Slaying
the Dragon
When Dragon's Den Investor James Caan told 250 entrepreneurs
that British manufacturing is dead he upset a few people. One of those
was fellow panellist Gary Dutton, Chairman of Synseal, who picked up the
gauntlet and threw down one of his own when he told the audience that
James deserved the top prize for daft comment of the day.
As
well as the quick retort Gary went on to make some pertinent points about
British manufacturing. ‘James should listen to someone who knows
about the British manufacturing industry properly. The fact is that the
unions and then the Far East have, in turn, decimated the UK manufacturing
sector. But some industries such as mine are not labour intensive. In
fact, 80 per cent of our cost is made up of raw materials. These are commodities
that we and the Chinese buy on the markets. Therefore, what advantage
they have by way of notional labour cost reductions are balanced out with
getting the finished product from the other side of the world.’
And Gary's comments are backed up by the figures. EEF, the engineering
and manufacturing support and employment advice for business, has recently
published results for manufacturing growth in 2007.
The survey showed the best conditions for manufacturing for ten years
with rising levels of output and new orders matched by expanding employment
levels. Investment intentions are at their strongest since 1995. And the
number of companies reporting improving profitability has risen from 4
per cent in 2003 to 34 per cent in 2007.
'The economy is tough but manufacturing is coming out on top. Over recent
years more than a million jobs have been lost in the manufacturing sector.
But much of that is because efficiency has been improved. In fact manufacturing
output has increased over the same period. So it's no wonder that seven
out of ten manufacturing companies expect the UK to remain their prime
location for production and assembly over the next five years.
'So it looks like James Caan wasn't well briefed.
'But no business can rest on its past successes. And nor can any industry.
The window industry has been brilliantly successful. According to statistics
over 80 per cent of properties in the UK have had some windows replaced
with PVC-U.
'So what about the future? 2008 has already proved to be a tough year
for many fabricators and installers. Many systems suppliers have been
struggling too. In recent years we've seen Aluplast, Marshall Tufflex,
Premier Profiles, Schuco and Status all close UK production.
'But perhaps more worrying is the number of systems companies who've stopped
investing in the future. Because without investment in the future it's
just a matter of time before we see more closures.
'As sales reduce and margins tighten fewer companies are willing to invest
in replacement extrusion tooling. Those companies that rely on banks for
large capital purchases will struggle to justify the expense. When companies
stop investing in tooling failure becomes a self-fulfilling prophecy.
'Synseal saw this first hand when it bought Permacell Finesse. Investment
in extrusion tools had stopped. And the customers suffered as the quality
of the products was compromised as tools wore out. Only when Synseal bought
the company and invested £2 million in tooling did quality improve.
'Without an investment programme every metre of profile that's extruded
is a countdown to closure.
'Synseal has a comprehensive re-tooling programme. Again this year we're
spending £1 million just on replacing existing tooling, this doesn't
include any new products. In addition we invest money in protecting the
most vital parts with a new surface treatment process while other parts
are treated with carbide. And we treat our tools with respect. We know
exactly how many metres each tool can run to keep it running correctly
and we keep everything in optimum conditions.
'For other companies without a tooling investment programme every metre
of profile that's produced is a ticking time bomb. It's only a matter
of time before the company will fail. The companies that will survive
are the companies that continue to invest.'
Tel: 01623 443200
Web: http://www.synseal.co.uk
