Now is the time to step up new product development if you can get your hands on enough cash.
The maxim ‘if you carry on doing what you’ve always done – you’ll get what you’ve always got’ doesn’t quite work in a recession, and especially in the manufacturing sector.
The cleverest innovators have always led the way, but when the thinnest resource is money, can you really afford to continue funding costly research and development (R&D) projects?
Manufacturing organisation EEF has published its 2nd Quarter Manufacturing Trends survey for Yorkshire and it’s not surprising the region’s businesses are still keeping a tight grip on the purse strings. Although there are signs the decline in orders has stabilised, uncertainty about future orders and the ongoing squeeze on cash flow are weighing on investment plans.
Invest in the future
Sheffield Forgemasters International (SFIL) has seen it all before. Established over 200 years ago the company specialises in a wide range of heavy steel forgings and steel castings, and supplies worldwide industries in defence, nuclear, power generation, marine and construction.
“Money is still available for the right businesses. The Manufacturing Advisory Service is looking for innovators to support.”
After a disastrous trading period between 1998 and 2002, when the business was under US ownership, SFIL went into administration in 2003. But a management buyout (MBO) team led by Graham Honeyman brought the company out of administration in 2005 and has since managed an impressive turnaround.
Turnover has grown from £40m in 2005 to £120m this year with the addition of 250 staff over the same period.
Director Peter Birtles warns businesses against cutting costs on R&D technology at the moment as this will leave them in a position where they can’t compete at the end of a recession. But with some of the banks still trying to shore up their own balance sheets he says companies need to find innovative ways of raising finance.
“Before you approach the banks you need to tick a few boxes first and form partnerships,” says Birtles. “Our biggest strategic customers have a shared objective and benefit from us investing in new technology. Banks want to see other parties investing before they commit themselves.”
Help available
There are still government funds available to help improve the region’s manufacturing base if you know where to look. David Baggaley, marketing manager – business and enterprise at Leeds City Council, says: “Money is still available for the right businesses and manufacturing in Leeds is a major contributor to the region’s economy. The council, Leeds Manufacturing and the Manufacturing Advisory Service (MAS) are looking for innovators to support.
“The universities and MAS can advise on technical and business processes but you will also need help when it comes to getting your product out to the market. Protecting your intellectual property is critical, as well as developing commercial revenue streams. Some businesses with great ideas are aligning themselves with bigger players to reach the market.”
And Baggaley is bullish about the prospects for manufacturing locally. He says: “We have a highly skilled workforce here and the strength of the Leeds manufacturing sector is in its diversity. Manufacturers who continue to innovate will do well. It’s a fiercely competitive market and in my experience we have some of the smartest and most competitive players in their fields.”
Innovation is fundamental
“Manufacturers who continue to innovate will do well. It’s a fiercely competitive market and we have some of the smartest and most competitive players in their fields.”
Linpac Packaging, based in Knottingley, is renowned in the food packaging sector for having an innovations director.
Alan Davey oversees the new product development process for all ideas. Linpac operates a Stage-Gate system that begins with a preliminary look to see if the idea is within the company’s core strategy, and if it has the potential to make money.
If it passes through that gate then it proceeds to a more detailed assessment, implementation and, finally, audit. Across the UK and European operations Davey and his team look at over 2,000 proposals a year.
“Innovation is fundamental to our business,” says Davey. “We have a multi-disciplined team looking at opportunities and seeing them through to fruition. As part of our customer care programme we ask our biggest ten or 12 accounts in Europe to rate our performance. If they don’t rate us highly in terms of innovation, then it follows that they don’t give us new enquiries.”
A full version of this article appeared in the June 2009 edition of Yorkshire Business Insider. To subscribe visit our online Shop.
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