Are you sitting down?

Posted on 16 Nov 2009 by The Manufacturer

Growth during an economic downturn is a rare phenomenon indeed. RGE Engineering is one manufacturer bucking the trend, however, as TM associate editor Edward Machin discovered.

Founded in 1963, Cambridgeshirebased RGE Engineering is a best in class manufacturer of plastic injection moulded components; injection moulded tooling, and associated plastic design.

The company’s expertise is founded primarily on two sectors: white goods — i.e. washing machines; tumble dryers; door trims; and shower enclosures, among others — and ergonomic office seating components, which comprise 35% and 35% of annual turnover, respectively. Anything not caught by the aforementioned RGE calls ‘trade moulding’, and includes the supply of products and components to the leisure; computing; electronics; childcare; garden machinery; heavy duty; and agricultural industries.

RGE’s corporate headquarters are located in Godmanchester, Cambridgeshire, a 120,000 sq ft manufacturing facility with 56 injection moulding machines.

The company also has UK facilities in Alconbury, Whittlesey, and Yate, together with purpose built factories in Tennessee, USA, servicing both North and Central America, Lithuania, and China — offering low cost, ‘speed to market’ manufacturing.

Says Dan Leach, RGE’s Commercial Director: “While approximately 70% of the group’s turnover is currently UKbased, we have seen a major upturn in global manufacturing and solutions in recent years.” As a result, RGE targeted the development of low cost, offshore facilities to enable the company to continue its work with global brands such as for domestic garden products, medical machine enclosures, office and domestic seating furniture.

To highlight, RGE serves a global manufacturer’s Power Tool division with the manufacture of moulded lawnmower bodies.

Says Leach: “Once you become accepted as a valued first tier supplier for one division of a multinational company, it often opens up into other divisions — giving you a pathway to becoming a premium partner, and thus greater traction to new territories. By way of example, having served exclusively the UK division of major electrical services manufacturer, RGE has recently been granted permission to supply the customers Central Europe and American divisions additionally.”

Share and share alike
To further enable this interconnectivity within the business, in 2006 RGE implemented a SAP business management software solution, both within its UK and offshore facilities. As a result, from the group’s headquarters RGE can instantaneously access data from each of its sites — especially significant given that the company has recently established a central costing centre in Godmanchester. Concedes Leach: “As seems to be the common experience, we found the transition somewhat challenging. However, now that we are fully understanding of the system, it represents one of the most vital aspects of the company’s winning new business.”

He explains: “In many instances we implement a multi-continent strategy for our customers. Similarly they may seek to move between territories due to currency fluctuations or logistics requirements. That RGE has a central costing centre which allows us to access complete sets of offshore facility costing data at the touch of a button gives a world class degree of flexibility to the service we offer our customers. Indeed, when taken with the ‘live’ auditing schemes and practices that RGE utilises, the odds of securing new business when a client visits one of our facilities are high.”

Coupled with the technical processes of data interconnectivity, central to RGE’s remaining as a best of breed manufacturer is the degree to which implementing ‘headquarter culture’ throughout the group is seen as vital.

Consequently, key personnel from RGE’s offshore manufacturing teams in China, Lithuania, and the US regularly visit the UK headquarters and have been heavily inducted into the RGE ethos. Moreover, says Leach: “We have developed an initiative whereby our Chinese employees reside in the UK for between three and six months, working alongside our teams in a unique, practical knowledge sharing programme.”

While the initiative initially extended only to managerial staff, such was its effectiveness that general toolmakers are now encouraged to take sabbaticals within the group, bringing their considerable experience of productivity and engineering to bear on their British counterparts — and vice versa. Says Leach: “Perhaps only naturally there was a degree of skepticism prior to their arrival. The impact they made, however, was both immediate and tangible, and that both parties are able to recognise the positive influence of the other on their day to day work is testament itself to the initiative’s success.”

While RGE’s seating portfolio principally concerns the manufacture of office furniture, the company has been diversifying into adjacent sub-sectors with, says Leach: “Fantastic growth in the UK.” Moreover, the RGE’s global accounts expansion strategy continues to go from strength to strength, retaining its flagship blue chip contracts while simultaneously expanding into other accounts and territories. The group thus targeted an expansion of the number of ‘premium partner account’ it holds as central to any mid and post downturn strategy. In essence, says Leach: “Businesses through the credit crunch have rationalised so as to streamline the flow of superfluous links on the supply chain. As a result, paring back to a smaller number of premium supply partners will enable faster turnover and sharper profits for both parties.”

One caveat to such unbridled development, cautions Leach, is that: “Our white goods sector is diminishing as an account, but RGE see that as both a good and bad thing. Of course any diminishing of market penetration is disappointing, but as a company, we arguably, had too large a proportion of our business in one sector, thus creating an imbalance of risk. Indeed, when tendering for new accounts, our potential customers are greatly interested in the health of business as a whole, and aren’t particularly enthused by an over-reliance on one sector — however successful it may be.” Tellingly, while the recession has been challenging for many UK businesses, manufacturers included, it has been RGE’s greatest opportunity for growth.

Explains Leach: “The companies that continue to win new contracts have been those who re-evaluated their costs, opened streams within the supply chain which were traditionally closed, and considered new partners with flexible and unique offers. We are proud to say that RGE can count itself as such an organisation, having seen one of the largest growth years in our history during the economic downturn. Indeed, thanks to the preparation of senior management, not only have we been successful in expanding our portfolio significantly, but the company’s traditional accounts have each grown in value through the credit crunch.”

Central to enabling growth in the most demanding economic conditions in living memory is the company’s business development department, which Leach heads. “Given the sector-leading expertise of RGE’s design and engineering team, and coupled with the aforementioned, the vast majority of new business is won thanks to our design, tooling and manufacturing as a complete bespoke proposal,” he says.

“As such, RGE is largely unique in the sector, and it is this dedication to providing a total solution package that enables us to remain ahead of the chasing pack.”