The Manufacturer January 2011 issue by The Manufacturer

www.themanufacturer.com January 2011 Vol 14 Issue 01

Government wrings truth out of the CRC greenwash

Interview Steven Norgrove

Managing director, GKN Wheels & Structures

Regional Focus â&#x20AC;&#x201C; North West

NW companies tap both big and niche markets

Lean Manufacturing

Lean methodologies applied to macroeconomics

Financial Supplement

Sources of corporate finance in 2011

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Editor’s comment

Government’s role crucial in sustaining recovery momentum Happy New Year! We all hope it will be as happy as 2010 when, with the exception of some sectors, manufacturing had a strong revival. Manufacturing will have grown by 3.8% in 2010, says EEF, far outstripping the whole economy. Many commentators feel that manufacturing raised its profile during the recession and 2010, as the public, press and politicians began to take notice of British industry again, seeing it as a genuine driver of the economy, less a romantic notion that the UK should preserve pockets of manufacturing against the tide of change. EEF’s Steve Radley identifies four big forces which will shape the manufacturing recovery in 2011, on page 13. Public sector cuts are a worry, but to partially counter this, emerging markets are expected to continue to be valuable sources of foreign trade as growth in the BRIC countries show little sign of slowing. You only have to look at the BBC’s excellent ‘John Sargeant’s on Tracks of Empire’ series to see how strong the UK’s industrial links with India are. Those bonds are still strong and organisations such as UK Trade and Investment are working to capitalise on this relationship by linking UK companies to growth opportunities in BRIC countries. A short piece on gear manufacturer Antonov on page 92 is the first in a BRIC Venture Watch series that will showcase some of these partnerships. Growth is at the top of everyone’s New Year’s resolutions and the Dept for Business Innovation and Skills launched the Growth Review Framework for Advanced Manufacturing in December. Some people who understand the needs of this sector comment on the Review’s rigour on page 5 and in the Blog section of www.themanufactuer.com. Access to finance will become more important in 2011, says EEF. The Growth Review deals with finance, referencing a bank-led £1.5 billion ‘Business Growth Fund’ to provide equity finance to established SMEs who need capital to secure their plans for growth, among other measures. Charles Maltby of Shearline Precision stresses that, while any state support for advanced manufacturing is welcome, the Framework must make the criteria for support crystal clear and the application process easy for it to work. Our Finance Supplement on page 62 reviews corporate finance options, quizzing stakeholders on their experience with accessing capital last year. The BIS email address for companies to send in ideas and evidence to the Growth Review is amgr@bis.gsi.gov.uk. Best of luck with going for growth in the new year. Will Stirling, The Manufacturer

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News and features 04 News

Manufacturing news

11 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

12 The big picture

Dealing with the middle men

Dr Letizia Mortara of the Institute for Manufacturing looks at how to find the right members of the manufacturing value chain

13 Economics

New year, new cheer Manufacturing is at the front of a net trade led recovery in 2011

14 The legal low down

Are your temps without risk? Thomas Eggar LLP discusses the risks and rewards of temporary staff

15 Business as unusual Going for growth

A majority of business leaders believe operation excellence programmes have helped them achieve market objectives

16 Lead story

Bruised and confused Changes to the Carbon Reduction Commitment cause headaches for manufacturers

22 Regional Focus

North West England During the one week of winter weather reprieve last December, Tim Brown took a trip to the North West to visit the UK’s largest manufacturing area

27 Interview

British industry in the driving seat Steven Norgrove of GKN shares his observations about manufacturing in Britain

30 Lean manufacturing

How a lean lens on the economy How the manufacturing industry might help the UK economy recover and thrive

36 Leadership, people and skills Skills make a world of difference

David Kirkwood of Lincoln Electric comments on London’s upcoming WorldSkills event

36 2

39 Growth Review Framework for Advanced Manufacturing Government comment on Framework

Business Minister Mark Prisk comments on the Growth Review Framework for Advanced Manufacturing

Contents Supply chain, logistics and material handling 42 Warehouse management keys to success

Brian Davis looks at the impact of increasingly outsourced supply chains on warehouse management

IT in manufacturing 48

A brighter future for APS?

Malcolm Wheatley investigates the slow uptake of advanced planning and scheduling systems

IT News 52

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

Special feature 57 PLM for profit

Jane Gray talks to end users and technologists to find out whether Product Lifecycle Management software really delivers all it promises

EEF Insight 60

A practical approach

The EEF Apprenticeship and Skills Centre provides a timely example of training provision which gives manufacturers the specific skills they need

FinanceSupplement

Money talks The Manufacturer explores the state of play for financing manufacturing businesses in the UK, including bank lending, minibonds, the cost of finance, barriers and what more government and banks â&#x20AC;&#x201C; and industry itself â&#x20AC;&#x201C; should be doing to help.

Manufacturinginaction Sponsored by TBM Consulting Group 75 Mahle Powertrain Powered up precision With origins dating back to 1979, Mahle Powertrain have developed a strong position in the automotive and off-highway engineering sector

Polestar Polestar finds true north

Alcoa Fastening Systems UK AFS has its day in the sun

Mann+Hummel Engine of growth needs a best in class filter

Newsinbrief COMPOSITE MATERIALS

Sector Skills Council Semta has revealed plans to support the growth of the composites sector in the UK with a new national occupational standard and a dedicated sector strategy group. Composites technology has long been identified as a key area for strategic growth in the UK. The development of composites skills was identified as a priority in the UKCES National Skills Audit 2010. Within industry, leading companies in the aerospace and defence sector as well as automotive, marine and more, have acknowledged how important the development of composites is for their future success through significant investment in composites research and employee training. REGULATION

Secretary of State for Business and Chair of the Reducing Regulation Committee Vince Cable set out a series of new principles that the Government will use when introducing European measures into UK law. These will end so-called “gold-plating” so that British businesses are not put at a disadvantage relative to their European competitors. The key to the new measures will be the principle of copying out the text of European directives directly into UK law. The direct ‘copy out’ principle will mean that British interpretations of European law are not unfairly restricting British companies.

ADVANCED MANUFACTURING

Dormer Tools has enjoyed an increase in sales of more than 20% in 2010 and is likely to achieve pre-recession order levels of two years ago. The UK arm of the engineering firm is enjoying better than expected results two years after moving to its facility at the Advanced Manufacturing Park (AMP) near Rotherham, which was officially opened in January 2009. Dormer’s premises at the AMP incorporate a state-of-the-art training suite and a major research and development facility - one of only four such facilities worldwide. Both areas have played a significant role in providing customers across the UK with the right cutting tools for their applications.

GOVERNMENT

Reduced Framework targets Advanced Manufacturing 1st The Growth Review Framework for Advanced Manufacturing, published December 10, has revealed how the Government plans to support the sector. As part of the Framework, the Government is investing £50m over three years in the Manufacturing Advisory Service (MAS) which provides an advice service to industry to make SMEs more productive and competitive. The framework also considers those barriers that are preventing the UK becoming one of Europe’s leading exporters of high value goods, and restricting people from seeking a career in engineering. Simon Howes, managing director for MAS South West, said: “We are delighted that the Government has confirmed its continued support and commitment to MAS. The work we do has a direct impact on the profitability and efficiency of business.” On January 25, the Government will hold an Advanced Manufacturing summit attended by Nick Clegg, Vince Cable and Mark Prisk MP as well as key manufacturing stakeholders and other government departments. Contributions from industry at this event and responses to the Framework will feed into the Advanced Manufacturing strand of the Government’s Growth Review which will announce policy proposals by April’s Budget. “A strong manufacturing base is essential for a balanced economy, where exports and investment not debt and unsustainable government spending, drive growth,” said Business Minister Mark Prisk. “The review into Advanced Manufacturing will see the Government align with industry in our shared ambition to put manufacturing industries on a more solid footing than in the past decade. While statistics have shown the future is bright for manufacturing, recent job losses announced by BAE Systems show that challenges remain that the Government will need to work with industry to address.” The contribution of the food and drink industry to the rebalancing and health of the UK economy was highlighted in the Growth Review. Director General of the Food and Drink Federation Melanie Leech says: “We welcome the publication of the Growth Review Framework. The consultation paper rightly highlights food and drink as an example of a successful advanced manufacturing sector. We look forward to working with the Government to ensure the future growth of the UK’s biggest manufacturing sector.” The Department for Business Innovation and Skills is also contributing £600,000 for a two year automation and robotics programme to be developed and run by the Engineering and Machinery Alliance and the British Automation and Robot Association. The programme will better prepare companies to introduce new automated and robotic systems and help them operate them effectively. The funding is the result of recommendations made in a recent industry study, Application of Automation in UK Manufacturing. Results concluded that the main reasons for UK manufacturers’ lack of investment in modern manufacturing Business Minister Mark Prisk technologies were due to talking to a representative from lack of knowledge, skills the Shadow Robot Company and confidence.

ManufacturingNews The Growth Review Framework for Advanced Manufacturing

Newsinbrief REGULATION

Has the Government shown that it adequately understands the needs of advanced manufacturers in the first iteration of the Manufacturing Framework? Industry commentators react to the launch of the Growth Review document in December. Charles Maltby, Technical and Commercial Director at Shearline, a precision manufacturing company in Ely, Cambridgeshire: “Any support for the manufacturing sector, which after all creates real wealth for the economy, is to be applauded. However for any SME time is the crucial issue, as directors of engineering companies need to concentrate on running their businesses. So it needs to be made clear what financial support is available, what the criteria is for awarding grants or funding, the application process must be easy and there must be a short timeframe for confirming that support will be given.

Robin Wilson, Lead Technologist, High Value Manufacturing, Technology Strategy Board: “We welcome the inclusion of Advanced Manufacturing as one of the six areas highlighted for immediate attention in the Government’s Growth Review paper. As the primary channel through which the Government will incentivise business-led innovation, the Technology Strategy Board places Advanced Manufacturing technologies at the heart of our High Value Manufacturing Strategy. This approach has already provided substantial funding for technically challenging innovation projects involving small, medium and large manufacturing companies and we see the Growth Review as an excellent framework for increased engagement with business to ensure that our future support for manufacturing innovation remains relevant and effective.”

Peter Dickin, Marketing Manager at CAD/CAM software developer Delcam: “Having quickly read through the document, it is difficult to find anything in it with which anyone involved in advanced manufacturing would disagree. Who will complain about removing barriers to growth, helping industry to export more or developing a more skilled workforce that wants to work in manufacturing? The report does, at least, provide further evidence that the Government is thinking about manufacturing and the contribution it can make to the nation’s prosperity. Manufacturers will be more convinced when they see how the 2011 Budget is influenced by the various policy proposals.”

Graham Dewhurst, Director General, Manufacturing Technologies Association: “...... The most important determinant of success will be investment – whether in new technology, skills or research and development. We need to keep ahead of the curve in order to maintain some of the advantages that the UK has as a place to do advanced manufacturing. If the Framework process isn’t used to promote investment it will be a missed opportunity.” For full comments go to www.themanufacturer.com/uk/blog

New rules on classification, labelling, packaging and notification of chemical substances have come into force. The Health and Safety Executive is supporting the European Chemical Agency’s campaign to remind companies of the new regulation. From now on, within one-month of placing a chemical substance on the market, all companies involved in their manufacture or import will need to notify the ECHA for their inclusion in the new Classification and Labelling Inventory.

FOOD AND DRINK

Union Unite has blamed incompetence on the part of international food company Bakkavör which has led the company to cut 170 jobs at its factory in Bourne, Lincolnshire. Icelandic Bakkavör announced that following a consultation period it had decided to make the redundancies at its site in near Spalding which are “essential in giving our business a future”. Unite says “a catalogue of management incompetence over several years” including failing to allow for foreign exchange fluctuations and ill conceived commissioning of new machinery are to blame.

A Norfolk based wine distribution SME will invest £10m in world wine making companies next year through an investor circle of its customers. Naked Wines, headquarted in Norwich with a distribution centre in Northampton, has set up an investment base which involves its customers – dubbed ‘naked angels’ – putting up cash which is invested in start-up wine makers from around the world. DEFENCE

Aerospace and defence company BAE Systems is to cut around 1,300 jobs following the Government’s scrapping of the Nimrod MRA4 and Harrier jets. The job losses will affect workers on several sites including Samlesbury and Warton in Lancashire, Farnborough in Hampshire, Yeovil, RAF Cottesmore and RAF Kinloss. “These are very highly skilled jobs that are being lost,” said Bernie Hamilton, the Unite union’s national officer for aerospace and shipbuilding. “It’s the beginning of the end of military plane-making in Britain.”

Newsinbrief PHOTO COMPETITION

EEF will announce the shortlisted entries for its photography competition on its website on January 7th. The competition, in partnership with Canon, aims to capture fresh, forwardthinking images of UK manufacturing. The national judging of the shortlisted entries will take place on January 10th and the judging panel includes member of the Guild of Photographers Simon Young and representatives from Canon. MACHINE TOOLS

DEFENCE

New appointment amid cuts Critic of defence purchasing and former journalist, Bernard Gray, has been appointed as Chief of Defence Material. Mr Gray, the author of a report published last year which highlighted that the MoD had over-ordered equipment by more than £36bn for the next decade, accused the defence procurement department of “incompetence” matching a level at which “even British trains cannot compete.” As

Many product launches are failing because they fail to meet customers’ needs due to a lack of insight, research from professional services consultancy Capgemini has found. Two thirds of respondents to a survey for Capgemini’s global manufacturing study, ‘Collaborating for Innovation’, said more than half of new products failed over the last three years despite increased support for innovation at an executive level. With customer collaboration highlighted as the least mature area of manufacturers’ collaboration efforts.

The Institute for Manufacturing at the University of Cambridge has produced a new report to help businesses select effective partners for collaborative Open Innovation (OI). OI involves working with external business partners to develop new products and access new technology but many businesses lack the necessary capabilities to engage in such a project and therefore seek ‘innovation intermediaries’, which include commercial and technical consultancies, government departments and academic networks.

The UK’s manufacturing technology sector had further reason for festive cheer last month as the Manufacturing Technologies Association (MTA) revealed another boost in machine tool orders in recent weeks. Levels of inquiries and order intake are both up compared to previous months, pointing to a business environment which is looking to invest in capital equipment. The trend is positive in terms of jobs in the industry too, with several MTA members reporting increased numbers of vacancies.

the new head of procurement, Gray will be responsible for assets worth £104bn as well as the delivery of new equipment with an annual operating budget of £13bn. Defence Secretary Liam Fox said: “Bernard Gray is without question the best man for this hugely demanding post at a uniquely challenging time. He brings to it deep knowledge and experience of defence generally, defence procurement specifically, of the Whitehall New Chief of machine and Defence Material, the commercial Bernard Gray, has been tasked with world. Unlike cleaning up defence many others spending practices who talk about the problems facing defence procurement, he talks about solutions.”

TAX

Tax avoidance targeted The Treasury announces new measures to try to prevent corporation tax avoidance. It is expected that the measures will raise over £2bn in extra revenue over the course of the next four years. With immediate effect, companies will no longer be allowed to use loans to other companies within the same group to reduce the group’s tax bill and companies will be more liable to include loans within its accounts. There will be further legislation introduced shortly which will

prevent disguised remuneration, stop investors retrospectively changing the currency they prepare their accounts in, and make it more difficult for businesses to split the supply of services with the aim of reducing VAT. Furthermore, Graham Aaronson QC has been asked to lead a study into the viability, effectiveness and attractiveness – for government and for businesses – of a General Anti Avoidance Rule (GAAR).

ManufacturingNews ENERGY AND ENVIRONMENT

Mainstream energy efficiency is expensive A new study has revealed that investment in energy efficient equipment is now the norm in Britain but further gains are being stifled by affordability. According to research by the financial services division of Siemens Investment, 44% of firms now declare that over half of their equipment is energy efficient. However, says the study, the momentum of investment has hit an affordability obstacle as the economy slowly recovers. To overcome the affordability issue, forward thinking organisations are using asset financing techniques to align monthly costs with monthly energy cost savings, achieving payback periods in some instances of as little as two years. David Martin, general manager for Siemens Financial Services UK, says: “The fact

that energy efficient equipment has clearly been the subject of mainstream investment for a sustained period is good news. But there is also evidently, and more importantly, a major need for further stimulus to keep up the momentum of investment. (See the Lead story on CRC on page 16). Energy efficient motors from Siemens

INCOME

Pay settlements have begun to increase in the manufacturing sector, according to a survey by EEF, the manufacturers’ organisation. EEF’s data for the three months to the end of November 2010 shows that the average pay settlement is at a 2% increase, up from 1.8% for the three months to the end of October. The half yearly average settlement figure in June 2010 was 1.5%.

PHARMACEUTICAL

Newcastle-based Aesica Pharmaceuticals has signed contracts to acquire three manufacturing sites in Germany and Italy from rival UCB. The purchase of the European sites from biopharmaceutical company UCB, in Monheim, Zwickau and Pianezza, are the company’s first acquisitions outside the UK and will almost double the capacity of the business.

MACHINE TOOLS

ENERGY AND ENVIRONMENT

Govt urged to clear the air Manufacturers’ organisation EEF has challenged the Government to rationalise the tangle of policies on carbon pricing while sharing the costs to business of tackling climate change. According to EEF the UK needs to generate £200bn in investment in its energy infrastructure. The announcement in December on Energy Market and Climate Change Reform, therefore, marks a good opportunity to give investors greater certainty to bring these investments forward. At the same time, it must reassure Industry that the UK will be a competitive location from which to deliver the low carbon economy. After a decade of growing complexity in climate change policy, the UK needs a much

Newsinbrief

more strategic approach, EEF says. This would involve consolidating overlapping schemes like the Carbon Reduction Commitment, the Climate Change Levy and the planned Carbon Price Support Mechanism. EEF believes this would create a cost effective, transparent and predictable carbon price and simplify the climate change policy landscape. However, to avoid adding extra costs to industry, there should be an offsetting reduction in the Climate Change Levy to the minimum level required by EU law.

The Technology Strategy Board and the Engineering and Physical Sciences Research Council have jointly allocated up to £400,000 for a competition design to stimulate responsible development of nanotechnology. The collaborative project from TSB and the EPSRC calls for innovation in technologies that can tackle the potential environmental health and safety (EHS) aspects of using nanoscale technologies in industry. Competition entrants are being asked to offer either innovative EHS products or solve EHS issues with nanotechnology enabled products and processes. LOGISTICS

Palletblocker Quarantine Systems is set to distribute its 100% British manufactured flagship product, Palletblocker, worldwide. Providing a highly visible deterrent which prevents forklift operators from incorrectly moving goods, the Palletblocker offering also supports existing quarantine and stock control systems while reassuring investors, auditors and customers. Negotiations are continuing with several international distributors to sell the world’s first lockable pallet quarantine device globally.

Newsinbrief SMALL BUSINESSES

A new report from the Federation of Small Businesses (FSB) shows that a quarter of small businesses export but are hampered by red tape and currency fluctuations. One in three businesses find red tape and bureaucracy one of the main challenges when exporting their products, a new report from the FSB has found. Almost a quarter (23%) of FSB members surveyed currently export products and services but are concerned by red tape and bureaucracy (32%), fluctuating exchange rates (48%), securing payment (25%) and difficulty in finding customers (23%). S P O R T and I N D U S T R Y

Engineers from BAE Systems have given the British Sailing Team’s chances of an Olympic gold a boost by helping them predict the weather with software usually used for unmanned aerial vehicles. Using the technology, Skandia Team GBR can forecast detailed weather patterns up to six to eight hours ahead of racing, helping them to plot fastest and most competitive route during big sailing competitions. The special innovation, known as Project Drake, applies predictive mathematical modelling used currently in autonomous technologies to give touchbutton access to data such as wind speed and wind direction.

DEFENCE

UK AeroSpace, Defence and Security trade organisation ADS has hired former Royal Engineer Gordon Lane to the newly created position of managing director for Defence. “Gordon takes the helm at a crucial time as the future of the UK’s Defence industry is being shaped through the Defence and Security Industry Technology Policy,” says ADS chief Rees Ward. “With the support of the growing ADS membership he is ideally placed to ensure that the policy and its implementation provide the right outcomes for our industry and the Armed Forces that it supports, and continues to add value to the wealth of the nation.”

Manufacturingoutput Output and exports hit top gear and firms recruit as EEF/ BDO survey corroborates December’s record PMI figures. Britain’s manufacturers continue to report strong trading conditions, with output indicators remaining at record levels for the third quarter in succession, according to a survey published by manufacturers’ organisation EEF and BDO LLP. This very strong performance, which remains consistent across all sectors and regions, has been underpinned by the robust demand from overseas markets. Exports to the BRIC economies (Brazil, Russia, India and China) have made a particularly big contribution to export growth since the recovery began. From the survey results, EEF has forecasted that engineering and manufacturing will continue to outperform the rest of the UK economy in 2011. Manufacturers have been recruiting new employees, according to the survey, as well as making new investments in response to the stronger than expected recovery in production. “Manufacturers should enter 2011 on a strong footing,” said EEF chief economist Ms Lee Hopley. “The survey has shown

record responses on output and orders for much of this year. But several risks remain firmly on companies’ radar... and the strong bounce back has also brought challenges, with some manufacturers’ struggling to get the skills they need and facing rising costs.” Tom Lawton, head of manufacturing at business advisers BDO, said: “This recovery shows that manufacturing can be the flag bearer for the vital private sector growth we need as impending cuts mean the public sector must take a back seat. Manufacturers now need to take advantage of this continued growth by investing in capital equipment and the skills within their workforce. They should also take the opportunity provided by the UK’s competitive currency.” Over the last three months, output and new order balances were up 33% and 32% respectively, both broadly unchanged since last quarter’s record levels. This growth has been driven largely by export markets (+26%), though the domestic order balance improved slightly to +22%.

chemicals

Tata buys British Salt Cheshire based British Salt – responsible for around half of all pure salt produced in Britain – has been sold to Indian engineering conglomerate Tata for £93m. British Salt – supplier to food manufacturers and farms as well as for road gritting and water softening applications – was bought out from its US owners by a mixture of management buyout and private equity in 2007. It has a turnover of £35m. Now, it will become part of Tata Chemicals’ Brunner Mond business, also based in Cheshire,

which makes Soda Ash (Sodium Carbonate), Sodium Bicarbonate and Calcium Chloride at two sites in Northwich. Martin Ashcroft, MD of Brunner Mond, said: “British Salt has an excellent reputation and we will be able to share with each other our manufacturing and processing experience which will help to accelerate our growth.”

ManufacturingNews AUTOMOTIVE

Automotive market uncertain Weak consumer demand for new cars in the UK continued in November, although sales are ahead of forecasts, while commercial vehicle production hits 37% year to date. According to figures released in December by the Society of Motor Manufacturers and Traders (SMMT), registrations of new cars fell by 11.5% in November to just short of 140,000 units. Analysts had predicted that figure would be lighter by around 10,000. The fall was the fifth straight fall in registrations of cars in 2010.

Staff at Vauxhall’s plant in Luton install the gear shift assembly

EEF Half page.indd 2

In December, sales of fleet vehicles were up 10.7% over the year to date. Paul Everitt, SMMT chief executive warned: “Next year will continue to be challenging as consumer spending tightens and government’s austerity measures take effect.” The market is forecast to fall by about 5% in 2011 to 1.93 million units, because of austerity measures beginning with the VAT rise to 20% in January. David Raistrick, automotive partner at Deloitte, contends that the situation could be bleaker still. “[These] figures are a stark reminder of the challenges that lie ahead for the motor industry in 2011,” he said. “I think it is unlikely that we will see a pre-New Year rush from consumers looking to save the additional VAT.”

Newsinbrief WOMEN IN MANUFACTURING

The number of women in Britain’s boardrooms has failed to increase for the third year running according to Cranfield research. The Female FTSE Report 2010 from Cranfield School of Management has revealed another year of plateau for the numbers of women in the most senior positions in British business. The authors of the report have suggested that changes to standard appointments processes might encourage greater equality and diversity in Britain’s boardrooms, particularly in the nation’s top 100 companies. Out of 1,076 on the FTSE 100 boards there are just 135 female-held directorships in the UK, a number which represents just 12.5% of the positions available. Despite the stagnation in numbers, the report does show a decrease in the number of companies with no female representation at board level.

17/12/2010 10:17

News Datesfor yourdiary January

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

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

The Manufacturing Institute are holding a How2 Problem Solve seminar. Contact Emma Holt at emmah@manufacturinginstitute.co.uk

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

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

February Throughout February The EEF will be holding seminars throughout the UK focusing on new agency work regulations. For further information visit www.eef.org.uk/events/current/Gearing-up-for-the-Agency-WorkersRegulations.htm and to book call 0845 293 9850

The FDF will be holding a seminar focusing on obesity. This seminar will discuss the next steps required to meet the challenge of obesity and assess the progress of regional and national approaches to obesity prevention in achieving lasting behavioural change. To book a place contact 01344 864796

MAS West Midlands are holding a relationship analysis & workshop - this clinic will provide a step-by-step explanation of the methods and relationship questionnaire, it will include case studies to illustrate the management of successful supplier-customer relationship workshops. For further information contact Carrie Holmes on 01902 838326

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

15-16

The Manufacturing Institute is holding a workshop focusing on the Shingo Prize. Contact Emma Holt at emmah@manufacturinginstitute.co.uk

16-18

The ADS are holding an information exploitation workshop, focusing on the delivery requirements to sustain the UK as leaders in the 21st century digital exploitation domain. For further information please contact 0207 091 4500

I T in manufacturing

CAD reaches out to the consumer In early December, TM reporter Tim Brown attended Autodesk University in Las Vegas for an update on the mouth-watering new developments being rolled out by the software giant. The theme of the 18th Autodesk University was ‘The power of possible’. It was aimed to be a demonstration, not of what the company is planning for the long term future, but a display of what is possible now. And, with Autodesk’s motto to ‘help everyone to imagine, design and create a better world’, the company showed it is also making some important inroads in to the consumer market. Utilising the power of consumer mobile technology such as the iPhone, iPad and Android devices, Autodesk is tapping into a new market and allowing design and demonstration to be done on the go, by anyone anywhere. New apps such as the Sketchbook, while simple, are able to create extremely detailed drawings and designs. Search ‘Autodesk Sketchbook’ on Flikr to see the possibilities this programme offers. These same portable ‘smart’ devices , which were originally designed for the consumer market, have become true enablers for business-tobusiness operations. The iPad, dismissed by some as a glorified movie player, has taken off in the manufacturing sector in the US. Autocad WS, which allows users to edit and collaborate on design data over the Web and with half a million users already, truly allows data to be taken in to the field. A new upgrade, Autocad WS 1.1, which removes the need to always be connected to the internet, will be available early in 2011. Shape extraction for Dummies Project Photofly is one of the newest and most interesting products available from Autodesk Labs, a website where users can try the company’s newest programs for free. Photofly is software capable of automatically converting photographs, taken around an object or a scene with a standard digital camera, into a 3D ‘photo scene’. Photo Scene Editor for Project Photofly is a small application that can be downloaded and installed on a PC running Windows. This application allows you to submit your photographs to the Cloud to and view the Photo Scenes returned by the Project Photofly servers. You can save a Photo Scene in its native format, RZI (Autodesk ImageModeler 2009 format), or export the scene to the DWG or FBX file format. Such shape extraction has previously only been available with expensive laser scanning devices so this new technology is an exciting development.

ManufacturingAppointments UK Appointments Andrew Witty BIS

Business Secretary Vince Cable has appointed Andrew Witty as the lead nonexecutive board member at the Department for Business Innovation and Skills (BIS). Witty, chief executive of GlaxoSmithKline, will

take up his position on the new departmental Board from January 1, 2011. Focusing on department performance and delivery, the new board will direct the strategic and operational activity at BIS.

Terry Morgan CBE MTC

Terry Morgan CBE has been appointed as new chairman of the Manufacturing Technology Centre (MTC). The MTC, based at Ansty Park in Warwickshire, is a new world-class facility and unique

collaboration between academia, research organisations and industry. It will bridge the gap between knowledge and cutting edge, competitive manufacturing production.

Julie Kenny Yorkshire Forward

In December the Department for Business, Innovation & Skills announced the appointment of Julie Kenny as Chair of regional development agency Yorkshire Forward, the Regional Development Agency. Kenny is managing director of

South Yorkshire manufacturer Pyronix and chairman of its sister firm Secure Holdings. She was already a board member of Yorkshire Forward, covering West, South and North Yorkshire and the Humber.

Jim Gilbert Birley Manufacturing

Sheffield-based Birley Manufacturing has appointed Jim Gilbert as manufacturing director, a new post created as part of the company’s growth plans. Gilbert previously

worked with Havelock Europa, Essanby and DRM Display Industries where he helped to improve company profitability at various sites throughout the UK.

Gordon Lane A|D|S

A|D|S, the UK’s Aerospace, Defence and Security trade organisation, has appointed Gordon Lane as Managing Director Defence. A Royal Engineer, Lane latterly served in the Joint Warfare, Military Operations and

Equipment Capability office and the Defence Evaluation and Research Agency. On leaving the Army he ran his own business and defence consultancy for two years before joining A|D|S earlier this year.

International Appointments Honeywell has announced it will combine Sperian Protection with Honeywell Safety Products to form one Global Personal Protective Equipment business. The combined business will be called Honeywell Safety Products and will continue to be part of the Honeywell Automation and Control Solutions Life Safety business. William Hayes, president of Honeywell Safety Products, has been named president of the combined entity. Aspen Technology, a provider of software and services to the process industries, has announced the appointment of John Hague as senior vice president and managing director for the Middle East and North Africa. With over 25 years of process industry experience in sales and business development, Hague brings additional focus to AspenTech’s growing presence in the Middle East.

The Association for Consultancy and Engineering has made three new appointments to its board. Paul Hamer, CEO of WYG Group, joins Chris Cole of WSP Group as the vice-chairmen of ACE, while Graham Nicholson of Tony Gee and Partners has been elected as chairman.

Ed Stubbs, previously general manager at Sheffield-based Loadhog has been promoted to the position of managing director. The appointment was announced just days before all Loadhog operations were transferred to a newly-refurbished city facility more than twice the size of the old site. Stubbs, began his career in the United States with Loadhog’s parent company, Gripple, and joined the Sheffield-based reusable packaging innovator five years ago as a sales manager.

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

The big picture Dealing with the middle men Cutting out the middle men is supposed to be beneficial, but for some manufacturers getting the right type of go-between can be the difference between success and failure. Dr Letizia Mortara of the Institute for Manufacturing explains why selecting the right type of intermediary could be good for business. Dr Letizia Mortara Institute for Manufacturing

Manufacturers used to be private fiefdoms, controlling everything in the value chain, from R&D through to production, sales and marketing, but times have changed. Increasingly firms need to collaborate with other businesses in order to introduce new products or services. Such partnerships – known as ‘open innovation’ help them gain access to the new technologies, ideas or skills they require to keep pace with today’s evolving markets and changing customer demands. It also affords an opportunity to exploit internally developed ideas and technologies by finding new routes to market. However, this more collaborative approach is often an innovation in itself as it demands a new set of capabilities which businesses, in particular smaller companies, may not fully possess. Manufacturing companies have increasingly turned to so-called ‘innovation intermediaries’ to help them to achieve their strategic goals – be it in providing access to important business networks, facilitating collaborations with new business partners or helping them to carve out important new commercial opportunities. These middle men can often open doors to new opportunities, helping clients to access a wider range of expertise, information, resources and services, due to the extensive business networks which they either possess or have the ability to create. But choosing an innovation intermediary can be a bewildering experience. There are dozens of organisations out there, from commercial and technical consultancies, to government departments, national and local development agencies, academic networks and university technology transfer offices. The services they provide also vary widely, from problem solving and identifying trends in technologies or markets, to developing long-term market strategy such as identifying potential barriers to entry. Some may have particular strengths in helping companies to develop a strategy for the future. Others may focus more on intelligence gathering, helping to monitor new technologies or identifying suitable collaborators for their clients to work with.

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

Faced with this tyranny of choice, how can a company select the right intermediary? Research suggests a possible approach to comparing the available offerings. Firstly, firms need to understand the kind of help an intermediary can offer, and how this relates to their own internal needs. For some firms it could be practical assistance in turning a new technology into a tangible product, or developing a commercial strategy for a new product. They could also help match collaboration, examining the strengths and weaknesses of potential alliance partners. It could even be as simple as providing additional resource during particularly busy periods. Secondly, firms need to consider the networks intermediaries reach or can create. It is important to ensure that connections available via an intermediary are the right ones for the business and will complement those already used. Thirdly, understanding the business model, cost implications and the position the intermediary takes with regards to owning the IP is also a vital decision criterion. Finally, the key to success lies in communication, being clear about expectations and long-term benefits. There is no single ‘right’ approach to innovation for a particular company; each depending on specific needs and priorities and preferred style of working. Furthermore it is difficult to compare like with like, as intermediaries will often use different terminology to describe their services, but the approach suggested above provides a language and method which can be applied to the different intermediaries to support the effective comparison of service offerings. Intermediaries are like any other business tool, you need to select the right type for the job in hand. While obviously no magic bullet, they can offer real benefits to business as long as your company understands both the pros and cons involved. The IfM has an active research programme on Open Innovation. For more details visit: www.ifm.eng.cam. ac.uk/ctm/teg/intermediaries.html

Economics New year, new cheer Steve Radley, Director of Policy, EEF

the start of 2010, shell-shocked from the worst recession in 80 years, no forecasters predicted anything more than very modest growth. It’s pleasing to say then, a year on, that growth both for the economy and manufacturing in particular has surprised on the upside. Indeed for the first half of the year manufacturing grew at its fastest rate in 16 years. Over 2010, we forecast that manufacturing will have grown by 3.8%. If there was a dark lining to this silver cloud it was the performance of inflation, which has also been higher than forecast. The CPI stayed stubbornly above 3% throughout 2010, well above the 2% target. That’s caused no end of debate about when the MPC should end the extraordinary degree of monetary stimulus in the economy and start raising interest rates. So far the exceptional uncertainty of the recovery has stayed their hand. In addition, although manufacturers have faced a range of rising costs, improving productivity and moderate wage increases have largely kept price hikes in check. So what does the future hold in 2011 for the economy and manufacturing? Our central forecast is a continued recovery driven by growth in net trade and investment. Manufacturing is at the forefront of strong export growth, particularly to emerging markets, which saw strong growth in 2010. Indeed manufacturing sectors with a high involvement in trade, such as metal products and mechanical engineering, will likely show the strongest growth. The economy should do better in 2011 than 2010 with 2.1% growth. As in 2010, manufacturing will again better this pace, with a forecast 3.8% expansion. There are four big forces to watch out for in 2011 that not only shape our central forecast but also suggest caution, with some downside risk. First is the government spending cuts. These will ensure government’s contribution to growth is negative and, along with the VAT rise, is likely to keep consumption growth weak. About a fifth of our members are telling us they see direct impacts from the spending cuts coming through in reduced orders, particularly in the transport manufacturing

2010 was, as expected, a difficult year, but the manufacturing sector has grown at a much faster rate than the rest of the economy. Now, the industry is at the front of a net trade led recovery in 2011, with strong links forged with emerging economies the ace up its sleeve. sectors. Additionally, 40% anticipate some impact through their supply chains. Our forecasts suggest that emerging markets like China and India will indeed retain their growth, though, and this will be vital given the uncertainty caused by the eurozone sovereign debt crisis which has already manifested in weak or negative UK export growth during 2010 across the eurozone, with Germany a notable exception.

Playing the credit card As manufacturers start to feel more confident and start to think about raising investment, restrictions on access to finance will become more important. The flow of credit remains seriously weakened by the financial crisis. Our most recent credit conditions survey shows a modest improvement but progress remains painfully slow. Further progress addressing problems in access to finance will be important by 2012 when several other factors including the banks’ refinancing needs and higher capital requirements could make conditions even tighter.

The economy should do better in 2011 than 2010 with 2.1% growth. As in 2010, manufacturing will again better this pace, with a forecast 3.5% expansion Cautious optimism was something of a catchphrase in 2010 and, given the uncertainty around the economy is likely to remain one in 2011. This makes it is vital that the government gets its Growth Review right. While the public finances have weakened the government’s spending power, it still has an important role to play in clearing away the barriers to growth. The first major announcements in March’s Budget should give us a clearer insight into the government’s growth agenda. By then, we should have seen a further three months of solid growth in manufacturing. But the recovery shouldn’t be taken for granted and government can play an important part in keeping the momentum going.

Have your say at www.themanufacturer.com

Thelegallowdown Are your temps without risk? Andrew Crudge Solicitor Thomas Eggar

Manufacturers have traditionally enjoyed the flexibility of being able to take on and then shed temporary employees as demand fluctuates, often in response to a spike/dip in orders. But what really are the risks and rewards associated with temporary staff? The benefit? In one word: “flexibility”. The perceived wisdom is that organisations have the flexibility to terminate the contract with the temporary worker without being liable for unfair dismissal or redundancy pay.

Whilst some temporary employees may also have the right not to be unfairly dismissed, this is unlikely to be an issue for organisations as the engagement of the temporary employee will be for weeks rather than months.

The rights of temporary employees

Other risks

Whilst you may be lulled into a false sense of security that temporary workers do not have any rights, this is a misconception. Temporary workers have some of the same rights as permanent employees, such as: The right to take time off for dependant leave. The right to take time off for antenatal care and protection against dismissal for pregnancy. Protection against dismissal on grounds of health and safety, asserting a statutory right and other prohibited grounds. The right to receive a written statement of main terms and conditions of employment.

In some cases, the need to meet the immediate demand means that temporary employees are recruited in haste and sometimes without the appropriate background checks. Aside from the reputational consequences of recruiting the wrong person, there is also a legal and potential financial risk. For example, organisations will be exposed to a serious risk under the Immigration, Asylum and Nationality Act 2006 if they employ an individual who does not have the right to work in the UK or who is working in breach of their conditions of stay in the UK. The risk of failing to carry out the appropriate checks can land organisations with a civil penalty of up to £10,000. With the increase of forged documents, which in some cases can be hard to spot, the importance of organisations taking the proper time to check the documents cannot be stressed enough. Whilst there may not be an obvious threat of an organisation employing an individual who poses a criminal threat, in the current economic climate it is well documented that staff dishonesty is on the increase. Temporary employees are for some organisations the biggest risk for employee fraud/ theft as the nature of the engagement means that the individual is in and out of the organisation very quickly, and in most cases the individual has been placed in the role with very little to nil background checking.

It is more than likely that a temporary worker engaged directly by an organisation will in fact be an employee. The temporary employee also enjoys other rights such as: The right not to be discriminated against on grounds of sex, race, gender reassignment, marriage and civil partnership, pregnancy and maternity, sexual orientation, religion or belief, age or disability. Entitlement to annual leave and the same rest breaks and restrictions on their working hours as apply to other workers. Protection against deductions from wages. The right to be paid the appropriate National Minimum Wage. The right not to be subjected to any detriment (including dismissal) for making a protected disclosure. Is a “data subject” under the Data Protection Act 1998, and so will be entitled to the same protection as other employees and workers. The right to be accompanied at disciplinary and grievance hearings. The right to a safe place of work.

What should manufacturers be doing? Manufacturers should ensure that they are familiar with the rights of temporary employees and ensure compliance with internal policies and guidelines to ensure that proper background checks are carried out before the engagement is confirmed.

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

businessasunusual Going for

Growth Anand Sharma, Chairman and CEO, TBM Consulting Group

Despite

Executive visibility and investor interest in operational excellence and lean manufacturing has never been higher. In a recent survey almost three out of four manufacturing executives say their companies have formal business improvement programmes. A separate study found that a clear majority of business leaders believe such programmes have helped them achieve operational and market objectives over the past three years.

such positive impressions, in my experience only one out of every ten companies has really leveraged their business improvement efforts to achieve a competitive edge or grow sales. Most are simply doing it to reduce costs or as window dressing to impress their customers. As top management focus turns outward once again in 2011, here are some of the critical elements of a growthoriented business improvement program: A clear vision and roadmap that’s aligned with financial objectives. To get anywhere you have to know two things: where you are and where you want to go. To understand where you are requires a reliable appraisal of market opportunities and your competition, which requires some form of benchmarking. Next, your vision should clearly articulate where you want to go and offer a compelling value proposition to your customers. After your vision and strategy have been established, one of the best tools for executing the strategy and achieving the targeted financial objectives is Strategy Deployment (also known as Policy Deployment). The methodology links management strategy to Annual Improvement Priorities. It then helps allocate resources to the most important projects and halt the many trivial activities that consume resources but are not aligned with your strategic objectives. Customer alignment. Whether it’s a formal voice-of-the-customer exercise, or a sales call, take advantage of every opportunity to capture the unarticulated needs of your customers. This intelligence gathering must be part of everyone’s job description. The subsequent insights will reveal opportunities to delight your customers with new or enhanced product and service offerings that they value but did not ask for. Supplier alignment. The efficiency gains, cost savings and enhanced responsiveness that result from working more closely with your suppliers can offer far greater returns than anything you do to improve processes internally. It’s more challenging, of course, but a CI program that works in partnership with your vendors to speed information and inventory flow will yield financial benefits for everyone. Today’s electronic communication and data sharing tools make it easier than ever before to build a supply chain that is lean, responsive and in sync. Real respect for your people. Sure, higher unemployment rates have made people more grateful

to simply have a job, but you want them to do more than just show up for work every day. If you think about it, your employees are your only appreciating asset. Every day they become more and more effective at serving and anticipating the needs of your customers. The best continuous improvement programs listen to and respond to employee ideas and frustrations, and tap into their creativity for finding solutions. Progress on many fronts. I don’t have any patience, and neither should you, for organisations that continue to operate in functional silos. Every HR, quality, engineering, sales, procurement, marketing, customer service, warehouse, and plant manager must recognise that only by working together as a team can you serve customers better each day. A good CI program crosses reporting hierarchies and provides tools and coaching that can help improve teamwork and cross-functional cooperation. Engaged senior leadership. When it comes to operational improvement, the expectations for senior leadership have evolved over the past several decades. At one time it was enough for executives to simply approve what the factory managers were doing, and run interference from time to time. But if you want such efforts to have a major impact on all areas of the business, and a noticeable impact on the bottom line, it requires a deeper commitment. That means more leadership time, visibility, attention and personal investment. These are some of the practices that can help you build a company where the responsibility for business process improvement extends beyond the limited scope and resources of the continuous improvement team. They can help you build a culture that is never satisfied with the status quo, that embraces new opportunities to create customer value, and that drives organic growth by anticipating and solving customer’s problems.

Summary: Lean manufacturing has never been more popular. Information and training about the tools for eliminating waste, process improvement and problem solving are available everywhere. Unfortunately, most of the subsequent initiatives are only focused on cost cutting. Your business improvement program should be helping you develop and commercialise new products and make other moves that win new customers and grow your business.

Have your say at www.themanufacturer.com

Bruised and confused

Is CRC the Great Carbon Reduction swindle? Of the Comprehensive Spending Review’s many casualties, Edward Machin finds manufacturers’ discontent being made increasingly wintery by a governmental about turn in carbon reduction policy.

Your

business has signed up for the mandatory Carbon Reduction Commitment (CRC), renamed the CRC Energy Efficiency Scheme in April 2010. Its benefits, both reputational and otherwise, promise a keener, greener future for a battered, but recovering, industry. Things are looking up. That is until you are informed that revenues from the sale of CRC allowances, totalling £1 billion a year by 2014/15, will be used to support the country’s public finances rather than be recycled to participants — your company included. And that rebate you were due for CRC participation thus far? Swallowed by the public purse, alas. “We’re seeing a lot of anger concerning the CRC,” says Michael Hutchinson, an environmental partner at law firm Mayer Brown LLP. “It’s both extremely complicated and bureaucratic; what’s left is essentially a tax with red tape all over it.” And the driver for such opprobrium? Last October’s Comprehensive Spending Review. Under the CRC’s original framework, organisations using more than

6,000 megawatts of electricity per year would buy £12 allowances for every tonne of CO2 emitted. Where that money was due to be recycled for participants in the revenue-neutral scheme, new rules outlined by George Osborne mean the cash — a green tax, effectively — will go straight to the Treasury’s pot. Unsurprisingly, “The decision to move away from a payment recycling scheme to a mandatory flat rate tax will have a huge impact on around 5,000 UK companies,” says Kevin Houston, director of Carbon Masters, a spin-out company from the University of Edinburgh. Based on publicly available carbon emissions data, Houston’s organisation calculates that the likely minimum tax charge for qualifying businesses will be £42,000 annually. He says these companies could further see their total bill for electricity, gas and carbon tax double over the next five years if consumption increases by a relatively modest five per cent per annum. Similarly, research undertaken by Energy Team, an environmental consultancy, finds that businesses with an average £1 million gas

Leadstory Bruised and confused

and electricity bill will pay £750,000 without a chance of a rebate. Prices will increase year on year, too, with organisations spending up to £110,000 by 2015 for a £1 million energy bill. “For a scheme initially brought about to change behaviour and encourage businesses to become more environmentally friendly, these changes mean it will simply operate as a tax for companies taking part,” says Harry Manisty, an environmental tax specialist at PriceWaterhouseCoopers.

Catch me if you can The kicker, should one be needed, is this: while enforcement proceedings for non-compliance haven’t been undertaken yet, your company may be towing the line while others continue to flout the regulatory requirements without penalty. Indeed, says Michael Hutchinson of law firm Mayer Brown, “some organisations have taken a strategic decision to do just that. ‘Why bother as they’ll never come after me’ — that sort of thing. It’s a pointless law.” For those manufacturers actively evading CRC, though, 2011 might just be the year that such cloak and dagger operations prove costly. “We expect to see new powers given to the Environment Agency, known as civil sanctions, being tested ever more forcefully,” says Helen Loose of Keystone Law. Such authority will also be given to the National Measurement Office, enabling it to issue compliance notices and stop notices and impose variable monetary penalties on manufacturers and importers of products breaching EU energy efficiency rules. “It’s going to be increasingly difficult to float under the radar,” agrees Steven McNab, a partner in

Simmons & Simmons’ environment and climate change team. “If the CRC does become a ‘straight’ tax as expected, the authorities’ leniency seen during the scheme’s early days will likely come to an end. There is significantly lower tolerance for tax evasion than environmental misdemeanours, after all.”

For a scheme initially brought about to change behaviour and encourage businesses to become more environmentally friendly, these changes mean it will simply operate as a tax for companies taking part Harry Manisty, environmental tax specialist, PwC There are, though, “some very rational steps to take for getting ahead of the energy reduction piece,” McNab explains. “Manufacturers can usually find 20 to 30% reductions in consumption for little, or no, cost.” Lancashire-based Camfil Farr is one such company. In August 2010, this producer of sustainable filtration solutions became the first UK manufacturing company to be awarded the energy management standard BS EN 16001. Experiencing rising and unstable energy costs, the business has since seen a big reduction in energy consumption, including: gas by 35%; electricity by 22%; water by 12%; diesel fuel by 19%; and waste by 17%. “Everyone is starting to wake up to the obscene

Top energy concerns for business in 2011 CRC Energy Efficiency Scheme – Following the government’s Spending Review, companies will no longer see financial rewards from the CRC Energy Efficiency Scheme. Instead the revenue raised by carbon allowance sales will be used to support public finances including environmental schemes. The good news is that organisations will not need to purchase allowances for 2011-2012 until 2012, but businesses need to prepare for the scheme now by accurately monitoring and managing energy usage. Energy productivity – There are three levels to energy policies. At the top level is the EU Emissions Trading Scheme, which then filters down to industry specific targets agreed with trade bodies. Targets have been set for specific manufacturing sectors based on the production of one unit

of output for a set number of units of input, which means there is going to be a greater focus on energy productivity and the processes used to produce goods. Power quality – By improving the efficiency of an organisation’s electrical network it is possible to improve the quality of the power and maximise the available capacity. Achieving economies in energy usage is readily possible in electricity generation and distribution and the way it is used by installing low loss transformers, checking the integrity of the cabling, installing active harmonic filters to reduce harmonics, variable speed drives to control electric motors and utilising low and medium power factor correction. Integration of the Smart Grid - The vision for the future is the Smart Grid,

an electricity grid that is equipped with information and communications technology and control mechanisms to integrate the actions of all users connected to it. Achieving a smarter grid means that businesses need to look at both their contribution to the grid and absorption of energy, as the classic linear energy grid becomes an intelligent and interactive network. Greater focus on synergy within the manufacturing environment – This means bringing together the five domains of process and machine management; power management; building management; security management; and critical power management through the use of a common network that integrates hardware, software and communications. This approach can deliver up to 30 per cent savings on Capex and Opex.

MSc Global Product Development and Management Enhancing careers for professionals globally This innovative course will develop your leadership skills enabling you to respond to the challenges and demands of modern globalised markets. You will develop an understanding of advanced techniques for integrating all global stakeholders from engineers to management. Benefit from: • Studying in a top three UK university for the impact of our mechanical, aeronautical and manufacturing research* • Lecturers from other prestigious international universities: Stanford (US), KAIST (South Korea), TU Berlin (Germany), NUS (Singapore) • Presentations from global business leaders, including Nissan, Thales, Jaguar and Rolls-Royce For further details, and an application form, please contact:

T: +44 (0) 1234 754086 E: appliedsciences@cranfield.ac.uk www.cranfield.ac.uk/sas/gptm * Research Assessment Exercise (RAE) 2008.

In association with:

Lead story Bruised and confused

waste of energy in this country,” says Bill Wilkinson, Camfil Farr’s managing director. “Legislation has crept up on everyone, but there are nonetheless huge savings to be made.” Mayer Brown’s Hutchinson agrees. “Despite its many flaws, this movement is presenting significant commercial opportunities for those in the manufacturing sector. Given the EU’s policy focus on eco-design and building recyclability into the integrated lifetime of a product, the supply chain for clean tech and renewables, to name two, is awash with potential.”

Public relations puff ‘n stuff While we have barely scratched the surface of where environmental change and economic change meet, John Cridland, the CBI’s newly-appointed deputy general, says the time is right to really get into this puzzle. “It is realistic to start joining the pieces of the jigsaw puzzle for a mature and

Everyone is starting to wake up to the obscene waste of energy in this country. Legislation has crept up on everyone, but there are nonetheless huge savings to be made Bill Wilkinson, managing director, Camfil Farr sophisticated manufacturing sector concentrating on the value added [by sustainable production],” he says. Many in the sector believe that the jigsaw is anything but box-fresh. Manufacturing organisation EEF’s head of climate and environment policy, Gareth Stace, is one. “Manufacturers have already made substantial reductions in emissions,” he says. “However, there is increasing evidence that they are struggling under the weight of legislation at European and national level which has produced a chaotic, over-crowded and complex landscape.” He says that manufacturers now need a fresh approach. “This will help a vibrant manufacturing sector to make a sustainable contribution to reducing global emissions of greenhouse gases and continue investing and creating jobs in the UK.” At a CBI climate change summit in November, the great and good of British industry echoed such sentiments. “The cost of inaction will rise exponentially if we continue on a course of business as usual,” said Cridland’s predecessor, Richard Lambert. “The risk to our future energy supplies, unless properly addressed, will seriously undermine the attractions of the UK as a place to invest… With enormous sums of private capital which could re-energise our manufacturing sector shifting to other, more welcoming, parts of the world [as a result].”

And while the Chancellor’s announcement that the Government will provide £1bn in funding for a ‘green investment bank’ designed to kick-start the UK’s low carbon economy must be welcomed, it isn’t placating many businessmen at the coalface. “To be perfectly honest the [CRC] scheme is a PR puff,” says Phil Worms, director of Scottish technology firm Iomart. “It doesn’t look at the different types of users; it’s bizarre to compare us to a local authority.” The European Union, too, is preparing to classify heavy clay industries — including manufacturers of brick, roof tile and clay drainage pipe — under ‘carbon leakage risk’ legislation, meaning any emissions over the EU’s stipulated allowance will now be subject to an increasing charge from 2013. Brick-makers, for example, will be liable to pay for 90% of their emissions by the decade’s end.

Wanted: Climate change reform Britain’s manufacturers have called for fundamental reform of the government’s climate change policy, given that it is threatening to derail the competitiveness of UK industry. Published by EEF, the report ‘Changing the climate for manufacturing’ argues for an economy-wide carbon tax based on energy usage. If such a tax were applied to the domestic sector, EEF estimates it would generate £1.7bn per annum for the Exchequer. The report’s key recommendations include:

Reform the Climate Change Levy so that energy users are taxed according to the carbon content of the energy and fuels they use. This would provide a clear incentive to reduce high carbon energy and fuel use while utilising high carbon fuels more efficiently.

Ensure that any carbon tax is accompanied by voluntary negotiated agreements with industry sectors so as to provide tax incentives for carbonintensive industry to reduce its emissions.

For climate change and energy policies, the costs of new regulations and measures should be considered in terms of their cumulative impact on manufacturers. Specific consideration should be given to impacts on energy-intensive manufacturers.

The Committee on Climate Change should be tasked with carrying out an assessment of carbon leakage and its possible future effects on UK manufacturing. This should be done in conjunction with its annual assessment of the UK’s progress towards meeting carbon budgets.

A review of the Carbon Trust’s role by the National Audit Office. Manufacturers report that the advice given by the Trust is too simple, generic or out of line with business investment strategies. The Industrial Energy Efficiency Accelerator is more a step in the right direction.

Carry out a full review of the effectiveness of the Enhanced Capital Allowance scheme for low carbon products.

Have your say at www.themanufacturer.com

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

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

Key Event Benefits::

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

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

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

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

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

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

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

CONNECT FORMULA One to One focused meetings

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

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

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

PLM CONNECT PROGRAMME – 17TH FEBRUARY 2011

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

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

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

SPEAKERS ALSO INCLUDE: James Harris 1

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

Steve Nevey

Business Development Manager, Red Bull Racing 4

Nina Dar

Managing Director, Cheeky Monkey Business Solutions

John Stark

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

President, John Stark Associates (JSA)

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

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

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

RegionalFocus In association with:

Manufacturing value added 2007: £21.1bn No. employed in manufacturing: 347,000 No. of manufacturers: 14,815

North West News in brief Bentley Motors, based in Crewe, has announced the appointment of Wolfgang Dürheimer as its new Chairman and Chief Executive. Mr Dürheimer, who joins Bentley from Porsche AG where he was Executive Vice-President, Research and Development, will commence his new role in February. He succeeds Dr Franz-Josef Paefgen who is retiring after over eight years at the helm. Kellogg’s recently announced that it is helping its employees beat the Winter Blues by offering them the chance to shun the 9 to 5 and come to work later or finish early. The Manchester food giant allows its 660 UK head office employees to break the confines of a standard working day when workers see very little if any natural daylight in winter. Precision engineering company, Dawson Precision Components, specialises in low to medium volume production and preproduction of components for specialist industries including medical, aerospace, automotive, motorsport and more. The company recently announced the purchase of a new state-of-the-art coordinate measuring machine (CMM) for the fully automated measuring of milled components and expects to take ownership in February.

North West Steeped in manufacturing heritage

The North West of England has a cherished industrial history. Bounded on the west by the Irish Sea, linked by a system of canals providing inland regions access to the sea and with a historically strong coal supply, the region was born of the Industrial Revolution.

1733, just north of Manchester, a gentleman by the name of John Kay invented the flying shuttle weaving mechanism. It was perhaps one of the greatest facilitators of the industrial revolution and, beginning with the textile industry, instigated the concept of automation within industry and resulted in considerable wealth creation for the area. During the roaring 1920s, Shaw and Crompton, a town in Greater Manchester with a strong textile industry, was reported to have more millionaires per capita than any other town in the world. On match day, Old Trafford and Eastlands may lay claim to that title these days. The importation of foreign cotton goods signalled the decline of the areas textile industry but despite this, steeped in manufacturing history, the Manchester and Liverpool corridor remains one of the UK’s manufacturing engines. Of the £155bn that the 12 regions of the UK contribute through manufacturing to the UK economy, the North West provides the single largest portion with a 14.2% share totalling £21.1bn.

Business support Today, as with much of the industry in the UK, the North West is more renowned for its high value technical expertise in industries such as aerospace, defence, automotive, technical textiles, biomedical and energy while also having a strong food and drink industry. Iconic brands in each of these sectors dot the region and are supported by a range of

RegionalFocus North West

organisations and North West Development Agency (NWDA) sponsored regional cluster groups. Manufacturers’ organisation EEF in the North West, based in Warrington, provides a unique combination of government representation, industry intelligence, networking programmes and business services designed to help the region’s manufacturers evolve, innovate and compete. As a membership organisation, its services are driven by the needs of its manufacturing member businesses in areas which include HR and legal advice, health, safety and environment, business improvement and training and development. The UKTI works with the North West Development Agency (NWDA) and regional cluster organisations to identify and develop key industrial sectors to be internationally competitive. Key cluster organisations in the area include: Food Northwest; NWtexnet (Northwest Textile Network); Northwest Automotive Alliance; Northwest Aerospace Alliance; Chemicals Northwest; Envirolink Northwest; and Bionow (Biomedical cluster development). The NWDA and its affiliates in the area have proved to be very popular among manufacturers and, as a whole, business leader are cautiously optimistic about the Government’s plans to replace the agency with new Local Enterprise Partnerships (LEPs). This sense of uncertainty was reiterated recently by the Government’s own business, innovation and skills committee which raised concerns about the LEPs in a report in December last year. The committee recommend that the RDAs should continue in some form in certain areas, claiming “the democratically expressed wishes of local businesses to retain regional coordination

Key people David Ost, North West region director, EEF-the manufacturers’ organisation

avid Ost is the North West Region Director for EEF-the manufacturers’ organisation where he leads EEF’s membership, influencer and media activities in the region. He works closely with EEF’s Regional Council which comprises manufacturers from across the North West. Passionate about manufacturing, he joined EEF in 2000, having previously held a number of senior roles in industry – including sales director at United Biscuits Foods, managing director of Candy/ Kelvinator and group human resources director for The Hoover Candy Group. David also holds a number of external executive appointments in the region including with PSP. Paul Ashley, chairman of Clark Door and chair of EEF’s Regional Council in the North West

aul Ashley is chairman of Clark Door Limited in Carlisle, Cumbria – an international and market leading innovator in the design, manufacture, installation and service of specialist acoustic doors for television studios and theatres and energy saving doors for the coldstorage industry. He is also chair of EEF’s Regional Council in the North West and was formerly past president of EEF Northern and the former vice chairman of Business Link for Cumbria. Paul started his career with Dunlop Engineering in Coventry working in both the U.K. and U.S.A. before joining Clark Door Limited as managing director and is now the company chairman. He is a chartered engineer and a member of the Institution of Engineering and Technology.

One to watch – Survitec Group Survitec fighter pilot equipment

Survitec immersion suit

he Survitec Group makes makes safety and survival equipment primarily for the defence, aerospace and marine markets. RFD Beaufort, part of the Survitec group, is based in Birkenhead, Merseyside and specialises in the manufacture of submarine escape suits, fighter jet pilot equipment (specified for the Eurofighter and Joint Stike Fighter), immersion suits and also features a service facility for the maintenance of Survitec manufactured life rafts. The North West site is the centre of excellence for defence products including the design department for the pilot flight equipment. The group company was the first strong performing UK business to be sold after the end of the recession. Sold on the back of both its organic and acquisitive growth program, the company plans to double in size to a turnover of £300m in two years.

should be respected where they are clearly manifested.”

Aerospace and defence The North West is the largest aerospace production region in the UK, accounting for a third of the UK’s turnover in this sector. Primarily based on airframe, aero engine system and component manufacture, the region also features the centre of excellence for military aircraft production (Typhoon, Join Strike Fighter, Nimrod, Hawk, UAVs). Comprising circa 1000 companies and employing more than 60,000 people, the sectors key players in the region include BAE Systems and Rolls-Royce with a strong supply chain of manufacturers such as Ferranti also based in the area. Government ministers last month pledged support to the Rolls-Royce bid to secure US contracts which would pave the way for the creation of jobs its Barnoldswick, 40 miles north of Manchester. The firm, which is the area’s largest employer, has

ENER-G’s CHP system in action at Birmingham Heartlands Hospital

lodged a bid to manufacture and supply engine fan blades for the F-35 Joint Strike Fighter. If the contract is secured it will open the door to a £30million expansion of its Bankfield site in Barnoldswick and create 100 extra jobs. BAE Samlesbury, north of Manchester, has a strong tradition of design, engineering and manufacturing excellence in the aerospace industry. The site is home to some of the most advanced aerospace manufacturing and assembly technologies in the world. At Samlesbury, BAE Systems provides manufacturing and support capabilities to a number of internationally important aircraft programmes including Eurofighter Typhoon, the most advanced swing-role aircraft in the world and F35-Lightning II, the largest contract of its kind in the world. With over 4,500 staff based at the 351 acre site, the company is a key employer in the North West.

Food and drink The North West is England’s largest food and drink-producing region and home to the UK’s highest concentration of food and drink manufacturing businesses. As a result, the area features the significant presence of high-profile brands such as Kellogg’s, Nestle, HJ Heinz, Premier Foods, Princes Foods, Warburtons and Uncle Joe’s Mint Balls. Premier Foods is the UK’s largest food producer. According to the company, 99% of all UK households bought a product from the company last year and 47.2 million people eat at least one Premier branded product such as Hovis, Hartleys or Branston every two weeks. In 2009, Trafford-based food giant Kellogg’s was voted number 30 in the Sunday Times Top 100 Best Companies to Work for List. Kellogg’s, one of Manchester’s biggest employers, provides employees with perks such as flexible working, ‘summer hours’ and it’s Fit for Life programme which create a ‘great place to work’. With headquarters in Bolton, Lancashire, Warburtons employs approximately 5,000 staff throughout the country and produces around

One to watch – Ener-g Group

ENER-G biogas generation system in use at Locharmoss landfill site

eadquartered in Manchester and with a turnover of £135m, Ener-g group specialises in delivering energy efficient solutions with the core of the group focusing on the reduction of the business energy costs and carbon emissions. The company’s core offerings include: energy consulting; combine heat and power plants (CHP); anaerobic digestion plants; landfill gas generators; and building management systems. CHP is an engine fuelled from natural gas which generates electricity and replaces a boiler to provide heating. Ener-g is currently the UK leader in this area with more than a 40% market share. The concept offered throughout the Ener-g group is to build, own and operate its products. Companies interested in installing a CHP onsite can do so at no expense as Ener-g can underwrite the cost. The product provides immediate carbon reductions of around 20% and Ener-g will sell the electricity back to the client at rate lower than industry standard.

Regional focus North West

Left: Fitting the front diffuser and acoustic undertray to a limited-edition Bentley Continental GT Diamond Series Right: Bentley Continental Flying Spur

two million bakery products each day. In late July last year, a major fire stopped production at the company’s Bolton site for a month when 15-20% of the snack plant was damaged. One hundred people had to be evacuated as 60 firefighters fought the blaze which was thought to have started in an industrial oven. Warburtons’ 13 other bakeries were tasked with ensuring that its bread deliveries remained uninterrupted. The fire failed to take the shine off the turnover for the year to September 26,

North West manufacturing in brief Manufacturing is a vital component of the North West economy employing 347,000 people in 14,815 manufacturing businesses and contributing £21bn to the economy The North West is the largest manufacturing region in the UK and the most productive Sector strengths for the North West include: aerospace; automotive; chemicals; food and drink; biomedical; and energy and environmental technologies The North West is the home of the industrial revolution Iconic and major brands in the region include: Kellogg’s; McVities; Uncle Joe’s Mint Balls; HJ Heinz; Premier Foods; Warburtons; Bentley; Jaguar Land Rover; Rolls-Royce; Leyland Trucks; BAE Systems; Siemens; PZ Cussons; Novartis; AstraZeneca; Unilever; Westinghouse; BNG; and more. The North West is home to a significant number of entrepreneurial start-ups in the bio and new technology businesses.

2009 which rose from £498m to £510m while profits increased from £32m to £34m.

Automotive The North West is the UK’s second’s largest automotive manufacturing area and comprises around 500 businesses ranging from volume car manufacturing such as Jaguar Land Rover to specialist supply chain members such as Dawson Precision Components. The area consists of a number of lean, precision-automated assembly plants producing prestige vehicles (Bentley), performance rally cars (M-Sport), trucks (Leyland Trucks) and buses (Optare). The Vauxhall plant at Ellesmere Port is now Vauxhall’s only car factory in Britain since the closure of the Luton plant in 2004, and currently produces the Astra model for the British market. From 1946 until 2002, Crewe in Cheshire was the home of Rolls-Royce motor car production and is the current home of Bentley motor cars. Bentley’s current model Continental Flying Spur and its sporting stablemate the 200mph Flying Spur Speed are the most successful four-door Grand Tourers in Bentley’s history. Since its launch in 2002, over 46,000 Continental model vehicles have been built. M-Sport, based in Cockermouth, Cumbria has grown in size and stature since it was originally formed in 1979 and has operated Ford’s World Rally programme since 1997. Ford has finished runnerup in the Manufacturers’ series on seven occasions under M-Sport, but the highlight came in 2006 when the Blue Oval won the FIA World Rally Championship for the first time in 27 years. It was followed in 2007 by a second WRC title. The Jaguar Land Rover site at Halewood, near Liverpool has experienced strong performance over the last 12 months. The site’s successful Freelander 2 model, achieved a 20% increase in vehicle sales to 17,336 in November last year. Halewood is currently preparing for the July launch of its latest model, the Range Rover Evoque, which has created 1,500

Regional focus North West

new jobs producing the company’s most eco-friendly model. During the recession, JLR was set to close one of its three UK manufacturing plants. This plan has now been axed and if growth continues, the company is may offer a further 3,500 positions.

Other important sectors Chemicals The Chemicals industry is vital component of the North West economy and the NW’s largest exporter with almost 60% of its output sold overseas. The James Cropper Burneside plant

One to watch – James Cropper

endal-based luxury paper maker and advanced materials group James Cropper plc is confident of a bright future. The firm, which employs more than 500 at its Burneside plant, comprises four divisions: James Cropper Speciality Papers; James Cropper Converting; The Paper Mill shop; and Technical Fibre Products. The company has posted strong numbers for 2009/10 with pre-tax profits for the year to March 27 up from £858,000 to £2.4 million on turnover of £76.2 million with 43% of its products exported. The company invests heavily in apprenticeships

(employing 3 in 2010) and management development and, as a result, the company is the largest private sector employer in Cumbria and can list over 100 employees with more than 20 years service within its ranks. “We are a proud plc with strong family values,” says Mark Cropper, the sixth generation of the Cropper family to lead the group of companies. “A combination of long serving employees and long standing relationships with customers and suppliers, together with our forward looking approach to business, gives us great confidence in delivering sustainable, profitable growth.”

Dates for your diary February 10: The EEF is holding a work shop titled ‘Gearing up for the Agency Workers Regulations’, in Warrington, which is designed to assist to understand the key provisions of the Regulations. www.eef.org.uk March 9: The EEF is conducting a seminar, in Warrington, to outline the key operational challenges posed by the abolition of the default retirement age. www.eef.org.uk March 11: The EEF is holding a member briefing on employment law updates in Warrington. www.eef.org.uk

There are approximately 650 chemical businesses in the North West, covering a number of specialist manufacturing categories, including agrochemicals, detergents, petrochemicals, plastics, coatings and technical textiles. Companies in the region include Unilever and PZ Cussons. Technical textiles The North-west is Europe’s largest cluster of technical textile companies with over 480 companies employing over 37,000 people. Turnover for the industry is over £3.97bn with more than 70% of the region’s output exported. As a hallmark of the areas textile origins, the technical textile sector is concentrated in central Lancashire and the northern part of Greater Manchester. Companies include Techtex, Vita, John Holden. Biomedical Europe’s biggest biomanufacturing region is located in the North West and is one of a handful of globally recognised bioscience communities. Around 350 biomedical businesses employing 20,000 people are located in the region, covering a range of life science disciplines including drug development, research diagnosis and healthcare products. The region is also the largest exporter of pharmaceuticals with major players in the area including AstraZeneca, Oystar Manesty, Novartis and Eli Lilly. Energy and Environmental Technologies Of growing importance is the Energy and Environment sector which consists of around 5,000 companies and employs 87,000 people. Strengths include nuclear, energy efficiency, water and waste water, renewable energy, waste management and recycling and land remediation. Companies include: Siemens, Ener-g, Enfinity, Eco Environments.

Interview Steven Norgrove

British industry in the driving seat

With a career spanning four decades, Steve Norgrove began professional life on the factory floor but now sits at the helm of GKN Wheels & Structures. This journey has positioned him well to make one or two observations about manufacturing in the UK. Mark Young reports.

Steven

Norgrove first joined GKN as an apprentice back in 1978 before working his way into senior positions at two other prominent British engineering names, Lucas and Corus. He then returned to GKN in 2007. In 2010, GKN, with its history that dates back a quarter of a millennium, created a new division – Land Systems – to sit alongside its Aerospace, Driveline and Powder Metallurgy divisions. Land Systems consists of Power Management, Aftermarket Services and Telford-

based Wheels & Structures, of which Norgrove is managing director. Wheels & Structures comprises the former GKN Wheels and GKN Autostructures businesses, the latter of which was Norgrove’s previous responsibility. Automotive, by chance or design, has become something of a life pursuit for Norgrove, a married father of two teenage sons. Born and raised in West Bromwich in the car making heartland that is the West Midlands, and where he also sits on the board of the regional Manufacturing Advisory Service, Norgrove had a successful career within Corus before taking up his role at GKN Autostructures. As well as following the fortunes of his home football club West Bromwich Albion, he counts restoring his classic TVR sports car and following a range of motor sports as chief among his recreational pursuits. As far as the UK automotive industry goes, Norgrove feels not having a national interest in the same way as France has Peugeot Citroen or Germany has Volkswagen isn’t much of a hindrance. In fact, there are even advantages. “The supply chain has developed to suit the model over the last 30 years or so,” he says. “Given where

we are now, you could argue we’d have done things differently in terms of government support and so forth but whether it would have made any difference in the long term is debateable. In a lot of ways, it

is advantageous. The car manufacturers here are global, which creates export opportunities, and they hold the UK supply base in pretty high regard.” There are more cars assembled in the UK now than in the 1980s, he points out, a claim substantiated by the Society of Motor Manufacturers and Traders.

Meeting the needs of modern industry

Biography Steven Norgrove 1977:

Joined GKN Sankey as a technical apprentice

1983-87:

Held various production and project engineering roles at GKN Defence

1987-97:

Lucas Aerospace, manufacturing and operations roles

1997-06:

Corus Distribution, general manager and later, a divisional role, responsible for driving Continuous Improvement

2006:

Returned to GKN as managing director of GKN Autostructures

2010:

Appointed MD of GKN Wheels & Structures

Norgrove is managing director of GKN Wheels & Structures – a global manufacturing business producing wheels and other hi-tech structures to OEMs in a variety of industry sectors – construction, agriculture, mining and military. He sits on the regional board of the Manufacturing Advisory Service in the West Midlands. He is married with two teenage sons and his hobbies include motorsports and following West Bromwich Albion Football Club.

Norgrove’s division has a far wider remit than just cars though, serving the construction, agricultural and mining machinery and military markets. Having assessed the wider potential opportunities and the skills needed to develop them, the business is also looking at opportunities to move into areas such as high speed rail and renewable energy. This industry-focused strategy is certainly paying dividends for GKN Wheels & Structures and GKN plc. In September last year GKN plc re-entered the FTSE 100 and has been trading well in the postrecession environment. After a difficult 2009, the company bounced back well in 2010. In the first six months, its sales across the company were at £2.7bn, up from £2.1bn in the first half of 2009, while profits increased to £202m from £25m. “These results are testament to the success of GKN’s corporate strategy, not only over the last few years but throughout history,” says Norgrove. “The Group has constantly evolved over the past 250 years in order to exploit the skills it has into new sectors, new products and new technology. The formation of Land Systems is the latest chapter in that strategy.” He says the rest of the UK supply chain would do well to follow suit. “If we all invest in the same enablers, it makes the UK supply chain stronger,” he says. “We need to focus on leveraging the skills base we already have to really profit. Investment in skills and technology is key to the success of any business. “In terms of skills, the UK has a highly-skilled and flexible workforce. We need to ensure that we have the right skills sets in the right places and the supply chain works together well in order to take advantage of global market opportunities. We are in reasonable shape but we need to realign.” Norgrove believes that industry and government need to share the responsibility for channelling investment and the next generation of talent into certain sectors and creating those skills at the right level. He says the graduate level has been “pretty well covered” but, as a former apprentice himself, says this level is “equally important, but becoming ever scarcer, and this issue is all too often overlooked”. He says: “In today’s job market it is often easier to recruit at graduate level than it is to find a qualified maintenance technician and there is a danger that this could slow the pace of progress. At the end of the day, a company is only as good as its products, which in turn are produced using the skills of its people. Attracting young people into the engineering industry is difficult and we need to present a better

Interview Steven Norgrove

image of modern engineering and manufacturing. We are involved in solving today’s and tomorrow’s global problems and as a result it is a rewarding area in which to build a career.” GKN Wheels & Structures, for its part, recruited eight craft and technical apprentices at Telford last year, in addition to recruiting from GKN’s graduate scheme. The business also supports the Year in Industry and other national schemes designed to nurture skills.

Bringing it back Some of the manufacturing that has left UK shores for low cost economies could be returning, Norgrove contends, because OEMs see responsiveness, quality and flexibility as ultimately more effective than ‘low cost at any cost’. “Supply chains evolve continuously and a well-designed supply chain is critical to driving competitiveness in the domestic market,” he says. “In today’s global marketplace, you have to be really selective about which goods and services you ship across the world, due to ever-increasing transport costs and growing concerns about the environment. In order to consistently reduce costs and remain effective, supply chains must achieve the right balance – manufacturing parts in the right place and getting them to customers at the right time. Good supply chains are continually designed and redesigned and managed – they don’t just happen. GKN Wheels & Structures has invested in the development of its global supply chain and uses appropriate sourcing strategies to support this and to deliver on customer expectations.” He says GKN Wheels & Structures has adopted the principle of ‘make where your customers want you to make’, as a general rule, and this has led to the establishment of a global network of manufacturing centres in Europe, North America and China. Companies should stay close to their customers in order to anticipate their needs and be ready to fulfil their requirements, he says, and should also look to collaborate with others if it means they can supply a service which they wouldn’t be able to otherwise. “You’ve got to give the customer a competitive edge by giving them something that others can’t,” he says. “This has been the driving force behind how we have shaped the business and our successful customer relationships. “By forming GKN Land Systems, we are seeking to harness the company’s vast global knowledge, expertise and technologies and bring it to bear for the benefit of our customers across a wide range of industrial markets, working together from early concept stage right through to delivery.” Overall, Norgrove feels that post-recession Britain’s manufacturing industry is in good shape to grow. “If you consider currencies, flexibility and skills, the UK’s manufacturing base certainly has some attractive elements and this is the key to our competitiveness,” he says.

GKN Wheels & Structures manufactures wheels and other hi-tech structures for machinery OEMs around the world.

Attracting young people into the engineering industry is difficult and we need to present a better image of modern engineering and manufacturing. We are involved in solving today’s and tomorrow’s global problems and as a result it is a rewarding area in which to build a career “The companies that have fought through the recession will be fitter and leaner as a result of their experience. We have to be mindful not to build costs back in, unless it is absolutely the right thing to do, at the same time as concentrating on delivering value for customers. “No one would want to repeat the events of 2009, but thanks to plenty of hard work, dedication and taking the opportunity to boost training, we are now in a strong position and ready to look forward.”

Have your say at www.themanufacturer.com

John Homewood, Pauline Found and Donna Samuel, collaborate on a vision for how the manufacturing industry might help the UK economy recover and thrive through more means than simple productivity and competitive strength. The group investigates how lessons in lean management from the original home of that methodology could be of help.

12th December 2010 the Localism Bill was unveiled in the UK revealing ministerial proposals to increase local control of public finances. The Localism Bill will lay the foundations for what David Cameron calls â&#x20AC;&#x2DC;The Big Societyâ&#x20AC;&#x2122;. Communities Secretary, Eric Pickles, says that he wants to take decisions out of the hands of councils and Whitehall. The aim is to empower local communities to take more responsibility for services and decision-making. Critics suspect that this is a cover for cutting costs and central government washing their hands of problems by passing them on to local councils and communities. However, the

Figure 1: Senior Management Dashboard

A lean lens the economy

Lean Manufacturing

big question will be ‘Can local communities run the services more effectively and efficiently than the councils?’ This will be a case of doing more with less – classic lean territory. Many of us will have observed and voted on the issues surrounding the performance of the UK economy, particularly after the catalogue of events following the sub-prime collapse in mid2007. Those of us who are lean practitioners within business and with a keen eye on business and policy behaviour in the UK economy, no doubt, will have said to ourselves, ‘Why don’t the government do lean?’.

A new perspective on lean roots Over the last two decades lean has spread well beyond its origins in car manufacturing. Lean thinking started to influence practice within certain organisations in the service sector almost a decade ago. More recently, the public sector is beginning to embrace lean and a number of evaluation reports have been commissioned. Indeed lean in public services has been a dominant theme in recent articles for TMs sister publication The Lean Management Journal, (LMJ). In the last issue of LMJ, Dr Zoe Radnor offered an overview of lean manifestations in certain central government departments and agencies and made two points of particular importance. First, that implementing lean in newer (non-manufacturing) environments

About the authors

Dr John Homewood has been employed at the Newport site of Cogent Power, a Tata Steel Europe subsidiary, since 1993. For the past 4 years he has been continuous improvement manager, also collaborating with LERC on research and publications. Dr Pauline Found is a Fellow of the Institute of Operations Management and holds a B.A., B.Sc., MBA and PhD. She is employed as a Senior Research Associate at Cardiff University. Donna Samuel has been employed by LERC since its formation in 1994. She has worked in a variety of roles, including teaching and applied research. She is currently completing her PhD thesis on lean diffusion.

Figure 2: Enhanced RONOA model

often means careful explanation of lean to counter unsophisticated, and often misguided, views among stakeholders. Second, that experience has shown that visual management often proves to be particularly powerful in overcoming some of these challenges. The purpose of this article is to develop this latter point by reporting some embryonic research ideas under development among a group of researchers at the Lean Enterprise Research Centre (LERC), Cardiff University. These ideas centre on the use of basic visual management to view the economy through lean lenses. The ideas, discussed here, emerged from the case study research investigated in the publication Staying Lean – Thriving, Not Just Surviving. One important outcome of the lean work undertaken by the case company featured in this research includes a senior management ‘dashboard’ (Figure 1) consisting of a single page representation of the organisation’s current state. Behind the dashboard sits a wealth of input data but, crucially, this data is easily accessed, gathered and configured. Figure 1 shows that the company clearly identified their current five priority areas. The bottom left section focuses on how these areas link to the wider company strategy while the bottom right focuses on how they link to current improvement activities. As the company developed the dashboard, the clear need to discard single

Figure 3: Dashboard of UK Economy

point (monthly) representation of information in favour of a time series became apparent. This change alone afforded considerable advantages over the way they had traditionally managed the company. For example, it allowed them to identify patterns and trends which were previously hidden early enough to take mitigating action. Furthermore, the dashboard provided a visual representation of the company’s current and future state, in an easily digestible form that was meaningful for other stakeholders, but most crucially, for employees. The dashboard offered a communication mechanism through which employees could see the context of their lean transformation and their role within that transformation. Another important outcome of the same lean work was a visual method for linking financial imperatives to lean behaviours. Figure 2 is an enhanced version of the Return-On-Net-OperatingAssets (RONOA) model. Figure 2 illustrates how the company was able to bridge the gap between financial performance and lean implementation. The RONOA afforded the company three main advantages. It enabled: Senior management to see the link between the creation of value and the financial imperatives The finance department to better understand the nature and purpose of lean Everyone else to identify the impact of their behaviours and actions on the financial fortunes of the company

1 2 3

Lean Manufacturing

In summary, the power of the visual management models stimulated the authors of this article to ponder its potential beyond the boundaries of a single organisation. What if similar visual management approaches were used to view the economy? Figure 3 illustrates of how visual management may be used to represent some macro-economic and other important indicators in the form of a dashboard. One obvious question is how does the dashboard compare with what the Treasury currently uses to manage the economy, what methods does the Treasury employ to track progress? The RONOA model can similarly be modified to view the economy. By way of example we took time-series data from taking Office of National Statistics (ONS), and structured into a RONOA-type view of the UK economy, over the last six decades (Figure 4). In a similar way to the dashboard, structuring data on the UK economy in this way stimulates us to think and question. For example: Is there a macro-equivalent for revenue? Is it GDP? What if, for example, our current focus on GDP has led us to pursue economic growth for growthâ&#x20AC;&#x2122;s sake? Is there an equivalent for profitability? Is it Balance of Trade? If no equivalent exists, what are the implications for the management of the economy? What does ONS data reveal when represented in a time series format? How does this link to policy decisions of the past?

Like any business system the UK economy is faced with a set of imperatives and challenges. However, viewing an economy in a structured form can enable us, as citizens and stakeholders, to visualise value and challenge priorities. It might also lead to questions that would cause decision-makers to think about the problem in a different way, just as it often does in with leaders in organisations who

As lean practitioners, we might consider how tried and tested lean techniques for value creation maybe adapted to different processes and valuetypes, such as health and wellbeing seek to understand cause and effect of business problems. Furthermore, as lean practitioners, we might consider how tried and tested lean techniques for value creation maybe adapted to different processes and value-types, such as health and wellbeing. Returning to the Localism Bill, what benefits might be derived by local authorities and communities striving to operate as a business-like system? The lessons of lean are out there to inform their response to the challenges this bill presents.

Figure 4: A RONOA perspective on the UK economy

Have your say at www.themanufacturer.com

Skills make a world

of difference In the past 115 years since Lincoln Electric company founder John C. Lincoln started selling his own electric motors, technological advances have meant that the manufacturing sector and the needs of consumers have changed enormously. Yet amongst all this change, there is one aspect of the manufacturing industry that has remained as vitally important today as it did in the 19th Century.

Companies that want to help WorldSkills out by loaning equipment to the event will recieve fantastic exposure for their products

This

factor is of course the workers. Not just any workers but the skilled, trained, talented employees who make such an enormous contribution to the UK economy. Without employees with the right skills, businesses would (and do) falter. David Kirkwood of Lincoln Electric says that as an employer, he knows firsthand how vitally important it is that staff have the right expertise and experience, and fully understand the demands of the market in which the company operates. Put simply, says Kirkwood, “skills mean business”. For this reason, Lincoln Electric has chosen to support WorldSkills London 2011. Taking place every two years, WorldSkills is the world’s greatest skills competition. It sees 1,000 young people from 50 nations battling it out to be the best of the best, competing for the honour of being the greatest in the world at their chosen skill. Next year, following a successful bid from team UK, WorldSkills comes to London. With 45 skills on display including Construction Metal Works, Autobody Repair and Welding, and around 150,000

visitors expected, it is set to be one of the biggest education related events of 2011. Lincoln Electric has been involved in WorldSkills for the past four years; in 2009 the company helped select candidates for the Welding category, and had prior involvement through links with the AWFTE and The Welding Institute. As a result, Kirkwood says putting the company forward as a sponsor when the competition came to the UK seemed very natural. “We are passionate about training and have our own Lincoln Electric Welding School in the US, where we teach students various welding techniques to enable them to gain a qualification. We believe in vocational skills and making sure that young people in the UK know about all of the options that are open to them before they start planning a career – something to which we hope WorldSkills London 2011 will open people’s eyes. “At the moment, despite the economic downturn and the well publicised job cuts, I would say there is still a clear skills gap in the UK. Ten or maybe 15 years ago, many skilled welders left the UK because

Leadership People and Skills

jobs did not exist for them. The lack of jobs led to a lack of investment and unfortunately, when new positions became available the lack of homegrown talent meant that the positions were often filled by migrant workers. We are still feeling the repercussions of this today, but believe things are now moving in the right direction. “Over the last few years we’ve seen more funding and resources, and a greater focus from employers on educating their existing workforce. While this is encouraging, there is still some way to go, but we’re confident that WorldSkills London 2011 will be the catalyst we need for people to start taking skills seriously. In our industry, we know better than most how skills shape our world. If we don’t have the right level of skills in the UK, there is no way we will be able to rebuild and maintain a strong manufacturing industry and remain a globally competitive force. The better our workforce, the better the quality of our work and the more attractive our products are to buyers.” A skilled workforce is absolutely key for rebuilding the UK economy but the current skills-shortfall does not always receive the media exposure it deserves. The recent student protests relating to the planned rise in university fees has been widely publicised in the media. However, according to Kirkwood, it is important that young people need to be shown that university is not the only way to equip themselves with qualifications for a successful career. Apprenticeships, work-based learning, and vocational skills are absolutely crucial for the UK economy now and in the future. “If we don’t start encouraging more young people to follow these paths,” says Kirkwood, “we could end up with an abundance of jobs in certain market sectors that no one can fill because they don’t have the right training or skills.” The government recently announced its latest skills development plan, demonstrating an understanding that sustainable growth can only be achieved if the country’s current skills shortcomings are tackled. It has promised more funding for apprenticeships and government backed loans for those who want to equip themselves with better skills. This will assist in alleviating the burden of the skills deficit, but for it to be truly successful industry needs to start inspiring people and showing them that developing skills in industry can lead to a successful career. WorldSkills is intended to inspire people by letting them see the world’s best welders, mechanics, electricians, all together under one roof showing what they can do. Any support we can give to the WorldSkills event and to Team UK is absolutely vital if the UK is going to emerge from the competition victorious and inspire young people to gain expertise at the highest level. In just 10 months, skills experts from all over the world will be in London, getting involved with the competition. For more information or to be a part of WorldSkills London 2011 and help create something to be proud of and that leaves a legacy of skillsproud youngsters for generations to come, visit: www.worldskillslondon2011.com

Competition categories include car painting

Competition categories include mechanical engineering design

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UKTI INTERNATIONAL AEROSPACE EXCHANGE 2011 Venue: Radisson Blu Portman Hotel, London Date: Tuesday 22 February 2011 The event is timed to support the launch of the 2011 edition of the UK Aerospace International Strategy produced annually by UK Trade & Investment and A|D|S. The 2011 Exchange is your chance to find out about key developments in the international aerospace marketplace over the next decade. The event provides, in one place, a platform for OEMs, and their Tier 1 partners, to brief UK aerospace suppliers on their international civil aerospace strategies and their procurement procedures and processes. Airbus, Boeing, Eurocopter and XAC have confirmed their attendance. And the confirmed Tier 1 contractors include GE Aviation, GKN, Spirit Aerosystems and Selex.

www.uktiaerospaceexchange.com The following early bird offers apply for registration: Before Monday 31 January - £120 + VAT After Monday 31 January - £170 + VAT

FOR FURTHER INFORMATION Email: aerospace@uktieventsteam.com Tel: +44 (0)115 947 5666 UK Trade & Investment (UKTI) works with UK-based businesses to ensure their success in international markets, and encourage the best overseas companies to look to the UK as their global partner of choice.

BISresponds Government

Government

comments on its:

Plan for advanced manufacturing

Business Minister Mark Prisk comments on the Growth Review Framework for Advanced Manufacturing

Britain

is a country that excels at making things. Where once we led the way as innovators in mining, textiles and iron production, today we are blazing a trail in frontier technologies such as robotics, software design and low carbon technologies. So it is important we explode the myth that British industry is dead. In fact, we are the world’s sixth biggest manufacturer. The sector generates £140bn a year for the economy, around 11% of total Gross Value Added, and it accounts for 53% of total UK exports. Manufacturing is a vital part of our future. That is why this Government is undertaking the long-term planning and thinking that is needed if we are to help UK manufacturers compete in the global marketplace. We want to lay the foundations for a new collaboration – with the sector in general, and advanced manufacturers in particular – over the next decade. So on December 10 we published the Growth Review Framework for Advanced Manufacturing. It is intended to drive forward discussions about how we dismantle the barriers that stand in the way of the UK becoming Europe’s leading exporter of high-tech goods. As an immediate first step, we are investing £50m in the Manufacturing Advisory Service over three years. Its service, which supports SMEs in becoming more productive and globally competitive, is hugely valued and this investment will ensure its continuation. But we know we need to do much more. In January, we are holding an advanced manufacturing summit to bring together all the key players, in industry, government and education, which will be an opportunity to agree a programme for the next ten years. The summit is a real chance to co-ordinate activities, in order to achieve our shared ambition

Mark Prisk (right) at Indestructible laboratories

of putting manufacturing industries on a more solid footing than over the past decade. The priorities agreed will feed into a suite of policy proposals in a number of areas – to improve competition; increase exports; reform the planning system; and slash red tape - in time for next year’s Budget. Government’s job is not to pick winners – it is to make sure that winning British companies get the backing they need. Earlier this year I visited Indestructible Paint, an innovative small firm in Birmingham. A quarter of the workforce is involved in research and development, allowing it to develop new products and expand its range of specialist coatings – including ones that protect jet engine components. This dynamic business has found its niche in a fiercely competitive global marketplace and now exports over half its output. I want many more UK manufacturers to follow suit. But to succeed, they need to attract the next generation of engineers and technicians. That means we have to redefine manufacturing’s image and raise its profile so more talented young people, the wellspring of future success, will be excited by the wealth of exciting career opportunities on offer. It is vital we win over and nurture that talent if we are to grasp the opportunities offered by emerging markets and share in the opportunities the future holds. We cannot shield ourselves from the profound transformations reshaping the global economy. But we can prepare to take advantage of them. As the advanced manufacturing industries of the future develop, so will the steps we take, hand in hand with business, to help Britain’s manufacturers develop the capabilities they need to succeed globally.

Have your say at www.themanufacturer.com

WHAT are the practices that need to be in place to move towards Operational Excellence? In

this second article, Suiko continues to discuss what makes operational excellence a way of life and fit your organisation. Suiko considers ‘WHAT practices’ by asking 3 questions: 1.1: What are the right practices? 1.2: What is the right balance between tools and behaviours? 1.3: What makes it fit with what you do now?

1.1: What are the right practices? The challenge is to make the link between results and practices the necessary practices understand the gap and deliver the targeted results’. It is critical to get the right balance between results and practices and help people understand why the need to change, what they need to do’ and how they do it. Too much focus on results by relying either on a few key individuals or adopting a hit squad approach may get a short term gain. However, without investing in developing capability, the right environment and the appropriate business systems, it will not be sustainable. Equally excessive focus on practices without making the link to results will lead to suboptimal performance’. It should not be an exercise in ‘tooling up’ the front line before they are ready. The key is to be able to choose the right tools for the job, applying a few things well to make a real difference. For many, the tools will often have been tried before so it is rarely about reinventing the wheel or introducing a new technique, but instead, it is about getting the wheels back on the bus which is driven by an involved team. Experience has shown that lasting change requires a stepped

approach; doing things at the right time and in the right order. Success will be seen when the chosen practices deliver the right outputs. The Suiko Levels™ describe the phases an organisation progresses through on its journey to excellence. It does require a consistent approach starting by ensuring the basics of operations management are in place. As people and processes become more predictable, capable and reliable, it supports the platform that enables people to operate at the right level. Consequently people get the space to think more proactively and once achieved, it is then possible to drive effective and continuous improvement. Mark Salisbury, MD at Uniq Prepared Foods Evercreech, concurs “There will always be opportunities to further improve, but it is important to recognise what is already working well and to tap into pockets of knowledge across the organisation.” Salisbury continues, “Suiko challenged us to think beyond the tools and encouraged us to pull on existing good practices and use appropriate

enablers to drive the right behaviours. We recognised the need to develop step by step and the levels provided a framework on which to build”. Having established the appropriate tools and necessary practices, it is then important to lock into standard work with the aim of creating a repeatable process and eliminate variation. A standard method will provide the platform on which to drive sustainable improvements. Maintaining the gains from establishing a continuous improvement culture is a worthwhile goal, but should continue beyond level 3 to develop individuals’ aspirations to exceed expectations with all functions seeking to optimise products, processes and people to deliver exceptional customer value’.

1.2: WHAT is the right balance between tools and behaviours? There must be an appropriate balance between developing tools and the associated behaviours. Process improvement without paying attention to the people

Diagram 1: Suiko Why™ understanding the gap

1.3: What makes it fit with what you do now? It must start with asking “Why?”, understanding the compelling reason to start doing something different in the context of both results and practices. Bob Parker, Business Improvement Manager, Akzo Nobel reinforces the point “Choosing the right opportunity is really important; something that is a really important issue for the business. Typically, senior stakeholders are results driven

Diagram 2: Suiko Levels™ 1-5

so getting early wins and tangible benefits are important to getting buy-in and accelerating the pace of improvement”. Parker continues, “The pace at which an organisation can adapt will depend on many factors and starts with leaders getting involved and taking an active interest, ‘doing’ rather than talking. Engaging and listening to process operators at all levels demonstrates management’s commitment to the process and helps demonstrate that operational excellence and continuous improvement is indeed the day job.” Arguably the largest commitment and the most important aspect of a change transformation is ‘respect the people’. Without it and if not addressed, it will become a major obstacle leading to a failure to adapt and deliver. You have to engage people and excite them about performance improvement, through practice and application; if you do, they will reach the conclusion themselves. Salisbury builds “This is one of the biggest challenges for everyone, especially the leaders of the organisation. As Jim Womack emphasises, being able to ‘Respect the people’ is critical. It is important for managers to move from having the need to come up with all the answers, to a position where they are able to ask the right questions and support others to get to the root cause of problems and find the answers for themselves.”

Suiko

and organisational culture issues will lead to a robotic adoption of proposed changes; compliance rather than a personal commitment and ownership to the way of working. Suiko believes that to embed exceptional practices, it is more about changing mindset than tools (80% behaviours: 20% tools), developing a culture which encourages enabling behaviours. Self discipline and ownership are key attributes for everyone, for it is this that maintains the processes’ sustainability. Use of assessments to check and challenge practices is a great way of getting a stake in the ground and enables you to see the gaps and identify where to focus next. It also provides a practical way of calibrating people in what are expected as the standard practices. Chris Horton, VP Operations LINPAC Packaging, worked closely with Suiko to develop their way of working “With the help of Suiko we developed our own roadmap and assessment and involved representatives from across the business. It has allowed us to share best practice, calibrate across sites and develop a common language. Most importantly it is our roadmap and has helped our focus on developing the right behaviours not simply deploying more tools.” In most cases the tools are easy to understand, but getting them embedded into ‘the way we do things’ is more difficult. Most of the change effort will need to go into influencing the behaviour change rather than tool development.

To summarise and consider: The right practices – will be dependent on the maturity of your organisation and its strategic direction The right balance – must focus on introducing appropriate tools and associated behaviours to enhance your ability to optimise results The right fit – will enhance your existing good practices by engaging everyone to close the current gaps and introduce better ways of working The final article will be published in March and will explore how to deliver profitable growth and implement sustainable change. If you would like to discuss how to address the issues above, then please call us.

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

www.suiko.co.uk

Warehouse management

keys to success Manufacturers are optimising business processes across increasingly complex distribution networks. Companies have to battle to balance tight inventory with speedy response, make-to-order and increasingly outsourced supply chains. 40

Supplychain Logistics and Materials Handling

manual systems are replaced by automation, real time order visibility is required by supply chain partners. Outsourcing has created a need for more flexible warehouse management system (WMS) applications that can accommodate new process requirements supporting multiple customer demands. Unfortunately there’s no one-size-fits-all solution. Some WMS solutions are general purpose, some are integrated within ERP, some are add-ons, and others are specially tailored. There is also a new breed of hosted versions, offering a pay-as-you-go option. @Logistics Reply UK, a member of the Italian Reply Group, is introducing a hosted WMS service using cloud computing, that promises significant cost savings compared with traditional WMS packages. Jez Tongue, partner in @Logistics Reply, says the hosted solution can be set up in weeks (rather than months traditionally) with cost-peruse based on business volumes. “This promises significant savings for sectors like food and beverage which may be seasonal,” he says. “There are no expensive upgrade costs, and support is built in. The system also integrates with RF and voice technology, as well as host order management/ERP systems, as @Logistics Reply is a partner of SAP, Oracle and Microsoft Dynamics.” Gerry Daalhuisen, global product manager at Kewill also believes the future lies in a serviceoriented architecture (SOA), for communications and contracts between parties as opposed to traditional batch oriented data exchange. The Kewill Service Bus acts as backbone for integration of paternoster systems in Japanese spare parts supplier NSK’s European distribution centres. Daalhuisen maintains WMS must be flexible enough to optimise multiple warehousing systems, including pick to light, conveyor, sorting, paternoster, and high bay. Kewill ver 6 features a combination of Transport Management System and WMS. “SOA offers transaction-based, handshake integration for real time feedback and online integration, for fast and fluent order and transaction management,” he says. “If inventory is tight and accurate, you can reduce working capital significantly,” remarks Steven Hargreaves, group product director at Solarsoft. He sees three main drivers for WMS: first, the need for high accuracy using ‘directed put-away’ e.g. correct handling for chilled or frozen goods in the food sector; improved batch traceability; and speedy data collection. He claims companies can achieve 20-40% productivity gains with accelerated data acquisition, in addition to reduced error rates and returns. Solarsoft version 4.0 features a graphic, real time console and more advanced procedures for pick pack and dispatch. Manchester-based cable tie manufacturer Hellermann Tyton switched from using an Infor 21 WM module to Solarsoft ‘because of the complexities of batch control as a major automotive

Supply chain disruption risk rises Manufacturers face increasing risk of supply chain disruption according to a new Supply Chain Resilience survey by the Business Continuity Institute (BCI). Research from 35 countries shows that over 70% of organisations, covering 15 industry sectors including manufacturing, recorded at least one supply chain disruption in 2010, and five on average. Though awareness of supply chain risk is increasing, many businesses remain exposed to high level risk. About 64% of respondents in the manufacturing sector suffered at least one disruption in the last 12 months, and 45% had experienced 1-5 incidents. The main causes of disruption were adverse weather (60%), followed by IT and telecomms outages, then transport disruption. 40% blamed poor product quality from outsourced suppliers, and there was one incident of intellectual property violation. Lyndon Bird, technical director at the BCI said, ‘The serious levels of supply chain disruption experienced by organisations globally, coupled with the wide range of threats, underscores the case for investment in business continuity management (BCM). Generally, poor warehouse logistics, lack of goods and other distribution issues were more of a problem than IT systems or telecom interruptions. Nevertheless, interrupts are a part of life, and have to be tackled.’ He maintains, ‘Business continuity is better the more resilience you have, but this often comes at a cost. How much risk are you willing to tolerate for business continuity, in terms of standby plant, facilities or alternative processes? The more you squeeze and extend the supply chain, the more interruptions can occur. BCM means dealing with the consequences, possibly holding more inventory and re-arranging global distribution.’ According to the survey, manufacturers said supply chain disruption had raised working costs, lost revenue and resulted in product delays or loss. About 20% of organisations reckoned supply chain incidents could damage brand reputation, and one firm estimated that the annual cost of interruption was €5-10 million. ‘The point of BCM is to accept that disruption happens. It’s impossible to predict what will hit and when, so preparedness is key to provide the opportunity to mitigate the impact and recover faster,’ said Bird.

supplier,” according to inventory, planning and control manager Scott Mayne. “We operated a FIFO (first-in, first out) rule and needed to pick lots of different boxes of cable ties from different pallets.”

At the time, the Manchester plant changed from being a stockist of about 3,500 pallets to a European end-of-line manufacturer shipping products to sister companies worldwide. “Solarsoft’s Agility WMS allowed us to move seamlessly from a make-to-stock business to make-to-order”, he says. Key benefits included better control, improved traceability and accelerated throughput (cut from 24 hours to minutes). Stock accuracy rose from mid-80s to 99%. On the downside, Mayne admits, the Solarsoft system sits on top of Infor 21 ERP, so inventory data reconciliation programmes now have to run every night. “As a make-to-order business we no longer have a huge amount of stock sitting in different locations, but move new production off machines into a dispatch lane through a very slick cross docking function,” he says. Mark Tredgold, senior business consultant warehouse management at Infor, reckons “The warehouse market is under pressure to supply on time, under budget, with high accuracy and flexibility across the entire supply chain.” He says the key is improving visibility of inventory and resources, in terms of staff and equipment. Furthermore, “many value added services, like light assembly, are now carried out in the warehouse rather than on the shopfloor.” Consequently there is demand for

automated task assignment, focussed on building a picture of what’s in the warehouse, staffing, goods status, equipment and space availability, with respect to picking, put-away, receiving, replenishment, etc. Tredgold mentions a poultry food producer that has cut order processing from four hours to one using Infor WMS, raising inventory order accuracy from 97 to 99%, and coping with 25% order increase. Dominic Regan, Oracle’s senior director for value chain execution in Western Europe, also reckons companies are looking to deliver higher throughput, flexibility and agility. “Manufacturers need to look at optimisation from a process rather than product perspective. You need to look at the whole process of logistics and fulfilment in the context of sharing data across the process, rather than individual operational areas.” The key to success is building flexibility, while integrating warehouse and transport management at a product and process level to deliver incremental value. Consequently there has been a move to distributed warehousing with WMS giving a single view of inventory. “Integration is required with all flavours of warehouse automation, from automated guided vehicles, to high bay, sortation, carousel, pick and light, RF and external RFID and barcoding,” he says. Since Oracle Release 12.1, WMS functionality

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14/12/2010 14:49

Supply chain, Logistics and Materials Handling

is offered as a standalone, distributed application, independent of the ERP solution. Manhattan Associates argues the case for a blended channel distribution model. “The directto-customer model requires multi-modal picking, so customers as well as the storage facility have visibility,” explains Chris Maynard, director of Professional Services. Companies like Clarkes Shoes and Halfords use Manhattan’s distributed order management system, which links with warehouse management decision points for distribution. Manhattan also offers extended enterprise management, which allows component suppliers to gain online visibility into the incoming supply chain of a distribution centre.

The serious levels of supply chain disruption experienced by organisations globally, coupled with the wide range of threats, underscores the case for investment in business continuity management Lyndon Bird, technical director, BCI

Andrew Kirkwood, executive director of Red Prairie also emphasises the need for accurate traceability in the food, beverage and pharma sectors. He cites the example of Bradbury Cheese which has to respond to different rules on shelf life, manufacturer and code dates as well as specific packaging. They previously relied on a paper-based approach, which has now become fully automatic since adopting Red Prairie WMS, resulting in 20% productivity improvement. “Generally, as supply chains lengthen there’s demand for WMS to be closely integrated with a supply chain synchroniser and distributed order management,” says Kirkwood. Red Prairie is introducing a flow costing module that allows manufacturers to take point-of-sale data directly from retail customers to plan production for make-to-order. Ian Scott, solution principle for Supply Chain Management at SAP sees increased use of control automation, voice activation and picking, and collaboration. SAP Extended Warehouse Management 7.0 works well with voice devices and offers graphical workhouse layout, integration with transport management and global trade services. “There’s more call for collaboration with outsourced manufacturing partners, as companies like AstraZeneca move towards acting like brand managers, shipping direct to customers from outsource partners rather than sending products to

a European warehouse,” he says. “This demands real time visibility throughout the supply chain. There is also closer sharing of demand signals from customers, working at a very low level of granularity, with deliveries a few times a day rather than one large ‘bucket’. This level of granularity requires a good planning system, resilience in execution systems, and real time collaboration for data exchange.” “No one wants to hold high levels of working capital in inventory today,” says Julian Mosquera, director at LPC Consulting. Shelf life is critical in food, pharmaceuticals and fashion, with need to refresh frequently. “The big challenge for manufacturers who have to address customers directly is the demand for allocating and ring fencing existing inventory. Responsiveness and real time traceability is important, which requires high levels of connectivity, visibility and reliability.” Basically, paper-based, batch systems are redundant. Responsiveness is key, with high levels of automation able to handle pallets and mini-loads, increased storage density, reduced manpower and high data capture, interfaced with manufacturing and back office systems. “Functionality has to be carefully defined, and WMS is by no means designed to fit all horses for courses,” Mosquera concludes.

Have your say at www.themanufacturer.com

Risk and control

In the third and final part of The Manufacturer’s risk management series, Ruari McCallion discusses business tips for the future with Steve Green of Zurich Insurance.

The cold weather has raised a few questions that

amendments to company law means that they

had not been thought of before. For example: if

can still be held liable for their actions even

an employee, on company business, is involved in

years after they have left the organisation. It is

an accident while driving when there is a general

legislation and regulation that Green sees as a

advisory to travel only if essential, will it impact

significant factor affecting business risk — and

on the company’s ultimate damages settlement?

he is not at all sure that everyone realises it, or appreciates the potential impact.

“All businesses should have a driving policy and process that has been assessed appropriately

Legal landscape changing

and then applied,” says Steve Green, head of

“There is a lot of talk about the fact that people

corporate business, general insurance at Zurich

are not aware of how the legal environment is

UK. “Evidence of such a policy and process will

changing,” he says. “For example, contingency

help in any action against them.” But there

fees for legal actions are not very common in

are competing issues in business. “It may be

the UK at the moment but the government

good from a health and safety point of view if

wants to see potential claimants getting

a company is not delivering goods but from a

more access to justice. If lawyers can charge

sales perspective, it may threaten the survival of

a percentage of damages received, then they

the company.”

are incentivised to get as much as possible.” Was it not ever thus? Well, yes, but some

Companies have a lot of previously-

consequences may be unexpected.

unconsidered issues to think about and not least of these is the upcoming Bribery Act,

“Take the change of pensionable age, for

which was discussed at some length in the

example,” he continued. “When considering

last issue. Changes to corporate manslaughter

potential lifetime earnings in a damages claim,

legislation mean that directors carry much

it has been the norm to look to retirement at

heavier personal responsibilities and

age 65. What if retirement age rises to 75?”

He further confided that there has been the

also the question of succession, especially in small

emergence of a trend for third parties, such

businesses and even not-so-small businesses. The

as hedge funds, to fund damages or liabilities

concept of Key Man insurance is well established

claims, in return for a share of the ultimate award

but what is even better is succession planning.

— typically, 30 per cent. It is no longer the case

But key individuals are not the only factor. As

that only those who have directly been affected

Green says, supply chain issues should be higher

by loss or damage can take legal action — and

up the agenda. And it’s not just a good idea, it’s

anyone who had relied on the idea that victims

the law.

‘could not afford to sue’ should think again, and very, very seriously. Indeed, businesses should think a great deal more broadly than they have been used to and that can include a rethink of their relationship with their insurer. Supply chain – the broader picture “We see a momentum building from customers who are gaining a broader view of risk,” says Green. “However, what is still baffling is the lack

“When considering potential lifetime earnings in a damages claim, it has been the norm to look to retirement at age 65. What if retirement age rises to 75?” Steve Green, Head of Corporate, Zurich UK General Insurance

of enthusiasm to address business continuity and supply chain issues, despite the broader understanding.” With even the weather getting

“Operation and Financial Statement (OFS)

in on the act, the complexity and vulnerability of

proposals, which are in the Coalition

the supply chain falls into sharper focus. Issues as

Government’s manifesto, look to impose

basic as staffing (can people get into work?), IT (is

more onerous requirements on companies,”

the weather going to disrupt communications?)

he continues. “It’s a question of looking at

and travel can drive some vulnerable businesses

the supply chain and business continuity,

to insolvency. And these aren’t just the businesses

understanding where the risks are and how to

themselves – how resilient is their value chain?

handle them – it’s a basic business discipline, as far as we’re concerned. It is a proper

“We see a need for a lot more focus on the

investment and indicative of the quality of the

potential impact of losing a big customer or a

management.” As this series of articles has

large supplier,” says Green. “It seems that people

illustrated, business risk is about a great deal

do not want to address their reliance on third

more than the danger of the factory burning

parties, suppliers or customers. There is still a

down. Businesses need to be equipped with an

parochial view, a focus on what is happening

understanding of contract law, international

to MY factory, to MY staff, what will happen if

precedent, legislative requirements and health

MY power supply goes off. There seems to be

and safety so as to ensure operational continuity.

nervousness about planning ahead and looking beyond today and tomorrow, into next week or next year.” One of the issues may well be that businesspeople have enough to worry about, day to day, without adding to the list of concerns. After all, they need to sleep at night, as well. Another is the view of insurance. It is viewed by business as a cost (naturally) and the job of ‘their’ broker is to be on ‘their’ side in getting the cheapest deal. But, as is generally acknowledged, the cheapest is not necessarily the best. Need for partnership “It is a confrontational approach,” says Green. “Our approach is that business needs a partnership approach with their broker AND the insurer. We’re not just capacity providers — content and value actually matter.” He recommends Zurich’s guide to ‘Business at Risk’ which is more than just a guide to premiums and areas of cover. “It looks at areas where businesses are at risk. Regulation and legislation is a huge area, as we have discussed.” There is

A brighter future

for APS?

Advanced planning and scheduling systems beat old-fashioned spreadsheets and ERP scheduling hands down. So why don’t more manufacturers use them? Malcolm Wheatley investigates.

Fenmarc

Produce, based in Cambridgeshire, sells pre-packed prepared vegetables to some of the UK’s most challenging customers, Britain’s major supermarkets. The challenge arises because of the demanding requirements of supermarkets in terms of responsiveness and ordering lead times. It’s a tough business, which the short shelf-life of freshlyprepared vegetables makes even more daunting. With retailers demanding reliability of supply, optimum shelf-lives and short lead times, manufacturers’ factories need superior planning systems if they are to maximise capacity utilisation and productivity while

Where the requirement involves contrasting scenarios, or ‘what-if’ analyses, then the answer is APS, and not ERP Andrew Killick, head of business consulting, Infor

simultaneously achieving consistently high levels of customer service. Back in 2008, Fenmarc realised that its existing spreadsheet-based planning systems were no longer up to the challenge. A more sophisticated solution was called for if the business was to be able to successfully schedule the complex batch led manufacturing processes that were involved. Moreover, it required a solution that could model in detail the factory’s capacity, factor-in the

short shelf-lives of raw materials and then plan the flow of product across different production lines.

The answer An advanced planning and scheduling (APS) system from enterprise applications vendor Infor was chosen as the solution which, according to planning manager Krystian Kaminski, “contained precisely the functionality that we needed. “Simultaneously scheduling production across our six lines, the system can create a watertight plan for the following day in just 15 minutes,” he explains. “Having processed the orders, it factorsin each stage of the production process, including the preparation areas where raw materials are chopped and peeled and incorporates the washing flumes, six production lines, the mixing vats and the packaging and sealing machines, and then identifies the most efficient approach to meet customer requirements.” Nor is Fenmarc alone. Peer into the inner workings of a growing number of manufacturing businesses, and APS systems are to be found — either, as at Fenmarc, replacing spreadsheet systems deemed to be no longer adequate, or sitting alongside ERP systems, replacing or supplementing the ERP systems’ own planning logic. And some manufacturers have gone even further. Leicester-based automotive interior trim supplier Coba Plastics, for instance, has taken its APS from enterprise application vendor IFS onto the shop floor, with a purpose-written ‘front end’ that enables operators to directly interact with it. “All key workstations are equipped with a touchscreen terminal that interfaces directly with the APS application,” says Antony Bourne, global industry director at IFS. “Machine operators use the screen

IT in

manufacturing

to access work instructions, drawings and data sheets for set up.”

Superior performance But while APS has seen a steadily increasing rate of adoption over the last ten years, it’s fair to say that many manufacturers simply don’t yet appreciate the significance of what APS can offer: better due-date performance, better capacity utilisation, and lower work-in-progress levels.

Right now, we’re seeing that aerospace, defence and specialised engineering are receptive to the APS message Christine Hansen, marketing manager, Epicor

And, what’s more, APS can deliver all this dynamically. It facilitates manufacturing in small batches at times of peak demand in order to meet delivery promises, for instance, and then switching back to larger batches when the pressure eases in order to boost capacity utilisation. And it does this, of course, through some serious modelling and number-crunching: identifying the constraints or ‘bottlenecks’ in the production process, and balancing their utilisation against the counter-balancing imperatives of work-in-progress levels and customer due-date performance. The software algorithms underpinning it all are complex, carefully-guarded, and can call for some serious computing horsepower. But there’s no doubt that they work. Stoke on Trent pottery manufacturer Steelite, for instance, has seen significant enhancements to its production efficiencies through the adoption of an APS solution from Coventry-based Production Modelling. “Planning used to be a massive challenge and, because many of the constraints were not covered, the output was far from ideal,” says production planning manager Rob Price. “Now, as well as effective schedules, the whole planning process is completed in just hours rather than days.” What’s more, he adds, “we are seeing a much greater continuity of production and a flow of products. This in turn is leading to reductions in work-in-progress, major increases in utilisation, and significant reductions in overstocks. We are now also more flexible, making it easier to meet customer demand, including ‘short notice’ orders.” There’s a similar story at Hatfield-headquartered greeting card manufacturer International Greetings,

where the implementation of an APS systems from Chippenham-based specialist vendor Preactor is credited with helping the 470-employee business to both expand and diversify. “We have grown from a £20m company to a £70m company, doubling the number of our converting machines, and handling more product lines with much larger jobs while reducing our planning department from twelve people to five,” says group IT manager Mike Harris. “Manually updating the plan used to take over two hours. Now, it’s just two clicks of a mouse button and is also always accurate.”

Slow adoption So given all this, why has APS struggled to gain traction? Why are manufacturers slow to see its advantages? One problem, says Graham Hackwell, technical director at APS specialist Preactor, is that “a large number of companies don’t realise that APS is the solution to the problems that they are experiencing.” In short, he says, they see poor due date performance, high work-in-progress levels and low machine utilisation but don’t see improved scheduling as the answer. Julian Atherley, a consultant specialising in helping companies to improve their forecasting and scheduling systems, agrees. “There’s a deeplyingrained belief within senior management that

At Coba Plastics, all key workstations are equipped with a touchscreen terminal that interfaces directly with the APS application. Machine operators use the screen to access work instructions, drawings and data sheets for set up Antony Bourne, global industry director, IFS

‘big batches are best’ — and it’s strong as ever,” he says. “Coupled to a lack of appreciation of the limitations of MRP-based ERP scheduling, the result is all too familiar: high stock levels driven by MRP’s well-known ‘bullwhip effect’, and poor due date performance.” And there’s a distinction to be drawn, as well, between ‘planning’ and ‘scheduling’, says Rakesh Kumar, global industry product director for manufacturing, at Microsoft Dynamics ERP. While APS deployments for longer-term planning have had a reasonable take-up, he notes, “the traction of APS deployments in terms of shorterterm planning has been slow — mainly because customers either don’t have the right information to

IT in manufacturing

feed an APS system, or it is scattered across multiple software systems and is difficult to collect.” Managements, too, may feel that they have bigger fish to fry. “Industry is focusing on a bigger problem elsewhere, such as demand planning and forecasting, or sales and operations planning,” says Hugh Williams, managing director of supply chain consultants Hughenden Consulting. “Manufacturing planning and scheduling have become sub processes to something much bigger, with hopedfor higher levels of benefit.” “There’s a lot of anxiety around new technology right now,” adds Sally Waterston, a director of Durham-based 60-employee business and IT consulting firm Waterstons. “They’re wanting to get more out of what they’ve got in place, and avoid the risks associated with implementing anything new.” Nor is senior management the sole problem: planning departments, too, can offer active resistance to APS. “Planners want to be in control,” says Jan Heerema, business development director for supply chain management at SAP, which has its own APS offering, APO. “Middle management can say: ‘This is great — we can optimise our bottlenecks.’ But planners look for reasons not to adopt it, and go back to their spreadsheets or card systems.” Antony Bourne, global industry director at enterprise applications vendor IFS, agrees — noting

We’re seeing a much greater continuity of production and a flow of products—which in turn is leading to reductions in work-in-progress, major increases in utilisation, and significant reductions in overstocks Rob Price, production planning manager, Steelite that under 10% of IFS’ manufacturing customers actually use the company’s APS module. “Planners can be very protective towards their existing systems and approaches, and it takes them time to actually appreciate the value of being able to reschedule very quickly, or call up ‘what if’ scenarios on demand.”

Horses for courses That said, there are signs that the APS message is finally getting across. Both Preactor and Production Modelling, for instance, have gone to considerable lengths to publicise the merits of APS, including a strong focus on actual customer experiences. Preactor, too, has released a free version of its

software, with a no-cost perpetual license, for customers to try before buying. What’s more, adds Preactor’s Hackwell, ERP vendors are becoming better at identifying situations where MRP-type scheduling simply won’t cut the mustard, and then pointing customers

Middle management can say: ‘This is great— we can optimise our bottlenecks.’ But planners look for reasons not to adopt it, and go back to their spreadsheets or card systems Jan Heerema, business development director of supply chain management, SAP

at either their own APS solution — if they have one — or to a specialist vendor such as Preactor. Preactor’s APS, for instance, is certified for use with Microsoft’s AX and NAV ERP solutions, as well as with SAP’s Business Suite. There are also strong links with QAD, Sage, SYSPRO and SAP — Preactor’s website, for instance, contains no fewer than ten SAP-based user case studies. “APS is getting traction,” insists Mike Straiton, managing director of Production Modelling. “Unlike ERP’s ‘top down’ approach, we approach scheduling with a ‘bottom up’ model of a factory or production process — something that customers can see that they won’t be able to achieve with spreadsheets or a manual system.” Not that manufacturers are moving in lock step, though: some are very definitely moving quicker than others. According to Epicor’s Christine Hansen, marketing manager for the company’s range of supply chain products, it is industries where customer due date performance and plant utilisation are under pressure that are in the vanguard. “Right now, we’re seeing that aerospace, defence and specialised engineering are receptive to the APS message,” she says. And the type of scheduling problem makes a difference, too, adds Infor’s Andrew Killick, head of the company’s business consulting arm. “There is certainly growing traction where there’s a need for schedules and plans where there are complex trade-offs to be optimised — and ERP just doesn’t do that,” he says. “Where the requirement involves contrasting scenarios, or ‘what-if’ analyses, then the answer is APS, and not ERP.” In short, then, the outlook for APS would seem reasonable. It might not always be an easy sell but it’s not an impossible one.

Gaining deep insight into your supply chain and process manufacturing lifecycle can make all the difference when it comes to staying ahead of your competition. That’s why a growing number of organisations are turning to solutions such as Process Industries for Microsoft Dynamics® AX to help optimise operations, and ensure compliance with the latest legal, regulatory and market requirements.

Maxima,

the leading IT business systems and managed services company, has recently extended its portfolio of Microsoft solutions by adding Microsoft Dynamics® AX for Process Industries to its range of enterprise business solutions. Maxima is already a Gold Certified Microsoft partner and holds Certified for Microsoft Dynamics® status – Microsoft’s highest standard for partner-developed software. The addition of Microsoft Dynamics AX for Process Industries strengthens Maxima’s specialist Microsoft-based solutions capabilities that are supported by the company’s dedicated Microsoft Competency Centre based at its Theale office in the Thames Valley. Here customers from key process industry sectors such as food & drink and pharmaceuticals will be able to see in-depth demonstrations of Microsoft Dynamics AX for Process Industries in action, and also experience how the solution integrates with other key Microsoft applications including Microsoft Dynamics AX and CRM, SharePoint, Business Intelligence and Office. The company’s Competency Centre also helps Microsoft Dynamics AX customers to understand how effective virtualisation and cloud computing

techniques can support their Microsoft Dynamics AX for Process Industries deployments. Microsoft Dynamics AX for Process Industries provides tight integration of business processes across both discrete and process manufacturing sectors. By integrating information and capabilities through the design and manufacturing lifecycle, Process Industries for Microsoft Dynamics AX can help organisations to maximise their capacity, manage co-products and by-products, comply with critical regulations, meet changing customer demands and drive continuous improvement. According to Paul Adams, Managing Director of Maxima’s Business Solutions division: “We’re delighted to add Process Industries for Microsoft Dynamics AX to our Business Solutions portfolio as this comprehensive application will allow us to leverage both our Microsoft Dynamics expertise and our 20-years plus experience delivering enterprise solutions to businesses in the UK process industries. This combination means we’re ideally placed to help organisations increase their

Maxima

Extending Microsoft Dynamics® AX support to Process Industries operational speed and flexibility, and respond quickly to changing market conditions.” Gilbert Garcia, Director of Process and Channels for Fullscope Inc, the original development partner for the Process Industry Intellectual Property purchased by Microsoft last year, adds “Maxima brings in-depth Microsoft Dynamics AX skills and proven expertise delivering enterprise solutions to the food & drink and pharmaceutical process sectors. We look forward to supporting them as a partner going forward.” Maxima is a trusted IT partner to over 1,400 clients, and the company’s Microsoft Gold Partner status acknowledges its ability to deliver the highest levels of technological excellence, marketplace impact and customer satisfaction through the use of Microsoft products and services. The company’s core service offerings include virtualisation and cloud-enabled solutions, network infrastructure and communications, business.

For more information about Maxima, please visit www.maxima.co.uk, contact our manufacturing marketing team on 0118 923 5150 or email marketing@ maxima.co.uk, or visit us at: Maxima, 1st floor, 1230 park view, Arlington business Park, Theale, Berkshire, RG7 4SA

With

ERP meats

our needs At sausage manufacturer James Blakeman, an ERP system from Solarsoft is delivering efficient processes, compliance with best practice and serious competitive edge. Malcolm Wheatley reports.

exacting traceability requirements and tough customer-mandated codes of practice to conform to, sausage and meat product manufacturer James T Blakeman & Co faced more than the usual paperwork headaches. Home of the famous Supreme Sausage, the Newcastle under Lyme business relied heavily on manual systems, supplemented by standalone applications to handle aspects of accounting such as invoicing and ledger posting. But as production planning and inventory management used paper based systems, managers found it difficult to produce accurate reports on inventory holdings, or track raw ingredients through to particular finished products. “Although a manual production record was made at the end of each day, it was becoming inaccurate and our costs were rising,” recalls Phil Blakeman, managing director of the family-owned business, which has been supplying domestic and export catering markets for over 50 years. “Management was also burdened with far too much paperwork,” he adds. “We recognised that we needed a new computer based solution, capable of providing full traceability, better quality control and a complete understanding of stock in hand in relation to works orders and the production plan.” The markets in which Blakeman operates are highly competitive, he explains. The company’s use of only the finest ingredients has ensured a reputation for consistently high quality, and the company has grown to become one of Europe’s leading manufacturers of sausage and meat products. Customers include some of the biggest and most prestigious names in food retail and food service—organisations that take quality and delivery reliability extremely seriously.

Tropos immediately gave us a much clearer picture of orders and the production schedule Phil Blakeman, managing director, Blakemans In addition, a sister company, James T Blakeman (Services) supplies cooked sausage and meat products to the ready meal and contract cooking markets, creating a combined business with an annual turnover of £22m and 125 employees. In short, he relates, by 2003 management at Blakemans had come to recognize that the key to continued success and growth was the ability to operate an efficient and consistent production process—one that was managed, monitored and fine tuned by sophisticated software. “When looking for an ERP provider, we talked to several suppliers,” says Blakeman. “We chose Solarsoft because they were able to offer far better support, a superior level of reporting and more

Casestudy Solarsoft

relevant customer references than the other vendors. Their Tropos system was also able to meet all of our requirements at a price that made sense.” Tropos is a specialist ERP system designed to meet the unique needs of food and drink manufacturers, particularly organisations supplying major retailers or distributing short shelf life products. The software is particularly adept at recipe based materials scheduling and production management. This means production can be planned and coordinated very precisely, and in real time, maximising productivity and eliminating spoilage. By early 2004, a phased development was underway to implement the Solarsoft solution at Blakemans, and by August of that year the system was fully operational. The contrast with the previous manual systems was stark. “Tropos immediately gave us a much clearer picture of orders and the production schedule which allowed us to do better planning,” explains Blakeman. “Almost immediately, Tropos helped us cut waste and increase production, because it provides the information that our operations managers need to make better decisions.” Not only does Tropos allow Blakemans to run a tight ship, he adds, it enables the business to provide complete traceability on all its products—so that it can tell customers exactly when a product was made, which ingredients were used, and the exact temperature of any given preparation area at each point in the process. Importantly, Blakeman also credits the Solarsoft solution with having helped his firm secure accreditation and satisfy the codes of practice for all retail and food service customers. “It doesn’t get much better than that!” he enthuses. “We supply to many leading names, and our processes play a huge part in winning that business. Our clients are extremely impressed with the system we use, because it means we can give them live data and instant traceability of every single movement a product goes through, from the raw ingredients to the finished product.” “By introducing these capabilities, we have set ourselves apart from the competition,” he stresses. “Solarsoft differentiates what we do. It gives us a better working relationship with our clients because they trust the data we are delivering to them. This gives them confidence in the quality of the goods we deliver and allows them to prove that strict standards have been adhered to in every unit they sell.” By June 2006, with steady growth in sales of its traditional product range and accelerating demand for the added value cooked foods from James T Blakeman (Services), Blakeman made the decision to invest in a significant expansion of the firm’s production facilities. The move to a new location was no small development. The company spent £4.4m on the project, doubling its production capacity at the expanded facility with 20,000 square feet of additional

floor space adjacent to a new distribution centre. And, having made this investment, Blakeman wanted to be sure of deriving the maximum return by running the upgraded plant at optimum efficiency. Up to this point, the Solarsoft system had been used solely by the primary manufacturing business. But with all operations now consolidated at the single location in Newcastle under Lyme, it made sense to expand the benefits of the ERP software right across the organisation, transforming all of Blakemans operations. So, after discussion with the Solarsoft team, Blakeman decided to roll out the Tropos system to the James T Blakeman (Services) business as well — keen to ensure that the benefits seen in the manufacturing division were replicated in its sister division, too. And Blakeman is in no doubt as to the scale — and significance — of those benefits. “There is no question that we’ve seen a return on our investment,” he says, pointing to figures that show a capital return in under 36 months. Without the Solarsoft system, for instance, the business

Almost immediately, Tropos helped us cut waste and increase production, because it provides the information that our operations managers need to make better decisions Phil Blakeman, managing director, Blakemans.

would need to employ two to three more people in quality control and in the planning office, and would be some 15 - 20% less efficient in production. Inventory levels would be higher, too, he adds. Better still, though, Blakeman is convinced that the Tropos suite has also given the business a distinct competitive advantage. “While we could run the business without the software, we’d be playing in the same ball park as our competitors, with manual systems and inefficient processes,” he observes. “It would be much harder to win the big names as clients. We’d need more people to handle the same workload, too. Solarsoft allows us to be more competitive in the market, gives us credibility with our clients and enables me to run a profitable business.” Putting a value on the new business Blakeman has been able to attract since automating its production planning and monitoring is more difficult, but it has been substantial, he says. “This is a very exciting time for Blakemans,” he concludes. “To be winning large, big name accounts in a tough market is testament both to the Solarsoft system and to the ability of Solarsoft’s consultants to really understand our business.”

Cutting the cost Recent legislation is posing regulatory compliance challenges for the chemical and process industries—as well as for their immediate customers. But for manufacturers running Microsoft Dynamics AX ERP systems, help is at hand.

A perfect storm According to mid-market Microsoft Gold-certified ERP implementation partner Charteris, the growing challenge of product compliance is adding countless layers of complexity, and can act as a barrier to both profit and growth. “With ever-increasing legislation, mid-market chemical and process manufacturers are facing a ‘perfect storm’ of increasing compliance complexity, looming enforcement deadlines, and ever more regulations,” warns Charteris sales manager Brian Hynes. And non-compliance, he notes, creates significant financial and safety risks that impact the entire supply chain – including the inability to import and export, sell globally, and meet customer demand. Yet all too often, he stresses, compliance is addressed through a mix of disparate systems and manual workarounds. “Such an approach is simply unsustainable in the emerging climate,” he insists. “Product compliance demands daily supervision and real-time access to accurate data as part of a planned product stewardship strategy. And traditional ERP systems simply don’t deliver this.”

any manufacturing business, it’s safe to say that regulatory compliance is never as straightforward as might be wished. From foodstuff production through to aerospace and defence, each industry has its own inevitable compliance quirks and requirements. But spare a thought for manufacturers in the chemical and process industries, where two pieces of recent legislation are posing complex and challenging regulatory requirements. And what’s more, those compliance challenges can spill down the supply chain into their customers. The good news? Unlike manufacturers running most other ERP systems, the growing number of businesses using Microsoft’s Dynamics AX system have an opportunity to productively automate that compliance—handily lowering the cost of compliance while simultaneously improving its effectiveness.

All change Already in force and causing headaches is European Union Regulation EC/2006/1907, passed into law in December 2006, which controls the Registration, Evaluation, Authorisation and restriction of Chemicals—hence its shorthand abbreviation into ‘REACH’. It’s been described as the most complex legislation in the European Union’s history, and its 849 pages took seven years to reach the statute book. Simply put, among other stipulations, it requires businesses that are importing or manufacturing more than one tonne of any one of 50 or

so ‘substances of very high concern’ to comply with a variety of measures—including notifying the European Chemicals Agency, which may require its replacement with a safer alternative. And more compliance headaches come in the shape of the European Union’s implementation of the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS) framework, brought into European law as the CLP Regulations (where ‘CLP’ stands for ‘Classification, Labelling, and Packaging’). In force from 2010 for substances—and 2015 for mixtures—it requires manufacturers to comply with a host of requirements ranging from appropriate labelling to the mandatory provision of safety data sheets (SDS).

ERP limitations In each case, the compliance problems brought about by these pieces of legislation are simply stated. Take REACH, for instance. Yes, conventional ERP systems contain Bills of Material or process ‘recipes’, detailing the ingredients that go into a product. Unfortunately, though, these are in terms of the materials ‘as bought’—and not, critically, in terms of the individual chemical substances that go to make up those ingredients. Which, of course, is what is required for compliance. And look a little more closely at the innocuous-seeming CLP Regulations, and problems just as intractable quickly appear. Take language, for instance. For each order, labelling and safety data sheets must be supplied in the language of the customer’s own country. In French for orders going to France, in other words, in German for orders to Germany, and in Spanish for orders going to Spain. Just as importantly, the labelling and documentation must relate to the specific nature of the

Casestudy Charteris, Microsoft Dynamics and IHS

hazards posed by the products in question, and the chemical substances of which they are comprised. And it’s not enough for the sales function to simply instruct the warehouse function to ‘label and document in Spanish’. Not only shouldn’t the order have been accepted if the correct language capability is absent, but such instructions don’t actually enforce compliance. However well-meaning the intention, a labelling lapse by despatch staff could see inadvertent non-compliance—and therefore potential prosecution.

Progress through partnership In short, what’s needed in the case of both pieces of legislation is a way of building in compliance automatically. A way of translating process recipes into their underpinning chemical substances, for instance. A way of linking orders for products to the inherent risks that those products pose, and the market applicability, including language requirements involved in labelling and documenting the order. And a way of doing so dynamically and intelligently—so that, for instance, an order may be declined if acceptance would pose a problem under either CLP or REACH. Thanks to an innovative three-way partnership, just such a capability exists. The partnership in question? It’s between Microsoft Gold-certified ERP implementation partner Charteris; IHS, a Microsoft Gold-certified independent software vendor—and finally, of course, Microsoft itself. And as far as REACH and CLP go, it’s a partnership that is changing—and challenging—the art of the possible. One part of the solution is an extension of AX functionality/capability provided by IHS known as IHS Compliance Guardian™, explains IHS’ director of sales engineering Fraser Goodey. It falls to Compliance Guardian, for instance, to handle the ‘bill of substances’ that breaks down the ingredients in the bill of material or process recipe into their individual components chemical substances. Likewise, Compliance Guardian deals with what’s known as ‘substance volume tracking’: keeping tabs on the amount of individual substances that have been imported or manufactured—even though those substances might form part of different products or raw materials, and have been bought from or sold to different businesses in different countries. “If accepting an order for a product would take a manufacturer over a particular regulatory or permit threshold, then it’s down to Compliance Guardian to provide notification of that fact—and to do so at the order enquiry stage, not retrospectively,” says IHS’ Goodey. And again, it’s Compliance Guardian that stores the finalised Safety Datasheets and Labels in no fewer than 44 languages. Based on a sales order, these documents will then be automatically dispatched by AX, complying with distribution legislation. IHS Product Compliance™ provides the regulatory output and documents seamlessly (through Microsoft’s

Application Integration Framework (AIF) into Compliance Guardian. This output can then be exposed to AX’s excellent reporting and alerting capabilities.

Up to date The second part of the IHS solution is no less important. In short, explains Charteris’ sales manager Brian Hynes, life doesn’t stand still—and it’s the job of what he describes as a ‘managed regulatory content’ engine within Product Compliance to keep track of the quarterly-updated list of chemical substances and associated data end points, the latest definition of the appropriate labelling requirements and hazard classifications, and the applicable warning and safety documents in the languages covered. Better still, he stresses, the close integration between the IHS functionality and the underlying Microsoft Dynamics AX ERP system means that compliance-related business rules can be ‘hard-wired’ into the system. “By baking compliance into the ERP system, rather than handling it outside, you’re sidestepping compliance problems in advance, rather than discovering them after the event,” he says. “Having the rules explicitly followed as part of the order acceptance process means that you’re not going to inadvertently breach the compliance requirements for a particular product or country of destination.” Regulatory compliance is rarely straightforward. But for manufacturers running Microsoft Dynamics AX, it’s certainly become easier and far more cost-effective.

IT in manufacturing

ITnews... CAD and 3D printing

Autodesk user ‘prints’ entire car body 3D printing has taken a big step forward, with the technology being used to create the entire body of a prototype — the first time, it is believed, that this has been done. The car in question — the innovative eco-friendly Urbee — achieves up to 200 miles per gallon, uses a hybrid electric/ gasoline engine, and has been designed by Winnipeg, Canadabased KOR EcoLogic, an environmentally-focused design group. Autodesk’s Clean Tech Partner Programme — which provides design and engineering software for emerging clean technology companies in North America and Europe — provided KOR EcoLogic with low-cost access to cutting-edge software tools to design and test the Urbee. These included Autodesk Inventor, Autodesk Showcase, and Autodesk Alias Design software.

”From concept through to rendering, Autodesk software helped us to not only build an efficient and sustainable car, but also communicate our designs to a broader audience, including potential investors,” said Jim Kor, president and chief technology officer of KOR EcoLogic. The Autodesk Clean Tech Partner Programme supports early stage clean technology

companies by providing design and engineering software that accelerates their development of solutions to the world’s most pressing environmental challenges. Clean technology companies in North America and Europe who can benefit from Autodesk solutions for Digital Prototyping are invited to apply to receive up to $150,000 worth of software for only $50.

Team Urbee SEMA

Advanced Planning and Scheduling

Preactor expands Sage ERP X3 alliance ERP vendor Sage has selected Preactor’s advanced planning and scheduling (APS) system as its ‘solution of choice’ for Sage ERP X3 users at an international level.

Already used by more than 3000 small, medium and large multinational companies located in 67 countries, Preactor APS now becomes the recommended

solution in a wider range of Sage’s international markets. Sage originally selected Preactor APS to be scheduling solution of choice for its French market back in 2008, and has already achieved over 20 reference sites in the country. Sage and Preactor jointly have over 250 global customers, notes Cateno Barberi, product manager for Sage ERP X3, which is

the company’s solution for mid market companies with international requirements, and which is in use at over 2,700 customers worldwide. “By extending the Sage X3/ Preactor partnership to cover a much greater number of countries, companies looking for a truly international solution can now have access to the strong combination of Sage and Preactor,” he says.

Orchestrating Production and Deliveries Just Got Easier. In a complex world, it’s reassuring to know there’s an IT consultancy helping manufacturers regain control by harmonising disjointed business processes. With a suite of Microsoft Dynamics® solutions to choose from—hosted in ‘the cloud’ or managed on your servers—Technology Management can co-ordinate system change across your business; freeing you to focus on profitable growth. Now that’s music to every manufacturer’s ears.

Ready to Orchestrate Change? Discover how you too can successfully harmonise your systems by requesting a FREE information pack today. For details call 01902 578300 or visit www.tecman.co.uk/change

Driving Innovation Across Your Operations™

IT in manufacturing

ITnews... CAD and PLM

PTC tackles CAD dilemmas Late last year, PTC announced that its ProE and CoCreate programs, used by 25,000 PTC customers worldwide, would be superseded by a new applications-based software package, Creo. Creo (from the Latin verbs think, create and believe) is PTC’s most significant product release since it introduced Pro Engineer 3D modelling in 1987. With launch of their new application suite PTC have taken the bold move of scrapping their existing and widely used CAD brands and substaining the 2D, 3D, parametric, direct and assembly design tools under the new Creo brand. Looking to get the best out of each of these approaches to design PTC has created a suite of applications that are driven by a consideration of the user’s role – including the ‘casual-user’.

The new AnyRole Apps approaches the problem of CAD being too difficult to use for all except a handful of power users. AnyRole Apps looks to solve this by offering a variety of applications, each with a user interface designed for specific user roles. The increased level of inclusion that these apps will give to a broad range of individuals previously locked out of the design process is validated by the intelligent sharing of data between apps which will communicate changes made by one user when another logs across the application suite. The data will also translate the relevant intelligence about a change made in one app to fit the capabilities and specific role of the next app. This means that a change can be made using direct modelling capabilities but appear with parametric intelligence for a parallel user. Furthermore – to prevent the creation of unsound

Enterprise Resource Planning

KTM Super Duke 990 Developed with PTC Creo Elements Pro

IT strategy

Manufacturer extends SYSPRO ERP footprint post-acquisition

High-performance IT departments drive business success

Specialist healthcare furniture manufacturer Kirton Healthcare is installing a new manufacturing, accounting and distribution system from K3 Business Technology Group in the operations of its newly-acquired specialist seating subsidiary A J Way.

According to new research from consulting firm Accenture, high-performing IT departments have left their less adroit counterparts playing ‘catch up’.

The company, which provides seating furniture for challenging environments, as well as shower, toilet and commode chairs, is a major NHS supplier, and Kirton acquired High Wycombe-based A J Way in July 2010. The rollout of the SYSPRO ERP system is intended to give the firm’s management team visibility of important business information that currently resides with a number of standalone systems, as well as more closely integrate the A J Way business with the rest of the group. Kirton Healthcare first installed SYSPRO ERP software over ten years ago at its Haverhill site in Suffolk, and recently upgraded to SYSPRO 6.1, which helps identify unnecessary costs in order to better manage cash flow.

or ‘un-manufacturable’ products – changes can be tracked and easily accepted or rejected on the grounds of the different expertise dispersed across application users.

During the recent economic downturn, says the firm, high-performance IT departments redoubled their efforts to drive more business value from IT, viewing IT as a growth engine — and the adverse economic conditions as an opportunity to build capability. In contrast, reckons Accenture, many companies simply slipped into ‘stagnation mode’ during the downturn, cutting budgets and focusing primarily on maintenance. “Our survey found that high-performance IT organisations are deeply involved in business outcomes, and closely attuned to business needs — current and future — right across the enterprise,” said Gary Curtis, Accenture’s chief technology strategist. “They are successfully retiring their legacy systems and embracing newer technologies. They are adept at managing the balance between optimising costs and ensuring that they have the budget, skills, and resources to help fuel business growth.”

PLM Connect

PLM for profit were then using. So we started

As TM gears up for the next of its technology Connect events in February, Product Lifecycle Management (PLM) Connect, Jane Gray talks to end users and technologists to find out whether this technology really delivers all it promises for product innovation, portfolio management and business agility.

implementing a PDM [product data management] system, as we managed to control our data better and to use it correctly new thinking has opened up around who else might be able to use the data sets. What controls do we need and at

Product

Lifecycle Management (PLM)

the same time how do we open

systems have experienced a

the data up? This thinking has

boom while other markets have struggled in the recession. Large

made a full PLM system the

enterprises, who invested before the downturn, continue to upgrade

next logical step.”

and seek new benefits and a growing segment of mid-sized companies

Collinson gives an example of

are now taking advantage of lower priced systems with web based

how this expansive thinking has

services and capabilities which were beyond their financial reach in

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traditional formats.

publications featuring images of

The growing popularity of PLM throughout the recession has been

our machines people used to

driven primarily by the quick ROIs it can give by controlling costs (like

go around taking pictures and

prototyping costs) and increasing operational efficiencies through

redrawing images in programs like

better product data management. However, as the dismal economic

CorelDRAW. Suddenly we were

environment of 2008 and 2009 begins to lighten, longer term strategic

able to see that we already had

interests in PLM are becoming more dominant and the bite-sized,

those images and that there was no

function specific investments which previously characterised many

reason not to use the engineering

purchases, particularly by mid-sized companies, are beginning to look at

data. We’ve now opened up the

the broader enterprise picture.

system so that those responsible for the publications can create

Small steps

the necessary quality images

Chris Collinson, engineering systems administrator at DEK Printing

from the 3D CAD data before the

Machines, will be sharing his experience of evolving PLM potential at

physical object has been made.

PLM Connect on February 17. In particular Collinson hopes to share

This really reduces our time to

the realisation that PLM has just as much value for business functions

market because we are all working

and processes outside the design and engineering departments, as

concurrently; nobody has to wait

it does within this traditional user base. Collinson tells TM: “Our PLM

for anyone else.”

capabilities have emerged as a natural progression. When I joined DEK 14 years ago we had very little control over the CAD data that we

However, the concept of opening up and innovating around

DEK Printing Machines DEK Printing Machines was established in 1969 and is now a global supplier of high tech screen printing equipment and processes for customers in automotive, communications, medical industries and more. Recently, product technology has advanced to include printing for solar cells. The company currently boasts a turnover of $300m and employs more than 900 people worldwide. With major competitors in China putting massive pressure on DEK there is a real need to make sure existing and new product offerings meet customers’ requirements, maintain their IP and hit the market quicker and with more robust support systems than ever before.

as our vendor PTC term it, that people can get to easily and be confident in the accuracy of what they are pulling out, means lots of time savings. Providing different viewing capabilities and access rights to different types of users means that everyone can just pull off the information they need as they need it. Our information isn’t tied down by traditional sequential formats that used to characterise the way information was passed between functions. This makes it far easier for us to get to market first with our offerings. Our

Chris Collinson, engineering systems administrator DEK Printing Machines

competitive market means that this is absolutely key to our business.” Many companies would flinch

the use of product data has

for a system which would allow

at the idea of all of interaction,

taken DEK a long way beyond its

us to create what we now call

or possible interference, with key

own organisational boundaries.

a baseline for a customer. This

product data and design channels

Collinson explains how the

provides viewing capabilities that

but Collinson is confident in the

company now gives customers

allow our customers, who may

security controls in the system and

added value through their PLM

have no technical skills with CAD

proud of a company environment

capabilities: “We used to have

data or knowledge of our internal

where the opportunity for great

a big resource problem with our

processes, to view 3D models and

contribution and collaboration

CAD guys being able to produce

part identify ahead of time.”

on product offerings was very

enough drawings to support

Time is repeatedly emphasised

readily absorbed: “The cultural

the documentation that went

by Collinson as the number

progression of working practices

out with our machines. These

one motivator in expanding the

came alongside our natural

drawings allow customers to do

company’s use of PLM: “Having

progression in stepping from CAD

parts identifications. When we

data on a single central repository,

to PDM to PLM. People were

were moving to PLM we looked

‘a single source of truth’ for data,

able to see the benefits and time savings which came with each

When we get down to the specifics of manufacturing companies we need to understand how PLM can help add value through managing the assets Allan Behrens, founder, Taxal

improvement of the technology environment and they were keen to be able to do their work better and get ahead of their game. Of course we did undertake a lot of training for everyone but the great thing about the system architecture we

new technologies are really going

“When we get down to the

and very accessible because it is

to help address them.

specifics of manufacturing

all web based.”

“This challenge is not helped

companies we need to understand

by the fact that many IT vendors

how PLM can help add value

Great leaps

present such a complex view

through managing the assets

DEK have come a long way

of available technologies when

inherent in and around your

in their ability to control and

actually, in essence, things

products throughout their lifecycle.

optimise their product data but

like social media and cloud

This is a very complex challenge

there are still further steps to be

technologies are very simple

and turning that complexity into

taken. Collinson identifies an area

to understand and, given an

simple value is what we want to

for next steps in exploring the

opportunity and a clear description

achieve through the use of the new

possibilities for interfacing more

the value proposition becomes

technologies that PLM offerings

closely with suppliers and other

self evident – I will go into this in

are starting incorporate and

supply chain partners through

more detail at PLM Connect but

interface with.

their PLM system. Allan Behrens,

what companies need to do when

When thinking about PLM

founder of technology analyst

approaching new technologies is

and its potential as an enabler,

and consultant company, Taxal,

cut away the jargon, look at each

it must be understood that we

and the closing speaker for PLM

individual technology in its own

are not talking about a discreet

Connect, has more ideas about

right, look at where each can be

technology; there are many

what interconnecting technology

used practically and consider what

stakeholders involved. Nor is

developments might mean for

sort of valuable, as well as how

PLM a single tool, it is more of

the benefit of companies, supply

much value it will bring.

an environment. Remembering

chains and business networks. Behrens talks about the

“There needs to be a rationale

PLM Connect

chose is that it is so easy to use,

this, a company would be best

for measuring this value at the

placed to think about all available

challenges for companies looking

same time as acknowledging

technologies and consider how

to exploit technology investments

that certain benefits will be very

they might enhance collaboration

as part of a long term strategy for

intangible. I hope that at PLM

internally and externally.”

ROI and business improvement:

Connect we can have some

“There are a lot of new media out

discussion around these points

there in terms of social media

and then start looking at routes

and cloud technologies and

for implementation. Who do you

many companies struggle to see

go to for advice? Where are the

how these will be of tangible

information sources?

value to their business. Common business issues and questions are more often around how

PLM Connect is being hosted by TM on February 17.

to reduce material costs, get

If you are interested in attending please visit:

suppliers to deliver on time, and

www.themanufacturer.com/plmconnect

effectively monitor and manage the performance of a workforce. These are business issues and most

For full event information or call 0207 4016033 to book your place.

companies struggle to see how

EEFInsight practical A approach

With National Apprenticeship Week a few weeks away, an insight into the EEF Apprenticeship and Skills Centre provides a timely example of training provision which gives manufacturers the specific skills they need to take their place at the forefront of a newly balanced UK economy.

Government,

it seems, is now firmly on the same page as industry in recognising the need for more vocationally based training which provides ‘real world’ skills for manufacturing and engineering roles. After Labour created the National Apprenticeship Service (NAS) and committed to overseeing 35,000 extra apprenticeship starts in 2009, the Coalition, since coming to power, has taken on the mantle with aplomb. Most recently, in November’s Skills for Sustainable Growth report, it was announced that there will be 75,000 extra adult apprenticeships created by the end of 2015 and a raft of measures to make progression from apprenticeships into advanced apprenticeships and other forms of higher education more feasible. Events scheduled for the second annual National Apprenticeship Week, organised by NAS, will outline all of the initiatives that are currently underway while seeking to raise more awareness and support for programmes. EEF, the manufacturers’ organisation, has never needed convincing. Each year its Apprenticeship and Skills Centre in Tyseley, central Birmingham, supports an intake of 80, typically aged 16-20, although all ages of apprentice are catered for, to undertake their first year’s ‘off the job’ training in which they learn the basic technical capabilities and employability skills they need to begin to contribute to real processes within a business. The students come to the centre either attached to a company or independently, with EEF seeking a position on their behalf. EEF then directs the rest of the apprenticeship programme ‘on the job’ with day release at the Centre. The apprentices complete a variety of NVQs as part of a full advanced apprenticeship. Critically, the Centre has set out its stall with the ambition of providing businesses with skills that apply specifically to their operations. To do this, EEF works closely with companies making on-site assessments to determine which elements of the National Apprenticeship Frameworks, presided over by the Sector Skills Councils, best suit each individual programme. The fully equipped machine shop at the training centre features mills, lathes, CNC machines,

Have your say at www.themanufacturer.com

Midland Precision Equipment in Solihull hired two apprentices from the Centre in 2008. Engineering manager Sean Dalton: We have found both of our apprentices to have an excellent attitude and able to demonstrate an excellent standard of core knowledge. They have been working on complex, highly accurate and challenging production machining work and are both currently spending one day a week in our quality assurance department engaged in the inspection of production components.

computer aided design packages, welding stations, hydraulic and pneumatic machinery, sheet metal and electrical facilities. Students will be instructed on a mixture or all of these, as per the bespoke design of the individual’s programme. “As a part of EEF, We have tremendous employer links and we are responsive to companies’ needs,” says EEF Apprentices and Skills Manager Peter Winebloom. “And being focussed purely on engineering and manufacturing allows us to give very specialist training. All of our instructors and tutors have a wealth of industry experience too which is invaluable as it means they understand what businesses need. Being a national organisation we are also able to offer an apprentice recruitment and project management service to employers outside of the West Midlands “ The Centre has an impressive success record, with 84 per cent completing their apprenticeship and securing their ‘first appointment’. “Technology and technical demands are advancing all the time and conformity is becoming ever more stringent,” adds Winebloom. “Advanced Apprenticeships are therefore vital. Our job is to demystify the system and make it possible for companies to get the specific skills they need to grow, but we can’t train apprentices without committed employers.” During National Apprenticeship Week, the Centre will be opening its doors for all manufacturing and engineering companies as well as prospective students and their parents to come and see what it has to offer. Contact Peter at: pwinebloom@eef.org.uk for details.

FinanceSupplement A special feature surveying corporate finance options and their success.

Money talks The recovery of the UK economy in 2010 has many influencing factors but principal among them for many companies is the availability of cash, for both working capital and investment for growth. The Manufacturer explores the state of play for funding manufacturing businesses in the UK, including bank lending, minibonds, the cost of finance, barriers and what more government and banks – and industry itself – should be doing to help.

oney makes the world go round. But

10,000 loans. In total, small businesses owed banks

for many companies, not least those

£45.3bn at that stage. The BBA says that lending to

in the manufacturing industry, in the

small business contracted by 5% between August

last two years the world will have

2009 and August 2010. Indicating that this could

nearly stopped turning. The recession has provided

be demand-driven, the Department for Business,

a spiteful reminder of just how important it is to

Innovation and Skills (BIS) found that demand from

have access to finance and smooth cash flow.

small businesses for loans, from all sources, was

The Bank of England’s latest quarterly Trends in Lending report, released in October and presenting figures for August, the latest figures available, says

down by 3% by value. The Government set the banks that were bailed

that the major high street banks and building societies

out by the tax payer – Royal Bank of Scotland and

increased net lending in August by £0.3bn. However,

Lloyds Banking Group – a combined target of £94bn

although the deficit is decreasing month by month,

lending to businesses this financial year, where

lending to businesses is still 5.4% down on lending

£45bn must go to small businesses. In their half year

12-months earlier. In addition, total lending has been

interim reports, both banks reported good progress

lower than repayments for the past six quarters.

with RBS saying it had lent £30.9bn of corporate

The most recent figures available from the British

down 7% over that period by number of loans and

loans and Lloyds £35bn. But it should be noted that

Bankers Association (BBA) for bank and building

when the target was set by the then Chancellor of

society lending to small businesses – defined as

the Exchequer Alistair Darling, the figure was to be

those with annual bank account debit turnovers

made up of gross lending. Secretary of State for

of up to £100m – show that new lending in

Business Vince Cable has since changed this so that

September 2010 was roughly at parity with the

the target includes net lending, meaning that loans

same month in 2009 at a total of £564m from

that have been repaid count towards the total.

financesupplement

Finance types: What is popular?

companies will look to use asset finance

Deloitte’s CFO survey for Q2 2010, conducted

and invoice finance than medium and large

in June, found that bond issuance – for those

companies, who both registered a similar demand

companies large enough to qualify – curries most

for these two types of finance (see table). Young

favour as a means of raising capital, followed

companies are more than twice as more likely to

by bank loans and then equity issuance. While

use asset finance than the average business (by

the metric Deloitte uses is ‘attractiveness’, it

age). However, all firms still see medium term

is inconclusive whether CFOs are basing that

debt over one to five years as the most

attraction mainly on the cost of borrowing alone.

likely option.

Peter Russell, head of manufacturing sector at

Over 80% of companies in EEF’s survey said

RBS Corporate and Institutional Banking, says the

they plan to use a range of funding channels, with

banks have favoured asset-based funding options

half quoting two to three sources of finance and a

for much of 2010 as they are capital efficient tools.

quarter naming four to five sources.

There are benefits for companies too, he says; primarily that more can be lent against any given pool of capital that an ordinary loan facility and there is flexibility to renegotiate for larger facilities mid-term. Russell predicts that there will be an increase in investors looking to put money into potentially high growth companies as they look for better returns than they would get by squirreling away cash in savings accounts. “We can expect new entrants in

More small companies will look to use asset finance and invoice finance than medium and large companies, who both registered a similar demand for these two types of finance. However, all firms still see medium term debt over one to five years as the most likely option

the [financing] market, and not only banks,” says Russell. “For example,

Tools for machine tools

insurance companies with capital to invest may

Leasing is increasingly being flagged in some

choose to target certain sub-sectors and/or types

quarters as a better finance option for buying new

of assets. Also, equity funds, which are attracted

machinery up front. Independent asset finance

to fast growth companies operating in high value,

company Bluestone Leasing says its new business

defensible markets, are likely to feature

has increased by 80% over the last year, with a large

more prominently.”

part of that attributed to manufacturers. Companies

EEF’s research from the Shape of Industry report finds that significantly more small

big and small have turned to leasing, Bluestone says, and its customers even include public sector bodies.

This article continues on page 66

Refinance Now will accelerate as the economy

By Graeme Allinson, Head of Manufacturing, Transport and Logistics, Barclays Corporate

strengthens and this may well coincide with the refinancing spike as it reaches a crescendo in 2012. This additional growth funding demand will increase the upward pressure on the already apparent 2012 refinancing spike, reducing available supply even further and

Contrary

public and private sector and confidence in the private sector

And the increase in demand for

to popular belief, banks are

increases, businesses will start

liquidity is not just a feature of the

working very hard to make

to borrow again for capital

lending market. Sovereigns, banks

sure there is sufficient funding

investments, which will increase

and corporates â&#x20AC;&#x201C; anyone raising

in the market generally, and

the pressure. This could well lead

finance â&#x20AC;&#x201C; will find themselves

the manufacturing sector

to a spike in demand and increase

exposed to the same liquidity

specifically, for those companies

the cost of debt to businesses.

constraints. Banks raise money to

that present a viable business

lend from customer deposits and

proposition. Indeed, Barclays has

companies with the ability to

through the wholesale markets.

provided ÂŁ35bn in new lending

refinance early with their lenders

There is increasing competition

to businesses and households

should seriously consider doing so

to attract customer deposits,

in the first nine months of 2010.

to avoid the squeeze and to secure

and increasing competition in the

Businesses have also been

the best possible rates before the

wholesale markets for liquidity.

borrowing less for some time

supply of finance available from

as the whole economy has

bank deposits and from the capital

for manufacturers to refinance is

deleveraged, but we expect new

markets becomes constrained.

now, while banks and the capital

All of this means that the time

loan demand to increase through

Adding additional pressure

2011 with demand set to jump in

to this spike will be demand for

2012. Manufacturers cannot afford

growth finance. Businesses are

to ignore the situation.

currently managing for cash,

are delaying refinancing in the

markets supply outstrips the presently low demand. However, it is clear many CFOs

but capital expenditure cannot

belief that spreads will fall before

to refinance in 2012 as a result

be deferred indefinitely and at

their debt matures. This belief

of three, five and seven-year

some point businesses, and

has emerged as a result of the

agreements signed in 2009, 2007

particularly manufacturers, will

widening of spreads over base rate

and 2005 reaching maturity.

have to invest again. Smart

and LIBOR from their pre-crunch

According to our estimates the value

management teams will also

levels, leaving many manufacturers

of debt will be double the amount

continue to spot opportunities

with the impression that lending

that was refinanced in 2010.

created by the recession and it

is currently expensive in historical

is these businesses which will be

terms. The reality is that while

the first to seek finance. Demand

margins have increased due to a

Many UK companies will need

In addition, as the UK economy begins to rebalance between

Therefore, those manufacturing

thus increasing the cost.

is that given the refinancing

The commentary provided by

change, such as banking capital

challenge it is highly likely that

Barclays Bank PLC is intended

requirements and the increased

debt capital markets will play a

to be used as information only.

cost of wholesale borrowing, bank

bigger role for more companies

Whilst Barclays and its employees

debt is still substantially cheaper,

than has traditionally been the

take every care to ensure that

in absolute terms, than in 2007 or

case. Although this wonâ&#x20AC;&#x2122;t apply

the content is accurate, Barclays

2008 due to the historically low

to all manufacturers, larger

will accept no responsibility or

interest-rate environment. This will

corporates are finding that capital

liability in respect of any errors,

not remain the case indefinitely.

markets can provide solutions to

inaccuracies and losses which may

their funding requirements and

arise from its use.

When examining their refinancing needs, manufacturers

where appropriate, this could

also need to look at all potential

mean introducing a greater

sources of funding. This starts

number of manufacturers to the

with the efficient management

investment bank.

of cash within treasury. A good

Barclays Corporate

rise in lending risks and regulatory

Indeed, products such as

bank should always look to

bonds and private placements will

engage with treasurers and

become increasingly relevant for a

finance departments about the sort of help it can provide in terms of cash management solutions. Many CFOs and treasurers may believe that they are already effectively managing the cash a company may have at its disposal, driving out any possible inefficiencies

Bank debt is still substantially cheaper, in absolute terms, than in 2007 or 2008 due to the historically low interest-rate environment. This will not remain the case indefinitely Graeme Allinson, Head of Manufacturing, Transport and Logistics, Barclays Corporate

in their current funding arrangements. But given the

greater range of companies. As the

refinancing challenge that many

bank lending market has become

manufacturers will face in 2011

more regulated, so the bank loan

and 2012, treasurers may decide

input costs have increased. So

that they wish to revisit the task,

while three years ago it may not

in particular looking at cash

have made sense for a company

management arrangements that

to issue a high yield bond, now it

potentially create capacity.

may well do.

When every possible cash

While many companies do not

avenue has been explored,

have to do anything about their

debt options including specialist

refinancing for several years,

products such as asset finance

the smart way forward is to deal

have been exhausted and the

with the big issues now. Being

company still has a funding

in conversation and opening

requirement, the next question is

dialogue with banks early is the

where to go to find the

key to developing a successful

required funding.

relationship and ensuring there

One of the reasons for bringing

are no surprises. Put simply,

Barclays Corporate closer to

refinancing early will avoid

investment bank Barclays Capital

the squeeze.

www.barclayscorporate.com

Chief executive Phillip Bennett says: “Leasing has

customers because they don’t always understand

many advantages over bank loans, overdrafts, re-

the value of machines and therefore they don’t

mortgaging or even cash. Monthly fixed repayments

recognise which of them, as assets, are more likely

make budgeting simple and the lack of default

to hold their value. I don’t blame them because I

clauses means that, so long as you keep paying the

don’t understand trucks or plant for instance, but I

rent, you can sleep at night without worrying that

do understand machines and this means I can lend

the bank will reduce your facility or pull the plug for

more money and offer better terms against them.”

reasons beyond your control. “Moreover, the lessor will only take security over

The name is bond

the asset itself and not the whole business. This is

A more novel way of raising capital is ‘minibonds’.

a great comfort and even if a personal guarantee is

Popular in Germany where around 70 were issued

required it is limited to the amount of the funding

last year, they are unlisted bonds issued by a

and is, in my experience, much less onerous than

company which return a fixed rate of interest after

the typical bank guarantee.”

a predetermined period. At least three companies

Andy Curran, director of Finance for Industry, a

in the UK – King of Shaves, Ecotricity and The

company which specialises in providing finance only

Chocolate Tasting Club – have embarked on such

for machine tools, predicts that leasing will become

programmes thus far. King of Shaves was in the

even more popular next year for tax reasons.

first in 2009 and raised £600,000 from its scheme. Ecotricity’s issuance, based on a four-

We can expect new entrants in the [financing] market, and not only banks. For example, insurance companies with capital to invest may choose to target certain subsectors and/or types of assets Peter Russel, Head of Manufacturing sector, RBS

year term at 7%, ended in December and the company is yet to state how much of its £10m target it has raised. The Chocolate Tasting Club, owned by Hotel Chocolat, aimed

“Capital allowances are set to be reduced from £100,000 first year allowance to £25,000 in April

investors don’t expect any monetary profit. They will

2012,” he explains. “If you buy machinery up to

get chocolate, though. Members usually pay a fee

£100,000, at the moment you can offset the entire

of £20 per month to receive luxury chocolate boxes.

amount against your tax. When the change becomes

If they invest either £2,000 or £4,000 up front their

effective, you’ll only be able to offset the first

member fees will be wiped and over three years

£25,000 in year one. However, by leasing instead

they’ll get boxes to the value of their investment

of buying, companies will be able to offset each

plus 6.72% or 7.29% per year in chocolate interest.

individual rental payment and therefore the entire

After three years they can redeem the bond for the

cost can be offset against the tax bill.”

original value.

Currently, hire purchase agreements are Finance

to raise £5m through its scheme but, in this case,

for Industry’s most popular product. However,

Action to inspire lending

Curran expects leases to become more popular

Whatever the statistics, the consistent message

sometime in 2011, ready for the Capital Allowance

from the banks throughout 2010 was that money

change next year. He says his company has also

is available to borrow and that they are keen to

seen a massive increase in business during the last

work with industry to find mutually beneficial ways

12 months and he puts this down to its focus on a

of opening channels. And now the banks have

specialist area of finance.

presented a united front and put that commitment

“The banks have tightened up their credit facilities

in black and white. The UK’s six largest banks –

and asked for additional security from their

Barclays, HSBC, Lloyds Banking Group, Royal Bank of

financesupplement

Scotland, Santander and Standard Chartered – created a Business Finance Taskforce (BFT) in

F r a n k D a l e F oods

response to government’s green paper, Financing the Private Sector Recovery, released in July 2010. In October, the BFT detailed 17 actions across three broad areas which they say are designed to “help businesses thrive and grow”. In addition to adhering to Business Secretary Vince Cable’s

Norfolk luxury canapé manufacturer Frank Dale Foods used a mixture of its own capital, bank loans, independent finance houses and individual equity investors to fund £200,000 worth of investment in its business last year.

instruction in the green paper that

Managing director Robert Dale says:

an independent appeals process

“We managed to source some investment from our bank because they recognised that we have a very strong management team and organisational structure. That seems to be the key thing and I think that’s the reason why we managed to get any money at all. The main bank that we deal with are absolutely fantastic but at their level it does seem that they have a directive from head office to limit cash.

should be put in place for when loans are declined and committing to laying out guidance principles for how transactions between businesses and banks should be conducted, the BFT says it will commit to initiating dialogue with companies 12 months before finance deals are due to end. This will include reviewing the businesses performance and prospects at that point in time and making recommendations for actions to maximise chances of refinancing. Under its ‘Ensuring better access to finance’ pillar, the BFT commits

“The independent financing house that has funded our newest manufacturing line say they have picked up a company with £5m worth of assets on its balance sheet which still couldn’t get money from the high street bank. “However, there are increasingly people who are willing to put money into business as equity. We have a private individual which has invested with us because he had confidence in our business strategy and thought that he could get a better return. You don’t get those bigger returns without added risk but in our case we are actually on course to far exceed what was originally expected.

to a creating new £1.5bn Business Growth Fund. Aimed at funding growing companies in the £10m to £100m turnover range, the fund

Contact INFORMATION: Tel. (01953) 788900 www.frankdalefoods.co.uk

will provide investments from £2m to £10m with the lenders receiving an equity stake in the business

As chairman of the BFT, John Varley, chief executive

which will be redeemed after five years.

of Barclays, said: “As banks we have an obligation to

It also commits to continued support for the

help the UK economy return to growth. The private

Enterprise Finance Guarantee scheme, a loan scheme

sector will play a key role in the recovery and it’s our

first set up in January 2008 which sees government

job to help viable firms to be successful. SMEs are

act as guarantor for 75% of commercial loans between

particularly important as a source of job creation

£1,000 and £1m with the bank backing the remaining

and growth. We look forward to working with the

quarter. The scheme has how been extended to run for

authorities and with business groups to take these

a further four years and the Government has committed

initiatives forward.”

to guaranteeing a further £2bn over that period. Finally, ‘Providing better information and promote

EEF commended the action points, noting specifically the publishing of lending principles, and

understanding’ contains several actions designed

urged the Taskforce to pay particular attention to

to make the banking industry and its performance

creating transparency between businesses and banks.

more transparent and to open up new channels of

“The rules have clearly changed for both banks

dialogue with business to tackle bottlenecks and

and businesses and hopefully we will now see some

barriers to finance.

common ground between what the Taskforce is

proposing and the needs of businesses through the recovery,” says EEF director of policy, Steve Radley.

Recommendations In mid-2010, NatWest’s chairman of small

Manufacturing investment levels have fallen substantially:

businesses Peter Ibbertson said in light of the high levels of bank bad debt that have had to be written down – one of the key contributors to the global recession – businesses now need to provide highly detailed proposals in order to convince the bank to

2009 -21% 2010 -14.4%

lend them money.

2011 7.3%

“If you’re a manufacturer looking to do something three or four months down the line, the key thing is come and talk to us now,” he said. “Involve us

-25% -20% -15% -10%

in those debates and talk to us about your cash

This shows a fall of 35% over the last two years and a forecast in 2011 of only 7.3%

flow. It’s a much better way than turning up at the last minute. It may be that traditional loans and overdrafts aren’t necessarily the best way to fund.”

-5%0

10%

(All figures are from August 2010 EEF/ Oxford Economics)

As a part state-owned bank, he pointed out that it would be irresponsible for RBS to lend money without more early transparency, especially given that, bonuses aside, much of the public furore aimed at the banks when the crisis began was fuelled by allegations of irresponsible, ‘casino-style’ lending.

A local approach Chief executive of the Manufacturing Advisory Service West Midlands, Simon Griffiths, meanwhile, has called on banks to reintroduce business bank managers to local companies in order to increase commercial lending, as he says they are likely to be able to make better judgements about which businesses would be reliable debtors. “In the days of a local manager he or she had such good working relationships with their customers and could spot a winner when one came along,” he says, contending that the centralised system banks now adopt for lending could mean that some companies worthy of investment are overlooked. Responding to the action points of the Business Finance Taskforce, the Black Country Reinvestment Society (BCRS) – a Community Development

Whilst 2011 is an increase following two years of decline, it is relatively low and historically should be higher given where manufacturing is in its recovery curve .Of those manufacturers who are investing, not all will use debt finance. Indeed a lot of manufacturers are looking to use cash to fund their investment rather than take on additional debt Graeme Allinson, Head of Manufacturing, Barclays Corporate

Finance Institution (CDFIs) – released a report of its own, A Co-operative Approach to Small Business

As CDFIs are entitled to Community Investment Tax

Lending, which included several recommendations

Relief, the finance becomes cheaper for the lenders

for a ‘co-operative approach based on

and the borrower. Banks will hold the accounts

mutual principles’.

meaning they are introduced to new customers that

The BCRS suggests that the banks, large

are potentially high growth companies – a pre-

companies, high net worth individuals, the Regional

requisite for them receiving the money. Under this

Growth Fund and local authorities should all

model, it is the businesses’ growth potential that is

contribute to and become stakeholders in local

used as security, rather than fixed assets, which takes

funding pots which would be disseminated by the

away one of the main barriers to accessing finance

CDFIs who then bear the risk of the loan or loans.

that small and start-up companies often hit.

financesupplement

EEF has also called for more non-price competition

old. With the help of the software it now has just

between banks to drive lending, something also

Eu500,000 in debts over 60-days.

flagged in the Financing the Private Sector Recovery

“In previous recessions companies would always

green paper.

just go to the banks and ask to borrow more

Another idea, under the moniker Project Merlin that

money,” says Taylor. “Today, that might not

is also being headed by Barclay’s John Varley, suggests

be possible. The money is sitting around with

that the tax on bankers’ bonuses is partly determined

customers; all you need to do is encourage them to

by their bank’s lending to small businesses.

pay earlier.”

Looking inwards

A brighter horizon?

If the usual channels for financing do not bear fruit,

Of note is that EEF’s research says finance appears

manufacturers may be able to look internally at

to be low on manufacturers’ grievance lists. Taking

their own processes and find that they can self-fund

businesses of all sizes, only 30% of companies

their needs with a few changes in their financial

who are looking to grow cited the availability of

management. OnGuard, an independent Dutch

affordable finance as a barrier to their ambitions.

software company, has developed predictive analysis

This figure dropped to 15% for those companies

software which helps companies better control their

that were simply looking to maintain their market

invoice payments and allows them to see where cash

position. Finding appropriately skilled employees,

flow bottlenecks could arise in advance.

meaning they

As banks we have an obligation to help the UK economy return to growth. The private sector will play a key role in the recovery and it’s our job to help viable firms to be successful

don’t have to go

John Varley, chief executive, Barclays

“We supply software that allows companies to streamline their accounts receivable,

to the bank capin-hand asking for money for investments,” says OnGuard CEO David

communication with suppliers and customers,

Taylor. “Because of the downturn, some companies are

availability and cost of raw materials, and

taking as long as 60 or even 90 days to pay. Companies

management capability were all cited as stronger

can free up large amounts if liquidity just by becoming

inhibiting factors than finding finance.

more disciplined with how they get paid.” The predictive analysis software works by

That isn’t to say that finance is not a serious problem for some companies even in a recovery

identifying customers which could be a risk in the

cycle. Begbies Traynor’s Red Flag Alert research

future so that extra attention can be given to them.

finds that 123,361 UK companies were experiencing

Whenever interaction takes place with a customer,

‘significant’ or ‘critical’ financial problems in

data is input into the programme, recording things

the third quarter of 2010, 5,353 of which were

like which dates were given for payment, whether

manufacturers, although these figures were

that commitment was honoured and what the

respectively 10% and 9% down on the same period

actual lengths of payment are. A scoring algorithm

a year before.

is built up for each customer. When timelines

But, as has been seen, credit conditions do appear

begin to slip or promises are broken, the score

to be easing, and businesses are looking at new

becomes negative and the account is flagged up

and innovative ways of funding their businesses to

with the customer so that they can make contact

complement the usual channels which bank lending

and devise another plan for the relationship, or

offer. The banks, for their part, have been vocal in

perhaps a more experienced client manager is

sending out clear messages that not only do they want

assigned to the case.

to lend but that, through initiatives like the Business

One of OnGuard’s clients in the Netherlands had Eu3 million outstanding on invoices over 120-days

Finance Taskforce, they are committed to finding ways to improve the corporate finance landscape.

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2011 Economic Outlook: Reasons to be cheerful Stephen Boyle, Head of Group Economics, RBS Group

of this growth can be delivered by investment and net trade, providing a more stable platform for future prosperity.

Reasons to be Cheerful

economic terms, 2010 was a mixed year. The UK economic recovery has been stronger than expected and the labour market has also shown signs of improvement. Yet the wider economic environment remains in a period of heightened uncertainty. It’s going to be a challenging year for the UK economy, but one where we can build on our strengths to rebalance and refocus on a more sustainable path of growth for the future.

A rebalanced economy In the last decade, the UK economy has been too reliant on consumers’ pockets and government largesse. Between 2003 and 2007, increases in household spending and government consumption accounted for almost four-fifths of our GDP growth. But, as spending increased, we also demanded more goods and services produced abroad. As a result, our export and import balance deteriorated and actually had a negative impact on our growth potential. Following the downturn we must seek alternative engines of growth for the future. Household spending will continue to contribute, but at

If the last three years has taught us anything, though, it is to expect the unexpected, and lots of uncertainty remains. Changes in economic policy, a loss of market confidence or further problems in the financial system could all de-rail recovery. But here’s some potential positive news for the UK economy: a much lower rate than before. With over £1.50 of debt per £1 of household income (compared to a long-run average of £1.10), the household budget will be constrained for the foreseeable future. Meanwhile, the large public sector deficit has forced government to seek savings of £81bn by 2014. However, there are two other sources that we can look to for growth. Private sector investment can directly boost our productive potential and demand within the economy. And, in a reversal of the position of the last 10 years, a boost in exports and lower growth rates in imports can turn net trade into a strength. Manufacturing has a key role in both these areas. It accounts for almost three-fifths of our exports and is a major component of private sector investment. Its health is a pre-requisite for a strong and rebalanced economy. Achieving this rebalancing won’t be easy and can’t be taken for granted, but there are grounds to trust it can be done. RBS’ forecast is for an average annual GDP growth rate of 2.4% between 2011 and 2014, only slightly lower than the average of 2.7% in the mid-2000s. More importantly, we estimate that over two-thirds

UK is a highly attractive 1 The place to do business The World Bank recently rated us the 4th best country in the world in terms of ‘Ease of Doing Business’. Indeed, our stock of inward foreign direct investment per capita is the world’s second highest. This provides a good starting point as we’re looking to boost investment.

invested in our 2 Wecapitalhavestock in recent years The UK has seen an 90% increase in its capital stock since 1995, with both public sector investment in infrastructure and private sector investment in productive facilities. France has seen only a 50% increase over the same period and the US 40%. The challenge now is to be more productive in how we use this capital stock.

labour flexibility has 3 Our helped in the downturn Compared with the downturns in the early 1980s and 1990s,

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companies are advanced 4 UKin their restructuring efforts The balance sheet of the UK corporate sector is in a position of relative health, especially in comparison to households and government. Firms have used the downturn to preserve cashflows, pay down debt and seek new capital. The spare capacity created by the downturn is now starting to reduce rapidly, while long-term borrowing rates remain at historically low levels – providing a sound basis for an improvement in investment.

are a major global 5 Weprovider of higher education A deficiency in basic skills levels remains a key concern for UK firms, particularly manufacturers. However, at the other end of the scale, we are one of the global leaders in terms of higher education. The UK is home to 19 of the world’s top 100 universities. We do not currently make the most of this asset – for example, the UK accounts for only 4% of global patent applications – providing ample scope for turning a strength for education and innovation into even more productive uses.

We have export strengths to build on

have major strengths in high value-added manufacturing, such as aerospace and pharmaceuticals, as well as more traditional export products, such as cars and food-stuffs.

economies offer 7 Emerging new export markets As these emerging economies, such as the BRICs (Brazil, Russia, India and China) continue to grow, their higher per capita incomes will see demand increase for the types of goods and services that Britain is good at producing. Encouragingly, our comparative advantages are largely different to those of the major emerging economies, suggesting a ‘win-win’ from increased trade.

still have a flexible (and 8 Wecompetitive) exchange rate The 25% depreciation in sterling since 2007 offers a more immediate trade benefit. In contrast to the monetary constraints faced by some of the peripheral countries in the Eurozone, we still retain the flexibility of using the exchange rate as a tool for growth. With world trade growing at a double-digit rate in 2010, a competitive exchange rate will have a great impact as global demand improves.

been here before 9 We’ve and prospered The most well-worn phrase in economics is “this time it’s different”. Almost invariably, this

turns out to be false. This applies not just to the build up of asset bubbles in an upturn, but also to the nature of an economic recovery. The mid-1990s were also characterised by major cutbacks in government spending, yet these were also years of positive growth and improvements in investment and trade.

RBS

employment levels have been much more resilient over the last three years. Firms used options for part-time work or re-assignments rather than just relying on layoffs. As a result, more workers have been kept in productive use than before, helping to retain and enhance skills.

There are ‘natural’ 10 advantages that the UK continues to enjoy English is the global business language, our legal systems are widely used, and the GMT timezone allows us to work in both the Asian afternoon and the North American morning. We have several strengths for which other countries would be envious.

A challenging but also exciting outlook I believe that we have the capacity to meet the challenges we face. We can’t rely on the volatile and unsustainable engines of growth seen in the recent past, but must look to areas such as manufacturing to provide longerterm boosts to growth through investment and trade. It’s not easy, but it’s achievable. And, if all else fails, there is always the old British sense of humour and stoicism to fall back upon. It is probably no coincidence that David Cameron has launched his new ‘well-being’ index at a time of economic uncertainty. If we can’t improve our GDP through higher productivity, investment and trade, we may still be happy!

For further information please contact your RBS Relationship Director

We are no strangers to international trade, indeed we are one of the most open economies in the world. We must build on this. The UK is the world’s sixth largest exporter, and the second largest in terms of services. We

www.rbs.co.uk

Manufacturinginaction Sponsored by TBM Consulting Group

Putting UK manufacturers under the spotlight AUTOMOTIVE ENGINEERING

Mahle Powertrain 75 Powered up precision With origins dating back to 1979, Mahle Powertrain have developed a strong position in the automotive and offhighway engineering sector.

PRINTING

Polestar 80 Polestar finds true north TM finds out how this innovative printing company has stuck to a service driven mantra for confidence in troubled times.

FASTENING SYSTEMS

Alcoa Fastening Systems UK 83 AFS has its day in the sun Edward Machin meets Alcoa Fastening Systems UK, a company developing a fundamental interest in the solar market.

FILTRATION SYSTEMS

Mann+Hummel 88 Engine of growth needs a best in class filter As pressure on the UK divisions of foreign companies to perform increases, Will Stirling meets a German company in the UK beating its European competition to win contracts.

All companies featured will be entered into the MIA Award 2010

Matsuura Machinery PLC (UK) Pioneers in the development High Speed Machining & the manufacture of automated, unmanned high accuracy CNC machine tools, Matsuura have been at the forefront of providing Engineering excellence through innovation since 1935.

atsuura Machinery PLC (UK) is a wholly owned subsidiary of Matsuura Machinery Corporation (Japan), & as a Group we are one of the most financially stable Machine Tool engineering solution suppliers in the World today. As a family owned concern since the company’s inception, promoting long term customer partnership & business integrity has always been at the core of Matsuura’s global strategy.

CNC machine tools & their associated production process solutions. Our product portfolio spans the whole spectrum of metal cutting CNC machine tools, supporting a diverse range of UK customers spanning all industrial sectors. Matsuura’s UK product portfolio is further enhanced by means of sole agency agreements with other equally prestigious brands within the world of high quality metal cutting products.

Matsuura in the UK are recognised as market leaders in the field of unmanned multi pallet & multi tasking

Investing heavily year on year in our UK support infrastructure is just one of the reasons why we continue to

maintain our leading market position. Our customers demand & receive unrivalled productivity, high accuracy & reliability from our products along with service, applications & technical support that is second to none in the UK machine tool supply chain.

Published in association with: Matsuura Machinery PLC (UK) Tel: +44 (0)1530 511400 Web: www.matsuura.co.uk

Automotive engineering MAHLE Powertrain

Powered up

MAHLE Powertrain provides unrivalled facilities for the production of complete engines, sub-assemblies, machined components and precision castings.

The

UK-based operations were formerly part of the legendary Cosworth Engineering Group and were acquired by MAHLE GmbH in 2005. Recent years have been tough, given a deep recession which has torn large chunks out of the UK automotive industry. MAHLE Powertrain has faced the challenges head on, and backed by a strong parent company has radically restructured and invested in new

Complex zircon sand cores

equipment, resulting in winning two major orders recently which will power the company well into the future. MAHLE’s facilities include an aluminium foundry in Worcester, using the patented Cosworth casting process, a plant for machining cylinder heads and blocks in Wellingborough and an engine assembly plant in Northampton. ‘We have all the capabilities to be a strategic partner for cost effective engine manufacturing, supplying OEMs at every stage from concept and design, through production to aftermarket support,’ says Stephen Large, operations manager for manufacturing at MAHLE Powertrain Ltd.

History - a racing edge MAHLE Powertrain’s casting process dates back to 1979. The MPT aluminium foundry uses a patented process which was originally developed to meet the exacting standards of race engines, and has evolved into a production process that offers the same benefits to volume production. Their casting process offers successful solutions for many applications including cylinder blocks, heads, brake components and other components.

British manufacturing means success for Mapal

t’s not true that Britain is no longer a good place for manufacturing, says John Claypole, Managing Director of MAPAL UK. British manufacturing is thriving and MAPAL should know: it manufactures in Britain and, as a leading supplier of cutting tools, it has virtually every major UK manufacturer among its customers. Manufacturers are investing in new tooling and MAPAL is servicing this boom – in 2010, its orders increased by 20% Why is MAPAL so successful? Its customers could buy tooling anywhere in the world – but that would mean sacrificing service and support. When a British manufacturer buys from a British supplier, it’s easy for the supplier’s experts to assess requirements on site. And tooling made in Britain means no shipping delays.

This applies to any tooling supplier with a British operation, so why is MAPAL special? First there’s the capability of its UK facility – it’s a full manufacturing plant capable of producing and refurbishing tools on site. Then there’s expertise: MAPAL is a world leader in tooling for metals and composites. And MAPAL’s service goes beyond manufacturing. For Mahle, it operates a tool management service. It takes full responsibility for Mahle’s tooling and charges solely on the basis of the number of components produced. In two recent major contracts won by Mahle, the company has nominated MAPAL as turnkey tooling supplier! These factors explain MAPAL’s success. It’s a local company, with exceptional products, unparalleled expertise and a commitment to support far beyond the ordinary.

John Claypole, Managing Director

Published in association with: MAPAL LTD Tel: (01788) 574700 Email: sales@uk.mapal.com. Web: www.mapal.com

Automotive engineering MAHLE Powertrain

MAHLE Powertrain at a glance Sector

Automotive engineering and off-highway

Sites

Worcester - aluminium casting, Northampton - engine assembly, Wellingborough manufacture of cylinder heads and blocks

Employees

500 in UK (200 in manufacturing)

Turnover

£30 million

Output

Aluminium foundry - 15,000 units per year Engine assembly - 2,000 units per year Cylinder heads - 100,000 units per year

Exports vs domestic sales

Domestic sales for JCB; Exports for Audi, Aston Martin

History

Formally part of the Cosworth Engineering Group, acquired by MAHLE Group in 2005

In-house facilities include a metallurgical laboratory, real time x-ray monitoring, co-ordinate measuring machines and a unique electromagnetic pump/metal delivery system, supported by a highly skilled team. The group has helped design and develop ultra-low volume prototype components and volume production parts, with a dedicated low volume production facility for supply of high performance castings. Success stories include production of the V12 block and cylinder heads for Aston Martin, the V6 cylinder head for Audi and V10 cylinder head for Lamborghini. Since the 1980s, MAHLE Powertrain’s road engine machining facility has supplied to major OEMs worldwide, with customers including Audi, Aston Martin, JCB and previously Ford, GM, Rolls-Royce. “We design and engineer manufacturing solutions to meet our customers’ requirements, from low-volume prototype or series cylinder heads and blocks, through to complete manufacture of multi-cylinder engine assemblies, matched to complex and ever-changing demands,” says Large.

Keys to success Keys to success are the ability to provide fast and flexible processes, short production lead-times and flexible volume capacity supported by highly experienced specialist engineers. “We can offer an economyof-scale approach to meet product requirements,” says Large, “with manufacturing based on a cost effective combination of capital and labour, process traceability and close cooperation with customers on facility and process development.”

MAHLE Powertrain’s cross-functional team approach is designed to ensure that projects are managed effectively and responsively as OEM needs rapidly change. With 30 years of machining experience, the company has a vast bank of automotive engineering knowledge to draw on. A year ago, MAHLE transferred its engine assembly lines from Wellingborough to Northampton. The Northampton facility includes a dedicated assembly logistics hall, which supports the assembly of cylinder heads and engines for OEM programmes. “The move gave us a dedicated facility which optimises production, improves plant layout, efficiency and cleanliness, and reduces stock movements. Optimisation has reduced stock movements very effectively.” The company mainly manufactures automotive engine components, and is currently doing work for Audi and Aston Martin as well as having a dedicated plant for manufacture of off-road diesel engines for JCB, featuring 21 Heller CNC machines. The other part of the business is consultancy for the automotive industry. Despite scaling down volumes due to the harsh impact of the recession, MAHLE Powertrain has restructured and feels well placed to respond to new and highly competitive markets. Strong investment in new automation also ensures faster and more effective response to demanding engineering challenges.

New investment In 2009, MAHLE invested £70,000 in new Ramsell furnaces for the Worcester based aluminium casting plant, creating better uptime, improved energy efficiency and greater throughput. The company has just signed orders for a new robot fettling cell. Traditionally, the fettling process, to remove the flashlines, is a very labour intensive and time consuming process. The £300,000 investment in the new Vulcan robot fettling cell will significantly boost productivity. MAHLE is investing about £4m in new production equipment for Wellingborough, including 12 new Matsuura CNC machines with 5 axis capability and a high pressure robot washing station from Dürr which will boost quality, process throughput and energy efficiency. There has also been significant investment in the building and power infrastructure to improve the carbon footprint and facilities in the production area. About £40,000 was spent on new energy efficient lighting, and the new power distribution

system will give the plant capacity for growth. Despite the recession, there was no problem raising finance as the German parent MAHLE GmbH is a foundation with strong financial resources, so there was no need to go to market for further funding.

Weathering the recession Admittedly, the recession hit MAHLE Powertrain hard. “There has been a lot of change since the recession really struck home in Q3 of 2008, resulting in significant cuts in manning and infrastructure. Major contracts vanished almost overnight, but fortunately we won two major contracts recently for the supply of machine cylinder heads and blocks for OEMs which will secure jobs for the next five years at Wellingborough and Northampton,” says Large. “The new investment will also enable us to offer customers the technical ability and flexibility for high quality supply of engine components for the future.” By serving a wide range of different markets including automotive, off highway and defence, MAHLE

Powertrain is particularly well placed to understand the different requirements, quality standards and tooling solutions necessary to meet increasingly demanding products and programmes. “We recognise the importance of achieving efficient process capability for all key areas, whether at high, medium or low volume. Today we are well integrated into the customers’ supply chain management systems, and have introduced account managers who work closely with customers.”

Continuous improvement Continuous improvement is a way of life and is embedded in all production operations, including casting, machining and assembly. There are monthly continuous improvement reviews of all lines, headed by departmental heads. Visual management is important. Every production cell features an area with KPIs clearly identified and lists of further opportunities for improvement. KPIs are reported separately to senior management, who feed quality data into the group headquarters in Germany. Kaizen events are held monthly by teams “and are considered to be a normal part of the working month,” remarks Large. The continuous improvement programme uses a broad toolset including 5S, Pareto analysis, statistical process control (SPC), Ishikowa diagrams, root cause analysis and total production maintenance (TPM). Key achievements of lean are significant reduction in set-up times, improved productivity, reduced downtime and more

Automotive engineering MAHLE Powertrain

Engines ready for dispatch

visual management. On time delivery in full performance with customers at Worcester, for example, is now 100% with ppm less than 0.5% failure. Before the downturn, MAHLE utilised Smallpeice as a consultancy for introduction to lean, and another government backed scheme to take some staff through business improvement techniques to NVQ level. “Continuous improvement is part of everybody’s job,” says Large. “Some group members have come over from Germany to advise on specific areas like root cause analysis, but the process is well embedded at all levels today.” MAHLE Powertrain’s manufacturing sites are focused on financial and quality KPIs to ensure that customer and business expectations are achieved. “Informing and involving the whole workforce in achieving the KPIs is vital for any organisation. The KPIs and the Balanced Scorecard approach enable all employees to see how their efforts effect the overall success of the business,” says Large.

Training Retraining has played a vital role in optimising operations, boosting

quality and process efficiencies. “All employees now have development plans with a view to increased flexibility and overall ability. The company supports all levels of vocational and academic training, up to and including MBA,” says Large. “We try to ensure that improvements identified by a team are acted on, and encourage the empowerment of employees to improve the way they work for the benefit of themselves and the company. Continuous improvement becomes a way of life.”

Sustainability MAHLE Powertrain has taken major steps to improve its carbon footprint. The Worcester plant has moved away from reliance on electricity towards gas for the furnace. “For all three sites we have mapped out the use of compressed air, resulting in changes to the way we use compressors. The deployment of energy efficient lighting at two of our sites will be extended to all sites in 2011.” MAHLE Powertrain has significantly reduced the volumes of waste to landfill at all sites. Most of their packaging is predominantly returnable or recyclable, and the company is ISO14001 accredited. ‘Sustainability is a win-win,” notes Large. “In the next six months, the introduction of the new robot washing cell will reduce the volume of water used, as well as improve productivity and quality of end components.”

Looking forward MAHLE Powertrain now sees a definite u-turn in terms of the recession. Having secured several long-term contracts, the company is now well placed to further invest in future growth, with a firm foundation and world class engineering experience to hand.

Sheffield uses the latest rotary ‘Unidrum’ stitching system

Polestar finds

true north Being focused on growing value for customers is an ideal which many in industry have struggled to support throughout recession, as cost cutting blotted every page. Not so at Polestar. TM finds out how the innovative printing company has stuck to a service driven mantra for confidence in troubled times.

It’s

one of the great perks of industry journalism that the variety of insight into business models, operational challenges and product innovations is apparently unending and frequently compelling. It is not often, however, that the interest comes quite so close to home as it does with Polestar. The Polestar Group is Europe’s leading independent printing company, offering an array of publishing services to a myriad of markets, including magazines, newspaper supplements, directories, financial services, travel and retail and direct mail. Looking over Polestar’s product range and service offerings from the point of view of a journalist, the value add propositions are striking. From a variety of high speed, high quality printing and binding services that make products similar to the publication you are holding now, they also offer complementary services around data management and document processing services for bespoke data base communications — and an innovative selection of cross media solutions so that targeted communications can be aligned across

Printing Polestar

Polestar at a glance Established

1998

Annual UK revenue

£30m

Key products

Printed goods for consumer and commercial magazines

Number of sites

20 sites located across the UK, Spain and Hungary

Points of interest

The company produces approximately 33 million magazines and supplements a week. In 2003 £100M was invested in a purpose built Sheffield plant which now employs 500 staff over 70,000 sq ft. The site is operational 24 hours a day, seven days a week.

a range of media for maximum benefit to the client. Polestar’s pride in, and determination to build on, its current position of strength is embodied in a clear mission statement that guides all of the company’s operations and innovations around products, processes and service. This statement declares that Polestar strives “to be Europe’s most customer-focused, innovative, and profitable printing company”. The way in which this mission manifests in practice is backed up by the company principles and policies, which look at the role to be played in achieving the mission statement by key stakeholders, including customers, employees, regulators, investors, suppliers and the communities in which Polestar operates. Support for these principles is given actively from top to bottom of the organisation. At Polestar’s largest UK investment, Polestar Sheffield, this means that MD Andy Reynoldson takes personal ownership of the way things are done day-to-day. Polestar Sheffield represents a £100m one-off investment for the Group, and leadership at the plant have been daring in their customisation. Automated technology has been applied to a range of processes almost unprecedented in the printing industry — and all with the aim of speeding up response time for customers and freeing up capacity to do more for them in the delivery of services. An example of this technology pioneering lies in a 2010 initiative to automate all work in progress and finished material movement within the Sheffield site. Ten Automated Guided Vehicles (AGVs) were purchased for this purpose, each equipped with laser guiding technology. Speaking volumes for

Polestar’s commitment to its internal stakeholders – its employees – as well as its external ones, it has been determined that no jobs will be lost through automation. At the project launch Reynoldson showed his appreciation of how the initiative would set the company apart from competition. “This project is an innovative installation within the print sector,” he said. Only a small number of printers worldwide use this technology and it is generally limited to despatch or paper reel handling only. At Sheffield, we intend to transport automatically multiple printed products from press to bindery then onto polywrapping and despatch... This project reflects Polestar’s forward thinking approach to maximise value for its customers.”

Sustain to gain Polestar’s customers themselves seem to agree with this, both in terms of Polestar’s efforts to optimise its processes but also with respect to its attention to detail in advancing quality and its commitment to going the extra mile. In the last few months of 2010, the Sheffield company received customer accolades from clients in a range of sectors, including Virgin Trains, which has chosen to exploit Polestar’s cross media offerings with a deployment of its HTTpublish systems, part of the Polestar Applied Solutions platform. National Magazine Company has also shown their faith in Polestar’s ability to deliver consistent value in product and service by awarding them a two year contract for the print and subscription distribution of one of the media group’s leading titles, Best magazine. Andy Parslow, group manufacturing manager at National Magazines, says: “Our long standing relationship with Polestar gives us every confidence that Best will be afforded the same level of quality that we experience with our current portfolio.” In addition to these specific proofs of Polestar’s ability to retain and develop customer relationships, the company received an ERA award in October 2010 winning European Publication Gravure Award for printing on improved newsprint. The award was attributed for their efforts with Telegraph Media Group’s Seven magazine. Constant improvement on all fronts characterises the Polestar attitude; in line with core value sets and the principles mentioned at the start of this article, this includes attention to environment and community. The company has rigorously assessed KPIs around environmental standards and a steering group which meets regularly to ensure the company makes no infringements or current legislation.

Polestar Being aware of the companyâ&#x20AC;&#x2122;s resource reliance on paper products, Polestar is committed to supporting the World Wildlife Fund, Global Forest and Trade Network, and to recycling all waste white and coloured paper collected on site. Polestar is also ISO 14001 compliant, and has many more environmental initiatives which reach across all the group companies and the intervening supply network. The importance of a responsible attitude to environment at Polestar is driven by the buy-in of chief executive Barry Hilbert, who sees the importance of thinking about the long term sustainability of competitive excellence at Polestar. It is a leadership attitude which extends to ensuring that talent is nurtured in the next generation of industry leaders; Polestar works extensively with schools, teachers and training providers to promote awareness of industry opportunities and to develop appropriate qualifications for the future needs of the industry. Manifesting these good intentions in actions (and more than

just printed words), the company has developed an award winning training programme which informs on different print processes from gravure through flexographic, weboffset and screen printing, as well as educating on related processes such as ink and paper manufacture and the production of industry-standard pdf documents. The enthusiasm and engagement that this scheme provoked also led Polestar to become actively involved in the development and delivery of a nationally recognised manufacturing and product design (MPD) Diploma for 14-19 year olds. This qualification was greeted extremely favourably by representatives from Sheffieldâ&#x20AC;&#x2122;s local schools, but recent restructures in the skills landscape and government cuts in spending have cast doubt over the future of all the Diploma style qualifications. This seems a great loss to the young people who might have befitted from hands on experience at a company like Polestar, but luckily the internal apprenticeship programme is still going strong. There were some who might have said five years ago that the future of printed literature was finite â&#x20AC;&#x201C; that quickly advancing new media formats and the web were sounding the death knell of the printing industry. What Polestar is proving is that a determination to exploit all available technology and delivery methods for outstanding customer value apparent threats can be turned into enhancements and furthermore, that such a spirit of adaptability will ensure new talent is constantly attracted to give its contribution to an organisation which is not afraid to change.

Fastening systems Alcoa Fastening Systems UK

sun

AFS has its day in the

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

Launched

to overcome the inherent weakness of standard lockbolts, the BobTail fastening system (see box over page) is designed without a traditional pin-tail, delivering the elixir that Alcoa’s industry has long sought: zero wastage. Stefan Biela, the company’s manufacturing manager, takes up the story. “Essentially, fasteners designed with a nut and bolt feature require periodic retightening. With the BobTail you do it once only — a process that takes two seconds maximum, with no waste material whatsoever,” he says. The BobTail is much quicker to apply and fasten than a conventional thread fastener, using the special applicator gun in an operation that takes seconds. “When you’re talking about solar fields [concentrated solar power, or CSP], which may require hundreds of thousands of fastened mirror devices, we’re saving the maintenance team a lot of time.” With a single order of 300,000 devices being installed by a customer in mid-November, those at AFS are understandably energised by their new discovery. While not designed with solar power technology in mind, the company is registering interest in markets well beyond the BobTail’s predicted sphere of influence. “I’ve been told that you can see the solar farms from space, and we’ve got a fundamental component of this burgeoning technology,” says Alcoa Business System manager, Jonathan Griffiths. Purchasing the raw materials from within the UK and further afield, not only is the wider UK supply chain

Fastening systems Alcoa Fastening Systems UK

Alcoa Fastening Systems at a glance At a glance

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

Products

Fasteners/lockbolts/blind rivets/installation tools

Location

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

Annual turnover

£19m

Employees

Contact

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

benefiting from a bona fide success story, but Telford — not immediately considered as a manufacturing hub — and the local community find themselves benefiting from AFS’s success, too. “If BobTail was based on nuts and bolts then, yes, the work might go to China,” adds Biela. “But we’ve got the technology, techniques and skills to sell — the result of which means that this industry-leading product is, and will continue to be, manufactured in the UK.”

Getting down to business improvement techniques “The first thing many companies do during recessionary times is cut back on staff training — we did the opposite,” says Griffiths. In 2009, co-funded with Telford College of Arts & Technology, AFS undertook a programme of NVQs for every employee on site: Level 2 in both Performing Manufacturing Operations and Warehousing, and Level 3 Business Improvement Techniques (BIT) for those in management roles. With all trainee engineers, deputies and cell managers being NVQ Level 3-accredited, Biela and his cohorts are looking to roll out Level 3 qualifications throughout the manufacturing side of the business. Unlike the other NVQs, which are necessarily more focused on assessing whether the person does his or her job to a national standard, the NVQ BIT has a stronger focus on delivering back to the business, be that in terms of cost, quality, time, or health and safety metrics. Jonathan Griffiths says this focus on continuous improvement is a particularly pleasing aspect of AFS’s drive to combat what have been challenging times for British manufacturing. “We regularly receive

BobTail® – The next step in LockBolt evolution Benefits: No pin-tail or pin-break Reduced material wastage Low installation noise Increased corrosion resistance Newly designed, compact, semiautomatic tooling Fastener installs in only 2 seconds, up to twice as fast as any other large diameter LockBolt on the market Consistent, high quality installation - 25 years experience or a novice makes no difference to the quality of the installation Smooth, shock free installation sequence – eliminates jolts to the operators arms and hands Unique helical lock groove (12 - 20mm diameter only) Holds pin and collar in place prior to installation Combined with all the benefits of using a Huck LockBolt Permanent, mechanically locked fastener: Installation process automatically provides fastener values No torque or re-torque required Unlike conventional nuts and bolts, they will not work loose, even during extreme vibration Easy visual inspection ensures correct installation

visits from both management and engineers in the US, France and further afield, because the staff development work we do is looked upon favourably across the group,” he says. “In the US, for example, there isn’t any form of national qualification like the NVQ. They’d love to take the BIT programme and implement it in their plants, so we’re very much an exemplar in that respect.”

Lean on me Central to maintaining AFS UK’s global reputation within Alcoa is the Alcoa Business System (ABS), a group-wide performance standard. The integrated set of systems, tools and language is organised around three core standards:

Kiveton Park Steel Limited K

iveton Park Steel, founded in 1922, is in continuous family ownership, servicing OEM, Tier 1 and Tier 2 supply chains in the automotive, aerospace, defence and precision engineering sectors. Alcoa Fastening Systems represent an excellent example of a supply partnership focussing on product quality and logistical support. Kiveton Park Steel is accredited to ISO/TS 16949, BS EN 9100, ISO 14001 and specific customer approvals, subject to regular audit visits confirming the quality assurance standards at the company. Customer service is a specific benefit provided by a dedicated in house team, with bespoke supply agreements for individual customers, including strategic stocking to accommodate the sudden schedule changes common in many sectors today. Kiveton Park Steel processes a

multitude of carbon and alloy engineering steels supplying round and shaped section wire and bar to customers globally. Most steels processed are heat treated in the companyâ&#x20AC;&#x2122;s many furnaces including hardening and tempering and spheroidise annealing in a continuous atmosphere controlled environment vital for the production of quality fasteners at Alcoa. There are other facilities, on the same site, offering surface grinding, chamfering, sawing and in line or off line surface defect detection for critical

applications. Continuous investment ensures the company meets the latest specification demands with the latest generation ultrasonic equipment for internal inspection of steel bars, upgraded heat treatment facilities and a new technical centre early in 2011. This particular supply partnership with Alcoa Fastening Systems continues the long established tradition within Kiveton Park Steel managing relationships with like minded people to meet the ever increasing challenges of the international marketplace.

Published in association with: Kiveton Park Steel Limited Tel: 01909 770252 Email: webenquiries@kpsteel.co.uk Web: www.kpsteel.co.uk

Fastening systems Alcoa Fastening Systems UK

(i) make to use (ii) eliminate waste, and (iii) people are the lynchpin in the system. “There is a huge difference between ordinary production and the ABS, the latter being focused on a multi-departmental approach to the way our business runs,” says Biela. It’s a complete shift towards lean manufacturing philosophies, in other words.” Because Alcoa sites are attuned to the benefits of the organisational approach, the AFS Global head office in Waco, Texas continuously benchmarks each business unit’s performance. “When we report to Waco, detailed discussion around our site’s ABS figures is expected. If it isn’t raised the inference is that we don’t consider it important,” Biela continues. “A lot of companies that ‘do’ lean give it twenty minutes here and there. At AFS it’s fundamental to the fabric of our operations: health and safety; continuous improvement; quality – every single day. Yes, the acronyms and buzzwords have their place, but the big principles remain so much more important.”

At the operations level, having recently recorded November’s ABS metrics, Griffiths reports an exposure rate of 65% — the percentage of employees on site who have been involved in ABS for any particular month. Measured both internally and by AFS’s external operational excellence audit, Telford was awarded three Best Practice grades on the last review. “We’re sprinting into 2011, and relish each and every opportunity to both demonstrate and benchmark the advances being undertaken at Telford. To the future, then!”

At AFS it’s fundamental to the fabric of our operations: health and safety; continuous improvement; quality; every single day Stefan Biela, manufacturing manager, AFS Meanwhile, quite how much the BobTail fastener will revolutionise the fastening applications market remains to be seen. Judging by the size of the single 300,000 unit order last month though, AFS is bullish that the solar energy market and other general engineering applications will take its company even further up the growth curve. Productivity will be essential, however, and the NVQ BIT programme is confronting constraints with a tangible solution.

Logistics train in motion

Engine of

growth needs a best in class filter

As pressure on the UK divisions of foreign companies to perform increases, Will Stirling meets a German company in the UK beating its European competition to win contracts. Its secret? Operational Excellence, yes, but also its total commitment to the professional development of its workforce. This above all, says managing director of MANN+HUMMEL UK, Ivor Ng, gives his company the edge.

An Operator checking for Zero Defects

Manufacturing

output is in the ascendancy and one reason for this is that UK-based manufacturers are obsessed with productivity. They need to be, as the UK divisions of foreign-owned companies have to compete for work both with other companies and with the European sites of their own parent organisation. The pressure to hit productivity metrics and delivery targets is even higher when sites across Europe are competing more fiercely than ever with OEMs who have no regional loyalty. MANN+HUMMEL (UK) Ltd (MHUK) is a good example of such a company. The parent, original equipment supplier MANN+HUMMEL Group, employs 13,000 people at 41 locations worldwide and posted a record turnover of Eu2bn in 2010. MHUK makes filtration systems and plastic components for automotive OEMs, industrial applications and provides aftermarket distribution for the UK and Ireland. For OEM production Europe is the larger market – the Volkswagen Group is its biggest customer. MANN+HUMMEL has factories across Europe, where some would have a location advantage over MHUK and certainly a labour cost advantage in countries like Bosnia. Yet MHUK has won new business from European customers this year. How? “We need to prove that we are better, in terms of quality, in terms of efficiency, in terms of service and speed,” says managing director of MHUK Ivor Ng. “This year we have won major contracts with auto OEMs to secure the manufacturing base in the UK in the mid-term, even as some of our current projects are ramping down – we have secured replacement business for the existing high volume work, against European competition.” How exactly has it done this? Mr Ng distils the reasons into two main parts: corporate culture and Operational Excellence. Neither of these are unique to manufacturers, but the efforts poured into both have delivered external recognition for MHUK for people development, as well as the ultimate prize, new business. Large companies often have their own proprietary system of business improvement, which for manufacturers can be a rebranded interpretation of ‘The Toyota Way’ or TPS. MANN+HUMMEL Group devised the MANN+HUMMEL

Filtration systems MANN+HUMMEL UK

Management System, or MMS, an internal business system and lean programme, devised to achieve world class manufacturing standards. In 20032004, it rolled this out globally.

People development Putting culture at the heart MHUK has made its people a core business pillar. This costs time and money, but the decision has paid off. In 2010 MHUK was awarded the ‘Investors in People’ Gold Standard, a standard achieved by only 2% of the companies who apply. On December 10. MHUK was named Employer of the Year 2010 by The City of Wolverhampton College. It is one of six finalists in the Midlands Excellence competition in the Training and Development category. “Our entries for these awards always cover the whole approach to training and staff development, not just on one area or programme,” says chief financial officer Neil Davies. Internal promotion is a big part of MHUK’s people focus. “We’re proud that almost the whole management team has been internally developed and promoted,” says Ng. “Neil, who was recruited externally due to specialist expertise, is the one exception but everyone else, myself included, has held previous positions within MANN+HUMMEL UK.” This fortifies employee loyalty and focus, Davies says, with labour turnover year-todate at just 0.66%. The company has a Management Leadership and Development Programme which appears to be working – 57 employees or 43% of the staff have been promoted at some point since they joined MHUK. Absence rates, year to date, are 1.6% while the (automotive) industry average is 2.7%. It seems that employees at MHUK are keen to come to work, put in full days and want to stay here. Several programmes have contributed to this success. The company has a Learning and Development (L&D) model which aims to recruit, develop and retain the right employees in the right jobs in order to achieve MANN+HUMMEL Group business objectives. Part of this is to develop MHUK into a learning organisation and an employer of choice, i.e. “a great place to work”. In 2002 the company first chose to be assessed by an external auditor against

the independent ‘Investors in People’ (IIP) standard, which provides a benchmark of HR management strategies and practices. MHUK has held the IIP accreditation ever since and was awarded the IIP Gold standard in 2010. “It’s important to know, this is based on employee feedback,” says Mr Ng. “The auditor is not just talking to the directors, but 25 per cent of our workforce were interviewed for this.” It has made employee empowerment one of the pillars of its Learning & Development model. A good example of this was in 2007 when the plant layout was reconfigured following a thorough workflow analysis, comprising building several one-piece flow cells and a one-way “train track” for inventory delivery and collection. Staff at all levels of the organisation were fully involved in the planning process and in moving and locating the equipment, including at weekends, so when the finished lay out was installed they had true ownership of its design and function. By December 8th, MHUK had delivered 764 training days to staff (shop floor and administration) year to date, and it also runs an Employee of the Quarter Programme. There are currently seven apprentices at the company. The apprenticeships map out a clear career path which includes continuous educational and technical support throughout. MHUK has a clear business and education support mandate, where it offers factory tours to other local businesses where its work in continuous improvement in manufacturing and corporate culture are showcased to third parties. It also delivers and participates in seminars and job fairs for local universities. It has close ties with local Wolverhampton higher education, supporting Wolverhampton University Business School’s Human Resource and Development course by offering a placement within MHUK. And it partners with City of Wolverhampton College on its apprentice programme, and on the Skills for Life initiative which offers regular training sessions to operators and staff alike in Wolverhampton site. MHUK also runs incentive bonuses, occupational health courses and hosts an annual family day in the summer, all in an effort to get the best from its extremely loyal workforce.

Return on investment How does it measure the return on this investment? For one energy consumption and saving exercise, the company tracked the hours invested to train and invested in the time spent on the project. It totalled the hours at a rough cost of £20 per hour and added the training materials cost. Savings were in cost avoidance – the measured Climate Change Levy – and in reduced energy consumption of 555,600 kWh. The net saving less costs was over £50,000 p.a. Ivor Ng says the loyalty and high promotion rates pay off also in achieving productivity targets, where staff and operators are always prepared to give that little bit extra to meet a target as they are proud to be part of the MANN+HUMMEL family. MHUK had to lay off 45 employees during the crisis in 2009. The company is now hiring again and over a third of those redundant staff have been rehired. “It’s interesting that the ‘Investor in People’ audit, which is employee-led, was carried out just after the cutbacks and we still achieved a Gold standard,” says Ng. MHUK’s other manufacturing site in Chard, Somerset implemented short-time working to minimise redundancies, which operated on a bank system.

The time not worked was banked and employees were given an opportunity to make up for those hours that were banked, as business hours recovered. This won Chard the EEF’s South West Region award. Mr Ng emphasises that some parts of MANN+HUMMEL’s HR programme are group initiatives but several are devised within MHUK, such as the Management Leadership and Development Programme.

Operational excellence World Class Manufacturing – the MMS way The second pillar for MHUK’s business after HR is Operational Excellence, the area which Ng says needs continual focus to compete at greater cost parity with Eastern European and other low cost countries. The company has broken down the component parts of its business to achieve what it perceives to be world class manufacturing standards. MHUK’s World Class Manufacturing structure, rolled out by Group in 2010 under the name ‘Production Basics’, forms a circle with five interlinking components: • People Development (see above) • Safe, Organised and Clean Work Area • Robust Processes and Equipment • Standard Work, and • Rapid Problem Solving

Some of the parts of this Operational Excellence model are familiar, such as targeting exemplary health and safety records and using Continuous Improvement tools. But MHUK has also created a full-time Zero Defect Team, whose job it is to scour the UK sites for any product defects, trace the source of defect and eliminates it. Filtration systems and technical components, by their nature, need to fulfil the highest technical specifications. Large orders from the auto OEMs are contingent on super-high product reliability. For serial production of the volume items, part of MHUK’s competitive advantage lies in material flow and low inventory. “Many of the tools you’d find in the Toyota system come out in the MMS System – kaizen rules, value stream mapping, kanban systems,” says Plant Manager at Wolverhampton, Paul Chapman. “The UK needs to be ‘best cost’ – in the last six years we’ve concentrated a lot on material flow through the site, with a high emphasis on logistics and removing waste from our processes.” Mr Chapman demonstrates the U-shaped factory lay out, parts delivered in one end and smooth flow through the production zone via assembly cells into finished goods. This is fed on a simple pull-flow system, with a specific stocking profile for finished goods. “When a customer takes a single box, it sends a message to production to make another set. When a box of parts is close to empty, it signals to the materials department to replenish – we are aiming to keep inventory to a minimum using pull flow systems to control our production.” To and improve Health and Safety and reduce waste, forklifts are banned in the production zone, only being used in finished goods. Everything is collected and delivered on a train system, where the driver has an optimum cycle takt time. “Material flow is fluid, all collections and replenishments are made on an 18-minute cycle,” says Chapman. “As long as I have the set level of stock in finished goods it will control production and allow us to meet any fluctuations in

MANN+HUMMEL(UK) Ltd at a glance

Location

Wolverhampton (240 employees), Chard in Somerset (60 employees)

Sector

Automotive

Main products

Filters – air filtration systems, intake manifold systems, expansion tanks, fuel filtration components and associated components, mainly injection moulded. Centrifugal oil filter systems (Chard)

Employees

300 in the UK

Turnover

£65 million forecast for 2010. This would be a record for the UK division. MANN+HUMMEL group Eu2bn worldwide in 2010.

Key productivity metrics

HSE; Quality focus with zero time defects (full-time team); CI; Lean principles implementation; Zero non-compliance in TS16949 certification; internally benchmarked Supply Chain Management; Benchmarking within the Group shares best practices

Main business improvement system

MANN+HUMMEL Management System (internal)

Awards

Investor in People Gold Award, Wolverhampton Employer of the Year, EEF South West Region (Chard site).

Collaboration with education

Partnerships with City of Wolverhampton College, the University of Wolverhampton and Polymer Training and Innovation Centre

Filtration systems MANN+HUMMEL UK

demand we get.” Low volume orders of discontinued parts, where batches can be in the 10s of units, are produced in a separate OES production cell which is isolated from the volume manufacturing lines. MANN+HUMMEL may support parts for certain models (auto and industrial) for between 10 and 20 years after it has ceased production. Kaizen and Value Stream Mapping have been done to the nth degree in MHUK’s production cells, to establish the best cell configuration and the optimum working position of the operators. “This considers both health and safety and lean concerns, giving good ergonomic design and reducing waste in excessive movements,” says Paul Chapman. Lean is good, but Ivor Ng acknowledges that being very Lean on inventory puts enormous pressure on the reliability of the processes and the supply chain, to ensure customer deliveries running on such low levels of stock.

Clean means lean The Safe, Organised and Clean Work area basic is essentially 5S with some

important additional parts; there is a health, safety and environment committee, each department has a qualified representative and there are regular risk assessments. Zoning demarcation within assembly cells is very heavy at MHUK, “so equipment that is out of position flags that we are running away from process,” says Chapman. It’s a fine level of analysis, but it is done to eliminate defects. MHUK also uses techniques like the 4-eye principle and 5Y and 2H approach to identify root cause. Crucially, for the staff, there is also a monthly bonus incentive to keep working areas in 5S perfection, and results are displayed clearly in the factory. Combining, and crucially synchronising, all the components of the MANN+HUMMEL Management System, expressed as MMS Production Basics, at Wolverhampton and Chard, is a big challenge. But it is working, exemplified by new and big orders. For example, MHUK recently won the contract to provide a large European OEM with all the air filters for its new vehicle platform, launching in 2011. Ivor Ng, Neil Davies and Paul Chapman are convinced that this success can be credited to the company’s efforts driving People Development and the Operational Excellence components like Robust Processes and Equipment and Standard Work. Is inter-site competition healthy, for M+H Group? Its part of the natural sporting culture in the UK, says Ng. “Whenever we are benchmarked against other sites, we like to win. Or if we don’t win, to know why not and where we can improve.”

Specialfeature BRIC Venture Watch

Antonov TX-6 transmission Companies considering a Chinese joint venture who have a range of concerns about working with a Chinese partner would do well to look at Antonov’s TX-6 programme.

Partnerships

in China

are complex: concerns arise over the technical capabilities of the Chinese company, intellectual property, and distance from the UK. British specialist automatic transmission manufacturer Antonov created a Chinese joint venture (JV) to develop its new TX-6 automatic gearbox for volume production. Chongqing EFA Transmission, a 50/50 JV between Antonov and Chinese transmission component manufacturer Chongqing Landai Industry Co Ltd was agreed in November 2009. A licensing agreement for the technology, worth Eu20m, was signed in February 2010. Antonov has invested the first tranche of 3.75 million renminbi (approx Eu400,000) of working capital into the new company. The TX-6 six-speed automatic gearbox is for conventional powertrains and was designed and developed in the UK. Antonov, which is listed on the Amsterdam Stock Exchange, has a long history of doing business in China, so while this gives the company an obvious advantage over UK SMEs new to a Chinese JV, it was an obvious place to manufacture and market a new gearbox for the mass market. TX-6 claims to be more efficient than existing conventional torque converter automatic transmissions, and the design is protected by worldwide patents. In November, the Chongqing JV signed a purchase agreement commitment with Lifan Motors for a minimum of 20,000 TX-6 units to be supplied in 2012, which can increase to 5,000 units per month. To ensure the TX-6 gearbox is competitively priced for the China domestic market, most of the subsystems will be manufactured locally by the joint venture and other Chinese domestic automotive suppliers. This includes parts produced by Conti Temic Microelectronic, Hofer Powertrain and Magna Powertrain.

Capacity and growth potential Construction of a new factory in Chongqing is underway with start of production scheduled for

Further information is available at www.antonovplc.com, on Chongqing Landai at http://en.cqld.com and for info on the TX-6 JV, contact rpalmer@palmerpr.com

late 2011. Initial production capacity is planned to be 200,000 units. With the continued growth in Chinese car production, the future launch of TX-6 product variants for different vehicle sectors, and the potential to export the transmission to other global territories, it is expected that annual production could increase to 500,000 units. Antonov says the JV’s success has heloed it to increase headcount in the UK to 50 staff, many of whom are design engineers. Technically, Antonov claims the mechanics move more easily than a conventional dual-clutch transmission. “The architecture of our transmission is to have a clutch for each gear,” says chief operating officer Simon Roberts. “There are no complicated multi-clutch shifts. We can go easily from any gear to any gear simply by opening one clutch and closing another.”

Teething problems The project has not all been plain sailing. The TX-6 demo platform is a VW Golf; when they test this, the first customer Lifan Motors may say that it drives and shifts very well in such a mature European product while, as Roberts says, some Chinese OEM vehicles don’t even have electronic throttles – a big problem for an automatic transmission. Antonov is working with those OEMs to encourage them to upgrade their cam and throttle systems to get the best from the TX-6 technology. “I’m very happy to have come now to the point where we can be commercially successful with Antonov’s TX-6 in China,” says Jos Haag, Antonov’s chairman. “Now that we have secured the first agreement, we are in a very good position to win additional clients.” Ni Hongfu, president of Lifan’s Powertrain Division, commented: “After seeing the TX-6 transmission successfully installed into our LF620 vehicle, we are happy to make a commitment to purchase 20,000 transmissions during 2012 for our LF620 programme. This will make this vehicle much more marketable to both our domestic and export customers.”

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

www.columbusit.co.uk 0800 0433 054