UK: Vickers' valuables. (4 of 4)

UK: Vickers' valuables. (4 of 4) - Keeping two Vickers tank factories busy will be a formidable task through the 1990s. An identikit version of the Newcastle plant now adorns the site of the old Royal Ordnance factory at Leeds, acquired by Vickers in 198

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Last Updated: 31 Aug 2010

Keeping two Vickers tank factories busy will be a formidable task through the 1990s. An identikit version of the Newcastle plant now adorns the site of the old Royal Ordnance factory at Leeds, acquired by Vickers in 1986. Simultaneously, McGawley and his opposite number at Leeds, Jim Prince, have to blend two completely contrasting management and working styles and traditions.

In good times the contrast between the two factory styles is obvious. Leeds has been used to building long production runs for the British Army. Its last Challenger 1 orders rolled straight off the production line in September to join the 1st Armoured Division in the Gulf, where their 96% availability was a major plus factor in seeking the Challenger 2 order.

By contrast, Newcastle's huge 546-metre long factory has developed an unrivalled experience of building small job lots. Its current workload includes a sizeable tank order for an African country, armoured recovery vehicles for the British Army, turrets for the Warrior tracked infantry vehicle, also of Gulf fame, and large steel caps for underground nuclear storage flasks. There is not much time left for change if Vickers is to exploit the brief window of opportunity in the world tank market. "For three years in every 15, there is a feast followed by 12 years of relative famine," McGawley claims.

Vickers is actually emerging from a current famine in pretty good shape ready to exploit the post-Gulf feast. The Newcastle facility, built in 1980, came in the nick of time to allow a sharp reduction in costs and improvement in working practices to see Vickers through the 1980s.

The new factory, which cost some £7.8 million, has actually been paid for in energy savings alone. The jumble of old sheds on the site used to cost some £750,000 a year to heat and light, against £90,000 for the new plant. Such measures make a huge difference to costs. The old Elswick needed 10 tanks a month to stay afloat. The new factory needs just two.

But McGawley is still not satisfied, despite the 40% improvement in added value per employee over the past five years to some £30,000. Adjustments are continually being made to the shopfloor, adding a new machine here, moving production cells around there, to shave costs. The rear sprocket (the driving wheel at the back of the tank) for Challenger armoured recovery vehicles used to take 13 weeks to assemble. During that time it would travel six kilometres round the factory, being machined and assembled. Now it takes two weeks and the sprocket travels 135 metres.

While there appear to be relationships between most parts of the group, one division stands apparently alone. Vickers Medical produces incubators, monitoring and diagnostic equipment. It also stands out as the one division to see a profits fall in 1990. Sir David, not one to make excuses for poor performance, defends the medical business, pointing to reduced spending by the National Health Service and US health care bodies, lost sales in Iraq and Kuwait, disruption in Eastern Europe and delays in approval for new products. Costs have been cut and he expects an "encouraging" 1991.

Beyond that, he maintains that the medical division does fit the profile of Vickers - world class manufacturing, strong brand names - but he claims that nothing, even tanks, is sacred. Alan Coats, analyst at Paribas, suggests: "Plastow's departure may lead to a less complex company. Vickers would appeal to the stock market more as a company specialising in luxury products and medical equipment than as a more wide-ranging conglomerate with defence and marine interests as well."

Sir Colin Chandler represents support for the tanks business and will doubtless have his own ideas. Whatever they are, he will find Sir David a hard act to follow.

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