Howden Compressors’ Jim Fairbairn and Peter Wallerstein tell Will Stirling how capital investment and understanding future markets is helping the award-winning company stay at the top of its market.
In January, Howden Compressors had a nice problem. Following a beefy £4.5 million investment in new machine tools, and owing to the resilience of the company’s core markets – petrochemicals, oil and gas, refrigeration – to recession, business was up and the company needed to recruit.
In fact, headcount needed to increase significantly to keep the gas compression company on its growth curve. It was a problem that many manufacturers would have been grateful for. But Howden Compressors has not let the downturn impede investment. “Throughout the recession we have remained profitable and have continued to grow and invest in our business,” says managing director Jim Fairbairn. Part of the reason for Howden Compressors’ success is the timely injection of investment, financed by parent company Howden Global, part of Charter International plc, to modernise its manufacturing operations.
Howden Compressors’ growth is in part due to its specialisation. What appears like an ostensibly simple principle of compressing gas using rotary screw compressors, belies a highly specialist engineering manufacturing process. Howden Compressors is good at it and is one of the top three gas compressor manufacturers in the world. The company has had plenty of time to perfect its art – Howden was founded in 1854, with the compressor business beginning in the late 1930s. More recently, Glasgow-based Howden Compressors has gone through several changes to crystallise its position as a global leader in its field. Capital investment is just part of the story which includes a business excellence programme using a team from Unipart Expert Practices that is helping to better engage the workforce in the new business practices.
In the beginning
James Howden, the Scottish engineer and inventor from East Lothian, started designing and supplying boilers and steam engines for the marine industry in 1854. Most famous for inventing the Howden forced draught system for steam boilers, his boilers and propulsion systems were used in many leading ships of the time including the RMS Lusitania.
His engineering company grew through the Victorian and Edwardian era, perfecting new areas of mechanical engineering such as fully enclosed high speed marine engines that were later modified for use in land-based systems as the Howden-Zoelly steam turbine.
In 1946, James Howden & Co Ltd licensed the screw compressor from Svenska Rotor Maskiner (SRM) in Sweden and was the first company in the world to commercialise the technology. Howden Compressors was born on Scotland Street, Glasgow, and over the next 70-years it grew steadily to a world leading position. Which company is the world leader? “It really depends which niche of the market,” says Jim Fairbairn. “We serve over a dozen niches and we all have different comparative strengths, in different niches. For example, Howden Compressors has a very strong position in high horsepower gas gathering and refrigeration.”
Howden Group, bought by British engineering group Charter plc in 1997, has an annual turnover of over £600 million and is structured around the design engineering, manufacture and support of its three main product groups: compressors, which covers screw, piston, diaphragm and turbo compressors, that are used in a range of industrial sectors such as oil and gas, petrochemicals and wastewater treatment; fans, an extensive range of engineered axial and centrifugal fans, and air and gas heat exchangers. The latter two product groups are mainly supplied to the power generation sector.
The product and the business
Howden Compressors’ manufacturing facility in Glasgow, which measures about 200,000 square feet, specialises in the design and manufacture of bare shaft rotary screw compressors that are used for a variety of demanding gas compression and refrigeration duties.
These highly engineered components can form part of full compressor packages for clients worldwide, in sectors including the petrochemical, oil and gas, power generation and refrigeration industries.
The other part of Howden’s screw compressors activities is a compressor packaging facility, also in Glasgow, which undertakes the complete engineering design, assembly and installation of skid mounted and packaged gas compression systems, using Howden twin screw compressor units at their heart.
“We manufacture about 1,000 compressors every year, from small compressors to compressors that are the size of a car,” says Fairbairn, who with operations director Peter Wallerstein is responsible for both sites.
“These vary in power from 20kW to 5MW. These larger units are used in applications including fuel gas boosting, propane cooling and coal bed methane, among other, niche applications.” Howden Compressors, says Fairbairn, has been at the forefront of building the best rotary screw compressors for over 70 years. It was the first company in the 1960s to introduce oil injection to screw compressors, which helps seal the compressor environment for more efficient gas compression. Among multiple improvements to the business in the last 24 months, “part of our continual investment in product R&D has allowed us recently to introduce new profiles in our screw compressors, to significantly increase their performance and efficiency” says Peter Wallerstein, who is proud of the latest changes at Howden which includes a £4.5 million investment in the latest new machinery.
People focus – top to bottom
People are key as well. “Adding to our expert engineering team, we have employed a world leading expert in screw compressor technology, Professor Ahmed Kovacevic from City University London, where he holds the office of Howden Chair of Engineering Design and Compressor Technology,” says Fairbairn. “He’s our research and development manager, in charge of a team of 12 people focusing on future R&D projects. The company is sponsoring two people through PhDs in screw compression technology at City University London. We are trying to look five years ahead to understand where the markets are going, with a high focus on technological development. You cannot sit still in this game or you’ll be overtaken.” Outside the most senior engineering positions, in the last three years Howden Compressors has made a bigger and deliberate effort to engage the workshop personnel, and indeed people in all departments, as well as trying to understand the customers and the markets they operate in better.
“People are the enterprise, and people respond to that kind of leadership thinking – the value of leadership and communication has been emphasised,” says Fairbairn. “That’s what we’re trying to bring in here, a culture of change and communication where people are informed of the business purpose.”
Perhaps that had been lacking before.
“And we’ve placed a huge focus on R&D and a very strong focus on emerging markets,” he adds.
Howden Compressors exports virtually everything it makes. “There’s very little that stays in the UK, just a few per cent,” says Fairbairn, just before flying out to Australia to meet clients. “We currently export to around 50 countries globally. Our focus is on working with these diverse customers more closely, to try to better understand where they want to go in the future.” Fairbairn says there’s only a limited opportunity in the UK, so you need to look at the growing markets like India, China and Asia-Pacific.” In March, the company sponsored and exhibited at the Coal Seam Gas Summit in Brisbane, Australia and the company works closely with Howden subsidiaries in Australia, India and Russia.
Howden Compressors has supplied its equipment and services to major oil and gas clients, including BP, Shell, Exxon and Chevron, as well as big energy utilities worldwide.
The managing director is keen to emphasise the importance to Howden of advanced manufacturing. “Our focus has to be at the high value end of the market,” he says. “We are not an air compressor manufacturer – we compress process gas, which means we have to conform to very stringent petrochemical standards like API.” Do customers pay a premium for this product, especially as it is made in the UK? “Yes sometimes the product can command a premium, but not always, it can be price sensitive.
It depends on the application and the product. But our goal is to be at the high value end of the market.” Fairbairn and Wallerstein support the wider industry approach of developing advanced manufacturing capability in the UK. “We don’t want to get into the lower end of the market, where it’s all about price and volume and we’re not interested in that, it’s not a place where we would be comfortable.” The product As part of its R&D activities, the company has recently developed a new profile design for its rotors. “A rotary screw compressor uses two rotors, a male and a female, which operate like gears,” says Peter Wallerstein.
“In the past 12 months we’ve moved from an older, more traditional design, to the latest technology rotor profile.
This has enabled us to drive significant improvement in compressor operating efficiency. This development has taken about twelve months.” Capital investment – Howden invests for future-proofing In January 2010, Her Royal Highness Princess Anne visited the Craigton screw compressor factory to give a royal seal of approval to a range of newly installed high technology manufacturing production equipment. This visit was proudly celebrated as a culmination of two years planning and £4.5 million of investment in machine tools and new processes. Four key pieces of equipment were involved:
1 WFL Millturn lathe
Perhaps the stand-out piece of kit, the Millturn lathe “has allowed us to eliminate seven stages of operation in the rotor manufacturing process,” says operations director Wallerstein. “It’s effectively a lathe with live tooling of a very robust and effective nature. The live tooling is basically as effective as a conventional milling machine. He continues: “With the lathe, on the centre axis we manipulate the rotor, keyed in with a radial feed, which allows us to rough mill the profile of the rotors without the need for dedicated tooling.
We can finish-turn the shaft and mill the profile in one operation.
Before this machine, we would have to manually change the tooling and physically move it from one machine tool to another, so it has saved a great deal of time.” Howden Compressors chose the Austrian WFL Millturn machine. “We are very happy with the WFL Millturn unit, and we were involved in the development process of this machine,” says Fairbairn.
2 Holroyd rotor profile grinding machine
Howden Compressors has had a long standing relationship with Rochdale-based machine tool manufacturer Holroyd, and Howden was Holroyd’s first customer for a new thread rotor grinding machine tool.
“Historically rotor profiles have been thread milled,” says Wallerstein.
“Now, in conjunction with Holroyd, we’ve developed this process from thread milling to thread grinding. It allows us to introduce statistical process control, or SPC, into our manufacturing that previously had required manual inspection of each rotor profile.” This new manufacturing process has helped the new compressors achieve substantial improvements in operating efficiency.
The investment in this machine tool will allow Howden to develop its own profiles without the need for investment in individual, single purpose tooling.
What are the key benefits? Wallerstein says: “It depends on your own R&D processes, but in this case we expect a significant saving purely on tooling, as well about three months of time spent on any future R&D project.” The new machine tool improves accuracies in the compression process by minimising the contact between the male and female rotors, therefore reducing friction and wear. 3 Giddings and Lewis horizontal borer A new twin pallet horizontal borer made by US machine tool maker Giddings and Lewis.
“This machine has reduced component cutting time by 15 per cent and has improved accuracy in bore positioning, helping to eliminate the need for rework.” 4 Global co-ordinate measuring machine A new global CMM. “Co-ordinate measuring machines allow us to fully inspect component parts,” says Wallerstein. “This has resulted in a considerable improvement in first time pass rate at compressor testing, which now averages around 96%-97% accuracy from a previous pass rate accuracy of 87%.” As well as the new CMM, the first three machines all incorporate Renishaw probing techniques in their processes to minimize operator intervention.
Manufacturing process improvements
Together with essential equipment upgrades, Howden Compressors has embraced a business improvement programme, working with a team of consultants from Unipart Expert Practices (UEP) the consultancy division of automotive components manufacturer Unipart.
Fairbairn says Unipart’s manufacturing background has helped them to empathise with Howden’s unique needs. from East Lothian, started designing and supplying boilers and steam engines for the marine industry in 1854. Most famous for inventing the Howden “We introduced Lean techniques about five months ago,” says Wallerstein. “We use Unipart as a business improvement consultant and advisor and they assist us implementing Lean to industry best practice. It’s important to emphasise that they’re one part of our strategic improvement process, engaging the services of UEP to help us introduce Lean best practice throughout the enterprise – beyond manufacturing, into administration and the whole organisation.” The Lean programme includes writing and maintaining new standard operating procedures (SOPs), and a lean champion has been appointed on site. Most of the SOPs have been devised to eliminate waste.
Legacy of recognition
In October 2009, Howden scooped three awards at the annual Bank of Scotland Glasgow Business Awards ceremony. These awards were Most Outstanding Business, Best Performing Business with over 25 employees, and Excellence in Skills and Learning.
This achievement followed the Scottish Engineering Award in May 2009 for the contribution the company made to raising standards within the engineering sector in Scotland.
Howden says it reflected the strategic planning, hard work and technological developments that brought the business to such a strong market position.
Following the awards in Scotland, Howden won the Best Company at the British Chambers of Commerce Awards late last year.
Recruitment, skills, costs, industry standards Howden Compressors is growing and needs to recruit. “We’re recruiting at the moment and expanding the direct workforce by close to 35 per cent.
We’ve significantly grown the business in the last 12 months,” says Fairbairn.
The recruitment drive began in July 2010, Howden has had 600 applicants to date and it has thus far hired factory operatives, engineering and business development staff – showing that a job with a Glasgow-based precision engineering company in 2010 is still highly coveted.
On finding people with the required skills, Fairbairn says it’s less of an issue now to find senior engineers than a few years ago. He added. “During the last decade with more money being loaned, businesses were growing in a boom time. Due to the recent economic downturn we are finding it easier to find qualified staff than we did say three or four years ago.” Fairbairn says he is more concerned now that the price of raw materials will shoot up in the next 12 months. “We expect to be fine for labour, but the world is starting to wake up and people are buying and stocking more.” Howden’s main raw material is steel, and it uses some recycled cast iron as a raw material.
Since the new business improvements began in 2008, the company recycles 85% of its waste from the factory.
Energy cost management is another area where Howden is finding savings.
“We’ve got very good cost management now, including electricity costs,” Fairbairn says. “We’re working on a new deal on forward energy purchasing to keep costs stable”. He adds, “We’re now accredited to ISO9001, ISO14001, OHSAS18001 – the full house,” says Fairbairn. “Many of our customers now ask for ISO14001 as greener manufacturing practices are being recognised more by clients in the sectors we operate.” Howden has established the Howden Academy, a commitment to give job specific training to up to 100 engineers annually, in conjunction with Glasgow Caledonian University. And Howden Compressors’ in-house training includes the sponsorship of two PhD students who are researching advanced screw compressor techniques.
There is also knowledge transfer within the group. Peter Wallerstein is a member of Howden’s global supply chain core team and best practice from his department is shared with other departmental heads across the group, and that health and safety best practice is shared between H&S managers who meet annually.
Focus on the needs of future markets Howden Compressors’ new company philosophy, forged from its investment programme, its strong new markets and its lean programme, is to look ahead. It wants to better understand the changing needs of screw compression customers globally, keep improving the product at the high end of the market and further engage and communicate with its employees.
Jim Fairbairn says: “If we had not invested in this machinery last year, we’d be on a revolving door going out.
This is advanced and sophisticated engineering with global applications, exactly where good UK companies have a future. If we don’t continually invest we will be out of business.”