First flush

Posted on 7 May 2008 by The Manufacturer

CME Sanitary Systems faces an independent future with conviction and confidence, as Robert Pols discovered when he spoke to CEO Brian Watson and operations director Simon Peck

The brands are the message. That’s the thinking behind the name of the new company formed from the sanitary systems division of Polypipe earlier this year. The organisation takes pride in its core products – Celmac toilet seats, Macdee flushing systems and the Ecoplay micro grey water management system – and their initials give CME.

Created by management buyout, CME Sanitary Systems starts its new life with a strong market position and three efficient manufacturing sites. The facility at Warmsworth, Doncaster, is concerned with plastic injection moulding for polypropylene seats, with flushing systems and their related technology, and with Ecoplay production. It also houses the company’s central warehouse. The factory at Dukinfield, Manchester, is given over to the compression moulding of thermoset seats, and a joint venture at Pan Yu in China specialises in forging the metalwork elements of CME products.

The MBO became effective on 30 January. “It’s a very progressive asset-backed funding deal,” said Brian Watson, MD of the old Polypipe business and now CEO of CME, “and it allows the management investors to own 100 per cent of the company. No investment banks own any shares. The Investec Growth & Acquisition Finance team provided a combination of assetbased lending, including receivables, inventory, plant and machinery and an acquisition finance loan. “The team worked well with Investec. We were very impressed by the Investec approach – understanding our business in depth and being innovative in their approach to devise a funding solution able to support the business through this exciting period of new ownership and growth.

“We were particularly keen to secure a deal of this kind because of the confidence we have in the business and the confidence I have in the experience of the investing directors – and that confidence proved significant in winning approval for the deal.”

The strategy the new company set itself was twofold. “We were concerned that the operations supporting our sales should be efficient, assured and competitive with regard to both service and quality. In addition, we wanted to ensure that we maintained our international competitiveness, because some 20 to 25 per cent of our business is exported. We recognised, therefore, that certain processes gain an advantage from being in lowcost manufacturing areas, which is why China is our location for certain operations that are traditionally intensive in terms of labour and energy costs.”

But total production in China is not, he added, the universal panacea: long-distance transportation is not suitable for some high-volume low-value products; lengthy periods of travel create problems for forecasting and servicing the market; and CME wishes to position itself to serve those distributors who prefer to rely on UK manufacturing and stockholding businesses.

So the current balance of locations is appropriate. “We have three manufacturing sites, all operating to world class standards. The big success story at all of them is the willingness of management and employees to engage with the transition from traditional processes to processes that involve job restructuring and (in the UK particularly) automation. There’s a high level of commitment and training at all our sites.”

As a result, there have been dramatic improvements. “Service performance in the business, on time and in full, used to run at about 70 per cent,” commented operations director Simon Peck. “Over the last two or three years, however – thanks to developing the workforce and systems in a structured manner and establishing rigorous measurement of performance – we’ve taken all three sites up to a level of around 95 per cent. Over the same period, by effective use of sales and operations planning, we’ve also managed to take about a quarter of the stockholding out of the business.”

Brian Watson reviewed the reasons for improvement. “It has been very much about people, and I must emphasise the support we’ve had from first line managers in adapting to change. We’ve also continued to openly benchmark our products against international competition, and that has proved a good tool for assessing the priorities for manufacturing improvement. It’s one thing to motivate people, but it’s also important to give that motivation a clear sense of direction, and we’re very definitely setting ourselves out to be the best. Our success also owes much to our suppliers, who have been supportive and innovative in a number of ways, improving their service to us, providing vendor-managed inventory, and adapting their performance and criteria to meet our needs. But, of course, improvement doesn’t stop here, and we need to continue to invest in our products, in automation, and in our people.”

This focus on people has been particularly evident since the MBO. Recent months have seen a significant strengthening of the management team, and new appointments have brought additional expertise to the purchasing, new product development and sales and commercial functions.
It’s a management line-up that’s designed to cope with a busy future.

“We foresee an expansion of our Chinese operations to support the business through production of the more traditional products and components,” Watson predicted. “We’ll also be launching a whole series of new products to broaden our range of both toilet seats and flushing technology, in order to grow the business and maintain our market-leading position in the UK. We’ll continue to focus on supplying our two core channels – the merchant distributors and the OEMs of vitreous china – and we have high-growth plans for inwall flushing systems and for the Ecoplay grey water management system. Ecoplay is truly innovative, and we’ve brought it from the design laboratory to a highly efficient production environment, moving in 10 months from single unit production to a capacity for building 100 a week.
It’s one of very few comprehensive and maintenance- free water recycling systems for domestic buildings; it won the 2007 Green Product of the Year award in the Sustainable Building Services category; and it was recently given approval to display the ‘Water Wise’ mark. There has already been significant interest and uptake from the building sector.”

In all, it promises to be an exciting future for CME Sanitary Systems, and that future will clearly be faced with the commitment that has become characteristic of the company’s operations.
“You don’t simply ‘do’ world class,” insisted Peck. “You’ve got to live it, eat it, breathe it – and that’s the attitude that has been at the heart of what we’ve achieved so far.”