Fox unearths a golden goose

Posted on 5 May 2010 by The Manufacturer

David Fox has taken Power Panels from a small electrical systems business floundering in obscurity to arguably the best company in its market in the world. Part of that success is due to the conviction that applied workshop training is at the heart of business improvement, a message he wants to take to the world through his business improvement consultancy. Will Stirling reports.

David Fox looks me in the eye and delivers his next punch line.

“We’ve just saved 170 hours. We can put all that into training to save another 170 hours. It’s a self-generating solution,” says the chairman and chief executive of Power Panels Electrical Systems. The boss of the Walsall-based manufacturer of electrical and electronic assemblies and systems is on a mission to convert UK manufacturing to his training school of thought – staff training is not a cost but, if done correctly, an investment. “On a recent project, it took us 30 hours training to save 200 hours, so the investment was almost 7 to 1. Do that continuously and you more than pay for the cost of the training. This is my strongest conviction that people don’t understand. Training is not a cost.”

Fox is talking about his newer company, PP Business Improvement, a value-add training and manufacturing process analysis consultancy launched in 2000. Before then, his main focus for 20 years was Power Panels Electrical Systems (P.P.E.S), the larger company which has grown rapidly from a turnover of £4m in 1990 to about £20m in 2009. Much of that growth has come since the launch of PP Business Improvement, and the two companies are a perfect fit, one identifying savings in and leveraging the productivity of the other. The consultancy, which has delivered some impressive results based on time savings for clients such as the MoD’s Defence Support Group and energy generation firm ENER-G, was borne out of P.P.E.S’s relationship with a key customer in the early 1990s which helped accelerate the company’s growth via raising its quality performance. Fox himself recounts the story in a direct style, a man who has total conviction in what he is doing.

The Yamazaki way
In 1980, while working in senior management for Simplex GE, Fox took an opportunity to buy and run his own company. Power Panels then was little more than a name, the company had few assets of real worth. Then, as now, it manufactured electrical control systems, specialising in systems for equipment used in automotive parts factories to control, for example, oil mist and fume extraction plants, or paint spraying lines. In the 1993, Fox says he was “blessed” with meeting Yamazaki Mazak, a leading Japanese machine tool manufacturer. Yamazaki Mazak (Mazak), established in the UK in 1987, had a reputation to protect and had high expectations of its suppliers.

It helped that P.P.E.S was working for Toyota and Mazak was using the Toyota Production System, and when Mazak tendered to 11 companies in the UK for its electrical systems, it chose P.P.E.S. The cigars remained in the box, however. “The feedback that returned with the first order was “you’re OK, but the best of a poor bunch”,” says Fox.

In 1993, Mazak expected its suppliers to deliver quality standards above 90% – over 90% products with no defects of any type, which took into account on-time delivery. At the time, its minimum requirement for suppliers was 85% quality and delivery, a benchmark it advertised proudly on a suppliers’ performance league table in the reception of head office. P.P.E.S’s quality standard was 94% but Mazak wanted more. The two companies worked closely together. “We’re a company that tries to develop suppliers,” says Richard Smith, group production director for Yamazaki Mazak Europe in Worcester.

“When they started they weren’t up to the necessary quality level, but we worked with them to lift this and to solve their problems.” What made P.P.E.S special? “They’re always striving to improve and are never arrogant enough to think they’ve achieved that,” Smith adds. “They listened and took on board what people told them to do. David is a dynamic leader of the company and has set a tremendous example.” By 1998 P.P.E.S had lifted its game to 98% quality, claiming Yamazaki’s Supplier of the Year in 1998 and 1999. “Quality standards in Japan weren’t as good as 98%, so they saw us as doing a first-class job. Everybody at that time thought 98% was world class.” But Fox identified that the big automotive firms were often achieving higher than 98% quality, and also that the Japanese system focused entirely on the process, not the people.

In 2000 P.P.E.S opened its own in-house training school, “the best decision I ever made,” says Fox. It had two objectives: copy the automotives on quality and introduce six sigma to the process; and develop and improve the culture in the business.

David Fox biography

Training to gain, and again
PP Business Improvement, a subsidiary company, started life as an extension of P.P.E.S’s own staff training scheme. Fox hired two six sigma green belts from the automotive industry and embarked on a thorough cultural improvement journey. “We spent lot of time trying to improve the culture by looking at the people, like the Jack Welch ‘ABC’ approach, which weeded out those who were the worst fit,” he says, in reference to the mercurial boss of General Electric whom Fox had worked for while at Simplex GE in the 1970s, and who had been a big inspiration for him. From 2000 to 2003 they analysed and assessed the staff. “It’s fair to say it was tortuous, a horrible period. But it had to be done.” P.P.E.S weeded out about 25% of the headcount in this period, in many cases because people were dissatisfied and in the wrong job.

“When you focus on culture change you see things more easily,” Fox adds. “We’ve spent an awful lot of time lately helping other companies to embrace this sort of logic.” Since 2003, PP Business Improvement has evolved from an in-house advisory department to a formal external consultancy, which works with companies on business improvement methods who visit P.P.E.S’s factory and see the theory being applied on the factory floor. The P.P.E.S consultants visit the clients’ plants, often for long periods, to see that the improvements are being applied by people in the manufacturing process.

It’s the focus on training in the workshop not the classroom that gets the enthusiastic Mr Fox even more animated. “My belief is that all workshop-based training has got to be done in the workshop, in the arena that people are operating in. You cannot do workshop training skills entirely in a classroom.”

Training for manufacturers, he maintains, is often too generic and is “not designed to improve a business, but more to satisfy some sort of mandate from a quango.” His favourite example of this is learning to drive. “You cannot learn to drive a car from theory any more than you can learn a series of workshop skills. Fundamentally I think the Government is wasting our money by trying to teach skills like this in a classroom,” he says, referring to some state-funded training schemes which, in his view, do not spend enough time in factory environments. This point raises the intriguing question of how effective manufacturing training is delivered by non-manufacturers – if every factory and each product is different, broad-brushed skills training is hard to deliver to companies from single bodies that devise training programmes for entire sectors. “We give every person we employ about 200 hours of training a year. A minimum of 60% of this is on the shop floor, learning to use the skills you’ve been taught the theory of.”

Unearth the hidden factory
In 2003-4, it occurred to P.P.E.S that they could develop their own suppliers in the same way Mazak had helped develop them. Gradually their suppliers joined the P.P.E.S training sessions and it progressed, so that suppliers to their suppliers came on the courses. Why do they come? Eleven of P.P.E.S’s customers are the best in the world at what they do, Fox says. “We don’t have that sort of customer profile by accident – we have to keep investing in new technology and people, to keep up with these top companies and stay ahead of the game.” PP Business Improvement worked on a cross-site improvement programme with Defence Support Group (DSG), a large defence equipment support provider.

Called Operational Excellence, it involved audits of current working practices from sales and operations, to planning and improving staff morale which involved a training roadmap. Over six months, much of which was spent at the sites, DSG saved 17,415 process hours, equating to more than £113,000. It’s an example of what Fox calls the hidden factory. “The problem we have to convey to people is there’s so much going on in factories that nobody records, so much waste. My absolute contention is you must unearth what in six sigma language is called the hidden factory, you can more than pay for the cost of training and gain on top by reducing waste.” Perhaps the best endorsement of the consultancy’s efficacy can be found at P.P.E.S itself.

“Since we’ve had the training school we’ve grown P.P.E.S to about £20m in 2009 [£11m in 2005 when it won the Best Factory award], but more interestingly profitability has grown from 2%-3% in 2000 to between 12% and 15% this year,” says Fox, who adds that P.P.E.S is extending the factory with a two storey block and will not need to borrow from the bank, because of the cash freed up from uncovering the hidden factory.

The National Skills Academy for Manufacturing recently agreed to endorse the consultancy as an accredited body to award NVQ Level 2. “We want to up the ante to Level 3 and 4, or even 5. Level 2 is only an awareness level. The politicians keep pushing it but it won’t make your business better,” he says. All staff at P.P.E.S – factory, administration and sales – are trained to NVQ Level 2 Awareness. All management staff in any department are trained to NVQ3, equivalent to six sigma green belt at the company. A big Training Roadmap is displayed on the shop floor, which shows staff the level they can reach with certain training grades, linked to a pay range. “For anyone who’s motivated they can get further. We’re now working on the first, second and third levels being compulsory.”

A promising talent
David Fox, a tall, imposing man with a strong West Midlands accent, began his career with a five-year apprenticeship at George Ellison, a manufacturer of electrical distribution systems, and had trials for Warwickshire County Cricket Club and West Bromwich Albion FC.

After working for Chamberlain and Hookham and then Square D Ltd, he was headhunted by Simplex GE and became the regional sales manager for the Midlands, under the supervision of mentor Jack Jameson, who taught him selling skills beyond the industry-standard “features and benefits.” In this period, he worked for Jack Welch, who would go on to run GE for 20 years. Fox was inspired by Welch and has applied some of his management techniques within the Power Panels group. The opportunity to take on Power Panels as a concern arose in 1980, beginning a 30-year chapter that has turned P.P.E.S into a world class company operating at 99.97% quality, “which is approaching six sigma levels of quality,” says Fox. “That is an extraordinarily high percentage when compared with other countries, and much better than they’re doing in Germany, the US and Japan, within our marketplace.”

Fox’s drive to improve extends beyond his company. The business is open to anyone to look at and learn from, he says. Is there a risk that direct competitors could copy P.P.E.S’s trade secrets? “Competitors can come if they want to; having a look doesn’t mean they can do it. And doesn’t our country need a boost? I want to share what we’ve learned with every manufacturer in the country.” A sceptic might add the consultancy will make a nice earner en route. But Fox says with real conviction: “This doesn’t sound genuine but it is – I don’t want to make any money out of this, I want others to benefit from what we’ve learned.”

David Fox has spent his working life in the electrical control systems business, but the last 30 years has been devoted to seeking continuous improvement. Now, with a proven formula at P.P.E.S Business Improvement, he says it’s not about making money but about sharing their knowledge with the manufacturing sector and beyond. This is a Fox who has found the golden goose but is happy to have everyone over to try his world class omelette.