Made in the UK
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Hugh Facey, the plain-speaking founder of Sheffield-based Gripple, which makes wire joining and tensioning devices called Gripples, sees no need to manufacture anywhere other than the UK, and his 180 staff are fully behind him.
‘The culture of the business is “us and us” rather than “them and us”,’ he says. ‘In the recent flooding, the employees stayed here all night to clear the water so that we could continue the next morning. That sort of loyalty makes a difference.’
It should be noted that Facey’s staff also have a 40 per cent share in the company, so it wasn’t done purely out of love.
The real secret of Gripple’s success is attributable to a smart mixture of innovation and sound investment.
‘I used to run a fence-making business but I sold that to start producing the Gripple, as I realised there was huge demand for the product,’ he comments.
Facey was right to trust his instincts. The tool is popular: 250 million Gripples have been sold across 65 countries, and there are 500 variants. Exports represent 80 per cent of production.
According to Facey, record sales of £3 million over a seven-week period were recently achieved, with £22 million targeted for the year. ‘We spend a lot on R&D,’ states Facey. ‘In fact, we spend about five per cent of turnover on it and are constantly developing new products. We now look for 20 per cent of our turnover to come from products we’ve developed in the past three years.’
The notion of manufacturing being profitable doesn’t sound quite right â“ not in the UK, anyway. Where success stories do exist, it’s because the company has appreciated the dynamics of the global economy and changed from generalist manufacturing to specialist, niche areas. It’s the only way to compete with low-cost, high-volume production from countries in Eastern Europe and Asia Pacific.
Economic forecasting group the ITEM Club observes that the manufacturing sector in the UK has seen almost no growth in output since 1997. An additional finger of blame â“ if it can be called that â“ is pointed at the success of financial and business services.
‘The City is like the cuckoo in the nest, growing ever larger and crowding out sectors that might otherwise be viable,’ says ITEM in a recent report.
This means manufacturers now find it harder to compete for the best graduates and increasingly have to look overseas to find skilled engineers and scientists, raising labour costs even higher â“ 50 per cent over the past decade, says ITEM.
Of all the business sectors in the UK, manufacturing appears to be one of the hardest in which to make a decent margin. Peter Spencer, chief economic adviser to ITEM, says: ‘Although there has been a decline in areas of traditional manufacturing such as textiles, the output from pharmaceuticals has quadrupled, and from aerospace doubled, in the past five years. Click here to view 'The two-speed economy' table
‘What the UK must aim to do is compete for exports in higher-valued manufacturing activities, as well as services, rather than competing for products that can be produced cheaply in other countries.’
Peter Claydon, commercial director of venture capital firm YFM, confirms that it’s not all doom and gloom. ‘The general perception is that manufacturing is in decline with job numbers falling. But actually, there are a huge number of very professional companies with a strong manufacturing base in the UK â“ small, medium and large,’ he reassures.
For a company to make it in this field, it takes guile and relentless ingenuity. Claydon says: ‘Those operating in commoditised markets have needed to shift their manufacturing base abroad. But if you’re creating a value-added, specialised product, there is a future for you in the UK.’
Manufacturing roots
Carclo, which specialises in plastics, is an excellent example of how to prosper. Its headquarters in Ossett, West Yorkshire hint to its textiles roots stretching back to the dawn of the industrial revolution.
The company develops high-spec headlights for ‘super cars’, as well as medical and optical devices, such as parts for asthma inhalers. Chief executive Ian Williamson, who joined the company in the mid-1990s when the focus was on producing wire and steel, explains the shift in direction.
‘In 1996, the year after I joined, the pound soared against the Deutschmark and that left us in trouble as our competitors were German,’ he says. ‘So we restructured, selling parts of the business and making an acquisition in the technical plastics arena to add to our existing plastics division. We became a leading maker of assemblies for mobile phones.
‘Then in 2000 we saw the collapse of the UK telecoms industry â“ at that time the UK was the largest producer of mobile phones â“ and within months it had all shut down. Not just [former telecommunications giant] Marconi but a complete industry was wiped out by cheap-labour competition from the Far East.’
Like those of its peers, Carclo’s tale is inextricably linked to the broader UK economic story. There are three kinds of products it manufactures from centres in the UK, the US, the Czech Republic, the Netherlands and China: medical equipment, where regulatory issues and controls are important; products with highly automated production and no labour; and very low-volume technical products, including the ten super-car headlights it makes a month.
The geographical spread is necessary if the company is going to stay competitive. Williamson explains: ‘We’re still a relatively small company at around £80 million in sales, but we’re globally spread. You’ve got to follow your customers sometimes and offer a global capability.’ Click here to view 'Components of manufacturing labour competitiveness' table
Williamson provides the example of a customer opting to move to China to reduce costs: ‘Carclo was already established in Shanghai and served many customers from there. In this instance, the customer ceased production of its complete product in the UK and transferred assembly to a China-based contract manufacturer. We were asked to transfer production from our UK factory to our China factory, which we did.’
Fight for survival
Some years ago, papermaker James Cropper’s management realised that being a plain old paper mill wasn’t going to cut it. As finance director John Denman recalls: ‘We realised you weren’t going to survive without being either really big or niche. We decided on the latter and set up Cropper as a speciality low-volume, high-quality paper mill and invested accordingly.’
Nowadays, the company is working with defence technology company Northrop Grumman on a stealth material for aircraft. Denman says the outfit is ‘capable of doing things that other people haven’t even thought of yet’.
The technical fibre products division, for instance, has been a slow burner, admits Denman. ‘But we saw potential and built relationships with key customers and have steadily grown our annual sales,’ he adds.
Other products to be developed are carbon-fibre tissues for the fuel-cell market, anti-microbial paper for hospitals and an adhesive tape to stick the wings of planes together. ‘Those rivets are just for show â“ planes’ wings are basically stuck together with double-sided sticky tape,’ says Denman.
The figures add up
The finances show diversification was a good idea. Last year’s revenues from the technical-fibres division were up 34 per cent, helping push group sales up eight per cent to £69.1 million and convert the previous year’s loss to a £2.5 million profit.
However, there’s always an exception to the rule and, in this instance, it’s carpet-maker Victoria that has taken an unorthodox strategy to sustaining growth. Established in 1896 as a weaver of tapestries, Victoria hasn’t moved offshore, slotted into a niche or survived solely though acquisition.
‘We’ve invested in state-of-the-art equipment,’ explains the company’s managing director Alan Bullock. ‘Our competitors have not done that because they’ve assumed that the market would get better. They’re not manufacturing in a very efficient way.’
Recently, the company spent £2 million on a machine that will, over time, cut costs in half and increase operational efficiency. Bullock says: ‘Labour costs are a big item and we are now making over three million square metres of carpet in the UK with less people than it took to make a third of that quantity a few years ago.
‘We’re committed to the UK and have a skilled workforce for whom our investment means a good future. We have no need to go offshore.’