Turning up the heat

Posted on 9 Mar 2009 by The Manufacturer

With the ever-increasing focus on climate change, Baxi Group UK has had to move quickly to translate market migration into continued business success. Louise Hoffman speaks with Jon Williams

Baxi Group UK, with its impressive 150-year history, has both seen and felt all of the twists, turns and developments in the technology, attitude and culture of the UK and, indeed, the wider world.

Established in 1866 by Richard Baxendale, the company remained a family business until the mid 1980s when it was sold to the workforce and became the largest employee partnership of its kind in the country. The firm continued on its path of innovation and profit – a profit which was always ploughed back into the business since it was essentially owned by its shareholders.

“Then in the late 90s/early 2000 we bought Potterton, which was our main competition in the UK, and became a consolidated group, and then about 12 months after that we merged with another company called Newmond, and formed the Baxi Group as it is now,” explained engineering manager Jon Williams.

Over the last 10 years or so, Baxi Group UK has been faced with much cultural change. A swift and major market shift from standard efficiency to high efficiency boilers three years ago took the company by surprise and resulted in a slight loss of UK market share. “We had to react to that position and consolidate manufacturing from two sites down to one,” said Williams.

The consolidation process meant the closure of the firm’s Padiham facility, and the relocation of its assembly operations to the main site 20 miles away in Preston – a process which saw total floor space drop from 54,000 to 28,000 square feet and which took 10 months to complete.

“The project was finished about eight months ago and the results have paid dividends phenomenally,” Williams enthused. “We have now started to see growth back into manufacturing, but doing it with significantly less space and significantly less cost.”

The move also provided the company the chance to improve its own operational efficiency. “We were given the opportunity to completely redesign all of the assembly lines – moving sites gave us the catalyst we needed to do that,” said Williams.

“We were constrained by the amount of space we had to work in, so we employed lean techniques we had learned during the last five or six years and employed them in the line designs, so they were considerably more compact and efficient.

“We effectively went back to basics – if we make things complex, what does it give us? It doesn’t really give us anything apart from a lot of headaches in terms of breakdowns. So we went back to the drawing board and came up with these very simplistic lean lines, and in doing so we took out a lot of the direct labour associated with the manufacturing of boilers.”

The redesign has allowed Baxi to achieve a 46 per cent improvement in direct efficiency, with lines producing 26 per cent more per hour than they had been, mainly thanks to the installation of extra test rigs, which have increased the speed of flow as well as contributing to a 97 per cent First Time Pass quality measurement rate.

The water used in these test rigs is recycled – just one of the firm’s green initiatives. Others include the monitoring of energy consumption in site buildings, with any unexpected leaps in usage investigated and actioned, and the launching of a supplier ‘milk run’. Williams explained: “Rather than getting our European-based suppliers to deliver from their factories direct to us, we now send out a vehicle to pick up from, say, five or six different suppliers in a geographical area and then return to the UK. So rather than getting 10 vehicles in, it’s just one vehicle with the right mix of parts. This saves on inventory, but it also saves on transport and energy costs.”

Indeed, although it has continued to be primarily involved in manufacturing European domestic boilers, Baxi Group UK has also found itself able to answer the needs of an increasingly environmentally-aware society.

“A lot more renewable technology is being developed by the group,” said Williams. “There is such a migration towards high efficiency products, solar products and renewable technology products, and that is being driven mostly by legislation. The market is beginning to evolve and we’re moving with that.”

The company is gearing up to begin mainstream manufacture of its latest heating innovation – Micro CHP (combined heat and power unit) – later this year, a product which integrates a traditional wall-hung boiler with electricity generation capabilities.

“What we’re seeing, as a consequence of how the market is changing, is heating companies like ourselves are looking at complete heating systems rather than just boilers. So we have to sell, say, a boiler with a solar panel and solar hot water cylinder, and maybe a heat pump. This is because of the way building regulations are going – they look at the total energy usage of a house, and how to achieve the net figure of X amount of kilowatts of energy in the most energy efficient, environmentally friendly way,” Williams outlined.

“What we’re going to see in the coming years, I think, is a shift away from building boilers and supplying them in bulk, to supplying kits of complete systems – kits in smaller quantities more frequently. And that is going to affect the whole industry.”

But Baxi Group UK has more than proved it is up to the challenge this market change is presenting. “We are now producing more boilers than we’ve ever done before, despite the reduction in equipment and space. In fact, the Preston site is now responsible for the manufacture of 95 per cent of the group’s UK-sold boilers.

“From a human point of view, this is a phenomenal achievement,” he concluded.