Issuu

www.themanufacturer.com August 2011 Vol 14 Issue 08

Energy and sustainable manufacturing

A budding green economy – Where are government’s green intentions headed?

Leadership, people and skills

Take me to your leader – CEOs need to shape-up and skill-up to face a new manufacturing era

Finance and professional services

Bribe money talks – The Bribery Act and corruption in manufacturing

Manufacturing technology special Out of stock? Print me a new one. Innovation brings 3D printing for all

Can we re-ignite industrial enthusiasm in the ‘virtual Crystal Palace’?

Interview Ian Edmondson

Chairman, Dunlop Aircraft Tyres

Manufacturing in Action

Factory of the Month – CooperVision

In partnership with:

The

Asset test

As the UK’s no.1, Lombard’s dedication to funding assets has stood the test of time. With over 150 years of experience we have an unrivalled history of helping businesses grow. We have in house specialists working in every area of asset funding, ranging from equipment, machinery, technology and fleet vehicles to name but a few. Using the flexibility of our leading end-to-end funding solutions we can meet most finance requirements with the added benefit of leaving your business’s cash flow intact. So if your business is looking to expand, or raise funds against existing assets why not look to Lombard and put us to the test. Security may be required and product fees may apply. For more information about how Lombard could help your business grow, please call 0800 028 7164. Type Talk 18001 0800 028 7164.

lombard.co.uk Lines are open 8am - 6pm Monday to Friday.

Editor’s comment

Back seat; back foot It was too good to last. The buzz of attention from government and mainstream media we celebrated at the end of June was well and truly knocked from its tentative position on the public podium last month by the News International scandal. As the frenzy over this debacle grew a sense of proportion was lost and reporting on more immediate, and potentially hugely damaging developments, was overshadowed. At a dinner hosted by law firm Eversheds last month, Ian Edmondson, chairman of Dunlop Aircraft Tyres (see p24 for our lead interview), commented on this imbalance in media coverage. This provoked some intense discussion over the threat to manufacturing posed, not just by economic turbulence in Europe, still the UK’s primary export market, but also by the bigger cloud of US economic problems. However firmly Hilary Clinton may have expressed confidence in the USA’s ability to contain its debt, the spats between President Obama and his Republican rivals are unsettling. Needless to say, the global repercussions of a US default would make the Greek crisis look like small fry. But why all this talk of macroeconomics? Is this the concern of the average manufacturing manager or business leader? According to those at the Eversheds dinner, and numerous other recent events, the resounding answer is ‘yes’ and increasingly so. Changing skills sets and expectations around job roles have been identified as a big challenge for manufacturing, particularly for positions like operations director (see p38). Financial canniness and awareness of currency dynamics are hardly trade mark virtues for a traditional small business ops director but as smaller UK companies join the race for opportunities in foreign markets it looks as though even old dogs will have to learn some new tricks. This ability to adapt is just one element within a wider issue of workforce flexibility which came under the spotlight at the end of July as both CBI and EEF published extensive reports detailing perceived challenges and requirements (see p18). What both reports show is that, while the majority of manufacturers are aware of the importance of flexible working within their businesses, both in terms of skills usage and shift patterns, they also doubt government commitment to creating the stable regulatory environment necessary to achieve flexibility. With such concerns being expressed it is imperative that manufacturers do not give up the fight to get into the front seat of policy formation through initiatives like the recent Red Tape Challenge and Made By Britain (see p14).

Cover image: Made By Britain was launched by Business Secretary, Vince Cable, on July 6 (see p14)

Jane Gray, Editor The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing.

In order to receive your monthly copy of kindly email c.woollard@sayonemedia.com, telephone 01603 671300 or write to the address below. Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors. Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

Editorial

Editorial Director – Will Stirling w.stirling@sayonemedia.com

Editor – Jane Gray

j.gray@sayonemedia.com

EEF is dedicated to the future of manufacturing. Everything we do is designed to help modern manufacturing businesses evolve, innovate and compete in a fast-changing world. www.eef.org.uk

Design

Art Director – Martin Mitchell m.mitchell@sayonemedia.com

Designer – Alex Cole

studio@sayonemedia.com

Associate Editors Tim Brown

Sales

t.brown@sayonemedia.com

h.anson@sayonemedia.com

Reporter George Archer g.archer@sayonemedia.com

Roberto Priolo

r.priolo@sayonemedia.com

Sales Director – Henry Anson Project Director – Matt Chilton m.chilton@sayonemedia.com

Britannia House 45-53 Prince of Wales Road Norwich, NR1 1BL T +44 (0)1603 671300 F + 44 (0)1603 618758 www.sayonemedia.com ISSN 1477-3201 BPA audit applied for June 2009. Copyright © SayOne Media 2010. The Manufacturer is independently audited by:

Recruitment Matt Chilton

m.chilton@sayonemedia.com

Subscriptions

Claire Woollard

c.woollard@sayonemedia.com

News and regulars 04 News and dates for your diary 08 Manufacturing appointments

Find out who’s heading where in manufacturing

10 The legal low down

Thomas Eggar’s commentary and advice. David Fanchi turns the spotlight on lease arrangements and termination for manufacturers

11 EEF Insight

Updates and analysis from the manufacturer’s organisation. Our latest insight highlights challenges to creating a flexible workplace

12 The big picture

Thought leadership from the Institute for Manufacturing, Cambridge University. Andy Neely looks under the skin of service-based manufacturing

13 Industrial policy

EEF’s director of policy, Steve Radley, makes sense of policy and regulation development for manufacturing firms

14 Lead story

Made By Britain Jane Gray reports on the latest attempt to close the chasm between government and industry with the launch of an initiative which hopes to re-animate the industrial enthusiasm of the Victorian times

18 EEF special feature

Labour flexibility needs stretching

The recession highlighted the flexible nature of the UK workforce. However, as Roberto Priolo finds out, this characteristic strength is under threat.

22 Interview

Treading on air Will Stirling talks to Ian Edmondson, chairman of Dunlop Aircraft Tyres, the UK’s only dedicated aircraft tyre manufacturer

Pillar features 26 Energy and sustainable manufacturing A budding green economy

George Archer looks at the practicalities of government schemes for green growth and uncovers the limitations and the own goals scored by legislation

32 Lean enterprise Lean and HR

The ‘people side’ of lean has been identified as the major challenge to sustainable initiatives yet human resources, the department most closely aligned with workforce issues, is rarely leveraged in pursuit lean success. Jane Gray investigates the potential

26 2

Contents Leadership, people and skills 38 Take me to your leader

Change in the UK manufacturing environment has become something of a cliché since the recession, but has knowledge of changing market conditions been realised in terms of skills development, especially for those convinced they know it all?

JCB Diary – The Best Job in the World 42

Paula Gwinnett, engineering team leader at The JCB Academy, shares her enthusiasm for the school’s education revolution

Employee of the month 43

Daniel Butler, Junior Engineer, Bentley Motors

Finance and Professional Services 50 Bribe money talks

Corruption in manufacturing is sadly more commonplace than many might assume, but with the introduction of the Bribery Act, it is not only the overtly guilty who will have to watch how they tread

IT in manufacturing

Summary execution 64

The demand for more effective ERP systems is growing among manufacturers. Are Manufacturing Execution Systems able to meet these growing expectations? Malcolm Wheatley investigates

IT News 68

Keeping you abreast of what’s new in manufacturing IT

Special features

Manufacturing technology special 58

Out of stock? Print me a new one. Will Stirling reports on innovations in the 3D printing market

Because we’re worth it 62

As the time approaches for TM’s flagship conference event we ask what the justification is for manufacturing leaders in spending time away from the helm

Manufacturinginaction

Factory of the month

• CooperVision is a specialist in the production of toric contact lenses – these particular lenses compensate for astigmatism • It is the third largest manufacturer of contacts lenses in the world

Fine Industries Chemicals

72 CooperVision

103 DavyMarkham Heavy Engineering 109 P&B Metals Metal work

AUTOMOTIVE

Ricardo reveals new facility for mean, green MP4-12C engine On July 20 British engineering group Ricardo officially opened its new high performance assembly facility, purpose-built to assemble the engine for the McLaren MP4-12C, one of the world’s fastest production cars. manufacturer and design specialist Ricardo has been contracted to design, engineer, supply parts for and manufacture the engine to McLaren’s tough technical specification in a timeframe of just 18-months. The Shoreham, Sussexheadquartered company received the contract for the V8 engine from McLaren in late 2008, the project kicked-off in June 2009 and factory production began in January 2011. Low emissions were a top priority, and Ricardo claims that the 600 horsepower M838T, 90-degree, V8 twin-turbo engine is the world’s greenest supercar engine. Using modern materials and innovative engine weight-saving features, including plastic intake manifold and cam covers and aluminium cylinder liners, the engine delivers 600hp in a package weighing less than 200kg with a very low centre of gravity. Emissions are a best-in-class 279g/km CO2 in the MP4-12C car. Performance benchmarks that the project demanded include power output of 600ps at 7,500rpm and torque of 600Nm at 3,000rpm within a sub-200kg engine mass, achieved mainly through innovative turbocharging and engine downsizing as well as a host of refinements including changes to valvetrain design and the

elimination of ‘T’ joints and assembly wave a flag to low-to-mid-volume leakage issues and designing better automotive companies globally that tool access for compact assembly. Ricardo can now design and also Fuel consumption is also said to manufacture super-high performance be class-leading, where there was and very green engines in thousands of a strong focus on reducing internal units per year.” friction and noise reduction was also a The new facility was opened by high priority. Tim Loughton, MP for East Worthing The clinical 600m2 facility has the and Shoreham-by-Sea, and Ron capacity to assemble 4,000 engines Dennis CBE, chairman of McLaren a year and the project has created 40 Automotive and the McLaren Group. skilled jobs with more within the supply Mr Dennis said: “As a staunch patriot chain. The factory layout was designed I am delighted that Ricardo was able and configured using best practice to not just design but also build this lean manufacturing standards with magnificent engine here in the UK, in input from ex-Toyota Motors and GKN so doing providing jobs and training for team members. engineers and supporting our British The technical challenge was automotive industry.” compounded by very tight time pressures. Within 18-months, the Visit www.themanufacturer.com for more engineering programme had to be detailed coverage of McLaren’s engine synchronised with McLaren’s vehicle and the Ricardo production facility. timing and a global supply chain of OEMs and SMEs was established, where parts were required in tricky mid-volume numbers of about 2,000 units per year. Steve Sapsford, Ricardo’s global market sector director, said: “The success Ricardo’s new assembly facility for the McLaren MP4-12C engine is of this project for designed with single piece flow and a 45-minute takt time McLaren will hopefully

Newsinbrief ENVIRONMENT

Luxus, the UK’s largest independent technical plastics recycling company, has invested half a million pounds in a new plastics processing line to increase its recycling capability. The new line will deliver a further 8,000 tonnes of compound a year using 100% recycled materials. This increased capacity will enable Luxus to effectively meet the rapidly expanding European demand for sustainable product manufactured from recycled polymers.

SKILLS

The Thales training facility in Leicester last month won the 2011 Company Training Award from Leicester College. The apprenticeship scheme has been running for two years at the site, which provides airline services, satellite communications and information systems. Apprenticeships at Thales in Leicester are split between the classroom and other parts of the business, where participants are able to gain hands on work experience.

ManufacturingNews AUTOMOTIVE

Fifty new jobs at Telford factory marks Stadco’s stunning return Britain’s largest independent pressings supplier to automotive OEMs has opened a new 24,000m2 manufacturing plant in Telford. The official opening, attended by local MP for The Wrekin, Mark Pritchard, and automotive industry expert Professor Garel Rhys CBE, took place last month at the new 18-acre site. Fifty new jobs will be created at the site, with a further 30 staff having been employed during the startup phase. Three pressing lines are now operating, running presses rated up to 2,000 tonnes and the spacious Telford site includes room for future expansion. Advanced manufacturing manager Paul Meeson expects the site to accommodate a further three press lines in the next few years, based on demand projections. “We are very excited and optimistic about Stadco’s future,” said Stadco managing director Dermot Sterne. “Today’s event is a fantastic opportunity to celebrate this key milestone in Stadco’s development and, importantly, thank our colleagues for the hard work and skill required to launch this plant in record time.” After a punishing recession, the investment suggests that parts of the UK automotive supply chain are recovering well. “The future for the automotive sector is looking increasingly positive for those automotive manufacturers who innovative, design, and produce high quality automotive parts and products,” said Mark Pritchard MP.

Datesfor yourdiary August

The final deadline for submission of entries for The Manufacturer of the Year Awards. Contact Laura Williams on: 01603 671323 or l.williams@sayonemedia.com for further information on how to enter.

September

The Institute of Operations Management is holding a free Manufacturing breakfast briefing at Aztec Hotel, Bristol. To register visit www.surveymonkey.com/s/7F37NKJ

13-14

NEC in Birmingham, UK, The Energy Event is the UK’s only event dedicated to energy procurement, management and efficiency and is free to attend. Visit: www.theenergyevent.com for more information.

13-15

The Recycling & Waste Management exhibition is being held at the NEC in Birmingham. For further information visit www.rwmexhibition.com

Lean Management Journal is holding a one day seminar focusing on lean office solutions at Kenilworth. For further information contact Benn Walsh on 0207 401 6033.

19-23

The MTA are going to be present at EMO Hannover, a conference focusing on products and services throughout all production areas. For more information contact Christel Moustacas on 0207 298 6400 or cmoustacas@mta.org.uk

EMS is holding a free energy management seminar at Allergate House in Durham, focusing on subjects such as voltage optimisation and sustainability. For further information contact Helen Lewis on 01709 836 200 or helen.lewis@ems-uk.org

The SMMT is holding an open forum at the University of Warwick, covering supply chain issues and the work of the Automotive Council. For further information contact cbalch@smmt.co.uk

Castle Precision, in association with The Manufacturer, is holding a one day seminar focusing on Castle’s working practices and systems, and how it guided them to the Manufacturer of the Year overall award in 2010. To find out more information or to book contact Benn Walsh on 0207 401 6033 or b.walsh@sayonemedia.com

The CBI is holding a conference focusing on the upcoming changes to the pension scheme for companies, due to start in October 2012. The event is being held at The Royal Society in London. For further information or to book visit http://cbipensions2011.eventbrite.com/

29-30

EEF are holding Health, Safety and Environment update seminars, focusing on the ongoing changes to the sectors. Seminars are being held at EEF branches at Hook (29th) and Cambridge (30th). For further information or to book call: 0845 293 9850 The T1 press at Stadco’s new Telford plant

Newsinbrief ENGINEERING

Engineering group GKN is to take over German engineering company Stromag for £174 million to bolster its land operations division based in Redditch. The deal comprises £146m cash consideration for the equity of Germany-based Stromag and £28m for the repayment of debt. Stromag is a private company whose shareholders include Equita GmbH and Co Holding, KGaA and a number of other notable international organisations and individuals. The company manufactures hydraulic clutches and electro-magnetic brakes, and is to be integrated into GKN’s land systems division. AUTOMOTIVE

From January 2012, British car manufacturer Caterham will begin exports of all of its current models to China including the Caterham Seven. The Chinese importer Courtenay Trading International (CTI) has begun a partnership with Caterham. It hopes to appoint six retailers in key provinces of China over the next year and is targeting initial sales of between 30 and 50 Sevens in its first year of operation. All of Caterham’s current EU5-compliant cars will be sold – Roadsport 120, Superlight 120, Roadsport 175, Superlight R300, CSR 175 and of course the Sevens.

An industry study – Coventry and Birmingham Low Emission Demonstrators – has shown that electric vehicles are capable of meeting transportation demands in urban centres. The study is the largest part of the Technology Strategy Board’s £25m Ultra Low Carbon Vehicle Demonstrator programme. The data was collected from the owners of 25 Mitsubishi i-MiEVs and 20 Smart Fortwos in Birmingham and Coventry. It showed that 77% of journeys undertaken lasted less than 20 minutes, and only 2% used more than 50% of the battery. This means that in the vast majority of cases, an EV can make a return trip without having to recharge its battery.

SKILLS

Government to fund 10,000 advanced apprenticeships Prime Minister David Cameron has announced details of a £25 million fund that will support up to 10,000 Advanced and Higher Apprenticeships, following a visit to Jaguar Land Rover’s Gaydon plant in July. The Higher Apprenticeships Fund will support the expansion of apprenticeships up to degree equivalent in companies, particularly SMEs, where there is unmet demand for the higher level skills. Industry representatives, in areas including manufacturing and engineering, are invited to bid for funding, which will be delivered via the National Apprenticeship

Service. The new apprenticeships will commence from October 2011. Prime Minister David Cameron said: “I am determined that this government should be the most pro-business there has been, with one purpose and one goal: creating jobs and growth. It is therefore crucial that we build up the skills in this country that our businesses need and that will fuel long term growth.”

20,000 firms participate in Semta skills project Semta, the manufacturing sector skills council, has announced the findings of a three-year, £100m programme to assist employers with finding employees with appropriate skills. At a House of Lords reception in July, sector skills council Semta brought manufacturers and policy makers together to review the success of the Semta Sector Compact and to assess the future skills needs of advanced manufacturing businesses. The Compact, which cost £100 million, ran from the end of 2008 to the start of 2011 and enabled Semta to contact 20,000 employers and complete 2,352 training plans. Over 85% of the plans were conducted with hard-to-reach smaller companies, to identify training for 76,000 learners and drive up the number of National Vocational Qualifications to a record 100,000 registrations. Detailed results are contained in a report, ‘Expert skills support to improve the sector’s performance,’ available at: www.semta.co.uk. The event also launched an online skills diagnostic tool, Business 2 Skills, to help employers identify the skills needs and training solutions that will help them achieve their specific business objectives and be more competitive. Case studies were presented by Jaguar Land Rover, New Holland Agriculture and W H Tildesley, and there were contributions from ex-trade union official Baroness Wall of New Barnet, Jacqui Henderson CBE of the National Skills Forum and Allan Cook CBE, chairman of Semta, WS Atkins plc, SELEX Galileo and also the UK Trade & Allan Cook CBE, chairman of Semta, Investment’s Advanced Engineering Sector at the Raising the Bar event Advisory Board.

ManufacturingNews AUTOMOTIVE

Nissan to fill 200 jobs for engineers and technicians Nissan has launched a major new recruitment campaign for engineers and maintenance technicians to work at the company’s Sunderland plant. Up to 200 new jobs across the plant will support the current record levels of production, the introduction of electric vehicle technology to the UK at the new battery plant, and the development of two exciting new models which have been announced for Sunderland, the 100% electric LEAF and the next generation Qashqai. A new website, www.careersatnissan.co.uk, has been launched for prospective

employees to find out more about Sunderland including information about the car plant with a section on the benefits of living and working in north-east England. Kevin Fitzpatrick, Nissan vice president for manufacturing in the UK, said: “These new recruits will play a key role not only in maintaining our record production levels, but in making sure that our Battery Plant and future new models are introduced successfully.”

REGULATION

Poor response to BIS’s Red Tape Challenge in 1st week One week into the manufacturing leg of government’s ‘Red Tape Challenge’ just one manufacturer had taken the opportunity to contribute to this exercise in dismantling business regulation On July 21 manufacturing companies were invited to take part in the ‘Red Tape Challenge’ and specify to government which business regulations are justifiable and effective, which need modification and which are superfluous with special regard to manufacturing. Only one comment had been Comments can be easily contributed on the dedicated website (www. redtapechallenge.cabinetoffice. gov.uk) and other sectors have commented prolifically during the periods dedicated to their industries. As of July 28 however, only one manufacturer had commented and submissions were originally due to close for the sector on August 11. The single comment appeared in the subsection on Products and Equipment, but the three other subsections – on Export Control, Intellectual Property and Weights and Measures – were left untouched.

The negative engagement picture this draws for manufacturing is mitigated however by the fact that the more open-ended cross sector areas of General Regulation 108 comments had been made in relation to Industrial Emissions and Carbon Reductions, and some 880 comments were posted on the foursubject Health and Safety section. The Government pledged to interpret the comments into proposals for keeping or scrapping specific regulations within three months of the deadline for each sector comment period. As a consequence of the retail sectors 9000 contributions, proposals were announced on July 28 to simplify 160 over burdensome industry regulations. EEF is supporting the Red Tape Challenge in line with its ongoing work to lobby for the simplification and clarification of regulation which blocks manufacturing growth in the UK.

Newsinbrief REGULATION

The Bribery Act, introduced in 2010, came into force on July 1 and Capita and Thomson Reuters have teamed up to provide online training on compliance with the act. Thomson Reuters’ governance, risk and compliance division and outsourcing company Capita are answering calls from UK companies to educate them more fully on the consequences for their businesses. See the Bribery Act feature on page 52 for an indepth look at the issue. LABOUR FLEXIBILITY

A survey conducted by the trade organisation EEF and JAM recruitment indicates that manufacturing pay settlements have levelled out to below pre-recession levels. Contrary to claims that the high rate of inflation this year would cause an increase in pressure on pay rates, data from an EEF / JAM survey has shown that the average pay settlement from April to the end of June was 2.5%. While 20% of pay settlements agreed have been a 3% increase, 12% of settlements were pay freezes. INVESTMENT

Investment into Europe by Chinese manufacturing companies is set to reach record levels in the second half of 2011, according to Deloitte, the business advisory firm. The total value of the five transactions announced in the first six months of the year was well over $1 billion, and this figure is expected to increase by the end of the year. It will be the largest volume of deals announced in a decade, surpassing the record of eight deals into Europe that completed in 2010. LABOUR

The CBI and EEF have raised concerns about the direction of government regulation on workforce flexibility, as 41% of manufacturers in a survey express pessimism over the UK’s environment for flexible labour. Both organisations have recently undertaken extensive research with recruitment agencies Hays and Executives Online respectively, to attempt to uncover employment trends in the sector and gauge industry feeling on the requirement for workforce flexibility against their capability in achieving it.

ManufacturingAppointments UK Appointments Archie Bethel CBE Society of Maritime Industries

Archie Bethel CBE has succeeded Alan Johnston CBE as honorary president of the Society of Maritime Industries. Bethel is divisional chief executive of Babcock International Group plc’s marine and technology division. Bethel joined Babcock in January

2004 and was appointed chief executive of Marine on its formation in mid June 2007. Bethel is a chartered mechanical engineer and a graduate of the University of Strathclyde (BSc, MBA, DSc) and vice president of the Institution of Mechanical Engineers.

Mark Ovenden Ford Britain

Mark Ovenden has been appointed managing director at Ford Britain, replacing Nigel Sharp who has decided to retire after 39 years with the company. Ovenden, managing director and president of Ford Russia, returns to Britain after an

assignment of almost three years at the head of Europe’s fastest growing market. His previous roles have included director of marketing at Ford Britain from March 2006, and Ford Europe brand manager, based at the Dunton technical centre in Essex.

Dr Martin Thomas The Trustees of the Arkwright Scholarships Trust

The Trustees of the Arkwright Scholarships Trust has announced the appointment of Dr Martin Thomas as the Trust’s national director, after Linda Scott announced she was retiring as chief executive. Dr Thomas, who is a materials engineer by training, has had an extensive career in academia,

industry and the civil service in both management and engineering research. He has particular experience in engineering education and skills having been Director of Educational Outreach at the defence engineering company QinetiQ and most recently as a director at EngineeringUK.

Adam Sims SCM Pharma

Sterile filling specialist SCM Pharma has appointed Adam Sims – a highly experienced non-executive director who previously worked at German firm Aesica – as a board-level advisor. Sims will play a major advisory role in SCM Pharma’s

ongoing expansion plans. SCM Pharma supports clients with finished product supply for clinical trials and commercial markets. It is able to fill liquids, gels and powders into a range of presentations including vials, ampoules, syringes, bottles and cartridges.

Tim Thomas EEF

EEF, the manufacturers’ organisation has appointed Tim Thomas as its new Head of Employment Affairs. In his new role Tim will be responsible for developing and enhancing EEF’s strong reputation as a key stakeholder

with government in the field of Employment Affairs. He will also represent EEF’s views in Brussels to the European Commission, working closely with CEEMET, the European Employers Body for manufacturing.

Peter Rask, managing director of Volvo Car UK and regional president of Volvo in the UK, Ireland and Iceland has left to pursue other interests outside the company. Rask has been in his role at Volvo Car UK for two-and-a-half years, and had been with Volvo for 14 years. Acting managing director is sales director Nick Connor, while a permanent replacement is recruited. International Motors, distributor for Subaru and Isuzu vehicles in the UK, has announced changes to its senior management team in its Subaru business in readiness of a busy launch period. Darren James has been appointed as managing director Subaru (UK) from his previous role of director parts and service. James takes over from Paul Tunnicliffe who is appointed to the newly created position of UK operations director. In his new role Tunnicliffe heads up each of the three IM Group franchises at board level, and takes on responsibility for IM Group functions including dealer development, distribution and after-sales.

Audi has announced that the key marketing role at its UK headquarters will be taken up by Dominic Chambers. Chambers has focused most recently on the technology sector with organisations such as Vodafone and LG Electronics. Chambers will preside over the communications strategy behind a range that has just peaked at 36 model types, and is set to grow to 42 over the next few years.

International Appointments BAE Systems has named Erin Moseley as senior vice president for Government Relations. Moseley will succeed Bob Fitch, who announced in April his plans to retire. In this role, she will assume responsibility for all government relations activities for the company’s US home market, overseeing BAE Systems, Inc.’s relationships with members of Congress, the Department of Defense and other Cabinetlevel organizations. Erin will also oversee Government Relations staffs across the organization in working with state government leaders.

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

Thelegallowdown P-lease sir...

IGetting want some more! the most out of your lease The

current economic uncertainties have impacted upon most sectors making it difficult for a business to plan for anything other than its short-term requirements. Manufacturing is no different. Without confidence in a stable order book or an otherwise attractive pipeline, many prospective manufacturer tenants are reluctant to commit to what they perceive to be inflexible, long term and expensive leases. This has created a problem for landlords, many of whom are highly leveraged and rely upon a stable rental income from their properties to service the borrowing that they have secured against them. In addition an income stream, a further issue of which investor landlords are all too aware is the underlying value of their investment. That value can diminish over time, especially towards the expiry of the lease or the date on which a tenant can exercise a break. In many circumstances demand for leases is currently being outstripped by supply, so landlords are often anxious to attract tenants to their properties. Similarly landlords with tenants in place under leases that could soon expire (or when tenantsâ€™ break clauses are approaching) are often prepared to listen to requests for an incentive not to vacate. These incentives can take many forms, but common examples are rent free periods, capital payments, agreements about future dilapidations liabilities or a longer term reduction in rent. Many manufacturers find that their space requirements change over time, but, like tenants in all other sectors, often wait until the end of the lease to consider moving to more suitable premises. As Andy Gibbs, Vail Williams LLP, says â€œmoving is not the only option. In order to keep you in the property landlords could be surprisingly accommodating. By exploring the options with a landlord, a tenant may well find there is now flexibility that they did not think existed.â€? When it comes to negotiating a new lease, either when considering a renewal or a lease of new premises, the message from the market to tenants is to ensure to ask for what you want. Whilst it is true to say that landlords remain keen for lease durations to be reasonably lengthy, a tenant who agrees to take a long lease should explore the availability of regular break options and whether a discounted or stepped rent could be agreed in

return. That is particularly important for a growing manufacturer whose requirements for space are constantly evolving. It is also important for a tenant to ensure that any lease, other than a very short term lease, contains provisions that allow the lease to be assigned or the premises to be sub-let without the landlord attaching onerous conditions to the same. This will allow a tenant to transfer the lease to a willing third party, or at least sublet any surplus space within the premises in the event that the tenant cannot part with the lease. In some circumstances, tenants will wish to ensure that their lease is terminated as soon as possible where that space is surplus to their requirements. The reality of the market means that if the landlord thinks it cannot obtain a new letting quickly and on acceptable terms, it may look for a reason to argue that the tenant has not validly ended the lease. Manufacturers must therefore be aware of not only when their leases can be brought to an end but, equally importantly, whether they need to take any steps to facilitate this. For example, a lease could contain preconditions to a break clause which may make it difficult to implement the break without sufficient planning. As well as the possibility of contractual restrictions on termination, statute may also regulate how and when a tenant can terminate. Some leases of business premises in England and Wales are affected by an Act of Parliament that was passed in 1954. This imposes a statutory framework which may apply to termination of a lease (both at the end of the term and on a break date) in addition to any requirements in the lease. If a tenant does not abide by all of the termination requirements then it is at risk that the lease with all of its inherent liabilities will continue. It is therefore crucial for manufacturers to properly understand both the contractual and statutory termination provisions and procedures that will apply to them when their leases end.

For more details contact: David Fanchi , Partner, Thomas Eggar LLP on: 02380 831248 or: david.fanchi@thomaseggar.com

EEFInsight Sidestepping shortages The manufacturing sector’s success in helping to haul Britain out of the recession is down to Britain’s flexible labour market according to interim management and executive recruitment firm Executives Online. This flexibility must be maintained, the company argues.

The

new EEF report Flexibility in the Modern Manufacturing Workplace, sponsored by Executives Online, finds the UK’s historically flexible labour market a key factor in its manufacturing sector’s success. We join EEF in urging the continued support of business practices which encourage flexible working – especially in enabling businesses to choose, with their employees, their own path to achieving flexibility. From our unique vantage point as suppliers of management and executive talent, we see the positive outcomes of flexibility first-hand. That the UK manufacturing sector leads the UK’s economic recovery is evident in our mix of business, where we’ve seen briefings from manufacturers rise 60% from mid2009, the fastest-growing sector in our diverse mix of clients. This grows out of a longer history of change and innovation in UK manufacturing, visible in our work as clients adopting practices which make them more flexible and competitive engage us to find people to help accomplish it. Whether this is gearing up a new factory to produce cars for export, implementing a banked hours scheme, consolidating operations from multiple sites into a single, more efficient plant, or creating training schemes to skill-up and empower staff; our directors, recruiters and registered candidates have a pulse on the sector and its changes. Using resourcing practices like interim management, consultancy, and the engagement of non-executive directors, flexibility in manufacturing extends to management, executive and board level roles. Manufacturers have continued their use of these flexible, high value-add contributors through the entirety of the recession, as evidenced by the steady presence of such roles in our business-mix. Many employers think that flexible executive resourcing is expensive, but in reality it can compare quite favourably to the true costs incurred for permanent employees. This is because costs such as employee pension contributions, national insurance, severance, paid time off, benefits and training costs are often hidden or not fully considered, whereas for interim managers all pay and benefits are reflected in the day rate. Research among more than 1,000 Executives Online clients and registered interim management candidates, published earlier this year and titled The Interim Report, finds that manufacturers use interim management at nearly twice the rates of other industries. The Interim Report also found an increase in the incidence of part-time contracts, a

shift in the profile of practicing interim managers towards those with more experience, and an increased willingness to move from working independently to employment and back again, depending on the opportunity. Flexibility in the Modern Manufacturing Workplace finds manufacturers concerned about skills shortages over the next five years. The ability to engage talent flexibly can have a direct impact on resolving skills shortages. Among reasons for engaging an interim manager, skills shortages are prominent according to The Interim Report. We note that flexibility also extends to remuneration of salaried employees, where employers create pay packages which change in tune with the company’s success. As companies source management and talent, we observe manufacturers taking a leading role in creating effective incentive-based compensation packages for their staff. Since 2008 through to the first half of 2011 we’ve seen the incidence of packages offered by manufacturers which include incentive compensation such as bonus or options more than double. (Over the same period, nonmanufacturing companies and organisations have also grown their use of incentive pay, but not to the same levels.) Roles with such packages attract stronger interest from applicants, and, by logical extension, a more successful hire. We encourage EEF and others in the business of providing flexible executive resource to continue to raise awareness of what flexibility means for employers and employees, and promote it. Flexibility in the Modern Manufacturing Workplace illuminates a range of manufacturer attitudes and practices regarding employee empowerment, flexibility, and the improving business cycle. We look forward to continuing to engage with UK manufacturers to find the right talent with which to enhance growth and profits into the future. About Executives Online: Executives Online is a leading interim management and executive recruitment firm with UK and international operations. Via its award-winning online candidate acquisition engine, the company builds and leverages a confidential Global Talent Bank of more than 100,000 senior managers and executives seeking interim or permanent roles. For more information or to initiate a search now, call +44 845 053 1188 or e-mail manufacturing@executivesonline.co.uk.

Have your say at www.themanufacturer.com

The big picture Servitisation’s human resources Andy Neely Institute for Manufacturing

The shift by manufacturers towards service is happening at a faster rate than ever before, but as Andy Neely of the University of Cambridge’s Institute for Manufacturing explains, the success of service is all about people and the relationships they form.

Let’s

start with some facts. First, it’s clear that the move towards servitisation (adding services to or integrating services with core products) is on the increase. Second, this move towards service is not a new trend – some have even suggested it can be stretched back to the mid 19th century. Finally, services won’t replace products – they are there to supplement and support them. A manufacturer’s product is the foundation upon which the service revenue streams can be built. We all know that transition to service is both complex and challenging, but it could be argued that services are not simply about business-to-business transactions but people-to-people. It’s easy to get caught up in the vast amount of data when evaluating service trends. Some of the latest figures throw up some interesting statistics. For example, recent studies suggest that around 30% of all manufacturers with more than 100 employees offer global services. The latest data also makes it clear that servitisation is much more prevalent in some countries than others - although the gap between countries is closing. In 2007 58% of US manufacturers offered such services, while less than 1% of Chinese manufacturers did the same. By 2011 the US figure had fallen slightly – to 55% - while the Chinese figure had grown to just under 20%. This rapid shift highlights that manufacturers in China will not remain as the world’s workhorse, concentrating on the low value added manufacturing activities. However, interestingly not all these firms are reaping the financial rewards of service. While for many firms revenues from services have remained relatively stable, it has not always resulted in the cash cow that some firms expected. The fact that the proportion of revenues manufacturers receive from services has not shifted significantly in the last few years is interesting. From a practical perspective, one has to ask what is holding firms back from their avowed intents of increasing service revenues. Especially in recent years, with the financial crisis, one might have

Andy Neely is a Director of the Cambridge Service Alliance, based at the IfM. To find out more please visit: www.cambridgeservicealliance.org/outputs/ papers.html

expected service revenues to increase as customers sought to increase the life of existing products rather than buying new capital equipment. While there are many examples of servitised firms that are extremely successful – both in terms of profitability and market valuation – there are also plenty of examples where firms haven’t achieved the potential they had hoped from their service offerings. All very interesting, but where is the human connection in all this? Given that some firms do well having servitised while others do badly, research by the IfM points to the question of execution – of building the right organisational capabilities and culture. This is essential to successful delivery of a servitisation strategy. Translation – people matter. It makes sense when you examine the nature of service contracts. Increasingly suppliers are being asked to provide outcomes or guarantee the availability of a specific product. These contracts are often long-term, in some instances lasting decades and so providers are involved, not just in customer or supplier dealings, but in very long term relationships. Companies which are looking to service must ensure that the people they have delivering these services possess the right skills. Put simply, if you start to offer a service you need to ensure that your underlying capabilities can deliver on promises. For example, many petro-chemical firms have expanded into retailing. The forecourt of a service station now resembles a mini-mart, offering everything from coffee and fast food to music and stationery. In order to ensure the success of a retail venture, these firms have to develop a comprehensive supply chain for perishable goods, especially foodstuffs. These skills may not be available within the existing business. And in a world where co-creation of value – where both the service provider and customer bring something to the table – it’s increasingly important to have personnel who can form and develop these beneficial relationships. It’s too easy to focus purely on the nature of the service your organisation intends to offer, you must not forget that the main delivery mechanism for this are your people. Service truly depends on human resources.

Industrial Policy

Flexibility for all Steve Radley, Director of Policy, EEF

For

many manufacturers, their success now depends on being innovative in buying and selling from a range of world markets. But opportunity but also means risk and firms are exposed to the ups and downs of these markets and disruptions to supply as they struggle to react quickly to changing customer needs and stay ahead of competition. All these factors mean that manufacturers need much greater flexibility and new EEF research, in our Flexibility in the modern manufacturing workplace report suggests that in most cases they are achieving it. Much of this success rests on gaining close and cooperative relationships within the workplace, based around strong communication, engagement and reward. But employers are concerned that transient, complex and prescriptive employment regulation is getting in the way of these productive relationships. Most of the time flexibility works as a two way street. Employers need their employees to work flexibly in a variety of ways but at the same time many employees are seeking flexible working arrangements, such as part time work, individualised hours and the ability to take unpaid leave to achieve the elusive â€˜work-life balanceâ€™. In many cases, employers reward employees for their willingness to meet business needs for flexibly by granting requests for more flexible working arrangements. This tends to be done informally and it is important that the government reverses the recent trend for unnecessary intervention in the workplace. The UK government has attempted to address employer concerns through root and branch reviews such as its Red Tape Challenge and its Employment Law Review. In addition, although employers may be weary of hearing it, consultation on the right to request flexible working and the proposal of a new system for parental leave does suggest that government is attempting to reduce bureaucracy. However, news from Europe is less encouraging. New laws from Brussels have an ever increasing impact on the daily lives of employers and their workforces. The Working Time Directive restricts employeesâ€™ ability to work longer hours when they wish to, while employers are faced with the imposition of an additional level of administration.

One of the messages we increasingly hear from manufacturers is the importance of flexibility to their businesses. But what does this mean in terms manufacturing behaviours and will regulation support it on an international scale?

Furthermore, the European legislative train continues to rumble on, with proposals for changes to the Parental Leave Directive and potential legislation to regulate the redundancy process further, as well as restrictive temporary employment proposals. All of these issues are already regulated in one way or another by existing UK legislation. This has important implications for government. If Europe is showing an appetite for more regulation it is vital that UK government thoroughly questions the need to introduce more UK-specific rules

If Europe is showing an appetite for more regulation it is vital that UK government thoroughly questions the need to introduce more UK specific rules and reviews whether existing measures are still necessary and reviews whether existing measures are still necessary. In addition, the UK needs to be influential in Europe; it commands only around 9% of the voting rights in the European Parliament and has a limited ability, alone, to influence the majority vote system exercised on most regulation issues. For its voice to be heard effectively, it must look to like-minded states, building a coalition of those with shared interests in sweeping away the barriers posed by regulation. With unemployment as high as 25% in countries like Spain, the prospects for building these alliances is greater than it has been for some time. These alliances should not just be about resisting or revising Directives that have already travelled some distance down the pipeline, they should also be about changing mindsets in Europe with regard to whether proposed regulation is needed at all. As they relax on the beaches this month, MPs and MEPs alike should spend their time thinking about how they can support the recovery by doing less not more.

Have your say at www.themanufacturer.com

Made

By Britain

Our lead story in brief A new initiative called Made By Britain has been launched to show case British manufacturing excellence The unveiling of the complete catalogue of Made by Britain nominees will coincide with the Queen’s diamond Jubilee celebrations Although this initiative has been welcomed as a means for rehabilitating the image of manufacturing, many are unsure that it will live up to its ambitions to give greater power to the voice of manufacturing in government Nominees for Made By Britain are being picked by constituency. So far nominations are diverse, ranging from food and drink manufacturers through bespoke apparel to precision component engineering. Companies also vary in size including both big household names and untold success stories. The deadline for nominations is September 15

The Great Exhibition of 1851; it was an event that created a legacy and an image of industrial grandeur which has outlasted its physical relics. Now the Government is trying to recreate the ambitious feat. Jane Gray reports.

July 6, an event took place in Westminster to launch a new initiative called ‘Made By Britain’. This scheme was conceived by the Associate Parliamentary Manufacturing Group and by the 1851 Royal Commission in order to revive the national significance of British industry, however, its structure may give an even greater opportunity to the manufacturing community. The vision for Made By Britain, as Mr Vince Cable, Minister of State for Business, termed it at the launch event, is to create a “virtual Crystal Palace”, in tribute to the original Great Exhibition of 1851. The new website will display the best manufacturing outputs the country has to offer and will be promoted as part of the Queen’s diamond jubilee celebrations next year.

Leadstory Made By Britain

A household name, Crowne Paints is hoping to be selected for Made By Britain

In order to compile this catalogue of industrial excellence, Policy Connect, the parliamentary group responsible for administering Made By Britain, have asked that every one of the UK’s 650 odd MPs select a manufacturing representative for their constituency. The idea behind this system of nomination is to push MPs who may be more or less unaware of manufacturing strength within their areas of administration, to look again and realise the local influence of the manufacturing economy. The hope is that this increased knowledge, profile of manufacturing and engagement between industry and government, will facilitate the formation of better industrial and business policy on both a local and national level. This is a fine ambition and all attendees at the launch event on July 6 supported it whole heartedly in principle. There were, however, many who were skeptical about the extent to which the admittedly gimmicky ‘virtual Crystal Palace’ concept would catch the lasting attention of politicians. Tata Group, who were present for Cable’s unveiling of the scheme, spoke of its skepticism to TM and asked “what will the tangible outcomes be?” In addition Tata questioned “how government will prove that it is now listening harder in real policy steps?” Grounds for this skepticism are not hard to find. The first round of nominations, while all exceedingly happy to be held up as industry exemplars, have said that their relationships with their local parliamentary representatives were already strong and meaningful. Engaging those who have been less enthusiastic in the past will be harder and ensuring that their nominations will mean more than simply ticking an engagement box will be difficult. The nomination process is hardly taxing and asks little of MPs in terms of justifying their choice through specific criteria. It is not unreasonable to question therefore,

how far this initiative is really pushing MPs to understand manufacturing better. But of course, as Cable pointed out in his speech to a crowded room of manufacturers, bankers, politicians, academics and trade body representatives at Portcullis House, it is easy to miss positive steps by focusing instead on what has not been done. The Business Secretary said: “I recognise in my job that we’ve got to do what we can to support [manufacturing]. Quite a few of you have come up to me already and said ‘why aren’t you doing more?’ It’s a perfectly good question. But I can’t go round the country with a cheque book. I would love to do so, I would love to be Father Christmas, but we can’t operate like that. But there are things we can do and are doing.” Alongside supporting apprenticeships, establishing Technology Innovation Centres and delivering what government funding it can through Regional Growth Funds, Mr Cable said that the key action to be taken was on changing the perception that the UK does not make things any more. This initiative, if properly communicated, should certainly do that.

L-R Clive Bell, Senior Mill Representative at SCA Hygiene, Business Secretary Vince Cable and Guy Opperman MP at the Made By Britain launch event

The following statements from some of Made By Britain’s first nominees give more insight into the hopes and concerns of those at the centre of this new project as well as highlighting the diversity of selection already made to exhibit British manufacturing expertise.

SCA Hygiene Products

SCA have been nominated by Guy Opperman MP to represent the constituency of Hexham, Northumberland. At the launch of Made By Britain, Mr Opperman explained that he had picked SCA because they stood out from the trend for focusing on high-tech manufacturing in terms of products. “The company is a fantastic example of modern manufacturing,” he said. SCA predominantly manufacture branded and own brand toilet rolls for the domestic market. One in five toilet rolls sold in the UK is manufactured by SCA.

intensive business such as ours. This is an ongoing debate but we welcome any opportunity to make our views known to government.” Bell’s hope for the communication of SCAs own business concerns and the general amplification of the voice of manufacturing were further encouraged by press coverage of the event. He said: “This launch event has attracted huge media coverage from the likes of the FT through to the Hindustan Times and the News of the World.” Although the coverage of this last paper will likely be viewed as less significant in the light of recent events nevertheless Bell says: “I hope the organisers of the campaign use this momentum to generate further recognition for this country’s hard-pressed manufacturing sector and as a business we’ll do everything we can to support that.”

All just a little bit of history repeating The fact this initiative was, in part, instigated by the 1851 Royal Commission is significant. This 1851 Royal Commission was established by Prince Albert in order to oversee the organisation of the, now legendary, Great Exhibition of the Victorian age. This immense celebration of imperial might drew in more than 6 million attendees and show cased the latest advances in industrial technology and manufacturing specialism from all around the globe. It was designed to allow Britain to revel in its global industrial dominance, but Prince Albert perceived a problem; he saw that the finest exhibits were frequently not those from Britain, or its imperial acquisitions.

Future fortunes. SCA’s support for apprenticeships was critical in Guy Opperman MP’s decision to select the company as constituency representative

Clive Bell is senior mill representative for SCA and he accompanied Mr Opperman to Portcullis House for the launch of Made By Britain. In response to SCAs nomination Mr Bell said that the company was thrilled but also indicated that the next steps and the direction of the initiative in terms of tangible outcomes were unclear. “We have been told that the organisers are planning to further develop the online resource and then look to have some kind of exhibition once every MP has nominated a company in their constituency,” he said. On his hopes for influencing industrial policy through involvement in Made by Britain, Mr Bell commented: “At the launch I took the opportunity to mention to a couple of people, including our local MP, the concerns we have over government energy policy and the high production costs for energy-

The Prince became concerned that the UK was falling behind in industrial innovation and application and he decided to extend the life of the Royal Commission, issuing it with the ongoing task of redistributing the significant profits made by the event, back into industry in order to support competitive development. From 1851 to the present the Royal Commission has continued to invest in research and education projects in support of manufacturing. The parallels between the needs of British industry today and those perceived by Prince Albert 160 years ago have never been more distinct. The Royal Commission is now chaired by Sir Alan Rudge who also chair of the ERA Foundation.

Lead story Made By Britain

Tees Components

Tees Components have been nominated by Tom Blenkinsop MP to represent the constituency of Middlesbrough South and East Cleveland. The specific products which inspired the nomination were the ship thrusters made by the Tees Gill Thrusters division. These advanced propulsion devices are used the world over. Tees Gill has a 50:50 ratio of exports to domestic sales and has a particularly strong market in the US. Sharon Lane, general manager at Tees Gill Thrusters said of the nomination: “The whole initiative is certainly a welcome step and it is good news for our business.” On the need to motivate MPs to do more in acknowledging the importance of manufacturing businesses in their constituencies Ms Lane commented: “We have always had a lot of contact. I don’t see the local MPs as being an issue, but perhaps we have been luckier than others.” On the wider impact of the initiative Ms Lane was diffident. In terms of policies she hopes will be given attention she identified nuclear new build prospects as a subject her company are keen to have clarified and supported. Ms Lane also said that the actual objective of the project itself needed to be made clearer before those involved could form clear ideas of the benefits to be gained. “You can build a website,” she said, “but who is it for and why is it there? Is the intention to attract young talent and excite them or is it to put forward the excellence of our product so that potential investors and customers from outside the UK think again about their perception of what is made here? Those two messages would require very different approaches.” Finishing on a positive note Lane added that it was “good that MPs have so far not just chosen household names. It has so far been small businesses who have really driven economic recovery and that is being recognised in a lot of the nominations.” Of course, inevitably and correctly, the smaller companies have been joined by some big hitters. Land Rover has made the product list in addition to custard creams from United Biscuits (under the McVities brand) and Young’s Fish Fingers. For these big organisations it might be supposed that recognition in a scheme of this kind would not be as highly valued as it is for less readily recognised companies and products. Not so say’s Leendert den Hollander, CEO of Young’s Seafood Limited. “It’s great to see Austin Mitchell MP showing his support for Young’s Seafood fish fingers. Young’s has been based in the UK for over 200 years and has a proud history. I know this will mean a lot to the hardworking staff based in all 13 of our UK sites.” A good measure going forward for how important this initiative proves will be the extent to which companies not yet nominated display jealousy

towards their peers. For Crowne Paints, based in Darwen, Lancashire, its nomination has become something of an ambition and it is working hard to influence local MP, Jake Berry, to pick Crowne as his constituency representative. Commenting on this ambition and why he believes Crowne should be listed in the Made By Britain virtual Crystal Palace, Dave McCombe, head of manufacturing at Crowne, said: “Crown Paints has always been at the heart of the communities it serves and we have been at the forefront of manufacturing innovation for many years. We are passionate about manufacturing and keen to be involved in any initiatives to establish it once again as a key tenet of government policy.” Despite having a self proclaimed “good relationship” their local MP, a relationship which includes regular meetings for the communication of business concerns, McCombe feels it is important for manufacturers to seize this chance to put a magnifying glass over isolated instances of best practice like theirs, and prompt less engaged constituencies to remedy their failings. “So far, the Government’s rhetoric on manufacturing is to be welcomed, especially after the decline in some of the sector in the past decade. We are not the only ones who believe that many of the UK’s manufacturers remain world-class but we [collectively] need support from ministers to ensure the economy is ‘rebalanced’ in the way they say they want it to be,” says McCombe. For those, like Crowne, who are keen to be listed as Made By Britain nominees the initiatives organisers are urging manufacturers to write to their MPs and spur them to action. A template letter is available to download on the Made By Britain website (www.policyconnect.org.uk/apmg/ made-by-britain). The deadline for nominations is September 15.

Manufacturing excellence at Tees Gill Thrusters is making waves around the world as the company grows in export strength

Have your say at www.themanufacturer.com

Labour flexibility needs stretching

Communication and strong management-workforce relationships are key to workforce flexibility

In a global economic recovery cycle, labour market flexibility is crucial. EEF’s latest report on flexibility in the modern manufacturing workplace looks at the characteristics of UK labour, and provides employers with a handy toolkit to manage short time working and staff numbers. Roberto Priolo explains.

difficult times, manufacturers have proved not only resilient, but also extremely creative in finding new ways to cope with different market conditions. During and following the recession, the British workforce has many times shown remarkable flexibility; helping keep many companies afloat. There is a growing concern, however, that this crucial virtue in the UK’s labour market is gradually disappearing. In a report published last month in partnership with recruitment company Executives Online, the manufacturers’ organisation EEF analysed the importance of flexibility in the modern workplace and looked at ways to make sure the UK continues to be a destination that provides companies with flexibility. Tim Thomas, head of employment policy at EEF, says: “We need to raise awareness of what flexibility means for employers and employees, and promote it. Now there is a right to request flexible working, but not a right to have it.”

Key points raised and investigated in this article are: 40% of companies disagree with the statement that the UK business environment gives them the flexibility they need. EEF calls for a hands-off approach to flexibility at work from government. Only 2% of the companies surveyed say they do not use overtime at all. Measures to alter the amount of hours worked or the type of workforce are widely-used to better respond to changes in the market. Manufacturers recognise skills shortages as one of their main problems but are trying to combat this. In the past year, half of the companies EEF surveyed increased their investment in training. According to Andrew Nicholas, regional director for the Midlands at Executives Online, many employers don’t understand all the flexible working options available to them. “Many people think that flexible work is expensive, but in reality it can be comparible to the true costs incurred for permanent work as costs like pension contribution, national insurance,

EEF

Modern manufacturing workplace

benefits or training costs are often hidden or not fully considered,” he says.

The need to be flexible Nine out of 10 EEF members export and for 40% of these, half of their turnover comes from exports. Access to new markets, the ability to offer innovative products and services and investment in modern equipment are fundamental to staying competitive internationally but without a flexible and adaptable workforce achieving these goals are impossible. More than half the companies surveyed said they have to switch between markets quickly or that they have short order books, while an overwhelming 97% of them agreed that responsiveness is one of the main reasons why they need labour flexibility. EEF’s Thomas says: “Flexibility means having staff who are multi-trained and multi-skilled, to move in and out of projects when business needs it. Those sorts of companies can retain skills by being nimble, and react quickly to changed conditions in the market.” Manufacturing is changing rapidly, with many firms specialising in customisation – even of one-time commodity goods – and creating new, bespoke products. Concentrating on these activities often means that order flow will be unpredictable, and that the skills a business needs can easily span several types of operations, from manufacture to design and servicing. “Skills monitoring and assessment, and continual development and training are the key,” Mr Thomas adds. “Employers should keep a training record, and look at what skills a particular person has and what are those he could gain. Workers might be good at a particular task, for example, and that might be developed, or even cascaded to other members of staff.” The report includes two company case studies. The first company trained teams of five employees in the same skills in preparation for when colleagues with specific skills leave, while the second managed to reskill and redeploy workers affected by the introduction of a new technology that increased automation and made their work superfluous.

Including employees in change Good employee relations are essential in developing flexibility. Cooperation between workers and management brings rewards even in difficult times. In the last recession, employers who made their staff part of the company’s strategy often managed to retain key skills and limit job losses. Body-inwhite products manufacturer Stadco told TM that despite having to make over 400 people redundant in 2008, good industrial relations and better internal communications meant that when the company began recruiting again in 2010, relations with rehired ex-staff were better than they were following previous redundancies. According to EEF, manufacturers are now looking at this kind of cooperation with greater interest, and

97% of manufacturers say responsiveness to changes in demand is the main element behind their need for flexiblity

they are including it in their business strategies, using greater employee engagement to achieve the labour flexibility they require. The need to adapt quickly to changes in processes and technology is an incentive for employers to communicate with staff, to let them know what the new conditions might mean for the company as a whole but also for them as individuals. Over 60% of the companies EEF surveyed use three or more different channels to communicate business information to their employees. The survey found that companies of all sizes now understand the importance of communicating with their staff in the context of flexible labour. Shared commitment is also achieved by using rewards (this can mean anything, from giving out bonuses based on performance to awarding cash for submitting suggestions) and investing in multiskilled staff. Mr Nicholas says: “You need to have a constant stream of dialogue with the workforce, you need to let them know the status of the business – is it growing, facing opportunities or tough times, or consolidating? Workers need to know what is happening. Letting them know what is best for the business and treating them fairly are critical to managing change professionally, and they also make for a much wider basis for cooperation.” Skills shortages and the difficulty in attracting skilled workers are still seen by manufacturers as large obstacles to flexible labour, and therefore growth, especially now that they are trying to respond to generally stonger demand. What is even more troubling is that they see the problem escalating over the next five years (two-thirds of manufacturers expect it will be hard to recruit production staff in this period). However, in the past year half of the companies

EEF VENUES BETTER BUSINESS SENSE IN PRIME LOCATIONS A group of outstanding conference venues dedicated to meetings, conferences, team building, training and corporate events. With conference centres in Warwickshire, London, Bristol and Sheffield, quality and service excellence are delivered as standard. For more information visit our website at www.eefvenues.co.uk or call our sales team on 0843 862 33 66.

Warwickshire

Bristol

London

Sheffield

EEF Modern manufacturing workplace

surveyed by EEF increased their investment in training and in the next 12 months 65% of companies said they will invest in training. In addition, almost 50% of the companies that took part in the survey are planning to recruit 16 to 18-year old apprentices in the next year, while almost a third of them expect to recruit 19 to 23-year old apprentices.

Toolkit for managers The wide range of measures manufacturers can take to achieve flexibility is influenced by their size, markets and the seasonality of their markets. With this in mind, the EEF report identifies the most common practices available to managers. There are broadly three types of measures managers can choose from: 1. Measures that involve changes in the number of hours worked. 2. Measures that involve adjustment to the numbers and types of employees, and 3. Measures that relate specifically to production. For the first category, overtime and the use of permanent workers are ideal to respond to demand increases that can turn out to be short-lived, while annualised hours are used by businesses experiencing consistent swings in demand. Variations in shift schedules are particularly popular with large companies and firms in more cyclical markets (but shift changes are also used in exceptional events, like the Fukushima earthquake in Japan, which caused widespread supply chain disruption). Despite extra shifts and banked or annualised hours being viable options, overtime is the most widely used of the measures that change the amount of hours worked. Half of the companies who responded to the survey said they find overtime particularly important in achieving flexibility, with only 2% saying they don’t use it at all. The ability to vary the nature and size of the workforce is also important to achieve flexibility. A quarter of companies cited the use of temporary workers as highly important in responding to changing market conditions. The use of agency workers is very common, but there are also several non-standard contracts that manufacturers use. Fixed-term or interim contracts, for example, are used for predictable periods of demand and to bring in skills currently unavailable in-house. Companies can cut back on agency workers immediately, a strategy many used during the recession to minimise permanent employee reductions. Additionally, agency workers are being hired now, in the recovery, as companies are being extremely cautious not to expand their full-time workforce too quickly. “Interims have a different mindset, focusing on the deliverables and on adding value every single day,” says Mr Nicholas. “In manufacturing, you soon realise that you are working in teams, that you have

to collaborate. It requires a mix of people: you bring flexible workers in to meet specific business goals, you train them in your company in terms of the tasks you want them to perform and you let them familiarise with the environment.” EEF’s Thomas agrees: “Flexible contracts give employers the workforce they need at the time they need it.” According to Nicholas, the duration of an interim contract ranges from two to 18 months, with an average of seven. Finally, following the recession many companies now have a much closer relationship with their suppliers and sometimes operate multiple sites, perhaps even overseas. Depending on demand, they sometimes have to flex production across these sites: two thirds of companies, for instance, says that they sometimes outsource production, while 40% says that they switch production between different sites when demand exceeds capacity.

Interims have a different mindset, focusing on the deliverables and on adding value every single day Andrew Nicholas, Regional Director for the Midlands, Executives Online Companies which operate in predictable cyclical or seasonal markets are more likely to focus on the ability to expand and contract their workforce, while those with short order books or in fast-moving markets require more rapid types of flexibility.

Too much regulation? When they operate flexible working arrangements with their employees, companies often encounter obstacles represented by the regulatory environment: according to the EEF survey, 40% of them disagreed with the statement that the UK business environment gives them the flexibility they need. Most employers are dealing with flexibility by cooperating with their workforce, without the need for any statutory intervention. “Regulation works well when it’s simple, clear and when it focuses on the outcomes that need to be achieved,” Thomas says. “It should leave the processes to be dealt with by employers with their employees. Additionally, the more you regulate the less flexibility there is going to be, and the higher the costs on business will be.” After a clear framework is set, the report recommends that government should keep a hands-off approach, helping those businesses that need support and leaving the others manage flexible work by themselves. At the same time, employers should be empowered and supported; currently the focus of policy is overwhelmingly on employees’ rights.

Have your say at www.themanufacturer.com

Treading One hundred years old last year, Dunlop Aircraft Tyres received a Queen’s Award for Enterprise in July in recognition of six years of export growth, now running at nearly 80% of turnover. Ian Edmondson is the man behind the wheel of a British tyre company going places.

Ian Edmondson has been at the helm of Dunlop Aircraft Tyres Ltd since 2007

Synonymous

with tyres and sports goods, Dunlop is an iconic British manufacturing name with a long pedigree. But these days how many people actually know what Dunlop does, where and under whose ownership? Dunlop Pneumatic Tyre Co. Ltd was formed in 1889 in Dublin, to commercialise John Boyd Dunlop’s patent for pneumatic tyres for bicycles. An aircraft tyre division was formed in 1911. Fast forward nearly a century and the Dunlop Rubber Company (Dunlop) was acquired by British conglomerate BTR plc, and Sumitomo Rubber Industries acquired the car tyre assets of Dunlop, including the rights to use the Dunlop brand. In 1996, the aircraft tyre business was sold by BTR to a 3i-backed private equity group, and Dunlop Aircraft Tyres became an independent company. Later, the wheels and brake business was sold off to aerospace group Meggitt. Today Dunlop Aircraft Tyres Ltd (DATL) is the last truly independent Dunlop tyre company, the only dedicated aircraft tyre company in the UK and one of only two in Europe. ACC Capital Partners, part of the private equity group which bought Dunlop Aircraft Tyres, had a three-stage business plan to recoup their investment based on growing the company. When a private equity firm buys a company in a technical field like tyre manufacture, it’s normal to parachute in an experienced engineering manager to take the helm and for Dunlop, Ian Edmondson, who knew one of the financiers, ABN Amro Private Equity, was this man. He was invited to run the newly independent company as chairman, then later as both chair and managing director. A Chartered Mechanical Engineer with a doctorate in engineering, Mr Edmondson’s career spanned sectors including the chemical and automotive industries, with some exposure to aerospace, but no history in tyres. “The nearest I got to tyres was brakes – I ran [brake product manufacturer] Ferodo for a time, and then Federal Mogul in the UK,” says Mr Edmondson. “I knew about elastomers, and a tyre is a reinforced elastomer. In fact a tyre is a composite structure, but is not often called that,” Edmondson adds, revealing signs of the technical mind behind the business brain.

Interview Ian Edmondson, Dunlop Aircraft Tyres

Three pillar growth strategy “The business was purchased on the basis of recognising the opportunity of taking this very famous brand in an important sector – aerospace and defence – and growing it vigorously on the global strength of that brand,” says Mr Edmondson. Dunlop Aircraft Tyres had become quieter under the previous private ownership, while the new model was very much to grow the business through a three pronged attack on: geographic expansion, the introduction of radial tyre building technology to the aircraft tyre market and improvements in the manufacturing cost base. This strategy led DATL to establish a joint venture in China for retreading aircraft tyres for the Asian market and Dunlop Taikoo (Jinjiang) Aircraft Tyres Ltd was formed in 2009. Edmondson explains the opportunity and the challenge: “Because of the safety-critical nature of aircraft tyres, it’s not easy to retread them other than by the OEM tyre manufacturer. That means in order to sell a tyre one must have a retread capability within reasonable distance of the operating base of the airline. In Asia we had nothing so in order to sell new tyres we needed to retread. We’ve created significant geographic expansion, where those new tyres are made here but retreaded in a China factory for the whole Asian market.” The strategy planned a similar move into North America, but the recession intervened. Now DATL retreads tyres there under contract to a third party. The second leg of company strategy was in radial tyre investment. Radials are popular in the automotive market and large aircraft. “We are spending a lot of money on designs, materials and products and the manufacturing technology that goes with it,” says Edmondson. “We bought in several people to enhance our knowledge base and have invested in manufacturing equipment because you need slightly different equipment to make radial tyres.” He says the company was fortunate to be able to purchase the assets and some manufacturing knowhow from Yokohama’s tyre plant in Japan when that company withdrew from the aircraft tyre business in the recession. DATL has traditionally covered the regional jet market very well, especially supplying turboprops like the Bombardier Q400. Now, it wants to go large. “The key driver with radials is the weight saving that you can often get – but not in every case, which is interesting,” says Edmondson. “As fuel prices continue to increase the value of weight saving increases. The disadvantages are that they don’t retread as many times as bias tyres do. Looking at the simple economics of the tyre, you can argue that the bias tyre is cheaper because it retreads so often. And sometimes it is cheaper regardless of weight saving, depending on the flight duty of the aeroplane – that is, how heavy the plane, how long haul the flight is and the number of flights. As the plane gets smaller and the duty cycles get shorter, the economics become more compelling.”

A Dunlop Aircraft Tyres operator assembles a radial tyre on one of Dunlop’s semiautomated tyre building machines

While DATL’s business was built serving the regional aircraft market, radial tyres now gives it an entrée into all the larger aircraft platforms.

Manufacturing – a survival guide There are restrictions on what you can change in the aircraft tyre manufacturing process without having to retest and recertify the tyre, but Edmondson says these constraints present opportunities. DATL has developed more semi-automated processes. “We have increased the amount of tyres that can be built with semi-automatic machines and we have a programme for the next 18-months to expand that capability,” he says. “It’s only semi-automatic, but it does save labour. As with anything you can automate, you get much better repeatability, consistency and certainty.” DATL has also invested heavily in technology to optimise the cure profile on its products. Tyres vary in thickness around the envelope, and the skill in the process is to cure the rubber material without overcooking the thin side wall sections. “With the ability to modify the cure profile of the component materials, we can devise an optimised cure regime,” Ian says. “We tweak the properties of some of the material constituents, we control and understand what goes on in the heat transfer process in the mould cycle, then we measure, test and check. The final outcome is an optimised cure profile, which leads to more productivity, lower energy usage and better performing tyres. Dunlop Aircraft Tyres is 101-years old – what’s the secret to survival? Like all aerospace and defence parts, says Edmondson, tyres are so safety-critical that the technology matters enormously, even more than on a car, which creates barriers to entry. “The real issue is the ongoing development of the technology and speciality of designing and making products like aircraft tyres.

Principal Supporter:

education • innovation • networking Energy Solutions brings together the latest renewable technology and education, to give you the tools to combat rising energy costs. Widely regarded as the UK’s leading energy exhibition, our unrivalled collection of exhibitors and speakers offers you a unique opportunity to: • source new technology • keep up-to-date with the latest energy legislation • watch live demonstrations • learn from best practice case studies • network with thousands of industry professionals Getting information and advice on energy saving alternatives and reducing energy consumption is easy, with over 300 exhibitors and more than 150 hours of FREE education.

R e g i s t e r f o r y o u r f r e e t i c k e t at

www.energysolutionsexpo.co.uk AND quote TMA1 to avoid the £30 onsite admission fee

Supported by:

Offset Partner:

Energy Solutions is co-located with:

If you are interested in exhibiting or in any of the sponsorship opportunities available, contact Nathalie Storey on + 44 (0)20 7921 8087

Interview Ian Edmondson, Dunlop Aircraft Tyres

It means that the labour cost component, while important, does not drive us to a low labour cost environment because the fundamentals are the knowhow, the quality and the integrity. We are perfectly happy with the UK and we are encouraged by the slight weakening of the pound.”

Biography Ian Edmondson Education: BSc in Mechanical Engineering at Imperial College, London. PhD on the melting of thermoplastics in screw extruders. Studies Business at the London Business School and Wharton Business School. 1969-87:

Various management jobs at ICI plc

87-1992:

MTM plc, speciality chemicals company. General manager then managing director at MPM Prochem Spa.

1993-98:

T&N Group, global automotive components and chemicals. General manager of Systems Protection Group, Europe then managing director of BIP Speciality Resins.

98-2005:

Federal Mogul Corporation. Several vice president positions in the UK and US, including Friction Products in Europe (Ferodo), Sealing Systems Products, Valve Train and Transmission Products and VP of Technology based in Detroit and Cologne.

2006:

Director of aerospace company Irvin GQ Ltd.

2007:

Appointed chairman and managing director at Dunlop Aircraft Tyres Ltd (DATL) after the company’s acquisition by AAC Partners.

2008:

Oversees formation of Chinese subsidiary company Dunlop Taikoo (Jinjang) Aircraft Tyres Limited, a joint venture, formed in partnership with two companies owned by Swire Pacific.

2011:

DATL wins Queen’s Award for Enterprise

Ian holds a doctorate in mechanical engineering and is a Chartered Mechanical Engineer. He is married with two grown-up children and lives in London and the Cotswolds.

He offers a personal view of global manufacturing economics. “As the pound has stayed weak, we will continue to see the currencies of developing countries strengthen. We see this in China with our business there. The labour cost issue will become more favourable in UK terms, while the technology and quality of the workforce available will become more relevant. The UK has by-andlarge a good workforce and good technology, but the Government should concentrate on this; incentivising people to study science and technology. We should subsidise the cost of science and engineering at universities, which would encourage them to do it because they’d pay lower fees.” Edmondson also believes the time is overdue for a proper approach to modern apprenticeships.

We’ve created significant geographic expansion, where those new tyres are made here but retreaded in a Chinese factory for the whole Asian market Where government can help As an engineer who runs a business in a global market, what else does he think government should do to help rebalance the economy? “As well as educational incentives there could be tactics adopted to support technology development, providing preferential or favourable tax regimes. More tax-efficient tools could be used to encourage companies to do that, for example, to encourage some of these foreign-owned companies to get their technology development done here in the UK. “Government can identify the factors critical to success, such as in Formula 1 for example, and see if we can encourage those in other sectors. In some cases the manufacturing may not be done in the UK. But that doesn’t matter necessarily, if the technology is here and the ownership is here then the money comes back here from overseas manufacturing. That’s what happens with foreign-owned companies, they invest a lot here and we benefit but they take a lot out as well.” Could Dunlop Aircraft Tyres spread its wings? “Manufacturing location has to be done under strategy. The day may come here when we’re full here, need another site and it’s a global industry so we may not choose the UK. That’s not a threat but just a fact of life. When we fill this place up we’ll have to decide what to do – that will be a lovely day to look forward to.” With a Queen’s Award for Enterprise, a healthy share of the regional aircraft market, a Chinese JV serving Asia and radials providing access to the big league, a wise man would not bet against that day being too far away.

Have your say at www.themanufacturer.com

A buddi n g green economy The Government’s efforts so far

While the Government attempts to cut UK emissions in half by 2025 with new legislation designed to incentivise the implementation of energyefficient measures, George Archer looks into how manufacturers are affected, and what companies are doing to reduce their carbon footprint.

Case study: the UK’s largest solar park

The new 5MW solar park in Hawton, Nottinghamshire

Hamburg-based solar energy specialist Conergy recently completed the construction of the largest free-field solar park in the UK – just in time to avoid the introduction of new FIT rates on July 31 (see opposite). The 5MW park is located in Hawton, Nottinghamshire. The project was built in cooperation with Conergy’s local partner Lark Energy and was completed only six weeks after receiving planning consent on the May 24 this year. Robert Goss, head of Conergy UK says: “With this park, our solar experts have shown that we are able to build large-scale projects in the UK. [We decided to construct this solar park] due to the FIT cuts on the one hand, and our product portfolio and experience ‘on the roof’ throughout Europe on the other hand.” The solar park in Hawton is owned and developed by Lightsource, with funding from Octopus Investments.

The Government’s Energy Bill was introduced into the House of Commons for its first reading on March 16 this year and had its second reading on May 10. Committee sessions were held on the Bill in June. Included within the Energy Bill is a scheme called the Green Deal. This is designed to encourage energy efficiency improvements in order to reduce the real cost of energy for households, private landlords and businesses in the future Under the Green Deal business owners in nondomestic properties will no longer be obliged to repay the cost of energy efficiency measures. Instead, repayments are attached to the property. This means that for a manufacturer wishing to relocate, expand or shrink its operations, any renewable energy installations on a factory or warehouse site will be the responsibility of whoever owns the property. The intention is to make the installation of energy saving measures more attractive to companies. Alongside the Green Deal, the Department for Energy and Climate Change (DECC) has set

Read this article to: Find out about the Government’s Energy Bill, and the effects it will have on large scale solar power generation Read about the expected roll out of smart meters by 2019. Learn about Brockhouse – a manufacturer which has successfully implemented energysaving measures at its main site. Find out about the limitations of green intentions Discover ways of working with your supply chain and logistics partners to get past the ‘green limit’. DHL explains how it strives to remain transparent for its customers.

Energy

and Sustainable Manufacturing

out the next steps of its CRC Energy Efficiency Scheme. Changes to CRC legislation, previously criticised for its lack of clarity, include removing Climate Change Agreement exemption rules and decreasing the administrative burden of CRC by reducing the number of fuels subject to the scheme from 29 to 4. The manufacturer’s organisation, EEF has however, said that the changes do not go far enough and that government should admit that the CRC is “now, in all but name, a tax”. EEF has also made clear its concern over the DECC statement that the proposal “may result in some organisations being required to participate in CRC that would have previously been exempt,” and is warning companies to be aware they may need to review whether or not CRC regulations are applicable to them.

On July 12, government released what it described as the “biggest reforms since privatisation,” in it plans to roll out smart meters to a large proportion of businesses in the UK. In its White Paper the government claims that: “the roll-out of smart meters will enable consumers to optimise their electricity and gas demand.” Although quite a number of factories have now installed some kind of energy meter, Smart Meters measure usage far more regularly than most - in intervals of an hour or less. This data is then sent to the site manager, allowing them to effectively monitor their electricity consumption. Furthermore, government has argued that, with a large proliferation of smart meters expected by 2019, demand side response (DSR) can be effectively implemented. DSR is a method by which an energy user decreases their consumption on a short term basis by agreeing to reduce demand at peak times. This should result in the introduction of a range of variable tariffs. To automatically respond to these electricity consumers would need equipment (to complement smart meters) that can reduce demand by turning off non-essential electrical devices.

Has the sun got his hat on? On June 9 this year, government proposed new power generation tariffs for large scale solar under its green electricity scheme. Under the new legislation feed-in-tariffs (FITs) will mean that large companies with the ability to produce a lot of electricity from photovoltaic (PV) solar cells will have little incentive to invest in solar energy as of July 31. For companies with a total installed capacity (TIC) of between 50kW and 150kW, the FIT will be 19p/ kWh; for those that have a TIC of over 250kW, the rate decreases by 10.5p to 8.5p/kWh. The Renewable Energy Association’s chief executive Gaynor Hartnell said of the government proposals: “We think government should increase the size of the FIT budget, and encourage a healthy PV industry to establish in the UK. But to be fair to the electricity consumer, government must be prepared

Calling for entries: Does your business deliver a sustainable manufacturing strategy that does more than simply reduce your carbon footprint? This award will be given to the manufacturing company or plant that, in the opinion of the judges, best demonstrates how it has improved its environmental performance and reduced its carbon footprint. This may take the form of a single highly effective initiative, or a wide ranging portfolio of smaller improvements. For example, switching to a renewable energy source, or increasing energy efficiency through simple but demonstrable methods such as minimising unnecessary lighting; re organising the shop floor to save energy; powering down equipment that will be dormant for periods of time; reducing packaging and designing recyclability into its products.

Sponsored by Kingston Smith

www.themanufacturer.com/awards

2002 - A draft Bribery Bill was announced but was rejected by joint committee examining it. 2006 - The Blair Government urged the Serious Fraud Office to drop an investigation into BAE’s Al Yamamah contract with Saudi Arabia which allegedly included the secret payment of £1bn to Prince Bandar of Saudi Arabia to secure Britain’s biggest ever weapons deal. The OECD, which usually carries out reviews on members every two years, decided to undertake an extra investigation of the UK’s enforcement of the anti-bribery convention following the controversial BAE decision. 2008 - The OECD Working Group on Bribery leased a report which said it was “disappointed and seriously concerned” about the UK’s continued failure to address deficiencies in its laws on bribery of foreign public officials and on corporate liability for foreign bribery, which it said has hindered investigations. The Working Group reiterated its previous 2003, 2005 and 2007 recommendations that the UK enact new foreign bribery legislation at the earliest possible date. 2009 - The strength of the criticism and lack of diplomatic language used spurred the Government into action and, following a white paper in March 2009, the Bribery Bill, based on the Law Commission’s 2008 report Reforming Bribery, was introduced to Parliament in the 2009 Queen’s Speech.

to the department’s evidence, Lindsey and Lee understood that all or part of this commission amount would be used to bribe CFE officials in exchange for contract awards. Those bribes were said to include a $297,500 Ferrari Spider and a $1.8 million yacht. The evidence presented at trial stated that Lindsey Manufacturing increased the price of the goods and services sold to CFE by 30% to ensure that CFE, rather than Lindsey Manufacturing, absorbed the cost of the bribes.

I did not expect to find, when I’m sitting here in July, that BAE has not as yet reached agreement on how the money is going to be paid Richard Alderman, Director of the SFO

On home soil With BAE Systems still in the headlines regarding its “dirty deal” to sell Tanzania an overpriced radar system in 1999, the UK is clearly not corruption free. In December 2010 BAE Systems Plc was fined £500,000 after admitting it had failed to

Finance Insurance and Professional Services

keep adequate accounting records in relation to a defence contract for the supply of an air traffic control system to the Government of Tanzania. This fine came in addition to a settlement already agreed by BAE as part of a global agreement earlier in 2010. This settlement, made with the Serious Fraud Office and the US Department of Justice concerned contracts in a number of countries and in relation to the Tanzania contract it bound BAE to pay an ex-gratia payment for the benefit of the people of Tanzania of £30 million less any fine imposed by the Crown Court. On July 19, 2011, the cross-party International Development Select Committee questioned BAE and SFO executives as to why the £29m that BAE had agreed to pay in 2010 still had not been received by Tanzania. “I expected all this to be done in the first month or two of this year,” said Richard Alderman, director of the SFO, when asked about

Once the particular risk exposures have been identified, it is then a case of putting in place adequate policies and procedures to address those risks and to help minimise further exposure going forward Matthew Bridger, Associate, Thomas Eggar LLP

the payment’s delay. “If, in the future, there are agreements of this nature... clearly we have to put in more rigid time scales. I did not expect to find, when I’m sitting here in July, that BAE has not as yet reached agreement on how the money is going to be paid.” The defence firm’s head of government relations Bob Keen told the committee that the company hoped to make an initial payment of around £10m “in a matter of weeks”, while BAE’s General Group Counsel Philip Bramwell said: “I think we are moving as fast as we reasonably can.”

Moving forward Except for investigations pre-July 2011, the Act repeals all previous statutory and common law provisions in relation to bribery, instead replacing them with the crimes of bribery, being bribed, the bribery of foreign public officials, and the failure of a commercial organisation to ensure adequate procedures to prevent bribery. Individuals will face up to 10 years in prison and an unlimited fine if found guilty of committing bribery. Parties involved in the News of the World fiasco may consider themselves fortunate to not be subject to the Bribery Act but

investigations from now on will be sure to utilise the full power of the Act and UK businesses must take heed its requirements to avoid falling foul of the Serious Fraud Office. According to Julian Smart of law firm BLM, there is a certain level of ambiguity with regards to the Act. Specifically he says that the areas around adequate procedures, hospitality and partner compliance are all somewhat open for interpretation. “The Act makes it out to be clear that facilitation payments (or grease payments) are prohibited and should be stamped out,” says Smart. “On that point it is not open to interpretation. However, another aspect is hospitality and that is open to interpretation. There is no level of value or figure as to what is acceptable for hospitality but the Guidance does give some examples which are quite helpful.” As stated in the Bribery Act Guidance: ‘Flights and accommodation to allow foreign public officials to meet with senior executives of a UK commercial organisation in New York as a matter of genuine mutual convenience, and some reasonable hospitality for the individual and his or her partner, such as fine dining and attendance at a baseball match are facts that are, in themselves, unlikely to raise the necessary inferences. However, if the choice of New York as the most convenient venue was in doubt because the organisation’s senior executives could easily have seen the official with all the relevant documentation when they had visited the relevant country the previous week then the necessary inference might be raised.’ The question of what constitutes adequate procedures will depend on the “factors such as the size of the organisation and where it operates,” says Smart. “What is adequate for a large multinational corporation is going to be different to a SME in the UK.” However, consensus among legal professionals focuses around the necessity of a risk assessment to ensure compliance. Tom Ellis, dispute resolution partner and Bribery Act specialist at law firm Wragge & Co, says that it is going to be important for a company to carry out a very robust risk assessment. “This is in order to establish where the risks lie and then take the measures to mitigate against that risk,” he says. “Where that extends to counter-parties and agents in other jurisdictions practical steps will need to be taken, those will vary on a case by case basis.” Matthew Bridger, associate at Thomas Eggar LLP, concurs. “Guidance exists to help show what will be considered to be adequate procedures and from that we can deduce what would be inadequate,” he says. “But the very first step for any company is an initial risk assessment to identify the particular risk exposures for each sector and employee within the business. This assessment will then be used as the basis for monitoring and evaluating bribery risks on a periodic basis.” “Once the particular risk exposures have been identified,” says Bridger, “it is then a case of putting

E x c l u s i v e i n v i t a t i o n

Join Microsoft & Chief Wine Officer for the launch of Microsoft Dynamics AX2012.

1 . 3 0 p m 1 3

–

6 . 3 0 p m

S e p t e m b e r

V i c t o r i a

2 0 1 1

L o n d o n

Mixing business and pleasure, this exciting launch will include: • A Welcome lunch • Keynote presentations from independent market experts, customers and partners • Break-out streams – covering services, manufacturing & distribution and the public sector • A Chief Wine Officer® fine wine reception & canapé dinner, with informal networking among clients, colleagues & friends from the UK’s leading companies.

To attend this exclusive event, please call Microsoft on 0870 166 6680 quoting ref 0253

S W 1

Finance Insurance and Professional Services

BAE Systems were fined £500,000 and agreed to pay the Tanzanian people £30m

MANUFACTURING IN ACTION AWARD Entries for the TM Manufacturing in Action Award are shortlisted from companies that were profiled in The Manufacturer magazine from September 2010 to August 2011. The criteria are a combination of key business excellence criteria covering: the product, the customer, growth and leadership, the manufacturing process, people and sustainability. This award will go to the company or site that, in the opinion of the judges, best demonstrates an efficient, modern, profitable business, which can show examples of product excellence and innovation, customer satisfaction, investment in people and training and effective management. The entry will ideally demonstrate a high level of manufacturing process efficiency, whether through a Lean or other business efficiency methodology, which demonstrates hitting target KPIs. The company will ideally invest in training and staff communications, show efforts to become more sustainable by reducing its carbon footprint and, preferably, demonstrate investment in R&D that has generated good ROI.

Have your say at www.themanufacturer.com

www.themanufacturer.com/awards

in place adequate policies and procedures to address those risks and to help minimise further exposure going forward. Training for all staff members should then be undertaken and this should be tailored to the risks that the employees face. It is also important to ensure that those who have authority to enter into contractual relationships on behalf of the company are doing so in a manner that properly incorporates anti-bribery and corruption provisions so that your trading partners are aware of your requirements and are contractually bound to comply with them.” There is certainly a risk both with the high level of involvement required for compliance as well as the likelihood of lost contracts to competitors not subject to bribery laws that may result in a considerable cost to UK businesses and put them at a competitive disadvantage. Not all view the Bribery Act in such negative terms however. Andrew Durant, senior managing director, FTI Consulting says that the act will “bring us into line with other countries that have signed up to the OECD convention. This will create a level playing field which will ensure that British businesses have a fair chance to win overseas contacts.” Ellis agrees and says that, “major companies that are operating to the highest ethical anti-bribery and anti-corruption standards will be able to exert influence and improve the conduct of those with whom they deal.” According to the International Chamber of Commerce, doing business in corrupt markets has been found to cost equivalent to a 20% tax on business. Once the level of compliance with the bribery act begins to filter down throughout the global marketplace this is certainly a cost most businesses will not be likely to miss.

Advertorial

The

FX Factor Safeguarding businesses against exchange rate volatility For UK-based manufacturers which depend on importing or exporting components and products, or which have global operations, exposure to fluctuating currency exchange rates often has to be faced. Peter Russell, Head of Manufacturing & Industrials sector at RBS, looks at how carefully planned, well-executed foreign exchange (FX) strategies can protect manufacturers’ competitiveness and market share, while seeking to maximise the benefits of favourable movements in FX markets.

For

companies engaged in domestic and overseas business, the volatile and unpredictable nature of post-recession exchange rates of even the most popular pairings (sterling, euro and dollar – see graphs) can illustrate the potential size of the problem. Regardless of how swift or successful a company’s growth, or the volume of new business won or contracts renewed, a poorly planned FX strategy – or the absence of a strategy – might easily cancel out hard-won profits. The exposure faced by each business will of course vary, as will attitudes to risk in the boardroom. More obvious factors – such as the length of a particular contract with an overseas supplier, or the amount of ‘wiggle room’ built into the manufacturer’s ability to trade at a specific price for a set period – may appear straightforward enough. But with so many variables in the mix, setting an overall strategy and selecting specific instruments requires careful analysis and planning.

Stay competitive, grab market share Even manufacturers erring on the side of caution by budgeting using specific rates (or capped and collared rates, moving between pre-set parameters) might be adversely impacted if currencies move in the wrong direction. That could mean a direct hit to the bottom line, unless costs can be cut elsewhere to compensate. And that’s where a carefully planned and well-executed FX strategy can really drive value and mitigate the risks of exposure. Heads of finance and treasury also use FX strategies to strengthen competitiveness. For manufacturers depending largely on imported raw materials, even smallish unfavourable exchange rate movements can send the cost of inputs soaring, with gross margins reducing commensurately. Unless they can increase charges to customers (and in highly competitive markets, or with products of relatively little added value, that might be difficult), profitability can suffer. But that’s not all. More forward-thinking competitors, protected by their own FX strategy against volatility, may not experience such an adverse impact, leaving them well-placed to take market share from the manufacturer that left itself exposed, with the added bonus of being in a stronger position to retain that advantage going forward.

Setting your FX strategy FX options available to manufacturers range from simple and immediate solutions to the complex and long-term – and all points in between. But what ends up yielding excellent returns for one company might pose serious threats for others – or have no net effect whatsoever. For instance, amongst a host of transactional hedging solutions, manufacturers whose product or input prices are dictated by markets might opt for longer-term fixed rates, while those with more flexibility may need only simple short-term strategies to feel well-protected. The reality for many companies is to go for a portfolio approach, with the mix of exposures determined by individual circumstances. Some FX strategies focus more on the risks associated with specific events, a merger or acquisition for example, or a major piece of capital expenditure, or even upcoming but as yet unknown external events, such as announcements of interest rate movements or key economic data. Any of these might have a significant impact on manufacturers leaving themselves without adequate protection. Likewise, ‘translational’ risk strategies typically deployed by multinationals aim to safeguard the sterling value of assets and liabilities in a foreign currency. But to describe one strategy (or a mix of strategies) as being safer, riskier or more neutral than another per se is inaccurate and misleading. It’s always going to depend on business models, the accuracy of cash flow forecasts (for both the company in its entirety and each constituent part) and the extent to which each currency’s value in the FX markets can be forecast with a measure of accuracy.

Advertorial

In manufacturing organisations where CEOs and other executives are naturally risk-averse, finance and treasury chiefs (and their professional advisers) will need to point out that ultra-cautious FX strategies also carry downsides. For example, choosing to be locked into a fixed 12-month rate for a specific currency, as protection against anticipated rise in cost, only to see the rate coming back quickly and markedly in that currency’s favour, and remaining there for the year, may not directly result in a higher-than-budgeted spend. But the loss of revenue, due initially to a lack of product price competitiveness and subsequently to having been forced to yield market share, has the potential to damage the business. Conversely, applying a strategy where beneficial movements in rates can be captured whilst budget rates remain protected can provide real competitive advantage. However, it’s important to understand the options that are available to a business for building FX strategies that perform well. That includes stress-testing them against scenarios that could easily present themselves should the economies of certain countries deteriorate rapidly. A game-changing development in international politics, business or economics that might spell disaster for some could provide a windfall for others. Economic recovery may be accompanied by sluggishness and instability. But despite geopolitical developments and volatile energy prices, the outlook for British manufacturers – at home and in export markets – is seen by many as optimistic. Particularly in the US and Asia, even if exchange rates mean increases in exports to eurozone countries will be choppier. Tighter fiscal policy could keep a grip on interest rates, potentially providing a competitive exchange rate. Nevertheless, the most robust businesses are likely to be those which insulate themselves against adverse currency movements through well-plotted and regularly reviewed FX strategies.

www.rbs.co.uk/corporate

From risks to opportunities

RBS

encountered over the duration of any fixed rate, will be important considerations.

Looking to find out more about foreign exchange strategy options for your organisation? Contact:

Source: RBS, Bloomberg. Please note: past performance is not necessarily an indicator of future performance Such is the volatility of exchange rates that keeping FX strategies under regular review is just as important as making an informed decision about which (if any) strategy to adopt in the first place. Switching regularly or suddenly to suppliers in different countries – or conversely, entering brand new markets – could hit profits at great speed and with less predictability than factors such as price, quality or availability of inputs. The degree to which the cost of adverse currency movements can be passed onto its customers, along with the magnitude and danger of risks that might be

Peter Russell Head of Manufacturing & Industrials Tel: 020 7672 1007 Email: peter.russell@rbs.co.uk

Sara Winsko Vice President, FX Sales, RBS Tel: 020 7085 2669 Email: sara.winsko@rbs.com

Out of stock? Print me a new one Objet raises the 3D printing stakes with more multimaterial technology While claims that 3D printing could be the next ‘trillion dollar industry’ may be brave, more and more companies are using this technology to realise their visions and now one 3D printing supplier’s innovations in materials technology could represent a real game-change for certain applications. Will Stirling reports. Toy prototype using different materials printed on the Objet260 Connex

May, aerospace and defence group EADS UK revealed a brand new bicycle. Had the Bristolbased manufacturer devised a new type of twowheeled warfare? Not quite. The bike was notable because it had been printed, not machined and bolted together. To be precise, the bike had been ‘grown’ using additive layer manufacturing where a laser sintering process builds up layers of powdered nylon. And the bike works. Little or no assembly was required, the wheels, bearings and axle were all formed intrinsically within the layering process. In the UK it represented the one of the latest steps to prototyping nirvana. Simulation software, rapid prototyping, 3D printing – take your pick. The product designer and design engineer today is spoilt for choice in methods to realise his dreams in three dimensions. But the race to simulate the most life-like product prototypes just got a whole lot hotter. In July Objet, makers of 3D printers and composite materials, launched the office-friendly Objet260 Connex, which it claims is the “world’s only affordable, compact, multimaterial printer.” While affordable is relative, Objet’s Connex technology – the Connex 500 has been on the market for some time – is the only 3D printing technology capable of printing several different materials in a single build. Connex printers can print up to 14 different material properties in a single part, from a range of over 60 materials.

Objet260 Connex Layer thickness Horizontal build layers down to 16 microns Tray size 260 x 260 x 200mm Build resolution X- and Y-axis 600dpi; Z-axis 1,600dpi Printing modes High quality – 16 micron, Digital Material and high speed – 30 micron Typical accuracy 20-85µm for features below 50mm, up to 200 µm for full model size Materials supported A range of over 60 Objet materials, can print up to 14 different material properties within a single printed part. 51 Digital Materials = hybrids of existing Objet materials Machine dimensions 870x735x1200mm, Net weight 264kg

Specialfeature 3D printing

This makes it very useful for designers and design engineers in simulating the ‘real-life’ effect of varying material components in complex or assembled parts. The Objet260 does this in a smaller size, at dimensions of 870x735x1200mm and a tray size of 260x260x200mm, it’s suitable for any size of office and accuracy is high. The Connex printers build layers down to 16 microns, avoiding the ‘step’ finish common on some printers. High Speed and Digital Material modes print at a slightly coarser 30 microns.

Material world The R&D department at Objet must be working overtime, as it has more trademarks slapped on its printers, materials and technologies than you can wave a 3D-printed stick at. Along with the new 260 Connex printer, Objet has just launched a new range of proprietary materials. Whereas before you could print in different materials to simulate rubber-like elastomers (TangoBlack) and thermoplastics (FullCure720 and the Vero range), more additions to the range have enabled more complex prototyping and the construction of products in “ABS-like” engineering plastics. Objet VeroWhitePlus is a good material for fit and form testing while Objet VeroClear produces transparent structures with good dimensional stability, and is suitable for simulating consumer goods and toys such as car lamp covers. Polishing the VeroClear structures produces very good clarity, endorsed by Industrial Plastics Fabrication (IPF), an Objet service bureau in Nazeing, Essex, who have been beta testing the material since 2010. Gary Miller, head of rapid prototyping at IPF, says word of mouth generated enough business to consume over 10kg of the VeroClear resin. “Customer feedback is excellent and the clarity is better than SLA (normal stereolithography printing),” he says. “We expect to see additional growth for the material in architectural, consumer electronics and medical markets.” Objet’s other big materials development is a high temperature material, RGD525, and an ABS-like digital material, RGD5160-DM. Both materials are less important for companies who want an overall impression of the look, feel and perhaps colour of a physical prototype. But for engineers who want to simulate robust, complex components with materials that have similar physical properties to the final product, they represent a major breakthrough. Heat distortion temperature, the point at which the material will change shape, for the near-white RGD525 material is 65°C out of the printer and 80°C after thermal treatment in an oven. Objet RG5160DM – we expect Objet to think of a snappier title for this one – is the closest Objet has got to a material with engineering plastics properties. Engineering plastics are those with higher mechanical and thermal properties than commodity plastics, and include acrylonitrile butadiene styrene, or ABS. This new Objet material has impact resistance of 65-80 joules per metre and an HDT of 90°C after thermal treatment.

Who uses advanced multimaterial 3D printing? The markets where multi-material 3D printing is most beneficial, according to Objet and other 3D printers, are in education, medical devices and dental, electronics, automotive, toys, consumer goods like mobile phones, and footwear industries. Objet counts adidas AG, Jaguar Land Rover and Trek Bicycles among its customers. Aerospace company EADS UK recently invested heavily in 3D printing to improve the accuracy, and speed, of its prototype building. At service bureau IPF, rapid prototyping as a proportion of the company’s overall business rose to nearly 30% in 2010. Bullish about the future, Gary Miller sees the new materials bringing growth in new markets and new applications for existing markets. He says: “It’s not just rigid and flexible prototypes, it’s for parts with varying ‘shore hardness’. There are many additional functional applications delivered through the digital materials and multi-material capability – for example, living hinges, seals, plugs and gaskets, overmoulding, shock absorption and impact resistance.” On a practical level, the more robust, nextgeneration materials last. Iconic British train model manufacturer Hornby uses IPF for its 3D models. “VeroClear doesn’t need any finishing (at least not at our end), it’s fairly flexible and very robust,” Siona Ward, an industrial designer at Hornby, told IPF. “It doesn’t seem to go brittle or opaque over time, which is very helpful when holding onto prototypes for marketing or posterity purposes.”

Objet’s head of line of business, consumerables, Zehabit Reisin, says that ABS-like materials are suitable for some manufactured finished goods and the company is not far from developing a full engineering plastics grade material. This could be a game-changer because more 3D-printed products could then be used as finished production items, providing the owner with quicker payback and less waste. This is all at a discrete level, however – the days of mass manufacture employing banks of 3D printers are not here yet. A good application for this ABS-like or, in the future, full engineering plastics material is prosthetics. Each one is customised to the individual, but traditional milling is highly wasteful. General manager Europe for Objet Andy Middleton says 3D printing has become mainstream and Objet is well placed to dominate. “We use inkjet technology,” he says. “Big printer OEMs like Ricoh and Epson spend billions of dollars perfecting this technology and Objet benefits from all this R&D. Manufacturers have to develop products faster to get a competitive edge and this will only increase.”

Have your say at www.themanufacturer.com

This year’s awards will recognise and celebrate manufacturing excellence across the following categories: LEADERSHIP & STRATEGY

SUPPLY CHAIN EXCELLENCE

INNOVATION & DESIGN

OPERATIONS & MAINTENANCE

PEOPLE & SKILLS

SUSTAINABLE MANUFACTURING

IT IN MANUFACTURING

MANUFACTURING IN ACTION

Celebrating the Success of UK Manufacturing

Awards and Gala Dinner Sponsor:

Researched and developed by:

Corporate sponsor:

Inspire excellence in your company and share manufacturing best practice by entering into The Manufacturer of the Year Awards.

ENTER NOW WORLD CLASS MANUFACTURING

SME MANUFACTURER

YOUNG MANUFACTURER OF THE YEAR

The Manufacturer of the Year Awards 2011 is a rare chance for you, your team and your company to receive industry-wide recognition for your achievements. Established over 10 years ago, The Manufacturer of the Year Awards competition is specifically designed to celebrate the strength and diversity of UK Manufacturing. So enter today and showcase your achievements. For further details and to register your interest contact Laura Williams on 01603 671 323 or email l.williams@sayonemedia.com

Key Dates: 31th August 2011: Deadline for receipt of applications 19th September 2011: Short listed companies announced THE MANUFACTURER OF THE YEAR

12th October 2011: Judging Day 9th November 2011: The Manufacturer of the Year Awards Gala Dinner & Awards Ceremony, Manchester

www.themanufacturer.com/awards

Bec ause w e ’ r e w o r t h i t Conferences for business leaders have proliferated post recession as more and more companies seek to take advantage of recovery through new business strategies. For a busy boss with responsibility on their shoulders, is there really value to be gained spending precious time away from the workplace, or are we being marshalled by event organisers pushing a lucrative business?

hat is the business case for sending professionals away from the workplace to ponder their industry and methods for business improvement? In manufacturing, dominated by the concepts of lean management, the central message is to be focused on ‘gemba visits’ – learn about problem resolution through visiting the source, being visible on the shop floor and taking a hands on attitude to business. In this context how can we justify turning our backs on the workplace for a day at a time sometimes more - particularly when businesses are facing strained economic times and conference events frequently come with simply astronomical price tags attached to them? While the cost involved with attendance is also a concern, the answer to the core question above is that managers and leaders in organisations rarely get the opportunity to step back from day to day fire fighting and truly consider how they might make their companies better for the long term. This fire fighting can be a symptom of failing organisational systems which require fundamental review or even rebuild; work which should not be undertaken lightly or without the opportunity to benchmark your position against peers. From a different perspective, relative success and growth in a business can often make leaders complacent and bar them from seeing how expanding horizons, collaborating or investing cleverly might allow their success to be amplified exponentially. A thoughtfully presented workshop day or conference with a

Lean Management Journal’s Annual Conference, June 16, Birmingham Lean manufacturing principles have already reaped rewards for many in the industry but recent research and case studies show that there is far more scope to be gained from the methodology as an end to end business system. This event inspired and cautioned lean professionals on the road to multiplying the success of their lean initiatives. This event set itself apart in the way it represented a balanced view of the need for both soft and hard skills in the application of lean principles. In addition it looked at the relevance of some recent commentary on lean implementation which has attempted to vilify the application of tools, focusing instead on elements of culture change, which are essential but insubstantial without technical know-how. One key session at this conference was a perceptive lesson in the use of Overall Equipment Effectiveness (OEE) as a strategic business improvement tool beyond the confines of the operations and maintenance department. Ian Tindle, director of Sora Group, delivered this session and asserted that many of his audience were leaving untapped potential in OEE data. For leaders looking to optimise investment in expensive IT systems, Tindle’s insight was a wake-up call. (See p46 for more on OEE data optimisation.)

Specialfeature The Manufacturer Directors’ conference 2011

good selection of industry peers in attendance should provide an opportunity to see past both distracting negativity and misleading success. TM frequently gets to attend a wide range of industry events and looking back over recent months there have been some genuine ‘lightbulb moments’. As we approach November 9, the day of TM’s own flagship conference event, we take the opportunity to review lessons learned and ask what further questions have been prompted. Other key events which have inspired and surprised TM so far in 2011 have included the Cranfield University National Manufacturing Debate, the SMMT International Summit and Subcon – reviewed in last month’s issue of TM. The key trends from these events picked out some mind set changes in UK manufacturing with regards to investment in capital equipment, the potential of service systems for additional revenue and the reality of access to finance. A presentation at Subcon, delivered by Malcolm Herrington, lead engineer for European supply chain development at Eaton Aerospace Group Europe, made a particular impact on TM highlighting as it did the unacknowledged levels of risk for top tier companies from those lower down the supply chain. Herrington gave some fascinating insights into how this could be combated. The insight and perspective provided by all of the events mentioned so far, and many more as well as our ongoing visits to factories, have given TM’s own events team plenty of food for thought as we edge into the final quarter of the year and towards the date for the Manufacturer Directors Conference (MDC) 2011, our flagship conference event. One of the main objectives of MDC this year will be to ask for the formation of action points rather than simple problem identification, which can tend to dominate such industry gatherings. Experts in economics, operations, manufacturing technologies and industry regulation will be in attendance to share words of wisdom, but crucially, they are also briefed with taking on the role of facilitators in problem resolution. They will help attendees go away with some clear objectives for changes both within their individual businesses and across the industry.

Xonitek and PCC Consulting’s A frictionless world conference, June 9, Milan

In the current economic climate a role in the events business will soon turn your hair grey. For every well attended conference you may grace with your presence you can be sure there are 10 on the same theme that only muster a paltry gathering of delegates or simply abandon ship as target audiences fail to find the budget or time out of the office. When low attendance numbers disappoint organisers, it is important to remember as a delegate that this may be your best opportunity to benefit. We all know that small school forms tend to outperform crowded classrooms, likewise conference rooms. A recent case in point was A frictionless world, an event which was lost to the many delegates who failed to show on the day leaving a handful of slightly disconcerted delegates rattling around in a room meant for a hundred. Once an initial feeling of embarrassment was overcome however, this event engaged with its attendees for genuine enrichment. David Bovis, founding partner of PCC consulting challenged attendees, mostly drawn from senior management and operations, to consider whether they really understood the so called ‘people side’ of their enterprises or whether they paid lip service to its importance. Bovis illuminated for attendees the relevance of developments in neuroscience to our understanding employee behaviour. As his lessons unfolded it was made starkly clear that, while many leaders require the display of ‘scientific method’ and hard data in the presentation of business cases for investment, strategic change or process alteration, they are extremely reluctant to look across disciplines and leverage science for the improvement of culture. With staff retention and skills development a priority for management, this would seem a mistake. Another insightful presentation at this event was delivered by the vibrant Carey Lohrenz of The Corps Group who shared her experience of the pursuit of operational excellence with the US Air Force. Staggeringly Lohrenz revealed that a zero accidents, high performance environment was maintained on board F-14 aircraft carriers in spite of an average age across the crew of just 19yrs and a complete staff change every 6 months. Her lesson in how to create a structure of responsibility and learning for accelerated organisational development was extremely powerful.

Corporate sponsor:

Researched and delivered by:

The Point – Lanc ashire County Cricket Club, manchester

Co-sponsor:

9 & 10 november 2011

Key participants in MDC 2011 will include: • Peter Marsh, manufacturing editor, Financial Times • Juergen Maier, head of industry sector UK, Siemens • Neil Parker, chief economist, RBS www.themanufacturer.com/mdc2011

While they will not be necessary for all MES systems are making an impact with impressive ROI for companies like The Cookie man

Summary execution Manufacturing Execution Systems are growing in popularity. But how do you tell if they are right for you? Malcolm Wheatley finds out.

The Cookie Man’s MES system gives a finer level of detail on production data than its ERP system could

Esher-based baked products manufacturer The Cookie Man, the business’s ongoing drive for improved manufacturing efficiencies was being increasingly hampered by a lack of critical data. And with leading supermarkets such as Tesco, Sainsbury’s, Morrison’s and Waitrose as customers, such improvements were clearly an important part of the business’s competitive edge. The problem? Its ten year old Lakeview ERP system - a very popular pick among food manufacturers, and a system with which the company was otherwise very satisfied - couldn’t provide the required level of in-depth visibility into manufacturing operations. It was, in short, a typical ERP system, rather than a tool focused on factoryfloor performance and data gathering. “To get the level of visibility that we needed, we were increasingly having to develop ‘workarounds’,” explains Cookie Man general manager Jayson Scheib. “The result was a growing number of spreadsheets and paper-based systems - none of which could ‘talk’ to each other, and which involved frequent re-keying of the same data.” It’s a common complaint. Scratch a growing number of manufacturers, and you’ll increasingly hear the same refrain. What’s more, it seems that it’s a chant given fresh impetus by the tough trading conditions that most manufacturers have experienced over the last few years. ERP, they’ll tell you, is great at determining which products need to be made, and by when: ‘the plan’, in other words. And for those

IT in

manufacturing

Hard data At The Cookie Man the implementation of an MES system acquired from Bracknell-based Mestec in early 2011 has transformed the company’s visibility into its manufacturing processes. The spreadsheets and paper-based systems that manufacturing management previously relied on have been eliminated, reports Scheib. And driven by newlyavailable hard factual data, a fresh wave of factoryfloor improvements is underway. “We’ve got instantaneous access to the data that we need: we don’t have to wait for people to type numbers from a paper system into the ERP system, or wait for a spreadsheet to be uploaded to ERP,” he explains. “We’re capturing – and then leveraging – a lot of data that might not be relevant to ERP, but which is vital to manufacturing, and to manufacturing improvement. It really has been a revolution.” And it’s a prospect that is attracting many more Lakeview customers, explains Mark Greatrex, the ERP vendor’s chief executive. Five years ago, he explains, his customer base “probably had zero interest” in MES. No longer: today, “perhaps 10-15% are actively expressing an interest in some form of MES.” But, firmly focused on its core ERP offering, Lakeview has chosen to meet that interest through a partnership with Mestec—while still providing its customers a single Lakeview point of front line support contact. “Any questions that we can’t deal with, we pass on to Mestec—but we hope to be able to deal with all of them,” sums up Greatrex. Yet despite such successes, many manufacturers remain unclear as to what an MES does, why they might benefit from acquiring one, and exactly how it might interact with their ERP system. And in truth, ERP system vendors themselves haven’t always helped the process of clarification. “If you talk to the ERP vendors, MES can be a highly confusing topic,” charges Julie Fraser, principal industry analyst at specialist manufacturing industry analyst firm Cambashi. “They’ll tell you that you don’t need it; or that if you do need it,

IT IN MANUFACTURING AWARD Calling for entries: Have you shown ROI from a well designed, planned and implemented IT strategy or project? This award will go to the manufacturing company or plant that, in the opinion of the judges, best demonstrates that it has made significant progress in designing, implementing and successfully operating an information technology infrastructure spanning all its business processes, which is able to show returns on the investment it has made in doing so.

www.themanufacturer.com/awards

manufacturers with complex order books, complex products, or factory floors characterised by process constraints, Advanced Planning and Scheduling (APS) systems will then take that ERPbased plan and break it down into machine-bymachine, job-by-job schedules. But what’s lacking is a way of disseminating those ERP-based plans and APS-derived schedules to the factory floor resources that are responsible for carrying them out and then capturing highlygranular data on what happens on the factory floor as these plans and schedules are carried out. Data, in short, that can be used to fine-tune manufacturing processes, and drive forward improvements in production efficiency. All the functions, in fact, that are undertaken by a class of software applications collectively known as Manufacturing Execution Systems (MES).

then they can offer it—or that they’ve just bought a company that does MES, or can offer it via a partnership that they have just entered into with a specialist MES provider.” Brian Holliday, divisional director for industry automation at industrial giant—and MES provider— Siemens, agrees.

Not all the data captured by MES is relevant for ERP - it’s often at too fine a level of detail Phil Burgess, regional vice-president for UK sales, Infor

“The ERP vendors have been talking about addressing the MES market, but we’ve seen little evidence of that in their products,” he notes. Despite which, he adds, MES applications have quietly gained a growing fan club among manufacturers who have discovered the technology. Siemens’ own SIMATIC IT offering, for instance, counts manufacturers such as Henkel, Whirlpool and Carlsberg among its users. “MES vendors are no longer having to educate the marketplace so much about what exactly MES offers,” sums up Holliday. “There are a growing number of credible MES vendors with customers

IT in manufacturing

who are happy to stand up and talk about the benefits that they’ve derived from MES.”

Interfacing That said, MES isn’t applicable to every manufacturer. Talk to experts, and it’s clear that characteristics such as process and routing complexity, together with the extent of factory-floor automation, hugely determine the extent to which MES solutions can add value. “The more important manufacturing and manufacturing performance is to a company’s business model, the more relevant that MES will be for them,” states Hugh Williams, managing director of High Wycombe-based Hughenden Consulting. “But in the right circumstances, you can undeniably get measurable benefits from MES that you can’t get from ERP.” Also at issue is the extent - and direction - of MES’ integration with ERP. Which system, for instance, should be the ‘system of record’: ERP or MES? Bills of Material, routings and recipes are common to both, notes Jack Payne, vice-president of enterprise software at CDC Software. And duplicated data is not just costly, he points out, but raises the prospect of errors through a lack of consistency. Another issue is the sheer volume of data that is captured by MES, and how, or if, it should be shared with the rest of the business. “Not all the data captured by MES is relevant for ERP - it’s often at too fine a level of detail,” says Infor’s regional vice-president for UK sales, Phil Burgess. “ERP wants to know when a batch has been started, and when it has been finished:

There are a growing number of credible MES vendors with customers who are happy to stand up and talk about the benefits that they’ve derived from MES Brian Holliday, divisional director, industry automation, Siemens it doesn’t need to know about every individual component or product as it is produced, or every individual operation in a machining centre.” And APS complicates the picture further, adds Mike Novels, chief executive of APS specialist Preactor. Sometimes, he says, the data flow of works orders goes from the ERP system to the APS system and then onto MES, and other times from ERP to MES and then APS. “There’s no right or wrong way: it’s down to individual circumstances,” he says. That said, a recently-inked partnership between Preactor and American interfacing specialists Missing Link Technologies makes such data links more straightforward than they once were. Pre-built links

have already been created for Syspro and Microsoft Dynamics AX ERP systems, and can be downloaded from Preactor’s website, says Novels. And, he adds, more such links are under development. But to some manufacturers, such integration complexities understandably help tip the scales

As ever, the barrier to adoption by smaller manufacturers remains a lack of clarity as to what MES can offer towards choosing an MES from an ERP vendor. That way, goes the argument, data is stored centrally and stored once - and integration is the responsibility of the ERP vendor, not the manufacturer. SAP, for instance, offers several MES solutions, depending on how complex the customer’s requirements are, explains Paul Boris, SAP’s global vice-president for advanced manufacturing operations and solutions. Simple MES requirements are met through the company’s Manufacturing Integration and Intelligence (MII) module, which has been part of the core SAP suite for a decade. For more complex requirements, he adds, the ERP giant’s acquisition of MES vendor Visiprise in 2008 adds a ‘full capability MES’ to the ERP giant’s product portfolio. However, SAP’s offerings for smaller manufacturers - such as SAP Business ByDesign - don’t yet include an MES capability, although that is under active consideration, says Boris. As ever, the barrier to adoption by smaller manufacturers remains a lack of clarity as to what MES can offer, he explains: “It’s still a very confused space. Put four people in a room, and you’ll get six opinions about what MES does.” Which is why The Cookie Man’s implementation of the Mestec MES - via its Lakeview ERP system - stands out as a significant step forward in MES adoption among smaller manufacturers. Of interest, too, is the ‘ROI as you go’ implementation model advocated by Mestec, which sees a carefully phased introduction deliver benefits at a pace that doesn’t overload the smaller manufacturer’s resources. “We did it step by step, gradually adding aspects of the MES toolkit to aspects of the production process, generating benefits and ROI at each stage,” says Mestec managing director Jeremy Harford as he describes the MES implementation at The Cookie Man. “And then, when we joined them all up, there was a cumulative benefit, and an even bigger ROI.” Cookie Man general manager Scheib concurs: “For smaller manufacturers like us, a ‘big bang’ approach is impractical. With Mestec, we could target what we wanted to achieve, and tackle it in bite-sized chunks. It really has been an eye-opening step forward.”

IT insight Time to look at

aftermarket optimisation? Manufacturers are under pressure to improve process efficiency, smarten up performance metrics, and invest in technology for supply chain effectiveness as changing market requirements bite. But has this work included the increasingly important aftermarket element? Cathy Humphreys, UK country manager at INFORM suggests it has not and furthermore that the nuances of aftermarket supply chains are not widely understood.

While

a strong understanding of the efficiency of a standard supply chain operation is commendable, many manufacturers have forgotten the aftermarket. With product lifetimes lengthening, companies are seeing changes in demand patterns and now is the time for the aftermarket supply chain to be at an optimum, rather than being treated as an “also-ran” division.

Demand volatility One of the main characteristics of an aftermarket business is the large range of parts which have to be stocked. If demand volatility increases, the effect on the amount of inventory required can have a major impact on cash-flow and bottom line profit. By improving the performance of a business’s spare parts division, profit can be driven into the company through increased revenue in the after-market. This can increase revenue in the mainstream business via increased customer loyalty. The length of time a company spends doing business in the aftermarket is often far greater than the initial sale. This creates an opportunity to sell more to happy customers. Although it is common practice for companies to utilise sophisticated software for the newbuild market, many still use spreadsheets for the management of spare parts. With the pressures of high service level requirements and high demand volatility, isn’t it rather the latter part of the business that now needs sophisticated support?

Improved demand accuracy Improving demand accuracy is the single most effective action which will cascade through all other

Cathy Humphreys, UK country manager at INFORM, has an academic background in Operations Research and has been at INFORM, advanced planning software providers, for four years. She was previously a director in the after-market services division of the rolling stock manufacturer Bombardier Transportation. Within this article, Cathy looks at: The contributing factors to why the time is right for businesses to be optimising the aftermarket supply chain. Why inventory optimisation is vital for companies serving an after-market with parts in the current climate. How to boost the efficiency of the after market process by effectively planning what is required without making massive changes to the operational systems. supply chain metrics, improving revenues and reducing costs. If aftermarket parts are inherently difficult to forecast, then this is where businesses should look at getting help. Advanced planning software, catering specifically to aftermarket products, can have a significant impact on demand accuracy by applying appropriate algorithms (automatically) to the historical consumption of every item, as well as combining known demand, such as scheduled maintenance or predicted failure rates. It is essential that businesses understand potential changes in the product mix as well as overall volumes. The cost of having the wrong parts could be a business’s breaking point.

Ultimately, effective planning is key Businesses prepared for changes in demand for spare parts will strengthen their market position. Predicting requirements, and planning proactively, will create greater visibility and the opportunity to enable a more efficient (and profitable) supply chain. The business benefits will be evident if it can better manage the aftermarket supply chain and achieve optimal stock levels to satisfy service level agreements. Benefits include a release of cash tied up from excessive stock, improved process efficiency and less emergency costs from fire-fighting as well as the potential for increased revenue from happy customers. Aftermarket supply chain management is complex, but the rewards are big when you get it right. The key is not to use systems created for the mainstream business and try shoe-horning them into a completely different environment. Instead, it is paramount to have the right tools for the job.

Have your say at www.themanufacturer.com

ITnews... ERP

General release of SAP Sales OnDemand SAP has announced that its new ERP software is now generally available across a number of countries, including the UK. OnDemand is designed to help sales people sell more effectively by providing the user with access to customer’s data. SAP argues that their product is different from others available on the market, because “unlike other offerings available on the market today, the solution is designed from the ground up, with the input of customers’ sales professionals in order to specifically support the way they work.”

SAP demonstrated the capabilities of the new software at the CeBIT trade fair in early March this year. Striving to focus on the needs of its customers, SAP has tried to take advantage of the growth of Smart Phones by supporting iPhones, Blackberry and iPad compatibility. This enables the customer to access customer data remotely if they possess one of the above phones. SAP Sales OnDemand has been developed based on feedback from customer and

Cloud Computing

Anger in EU over data rights The European Union and the US came to blows over data rights laws earlier last month, as Microsoft warned it would have to hand over EU customer data to US authorities. As well as being forced to hand over the data, the company may also be required by the Patriot Act to keep details of any such data transfer secret. This law is in direct opposition to its counter-part in the EU, which states that organisations must inform users when they disclose personal information. EU Parliament civil liberties committee member Sophia In’t Veld posed the question: “Does the Commission consider that the US Patriot Act thus effectively overrules the EU Directive on Data Protection?” Microsoft is already able to transfer EU data to the US under the current Safe Harbour agreement. But legal experts have warned that this agreement is dead in the water. There are seven principles of Safe Harbour; including reasonable data security and clearly defined and effective enforcement. However, this is irrelevant if the Patriot Act is invoked. Major cloud computing providers such as Amazon and Google are, understandably, not pleased with the news.

prospect sales teams. This follows the company’s focus on what they call ‘design thinking’ – where the emphasis is placed on co-innovating in the design, development and deployment phases.

Business Intelligence

Epicor confirms its support for Denali Microsoft’s SQL Server code name Denali was given the support of Epicor earlier this month. Denali is a complete set of enterprise-ready technologies and tools, designed to enable customers to derive the most value from information at the lowest total cost of ownership. On July 12 Epicor released a statement in which it proposed its intention to support Denali, in order to attempt to enhance its Enterprise Performance Management suite and make the most of the release’s upgraded levels of performance, availability and security. The system is expected to enable customers to derive as much value as possible from their data analysis. Director of Microsoft’s SQL Server BI Product Management Herain Oberoi said: “Business executives and information workers in organisations that use the next release … will be able to leverage the data residing in their enterprise resource planning system faster and in more interactive ways.” “Microsoft’s new in-memory computing capabilities will afford much faster data analysis and easier navigation for customers leveraging Epicor EPM solutions,” said Hakan Ebersjo, Epicor’s director of Product Marketing. Epicor revealed its ‘Smarter Business Intelligence’ initiative at its user conference last October, previewing plans to make use of the more advanced analytic and cloud computing technologies offered by Microsoft.

IT in

manufacturing

ERP

Supply chain management

Infor and Golden Gate Capital Complete acquisition of Lawson Software Lawson has been combined with an affiliate of Golden Gate Capital (GGC) and Infor called SoftBrands. The acquisition came into effect on July 5. The new affiliation will enable SoftBrands and Infor to share and integrate technology while partnering on product offerings through cross-selling, marketing and distribution arrangements. Under the terms of the takeover agreement, Lawson’s stockholders are to be given $11.25 per share in cash, without interest and less any applicable withholding taxes, for each share of common stock they owned before the merger comes into effect. The new development plan includes aims to introduce several new products before the end of the year, including the Lawson S3 and Infor FMS SunSystems Enterprise; Lawson S3 and Infor EAM, Lawson Human Capital Management and Infor Workforce Management. “These first product examples reflect the potential of this partnership and the fast pace of our development efforts,” said CEO of Infor Charles Phillips. “We will continue our work to deliver deeper functionality and industry-specific applications, particularly in key industries such as manufacturing, healthcare, distribution, public sector and hospitality.”

RedPrairie supports LXE Thor Vehicle-Mount Computer The new hardware, released in mid July, has received the support of RedPrairie – a global productivity solutions provider. The laptop-grade processing speed of the Thor is expected to place it in a good position inside the market, supporting existing RedPrairie systems such as the Warehouse Management System, Yard Management System and Transportation Management System. RedPrairie vice president of Sales Gary Morgan said he believes the hardware will allow customers to deal effectively with changes in demand, exceptions and multiple suppliers among others. “[We at RedPrairie believe] that the Thor is the ideal hardware complement because with its unique feature set, the end user can react and respond to change with speed and flexibility,” he said. There are several features that are pending patents on the Thor –the Field-Replaceable Front Panel and the Quick Mount Smart Dock.

Production identification

New Episys software rids supply chain of mistakes Pharmaceutical companies are set to benefit from new software released by Episys this month. Ensuring medicine is labelled correctly, the aim is to maintain higher standards of safety. The software is supported and promoted by Idis, a company that partners with those in the health industry such as pharmaceutical firms, doctors surgeries and hospitals to ensure that patients

are not given the wrong information regarding their medication. The Ultimate™ Platinum labelling system is a validated labelling system which produces labels for products, enabling Idis to improve their service when supplying product to NHS hospitals. The solution has helped Idis’ customers save time and Episys claims it makes it easier for them to ensure that their patients are better informed about their medication. Marketing director for Episys Peter Lewis said: “Patient safety

is of key importance, and it’s business critical that Idis have a fully compliant solution in place to enable them to provide the correct guarantees.”

Have your say at www.themanufacturer.com

SAP www.themanufacturer.com/bi

Business Intelligence for competitive edge An opportunity to understand more about the power of the latest advances in Business Intelligence.

those in the know,

any new product release in

it’s a real opportunity waiting to

“it’s a game-changer,”

SAP’s history.

be grasped.”

enthuses one expert. To another,

“Manufacturers need to take

“the Business Intelligence

of data held in memory, and

on board three key messages,”

landscape will never look the

simply accessed—lightning

says Mark Todd, SAP data

same again.”

quick—in real time,” says

solutions architect and one of

In short, new technology

Colin Sharp, UK and Ireland

the experts featured in the video

paradigms are re-writing the rules

director for SAP Business

series. “First, data is a strategic

of Business Intelligence, and at

Objects. “You can run fairly

asset; second, high-performance

a stroke transforming not only

unstructured queries and reports,

analytic technologies can deliver

the benefits that it delivers, but

see the results almost instantly,

real value from that data; and

also the investment in resources

and move on and look at

third, some simple ‘best practice’

that a Business Intelligence

something else. It’s true ‘look and

rules can really cut the

implementation calls for.

see’ Business Intelligence: you’re

time-to-benefit.”

And the benefits of Business

not so much writing queries as

Intelligence speak for themselves.

simply looking at what the data is

Viewable via The Manufacturer’s

Better insight into opportunities

telling you.”

website are interviews, case

to improve manufacturing

And all at a sharply reduced

studies and articles which

efficiencies, cut costs and trap

resource cost. To those

highlight the nature and

quality issues, for instance. Plus,

accustomed to thinking of

accessibility of the opportunities

of course, ‘top line’ opportunities

Business Intelligence in terms

that Business Intelligence can

to boost sales revenues by better

of data warehouses, difficult-to-

create. So to learn more about

understanding customer needs,

master report-writing software

how today’s new Business

and identifying improvements

and power users, today’s

Intelligence technologies can

in customer service and cost-

generation of ‘point and click’

transform your business, visit:

to-serve.

Business Intelligence tools,

www.themanufacturer.com/bi

The starting point is the power

running in real-time, are a genuine

of today’s enterprise computing.

eye-opener. The trouble is, the

SAP’s High Performance Analytic

technology is moving faster than

Appliance (HANA) technology,

manufacturers’ appreciation of its

for instance, is a new paradigm

power and potential.

of ‘real’ real time computing,

“You can have vast amounts

“Many manufacturers are

that allows companies to analyse

behind the curve,” says one

and explore data ‘on the fly’, as

observer. “They don’t understand

required. Released just this year,

the opportunities that are out

HANA already has one of the

there. At a time when competitive

fastest growing sales figures for

pressures are tougher than ever,

Manufacturinginaction Putting UK manufacturers under the spotlight Factory of the month

CooperVision 72 A vivid world

CooperVision is a specialist in the production of toric contact lenses â€“ these particular lenses compensate for astigmatism. It is the third largest manufacturer of contacts lenses in the world.

CHEMICALS

Fine Industries 96 Fine Industries had to deal with the rise of Asia in the late 1990s after a long period of sustained success. During the mid 2000s, the company focused on improving its culture. In 2008 the company was bought out by the management.

HEAVY ENGINEERING

DavyMarkham 103 After losing popular managing director Kevin Parkin last year, DavyMarkham feared the worst. The senior management team that was left proactively stepped into Parkinâ€™s shoes. Seeking further growth, DavyMarkham is looking to develop a strong position in the civil nuclear supply chain.

METALWORK

P&B Metals 109 P&B Metals has just turned 50-years old. The company exports over 40% of its low cost contract assemblies to Asia. 20-years ago 80% was exported to the UK, now the figure is just 18%.

All companies featured will be entered into the MIA Award 2011

The new, colourful branding of CooperVision reflects the contact lens manufacturer’s commitment to bring a ‘refreshing perspective’ to its marketplace. Ruari McCallion is given an insight. 72

Factory of the month CooperVision

CooperVision’s

branding stands

out somewhat in its marketplace – contact lenses. Contact lenses are medical devices and the convention in the industry has been that from a communications perspective, subdued colours and imagery are the norm – in fact, everything is blue,” says Heath Clash, communications manager, EMEA, for CooperVision. “Part of our brand promise is that no two eyes, no two days and no two patients are the same. We have breadth and depth in our range of contact lenses; we wanted to communicate this philosophy and the outstanding products on offer“. However branding is not just about the face the company shows to the world – it’s about the internal processes that deliver the foundation of customer and consumer perception: quality products, delivered at the right time, to the right place and at the right price. CooperVision is one of the three largest contact lens manufacturers in the world. It is the leader in some of its markets but, overall, it is third in the global market which leads it to try harder, across a range of activities. It is the leader in the development of third-generation of silicone hydrogel soft contact lenses; it has been working on improving its processes with an almost fanatical zeal; it has a structured product development process that is totally focused on advancement; with a huge amount of work to further improve the manufacturing processes and performance; it has put a lot of work into its warehousing and distribution systems to enable it to balance availability and breadth of range against inventory control.

There is a need for ever-increasing improvement in production and development and that has lately come through material advances, rather than lens design Andrew Sedgwick, CooperVision president, EMEA

An Italian idea

High volume automated production of contact lenses

While the Italian genius Leonardo da Vinci may have come up with the original idea for contact lenses, back in 1508 (Codex of the eye, Manual D, in case you were wondering), it would be several hundred years before the technology to develop and manufacture them became a reality. A German ophthalmologist named Adolf Fick is credited with creating the very first practical contact lenses, from blown glass – and as long ago as the late 19th century. They were large – they covered most of the visible portion of the eye – and heavy, and could only be worn for a maximum of two hours or so. Corneal lenses, which cover just the cornea and are the size we are familiar with today, first appeared in 1949. Initially the materials were made from rigid plastics and termed hard lenses, but soon innovation lead to the development of softer lenses materials that consisted of both plastic and water, termed hydrogel lenses; which first hit the market in the 1960s. It is estimated that, today, around 125 million

Factory of the month CooperVision

Contact lenses in blister packs being assembled into trays, on an automated production line; prior to sterilisation process

people worldwide now wear contact lenses. They have become part of everyday life and they have seen almost as much development and innovation in the last 50 years as computers in the same time period. Wearers today have the options of hard lenses, hydrogel lenses and more recently silicone hydrogel lenses, with the latter allowing significantly more oxygen permeation than conventional hydrogel lenses due to additional oxygen transmission gained from having a silicone content. Disposable lenses have made major inroads into the marketplace - but there is something of a dichotomy, or contradiction, in the business. Contact lenses are highly sophisticated pieces of technology and, as medical devices, they are strictly regulated; however, they compete in a volume market where price is a key factor – which means they have some characteristics of a commodity. Squaring this circle, technology versus commoditisation and easy availability versus high precision, is something that CooperVision has got rather good at. Two third-generation silicone hydrogel lenses, technically known as Comfilcon A and Enfilcon A and marketed as Biofinity and Avaira, respectively, were both invented by CooperVision.

Innovation and expectation “It certainly does present a challenge“, says Andrew Sedgwick, CooperVision president, EMEA. “I’m not sure that commoditisation is the right word, though. There is a need for ever-increasing improvement in production and development and that has lately come through material advances, rather than lens design. On the other hand, the market is very

competitive. There are three or maybe four companies worldwide at the cutting edge. The competition drives innovation but it also means that we have to be careful with costs; any premium that can be commanded in the market tends to be short-lived.” Getting a lens from the idea to the user’s eye is a challenging process. CooperVision has a very structured approach to technological development, as Neil Goodenough, UK R&D Director, described. “We have over 100 people globally, of whom a high proportion are PhDs. My team here in the UK numbers 27. We have a range of lens-making capabilities and we can actually make lenses from raw materials through to the finished product in our R&D facilities. We have the ability to conceptualise an idea and test it on one of our pilot lines in our R&D facility until we have something ready to industrialise. This allows us to replicate every aspect of production to the smallest detail. The vast majority of new lens designs come through the R&D group, including all new formulations.”

HVAC Energy Saving EMS has been providing planned maintenance services to end users within the manufacturing sector for 10 years. During that time it has witnessed an ever increasing emphasis being placed on energy efficiency, and has tailored its service to reflect this trend.

t is generally accepted that proper maintenance of HVAC plant extends life, reduces breakdowns and enhances efficiency. Most maintenance contracts, however, do not place sufficient emphasis on measuring how effective the maintenance is in saving energy.

often – plus, of course, reduce bills and carbon emissions. There are three main areas to look at when seeking improvements to HVAC plant efficiency – i.e. (a) heat rejection through refrigeration plant, (b) fan power and (c) controls.

Compressor Power Industry research suggests In many cases maintenance that most refrigeration systems contracts do not include operate at 80-85% of optimum an incentive for the service provider to reduce breakdowns, efficiency. By analysing the existing Coefficient of since the contractor makes Performance (COP), and making a profit from the consequent adjustments to, for example, repairs. Sometimes the client the refrigerant charge and will seek an “all-inclusive” agreement, thereby introducing expansion valve setting, it is possible to improve efficiency an incentive to the contractor to >95%, thereby improving to reduce breakdowns. These contracts, however, are usually system performance, reducing priced high enough to minimise compressor run hours and extending plant life. the contractor’s risk, so the incentive to improve efficiency Fan Power is lost. Fan power is a product of air volume and total fan pressure. It EMS looks at maintenance is often possible, when measuring from a different viewpoint. Air Handling Unit duty and It places the emphasis comparing it with current design on improvement of plant efficiency, and takes the view requirements, to reduce both volume and pressure – thereby that equipment running at making significant savings in optimum efficiency will last power consumed by fans. longer and break down less

Case Study EMS has recently completed an exercise for Coopervision Manufacturing Ltd, a world leader in the manufacture of contact lenses, in one of their production areas. The area is served by 9 Air Handling Units, each with cooling provided by 2 refrigeration circuits. The area was consuming 158 kW of fan power. By examining the filter pressure drops, reducing the fan resistance, and subsequently reducing the fan speeds, a 27% saving in power was achieved. The refrigerant compressor power was measured as 144 kW. The fan speed reduction, subsequent re-charging of refrigerant and COP analysis, resulted in a 10.6% saving in power. An overall annual saving of 417,000 kWhrs was achieved, equating to 226 Tonnes of CO2. Similar exercises are now being planned for other areas of the site.

To find out how EMS can improve your HVAC efficiency, and help reduce your carbon emissions, call us on: 0845 2000 062 or visit our website at: www.emsltd.biz

Factory of the month CooperVision

The ideas factory “We have very complex systems and tools for analysis, above and beyond the capabilities of manufacturing” Goodenough says. “We are interested in understanding how reactions occur; manufacturing is more about whether the product is of the right quality. We have the capacity to make our own high precision tooling; the starting blocks lenses are made from.” The CooperVision R&D Group is the team that developed the technology of thirdgeneration silicone hydrogel soft lenses. For the last 20 years, contact lens manufacture has been largely about soft hydrogel lenses. They are comfortable, but there are some limiting factors.

Our vice-president, Arthur Back, was a Research Optometrist himself and so we are very patient-driven. He drives us to deliver the best possible lens from the patient’s point of view – and that’s exactly the way we should look at it Neil Goodenough, UK R&D Director

Lens Power Mapping

they were seeing healthier eyes (no redness) and it was the increased oxygen permeability that was responsible. When CooperVision came to the silicone hydrogel market, however, it was a little late – others had got there first.

The benefits of late arrival Prolonged ownership and wearing can make the lenses more prone to, tear film contaminant build up, e.g. lipids and proteins. That can be addressed, to a significant extent, by the shorter and shorter periods that lenses are used. Consequently, the ownership period has come down from years to six months, then monthly and now to daily disposables. “When the eye closes for prolonged periods, it is mildly starved of oxygen” he explains. This is because the lid acts as a barrier to the cornea and similarly all lenses will influence, by design, how much oxygen the cornea will see. “CooperVision’s third generation silicone hydrogel lenses are designed to allow five times more oxygen through than their predecessors and that is much healthier for the patient.” Even healthier than the company expected; when they were launched onto the market, opticians started reporting that

“It turned out to be one of our key strengths,” says Goodenough. When the company arrived in the market, two companies were already there and a third was about to launch so there was little room to manoeuvre to develop a distinguishing product. “One of the problems with silicone hydrogel lenses, when they came out of the mould, was that they were un-wetting. They were like the bonnet of a car after it had been freshly waxed, while we actually wanted a smooth surface with good lubricity.” We believe that the competition had gotten around that by surface-treating the lenses. “We had to find a different way and did so by making an effort to really understand the chemistry. What we developed were lenses that are intrinsically wetting, straight out of the mould. We call them third-generation lenses.” They are super-lubricious, highly oxygen-permeable, and CooperVision got there by exceptional innovation. “The first third-generation lens we launched was Biofinity, manufactured here in the UK, which we produced around 2006 – and it has been phenomenally successful,” he explains. “We went from zero to approximately 80 million lenses/year in sales in a very short period of time. Because of the way we manufacture Biofinity and the lens properties out of the mould, we had to develop a number of new process steps for both the equipment and manufacturing.”

Factory of the month CooperVision

Patients are the virtue

Casting off

A key element in the success the company has enjoyed is that it is genuinely patient-driven. It is easy for R&D groups, in general, to get so involved with the fascinations of the science that the ultimate objective can be lost sight of. But CooperVision’s R&D group is clearly focused. “Our vice-president, Arthur Back, was a Research Optometrist himself and so we are very patient-driven,” says Goodenough. “He drives us to deliver the best possible lens from the patient’s point of view – and that’s exactly the way we should look at it.” When the company comes up with a new lens idea, it benchmarks it against the current best on the market, with the goal to at least match and, preferably, exceed it.

A soft contact lens is frequently made by using two plastic moulds. A small amount of liquid lens formulation is dispensed onto a concave mould surface and the nature of the formulation will dictate lens properties. The two moulds are then sandwiched together and the lens then goes through curing, where the liquid formulation polymerises and creates a solid lens from the formulation. The moulds are then opened, the lens is removed. “Typically, the lens removal process is effectively destructive to the moulds” Goodenough explains. “The moulds (or casting cups as they are often referred to) are made in clean rooms using injection moulding with tools that look like highly-polished steel, but these are in fact produced using high precision lathes, which can cut without any need for polishing. The used plastic from the moulds does not go to landfill. It is high-quality recycled feedstock, which is taken by a local recycling company and re-used to make traffic cones, pencils and cups, for example. “Each cavity in a moulding tool carries tooling - termed inserts- formed with the prescription of the patient,” he

The front entrance to Delta Park Packaging and Distribution centre. The building is also the EMEA Region HQ and above the door is an example of the new CooperVision branding

Sophisticated Molding Automation for a Perfect Sight Large-scale manufacturing of soft contact lenses requires fast, accurate and reliable production technology. This is not the only reason why CooperVision relies on a long-term partnership with German molding automation specialist HEKUMA.

oday, most hydrogel contact lenses are cast in split molds, which determine the optical properties of the finished lens. As there is a wide range of refractive powers, lens diameters and curve radii, contact lens manufacturing requires a multitude of such molds. An established manufacturing technology uses disposable plastic split molds, which are produced by a preceding injection molding process. Speeding up soft contact lens manufacturing CooperVision and HEKUMA teamed up more than a decade ago, when a new injection molding and lens casting concept had to be implemented. We at HEKUMA have extensive knowhow on automation for products in the medical, pharmaceutical and healthcare markets. This helped us to develop a spaceefficient, highly available solution, which is indispensable for cost-intensive clean-room production environments. The process works with a multicavity injection molding system and includes parts take-out, monomer-filling and split mold assembly. It safeguards bubblefree filling with a precise amount of monomer as well as accurate press fitting of the two mold parts. As medical manufacturing requires extensive validation processes, high machine lifetime is an important issue as well. The

new solution realized a reduction of production cycle time by 50%. As a consequence numerous systems were installed in the following, which are running up to today. State-of-the-art molding automation technology HEKUMA develops designs and manufactures sophisticated molding automation solutions, including high-speed linear take-out robots, 6-axis robots, up- and downstream automation, quality testing and packaging. Our focus is mainly on the medical, automotive and consumer goods market. Our systems for medical device, pharmaceutical and healthcare products comply with the highest demands according to clean room requirements and ensure a 100% quality control of the product. The interaction between robotics, cavity-oriented post-processing and quality assurance helps to maintain high production output even in case of defects in specific cavities. Thinking beyond standard solutions Most customers call our specialists in early product development stage to benefit from an integrated design approach, including the integration of injection molding machines, tooling and peripherals. More than 35 years of experience in realizing highspeed automation allows us to

develop customized solutions beyond standard molding automation. What we recently did for CooperVision as well. Manufacturing of hydrogel contact lenses requires a curing process after casting. But standard conveyor-type curing furnaces take up a lot of precious cleanroom floor space. Therefore HEKUMA developed a new, vertical drying furnace with a dramatically reduced footprint, which helps reducing overall manufacturing costs. Take advantage of our experience Whether it is contact lenses, Petri dishes, pipette tips, automotive housings or food and beverage containers - our staff is dedicated to providing our customers with high-quality turn-key automation solutions with unmatched availability and lifetime. More than 5000 systems have been installed worldwide since founding the globally operating company.

Contact information: HEKUMA GmbH Freisinger Strasse 3 b 85386 Eching Germany

Klaus Wanner Director of Sales & Marketing Tel: +49-8165-633-0 Email: sales@hekuma.com Web: www.hekuma.com

Factory of the month CooperVision

continues. “There are a lot of different optical corrections available. The majority of patients are myopic – they are short-sighted – or hyperopic long sighted - and we have about 70 different SKUs (stock-keeping units) for any one material range that cater for these power correction needs. The second most prevalent vision correction is for astigmatism, where they eye becomes rugby ball shaped rather than round. People can have that in combination with myopia or hyperopia and for that particular type of lens (called a Toric lens), we have about 4500 SKUs in a single material type alone. Presbyopia (poor visual acuity due to lack of accommodation

We have a range of lensmaking capabilities and we can actually make lenses from raw materials through to the finished product in our R&D facilities

Over 15,000 sq feet dedicated to pure R&D in the UK alone.

Continuous Improvement meeting in progress at CooperVision

Neil Goodenough, UK R&D Director

in the eye) is a condition that people get later in life when they find they need reading glasses, for example. We have, typically, 450 different SKUs for that. When you look at different material types we market and multiply that with the basic SKU range, you find we have SKU ranges in the region of 30,000 for cast moulded products. By comparison, a typical supermarket will have around 15,000 SKUs. Here, we also make to order, for which we partially mould a thick lens and then lathe the necessary correction onto the lens. Add those in and the SKU range becomes huge e.g. 500,000.” That can be a problem for inventory control, packaging and distribution – of which more will be discussed later. “We make lenses for everyone – no-one’s sight is ‘not worth it’ for us; we are a one-stop shop.” Once the lens is removed out of the mould it is inspected – every lens is inspected, either by machine in the high-volume areas, or by human eye for lower volume areas, – and put into a blister pack with a dose of saline, sterilised and sent to the customer.” The focus of CooperVision’s R&D in

CooperVision at a glance Locations

Southampton, Hampshire

Contact details

Delta Park, Concorde Way, Segensworth North, Fareham, Hampshire, PO15 5RL

Established

1976 in the UK

Turnover

$1.2billion

Employees (number of)

2000 in UK

Key markets

Global contact lenses

Key products

Biofinity, Proclear, Avaira & Biomedics

Key customers

Opticians & Optical chains

Domestic / export sales ratio

20 (domestic):80 (export)

Key people

Andrew Sedgwick (President EMEA), Kevin Barrett (MD UK Manufacturing), Neil Goodenough (UK R&D Director)

Points of interest / interesting fact about CooperVision

Global leaders in Toric contact lens sales (lenses which compensate for astigmatism)

Factory of the month CooperVision

Bulk preparation of contact lens materials

recent years has been around silicone hydrogels, which are helping to build market share, but there is still a high demand for standard hydrogels. “Material performance is better with silicone hydrogels, but they are more expensive to make than conventional hydrogels, in time we will drive down costs on all our third generation silicone hydrogel products,” says Goodenough. Over the past halfdozen years, CooperVision has been developing around two new products a year. “We have developed several different daily disposables, and we are currently working on lenses to slow the progression of myopia.” That research is potentially of great interest in the Far East, where the progression of myopia continues far beyond what is common in the West. Generally, new product development falls under one of two headings: advanced contact lens materials or advanced designs.

The clear path to development “The starting point in the development process is pretty similar, whatever the product. We undertake market research, gap analysis and collect market intelligence,” he continues. “We assess whether the project aligns with our strategic goals, set its direction, assign resources and perform a risk analysis. We assess whether it is a ‘must-have’, ‘need to have’ or ‘nice to have’, as well

We are interested in understanding how reactions occur; manufacturing is more about whether the product is of the right quality. We have the capacity to make our own high precision tooling; the starting blocks lenses are made from Neil Goodenough, UK R&D Director as assessing whether we are trailblazing and will be first to market with it. We profile the risk – is delivery guaranteed? There is a realisation in this business that we will sometimes start a project that may not have a high guarantee of delivery; so long as people are aware of that, we have managed expectations

Rockwell Automation R

ockwell Automation’s relationship with CooperVision extends far beyond supplying products to both CooperVision’s UK contact lens manufacturing plants and their research and development facility; it reaches into their supply chain, plant software and strategic maintenance. CooperVision specifies that Rockwell Automation products are used in all machines supplied to them by Original Equipment Manufacturers in order to take full advantage of Rockwell Automation’s Integrated Architecture platform which allows quick and seamless integration of machinery, data and control mechanisms. The research and design facility also specifies Rockwell Automation technology and equipment when designing new machinery. With more than 200 machines using Rockwell Automation products, from Control Logix

for PLCs, Kinetix for motion control, PowerFlex drives, Rockwell Software products such as FactoryTalk View SCADA and FactoryTalk AssetCentre together with an extensive array of industrial and safety components, CooperVision benefits from ease of integration and machine and line performance monitoring. The availability of information in real time is also a primary ingredient in enterprise level management techniques such as Overall Equipment Effectiveness which allows companies to use the rich data feedback to hone the efficiency of their equipment and help reduce downtime as well as identify and apply ‘best practice’ principles across multiple lines. This is not the limit of the service that Rockwell Automation provides, however. With CooperVision’s high volume outputs, helping to reduce avoidable downtime is

a key requirement to increasing output and efficiency, minimising costs and maximising the bottom line. By working closely with Rockwell Automation through a Strategic Maintenance Agreement, CooperVision has an array of services that help keep the production line running. The 24 hour a day, 365 days a year technical support, comprehensive on-site and off-site spares, repair, emergency, administrative, training and software support and engineering visits that constitute the agreement mean that both planned and unplanned downtime can be kept to a minimum. Rockwell Automation provides a range of solutions and product support for the Life Sciences industry, including support for research and development, clinical supply, manufacturing, operation, automation, quality management, validation and regulatory compliance.

Factory of the month CooperVision

Lens Optical Quality Assessment

– and we always aim to succeed and when we do succeed, it’s great!” Research and Development is divided into four areas: projects, which have a horizon of up to two years; programs, which look three years ahead; new technologies, which reach further, to five years; and ‘venture funding’, which goes beyond five years. Any new product development project has four main partners – R&D; Advanced Manufacturing Technology (AMT); Manufacturing and it almost goes with out saying Marketing. Leadership depends on where the project is in its development. Initially, it will be R&D but development teams are all cross-functional. The new material or initial process feasibility phase, as well as lens design, are led by R&D. AMT leads on process industrialisation; and manufacturing takes pole position in continuous improvement and ultimate ownership.

Meat and think “As the Advanced Manufacturing Technology team we often feel as if we are the meat in the sandwich between R&D and manufacturing. It’s sometimes challenging but it gives us a great perspective, from R&D and small runs through to manufacturing, where we produce millions of lenses,” says Stephen English, global director of AMT. “From the start of any given project, AMT and manufacturing are involved with R&D. As a collaborative team we meet to run through the formulation and through the bespoke process steps required to deliver the particular product. We come into the project and work closely with R&D and look at industrialising that element of the process, ensuring robustness and repeatability of the product. It is analogous to Six Sigma processes – noise reduction, yield improvement, et cetera – and enables us to ramp up to full industrial production.” AMT runs a stage-gate methodology, with seven stages and clear milestones. “We have a list of things in the stage gate process that we need to achieve before we move on.” This cross functional structure of the development process was adopted around 2004. The approach enables the team to overcome problems of isolation and nuances of quality and delivery by working closely together through every

Heathfield Contracting O

ur technical expertise and reputation for a professional but personal service has allowed us to build up strong relationships with many leading manufacturing companies across a wide range of industries. With the commercial sector constantly evolving in response to both economical and legislative issues, we offer a wide range of services to suit our customersâ€™ ever changing requirements. These services include full electrical consultancy and advice on compliance with low carbon legislation. Over the past 15 years we have facilitated CooperVision Manufacturing Ltd in the expansion of both their Hamble and Fareham sites, including

the installation and maintenance of operations and have an ongoing production lines and the electrical fit out commitment to ensuring our customersâ€™ of their new European Distribution Centre. needs are met as efficiently and Our current projects include consultancy economically as possible. on energy saving solutions within their lighting and power installations. As an NICEIC approved contractor our highly trained team is qualified to the latest Published in association with: electrical installation HEATHFIELD CONTRACTING LTD standards, and we operate Beechleigh Southwick Road successful Electrotechnical Wickham Apprenticeship Schemes Hampshire PO17 6HX in conjunction with JTL Tel: 01329 836622 and our local college. Email: darren@hcontractingltd.co.uk We are committed to Web: www.hcontractingltd.co.uk delivering an excellent service in all our

Factory of the month CooperVision

Checking of lens material strength

stage, within the company and outside organisations, such as equipment vendors. AMT typically takes the lead, after the project has developed a formulation that is acceptable and the manufacturing equipment and processes are being constructed to allow the project to progress to acceptance testing. Manufacturing engineers give additional input and so the design is accepted from all parties. Perhaps strangely, simulation is not a major component in our project workload and is typically introduced only on complex projects. “We have previously worked with a company called System Navigator and we use simulation when we need to present to the executive team to explain the project’s complexities – an Excel macro may not mean anything to those not intimately involved,” says English. “A visual simulation may explain things much better but we don’t use it just for the sake of it.” The project governance system deployed in the UK is the same as that used in the USA. “We have very good project governance and by following the same methodology, we ensure we’re all singing from the same hymn sheet.”

What we developed were lenses that are intrinsically wetting, straight out of the mould. We call them third-generation lenses. They are super-lubricious, highly oxygenpermeable, and CooperVision got there by exceptional innovation Neil Goodenough, UK R&D Director When a project is delivered, it then passes over to Manufacturing, who then go on to produce the high volume lenses needed to satisfy our customers. Improving the vision “A particular success we have enjoyed over the past three to four years has been our focus on business improvement planning,” says Kevin Barrett, managing director of UK Manufacturing. He is tasked with producing enough lenses to ensure that customers get what they need and when they need it. “We create a detailed improvement plan every year and measure and monitor it against previous years. The improvement plan gives everyone a clear focus on ‘the vital few important things, that will dictate the ongoing success of our operation’.” CooperVision has a number of specific objectives in 2011, including: to develop the manufacturing operation as a Centre of excellence for lens making; to exceed the budget commitment by focusing on business improvement and Lean manufacturing; and to establish a stronger business processes and business infrastructure. “It is not just about being good at making lenses; it’s about the knowledge of making lenses and becoming expert in every aspect of lens making. It’s a two-stage process: to become Lean in manufacturing terms and for our knowledge to improve significantly over the years,” says Barrett. “We have become very good at executing our projects and improvements, so we have become a very efficient organisation. For the future, we can continue

STR is a long-standing recruitment partner of CooperVision. Working with sites across Hampshire, we have supplied skilled candidates for a variety of roles including R&D, Engineering, Technical Management, Manufacturing, Process Improvement, IT, Procurement and Human Resources.

stablished in 2000, STR are innovators in the Technical, Professional and Health recruitment sectors. Our teams of specialist consultants deliver the best talent fit for our clients, working across the UK and internationally. We create bespoke recruitment solutions for all clients, whether it be permanent, temporary or fixed-term contracts.

SME’s, Multinationals and OEM’s and develop relationships built to last. Our technical expertise has allowed us to build strong relationships with leading manufacturing companies across industries including, Automotive, Aerospace, Electronics, Oil and Gas, Maritime, FMCG and Pharmaceutical.

By choosing STR, you can be CooperVision trust us to supply confident that quality is paramount in today’s best talent. Our partnership everything we do. We are members is based on honesty and integrity, of both the REC and APSCo where and our consultants have in-depth quality assurance is essential. STR knowledge of the marketplace. We are audited externally by the BIS and support CooperVision throughout REC to ensure compliance to industry the whole recruitment process, standards and we have full ISO meeting regularly with Hiring 9001:2008 certification. Managers and Directors to understand their specific If you would like more information please recruitment needs.

contact our Client Services Team on:

STR is a market leader in full lifecycle recruitment for the Manufacturing Industry. We deliver fast and responsive recruitment solutions to

Tel: 023 9237 4444 Email: clientservices@strgroup.co.uk Web: www.strgroup.co.uk

Factory of the month CooperVision

to work on efficiency and develop a more focused process and a suitable infrastructure. But our first objective, to become effective, means we are already good at what we do; in the future we will concentrate more on becoming efficient, which is becoming better at how we do things.” CooperVision has an established improvement planning process. The improvement framework, including techniques such as Lean tools and Six Sigma processes, is deployed throughout the whole organisation.

Sharing the objective “What was vital was to get senior and middle management to understand what business improvement is about,” he says. “As a result we have actually moved away from ‘Lean’ and ‘Six Sigma’ terminology and created our own Continuous Improvement framework. The framework incorporates both lean and six sigma and takes the best from both to match our specific needs: it’s the CooperVision improvement program.” The process involves both ‘leading’ and ‘supporting’ teams and activities and Barrett says that there was, in the past, a misplaced belief in ‘leaders not giving direction’, only asking if support was needed. “Our job as leaders is to provide guidance and leadership. As a business, we determine objectives centrally, based

on market opportunities – not what we think we should do internally. We ensure our people know what we need to do and ask them what support they need to make that happen.” That means that some ideas and opinions may be rejected, however when that occurs we do that with respect and explain the reasons why – but it is not afraid to make decisions and to move forward. “From a business perspective, the achievement I am most proud of is our ability to make silicone hydrogel lens in volume and to high quality standards,” he says. “It was a long and difficult journey to learn to make silicone lenses and using Lean manufacturing and improvement techniques to understand the processes we use to manufacture them. We have achieved a significant (but confidential) percentage increase in output – and, in doing so, we have improved productivity of the manufacturing line dramatically. We are becoming very successful in what we are tasked to do – to manufacture product at the right price.” On the other hand the softer side of the business improvement process has not been ignored. “We have a culture where people understand what they are here to do,” Barrett explains. That assertion blends with communications manager Heath Clash’s observation that brand values ‘come from within’ – that personnel have to be involved and that it is not just about the public image. “We have increased the level of involvement and we now have an organisation that is clearer, has more direction and more focus on improvement and efficiency. What we do is not always open to discussion; how we do it, is. We like to deploy authority to make decisions – and accountability – to the lowest level, and we back our teams up.” One of those responsible for delivering the objectives is John Cole, senior engineering manager, who was appointed to look after elements of the technical function and is responsible for continuous improvement techniques and structural problem solving.

Precision manufacture of mould tooling for contact lens manufacture

????? L

angen Packaging Group has over 50 years experience of building innovative product handling and cartoning machinery. An engineering lead company based in Holland and Canada, Langen have been working together with CooperVision since 2001, developing complex packaging systems to ensure the high quality control standards demanded for their wide range of contact lens products. Product validation lies at the heart of all machines supplied to CooperVision, with the required scanners or vision inspection systems integrated to ensure all components entering the machine from product to carton to leaflet are fully verified. Specific data applied to either product or carton within the packaging line by print and apply labellers or laser

printing onto cartons is also verified to bottles/min to high speed packing of ensure total batch integrity. flow wrapped biscuits to supplying a Innovative product handling systems full variety pack collation and packing have also been a focus, including fully system for cereals. automated product loading directly The strong working relationship from autoclave trays, and end of line which Langen and CooperVision have stacking systems. By introducing this built up over the last 10 years has higher level of automation, along with extended the skills of Langen while the integration of previously separate ensuring CooperVision a range of production stages, the Langen systems highly efficient machines tuned exactly have delivered significant improvements to their needs. to production efficiencies. Langens innovative Published in association with: approach to product Langen Packaging Group handling and cartoning have benefited companies in Tel: +31 (0) 24 648 66 55 many different industries; Email: sales-europe@langengroup.com from placing bottles of Web: www.langengroup.com whisky into individual gift boxes at speeds up to 360

Factory of the month CooperVision

A Project Team going through the final stages of handover of a new production line into Operations

Progressive insights “In the past, we had a steering committee without any particular responsibility and about two years ago we decided that we needed clear management responsibility in the area,” he says. “We have been using Six Sigma techniques for about four years, when we began following the DMAIC (define, measure, analyse, improve, control) process to resolve certain issues, in two specific projects.” The company partnered with Catalyst, a consultancy company, to coach CooperVision in using the tools – and in developing a ‘common language’ to aid understanding; CooperVision has grown by takeovers, as well as organically, which added a layer of potential difficulty to the normal experience of different departments failing to understand each other. A green belt project was started and a change management programme incorporated skilled people who were not, at the time, necessarily in leadership positions, which all helped to strengthen the development of crossfunctional teams.

“Seven of our engineers undertook an advanced green belt programme and we took the green belt programme into the workplace,” he says. “We wanted to demonstrate that these are not just ‘techie tools’, that they are a useful way of working out how to deal with issues.” Like many – if not all –

From the start of any given project, AMT and manufacturing are involved with R&D. As a collaborative team we meet to run through the formulation and through the bespoke process steps required to deliver the particular product Stephen English, global director of AMT organisations, the company had a history of fire fighting, of dealing with symptoms rather than problem causes. The Six Sigma-based programme helped it to improve its success in identifying root causes. It has seen positive results and has proven that it can afford to persevere. “A few cases stand out,” says Cole. “We have achieved significant savings on downtime in automated lines. We took the time to stop, deployed the methodology and worked with our vendors to identify and resolve the issues we were encountering. We simulated a lens manufacturing

KNAPP UK Limited Warehouse automation specialist, KNAPP UK Ltd, supplied the automated materials handling systems at CooperVision’s Fareham facility.

s systems integrator, KNAPP designed and delivered the paperless order picking and automated storage system as a complete turnkey project. 3000 fastmoving lines are picked direct from carton live storage, the picker being directed via a pick-to-light system. The slowermoving lines are stored within KNAPP’s 30,000-tote-capacity OSR ShuttleTM system and picked at ergonomically designed, high-performance workstations. All elements of the solution are integrated seamlessly by the KNAPP conveyor system, which transports picked goods to the packing and dispatch areas. The OSR ShuttleTM units – of which more than 6000 are in operation worldwide – provide very rapid handling

and storage of cartons and totes. The OSR ShuttleTM can achieve up to six times the throughput rate of an equivalent automated storage and retrieval system (ASRS) and – through a combination of energy recuperation from the braking process, sophisticated software to optimise power usage and intelligent design to minimise shuttle weight – consumes less than 10% of the energy used by a conventional ASRS.

Published in association with: KNAPP UK Ltd Tel: +44 (0)1844 202149 Email: sales.uk@knapp.com

Factory of the month CooperVision

Manufacturing, in process quality assurance measures

line that was on order and improvement was apparent from as soon as it was installed.” Line simulation was able to identify variations in downtime by shift, which led to identification of who was doing things slightly differently. “We brought different cross-functional teams together from various shifts, identified the best way of working and standardised it.” While the terminology of Six Sigma may not be high-profile within CooperVision, its tools continue to be deployed – and the network is building. The UK operation has a black belt in place, as does the Puerto Rico sister plant. A yellow belt course is planned as the company establishes its internal structured problem solving hierarchy.

Picking from the flow racks using Pick-ToLight (PTL) technology, which contain about 3000 locations of faster moving product

Focused improvement “We use the process to develop product leadership teams and an environment of kaizen (continuous improvement) in the work area,” Cole explains. “A key point is that, where the business champion has the pain of the project, he supports it very well.” There is an ideas management process in place, named ‘Bright Spark’, in the hydrogels business unit and the technical support function, which is devoted to the engineering workforce and allows the people on the shop floor to identify issues on a daily basis. There are visual references to

continuous improvements all over the factory, including progress storyboards, and the company’s magazine highlights wins. Weekly core briefings ensure that information is disseminated across the company and the visual impact of a 5S

We make lenses for everyone – no-one’s sight is ‘not worth it’ for us; we are a one-stop shop Neil Goodenough, UK R&D Director

program has been further recognised with a Four Star Award from the British Safety Council. As Heath Clash said, the branding comes from within the company, its practices, culture and attitudes. However, after all the technicalities, product development, improvement in manufacturing processes and everything else, the business of CooperVision

is getting contact lenses onto people’s eyes. The task of managing the inventory and ensuring the delivery of the right products, at the right time and to the right place, falls to operations director John Worster, whose responsibilities include packaging and distribution. “We produce, package and distribute in excess of 500 million lenses a year,” he says. “We are currently holding more than 100 million lenses in stock and, for us, managing that variety of SKU’s is a challenge.” I don’t think that anyone would be in disagreement there – but a question is immediately prompted by those numbers: if CooperVision is focused on Lean improvements and boosting efficiency, how come the company is holding so much stock?

Stocks and shares “First, next-day delivery is important,” he replies. “Pullthrough from packaging takes a couple of days. For packaging machines, like any process flow, setup time is a significant element. It is not practical to be packing one lens for one customer.” While CooperVision’s main customer base is opticians and eye care chains, it both delivers to its customers and supplies lenses direct to consumers on behalf of them – so there is an element of ‘single packing’. “We supply in relative bulk to distributors and our own network, as well as supplying the local market direct to homes, opticians and chains – so there is a variation in picking. For the domestic market, I could be packing two lenses, one lens – very small quantities. To package to demand is unrealistic within the next-day timeframe, and it is very inefficient. Further, what gives us competitive advantage is the breadth and depth of our range.” In essence, then, the company

Factory of the month CooperVision

has to balance the clear attractors of minimising inventory against the cost of doing so, in both financial and service terms. As explained earlier, there are a lot of SKUs being held. “Our stockholding varies from a few days on fast-moving lines to many months on the extreme ends of the range,” says Worster. “I will typically have 12,000 ‘unlabelled’ SKUs,” they are actually labelled, for identification, but they are in blank, unbranded packages, “and packaging takes the total up to 70,000-plus.” They become ‘labelled when they are packed and assigned. “We convert the lenses to finished goods as late as possible.” Management of the 10,000 square metre warehouse is highly automated, with pick-to-light machinery and a design that has helped to boost efficiency and effectiveness. “Over the past two years, we have reduced our stock significantly, through planning and flow-through in sensible

batch sizes,” he says. “We have adopted Lean techniques in looking at how product flows through the machines, we have a continuous improvement process, we use mapping, SMED (single minute exchange of dies) techniques and we have purchased some simple software that measures OEE (operational equipment effectiveness) on our machines. Taking all those efforts together, we have been able to raise our OEE dramatically, reduced distribution costs and improved operational effectiveness.” CooperVision has seen its volume grow by about 15 percent a year but it hasn’t had to move into new warehouse premises. Its efforts have enabled it to effectively increase capacity by 40 per cent, with no extra space. “Ultimately, it’s about how we add value for our customers,” says Andrew Sedgwick. “It’s about how we differentiate ourselves by providing additional value and services that our customers require. Product is critical and innovation is important as part of that and the rate of change has increased dramatically over the last 10 years – but customers expect that. It is about what we can do for our customers that goes further, which includes home delivery, maybe providing different packaging formats for customers’ delivery systems, or to support their brand. We are currently number three, we want to get to number two, and that is what we are striving towards.”

Surface Wetting Assessment

A fine

state of affairs Rewind the clock 10 years and Fine Industries was a very different place to work at and to do business with. The usual clichéd terminology of culture change and shifting global markets do not really fit the bill in this instance as Jane Gray finds out.

QC Sampling and analysis

The

90s was a good time to be in business for pharmaceutical and chemicals companies in Europe. As part of the Laporte Group, Fine Organics Limited (FOL) used to turnover £80m and seize a sizeable £20m profit margin. Keith Hanson, now managing director at FOL looks back on the 90s, when he was operations director with the

company, as a time of quick money and easy living. Hanson reflects: “I don’t think the profits we were pulling in were at all unusual at the time. Life was good. We all had an inkling that Asia might ‘happen’ in the early 2000s but many people chose to hide from the possibility saying, ‘it’ll never happen; they’ll never get the quality right’ and so on.” But of course Asia did ‘happen’, and in a big way. Not only this, but the pharmaceutical and agrochemical industries were rife with big mergers and acquisitions in 2001 and 2002, indeed FOL itself was acquired by

Chemicals Fine Industries

put to an end through redundancies. In 1999 FOL had 450 staff; by the end of 2004 it had 250 and there were no signs of increased sales in the pipeline to raise morale or provide assurance that there was light at the end of the tunnel. It was at this point that Hanson gained the opportunity to become general manager at the faltering Seal Sands plant near Middleborough, and between 2004 and 2008 he led an impressive transformation journey. In 2004, with the company haemorrhaging millions of pounds a year, big change was a must and so a number of operational transformations

We look for results orientation and advanced interpersonal or communication skills, and not just at the senior management level Steve Catchpole, operations director

chemicals giant Degussa as part of a larger deal which saw Laporte subsumed. Hanson explains the implications of this kind of activity: “Every time a big pharmaceutical company buys or merges the first thing they do is stop the pipeline. They then take a basket of selected products forward and throw the rest in the bin; unfortunately if you had business in those products you simply lost it overnight.” Within three years FOL saw its turnover halve and with directives from head office to cut cost. The good times were

were implemented with a firm hand. Hanson remembers: “We changed the shift pattern from 12 hour shifts to eight hour shifts, we cancelled operator contracts and we cancelled union agreements; the whole lot.” Given the difficulties currently being experienced across public and private sector organisations there must be many who would give their eye teeth to know how Hanson managed this without revolt. His answer is simple; communication and education: “We went to the brink of strike twice in one year. But we communicated with the union and the workforce every two weeks and we worked hard to get understanding that life was different out there,” says Hanson. “The business had been so successful in the 80s and 90s and a lot of the staff were still here in the 2000s. We had to reconcile their knowledge of the profits we made then with the pressures of the external environment in the present.” Hanson’s education approach was successful. Whereas pay disputes in 2004 took several months quibbling over fractions of a percent, post 2004 they were reduced to just one day. By 2005 Hanson felt that the changes implemented so far had laid

sufficient ground work, and he moved to the next stage of his long term transformation plan. In his mind’s eye Hanson always looked to create a culture of autonomous and continuous improvement (CI) at FOL but, unlike many organisations with lean ambitions he did not just pay lip service to the concept of employee engagement nor underestimate the power of a truly committed workforce. 2005 was given over entirely to consolidation, culture building and morale boosting for FOL.

Fully equipped QC laboratory

Hanson explains his reasoning: “I took the decision that there is no point whatsoever in introducing CI, lean sigma, six sigma at a point when it would be seen as a cost reduction programme, because that is all it would ever be seen as.” Instead Hanson spent two years focusing on the culture of the organisation. Between 2005 and 2007 everyone in the company was taken off-site at least twice for training and team building sessions. These sessions were designed to create an environment in which employees felt comfortable talking to management. The result of this attention to people has been striking. Hanson has been guided by the mantra: ‘it is easier for a hundred people to take one step than it is for one person to take a hundred steps’. His approach to building knowledge of CI techniques (a programme which started in 2006) has been that it is a way of thinking for the whole organisation and needs to be understood at every level. It cannot be the preserve of an elite few. Hanson’s efforts with the Seal Sands site did not go unrewarded. By 2007 the company was once again breaking even. More importantly it had a visible CI agenda in place, and unequivocal engagement from senior management to the chosen methodology for efficiency (Hanson was the first to apply 5S, or as FOL call it, 5Cs in his office). It is not just the path of true love that is prone to a bumpy ride however, and just as things started to look up, a commercial problem with two of the products being supplied to the USA threw the company back into an uncomfortable

Chemicals Fine Industries

Fine Organics at a glance Established

Fine Organics was established in 1977, and was bought by Fine Industries Ltd in 2008.

Location

Seal Sands, Middlesbrough.

Employees

Fine Industries 214 (178 Fine Organics, 36 Fine Facilities Management)

Key Products

Contract Manufacturing of Pharmaceutical (APIs & intermediates) (http://www.fineorganics. co.uk/pharmaceuticals.aspx); Crop Protection, and Speciality Chemicals.

Key Customers

“Blue Chip, Top Tier” Pharmaceutical and Agrochemical Companies.

Turnover

circa £30m

Points of interest

Three years of continuous profitable growth, at a time of deep global recession. In-house developed Business Management System is behind Fine Software Solutions. In 2012, Fine Environmental Services will bring online one of only three approved incinerators in the UK with permission to burn hazardous liquid waste. Fine Contract Research will offer clients small scale assets and a highly qualified team who are technically competent in all aspects of custom synthesis, route selection and laboratory operation to gain cost effective solutions for their product development requirements. CI programmes across all business areas continues to provide the basis and backbone for long term contract opportunities.

situation. “All of a sudden we were a potentially significantly loss making business again,” recalls Hanson. As an indentified cost centre within a large group it did not take long for a summons to arrive from HQ in Germany. It was not a happy meeting. “I presented a credible business plan for pulling the site back on track and I didn’t get a thank you or a smile,” says Hanson. Piqued and unsettled, Hanson asked for honesty from the board. The frank response was that “everything is for sale if the money’s right” a statement which was followed by a half joking: “Are you interested in buying?” comment from the financial controller. Hanson’s mouth ran away with him and before he knew it he was at the centre of a management buy-out. In a whirlwind year of management selection, legal work and brand restructuring the die was cast and the buyout was completed in November 2008. Since then Fine Industries, the new umbrella group under which FOL and its related businesses now sit, has not looked back. “Although at the time,” says Hanson, “people, particularly our wives, thought we were mad.” Sensitive to the feelings of customers who might think the same, or who would see this fledgling independent company as a risky supplier, the first priority of FOL was to secure contracts and prove ability through delivery. Luckily this was an area where Hanson and his new, carefully selected management team

were confident; a confidence which sprang from faith in the workforce they had worked so hard to develop. Steve Catchpole, operations director at FOL says: “I’ve operated in five or six different sites and, I know it might sound cliché, but the quality of the people here drew me back

[after leaving FOL in the early 90s]. Their ability to adapt within our project based business is really unique. It takes a very special kind of person to be able to deal with the transience of our environment.” Expanding on this point, Catchpole explains that, whereas many chemical companies have one or two products to which they are dedicated, FOL has developed the flexibility to deal with continuously changing projects. Typically, the plant will manage around 50 changeovers a year which require complete reconfiguration of the plant. Of course, we have heard how FOL’s workforce has been whittled down due to the pressure of recession and invested in to maximise the capabilities of the remaining crew, but going forward, how does the company plan to safeguard the quality of personnel which it values so highly? Catchpole explains that recruitment rigour plays a key role: “When we recruited our engineering manager after the MBO, we took a year to find the right guy. We talked to some very good candidates but they were not all people

we felt could excel in this environment. We took our time and we got our man in the end.” Digging down deeper into what qualities a potential employee should display, Hanson and Catchpole agreed that the ability to see the business in the context of the wider world and to juggle multiple tasks were essential. “In addition,” says Catchpole, “we look for results orientation and advanced interpersonal or communication skills, and not just at the senior management level.” Clearly the clarity of purpose which these characteristics bring the company is effective since, despite the upheaval of the MBO and amputation from the securities which come from being part of a large group, FOL lost none of its customer base following the buy-out. Furthermore, due to a hard working sales operation, new business was secured and after one initial year of loss the company has now stabilised as a profitable enterprise. Earnings before tax this year are expected to be in excess of £1.0m. But mere profit was not enough for the ambitious new management team. Proving beyond all doubt that CI is a way of life at FOL, the reaction to success was ‘what next?’. In considering business strategy, Hanson says the company’s position as a small private business did not give it the financial position to attempt the strategies taken by many other chemical and pharmaceutical firms. “We did not have the money in the bank, so we decided to start our strategy by looking at where we spend money and whether or not we can spend it more wisely,” says Hanson.

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

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

100

In association with:

Chemicals Fine Industries

This train of thought has led to a major re-structuring of Fine Industries. The company has sub-divided into a number of different businesses which are designed to minimise the amount of contract labour brought in and maximise output from the diversity of skills held within the business. Maintenance was one of the first and most obvious areas for re-invention. Despite the fact the FOL had strong in-house expertise and was a difficult customer to serve, since it had developed a strong set of in-house maintenance systems, the company was still spending half of its £3.4m maintenance outgoings per year on contracted labour. Catchpole says: “It became a no-brainer to take everything inhouse, but we then took that logic one step further.” Catchpole explains that realising just how high their own standards were started to beg the question of opportunities to deliver services for others. “While the chemical industry is generally quite sophisticated we started to investigate if there were other industries where we might bring our expertise to bear,” says Catchpole. As a consequence a new business; Fine Facilities Management has been born. This expertise in maintenance, planning and scheduling which this business aims to take further afield is,

however, supported by another in-house asset which now forms an exciting business proposition. Namely, Fine’s custom-built IT system which is ran out of the subsidiary Fine Software Solutions. This specialist OEE and business management asset is, says Catchpole, the easiest and best business management system he has used during his diverse career. The system, which was developed by manufacturers for manufacturers, enables real time monitoring of business assets through touch screen points around the plant as well as mobile access to business analytics and data. Hanson says access to this information in meetings has enabled him to clinch contracts with new customers in the past. Aside from the Fine Facilities Management and Fine Software Solution offering, the company has already established fledgling management teams for; Fine Environmental Services and a not-for profit organisation, Fine Contract Research. The first of these businesses will exploit an on-site but currently dormant incinerator in order to deal with industrial waste for other organisations. The second will protect Fine Industries’ long term interests by building relationships with start-up businesses and innovators in order to support a more dynamic, collaborative chemicals industry in the UK. The final part of the business – the traditional chemical manufacturing business, now exists under the banner of Fine Organics. The dynamism and ambition demonstrated in FOL’s radical new strategy is a manifestation of the business model innovation which bodies like the Technology Strategy Board and many leading management schools are saying will be the make or break factor for companies in the coming decade. Having seized a risky opportunity to take control of their own destiny in an industry dominated by big hitting international players, FOL is busily laying foundations which will make it a force to be reckoned with in the future.

I’ve operated in five or six different sites and, I know it might sound cliché, but the quality of the people here drew me back. Steve Catchpole, operations director

Raw material and effluent storage

101

Heavy engineering DavyMarkham

Laronde Mine Production Hoist

Leading The departure of a popular leader can leave a crippling vacuum in a company, wrong-footing strategic direction and unsettling staff. Not so for DavyMarkham however, as Jane Gray finds out.

When

TM last profiled heavy engineering firm DavyMarkham in April 2010 the company had a truly inspirational story of transformation to tell. From a situation in 2006 where business was weak, morale low and an aging workforce was making crucial skills critically endangered, the company has undergone a dramatic reversal of prospects. This turnaround was driven by the robust leadership of then managing director Kevin Parkin who proved beyond all doubt the power of charismatic leadership and the responsibility that needs to be borne by all company leaders to ensure the success of an organisation. In his time with DavyMarkham, Parkin initiated an intensive education and engagement programme for all employees which taught the principles of continuous improvement and empowered them to uphold quality and efficiency through the use of lean tools such as 5S.

Another outstanding outcome of Parkinâ€™s leadership at DavyMarkham was the establishment of its tailored apprenticeship programme, the striking success of which has caused it to be held up as an industry benchmark for training provision by institutions like the Institute of Mechanical Engineers and EEF. In addition to safeguarding the future of the company by creating skilled engineers to whom outgoing, experienced employees can pass the torch of industry, the programme has revitalised workforce enthusiasm with an injection of fresh blood, increasing productivity. In March this year however, Kevin Parkin moved on from DavyMarkham to take up a new position as chairman of a newly formed plastics recycling business, R3 Products. Creating continuity in the wake of such a departure can be difficult and many business consultancies thrive on helping companies understand leadership legacies in order to avoid a crisis of confidence. While DavyMarkham did not feel the need for external help in their recent transition of power, Gordon Scott, director of sales and marketing at DavyMarkham, admits that when Parkin left there was very real concern about what the future might now hold. Such fears were soon put to rest.

103

Powerful and versatile industrial gear units from SEW Eurodrive

EW Eurodrive is proud to supply bespoke and standard industrial gear units to drive Davy Markham’s mine hoists, geared head sheaves and winches. SEW Eurodrive is a leading global supplier of drive technology with a reputation for innovation, reliability, fast delivery and rapid turnaround. With a design and manufacturing plant dedicated to industrial gears even bespoke units can be designed and manufactured quickly. The heavy-duty X Series range of helical and bevel-helical industrial gear units was the perfect solution for Davy Markham’s mine hoists. Offering a choice of 23 finely graduated sizes, with torques ranging from 6.8 to 475kNm, and high power densities, the X Series range enables optimal selection for every task and can reduce costs and weight. Designed around a modular concept, with the availability of predefined accessories, the units are infinitely adaptable to suit a wide range of different applications. The reversible gear unit housing of the X Series units allows for variable installations with a single version. This means there is a reduced number of

variants for both operators and original equipment manufacturers alike. Other key features of the X Series range include, operational safety, ease of maintenance, extremely robust gear unit housings, low noise operation and efficient cooling systems. SEW Eurodrive is well known for its short delivery times on standard items and spare parts but the company also has the ability to respond quickly when a bespoke solution is required. Recently Davy Markham required a new gearbox with twin input shafts from two 900kW motors to drive a large mine hoist. The in-house design team at SEW Eurodrive’s modern industrial gears facility designed a new gearbox to the exact specifications supplied by Davy Markham’s engineers, utilizing X Series technology. The new gearbox was 3 metres long, 1.25 metres high and weighed in at a colossal 11.5 tonnes. From being given the specifications, SEW Eurodrive’s team were able to design, manufacture and deliver the gearbox within just 20 weeks. With 13 manufacturing plants and 66 assembly plants in 47 countries SEW

Eurodrive is a leading global supplier of drive technology and solutions. That’s important for companies like Davy Markham whose mine hoists and engineering products end up all over the world. With SEW Eurodrive’s drive technology installed, spare parts, service and support is never far away. According to Steve Marriott, UK sales manager of Industrial Gears, ‘SEW Eurodrive is the perfect partner for plant and equipment manufacturers, not only because of its wide range of innovative products and services, but also because of its global presence. If Davy Markham has a customer on the other side of the world it’s reassuring to know that SEW Eurodrive is there too and able to provide rapid response to the customer’s service and support requirements.’ SEW Eurodrive has drive technology installed on just about every conceivable application worldwide, in the automotive industry, building materials, food and drink, metal manufacturing and many more. The decision to use drive technology manufactured by SEW Eurodrive not only opens the door to reliable and innovative products it also comes with enthusiastic, highly skilled engineers whose philosophy is all about exceeding customer expectations.

Published in association with: SEW Eurodrive Normanton West Yorkshire WF6 1QR

Tel: +44 (0)1924 893855 Email: service@sew-eurodrive.co.uk Web: www.sew-eurodrive.co.uk

104

Heavy engineering DavyMarkham

DavyMarkham at a glance Location

wSheffield, United Kingdom

Turnover

£20m

Employees

200

Size of site

Manufacturing Area 175,000 sq ft

Key markets

Civil Infrastructure, Mining, Quarrying and Tunnelling, Water Control, Steel and metal processing, Power generation including Wind and Hydro Power, Nuclear – storage and movement, Oil and gas

Key products

Mine hoists, tunnel boring machines, mechanical handling systems, test rigs, press components, moving bridge components and products to aid the control of water in hydro generation projects

Points of interest

Since 1869, more than 300 hoists of all types and sizes have been supplied to customers around the world. Our largest hoist to date is a double drum, single clutch production hoist, rated for a maximum rope pull of 78000kg, and a maximum depth of 2650m, at a hoisting speed of 15 metres per second, and a motor rating of 6.25MW rms. These drums are 6400mm diameter, and carry 64mm diameter rope.

Stepping up Stepping confidently into the legacy left by Parkin and showing their commitment to continuing DavyMarkham’s transformation the new management team immediately took steps to speak directly to employees and reassure them. Scott says: “Kevin’s initiative was founded in the idea of taking on the engagement issues we had here at DavyMarkham and the four of us now on the senior management team [John Watson, director of production; Mike Robotham, director of engineering and contracts; Andy Howard, financial controller and Gordon Scott director of sales and marketing] are absolutely committed to taking that forward. We did recognise the potential issues around Kevin’s departure however, and the week after he left we stood up in front of the work force and explained the future plans we had for this company. This was very well received as there had been some genuine concerns that, with Kevin leaving, there would be a big hole left in the organisation. What we were very keen to make clear, in person, was that this is not the case. All the initiatives in place have been fully committed to by the management team.” The decisive statement from the new management team was that there would be no glitches in the company’s trajectory and that business as usual should continue without pause has allowed further improvements business wins to roll on without delay. The

A world of opportunity Defying the grubby, far from glamorous, image of heavy engineering DavyMarkham’s approach to project planning means that many engineers working on mining and industrial equipment get to live a somewhat an exotic, jet-set lifestyle. Scott explains: “There is continuity in a project from the moment the plates arrive on the shop floor for fabrication, through to the finished product and installation.” What this means for those working on a project is that they see it through from end-to-end, including the process of fitting equipment, wherever its end location may be. For those working on the company’s newly won contract in Peru, this will provide a chance to exchange England’s North East steel bashing beat with the spirited Latin rhythm of industry in one of the world fasted growing industrial markets. Scott says this kind of opportunity provides a foundation for enthusiasm: “Throughout the company people are enthusiastic about both the heritage and the future. That is something we encourage in every way possible.” Furthermore this end-to-end approach, which includes refurbishment through the product’s life in service, helps to safeguard British involvement in prosperous new markets and emphasizes the need for advanced engineering and manufacturing skills in the UK.

company is now about 50% of the way through applying 5S to all of the equipment on the shop floor and there are 13 active projects on the go. With regard to continuous improvement (CI) the company’s dedicated CI manager, Pete Cross, having worked with the machine shop staff to establish a CI culture, is now starting work with team in fabrication and fitting. The apprenticeship programme is also going from strength to strength. There are currently around 20 apprentices

105

106

Heavy engineering DavyMarkham

Lalor Lake Hoist for Hudbay

enrolled with DavyMarkham, a figure which represents around 20% of the workforce on the shop floor. The first apprentices to graduate from DavyMarkham’s programme, which other manufacturers now come from far and wide to observe as a reference point for their own apprenticeship aspirations, are now in the workforce. Scott says: “They are working on the large machines in fabrication and in on suite fitting projects. They are working with mentors now and taking on the kind of responsibility which might have taken them eight or ten years to achieve just a generation ago.”

Special relationships Skills and people development at DavyMarkham is not, restricted to the engineering and production areas of the business. For a company that is renowned for its flexibility in being able to frequently undertake one off engineering projects, some of epic magnitude, the attention to detail which DavyMarkham applies in its sales and customer care truly differentiate it from competitors, according to Scott. Since we last profiled DavyMarkham the sales staff has grown and Scott explains that the team’s strategy is to treat every customer as an account,

107

DavyMarkham despite the one off nature of most business. “We look after clients on an ongoing basis, even if we don’t have any live enquiries. With key clients, like Roll-Royce and Sheffield Forgemasters, this means keeping up regular contact on a weekly and monthly basis to hear what is happening now and what projects they are thinking about. This helps with production and capacity planning.” DavyMarkham now has an active graduate programme for bringing graduates into sales and marketing, as well as engineering. Sales and marketing recruits are employed and

Heritage and hereafter DavyMarkham has grown into the company it is today through the parallel development of two companies; the Davy Company of Sheffield and Markham and Company of Chesterfield. Both companies were founded in the 1830s, the former specialising in steel manufacture and processing, the later in the production of mining and tunnelling equipment. The path towards unifying these two companies, both highly respected within their industries and the local community, has been somewhat circuitous. Each organisation has been through a number of acquisitions and, after a joint acquisition by Kvaerner ASA in 1996, a number of name changes too. The incarnation of DavyMarkham as the organisation we know today took place in 2006, cementing and rationalising the combination of skills and experience which both could bring to each other’s markets. The reversion to original names of the two companies also underlined the strong heritage which each had in those markets and formed a strong base on which build a brand which now commands great customer confidence. Looking forward however DavyMarkham is keen to extend the potential of this brand confidence and is pioneering in new markets where its expertise could be leveraged. A focal point for strategic development is the new-build nuclear sector in the UK. Considerable opportunity has been identified here in the provision of equipment for power generation, such as low pressure casings, as well as the fabrication of water cooling systems and tunnelling equipment. While plans in this area are in something of a hiatus following the Japanese tsunami earlier this year, the company is confident that the market still represents significant opportunities. Plans are in place to develop the necessary quality specifications and work procedures which will qualify DavyMarkham as a nuclear supplier. Training programmes for targeted areas of the workforce are also in development.

108

trained to make the most of specialist knowledge of particular markets. Scott comments: “Because we have such a diverse number of markets it can be difficult for a small sales team to cope with. Each market has a different style of operating. Energy, mining, tunnelling and our civil engineering projects for bridges; they are all quite different. We are looking to develop people as specialists in each area.” Scott is confident this approach will help DavyMarkham in the up-front work which has to be done in bidding for projects before the quotation and proposal stage is even thought about and that it will put the company on a much stronger footing for winning new business. In terms of DavyMarkham’s traditional market for mine hoisting equipment, finding new business means keeping a close weather-eye on emerging markets. Scott reflects: “In this traditional area of the business our home market has almost entirely disappeared. We have about five operating mines in the UK now. “Exports however have been very successful. We initially exported to Africa and then North America for the nickel, gold and semi-precious mines located there. In the last eight years about half of our turnover has come from this mining equipment business.” A recently won contract in Peru will extend the work being done in North America. Scott says: “We took a close look at which countries are expanding their mining markets and Peru came first among those we identified. This will be the first time we have supplied new equipment to Latin America and we have just signed a contract worth £3.25m. We will be looking for further expansion in Peru and then, once we are well established there, we will be looking at Mexico, then Chile.” These plans for expansion, alongside moves to secure more business in the renewable energy sector and sustain activity in the UK steel and bridge engineering industries speak for themselves of the dynamism and forward thinking culture at DavyMarkham. Stressing the point however, Scott says: “We are moving forward as a company. We want a secure workplace for our workforce; we want to bring in new people and new ideas in order to continue our successes so far.”

Metalwork

Precious & Base Metal Components

Precious

commodity P&B Metal Components has just turned 50-years old. But perhaps the greater achievement is that more than 40% of its low cost contract assemblies are exported to Asia. Phil Penney and Colin Richardson tell TM how this manufacturer is futureproofing itself with a new plant refurbishment project driven by productivity needs, a 5S programme and the devotion to delivering prices that customers want.

P&B

Metal Components has come a very long way since its one-man beginnings in north London 50-years ago. Relocating to Whitstable in 1968, the company supplied contacts for switchgear and telecommunication relay manufacturers. Half a century later, the business is a global supplier of a vast range of contact assemblies. It operates three sites in Kent and Sheffield and employs 210 extremely loyal staff.

Today, with commodity inflation rife and new global business opportunities in a competitive market, the company’s key executives chose to invest heavily in plant to keep ahead of the game.

Investment – customised controls The company is about halfway into a comprehensive 2.5 year machine refurbishment project, where investment to date tops £250,000. “Working with Able Controls, our investment involves stripping all the welding and multiforming machines down and replacing all the electrical systems with Siemens and Omron PLC-controlled

109

Precious and Base Metal Components

P&B Metal Components at a glance Business

Manufacturing a wide range of contact assemblies, rivets, contact strip, pressed and turned parts.

Headcount

210 employees

Processes

Stamping and pressing; contact welding machines; multi-forming machines; heading machines; cold-bonding mills; added value operations inc assembly and screw insertions; new turned parts manufacturing services.

Markets/exports

41% to Asia Pacific countries, 33% to Europe, 18% to the UK, 8% to North America

Acquisitions

Turnomatic, October 2010

Investment

Welding and multiforming machines – upgrading all control system technologies. Warehousing restructure to improve product flow, storage capacity and access.

Key people

Phil Penney, Engineering Director Colin Richardson, Operations Manager

instrumentation, with cameras for quality checks and more,” says engineering director Phil Penney. These new control systems will be plug-and-play, allowing the company to move them between machines should a fault arise. “The cameras and sensors will improve quality and output and increase our efficiency. That’s what customers want,” says operations manager Colin Richardson. Precious and base metal prices have never been higher, with silver and copper peaking to historic highs this year. With such inflation, the pressure is on to manufacture efficiently. This investment was unavoidable, says Mr Richardson. “With rising metal costs, the margins are not there and everyone wants cost-down. There is an expectation for us to ‘engineer our way out’, and we invest a lot of time with large customers on cost-down exercises and developing best practices.” This encourages innovation, and P&B redesigns products to be manufactured differently. Value engineering exercises with customers are common. Part of the productivity mission is to get lean. P&B is in the middle of a new 5S and lean manufacturing programme. “What do our customers want from us?” asks Mr Penney. “On-time delivery, reduced lead time, reduced stock holding – the usual standards. Lean and 5S can help achieve these.” Colin Richardson adds: “There’s an expectation in the market when like-forlike manufacturers work with suppliers, many suppliers are very lean in their approach so they want to transact with

110

like-minded companies, especially in the automotive sector. We want to be in a place where any customer can talk and transact with us in the same language – this helps us to understand their business too, to be more responsive.” Working hard to reach price points that are mutually acceptable is important, but service and quality are equally so. Mr Richardson says the company has developed a competitive advantage in its knowledge of customers’ needs and their ordering patterns.

Employee loyalty, a zeal for making things There’s something about Whitstable – it might be the bracing sea air, or maybe the Kentish hops – that makes people very loyal to their employers. The reception at P&B Metal Components is adorned with long service awards – two employees’ have been here for 41-years and it’s not uncommon for staff to serve for 20 or 25 years. “People enjoy the culture and philosophy,” says Mr Richardson. “This is a fast-paced company, very responsive and progressive. We are all about manufacturing and the philosophy is about how the rest of the business supports that manufacturing.”

A Wieland company

B Mason and Sons Ltd are proud to be one of P&Bâ€™s main suppliers, working closely together for over 30 years. The entire service is based on flexibility, quality and customer satisfaction enabling us to be the UKâ€™s leading manufacturer of precision rolled non-ferrous strip. B Mason and Sons Ltd is a member of the global Wieland group and benefits

from their strong support, renowned expertise and pioneering developments in metal technology. We have the ability to supply the most challenging markets around the world combining modern manufacturing equipment and practices with over 150 years of experience. Typical end-use applications of our products include

Automotive, Electrical, Optical, Keys, Cutlery, Musical, and Precision Stamped Parts.

Published in association with: B MASON AND SONS LTD Wharf Street Aston Birmingham B65SA

Tel: +44(0)121 327 0181 Email: sales@bmason.co.uk Web: www.bmason.co.uk

111

Precious and Base Metal Components Diverse global markets Mr Penney is proud of P&B’s export record. “Forty one per cent now goes to Asia Pacific countries and just 18 per cent to the UK. It was more like 80 per cent to the UK 20-years ago. We at P&B are proud of this change; particularly having achieved this during difficult economic times.

There are plenty of problems associated with manufacturing, but you do get a buzz from it when something goes right Phil Penney, Engineering Director How can P&B Metals explain why the China region, as master of low cost manufacture, is such a big market? The answer: High automation, meaning 30:1 person ratio between Chinese competitors and P&B, as well as its consistent quality. P&B now has full-time sales representatives across the region and is constantly developing new customers. Growth can also be attributed to P&B’s responsiveness. Customers, says Mr Richardson, don’t always get it right. “It is not uncommon for the customer to say that they’ve experienced a stock loss or, they’ve had a big increase in demand,” he says. “P&B has developed a commitment to turnaround really quickly with new products. It’s common for us to work into the night and

work weekend shifts, to put orders on a plane. That differentiates us in this market.” Productivity is, as ever, essential in this area of manufacturing. “Clearly we can’t compete on labour with China, but we far exceed their productivity rates and I believe we get better quality as well,” says Penney. With the high cost of raw materials, customers don’t want to keep stock and there is pressure for P&B to be leaner and more responsive. That’s a science when operating in such geographically diverse markets. P&B operates locally managed stock policies in the region to overcome logistical concerns of its customers.

Your greatest asset While inflation is the visible enemy, in the long term the bigger risk to P&B could be access to experienced workers in both UK sites. The company has two teenage tool-making apprentices in their Whitstable tool room and another two in the contact welding section who are being developed. “It’s about getting people with the passion” says Richardson. “From agency workers who “get” our business values – customer service, responsiveness – we’ve got some really good new blood coming through.” P&B offers training possibilities to its entire staff. If they identify skills needs for an individual that they can’t provide in-house, P&B will source it. The company has offered a one-year placement to two or three local people struggling to find a job. “By the time they get an NVQ, if they chose to, and have our training boxes ticked, hopefully we will be in a position to keep them,” says Richardson. “There are a few programmes locally that P&B are involved with to get people out of the ‘can’t find jobno experience trap’. The company is now looking to develop a work-based NVQ and Train to Gain. Local Colleges have been in to review its needs, whether enhancing Basic English and Maths or trade-based NVQs.

Happy birthday Fifty years after its humble beginnings, P&B Metal Components is in a good place. With over a third of product exported to Asia, major new business projects, and a super-loyal workforce, confidence is high that this manufacturing company has a good future. “Our mantra is: total customerfocus, quality, high service levels and product knowledge,” says Richardson. “If the business can maintain those priorities, we will keep growing.”

112

EEF PhotograPhy ComPEtition 2011 Heroes of Manufacturing. At EEF the manufacturers’ organisation we want you to capture the essence of what makes manufacturing great – its people, products, processes and places of work. Show us how you would capture the image of manufacturing heroes before October 31, 2011. Entry is free and open to everyone. For information and to upload your photograph visit

www.eef.org.uk/photo or contact Stuart Biddle on 020 7654 1501

Snap up your chance to win £5000 worth of Canon photo equipment.

In partnership with:

Media Partner:

Supported by:

THINK YOU KNOW ERP? THINK AGAIN. The new Infor ERP: personal, flexible, and adaptable— for the way you work. It may be the backbone to your manufacturing business, but can your ERP system keep pace with the everchanging demands on your company? Can it support innovation? ERP doesn’t have to be complex, expensive, and inflexible to do this. Think about an ERP system that gives you the power, flexibility, and adaptability you need to stay ahead of the competition and focus on serving your customers. Think Infor—and get an ERP system that works the way you want to work—not the other way around.

Learn more at: www.thinkyouknowerp.com

The Manufacturer 2011 August issue