Living with growth

Posted on 20 Feb 2008 by The Manufacturer

Kawasaki Precision Machinery has achieved an enviable increase in turnover, but it won’t take the future for granted, as Steve Cardew made clear when he spoke to Robert Pols

Who wouldn’t want to double their revenues in four years? It sounds like any company’s dream. But success sets its own challenges, as Kawasaki Precision Machinery (UK) is well aware.

Located on the banks of the Tamar, Plymouth-based Kawasaki Precision Machinery (KPM) manufactures and sells hydraulic components – pumps, motors and control valves – for markets in Europe, India, the Middle East, South Africa and Australasia, and it has seen turnover increase from £30 million to nearly £60 million in recent years. “That has much to do with continuing growth in marine shipbuilding and construction equipment, which are two of our main markets,” said Steve Cardew, KPM’s general manager. “Those sectors have been particularly strong, and that has meant a tremendous amount of growth for us.”

Such a dramatic increase in business, he continued, has inevitably created its own pressures. “We’ve needed to increase the capacity of the plant significantly. It’s not easy, of course, to achieve stability while going for continual growth; and we’d no sooner finished planning for one round of investment in new equipment than we found ourselves planning for the next. Space on the site has also come
under pressure, and at present we have to store some goods off-site. But we’re now focusing on reducing inventory, which will enable us to free up floor space and make better use of what’s available.”

The investment he referred to has been significant and sustained. In fact, the company has been buying in new capital equipment at the rate of some £2 million a year. It has also found it necessary to increase the size of its workforce, which now stands at around 300. But this has involved an approach that goes beyond simply raising the headcount. “There have been difficulties,” commented Cardew, “given our geographical location. Getting the right skills hasn’t been easy, so we’ve developed a substantial
in-house training and up-skilling programme. But we’ve also taken the opportunity to bring in some new people who already have the skills and knowledge we’re looking for. In practice, that particularly means people with experience in the automotive industry, who can bring with them an understanding of lean
manufacturing and such methodologies as six sigma and advanced product quality planning. In this way, we’re aiming for a degree of cross-fertilisation.”

It’s a policy that can only sustain the impetus of a lean journey that’s already well under way. The continuous improvement philosophy is at the heart of KPM’s aspirations to world class, and a range of business process tools – including six sigma and failure mode and effects analysis – is deployed against this kaizen background. But Cardew is wary of putting all the improvement eggs in one basket. “You need a broad and flexible approach to the various methodologies. Six sigma, for example, is a valuable skill that we’ve developed across the site where appropriate, in order to identify problems and take the necessary corrective action. But it’s only one of several methodologies that we use, and it’s not, in itself, a cure-all. Ultimately, it’s all about process control, about having standard operational procedures and control plans in place, and about using the applicable tools to bring about and maintain stability.”

It’s necessary, too, to look beyond a company to its sources of supply, and that’s a topic that also engages his attention. “All our processes are only as good as the weakest link in the supply chain, and we have to be conscious of that. A lot of our raw materials are castings and forgings, but many foundries – especially those in the UK – now have a reduced capacity. This is reflected in the cost of the materials, and the challenge for us is to try and mitigate these increased costs by developing our supply chain more effectively. This may involve working with existing suppliers, but it may also mean looking at alternative suppliers who might be found in lower-cost areas.” There’s little doubt that the price of materials will continue to be an issue, and the strength of sterling may be another problem that has a continuing shelf life. After all, when you export some 80 per cent of what you manufacture, exchange rates become an important and sometimes discomforting fact of life.

But the mood at KPM remains positive. Innovative products will continue to set the pace, with the latest example being the launch in the coming months of a new series of more compact pumps in the K7V range. Designed to meet the growing demand for energy efficiency, these pumps will help customers in their drive towards greater environmental friendliness. There will also be the impact of new appointments. After a period of little change, departures and retirements have allowed major additions at senior level. The arrival in spring of new manufacturing and technical services managers – both from an automotive background – will complete a series of changes to the management team who will lead the company into the future.

It’s also clear that there will be no relenting in the quest for improvement. “We’re now in a period of growth,” Cardew conceded, “but there has to come a time when our currently robust main markets stop growing, and we must be sure that we’ll be competitive then. We can’t afford to wait around until the demand decreases; we have to be realistic and increase our efficiency now. Our products have an exceptional reputation, but the costs of maintaining their quality are high, so we need to target those costs while maintaining and making further improvements to quality.

“I believe our approach to manufacturing is working well, but there’s still a long way to go to reach the standard we want to achieve in terms of being a world class manufacturer. Nevertheless, we’re making big strides, and we’re making them in the right direction.”