For the past 30 years, too many companies have rested on the laurels of established successes, rather than focusing on research and development in order to ramp up new product introduction (NPI).
“For our business, and I think for UK manufacturing in general, it’s paramount we realise that we need to be building businesses which are going to here in 25, 50, 100 years, not six months.”
That’s the opinion of Tim Pryce, CEO of Icon Aerospace Technology, who recently sat down with The Manufacturer to discuss the 150-year old business’ multi-million-pound modernisation programme.
Over the past 10 years, the Nottinghamshire-based company has risen further up the value chain by producing ever more innovative and technologically-advanced engineered products. That transition has been enabled by recognising where the company was on the product lifecycle curve and, more importantly, where it wanted to be.
Pryce explained: On a product lifecycle curve, you have NPI on the left, i.e. the development and birth of a new product. That rises to peak production in the middle, followed by the decline and, ultimately, the product’s removal from the market on the right.
“In 2009, virtually all our products were on the right-hand side, roughly 80%, with 10% at peak production and 10% in NPI. What we had to put in place was a strategy that started to change those figures to 60% in NPI, 30% at the top of the curve and just 10% in decline.”
With a clear emphasis on sustainability, Pryce and his team had to answer the question, ‘What type of markets could Icon enter which would be sustainable for the long-term?’
The answer was aerospace, a decision supported by the business’ well-established reputation in, and experience of, defence. The lifecycle of a new aircraft takes approximately five years to move from design to introduction, with a 10-year build cycle followed by a further 20 years of spares and aftermarket support.
Such a strategy would allow Icon to provide long-term, sustainable employment and a relatively secure base for future growth.
However, since the early-1980s, Pryce has seen a total lack of management investing in the left-hand side of the graph within UK manufacturing.
“That needs to change, because unless the majority of your business activity is focused on innovation and developing new products, then your business will disappear. The world is dynamic, it is constantly changing around you, so you must create something which is capable of change.
“As soon as you stop adding things to the left-hand side of the cycle, you are – by definition – accelerating towards your death. The left-hand side, however, represents growth.
“This year, we are forecasting that Icon will organically grow by more than 45% manufactured product. We should close out 2017 north of £25m and I would say we are moving from being an SME to an ME.”
Icon has the ambitious goal of doubling revenue by 2019. It is currently working through an order book worth upwards of £150m (based on Teal Group data), and has created 100 new jobs over the past 18 months.