Last Updated: 31 Aug 2010

Most Improved Factory; Sponsored by KPMG Peat Marwick.

The peace dividend has not been good news for defence manufacturers, but one factory at least has something to smile about. The Dynamics Division of British Aerospace Defence Ltd, at Lostock, near Bolton, is this year's Most Improved Factory. The plant makes missiles - Rapier, Alarm, Seawolf, and others - along with (in the case of land-based weapons) their guidance and launcher trailer units. It should not be assumed, that a military trailer is anything like as simple as its civilian counterpart. These have unique wheels, hubs, brake drums, even tyres - 10,000 individual components and an equally staggering price-tag.

The factory, which occupies a sprawling 42-acre site, was at one time 'the largest machine shop in Western Europe' - and it had problems to match. 'We used to be world class at fire fighting,' remarks Dave Aspey, head of manufacturing, wryly. But in recent years it has changed out of all recognition. Management layers have been stripped out: there are now only half as many as in 1989. Steps have been taken to end the old 'them' and 'us' attitudes by eliminating divisive conditions of service: there used to be five levels of canteen, for example. The former functional layout has been replaced by product-related cells with painted kanban squares. The most committed aficionado of Japanese-style production techniques would find plenty to applaud here. But he would also find a lot more that is novel, individual and genuinely innovative.

The factory floor tooling location systems are among the most thorough that the judges have seen, although much of the equipment is old and fully written-off in the books. On the other hand, substantial sums of money have been spent on people and their training - where appropriate by employing consultants. Every member of the 900-strong workforce (down from 3,500) has been through a three-day team-building programme. Within the manufacturing cells multi-manning is now widespread. One of the cells has 33 men and 47 machines, and is responsible for producing 870 components on demand. The missile wiring looms are assembled on boards two at a time, rather than singly as before: the operative simply repeats on the second board every operation that he has just carried out on the first, and produces it 'almost for nothing'. The electronics assembly area has actually achieved the fabled 'one-minute set-up'.

The shift from cost-plus to fixed-price contracts entailed more than a change in the relationship between the factory and its customers. It triggered internal changes, too, including a different attitude towards management information. There used to be 67 accountants on the site, who kept track of everything. These days there are only six. 'Measuring things doesn't add value,' says Aspey. 'So we don't try to do it.' Information about work-in-progress, for instance, is at best sketchy, but Aspey is not greatly perturbed. 'Get the number of people right, get the "drumbeat" right, and material will flow as planned,' he argues. One further detail that impressed the judges: in the cells every machine has a 'flag' on it, indicating its current status - working, setting-up, under repair or waiting for material. 'The lines talk to you,' says Aspey. Some companies spend hundreds of thousands of pounds to get much the same information from fancy computer systems.

A new focus on defect prevention, rather than detection, led to the former army of 256 quality inspectors being cut to just 12. Talk about Total Quality is cheap, but before you dare take a step like that in the weapons business you need to be pretty sure of your ground.

Managers at BAe Defence Dynamics Division reply laconically that their Sea Skua missile was launched 12 times during the Gulf War - and registered 12 hits. The Dynamics Division factory itself might not score 12 out of 12 in every respect, or in every department. But it gets the award for having achieved a great deal.

Most Improved Factory Award

Sponsor: KPMG Peat Marwick

KPMG Peat Marwick is the largest auditor of The Times 100 companies in the UK. KPMG's Manufacturing and Technology Unit is a multi-disciplinary business covering accounting, corporate finance investigations, tax and consultancy.

The consultants' experience stretches from strategic planning to shopfloor productivity, and their re-engineering and change management projects embrace both suppliers and distribution companies. Two specialisms are the implementation of pan-European business systems and Total Quality Management.

Activity: Missile and launcher assembly

Task: To assemble and test sophisticated military equipment

Complexity: High

Size: 910 employees

Outstanding Features: Employee commitment, cellular production, practical factory-floor innovation.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Is it favouritism to protect an employee no one likes?

The Dominic Cummings affair shows the dangers of double standards, but it’s also true that...

Masterclass: Communicating in a crisis

In this video, Moneypenny CEO Joanna Swash and Hill+Knowlton Strategies UK CEO Simon Whitehead discuss...

Remote working forever? No thanks

EKM's CEO Antony Chesworth has had no problems working from home, but he has no...

5 rules for work-at-home productivity

And how to focus when focusing feels impossible.

Scandal management lessons from Dominic Cummings

The PR industry offers its take on the PM’s svengali.

Why emails cause conflict

And what you can do about it.