The Manufacturer January Issue 2012 by The Manufacturer

www.themanufacturer.com January 2012 Vol 15 Issue 1

Back to For smarter youth engagement

Manufacturing leadership Lingua franca – Speaking the language of export success

Clegg: in defence of RGF

The Deputy Prime Minister justifies delays in funding delivery

Finance and professional services

The other Dragon’s Den – The Business Growth Fund’s unrequited love for manufacturing

Special Feature

Jump the dump – Crown Paints’ journey to zero waste to landfill

Save the date:

March 6 2012 Interview Andrea Thompson MD, Leyland Trucks

Factory of the month BAE Systems, Rochester

See p40 for more details on this event

Editor’s comment

We live in interesting times The end of 2011 cast a strangely portentous hue over the New Year. The unfolding saga of the eurozone crisis and Britain’s relations with her EU neighbours took the headline spot in December ahead of yet another rise in British unemployment, a flurry of private sector strike action and other gloomy economic news. But, as Dick Olver, chairman of BAE Systems commented at the Financial Times Future of Manufacturing conference, we had only then seen the first act in a play of many parts with Cameron’s dramatically reported veto of the EU treaty. (See p4 for industry comment on this) Similarly, for exporting manufacturers, we should also remember that while we must maintain our concern for European trade relations, which make up a significant proportion of our exports, this destination is only a drop in the ocean when compared to the potential of newer, more buoyant markets. Perhaps insecurity in Europe could act as a spur for UK companies to explore these opportunities more fully? A CBI report released toward the end of last year highlighted a potential £20bn to be released into the UK economy if the number of exporting medium sized businesses in Britain can be raised – a figure which government later raised to £30bn. Breaking this potential down, it is soon clear that the most lucrative destinations for goods and services are not within the EU but in the BRICs and a hive of other rapidly expanding economies in South East Asia, the Middle East, Africa and South America.

20 36

Who do these markets hold potential for and how do you go about establishing an export strategy if you are new to the game? These are questions TM will be asking throughout 2012 and which we start to touch on in this month’s article Lingua Franca (p26). Before setting out to conquer international markets however, UK companies need to be sure that they are globally competitive. One measure of this will be their investment in the best manufacturing kit – and this will require a better flow of cash from banks to support strategic investments, under terms which reflect the nature of manufacturing returns. While access to suitable finance is often cited as a blocker to UK manufacturing growth – there are signs that this is changing. There are a number of initiatives to provide SME firms with equity finance – such as the Business Growth fund (p48) – and asset financiers like Lombard are keen to prove they have an appetite to invest in manufacturing firms (p41). Indeed Alex Baldock, Lombard MD, will be beating a drum to this effect at EEF’s National Conference on March 6. Cover image: Will Stirling says manufacturing needs to get smarter not busier in its efforts to engage with schools and raise industry profile (p14)

So, while the mainstream press focuses on the undoubtedly dramatic macro political and economic turbulence of our present day, there are reasons for manufacturers to be optimistic and ambitious in 2012 (p50). Jane Gray, Editor

28 70 1

The team Nick Hussey, Managing Director Nick has 20 years of experience in the publishing industry spanning titles in the UK, US, Asia and Australia. In addition to his commercial enterprise experience Nick has also worked in government, spending a year as Managing Director of Manufacturing Insight, a programme aimed at changing the image of Manufacturing. He holds several non-executive directorships and is a founder member of the IET’s Manufacturing Policy Panel. n.hussey@sayonemedia.com

Editorial

IT Editor Malcolm Wheatley malcolm@malcolmwheatley.co.uk

Associate Editor Roberto Priolo

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Editorial Assistant George Archer

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Art Director Martin Mitchell

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Henry Anson, Sales Director Henry is a shareholder in SayOne Media (SOM) and responsible for the company’s commercial activities developing new concepts and products for The Manufacturer’s readership. Henry is keen to build a bridge between the manufacturing community and sector which supports them. h.anson@sayonemedia.com

Designers Alex Cole Vicky Carlin

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Will Stirling, Editorial Director Will edited TM for two and a half years and now is working to expand the SOM publishing portfolio. He is responsible for the launch of new reports and special supplements for The Manufacturer and for the maintenance of editorial standards across SOM publications. Before joining SOM Will worked for Euromoney and IPC Media. w.stirling@sayonemedia.com

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Jane Gray, Editor

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Jane joined SOM in 2009 for the launch of the Lean Management Journal, sister publication to TM. Reporting concurrently for The Manufacturer, Jane focused on industry skills development features and lean enterprise until she became editor in June 2011. j.gray@sayonemedia.com

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Contents 04 News and regular columns. A whistle stop tour of manufacturing news and events in the last month along with commentary on industrial research, legal issues and economic challenges for manufacturers

11 Naked Engineer

This month NE exposes the tainted nature of executive pay setting and considers proposals for regulation

14 Lead Youth engagement can work smarter not harder: Will Stirling unpicks the tangle of initiatives for youth engagement and industry promotion in attempt to find a leading, cohesive voice for the future of manufacturing

20 Interview Team Captain: Will Stirling speaks to Andrea Thompson, MD of Leyland trucks about the forces at play behind the company’s widespread acclaim for operational excellence

Pillar features 26 Manufacturing leadership

Lingua franca: Jane Gray discovers what is holding UK manufacturers back from exploiting international trade opportunities to their full

36 Clegg: in defence of RGF: Thomas Moore speaks to the Deputy Prime Minister about the delivery of promised support to manufacturing businesses 37 Workforce and skills

Big Bang Diary: Paul Jackson, CEO of EngineeringUK puts the importance of the UK’s largest careers event for young scientists and engineers into the context of his organisations recently released annual report

39 Employee of the month: Alasdair Mercer of Surgical Innovations 46 Finance and professional services

Another string to the bow: Tim Brown speaks to GE Capital about the potential benfits of using accounts receivable finance

48 The other Dragon’s Den: Explaining the Business Growth Fund and questioning why it is failing to find traction with an initiative weary manufacturing community

60 IT in manufacturing

Opportunity ahead: Malcolm Wheatley reviews TMs recent Business Intelligence Connect conference and reflects on delegate comments on the technology

64 IT news

Special features 24 Jump the dump: Jane Gray finds out how and why Crown Paints has achieved zero waste to landfill 28 In the fast lane: Investigating the qualities and achievements behind engine manufacturer Cosworth’s triumph at The Manufacturer of the Year Awards 2011

Manufacturinginaction Each month TM conducts interviews and case studies with companies from the whole gamut of UK manufacturing from large multinationals to niche SMEs across sectors. This month TM visits:

74 BAE Systems: Rochester – Aerospace and defence 88 Coca Cola Enterprises – Beverages 98 CHH CoNex – Cable assemblies 102 Metal Spinners – Component engineering 104 Ford Motor Company – Automotive 108 The last word

Jane Gray investigates the value of Vince Cable’s recently announced Advanced Manufacturing Supply Chain Initiative

Manufacturing ENVIRONMENT

EU TREAT Y

December 2011 saw controversy over UK actions with regards to the eurozone and Prime Minister David Cameron’s decision to veto the EU treaty over concerns for the UK financial services sector. The repercussions of this decision are ongoing and the longterm impact on UK trade is not yet clear but below is a range of industry comment and commentary on the wisdom of Mr Cameron’s actions and the potential outcomes: Dick Olver, chairman of BAE Systems: “What has happened so far is a short preamble in a multi-act play – but let’s look at some of the facts. Has our exchange rate and not being in the euro been an advantage to us lately? Absolutely yes. We export forty per cent of our goods into the euro area so clearly having the common economic area is hugely valuable. So I think not signing up to a blank cheque was the right thing to do and a brave thing to do.” Will Hutton, principal of Herford College, University of Oxford: “Both CBI and even the British Banking Association have said that there was nothing on the table [for the EU treaty] that threatened British interests...The financial transactions tax was a phantom threat. [Cameron’s actions] were therefore a major failure of British diplomacy. We have now made it much harder to defend the things we want to defend. I think it is a gigantic cock-up.” Ian Rogers, director UK steel: “With around forty per cent of the UK steel industry’s sales going to other EU countries, the single market is crucial for UK steel companies. The UK’s vetoing of the proposed Treaty amendments does nothing to change this. So in the short to medium term, the Prime Minister’s veto does not damage manufacturing. There is a risk that in the longer term, with the UK not participating in meetings dealing with European economic convergence, the UK’s stature in Europe could be diminished. “What was most striking about last week’s decisions in Brussels was that they signally failed to address the most urgent problem – the present eurozone crisis. The new proposed Treaty might help prevent such crises in the future, but does nothing for the present one.”

Andrew Churchill, Managing Director of JJ Churchill

Trade body EEF released a report titled ‘Green and Growth Solutions for Growing a Green Economy’ at a launch event in Westminster on December 13. The report follows on EEF’s Green versus Growth research and suggests ways in which UK green policy might be better structured to support growth and attract investment. The report calls for a move away from policies focused on taxing carbon, consolidation of the Carbon Reductions Scheme and the abolition of the Carbon floor price among other measures.

NUCLEAR Andrew Churchill, managing director, JJ Churchill: “The veto is an utter irrelevance. The elephant in the room is the fact that the euro is in intensive care. It appears that without it splitting, the southern European, ‘club-med’ economies will not be able to address this fundamental issue of competitiveness and this constant issue of loans will simply become grants – gifts from the German tax payers to the Greeks. That would not be sustainable. From a manufacturing perspective it is absolutely imperative that we have a free European market. But Norway and Switzerland are a part of that – yet they have far fewer commitments than the UK. I think we can still be good Europeans – but the use of the veto was useful in drawing a line that we can’t cross.” Charles Morgan, managing director, Morgan Motors: “We have got to get clear the costs and the benefits of being a part of the EU and at the moment discussion seems to be entirely focused on the costs – of loans et cetera. The benefits of free trade, collaboration and common standards on issues like vehicles approval far outweigh these costs. Over the last ten years Morgan has had a massive increase in sales to Europe that I doubt would have been possible from outside the EU. “I worry about the motive behind the veto of protecting the City. Cameron threw the weight of our entire economy behind protecting a small enclave that is a minieconomy with rules unto itself.”

Sheffield Forgemasters has improved its accreditation status for the manufacture of products for the civil nuclear market place. The company upgraded its American Society of Mechanical Engineers (ASME) accreditation in order to expand its nuclear capabilities. It is now qualified to weld and fabricate critical components for use in the heart of civil nuclear plants across the globe.

M&A UK Aero-engine component manufacturer, MB Aerospace, announced the acquisition of USbased Gentz Industries in a multimillion dollar deal in December 2011. The takeover doubles the size of MB Aerospace’s operations and expands the company’s international network of customers. Detroit-based Gentz Industries has an annual turnover of $43m, the move creating an international brand with total revenues in excess of $80m per annum.

News NUCLEAR Westinghouse Electrical Company, a major nuclear contractor, has been awarded Interim Design Acceptance Confirmation and Interim Statement of Design Acceptability for the manufacture of its AP1000 nuclear reactor in the UK. The accreditations were awarded by the UK Office for Nuclear Regulation and the Environment Agency on December 14, 2011.

SKILLS On December 8 Make It in Manufacturing, an initiative designed to inspire young people to pursue manufacturing careers through hands on experience in manufacturing challenges, school open days and careers fairs, celebrated its fifth birthday. Make It in Manufacturing is run by The Manufacturing Institute. Rolls-Royce employee, Nikki Cusworth has won the first ever UK Inspirational Technician Award. The award was devised by vocational education charity STEMNET and Lord Sainsbury’s Gatsby Foundation to recognise the contribution of technician level skills to the UK economy and competitiveness. Ms Cusworth is a quality improvement technician at Rolls-Royce in Glasgow.

Datesfor yourdiary January

25-26

Shingo is hosting a two day workshop entitled The Shingo Prize Approach to Operational Excellence Workshop at the Royal Mint in Llantrisant, Mid Glamorgan. Email info@manufacturinginstitute.co.uk to book

The Institution of Mechanical Engineers is holding a one day event entitled Triz - rapid innovative problem solving. Attendees will be introduced to Triz - a proven process for solving problems, generating new ideas and developing systems more quickly, cheaply and inventively than traditional methods. Visit events.imeche.org for more information.

Scala Group is hosting the first in a series of events for its Fresh Connection 2012 competition. The event will give the opportunity to find out about the Fresh Connection enterprise and its benefits. Focus areas for this year’s Fresh Connection supply chain and logistics competition include carbon management and on-shelf-availability. For details go to www.thefreshconnection. co.uk or contact Dean Starr: dean.starr@scalagroup.co.uk on 01484 437497

The first ballot for stands in excess of 300m² at this year’s MACH event at the NEC in Birmingham will take place. Hosted by the Manufacturing Technologies Association in April next year, MACH 2012 hopes to welcome more 20,000 delegates. For more information and to book contact Graham Shearsmith: gshearsmith@mta.org.uk on 020 7298 6400

February

6-10

The National Apprenticeship Network is holding the National Apprenticeship Week. Designed to celebrate and promote apprenticeships, the event takes place over four days. For more information contact Dawn Hirst: dawn.hirst@apprenticeships.gov.uk on 0191 4926312

15-16

The Southern Manufacturing and Electronics Exhibition is taking place in Farnborough in February. Attendees will be able to see the very latest technology, components, materials, products and services available in the South of England. For more information and to book, visit www.industry.co.uk

Nikki Cusworth, Rolls-Royce

PLANT INVESTMENT Caterpillar’s Building Construction Products Division announced a £50m investment in their assembly plant at Desford, Leicestershire and fabrications facility in Stockton-on-Tees on December 8. The investment will be used to fund manufacturing capacity increases to meet growing customer demand for Caterpillar’s products, as well as further investment in new products, and R&D programmes. This investment follows Caterpillar’s announcement of the creation of 300 permanent jobs at Desford.

March

EEF is hosting its first annual National Manufacturing Conference in partnership with The Manufacturer on May 6. Book now to avoid disappointment. Call Benn Walsh b.walsh@sayonemedia.com on 0207 202 7485 to register

Semta is hosting an event in Westminster on March 8 to celebrate International Womens’ Day. The event marks the launch of a new strategic focus for Semta in opening up engineering and manufacturing careers to women and will showcase female role models from industry. Margaret Prosser Baroness Prosser, OBE, Labour Life Peer, and deputy chair of the Equality and Human rights Commission will be guest of honour. For further details call 0845643 9001 or email customerservices@semta.org.uk

Manufacturing news PLANT INVESTMENT Petford tools, an SME manufacturer of specialist injection moulding tools, took delivery of a £560,000 KraussMaffei injection press at its Peartree Lane facility, Dudley in December. The investment was made on the back of a record year in which the company saw 15% growth – largely due to strong order from the agricultural and automotive sectors. Sofa manufacturer and retailer DFS has invested £2m in expanding its UK operations, including increasing capacity at two of its three UK manufacturing plants. The investment is expected to create an extra 130 jobs in South Yorkshire and Derbyshire and a spokesperson has hinted at plans to increase this job creation in the first half of 2012.

M&A Premier Foods has sold of many of its Irish brands in a Eu41.4m (£34.8) deal. Chivers jams, Gateaux cakes, McDonnells noodles and the license for Erin soups will now be controlled by the Boyne Valley Group. Premier Foods and The Boyne Valley Group have entered into manufacturing agreements whereby Premier Foods will continue to manufacture the Irish Brands division for three years.

EXPORTS Airbus delivered it 7000th jetliner. The single-aisle A321 goes to US Airways, which operates the world’s largest Airbus fleet. The 7000 milestone comes just two years after Airbus made its 6000th delivery and reflects both the healthy demand Airbus is currently experiencing for its products as well as an improving ability to deliver orders in shorter lead times.

US Airways operates the world’s largest Airbus fleet

GOVERNMENT SUPPORT In November and December last year a raft of new initiatives for funding and financial support to the manufacturing industry were issued by government. Some industry representatives are sceptical of the motivation behind this activity. One industry spokesperson told TM “its starting to look worryingly like Gordon Brown’s panicked ‘initiative Business Sectretary Vince Cable a minute’ approach to not resolving deep set problems.” Whether or not this is the case will be borne out by the level to which industry accesses finance offered and the government’s ability to deliver promised support promptly. Among the recent initiatives are: The Advanced Manufacturing Supply Chain Initiative: This was announced by Business Secretary Vince Cable on December 7. Dr Cable pledged up to £125m to support improvements to the competitiveness UK supply chains through innovative projects like the SC21 programme which has brought great benefits to the aerospace industry. “British suppliers have a lot to offer and we need to help them realise and develop their strengths and sell them on the international market,” said Dr Cable said. Biomedical Catalyst Fund: This £90 million government investment in life sciences industry was revealed by Prime Minister David Cameron on December 6. The package aims to accelerate commercialisation of discoveries in the UK’s life sciences industry. The fund will see the Technology Strategy Board team up with the Medical Research Council in prioritising the allocation of available support. Regenerative medicine is expected to be an area of focus for the fund. Food and drink ‘shared vision’: While not yet an ‘initiative’ as such, an agreement between the Food and Drink Federation and government, announced on December 13, targeted 20% growth in the UK’s food and drink sector by 2020. Further structure and detail around how this will be achieved are expected early this year (2012). Business Angel Co-Investment Fund: Announced by government on November 29 this £50m will partner with business angel syndicates in the UK to give a helping hand to entrepreneurial companies. The aim is mitigate against risk aversion for business investors in the UK by matching private sector investments with government capital. It is hoped the scheme will help accelerate the growth of promising medium sized businesses with development funding from £20,000 to £2m. Innovation and Research Strategy for Growth: Under this broad scheme to boost investment for innovation a £75m boost for high tech SMEs was announced on December 8. The money will be administered by the Technology Strategy Board and is designed to give growing, innovative and high tech companies better access to the facilities they need to accelerate growth. A further £25 is to be made available specifically to facilitate the development of large scale prototypes. Higher Apprenticeships Fund: On December 1 it was announced that £18.7m would be drawn from the Higher Apprenticeships Fund to support the progression of thousand of apprentices to degree level. The money will target several sectors including construction, advanced engineering and financial services. Leyland Trucks and Burberry are among 250 companies to benefit.

For all of the latest news in the manufacturing world visit www.themanufacturer.com

ManufacturingAppointments UK Appointments Mark O’Connor eXception Group

eXception Group, a printed circuit board and contracts electronics manufacturing solutions provider, appointed Mark O’Connor group chief executive officer. Promoted internally from his position as joint managing director, O’Connor will build on the company’s recent success, which

has seen it continue to grow 10% year on year, spearheading its latest drive into new geographies as it continues its growth in Europe and Asia. Chairman Jon Sopher said, “Mark’s experience and expertise will be instrumental in the next phase of our growth plans.”

Cyrus Mistry Tata Sons

The board of directors of Tata Sons unanimously recommended Cyrus Mistry as deputy chairman. He will work with chairman of Tata Sons, Ratan Tata, over the next year and take over from him when Tata retires in December 2012. Ratan Tata said: “The

appointment of Cyrus Mistry is a good and far-sighted choice. He has been on the board of Tata Sons since August 2006 and I have been impressed with the quality and caliber of his participation, his astute observations and his humility.”

Sir David Brown The British Standards Institution

The British Standards Institution named Sir David Brown as the deputy chairman and chairman designate of BSI Group with immediate effect. He will take over from BSI’s current group chairman, Sir David John KCMG, who will retire on 30th March 2012. A

chartered engineer by training and a fellow of the Royal Academy of Engineering, Sir David was, from 2003 to 2004, president of the Institution of Electrical Engineers and, from 1999 to 2000, president of the Federation of the Electronics Industry.

Shaun Hipgrave ADS

ADS, the trade association for the UK Aerospace, Defence, Security and Space industries, elected a new team of president and sector vice presidents to serve for 2012. The new ADS President is Robin Southwell, chief executive officer of EADS UK, while the sector

vice presidents are: for aerospace, Marcus Bryson, chief executive of GKN Aerospace; for defence, Sir Brian Burridge of Finmeccanica UK; for security, Shaun Hipgrave, MD, Forensic Telecommunications Services (pictured); for space, Ruy Pinto of Inmarsat Limited.

The National Renewable Energy Centre (Narec) appointed Trevor Murch as its new non-executive chairman. Murch took up his position on December 1, taking over from Alan Rutherford. An Oxford University graduate, Harvard Business School MBA and qualified accountant, he has over thirty years of experience as a senior executive, managing high-value global businesses in the energy, engineering and aerospace industries. Richard Anderson was elected chairman of the board of directors at the Institute of Risk Management. Anderson is managing director, UK at Crowe Horwath Global Risk Consulting and was previously IRM deputy chairman. Two deputy chairs have also been elected: Chris Charman, independent risk consultant, and Alyson Pepperill, Client Projects Director at Oval Insurance Broking. Following the appointment of new CEO Stephen Phipson in September 2011, Stadium Electronics appointed Charlie Peppiatt (joining from Laird Plc, an electronics company where he was responsible for a division with manufacturing in eight locations across Asia) as group operations director, Ian Davies as business unit director for its Midlands-based manufacturing operation (where he will oversee a planned expansion of the facility this year) and Lindsay Driscoll, Steve Henderson and Sinney Leung to the sales team.

Kronos Incorporated, the workforce management solutions provider, appointed Tim Bisley as general manager, EMEA. Bisley joins the Kronos senior leadership team to take up the role of developing the EMEA growth strategy and is based in the UK. The TTE Technical Training Group’s managing director, Steve Grant, has been appointed to the EEF North East Regional Board. EEF’s Northeast regional board is currently made up of around 28 business leaders from many of the region’s well-known manufacturing companies. TTE, a long-standing member of EEF, is the region’s largest supplier of apprenticeship training. The organisation is currently responsible for more than 650 young people at various stages of their training.

International Appointments Gerber Technology appointed Donny Askin president of its software solutions business. In this role, he will manage the strategic direction of the company’s widely-adopted flagship product, the AccuMark® pattern design, grading and marker making system and its fastgrowing YuniquePLM™ product lifecycle management solution.

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

“We acted quickly to help our customer rebuild after the fire. Because we were not only restoring a building, but a business.” John Parvin, Claims Manager, UK Claims Major Loss Team, Zurich Insurance plc

Expertise and foresight to minimize business interruption. At Zurich, we establish a relationship with our customers before dealing with potential losses. Because understanding risk management strategies and the roles of key individuals ahead of time gets businesses back up and running later. It’s an example of how Zurich HelpPoint delivers the help businesses need when it matters most. Watch the video to learn more. www.zurich.co.uk/expertise

Available for companies with a turnover of between £5 million and £300 million. Zurich Insurance plc, a public limited company incorporated in Ireland Registration No. 13460. Registered Office: Zurich House, Ballsbridge Park, Dublin 4, Ireland. UK branch registered in England and Wales Registration No. BR7985. UK Branch Head Office: The Zurich Centre, 3000 Parkway, Whiteley, Fareham, Hampshire PO15 7JZ. Not available in the Channel Islands.

BacktoSculoer

Thebigpicture

You’re never too small for a strategy Managers of small companies are often so busy fire fighting that thinking about a business strategy seems a needless distraction. But, says Dr Derek Ford, it could be a game changer.

mall businesses are widely seen as the key to boosting UK growth. Almost 60% of private sector jobs are provided by companies with less than 250 employees and the same firms account for nearly half of private sector turnover. However, 30% of new start-ups fail during their first year and 50% survive for less than seven years. Why? Research shows that many new businesses fail because they lack a clear strategy to guide them through competitive markets. While large corporations can afford to have teams devoted to strategy development, small companies typically devote most of their energies to keeping the business afloat. Taking time to think about the direction their business should be taking, however, can be a game changer. This is particularly true in hard economic times. Developing a business strategy is not rocket science. Try considering the following. What is the main reason your customers buy from you – what is your company really good at? Are you valued for prompt delivery? Is your technology, product or

service unique? Or is your main selling point providing quality service for which customers are prepared to pay a premium? Consider how you can focus on your strengths and avoid wasting time and money on anything else; trying to be all things to all people is a common mistake made by companies desperate to take advantage of every business opportunity. Then ask yourself if there are any factors that may throw your business off course in the future - is there a new technology or other market development that could pose a threat? Are your customers concentrated in a single industry sector that could go into decline? What plans can you make to overcome these risks? Your answers to these questions will form the basis of your business strategy, guiding future decision making. Our experience shows that time spent in this way can pay huge dividends very quickly. Dr Derek Ford leads the small business team of IfM Education and Consultancy Services at Cambridge Institute for Manufacturing. www.ifm.eng.cam.ac.uk/ working

BacktoSculoer

Terry Scuoler, EEF’s CEO discusses the roles of industry and government in meeting the economic and industrial challenges of 2012.

ever has the saying ‘what a difference year makes’ rung as true as it does as we enter 2012. For most of last year hopes of a broad-based industrial recovery were borne out as a competitive exchange rate and the opportunity to sell into fast growing markets overseas have helped manufacturing outpace other sectors. Looking ahead to this year, the eurozone, government debt and banking crisis has gathered pace, weakening many of our major export markets. However, in spite of the risks ahead, we should not forget that there are still areas of growth. A number of sectors, including automotive and civil aerospace remain optimistic. Looking across the world, emerging economies are continuing to post stronger growth than the UK’s European neighbours and increasingly, we hear from manufacturers that they are making inroads into these markets - this is backed up by trade statistics, which show that our exports to the BRIC economies have grown by a half since the beginning of 2009. However, there is little doubt that the first half of this year at the very least is going to be immensely challenging and policymakers and companies are will need to react quickly to changing circumstances. Government forecasts are projecting that close to 90% of the A number growth in our economy will come of sectors, from business investment and it including has a vital role to play in facilitating automotive and this. The Autumn Statement saw civil aerospace some useful moves that should remain help companies to invest, including optimistic reforms to the R&D tax credit, but looking forward, we also believe that this year’s Budget should increase the rate of capital allowances to 100% for a two period to give a boost to cashflow. However, I want to conclude this article by looking further ahead. Near the end of last year the government announced a Manufacturing Foresight project to examine the shape of manufacturing in 2050. As well as being a welcome recognition of the importance of the sector to a rebalanced economy, it reminds us that, whatever challenges we face this year, we will continue to have a manufacturing sector of which we can be proud. This article is abridged. See the full article online at www.themenaufacturer.com

Monthly columns

Thenaked engineer: Stripping industry issues bare This month NE strips down government proposals for executive pay controls and exposes a flawed complexion to relationships between institutional shareholders and FTSE CEOs.

xcessive executive pay has been in the news recently, with Nick Clegg committing the Government to a crackdown. Bankers still pay themselves loads, while FTSE chief executive pay shot up by over 40% last year. So the politicians are considering three measures. First, shareholders need to become much tougher on approving executive pay. Second, accounts should disclose top to bottom pay ratios, and in the case of banks, show the compensation of senior managers not on the board. Third, workers should sit on remuneration committees or have a secret ballot to vote on bosses’ pay. These are tough proposals, but with the spectacle of a Pharisee class gorging on the cookie jar, they are necessary. Some of the worst offenders are, surprise-surprise, those in the financial services sector, the “unrepentant rescued”. If you want to make widgets, work with widgets. If you want to make money, work with money - particularly if it is somebody else’s or the taxpayer’s. We all know about bank executives looking after themselves, but don’t forget pension fund managers. As institutional shareholders investing in Britain’s top companies, they are charged with the responsibility of monitoring executive pay. But when you’re overcharging savers for running their pension funds and investments, taking one percent or more a year for sitting on their assets, plus fees for trading them to and fro, you’ve got a lot of cash coming in. You

lose perspective. It encourages a Faustian Pact between institutional shareholder and FTSE CEO. “Do whatever it takes to boost your short term share price, and in return, I won’t stop you paying yourself way too much”. In this environment, you can forget supporting long term capital expenditure and national growth. It’s all about misappropriating the cult of shareholder value into looking good for a few years. Would you expect manufacturing

We should welcome the proposed executive pay reforms, but it’s only a start in properly reforming the system, high fees for running pension funds, which reduce everyone’s retirement income, need to be regulated down to what is normal in other countries

companies to do well in this particular game, with their 20-30 year decisions on factory and plant investment? The answer is “No”. You only have to look at how many large engineering companies we have left on the stockmarket, or the UK’s Balance of Trade, to see the evidence. So we should welcome the proposed executive pay reforms, but it’s only a start in properly reforming the system. High fees for running pension funds, which reduce everyone’s retirement income, need to be regulated down to what is normal in other countries. The tax deductibility of corporate debt - which encourages excessive borrowing - should go, to be replaced by a reduced rate of Corporation Tax. We might even end up with a national comparative advantage in conservatively financed businesses. Just like the Taliban has hijacked Islam, so the short termists have hijacked Western Capitalism. There’s nothing wrong with the underlying religion, it just needs to be allowed to flourish properly. We now need to put it right.

Have your say at www.themanufacturer.com

Thelegallowdown Keeping pay to those in control

under control An overview of the Government’s discussion paper on executive pay

t has become easy, indeed second nature, in the aftermath of the recent financial crisis, to question huge payouts to executive directors. But it is only really those pay increases which do not correlate with company performance that legitimately warrant our criticism and call for reform. The harder question is what should be done to resolve remuneration problems? The Government recently published a discussion paper on executive remuneration in conjunction with its consultation on narrative reporting. The response period for this has now closed, with implementation being proposed from 1 October 2012. So what are the main proposals made in the discussion paper in relation to executive pay and what are their likely implications?

Improving Transparency Directors’ remuneration reports are often lengthy and complex making it difficult for shareholders to effectively scrutinise and challenge executive pay. The Government have therefore proposed that information be presented in a more direct and useful manner including displaying a single figure summarising the total remuneration for each director (and how this is calculated) thus improving disclosure of the relationship between executive pay and performance. While this may seem like a very simplistic step, any increased transparency should help raise awareness, and therefore challenge, of the bottom line figures.

The Role of Shareholders The Government recognises that shareholders play a central role in tackling the issues around executive remuneration and have therefore made proposals seeking to increase their involvement with this issue. These include making the advisory vote that shareholders have on the directors’ remuneration report binding and giving them rights to vote on all termination payouts, not just those that exceed the director’s contractual entitlement. Again the accountability is to be praised, but there is a real risk that such provisions would unduly fetter the ability of the directors to effectively run the business.

The Remuneration Committee There is a suggestion that making the remuneration committee more diverse will help in setting a realistic, and more grounded, figure for executive pay. Their proposals include having independent members on the committee who will bring with them a fresh set of views outside of the usual corporate sphere, and presumably the ability to challenge any internal views.

The Structure of Remuneration Establishing some general principles on the structure of remuneration to help encourage long-term interest in the company and demonstrate a clearer link between pay and performance have also been highlighted as areas where improvement can be made. These proposals include using more tailored performance

A move towards any increased transparency or external scrutiny is generally to be welcomed, but not at the expense of the operation of the business involved Esther Smith, Partner, Thomas Eggar LLP

measures, deferring a larger proportion of pay over more than three years or paying a substantial proportion of remuneration in shares to be held for several years before realisation and making provision to allow the company to ‘claw back’ remuneration in exceptional cases involving misstatement or misconduct. Schemes such as this have already been implemented in many sectors where high pay is prevalent, such as investment management businesses, but it is too soon to judge the longer term effects of their success.

Promoting good practice The Government have invited views on how to research and promote good practice in executive remuneration and have suggested establishing an independent body to take responsibility for improving the quality of information on, and practice in respect of, executive pay. In conclusion, while the practical and legal implications involved in implementing the proposals may make some of them too onerous to take forward, they are, at the very least a recognition that reform is needed and provide a basis from which to discuss and debate the issues before any firm proposals are pursued. A move towards any increased transparency or external scrutiny is generally to be welcomed, but not at the expense of the operation of the business involved.

For more details contact: Esther Smith, Partner, Thomas Eggar LLP esther.smith@thomaseggar.com or 023 8083 1203

Youth engagement can work smarter, not harder There are hundreds of projects connecting children to manufacturing jobs and companies. Should they more more linked-up?

With so many youth engagement programmes, industry has reached a point where better coordination and information sharing would be more effective than launching more schemes, says Will Stirling.

The environment is far too fractious [in the Sheffield City Region]. They are all doing the same thing and you want to say “come on, get a grip” Alison Bettac, Firth Rixson

ichard Noble got up to leave the meeting with a heavy heart. His last ditch appeal to the minister for the missing piece of his 1,000mph jigsaw puzzle had fallen on deaf ears, his project looked doomed. “Hang on a minute, Richard” said Paul Drayson, then the Minister for Strategic Defence Acquisition Reform. “There’s something you can do for us.” Drayson, also then the Minister for Science at the Department for Business (BIS), told Noble the extent of the science and engineering skills gap in the UK. Unless something was done, and soon, the education system would fail to equip youngsters

for the hundreds of thousands of future jobs in technical fields. In the US in the 1960s, he said, during the manned space programme the number of applications for degrees and PhDs in science and engineering (STEM) subjects quadrupled. A similar phenomenon occurred in the UK and France when Concorde was being developed. The conclusion: the UK needed a big, shiny project to inspire school children to become scientists. Noble signed up, he got his RollsRoyce engine – on loan – and Bloodhound SSC, the world land speed record project, was a goer. It was January 2007. Since then, Bloodhound has engaged

Leadstory Youth Engagement

with more than 4,800 schools nationwide, demonstrating the car’s capability and helping start model rocketry projects. Birmingham’s Joseph Leckie College built a model that travels at over 80mph (see link, bottom). Paul (now Lord) Drayson’s vision is working. Make it in Great Britain, Made by Britain, Engineered in Britain, Make it in Manufacturing – a wave of manufacturing patriotism is washing over the country. If someone outside the sector was asked to research what is wrong with British youth’s perception of engineering careers, on the body of evidence he might reasonably conclude ‘nothing’. There are literally hundreds of engagement programmes and projects nationwide, ranging from day visits at small companies to grand projects like The Big Bang Fair and WorldSkills UK. Science and maths network STEMNET ran 35,000 activities in the last 12 months – allowing for 20 kids per engagement, that’s 700,000 young people ‘reached’. The number and variety of outreach programmes in the UK organised by institutions like the Royal Academy of Engineering, EngineeringUK, the Institution of Mechanical Engineers and The Manufacturing Institute is staggering (see illustration on next page). And those who record children’s responses say it is working. Following a visit The Big Bang Fair asked children questions on their impressions of engineering and science– 74% of boys and 81% of girls aged 12-19 said that the visit had changed their view of engineering either ‘slightly more’ or ‘much more’ positively. Sixty-one percent of boys and 58% of girls of the same age said that their visit had made them either ‘a little more’ or ‘much more’ likely to want to be an engineer. It is having an effect but clearly much more is needed, hence the existence of Bloodhound. Companies are more than pulling their weight, too. Dig

We have been encouraging those who want to get involved to be clear about the targeting of initiatives, coordinating with others who are already working in the space to get the best overall impact and to have a proper evaluation scheme in place

around and nearly every manufacturer of a critical mass runs some kind of youth engagement project. CocaCola Enterprises (CCE) has built education centres at four UK manufacturing sites, most recently a large investment at Sidcup. In 2010, over 12,500 students completed an educational programme with CCE and, the company claims, 100% of teachers said they would recommend the visit. BAE Systems runs the Engineering Roadshow, a heavily-funded programme in partnership with the RAF, the purpose of which is to inspire STEM subjects. “By the end of 2011, 125,000 school children will have seen BAE Systems’ travelling theatre show since it began in 2005,” says BAE’s Kate Watcham. “In 2010 we doubled our roadshow activity and reached over 300 schools nationwide. High technology group Renishaw is part of the STEMNET programme, and it has just appointed an Education Liaison Officer to facilitate school visits. Firth Rixson, Tata Steel and Yamazaki Mazak are just some of the other big

manufacturers doing a lot with schools. But small companies too do a great deal in this field, and some of their stories reveal a darker reality to the challenge.

Build it and they will come.. sometimes Alan Pickering, managing director of tube bending machine manufacturer Unison organised the Scarborough Engineering Week in September, which put 1,000 schools through his company. “Boy it was hard work, and painful, but worth it,” he says. Painful? Getting teachers and kids into companies is not easy – although teachers might counter-argue the same is true for some companies. “The apathy within our education system to actually get kids ready for work rather than to hit targets is astounding,” said Mr Pickering. “There are so many reasons why not to do stuff – risk assessments, transport hold-ups – rather than engaging more with businesses in the local area. The event was free, the kids that came loved it – it’s the teachers that need a rocket up their backsides!”

Paul Jackson, EngineeringUK

Following their experience with Go4SET (run by the EDT) pupils describe scientists and engineers as professional, well paid, logical and clever. 52% of Go4SET students are girls

Some programmes in the UK that connect young people to manufacturing and engineering

Programme

Be Connected

Organisation

BXL

Funding

Private

No. schools or children reached to date

20,000 over three years

Target audience

Young people

Programme

Make it in Great Britain

Organisation

Programme

The Big Bang Fair

Organisation

EngineeringUK

Funding

Community Interest status + corporate sponsorship

No. schools or children reached to date

2,000 schools, 90,000 young people since 2009

Target audience

Mainly 11-14, but from 7 to 19 years

Programme

Bloodhound SSC

Organisation

Same

Funding

Charitable donations

No. schools or children reached to date

4,800 schools to date

Target audience

Everyone

Programme

Make it in Manufacturing

Programme

See Inside Manufacturing

Department for Business (BIS)

Organisation

The Manufacturing Institute

Organisation

BIS

Funding

Government

Funding

Charitable/Private

BIS, companies donate time

No. schools or children reached to date

Exhibition in 2012 at the Science Museum

No. schools or children reached to date

30,000 school children

No. schools or children reached to date

20 automotive companies, 27 sites, 100 events

Target audience

All age groups

Target audience

11-18 years

Target audience

Key Stage 3 (11-14 yrs)

Programme

WorldSkills UK

Programme

STEMNET Ambassadors Programme

Programme

WorkWise

Organisation

Business Education South Yorkshire

National Apprenticeship Service

Funding

Sponsorship

No. schools or children reached to date

2011: high % of 200,000 visitors were school children

Target audience

All young people esp 11-14 years

Organisation

STEMNET

Funding

BIS/ Dept of Education

Funding

BESY

No. schools or children reached to date

over 500,000 young people, Gatsby Foundation

No. schools or children reached to date

N/A

Target audience

12-21 years

Target audience

14-16 years

Leadstory Youth Engagement

One manufacturer in the North East told TM that he had invited several Tyneside schools to visit his factory. Eight of them accepted. On the arranged day, only one showed up. Will ButlerAdams of Brompton Bicycles, who makes an identifiable product that should get school kids really stimulated, has similar tales of no shows on the day. But there is much happening and all this good work has not gone unnoticed. In June, the Government (BIS) launched See Inside Manufacturing, a campaign to get school children into factories to experience manufacturing, starting with the automotive industry. Every volume carmaker in the UK, and several manufacturers of parts, diggers and trucks, opened their doors to schools in a concentrated burst of visits in October. Hailed a success, BIS couldn’t provide the final number of students who were involved but the Department has plans to replicate the programme at aerospace companies in 2012 and, following that, the chemicals sector. The Government launched two other engagement projects in 2011. Made By Britain is designed to replicate a “virtual Great Exhibition” by showcasing one manufacturing company from every constituency in the UK, both physically at Alexandra Palace, and digitally online. Its purpose is to: raise the sector’s profile and engage with kids. Then in October BIS launched the confusingly similar Make It In Great Britain, which will appoint 30 industry champions to promote the virtues of manufacturing to young people and the investor community. It will culminate in another exhibition at The Science Museum in London concurrent with the Olympic Games. A busy six months for the Government’s PR team, but unsurprising given the urgency of economic rebalancing. With so many projects running, what’s the problem? Every single youth engagement is a good thing, as many people including

Child’s play: Many youth engagement projects put engineering into the hands of kids, but not all record their impressions

It’s best to have a collection of small intense programmes working at grass roots rather than one national entity Richard Noble, Bloodhound SSC

Mr Butler-Adams, one of the Make it in Great Britain industry champions and Nicola EagletonCrowther, who leads ‘Make it in Manufacturing’ run by TMI, say. But if the common goal is to make engineering – and manufacturing – careers more popular, to grow the sector, then there is a vast amount of intellectual capital held within these disparate projects that could be tapped with a better connected, national network. The numbers are big. Most of WorldSkills’ 200,000 visitors were young people, the organisers say. Science and maths network STEMNET organised 35,000 activities in its Stemnet Volunteer Programme, which gets STEM-enthused volunteers into schools and colleges to explain practical applications of science. Head of public affairs Teresa Sutton says on average there are 20 to 25 children involved in each activity, equating to +800,000 youngsters accessed. Tomorrow’s Engineers, the outreach programme run by EngineeringUK, is a front runner. “By 2020 we estimate that 100,000 young people a year will experience The Big Bang and Tomorrow’s Engineers has the potential to influence over 130,000 pupils a year, reaching over half a million through the use of our evaluation

scheme and career resources,” EngineeringUK’s Miriam Laverick says. Given the numbers, networking the activities and pooling the data, such as tallying improved perceptions and decisions on GCSE options, seems tantalising.

Join the dots Regionally, promotion of manufacturing in schools can seem disjointed and almost competitive, a concern with cash-strapped public finances. Alison Bettac, HR director at steel converter Firth Rixson and on the manufacturing board of the Sheffield LEP, says, “The environment is far too fractious. In this region alone we’ve got Work-Wise, run by Business Education South Yorkshire which was, but is no longer, funded by the Local Authority; we now have work experience.com, which is funded by the Local Authority and we have the Master Cutlers Education Programme. They are all doing the same thing and you want to say ‘come on, get a grip on this’”. Could the smaller, and company-based, youth projects learn from the experiences of the larger ones like Big Bang Fair? Should a national strategy link-up all these programmes, and process the data, to assist policy-making? Richard Noble of Bloodhound SSC says, “It’s

Lead story Youth Engagement

best to have a collection of small intense programmes working at grass roots rather than one national entity. Today with IT there’s no reason why small organisations can’t communicate with one another to ensure continuity.” But are they doing so? BIS’s latest project, Make it in Great Britain (MiiGB), could have played a role in joining these dots rather than being another parallel engagement

Redefine the profession While schools are meeting the manufacturers, something fundamental is missing from all this effort which could undermine its entire purpose. In December, Lord Browne, president of the Royal Academy of Engineering, was asked on the Today Programme how we should define an engineer. Is a man who comes to fix your washing machine a type of engineer? He said, “Yes of course he is. I don’t think we should quibble over words.” Will Butler-Adams received a complaint from a post-graduate student at Leeds University that this undermined the status of engineering. “Until you can award the term ‘engineer’ the recognition in society that it needs, you will only make so much progress with these [engagement] initiatives,” says Mr Butler-Adams. “They are great, I support them all, but to really change the perception and allure of engineering…. Think that legally you cannot call yourself a doctor unless you are a doctor. Personally I would say you have to become chartered to deserve the job title ‘engineer’. Even if you merely say a Bachelors degree is needed before you can say you’re an engineer that will be a start. Somebody, perhaps the Engineering Council, needs to take a leadership role in this.”

There is a vast amount of intellectual capital held within these disparate projects that could be tapped with a better connected, national network

The Engineering Development Trust claims to be the largest provider of STEM enrichment activities for UK youth, providing about 30,000 student experiences per year

scheme. “We value any initiative that aims to raise the profile of manufacturing and promote the sector as an attractive career choice for young people,” says Make It’s Eagleton-Crowther. “Clearly this needs to connect to the current successful activity taking place. The expected outputs for MiiGB are not yet clear but we look forward to hearing more about what the campaign hopes to achieve.” Paul Jackson, CEO of EngineeringUK, says it’s essential to coordinate with other projects and to assess the outcomes: “It is always good to see enthusiasm for promotion of manufacturing and engineering careers to young people. We have been encouraging those who want to get involved to be clear about the targeting of initiatives, coordinating with others who are already working in the space to get the best overall impact and to have a proper evaluation scheme in place. We already have over 150 organisations doing just that through the Tomorrow’s Engineers programme and The Big Bang.” The Government, and industry, could do a great deal more with these activities if they joined them up, helped share best practice and pooled user experience feedback. When asked whether the MiiGB programme could have helped co-ordinate such a network, a BIS spokesman said: “By working closely with industry, through this campaign and other initiatives like See Inside Manufacturing, we can make sure that we leave a legacy of changed perceptions and engaged young people who are willing to seek out and enjoy rewarding careers in British industry.” Sure, but how precisely do others work in tandem with this campaign and use the information that it procures? For more information about the objectives of Bloodhound SSC, go to http://www. themanufacturer.com/videos/ bloodhound-the-mission/

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Team

Captain

Andrea Thompson makes thousands of trucks a year on a production line where two consecutive trucks are rarely the same. Her company has won a string of awards for operational efficiency and product quality. Will Stirling talks to a woman at the top and finds that success for Leyland Trucks, invariably, comes down to team power.

or advocates of best practice UK manufacturing, Leyland Trucks is a perennial. The only truck building company in the UK is a serial award-winning business that has embedded itself firmly in the textbooks of world class manufacturing. How? Resilience through difficult times and belief in a quality product is part of it. Support from US parent PACCAR Inc, which has invested heavily in the products, facilities and people at the Leyland, Lancashire-based plant, is another reason. But the switch from a traditional, hierarchical automotive model of truckmaking to an employee-focused philosophy that became known as ‘Team Enterprise’ is perhaps the most important chapter. Andrea Thompson runs the operation with the calm focus of a woman at the top in a man’s world. She is one of only two female board members of the Automotive Council UK, and the only female board member of the

Part of the message of See Inside Manufacturing must be that it’s not just bolting things together. Its designing, its computers, its robotics, purchasing, sales = the whole gamut of the business

Society of Motor Manufacturers and Traders. The British-born US citizen attended Michigan State University followed by an MBA in operations management and finance at the University of Pittsburgh, acquiring a grounding in manufacturing management. She joined PACCAR Group, the world’s third largest manufacturer of heavy trucks, in 1995 and over the next 12-years climbed the executive ranks in the US and completed a programme in Leadership in Plant Operations at Michigan University. She moved to the UK in 2007, joining Leyland Trucks as assistant operations director. She may have all the right tools, but you still have to do the job. Here, there is little argument. Under Mrs Thompson’s stewardship, Leyland Trucks won the overall award at the Institution of Mechanical Engineering’s MX Awards in both 2009 and 2010, and the MX award for Business Development and Change Management this

year. This followed winning the Shingo Prize Bronze Medallion in August, only the third UK company to have received the award. “The MX Awards push us and provide a benchmark, and has been a big help to our business. But there is a difference with Shingo,” says Mrs Thompson. “They examine the manufacturing but also the people side – we talked through our Team Enterprise, the innovative processes and ideas we’ve had with, and from, our employees. That pushed us in other areas of the business.” As well as manufacturing, the company has a strong environmental record. It was the first manufacturer in the UK to achieve ISO14064, the international standard for greenhouse emissions. And it was the first truck plant in Europe to achieve zero waste to landfill. “It took nearly 10-years to achieve, but nothing from this plant goes into landfill anymore,” says Mrs Thompson. For example,

Interview Andrea Thompson Leyland Trucks

Leyland’s paint sludge now gets reused for making the soft matting in children’s playgrounds.

Ashworth. While the number of cars on the road has ballooned to about 32 million units, new trucks have remained remarkably static at about half a million. Leyland’s No. 1 market share of this total has remained consistent – 24%-30% – but today its workforce is only 1,000 people, compared with nearer 30,000 across the whole group (inc buses and tractors) in the 1950s.

Fortunes of a popular brand Leyland Trucks had been through its most momentous changes when Andrea Thompson joined. It was merged with DAF of The Netherlands in 1987 to form Leyland DAF, with the Dutch running the company. Following turbulent changes in the UK automotive sector in the UK and plunging orders in the early 1990s, the company went into receivership in 1993 but a management buyout at the Leyland Trucks site saved truck-making in the town, and the UK. These trucks would now be sold in the UK and Europe as ‘new DAF’ and today there are no Leyland-branded vehicles. PACCAR bought DAF in 1996, and since 1998 the Leyland story has been one of investment and growth. Today the site builds full body trucks – chassis cabs and bodies, another first in OEM truck building – across the whole DAF range; light (LF) starting from 7.5 gross tonnes, medium (CF) and heavy (XF), in a right hand drive variant, up to 44 tonnes. It exports LFs in ‘truck in a box’ kits as far as South America and Australia. The company had a very tough time in 2009, when the UK truck market crashed from a consistent 50,000 units p/a to about 28,000 units, when its UK market share dropped to 23.8%. Since that nadir, the market has recovered well – despite the recent dip in manufacturing output. “We are taking the same number of orders today as we took three and six months ago. We have not seen any fall off at all – it’s a medialed recession,” says Andrea’s colleague Ray Ashworth, managing director of DAF Trucks Ltd. And Leyland’s UK market share is clawing back to nearer the 27% pre-2009 level (the No. 2 brand holds about 15%). The size of the UK truck market illustrates Leyland’s productivity well, says Mr

The difference – Team Enterprise

If you abandon clocking-on, the rigidity isn’t there – that’s how you get innovation Ray Ashworth, Managing Director, DAF Trucks Ltd

Acquisition by a foreign group tends to sharpen the management focus, but what else made the big difference to Leyland’s fortunes since the early 1990s? When the Toyota Production System introduced the idea of doing things differently in factories, Leyland was one of the first truck makers to recognize this was a good thing to do, Thompson says. “It was traditionally a siloed organisation,” she says. “Individual departments realised this system didn’t work as efficiently as it could, so they moved to a team system of management, beginning on the shop floor. Quality and engineering representatives work within teams; if there is a problem, they could take care of it and not call someone in. This helped start the responsibility piece of the cultural change.”

It was the beginning of the model known as Team Enterprise, a transformation that began under John Oliver, Leyland’s managing director in the 1990s. It boils down to engaging the workforce, says Thompson, but, correcting herself, “it’s not a workforce, these are employees. When people come to work here we want them to think about the business, to understand it and make suggestions… not just to assemble trucks. They’re here to help the business.” Team Enterprise recognised the employee as an equal contributor to a group activity with a shared aim. Examples in practice? Leyland Trucks has not used a clock-on time attendance system for years, and there are no job descriptions. “Job descriptions place boundaries on what people could or should be doing,” says Thompson. “If you abandon clocking-on, the rigidity isn’t there – that’s how you get innovation,” Ray Ashworth adds. Solidarity is at the heart of the ethos. Leyland employees have ‘Meet the Boss’ and ‘Meet the Team’ sessions. Teams have the chance twice a week to ask the MD questions. Monthly all-employee sessions explain what’s happening in the business. “Recognition, of the individual, the team or site, is a big part of the culture here – you need to thank people genuinely for what they’ve done.”

Andrea Thompson addresses the SMMT International Automotive Summit in June

Interview Andrea Thompson, Leyland Trucks

Leyland runs an ideas scheme called Every Little Counts. Not all ideas are used, but outcomes are always fed back to the individual. “We get over 6,000 ideas a year.” What type of incentive is used to reinforce it? “We’ve studied this and consulted the employees. The main conclusion was they just want a thank you, even a handshake from the manager.”

Operational excellence and challenges Leyland Trucks’ key challenge is probably the reason it has been such a good exemplar in its sector; it is a build-to-order operation, volumes are neither low nor high (full capacity is 12 trucks an hour) but each truck on the line is different because Leyland makes all model variants and orders tend to be small.

A derivative of Team Enterprise has been what Thompson attributes to be one of the key differentiators in its manufacturing system: workload balance. There used to be separate light and heavy truck lines here, but no more. “Where we’re very good at manufacturing efficiency is the workload balance on the line,” she says. “Our employees are split into teams of 12. Their work is balanced with the team next to them. One might be working on an LF, a relatively low workload, with the next team on a big XF, a heavy workload. But all this is balanced out so that one group is not taking the pain and the other is getting an easy day.” This is managed by an advanced planning system, which knows what needs building each day and sequences them the best order possible so that each team gets a balanced workload as different trucks come through the line.

When people come to work here we want them to think about the business, understand it, make suggestions… not just to assemble trucks. They’re here to help the business

Biography Andrea Thompson 1990:

Graduates with B.A. in Accounting, Michigan State University

1991:

MBA, Operations Management and Finance, University of Pittsburgh, Pennsylvania

1991:

Automotive Council and UK industrial strategy

Joins Rockwell International, Automotive Division. Works in finance, production and quality engineering

1995:

Joins PACCAR, in the corporate Leadership Development Program, Seattle

1996:

Appointed assistant materials manager, then later materials manager, Kenworth Renton and Seattle Plants

1997:

Begins five years in corporate supplier quality while training in Leadership in Plant Operations, Michigan University

2007:

Appointed assistant operations director, Leyland Trucks in the UK. Becomes operations director in 2008

2009:

Managing director, Leyland Trucks

Automotive manufacturing is a male-dominated industry. Do you think you bring a specific quality to the Council and the SMMT? “Not as a woman necessarily,” she says. “But speaking as a lower volume manufacturer, and a more customised manufacturer than many of the car guys, I’ve been able to voice those specific concerns well and to help recognize that if we’re talking about automotive, it is cars, trucks, niche car makers – everybody. Does the UK have an industrial strategy? “It’s changing,” she answers diplomatically. “In our sector it’s changing through the work of the Council, on which Mark Prisk [the business minister] sits. Activities that BIS is running, such as See inside Manufacturing and Make it in Great Britain, reflect the work the Council is trying to do. On the wider strategy point, the UK has a long heritage of manufacturing. It’s time to reinvigorate that, and the Automotive Council is trying to do that in our industry.”

Andrea is a board member of both the Automotive Council UK and the Society of Motor Manufacturers and Traders. She is involved with The Manufacturing Institute in Manchester and in 2011 Leyland Trucks won the Shingo Prize (Bronze Medallion). She lives in Eccleston, Lancashire.

What have been your biggest challenges to achieve all these accolades? “It’s wonderful to win these awards and get recognition for your employees, but how do you keep the momentum? How do you keep building on what we already have when it is actually very good? So far we’ve done well to keep the momentum and innovate. The challenge is not to get complacent.” Shop floor employees, not management, attended the MX Awards this year. “One employee said to me there: “No matter who is at the top, we know what we have to do.” The employees here own the process,” Thompson says.

Jump the dump S

etting out the timeline for Crown’s impressively swift achievement of the zero waste to landfill goal, and explaining what kick-started the ambition, Mr Lloyd tells TM: “October 2008 was the pivotal date for us as we were sold by AkzoNobel, the world’s largest paints and coatings company. AkzoNobel had previously been responsible for all our environmental objectives, but all of a sudden we were on our own and needed to be able to compete in the market place.” Between Lloyd and his colleague Brian Widdop, Crown’s technical director, they plotted a number of objectives to help the newly independent company become less wasteful. Among these was the zero waste to landfill target which, as well as aligning with Crown’s overall anti waste agenda, would bring financial savings through avoiding escalating landfill taxes. The scale of the challenge in front of Crown was considerable. In 2009, one year into the zero waste to landfill project, the company still sent a hefty 464

An alteration to purchasing practices for tin plate hugely reduced waste from packaging materials at Crown

In 2009, one year into the zero waste to landfill project, [Crown] still sent a hefty 464 tonnes of waste to landfill

In November 2011 Crown Paints announced that its two UK manufacturing facilities had achieved targets to become zero waste to landfill. By the time this article is published, its 130 shops and decorating centres will have also attained this status. Jane Gray talks to Mark Lloyd, sustainability manager at Crown about why the company set out on the zero waste to landfill road and how it achieved so much ahead of schedule.

tonnes of waste to landfill. Lloyd explains how the company focused its efforts to get this figure down, “We knew that our most difficult waste was our effluent. This was produced in large quantities whenever we washed our tanks. When we separated the paint residues from the water we were left with a dry effluent cake which represented a lot of tonnage.” To give an idea of just how much effluent Crown were dealing with, Lloyd states that each of Crown’s UK manufacturing sites in Darwen and Hull produce around 40 million litres of paint each every year.

Setting the strategy Formally documenting and tracking progress was essential to Crown’s success with its zero waste to landfill target, which is just a part of what became known as the earthbalance programme in 2008. Lloyd explains, “It was important that everyone in the organisation was able to associate the various pieces of environmental work we now do with one coherent programme.”

Specialfeature Crown Paints

Also central to success was the deliberate effort made to ensure that employees felt they had ownership and influence of waste reduction schemes was also central to success. “Our first step was to communicate in workshops what the purpose of earthbalance was. We then built forums which asked for ideas on where waste could be reduced in all areas of the business.” In the business climate at Crown after its sale by AkzoNobel, Lloyd says that employees leapt on the opportunity to take more control in designing and implementing environmental policy. “Every contribution in getting our waste down has been invaluable,” says Lloyd, including contributions from outside the organisation. “We could never have achieved zero waste to landfill without the partnerships we forged,” says Lloyd. “We have asked most major recycling companies to suggest ways in which they could help us and have had a lot of audits at our sites. We have a good partnership with a company called Centrol who now take hold of our effluent and use it in anaerobic digestion.” Another important partnership is with waste collection company CVA. “CVA has been very influential in allowing us to bring our shops down to zero waste to landfill,” says Lloyd. This was a challenge for Crown since its shops are widely dispersed and waste disposal had previously been locally contracted. “CVA now collects anything we cannot re-use or recycle at our shops and bring it back to a central hub in Darwen.”

Pacing yourself Crown achieved zero waste to landfill at its manufacturing sites well ahead of its target of January 2012. Although progress has been swift, Lloyd is careful to advise others not to expect big wins overnight. “Zero waste to landfill can be a big goal to go for,” says Lloyd. “First of all you need to take every step you can to reduce the amount of

Steps to sustainability A few tips on achieving zero waste to land fill: Prioritise waste reduction by analysing the effect of the complete product range on the environment, from the raw materials through to the logistics in getting each product to its destination, and ultimately the end of the product’s life. Extend this understanding of waste and carbon hotspots. Partner with experts to map the carbon footprint products throughout the supply chain. Consider base materials, packaging, manufacture, distribution and product use. Encourage all employees to reuse or recycle as much waste as possible throughout the business. For waste that cannot be traditionally recycled consider partnering with a contractor to compost waste after treatment and segregation or use technologies such as anaerobic digestion. Commit to the reduction of carbon-intensive raw materials. Crown has reduced consumption of solvents through the use of innovative low volatile organic compound (VOC) formulations. Modify your manufacturing equipment. Crown installed timers to pumps, upgraded thermostatic controls and fitted L.E.D light systems to reduce electricity consumption by more than 10% and gas consumption by more than 15%.

overall waste through re-using and recycling. It is important to acknowledge the little steps as well as the bigger ones.” To assist in this communication of triumphs large and small Crown elected champions at all of its sites who meet regularly in forums to discuss initiatives and share best practice. Waste segregation, investing in different waste receptacles, and creating a mind set among employees that waste needs to be segregated at source accelerated gains. Other key steps on the road to zero waste to landfill have been achieved through employee suggestions to reduce the use of outsourced solvent cleaning. This has not only saved money but improved the manufacturing process. In another case, a suggested alteration to the purchasing process of tin plate used in packaging, which significantly reduced waste to landfill. “We were paying for tin plate to be printed and, if we over evaluated, then we would send the surplus to waste. One of our guys in the purchasing department looked into an improved method for ordering and he has eradicated the waste we used to see here.” Creating a lighter tone to the waste reduction strategy Crown has also found small but visible ways to give something back to

areas of the business that have done the most to collect and recycle plastics. An external partner turns collected plastics into park benches and “funky” street furniture, which are given back to the areas that made the biggest contribution. The next major hurdle for Crown will be the reduction of waste after sale. “There is a lot of waste paint out in the market with consumers and we are looking to combat that,” says Lloyd.

The bigger picture On being asked why UK manufacturers should make a zero waste to landfill target a priority Lloyd responds, “Every time you turn on the news you hear more about the dire economic situation we are in at the moment. If manufacturers in the UK want to compete on a national and international stage they cannot afford to let any waste go unnoticed.” A sign of how fully Crown believes this is the rigorous carbon footprinting it has undertaken. “I am not aware of any other paint company in the world which has fully carbon footprinted its whole portfolio,” comments Lloyd, before going on to explain how this information about its products is shared internally on an intuitive earthbalance IT system. The information is essential in concentrating the efforts of environmental champions in areas where they can gain most benefit for the company. “We are targeting a 10% reduction in the overall carbon footprint by 2015,” states Lloyd. So Crown is putting the pressure on itself with ambitious targets, but is government adding an unnecessary burden with environmental regulation? Lloyd is ambivalent, “We need an element of pressure,” he says. “Nobody wanted to see landfill taxes go up as they have but a lot of companies would probably still be wasting materials, supporting wasteful processes and damaging the environment without that tax.”

Lingua

franca I

n November 2011 the CBI published a report in partnership with financial services firm Ernst & Young titled Winning overseas: boosting business export performance. The report lays out the imperative for growth in UK exports stating that from 2000 to 2010 the UK’s share of global exports, fell from 5.3% to 4.1%, while comparable competitors such as Germany grew their share. At the same time, the establishment of economies, previously considered ‘emerging’, but now firmly established as industrial powers with ambitious middle classes, has amplified the wealth potential in exports. CBI estimates that a re-orientation of UK business to focus on export opportunities could leverage an additional £20 billion in GDP by 2020 – an increase of 1.5%. But this shift may be hard to achieve. CBI points to the UK’s large SME base as the key to export growth, particularly urging those in the medium sized business category to bring their weight to bear. However, at present only one in five UK SME’s has an export element to its business and the last time the UK’s net export was positive was in the mid 90’s. Today CBI says many manufacturers express nervousness and insecurity when faced with the idea of setting up export initiatives, they are unsure of the risks involved and the legal practicalities of engaging with foreign administrations. In addition to these concerns however, CBI identifies a worrying lack of the skills and strategic awareness companies need in order to successfully export their goods and services. Top of the list for failing UK skills is language capability.

The language of competition According to another CBI report in 2011, this time focussing on education and skills, 47% of manufacturers consider expertise in foreign languages to be important skills for representatives establishing operations overseas, but 60% of UK companies overall feel language skills are lacking.

Our European customers expect us to communicate in their own language. There are many who refuse to speak English, even if they are able to do so, during contract negotiations O’Connor, CEO, Exception Group

Exports have hit the headlines as the strategy for economic recovery in the UK and manufacturing is at the centre of debate. But have British SME’s got what it takes to lead in globalised markets? TM explores some of the key skills and characteristics that competitive export manufacturers are developing to keep pace with international opportunity.

While the root cause of this may be in the UK education system John Cridland, director general of CBI, commented to TM that: “this is part of vocational training”, implying that there is an employer responsibility to ensure employees operating abroad are equipped with an appropriate level of language skill. This is increasingly the attitude of Mark O’Connor, CEO of PCB manufacturer Exception Group. This organisation has been operating internationally for around five years now. It has two core manufacturing sites in the UK, nine partners in China and 60% of its customer base distributed around various European countries. As such language capability is key to business success. It is particularly at the sales end of the business that Mr O’Connor says language skills are important. “Our European customers expect us to communicate in their own language. There are many who refuse to speak English, even if they are able to do so, during contract negotiations,” says O’Connor, rejecting the idea that English is the international lingua franca as outdated colonialism. To service this expectation Exception Group has recently made an effort to recruit UK graduates with strong French and German qualifications, among other European languages, and O’Connor says he would consider investing in training and development to improve the language skills of all staff that come into contact with foreign customers. While such a training ambition is admirable, recent research confirms Britain’s poor reputation, not just for linguistic skills, but in many of those areas considered essential for international business success. Tony Goodwin, CEO of Antal Global Recruitment recently deemed British graduates “unemployable” in comparison to their international peers. Mr Goodwin cited laziness, arrogance, poor vocational skills and degrees in irrelevant courses as hallmarks of British university graduates. Chinese, Indian and Polish graduates were identified by Antal as top contenders for international jobs.

Leadership in manufacturing

More than words can say While Mr Goodwin’s statement that “if you want lazy, uninspired graduates then Britain is the place to go,” may be unusually extreme, it is certainly echoed in recent research carried out by the Association of Graduate Recruiters (AGR), the Council for Industry and Higher Education (CIHE) and research agency CFE. The results of this research suggest that the international mobility of UK students and graduates is low in comparison to other nations. Among eight key characteristics considered essential for international mobility and effective professional bearing, the top four were: A global mindset – awareness of different cultures and values Global knowledge – knowledge of global business activity and specific background knowledge of the economics, history, and culture of targeted countries Cultural agility – the ability to cope with and adapt to living in different environments. Advanced communication skills – the ability to communicate effectively (speaking, listening and presenting) with others from around the world and, where required, communicate in the native language Gary Lydiate, CEO of SME manufacturer Kilfrost, agrees that having managerial and executive staff with these qualities is critical to the success of any global company. Kilfrost supplies antiicing products, largely to the civil aviation market and Mr Lydiate says the company now uses around 10 different languages throughout its global operations ranging through Mandarin, Hindi, French, German and more. Local business is conducted in the local language at each of Kilfrost’s sites – an approach Lydiate is adamant in supporting. “You can buy a business in English, but you must manage it in the local language,” he says. This has obvious challenges for senior management and executive employees in terms of communication between sites and

Employer demand for foreign language skills (% of respondents)

Source: CBI education and skills survey, Building for growth: business priorities for education and skills, 2011 communication of strategy. It is not this however, which concerns Lydiate in terms of recruiting the right people to take the business forward, so much as the simple availability of candidates willing to travel on a flexible basis. “At every single executive level it is import to be mobile,” he says. “In my experience the majority of the UK graduates, and much of the managerial population, are static. They do not like to move, and this is true even within Britain as well as overseas.” Stubbornly poor communications skills seem unlikely to improve while languages at GCSE remain non-compulsory, and as CBI has pointed out in its analysis

of global export opportunities, the traditional study of French and German will have limited cache when the fastest growing economies are in Asia, South America and Africa. In spite of this however, there is a challenge before government industry and education to embed more culturally flexible thinking into the UK workforce. Without this the leveraging of the UK’s SME base in order to gain access to export wealth will be difficult and the UK will compound perceptions that, as one German journalist attending CBI’s Winning overseas report launch suggested, “The majority of UK business is parochial and inward looking.”

Cultural awareness and communication challenges are not just an issue for international factory operations or contract negotiation. Sophie Howe, director of Comtec translations, a company specialising in the translation of company documentation and marketing material, says that many organisations underestimate the attention to detail needed in designing websites, styling marketing material and building inhouse skills for success in new markets. Read TM’s interview with Sophie Howe online at www.themanufacturer.com

In the

fast fast lane lane Image 1 Cosworth made its name in motorsport but has followed an aggressive diversitifacation strategy in recent years

Image 2 The Cosworth F1 engine being used in the inspiring Bloodhound super sonic car project

Image 3 The Cosworth team scooped both SME of the Year and Manufacturer of the Year at TM’s awards in November 2011

Winning formula

John Silcox discovers how famed motorsport name Cosworth is forging ahead in new markets thanks to its flexible skills base and advanced manufacturing.

ritish engineering company Cosworth has been synonymous with achievement since its inception in 1958, notably powering Formula One legends Sir Jackie Stewart and Michael Schumacher to victory. This competitive legacy also fuels the high-value engineering side of its business, something the company has powered-up in recent years, enabling it to take top step into prime position on the podium at The Manufacturer of the Year Awards 2011 in November. “There’s a maxim in the motorsports world that says there’s no point in turning up with the winning car on a Monday morning,” says Cosworth chief marketing officer, Rik Temmink. “To win a race you have to be on the grid when the lights go out with a car that works, so that’s the way we approach every project. A deadline is a deadline and there’s no scope for extension. We don’t want to lose our motorsports ethos and enthusiasm, but we have culturally diversified

and the market is now starting to understand that Cosworth is no longer just a racing-car business. Its also a business that’s good at solving difficult engineering problems.” Indeed, since the business was bought by independent American investors Gerry Forsythe and Kevin Kalkhoven in 2004, the Northamptonbased company has embarked on a successful diversification strategy, exploiting opportunities in the automotive, aerospace and defence markets. In 2010, the 350-man operation boasted £50.5 million turnover – an increase of nearly £15 million on the previous year – and £4.9 million profits.

With a string of recent multimillion pound contracts with the Ministry of Defence, Aero Engine Controls (AEC) – a joint venture between Rolls-Royce plc and Goodrich Corporation – the US navy and Aston Martin, Cosworth is demonstrating its excellence away from the track. This diversification applies to new business markets and also to the work being done. Not only is Cosworth providing engineering solutions to these new clients, but the company is also manufacturing and assembling many of the components. “Our Formula One engines are probably the most prominent example,” says Temmink. “We design and build the engines in Northampton, manufacturing most of the components ourselves onsite. But the real transformation is making our manufacturing expertise available to other companies. With AEC, we have a contract to

Specialfeature In the fast lane

manufacture their designs and that’s probably where our most sophisticated manufacturing capabilities come into play. They have some very high-value components that are very difficult and complex to craft. It’s very specialist, so we instigated a collaborative arrangement, where we invite their experts to work alongside us at our facilities and make these components to the exact standard the client desires.” These manufacturing developments haven’t gone unnoticed in the wider industry. In 2011, Cosworth picked up the New Markets Award from the Motorsport Industry Association and it claimed two trophies at the Manufacturer of the Year Awards, including the RBSsponsored top prize. This recognition is well deserved, says Paul Mitchell relationship director, RBS, East of England Corporate: “Cosworth is a great example of an advanced manufacturer that has

grown by identifying areas where it excelled and finding new ways of exploiting this to full capacity,” says Mitchell. “They have done a great job at diversifying their activities and we were proud to see their achievement rewarded by an RBS-sponsored award.” Temmink is delighted by the achievement. “The Manufacturer of the Year Award is our biggest award in quite a while and it is one we’re extremely proud of,” he says. “To be given this prize as a company that is proud of its manufacturing, but has a motorsports history was quite a pat on the back for us. It’s good to celebrate this alternative image of the company that most people don’t know exists.”

Advanced manufacturing In Temmink’s opinion, Cosworth’s success is based on the potential to offer a more thorough approach to advanced manufacturing than many of its competitors, something

exemplified by its development of a new light-weight heavy fuel engine for unmanned defence vehicles. “We don’t believe in a quick-fix solution for things,” he says. “We prefer to take our time and do things thoroughly instead of taking the easy route. For the defence industry we have developed some lightweight compression-ignition diesel engines for use in unmanned air, land and sea drones, as well as portable generator sets. It’s a great example of the kind of work Cosworth is good at, and the field of unmanned vehicles is one of huge growth, particularly with governments trying to reduce the number of humans in conflict areas.” Because of a single-fuel policy respected by the majority of Western armed forces, diesel is the only available fuel used in warzones as it is less explosive to transport than petrol. But producing a small highperformance diesel engine was deemed impossible. Cosworth believed the contrary and set out to prove it. “Five years ago we were told it was crazy,” says Temmink. “But now we have contracts from the left, right and centre, and we see this element as a big area of growth for the future.” Growth is also expected to come from the development of international business. On top of two UK bases in Northampton and Cambridge – where most of its electronics work is done – Cosworth also has three bases in the USA and an office in India. The company’s expansion strategy is highly intertwined with emerging markets, notably in Asia. “In the US we have a good customer base thanks to our long-standing relationship with Ford,” says Temmink. “We have access to that market but we need a few things to come together to build from there. But what we’re really focusing on at the moment are India, Russia and China.” He adds: “We fit in well with the requirements of these markets and can develop things more quickly in a collaborative way. Quite a few of the emerging economies are interested in learning from mature western businesses, so we look forward to expanding in a role we play well.”

For more information please visit: www.cosworth.com

IT’s for the

greater

good

Breaking down silos in traditionally function-oriented businesses can be both practically and culturally challenging. But, as Jane Gray discovers it can free-up unrealised potential and amplify an organisation’s ability to exploit existing capabilities.

he relationship between IT and other business functions, including manufacturing and engineering, has become frustrating for many. An experience which was no different for data management and analytics company EMC. EMC is a global organisation employing around 48,000 people worldwide. It is a complex business offering an immense range of services as well as software and hardware solutions for businesses across industries and from large enterprise level into the midmarket. Solutions range from its traditional data storage capabilities, through, data analytics, infrastructure consolidation and optimisation, backup and recovery, security and more. EMC manufactures and configures to order a diverse range of technology products at sites in the US and Ireland. Given that the delivery of effective IT infrastructure is what EMC is all about, it might be assumed that the organisation has always been a shining example of technology exploitation for efficient and effective manufacturing. But a visit to EMC’s international manufacturing facility in Cork, Ireland, reveals that the company has endured many of the same challenges in aligning knowledge across functional silo boundaries as its manufacturing peers in others sectors. Since 2010, IT and manufacturing staff at EMC’s cork site, which is also a Centre of Excellence (see box) for mature management approaches, have been battling to break down traditional silos in its business. They are now uncovering innovative ways to collaborate, utilising many of EMC’s own solutions and a ‘private cloud’ approach to IT Service Delivery for its manufacturing operations.

What is a Centre of Excellence? EMC has seven Centres of Excellence (COEs) around the globe A COE is defined as “a capability or competency centre” with a heavy emphasis on people as the greatest asset A COE will be a hub for pilot projects and research initiatives around a defined ‘excellence’. A COE will build a team with expertise to promote the use of best practice in its ‘excellence’ across the business EMC’s site in Cork is a COE focused on supply chain and mature management approaches with a number of the business unit leads taking on Global or International roles Cork is the only EMC COE which is also a manufacturing site. It was awarded COE status in 2010 Benefits of being a COE include; collaboration across business units, greater understanding of site ‘value’ and purpose within EMC corporation, better access to global business investment for development and pilot business improvement projects and enhanced employee career opportunities

Now and then Explaining the baseline from which the IT-manufacturing relationship has progressed Ian Fitzgerald, senior manager EMEA, private cloud and data centre operations at EMC, says “We have around 40,000 internal users. There are five data centres and around 500 applications or tools in operation. Or at least that is how many we knew about in 2008 . In fact there were many more ‘make-do’ applications which people had either built for themselves or gone to external companies to provide because they were frustrated with long lead times and ‘red tape’ of IT.” Back then, Mr Fitzgerald says IT had an introvert, project-based mentality which focused on costs and efficiency. “We were unsure of our ability to meet the demand if we advertised what services we had the capability for,” comments Fitzgerald. “The company had doubled in size over the past decade and had heaped in complexity thanks to numerous mergers and acquisitions.” The potentially critical nature of some of the impromptu applications springing into life necessitated a transformation in IT. “These ‘shadow IT’ applications were potentially a real headache for us,” says Fitzgerald. “The longer they stayed in place, the more likely it was that they would become business critical – but they were outside our control for monitoring,” infuriating for a company which provides the very best in data security, recovery and information management for its external customers. “We realised we needed to change our view of internal customers,” comments Fitzgerald, “and over the last year we have reoriented to become service focused rather than project focused. We now have SLAs with all different areas of the business and, although we are an internal provider, we see ourselves as being in a competitive landscape – and so does the business.”

Specialfeature IT’s for the greater good

The capability IT has leveraged to make this transformation possible has largely been from EMC’s cloud and virtualisation portfolio. This has removed the need to raise tickets for many IT requests, putting power into the hands of users to create the capability they need for short term IT requirements or additions to their infrastructure. An internal application called Cloud 9 provides the user interface for this – largely created using tools from VMWare, part of the EMC family. Fitzgerald explains, “In the past it would take an IT engineer upwards of 90 days to get the simplest provision in terms of applications or servers in which to create a ‘sandbox’ environment for testing code. Now they can access that in a matter of minutes – and it is all self service. Automation – we couldn’t deliver our new IT services without it.”

Collaboration for innovation Having achieved this internal improvement in service delivery employees at Cork started to look for even more ambitious ways in which to use its marketed capabilities within the business. Manufacturing has been the first port of call and John Carmody, senior manager in test engineering at EMC, Cork, is full of enthusiasm for an innovative new virtualisation project, Cumulus, which is bringing a range of benefits to manufacturing by putting process control equipment capability in the cloud. “It’s one of the most exciting projects I have worked on for some time,” says Mr Carmody, “by partnering with IT we have been able to leverage their best practice for what would traditionally have been a test engineering role. There are so many levels at which manufacturing benefits – agility to support change (scaling to fit product line changes), software and hardware maintenance,

asset capitalisation, security [a virtualised system is at lower risk to viruses, non compliant software or even to possible data removal through peripheral devices like USB memory sticks]” As the test servers disappear off the shop floor valuable space is opened up, allowing for manufacturing capacity and flexibility to increase. But more than that, the Cumulus project will also enable far reaching improvements in the manufacturing process itself through leveraging the capabilities of other EMC acquisitions. For instance, integrating capabilities from the newly acquired analytics company Greenplum will help bring new understanding to manufacturing data. “It means we can pool far more data back from the testing, in real time, and run analytics on it,” says Carmody, “We will be able to make discoveries about performance problems a lot faster and start our investigations sooner,” ultimately improving quality and reducing variability and waste. According to Carmody the Cumulus pilot project is expected to deliver business savings of $3m through hardware virtualisation, power savings, facilities footprint reductions and labour savings.

Image EMC’s 600,000 square foot Centre of Excellence in Cork, Ireland

Over the last year we have reoriented to become service focused rather than project focused Ian Fitzgerald, Senior Manager EMEA, EMC

The next big challenge for IT and manufacturing at Cork is the implementation of a new SAP ERP system – a notoriously challenging process. The newly collaborative team are viewing the challenge with enthusiasm however. The implementation will be 100% located in EMC’s private cloud and the ambition is to keep it completely ‘vanilla’. “It is an opportunity for us to work with manufacturing to review and completely understand their processes,” says Cathal Holland, IT business consultant at EMC and IT Site Lead for the ‘Propel’ ERP project. Sitting with a gathered team of engineering, manufacturing and IT professionals who all seem at one with one another’s needs and confident in the structures now in place to service those requirements, it seems as though EMC has reached an ideal situation. Not so, says Fitzgerald. “It’s all part of a journey and we have much more to come,” he comments. “It’s about our need to be agile in responding to business needs. We have taken a lot of cost out of the business so far and we have gained a lot of efficiency. But agility is the most meaningful measurement for us.” We watch with interest for the next innovations to this end.

For more information please visit: www.uk.emc.com

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Regulation Update: Pensions

An age old issue Pension schemes have often been a point of contention for businesses and their employees. Often responsibilities and liabilities are poorly understood on both sides. However, legislative changes in 2012 to both direct contribution and defined benefit pensions schemes may raise new challenges around this age old issue. TM investigates.

n 2012 a number of changes to the way in which pension schemes are structured and administered by employers will come into force. According to commentators, including The Pensions Network, a membership based organisation comprising senior professionals in pension provision and employee benefits, there is little understanding of the forthcoming, and in some cases, businesses have already implemented changes to employer responsibilities for pensions. At a recent meeting of The Pensions Network, a presentation from Emma Watkins, director of business development for MetLife Assurance. revealed that 56% of employers were unaware of any of the below changes to employment law or pension provision: The abolition of the Statutory Retirement Age The start of auto-enrolment The move from RPI to CPI indexation Changes to IAS reporting requirements Such a lack of awareness may prove costly for many businesses. The same research, conducted by MetLife in September 2011, showed that 38% of employers have not yet carried out any review of the costs likely to stem from auto-enrolment of employees.

Pensions and union action There has been a number of clashes between unions and employers over pensions and proposed changes to existing schemes at major manufacturing organisations in recent months. More than 2,500 workers from Unilever’s sites at Purfleet, Port Sunlight, Warrington, Leeds, Crumlin, Gloucester, Manchester, Burton-on-Trent and Chester joined picket lines on December 9 2011 as part of a widespread day of action to protect their pensions. Other companies experiencing pensions disputes include BMW and Ford. Union leaders from the manufacturing sector’s largest union, Unite, have criticised these wealthy companies for what they see as “wanton greed” in attacking employee pensions schemes but these companies have defended their need to curtail the escalating cost of pensions. Alterations to pension schemes remain an emotive issue for employees and potentially volatile for employers.

An explanation of auto-enrolment from Andrew Arter, senior partner at law firm, Eversheds

rom 1 October 2012, new laws are due to come into force which will require employers in Great Britain to automatically enrol its eligible workers in a pension scheme. Employers can use their own pension scheme provided it meets certain minimum standards, or enrol their workers in the Government’s National Employment Savings Trust (NEST) pension scheme. There are also a number of other providers providing alternative arrangements to NEST. The new duties mean that employers will need to automatically enrol and pay minimum contributions for any workers aged between 22 and the state pension age who earn at least £7,475 per year (to be reviewed annually). This will go into an employer’s pension scheme, NEST, or one of the alternatives. Workers will have a right to opt out of whichever scheme they have joined. However, employers will be required to re-enrol those who opt out approximately every 3 years. They have a six month window in which to do this. Employers will also need to comply with a range of new registration, information and record keeping duties. The Pensions Regulator will notify each employer in advance of the date from which the new duties will first apply to them, based on the size of the employer’s payroll. The largest employers, those with 3,000 or more workers, will need to comply with the new duties from October 2012, and smaller employers may have start dates - or “staging dates”, as these are called - as late as 2017. The new duties mean that employers will need to have appropriate administrative systems in place to, for example, monitor the level of earnings of their workers, and to keep track of those workers who need to be automatically re-enrolled in accordance with the legislation. They will also have to bear in mind the potential additional cost of pension contributions; contributions will be phased in so that from October 2017 employers will need to contribute a minimum of 3% of “qualifying earnings” on behalf of workers.

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want to know more? For more information on Columbus manufacturing, including case studies, videos and white-papers, visit www.columbusglobal.com/manufacturing

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Regulation Update: Health and safety

The Löfstedt Report: its impact on health and safety legislation Rob Elvin, partner and European head of the environmental, safety and health group at Squire Sanders, advises manufacturers of the impact the Löfstedt Report is likely to have on onerous health and safety compliance.

n March 2011, Professor Ragnar Löfstedt was commissioned by the Department for Work and Pensions to conduct an independent review of health and safety legislation. The current regulations impose costly administrative burdens on businesses, with the bulk of these stemming from just a few regulations, including the Management of Health and Safety at Work Regulations 1999. The purpose of the review was to examine whether, on the balance of risk and evidence, current health and safety regulations are appropriate, and to identify opportunities for reducing such burdens whilst maintaining improvements in health and safety outcomes. In his report published in November, Professor Löfstedt concludes that there is no need for a radical overhaul of the legislation, suggesting instead that the problems stem from a misunderstanding and application of existing regulations. The report

recommends the revision and/ or clarification of health and safety regulations in order to consolidate legislation, keeping it risk-based rather than hazardbased, and ensuring that enforcement bodies are targeting businesses which pose the greatest risks. Key recommendations include: Conducting a review of specified regulations including the Work at Height Regulations 2005 and the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 (RIDDOR) in order to prevent confusion which may lead to over-compliance; Requiring a review of all strict liability offences by June 2013 with the intention of qualifying those regulations with what is reasonably practicable where strict liability is not necessary, or amending them so that civil liability shall not attach to breaches; Requiring the HSE to review its Approved Codes of Practice, ensuring that they remain relevant, unambiguous and up-to-date, and that they assist businesses by explaining what is reasonably practicable in order to avoid over-compliance; Conducting a programme of sector-specific consolidations (intended in part to ensure regulations reflect current industry practices) by April 2015. The report does not provide a comprehensive list of sectors, but gives as examples mining, petroleum and biocides. It is also recommended that the HSE

1 Rob Elvin, Partner and European Head of Environmental, Safety and Health Group, Squire Sanders

3 4

look at the possibility of consolidating the core set of health and safety regulations to provide clarity and savings to businesses; Giving the authority to direct all local authority investigation and enforcement activity solely to the HSE; Exempting the self-employed, whose activities do not pose a risk to other, from health and safety law; Requiring the government to work more closely with the European Commission and others to ensure a risk-based and evidence-based approach for new and existing EU health and safety legislation.

5 6 7

The recommendations seek to remove unnecessary red tape, making it easier for employers to identify risks and implement proportionate measures to control them so as to reduce costly repercussions to businesses. The report is an important step towards reinstating common sense into health and safety legislation, and the Government is fully committed to implementing all of Professor Löfstedt’s recommendations. We await with anticipation the outcome of the consolidation exercise, and hope that the HSE will use this as a platform to promote a more businessfriendly system for health and safety regulation in the UK, as envisaged by Professor Löfstedt. The prospect is for a much healthier working and business environment for UK manufacturers.

Interview: Nick Clegg

Nick Clegg visits TF Automation as part of a UK tour to promote the Regional Growth Fund

Clegg:

in defence of RGF

Thomas Moore pins down Deputy Prime Minister, Nick Clegg, during a visit to specialist machinery and pneumatic equipment manufacturer, TF Automation. In an interview with TM Nick Clegg defends the effectiveness of the Regional Growth Fund and discusses how the UK’s fracturing relationship with Europe will might upon British industry TM: During this Regional Growth Fund tour how do you plan to connect with manufacturers – a sector the fund has a particular remit to help? Nick Clegg: My personal interest is partly as an MP for a great manufacturing city, Sheffield, and partly because - and I said this from the first day that we entered into government – we’ve got this huge rebalancing exercise to do with the British economy. The old model was this - you had the goose laying all these golden eggs in the city of London and you had a succession of governments, which would take that money in terms of tax revenues, and hand it out as public subsidies in other parts of the country, particularly the north. That merry-go-round has come to a halt and what we need to do, through for instance the RGF - is to is to stop relying on hand outs from Whitehall for the economic survival of the North and great cities like Sheffield, Bradford and Leeds. We need to make sure we provide more support to manufacturing companies, advanced manufacturing companies and exporting companies. That’s what the RGF does. It offers a pot of money, first it was £1.4bn, now it’s £2.4bn in total, and we believe it will create or safeguard 500,000 jobs with many of these in manufacturing. TM: The Shadow Business Secretary, Chuka Umunna, recently criticised the Regional Growth Fund for delays in handing over funding. It was confirmed that only a quarter of 50 successful bidders from round one has received its funds. What has been the hold-up? Nick Clegg: It’s very revealing that Labour thinks the way the private sector works is that nothing happens until an official turns up with a cheque. It’s like the Soviet Union; this idea that you have to have some

official that brandishes a quill and says “now your project can start.” It doesn’t work like that. The way it works is that the government says “you will get the money”. This allows the private sector to get on with the project because they know that they are going to get the money at some point. Over 50% of all the RGF projects have already started, even if they haven’t necessarily got the cheque in their hands. TM: But companies have plans in place to buy machinery and other capital intensive resources. They need to pay suppliers so surely delayed cash flow is inhibiting? Nick Clegg: There’s not a hold up at all. We’ve been very open with all the recipients of our RGF funding. We’re not just going to suddenly start splashing it around without checking that it’s money well spent but the due diligence takes a bit of time. We’ve said to people that the money will be received this Autumn/Winter, which is precisely what’s happening. TM: Relations with Brussels have taken a battering recently. Do you think UK manufacturers will now lose out on contracts with Europe?

Nick Clegg: It would be a disaster for Britain if there was a fragmentation of the single market. The reason why it is so important to us is because it’s the largest borderless single market in the world, with 550 million consumers. Three million jobs in the UK are dependent on our role in the single market. We don’t want to see anything which fragments our access to the single market, but you’re right, [UK-EU relations] are very important for investors. They have invested heavily in Britain, including manufacturing, because we have untrammelled access into the single market. TM: Are you worried by the large number of Conservative backbenchers who want out of Europe? Nick Clegg: I will do what I judge to be in the national interest. The PM and I may have different views on Europe and in many other respects, but we’re working hand in glove to make sure that Britain’s leadership role in the single market is maintained. This is an abridged version of TM’s interview with Nick Clegg. For the full version please go to: www.themanufacturer.com

Big bang Diary

Big Bang

How eight year olds can save the UK economy

Diary

EngineeringUK state of engineering report launch at BIS

Paul Jackson, Chief Executive of EngineeringUK adds to the build up to The Big Bang Young Scientists and Engineers Fair 2012 in the context of a new report from his organisation.

ngineering UK 2012: the state of engineering, was launched at the Department for Business, Innovation and Skills on December 8 and has the potential to be a rare good news story for the economy and for our future workforce. So what is the headline? Engineering accounts for nearly a quarter of the economy, is a major employer and is at the heart of responding to global challenges and delivering UK growth. The launch brought Business Minister Mark Prisk together with business leaders to address the challenges we face in ensuring our future engineering talent pipeline. By the time today’s primary school pupils are of working age, the UK will need over two million additional engineers to meet demand. The message is clear: if parents want their eight year old to be out in front when the UK economy moves back into growth, they should make sure their children take physics and mathematics - a must for most engineering careers. The report confirms what those of us in the industry already know: that engineering is central to ensuring economic growth and plays a major role in tackling global challenges, including climate change, health, food security, and more. At home, the challenge for the engineering, manufacturing and science sectors is to develop and exploit emerging technologies, such as advanced manufacturing, manu-services, and low carbon and environmental goods and services. The engineering sector is a huge success story generating £1.15 trillion in turnover for the year ending March 2010 – nearly 25% of the turnover of all UK businesses. But our underlying challenges is to re-invigorate public perception about what it means to be an engineer in the twenty-first century. From large infrastructure projects like Crossrail or next year’s Olympics, to the massive impact at a microscopic level of robotic surgery, there are numerous excellent

opportunities to showcase UK feats of engineering - and programmes, such as The Big Bang Fair and The Queen Elizabeth Prize for Engineering, will go a long way to inspiring our future generation of engineers. If we are going to seize the opportunities identified, then we need to take a long term view - if we are going to maintain our

position in product innovation, we simply can’t afford to live just for today. There has never been a more important time for business and government – across all departments - to work together to make it happen. The launch demonstrated a commitment to do that. I can’t think of a better note with which to start the New Year.

About the report Engineering UK: The state of engineering is an annual report released by EngineeringUK an independant, non-profit organisation dedicated to highlighting the contribution made by engineering to the UK economy, as well asprotecting the future of UK engineering. The launch of Engineering UK 2012: the state of engineering was attended by representatives from Alstom Ltd, Aston University, BAE Systems Plc, Crossrail, EDF Energy, EngineeringUK, Finmeccanica UK Ltd, Rolls Royce, Shell UK, Semta and The Royal Academy of Engineering. Key points from the report include: Examination of the Sector Skills Assessments for the 10 engineering-related Sector Skills Councils shows that the estimated requirement for employees over the next 5-10 years will be an additional 2,217,500 The UK is now the seventh-largest manufacturing nation in the world, behind the USA, China, Japan, Germany Italy and France In 2010, 2.5 million people were employed in UK manufacturing, representing 10% of all employees Manufacturing is a major investor in Research & Development (R&D), which is an important driver of technological innovation. Of the top 25 UK companies by R&D spend, eight are from the manufacturing sector To read the report, go to www.EngineeringUK.com

World Leaders in

Lean Research & Education The Lean Enterprise Research Centre (LERC), part of Cardiff Business School, has for the past 17 years assisted manufacturers to improve their operations, reduce waste and build in value and efficiency to their production and supply chains. Renowned for exceptional research, a world class Master’s programme and industry focused training programmes.

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about manufacturing. How wrong I was. MSc in Lean Operations student

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29/09/2011 11:23:31

f o e e y o l Empmonth the 012 ry 2 a u n Ja

Alasdair Mercer Project Manager, Product Development, Surgical Innovations There is a lot of talk about the challenge of attracting talented young people into manufacturing. Articles like these can have a tendency to focus on ‘against the odds’ stories of star employees who nearly missed out on manufacturing careers. For some however, other industries simply never stood a chance. Alisdair Mercer of Surgical Innovations, medical device manufacturer and designer, talks to TM about his deep-set passion for his work. TM: What first attracted you to a career in manufacturing? AM: I have always been interested in how things work. Since my GCSEs I have chosen to study design and technology and science based subjects. I went on to study Design Engineering at University and was then completely convinced that I would like to pursue a career in this area. TM: What are the most rewarding parts of your job? AM: Manufacturing is extremely rewarding as a career, with one project being very different from the next. I am able to see designs become reality. Seeing a product which I have personally developed go to market is personally very rewarding. TM: What are the main responsibilities of your role? AM: My role is to manage the product development team. Having worked previously as a development engineer at SI, I am able to offer advice and guidance in a wide range of technical areas. For the past year my main responsibility has been to manage the development of pioneering new product PretzelFlex™ - the world’s first reusable pretzel shaped organ and tissue retractor for use in minimally invasive surgery. The shape gives it unique its strength and stability. The product was launched in November this year. TM: What are the key skills you use? AM: It is vital that I am able to plan and prioritise in order to ensure that the project timeframe is on track. Problem solving - backed up with technical experience is essential too. On the ‘softer side’, being good with people is an asset - I believe that looking after your

team ensures that they work to the best of their ability. I am very focused and driven in all that I endeavour to do something I try to enthuse into everyone who works around me. I am passionate about SI and what we achieve, after all, the devices that we make at SI can save lives. TM: What do you consider to be your biggest personal success at the company so far? AM: In just over two years I have been involved in the development of five new medical devices which are all now in production and being used in operating theatres around the world. This includes the 3mm YelloPort+plus™ for cuttingedge ultra-minimally invasive surgery. The device forms part of the YelloPort+plus™ range which won the Queen’s Award for Innovation in 2010. Most recently I have been tasked with sole responsibility for the PretzelFlex™ project. This was a technically challenging project however, I am proud to say that it was completed on time and the device is an international success. An additional factor, which makes the PretzelFlez™ project such an inspiring piece of

work to have been part of, is that my team are all young engineers, new to the company. TM: How do you think best to get more young people interested in manufacturing? AM: I think it is important to make young people aware of manufacturing from an early age. Building with toys like Lego can be a great way to get them interested in the first principles of mechanics and how things work. Being ‘hands on’ is key and school trips to factories and engineering museums would help young people to see the industry in practice and the products they can create.

CV in brief: Alasdair Mercer Age: 27

Qualifications:

BSc Hons in Design Engineering. 9 GCSEs, 3 A levels, as sociate of the Institute of Mechanical Engineers

Industry experience to date:

Motor sport, oil and gas, medical devices

Interests:

Motor sport, climbing, mountaineering, mountain biking, snowboarding and skiing

Have your say at www.themanufacturer.com

in association with:

UK MANUFACTURING: COMPETITIVENESS IN THE GLObAL ECONOMy

SHOULD THE GOVERNMENT DO MORE TO SUPPORT THE MANUFACTURING SECTOR? 6th March 2012, Queen Elizabeth II Conference Centre, London 10.00am – 4.45pm Followed by the prestigious EEF Manufacturers’ Dinner, Dorchester Hotel, London

IMPRESSIVE LINE UP OF MANUFACTURING LEADERS AND POLITICIANS

Best practice workshops: — Innovating products and processes for growth — Alternative finance for investment — Manufacturing growth through exports

For more information or to book www.manufacturingconference.co.uk or contact Benn Walsh on 020 7401 6033. workshop partner:

conference organiser:

Specialfeature An asset to manufacturing

An asset to

manufacturing Jane Gray talks to Alex Baldock, managing director of Lombard, ahead of his participation in EEF’s National Conference on March 6.

n December 14, 2011 Business Secretary, Vince Cable, announced the formation of a new industryled task force with the remit of diversifying business finance options. Access to finance is popularly stated as a key barrier to growth for UK manufacturers, suffering as they do at the hands of misconceived finance models aimed at industries with faster ROI. But it is hoped that this task force, and the ongoing efforts of key players in the financial services sector, will soon change this. The subject of ‘alternative finance’ will be a central theme at EEF’s first annual conference on March 6 where Alex Baldock, managing director of event sponsor, Lombard, is due to present on the topic. ‘Alternative finance’ in the context of Mr Baldock’s presentation will cover a range of finance options which steer clear of bank debt. These options include asset finance, a speciality for Lombard, but will also touch other options. Mr Baldock explains: “It is indisputable that manufacturers need better access to finance, but expecting bank debt to shoulder the full burden of that is unrealistic. There are more appropriate forms of finance available to suit particular business needs.” Private equity for instance. Furthermore, for cases where debt is unavoidable Mr Baldock will talk about the possibility of

It is indisputable that manufacturers need better access to finance, but expecting bank debt to shoulder the full burden of that is unrealistic. There are more appropriate forms of finance available to suit particular business needs Alex Baldock, managing director, Lombard

alternatives to simply “slapping on an overdraft.” He comments: “If working capital finance is what you need then you might be best off looking at invoice finance. A vanilla loan will almost certainly not be the best solution for everyone involved.” Inevitably however, as MD of the UK’s largest asset financier by some distance, it is this form of provision on which Baldock will focus. “Not enough manufacturers are aware of how asset finance works and the benefits it can bring,” says Bladock. “It is a fantastic way of giving manufacturers access to the kit they need to stay competitive – without the risk of hefty investment and with the flexibility to refresh the kit as technology advances.” According to Baldock this does not only apply to key capital equipment, but also to IT and technology products in business infrastructure. The key selling point of asset finance is that the manufacturer only pays for the kit while it is making money for them and the risk of asset depreciation at end of life is taken out if their hands. Furthermore, Baldock says that manufacturers can typically get far great value from asset finance than they would be able to get from a traditional bank loan. “Asset financiers can get comfortable lending more because they are secured on the asset – and we know our assets well.”

Why is Lombard sponsoring the EEF National Conference? In 2011 Lombard celebrated its 150th birthday. An important milestone for the company and a time for it to reflect on its heritage. Alex Baldock, Lombard managing director recounts: “When Lombard was first established our very first deal was struck with a manufacturer and for some time after that, oiling the wheels of industry was our bread and butter. For a variety of reasons that has not perhaps been the case in more recent years but today we have very real desire to rediscover our roots.” Putting meaning behind that ambition Mr Baldock speaks of the imperative of increasing manufacturing exports for economic recovery but says: “the bare facts are not favourable at the moment. Britain invested less in capital expenditure last year than Turkey and Mexico,” two markets UKTI has been working to raise awareness of throughout 2011 due to their rapid growth and potential for UK exports. As an asset financier Lombard has taken on a crusade to “beat the drum” for capital investment and to show it has an appetite to invest in UK manufacturing – for the ultimate wellbeing of the UK economy as a whole.

Lombard has recently launched a new product to support competitive growth in UK manufacturing – Capital Import Finance. This combines asset finance and trade finance to create a one stop shop for sourcing the best manufacturing kit on the international market. Learn more in the February issue of TM.

For more information go to: www.manufacturingconference.co.uk

Apex

vends a helping hand

Apex Supply Chain Technologies is hoping to transform UK factory floors. It has already experienced significant success in the US

Roberto Priolo speaks to Apex Supply Chain Technologies, whose point-of-work vending machines have conquered the US. Now the company is entering the European market, confident it can change the way supply chains are managed in the Old Continent too.

ending machines must be one of the cleverest inventions in our recent history. They have transformed the way supply chains for many of our favourite snacks and beverages work – and the way in which these products are consumed. It was just a matter of time before somebody found new uses for them. For instance, what if we positioned a set of machines by a production line in a manufacturing

facility, or in a hospital, dispensing commonly used equipment and connected to a cloud-based supply chain IT system to ensure reliable replenishment and easy access to spare parts and tools for workers? Apex Supply Chain Technologies, an Ohio-based company that with a portfolio of point-of-work vending machines has done just this. The organisation, founded by Kent Savage in 2006, has experienced extraordinary growth in the States over the past five years: it now holds a 60% to 70% market share across the pond. In June 2011, Apex Supply Chain Technologies crossed the Atlantic, and opened its European headquarters in

Worcester. It is looking to apply the same winning formula it used in North America to the Old Continent. Steve Dobson, director of business development, says: “Our successful approach provides a win-win outcome and entails distributors providing machines for customers in return for gaining a bigger share of their spend on consumables. The advantage for the customer is that the usage of items is greatly reduced, often by 35% or more. Additionally, the distributor gets to lock in the customer, lock out the competition and gain a wider range of products. Apex also helps distributors to drive their brand by branding the machines in the distributors’ logo and colours.”

Supplychain Logistics and Materials Handling

Head in the clouds?

Apex Supply Chain Technologies arrived in the UK in June 2011 The company produces vending machines that are designed to be placed at the point of work Apex machines dispense over 80,000 different products to thousands of companies in the USA Typical savings of 35-40% have been achieved on MRO consumption. Apex machines are controlled by the cloud, no transactional data is processed by the machine It’s a ‘connect and go’ internet appliance supported by a nationwide network of service engineers

Founder and CEO Kent Savage adds: “We found that the capital budgeting process for manufacturers tends to favour production investments over production support investment. It is difficult for many manufacturers to get capital funds to support the technology they need in order to improve. The model we use allows suppliers to make capital investment and provide our technology as part of their offering, lowering the barrier preventing manufacturers from acquiring innovating technologies.” This marketing model has already paid off: the company has installed over 10,000 machines this year. With 160 of Europe’s largest companies already using Apex’s technology in their facilities in the States, Apex Supply Chain Technologies is now confident about having a strong customer base to build on as it enters the European market, both in terms of end users and large distributors.

The cloud allows us to increase visibility throughout the supply chain, linking information at all levels and automating processes and inventory Kent Savage, Founder and CEO, Apex Supply Chain Technologies

According to Dobson, using the cloud gives Apex a distinct competitive advantage over its peers, who still work with older PC-based technology. He adds: “It’s a fantastic management tool. All reordering is automatic, as the cloud sends a message to distributors or buyers anywhere when replenishing becomes necessary. All you needed is a device to get onto the internet, wherever you are, and you will be able to track what the usage is for each person, machine or cost centre. Savage comments: “The cloud allows us to increase visibility throughout the supply chain, linking information at all levels and automating processes and inventory.” Apex’s machines bring the tools to the point of use. A line operator won’t have to travel to the parts store, thereby losing time and focus. By swiping their cards in the machines, they have immediate access to what they need, be it a pair of goggles, a drill or gloves. Besides the time savings, these solutions provide management with a valuable means of knowing who is using what at any given time. Reports are also available to help see where stock is going. For example, data can be segregated to profile and compare usage between groups to realise where best practice is. Inventory levels can be reduced by 50% and consumption by 15 to 50%. The increase in stock levels totals around 30-40%. The low cost makes the Edge 5000 vending machines particularly appealing, together with the quick installation and the fact that there is no need to purchase software. To put it like Dobson, these devices are a simple connect and go internet appliance. Dobson adds: “There is a low monthly management data and support fee and it’s per machine and not per user, which gives you the full support of

a UK-based team. The Edge 5000 has proven to be robust with thousands of hours of maintenance-free operation.” From its recently-opened Worcester offices, Apex supports the European market. “It would make sense to open other offices outside the UK and the US if we feel it’s necessary, but we are establishing our European base first,” Dobson comments. In the second quarter of 2012, the company will introduce its newest technology, Megastore. A larger point of use vending machine that will be completely pre-configurable depending on customer specifications. For example, Megastore can change if more space or extra storage is needed for larger items. It will be able to detect even the lightest items, even screws being taken and then put back into place. Savage says: “Megastore allows a wide range of items to be dispensed in a very compact way. It makes restocking fast and efficient, delivering greater value than ever before. We have made the space smart.” To make the most of the use of the vending machines, Dobson stresses that companies need to understand what they want to achieve from the implementation. “What are their objectives? For many it’s the easiness to have items available at the point of work, but also the ability to cut usage. Many companies find it difficult to keep track of their inventory. They need to identify what they want to achieve from the machines. Is it cutting down on the usage of items, driving down costs or having the ability to measure their supply chain operation on consumables and tools?” he explains. The advantages for users are endless, and Apex is now selling its way into more sectors than just manufacturing, such as healthcare. Savage concludes: “We have spent over €10m in R&D over the last two years, and we’ll keep investing heavily to take our technology forward.”

Special feature: Kingston Smith

Innovation

Can the UK be a more innovative place to manufacture in?

Daniel Martine, partner at accountancy firm Kingston Smith, reviews the intentions laid out in the Autumn Statement 2011 for boosting innovation in the UK and protecting the nation’s intellectual property.

e waited with bated breath on 29 November to see what rabbits the Chancellor could pull from his hat to boost confidence in the economy. Whether or not he has managed to successfully boost manufacturers’ confidence, only time will tell, but he has at least acknowledged that innovation must play a significant role in the country’s future. The Autumn Statement led into draft legislation released on December 6 on the adoption of a Patent Box tax regime and on revisions to Research & Development (R&D) taxation. The Patent Box for corporate tax payers has been on the political agenda for some time, and the draft legislation now gives businesses a clearer picture of how it will operate. The key features of the proposed tax regime are: It will apply from 1 April 2013 It will provide a reduced rate of corporation tax of 10% on profits attributable to qualifying intellectual property (IP) It will apply to patents issued by the UK and EU patent offices, but also to patents issued by other European states with similar criteria It will apply to both existing and new IP

A relatively complicated formula will be applied to calculate the profits attributable to the lower 10% corporate tax rate; For company’s with taxable profits of less than £1 million a simplified system will apply whereby 75% of the attributable profits will be taxed at the 10% rate, and no requirement for the more complex formulaic approach would be required; Losses generated from the exploitation of the patent box regime will be offset against patent box profits in other group companies, if appropriate, or carried forward against future patent box profits. The R&D tax regime has also been under consultation for some time. The proposed changes are aiming to improve the system for SME tax payers in particular. The key amendments to the R&D system for SMEs are: The additional deduction of 100% of qualifying expenditure will increase to 125% of qualifying expenditure (i.e. spend £100 and get tax relief of £225), on expenditure incurred from April 1, 2012 Restriction of the R&D payable credit to 11% of expenditure Abolition of the Vaccine Research relief Removal of the restriction of any payable R&D credit being limited to the company’s PAYE/NIC liabilities

Clarification of the ‘going concern’ definition from the existing legislation, to now exclude companies in administration For both SMEs and large companies: The minimum spend level of £10,000 will be removed Relaxation of the rules for payments made to businesses that provide staff to R&D companies The Economic Impact assessments issued with the draft legislation shows that the government anticipates the Patent Box and R&D regimes to go towards improving the state of the UK economy, making the UK a more attractive place for the full spectrum of manufacturers as well as inward investment. A step in the right direction has been taken to keep the UK competitive, but further steps may be required in the future. The government understands that manufacturers are crucial to the growth of UK plc. Witht hese changes to the in the tax system adding an extra boost for SMEs, now is the time to ensure you get the right advice for your manufacturing business.

To find out more about these changes and how they will affect your business, contact Daniel Martine, Partner at Kingston Smith on 01708 759759, or dmartine@ks.co.uk. Alternatively visit www.kingstonsmith.co.uk/manufacturing

Kingston Smith -- your specialist manufacturing accountants Getting the right advice when you need it often makes the difference between success and failure. At Kingston Smith our philosophy is simple: we want all our clients to succeed. Through our specialist knowledge of the manufacturing industry, our dedicated team is able to offer clear, practical and jargon-free advice to help you achieve your objectives. As a top 20 firm of Chartered Accountants, we have the capabilities to support you as your business develops. We offer a wide range of accounting, tax, corporate finance and HR services, both in the UK and internationally, as well as a comprehensive value added seminar and events programme.

For further information: Devonshire House 60 Goswell Road London EC1M 7AD T: 020 7566 4000 F: 020 7566 4010

If you are a manufacturing entrepreneur and would like www.kingstonsmith.co.uk/manfacturing to have a chat with a member of Kingston Smith’s team, please contact us. Key contacts: Specific areas that you may wish to discuss with us include: • Reviewing the most efficient and appropriate business structure • Routes to raising finance and working capital • Tax efficient investment planning • R&D claims to generate cash • Incentivising key employees • The pros and cons of using contractors or employees • Specialist advice on supply chain risk management • Expert advice on energy and cost saving strategies • Exit and succession planning

Maureen Penfold, Partner mpenfold@kingstonsmith.co.uk David Goodridge, Partner dgoodridge@kingstonsmith.co.uk Dan Martine, Partner dmartine@kingstonsmith.co.uk Keith Halstead, Partner khalstead@kingstonsmith.co.uk Follow us on @kingstonsmith

Another string

to the bow Accounts receivable finance offers stimulating alternative Business owners and managers are constantly wrestling with the difficulties of obtaining capital to finance growth or meet cash flow shortages. The nub of the issue is that, in the eyes of many SMEs, business financing solutions are becoming harder and harder to access. As a result, accounts receivable finance is enjoying steady growth discovers Tim Brown.

sset finance has not always enjoyed a rosy reputation. For many, accounts receivable (AR) financing has been perceived in years gone by as the finance of last resort to prevent bankruptcy. Today, AR is competitive with many other forms of finance and often much easier to obtain from risk averse lending agencies. “Where companies historically would have relied on a single source of financing, in today’s world, a lot of treasurers have realised the need to diversify,” says Stephan Caron, commercial director, GE Capital UK. “In the same way that a company would diversify its product range so as not to be reliant on a single product, companies are using the same principle with their balance sheet management.

“What we’re seeing is more and more is that bigger companies and profitable businesses are accessing this form of financing alongside other types of financing. There is a misconception that AR finance is more expensive than other forms of financing. I don’t think it is true. In fact AR finance can be up to 2% cheaper than senior debt.”

Sizing up accounts receivable Late last year, GE Capital released findings on the potential benefits of accounts receivable finance. According to its report, The ‘AR’ Factor, by 2020, €59bn (£50bn) of combined quarterly GDP across France, Germany, Italy and the UK as well as 1.66 million jobs would be reliant on the existence of AR

We see a lot of companies turn to AR financing as a more convenient form of financing as you only pay equivalent to what you are receivin Stephan Caron, Commercial Director, GE Capital UK.

finance. Furthermore according to GE, should AR finance usage increase to an optimal level, the combined GDP of those four nations could grow by an additional €53 (£45bn) per quarter and an additional 937,000 jobs could be created. In total, AR lending volume across Europe in 2010 was €989,951 million. According to the EU Federation of Factoring and Commercial Finance, this number equated to 8.43% of total EU GDP in 2010. AR finance offers a number of distinct advantages to businesses over traditional credit. These include: the provision of very short-term funding, without the need for businesses to provide supplementary guarantees; the improvement of cash-flow because of the shorter lead times

Finance and Professional Services

in obtaining cash; flexibility over how the finance is used. Although it is becoming increasingly recognised as a positive alternative to traditional bank credit, AR finance has not been a widely used form of financing compared to other instruments. In the UK the Asset Based Finance Association (ABFA) estimates that 42,000 of the UK’s one million SMEs use AR Finance. This means that penetration is just 4.1% in terms of number of UK businesses. However, total GDP penetration – the proportion of GDP that is financed through AR – is much higher at an estimated 13.34%. Although its use in the UK is not prolific, the remainder of Europe is even less engaged with AR finance. France 3.1% of all SMEs Germany less than 1% of all SMEs Italy, under 2% of all SMEs “We see a lot of companies turn to AR financing as a more convenient form of financing as you only pay equivalent to what you are receiving,” says Caron. If the value of the receivables that you are selling is going up or down, you don’t have a fixed line of financing.”

AR Finance Penetration % of GDP % of SME’s

Where companies historically would have relied on a single source of financing, in today’s world, a lot of treasurers have realised the need to diversify Stephan Caron, Commercial Director, GE Capital UK.

More than 50 companies contributed to the report and according to the economist who developed the report, Steve Lucas, Director of research firm SQW, companies using AR finance were consistently impressed with its versatility. “What companies stressed more than anything was the flexibility and the responsiveness of this form of credit compared to other forms. If an increase in orders came that needed to be funded, the additional finance could be sourced out, very frequently, within 24 hours. This allows them to respond very quickly to opportunities.”

AR offers positive outlook As well as the positive impact of current and expanded use, the GE accounts receivable finance study also examined how reliant these economies are on existing AR finance provision and the potential for growth from increased further use. The report showed that if AR finance were not available to companies in the countries examined and the benefits of its use were stripped out, all four economies would be critically impacted and Source: GE Capital’s The AR Factor report

experience restricted future growth. In order to demonstrate the value of AR finance to the four economies examined in the report, GE looked at the impact if AR finance was to be withdrawn immediately from each economy. Given the scale of AR finance and its importance as a source of working capital and even considering the availability of alternative forms of finance, our model shows that the major European economies would see an immediate and significant impact: across the four economies, €16.92bn would be wiped off the combined GDP in the fourth quarter of 2011. There are therefore a number of potential benefits for all four European economies in supporting the wider adoption of AR finance but there are a number of barriers to this that have so far limited penetration across Europe. Should these barriers be overcome the number of companies using AR could rise as much as threefold. Based on consultations with factoring associations in each of the four markets which were the focus of the report, there is a consensus that 6-10% of businesses in each market not currently using AR Finance are eligible and would find it beneficial. If the full number of eligible companies made use of AR finance, this could also support a significant growth in the number of jobs available in those economies. The UK economy, for example, could grow by an additional 2.09% per quarter and that growth could lead to the addition of more than 300,000 jobs. As the headline figures from the report illustrate, AR finance is currently facilitating substantial economic output. However, the opportunity is certainly bigger, both in terms of the number of businesses who could access this finance to deliver growth and, as a result, the overall economic uplift which could be realised throughout Europe.

The other

Dragon’s Den Mark Bryant, business director of Business Growth Fund explains how his new organisation is seeking to leverage the potential of Britain’s strong SME base to help them go from good to great. Here he explains the equity investment model and urges manufacturers to fire up their growth ambitions.

hen I was recruited as the business director for BGF earlier this year, part of my remit was to communicate the combination of growth capital and business support we have to offer, to the UK’s fast growing medium sized businesses. Top of my list is manufacturing. With over 30 years’ experience in Industry, primarily as the managing director/CEO of manufacturing businesses, I feel passionately about this sector. Those of us

Too many British manufacturers are happy to settle for ‘good’ and don’t see the need to push on for ‘great’ Mark Bryant, Business Director of Business Growth Fund

who work in manufacturing know just how important midsized businesses are. These firms represent over 30% of the UK’s manufacturing employment base. They rank among them some of the fastest growing and most innovative companies in Britain today, producing world-leading products for aerospace, motorsport, oil and gas, and healthcare. And while mid-sized firms in general may represent less than one percent of firms in the UK, they account for

The Nuts and Bolts: Business Growth Fund BGF became operational in April 2011, the brainchild of the Business Finance Taskforce and its remit to help Britain’s fast growing small and medium-sized businesses excel. Growth potential is the key criteria and BGF can invest between £2m and £10m per business. BGF is an independent company with capital of up to £2.5bn, backed by five of the UK’s main banking groups - Barclays, HSBC, Lloyds, RBS, and Standard Chartered. BGF is however, managed completely autonomously. To consider whether you could benefit from what BGF has to offer ask yourself: Are you looking for equity investment to grow your business? Is your business demonstrating a strong growth trajectory and does it have a turnover between £5m and £100m? Would you value the added input of an experienced partner investor? Find out more and apply for funding online at: www.businessgrowthfund.co.uk

22% of all economic revenue. In the search for economic growth and the new jobs it provides, Britain’s mid-sized manufacturing firms have a critical role to play. They deserve all the funding and support we can give them. The national media may be full of doom and gloom, but as I travel across the UK and spend more time with business owners and entrepreneurs I see genuine cause for hope. The UK’s reputation for innovative, high quality manufacturing is alive and well. In addition, key industry bodies are helping to drive manufacturing growth. The launch of the new nationally operated Manufacturing Advisory Service (MAS) will help small and medium sized manufacturers. The new service will be delivered by the Manufacturing Advisory Consortium (MAC) and will help create £1.5bn in economic growth, 23,000 jobs and safeguard 50,000 jobs. So what is stopping these good manufacturing businesses becoming great national and international companies? Access to finance provides some of the answers, but isn’t the whole story. I believe there are a series of additional reasons.

Finance and Professional Services

The first is that there are too many good excuses for deferring investment. The state of the global economy, another eurozone crisis or domestic inflation. They can all provide an excuse to wait another year for investment or expansion. But history shows that many great companies were created in downturns, proving that this can be a good time to invest. Secondly, many business owners simply don’t like the idea of increasing debt. Why would they risk it? Which leads to my third reason: stalled ambition. Too many British manufacturers are happy to settle for ‘good’ and don’t see the need to push on for ‘great’. But just as we shouldn’t solely blame the banks, we shouldn’t lay all the responsibility at the feet of entrepreneurs. Taking a company to the next stage can be daunting. Running a bigger company requires more resources, more support and more advice at the very least. Knowing where to turn and who to trust is critical. Business Growth Fund seeks to answer these concerns. It helps a business focus on what is in its control and find the most appropriate way to fund future growth. Securing investment from BGF is about more than just money. In addition to longterm capital investment, we offer companies the opportunity to meet, and be guided by, some of the most experienced businessmen and women and investment experts in the UK. Our partnership approach and sharing of expertise, guidance and contacts will be almost as valuable as the capital we inject into businesses. We will invest between £2m to £10m in businesses with a turnover between £5m and £100m that demonstrates an ability and desire to grow rapidly. We only take a minority stake; we are building not buying businesses. These businesses will have a proper business plan and a clear idea of how they might use BGF’s investment to grow their business over the longterm. In turn we will help our investee companies develop longterm growth plans, and the right financing structures for their needs. We believe that having the right balance sheet can help businesses unlock additional bank finance for working capital. Other financial backers will feel more confident in backing businesses that have BGF as a shareholder. So, with a great team in place, my task now is to find and engage with the UK’s fast growing manufacturers and talented management teams that can become the star manufacturers of tomorrow. Now is the time to ensure export opportunities are realised and not lost to overseas competitors. We look forward to working together with the whole business community to give these companies the confidence, financial backing and managerial support that they need to fulfill their potential.

Missing a trick? Despite access to finance being popularly quoted as a key stumbling block for growth, the new availability of the debt free support BGF is offering has not been snapped up in the way some of its leaders had hoped for. In addition, although Mr Bryant has expressed a passion for manufacturing and a will to invest in firms with a strong growth trajectory, only 17% of all applications to BGF have come from manufacturing firms and none have been awarded investment. Mr Bryant says there are a host of reasons why this may be so including bad past experiences with financiers, unfounded suspicion of buyout intentions or simple lack of ambition. According to Bryant this last issue is a distinct handicap for the UK and something which needs urgent attention. To try and find out more about why BGF is experiencing this TM asked a few of its readers about their awareness of the scheme and how attractive it seemed to them. Jonathon Duck, CEO of Amtico (turnover of £115m) says: This seems to be another scheme within a stack of initiatives that have gone nowhere. Conceptually I have to question what BGF is doing, the banks which back this fund ought to be supporting businesses anyway. As a manufacturer, how do I differentiate between BGF and my bank? According to the Financial Times BGF invested £8m in UK business up to November 24th [2011]. It is well behind its targets and appears as one of a blizzard of micro initiatives intent on playing with the icing, while the cake of taxation and the UK investment climate remains half baked. Peter Darke, MD Hampshire Cosmetics (turnover of £20m) says: “The low number of applications is most likely down to poor awareness. [BGF] do not seem to be publicising themselves very much and they have certainly not approached us. Had they done so I would certainly have looked at the proposition with some seriousness. However, one has to wonder why 17% of manufacturers that applied has been turned down – were they not viable?” With views such as these among manufacturing leaders it seems as though BGF has some significant challenges still to address in terms of overcoming cynicism, clarifying purpose, attracting attention and proving itself more than the faddish establishments of the Enterprise Capital Fund, Regional Growth Fund, Green Investment Bank, the Enterprise Finance Guarantee scheme or countless other programmes which have disillusioned manufacturers in recent years.

New year, new hope?

for 2012

Manufacturers have many reasons to look forward to 2012, even those whose fortunes will be played out against a backdrop of uncertainty and volatility. Peter Russell, Head of Manufacturing, UK Sector Coverage, at RBS, explores grounds for confidence.

ass redundancies and factory closures typically make more sensational headlines than job creation, even at times when good news should be big news. So it’s perhaps understandable that job losses at British and foreign-owned manufacturers, geopolitical turmoil overseas and wobbles in world markets make it easier for some in the media to argue that Armageddon lies just around the corner. Yet there is a rational case to be made for the country having the tools, skills and resources to withstand whatever lies in store over the next twelve months.

Talent attraction: developing and redeploying key people No-one is pretending that there hasn’t been bad news for manufacturing firms since the onset of recession. But while economic trends are hard to predict, there are indicators that certain sub-sectors and companies are all set to progress. Only recently, Jaguar Land Rover announced it intends to hire 1,000 workers in Solihull and Merseyside, while more jobs will accompany a brand new engine plant the company is building

in Wolverhampton. Similarly, Toyota’s £100m investment in its site in Derbyshire promises up to 1500 jobs over the next two years, supported by an additional £85m pumped into the UK supply chain. Outside of the automotive sector, Nestlé confirmed a £110m expansion of its Derbyshire plant, creating 300 jobs. These good news stories provide evidence that, should the government and industry efforts to promote skills-based education, apprenticeships and long-term careers succeed, there are likely to be plenty of opportunities waiting for tomorrow’s engineering and manufacturing professionals.

Inward investment: the UK is open for business The UK’s appeal as a place to do business is evident in the enormous interest that continues to be shown by foreign companies and governments. In November, the chairman and chief executive of China Investment Corporation declared that the sovereign wealth fund is now proactively seeking opportunities to channel some of its $410bn of funds into UK infrastructure projects. This represents

Specialfeature RBS

a step forward from China’s prior position as an investor which preferred to take more of a back seat role. It’s also, say UK government officials, a declaration of confidence in the UK. Closer to home, Irish, French and German firms continue to invest here, belying the notion that individual countries (and especially those in the eurozone) are drawing up the ramparts. In many senses, the reverse is true. Whether drawn by our highly skilled workforce, a lighter regulatory touch or by the markets’ implicit approval of the country’s deficit reduction plan, the UK continues to attract attention and finance from foreign entrepreneurs, corporates and governments.

Leaner, cleaner and greener: innovation paying dividends Adoption of sustainable energy remains high on the agenda in boardrooms. That’s down to financial considerations as much as corporate social responsibility objectives. But with the cost of fuel and power heading in only one direction – and at breakneck speed – if companies plan to make, import or export more goods or components to fund their growth, new ways must be found to achieve energy efficiencies, reduce carbon emissions and avoid prohibitive green taxes. It’s therefore a good sign that, in certain pockets of the manufacturing sector, increases in revenues haven’t been matched by proportionate rises in carbon emissions. Take the motor industry: productivity, workforce and turnover may have grown significantly – but, according to the UK’s Society of Motor Manufacturers and Traders’ annual sustainability report, environmental impact has actually reduced. Per vehicle manufactured, year-on-year energy use has fallen by 8%, CO2 output by 10.5%, and landfill waste by 18.5% (see www.smmt.co.uk/sustainability for more detail). If this reflects investments in innovative, cleaner, greener production processes, it’s a clear signal that manufacturing growth needn’t be held in check by assumptions that environmental damage and tax liabilities will sky-rocket correspondingly.

Flying the flag: investing in exports With domestic markets relatively flat, UKbased manufacturers have been able to take advantage of sterling’s weaker exchange rate to break into new overseas markets. Policymakers and industry leaders alike agree that exporting represents a crucial route back to sustainable growth. Strategies of proactively paying down debt throughout the recession have left many companies well-positioned to fund overseas growth using profits. For manufacturing firms without substantial surpluses, low underlying interest rates mean that corporate borrowing has never been so keenly priced. Soundings taken by our relationship managers from manufacturers indicate a readiness

to invest in domestic capacity with overseas business in mind, or to put down roots in markets more likely to generate returns from local production or supply chains. Recognising the successes enjoyed by UKbased manufacturers in 2011 (much of which slipped below the media radar), the government continues to demonstrate confidence in the sector’s export potential. In an Autumn Statement that was otherwise largely sombre, the Chancellor was sufficiently encouraged to announce or reaffirm moves to support manufacturers, including a doubling (to 25,000) of the number of SMEs eligible for export guarantees from UK Export Finance. The announcement of more lenders participating in the Enterprise Finance Guarantee (EFG) for asset-light firms (those with turnovers of under £44m) underlines this confidence – let’s remember the government has even fewer cards to play with than it did this time last year, and must be even more judicious with how resources are distributed.

A watching brief: assessing risk and planning for growth Of course, uncertain times lie ahead. The eurozone’s economic picture is changing almost daily, driving unpredictable behaviour in global markets. Downward revision of the UK’s growth forecasts, and the corresponding increase in government borrowing, may prompt further belt-tightening, amongst consumers and businesses alike. How might these headwinds play out for manufacturers? The relationship directors in my team talk every day to CEOs and CFOs of manufacturing companies. And while hard facts and figures inform boardroom decisions, the collective mood that filters back via those conversations is one of an increasing appetite for taking growth opportunities in a considered way. Interest in acquisitions remains firmly on boardroom agendas. More senior management teams are exploring their options, some with considerable urgency. The effectiveness of determined strategies to keep costs down while maintaining quality, driving revenues and building market share means many of those companies are not just positioning themselves as acquirers – they’re also becoming attractive takeover targets themselves. Planning ahead? Revising your domestic or overseas strategy? Re-evaluating your risk profile? To discuss how RBS might be able to support your strategic objectives, contact Peter Russell, Head of Manufacturing, UK sector coverage Tel: +44 (0)20 7672 1007 Email: peter.russell@rbs.co.uk

A motor management policy ensures that high-efficiency drives are used where they are most needed

Zurich, the insurance company, sees sustainability as a vital element in risk management. Ruari McCallion finds out why.

Vital Sustenance Anyone who has not come across the word

Zurich is investing time and effort into raising

‘sustainability’ in recent years must have been

awareness of the importance of sustainability

spending time on another planet. Whether it

among its brokers and it has developed contacts

is because of political exhortations to insulate

and resources that are intended to help

and investigate solar PV, the sprouting of wind

customers to understand the issue better and to

farms across the country, the cost of filling up

improve sustainability in business. But why?

a car, unwelcome numbers in an energy or landfill tax bill, or regulations relating to recycling

A broader view

cars, plastic or other materials and products,

“The single biggest feature for us as an insurance

sustainability has become a ubiquitous concern.

company is the quality of management leading the businesses we deal with,” said Jim Wilkes,

Having said that, it may not be the first word

senior technical underwriter, Zurich Insurance.

that springs to mind when one considers various

“It is critical to how we choose our customers

offers from insurance companies. But Zurich says

and how we underwrite business. When we

that it is a subject that is well up its own agenda

encounter customers who understand business

and that it has an influence both on the business

and manage their risks effectively, we get better

it will take on and on the premiums it will charge.

underwriting and offer better costs.”

It is the case, then, that companies looking

Good advice – and where to find it

for the best deal will be those that have

“A recent report from the CBI looked at mid-sized

sustainability on their list of risk to be managed,

corporations in the UK and one of the big issues it

as well as health and safety, hazardous materials

identified was lack of access to good environmental

storage, security, fire protection and all the other

advice,” said Steve Green, European middle

areas thought of as directly related to insurance.

market network leader with Zurich. This could

Wilkes agrees.

lead to a lack of awareness of both legislation and opportunities for improvement. Taking steps

“If a business believes that it is managing risk

to improve awareness is not pure altruism, there

better, it should be discussing that with its

is (in the classic Ayn Rand phrase) ‘enlightened

insurer,” he said. “There is also the question

self-interest’ involved, as well. The company is

of upcoming legislation.” From 2012/13, the

in business to do business. If its customers are

UK government will alter reporting regulations

suffering, then it suffers as well.

for all companies to require reporting on environmental and social issues, so there is a

One of the partners the company works with is

need to think more widely. “We are seeing

Burcote Consultancy, which provides a variety

customers doing this now. There are cut-off

of services ranging from energy and carbon

points and the concept of quality indexing

compliance to full carbon management, including

is coming to the fore.” Among the factors is

carbon reduction commitment – which is the

ISO14001 – and for more than one reason.

mandatory carbon emissions cap and trade mechanism for non-energy intensive businesses.

“Certification is important,” Wilkes confirmed.

Energy sustainability, process and production

“ISO14001 is environmental but it covers

sustainability and effective carbon management

workplace safety, too. On the environmental

all impact on the bottom line as well as

side, a lot of companies have reduced the quantity of dangerous chemicals they use, as well as how they use them and this is not just

“A recent report from the CBI

environmental; it affects the risk. It reduces

looked at mid-sized corporations

potential liability, so it is relevant. What

in the UK and one of the big issues

companies must do is to be sure their broker

it identified was lack of access to

knows and puts this information forward to the

good environmental advice”

insurance company.” Steve Green, European middle market network leader. Zurich

ISO14001 also requires detailed documentation, which creates an audit trail and makes it easier for the insurance company to get a clear picture of what it is being asked to take on. Which

demonstrating good management. The positive

is all great – but where do companies go for

news is, there is no need for companies to worry

information, help, guidance and support in

about groping around in the dark. There is plenty

raising their game?

of real-world experience available for sharing.

The first step is likely to be their broker and

“Certain organisations, especially those at

that may require a shift in mindset, both from

the forefront, like Coca-Cola for example,

the broker community and from the company

have been considering costs associated with

itself. Insurance is usually, if not overwhelmingly,

energy,” said Ruth Gilbody, commercial director

thought of as a cost, and the idea of seeking

at Burcotes. She is responsible for client and

ancillary services through an insurance company

market development in the areas of energy,

may be somewhat novel. Even more so, help and

environmental and sustainability consultancy

advice that appears to have nothing directly to do

relating to organisations and property. “Smaller

with insurance at all.

organisations have not got there yet. What we do with those we engage with is help to unpick

However, things are changing; Zurich works with

the complexity of the legislation – some of it

partners and collaborators to offer a range of

is very complex. The issues we address include

services outside pure insurance policies. Some,

competitiveness and cash flow. Some measures

such as legal services, are pretty logical but advice

we can suggest have a quick payback. What we

and consultancy on energy sustainability, for

are looking to do is to help business reduce its

example? That is a step outside the envelope,

cost base.” Which is good to hear – a number of

although the rationale behind it flows from the

apparently clever ideas can be expensive and take

company’s broader attitude to risk.

a long time to generate payback.

areas of consumption reduction, increased efficiency, recovery and reuse have been explored and implemented. This is the sort of thing that is meat and drink to Burcote but there is more. Every day brings energy-saving offers through the post or e-mail. It can be a minefield. “Organisations are being bombarded by lots of people saying ‘we can help’. They need to take the time to step back and take independent advice, to avoid jumping from one solution to another,” Ms Gilbody said. CHP (combined heat and power) plants can be very useful in the right circumstances but it is not a panacea. If it is being used roundthe-clock then it can pay for itself quite quickly; if it is not, then ROI can take quite a while. Legal burden

State-of-the-art

Legislation is a particular concern. There is no

drives provide energy savings and improved reliability

doubt that there has been a lot of it and it has to The right choice for ROI

be questionable whether mid-level organisations

In the context of payback and return on

– and even more, smaller enterprises – are

investment, it is probably appropriate to mention

completely up to date on it. Even when they

the Symposium on Sustainability that the Institute

have heard of some aspect, they may not always

of Engineering and Technology (IET) held in

be aware of recent developments. Take carbon

November 2011 at Caterpillar Logistics, near

reduction, for example. The legislation is aimed at

Leicester. A fuller report can be found online at

underpinning government strategy for reduction

www.themanufacturer.com but a few points are

of carbon emissions by 80% by 2050. European

worth highlighting.

legislation, such as that related to the energy performance of buildings, introduced in 2008,

Carpet tile manufacturer Interface FLOR has

is part of the landscape. ‘Carbon trading’ is a

saved over $438 million since embarking on

phrase that has entered the business lexicon

its sustainability drive in 1994. Shorter-term

– but just when you think you know what it

gains have been enjoyed by Weetabix, which is

implies, something happens.

projecting energy savings in excess of £175,000 a year from its combined heat and power plant,

“The government undertook a U-turn in 2010,”

after installing a programmable logic controller.

Gilbody continues. “The legislation was based on

It also identified product wastage savings of over

recycling carbon emissions, which have to be paid

£80,000/year. Toyota has cut energy consumption

for and some companies stood to do well and to

by 12.5 % during a period of growth. ABB

make money from it. But the Spending Review

helped another motor manufacturer to cut

changed that and it is more like a tax, now. The

electricity costs by over £100,000/year, through

MoD, for example, will have to buy £21 million-

the use of variable-speed drives.

worth of emissions next year [2012]. The carbon emissions regime is now seen as an absolute

Energy savings are the gift that keeps on giving,

tax. The Carbon Reduction Commitment (CRC)

of course. Not only are they permanent – more

scheme is effectively a 10-11 per cent tax. Costs

so than just getting the lowest cost for your gas,

are adding up for businesses.”

oil or electricity – but as energy costs rise, the actual savings increase as well. And it is not just

What follows from that is that the more businesses

large companies that can achieve quick payback.

can reduce energy usage, the more cost they

A point that was made several times at the

will save. The issue is rather pressing. But if the

symposium was that investment in new capital

government is sincere in its statements that it

equipment – for the sake of energy saving –

wants to se a recovery in manufacturing in the UK,

should be the last thing considered, after other

it does not seem to be going about it the right way.

“There is a need for more grants and reliefs in

including CHP and energy from organic waste

this area, there is a need for funding,” Gilbody

– anaerobic digestion – may be more effective

says. And there is some money available. The

sources of power, depending on the scale of the

Carbon Trust is able to provide interest-free loans

operation. The list of opportunities to save power,

of up to £500,000 per site, and there is incentive

use it more effectively, recover it, reuse it and

for businesses and utility suppliers to work

deploy machines that use less in the first place is

together to reduce energy consumption, strange

getting longer by the day.

as that may seem. But the first step is to make sure the lights are Other people’s money

switched off when everyone heads home, then

“Under the ‘Green Deal’, the government’s

to ensure that existing energy is being exploited

initiative to support the implementation of

as effectively as possible. Only when the quick

energy efficiency measures to households and

wins have been secured should thoughts turn

businesses, the organisation itself does not

to significant investment programmes – but

have to put up the money for energy-saving

the good news is that the savings achieved in

measures,” explains Gilbody. This is under the

the quick-win phase might help to pay for the

Energy Company Obligation, which is designed

larger commitments.

to integrate with the Green Deal, allowing supplier subsidy and Green Deal Finance to come

The processes should be looked at, with a view

together. “It can be given direct to the utility

to driving down on waste material. This can

company, which will work with the customer to

include design of cutting tools and the cutting

reduce energy consumption.” If the funds and

matte itself, as well as opportunities to reuse

various measures are available, the question

waste material as well as turning waste from a

becomes very much how they are to be allocated

landfill or disposal cost into a revenue stream

and what should come first.

– one company’s plastic waste could be raw material for a carpet tile manufacturer, or a car’s

“We ask what companies’ ROI horizon is and

noise, vibration and harshness (NVH) insulation.

get a pretty clear steer – most are looking three

A measure of behavioural change is required but

to five years,” she says. “We prioritise in order:

unsustainable or wasteful behaviour is becoming

less than a year’s ROI; less than two years; then

viewed as irresponsible and likely to attract

three to four years. We focus on quick wins

disapproval from business partners as well as the

and it’s possible to find a lot by, for example,

broader community – with potential negative

metering. Energy monitoring and costing

impact on performance.

enables us to work out what is being used and where. We establish the baselines; for example,

Change for the better

it may be that night usage should be zero but

“Behaviour is a huge change management

we actually find it’s 60-70 per cent of day use.

issue,” Gilbody states. “What we seek to do is

Clearly, things are being left on at night. It’s not

to get people to behave in the workplace as they

unusual for us to find thousands of pounds of

would at home – or the other way round! The

potential savings during our first day of working

impact of energy price increases in the domestic

with a company.” One of the first things is

realm is moving to the workplace – but people

often compressed air – still a major consumer

aren’t always directly paying for energy in the

of electricity. “There are some very interesting

workplace.” The trick is to engage peer pressure

solutions out there but they have to be suitable

in the process, in order to help improve those

for the application.” Those solutions can include

areas of performance on which the workforce

variable speed drives or piggy-backed motors,

can have an impact – or, indeed, the company

which provide supply to meet peak demand.

may rely on its employees to help improve.

A right-sized solution is the ideal but stopping

The net is spread ever-wider, as well. Marks

leaks is the first stop.

& Spencer (M&S), for example, is rating all its suppliers for environmental management. M&S

“We also find that a lot of companies are

has staff travelling around the country and the

losing heat that they need or could reuse,” she

world, checking that people are doing what

continues. “We investigate how foundry ovens

they say. The implication is that it is high time

and the like can be optimised for usage, how

for its suppliers to be doing something about

quickly they heat up. We pick the process apart

sustainability, if they have not started already.

and engineer it to improve performance. Waste heat is fed to where it can be reused. Whenever

“Sustainability generally involves a combination

we come across heat, we always ask what we

of lots of things,” comments Gilbody. “It’s

can do with it.” Alternative power generation,

about looking at the efficiency of what you

Pump or fan system running at 80 percent speed Based on a cost of 0.75p/kWhr Flow control

Motor/Pump

Valve

80 L/S

400,000 kWhr pa

£30,000 kWhr pa

VSD

Motor/Pump

80 L/S

225,000 kWhr pa

£16,875 kWhr pa

mechanical valve

Flow control variable-speed drive

Savings: 175,000 kWhr pa = £13,125 pa are doing; it’s about cutting down on energy

Ask your broker

use; and it’s about what is being done on-site

“Not all brokers will embrace the idea but

and improving energy security. That is very

if they can talk about things other than

important – gas, for example, will become more

insurance, including energy, they are offering

and more difficult over the next 10-15 years. It

added value,” says Wilkes. “People have to

is very hard to know exactly what is going to

start raising their heads and thinking ahead,

happen.” Yet it is important to make the right

something like five to ten years ahead, at least.

choices. A changed refrigeration system, for

We know that businesses are doing that in

example, happens only rarely: a company has

other parts of the world.”

one chance to get it right for the next 20 years, and that timescale is way beyond the normal

The value of insurance is not generally realised

five-year horizon.

until there is a problem or a claim, so companies tend to regard it as a cost, rather than an

Sustainability is not just a good idea – it’s

investment. Wilkes comments, “We deal with

the law. From 2012/13, all companies will be

the consequences of failure every day and

required to report on social and environmental

we know that some companies deal with the

issues. This means that companies have no

regular insurance issues of fire, flood, storm,

choice but to think more widely, according to

injury and the like, better than others. But

Zurich’s Steve Green. “The problem is: who is

we also know that issues of sustainability are

going to tell them and how they prepare for

becoming a concern at Board level, from small

it?” he asks. Zurich is looking to the insurance

family companies to larger businesses. We have

broker community to recognise the opportunity

seen companies assume that their brokers are

to expand the services they offer, not least to

telling insurance companies about the way they

differentiate themselves in a competitive market

are managing broader risk issues but that is

and to build closer relationships with their clients.

not always the case, even to the extent of the

They are in closer and more enduring contact

efforts they have made to reduce the amount of

with the companies in the mid-market sector.

hazardous chemicals they use. It is not just an environmental issue, it’s about risk as well – fewer

“I have spent much of the last month [October/

chemicals means less liability. It is relevant and

November 2011] making presentations to brokers

companies should ensure that their brokers put

that have not been insurance-related, but they

the information forward.”

are about risk,” he continues. “The CBI report said that mid-market companies are not getting

Zurich has recently updated a document it

this advice from external sources. They call in

produces, entitled Business at Risk. It contains

solicitors when they have a legal problem and their

information about sustainability, carbon taxes,

accountants are limited in their advice to finance.

landfill and a range of other environmental

We don’t expect brokers to become experts on

issues. The company says that it has grabbed the

sustainability, rather to raise awareness of it.”

attention of switched-on brokers. All companies

There is a parallel with, for example, product

would like to think their people are in the

liability and claims. If the supply contract is hard

‘switched-on’ category; the current situation

to understand then the broker will recommend

provides the ideal opportunity to confirm that,

getting a solicitor to look at it properly.

and to gain some cost-saving suggestions as well.

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shortlist Displaying some of EEF’s shortlisted entries for the EEF photography competition 2011.

EF’s Photography Competition is now in its second year, and on a quest to change the perception of UK manufacturing. For 2011 The EEF, in partnership with Lombard called for images of the Heroes of Modern UK Manufacturing. Images could depict a ‘hero’ person, product or process from UK manufacturing – with the united brief that the image must inspire interest and challenge popular mind sets about what UK manufacturing is or who it employs. Entries came in their droves with 440 pictures submitted across the three categories; Amateur, Professional and Young Photographer (14-19). The images displayed here a a selection from the judge’s shortlist - the overall winners will be unveiled at the Gala Dinner on 26th January, at Plaisterers Hall in London. They will share £5,000 worth of prizes supplied by Canon.

r working on A steelworke r surface of polishing inne heffield S . ng si a cast ca rs Steelworks te as em rg Fo

The judging panel The shortlisting and final judging process for EEF’s photography competition 2011 was undertaken by a diverse group of judges with expertise spanning manufacturing, marketing, journalism and photography. The group was selected in order that the winning images should represent a balanced brief with regards to highlighting UK manufacturing excellence and use striking, well composed imagery. The judges for 2011 were: Stephanie Chan, Online Marketing Manager, Lombard David Wilson, Director, ERA Foundation John MacRae, Guild of Photographers Will Stirling, Editorial Director, The Manufacturer Jane Gray, Editor, The Manufacturer Kim Scott-Clark, Picture Editor, The Daily Telegraph Alastair McDavid, Managing Director, The Digital Asset Lab

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This image was taken during the fabrication of a massive forming die. The die is used to form part of the steam generator for a nuclear reactor. Despite the product representing the ultimate in engineering integrity, the completion of the forming tool still relies on the knowledge and skill of manufacturing heroes to ensure risk free operation.

Led safety in manufactu your hands. New red from signal 7 material, 92% recy 3% reclaimed cla lowest in class pow ble at end of life & er consum ption.

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Opportunity

ahead At a conference to highlight the returns offered by Business Intelligence, Malcolm Wheatley finds solid evidence of the technology’s benefits for manufacturers.

en years ago, few manufacturers had heard of Business Intelligence. Large retailers and financial institutions knew of it, to be sure - and were already banking the profits earned from the insights into consumer behaviour that they had gleaned. But manufacturers? For the most part, no. Roll the clock forward, and a lot has changed - as was made abundantly clear at a conference organised by The Manufacturer in London in early December. Speaker after speaker strode to the podium and confidently outlined how their businesses were using Business Intelligence, and the benefits that they had gained. Rolls-Royce, Concord Filing Products, Tata Steel, New England Seafood: each had ventured on a voyage of discovery, and each had a clear view of the value of the investment that they had made in Business Intelligence.

Ten years ago, few manufacturers had heard of Business Intelligence. Roll the clock forward, and a lot has changed Malcolm Wheatley

Chaired by Peter Thorne of Cambashi, observers of the Business Intelligence scene, too, had something to contribute. Richard Brown of Capgemini, Pierfrancesco Manenti of IDC Manufacturing Insights, John Hammann of SAP, The Manufacturer’s own Nick Hussey: intelligently positioning Business Intelligence within the broader context of the general challenges that manufacturers are facing, each helped delegates to look beyond the hype to see the very concrete ROI that could be lurking, unlooked-for, in their data. So what were the messages to emerge? Several broad themes were clear. First, Business Intelligence delivers. Richard Brown of Capgemini, for instance, pointed to a study by America’s Massachusetts Institute of Technology that highlighted how ‘data driven decision-making’ could explain a 5-6% increase in corporate output and productivity

beyond that predicted by traditional IT inputs and outputs. Second, today’s ‘new normal’ is a competitive environment of greater complexity than ever before. To survive and prosper, argued Pierfrancesco Manenti of IDC Manufacturing Insights, manufacturers needed to be customer-centric, agile, and robust. And to Manenti, that sounded like a call for something suspiciously like Business Intelligence - a judgement with which it’s difficult to argue. It certainly doesn’t sound like a call for traditional and notoriously cumbersome systems like, for example, ‘old school’ ERP. And third, Business Intelligence can help manufacturers not just deal with the future as it comes upon them, but to predict it as well. As John Hammann of SAP noted, a single Business Intelligence dashboard was helping oil refiner Valero to save $200 million a year - a meaty return in anyone’s book.

IT in

manufacturing

But how realistic are such ROIs? And how attainable are they for the average manufacturer? Here, the manufacturers who presented at the conference helped delegates to ground the claims made for Business Intelligence with some solid hard-won experience of their own. Rolls-Royce’s Steve Whittle, for instance, spoke powerfully around the theme of data quality, and putting in place a data governance framework. And if that sounds dry, his engaging examples soon painted an all too convincing picture of the problems potentially faced by a business with cross-border operations. Currency settings, part numbering conventions, date settings - very easily, it turned out, was it possible for Business Intelligence to be flawed by data inconsistencies. The moral: time spent at the start, ironing out such issues, was an investment, and not a cost. That said, delegates confirmed the power of Business Intelligence in overcoming another commonly-found business scenario: “spreadsheet hell”, as Russell Robinson, speaking on behalf of New England Seafoods, put it. An accountant working as an independent Business Intelligence consultant, Robinson related how a Business Intelligence system had helped New England get to grips with forecasting and product profitability - in the process replacing a spreadsheet with six tabbed worksheets, 518 rows, and 468 columns. “A spreadsheet of that magnitude was complex, error-prone, completely undocumented and liable to splinter into multiple versions,” said Robinson. Its replacement was an animal of a very order - a Business Intelligence application that offered clear user interfaces, ease of use, ease of administration, and the power of “a single version of the truth.” Or, as New England’s finance director Charles Noble puts it: “We now have a system that shines a light on all areas of the business, from the sales trends of product lines to the profitability of individual products. We now also have sales team members doing a lot more analysis themselves, safe in the knowledge that they are dealing with reliable data from one source.” Nor need the costs of that clarity be excessive. Kevin Allen, chief executive of stationery manufacturer Concord Filing Products, painted an impressive picture of why his organisation had opted for a Business Intelligence solution hosted together with Concord’s data - on the cloud. “We wanted a solution aimed specifically at manufacturing and distribution companies, and selected a cloud based Business Intelligence solution from Matillion,” he explained. Why? Look no further than speed of implementation (4-8 weeks, instead of 6-12 months), no hardware or software to purchase, and no need for IT support or extensive training. The message wasn’t one that sat comfortably with every delegate, as subsequent questioning made clear, but the logic was hard to refute.

John Hamman, SAP, speaking with delegates at BI Connect, one of a series of technology Connect events hosted by TM

A spreadsheet of that magnitude was complex, error-prone, completely undocumented and liable to splinter into multiple versions Russell Robinson, New England Seafoods

Nick Reeks of Tata Steel, too, had a powerful message - and one that took the range of proffered Business Intelligence examples outside the often-found departmental deployments in sales, marketing, and finance. The procurement function within Tata Steel, it turned out, proved fertile ground for Business Intelligence’s insights. And in a twist that highlighted the wisdom of Rolls-Royce’s Steve Whittle’s emphasis on data quality, Reeks showed a slide containing a pile of crane wheels, intended as spare parts for steel mill cranes at Port Talbot. Their collective value? Half a million pounds. And why so many? Different part numbers, it turned out, and different ordering systems. “We just kept reordering - until Business Intelligence showed us that we didn’t need to,” summed up Reeks. And what of the future? Among other topics, a lively question and answer session probed the barriers that prevented Business Intelligence being deployed more extensively on the factory floor, where most delegates agreed a huge opportunity existed. Yet it was an opportunity that not every manufacturer saw: Matillion’s Matthew Scullion, for instance, powerfully described possessing a factory floor solution, yet seeing manufacturers seemingly more interested in sales and finance rather than boosting yield, OEE and quality. Inevitably, it was an argument that couldn’t be settled there and then, and conference chairman Peter Thorne of Cambashi drew the proceedings to a close. A debate for next time, perhaps.

Have your say at www.themanufacturer.com

Manufacturing Innovation Forum Stimulating proﬁtable growth through new technologies and ways of working Date: Thursday 8 March, 2012 Venue: Hellidon Lakes, Northamptonshire • A keynote speech by Pierfrancesco Manenti – leader of IDC’s Manufacturing Insights research practice • The latest innovations around analytics, mobility and OnDemand solutions for the Manufacturing sector • Meet Manufacturing customers, industry experts and visit the SAP partner showcase Find out more by visiting www.sap-manufacturingforum.co.uk or email sapmanufacturingforum@grg.com

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SAP Innovate or die

Innovate OR die

In early March, a free Manufacturing Innovation Forum aims to help manufacturers address the challenges that lie ahead. Save the date, and book a place.

tanding still is not an option: businesses must constantly innovate and improve. And improve not just their products, but their whole go-to-market proposition and business processes. For new ways of working, as well as new technologies, are key to promoting responsiveness to change. And the rules of success are stark: the laggards in business get left behind - and ultimately become part of the past, and not the future. Everyone knows that, of course. The problem, as always, is that doing something about it is complex, challenging and time-consuming. For manufacturers especially, day-to-day fire-fighting consumes an enormous amount of senior management bandwidth, leaving little left for thinking about the future. Or at least, a future that is any further away than the end of the month. But it doesn’t have to be that way. Which is why SAP the world’s largest enterprise software company - is hosting a Manufacturing Innovation Forum on March 8th 2012 at Hellidon Lakes in The Midlands Free to attend, the event is the first step in building a community of like minded manufacturing firms, in order to share the kind of best practices and inventive thinking that will help all participants convert opportunities into growth earlier and more profitably.

We’re convinced that we can help manufacturers to grow and improve their competitive edge in what is turning out to be one of the toughest business environments for years John Hammann, UK Industry Principal for Manufacturing, SAP

And you don’t have to be an existing SAP customer to attend, and to benefit from what will be a day of insightful presentations, ‘break out sessions’ with fellow manufacturers, and leadingedge thinking from a variety of speakers. Guided by experts such as Pierfrancesco Manenti - leader of IDC’s Manufacturing Insights research practice - and Lee Hopley, chief economist at EEF, the manufacturers’ organisation, manufacturers can explore how best to prepare themselves for the future, and examine the business best practices and processes that will turn aspiration into reality. SAP can help, of course. Innovative and committed to best practice itself, SAP has a distinguished track record in delivering solutions that dovetail with manufacturers’ needs - from cloud-based ERP to Business Intelligence, and from industry-specific best practices to innovative implementation partners and industry expertise. And with technology partners such as Ciber, itelligence and Bluefin Solutions in attendance, the idea is also to highlight how new technologies in terms of

mobility, analytics and ondemand solutions can help manufacturers address the challenges that the future holds. “We’re convinced that we can help manufacturers to grow and improve their competitive edge in what is turning out to be one of the toughest business environments for years,” says John Hammann, UK Industry principal for manufacturing at SAP. “To thrive in such an environment, they’ll want to improve the way that they collaborate, make better and faster decisions, and operate more efficiently on the factory floor and in their supply chains.” And size of business is immaterial, adds SAP channel sales executive Nick Hemming: small, medium-sized or large, every manufacturer is welcome at the Manufacturing Innovation Forum. “Smaller companies face the same challenges as big ones - but don’t have the same resources and ability to address them,” he notes. “And for manufacturing, we want to demonstrate that when it comes to innovation and best practice, there’s a lot we can do to help them.”

For more information please visit: www.sap.com/uk

ITnews... Manufacturing can learn from the fashion industry Mike Evans, research director at industry analyst firm Cambashi, highlights opportunities for manufacturers to gain competitive advantage through looking at the technology solutions for design and customercentricity being applied in other industries. At first sight there may seem little in common between the catwalk at a fashion shows and the world of metal bashing. For the former ostentatious luxury is the name of the game, while mainstream manufacturing works tirelessly to eliminate waste and drive down costs. No surplus features or functions are tolerated. But the two industries do have one important thing in common - they have to focus on their customers and establish brand and product value loyalty that keeps those customers returning to buy, again and again. That means creating a collection in fashion, or a portfolio of products in manufacturing, that favourably differentiates the supplier to their target customers. In the case of the world of fashion, the customers want products that show them as discerning individuals - high price is no barrier, provided products are instantly recognisable. In the case of manufacturers value for money is key. However, another big factor in procurement decisions risk minimisation. That is where the similarity between manufacturing and fashion starts to kick in. A manufacturer will win more deals as a lower risk provider if their products are recognised as a portfolio. Today, if you walk around a shop floor, you can often recognise the supplier of machines from their look. However, this has largely come from unconscious repetition of design rather than as a policy of styling. Dassault Systèmes recently announced FashionLab, a technology incubator that allows well known fashion designers to access their design capture, visualisation and simulation software tools. This interesting development will no doubt be good for the fashion industry. However, it also offers the intriguing thought that mainstream manufacturing could use the techniques of the fashion trade to build brand values. Learning from the fashion industry how to use style consistently would help build brand values across a portfolio of products. Learning from the fashion industry how to manage a portfolio of products that changes faster is likely to generate more revenue from products entering their market earlier.

CLOUD ERP

Halifax Fan implements SAP Business ByDesign One of the UK’s leading manufacturers of industrial and centrifugal fans has replaced its NetSuite CRM solution with a fullyintegrated cloud-based solution from SAP, SAP Business ByDesign. With only 40% of employees based in the head office in the UK and the other 60% split across nine different locations including China, Halifax Fans was beginning to feel the strain of not having an integrated system in place. Company owner Ian McEvoy explained: “We had several bespoke systems in place, as well as CRM from NetSuite, and although they worked fine individually, it put a strain on the business from the perspective of being able to have one single view of data.” In order for the company to be able to maintain its growth, McEvoy says it was obvious that a fully integrated solution was needed, but that lacking a big IT team, a cloud-based offering was a practical choice.

ENTERPRISE ASSET MANAGEMENT

Moy Park cuts engineering purchasing costs and production downtime Poultry processor Moy Park is deploying an asset management application from Infor, tasking it with helping to manage all its non inventory assets within the business, valued at approximately £17m. Infor10 EAM Enterprise is set to go live across 13 sites in Northern Ireland, England, Wales, Scotland, France, and The Netherlands by June 2012, helping to reduce production downtime and purchasing costs, boost productivity and deliver better financial control. EAM Enterprise will help deliver an improved analysis of the engineering department’s spending, says Conor Thompson, information systems programme manager at Moy Park. It will also help to measure suppliers’ performance and cut the costs of procurement.

IT in

manufacturing

BUSINESS INTELLIGENCE

Food provider improves sales analysis reporting with QlikView Prepared foods and produce manufacturer Bakkavör, which has over twenty business units in the UK many with different ERP systems and processes for analysing sales data has rolled-out the QlikView business intelligence application, in order to deliver accurate sales data analysis. The system was sourced from QlikView elite solution provider and manufacturing IT specialist Informance. Murray Shaw, systems manager for Bakkavör commented: “We wanted to provide a standard approach to enable data to be

gathered quickly, so as to allow our business users more time to spend on analysis and value added activities.” A pilot project, built around Bakkavör’s Scotland-based business and concentrated on solely sales analysis, was built

IT SECURITY

IT security is “biggest threat in 2012” IT security, from cyber attacks to issues related to disaster recovery and business continuity, will be the greatest threat to businesses in 2012 according to the uncompromising view of Cheryl Martin, head of security at BT Engage IT. This outlook comes after a year in which diverse threats, such as the Stuxnet virus and Japan’s earthquake, have shown just how vulnerable businesses can be. Timely preparation is vital, insisted Martin, waiting until disaster has struck isn’t an option. “The key for successful technology risk management is maintaining the balance between known risks, and events that we cannot anticipate, ‘black swan’ events, which can cause an extreme

and delivered by Informance in approximately one week. “Our plan is to achieve the roll out of the sales analysis application to at least 10 more busineses, and increase the user numbers to over a hundred before the end of 2012,” concludes Shaw.

EDI

Free conference to boost automotive manufacturers’ supply chain integration Recognising the fact that only 20% of suppliers in the automotive supply chain are properly integrated through technologies such as EDI (electronic data interchange), with smaller manufacturers especially vulnerable to a lack of integration, the European Commission has launched a programme to boost electronic connectivity.

impact that only seems explainable in retrospect.” Stephen Manley, chief technology officer of data storage specialist EMC’s Backup Recovery Systems division, agreed and stresses. It’s generally smaller and mediumsized businesses that are often most at risk from data loss.

Dubbed the Auto-gration project, it brings together a group of leading automotive organisations - including Odette International, BOOST, CECRA, CLEPA, Inova+, COVISINT, FIGIEFA, GALIA, SupplyOn, and TecCom - under a commission-sponsored umbrella. A conference in Stuttgart, taking place March 15-16, will bring together more than 200 automotive players from across Europe, including vehicle manufacturers, Tier 1 suppliers, small businesses, automotive industry associations, standardisation bodies, and IT service providers. On the agenda: outlining the project’s progress to date and explaining the low-cost options available to manufacturers.

Have your say at www.themanufacturer.com

Manufacturing Technologies

Industrial Automation:

leaning forward A recent Frost & Sullivan report highlighted the convergence of programmable controllers and distributed control systems as an important market trend, but also noted that it has yet to yield expected results in the field. Stuart Greenwood of Eaton’s Electrical Sector sets out to prove the report wrong with his insight into lean automation advances.

t could be claimed that as soon as remote input/output modules became available, the process of convergence between programmable controllers (PLCs) and distributed control systems (DCSs) was underway. With this in mind, it’s hard to see the convergence of PLCs and DCSs as a new trend since it has been with us for at least a couple of decades! But, of course, convergence continues to spread and most modern automation systems now incorporate intelligent devices – such as variable-speed drives with built-in intelligence, and electronic operator interface panels. With all these devices linked to the central controller via network or fieldbus connections, it does become difficult to distinguish between the PLC and the remainder of the automation system. Except, that is, within the control panel itself. It is astonishing to realise that, although conventional hard wiring of field devices has virtually disappeared in all but the smallest of installations, traditional hard wiring is still very much the norm inside most control panels.

Disrupting the status quo Wiring runs are, of course, much shorter inside the panel than outside, but that’s no longer a valid reason to ignore bus-based panel wiring – perhaps better described as lean panel wiring. This surprising omission in automation technologies has finally been addressed in Eaton’s SmartWire-DT which allows all of the devices within a control panel, such as motor starters, HMI panels and even conventional pushbuttons and indicator lights, to be connected to the central controller, whether it’s a PLC or a smart relay, via a simple daisy-chain connection. Conventional control wiring is eliminated. It’s important to note that with the best lean panel wiring systems, special components are not needed. Instead, inexpensive interface units are added to standard components in exactly the same way that an auxiliary contact block is added to a contactor. Some

of the benefits of this technology include dramatically cutting panel wiring time dramatically time and the time needed to test panels. It is also easier to make modifications to panels – instead of having to carry out extensive wiring changes for even the simplest modification, all that’s needed is to daisy chain the new components to those already there.

Bringing transparency Possibly the biggest benefit, however, is that the use of lean panel wiring facilitates the flow of information between panel components. A suitably equipped motor starter could, for example, report the running current of the motor and the status of the protection device to the central controller. This information could be processed and used to initiate further actions, such as sending a message to the HMI panel and alerting the operator to an impending overload condition. Put simply, adopting lean panel wiring greatly improves the transparency of the automation system. Since fieldbus and network-based field wiring already supports information exchange, the addition of lean panel wiring means that any information about the automation system’s operation can be made available wherever it’s needed. This transparency is one of the key elements needed for lean

automation and the growing uptake of lean automation is arguably a much more significant trend than PLC/DCS convergence. Lean manufacturing is a well-known concept that is based on identifying all sources of waste and inefficiency in a process and eliminating them. Lean automation extends this concept to automation systems, slimming down control panels, simplifying wiring, increasing data transparency and enhancing performance while reducing overall costs. With the introduction of lean panel wiring, lean automation can now cover every facet of manufacturing processes, from the ERP system right down to an emergency stop button, and from the SAP package down to individual sensors. In summary, there certainly is a trend for PLC’s and DCS’s to converge and this trend is continuing because convergence has already been shown time and again to deliver excellent results. This is hardly news. What is news, is the emergence of lean control panel wiring systems that mark the final stage in the transition from traditional control system technologies to modern network- and bus-based technologies, facilitating the implementation of transparent automation.

‘Service culture’ is not enough Whether or not it is possible to label ‘servitisation’ as a trend in manufacturing. There is little doubt that it is a business approach which has brought significant and sustainable wealth to some manufacturing firms, allowing them to move against the curve of manufacturing decline in the UK. Jane Gray investigates what the manu-service model requires.

Recently installed, the centres new thermography equipment will improved non-destructive testing capabilities

ervitisation’ is an approach whereby manufacturers retain some level of ownership or stake in the value of their products, long after they have left the factory gates, through the establishment of through-life maintenance contracts, product training, end of life disposal and a variety of other services. Rolls-Royce was among the first to demonstrate the value of this approach and the company is still considered a leader in the servisation field. The scope of servitisation reaches well beyond the aerospace sector however. Servitisation goes hand in hand

with a strategy to position the UK as the home of high-tech manufacturing for sophisticated products. Companies like data storage specialists EMC have a 24/7 service operation which monitors and maintains the performance of the hardware it manufacturers in Ireland and the US. Siemens has recently launched a new cities and infrastructures division which aims to provide the products and intelligence for a new generation of ‘smart’ city infrastructure. More and more it seems as though the line between manufacturing companies and service organisations is blurring

Lagging behind Despite the potential for so called manu-service companies to multiply the value of their products and gain access to sustainable revenue streams, a report from Barclays Corporate, released in Sept 2011, suggests that a disappointing number of UK manufacturing firms consider the model to be applicable to their own businesses. The Servitsation Report which surveyed more than 200 manufacturers revealed that 44% of manufacturing firms still provide no after sale or in-life services for their product and 82% of this segment have no intention to do so in the future. To read this report in full go to: www.barclayscorporate. com/inperspective/business-strategy-and-insights/ manuservicereport

– perhaps requiring a reorientation in how we think about the ‘rebalancing’ of our economy. But turning manufacturing firms into manu-service organisations is a complex task which will require more than simply improving customer service skills and recruiting staff for the maintenance of new SLAs. The technology required to deliver complex services and manage product performance is still a relatively young field. At the Engineering and Physical Sciences Research centre, based at Cranfield University, the development of technologies to support servitisation is core to strategic priorities. The five focus areas for research are: A study of the cross sector challenges in throughlife engineering services feedback to design and manufacturing Reduction of no-fault found (NFF) through system design Characterisation of in-service component feedback for system design and manufacturing Improvement of system design process for whole life cost reduction Self healing technologies for electronic and mechanical components and subsystems

1 2 3 4 5

This research is being led by a collaborative team from Cranfield and Durham Universities. Andrew Shaw, National Centre Manager for the new EPSRC centre, explains a few of the projects: “We are looking at how data obtained from the servicing of complex manufactured products can be used to inform the design and manufacturing process. The aim of the research is to maximise availability and operability of such products through the reduction of

Manufacturing Technologies

maintenance activities. This is achieved by gaining a thorough understanding of the failure mechanisms affecting such products and then engineering out potential defects and control system anomalies.” A few key projects, all at a relatively early stage of development, include:

1. Characterisation of In Service Component Feedback for System Design and Manufacture The research will investigate damaged components using 3D optical, thermography, and X-Ray scanning to identify degradation type and the amount of material loss. This study will identify the relationships between the component degradation and the initial component design and the process used for its manufacture. The new knowledge obtained relating to these dependencies will define design and manufacturing practices to increase component life. Typically, thermographic non-destructive testing (NDT) techniques can be used to identify cracks within gas turbine components. The recently installed equipment enables the centre to study the heat signature of preheated components. Cracks show up as ‘hot spots’ on the thermal image. The equipment can also be used upon electrical circuits to identify failing electronic components and loose connections which again show as hot spots. The component degradation information will be integrated with the component ‘AS USED’ and ‘AS MAINTAINED’ data to predict the remaining life. This technology, when used in conjunction with the other NDT techniques listed above and subjected to data fusion techniques provides a powerful diagnostic and prognostic suite when predicting useful life.

Here and now While the research projects underway at Cranfield and elsewhere hint at exciting possibilities for servitisation, manufacturers should not feel that the technology infrastructure for an effective manu-service model is a thing of blue-sky dreams. Technologies exist in the here and now which can help traditional manufacturers transform their offering and extract new value from their products. Serigne Gaye, senior manufacturing consultant for Teradata EMEA, explains how his organisation’s technology for data warehousing and business analytics is already playing an important role. “While the growing trend towards servitisation can undoubtedly create new business and revenue opportunities, it also increases exposure to risk. Technology such as Data Warehousing and Business Analytics can reduce this exposure by helping OEMs build a deeper knowledge of customers and their use of the equipment. “Performance-based support contracts also demand faster decisions and greater transparency on achievement of targets. Here, an effective Business Intelligence infrastructure, comprising a scalable data warehouse combined with advanced business analytics, makes it much easier to streamline support activities. “In effect, as part of a best-practice process, the technology has the potential to improve products and engineering, create better customer relationships and, crucially, to increase service revenues.” www.teradata.com/industry-experience/manufacturing

2. Reduction of no-fault found (NFF) through system design Investigations show that there are many reasons for the occurrence of NFF in electronic, electrical, and mechanical systems. Solutions to NFF events prove difficult within engineering services and occur from incorrect diagnostic techniques or tests, wrong processes, operational pressures, poor design and/or training. Such faults can be very significant especially when product availability business models are employed. Research and practice suggests that there are three classifications of NFF: Intermittent faults Integration faults Built in test equipment indicates a fault but there is insufficient information available to locate the fault The study, just started within the centre, will identify common root causes for the three types across industry sectors and understand the nature and impact of interaction between systems to cause NFF. Furthermore, a novel FMECA technique will be developed to yield Fault Detection and Isolation (FDI) methods.

3. Self-healing technologies for electronic and mechanical components and subsystems Achieving the goals of highly reliable, predictable and available systems requires the best available data acquisition to capture in service performance and degradation over

wireless networks from novel MEMs based sensors. Making sense of the massive data banks captured is the next step so that problems can be identified early and quickly fed back to the “design for reliability” process. Going further than this requires that not only can the products identify and signal that they are unwell but that they have a certain amount of local capacity to self repair. The similarity with biological processes is clear. Humans are as reliable as they are because they self heal and can keep going within certain limits. Electronic engineers have been building self test into systems for some time and allowing a circuit to self recover from failure is now possible. The field is new when extended to mechatronic systems, but there has been some early success in demonstrating how such a system might behave. Medical analogies are useful here and we are calling this new subject “regenerative engineering”. Investigating stem cell algorithms has been our focus.

Light

fantastic Replacing a bespoke legacy system with Microsoft Dynamics AX has delivered a smooth business transformation for Urbis Lighting which belies it power, finds Malcolm Wheatley.

art of Belgium’s Schréder Group, Basingstoke-based Urbis Lighting, as with Schréder’s other 43 companies around the world, manufactures public street lighting, and associated ‘street furniture’ such as bollards and benches. Back in 2009, came the recognition that Urbis’s existing legacy enterprise system was posing an increasingly unacceptable risk to the business. A bespoke piece of software that had been written specially for the company by an external contractor, it had the advantage of being honed to Urbis’s precise requirements. There were also no license fees to pay, as the company owned the software application.

A product configuration module asked a basic series of questions, the answers to which then built up the technical structure of the product Stephen Hemsley, Manufacturing Director, Urbis

Even so, says Urbis manufacturing director, Stephen Hemsley, the imperative for change was clear - not least because the core ERP capability was quite separate from the company’s accounting system, requiring cross-posting between the two. “As the business grew and evolved, we were increasingly aware of gaps between what we wanted, and what the system provided,” he notes. “We also saw the desirability of more comprehensive reports, and more accurate information, which would give us better insights into the business.” Most telling, though, was the business risk posed by continuing to stay with a piece of software that had but a single user – Urbis – and which had been developed by a single contractor. It was, in short, time to change. It was not difficult to identify a replacement enterprise platform. Across the Schréder group, a number of the businesses had already moved to Microsoft Dynamics AX. Clearly, says Hemsley, from a risk reduction perspective, an adoption of Dynamics AX by Urbis would be a clear and consistent step forward. Better still, he adds, Schréder had developed a number of enhancements to the core Dynamics AX product, and moving to Dynamics AX would provide access to these. “There were a number of modifications that were quite specific to our group,” he recalls. “A product configuration module, for example, that suited our business much better than the standard Microsoft-supplied one. It asked a basic series of questions, the answers to which then built up the technical structure of the product, the bill of materials, and the resulting product cost.” Accordingly, the decision was made to look for a UK-based implementation partner - a search that

This article follows a case study in a company where: A bespoke legacy system was posing excessive IT risk Dynamics AX offered proven ERP capabilities, plus company-specific add-ons Linked to shopfloor touchscreen terminals and barcoding, productivity has increased and accuracy has improved Dynamics AX has delivered controlled and disciplined business processes

Specialfeature Columbus

quickly ended with a decision to move forward with Dynamics AX specialists Columbus. “Columbus clearly knew manufacturing well, and very quickly understood our business,” recalls Hemsley. “They made it clear that they could help us implement the core solution, install the Schréder-specific additional functionality, and work with us to drive some very targeted business improvements in terms of due date performance and operating efficiencies.” Accordingly, work began in January 2010, with the intention of going live in the fourth quarter of the year - a timescale in part determined by the need to develop new business processes. “Right from the outset, we knew that MRPII was going to be a massive cultural change for the organisation,” explains Hemsley. “We’d only ever had very limited MRPI before, and Dynamics AX would give us full MRPII. We were warned by Columbus not to underestimate the difference and even with all the preparation that we put in, we probably did still underestimate it to some extent.” The project was also delayed by a decision, taken at Schréder Group level, to use the Urbis implementation as a model for further group-wide implementations, a decision that necessitated further work on the business processes that Urbis was developing and rolling out. “There were very detailed process descriptions to be written, and then turned into blueprints for others to follow,” says Hemsley. “We also wanted to put in place touchscreenbased factory-floor data collection and control terminals, instead of paper feedback systems, and make greater use of barcoding.” What’s more, as with Schréder Group’s other Dynamics AX installations, the new ERP system would be hosted externally, at a data centre in Brussels, fullyreplicated at a mirror site also located in Belgium.

Columbus clearly knew manufacturing well, and very quickly understood our business Stephen Hemsley, Manufacturing Director, Urbis

“Group-level control of data reduces risk, a lesson Schréder had learned when a factory burned down several years ago,” sums up Hemsley. “But as well as reducing risk, centralisation also reduces cost: there’s no need for companies to each run servers and databases locally, with all the duplication and additional expense that local servers entail.” The new system finally went live in April 2011, several months later than had been originally intended. But the wait, it seems, had been worth it. Simply put, significant aspects of the factory’s operations have been transformed. “We’ve a lot less paper on the factory floor, with touchscreens at every workstation displaying all the bill of material information that the assembly staff need,” says Hemsley. “Linked to the use of barcodes, it’s made it much more difficult for people to accidentally use the wrong part.” In future, he adds, the system will also display work instructions on the screens, further errorproofing the assembly process. What’s more, operators now clock-in at their terminals, rather than queuing-up four times a day at the two clocking-in

machines installed in the factory. With over a hundred operatives, the savings in time are far from insubstantial, notes Hemsley. Dynamics AX has also imposed far more discipline on the factory’s manufacturing, scheduling and procurement processes, he adds. “Our processes are now far more rigid and controlled, and people can’t hide mistakes, or exploit loopholes,” he says. “Sales staff can’t place an order on the factory that is due tomorrow, for instance, and it’s much more difficult to circumvent the proper buying process. And we’re also benefitting from following MRPII’s recommendations, instead of second-guessing what the former system used to recommend - so stockholdings have come down.” In all, he says, the transition to Dynamics AX has undeniably transformed the business. “Our data is far more accurate, our processes more efficient, and after the inevitable initial teething issues our due-date performance is improving nicely,” he sums up. “And from a pure IT perspective, we’ve got a better solution, with less risk. What’s not to like about that?”

For more information please visit: www.columbusglobal.com/uk

Manufacturinginaction Putting UK manufacturers under the spotlight Supported by:

Factory of the month

BAE Systems: Rochester 74 Rochester has evolved over the years after a succession of takeovers and mergers, leading to the site becoming part of BAE Systems in 1999 BAE Systems Rochester has over 1,000,000 sq ft of integrated electronic and electro-mechanical production capacity Since 2010 the company has developed its strategic goals using the Shingo Model for continuous improvement To date, 200 members of the workforce at Electronic Systems Rochester have been put through a BIT course â&#x20AC;&#x201C; 16.6% of the site. B everages

C omponent engineering

Coca Cola Enterprises 88

Metal Spinners 102

Water efficiency has been a key focus for CCE since the launch of its Corporate Responsibility and Sustainability agenda. In 2011 more than $30 million was been poured into capital, technological and people investment The desire to drill down into production data for further improvement prompted the roll out of a bespoke performance diagnostic system in 2009 â&#x20AC;&#x201C; LineView CCE has developed an internal measurement system for line performance which takes into account the varying capabilities of legacy equipment and new installations

Metal Spinners, a Newcastle-based supplier of components and sub-assemblies, has been mastering these operations since 1953 Metal Spinners also owns two of the largest, multi-purpose, machines in the world, two PNC1800 machines In 1997, it was acquired by Precision Engineering International, which changed the direction of Metal Spinners to focus on critical performance industries and applications It can manufacture components from a wide variety of metals, ranging from steel and aluminium to exotic materials

C able assemblies

CHH CoNex 98

A utomotive

Part of the CHH CoNexâ&#x20AC;&#x2122;s progression from its humble beginnings was success in achieving the high standards required to join the SC21 programme As part of its early steps toward penetration in the aerospace, defence and security sectors, CHH CoNeX also achieved AS9100 certification Following a Carbon Trust audit in March 2011, potential cost savings of 15% were identified The company may not be the cheapest supplier of its capabilities globally, but it aims to demonstrate that it can be the most cost effective

Ford Dagenham Diesel Centre 104 Due to increased efficiency demands from motorists, Ford Dagenham has seen a growing demand for its diesel car engines Production at the site reached nearly a million units in 2010, compared to just 600,000 in 2000 The plant has co-located product design engineers that reside onsite alongside the production team One area in which Ford has improved dramatically has been the cycle times on CNC machines

All companies featured will be entered into the MIA Award 2012

go All systems

When you think BAE Systems, you think hi-tech. Supported by over two centuries of history at the forefront of military and commercial developments Manufacturing Director Darren Patterson tells Tom Moore how a major skills initiative at the company is adding real value to the products it makes.

A pilot wearing one of ES Rochesterâ&#x20AC;&#x2122;s Q-Sight Helmet Mounted Displays

Factory of the month E BAE Systems (ES)

ach BAE Systems operation has its own identity and specialisms, something which is particularly relevant to the Rochester site since it became officially known as an Electronic Systems site in July 2011. Electronic Systems Rochester has a history dating back to 1795 when the site was managed by William Elliot. Rochester has evolved over the years after a succession of takeovers and mergers, leading to the site becoming part of BAE Systems in 1999 following the merger of British Aerospace and Marconi Electronic Systems. Darren Patterson, manufacturing director at Electronic Systems in Rochester, comments: “Electronic Systems Rochester specialises in displays, active and passive inceptors, pilot machine interface flight controls.” The site changed from Platform Solutions (PS) to Electronic Systems (ES) in July 2011, representing a synergistic move by BAE Systems to merge two of its integral Inc-managed businesses, Platform Solutions and Electronic Solutions. The new consolidated business, Electronic Systems, is headquartered in Nashua, New Hampshire, employing approximately 13,000 people globally with engineering and manufacturing functions primarily in the United States, United Kingdom and Israel..

BAE Systems: Electronic Systems (ES) at a glance Revenue

£21 bn (2010, BAE Systems group statistics)

Employees

1,400 at ES Rochester, 13,000 in ES worldwide. BAE Systems group statistics: 38,000 employees in the UK, 100,000 worldwide

ES Overview

The ES sector spans the commercial and defence electronics markets with a broad portfolio of mission-critical electronic systems, including flight and engine controls; electronic warfare and night vision systems; surveillance and reconnaissance sensors; secure networked communications equipment; and power- and energy-management systems

ES Rochester core products:

Sensory helmets, head up displays and helmet-mounted displays, active and passive inceptor sticks, pilot machine interfaces, fly-by-wire and integrated flight control systems, power and energy management systems

Customers

Serves a broad spectrum of commercial and military customers in the UK and RoW

Supply Chain

Involves around 7,500 UK businesses Another sign of bigger picture thinking and Electronic System’s awareness of the need for long term, sustainable success is Rochester’s aspiration to become one of a small number of UK companies to achieve a bronze award in the much vaunted Shingo Prize. While an electronic systems provider specialising in defence and commercial avionics may not be the first company you would expect to excel in the Japanese model for cultural and operational excellence, Electronic Systems Rochester has thoroughly grasped the concept that longlasting success doesn’t just come from the training you provide, but also the culture within the organisation. Every manufacturer wants to be a leaner, meaner machine – producing better products in quicker time. But after years of leaning out, Darren Patterson labels business culture “the final step” and he is in a good position to lead on defining what this culture should be like. Hardly the

Factory of the month BAE Systems (ES)

wet-behind-the-ears HR manager sometimes stereotypical as an advocate of ‘cultural engagement’, Mr Patterson is a former apprentice who grew up in the local area. He has now been with the company for 24 years and has worked on the production lines himself. Mr Patterson says that having the right culture enables staff to prosper. “We are moulding a culture where two things occur,” he says, “firstly, that everyone sees continuous improvement as part of their day job, we’ve already achieved a lot in this regard. Secondly, it’s not good enough to deliver your product on time, to the right quality, to the right cost; you’ve got to make it easier, quicker, cheaper and less prone to errors. In short it is all our responsibilities to make what we do better.”

Q-Sight Helmet Mounted Displays. It is smaller and lighter than conventional solutions and employs employs a revolutionary means of moving light using holographic waveguides. This provides pilots with heads-up and eyesout capability.

Breaking down the barriers The Electronic Systems operation in Rochester has three shop floors, each floor made up of approximately 15 cells. A cell is a team of around 10 people working in specialised production units fitted with the facilities to assemble, inspect and test the different products they manufacture. BAE Systems Rochester has over 1,000,000 sq ft of integrated electronic and electromechanical production capacity, so when the company decided it wanted open plan shop floors, the sight of these cells stretching from one side of the building to the other now makes for quite an experience. Each cell undertakes quite different tasks and duties but there is a real bustle on the shop floor amongst staff that know each other and are not separated to social groupings by job title, role, or cell divisions. Electronic Systems Rochester emphasises the fact that each cell makes up a whole each is interconnected, something which is implied in the term “cell”. Mr Patterson tells of how the shop floor used to be separated from the offices by a dividing wall before management decided to knock it down. “At first, people opposed the idea to knock down the wall,” he says, “but we opened it up and what we have now is an in-office integration manufacturing team (IMT), including materials schedulers and other roles, which can see the result of their decisions for their customer on the shop floor.”

Mr Patterson continues: “Over the last few years an area we have focused on is support overhead, trying to make us more efficient at supporting the shop floor. We have put the IMT’s next to the cells they support, meaning that they see the impact that each decision has and therefore support production in the best possible way.” Explaining the move, Mr Patterson says that the change in design it not just aesthetic, but a way of creating more desirable working patterns and behaviours. “It’s about empowering people to believe that they are in a position to come up with an idea and implement it,” he says. “If they can’t implement it themselves then there are systems we have in place where we can record it. Once a month a team leader from each cell will come and present to the management team to explain the areas they need help with and receive support to meet these needs.”

Culture club The key message at Electronic Systems Rochester is that culture involves everyone over a long period of time, not just one or two cells. At the same time, Patterson points out that the Shingo culture model of respect and continuous improvement is behavioural, and as such is a journey, rather than a quick fix. “So far, 120 plus people, including site leaders, are on the journey and knowledgeable about Shingo,” he said, “and they would all be able to tell you about it in some detail.” Considering how far the Rochester operation has travelled along this road Patterson says, “What we want to do is take everyone to the same place. Shingo looks at an organisation through a number of different lenses, such as frequency and duration, so if you want to go on a journey to operate in this way, a company has to demonstrate that it has been doing so for a period of time. It is only then that you can tell

Catalyst Consulting What is Lean Six Sigma There’s a natural synergy between Lean Thinking and Six Sigma. In seeking to maximise this synergy, a set of key principles, the ‘Magnificent Seven’ emerge: Focus on the customer Identify and understand how the work gets done – the value stream Manage, improve, and smooth the process flow Remove Non-Value-Add steps and waste Manage by fact and reduce variation Involve and equip the people in the process Undertake improvement activity in a systematic way In essence, these principles provide the framework for improving the efficiency and effectiveness of your processes. Reducing cost and enhancing the bottom line is one of the benefits in applying Lean Six Sigma. Improving customer satisfaction and market share provide

As you can see, Catalyst’s Deployment model is built around a framework of ‘Assess’ ‘Improve’ and ‘Maintain’ (AIM); along with three main elements, ‘doing the right work’, ‘doing the work right’, and ‘creating the right culture’. The whole approach is founded on the importance of Leadership thinking, behaviour, and development – without this foundation the deployment of Lean Thinking would crumble and fail.

further reasons for adopting this approach. And it’s an approach that is equally suited to manufacturing, transaction and service related processes. Focusing on the customer, and the concept of Value-Add, is especially important, as typically, only 10–15% of process steps add value, and often represent only 1% of the total process time. Incidentally, ‘Six Sigma’ performance means you are meeting your customers’ requirements virtually 100% of the time, whereas in many organisations performance below 95% is not uncommon. Even a 1% defect rate has a huge impact both for the business and the customer. How can Catalyst help? Catalyst’s team of trainers and coaches is highly experienced in applying and deploying Lean Six Sigma in a wide range of organisations and industries. Our comprehensive range of products and services include both inhouse and public training programmes from

Awareness to Master Black Belt. The training is supported with highly acclaimed materials and a full certification service through the British Quality Foundation. Additionally, we can provide post-training coaching support to help ensure your improvement projects are successful, or facilitate Kai Sigma Rapid Improvement Events for you to help achieve some early benefits. We can help you develop and implement an appropriate approach and programme for Lean Sigma Improvement within your organisation by: Assisting in evaluating the benefits it could bring to you Designing a tailored programme to meet your business needs and objectives Providing comprehensive training and support to your staff Helping you roll out and deploy the approach across your organisation Ensuring skills transfer Providing continuing advice and support

John Morgan Director Catalyst Consulting John is the author of ‘The Lean Six Sigma Improvement Journey’, and ‘Go Lean’, and co-author of ‘SPC in the Office’. He has also cowritten ‘Lean Six Sigma for Dummies’ with fellow Catalyst Director, Martin Brenig-Jones - a second edition is being published in February.

www.catalystconsulting.co.uk

Factory of the month BAE Systems (ES)

whether a behaviour is truly baked into the culture.” Patterson has been pro-active in leveraging Electronic System’s Rochester considerable heritage to create a sense of continuity and context for cultural progress. “All staff are made aware of both the heritage and symbolic status of the Rochester site. It carries a strong legacy of avionic expertise and upholds BAE Systems’ long and proud company history of small to medium sized business utilization through its legacy companies,” he says, explaining that lean is deeply embedded into the company’s culture. Each new employee takes part in a Lean Overview, as part of their induction. Clive Simmonds, manufacturing engineering manager, comments, “this is why Shingo doesn’t have a start and an end, it is continuous. Even when all of our current staff are trained, new staff will always need to be brought up to date.” A fact that encourages cultural evolution and instils a readiness to sometimes re-examine or question cultural characteristics, ensuring they do not become stale or side-lined. Since 2010 the company has developed its strategic goal using the Shingo Model. It has embarked on the next phase of the transformation journey which leverages the principles of operational excellence to help focus on cultural and behavioural aspects. Picking up on this point, Electronic Systems Rochester Operations function’s new mission statement, developed in 2011, is to ‘have an enthusiastic and empowered workforce that delivers effective products and services to our customers with efficient processes and minimal impact on our environment.’ The ‘knowledge boards’ that now line the cell partitions have brought a number of improvements, one example being the cell producing Integrated Display Helmet products. This high-tech product uses sensors in the back of the helmet shell to indicate where the pilot is looking. A missile can then be fired based upon the coordinates received from data in the sensors that feed algorithms such as speed and direction of both the pilot and the opposing aircraft. This has increased the pilot’s safety. Gary Chapman, team leader of the helmet cell, described one improvement that has occurred in his section. “There is a cable in the helmet that needs to be secured with adhesive. Marc Newman,

one of our shop floor technicians, decided that it would be a good idea to replace the masking tape in the helmet with clamps. He brought some pegs and modified them so that the sensors are held down not just by adhesive, but clamped into place. The time it took from knowledge board to implementation was just one totwo months.” Mr Chapman adds: “The improvement programme operated within the cell, coupled with the training given to the team has helped us identify wastes within our processes. It has empowered the whole team (even the quietest members) to take real ownership of the product and the build processes. Finding new ways to reduce our build times and improve quality and consistency. It’s enabled the team to develop, gain confidence and learn new skills by examining our processes and implement solutions to problems that previously would have been passed off to other teams to fix. We are very proud of our achievements as a team and that some of the improvements have been adopted by other cells.”

BAE Systems’ Eurofighter Typhoon integrated Helmet Mounted Display (HMD). Then: It is designed to meet the stringent requirements of the Eurofighter Typhoon aircraft, providing 24-hour, all-weather, all-altitude operation over the full combatflight envelope.

Hands up for business improvement... Would you like to: - Improve efficiencies? - Reduce waste? - Drive behaviour and cultural change? - Standardise your processes? - Improve the utilisation of your teams knowlege? - Focus more on activities that add value?

7 Step Approach to Change Management

M Co emo n tod tac to se t a inf y fo Deve lf... r oo l n s the l op-u u a c t c pro hang cess est ful gra e mm es

Creative co-operation Holistic approach to upskilling Assess and address culture Need for innovative leadership Generate and demonstrate the â&#x20AC;&#x2DC;visionâ&#x20AC;&#x2122; Energise by enabling positive feedback Sustain by measuring, reviewing & embedding

To find out more contact us on 01709 789 567 to see how we can help you to achieve the changes you desire or email sam@develop-u.co.uk

Factory of the month BAE Systems (ES)

Marc Newman, shopfloor technician (left) and Gary Chapman, team leader of the helmet cell, (right), with the adapted integrated helmet display that was improved within the cell at ES Rochester.

Marc Newman says: “It is excellent that BAE Systems’ Electronic Systems provide this opportunity for employees to put forward their ideas. It was rewarding to watch my idea go from concept to prototype to fully completed tooling to be used on all builds. I also received a ‘Recognising Excellence Award’ certificate in recognition of my contribution; this has encouraged me to look for other improvement opportunities.”

Staff not just a BIT-part While lean and continuous improvement goals are now ubiquitous in many UK manufacturing firms, Electronic Systems Rochester is being careful to ensure its programme does not become viewed as cliché or fad-like. The company measures improvement carefully and now has the figures to back up its pronouncements around workforce empowerment and ownership of improvement by shop floor staff. The savings figure for the full four cohorts now completed is not

yet known, but it is clear from the first three Electronic System’s investment in Business Improvement Techniques (BIT) training has been more than an HR relations exercise. “A lot of our team’s improvements are individual, not management led, it would be difficult for me to pick up on a lot of the day-to-day improvements that have come from the shop floors,” says Patterson. He is confident that waste and time saving measures, such as where trolleys, tools and PCBs are kept, are things that could only come from the shop floor. Since July 2010, when BIT training first started at Electronic Systems, there have been five cohorts put through the NVQ scheme. Clive Simmonds, manufacturing engineer manager at Electronic Systems Rochester, explains the training structure: “Essentially BIT is a two and a half day course, followed by coursework lasting 12 weeks. The cohorts, which are divided into teams, will raise and sort out problems in an area of their choosing. One of these will be associated with workplace organisation, where the teams will identify problems before creating solutions.” Mr Simmonds notes, “A recent BIT team came up with three projects. One based on workplace organisation, they built a designated storage place. Secondly, a project using the knowledge of everybody involved in fault finding. The team created a database to capture the knowledge so that people don’t waste time testing things or finding out solutions. Problems can now be answered via the database.

Change for the Good D

evelop-u is an award-winning training provider that designs and delivers employee and organisational Learning and Development programmes that make tangible and sustainable improvements to their clients’ performance. Established in 2005 and based in South Yorkshire Develop-u have worked with a variety of businesses throughout the UK and more recently in Europe. They work with all industrial sectors to share the latest Business Improvement Techniques (Lean) that will deliver the clients’ desired performance changes. We add massive impact by including modern “Behavioural Change Techniques” in all of our products and services. In July 2010 Develop-u were invited by BAES’s Electronic Systems (ES) business to become an integral part of the organisations long term strategic and developmental vision for their Rochester operation. One such vision is to become one of a small number of UK companies to achieve a bronze award in the much respected Shingo prize for operational excellence. Through a partnership approach, Develop-u continues to work with ES to create an innovative programme designed to support the operational objectives highlighted within the Shingo brief. ES are recognised for investing substantially and consistently in the development of their employees. During the first meeting with the Senior Operations Team, led by Mike Tierney (Operations and Supply Chain Director for ES Rochester), it was clear that they wanted the programme to support three areas of workforce development: the programme needed to: 1 up-skill the workforce in Business Improvement Techniques 2 introduce the workforce to alternative behavioural techniques i.e. NLP, Positive Thinking and Emotional Intelligence 3 embed the new culture through frequent practice and constructive feedback. Mike Tierney said “choosing the right training provider was extremely important to achieve the positive changes we desired”. Mike had

previously worked closely with Sam Morris, Develop-u’s Managing Director, on an extremely successful culture change programme delivered into General Motors, Luton in 2009/10. This programme delivered its main objective by helping the site secure the contract to build the new model Vauxhall Vivaro van which in turn secured 1000 jobs for the forseeable future. To date, ES have supported 200 of its employees to successfully complete this innovative model of Business Improvement Techniques and has future aspirations to enrol 500 more of its employees to enjoy and benefit from the same experience. This courageous development journey will not be fully realised until late 2014 and shows great determination by a forward thinking employer to engage all of its people. Clive Simmonds, Manufacturing Engineering Manager, technology & strategy, Electronic Systems Rochester, is clearly happy with the programme outcomes, “Currently we are achieving excellent results both in the process improvements, financial savings and changes in the attitudes and behaviours of all involved”. The sort of savings realised by the first three cohorts are; Cohort 1 – Five projects with projected total savings of £2.2m Cohort 2 – Five projects with projected total savings of £0.506m Cohort 3 – One project with actual savings of £1.272m + 4 projects still to be assessed The site has also realised increased levels of staff morale as well as generating real positive interest and expectations for those about to enrol onto the B-IT programme. Glen Broughton (Develop-u Regional Manager) says; “For any change programme to have a chance of long term sustainable success it has to

Published in association with: Develop-u Tel: Fax: Email: Web:

01709 789 567 01709 789 301 info@develop-u.co.uk www.develop-u.co.uk

have the buy-in and the ownership from the whole employee group. From the very beginning of this relationship the senior management team delivered total commitment and effective communication. They also visited the workshops and encouraged the delegates to participate productively.” Develop-u’s successes are primarily attributed to its unrivalled levels of learner support, engagement and passion. By using a holistic approach to up-skilling, Develop-u energise and equip the workforce with not only the hard tools and techniques but, equally as important, promoting the beneficial impact of positive behaviour and nurturing a community of shared best practice. Another distinct feature of the Develop-u programme is the added value of providing a full-time dedicated coach assessor, who is based on-site for the entire length of the programme. Laurie Heald, Lead Coach Assessor states, “We are passionate about being an integral part of our client’s journey and we work in close partnership in order to individualise our programmes to suit their particular requirements. This ensures that all outcomes contribute to both Electronic Systems’ strategic and developmental needs and each individuals learning journey. Rowena Hobbs, Logistics Controller at Electronic Systems’ Rochester adds, “The course has been a milestone for me at nearly 60 years of age. It has proved to me that I can still learn new things after 36 years of service with BAE Systems. The only way at any age… is forward.” To find out more about Develop-u or to arrange a site visit to explore how we could support you and your organisation please contact our team on 01709 789 567 or email sam@develop-u.co.uk

Factory of the month BAE Systems (ES)

The third project focused on visual management, colour coding the shop floor to save time on finding things. All of these recommendations were carried out.” The sort of savings that are being realised: Cohort 1 - Five projects with projected total savings of £2.2m. Cohort 2 - Five projects with projected total savings of £0.506m. Cohort 3 - One project with actual saving of £1.272m. To date, 200 members of the workforce at Electronic Systems Rochester have been put through the course. “Our aspiration is for an additional 500 employees, on top of the 200 who have already completed the course, to undertake BIT training. With the Governments’ support, we receive some funding towards the cost of the programmes,” says Patterson. The improvement projects undertaken as part of Electronic Systems’ training courses have done more than just benefit business operations and efficiency. Staff morale has also been boosted, a fact reflected in an anonymous survey in which 98% of respondents identified benefits associated with completing the BIT course and 83% of people who completed the training responded positively to the question ‘Are you doing anything differently as a result of undertaking the course?’ Quotes from course attendees include: “I appreciate the opportunity to take part. It built confidence in the forward thinking management of Electronic Systems Rochester.” “It’s been good to get the brain working again, presenting to a large audience was a first and has given me more confidence.”

coordination teams. All activity across the teams is aligned and given coordination through a five year training plan. The project stretches all the way from the bottom to the top, Malcolm Ashcroft, general manager for Electronic Systems Rochester, sanctioned the company’s focus upon integrating a new culture around the site, one where he says “Continuous improvement is improving all systems and processes at every level of the company every day.” Mr Ashcroft adds that “Results come because people are passionately engaged and driving continuous improvement.” The diagram is a visual depiction of a culture where those at the “top” are those on the shop floor, a culture where the importance has been placed upon engaging the workforce. The improvement training diagram demonstrates three years of the five year integrated training plan. It demonstrates the steady increase in the numbers of staff put through BIT at Electronic Systems Rochester and the action the company is embarking upon to journey towards a better trained workforce, capable of identifying and carrying out improvements throughout all levels of the business. Mr Ashcroft says: “We recognise that a set of consistent behaviours through teamwork and transparency create a high-performance culture. We aim to create systems that allow our people to improve our processes closer to perfection.” The training plan is one way the company is doing just that.

Support Keen to nurture growing confidence in the workforce, Patterson says a tight support network has been built at the Electronic Systems Rochester business. “There is a system in place where the Black Belts support the Green Belts, the Green Belts support the BITs and the BITs support the feedback team,” says Mr Patterson. The Site Wide Improvement Training diagram – The labels on the left of the Improvement Training diagram are the improvement activities and the labels on the right are the

Typhoon Helmet Mounted Sighting System

Fasteq Ltd F

asteq Ltd is a supply chain solution specialist for Primes and sub contractors within the Aerospace and Defence Industry and supports BAE Rochester’s site by providing an On-SiteStores Management Facility for C Class components. We have been awarded consecutive Silver Supplier Status Awards over the past year. Fasteq are AS9120 accredited and have over 75 years experience in the management of C Class product. We have excellence and core competency over a far greater product range so can therefore take a formulaic approach to provide a true “Supply Chain Management Solution”. (Please see our website for details or request a catalogue on 01506 841230) Our Supply Chain initiatives are based on our Customer’s individual needs and truly add value to their business. We understand and adapt quickly to changing demands and are continually involved in developing innovative new solutions with our customers.

Striving toward a goal of zero defects and 100% RFT and OTD, Fasteq will achieve SC21 Bronze Status in early 2012. Making Fasteq the first specialist Class C & Fastener company to do so. Fasteq provide value added service by inspecting and certifying all Stainless Steel Fasteners and Machined parts using XRF technology and hardness testing. This service has proved to be invaluable to our customers given the level of accuracy and traceability required. Only recently Dr Guisseppe Marazaroti, Chairman of the EIFI Stainless Steel Fastener Group was so concerned about the poor quality of fasteners within the European Union that he made these comments in the Fastener Industry Trade Magazine: “Obviously, sub standard steels are being used in the manufacture of fasteners which clearly do not comply with the standards inferred by their head markings A2-70, A4-70/80. The importers of these screws need to be aware of their

liabilities in case of product failure and buyers need to be on their guard for such fraudulent products” The Fasteq Certificate of Conformity gives the customer total piece of mind. Does your Fastener supplier provide this? Services provided by Fasteq include: Vendor Managed Inventory, Kitting Services, Ultrasonic Cleaning, Customer On-Site-Stores Management and various other Customer led initiatives. Give Fasteq a call to find out how we can improve your Supply Chain.

Published in association with: Fasteq Ltd Tel: 01506 841230 Fax: 01506 842728 Email: info@fasteq.co.uk Web: www.fasteq.co.uk

Factory of the month BAE Systems (ES)

Mr Patterson says, “The training is just the beginning. We needed to create the right environment for people to keep innovating and improving; to continue doing what they have learnt. It is good to see this happen in practice and I’m continually amazed by some of the improvements that are being implemented by the teams.”

Three Year Training Plan.

Industry projects ES Rochester lays out the first three years of the five year training plan. The different colours indicate the level of training.

There has been 15 Green Belts and nine Black Belts trained at Rochester so far. Lean Six Sigma Green Belt training is aimed at training individuals to lead and facilitate improvement workshops and deliver improvements in business performance using specific Lean Six Sigma tools for more complex projects. This is a two and a half week inhouse course developed in conjunction with the company’s colleagues in the USA. Black Belt training is designed to develop key members of staff who will be able to work as leaders of six sigma DMAIC projects. The 16 day modular course covers the full range of six sigma and lean tools and is provided by Catalyst Consulting This course is provided by Catalyst Consulting. These Black Belts work with Electronic Systems’ Rochester manufacturing teams and suppliers. The company is currently awaiting the accreditation of a further six Black Belts and 15 Green Belts are being trained during Q4 2011.

BAE Systems recognises that in order to create a constant stream of highly skilled engineers, the company must play its part in promoting the industry. The preservation of engineering talent is vital for BAE Systems, the company investing more than £50m each year in education projects and skills development, as well as training its 1,000 apprentices. At the National Apprenticeship Awards in June 2011, BAE Systems was recognised with the Large Employer of the Year Award. BAE Systems are leaders in helping to shape the right climate for manufacturing from the top to the bottom. Dick Olver, chairman at BAE Systems, sits on the Council for Industry and Higher Education and Nigel Whitehead, group managing director for programmes support, is commissioner for the UK Commission for Employment

On point While investing strongly in people BAE Systems has not ignored the need to support staff in their work through the implementation of enabling technology. To this end, and for improved efficiency in data management, Electronic Systems Rochester has recently replaced its Enterprise Resource Planning (ERP) system with an Oracle system. The new software allows for a new point of use supply chain strategy to be rolled out across Rochester. “Point of use is being implemented in all places where it is appropriate,” comments Alison Marshall, procurement manager at Electronic Systems, Rochester. One cell where point of use is currently being employed is in the manufacturing of the 777 primary flight control computer. A bin system has been implemented whereby supplies

are made available when needed, another result of the new ERP. Ms Marshall, says: “All the material needed to complete an operation is stored where it is needed; its point of use. The onsite supplier will then manage that material through monitoring triggers. This has removed the need for inwards goods, stores etc, allowing for a far more efficient material management system.” Marshall explains that the benefits of having on site suppliers include; accurate measuring of stock control and planning, quick response times to technical questions, less material handling and a streamlining of suppliers. Avnet supply parts for the PCB line, Fasteq supply fasteners and TTI supply electrical components. “With a fastener supplier on site, we went from 77 different sources for fasteners to just one. Fasteq have become the focus of all of our business, as long as it is cost effective to do so,” says Marshall. The change

to keeping suppliers on site has led to a reduction in turnaround from the supply purchase to sale from 45 to 15 days. Marshall added: “One of the projects for next year is to try and make the entire racking mobile. That will mean that we have the flexibility of all three lines, running any PCB at any time. As we take them over to point of use, we will effectively create a car parking area. The materials will be identified by which project it feeds so that when the operator sees the trigger they will be able to go over and collect the relevant cart, wheel them up, load the machines on and let the job run.” Malcolm Ashcroft places emphasis on Electronic Systems Rochester’s ability to forge strong supplier relationships, saying: “We are continuing to focus not only on our employees but also on our suppliers. We aim to promote and support suppliers who practise inclusivity and promote diversity.

and Skills. Some examples of the company’s education partnership projects include: A £1m donation over five years (2008-2013) to fund ‘top up’ science and technology for thousands of teachers at the National Science Learning Centre in York, part of project Engage. A £1m partnership with the Royal Academy of Engineering over three years. This includes sponsoring initiatives such as the Big Bang Science Fair and helping to support the Engineering Engagement project with the Royal Academy, providing training for Engineering Diploma teachers and funding for school science clubs. A £2m donation to the Royal Anniversary Trust, which recognises and promotes the very best UK and higher education university projects. The Company is involved in the government’s UK India Education & Research Initiative and is supporting a research programme linking Leicester University with the Indian Institute of Science in Bangalore. Sponsorship of the annual Apprentice of the Year Awards. Sponsorship of the Institute of Mechanical Engineers’ School’s Aerospace Challenge. Sponsorship of The Engineer magazine’s Technology Awards for collaboration between universities and industry.

The hot topic: apprenticeships BAE Systems invests £73,000 in each apprentice over the course of their training programme. Most BAE Systems apprentices are between the ages of 16 and 21, with around 75% taking craft apprenticeships and 25% taking higher level technician apprenticeships. BAE Systems is one of the largest employers of engineering apprentices in the UK with over 1,000 in training, 95% in engineering training. The company’s apprenticeship programmes last for two or three years. Mr Patterson comments, “Our schemes currently in operation, predominantly produces two type of apprentice for the business. The Craft apprentice are on a two year scheme which includes a PEO ( Performing Engineering Operations) NVQ level II and a BTEC National will typically move into a “hands on” role within the manufacturing department, whilst the Technician studies an extra year completing an NVQ Level III moving through NC, HNC and occasionally on to a Degree. Primarily the Advanced Technician will enter at a Test level and will potentially move in a junior supervision or Manufacturing support role within a few years.” BAE Systems has one of the highest apprenticeship completion rates in any sector, reporting arrangements show that the company recorded 82% completion in 2008.Once the apprenticeship is complete, staff are able to take up further study, such as HNC and HND qualifications. Apprenticeships and low entry level positions within BAE Systems are encouraged to take up training, many reaching senior management positions. Visiting the Electronic Systems operation at Rochester, it is clear that the company offers not just a job but a career. Between three of the key figures at Rochester alone, there is 58 years of BAE Systems Electronic Systems’ experience, Darren Patterson has 24 under his belt, Alison Marshall has clocked up 23 years and Clive Simmonds 11. BAE Systems has one of the highest apprenticeship completion rates in any sector, reporting arrangements show that the company recorded 82% completion in 2008.Once the apprenticeship is complete, staff are able to take up further study, such as HNC and HND qualifications.

Factory of the month BAE Systems (ES)

A London bus powered by ES Rochester’s Power and Energy Management System.

Unique, not only at the selling point There is a growing demand for through life solutions, allowing manufacturers to develop long term sustainable business from products long after they leave the factory. BAE Systems is among the global leaders developing this business model and the products made at its Rochester operation are no exception. Lewin Edwards, project manager at Electronic Systems Rochester, states “We provide the complete solution through the whole life cycle and offer our customers tailored sustainment solutions, ranging from traditional spares and repairs through to technology upgrades and comprehensive availability solutions”. “The team at Rochester has a wide range of experience, expertise and a proven track record of delivering these solutions, utilising the global reach of BAE Systems to ensure that our customers needs are be fulfilled in the most efficient and effective manner”. Another aspect that makes Electronic Systems Rochester unique is its ability to find new opportunities and markets that could benefit from its technology. Over

the last decade, Electronic Systems’ presence in commercial markets has rapidly increased, transferring its knowledge and technical capabilities into products and services that we use day in day out. Over four million passengers each day travel on buses that are powered by BAE Systems’ HybriDrive® Series hybrid electric propulsion system. The company was awarded a large contract by Transport for London and have the 230 HybriDrive Series powered vehicles in service across a number of other cities, including Edinburgh, Manchester, Oxford, Reading, Newcastle and Hull. The solution provided by BAE Systems ES Rochester has saved London United, owned by international public transport operator RATP Group, over 44,000 gallons of diesel and prevented the release of more than 450 tonnes of CO2 as a result. Rob Lindsay, business director for the HybriDrive® Solutions business, says: “The transport sector offers some interesting growth opportunities even in these difficult economic times. We have developed a family of hybrid propulsion systems for heavy commercial vehicles named HybriDrive®, which have been very successful around the world in the Bus market, and which are now making their mark in the Truck sector. The HybriDrive® propulsion systems helps to reduce carbon emissions, and other harmful emissions, through reducing significantly the fuel consumption of heavy commercial vehicles. BAE Systems has delivered over 3,700 systems to the vehicle manufacturers around the world, including UK bus OEM Alexander Dennis, a company that has sold more than 300 hybrid Double Deckers around the UK.”

Beverages

Coca Cola Enterprises, Sidcup

real

The

Jane Gray finds out what keeps the fizz in business at CocaCola Enterprises as its Sidcup site celebrates 50 years of operations.

n September 27 Coca-Cola Enterprises’ Sidcup factory threw open its doors to local dignitaries, retired employees, community groups, employees and their families and anyone else who cared to see what it takes to produce one of the world’s most highly demanded consumer products and the UK’s number one grocery brand with reliability and efficiency. Over 150 guests and 200 employees attended the bi-centennial celebrations at the Sidcup plant. Speaking with staff it is clear that employees at all levels have a real pride in the heritage of the site. “We have a lot of families working

It is the processes put in place around how we act on LineView information that really drive improvement – without them it is just an expensive screen saver Chris Doyle, Engineering Manager, CCE Sidcup here – aunts, uncles, daughters” explains Chris Doyle, engineering manager at CCE Sidcup. “And there is no problem with staff retention – quite the opposite” adds distribution operations manager, Steve Ransome, before speaking at length about the contributions made to the business by the plant’s longest serving employee, Frank Mooney. Frank has worked at CCE Sidcup for 39 years and his name crops up repeatedly as TM’s tour of the plant progresses.

Beverages

Coca Cola Enterprises, Sidcup But this Walton-esque picture of CCE is just the surface appearance of a focused business with highly efficient manufacturing operations in which every member of staff takes ownership for seeking further improvement. With sound procedures in place for advancing employee suggestions, CCE Sidcup is constantly discovering new efficiencies, many of which have helped the plant meet and exceed company targets for yield and sustainability – two core focus points for the business. In the primary processing area for syrup for instance, an idea from line operative Sam Whitehead to alter the Clean in Place (CIP) has saved the plant around 12 million litres of water in a single year. In recognition of his contribution Sam was nominated for the CCE Icon rewards initiative.

Typically our apprenticeships have a mechanical engineering focus – about a third of our current technicians have come up into the business through the apprenticeship scheme Steve Adams, Operations Director, CCE Sidcup

Water efficiency has been a key focus for CCE since the launch of its Corporate Responsibility and Sustainability agenda. This agenda is driven from the very top of the organisation with CEO John Brock, acting as a champion. Despite the global nature of CCE, Mr Brock’s interest in CSR is felt every day in CCE plants through frequent communications like newsletter and management briefings. There was even a video of Mr Brock’s latest ambition setting announcements for the company playing in reception as TM arrived on site. These most recent targets for CSR are important since they have changed the approach to reducing CCE’s

Key milestones for CCE Sidcup in sustainability 2011 represents a year of unprecedented investment in the CCE Sidcup site. More than $30 million has been poured into capital, technological and people investment and much of the focus behind this spend has been to allow progress with sustainability objectives - all investments in capital equipment now require validation of the relative environmental credentials of that equipment. Some key sustainability milestones for the Sidcup plant include: 2010: Achieved zero waste to landfill Altering the CIP process to use a third of the water previously required, saving around 12 million litres of water Reducing the duration of the water jet in the rinse cycle for PET bottles from seven to three seconds has saved an estimated 12 million litres of water Ambient filling rather than chilled filling on some PET lines has saved an estimated £40,000 annually Innovative packaging which removes the need for product trays on selected lines has saved 350 tonnes of cardboard Preforms for the moulding of PET bottles have been reduced in weight by one third, providing carbon savings for both CCE and suppliers Next steps Speaking about next steps, Mr Barnett says: “There is a commitment to working more with our suppliers in the future to find broader savings and benefits. We are also beginning to look at obsolescence of equipment and facilities like our boiler system. The challenge now is to move from gathering the low hanging fruit to a concerted effort in reducing our baseload.”

environmental impact. Whereas targets previously stated ambitions to reduce water or CO2 usage in manufacture and distribution, a new vision based on reducing the CO2 footprint of a half litre bottle of Coke by 30% by 2020 will require a different efficiency mentality says Ian Barnett, environmental manager at CCE Sidcup. “It should help people to realise the end results of our sustainability work better and visualise how work in a variety of areas helps towards a common goal,” he comments.

Howard Tenens off site storage operator and haulier for Coca Cola Enterprises

s a supply chain partner of CCE Howard Tenens has been engaged in CCE’s evolving sustainability plans for a number of years and was recognised for the commitment made in working towards their targets with the CRS supplier of the year award in 2009. Catherine Crouch, Group Environment Director for Howard Tenens explains, “We are working closely with our customers to assist them reduce the environmental impact of their value chain. Sustainability is core to Howard Tenens strategy and both the Voltaic warehouse and dual fuel vehicles are examples of this in action for CCE.” Voltaic warehouse The 233,000 square feet Voltaic warehouse, operated by Howard Tenens, is the off site storage facility for CCE’s nearby manufacturing factory. It has a number of environmental

features which help to save 121 tonnes of carbon per annum; a ground source heat pump provides heating and cooling systems, solar photovoltaic cells generating electricity, 15% skylights providing natural light while reducing electricity usage as well as eco-friendly motion-sensored lighting and rain water harvesting. Sustainability is fundamental to our business plan and we are making environmental and operational efficiencies across the 3 million square feet of warehousing space in our ownership. This is why Howard Tenens’ warehousing, handling and distribution solutions are the first choice for a rapidly growing number of customers – and why we believe our comprehensive range of value for money, tailored logistics services could also be the driving force behind the success for other manufacturing companies. Wendy Manning, Customer Logistics Director at CCE said, “Howard Tenens is at the forefront of low carbon transport and they have trialled dual fuel (gas/diesel) vehicles for us as well as sourcing and managing the Voltaic sustainable warehouse and we are pleased to be working with a company whose sustainable ethos is a good match for CCE.” Dual Fuel vehicles Howard Tenens has taken a pioneering approach to alternative fuelled vehicles and has introduced dual fuel vehicles substituting diesel with natural gas reducing both carbon emissions and those that impact on air quality. As well as running a dual fuel trial for CCE, Howard Tenens has rolled out dual fuel vehicles across our HGV fleet and gas refuelling stations at Andover, Boston and London (South Ockendon). The refuelling stations are open by arrangement for third party access, which we hope will encourage others to consider gas as road transport fuel. Natural Gas is however is only part of the story with the ambition to

replace natural gas with biomethane, which is widely accepted as the most sustainable fuel for the haulage industry and will see emissions reduced by an impressive 60%. Sustainable Logistics Howard Tenens welcomes enquiries from the manufacturing sector to discuss how our experience, expertise and innovative approach to logistics can help realise your environmental ambitions. Our professionalism, our passion for excellence and an uncompromising commitment to deliver both outstanding customer service and a sustainable performance are the qualities that are the driving force behind everything we do. For more information about how Howard Tenens can drive your business success, please contact, Eilis Cope, Marketing and PR Director.

Published in association with: Howard Tenens Tel: 08702 415640 Email: sales@tenens.com Web: www.tenens.com

Beverages

Coca Cola Enterprises, Sidcup

While the buy-in of employees has been critical to meeting both sustainability and productivity targets within CCE, the ambitions of the company in these areas go well beyond efficiencies detectable to the human eye. The desire to drill down into production data for further improvement prompted the roll out of a bespoke performance diagnostic system in 2009. LineView is used in all CCE factories in Europe but is customised to suit the product mix and operational characteristics of each site. The LineView system provides detailed performance information for all of CCE Sidcup’s seven production lines. Intelligent analytics track the effect of downtime on output without the need for operator intervention. The system does however allow for operator comment on line incidents providing a comprehensive information capture system. Line managers can view relevant performance information along or across production lines on their desktop PCs. Information is quick and easy to assess thanks to clear colour coded charts and other visualisation tools. “It is so easy to see where problems are occurring or where time has been lost over anything

from the last 15 minutes to the last 30 days,” enthuses Mr Doyle, though he does add the proviso, “It is the processes put in place around how we act on LineView information that really drive improvement – without them it is just an expensive screen saver.”

Tracking performance CCE has a structured development system for staff and plant which adheres to a common scorecard. Cascading from the top of the business down to regional businesses, sites and shop floor teams performance is measured across eight KPIs relating to OEE, labour efficiency, energy ratios, water ratios, safety, quality (in terms of complaints per million units), customer satisfaction and attendance. But although these measurements are important they are not in themselves the primary prompt for change. Peter Geering explains that it is the lead indicators sitting behind these KPIs which give more insight into the root cause of problems and which are the focus for improvement activity In terms of daily reference points for performance, safety is paramount and the days since the last lost time accident are recoded religiously. The bottle blowing facility currently holds the plant record with over 4270 days since the last lost time accident. The current record for the whole site is 439 days.

Stafforce - so much more than a recruitment company! Itâ&#x20AC;&#x2122;s the added value that makes the difference

aving the right people in place at the right time is essential to any business and not least in manufacturing. However, it is the added value service provided by Stafforce which is really making a difference to companies in the manufacturing sector. The company has been recruiting the right people for the right jobs for over 34 years and has been working with Coca-Cola Enterprises in Sidcup for over 14 years to support their recruitment needs; so Stafforce must be doing something right! Specialist recruiters to the manufacturing industry, today the Stafforce business has the expertise to deliver added value services that increase profitability for a business through people, processes and technology. So how do we do it? Stafforce is leading the way in developing innovative and unique solutions which go

beyond traditional labour provision and meet often complex business needs whilst delivering cost savings and sustainable results. This includes a clear focus on implementing Lean Manufacturing techniques and providing Business Improvement consultancy which can reduce overheads and provide greater productivity for an organisation. Stafforce, a national company with over 25 sites, works with clients across the UK and prides itself on being able to meet local requirements. The company is rapidly expanding, having made four strategic business acquisitions in the past 12 months, including Action 4 Business and CenFRA (the Centre for food robotics and automation), which is the UKâ&#x20AC;&#x2122;s centre of excellence for all robotic and automation activities relating to industry. These strategic acquisitions allow Stafforce to further enhance its services to customers in the manufacturing sector.

For more information on Stafforce, visit the website www.stafforce.co.uk, or call 0114 384 0100.

Published in association with: Stafforce RECRUITMENT Tel: 0114 384 0100 Web: www.stafforce.co.uk

Beverages

Coca Cola Enterprises, Sidcup In a bid to make even more use of the LineView data at a broader business level, feeding performance metrics into top level strategy formation, CCE is currently in the process of rolling out and integrating a SAP enterprise resource planning system. When Sidcup comes online with this roll out in 2013, LineView information will be pulled into the ERP system automatically providing far higher visibility on performance and resource distribution requirements across the enterprise. The high tech manufacturing environment at Sidcup contrasts dramatically with its strong sense of heritage and record for long serving employees. According to Mr Geering, the longest serving employees understand the importance of change and are both flexible and forward thinking – providing great leadership for newer recruits. This willingness to progress from a highly respected segment of the workforce has been a great boon as CCE brings its apprenticeship programme back on line and also recruits graduate trainees. For Steve Adams, operations director at CCE Sidcup, the renewal of the apprenticeships in particular is a meaningful step forwards, “It’s a personal passion,” he explains. “Like many of my colleagues I started out in my career as an apprentice and I believe it is high time manufacturers remember how important the apprenticeship process can be.” Despite manufacturing and engineering companies being the traditional home of apprenticeships only

Investment highlights In a year of unprecedented investment for the Sidcup site perhaps the most important and certainly the most cash hungry, has been the installation of a high tech canning line. Though now fully installed the line is still undergoing some commissioning work. When it becomes fully operational it will be capable of turning out 2000 cans of coke per minute. It has cost around £15.5m to install the line and was officially unveiled as part of the 50th anniversary celebrations on September 27. However, investment in optimising line seven is ongoing as staff are trained and upskilled to get the most out of the technology at their fingertips. Explaining the vision for multiskilled workers Mr Peter Geering says: “Employees from our other canning lines will be able to switch between the old lines and this new one and each will require very different ways of working.” A key area of difference will be change over times and expectations for the filling process. On the new line high tech automation will allow changeovers to take place in around 10 minutes – on the old line manual systems mean that it takes around 90 minutes to complete the same task. CCE has developed an internal measurement system for line performance which takes into account the varying capabilities of legacy equipment and new installations. Similar in many ways to overall equipment effectiveness, the CCE line utilisation metric is recorded regularly on each line every day. Targets are based on historical performance crosschecked with known changes.

Coca Cola Enterprises, Sidcup at a glance History

Plant opened in 1961 under Schweppes management. CCE purchased the site in 1997

Employees

332

Average production

40 million cases of drink every year

Number of production lines

Key brands produced

Coca-Cola, Coca-Cola Zero, Diet Coke, Powerade, Sprite, Dr Pepper, Lilt, Fanta

Points of interest

CCE Sidcup is currently the only UK site to produce Powerade – one of the official drinks for athletes competing at the London 2012 Olympics.

11% of UK employers in these sectors currently offer apprenticeships in core mechanical and electrical engineering areas. Sector Skills Councils like Semta are urging companies to change this statistic – even highlighting opportunities for apprentices in other areas of the business like finance or logistics. Contemplating this suggestion Mr Adams believes it will be a while before CCE takes such a step. “Typically our apprenticeships have a mechanical engineering focus – about a third of our current technicians have come up into the business through the apprenticeship scheme. For more business focused talent development our graduate scheme is excellent for developing a really broad understanding – graduates move around between departments so they get to know all the different functions.” CCE is committed to recruiting talent for the next generation and to protecting its future competitiveness. The company CRS strategy is, again, central to guiding action on this commitment. “We find that the environmental and community work we do is of very real interest to potential recruits,” says Adams. At a time when manufacturing is low on the priority list of potential

Beverages

Coca Cola Enterprises, Sidcup careers for most young people CCE is doing its best to capitalise on its strong CRS record and change young people’s perceptions of what the industry is like to work in. To this end CCE Sidcup recently invested £750, 000 in a new Education Centre and has employed ex teacher, Caroline Mounter as education centre manager. The centre is the fourth to be opened by in the UK by CCE. As Ms Mounter explains, the common purpose is one of communication – the centres welcome secondary school and university students to visit CCE factories and offers subject focused presentations on how particular skills are relevant in manufacturing. Classes of students studying anything from business studies, through to IT and design technology, are able to gain insight into how they could apply their talents in the manufacturing workplace at these centres. The CCE Sidcup Education Centre aims to receive 4000 students every year across six weekly sessions. Each trip is about two hours long – depending on the requirements of the class. Each session aims to include Q&A sessions with relevant staff members and Ms Mounter says that staff have been incredibly supportive and eager to get involved whenever possible. Importantly however, CCE is not only aiming to educate the students that visit its sites. The education of those individuals most likely to influence career choices is critical. When the centre officially opened on July 5 this year an inaugural ceremony was attended by 60 representatives from local educational institutions, business and government. On an ongoing basis Ms Mounter hosts ‘twighlights’ for teachers. These manufacturing evening classes are well attended and Mounter says “Perceptions among teachers in particular are already being changed – we gather feedback from all our sessions to track this.” Coca-Cola has not been a name synonymous with sustainability and social care in the past, but the improvements, investments and actions at CCE’s Sidcup plant are indicative of a wider C-change for the company. With sustainability in its broadest sense as its guiding principle CCE looks set to hold many more anniversary celebrations for its plants around the world.

The North West Kent Countryside Partnership is one of six Countryside Partnerships that operates in the County of Kent. The NWKCP is a not-for- profit organisation that operates in Sevenoaks, Bexley, Gravesham and Dartford. The key themes of the NWKCP are as follows: Conserve and enhance the Partnership Area: the special landscape character, natural and cultural heritage as well as overall biodiversity. Work in partnership with community groups in support and assist them to undertaking projects and practical action that conserves their local environment. Educate and encourage an understanding and respect of the countryside and wildlife through projects and talks. Provide a local conservation volunteering opportunity to encourage active involvement from a diverse but enthusiastic group of participants. Develop sustainable access opportunities for the public to explore the countryside of the Partnership Area. Promote the social and health benefits of the countryside and rural environment for both urban and rural communities through participation. Over the past two years, the North West Kent Countryside Partnership has been working in partnership with Coca-Cola Enterprises (CCE) operation at Sidcup to help manage and improve wildlife sites in Bexley, Kent. Teams of volunteers from the soft drinks manufacturer have joined the Partnership in undertaking valuable work on the River Cray and other local nature reserves to improve the environment for both people and biodiversity. The Partnership is keen to support local business such as Coca-Cola Enterprises Ltd by providing real opportunity to make a difference in their local communities through volunteering opportunities and providing specialist knowledge, expertise and practical assistance from the NWK team.

scratch Starting from

Born from the ashes of Instelec Ltd, CHH CoNeX has grown from a small start-up employing eight people to a company with a workforce of 141. Tom Moore discovers the structure and intent behind the growth curve.

HH CoNeX had a host of facilities before obtaining the funding for a permanent site. The mix was made up of a range of unusual work spaces, from patio floors to garden sheds, while it fought to meet a contract supplying cable assemblies to its sole customer, Birmingham-based GEC Avery, a manufacturer of weighing and food processing systems. This contract was left vacant following the collapse of Instelec Ltd, and provided the start-up with £7,000 for its first month in business. Since then the company has built a strong customer base and achieved a steady, controlled rate of growth. The company moved into its 85,000 sq ft facility in Witton in 2007. CHH CoNeX is 100% owned by its directors. Tim Hughes, managing director, comments: “It is not just your business reputation on the line, but also your personal one. There is a real buzz created by the will to go and do things without being held back by a corporate structure or governance.”

The next step CHH CoNex acquired two new Directors; Steve Turner, supply chain director and Andy Whitmore, sales and marketing director at the turn of the century. They came on board to facilitate growth to facilitate the growth strategy and two years ago, in January 2010, the

management team decided CHH CoNeX was ready to step up to the next level. As a result, Shaun Ashmead came into the business as operations director, taking up a stake in the company – just as the other directors do – and bringing experience of managing a manufacturing team of over 200 people with his previous employer. Tim Hughes says: “The Company needed to re-assess its current position so we spent four months redefining strategy. We concluded that we wanted to diversify into new markets and new customers with new capabilities. The director team was strengthened with the addition of contract electronics manufacturing (CEM) specialists.” With the right team of directors in place, CHH CoNeX began to look at the core competencies of the business, the processes and the marketing plan. As with many businesses that grows from a start-up to a medium-sized business, growth can muddy strategy. As contracts were picked up in order to drive business growth, the core disciplines of the business became fragmented. The directors realised that operations needed to be streamlined. As a result any business deemed noncore - like a project to make electronic beer brewing kits - that clearly didn’t fit within this new strategy, were cut.

SC21 Award Part of the CHH CoNex’s progression from its humble beginnings was success in achieving the high standards required to join the SC21 programme (21st century supply chains). “The programme parameters gave us a framework against which to set part of our strategy deployment,” comments Mr Ashmead. SC21 is a UK supply chain programme, instigated by the aerospace, defence and security trade body ADS, to accelerate the competitiveness of companies these sectors, by ensuring that they deliver high quality solutions for customers in the most

Cable assemblies CHH CoNeX

efficient and effective way possible. As part of its early steps toward penetration in the aerospace, defence and security sectors, CHH CoNeX achieved AS9100 certification, a quality management standard specifically written for the aerospace, defence and security industries. Ashmead describes this as “a statement of intent to enter the aerospace, defence and security market.” As part of the company’s desire to provide a quality service to its customers, CHH CoNeX became a signatory to SC21 and has actively promoted the programme’s concepts throughout its supply chain. “Just fourteen months after CHH CoNeX first became a signatory of the programme, it was awarded the prestigious SC21 Silver Award,” says Ashmead. The company met the SC21 requirements in a fraction of the typical time. Out of around 600 signatories, the company became only the fifth firm to achieve the SC21 Silver Award. Funding from MASWM helped the company meet the requirements for the SC21 Award, a cost which added up to circa £20,000.

Accreditation timeline SC21

Signatory April 2010 CSIP – Published Aug 2010 Silver Award recognition July 2011

AS9100

Audit 26-29th July 2010 Accreditation Aug 2010

Green is the new black Costs are an essential part of any business and as many are now finding, becoming green means becoming lean. CHH CoNeX spends approximately £85,000 on gas and electricity to power operations and heat its premises per year. Following a Carbon Trust audit in March 2011, potential cost savings of 15% were identified. Realising these savings has meant many small changes but minimal impact upon staff, such as setting radiator temperatures 1°C lower and creating a power down policy when an area is not in use. When the changes are all in place, CHH CoNeX anticipates a saving of around £12,000 per annum. The motive behind the Carbon Trust audit was to seek ways of meeting requirements for the SC21 accreditation. Now it seems that taking that initial step has led to CHH CoNeX becoming much more environmentally aware. The company has plans in place to pay for the Carbon Trust to come back and talk with the company’s six-man strong environmental team.

Diverse Efficiency CHH CoNeX’s green credentials are furthered by the minimal amount of waste generated from defects. Impressively, the cost of defects and in-house errors totals just £200 a year. Twelve month rolling average figures demonstrate the focus on quality which underlines all operations at the Witton factory. On time in full delivery performance stands at 99.86% while the right first time quality scores a steady 99.82%. Furthermore, these results were achieved in markets with a marked lack of scheduling information and constant demand changes. “We can predict that there will always be customer changes at the 11th hour, just not what those changes will be. We study historical demand profiles, variability and volatility in order to have an inventory portfolio coupled with a flexible process to ensure customer satisfaction,” comments Mr Hughes.

Tim Hughes, Managing Director

Such is CHH CoNeX’s efficiency regime that it now has a track record of winning UK contracts that may have otherwise been sent overseas. To capitalise on such opportunities the company emphasizes its ability to: 1) Offer the customer a product with a small carbon footprint 2) Ensure and aid the reliable transportation of goods and services on-time 3) Allow the company to reduce total aquisition costs to win contracts. This includes coming up with transport solutions such as CHH CoNeX delivering straight to its customers’ customer. These points are highly valued by the organisation’s customers. “We are using our experience and expertise within the telecoms, industrial and medical sectors, where on time delivery is standard practice, to bring a high standard of service to other sectors. This is helping us to win contracts and move into new product areas,” says Hughes. He adds: “What we offer is reliability with our percentage of on-time in full rates in the high nineties. This is the norm in the telecoms, medical and industrial industries which have long been core markets for us. The aerospace, defence and security sectors we are moving into average circa 70% on time delivery, which gives us a distinct advantage over our competitors as we look to penetrate these markets.”

Analysing the supply chain Hughes says that it is this reputation and consistent performance that has led to an exciting new opportunity. “Our customer had placed orders for thousands of cable distribution frames (essential components in the infrastructure cabinets

on UK streets) from a large manufacturer in India, but was being let down with delayed shipments. Our proven track record for on time delivery coupled with our reputation for high quality were the reasons that we were recommended to this organisation by mutual business associates and why they were convinced to turn to us,” he claims. CHH CoNeX undertook to research the pre-existing supply chain and process and discovered that before the final product arrived in the UK, it had been well travelled through; Turkey, Hungary and India. Its investigation showed that re-sourcing to a UK supplier not only cuts CO2 emissions but actually reduced the total acquisition cost of the product. Transporting the goods around the world before their arrival in the UK incurred substantial freight and inventory costs which belied the apparent unit cost savings of the various constituent parts. Allowing buyers to decide on a product by unit price alone would not be in CHH CoNeX’s interests. “We aim to build relationships with buyers where we can highlight how our supply chain solutions and innovative engineering combine to create a lower total acquisition cost than the current state. What we need is open thinking from the buyer in order to see the bigger picture and not just the constituent unit costs. This coupled with an appreciation of impact to the corporate bottom line as opposed to impact to the purchasing department’s objectives is a recipe for success.” CHH CoNeX looks at the whole supply chain in order to make sales. The company may not be the cheapest supplier of its capabilities globally, but it aims to demonstrate that it can be the most cost effective. This is often achieved by auditing the process that a product

Cable block

100

Engineering Excellence Environment: Wireless Communications Application: Microwave Technology Customer Testimonial “CHH CoNeX was the only UK company who fully understood our urgency and requirements and were able to deliver a test ready cable within 3 weeks, which meant that we could start the roll out of our 15,000 sites. In addition since the start of the project 3 years ago there hasn’t been a single failure. Potential failures could cost anywhere from £2,000 to £20,000 per site.”

Customer Problem Customer was not able to close the door of the telecoms rack, due to cable routing issues and the size of the cable bundle. Without the cable, the project for over 5,000 sites could not start, resulting in a potential revenue loss of £30,000 per site.

CHH CoNeX Solution CHH CoNeX designed a unique connector to route the cable assembly through 180 degrees, allowing the mating of the connector in a considerably smaller space. Integrity of the signal was preserved.

Customer Benefits CHH CoNeX’s solution designed and prototyped in 2 weeks, volume production in 5 weeks. Rack door closed securely. Installation of the cabling and engineer waiting time reduced by 25%. Project slippage was avoided. Customer programme delivered on time within 6 weeks. Total resilience: zero failures in 3 years (9,000 cables supplied).

will go through and the end result required, as opposed to just looking at a specification. This may result in suggested changes to the processes employed by the customer simply to consolidate multiple activities into the same environment, thus delivering efficiencies. For example: “a competitor was pricing a part at £1.50, but what they didn’t realise was that once received; the part had to undertake further value added activities which added another £5 in cost. Whilst our proposed consolidated product unit cost doubled the original price to £3, when the additional activities were taken into consideration, it actually delivered a total acquisition cost saving of £3.50 per unit,” says Hughes. Hughes explains that this sales strategy requires “getting all levels of our business communicating with the customer; a multi-level approach. Customer facing engineers are extremely desirable.” Other examples of saving costs through process improvement and being flexible in the approach to clients include measures such as: Consolidating invoices for companies to just one per month, rather than transacting 200-300 individually throughout the month. Amending a process to move field based engineering activity to the manufacturing process in a controlled factory environment; significant reduction in total cost and improvement in quality Eliminating the use of couriers in supporting customers’ field based engineering staff through the deployment of specialist on line material provision and bespoke logistics

Cable assemblies CHH CoNeX

Process Review / Project Management / Cost Reduction Environment: Fixed Line Telephony Application: Voice/High speed broadband transmission Customer Testimonial “CHH CoNeX’s partnership approach to working with our engineering team on process audit delivered great benefits. Collectively we managed to achieve increased output, improved quality and optimised total cost of acquisition by redesigning the process to better align activities with appropriate resources, in the right environment at the right time. An excellent outcome.”

Customer Problem Customer needed two engineers for every installation to complete the test regime. Engineers working in difficult conditions such as poor light, at height or in congested cable runs. On site termination was taking 2 hours per cable (between 2 and 10 cables per site).

CHH CoNeX Solution The customer’s installation site was visited to observe activities and conduct a process review. Product and process improvements were identified and introduced to eliminate the need for the second engineer. The solution meant that one end was factory terminated and could be plugged in immediately on site.

Customer Benefits Annual on site engineering savings of £594,000 were achieved. Net cash savings of £227,520 achieved. Sites were fully installed and commissioned by one engineer instead of two engineers. Increased capacity by releasing 16,500 senior engineering man hours.

(These examples and many more can be seen in the case study section at www.chhconex.com) As a result of the company’s new strategy, it now undertakes relationship management reviews with its customers. “We didn’t understand the opportunities out there and companies didn’t understand what was on offer from us,” comments Hughes.

Looking to the future CHH CoNeX is targeting sales of £21m by 2014, which is certainly ambitious, representing a doubling of revenues within three years. CHH CoNeX renewed the lease on its Witton factory for a further 10 years in June 2010. Hughes says that this is a “statement of determination that underpins our commitment to growth.” One plan is for the business to acquire a contract electronics manufacturer specialising in the population of printed circuit boards. The reasoning behind this is that there is an opportunity to take on more work with “virtually all our customers,” according to Hughes. He adds that the acquisition “can elevate us to the next level as large primes are looking to rationalise their supplier bases.” Whilst the market research and analysis has been done and there is a list of preferred acquisition targets, no firm bids have yet been made. Looking at the year ahead, the company hopes to gain ISO 14001 and OHSAS 18001 accreditation. The ISO 14001 is

Intelligent Stock Control / On Time Delivery Environment: Field Engineering Application: Logistics Customer Testimonial “By working in partnership with CHH and ByBox we were able to introduce an innovative, efficient online ordering system, reduce our stock holding, improve traceability and tracking and most importantly get the right components to our engineers on time and in the right place. Overall we saved £1 million.”

Customer Problem Incorrect quantities of components were being shipped to site, preventing engineers from completing projects. This meant a wood screw priced at 2p, became a 47p screw, when additional labour, logistics and engineer downtime were added on. The wood screw was one of 2000 items for the exchange based telecoms product which had huge implications for overall project costs.

CHH CoNeX Solution Redesigned the processes. Created an intelligent online stocking solution within 6 weeks. Partnered with ByBox to provide the secure and reliable delivery routes and locations. Rolled out and fully operational within 10 months.

Customer Benefits Engineers empowered to self order components. Full tracking and traceability. Labour savings of £200,000. Cost of failure (wasted time) savings £500,000. Transport cost savings £250,000.

an environmental management system that applies to environmental aspects which the organisation has control over and can drive efficiency improvements. OHSAS 18001 is a health and safety certificate to manage risk and reduce the potential for accidents through creating an environment which is safe and a pleasure to work in. The company continues to see a mass of opportunities in the UK as “customers want the flexibility of having a supplier located in region so that order changes can be accommodated. Additionally the government sponsored drive for the UK to have the best broadband network in Europe by 2015 is manifesting itself in the deployment of fibre optic based networks across the country and driving increased activity and revenue in our traditional markets.” CHH CoNeX is clearly an ambitious company and in the words of managing director Tim Hughes, “run with the energy of a 21 year-old start-up.”

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Roberto Priolo talks to Metal Spinners, a Northeast-based company that manufactures components and sub-assemblies through unique and rather unknown processes.

Spinning

around S

ome believe that metal spinning, shear forming and flow forming are merely a job for highly skilled craftsmen, but in the right hands they are complex manufacturing processes that require engineering technology and expertise. Metal Spinners, a Newcastle-based supplier of components and sub-assemblies, has mastered these operations since 1953. The company employs 90 people in two sites and provides solutions for a variety of industries, from oil & gas to defence, from aerospace to architectural projects. Managing director Brian Batchelor says: “We position ourselves as a manufacturing solutions provider for cylindrical hollow components and ancillary processes, rather than a pure metal spinning company.” “It is one of our missions in life to make the process more well-known and ensure it is available to those who might need it,” he adds. In March 2011 the business was acquired by US-based Standex, which saw in the company a business able to match its drive for high integrity products. Batchelor says: “Standex acquired us because we are a healthy, successful business. There was no headcount reduction resulting from the acquisition, the only change in personnel being the exit of previous owners and managers.” Soon after the acquisition, a £1m investment in new machinery was made, to purchase a PNC1600, a CNC spinning lathe capable of producing components to 3.2 metres diameter. Metal Spinners also owns two of the largest, multi-purpose, machines in the world, two PNC1800 machines, which allow it to have the flexibility to produce a wide range of components. Development director Paul Pearce said: “There are larger machines in the marketplace, but they are highly specialised and designed to produce one thing and one thing only.”

The history and the vision Over the decades, Metal Spinners built a strong reputation for quality. Pearce said: “Our products started to be at the top end of the range they were supplied into. This drove our own technogical progress, leading us to introduce the first hydraulic operated machine in the UK. In 1965, we introduced the first CNC spinning machine in the country.” Through organic growth and the acquisition of complementary businesses, Metal Spinners continued to expand. In 1997, it was acquired by Precision Engineering International, which changed the direction of Metal Spinners, moving its focus onto critical performance industries and applications. “We built a strong pedigree. We are renowned for our investment in innovation,” Pearce says. The company’s focus is on the customer and this principle is constantly iterated in the business, through a continuous

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Engineering Metal Spinners

improvement programme. “We don’t have a product range, but a process capability we are offering the market. We have to be focused on our customers, and highly value the contribution coming from our employees,” Batchelor explains. The most important sector for Metal Spinners is now the medical industry. The company supplies components for MRI scanners, for example, but there are several other sectors it operates in. It successfully supplies customers in industries as diverse as defence, oil & gas, aerospace and power generation, also complementing the capabilities of its sister company, Spincraft, in the United States. Moving away from the common image of a pure metal spinning company, Metal Spinners tries to position itself as a provider of high value, high integrity sub-assemblies. It can manufacture components from a wide variety of metals, ranging from steel and aluminium to exotic materials. The company can produce components in batches as well as one-off pieces. Pearce explains: “We are not volume manufacturers in the common sense of the term. We generally run batches of 50 at a time or less. But we also work on a lot of unusual items with unique shapes, sometimes engineering prototypes or pieces of ‘street furniture’.” A skilled and experienced workforce (the company boasts good levels of employee retention), as well as a constant focus on innovation and investment in new equipment, allow Metal Spinners to provide its customers with components and sub-assemblies that are, many times, ready to fit. “In

the markets we are serving, customers want a component that is ready to fit without requiring any further processing,” says Batchelor.

The process explained Designed to produce rotational, symmetric and hollow components, the metal spinning process involves a spinning lathe. Generally, the work piece starts as a circular blank attached to a spinning mandrel. The outer shape of the mandrel is the inner shape of the component to be manufactured. Pearce explains: “Looking at the basic principle, you load the mandrel onto the spinning lathe and the circular blank in front of the mandrel. The lathe will hold the work piece against the mandrel with the hydraulic tailstock. The mandrel and the work piece will rotate at a speed that depends on the shape and thickness needed. A CNC-controlled spinning roller will then make contact with the work piece and take the metal to its plastic condition, allowing it to flow over the mandrel. In a series of passes, it forms the material blank into the shape you require.” Shear forming is similar to metal spinning, but it produces the finished shape (typically conical) by working from the thickness of the starting blank, in a single spinning pass, deliberately forming a part thinner than the starting blank. Any areas not shear formed will remain at the starting material thickness. Features can be incorporated into these areas prior to the shear forming operation. Flow forming is an advanced process for manufacturing seamless, dimensionally precise tubular and other rotationally symmetrical products. It involves applying compression to the outside diameter of a cylindrical preform, attached to a rotating mandrel, flowing the material in both radial and axial directions. The process produces dimensionally accurate net or near net shaped, high-quality cylindrical or shaped tubular products. To ensure the efficiency of its plants, Metal Spinners uses a bespoke software that helps identify waste and process requirements from a theoretical point of view, on which performance is then based. In addition, it deploys a continuous improvement programme. Performance is measured against a number of indicators. Batchelor says: “In terms of KPIs, we work around a balanced scorecard approach, regularly reviewing all the business metrics we have, such as sales and order generation, quote activity and quote success, and also profitability by customer and by job. We also look at process capabilities, on-time delivery, production losses, reasons for breakdown and OEE. For process control, we use SPC.” Metal Spinners is working with its American sister company, Spincraft, to devise a combined strategy for business. This partnership is considered as being very beneficial, as the business focuses on its manufacturing and engineering capabilities for the future.

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The

diesel

revolution

Ford Dagenham Diesel Centre

Tim Brown takes a look inside the iconic Ford Diesel Engine plant in Dagenham and talks to manufacturing manager, Martin Everitt, about the Ford journey.

ord in Dagenham has enjoyed somewhat of a renaissance in the past eight years. Not only has the company seen a growing demand for its diesel car engines, it has undertaken a number of class-leading initiatives to help drive further improvements off the back of that success. Following the steep increase in oil price which has occurred since the turn

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of the century, diesel cars have increased tremendously in popularity due to their increased mileage capacity. As the only Ford diesel engine plant in Europe, the Ford Dagenham Diesel Centre has experienced a large increase in demand for its diesel engines, with production at the site reaching nearly a million units in 2010, compared to just 600,000 in 2000. “We’ve done a lot of work here in Dagenham to increase our efficiencies and productivities to meet those customer demands,” says Martin Everitt, the site’s manufacturing manager. “We’ve been working very hard, as a team here in Dagenham, to deliver the efficiencies we need to meet what has been an outstanding customer demand for diesel engines.”

Co-habitation Part of that hard work has meant considerable investment in technology, facilities and tooling but has also included a concerted effort to ensure connectivity within processes and roles. One of those areas of focus has been to ensure a solid design capacity at the plant. “We have co-located product design engineers that are resident here onsite,” says Everitt. “We don’t just make engines here we have a design community that are creating new engines.” From a manufacturing perspective, the benefit of having these teams onsite is so the designers and engineers can be involved in the process and see any issues firsthand.

Automotive

Ford Dagenham Diesel Centre “We walk the lines with the designers so they can understand if we have a manufacturing concern or not. In addition it means we can work together to help achieve new opportunities that they want to realise.” As well as the close relationship between engineers and production, the management at Ford Dagenham has actively sought to ensure an amicable relationship with the employers unions. This relationship has been built over time and now involves a weekly Friday meeting where the company picks one of the engines and sits down with the Union to discuss the status and challenges of producing that particular product. The site’s continuous improvement strategy has also reaped important rewards for the Dagenham plant which are fed their improvement objectives from the very top. Ford has a balanced scorecard approach which details a number of metrics from which the company’s plants are to be measured. Those objectives, which include safety, quality, delivery, costs, morale, maintenance, and environment, work their way down to the individual operators and groups on the shop floor. “We do regular reviews with each work group which are either completed by the foreman, production team manager, the area manager, myself, or Dave Parker and we will sit down with the work groups and figure out where they are, what progress they are making and what support they need.” The Ford mentality is very much a team centred approach. Improvement is not achieved simply through the addition of more technology. It is about working with people and getting those people aligned so that everyone know what needs to be achieved and getting the tools in place to achieve those objectives. “We have workgroup boards where all the objectives are stated and the groups track their performance against those objectives,” says Everitt. “Some of the information is automatically generated and some of it is manually created. We then review performance against the scorecard objectives.”

Improvements According to Everitt, all the work groups have achieved important and interesting improvements. However, he

The Ford Dagenham site produces four main engines architectures. 1: 2.2L diesel engine used in: Ford Transit, Citroen Relay, Citroen Dispatch, Peugeot Boxer, Peugeot Expert, Fiat Ducato, Fiat Scudo, Land Rover Defender 2: 1.8L diesel engine used in: Ford Transit Connect 3: 1.4/1.6L diesel engine used in: Ford Fiesta, Ford C-Max, Ford S-Max, Ford Fusion, Ford Focus, Ford Mondeo, Mazda 2, Mazda 3, Volvo V50, Volvo C30, Volvo S40 4: 2.7/3.0L V6 diesel engine used in: used in the Jaguar XF, Jaguar XJ, Land Rover Discovery, Range Rover, Peugeot 607, Peugeot 407, Citroen C6, Ford Territory TS

says that one area in which they have been performing very well has been the cycle time improvement on CNC machines. “We buy our CNC machines from a major machine tool company and we buy them as a part of a programme for a new engine for example. That company will do all the programming of the machines and all the CNC codes.” Recently, the production team on the 1.4/1.6L TDCi diesel engine noticed an opportunity within the CNC programming code, and over the last year, they have improved the cycle times on the pretty much the whole of the CNC lines by up to 20%. That has meant an important improvement in the efficiencies of those lines over the last year.

We do regular reviews with each work group, we will sit down with the work groups and figure out where they are, what progress they are making and what support they need Martin Everitt, Manufacturing Manager Traditionally CNC coding is an engineer’s role but Ford has sufficiently up-skilled its workers so as to have the skills on the shop floor. That means operators of the equipment are capable to interrogate the code and find ways to improve performance through the machine tool code itself. “From a staffing and skills perspective, the people around us are one of if not the most important assets that we have,” says Everitt. “Making sure that they are engaged and also skilled to right levels is paramount in the success of the Dagenham engine plant. We’ll continue to engage with the workforce and continue to, where we can, up-skill the workforce to make sure that we can face the challenges coming towards us.”

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Mitsubishi Heavy Industries (MHI) Mitsubishi Heavy Industries Equipment Europe BV: Excellence in transforming energy into motion

itsubishi Heavy Industries, Ltd. (MHI), headquartered in Tokyo, Japan, is one of the worldâ&#x20AC;&#x2122;s leading heavy machinery, technical driven manufacturers. MHIâ&#x20AC;&#x2122;s diverse lineup of products and services encompasses shipbuilding, power plants, chemical plants, environmental equipment, steel structures, industrial and general machinery, aircraft, space rocketry and air-conditioning systems. One of the product groups are automotive turbochargers. MHI Equipment Europe b.v. (MEE) located in Almere, the Netherlands, is a 100% subsidiary of MHI, Japan. MEE has two product divisions: Diesel engines for marine and industrial application and turbochargers for the automotive industry. A leader in the design, development and manufacture of a wide range of customized turbocharger systems. MEE has 600 employees, is technically driven and is supporting European OEM with turbocharger development.

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MEE will produced in 2010 2.0 million turbochargers and in 2013 will boom the grow to 4 million turbochargers.

Published in association with: MHI Equipment Europe B.V. Damsluisweg 2, 1332 EC Almere The Netherlands

We are committed to excellence turbocharger development in all areas of the business and continuing to deliver excellence to FORD Motor Company.

Tel: +31 (0)36 5388311 Fax: +31 (0)36 5388235 Web: www.mhimee.nl

Automotive

Ford Dagenham Diesel Centre Environment is on the cards The environment is one of the criteria which help make up Ford’s balanced scorecard formula. For that the company looks at environmental compliance as both legal requirement but we also as an area to drive potential innovation. “We track and task ourselves against energy consumption, water usage, chemical consumables, landfill waste and also making sure that we have the right operating systems in place to ensure that we continually monitor and track the environment and react to any issues.” One of the issues that has impacted the Dagenham plant, along with all other industrial sites in the UK, is the increase in energy costs and carbon reduction requirements. As a result, Ford Dagenham, along with other Ford sites in the UK, has undertaken a collaborative project with wind turbine company, Ecotricity, to install three wind turbines. In October of this year, the company completed construction of its third turbine and the site has the potential for at least one more. The turbines provide green electricity which is fed into the grid to offset the power used on site. At their current capacity, the three wind turbines now fully offset the power used in the estate’s Dagenham Diesel Centre. Ford has just finished launching its new range of EU5 emission standard engines and its engineers have already started working on the EU6 engines for the next level of EU emission standard requirements. With the market demanding more efficient and lighter engines, Ford is continuing to work

Ford Dagenham Engine Plant at a glance Staff Numbers

2000 employees

Turnover

$1.1bn

Customers

Ford, Jaguar Land Rover and PSA

Export/domestic

Approx 80% of Engines are Exported

Output

Approximately 1 million engine units per year. Of that less than 10% of units are made for Jaguar Land Rover.

KPIs

OEE Assy line Uptimes between 85% and 95% excluding Launch effects Lost time case rate 0.23 (4 incidents year to date) Quality Repairs per 1000 @ 0MIS 0.07 to 0.27 for Ford Products

Key figures

Dave Parker, plant manager Martin Everitt, manufacturing manager

on developing new engine architectures to meet those customer demands as well as to satisfy the company’s own environmental considerations and regulatory compliance requirements. As a result, the company has committed to £1.5bn R&D and manufacturing investment over the next five years so as to rise to the challenge and continue to make engines that are best in class. While Ford’s footprint in the Dagenham area is not as extensive as it once was, it is clear that the diesel engine plant which still remains draws on the considerable experience and expertise of the Ford brand. Taking the initiative and drive which saw Ford of Britain develop into an industrial powerhouse of the mid twentieth century, the site continues to demonstrate the forward thinking attributes for which the parent company was originally made famous.

Ford’s clean engine production facility, The Dagenham Diesel Centre

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lastword The

Jane Gray, examines one of government’s final flings for industry in 2011 – The Advanced Manufacturing Supply Chain Fund.

Image Manufacturers will compete for attention from the Fund by submitting ideas for ‘innovative’ supply chain approaches.

“A

nd have you seen this last invention that Cable has produced! Some supply chain initiative. I’m not sure I see how that will work or help. All these announcements from government are just masking the fact that the fundamental issues for industry are not being properly addressed.” These were the ire-filled and cynical words of a manufacturing MD in response to the news in December that Business Secretary Vince Cable had just launched another new scheme to support UK Manufacturing – the Advanced Manufacturing Supply Chain Fund. This £125 million package is designed to challenge industry to come up with innovative ways of improving the efficiency, effectiveness and agility of UK supply chains across manufacturing sectors. The ultimate intent is to encourage investment in the UK by the world’s leading manufacturing powers. At the CBI Annual Dinner on December 6 Dr Cable expressed the motivation thus: “in order to choose to base operations in the UK, leading manufacturers need to know they will have a range of firms able to supply quality parts and services

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SME manufacturing leaders may therefore need to shelve the cynicism for a little while yet, at least until further details are announced

Have your say at: www.themanufacturer.com

with complete reliability. This is what the Mittelstand offers major manufacturers such as Siemens, Bosch and BMW in Germany.” Dr Cable’s intention to see UK suppliers become global players may be laudable, indeed critical if the UK is to be a credible manufacturing location in the future. But a world weary industry, which has seen a host of government initiatives come and go without halting the UKs slide down the ratings of global manufacturing powers, is now deeply sceptical of the ability of such schemes to deliver. The key questions are: Who should be looking to apply to this fund; how will they do so; and how will the support manifest itself? Definitive answers remain hazy. The name of the fund itself expresses an unspecific target – it is not the first time industry has been led to question “what do government mean by ‘advanced manufacturing’?” So far the increasingly ubiquitous ‘manufacturing for low carbon technologies’ has been the flag waved by BIS. And despite a promise that details on the application process would be ‘coming soon’ on December 6 the Technology Strategy Board, which is taking ownership of the fund, said that updates should not be looked for until this month. Some lag between the announcement of funding and the details of its structure may be understandable. But, given the initiative fatigue many manufacturers are now expressing, there is a risk of losing the moment if tangible details cannot be seen at the same time as Ministers attempt to titillate the interest of industry. The scope of projects which might qualify for funding so far seems very broad. Applications might focus on the need for

capital equipment, training or research and development. Such flexibility is, of course, far from negative – but it does leave smaller manufacturers with a lack of inspiration or examples around which to shape funding bids. With time at a premium it is therefore likely that many will simply hunker down with the day to day. To combat this Cable has pin-pointed a major role for large manufacturers in prompting supply chain involvement with the

fund. Chairman of BAE Systems, Dick Olver indicated that he would welcome this responsibility. He commented at the Financial Times ‘Future of Manufacturing’ conference in December that his organisation would willingly work with suppliers to improve both BAE’s position and international standing of the UK supply base. With big names like BAE throwing their support behind the Advanced Manufacturing Supply Chain Fund and positive noises from trade organisations like CBI and EEF, there is hope that this scheme will produce the trousers to go with the talk. SME manufacturing leaders may therefore need to shelve the cynicism for a little while yet, at least until further details are announced.

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