Jane Gray rounds up an eclectic discussion of business challenges and opportunities among manufacturers in the south of England.
Companies in attendance at this event included:
Astrium, Eaton Hydraulics, Di-Spark, Thinking Space Systems, WPL and VitaCress
It’s become a tiresome truism that manufacturers across sectors can learn from one another; that synergies will arise when discussion of business challenges and opportunities for improvement takes hold.
And yet it’s an accepted piece of wisdom which can still surprise – and it certainly did so at TM’s July Manufacturer Director’s Forum (MDF) for companies in the south of England. Even Ian Greenwood of salad producer VitaCress and Simon Taylor of satellite manufacturer Astrium found common ground, immediately sparking up discussion on the use of satellite data to identify the most fertile land within a farm and the challenge of working with supply chain partners to maximise the potential of this technology.
The dinner was designed to allow regional manufacturers to exchange insight into business confidence and how they are tackling generic challenges like access to finance, business improvement and filling skills gaps.
Over the course of the evening, valuable tips were exchanged on which local partners are best to work with on these issues. Tyrone White, manufacturing manager at Eaton Hydraulics for example, highlighted the excellent service it is receiving from Peta (Portsmouth Education and Training Association) in delivering its four year engineering apprenticeship.
“They provide a pre-screening and development programme for a schedule of study devised in partnership with us,” he explained. “They’ve dealt with the funding application and over three years they have supplied us with three rounds of apprentices after a fifteen year gap.”
Peta has provided good marketing for vacancies said Mr White and, while he admitted it is still hard to find people with genuine passion for engineering, Eaton now regularly receives around 15 applications for each apprentice place “and by the time they walk in the door with us for on the job training they all have a basic level of skill and understanding guaranteed,” said White, going on to outline the six month course that successful applicant go through with Peta before starting the course proper at Eaton. “They also have to have GCSEs in certain core areas because part of our four year apprenticeship includes an ONC course that requires these.”
Eaton’s experience with Peta impressed other guests who had had less favourable experiences with local apprenticeship training providers.
In terms of local support for other business needs, the regional arms of the Manufacturing Advisory Service (MAS) and Growth Accelerator were largely praised. Wayne Palmer, MD of Thinking Space Systems a manufacturer of modular aluminium structures, was particularly positive about his experience with Growth Accelerator. “They provided us with management training which has proved vital to us in a period of growth. Sometimes free training is not worth the money you don’t pay for it. But this was very high quality.”
David Light however, complained that using government-funded business support schemes is “not very lean”. He felt there was still too much paperwork attached to getting their help.
Talk of lean raised enthusiastic ideas swapping. All companies present said that they were using the methodology to try and streamline their processes and realise growth opportunities with limited resource.
Everyone agreed that the biggest internal challenge in deriving benefits from lean is in
gaining the buy-in of employees. Astrium’s Simon Taylor confided that this was a stalling block for his high-tech firm. “There was a very strong feeling when we started down the lean road that it didn’t and shouldn’t apply to the space sector which is driven by a series of complex one-off orders,” he said. “But we’ve managed to use value stream mapping and other tools to achieve some significant cost reductions and reduce lead time and now there’s much more belief.”
Guests from smaller firms seemed more confident of their ability to get their employees on board with lean and continuous improvement initiatives. “I think there’s a quicker realisation today that there’s a shared interest in making lean work,” said Gareth Jones, finance director at WPL, a manufacturer of wastewater treatment systems. “People know that we’ve been in recession. There aren’t many jobs out there. At the same time, I’m saying to them that we’ve got to grow, but that we can’t bring more people in. So we have to work out together how that will work.”
Simon Taylor, head of test and validation for payload products at Astrium’s Portsmouth facility gave an informal introduction to this MDF dinner debate, sharing insights into the challenges, opportunities and priorities for the global space industry and his local operations. Astrium, a subsidiary of EADS, employs 18,000 people across Europe, 1,200 of which are based in Portsmouth. In 2012, the company turned over Eu5.8bn with a Eu12.7bn order backlog.
Mr Taylor is responsible for a team of 60, based across Astrium’s Stevenage and Portsmouth sites, focused on the verification and testing of the payload boxes which sit within a satellite – what Taylor described as “the brain”.
The team conducts testing throughout the manufacturing process. Carefully weeding out potential workmanship and performance defects in sub assembly and final assembly phases before progressing progressing to customer acceptance testing and then a rigorous environmental testing campaign.
While the space sector as a whole is booming (note recent government investments for further growth in the £9bn sector), Astrium does face big challenges in the saturation of the telecommunications satellite market.
This competitive hurdle is pushing business growth initiatives in the institutional market for earth observation, and is also promoting investment in lean manufacturing methodologies. “We already have a brand which is synonymous with quality and reliability,” said Taylor. “Now we need to maintain that while getting better and faster at what we do.”
It’s an exciting time to be a part of the intrinsically global space sector said Taylor, relating work that Astrium is doing to build maturity in emerging markets like Brazil.
The company is also pushing boundaries internally and in July celebrated the launch of the biggest satellite it has ever built. Alphasat, commissioned by the global shipping company Inmarsat and ESA was and built between Stevenage and Portsmouth before being shipped to Toulouse France for final integration.
The double decker-sized craft weighs 6.6 tonnes and has a solar array spanning 40m.
Alphasat benefited from around £36m of UK Space agency funding and took around six years to complete.
For Mr Jones and his colleagues, as for many UK firms, achieving its outlined growth targets means looking abroad for new markets. But exporting products and services can be tricky.
Jones said he has come up against barriers in taking advantage of a developing market for his water treatment products in Slovenia. “The market’s attractive because it’s one of a number of new EU states to benefit from development funding. But because we are dealing with a state-owned municipality we can’t get commercial credit guarantees,” he explained.
While difficulties persist, Jones said that UKTI has been as helpful as it can especially in highlighting potential pitfalls in local bureaucracy and regulation. Such pitfalls include potential corruption, an observation which drew groans from most guests.
High profile prosecutions and scandals over corruption and bribery have driven home the importance of maintaining compliance with the Bribery and Corruption Act which came into force almost two years ago. Jones said that his SME firm has put a lot of resource into defining and communicating its bribery and corruption policy but that maintaining compliance with the Act is putting many UK firms on an uneven playing field with international competitors.
“I have no doubt [the Bribery and Corruption Act] will greatly improve the nature of international business in the long run,” said Jones. “But the frustration in the meantime is that we can’t make a small payment to get a container out of the shipyard while rivals in from other countries can.”
Another guest said that he felt zealous compliance with the Bribery Act is holding up cash flow in his supply chain. “It’s hard to get visibility of when a contract will actually be signed of with one of our big customers now because it has to get so many signatures on it,” he said.
Representatives from larger firms at this dinner agreed that compliance requirements are rigorous in their companies. Tyrone White shared “At Eaton, the policy is very, very specific. Any gift that has a monetary value is not allowed to be accepted.”
Mr Taylor said the situation was similar with regards to EADS’s ethics and compliance policy which has been heavily promoted across the group, including Astrium in the last year. He sympathised with the need for this rigor however, observing recent cases in the national press and saying, “One person can destroy a company’s reputation by making one bad or ill-informed decision.”
Dos and don’ts for ERP starters
A key objective for Thinking Space Systems’ Wayne Palmer in attending this regional MDF was to seek out advice from his peers on planning and managing investment in Enterprise Resource Planning technology for his growing firm.
“We’ve invested a lot in training, a lot in documenting our processes and sharing information, and we’ve earned a lot more money because of that,” he told fellow guests. “But we’re at a stage now where my limited team are spending too much of their time picking up information from other people. We need to automate that.”
Palmer hopes to get an implementation project rolling within the next three years but said he has been unnerved by his initial contact with the voracious ERP vendor market.
His experience resonated. “Be careful,” chorused other guests, all of whom had implemented ERP systems to varying extents. They rallied round with advice, most importantly, to avoid customisation at all costs and not to underestimate the amount of management time that will be absorbed by an ERP implementation, especially in an SME.
“Worst case scenario: it could make you go bust,” said one guest. “And best case, you have to accept that your business will essentially stand still for about six months.”
The most positive ERP tale from those present, came from Tyrone White, who shared his experience of managing his previous firm – an SME medical device manufacturer – through one of the earliest implementations of Microsoft’s Dynamics AX product.
“We had some very specific requirements but cost was important so we knew we needed to look at vanilla systems,” he said.
“The great thing about Dynamics was that it offered an incredible range of functionality across disciplines, but that you could choose to take 1% of that functionality and dial up from there – all on a standard offering. We got a truly off the shelf system. And we got a system which really worked. The usability was beautiful. Everything worked in a windows operating system.”
Of course no implementation project is perfect, and White admitted that “We underestimated the resources to deliver it on our site. We scoped a project team of ten and ended up with a project team of fifty.” He also said time and cost crept up. But despite these imperfections, he fondly remembered the project as a big success which allowed the company to take a competitive leap forward.
Rounding off the conversation on ERP investment, Thomas Eggar’s Hayley Bevis, acknowledged earlier points made about avoiding customisation, but said that, should a company choose to build some custom programmes in-house, they should be careful about intellectual property. “I have seen companies get their fingers burnt in the past when the IT whizz kid responsible for the in-house systems has suddenly made the organisation unpleasantly aware of the hold they have over them.”
“Write clauses into employment contracts that clarify it is the company that will own the intellectual property for systems employees may write,” she advised.