Every firm in MT's Awards for Manufacturing 2003 is ready to take on all-comers. Reports by Simon Caulkin.
When James Dyson announced in August that he was transferring his washing machine manufacture from Wiltshire to Malaysia, the news was greeted with resigned nods and sighs (apart from a few ritual trade-union explosions).
What can you expect with UK labour costs? ... inevitable structural shift ... sterling exchange rate ... unionised workforce ... This resignation is echoed in thinking at policy levels. A recent report on manufacturing by the Institute for Public Policy Research (IPPR), a left-leaning think tank, predicted that UK manufacturing, already down to a 16% share of the workforce, would continue to shed jobs. By 2050, manufacturing will employ only one in 20 and produce output of just 10% of GDP, half today's proportion.
What's more, the IPPR is unperturbed by the decline, seeing no quick fixes and sharply querying whether DTI assistance for manufacturing is value for money.
Ironically, for once there are fixes - not instant, but rather quicker than the IPPR's 50 or even 20 years. MT's Awards for Manufacturing prove it. Run, as ever, with Cranfield School of Management and supported by the DTI, the awards do indeed ask difficult questions about the direction of the UK economy, and British firms especially. But they also directly challenge the fatalism of Dyson and the IPPR.
On the basis of the awards database, it is possible to make these categorical statements:-
- UK firms can compete in the design, manufacture and delivery of high-tech engineering and electronic and commodity processed goods anywhere in the world, including Japan and China.
- The UK workforce, even a unionised one, can be as productive as any.
- 'Mature' markets and existing plants are no barrier to success.
- Although improvement never ends, by using largely internal resources, any firm can be brought into contention in world markets in three years; a real difference in performance can be made in one.
- The most important resources are time, effort and organisation, not money.
- There is therefore nothing inevitable about UK manufacturing decline.
Let's look at these more closely. As with all our previous award winners, many of the class of 2003 compete without excuses in world markets. From Andover, Stannah Stairlifts, manufacturing plant of the year, exports made-to-measure stairlifts to Japan and the US, beating big-name domestic suppliers on delivery time as well as quality. In competition with the great Japanese electronics firms, Baxall, based in Stockport, designs and builds CCTV cameras and the networks that control them for export all over the world, including China. From plant on Teesside up to 30 years old, DuPontSA competes on equal terms with greenfield sites in the Far East for world polyester markets.
All our plants prove the point about the potential of the UK workforce. A unionised factory on Merseyside producing dairy spreads? A high-end loudspeaker manufacturer in Worthing? A Cornish-pasty bakery in rural Cornwall? A Sheffield engineering firm turning out fasteners for construction and agricultural uses? Dairy Crest, Bowers & Wilkins (B&W), Ginsters and Gripple are all examples of superior industrial organisation in seemingly unpromising contexts, and all are steadily growing more superior year by year.
And that, of course, is the key. As Baxall's production director notes, the world is too competitive for any company to succeed with 10 managers deciding what to do and 200 operators waiting around to be told. Every ounce of intelligence in the factory needs to be creatively deployed to satisfy the customer better.
Take DuPontSA. Up to three years ago the Wilton site was imprisoned by the assumption that it was inherently unable to compete with more modern Far Eastern rivals. Breaking that assumption was like removing a blindfold.
When it studied the root causes for its failure to compete it discovered that they were contained in the assumptions - most of them were in its power to change. In three years, workers and managers at Wilton have upended those assumptions. With the aid of a small amount of investment in capital, but much more in people development and work organisation, the site has driven efficiencies up to world-class levels.
DuPontSA, Stannah and loudspeaker manufacturer B&W confront another brand of UK fatalism. A recent article in the Economic Journal showed that depressingly little of the UK's meagre productivity growth was the result of improvement of existing plant. Most productivity gain, the authors claimed, came from churn: closing old and inefficient plants and opening new and better-equipped ones, thus raising the overall average.
Yet, as in previous years, our list shows that there is nothing preordained about this. Many of our champions were once distinctly average. Their lesson is that the crucial first step to bootstrapping is an act of will - a decision to look unwelcome facts in the face and act: no more, no less. As Jim Collins notes in his book Good to Great, beginning the improvement journey requires a combination of brutal realism about the present facts and unwavering faith in where you want to go. All our award winners have managed this difficult trick.
But if the initial proposition is true, if, as managers and workers in all our plants would unhesitatingly assert, improvement to international standard and beyond is within the reach of any manufacturing firm, it poses a pounds 60 billion question (the amount that would be added to UK GDP if productivity matched that of international rivals): Why don't more firms do it? What's holding them back?
There's no simple answer. But a clue may lie in a theme detectable in the experience of all the award-winners of this and any other year: conspicuous commitment to an enduring purpose. Why is this so important? Think back to the need for both faith and brutal realism. Although initial gains from jump-starting manufacturing improvement are surprisingly quick and cheap, the results are cumulative. To embed the underlying disciplines (good housekeeping, total productive maintenance, team responsibility for quality and yield) and link them into a virtuous circle through learning and development, performance management and teamwork takes several years before the larger benefits feed through.
So patience, resolve and initial will are necessary. Is it a coincidence in this context that so many of MT's award-winners are privately owned?
True, Reckitt Benckiser, the Alton brewery, and Dairy Crest's Kirkby plant in this year's list belong to public companies. But the theme is clear enough to prompt the disquieting question whether in the UK's model of stock-exchange capitalism we may have developed an institutional framework that is fundamentally inimical to the patient managerial work of developing people and improving operations rather than doing financial deals.
Reckitt Benckiser, whose Hull pharmaceuticals plant won an award last year, is clearly an exception - a quoted company whose stock-exchange success is built on fierce operational demands. On the other hand, Baxall's CEO notes that venture-capital ownership of the Stockport firm has been impeccably long-termist - more so than his experience of a plc regime. How many publicly owned firms would have as part of their mission ensuring that manufacturing survives in Andover (Stannah)? Or would countenance an R&D spend of 10% - or 6% of revenues (Baxall, Gripple)? Or build themselves round the community and people-centred cultures of Ginsters and Gripple?
An impressive number of our firms are committed to final-salary pensions, private health insurance and profit shares, often equally split between all individuals. Memo to plcs: not one of our top-performing firms sees the need to attract good managers with the grossly unequal conditions or salary that disfigure many larger companies. Indeed, they intuitively know that any individual gain would be more than wiped out by demotivation of the rest of the organisation. Gain, like pain, must be shared. Private companies, being more personal, may be less distanced from that and other emotional truths.
All these companies underline the message that UK manufacturing decline is not an inevitability - it is a choice. We know that the potential for improvement is everywhere. All a company needs to get started is an MT awards self-assessment questionnaire, and the Cranfield case studies written about the winners for guidance along the improvement road.
And the corollary is that there are no excuses. Just do it.