A bigger bang

Posted on 7 May 2008 by The Manufacturer

Investment in increased capacity, including one of the largest transfer presses in the UK, is evidence of a bright future for Covpress. Ruari McCallion visited the factory and talked to CEO Mike Gillett and commercial and quality director Mick Taimiot

The 33000m2 facility at Burnsall Road, Canley, just off the A45 in Coventry, has been home to Covpress for many years. Upon arrival I was greeted by Mick Taimiot, and the French accent provided me with a hint as to the company’s more recent history when it formed part of the French-based Sofedit Group.

Thyssen Krupp of Germany subsequently acquired the Sofedit Group, and with the German group already having a number of UK manufacturing locations, they decided against including the Coventry facility as part of the acquisition.

“At the time we were pretty much left to our own devices and faced an uncertain future. Then we became involved with Grove Industries, the private investment firm headed by west Midlands industrialist David Grove, and this resulted in a management buy-in,” said Mike Gillett, CEO of the renamed Covpress.

The MBI took place in July 2004 and almost immediately the team laid down the strategy for the future. “The previous strategy was to focus entirely on the auto industry and to only be a Tier One supplier,” said Gillett. “Now we are able to supply whoever we wish – auto, non-auto and other Tier One suppliers.”

“Now, if it’s feasible for us to manufacture then we will consider any opportunity,” added Taimiot. “Although the company’s core expertise remains in the manufacture of body-in-white assemblies and structural components where we supply all of the leading UK manufacturers including Jaguar and Land Rover, UYT (Honda), Toyota, and Luton-based van maker IBC and, through it, GM, Renault and Nissan, who all share the same platform (Vauxhall Vivaro/Renault Traffic/Nissan Primastar).”

The tour of the factory floor began and immediately a mock-up of the Vivaro body shell came into view, where the numerous parts supplied by the company are readily identifiable.

We then approached the latest Covpress acquisition – a 2500-tonne transfer press, supplied by Italian company Cattaneo. The £3 million investment, including installation and commissioning costs, is a big vote of confidence in the new strategy. “It’s clearly a considerable investment at a time when UK manufacturing faces increased competition and cost pressures,” Gillett said, adding: “It’s not normal practice for UK companies to make investments of this size without guaranteed contracts being in place, however we are confident that the competitive advantage gained from our investment will enable us to secure additional business with both existing and new customers. More than that, we expect to be able to replace more of our manual presses with automated equipment.” The company has over 30 presses extended from 125 to 1500 tonnes, so the new machine is a major extension.

It is certainly the largest and most visible representative of Covpress’ four-pillar strategy.
The second pillar is the continued investment in further automated presses as well as other high capital-low labour equipment and automation.

“Thirdly, we recognise that the auto industry is migrating east. Most companies we supply in the UK have plants in central and eastern Europe If we are to continue to be successful in securing future business our strategy must include a low cost manufacturing base, and after considerable research we concluded that Turkey offered the best fit for our business.” He continued: “We have found a partner and signed a joint venture (JV) agreement to build a new stamping facility on a greenfield site, which is located in the Bursa region of Turkey. The construction process is underway and we hope to have the new plant up and running by early 2009. As part of our consultation we have spoken to several OEMs who have manufacturing capabilities in Turkey – Renault, Karsan, who manufacture under licence from Peugeot, Fiat-owned Tofas and Honda, who are all nearby. We’ve learned there is a shortage of large-bed press production facilities in the country and as we establish ourselves there, we hope to see total production double in the next five years.”

Expansion into foreign fields, green or brown, isn’t limited to Turkey: the company has looked at Romania and the Danube valley, too. It isn’t simply about low-cost labour; everyone who is active in the area knows that wage-price advantages look distinctly shaky, with pay rates rising by leaps and bounds – 25 per cent is far from unknown. “We’ve seen people invest in eastern Europe for the wrong reasons. Looking for cheap parts and labour is short term – and, by the time they get on the move, the opportunity is lost. We’re looking to support our local customers. When we looked at Romania, the last pay deal was 15 per cent. If you’re looking simply to source, you will lose out when that happens. If you’re looking to support the local community, that kind of inflation doesn’t matter so much. Our decision to set up in emerging markets is a strategic decision, which is very strongly influenced by the attitudes of our customers.

“It’s becoming essential to have overseas locations. When I speak to customers about upcoming projects some simply aren’t interested, unless we can demonstrate that we have local facilities overseas,” said Taimiot. “Conversely, a low-cost link overseas actually helps our business in Coventry.”

But locating overseas raises various challenges, as Covpress recognises. “We’re being very careful to avoid known JV problems,” Gillett said. “We’ve been two years travelling in and out of Turkey to find the right partner. In terms of our own JV company, we will own the majority share, so we are confident of our ability to succeed.”

The fourth pillar in Covpress’ strategy is growth by acquisition. The parent company is Covpress Holdings, which has owned NCJ Pressings (NCJ) since 2005.

“We purchased NCJ in 2005 and moved its operations from Stratford to Coventry fairly shortly afterwards. It took six months to make the move and 12 months to fully integrate it into our business,” Gillett explained. “It brought approximately £15 million in turnover to the company, which will total around £55 million in 2007. In 2008 we expect to increase this to £62 million, and we’re constantly on the lookout for further acquisition opportunities.” The NCJ acquisition and subsequent growth has been extremely successful but raised its own unique challenges. The culture at NCJ was different to that at Covpress and it took time to integrate NCJ into the company and implement the improved working practices. Now NCJ operates at the same level of activity with only half the workforce.

This is a direct result of the ongoing improvement process and drive towards continuous improvement, the foundations for which were forged over a decade ago.

“When I joined in 1985, we were predominantly a supplier of back plates and clutch covers, mainly for the commercial vehicle marketplace, but we’d just diversified into steel fuel tanks. Toyota established its Derbyshire plant and awarded its fuel tank contract to a French company, on condition it could supply from a location within an hour of Burnaston. They looked for a UK company that could supply steel fuel tanks, found us, and bought us. That was Sofedit.

“Toyota itself was looking for UK companies that could show improvement and were prepared to adopt its approach and we became a showpiece company for Toyota. They lived with us, showed us kaizen, standardised work, 5S and other tools, took us to Japan for training and everyone here learned an enormous amount. You can see that we still operate on a TPS (Toyota Production System) basis throughout the whole of the organisation.” The Covpress management team firmly believes in TPS and the way it works for them.

The company has a smooth and fast-flowing operation, with no more than a few hours’ stock at either end of the operation. “You can’t MRP quick flow-through. We use kanban-based pull, so that all we ever make is what we’ve just sold. It’s the only thing you can employ if you have parts flowing through so quickly,” said Gillett.

Walking around the plant you see a company that has been working with Andon and visual management boards for some time and is comfortable with it. It’s effective: even a layperson like me can quickly appreciate what is going on. You can see where there may be problems and identify the cause. “This station missed its hourly target and the reason is recorded here – a 10-minute break.” Very simple, very clear. “Some companies I have come across tell me proudly that they’ve got reduced pay rates when their operators aren’t doing anything. Our philosophy is to ensure that everyone is kept busy.

“However, we don’t do piecework – we use TAKT time. If the customer is making 35 cars an hour, we make 35 parts for it. If it’s a multi-use machine that’s doing it – something that can make 600 parts an hour – we work together on how to get the best from it. For IBC, whose TAKT time is 26 vehicles per hour, we hold around three to four hours of finished goods.”

The Vivaro contract is worth a lot to Covpress and you don’t get that sort of confidence from an OEM if you can’t deliver a quality product on time at a competitive price. “My main priority, when I came over a few years ago, was to focus on raising quality,” Taimiot said. The company now operates at world class levels with PPM levels in single figures. “We’re very proactive with customers to reduce costs, through changing designs and helping them to make improvements in the process.
We hold brainstorming meetings, with both customers and suppliers, where we take all the parts we supply, put them on the table, involve all departments and discuss ideas to make them cheaper, simpler and to higher quality.” It sounds basic but the response – and the outcome – has been outstanding.

“We will work open-book with customers who recognise that we need to make a return in order to reinvest. Our customers are demanding and sometimes get too involved with price, rather than how it’s made up. We advise our customers that we will achieve far greater benefits by working together to remove genuine cost as opposed to negotiating year on year cost-downs”.

What Covpress has achieved is very impressive. The confidence to invest in its own capacity and technology and its willingness to work with the value chain to drive out costs makes it the kind of company people want to do business with. “Companies that aren’t prepared to change are the ones that disappear,” concluded Gillett. “We believe in change for the better.”