SMEs hold the key to rebalancing the UK economy

Mark and Sam Hyde could not have chosen a more challenging time to take their small business to the next level, but somehow, they achieved it and then some. Indeed, 2020 and 2021 were record years for Hyde Engineering, with the manufacturing side of the operation doubling year-on-year and continuing to go from strength to strength and become one of the UK’s leading SMEs.

Historically, Hyde Engineering provided services such as workholding, fixturing, tooling, offline programming and process engineering, with production work outsourced to an experienced and vetted network of UK-based sub-contractors.

However, with companies struggling to source parts overseas due to pandemic related delays and domestic lead times soaring, the directors spotted an opportunity.

“A customer was struggling to source a part with roughly a 45 minute cycle time. They needed 12,000 and they needed them quickly. I didn’t know any company that had machines stood idle so that was a lightbulb moment,” explained Mark.

The pair decided to invest in two firsts for the business – an in-house manufacturing facility and additional staff. In late 2021, they relocated to a building on the Shires Industrial Estate in Lichfield. Within six months, they had already outgrown that space; fortunately, the unit next door was vacant and available.

Hyde Engineering now has 7,000 sq. ft (roughly 80% shopfloor and 20% office space), filled with the latest 3- and 5-axis CNC machine tools, mill-turn capabilities, CAD/CAM software and, more recently, 3D printing and scanning technology.

The business also benefits from a newly integrated MRP (material requirements planning) system – selected and implemented thanks to grant funding and invaluable support from Made Smarter.

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Everything is in place to power the next phase of growth, something that will see turnover break into seven figures and the workforce more than double. Yet Hyde Engineering, like many of the country’s SMEs, faces challenges, not least the rising cost of doing business, recruitment and dwindling government support. I sat down with Sam and Mark to learn more.

You regularly engage with a broad cross section of industry, what’s your sense of UK manufacturing currently?

SH: Manufacturing has always had a genuine sense of community. That’s definitely increased following a tumultuous few years. There’s still healthy competition, of course, but if people can help each other and push work in each other’s direction, they will do.

Everybody is banding together because there isn’t anyone in government fighting for UK manufacturing. A terrific example is the widespread support for the ‘Campaign for a Dedicated Minister for Manufacturing’ led by Andrea Wilson (Director of Hone-All Precision and The Manufacturer Top 100 alumna).

We desperately need a cabinet minister like that; someone who understands the industry and the challenges and opportunities we face. Someone who will fight in our corner, restore business confidence and help us provide the economic growth we know we can deliver.

Right now, there’s no long-term strategy, there’s not even a short-term strategy. All we have are empty slogans like ‘Building Back Britain’ and ‘Levelling Up’ with no substance behind them.

MH: A major concern is that support for SMEs just isn’t there. The ambition to get small businesses supplying into major industries like defence and nuclear is admirable, but it’s not filtering down.

SH: We attended Farnborough International Airshow last July and saw a presentation from a major defence prime about its work with SMEs and how they were bringing them into their supply chain. It was great to hear but it relies on Tier 1 and Tier 2 suppliers flowing that on.

Even when you’ve worked to get yourself on approved procurement registers, buyers rarely look beyond companies they already know and work with. The solution, I suppose, is to get out there, network and attend as many industry events as possible. But finding the time to do that when you’re one of a small team running a business isn’t easy at the best of times.

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Will that lead to more SMEs pooling resources and capabilities in order to bid for work they couldn’t or wouldn’t win individually?

MH: It already has. Something else I’ve noticed is individual businesses or SMEs requesting finance from lenders to draw down and acquire companies with competencies different from their own. For example, an electronics company buying a CNC or plastic injection moulding business. It’s not SMEs working together on the same project, it’s more gaining the ability to say yes to a wider variety of jobs and retaining work within a group.

On the subject of finance, a lot of our machines have come from and been financed with DMG Mori. Many small manufacturers don’t seem aware of the finance options offered by machine tool manufacturers and distributors.

Bringing in a machine seems to be seen as an overhead or debt rather than being viewed as additional spindle time. I don’t know why more companies haven’t grasped that because they’re missing out on valuable extra capacity.

SH: It might be the risk versus reward of investing in a machine and not having any work to go on it. We’ve possibly been more gung-ho. Though work was in place for each of our machines ahead of their arrival.

It comes back to not having a long-term strategy from government and an apparent lack of commitment from OEMs and their Tier 1 companies. Knowing work is coming your way gives you the confidence to invest.

There’s a huge buzz surrounding reshoring at the moment. It’s all well and good saying all this work is coming back but who’s going to do it? I don’t know any manufacturers sat twiddling their thumbs. Where’s that extra capacity going to come from?

For reshoring to become a genuine, sustained movement, it needs top-level support from government, in coordination with larger industrial players and clear two-way communication with SMEs.

On the subject of extra capacity. You’re currently recruiting for several positions; how are you finding it?

SH: Tough! The cost of living crisis has made things so much harder. Where before people perhaps focused on opportunities for growth and development, now the most important thing is paying their bills. When the sole thing being competed on is salary, small businesses can’t match what large companies can offer.

How are you trying to overcome that?

SH: Primarily, we’re focusing locally and trying to encourage those with a long commute every day to see the opportunities closer to home. We’re also a family business; family is very important to us. We’re not a large corporate, we treat everyone as an individual. Possibly the biggest differentiator we can offer is the autonomy and ability to shape your position; to truly own your role and responsibilities and not be micromanaged.

MH: A big issue we face, and I’m sure it’s the same for many small manufacturing businesses, is that a lot of the engineering skill set sits with me. I’m the person who looks at drawings, costs up projects and handles the engineering side such as programming and designing the fixtures. I’m often the person on the shopfloor machining the part. I’m also the business owner and salesperson.

I probably spend 80% of my time standing in front of a machine. I don’t mind that, I enjoy doing it, but I know that can’t be the case moving forward. I need to be focusing on growing the business, improving processes, streamlining the operation and winning new work. This is why we’re recruiting for an experienced manufacturing engineer to allow me to focus on those activities.

Another problem we face is we can’t make parts fast enough to satisfy demand. That’s a fantastic problem to have, granted, but it means having to reassess our processes.

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For example, we’ve realised that certain machines complete jobs much faster than others. We recently ran the same job through two different 5-axis machines simultaneously. Everything was identical down to the lines of code, yet it ran almost 25% faster on one machine because it has a smaller footprint and moves faster.

That’s a massive difference. Every fifth part is effectively free from a time perspective. We’ve now ordered another of those machines. Moving certain jobs onto them means gaining a significant amount of additional capacity without having to change anything. Add in upcoming investments in automated pallet changers and lights-out operations for nights and weekends and that’s how future growth will be accommodated.

You’ve recently branched out into 3D printing. What’s the market appetite like for 3D printed parts?

SH: It’s growing but there’s still a lack of confidence in additive’s ability to replace conventional subtractive manufacturing. Additive is a fantastic way to reduce waste, manufacture more efficiently and go from A to B much faster. Not because it takes less time to print than CNC, necessarily, but rather because it’s so much quicker to go from concept to finished product via the additive route.

MH: People still see polymer 3D printing as hobby printing with a material that degrades in sunlight, becomes brittle and breaks. We’ve found there’s a widespread lack of knowledge of the higher-end, industrial materials and their capabilities and application.

The core material we print, for example, is a high-strength, micro-carbon fibre filled nylon composite. Once people hold it in their hands, they can’t get over how strong yet flexible the material is.

Often all it takes is for someone to give it a go. An example of that is a friend who works for a major global manufacturer. They had an issue with part pushers on their mill turns. Once the part is finished, a pusher at the back of the spindle pushes it out. The trouble was, it was steel on steel contact. Over time, when swarf had built up at the back of the spindle, it was damaging the part.

Knowing we offered 3D printing, my friend asked if I could come up with a solution. I designed a pusher with a spiral-fluted coolant flush inside so it cleared the spindle as it was pushing the part out. There was widespread scepticism that a 3D printed pusher would work or be strong enough but my friend convinced the team to give it a go.

It not only worked but its success has led to a sizeable contract to print more than two dozen variants for a multitude of machines. But it needed that initial buy-in and open-mindedness.

Do SMEs need to catch up with technology?

SH: Exactly. It’s also about being able to access appropriate support and guidance. We were fortunate to get our industrial polymer 3D printer and scanner via the Aerospace UP (Unlocking Potential) programme, delivered by the University of Nottingham and the Midlands Aerospace Alliance.

The programme, like many others, is supported by the European Regional Development Fund (ERDF) but that won’t be available in the UK after this year. What’s going to replace it? No one seems to know. And if they do, they certainly aren’t letting us know.