Are manufacturers investing? You bet, as exhibitors at Subcon 2011 testify. After a brutal two years of expenditure clamp-down, companies are investing again. But are they investing enough to remain globally competitive? Some quarters say ‘no’, but is this fair? The Manufacturer talked to some of the exhibitors about investment programmes and whether, in their opinions, the economic recovery is more than a brief spike before a double-dip.
Arnold Engineering Plastics productivity up four-fold
Company size: £3 million. Headcount up 15% since December.
Investment: Homag 3/4-axis CNC router, Haas SL30 CNC lathe with automatic bar feed, new Cannon vacuum forming machine (approx £75,000) and a Minaki JV33 large format digital printer.
Cost: Two-year programme totalling £350,000 to June 2011.
Arnold Engineering Plastics is near the end of a £350,000 investment programme. It has bought three new pieces of equipment: a new 3/4-axis CNC router, a CNC lathe with a bar feed and a Cannon Forma vacuum forming machine, which has increased its vacuum forming capacity greatly.
Why invest? “There have been a few capacity and delivery issues with the existing equipment,” says manager of the Plastics Engineering Division, Robin Oakenfull. “A fire on one of the routers put that out for six months – shift work helped, but that didn’t help with delivering extra capacity.” Arnold’s new CNC router is four times faster, in speeds and feeds, than the incumbent machine. “The piece price is much more competitive, it makes a big difference,” says Gary Vanderhoeven, Vacuum Forming manager. “The vacuum former came along at the right time and price.” The company financed the investment from profits made in last two years.
On the timing of the investment, Mr Vanderhoeven adds: “We wouldn’t have been confident to make the latest purchase before now, but also we wouldn’t have got this new work without this machine.”
Laser Process makes biggest investment to date
Company size: Circa £5 million turnover, 40 employees
Investment: Two new Trumpf laser cutting machines, L3030 and L3040, installed in July 2011.
Cost: Close to £1 million including implementation costs
Subcontract laser cutting business Laser Process used to invest in new machinery every 18-24 months, but until now had not bought new equipment for four years. “We had to do it – to catch up with the latest technology and just replace our older machines. It was either that, or go backwards,” says managing director David Lindsey. They bought two new Trumpf laser cutters, delivered on June 29, the biggest investment the company has made at once.
The investment was paid for with a approximately 20% deposit plus finance on the balance over three years. On borrowing conditions for subcontract manufacturers, he says: “Even though we’ve had a bad two years and our balance sheet took a knock, we’ve bought a lot of expensive capex in the last 20-years and have never reneged on a payment. This helps.”
Investment is about confidence as much as access to finance and Mr Lindsey says: “Now is the earliest time we could have done this and had the confidence that we were doing the right thing.” Lindsey adds, however, that nobody in the industry has total confidence that it’s going to be the same next month or the month after; about 5-6 more months of this demand is needed first, in his view.
Aerospace powers investment at Benham Manufacturing
Company size: £7 million turnover, 66 employees. Turnover doubled in three years.
Investment: 2010: x3 Mazak Integrex Mill-Turn centres and one Mituyo co-ordinate measuring machine (CMM).
2011: One Mazak Horizontal Milling machine
Cost: 2010 and 2011 investment to date = >£1 million.
Finance: Company funding and some non-bank borrowing.
Totton-based Benham Manufacturing has grown continuously since 2008. The company mainly produces parts for the aerospace sector, one reason why managing director Paul Benham says that the company “didn’t really see the recession.” He says: “As [industry has] come out of recession, manufacturing appears to be very busy throughout the UK. Perhaps there are fewer players now. Customers appear to be struggling to find capacity and this gives us a chance to diversify our customer base.”
Three new machines Benham bought in late 2010 will assist the company’s strategic growth and has helped it secure a big new contract. “It’s nice to have a strategic relationship with a customer so you can make these investments,” says Mr Benham. This year, the company bought its first horizontal work centre, a Mazak MTN 6000. In May it bought a new 5-axis mill turn which is quicker and allows manufacturing of more complex features.
“We invested after assessing our position in the market, and what we need to do to fulfil our strategy, which won’t happen without the right tools and people.” The company models its training on the Investors in People toolset, it was awarded the SC1 Bronze Award in 2009 and is now going for SC21 Silver.
On the availability of bank credit, Mr Benham said they visited several banks two years ago to assess what risk the company presented, and were offered secured lending with acceptable terms but decided not to take it.
What recession? WEC Group keeps growing
Company size: £27 million group-wide, 300 employees.
Investment: Correa Axia 10-metre milling machine (10,000mm by 1500mm by 2500+450mm 3-axis travelling column), with automatic rotating heads and automatic tool change capable of 5-sided machining.
Enables machining of much larger components than the previous capability.
Cost: £600,000. One of several group-wide investments including acquisitions and borrowing.
A group of nine engineering businesses based in the North West, WEC Group barely noticed the recession. The 32-year old large metal fabrication and engineering group recently acquired two businesses – a second machine shop and a fabrication workshop – and has increased headcount from 230 to over 300 in the last 18-months. A new 10-metre milling machine will allow WEC to undertake more specialist work like decompression chambers and aerospace components.
“We’ve been investing in new equipment and growing for the past five years,” says business development manager Jean-Yves Dziki. “During the recession we started manufacturing large components for the rail industry, and we have been growing through that period. On the back of a big order, we opened a dedicated facility for rolling stock with 20 full-time staff.” Mr Dziki says.
Where are the new business prospects? Rail is strong and WEC is working on its aerospace accreditations. Despite Ministry of Defence cuts, Mr Dziki sees good growth opportunities in defence. He adds: “We already make parts for the nuclear industry and we’re watching that sector.
We’re very proactive in bidding for that kind of work.”