As Elddis unleashes its latest touring caravans and motorhomes to the holidaying public, Tom Moore speaks to associate director Gary Jones to discuss the company’s latest round of investment.
When The Manufacturer last turned up on the doorstep of Elddis, the touring caravan and motorhome manufacturer based in Consett, County Durham, it was February 2010 and the economy appeared to be making a steady recovery. Since then, UK growth expectations have been consistently cut, the euro zone has become conjoined to the word crisis, and talk of a double dip became a self-fulfilling prophesy.
Stop, look and listen
Elddis had expected to hit £46m turnover the financial year running from September 2010 to August 2011, but didn’t meet this due to a shrinking marketplace, finishing on £42m instead. In 2012, the company is not relying on the market to grow, but instead focusing on increasing its share of the pie. To do this, Elddis went back to the drawing board and set up a number of focus groups, putting its ear to the touring caravan and motorhome market to find the demands and supply them. What they learnt has fed back into all stages of manufacturing process and resulted in a renewed focus on its products and in the way that it makes them.
Buying a touring caravan is serious business, with an Elddis-made holiday vehicle costing between £10,799 and £49,999, its products are a long-term investment. Elddis are no different to those companies at the cutting edge of other sectors in seeing innovation as the best way to build and maintain a commercial advantage. End customers buy with the next ten years in mind so the firm are concentrating on the future aesthetic appeal of the vehicles so that customers can buy without fear of it ever looking outdated.
Putting the eye into design
Angela Robson, associate director, aesthetic design and customer care, says, “We research both the domestic and foreign competition and work with our customers to find ways we can improve the product. What is becoming more and more important to us is customer. To engage with customers we have set up open weekends for customers to tour the factory and view the products.” The company welcomed over 1,000 visitors on site last year and expects even more this time around on 15-16 September 2012.
This type of customer-facing activity helps to identify trends towards new styles that shape the design and manufacture of its vehicles. For example, Elddis has identified a trend away from making seats up into beds. Robson explains, “people want caravans to be a home from home. We use 3D design to get a snapshot of the visuals and build full size mockups so we can get in and feel the vans to ensure they meet or surpass our customer needs.” Elddis has been using CAD design for many years, leaning on technology to consider what people want from a holiday and how they utilise space. “This product visualisation means that everyone can see it and sign it off, that every change makes real and practical sense,” says Robson.
The new programmes have improved the link between design and manufacture. Product clearance since the model year started in Aug 2011 has risen from 15% in week one to 100% in week eleven. The 100% figure has stabilised showing that capital spent in design means less time and money spent making alterations at a later date. Elddis’ associate director Gary Jones comments, “We have reduced the number of issues recorded on new vehicles from 58 in 2007 to 25 in 2012, on products where we use over 6,000 components.”
Weighing up the pros of investment
With fuel costs in the UK and elsewhere continuing to rise one of these trends has been weight reduction. End customers of want to save money, particularly when the vehicle is being used for a holiday, a time when people are hoping to spend their hard-earned cash for the year on their favourite pastimes rather than the petrol to get them there.
With this in mind, Elddis went on a weight reduction mission to shift pounds quicker than any celebrity fad-diet. The result? The firm saved an average of 45kg per vehicle over the last year. It made the design more compact through improved R&D, using composite technology and CAD software that may be more typically associated with the defence and aerospace sectors to plan space more efficiently. A £12,000 investment into new CAD structural drawing packages, linking CAD data to machine data, has enabled Elddis to produce the lightest 2-berth, 4-berth and 6-berth caravans in the UK, the Elddis Xplore range. This means that less petrol is consumed in towing the vehicle and higher spec caravans, such as the Avante 624, are now able to be pulled by an average mid-size family car – expanding the company’s potential customer base.
Elddis’ design manager Alan Bateman states that “product development has been really aggressive in the last two years.” A number of caravan and motorhome ranges, including the Xplore range that starts with a 930kgs maximum technically permissible laden mass (M.T.P.L.M) and won both the Caravan Club’s Design Award and Lightweight Leisure Trailer Award, have been fitted with under floor heating that reduces space and weight.
Reducing energy usage has been a key consideration behind the innovation at Elddis. Understanding that holidaymakers are spontaneous and don’t adhere to the time schedule lifestyle that heating time settings require, the company’s Buccaneer range at the luxury end of the market has incorporated a heating system that can be controlled internally or via a remote control. Elsewhere, the Avante 624 was installed with 100% LED interior lighting, saving up to 80% battery consumption and giving over 70% improved Lux readings.
Bringing production in house
These improvements have been developed alongside suppliers, but Elddis is increasingly looking to bring production in house. The holiday vehicle market is shrinking but Mr Jones is confident that the firm remains competitive and says that its USP is the way its products look and are styled. Following discussions with customers, Elddis identified the need to add flexibility to what it can do with its machinery. It has spent £180,000 on improving its tooling over the last two years and invested £340,000 into a Homag Baz worktop machine, aided by a £49,000 grant from One North East, a regional development agency that closed in March 2012.
The investment has given the company autonomy over its designs in a key quality area and has aided weight reduction targets by saving 6-7kg per vehicle since it was installed in October 2010. Jones says that the new machine has gives it the opportunity to design differently more flexibility to improve products. Jones explains, “We used to purchase worktops from external suppliers but have always found it difficult to get the level of service that we expected. Quality was always good but delivery was bad and the costs were high.”
Part of the problem was that Elddis has sought to reduce batch sizes as part of its continuous improvement journey in order to store less stock and increase quality. By bringing the machining in house Elddis now manages those smaller quantities and cannot be governed by the minimum order quantities of suppliers and the necessity to bulk buy when ordering from abroad to save on shipping costs.
Jones says that “before the investment in the worktop machine, we wouldn’t have been able to purchase the worktops that we currently have in the vans. We can now shape our worktops the way we want to, communicating with our aesthetics team in the process. We can now use the analysis obtained within our customer forums to create a closer link between our manufacturing what will ultimately fulfil customers’ requirements.”
Robson adds, “Historically, all worktops had a hard wood edge but everyone has different tastes. Some customers now prefer plastic type finishes so we now have the opportunity to make both hardwood and plastic edge designs.”
Higher quality but with lower costs
Typically, quality is associated with higher costs, but this new machine has allowed Elddis to save £100 per unit. The company no longer has to pay to transport components and can machine more quickly, shortening lead times. The percentage of aftermarket parts supplied within one working day has increased from 2% in October 2010 to 50% in October 2011. The cumulative percentage of parts supplied per working day graph shows the progress made on speed of response to customer parts supply. This is a vital improvement to the manufacturing process as the goods supply of aftermarket parts can lead to more orders for products.
Robson points out that Elddis’ brands cover all ends of the spectrum, bombastically stating, “Our USP in one word? Style.” Now that the company manufacturers all internal furniture components on site, it has the adaptability to change production in order to manufacture the latest styles. Additionally, the variety of products its makes means that by bringing worktop manufacturing in house, Elddis has saved significant administration and logistics costs from having to source components for its wideranging portfolio. It also means that the R&D spent on enhancing its luxury Buccaneer brand, which it purchased in 1998, can trickle down into its value for money ranges when it is cost effective to do so.
Jones adds, “Luxury brand sales of the Buccaneer and Crusader have gone up. So we are going to develop and launch a new range of products at the other end of the market as well. Our owners believe that we must continue to invest even if time gets hard.”
Skills on wheels
The recent investment has directly saved jobs as employees are carrying out roles that would otherwise have been outsourced. The company avoided any further redundancies after a round of cuts in 2008, although there has been a small amount of natural wastage. People are an investment that the caravan-maker is hoping to cash in on at a later date. Jones explains, “It has meant that we have kept valuable skills on our site. That one worktop project has probably saved five to ten positions alone. We’re keeping the skills on the remit that we will see an upturn in the market and the wider economy. We have all the skills in place to turn the factory back on to a higher volume production as soon as we see an upturn. We’ve invested a lot of money on training within a niche skills market, as our products are not something that you can go and get someone off the street to do, we can’t waste that.”
The firm has what Jones phrases as an awful lot of “old-style” apprentices, with 11 members of the workforce gaining recognition for 21 years service in 2011 alone. “When people come to work at Elddis they usually stay working at Elddis,” says a buoyant Jones. As a former apprentice himself, he provides a refreshingly honest opinion on industry’s role in the substantial decline in UK apprenticeships during 1980-2000. “Everyone always blames it on the government, but industry is to blame too – people just stopped employing apprentices. We are now industry leading for employing apprentices. Over the last six years, we have created 20 apprenticeships.”
At a time of mass unemployment Elddis has struggled for three months to fill two vacancies, highlighting the neglect of manufacturing skills that the government and industry are now trying to correct. Jones says, “It is becoming more difficult to get engineers with the skills we require and this goes back 20 years to when people were not bringing engineers through. It is having an effect on all of the industry, which is why we are trying to bring apprentices through… so we can grow our own.”
Safe as houses
This in-house attitude has led to opportunities for existing staff to progress and learn new skills. Elddis is a member of the British Safety Council and won its fourth industry-specific International Safety Award this year for continual improvement and being a leader within its sector. The moving annual total (MAT) of any reported accident has reduced significantly, dropping from 125 in 2007 to 55 in 2012.
Elddis and Buccaneer come under the Explorer Group, which has an accident rate just one quarter of the industry average. The industry standard for caravan manufacture is 1,811 reportable incidents per 100,000 hours worked, but for the first nine months of 2011, the group averaged 400, rising slightly to 600 for the final three months.
Jones puts this record down to “a renewed focus on awareness and risk assessments stemming from the passion of one guy, Mel Dunn, Elddis’ health and safety officer. He has the final say on whether things do or don’t happen and carries out all the training in house.” Unfortunately, Elddis’ safety superhero who has taken the company through the lean management tool 5S, which has brought about a tidier and cleaner work environment resulting in fewer accidents, is due to retire in October 2013.
To pass on his skills the firm has promoted Colin Wheatley, who is currently in the middle of a three year succession and training period. Jones says that “if the skill level is there then internal recruitment saves costs and gives an opportunity to current staff. I would have had to have spent more on salary and several thousand pounds to advertise, plus any external candidate would have to learn about our business. It just makes more sense to plan ahead and recruit internally.”
Standing up for UK manufacturing
Jones is passionate about skills and is unflinching in his argument that the market will inevitably improve, declaring that this type of UK recession will not last for the next 20 years so companies should look to the future. In a vehement defence of what UK manufacturing can offer, Jones claims that “UK businesses don’t always get a fair crack of the whip. It has had some success despite manufacturing bases being shut down and moved elsewhere.” Elddis fights off competition from Europe and further afield but has an advantage when selling to the UK market because there are substantial costs involved in transporting a caravan or motorhome, even if a rival firm has lower labour costs abroad.
Elddis’ recent success at trade shows highlights its strong performance in a difficult marketplace. At the National Caravan Show at the NEC in September, the whole show was down by 460 units but the company consolidated its position by increasing its share of the show by 3% in terms of total sales. More recently, Elddis’ share of the Caravan and Motorhome Show 2012 in Manchester went up by over 150%, something Jones puts down to the time invested in developing its products.
The company produced 2,800 touring caravans and 1,100 motor homes during 2011 and is aiming for stabilisation this year with some small growth. Elddis remains confident that concentrating on increasing its market share now will result in strong growth when the market begins to grow.
