Does manufacturing have a future in the UK? Jane Gray finds out how automotive supplier, Stadco, has emphatically committed itself to making sure the answer is ‘yes’.
Like many UK manufacturers, and particularly those in the automotive industry, Stadco was hit hard by the recent recession. As demand for its services fell toward the end of 2008 and the credit crunch became full blown recession in 2009 the company was forced to release 40% of its workforce and the future looked uncertain.
Looking back at those uncertain times Dinos Andreou, sales and marketing director at Stadco, remembers the tough decisions that he and his colleagues on the management team had to make. As he explains, these decisions were not only in relation to people but also with regards to the way the organisation operated: “We undertook a fundamental strategic review process to identify where we needed our focus and attention for the future of the business.” This review process resulted in the streamlining of operations. One of their plants in Coventry was substantially downsized with the work transferred to other sites in order to better utilise available capacity.
Activities in electro-coating were discontinued and a phased withdrawal from certain specific stamping segments which were no longer deemed competitive was initiated. In discontinuing such non-core areas however, Stadco pared back operational burdens and freed up resources to exploit what the management team had identified an island of opportunity in a market largely characterised by austerity. Andreou elaborates: “We saw model proliferation on the behalf of our OEMs as a trend which is going to continue. We also saw that that a big facilitator for the OEMs would be the ability to bring those vehicles to market in an investment efficient manner.
“What this meant for us was the creation of two central strategy strands. Firstly the creation of low investment solutions to support the introduction of more models to the market place. Very much related to that, the second strand of our strategy focused on being able to provide smart flexible facilities.” The latter is an enabler for OEMs, allowing them to utilise Stadco’s technical capabilities in order to lower the traditionally high cost involved in the development of new model derivatives.
Stadco can trace its roots in the production of metallic forgings back to 1812. In 1825 the company’s headquarters were established in Shrewsbury, where they still reside today.
The focus of operations moved decisively toward the automotive sector during the vibrantly productive years of the 1960s when the company became known as the Shrewsbury Tool and Die Company. This name evolved into the acronym STADCO, though today the derivative is no longer used and the marque ‘Stadco’ is independent of any further meaning.
Initial forays into automotive supply say Stadco invest in tool making capabilities. In the 1980s however the company developed expertise in of body-in-white stampings and assemblies. Stadco still prides itself on a particularly diverse range of offerings in this area.
With regards to stamping, Stadco can turn out the smallest bracket through to the largest body panel. In assembly the simplest sub-assembly and the most complex modules and even complete body structures in steel or aluminium can also be accommodated. Stadco has a particular expertise in the stamping of aluminium, including skin panels, with more than 20 years experience dating back to the first generation Land Rover Discovery vehicle. Furthermore, whereas most manufacturers will limit themselves to supplying one volume range, Stadco will supply for niche orders of a few 100 parts per year through to high volume supply of around 400,000 vehicle sets per year and anything in between. Such range is a central differentiator for Stadco.
Today, Stadco supplies over 70 million such parts annually to the world’s leading automotive manufacturers. Looking to the future, Stadco has streamlined and focused its business model. Core strengths in the production of aluminium and steel stamping and assemblies will drive future business while product and process development will in turn be driven by demand for lighter weight architectures to support fuel efficiency.
Stadco stuck firmly to these principles throughout 2009 and 2010 and achieved enough success to be confident their choice had been right. It was not until early this year however, that the chance came to properly capitalise on the new focus and also to strike a compelling blow in the battle between UK-based manufacturing and the gradual migration of industry to foreign shores.
In February this year Stadco acquired a new site in Telford. But this was not just any site. Stadco’s supply chain director, Chris Fisher recounts the turn of events: “The Telford site had previously belonged to one of our main competitors, Ogihara, who had opted to withdraw from manufacturing in the UK during the downturn. When we took the site over it had been lying dormant for 14 months and most of the facilities had already been stripped out and transferred overseas, capacity which has been lost forever to the UK.
Fisher continues: “What were left on the site were two fully automated, modern stamping lines and a fully equipped tool room in a 33,000 square metre plant. All this empty space provides a huge opportunity for us to develop low cost, smart, flexible manufacturing processes.” Since February the Telford site has been a hive of activity. Significant investment has gone into equipping the plant. The stamping lines were swiftly re-commissioned and just five weeks after the purchase was made, Telford was turning out product for key customers such as GM and Jaguar Land Rover (JLR) whose demand for services had returned with vigour during 2010, putting pressure on the capacity of suppliers.
Giving more detail on the kind of capacity which they have now reopened for the automotive market Andreou comments: “The Telford site provides specialist capacity in the area of large stampings – 1000 tonnes plus. This puts Stadco in a unique position in the UK. We are the only supplier that is capable of supplying, in volume, exterior skin panels to OEMs at that tonnage and size – typically this type of work is undertaken in-house by the OEM’s since they regard it as a core capability.
“However, with certain core customers we have struck strategic relationships to provide this kind of work. We have stamping lines at our Shrewsbury and Castle Bromwich plants that are already doing this but the acquisition of Telford was prompted by a critical need to increase capacity in order to service growing OEM demand.” Primary among the customers now relying on Stadco for the supply of its large pressings is JLR, a company with which Stadco has a long running and extremely close relationship. Stadco had been supplying pressings to JLR since the early 1980s. Both Stadco and JLR have a real will to develop British automotive manufacturing and, throughout the recession, the two companies have worked together to develop business cases for bringing offshored manufacturing back to the UK.
Of course such ambitions have to be based on something more than patriotism but Andreou is firm in stating that, so far, JLR has reaped benefits from such relocations, both in terms of logistics savings and green credentials.
Andreou says activity on such projects is high: “In the last 12 months we have moved significant amounts of work from Canada, Germany and Sweden, back to the UK.” Such actions defy the popular perception that UK manufacturing has no future and make a strident statement for the value which local supply can bring to markets like automotive.
Unsurprisingly, Stadco’s close work with its customers in supplying unique services to the UK automotive industry, and its work in bringing more manufacturing activity back to the UK, has also necessitated strong communications with and support from its supply base. The context of recession has made strong relations here all the more paramount as David Watson, purchasing director at Stadco, explains: “During 2009 and into 2010 we were losing a lot of our supply base. Now our key suppliers in the UK have been reduced to a few large organisations. Our main raw materials are aluminium and steel which are provided by the likes of Tata, Arcelor, Steel & Alloy and Novelis.”
Watson suggests: “Just as Stadco benefitted from Ogihara’s decision to close its UK manufacturing base, our suppliers have benefitted as we have moved business from others which succumbed during the recession.” Andreou agrees and adds perspective: “There is a direct parallel between the deliberate consolidation strategy we have seen among our customers in placing work with a smaller base of reliable suppliers, and the strategy we have ourselves followed. The result is that we have much deeper and wider relationships with those which still support us.”
For Watson, what these “deeper and wider” relationships entail is the opportunity to form far more interdependent business models. He explains: “With key suppliers we are sharing expertise and collaborating, for example, in the development commercial proposals for new business. We are also working with key suppliers, for example, Tata, on joint health and safety policy reviews, this exchange of expertise supports continuous improvement and performance of both organisations.”
Speaking in more general terms about the importance of supplier relationships Watson emphasizes: “Particularly with raw materials supply there has been exceptional support throughout hard times. Tata is a great example, in addition to the health and safety reviews, we are also working with them on a number of projects, consignment stocks at our Telford facility being one.”
With input prices remaining volatile it is likely that we will see more manufacturers creating supportive networks like those Stadco is now collaborating in. Andreou says: “With rising utilities and materials prices we have had to work hard to strip cost out of our business on a year on year basis.” This includes working with suppliers and customers in triumvirate on some purchases to ensure that the most cost effective procurement solution is chosen.
These programmes focus on providing lean capabilities at operator level but, as HR director Stan Meiklem, say: “This is just the latest incarnation of a process that has been going on for years.” Stadco supports an integral culture of improvement and due diligence at all times, not just when the going gets tough.
This is a work culture which will become more accessible to a new generation of employees as Stadco prepares to re-introduce its apprenticeship programme.
Telford College of Arts and Technology will support the delivery of this programme by taking on a large part of the administrative burden while Stadco concentrates on ensuring that it has the resource to provide a rigorous management structure for apprentices who find a home with the company.
All in all it must be said that the storm clouds are rapidly dispersing for Stadco. Commitment to a well thought through strategy and a fundamental belief in collaboration as a tool for resilience, have put the company on a firm footing as the UK swings in to economic recovery.
Chris Fisher sums up the situation: “We were forced to consolidate, take stock and re-organise. But we have come out as a stronger and more focussed organisation with a clear vision of where our future success lies.”
Stadco – at a glance
Overview International supplier of Body-In-White products and services to the automotive industry
Site locations UK: Shrewsbury, Castle Bromwich, Telford, Shrewsbury, Powys, Coventry Germany: Saarlouis India: Chennai
Employees 920 (UK & India)
Turnover £92m 2010 (UK & India)
Import/Export ratio of sales 90% of UK production supplied to UK based OEM’s
Key customers/markets Jaguar Land Rover, GM, BMW, Ford, Nissan, Magna, Benteler, AGCO
Points of interest Stadco is due to celebrate its 200 year anniversary in 2012