British manufacturing: the best thing since sliced bread
Sunday 18 August 1996
When the world started again in 1945 German industry left us behind. But we can still make our mark, as three UK firms celebrating their 50th birthday have demonstrated
Max Gore-Barton is 82. He comes into the Dualit fac- tory off London's Old Kent Road every day, and sits in a large black chair next to his son Leslie. Mr Gore-Barten founded Dualit in 1945, but for the last decade Leslie has been in day-to-day charge. His job: to satisfy the voracious demand for Dualit's legendary robust toasters.
Until 15 months ago another octogenarian, Charles Parsons, came to board meetings of Karrimor, the company he and his wife founded in Accrington in 1946. Now, this supplier of rugged equipment to rugged people is run by their son, Mike. It, too, is a success, employing 350 people, turning over pounds 20m and growing fast.
Geoffrey Howard has not been into HMD Seal/Less Pumps' office in Eastbourne for several years. He is 89, and his family sold out to US engineering giant Sundstrand two years ago. HMD is, however, busy reinforcing its world lead in high specification pumps, and is doing nicely. It, too, was founded in 1946.
Throughout the country, hundreds of companies are celebrating their 50th birthdays, give or take a year. The reason is simple - the world started again after the Second World War. People left the forces brimming with ideas and technical skills, and discovered that consumers would pounce on anything they could supply.
These three companies, each a leader in its respective field, have more in common than their birthdays. They tell, in microcosm, the story of post-War industrial Britain. Each is small - a sign, partly, of deliberate conservatism, but also of a failure to invest and expand.
Many German companies are half a century old too - but most are bigger than their British cousins, with sales of perhaps pounds 50m rather than pounds 10m. Their survival rate has been higher too, partly because of a steadier economy, partly because takeovers have been so rare, but primarily because they have been more professionally and aggressively managed.
That is the bad news. The good news is that these three companies have veered from the low growth path in the past decade, and are all now as well-managed as their German counterparts. They are helping to slow Britain's industrial decline and reflect a significant, though patchy, upsurge in the standard of British management. It is just a shame it did not come 40 years earlier.
Charles Parsons set up his bicycle shop in Waterfoot, Lancashire, in 1931. Eight years later he had an accident that led, 12 years after that, to his blindness. Meanwhile, the end of the War had brought him a problem and an opportunity. He could not buy bicycle bags but he could get cotton, so he persuaded his wife and her sister to make up bags for him. Soon they were selling in other shops too, and Karrimor was born.
In the late Fifties the company started making rucksacks, though when Mike Parsons joined in 1960 it still had only seven employees. He built Karrimor into an internationally respected brand. Its rucksacks found their way onto Himalayan expeditions, and Mr Parsons' own obsession with outdoor pursuits meant he was the company's best tester and salesman. At 54, he has just run his 23rd horribly gruelling Karrimor Mountain Marathon. "If we try a product we don't understand, it doesn't work," he says.
By 1980 the company had three factories and 300 workers. Then disaster struck. Sterling and interest rates rocketed, making much of Britain's industry, including Karrimor, hopelessly uncompetitive. Mr Parsons shut two of his three factories and cut a third of the workforce.
After that, he says, "everyone said we didn't need to make things at all - Karrimor was a brand, so we could just source everything from abroad. But I grew up learning how to design and make things that sell. I didn't want to give that up". So Mr Parsons started making clothing that would sell counter-seasonally to the rucksacks, and tried some of the fancy new manufacturing techniques he had read about. "They didn't work," he says.
In 1988 he discovered what he had been doing wrong. He signed up for a study tour of US manufacturers and, he says, "I was staggered by what was out there." He learned what parts of British industry - mainly in the automotive sector - already knew. That by applying a few common-sense principles it was possible to transform productivity and quality. And there was no reason why he could not compete with the world from humble Accrington.
Three US trips later - including one to the famously efficient textile maker Milliken - and Karrimor is now super- efficient. The factory is divided into "cells", as approved by all the gurus, and a slick reordering system means every Karrimor product is, in effect, made to order.
The most difficult thing, Mr Parsons says, has been to convince his staff he is not crackers. "I assumed that because people could relate to American films, they could relate to American management techniques," he says. "They bloody don't - it is only when you tell them something is going on in Milliken in Wigan, they say 'Ah!'. "
For the people of Accrington, the overriding advantage of Mr Parsons' new system is that manufacturing can never be transferred to the Far East - only a company that is physically close to its market can possibly offer the flexibility it demands. How many people would Karrimor employ in Britain had it gone down the importing route? "My guess is 18 warehousers and six stitchers," he says.
The process has been painful - he reckons the change-over to the new systems deprived the company (meaning him and his family) of pounds 1m in lost profits. "It has been an enormous effort, but we are now the industry's most significant supplier," Mr Parsons says.
Leslie Gore-Barten appears to be the antithesis of Mr Parsons. He prefers his black Mercedes sports car to running shoes, and gets his tan in the Caribbean, not the Pennines. He is also scornful of trendy management techniques, and spurns the idea of "getting close to his customers". His company does not even have a receptionist.
But recent history reveals that the two have more in common than they might think. Max Gore-Barten was a Swiss engineer who was trapped in Britain during the War, and ended up monitoring German broadcasts for the intelligence services. He was by nature an inventor and in 1945 bought a small factory to turn his inventions into reality. One was a sophisticated cocktail shaker, another an electric fire (called the Dual Light), a third a small electric toaster. The toaster sold well, but Mr Gore-Barten decided he did not want to compete against the likes of Kenwood, which by then was already mass-producing kitchen appliances. So in 1952 he built a large commercial toaster - the first in the world with a built-in timer. And that, in terms of development, was that.
Although the shape has been streamlined, the Dualit toaster is more or less as it was 44 years ago - with a few innovations such as a filament that uses the same heat-proof tiles as the Space Shuttle. It was expensive then, starting at five guineas, and it is expensive today - at pounds 120 and upwards. Like Karrimor, Dualit grew slowly at first. .The product was highly profitable and Leslie, who joined 20 years ago, was inclined to follow his father's instincts.
"Why bother killing yourself making 50,000 toasters when you can make the same profit with 5,000?," he asks. By the early Seventies, Dualit still had only 20 employees.
Then, despite his best efforts, Dualit began to grow. Mr Gore-Barten accepted that he had an Eighties icon on his hands, and he had to satisfy demand that was growing at 25 per cent a year.
By the late Eighties, he says, "we had a severe problem with over-demand". He expanded, buying first the factory next door, then the one next to that: he has now gobbled up a whole London street.
Dualit has become a slick manufacturer. Twenty years ago 20 people made 50 toasters a week; now 70 workers make 2,500 appliances - soup and water kettles as well as toasters. Turnover, which is secret but "under pounds 10m", has been growing at 20 to 30 per cent a year for the last decade.
As with most good management, most of what Mr Gore-Barten has done is common sense. His 24 assemblers are responsible for making 10 appliances at a time - they put everything together and stick a badge on the bottom. If your new Dualit toaster has the code "2" on it then it has been made by Luigi Zenelli - and if it goes wrong in 10 years' time Mr Zenelli will be asked to put it right. Mr Gore-Barten trusts his workers and pays them well too - assemblers are paid piecework and earn up to pounds 25,000 a year.
Does it make sense to pay manual workers such a salary? Yes: the wage bill for the assemblers comes to only about pounds 500,000. And where Mr Gore- Barten needs to automate, he does: capital investment is running at pounds 300,000 a year.
Charles Howard and his brother Geoffrey started work in their father's engineering factory in the Thirties. Emerging from the War, they started Hydraulic and Mechanical Developments with the aim of developing a pump that would not leak. Their solution was brilliantly simple - they would abolish the seals so there was nothing to leak. Instead of connecting a pump physically to a motor, the two were connected via magnetic rings: by putting one inside and the other outside a pipe, there was no need to have any holes, so leaking was impossible.
Scouring war surplus materials, the Howards found the components they needed - notably tube sections from periscopes and magnets from limpet mines - and set about manufacturing in Geoffrey's garage. The business grew, and for the next 25 years HMD had a near monopoly of the seal-less pump business.
They did not, however, pursue growth aggressively. "They didn't have a sense of how big the company could be," says Doug Twyford, the marketing director. "They invented something that is recognised worldwide, but they were happy to be the sustainers of 100 families in Eastbourne." He suggests that had they tried to sell in a more coherent way, turnover could be three times its current pounds 12m.
When the big US pump companies developed seal-less products, HMD found itself under pressure. It now has 15 competitors, and while it is still number three in the world, it has had to battle. "We had some savage hard times," Mr Twyford admits.
The US giant Sundstrand bought HMD in 1994. It was impressed by its engineering skills, but not by its manufacturing. The factory was grubby and disorganised and, they reckoned, the product was costing 10 per cent more than it should.
A thoughtful young production manager, Ian Wallace, has been examining the latest manufacturing techniques and considering which ones are appropriate. Mr Wallace is by nature cautious. "Every time I read about just-in-time, cells or whatever, I think yeah, great - but you've got to tailor it to your own business."
The factory is now brightly coloured and clean and workers are - by choice - wearing "Teamwork since 1946" T-shirts.
Delivery times have been brought down from 19 weeks to six, and quality and productivity have improved. All, Mr Wallace says, "just through tidying up, and tweaking here and there".
The key, as ever, is getting the workforce on side. "We are involved in getting people involved - it's amazing what comes out when you drive decision-making to the lowest level."
All HMD is doing now is what it should have done years ago - and what every other company should now be doing. If it does - if good management spreads like a benevolent virus - the next 50 years could be exhilarating for British industry.
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