A family affair

Posted on 7 Dec 2010 by The Manufacturer

Having produced components for aircraft including Concorde, Boeing’s Dreamliner, the Harrier jump jet and any number of Rolls-Royce and Cummins engines, things appear to be going well for JJ Churchill Engineering following a tough recession. The company’s MD, Andrew Churchill, is thinking bigger, though. He speaks to Edward Machin.

Meet Andrew: he looks like you, sounds like you, and probably thinks similarly, too. Andrew holds the position of managing director for a manufacturing SME, JJ Churchill Engineering, a company founded by his grandfather in 1937 to produce parts for the Spitfire engine. And, like you, he’s focused on a single, driving objective for his company: to remove the ‘s’ from SME.

A chemist by degree, Churchill began his career with a Birmingham-based subsidiary of Burmah Castrol before moving to China to undertake joint venture opportunities in the steel industry.

Transferring to the group’s screen printing division as an Asia/Pacific marketing executive, and responsible for strategic planning, he found himself stationed in Hong Kong and Australia, respectively.

With the globetrotting bug beginning to wear off after eleven years, Churchill returned to the UK, intent on continuing his career within the conglomerate. Until an otherwise unremarkable family meal changed everything, that is.

“I came home with the objective of taking a position in Europe, and popped in to see the folks one evening,” he begins. “‘I don’t suppose you’ve ever thought…’ said my mother, and, no, I hadn’t actually. My father and I agreed fairly early on that I wouldn’t come into the business; I had no direct experience of engineering, after all. But the sales and marketing manager had just moved on to pastures green, and it was all somewhat serendipitous.”

Growing pains?
Family businesses, though, can be fraught with danger — just ask the Corleones. How, then, did Churchill avoid sleeping with the fishes? “Anyone moving into the running of a company, as I did, wants to be able to see opportunity to make a difference,” he says. “If everything’s running perfectly you may enjoy it for a week or two before the intense boredom sets in. We enjoy a fantastic quality record with Rolls-Royce of zero escapes; our diesel engine customers have come to expect 100 per cent ontime delivery. The product portfolio, many of which we’ve been supplying for decades, is stable. We’re paid on time and have almost no staff turnover, so why do anything different? Glass half full: JJ Churchill is here 73 years after its founding. Glass half empty — we’re still an SME.” The company doesn’t struggle on quality, delivery or cost, nor the ability to take on new technology — an increasing percentage of JJ Churchill’s equipment is, in fact, the first of its kind in the UK. Makes for pretty good reading, right? “Strategic mass,” he says; “that’s the Achilles’ heel.

Thirty years ago a blue chip OEM dealing with a plethora of SMEs wasn’t seen to be a problem. But increased globalisation means that if Rolls-Royce, say, wanted to divide a tender because it was too much for a single SME to manage, the cost of that account is doubled. So we need to grow from the £20 million turnover company that we are today to one of approximately £50 million. That, in essence, is the challenge.” Churchill’s plan is to ship out low-cost work while maximising high-value, high technology-based engineering. “Our entire strategic vision starts with the premise that we’re in a high labour cost economy,” he says. “Could we move overseas? Perhaps, but it’s not something I’m particularly interested in doing.

From my experience in Asia, yes, you can get a cost reduction, but it doesn’t take long for the local industry to pick up on what you’re doing and find a way to do it cheaper.” So how can, and does, his company compete? Very simply, by selecting niches where the cost of labour isn’t as substantial; hightechnology manufacture, in other words. In the gas turbine market, to name one, JJ Churchill seeks out the most difficult material to machine, the most obtuse geometry and prototyping where an eye-wateringly fast response time is required.

Fix up, look sharp
This willingness to go beyond the comfort zone has led to what Churchill calls, “An exciting recession, with a number of interesting characteristics. It was both the sharpest and deepest we’d experienced in our 73 years. Pleasingly, however, the returns were sharper.” His company’s problems concerned not cash flow, JJ Churchill has no net borrowings, but supply chain management. “Getting our casting and forging houses to respond as quickly as we needed to the upswing,” he explains.

“At the same time, we doubled our capital investment to £2 million during a period when turnover halved, purchasing state-of-the-art machinery in line with our ten year strategic plan.

Crucially, it has resonance with both our customers and bank; if you’ve got that firm underpinning then a recession is actually an incredibly good time to buy. This aggressive, counter-cyclical investment might be seen as slightly odd to some, but the ability to purchase equipment at a much enhanced price, greatly reduced lead time and when our competitors weren’t doing so meant that the turnaround was incredibly sharp for us.’ While the common thread remains low labour cost, JJ Churhill nonetheless continues to undertake manufacture which doesn’t fit within so forward thinking a remit: ferris exhaust manifold work cast out of iron, for instance. “This type of work shouldn’t be with us; it should be in China, where it can be sourced and finished cheaper than I can buy the casting,” says Churchill. “We’ll work with the customer to manage an exit, communicating to them our strategic plan and why some packages fit and others don’t. The other flavour is that we get a huge number of enquiries each month, the vast majority of which we could machine — the question is whether we should. Because we’re looking at sustainable, profitable growth for all our stakeholders, and thinking about the next 73 years, I’m looking for work which will give us the opportunity to drive process improvement and minimise the labour cost component. Doing so means we can compete on a global stage, because the high value-add niches — whether this means product or process — we’ve chosen make sense in the UK.” Indeed, Churchill believes that high value-add — with its faster load and unload times and increased cycle rates — must be adopted within Britain as a matter of course. “Whether we choose to recognise it or not, we are increasingly choosing to compete on the cost of labour,” he says. “And it’s a battle we can’t win. JJ Churchill can’t win, nor can Britain.

The Manufacturing Framework — published on 6 December — is all about driving very positively towards high value-add, high technology sectors in which the UK can lead globally.”

You’ve been Frameworked
“I don’t mind admitting that I was nervous,” he says of the Framework document. “We hadn’t seen a change of regime for a number of years, so we weren’t used to a fairly fundamental judder in policy. I was getting concerned around September time that there might have been some policy stasis; what I didn’t know was there was a lot off paddling beneath the surface. Having now seen a number of drafts, I’m a lot more positive and really rather impressed, actually.

“There is an awful lot of detail to come, but I can now see the fundamentals in place for the first time.” Churchill cites an example: if he ran JJ Churchill without a business plan or vision stretching at least five years, he’d run it into the ground — or be sacked before it got there. The same, he says, goes for our economy and manufacturing’s place in it.

“Traditionally we haven’t had a view that extended beyond a Parliamentary term. If the economy is working beyond, as it is, then we need policy which matches it. The document is going to lengthen it for a period of ten years, which is a change — a gutsy one, at that. Of course, it’s not yet a strategy at this stage, but what’s really positive is that there’s an understanding that in business we expect our progress to be measured from a baseline, which now appears to be the case with Westminster.” He is forthright when he says he will work with anyone in creating policy who has a passion for manufacturing and recognises that it is one of the core drivers of our economy. “I don’t care what political flavour they are, either, so long as they have manufacturing at their heart,” he says. “There’s a quid pro quo here, though: we can’t whinge that we haven’t influenced policy or that Whitehall doesn’t ‘get us’ if, when the opportunity to influence comes around, we wait to be invited in. We should be battering down their doors.

“At JJ Churchill we are, like the majority of manufacturers in this country, an SME. We wear a variety of hats, and could spend twenty four hours a day at work and still not finish, so it’s a question of prioritisation. If a statistically significant proportion of those in manufacturing spend a little more time talking, educating and getting the MPs, ministers and civil servants out to our businesses then we really can make a difference. The corollary is that if we don’t, we’re reaping the future that we haven’t bothered to sow.”

Andrew Churchill Biography