Chief executive of Ricardo plc David Shemmans tells Will Stirling about delivering exacting projects globally, pre-empting market needs for complex engineering puzzles and the gradual transition from a pure engineering consultancy to a niche manufacturer of some very special kit.
Bugatti Veyron. McLaren MP4-12C. JCB Dieselmax. Not a bad line up, is it? And what unites these extreme machines is Ricardo plc, the understated brains behind the engineering.
Ricardo is a rare gem in British industry. A class-leading engineering consultancy with a strong motorsport heritage, it has a footprint in all three main continents, works with companies across the high performance engineering spectrum from transportation to clean energy, exporting IP and certain high value manufactured goods.
The Shoreham-based company specialises in solving complex engineering conundrums to finely balance three, ostensibly incompatible, factors: performance, low carbon emissions and cost. Publically listed and turning over £160m a year, while frequently the ‘go to’ company in its own markets Ricardo is relatively little known in the UK. However, young guns who are serious about a career in mechanical, electrical and project engineering would cherish the company’s name on their CV.
But is it a manufacturer? The short answer is yes.
“We are now assembling complete engines, a first,” says David Shemmans, Ricardo’s chief executive. “When people ask me ‘what is Ricardo?’ I say we’re an engineering consultancy. But assembly and manufacturing is an important part of our strategy even if it’s almost a one-stop shop.” He adds: “We focus on designing engines, transmissions, electronic systems. Then integrating and calibrating all thesystems in harmony, to deliver carbon emissions and performance that the customer specifies, in a package that is something the customer wants to buy.” Dave Shemmans is direct, articulate and an easy talker. He emits a bright-eyed passion for his company and profession, and breezes through the interview with the enthusiasm of a man unfettered by too many corporate sensitivities. And he’s honest; here’s one of his business philosophies: “Surround yourself with people who are better than you – I really believe that. And never be scared if they chomp at your ankles.” Does this apply at Ricardo, too? “Although I’m an electronics engineer, I would never have made the grade of being an engineer at Ricardo. I was never good enough to succeed in that capacity, I’m convinced. We employ some very, very special engineers here.”
The interface of design and manufacture
Despite its stock having a wobble in July, Ricardo plc is doing well and it performed well through the recession relative to its number one market, automotive. Mr Shemmans was MD ofRicardo UK in the previous downturn in 2002. One of his first jobs was to implement a 20% slash in headcount. “I said if ever I get to run the plc, I would do whatever it took to avoid that.” Consequently, in the years leading up to 2008 Ricardo made a deliberate diversification play and pursued more commercial vehicle, defence and power generation projects. The strategy was prescient – when the recession came, it was brutal for the car industry.
From having more than 50% of its business in automotive in the 1990s, in 2008/2009 this proportion of order intake fell to almost zero.
Historically Ricardo has kept a low profile; this is a discreet industry, and customers with global reputations do not always want to say they are working with a third party engineering expert. For example, when McLaren’s enigmatic owner/chairman Ron Dennis first openly dropped Ricardo’s name visá- vis the MP4-12C engine (and even delivered a two metre picture of the car for display in the Shoreham office), company staff were not allowed to confirm any connection with the McLaren car.
Today, with several prestigious projects delivered or in the pipeline – Ricardo has an order book of about £100m – there is a strong sense that the company wants to bang its drum a little louder.
And, when clients allow, there is plenty to crow about. In September 2010, Ricardo and its partner Force Protection Europe won a very competitive tender to build the first 200 Light Protected Patrol Vehicles for the British Army, designed to replace the Snatch Land Rover. Originally called Ocelot, renamed Foxhound, the innovative vehicle was engineered with a clean sheet, featuring a V-shaped hull and high wheelbase designed to deflect bomb and mine blasts outwards, rather than launching the vehicle vertically up. “More personnel die from the vertical fall damage when these lighter armoured vehicles hit mines, than the physical blast,” says Shemmans. The first 100 have been assembled at the firm’s Special Vehicle division located at Shoreham airport.
“Do we want to be a large volume manufacturer? No,” says Shemmans. “But we will take on projects that will enhance the business. For this particular one it helped us establish ourselves more firmly with the military. It’s also a project that you have to do – it saves lives, it’s the right thing to do.”
The £165,000 puzzle
On July 13, Ricardo unveiled perhaps the brightest jewel in its crown – a brand new manufacturing facility employing best-in-class lean principles to assemble in semi-series the extraordinary engine for McLaren’s new MP4-12C road car, the first ‘micro mass market’ supercar to be built in the UK. Stuffed with clever technology in a compact package, the 600hp engine delivered all McLaren’s exacting specifications within the inflexible 18-month period from receiving the contract to delivery of the first engines. These included delivering 600hp in a sub-200kg unit and class-leading carbon emissions of 279g/km. “The engine also has to be visually attractive because it’s under a glass cover and has got to sound right both outside the car and under the car,” adds managing director of Ricardo UK, Martin Fausset. Almost as impressive as the engine design was planning and executing with a global supply chain of custom-made parts, produced in tricky batches of hundreds not tens of thousands, as well as the factory design, construction and ‘flow’, masterminded by ex-GKN man Tim Soar, all within the 18-month deadline.
The short production run of the McLaren MP4-12C presents a special challenge. “It’s a really interesting segment – you could say a mass market for supercars,” says Shemmans, a graduate of UMIST and Harvard Business School. “Bugatti will make 300-400 Veyrons per year. Although they have to be technically excellent, most of them are notgoing to be driven at their extreme performance limits – people don’t want to trash a £1 million car.” Bugatti still did the right thing and poured money into the engineering, he says. Compare this to a Ford Mondeo, however, a mass market model that goes into production with heavy investment to perform the job absolutely, partly because the cost of warranty failure is huge.