If anyone tells you the UK has no future as a manufacturing economy, point them to Andover. In this sedate Hampshire town they will find Stannah Stairlifts, which leads the world in building stairlifts for the elderly and infirm. Stannah disproves many a myth about what it takes to succeed in a global market: that you need to be publicly owned (for access to capital), huge (for economies of scale), and run by whizzkid MBAs loaded with share options (to pick up on all the latest management theories).
Oh, yes, and that you can't compete with the Far East from a high-cost base like the UK.
Stannah is a home-grown story in the best possible way. The company was founded in the 1960s by the entrepreneurial family that still owns it.
(Other companies in the group make lifts and distribute the products.) Partly through Stannah's pioneering efforts, the UK is the world's largest stairlift market, and the company prospered quietly until the going got bumpy in the 1990s. At that point a period of rapid demand-led expansion was followed by stalling volumes and declining profits as an unfavourable exchange rate pushed up export prices and foreign competitors took advantage of a weakening euro to undercut them.
'We were very paternalistic, and part of that was shielding people from the bad news,' concedes managing director David Walton. The crux came in 1999, when the company was faced with what has come to be known as 'The Graph' - a grim-looking return on sales chart that finally destroyed the illusion that life could continue as before. Stannah had no choice but to address fundamental issues of quality, cost and product and people development, which had been disguised by the sellers' market of the early 1990s.
Since then Stannah has worked hard to overhaul every aspect of the business.
As ever, it starts with the customer. As marketing director Peter Gilbert points out, stairlifts are not an aspirational product: no-one buys one until they have to - at which point they want it next day. They also require it to work faultlessly out of the box and to keep on working. Safety and reliability are paramount.
On the other hand, Stannah manufactures only in the UK (it has a second site at Blaydon, Newcastle), and every stairlift is made to measure. Meeting this demanding customer need requires sensitive marketing, accurate design and manufacture, and brilliant logistics, including installation carried out by distributors. Working through both products and processes, Stannah has reorganised itself into manufacturing cells and teams, improved standard operating procedures, overhauled the supply chain so that many of the most important components are vendor-managed and delivered direct to lineside kanbans, and redesigned the product. In a joint venture, it has also launched a revolutionary (for once the word is justified) surveying kit called Stairtracker, which uses photogrammetry to achieve survey accuracy of a few millimetres over a typical six-metre stair rail.
Stairtracker is taking the industry by storm.
The result of these efforts, all driven from within: since 2000, productivity has risen by 40%, out-of-the-box defects are down by 60% and on-time-in-full delivery to distributors has reached 99%. Lead times have been halved to a guaranteed 16 working days, allowing Stannah to deliver faster to the US or Japan than domestic rivals on the spot. Volume has gone up 57% within the same manufacturing space - and that graph looks much more cheerful.
Walton believes that the underpinning of progressive private ownership has been an important element in Stannah's story. It has allowed the company to take a long-term view of both product and staff development, and now that the two are fully aligned, the momentum seems unstoppable. Larger companies might take note of people values that have remained consistent through tough times and which are expressed in salaried status for staff and equal profit-share payments for all. Significant new product innovation is in the pipeline, which will give a further turn to the virtuous circle.
All this both vindicates and strengthens a sense of purpose that is almost palpable. When Walton arrived as the first senior management outsider in 1989, he found that his mission was to 'ensure the survival of manufacturing in Andover'. Manufacturing has not only survived but thrived, and Stannah should be case-study reading for every medium-sized engineering company in the land.
- South Yorkshire is a great place for manufacturing industry. With one of the largest regeneration programmes in the UK, South Yorkshire is committed to building an even stronger advanced manufacturing and metals business base, supported by high levels of funding. To help ensure this happens, Renaissance South Yorkshire has been created as an independent partnership with members from Yorkshire Forward and the local authorities of Rotherham, Barnsley, Doncaster and Sheffield. For details visit www.surprising-sy.com.