and thoroughly may help prevent tribunal cases being brought by disgruntled employees by highlighting issues at an early stage and demonstrating that the business listens to its workforce.”

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Getting this process wrong can have expensive consequences. She adds: “In summary, the financial implications of getting any part of this process wrong can be catastrophic for businesses within the current climate and it is imperative that advice is taken early on — prevention is undoubtedly better than cure.”

Benefits of outplacement support

While the term itself may be a euphemism, outplacement support can be an invaluable service, both for employers and employees. From an employer’s perspective it can reduce the likelihood of legal action, help to portray a firm as an ethical employer and improve staff retention rates. From the point of view of outgoing staff, it can turn the transition from casualty into opportunity.

Outplacement can be provided internally by the company or by consultancy firms. Outplacement is not, as its name might suggest, simply finding a new job for employees who are made redundant — although this would be the best outcome for both parties, especially in terms of maintaining a good reputation in and outside the firm. Outplacement is the process of making the transition from employment within the firm to the next stage in a person’s life as comfortable as possible.

It can include specific retraining in new disciplines and even new industries, provide help with CVs and interview skills, the provision of job vacancy details and assistance in domestic relocation. Companies can also provide employees with paid days off during notice periods to look for new jobs or to seek personal/ life advice, and they can provide help by working out employees’ skills and strengths as well as finance management services.

Many people decide to start their own businesses when they are made redundant, especially if this is a route that they had not investigated due to a lack of capital — the severance package they receive following redundancy may be big enough to allow this. In this case, a business’s outplacement service for these employees may be of assistance in educating them about tax self assessment, creating relationships with suppliers and distributors, finding premises, obtaining further finance or marketing efforts.

To illustrate its value, recent research by employment consultancy Reed Consulting revealed 78% of people thought the provision of outplacement could improve a company’s general reputation, while 55% believed outplacement could benefit the company’s image as an employer of choice for future candidates.

It also found 25% of top performers at a company leave within 90 days of a major redundancy announcement, and 65% believe outplacement for staff who are to go helps to retain those that stay.

Stuart Lindenfield, head of transition services at Reed in London, says: “Our study shows that organisations recognise the value of outplacement support to help improve their reputation, increase their ability to retain key staff during times of change and support line managers to deliver the message with a clearer conscience.

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The 44-page Redundancy Handling booklet can be downloaded as a PDF from www.acas.org.uk

“The findings reveal that the provision of support is expanding with 78% stating that the need for outplacement would grow in the coming year, or stay at current levels. Successful transitions need careful planning and the engagement of all stakeholders as early as possible.”

Critiques of outplacement services are often concerned with the rigidity of a generic, ill-defined program which does not account for the personal needs of the people it serves.

This is simply poor outplacement. Good outplacement helps people by addressing their individual circumstances, requirements and wants. The message is be wary of poorly executed or outsourced outplacement. If the perception of the service by outgoing staff, colleagues who are remain with the company or third parties is that the exercise was a token gesture by the company mainly for PR purposes, it could have the opposite effect and damage the firm’s reputation, as well as providing no real benefit to the outgoing employees. One-to-one sessions between staff and outplacement agent are therefore essential.

When redundancy is on the agenda, decisions about the number of jobs to be cut and which employees will leave are difficult decisions for any executive tasked with the job. Regrettable as they may be, they are unavoidable when the alternative is insolvency. As several household name manufacturers know very well, by making tough but right decisions at the right time, the futures of those remaining staff and brighter prospects for the business can be secured.

Hannah Strawbridge and NorthgateArinso are contactable on 0845 077 8881 or at www.northgatearinsoemployerservices.com.

All advice and guidance given in this article is provided as a general introduction to the subject matter and does not constitute a comprehensive guide or proper legal advice. Professional legal advice should be sought prior to any action involving severance or redundancy.

People, skills and productivity

Sweetening a bitter pill EEF’s redundancy management course is attracting high interest A big part of the Engineering Employers’ Federation raison d’etre has always been employment relations advice and, within that, to provide redundancy management advice to its manufacturing sector members. It employs up to 60 lawyers and employment relations professionals in its Employment Relations and Legal Affairs department located throughout its regional offices and London. The service is recognized as one of the first ports of call when sizable redundancies are likely. But until the latter part of 2008, the service was provided one-to-one only.

Since the financial crisis-inspired economic downturn, the EEF has had to expand the service by offering a redundancy management seminar.

This one day course covers key points that companies will need to know when preparing a redundancy strategy. This includes how to avoid and minimize redundancies, legal requirements, redundancy selection criteria, how to identify and avoid common pitfalls and tackling change management and any corporate reorganisation following redundancy.

The course was devised in reaction to the downturn that manifested itself particularly from summer 2008. “Initially the drive came from companies within the car manufacturing supply chain – but I suspect increasingly that a wider spectrum of our members are likely to be interested in the course,” says David Yeandle, head of employment policy at the EEF in London and Brussels.

Apart from the obvious reason that the UK is in recession, there are several reasons why redundancy is a hot topic, says Yeandle. For one, the efforts of finding good people do not want to be in vain. “Companies are really quite desperately trying to hang on to the people that they’ve had to work so hard to attract and retain in the relatively tight labour market that we’ve had for the last few years,” he says. Manufacturers, who usually require more refined skill sets than many service sector employers, are prime examples. Another issue is the profound effect that redundancies can have on companies that are, in 2009, about as lean as they have ever been. Business is far less labour intensive and every job is critical to the business. “Twenty years ago it was relatively easy to reduce employee numbers without materially affecting the business. Today taking even quite a small number of people out means you may have to have a fundamental rethink of your business – in some cases you may have to stop making products or providing services.”

Anything to avoid the axe

Recently companies are using a raft of staff retention techniques, in an effort to make redundancy the very last resort.

Pay settlements, forms of reduced pay and pay deferrals; short-time working and suspensions (several big manufacturers gave employees extended, unpaid Christmas breaks); more innovative, nonsalary ways of remunerating people, through bonuses, where payment is not pensionable, and so on. “We’ve seen a range of measures being used by manufacturers (to avoid redundancies) – for example our pay settlement data shows that 1 in 4 companies that settled in the last quarter of 2008 were either freezing pay or deferring their pay settlement and this pattern has carried over into this year,” adds Yeandle.

The EEF’s redundancy hotline is popular. Between July and September 2008, its Birmingham office dealt with 30 enquiries, but between October this number went up to 80. The EEF says this has been replicated elsewhere as a trend, suggesting that nationwide in the last quarter of 2008 redundancy advice enquiries tripled.

The attendee companies will not all be looking to wield the axe, however. “The fact that certain companies are coming to the course does not by definition imply they will make redundancies; some are taking this as an opportunity to get up to speed in case the worst happens,” says Yeandle.

Understanding one’s legal liability and corporate responsibility is certainly a big draw for the EEF’s HR advice service, but it is keen to emphasise that broader HR issues are covered by the seminar.

Redundancy strategy, learning how to communicate the selection process to staff, and how to deal with the press – ‘damage limitation’ – are all part of the wider management remit. “Many HR professionals today haven’t got much practical experience of going through this process, on this scale,” Yeandle adds.

“If they’ve only been working for 10-15 years it will be new territory for them. EEF has first-hand experience and we can help them to avoid making some of the mistakes that have been made in the past.”

Managing the Threat of Redundancy’ is a one-day EEF seminar taking place three times a month at locations around the UK. http://www.eef.org.uk/redundancy/ Chrysalis Solutions, a human resources company, recently held a one-day ‘Handling Redundancy’ course in Birmingham. The course is being run again on April 8th. It covers the legal processes and obligations to follow, difficult special situations and dealing with remaining staff. A toolkit containing standard letters and refernce material is supplied, see www.chrysalishr.com for details.

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Total

protection Adequate protection of IT on the plant floor can often be overlooked by a company’s IT security arrangements. The truth is that the dangers of fraud, electronic espionage and vandalism are just as applicable to machinery operated by shopfloor computers with internet access. TM spoke to David Robinson, general manager at Norman Data Defense Systems

There

is a tendency for people to think of internet security in terms of a personal threat primarily driven by credit card fraud, identity theft and virus infection of domestic PCs. A breach of this security involving a compromise of personal or financial details, for example, can be frustrating, infuriating and painful, but will not result in commercial disaster. Infiltration of commercial IT is much more onerous.

companies’ understanding of the problem means that there is a greater threat to process and control systems than ever before, says Robinson. “In an office, it is relatively easy to ensure that PCs are covered by upto-date anti-virus software, but on the factory’s plant floor, anti-virus security is often ignored, and there is limited control over who connects what to the control and process systems,”

Computer security is an accepted part of effectively managing any business. Corporate information is clearly sensitive and vulnerable – from personnel records to confidential company accounts or customer data, there will always be something valuable for someone to steal.

The crux of the problem, Robinson says, comes from a lack of understanding of the risks associated with increased connectivity between former ‘islands of automation’ such as process plants, manufacturing sites and distribution centres, and the business systems operated in companies’ head offices. “Many firms don’t run any security software across their production networks — which will most likely be running old versions of operating systems that remain unpatched.”

One area of increasing concern is the vulnerability of the manufacturing industry to IT security breaches.

“The internet security industry has seen a massive increase in the amount of malicious code being distributed,” says David Robinson, general manager at Norman Data Defense Systems, an IT security company based in Milton Keynes. “We are receiving 30,000 new pieces of malware every day — that’s an exponential rise. We have seen more over the past 18 months than in the 24 years we have been in existence – despite the fact that companies and individuals have deployed IT security measures [for a long time]. The threat is greater because organised crime gangs have found that they can make a serious amount of money. Many firms just haven’t been able to keep up.”

The combined problem of the steep rise in malware — malicious software — and the time lag in manufacturing

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The main source of malware infection is the browsing and downloading of data from the internet, email, USB flash drives and external connections. It is imperative that a contracted IT consultant be responsible for the protection of the whole business, including manufacturing and plant networks, and not to confine protection to the offices, Robinson says. While many viruses are known mainly for their nuisance value, more and more can disable or manipulate computer systems and cause major disruption. There have been numerous publicly reported instances that have caused immense disruption to the operations of control and process systems – on the plant floor, operators could be powerless to start or stop key plant, prevent the opening or closing of vital valves, and have alarm and trip settings overridden.

IT in

manufacturing

This shop floor-level problem is rising. So what can manufacturers do about it? Well, the Government has been onto it for some time. A report in 2007 by the Science and Technology Select Committee included the explanation: “Criminals attacking the internet are becoming increasingly organised and specialised. The image of the attention-seeking hacker using email to launch destructive worms is out-of-date. Today’s bad guys are financially motivated, and have the resources and the skills to exploit any weaknesses in the network that offer them openings…with money available on a big scale, it is hardly surprising that those responsible for e-crime, commonly known in the IT world as the “bad guys”, include major organised crime groups, typically, though not exclusively, based in eastern Europe. They are well resourced, and employ specialists to perform particular tasks, such as hacking vulnerable websites, cashing cheques and receiving goods fraudulently purchased online. In summary, the internet now supports a mature criminal economy.”

Robinson agrees: “It’s continuous. It’s more like an arms race between the good guys and the bad guys — and there are some very clever bad guys out there putting up a fight that the good guys have to defend against. Sometimes the industry is playing catch-up; sometimes it’s in front. Software, including operating systems and applications, has bugs inherently, especially in new releases. This is unlikely to change.

As such, cyber criminals will continue to write programs to exploit these vulnerabilities.”

Contrary to popular opinion, many viruses do not destroy data indiscriminately. Data is destroyed as a side effect of the pursuit of a nefarious purpose. “Writers of malicious software want to get on to a machine and extract information from it,” says Robinson. “They do not always have an immediate purpose — a Trojan horse will sit there and wait for further instructions.

There are many tens of thousands infected computers all over the world, sometimes under the control of just one person. It’s scary, but it’s happening all the time. Much of the organised crime comes from countries which do not operate international extradition laws.”

A manufacturing company should consider two important actions. First, make sure you have adequate protection from online sabotage at the outset – in the office/s, the factory floor and all possible connections in between. Protection needs to be seamless or it will be breached as soon as someone from outside inserts an infected USB flash drive (or memory stick). Secondly, protection needs to be constant, so it should be updated continually. Most antivirus programs have an automatic update facility, and corporate IT departments need to be aware of upcoming threats and the status of the online ‘virus community’ at all times.

Incident response

If a system’s security is breached, Robinson recommends putting in place a “malware incident response”: “In the event that you have been infected, how do you get back up and running? Did anything actually happen? What was it? Sometimes little

or nothing happens because it is a random piece of malware, but we are seeing stuff targeted at government departments and large companies. It is getting more and more important to ascertain what’s happened because malware can be very complex. It can put another type of malware on the system, which then drops another type, then another one and so on.

Unless you find out what the dropper [hacker] did, you can’t find out if your system is actually clean.”

It is therefore essential to diagnose what has happened and how the violation has affected the company’s data, so that the damage can be rectified and steps taken – usually by a security software upgrade – to ensure the same thing doesn’t happen again. If the invasion is a clear, or suspected, case of criminal intent, the incident needs to be reported to the police.

While sabotage of manufacturing processes is a more overt problem, fraud can often be behind an infected computer system – and can originate from both internal and external sources. The risk of having sensitive corporate details compromised is much higher today, as a meaningful volume of data can be removed very discreetly. “When companies used floppy disks it was difficult to get an amount of data of any use onto a disk. But a USB key can hold 32GB of data: a serious amount of information,” Robinson says.

many viruses are “ While known mainly for their

David Robinson Norman Data Defense Systems

nuisance value, more and more can disable or manipulate computer systems and cause major disruption

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Call to action

Many manufacturing companies do not have a proper grasp of their susceptibility to IT security risks, or what they should do about protecting themselves.

“They should be involving their IT security department, systems providers and external experts, and getting them involved in building systems that have security as built-in. In-house IT departments will know what they themselves see, but may not be aware of risks to the plant. There tends to be little cross co-operation between many parts of the IT support chain. In the days of propriety production networks that was fine, but because they are now utilising common components, IT security is something that cannot be just for one department and not for another.”

Malware is a growing menace with such potentially disastrous repercussions that manufacturers should see protection from it as a company-wide priority.

To attempt to combat the devious techno-trickery that online criminals employ to extract data illegally, an effective IT defence needs constant vigilance and continuous updating.

Have your say at www.themanufacturer.com

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Optimising supply chain

performance

Choosing and applying the most appropriate software to optimise supply chain management performance is a big issue for manufacturers — the software is powerful, complex and costly. Globalisation has put this issue higher up the agenda.

The Manufacturer asks Andrew Kinder of software developer Infor how software can improve global supply chain management efficiencies

What are the biggest themes that manufacturers in international supply chains focus on where software can help improve supply chain management (SCM) and logistics efficiencies?

The biggest theme at the moment is simply the world’s economies. No region is unaffected by the events of the past 12 months and cost cutting has become imperative.

Historically, the primary motivators for investment in supply chain solutions has oscillated between improvement in meeting customer mandates and operational cost reductions, depending on whether the outlook is for expansion and growth or cost containment. It is not hard to imagine that the pendulum has swung back to cost control as the number one motivator for supply chain focus.

In the past 12 months, two other topics have dominated conversations with supply chain managers.

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Firstly, managing risk in the supply chain. Risk comes in many forms and there was no shortage of examples in 2008: fluctuations in energy and commodity prices; global scarcity of critical materials; supply quality issues — the latter, if substandard, with devastating impact on brands — companies have to be careful about who they sub-contract their work to and continue to scrutinise quality. The biggest of these topics has been managing global supply chains, with organisations of all sizes managing their operations and facing more competition from low cost economies in Europe and Asia. This requires a different perspective on supply chain technologies with greater emphasis on demand and supply management, network design, dynamic sourcing, supplier collaboration and increased visibility across the entire supply chain.

Secondly, a major topic is sustainability and how manufacturers are adapting to operate in an increasingly carbon-constrained world. While the economy has stolen the headlines back from sustainability, the underlying

Logistics and supply chain

Even with today’s gloomy outlook, around 50% of companies of all sizes are planning to increase their IT investments, according to the EEF. Less than 10% are planning to decrease them, which speaks volumes for the importance attached to IT investments in the supply chain.

Four of the top six areas for IT investment in UK manufacturing are all connected with better management of the supply chain; planning operations; analytics and reporting; supply chain logistics; and demand forecasting.

How have software companies specifically addressed these themes, with examples and cost savings if available.

When a company’s supply chain consisted of a single plant and manageable numbers of customers and suppliers, the capabilities of standard ERP systems were enough to meet requirements. With global supply chains, obtaining that same visibility, flexibility and speed of reaction to demand or supply changes needs different technologies.

There are more products passing through more countries and more partners, and registered on more systems, than ever before. Supply chains are more properly described as “supply networks” rather than “supply chains”, with each node of the network playing just as important a role in getting product into the hands of the consumer at the right time.

Technologies that allow manufacturers to get a grip on their supply network include: Demand planning and forecasting — now brings a total picture of global demand for all your products and uses this to set inventory and manufacturing targets Inventory optimisation — balancing how much inventory and where it should be stored to satisfy orders without excessive investment in stock

Supplier collaboration — which uses web based technologies to instantly communicate orders to suppliers.

Also tracks and provides the global visibility of incoming deliveries and expected arrival dates when product is shipped across the world There are other technologies such as event management and alerting capabilities which instantly detect problems anywhere in your supply chain on any system and escalate the problem to the appropriate person to take action. Such technologies are your ‘eyes and ears’ on the supply chain where there is so much detail it might otherwise take days or weeks to spot the problem.

not hard to imagine that the “It’spendulum has swung back to cost control as the number one motivator for supply chain focus

“

pressures that make carbon emission reduction a business imperative remain. Globally, governments are winding up the pressure on manufacturers to cut their carbon emissions, converting ‘guidelines’ into legally binding targets and introducing legislation that makes reporting and greenhouse gas (GHG) reductions mandatory.

Australia was the first to make a stance. It is likely the UK will be next with the passing of the Climate Control Act in November 2008 paving the way for further actions.

Advanced planning and optimisation — which allows you to plan a multi-site manufacturing and distribution network and ensure that customer orders are filled from the optimum warehouse and sourced from just the right manufacturing facility to minimise overall operational costs

Andrew Kinder, director of product marketing, Supply Chain, Infor

Infor customers report very substantial savings across their supply chain. On a macro scale, the evidence from the EEF, the manufacturers association, in their November 2008 report, ‘Manufacturing IT — Boosting Productivity by Managing Performance’, showed that manufacturers which invested in IT demonstrated better performance in on-time deliveries, finished good stocks, raw material stocks and wastage — key measures of supply chain health.

UK manufacturing: what logistics and supply chain (L&SC) efficiency issues are particularly relevant to British SME manufacturers? How has your software identified these needs and applied them?

Manufacturers of all sizes compete today in a global economy and the focus for UK manufacturers has been improving productivity to compete effectively with European, US and Asian manufacturers.

Research provided by the EFF shows that UK manufacturing productivity has performed well — improving 18% since 2003 — but that there are still gaps between the UK and international competitors in the US, Germany and France.

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Optimal efficiency The complexity of modern global supply chains can require big, clever SCM software modules But simpler, cheaper solutions are perfectly suitable for less demanding applications, that still improve supply chain performance. David Strong at Yuasa Battery (Europe) explains.

We sell and manufacture automotive and valve-regulated lead acid batteries for a network of distributors and manufacturers across Europe. Working with delicate and degradable products which are subject to enormous fluctuations in customer demand presents specific supply chain challenges, which is further complicated by working with multiple suppliers. As our original ERP system didn’t have the flexibility and automation required to support a complex and variable supply chain, we made the decision to implement a system to optimise efficiency.

The lead time for batteries can be up to six months and as the company aims to keep two months of safety stock, we are continually planning for up to eight months ahead. This can be difficult, especially as demand for automotive stock is seasonal. On the one hand, product left on the shelf for months and months will degrade, but equally, if we unexpectedly run out of stock of any product our customers could face a lengthy delay before we replenish. To try to avoid this, we keep a supply of ‘blank’ unfilled and uncharged batteries that can be reworked as necessary as an emergency contingency option, but that is not a fail-safe.

In our sector it is vital to give our customers the freshest products possible, so we can’t afford to keep vast amounts of stock sitting in warehouses waiting for orders to come through. We need to use demand to drive supply.

Before, our MRP process was run from spreadsheets which generated figures for upcoming purchase requirements, which were then converted into purchase orders. The orders were manually input into the sales company’s ERP system, then printed out and manually typed again into the supply chain company’s ERP system.

We have now consolidated the entire process into one simple system.

Running MRP in Microsoft Dynamics AX generates a list of planned purchase and works orders, and even suggests alternative routes where batteries could be bought quicker or reworked from existing stock. When orders are confirmed, a purchase order is created for the sales company and a corresponding sales order created for the supply chain company. These are linked, so if the requested delivery date changes on the sales side, the supply chain side is updated automatically. This has saved us considerable amounts of time, not to mention a lot of paper!

Manufacturers have been improving productivity through efficiency improvements across the supply chain and manufacturers have invested heavily in IT to become more competitive. Even with today’s gloomy outlook, around 50% of companies of all sizes are planning to increase their IT investments, according to the EEF. Less than 10% are planning to decrease them, which speaks volumes for the importance attached to IT investments in the supply chain.

Four of the top six areas for IT investment in UK manufacturing are all connected with better management of the supply chain; planning operations; analytics and reporting; supply chain logistics; and demand forecasting.

A tougher economic outlook will unquestionably drive manufacturers to look more forensically at their supply chains, seek operational cost reduction, improved service and faster innovation, which means investments in planning, scheduling and even asset maintenance programs.

However, innovation performance is often seen by manufacturers as the key to future success, so investments in collaborative product life-cycle management solutions that accelerate time-to-market are also rated highly by manufacturers.

Supply chain visibility: How does L&SC management software help interface with parties in the supply chain? How do people at each location (and third party contractors) see key information simultaneously, and track real-time changes to inventory? Is this an important area of development?

Supply chain visibility is a key requirement to support today’s global supply chain.

There are several aspects to this. Visibility of supply can be gained through portals that allow multiple parties to add supply information and eliminate the ‘black holes’ that otherwise exist when product moves from one node to another along the supply network.

New technologies, such as service-oriented architectures, make this easier to deploy as do the emergence of more open standards for data translation and communication.

David Strong is a senior business analyst at Yuasa Battery (Europe), which supplies and manufactures batteries

in association with KPMG and the Lean Enterprise Research Centre at Cardiff University presents:

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The Logistics and Supply Chain Report 09

For more information please see the back page of the magazine

Logistics and supply chain

Visibility is one element, next you have do something with it. Advanced planning and optimisation systems are required to orchestrate the movement of product.

For example, if 10t of product A is in London and 5t of the same product is in Amsterdam, from which location would you satisfy a customer order for 2t in Paris? The answer depends on several factors; the lead time to delivery; the relative cost of transport; what other demands are on stock in those locations; whether the customer order includes other products — product B,C,D — which could be consolidated onto the order, etc.

Visibility is an essential component of global supply chain management but it needs intelligence in the decision support solution to make the best of it.

Highlight one product relevant to SCM for manufacturers that has either had a recent new version launch, or is very popular with customers. In brief what are the key improvements, or why is it proving popular?

There have been two recent new releases that support global supply chain management.

The first, Infor SCM Network Design, helps organisations model their global supply chains and identify the locations, capacities and sourcing options for product that flows through their network. It is highly graphical and supply chain managers can visibly see all their customer demand points, warehouses, manufacturing locations and supplier locations and the movements between them.

In the latest release, Infor included the ability to factor in carbon emissions into the model, so that manufacturers could get an immediate view of their modifiable carbon footprint, and use this data with other parameters such as cost and capacity to model the affect of for example, a 30% reduction in GHG emissions.

The real value of the solution is in the ‘what-if’ modelling which allows manufacturers to assess and model the risk in their supply chains and evaluate alternative strategies to mitigate these. Last year, when energy and fuel prices spiked, manufacturers were re-evaluating their sourcing strategies with the prospect of, what then, was a $200

per barrel prediction. Looking forward, manufacturers can also use this to assess the impact of a proposed green taxation on total cost make-up and whether this would influence their sourcing strategy.

A second complimentary product is Infor SCM Advanced Planner. This can take the results of the supply chain network from the network modeller — or just establish your own network as it is today — and then identify the lowest cost solution to meeting customer order demand from all the millions of permutations of delivering from one warehouse or another, or making in one site or another.

Also very graphical, the latest solution also uses 64bit technologies to handle the additional complexities of managing global supply chains.

with today’s gloomy outlook, “Even around 50% of companies of all sizes are planning to increase their IT investments, according to the EEF. Less than 10% are planning to decrease them

“

Some trading partners — logistics and transport providers — will provide global track and trace information as a published service, which can be pulled into portals to maintain visibility and provide more accurate due date deliveries. Satellite navigation and RFID are also playing their part in keeping tabs on inventory and its movement.

Cost: This software is powerful, sophisticated and expensive. Has your company developed any finance initiatives that help UK SMEs with limited IT investment budgets to buy the software, or build up the full product in a modular way?

Investments in supply chain solutions are always returnon-investment (ROI) driven and given their potential to reduce operational costs and protect margin, are perceived as having strong value.

However, all capital investments are more closely scrutinised and Infor has offered choice to our customers in several ways, from financing options to offering different licensing options for some of our products, including hosted and software-as-a-service.

Many of our solutions are also offered in “business edition” versions, which allow customers to match their requirements to smaller scale solutions with the option to extend to “enterprise” versions in the future if their needs change. Many of our solutions can also be deployed quickly using our Fast Start programme, which aims to get customers up and running quickly, so that they can start to gain the value from their investment in as short a time as possible.

Have your say at www.themanufacturer.com

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Promotional feature

Overlooked workers could benefit business.

Kevin Gordon

Are employers missing out on a pool of talent?

When Kevin Gordon informed his managers that he was losing his eyesight, the last thing he expected was to be offered a promotion.

Kevin lost the eyesight in his left eye when he was a teenager. When he was diagnosed with angioid streaks in his right eye, he knew that he couldn’t continue in his job as a press setter.

Kevin has over 20 years of valuable experience in the manufacturing industry and managers at Makefast Ltd where he works in Newtown, Wales, were not prepared to lose him.

Promoting him to a role where he could help other colleagues develop their knowledge and skills was a way of meeting business needs and addressing the problem of Kevin’s failing eyesight.

Makefast has purchased a range of magnifiers and other equipment to help Kevin do his job.

Adjustments have also been made to make it

easier for Kevin to find his way around the factory. Being practical about his disability has helped Kevin adjust to his changing circumstances and to his new role at work.

Production engineer and manager Mike Mills believes that any costs the company has incurred to retain Kevin as an employee have been worth it. He says: “It’s difficult enough to find good employees. We don’t want to make the pool of talent that is available any smaller, which is why we do what we can to keep good staff.”

To read more about Kevin’s story and find more practical advice about employing disabled people, visit dwp.gov.uk/employability

Mike Mills

Promotional feature

Ways to employ ability: Don’t limit your talent pool by overlooking disabled people - focus on who has the right skills for the position.

Find out what the law says and how it affects you as an employer at dwp.gov.uk/employability Take time out to look at your policies and procedures. Simply having accessible application forms and interview venues could encourage more people to apply for positions.

Don’t make assumptions about disabled people and what they are able to do. Ask them.

Employing a disabled person is no more of a risk than employing anyone else – and a disabled applicant may have talents that could really benefit your business.

Non-disabled people can feel intimidated about how to address disabled people for fear of saying the wrong thing. Look for more advice at dwp.gov.uk/employability/resources Ask for advice on opening your vacancies up to disabled people from the Disability Employment Adviser at your local Jobcentre Plus.

I navigate a busy town centre with a white stick every day.

Business forecasts are easy in comparison.

Jimmy, Financial Controller.

This scenario is based on the typical experiences of disabled people and those with long-term health conditions. Don’t miss out on the talent they have to offer.

For employment advice and information visit dwp.gov.uk/employability

With climate change climbing the corporate agenda, how important is it for manufacturers to bear the crest of their carbon reduction efforts? While real benefits lie beyond the branding, do companies know exactly what these are and is there a self-promotional motive for displaying a green badge? Becky Done finds out

Visit

the website of any big company and it is likely you will find a statement or even a report on its relationship with the environment. For manufacturers, whose work generally involves high energy usage and the production of waste, an environmental policy is becoming increasingly important. Attitudes to the environment have become a way that companies can differentiate themselves from the competition, and attract business from customers and consumers whose buying choices are increasingly motivated by more altruistic factors than pure cost.

Unsubstantiated claims are worth little, however, which is why many firms are seeking to verify their green commitments by using a recognised standard. The purported advantages of this approach include such business benefits as stronger supplier relationships, cost savings and brand enhancement.

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But what is the reality of embarking on a project that will prove your carbon reduction credentials to the world?

The Carbon Trust is a private company set up by the UK government in 2001. One of its objectives is to help organisations reduce their carbon emissions.

Two ways in which it can help manufacturers do this are through its Carbon Trust Standard (CTS) and its carbon labelling scheme, run by the Carbon Label Company, a subsidiary of the Carbon Trust.

Hundreds of companies have applied to be assessed for the CTS since it was launched in June 2008. Replacing what was the Energy Efficiency Accreditation Scheme (EEAS), the CTS is the only certification that measures carbon reduction by a revised method of quantitative analysis, which is complemented by a qualitative assessment that examines the carbon reduction

Sustainable manufacturing

CTS certification will cost the organisation anywhere from £4,000 to a maximum of £12,000 — although existing EEAS certificate holders are eligible to convert for a discount. A pre-assessment is carried out to inform applicants if they are likely to pass, mitigating both disappointment and financial loss.

Initiatives that pay their way

FIS Chemicals in Aberdeen took the decision to seek further accreditation that would build on the BS EN ISO 14001:2004 it has held for many years. “Part of that standard is to look at your energy consumption,” says Lisa Oldman, QHSEE manager for the company, “so last year we decided to go for the EEAS. We achieved accreditation to that scheme in July, just as the CTS became live, so while everything was fresh in our minds we decided to go for that, rather than wait for a couple of years and go for it when our energy efficiency accreditation expired. The reason that we were able to do that is that we have shown continual reduction in our energy consumption over the past five years — part of it is being able to show your figures; your reduction,” she says.

The company has had to drive energy awareness across its operations. “We have objectives in place to try and reduce our energy consumption year-on-year.

Last year, we had an energy awareness month which really focused on how much we can save just by doing simple things, such as having our lights on timers,” Oldman explains. “We tried to do as much as we could just through employee awareness. We’ve shown how much companies can reduce their energy consumption just from initiatives like our Switch Off campaign.”

The company is now seeking to further reduce energy usage this year by using an on-site wind turbine.

Oldman estimates that with all these measures in place, the company will have recouped the cost of the initial conversion from the EEAS to the CTS by the time re-accreditation comes around. “Energy bills are going up all the time, but we have seen a reduction [in costs],” she says. “Hopefully, by the end of the financial year, we’ll see a drastic cut.”

The environmental achievements of FIS are made all the more impressive by its small workforce; it employs just 13 full-time staff. Indeed, Oldman confirms that having achieved the CTS has made a positive impact on the business: “Our customers are very impressed with what we’ve done with the CTS and with the fact that we are a very small company looking to do business in a more environmental way,” she says.

CTS certification is an instantly recognisable sign that a company is making a continuous, quantifiable reduction in CO2 emissions. But there are many other benefits too, including bottom-line cost savings as a result of changes in energy usage. The required corporate cultural change can, the Carbon Trust says, also lead to greater efficiencies and improved team cohesion.

Potentially of greater significance to manufacturers is the fact that achieving certification can reduce the cost of compliance. Take as an example the Carbon Reduction Commitment (CRC), due to come into effect in April 2010. The CRC dictates that organisations that exceed target energy consumption levels must purchase carbon allowances from the time the legislation is introduced. But companies that hold a valid CTS certificate for the qualification period will receive an improved ‘league table’ ranking, which translates into a direct financial return. The CRC is different to the EU Emissions Trading Scheme, already underway, which covers emissions from certain energy-intensive industries (see foot of article).

Bedfordshire-based Abbey Corrugated, a leading UK manufacturer of corrugated board, has experienced this improved ‘league table’ rating from having achieved CTS certification: “The Standard will result in the business having a higher ranking in the CRC league table and therefore will have a positive effect on our tariff,” says operations directors Adrian Swindells.

have objectives in place “We to try and reduce our energy consumption year-on-year. Last year, we had an energy awareness month which really focused on how much we can save just by doing simple things, such as having our lights on timers

“

policies the company has in place. The whole process is carried out by an accredited consultant, selected by the Carbon Trust to match the needs of the individual firm. Certification is valid for a period of two years, after which the company must be reassessed.

Lisa Oldman, QHSEE manager, FIS Chemicals

Like FIS Chemicals, Abbey had already achieved EEAS accreditation when it decided to work towards the CTS. It has found its investment of time and money to have paid off: “We did have to commit some time to setting up relative benchmarks and a denominator,” Swindells says. “But overall, we have saved more on reduced energy costs than the costs of implementation. The Standard is a good vehicle for ensuring that your business has the correct policies and procedures in place to maximize energy and Co² reductions — therefore reducing input costs and improving returns.”

Swindells says that achieving certification has also brought about a welcome shift in workplace attitudes towards energy awareness. “Representatives from all levels of the business have been involved for several years, via a Responsible Care group for energy,” he explains. “This group would bring forward ideas on energy reductions from each area of the business.

We are now much better on business housekeeping with controlled start ups and shutdowns that help to reduce costs. The Standard marks the achievements of not only the group but the entire workforce, and is a driver for further improvements for years to come.”

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As new regulations and other environmental obligations are applied, the incentive to meet certain green standards is set to increase across the supply chain, as firms jostle to fulfill their carbon reduction obligations and maintain their footholds in competitive, cost conscious sectors.

was one of three pioneers that enlisted the help of the Carbon Trust to calculate the carbon footprint across its supply chain. Following an audit, innocent was able to calculate the carbon emissions of some of its recipes.

“Since undertaking the audit we’ve managed to reduce the carbon footprint of our smoothies by 21 per cent,” says innocent drinks’ head of sustainability, Jessica Sansom.

Be seen to be green

In March 2007, emissions for one of its products, the strawberry and banana smoothie, was calculated to be 282 grams. Innocent was then able to take steps in carbon reduction that, nine months later, resulted in emissions for the same product of 241 grams — a 14.5% reduction.

The Carbon Trust has also worked with companies to create a Carbon Reduction Label, which displays the carbon footprint of a particular product. The scheme, first piloted by manufacturers including Walkers Crisps and innocent drinks, is carried out in accordance with PAS 2050 – the publicly available specification setting out the requirements for assessing the lifecycle greenhouse gas emissions of products. Companies are able to benchmark the carbon footprint of a particular product they make, and the label is awarded as a ‘symbol of intent’ that they are actively attempting to reduce it. Crucially, it is not obligatory to demonstrate carbon has been cut to display the label, only that the company has made efforts to cut it.

However, manufacturers should remember that the process is very time-consuming. In addition to the actual calculations, companies need to have their product’s carbon footprint certified against the Trust’s comparability requirements, including PAS 2050, Code of Practice, Comparability Rules and standard secondary data, where appropriate. The initial audit that began the process at innocent revealed many areas where carbon could be reduced throughout the supply chain, which involved in-depth work with the company’s suppliers.

Costs of a carbon labelling project will vary. “The cost of conducting a pilot and having a product analysed varies a great deal,” explains Euan Murray at the Carbon Label Company. “From our experience, factors that influence the costs include the amount and synergy of products to be footprinted, the complexity and size of the supply chain being assessed and the amount of data collection already conducted.” But, just as with the Carbon Trust Standard, the labelling process itself should reveal areas within the business where cost savings can be made. In lean economic times, it can be tempting to reject any ancillary outlay that doesn’t deliver an immediate and meaningful return on investment, but companies will be considering the potential cost savings, and the value that a carbon reduction label could add to a brand.

Following the audit the company also increased the recycled content of its bottles, which reached 100% in September 2007.

One manufacturer famous for its branding is innocent drinks. It

working with the Carbon “ ForTrustus,was not about getting a

symbol on pack that we can use as part of our marketing. It was about setting ourselves a genuine measure that we can use to improve our environmental performance across all areas of our business Jessica Sansom, sustainability head, innocent drinks

“

O2 50

In recognition that the labelling process is several steps on a long road, innocent does not include the label on its packaging. “We want to be sure that it is meaningful to consumers before we go ahead [and use the label],” says Sansom.

“For us, working with the Carbon Trust was not about getting a symbol on pack that we can use as part of our marketing.

It was about setting ourselves a genuine measure that we can use to improve our environmental performance across all areas of our business, and sharing this information with our consumers.”

Sustainable manufacturing

Global ambitions

Carbon labelling is still in its infancy, so it is too early to measure its influence on consumers. But buyers’ attitudes towards energy efficiency are certainly shifting. For example, when buying white goods such as fridge freezers, consumers are now looking for A and A* ratings. By law, the European Community Energy Label must be displayed on all new household appliances displayed for sale, hire or hire purchase. This label informs the buyer of how efficient the product is by displaying how much electricity the product uses in kWh, rating the appliance from A to G. The Carbon Trust is working towards footprinting projects in the US, China and continental europe, and Murray says the company would welcome the introduction of a single, recognisable Carbon Reduction Label worldwide: “The PAS 2050 was developed as an international standard and is freely available for download in every country.

The consultation process to develop the standard included more than 1,000 different stakeholders from around the world. It was also informed by the 20 pilot projects run by the Carbon Trust; every one of these looked at products which had an international supply chain.

“Looking ahead,” says Murray, “the Carbon Trust will participate in both the GHG Protocol’s Supply Chain Initiative, run by the World Resources Institute and the World Business Council on Sustainable Development, and any future ISO developments. In this way, the PAS 2050 and the thinking behind its development will play a significant role as a foundation document for any future international product emission standards. We are therefore confident that it can and will be adopted internationally.”

As environmental labelling is relatively new, opportunities still abound for companies to position themselves as industry leaders and pioneers who are forward-thinking and prepared to invest for the greater good of society.

It is possible that those organisations which take part in such initiatives early on will be better equipped to meet future carbon targets, and benefit from a competitive advantage.

If your company is thinking of investing time, money and effort into carbon reduction initiatives, you could well be placing yourselves ahead of the game.

Casestudy Walkers Crisps

Carbon labelling Part of PepsiCo, Walkers Crisps was the first company in the world to display the Carbon Trust’s carbon reduction label on a consumer product, having worked with the Carbon Trust since 2001 and having measured the carbon generated in the manufacture of its products since 2005.

CO 2

“We took the step because we were confident that introducing the reduction label to one of the UK’s biggest consumer brands would raise consumers’ awareness of the link between carbon emissions and the products they buy, set a new benchmark for transparency on environmental performance, and give a clear goal for our business — and our suppliers — to aim for,” a spokesperson from Walkers explained.

The company kept its customers in mind when introducing the label: “With growing consumer demand to know more about the ‘carbon cost’ of the goods that they buy and what companies are doing to reduce it, we decided to display the results on pack, to enable consumers to see our clear commitment to reduce carbon,” says Walkers. “[Our] research shows that the label and the commitment to reduce has a positive impact on how consumers perceive a brand and their likelihood of buying it — although this was not our motivation in introducing the label.”

The project has also helped Walkers to realise bottom-line benefits as a result of improving its energy and water usage efficiency. The company also advises that collaborating with suppliers can deliver further benefits: “Close working relationships with external partners are essential. Since the end of 2007, we have brought together our key suppliers through a series of sustainability summits, and become a founder member of the Carbon Disclosure Project’s Supply Chain Collaboration.

This gave us the opportunity to look at common risks and opportunities, and to share learning and carbon minimisation approaches. We are now in a position to reduce our combined carbon footprint.

“Ultimately,” Walkers concludes, “the long term objective is that more products will display the carbon reduction label, so that more companies step up their efforts to reduce their carbon emissions.”

To find out if your company is covered by the CRC or the EU ETS, go to Defra’s website: www.defra.gov.uk

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Development A

diary of product development

Evora

journey The

This month we have achieved several milestones in bringing the Evora to our production lines. We are in the final stages of finishing the car’s VP build (see Dec/ Jan issue of TM) and we have now seen the very first ‘production’ car enter our production system

We

were very proud to produce the first complete set of right–first-time Evora body panels from our body shop earlier in the month. These achieved the full engineering specification without any further need for engineering support input. Our principal manufacturing engineer Paul Allen says: “It is a great achievement to have got to this stage of quality so quickly. It shows a high level of commitment and effective teamwork from all concerned. We now have full confidence that we can produce exacting standards for our customers.”

Paul’s comments reflect the approach that Lotus has insisted on to ensure that all the parties involved in producing the Evora work very closely together.

Our Station Readiness programme has also gathered momentum. Its main objective is to confirm that we can build high quality, repeatedly, on every workstation throughout our production system. This means that all process documentation must reflect capable processes in sufficient detail to describe how each operation must be performed. A ‘process sheet’ will include a specific standardised work sequence and relevant care points for each operation. Part numbers and tool listings, together with visuals, are also included. These documents are used as the sole reference point for training and for problem solving.

Quality standards are also documented and made explicit for the team member.

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The Evora journey is a monthly diary column following the production journey, from design to road-legal model, of the new Lotus Evora.

Guest tour

Now that we are up and running with the car, we have also had the pleasure in recent weeks of meeting many individualistic, true sports car enthusiasts determined to be among the first to buy the new Lotus Evora, many of whom have already placed deposits. Lotus CEO Mike Kimberley personally invited several Evora customers to come and enjoy a ‘Lotus Experience’ day out at our plant in Hethel, Norfolk. Mike’s invitation provided a rare opportunity for customers to meet some of the key Lotus personnel behind the car’s design, engineering and development. Our guests were also treated to see some of our most secret and secure facilities where new Lotus projects are born.

This was followed by a tour of our production facilities, where they were able to see the final development and first pre-production Evora cars being progressed through the production lines. This gave them a closeup view of our unique manufacturing process and also to meet some of the people engaged in building the cars.

After a private lunch with members of the Evora team, customers were treated to a true Lotus driving experience (with the help of a Lotus Elise and one of our most experienced test drivers). This, we like to think, gave each of them a ‘close-up’ feel for the sublime driving characteristics and performance that only owning a Lotus can bring.

Takeover y r dia

A diary of a

takeover

Surviving the recession

In the latest entry of the diary of Wigan manufacturer Kanban Sheet Metal’s takeover, new company owners Mark Blayney and Paul Bell consider how productivity improvements at the firm have bedded in

“THE

recession has meant that the time and money spent on promotion, sales and marketing – which should have generated a good degree of growth in a more normal environment – has so far only balanced the business lost, as other customers have reduced their demand levels.

The good news is that the drop in sales to existing customers appears to have stabilised, and the business is gaining four to six new customers each month, which allowed the company to start 2009 with a full month’s worth of orders in place.

This put the pressure back onto production, made all the more challenging by our bold commitment: “If it’s late you don’t have to pay”. But the benefits of the move towards single piece flow manufacturing have now really become evident.

The company has been in the fortunate position of being able to tap the expertise of Manufacturing Excellence, its associated consultancy and training company, to plan the new operation.

The old processes were value stream mapped, and a future state was identified in which lead times could be reduced by 70% and capacity increased by 100%.

This transition has taken more than two months to achieve and has cost in the region of £50,000. Large machines have been moved closer together, conveyors installed, extraction booths have been designed and built in-house and services connected.

Now that the new cell is being run in earnest, the planned improvements have been realised. The

cell has allowed single piece flow operation, with conversion from sheet steel to finished products (arriving at the paint line) in less than an hour.

Production manager Tony Swarbrick is rightly proud of the big improvement he has managed, and his team have now had the opportunity to put their improvement training into practice.

Lead times have come down by 70% as planned, and a capacity increase of 100% is available. The customer delivery commitments are being successfully met, but there is still a substantial amount of unused production capacity, so the company is now pushing ahead to win more business to really maximise the benefits of the improvements that have been made, and convert capacity into profitability.

Paul Bell is a graduate of Cambridge and Cranfield and is a manufacturing improvement consultant. He founded Manufacturing Excellence, a leading specialist in lean and agile manufacturing consultancy and training in the north of England.

Email: Paul.bell@manufacturingexcellence.co.uk, Mark Blayney is a chartered accountant and member of the Institute For Turnaround and managing director of Turnaroundhelp, a consultancy specialising in crisis financial management and the mentoring of owner-managed businesses in recovery, as well as finance raising.

Email: help@turnaroundhelp.co.uk

Contacts: Manufacturing Excellence: 01748 831908 Kanban Sheet Metal: 01942 520200

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Specialfeature CAM software options

Why best in class beats the single vendor solution Martin Bailey discusses the CAM software options available to owners of CNC machine tools

There

is a trend by some CNC machine tool manufacturers, in any market sector, to push a complete integrated CAM software and hardware solution. While this does provide the customer with a single point of reference, there are many hidden pitfalls. It can often be considerably more expensive in the long run and can also be restrictive when the company looks to buy new equipment in the future.

Companies that are purchasing new CNC punching or profiling machines for the first time may not be familiar with the options available to them. They will no doubt review a selection of machines, each supplied with a recommended CAM system, and may not spend the time to correctly assess whether the software is the right solution for the hardware.

The main function of the CAM software from the machine’s perspective is to generate good quality NC code to tell the machine how to function. However, this is not the only purpose of CAM software – a good CAM system needs to be able to: Import a variety of CAD formats, and be able to intelligently clean ‘dirty’ files Provide easy and functional ways of applying cutting information to the part Nest parts efficiently, which can provide significant material savings Optimise the cutting path, which can deliver substantial reductions in job runtime Integrate with legacy data systems such as MRP Support many different machines as opposed to just one machine supplier Provide ease-of-use. Must also be manageable and scalable

The biggest issue is that vendor-branded CAM software will almost always only drive that particular brand of machine, and may also only be limited to one cutting technology (e.g. punching or profiling). If your business expands and you decide to buy more machines, you will then be either forced to buy the same machine brand in order to maintain compatibility for your CAM-generated parts or you will have to run two CAM systems, which in itself opens up a whole ream of new problems: staff

54

training becomes fragmented, with some staff knowing/ preferring one system over another, and it may be difficult or even impossible to move jobs between machines.

Tricks of the trade

CAM software is a value-added product for a machine tool, yet the machine cannot be driven without it.

Vendors will often use the software as part of a discounting structure – buy the machine and we’ll give you the software. This often seems like a deal not to be missed, but it often equates to less than one per cent off the overall price. This can also affect the ongoing maintenance costs, as hardware maintenance generally costs considerably more than software maintenance, so you end up paying extra year on year.

A machine tool vendor may quote an integrated solution, but this integration is often only between the CAM software and machine tool, which you would expect anyway. True integration, and subsequently automation comes when your CAM system can communicate seamlessly with all applications that need to interface to it, including any CAD systems, machine monitoring equipment and your MRP or ERP system.

Performance and usability are also key factors. A cheap but cumbersome system will quickly cost you more in man hours if all but the simplest tasks take time. Compare common tasks such as importing/ cleaning a CAD file, applying tooling, nesting and generating NC code. A CAM system should save you in three key areas – programming time, machine runtime and material utilisation. If you can automate common tasks then programming time will be minimal.

Machine runtime is also a considerable factor. No doubt you know what your machine and staffing costs are per hour – compare NC code from your selected CAM systems by running them on the machine to see if there is a significant different in run time. Features such as common line cutting, intelligent lead-ins and optimised sequencing can shave hours per week off your machine runtime, allowing significantly more throughput. Finally, material efficiency is becoming more important, especially with many material costs doubling in recent months. Even a one to two per cent difference can yield savings of thousands of Euros.

Martin Bailey is the marketing manager for JETCAM International, and the author of several marketing and technology sector books.

Knowing the benefits that a good all-round CAM and nesting system will deliver, coupled with the pitfalls of choosing the wrong system, is only half the battle. In the second part of this article you’ll learn your legal rights during pre-sales discussions and can follow our CAM buyers’ checklist.

Manufacturinginaction Putting UK manufacturers under the spotlight Elekta

Factory of the month

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Taking care of business to help treat cancer – Jayne Flannery reports on a Crawley-based company that specialises in equipment for radiosurgery and radiation therapy

Seven Seas

Vitamins, Minerals and Supplements

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Getting the tactics right in terms of branding and people, along with a little human kindness, has made it plain sailing for vitamins, minerals and supplements producer Seven Seas.

Mark young reports…

Gripple

Suspension Equipment

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Steady as they go… Mark Young finds people are “the bedrock of business” for joiner, hanger and wire tensioner maker Gripple

UV Modular

Automotive

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This West Yorkshire based firm’s design, construction and supply of ambulance fleets makes for healthy business all round. Ruari McCallion examines the finer details

BAE Systems

Aerospace and Defence

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Mark Young takes a lean look at BAE Systems’ efficiency initiatives at its Eurofighter and F35 factory in Samlesbury, Lancashire

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Making the future Possible

Steve Wort, VP of Global Manufacturing and John Williamson, Quality Assurance Director, talk about the evolution of the human care business of the Elekta Group as it becomes a full-scale partner in the delivery of the world’s most efficient cancer treatments. Jayne Flannery reports

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Factory of the month Elekta Group

Most corporates profess to care deeply about

something other than their bottom line. Only a tiny number though can draw any kind of comparison with the mission of human care solutions provider Elekta. Headquartered in Sweden, this global business group has the value of human life at the essence of what it does.

Elekta´s aims are simple. As the world leader in image guided and stereotactic clinical solutions for radiosurgery and radiation therapy, it exists to improve, prolong and save human life. After twenty years in the business, Steve Wort, VP of Global Manufacturing and John Williamson, Director of Quality Assurance both find this proposition uniquely gratifying.

“Every second a patient somewhere in the world comes into contact with Elekta equipment or equipment that is driven by our software,” stated Wort. “We are improving patients’ life chances and that brings us a great sense of satisfaction.”

Solutions in oncology and neurosurgery developed by Elekta are in use in over 5,000 hospitals spread across seventy different countries. Every day more than 100,000 patients receive diagnosis, treatment or follow-up with the help of a solution from Elekta.

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Every second a patient somewhere in the world comes into contact with Elekta equipment or equipment that is driven by our software Steve Wort, VP of Global Manufacturing, Elekta Group

The company came to life some fifty years ago as the brainchild of the late Professor Lars Leksell, a neurosurgeon with a passion for innovation who revolutionised neurosurgery with the sterotactic concept, which allowed for much greater precision in the placement of instruments in the brain during surgery. Leksell had the vision to realise that anything which reduced surgical intervention and patient trauma could only have a positive impact on the forbidding levels of mortality that were a feature of many cancer treatments throughout the first part of the 20th century. The emphasis on techniques and treatments that are either non-invasive or minimally invasive, but clinically effective, continues to this day.

From modest beginnings as a small family-owned company, Elekta underwent many changes. The sixties and seventies, for example, were decades of innovation, the results of which subsequently had to be commercialised. Then came internationalisation and the development of a global reach and identity in the 1990s.

A stream of acquisitions has since broadened and deepened the portfolio. Elekta never wanted to be a niche player on the sidelines. The aim was to develop a presence in every aspect of the cycle. Steve Wort and John Williamson both joined Elekta in 1997 when the company – still a relative minnow with just 400 employees – swallowed the much bigger fish embodied in the radiotherapy division of Philips Medical Systems. “This immediately established Elekta as a major player in cancer treatment. Prior to this the portfolio was centred on radiosurgical and neurosurgical equipment,” explained Wort.

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Factory of the month Elekta Group

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We cannot back engineer our existing portfolio. It is now a question of ensuring that future generations of our products are engineered with modularity in mind

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Other acquisitions quickly followed. The jewel in the crown came in 2004 with the acquisition of US company Impac, the world’s largest provider of oncology related software. “We now see ourselves positioned very much as a solutions provider,” he added. “The addition of Impac software means that we are now involved with patients from the earliest consultation through to post treatment follow-up. We have increased our presence at every stage of the treatment cycle.”

Steve Wort, VP of Global Manufacturing, Elekta Group

Eastern expansion

Another key milestone was the development of a wholly-owned manufacturing capability in Shangahai, China in 2001. It was subsequently joined by a second facility in Beijing when Elekta purchased most of the shares of the Chinese company BMEI in 2006. This site was originally producing entry level linear accelerators for the domestic market. Elekta has brought the product up to international standards to produce the new Elekta Compact – a competitive linear accelerator for high quality conventional radiotherapy which has been configured for countries which need to rapidly reinforce and advance their treatment capacity.

“Creating a manufacturing presence in China was a way of quickly gaining entry into one of the world´s biggest and fastest growing markets. It also had the associated benefit of providing a local infrastructure to source materials at a low cost for our UK manufacturing base in Crawley,” explained Wort. The main manufacturing plant at Crawley now sources an increasing percentage of its raw materials and components from China and the trend is set to continue.

“A key facet of our strategy for future growth is to be able to manufacture and source in the most cost efficient regions,” he continued. “Even though our forecast savings have diminished because of the weakness of sterling, we are still seeing positive effects from being able to source and manufacture in China.”

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Tailored solutions to the medical devices and pharmaceutical industries Are you looking for a proven supplier to provide real solutions into highly regulated manufacturing industries?

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lobe Microsystems Ltd has been sucessfully serving the manufacturing industry for 17 years. Globe is a niche supplier, supplying tailored solutions to the medical devices and pharmaceutical industries. Globe also supplies specialist support, maintenance and supply to a range of manufacturing clients.

Globe’s philosophy entails knowing our clients inside out. We develop and nurture staff within Globe, gaining specialist knowledge within our client base, allowing us to provide intelligent and cost-effective solutions.

Where we supply computer equipment to client specifications, we pride ourselves on our product knowledge, our knowledge of our client, our adherence to the client’s quality control systems, our conformance to our own quality control systems, and our ability to configure and integrate solutions quickly, effectively and at competitive price levels.

Our products range from a simple support contract, consultancy or hardware supply, through to managed specialist applications and customer specified builds, all in highly regulated industries.

We are heavily involved in our clients’ internal quality assurance and approval procedures, usually providing approvals within the remit of our supply. Where necessary, our supply doesn’t stop until we have secured qualification of our supply with the client.

Globe supplies equipment from a wide range of computer hardware manufacturers, electrical component manufacturers and specialist software

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solution providers. Globe often requests user-specific changes on relatively short runs, and specific requirements are often fulfilled at very short notice.

Globe has the ability to build specialist applications from component level up, and on very short runs. Our history of supplying the pharmaceutical and medical manufacturing industries, and the UK government, is indicative of the highly scalable and reliable nature of our solutions.

We support and supply to highly specific businesses, where accuracy and reliability are paramount. Again, our knowledge of the client is thorough, providing Globe with the insight to provide a complete, outsourced solution.

Our knowledge of the aftermarket for spares, components and items coming to end of life means that Globe can stock up on items that are going to become scarce in order to secure supply for our customers. Where our customers are highly regulated this gives them time to test, qualify and introduce upgraded product without interruption of supply.

A particular emphasis at Globe is using our knowledge of the IT market to assist companies in specifying alternative solutions. Where Globe has had particular success is in providing graphical, highresolution solutions to Elekta, switching from a specialist graphic supplier to higher end, more readily available solution, at significant cost savings.

Globe is able to do this across the board, from server specifications through to printing solutions.

Keeping track of your organisation’s software technology presents a unique set of challenges. In contrast to hardware, software is difficult to control. If you want to effectively manage your organisation’s software assets, Globe offers a thorough understanding of software licensing and help with the complexities of the many agreements offered by the software manufacturers. We help you choose the right agreement and maintain your software assets and costs.

We offer guidance and understanding of software and assist in completing and reviewing your licensing contracts. Globe will look at the detailed cost benefit and compare applicable volume licensing, OEM and boxed product options.

Globe is here to support you in your internal software deployment and migration strategies, as well as with your OEM solutions. We will tell you which versions you can upgrade from or to, and suggest competitive upgrades when they become available.

To discuss specific projects and requirements please contact Lucien Bartram using the details below.

Published in association with: GLOBE MICROSYSTEMS LTD Tel: 01372 471000 Email: lbartram@globemicro.com www.globemicro.com

Factory of the month Elekta Group

During the process, Elekta has developed a high degree of competency in shifting manufacturing, not just from one site to another, but also from one country to another. “The learning curve we have undergone in transferring design and manufacturing functions from a European into a Chinese supply base has been very steep, but will serve us well in the future. We are ready to move to wherever economic indicators suggest is best for our overall efficiency and next time we will be able to accomplish it with much more speed and agility,” said Wort.

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Lean for us has been all about bringing focus into our activities and developing a culture where people are brave enough to try new ways of doing things John Williamson, Quality Assurance Director, Elekta Group

Move towards modularity

The radiotherapy side of the business now has a total of three manufacturing sites, but the neurosurgery side of the business is handled very differently. Here the manufacturing strategy has been built up around modular design. Each module is fully verifiable, but built independently wherever it can be done most cost effectively in the supply base. The product comes together for the first time on the customer’s site which is where full integration and customer acceptance takes place.

Leveraging the opportunities inherent in globalisation means that a clear manufacturing strategy must be in place.

Wort believes that a modular approach can best give the flexibility needed to adapt to economic changes on the world stage. “In future it is our intention that radiotherapy will follow the same strategy and vision,” he stated.

Given that a final assembly may have as many as 15,000 components arranged in approximately one hundred subassemblies, the challenge is clear.

“These are complex, computer controlled electro-mechanical systems that must be maneuvered to sub millimetre levels of accuracy. A typical machine weighs in excess of six tonnes and, just in order to be shipped, has to be taken apart, divided into sub-components and then put together again in situ, which already means a lot of non-value added activity. Modular design and build will not only let us manufacture and supply globally, it will also eliminate this sort of waste,” he said.

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The complete solution to your wiring needs Ryman Control Systems (RCS) is a leading specialist electronic wiring sub-contractor

RCS

operates from modern premises in Faygate, West Sussex and is conveniently located close to the M23 and Gatwick Airport for easy access.

RCS has operated from West Sussex for over 30 years. The company, Ryman Control Systems Ltd, was incorporated in April 1995. Prior to that, the firm, Ryman Control Systems, had operated since formation in 1978. Throughout this period we have worked on behalf of customers in many varied industries, including thermal analysis, medical, flight simulation and automation. All our clients are assured of a complete confidential service.

RCS has extensive experience in prototype and development work,

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providing the complete solution to your wiring needs, which includes cable assemblies, electronic subassemblies, panel wiring, prototype and development, cable looms, procurement and kitting services and IP65 control cabinets.

RCS works closely with our clients throughout the process, from the original conception to full production, providing the complete wiring package.

We concentrate on giving both a professional and personal service.

Our workforce is trained to the highest standard. All items manufactured by us are thoroughly tested before they leave the premises.

We use an extensive range of test and calibration equipment and where necessary, we custom-build our test equipment.

RCS is proud to operate to ISO9001:2000 standard and has been accredited since 1997. RCS is very proud to have worked closely with Elekta Ltd for over 20 years.

Published in association with: Ryman Control Systems Tel: 01293 851865 Email: info@rymancontrol.co.uk www.rymancontrol.co.uk

Factory of the month Elekta Group

Set within this context, the current focus on lean thinking in the business has not stressed manufacturing as its starting point, but product creation. “We wanted a wider remit in driving the concept of continuous improvement through the business,” explained John Williamson. “The Manufacturing Excellence Programme that was a part of the Philips legacy left us with an awareness of lean concepts and tools, but no systematic attempt had been made to take it forward or adapt it to the new needs of the business.”

He continued: “Lean for us has been all about bringing focus into our activities and developing a culture where people are brave enough to try new ways of doing things; it is about being pro-active in regard to change and developing a positive approach to risk-taking. Until two years ago we had no coherent continuous improvement programme, just lots of fragmented, independent initiatives. Now lean is the primary process that lies behind all our efforts to improve quality and productivity and cut lead times.”

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Eight per cent of our revenues are re-invested in research and development activity and a key challenge for us is reducing the time it takes to bring new products to market

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Elekta is still some way off fully realising this vision and Wort explained why it takes so long to implement. “We cannot back engineer our existing portfolio. It is now a question of ensuring that future generations of our products are engineered with modularity in mind,” he said. There are also issues to be resolved around final integration. “If a product is designed to be modular, then the challenge is one of managing the interfaces between the modules,” he added.

John Williamson, Quality Assurance Director, Elekta Group

It is a highly regulated industry and this can lead to frustration.

Williamson sees lean, with its focus on processes, rather than departments and functions as the best way of creating

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Factory of the month Elekta Group

Our ability to offer this service to Elekta has prompted recommendations to other suppliers and we now also supply Elekta parts to no less than three other companies.

WRW Engineering are a team of experienced engineering professionals with a proven track record as a subcontract engineering service provider.We possess a unique combination of in-house skills, which includes machinists, electrical and mechanical assembly engineers, supported by a proven supplier base enabling us to provide our clients with a one-stop-shop engineering service.

A host of improvements can be evidenced, but one of the most important has been the 40 per cent reduction in lead time from customer needs to implementation.

He believes that lean is acting as a catalyst in unleashing the full potential of Elekta´s talent for design and innovation. “What we are witnessing now is the company starting to take huge strides forward in adding efficiency and value to its products and processes,” he explained.

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What we are witnessing now is the company starting to take huge strides forward in adding efficiency and value to its products and processes Steve Wort, VP of Global Manufacturing, Elekta Group

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WRW Engineering WRW Engineering has been a business partner of Elekta for some 20 years with many parts being delivered directly to the shop floor on a “just-in-time” basis. It is therefore critical that parts are delivered correct and on time every time.

a common operational and cultural ethos across ever more diverse geographical locations. “We have 100 development engineers working in the UK plus 30 support staff from functions other than R&D. We needed a process to unify their efforts and help achieve consensus in multi-functional teams,” he said. “Eight per cent of our revenues are re-invested in research and development activity and a key challenge for us is reducing the time it takes to bring new products to market.

This is where lean can play a big role,” he continued.

In the next phase of Elekta´s evolution, both men want to see the company grow by strengthening the emphasis placed on collaboratively developed solutions to specific technological and treatment challenges. “It is patient care that sets us apart and the emphasis that we place on providing a total solution. The optimum solution can always best be found by collaborating as closely as possible with our customers – hospitals, research institutions and universities,” concluded Wort.

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VMS

Seven Seas

Sailing through the economic storm

Seven Seas is the UK’s marketleading manufacturer of vitamins, minerals and supplements (VMS). Part of the German Merck AG Group which turns over €7bn a year, Seven Seas manufactures, markets and distributes from Hull, East Yorkshire. Mark Young explores how the company has made great strides in efficiency through a number of continuous improvement activities

With its own on-site oil refinery, Seven Seas makes a range of cod liver oil products, pro-biotics, multi-vitamins and herbal remedies, along with a range of supplements aimed at children under its Haliborange brand.

At the beginning of 2008, Seven Seas’ finance and operations director Chris Chambers embarked upon a radical overhaul of the firm’s production processes to allow it to comply with the modern obligations of a fast-moving consumer goods organisation (FMCG).

Had he not, the firm would probably not be in the secure situation it can be found in today. “With everything that’s going on at the moment with the economy – how we’re getting killed with regards to sterling versus the dollar and the rise in costs of raw materials – it’s been very timely that we’ve started to see our operations becoming significantly more efficient,” said Chambers. “It has allowed us to offset these kind of external macro issues that the business faces.

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Cost-effective solutions PolPharma Services was invited by Seven Seas to provide a proposal to improve efficiencies and GMP standards on four Biochem tabletmoulding machines

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hese machines had been in production for over 30 years, and the cost to replace them with new would have been in excess of ÂŁ100,000 each. Working with Seven Seas, PolPharma fully overhauled, rewired and updated the machines to provide a cost-effective solution to the project with a saving of up to 50 per cent on capital expenditure. Efficiencies on the machines were improved by 25 per cent and quality of the finished product was greatly improved.

Following the success of this project, PolPharma was given the opportunity of looking to improve efficiency of existing

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King SC12L tablet-counting machines.

The main issue was the length of production downtime during product changes. PolPharma redesigned the counting head and internal mechanical parts, enabling easy operator access to the internals of the machines for thorough cleaning. Duplicate change parts were manufactured, allowing pre-cleaning of one set of parts whilst the machine was in production. This combination has reduced changeover time by approximately 40 per cent.

PolPharma has supplied Seven Seas with fully refurbished King SC20L

and SC10L tablet-counting machines, two CS180 and one CS180ROPP rotary capping machine, complete with size change parts at very competitive prices compared to the cost of new equipment.

Published in association with: PolPharma Services Ltd Tel: +44 (0)1494 437914 Fax: +44 (0)1494 461173 www.polpharma.co.uk

VMS

Seven Seas

“If we hadn’t of embarked on this journey at the start of the year we would have had some serious problems with regards to the bottom line at this stage.”

Chambers said the changes have, in fact, lowered the firm’s material costs and this has been key in preventing it from joining the list of the manufacturers that have had to reduce headcount.

Not quite a year on, the firm’s OEE – overall equipment effectiveness – has rocketed from 46 to 70%; an improvement Chambers felt was ambitious when he set an eighteen-month period for it as he first began his role.

So how has this been achieved?

According to Chambers, the two main factors a company must consider are its branding and its people. But, in reality, what that equates to is quality

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The idea of saving a second is slightly underwhelming until it is put in the context of a 10-second cycle.

But that’s a 10% improvement in line output and efficiency. “Historically, the focus for this firm has been ‘how do we build the brand?’ from a consumer mindset.

The processes that have been adopted over the years have been very solid and robust. But have they been efficient in an FMCG environment? The answer to that is ‘no’.

“The Tescos, Boots and Asdas of this world are in that environment and that’s what they look for. So, simply put, that’s what we need to supply.”

Efficiency can no longer be contravened by quality. But the same is true vice versa. “The key thing is that when somebody buys a Seven Seas brand they are buying it because of the quality in raw materials and production that we’ve used. So our top prerogative was to make sure during the changes that have been taking place that the quality has not been compromised in any way and that there are no issues with any of our products. No dilution in the process or quality, just flexibility.”

So to address efficiency, Chambers first had to address the company culture.

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VMS

Seven Seas

bridges the gap between management and the shop floor and reduces hostility towards change.

An example of the actual continuous improvement initiatives implemented is on the Cod Liver Oil filling line. Using a bottleneck analysis technique, a team determined the slowest processes on the line and investigated the possibility of increasing speed through cycle time reduction methods.

The benefits of this included: doubling throughput, sustained performance in customer service at 100% and an increase in OEE of 35%.

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All we needed to ensure was regularity of supply and consistency in our manufacturing process to turn the oil around in a comfortable timescale

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The main initiative that has helped to achieve this is the implementation of an internal continuous improvement team, made up of staff from the shop floor who have been chosen to champion the cause.

Seven Seas pulled in Lauras International, a consultancy firm offering rapid improvement solutions for manufacturing firms. Lauras set up a number of primary initiatives and held three-week training programmes where Seven Seas staff learned about things like energy efficiency, bottle-necking, downtime reduction, mistake-proofing and defect eradication. These sessions were to enable the internal staff to continue the improvement journey from the inside after Lauras vacated the site. The continuous improvement team was chosen from those who fared best in training and were most empathetic to the ideals.

The importance of having in-house-led implementations, says Chambers, is that workers are more responsive to ideals that are touted by their peers – people who are on the same wavelength, have common objectives and are not afforded a superior status within the institution. It

The main profit however, claims Chambers, was not the actual direct efficiency improvements themselves, but the unlocking of people’s ideas and skills from the demonstration that the initiatives they had been working on could actually make a significant change. “The difference a second can make…”,

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VMS

Seven Seas

Chambers heard one of his team remark when the results were communicated to the team. “The idea of saving a second is slightly underwhelming until it is put in the context of a 10-second cycle. But that’s a 10% improvement in line output which is clearly a massive enhancement.”

Also on the agenda was absenteeism. At over 11%, Seven Seas’ sick rates were well above the average for both manufacturers and businesses in general, which is usually around four to seven per cent.

Since the beginning of 2008 and the start of Chambers’ reign, that figure has been slashed by over half.

“Certainly making people feel part of a team, constantly working with the initiatives and with regular communication about how we’re getting on has given people a refreshed emphasis on getting in and the staff feel they are coming into the workplace for a reason now. We are all involved and we all feel a sense of responsibility.”

Another of the most effective initiatives that has been implemented is justin-time deliveries. The firm used to receive shipped oil twice annually and would store it until it was needed.

This approach was costing a lot of money in working capital for buying vast quantities in advance, the physical storage it required and the man hours in logistics required to deal with the stock. “All we needed to ensure was regularity of supply and consistency in our manufacturing process to turn the oil around in a comfortable timescale,” said Chambers. “That has radically reduced the level of stockholding and cut the costs of working capital immensely.”

Twenty-five per cent of the company’s products are currently shipped abroad; though this is a figure that’s set to increase over the next few years. This is initially due to the benefits of exporting while sterling is weak but mainly because Seven Seas, as its name suggests, is currently something of a big fish in a small pond – it has worldwide aspirations. That’s not to say its supply

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“ Chris Chambers Seven Seas’ finance and operations director

It’s about making people feeling better about the business and feeling more positive about their own roles within it

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Having completed a full review of occupational health and safety, including full staff retraining and a lean approach to vigilance to prevent long-term sick leave through injury, Chambers used the continuous improvement programme to challenge his people’s mindsets. It hasn’t been “a case of wooden stick,” he says. “It’s about making people feeling better about the business and feeling more positive about their own roles within it.

chain couldn’t already be described as global – some of its main markets include Oman, Saudi Arabia and Nigeria; and all of its oil is sourced from the Nordic region.

Yet not all of Seven Seas’ foreign activity has a commercial angle. The company is set to send 250,000 Vitamin A, C and D tablets to Goa, India, where they will be distributed to undernourished children. Chambers organised the move after hearing of the shortage of supplements available through Walking Tall, a UK charity based in India. He touted the firm’s cost saving exercises as the enabler of the move.

“It is great that due to our improved efficiencies on our operations side, we can invest in charitable causes such as Walking Tall,” said Chambers. “In the UK we take for granted that our diets will allow us to have the right level of beneficial vitamins we need. It is crazy in this day and age that many children in India have vitamin deficiency-linked illnesses like rickets when it is so easy to rectify.”

Overall, Seven Seas has realised that while business, especially these days, is not always plain sailing, there are only two real options when the ship turns over — you can sink or swim.

When you swim, you make small progress forward but when you sink, you die. As long as you’re going in the right direction, keep swimming — you’ll get to solid ground eventually.

Suspension equipment Gripple

“People business”

are the bedrock of

Gripple makes wire joiners,

tensioners, suspension systems and earthquake bracing systems – tools used to stabilise things and secure them down.

The effectiveness of its products is a close analogy of the HR inside the firm.

“The starting point of any success is first-rate people,” says Gripple managing director Mark Edmonds, “first-rate people and a first-rate culture to support them.

Without those you might as well forget about it.”

So how do you ensure you’ve got the best people in the right frame of mind?

Gripple use a company called Management Bank for their recruitment needs. The firm is nearly 20 years old and, as a specialist in manufacturing recruitment, has had its

With a turnover that has rocketed 20 per cent to £25 million in little over two years, the success of Sheffield-based former Manufacturer of the Year Gripple cannot be put down to any one thing.

But without its 200-plus employees, none of it would be possible at all, as Mark Young discovers services utilised by Gripple since the turn of the millennium.

Also based in Sheffield, the company is able to afford Gripple the bespoke care and attention required to bring the right staff in when needed.

Management Bank assigned Gripple a personal account manager, Deborah King, who has been working with them since the start of the two firms’ relationship. She works from Gripple’s site at least once a month in order to keep in touch with what’s happening at the company.

“She understands our culture,” said Edmonds, “and that means she knows exactly what we need and she gets it for us.”

It’s this kind of personalised service along with consistently successful appointments that has led to Management Bank becoming one of only two external shareholders in Gripple – a mark of respect that speaks for itself.

“We wouldn’t allow a company who didn’t have the best interests of this company at heart to share in our success,”

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MANAGEMENT BANK Recr uitment

Outsourcing

Search & Selection Recruitment Advertising Interim Management

• Executive & Operational • Sales & Marketing • Finance, HR & Administration • Export & Bi-lingual • PA’s & Secretarial • Production Management • R & D, Technical & Quality • Project, Mechanical & Electrical Engineers • Design Engineers & CAD Operators • Supply Chain & Procurement

We’ll Manage Your Expectations…

Aizlewood’s Mill, Nursery Street, Sheffield, S3 8GG. Tel: (0114) 2376660 Email:admin@managementbank.com Website: www.managementbank.com

Recruiting success Recruitment plays a hugely important role in the success or failure of a business

D

espite current global economic concerns, UK unemployment is still at a relatively low level and finding high calibre people within manufacturing remains a tough task which is likely to get harder because of skills shortages and the predicted reduction in the working population.

Management Bank is an owneroperated recruitment solutions provider which is different; the directors work hands-on in the business, therefore the company does not suffer the constant staff turnover that many of the larger recruitment consultancies experience, and it is able to build up and retain the knowledge of the types of people employed by its client companies.

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Director Deborah King says: “Our different approach has helped us develop long-term partnerships with leading manufacturing companies, some of whom use our services on an exclusive, retained basis. These companies share common values and goals and always believe people are the bedrock of any successful organisation.”

Seven years ago, Queen’s Awardwinning Gripple outsourced its recruitment to Management Bank with impressive results, not least a 25 per cent reduction per annum in recruitment costs.

Over 100 people have joined Gripple through Management Bank during that time, in permanent positions from director

to production operative. The cost effective outsourcing service allows Gripple staff to focus on the day-to-day core business functions while gaining the services of specialist recruitment managers with 20 years’ experience.

Published in association with: MANAGEMENT BANK RECRUITMENT OUTSOURCING Tel/Fax: 0114 2376660 Email: deborah@managementbank.com www.managementbank.com

Suspension equipment Gripple

A measure of Gripple’s success, aside from phenomenal growth in profitability, various accolades and an innovative product design that is threatening to define its industry, is its short-term plans regarding its staff numbers. With budgets now mapped out and finalised for 2009, Edmonds has calculated that he can take on a further six staff next year.

Modest it may be, but expansion of any kind is becoming increasingly scarce.

Simply planning to keep the staff they have on the payroll might make positive press for a manufacturing company in the current economic climate so a steady growth in numbers certainly reads well.

continues Edmonds. “Management Bank make sure they get us the best people available who will fit in with what we’re about and get the job done. It’s in the best interests of our future prospects which means it’s also in theirs.”

A good indicator of the type of person Gripple wants is the range of questions asked at an interview. If candidates are more concerned about how much pay is on offer than their career prospects, then Edmonds tends to doubt they have the dedication he’s looking for. It’s Management Bank’s job to find this type of person, making Edmonds’ job easier when it comes to questioning candidates in front of his desk.

And by all accounts they do it well.

“I can say without equivocation that Management Bank Recruitment see each assignment as finding the right person for us and not just earning a fee,” Gripple founder and chairman Hugh Facey MBE is on record as saying.

And as far as this company is concerned, ‘steady’ must surely be the operative word.

A Gripple that isn’t defeats its own purpose.

To give a flavour of the company culture embedded in Gripple, unlike in many companies these days, the employees aren’t given free shares in the firm. But, as previously mentioned, there are only two external shareholders in the company.

Employees buy the shares instead.

This year, Gripple is holding its inaugural annual innovation contest which Management Bank has sponsored. This is a competition open to any employee in which the workers submit their own design for a new product in the Gripple line, a new element to the production process, a more efficient operation procedure or pretty much any innovative idea from which the company might benefit. The prize for the winner is £500.

In some cases they are also used as a tool for staff retention.

The shares are awarded annually but cannot be sold until a set number of years later. Employees therefore always have the incentive of cashing in shares a year down the line as an incentive to remain on the books.

That’s not the case at Gripple. “Our people invest in themselves and each other. The success of the company and therefore the dividends paid depends on the efforts of the shareholders themselves. And this way the staff see more of the fruits of their labour. It’s a massive incentive for them and it’s a way of ensuring we have the right type of people on board – those that have the confidence in themselves and their colleagues to continually over-achieve.”

Everyone gets their money straight up at Gripple; there are no bonuses for certain factions like sales teams or management.

“We believe that if we agree a contract with a firm and then honour that contract – manufacturing and delivering products to the correct spec and on time – that success is down to everybody in the team, not just a salesman,” said Edmonds.

As for holiday, everybody from the directors to entry-level operatives on the shopfloor get the same annual entitlement.

“All of this helps to show our staff that this is very much a team operation and that everybody has an equally important part to play in our success.”

Employee retention rate is also very high, despite the lack of the tactics described above in its respect. “Occasionally people join and decide the job is not right for them or we decide they’re not right for the job, but if people settle in here they tend to stay for a very long time. We have a number of employees here who have been on the books since the company first formed,” said Edmonds, “and that’s 20 years!”

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Our people invest in themselves and each other. The success of the company and therefore the dividends paid depends on the efforts of the shareholders themselves

“

Free share schemes are offered by firms as part of a package that offers potential income in excess of a basic salary that often starts below what that worker might usually expect to earn. The free shares bring the basic pay up to acceptable level.

“A great idea can come from anywhere,” said Edmonds. “We’ve got a highly motivated and intelligent workforce whom, as we’ve said, are investing in their own futures. This means our environment is primed for those ideas to flow. Of course we want to encourage people to come forward with those ideas because we might just find the next little gem in Gripple’s future.”

Edmonds is adamant that Gripple would not be in the position it is now without the workforce it has had over the last 20 years. “Everybody is on board together.

We like to think of Gripple as an extended family, one that’s expanding all the time but knows where it came from and what it’s all about.”

His advice to other manufacturers?

“Respect your staff and they’ll respect you. Simple as that.”

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Investing in the latest technology Founded in 1979, WEC Group Ltd comprises six divisions, each specialising in different aspects of sub-contract engineering

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ollowing substantial investment in new CNC machinery, the Group is able to offer a wide range of sub-contract multiaxis machining. Continuing investment in the latest technology provides customers with a CNC vertical milling capability up to three metres in length, together with CNC horizontal pallet loaders for cost-effective batch manufacturing. CNC lathes with both driven tooling and sub-spindle options provide turning capacity up to 1.5 metres in length. Complemented by a CAD/CAM system to minimise programming and downtime, the shopfloor can provide a rapid response to customers’ requirements.

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The Group also provides a sub-contract laser cutting service using four Trumpf laser profiling machines, offering 4 x 2m bed size and capable of cutting stainless steel, mild steel and aluminum up to 25mm thick. In addition, it offers CNC laser tube cutting and box section using the current lasers. The Group has recently purchased a Trumpf TruLaser 7000 Tube machine, the first to be installed in the UK. This new laser tube-cutting machine can laser cut tubes from 9.2 metres long, with diameters up to 250mm. This ability to cut tubes and profiles with large diameters and wall thicknesses without sacrificing productivity

provides customers with cost savings, no matter how complex their requirement.

Utilising its wide range of experience and facilities, the WEC Group is able to offer a wide range of components and complex assemblies for emergency service and commercial vehicles.

Published in association with:

wec Group Ltd

Tel: 01254 773718 Fax: 01254 700254 www.wec-group.com

Automotive UV Modular

Scaled

module

Now part of AssetCo Group, UV Modular is looking forward to growth and development, with new contracts and an emphasis on continuous improvement, as Ruari McCallion found out

There’s no doubt that parts of industry are

suffering in the current economic climate but UV Modular is looking forward to a bright 2009 and beyond. In January of this year, it announced two major contracts for the design, construction and supply of its familiar ambulances. A twoyear deal, worth £4 million in the first year, with the North West Ambulance Service Trust renews and extends a successful relationship that saw the company deliver 45 vehicles during 2007-8. Looking further north, UV Modular’s relationship with the Scottish Ambulance Service NHS Trust seems to be blossoming. It previously supplied the Scots with passenger transport service (PTS) van conversions in a £700,000 contract; it has now signed up for an £8 million partnership for the provision of ambulances across Scotland. The company has been responsible for the design and conversion of almost all frontline vehicles in service in Scotland over the past four years; the new contract is initially for two years, with the potential to extend for a further 24 months. Naturally, UV Modular’s managing director is delighted and believes it vindicates the company’s ongoing strategy.

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Automotive UV Modular

“This contact win demonstrates that even within today’s tough economic conditions, there is a market need for specialist technology and integrated vehicle design and build solutions,” was his reaction to the Scottish announcement.

Based in Brighouse, West Yorkshire, UV Modular is a specialist vehicle builder, focused on the design, development, manufacture and supply of ambulances and personnel transport systems for the healthcare market. It was originally created in August 2002 from the merger of UVG with Modular Ambulance.

UVG had longstanding expertise in the use of fibreglass technology in ambulance construction; Modular’s speciality was in the building of demountable aluminium vehicle bodies.

The new company was immediately in a strong position, with a 65 per cent share of its market and every intention of building on their individual strengths to create a stronger whole. Its progress took a further significant step when it was acquired towards the end of 2007 by AssetCo Group, which has a strong reputation in fire and emergency vehicle management.

The increased financial strength means that the company can raise its sights even higher than an internal border within the UK, to export markets in the wider EU.

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UV Modular’s salespeople are equipped with the right skills and understanding to work with customers and guide them through new innovations, regulations and developments

So, what goes to make a company successful in the health and emergency vehicle market? Well, experience, for one thing.

While UV Modular was established only seven years ago, the company’s roots go deeper, to the 1930s, when ambulances were first brought over from the USA. A commitment to development and improvement is important, too – but most of all, its products have to meet stringent standards and be delivered to customer specifications, when expected. If they maybe exceed expectations, so much the better.

UV Modular can boast a characteristic that looks to be unique; the company and its 200 employees are totally dedicated to the local authority and emergency sectors. That has enabled it to build up a deep understanding of its customers’ needs, from the immediate client right through to the end-users: emergency patients, paramedics and drivers. An ambulance will undoubtedly be a reassuring sight if you or a relative should ever come to need one but it won’t be much use on its own if it isn’t able to deliver the right help, quickly and effectively. So UV Modular’s salespeople are equipped with the right skills and understanding to work with customers and guide them through new innovations, regulations and developments.

One of those relatively new areas is CEN (European standardisation) compliance. It’s a development that has been welcomed by UV Modular, as it has eliminated grey areas and helped to move the market forward in terms of safety. The company works closely with the VCA, the UK’s designated vehicle type approval agency, and with DPTAC (Disabled Persons Transport Advisory Committee) and MIRA (Motor Industry Research Association) to ensure that its vehicles exceed not only current standards, but pending safety legislation, also.

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The premier supplier of quality pad printing machinery and consumables in UK and Ireland SIC 60 E New Electro/Pneumatic machine with a very favourable price

HYBRID 90-2 integrated clichĂŠ production by laser

Tampoprint UK Limited Oaklands Park, Wokingham, Berkshire RG41 2FD Tel: +44 (0)1189123310 Fax: +44 (0) 870 770 5039 email: sales@tampoprint.co.uk Web: www.tampoprint.co.uk

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Laser Marking Systems

Automotive UV Modular

The Treka passenger transport solution comes in two capacities. Treka 16 seats 16 and Treka 24 carries (you’ve guessed it) 24 people. Full DPTAC versions are available; they both have underfloor lifts, which in the case of the wheelchairaccessible Treka 24 comes in a choice of designs. The flat floor has no wheelarch intrusions, which means that no-one draws the short straw when it comes to access and comfort. The body frame is made of aluminium and features antiburts, double-action rear doors.

emergencies, from drugs to hardware, and they have to be transported to the scene of an accident whether they are actually needed at that site or not. The challenges of total weight, and its distribution, are met by UV Modular’s team of dedicated engineers and designers, who optimise the layout using Navigator 3D CAD/CAM. The program enables a virtual reality vehicle to be built on screen, with every component to be used – right down to the smallest washer – captured on the database. Each item can be put in place on the screen and assembled in virtual reality up to the contract’s specifications. When weight distribution and ergonomics have been checked and passed, Navigator automatically produces a bill of materials (BoM), which enables purchasing departments to get to work on ensuring all components are ordered and scheduled for delivery at the right time. The customer can also view the design at any time during the process.

“

The company has established a manufacturing improvement team (MIT), which works with key operators to ensure processes are adhered to, quality is maintained and provides ongoing support in problem-solving

“

All of UV Modular’s vehicles are based on Mercedes Sprint chassis, which are often bought by the local authority and then sent to the company for modification. The Modular is described as a big, tough, wellhandling vehicle. Its demountable body is made of aluminium, with a flat floor, patented tail-lift and external lockers. The body is crush-tested to 10 tonnes and contains a risk-assessed interior featuring a bespoke design to cater for customers’ needs. Premia is a spacious vehicle, which is again designed to handle well on the road. It has a streamlined body to improve performance and reduce fuel consumption, features a patented step ramp, has integral lighting and sliding side saloon doors, for ease of access. It comes with a seven-year anti-corrosion warranty and it, too, has been risk-assessed.

A recent addition to the range is the fully DPTAC-compliant Cura. It’s a smaller vehicle, with two rear- and four frontfacing seats.

When it is time to build, three production lines at Factory One produce seven frontline A&E vehicles and four Mobility Buses each week, from single-shift working. Factory Two produces all the GRP components for both emergency vehicles and buses; it also houses the development department.

What all the UV Modular vehicles have in common is attention to detail.

The health services, in this country and around the world, have faced a problem with hospital-transmitted infections, such as SARS and MRSA. When The Manufacturer spoke to UV Modular in 2005, it was already putting a strong emphasis on anti-infection.

The company installs filters to ensure nothing escapes or enters the vehicles through the air and it has worked with its GRP suppliers to produce a surface that will reject and kill bugs, including MRSA. It also makes recommendations to users for safe practices in operation to reduce cross-contamination, such as restricting access to the vehicle and protocols when operators change shift, for example.

It’s all pretty advanced stuff and has justifiably helped UV Modular to its leadership position, but it doesn’t end there.

The company is committed to continuous improvement.

Because of the nature of its business – low-volume, highly specialised – it’s unlikely that it could ever get to full justin-time delivery from its supply chain of specialist vendors but it continually strives to reduce inventory and improve effectiveness. It has introduced 5-S and lean manufacturing tools, with the recruitment of specialists and assistance from external consultants. It also focuses on raising skills levels, through the recruitment of apprentices who undergo a rigorous pre-build educational process followed by handson experience working with the most highly skilled members of the coach building team. The company has established a manufacturing improvement team (MIT), which works with key operators to ensure processes are adhered to, quality is maintained and provides ongoing support in problemsolving. It also deals with initial organisation of the line and sets standard hours.

Modern medical equipment is heavy.

While items like defibrillators have been made lighter and easier to use, no-one has – so far – come up with a better way of containing gasses than large metal canisters. An ambulance has to carry a range of treatments for

UV Modular is continually looking for ways to improve safety, comfort and efficiency, for passengers and customers alike. Four years ago, it set a target of £30 million annual revenue in five years; it has already achieved that. Customer satisfaction is paramount and UV Modular believes its ongoing development program and commitment to outstanding safety and performance will keep the company at the forefront of its industry.

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Lean, mean flying machines

Mark Young explores the lean set-up at BAE Systems’ manufacturing site in Samlesbury to see what efficiency weaponry the defence giants are employing at the plant

BAE Systems – requiring no introduction but

receiving one nonetheless – is the third largest defence company in the world, recording worldwide sales in 2007 of £15.7 bn. It employs almost 100,000 people and spends £1.4bn per year on research and development. It lists six regions as its home markets – Australia, Saudi Arabia, South Africa, Sweden, the UK and the US. BAE means big business. Its vision is to be the best airframe design and manufacturing business in the world. So, like the majority of manufacturers — large and small, from corporations with billion-pound profits to one-man operations — BAE has committed to making its production more efficient through lean techniques.

“Lean is a commitment to reassess what we do across all functions, and with our partners, to take out steps, time and cost. This approach is crucial to deliver our strategy,” says Greg White, vice president of finance for BAE’s electronics and integrated solutions.

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Aerospace and defence BAE Systems

Safety, Quality, Cost, Delivery and People – part of what it calls its “Blue Sky Vision”.

Organisation

BAE has incorporated elements of 5S in its working routines at Samlesbury to provide regularity to its operations. Under the principle of set-in-order (seiton in the original Japanese principles), a standard diary is used for “short, high energy meetings focused on decision making”. Examples include a weekly SQCDP performance review which runs Monday mornings from 10am to 11am and a fortnightly continuous improvement plan, review and decision-making meeting which is scheduled for every other Wednesday from 10am until midday.

By scheduling the meetings, less time is spent arranging and communicating them while misunderstandings of time or date are avoided by consistency. This allows the team to spend 90% of their time on production or other efforts by meeting collectively for only 19 hours out of 200 each month.

“

“

Lean is a commitment to reassess what we do across all functions, and with our partners, to take out steps, time and cost.

This approach is crucial to deliver our strategy Greg White, vice president of finance for BAE’s electronics and integrated solutions

Eurofighter Typhoons in flight

This is followed by more 5S in order to solve what was identified as Samlesbury’s biggest problem – integrating a model line production concept to streamline manufacturing.

Implementing the system was particularly risky, with “failure not being an option”. Therefore, a full artillery of lean weapons was needed from ‘planning to application’ to ‘continuing production’.

What efficiency initiatives has the aerospace company undertaken? A factory in Lancashire, one of eight that BAE operates in the UK, has been picked for some lean inspection.

Since integrating the ‘good housekeeping system’ thoughout, which, along with 5S, employed value stream mapping, master scheduling, statistical process control, and visual factory methods – all supported by a DSUM (data summary) process of raising awareness of issues – the model-line has yielded results. Production rate has doubled, scrap materials have improved by 20% and the Typhoon delivery rate now stands at 100%.

The plant in Samlesbury, near Preston, employs 4,500 staff and the company carries out airframe manufacture and design and provides in-service aircraft support. It produces fuselage and other military parts for a number of aircraft including the Eurofighter Typhoon and Lockheed Martin F-35 Lightning II and is also a leading supplier to Airbus.

At Samlesbury, BAE employs a variant of the tried and tested QDCM (Quality, Delivery, Cost and Morale) model.

Included in that, BAE operate SQCDP —

Engagement

In an area that has led to the demise of many lean practitioners before it, BAE has recognised engagement as a key principle in the fight for efficiency through change. Creating a lean culture throughout the company was essential as, without it, other devices in its name will be doomed to fail. Lean facilities will not produce results without lean culture, but some elements of lean culture can improve efficiency without the lean facilities. This is part of BAE’s ‘people emphasis’ — decisions made at the top must be communicated through the ranks. There is an open dialogue on the change process which seeks the opinions and expertise of the staff and every member is kept up to date at each stage of decision making and progress.

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first-class service HG Aerospace Engineering Ltd is an independent manufacturer of quality aviation components, providing a first-class service for both the civil and military aviation industries

B

ased in East Sussex, HG Aerospace has been manufacturing aircraft components globally for fifty years. With a large range of clients, including BAE Systems and Airbus, HG Aerospace has established itself as a leading manufacturer in the production of aviation components to a high quality, to both standard and nonstandard specifications.

With a fully qualified workforce, from CNC setters to manual machinists, HG Aerospace is able to undertake works involving CNC and conventional turning, milling, drilling and has the capability for sheet metal and tube forming. Constantly

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seeking ways to improve, HG Aerospace invests in the latest technology in order to provide a quicker, more efficient service to our clients.

As a company, HG Aerospace believe that the client comes first and is ready to step into 24-hour production and purchase new equipment, including increasing our CNC capacity to suit extended contracts and large orders.

In the past year, HG Aerospace has increased its stock capacity by 50 per cent. This covers both the stock of raw materials, to ensure the supply of materials that are harder to source, and

over-production of popular parts, allowing us to offer a quick turnaround of small orders at competitive prices.

A full list of stock parts can be found on our website: www.hgaerospace.com.

Published in association with: HG Aerospace Engineering Ltd Tel: +44(0)1424 853444 Fax: +44(0)1424 851690 Email: michael.gray@hgaerospace.com www.hgaerospace.com

Aerospace and defence BAE Systems

The F-35 STOVL variant undergoing fuel testing

In addition, communications at BAE are consistent. One message from a single, united voice provides clarity and confidence. Familiarity is a rhetoric device through which workers build trust in a continuous objective. Staff are given goals, the presentation of which they expect and the formulation of which they have interacted with. They are valued and involved and are empathetic of the cause. Thus they are more productive; there has been a 22% improvement in BAE Samlesbury’s Employee Opinion Survey scores since 2004.

One way to improve the efficiency of production was to find ways to cut the number of processes involved. Labourintensive fabrications — the term applied to a process the main cost of which is that of the staff required — have made way for single-piece machined parts. The plant uses superplastic-formed titanium for plane fuselage which means it can be made from one piece of material and in one single process. This means machining and assembly operations are restricted to a minimum and production time is shortened. As the number of processes is lowered, so are the chances of a defect. Superplastic-formed titanium weighs less too — the Typhoon airframe using this material is 40% lighter than that of the Tornado.

For Airbus operations, Samlesbury has improved parts quality by reducing errors by 90%; from 10,000 parts-per-minute faults to less than 1,000. In addition, Airbus process costs have been reduced by five per cent, year-on-year.

Overall, the fruits of the labour are sweet — since 2004, BAE has seen real improvements across all areas of SQCDP. Safety measures have resulted in 45% less accidents, while quality is up, with a 30% improvement in scrap and concessions.

There has been a 25% reduction in non-labour costs and a 19% rise in productivity for delivery. The 22% improvement in Employee Opinion Survey scores completes the set with the people element.

BAE has recognised engagement as a key principle in the fight for efficiency through change But BAE says that after three years of operations at the site, Samlesbury is “still in the foothills” in terms of possible efficiency.

There is a lot of potential, the company says, to make productivity sleeker, smoother and more effective. That is why the company will continue to invest in the development of lean and continuous improvement. It will continue to labour towards optimum efficiency until one day it can adapt one of its oft-employed maxims: “While changing the culture changes business performance,” it preaches; “maintaining the culture maintains business performance” is what it is no doubt attempting to reach.

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Source of Supply

in association with KPMG and the Lean Enterprise Research Centre at Cardiff University presents: www.themanufacturer.com February 2009 Vol 12 Issue 1

The Logistics and Supply Chain Report 09 This report will build on the research of our six previous reports to deliver an impartial assessment of the trends, techniques and issues in the international logistics and supply chain business. It endeavours to uncover new thinking in the sector and how the relative importance of key criteria such as fuel costs, time-to-market, inventory and storage capacity, customer service and ERP & SCM software is changing.

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The report’s findings are compiled from both quantitative and qualitative primary and secondary research, combining analysis from supply chain professionals, case studies, interviews and existing literature.

The report will cover: Global supply chain Lean supply chain and logistics Outsourcing Risk management Transport

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People and skills

Managing redundancy

Strategy - Electronics

A case for keeping production at home Expert academic partner The Manufacturer is teaming up with experts from the Lean Enterprise Research Centre at Cardiff University in writing the report, reinforcing its accuracy and credibility. The Centre has strong links to Cardiff University’s award-winning Manufacturing Engineering Centre. All experts are commercially independent of the report.

Sustainable manufacturing

As a global recession puts the squeeze on international supply chains, up-to-date commentary and analysis of global supply chain participants in the UK is an essential reference.

Top jobs in manufacturing

The Carbon Trust Standard

Appointments

For more information about unique advertising and sponsorship opportunities in this special report, please contact David Alstin, business development director on, Tel: 01603 671307 Mobile: 07918 125264 or email: d.alstin@sayonemedia.com.

“KPMG is pleased to be associated with the 2009 Logistics and Supply Chain Report from The Manufacturer.

We’re confident that this report will provide you with an in-depth look at how your peers are focusing on and managing every aspect of their supply chain—from planning and forecasting, to current and planned initiatives, and beyond. Ultimately, this report should prove extremely beneficial when looking inwards at your own supply chain to succeed in these turbulent times.”

www.themanufacturer.com February 2009 Vol 12 Issue 1

NOTE: The Manufacturer is also publishing several other special, manufacturing sector-specific reports in 2009 including: Sustainable Manufacturing, IT in Manufacturing, and the Annual Manufacturing Report.

Give me

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Interview

Hilary Devey Founder and owner of Pall-Ex

credit Government support packages examined