Mark Young explores some firms that are defying the downturn and manufacturing success
Though very much at risk of repeating myself, I feel it pertinent to reiterate one simple fact about the UK media: bad news sells.
I’m not denying there’s currently a lot of it around, bad news is, generally, considered more newsworthy than good news. That’s because of the shock value – it’s ‘extraordinary’; not what one would expect. The Western world has been in periods of growth for so long that it has become the norm. Success is standard and anything else is automatically a failure, right? Constant government and corporate discourse over the last few decades have naturalised that ideal into our perceptions of business principles.
It’s like: “We must achieve this level of profit and this level of growth or we will have been unsuccessful.” And therefore when the achievement is made, it isn’t news – it’s ‘normal’; it was supposed to happen…
So while we can’t ignore bad news, we can refuse to ignore the good.
And every cloud and all that… Peter Bishop, deputy chief executive of the London Chamber of Commerce, said last week: “We have to be realistic about the state of the economy but there has yet to be a situation like this where opportunities have not presented themselves for many businesses. This downturn is no different.”
So, amid all those gloomy tales of nose-diving profits and widespread redundancies, success stories within UK manufacturing seem sparse. Yet success stories there are, as this round up of recent affirmative news provides.
London foldable bike manufacturer Brompton is one of the last firms in Britain to exclusively produce pedal cycles here on home soil. The 95 staff at its factory in Brentford makes 22,000 bikes a year and exports 70 per cent of them to places like Holland, Spain, Germany, the US, Japan and Taiwan. Business is booming for Brompton, despite the credit-crunch, and possible in some way because of it, as city dwellers look to avoid the congestion charge, cut their carbon footprints and save the cash by swapping their second car for its two-wheeled, engineless cousin.
Brompton have witnessed 20 to 25 per cent growth over the last two years and expect to maintain that in 2009.
Will Butler-Adams is Brompton’s managing director. He says the biggest factor to the company’s growth is the reality that using an internal combustion engine in a one-tonne vehicle to get around urban areas is not a practical solution to transport. And this is creating demand for the product.
“There are a few reasons why the numbers of people on bikes is going up, including obesity, carbon footprints, and the expense of running a car,” he said. “Normal bikes have a part to play but the reason ours is growing in popularity is because you can take it on the bus or on the tube or put it in a cab if it rains and you can take it in the office or your fifth floor flat so that it doesn’t get stolen.”
Butler-Adams said the recession is currently giving people “the final push they need” to get out of cars and onto bikes but admits if the situation gets much worse it will start to negatively affect sales. “If people don’t have jobs they won’t be able to spend money,” he said.
But, for now, the recession is actually helping as the product is more of a transport device and not a recreational item – one that relieves the strain of congestion charges, fuel costs, parking fines and possibly even gym memberships.
Another situation that has arisen out of the current economic climate is the weakened value of sterling. And this too has helped Brompton Bicycle. This year the firm implemented a five per cent price rise on its products. But using the US market as an example, when the sterling price was converted to dollars it actually constituted a ten per cent price drop.
“So, in this situation, everyone’s a winner,” said Butler-Adams. “It’s meant the extra costs we incur from importing materials on the other side of the coin have been offset.
“In addition, most of our competition in the UK are importing their bikes. If they are buying from places like Taiwan they are probably dealing in dollars so the weakened sterling means they are paying more and have had to add 15 to 20 per cent onto retail prices. We make and sell here so we don’t have that added cost.”
Brompton spent half a million pound last year initiating lean techniques in its factory. “If you’re operating out of the UK you have to be lean or you won’t be able to compete long-term,” warned the MD.
This year the company will invest another half million pounds changing its production method from batch to cellular. This will allow it to produce 50,000 bikes a year. “If we want to make more bikes we have to make them more cost-efficiently,” said Butler-Adams, “but we can’t drop standards and indeed we have to carry on improving them. To that end we’ve just taken on some new designers which has doubled the number we have on site now. We’ve got ideas coming out of our ears and it’s a nice position to be in.”
And that’s his main advice to other manufacturers whose current fortunes might not be in such good shape: “Always keep the product in mind.”
He said: “Our business is about making a great product. We believe if we make a truly quality product people will buy it. Some companies get all excited about marketing and forget about what they are actually trying to sell. When Britain eventually comes out of this recession a big part of it will have been through keeping world-class standards and making things that people actually want to buy.”
Single Malt Whisky Distillers
Another result of a weaker sterling is the satiation of middle class China’s thirst for single malt whisky – a product synonymous the world over with the bonnie glens of Scotland.
Sales have risen in the Far East by 75 per cent in the last two years as its growing popularity there, along with a surge in expendable cash, has coincided with a steady decline in the value of British currency.
Exports to India have risen 36 per cent.
Macallan’s distillery manager Alexander Tweedie is on record as saying: “We can’t meet demand the way we are going, especially in India and China,” while John Campbell, distillery manager at Laphroaig on Islay, said: “It is a problem we have had even before the boom in the Far East. We already ran low on stocks of 10-year-old, because we didn’t forecast the growth.”
Stocks of Scotch more than 12 years old are running low now because production wasn’t stepped up in line with a growing popularity in conventional markets in the 1990s. Now that the Far East is providing a further boom the distilleries are beginning to run dry.
According to the Aberdeen Press and Journal, Scotch Industry Association bosses say “the industry is spending substantially to help double its production.” Reported estimates suggest the investment figure in distilleries this year to be at around the £500 million mark.
In 2007, the UK whisky export market was worth £2.8 billion which constituted an all-time high. Analysts expect last year’s total to have easily surpassed that.
West Midlands-based heating and water appliance manufacturer Bosch Thermotechnology, a subsidiary of Worcester Bosch last week announced initial consultation plans to relocate to a bigger premises and employ a further 1000 staff.
The move, which will almost double the firm’s headcount, will enable Worcester Bosch to continue to develop its renewable technology lines, an area of concentration attributed to its recent growth. That will include things like solar panels as well as energy efficient forms of conventional gas boilers.
A spokeswoman for the company said though the earliest stages of consultation the company want to move to the site to give it “some breathing space” from the parent company. Its plans are for the development to be up and running by 2012 and the site will include a research and development arm tailored towards renewable technology and a training centre for both Bosch staff and independent contractors.
“As a company dedicated to looking at ways to conserve non-renewable energy resources and minimise environmental damage, the proposed new site has the right credentials,” said Richard Soper, UK managing director at Bosch Thermotechnology.
“We will be launching two new air source heat pumps in the summer of 2009 to complement the existing range of ground source heat pumps and solar panels,” he added. “Other new technologies are also being developed here in Worcester and the expansion would create new high-tech job opportunities.”
DO YOU HAVE A RECESSION-BUSTING STORY TO TELL TM? Get in touch…
Bikes, heating appliances and single malt whisky – these are three industries that are currently beating the blues of recession and defying the downturn. But what else is? There are thousands of success stories in UK manufacturing; we just need to hear more about them. Email me your own stories at [email protected] or call 01603 671315.
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