Sheffield's sharpest practice: In the first of a series on firms that have survived the toughest conditions, Nigel Cope looks at a knife-maker that honed its operation to compete

LAST Thursday the great and the good of Sheffield's cutlery industry gathered in the gilded spendour of the city's Cutler's Hall for the annual Hallamshire Feast. The occasion is a high point in the industry's calendar; fine wines, uniformed buglers and a meal consumed using some of the poshest knives and forks the industry produces.

But the great and good of the Sheffield cutlery sector do not fill the same sized hall as they used to. In the 1950s, when the hallmark 'Made in Sheffield' was famous worldwide, the industry employed more than 30,000 people. Now there are fewer than 2,500. In the old days, Fullwood Road on the east side of the city was known as 'Millionaire's Row,' because so many of wealthy cutlers lived there. By the early 1980s it was decimated by the closure of factory after factory.

There were two main reasons for the industry's problems. One was the decline in formal dining - not so many families keep a best set of cutlery for relatives' visits. The second was the increase in imports from low-cost producers such as South Korea and China.

'There was a degree of arrogance in Sheffield,' one manufacturer says. 'There wasn't enough investment, management was poor and they paid the penalty.'

But all is not doom and gloom. There are still about 100 cutlery companies in Sheffield and although most are small and family- run, there are a handful of survivors that can still beat the world. Arthur Price of England remains a force in upmarket table cutlery, or flatware as the industry calls it. And Hiram Wild is challenging overseas competition with low-cost cutlery for airlines and the hotel trade.

But the example of Richardson Sheffield takes some beating. With a history going back to 1839, the company had long been a mere also- ran in the industry, but it has transformed over the last decade into an international force in the kitchen knife market thanks to the development of the Laser knife.

Now the biggest knife producer in Europe - larger than the Finnish-owned Kitchen Devils - exports account for more than 50 per cent of its sales. Profits were up to pounds 2.5m last year on turnover of pounds 23m. While companies all around have been laying off workers, Richardson's staff has grown from 160 in 1981 to more than 500. Both Harvard and London business schools have used the company as a case study of survival.

'They have done a superb job both technically and in marketing terms,' says John Price, chairman of Arthur Price of England and president of the Sheffield cutlery and silverware association. 'It is well managed and the factory is first-class.'

Like many survivors, Richardson Sheffield owes its continued existence to a timely change of ownership. In 1960 the company was bought by Jerry Hahn, an American entrepreneur seeking a European blade maker for his knife business. It was Mr Hahn who gave the company many of the values it has kept, such as a concentration on customer service. He also takes a good deal of the credit for the development of the Laser knife in 1980, which catapulted Richardson into the big time, when many great names, such as Viners, one of the largest cutlers in the city, and Richards, a pocket-knife maker, were going bust.

Billed as 'the knife that never needs sharpening' and sold with a 25-year guarantee, the Laser knife has been the company's meal ticket for nearly 15 years. Its innovation is the unusual serration on scalloped edges, which optimise the cutting angle of the knife.

'Without Jerry Hahn buying the business and the development of the Laser knife, we would just be a small blade producer,' says Gordon Bridge, Richardson's managing director.

The idea came on a sales trip in the US when Mr Hahn was sent away by a Sears Roebuck buyer. 'Come back when you've got something different to sell,' he was told, 'like a knife that doesn't need sharpening.'

Mr Hahn, together with Bryan Upton, his managing director back in Sheffield, worked on a knife that could be sold as a premium product. Before 1980, knives were little more than a low-price commodity product. Mr Hahn and Mr Upton wanted a branded knife that could be sold separately or in sets in attractive wooden blocks as gifts for newlyweds or first-time home buyers.

The market was initially sceptical about the Laser knife. The sales director, Kathy Sanchez, spent hours cutting up telephone directories in demonstrations. But by 1982, the concept was established and the company never looked back.

The attributes that helped Richardson to develop the Laser knife are still visible in the company today even though Hahn sold the business to Macpherson, an Australian house-products group, in 1986.

The company's two factories in Sheffield - they have to be based within the city limits to use 'Sheffield' in the name - are highly automated and the company develops its own machinery if it cannot find what it wants in the market.

The factories pride themselves on their flexibility. If a customer wants a sample of a new knife, everyone in the factory drops everything to work on it. A fortnight ago, a Swiss customer visited Sheffield requesting a knife that would cut the peel from oranges and pick the pith off too. A runner was despatched to the grocer and there were soon oranges all over the place as computer-aided design operators and foremen put their heads together to develop a sample for the customer to take back with him to Switzerland that day.

It is a system that has helped Richardson to develop knives for individual markets.

In the display room there are short, dagger-type knives aimed at the Italian market, where they are used to hack at parmesan cheese. For the German market there is a serrated knife with large holes so the blade does not get wedged in the cheese. And for the Finns the company developed a long, double- ended knife for mushroom-picking, featuring a blade at one end to slice off the stalk and a brush at the other to remove the earth.

Speed of response is taken very seriously at Richardson. Phones are to be answered within three rings. Faxes are to have a response within an hour. Incoming phone calls and correspondence are to be answered in their native language.

'If a letter comes in in Swahili, it is answered in Swahili,' the marketing director, Glyn Morgan, says.

Kathy Sanchez, who speaks six languages, is a key asset here. Other staff are encouraged to take language courses and are given grants by the company to do so.

Staff are also encouraged to come up with new ideas and the company is currently broadening its product base. Last year it launched a range of mass-market dining cutlery called Cameo. Add-ons such as barbeque accessories and chopping boards are being considered.

'We know good ideas don't last forever,' Mr Bridge says. 'We've managed to get into this position. Now we've got to fight to maintain it.'

(Photograph omitted)