UK: Britain's Best Factories.

Management Today and Cranfield School of Management's Best Factory finalists are discussed.

The latest trade figures, showing yet another one billion pound deficit on visible trade, are further testimony to the sad decline of a country that was once the workshop of the world.

In better times the "Made in Britain" stamp on the machinery and tools that left these shores stood for reliability, quality and solid engineering. All the things, in fact, that British consumers now associate with "Made in Japan" or "Made in Germany". As a result, it is now over a decade since UK plc last had a positive balance on its visible trade account.

Incredibly, there are British-designed, British-built goods on the market today that manufacturers sell under oriental-sounding names in order to persuade consumers that what they are buying is Japanese rather than British. This might, one hopes, be good marketing but it seems rather shamefaced, a retirement from pride in British manufacture. Elsewhere the climate is different: in Japan, Germany, the US and France the vital link between manufacturing industry and the health of the economy as a whole is at the centre of government strategy. These are countries where the brightest go into manufacturing - and not just those who can't gain admission to the more exalted circles of government and the professions. Nevertheless, after half a century of successive dollops of bad news, we may be in for some good news. Several sources indicate that the UK's comparative gulf in standards of quality, technology and cost competitiveness may have ceased widening. A report last winter from the CBI made headlines when it showed that the export trend was rising, that manufacturing output was higher than in '81, and that investment levels were holding up and industrial relations were markedly improved. A survey earlier this year by Coopers and Lybrand examined 450 of the biggest manufacturing companies in the country. Dramatic improvements showed up on the quality front, with double the number of BS5750 or ISO9000 accreditations since 1989. The rate of product innovation was shown to be on the increase, bringing considerable competitive edge to manufacturers who were able to reduce their development times.

In every sector that was surveyed, businesses were not only talking about investing in skills training but actually doing something about it. Labour relations were noted to be improving, with managements and unions working more harmoniously together. There were at last signs that the bugbears of the '60s and '70s - strikes, shoddy quality, unreliable suppliers, a lack of innovation and investment - were diminishing.

In January Management Today, in association with Cranfield School of Management, set out to find the cream of what looks like a new era in British manufacturing. A record 188 companies responded to our challenge - "How good is your factory?" They were asked to complete a 14-page form consisting of 100 questions which covered factors such as lead times, changeover performance, inventory control, labour productivity and delivery reliability. Eleven finalists emerged over five different industry categories, with the results computer-calibrated for the inevitable diversity in commercial complexities.

Throughout July and August, a Management Today/Cranfield team visited each factory to judge at first hand the manufacturing claims each made, and to quiz the management on a further set of questions dealing with issues such as manufacturing strategy and improvement objectives. As much time was spent on the shopfloor - talking to operatives, examining procedures, assessing the plants on pace, working environment and housekeeping - as in the boardroom. And just as much, if not more, was learnt when the team witnessed things going wrong. At Board Products in Bedfordshire, for instance, the management had talked about their efficient shopfloor teamwork and, indeed, a sudden jam in their corrugating machine when the judges were there provided an impressive demonstration of this. There were amusing moments too, such as when an earnest operative at Kodak asked Cranfield's Professor Colin New if he had heard of Just-in-Time. Professor New modestly replied that he had.

Out of all these investigations came our five industry category winners and our overall Factory of the Year 1992. They clearly illustrate the enormous strides made in manufacturing in the last few years. Nowhere did we find a litany of yesterday's approaches - the dreary mechanics of time and motion studies, or supposed "productivity" schemes. At plant after plant, managements explained that they had discarded these because they impacted quality, destroyed teamwork and throttled output. They discovered that there were other ways to motivate people - read how the process plant winner Kimberly-Clark does it, for example, or small business winner HD Plastics. While the description of the bonus scheme at small business finalist Willett Systems - "continued employment" - may be hard to swallow, it does encapsulate the new industrial reality of the '90s.

Palming shoddy goods off onto their customers proved the final nail in the coffin for many manufacturers in the '70s and early '80s. Consumers bought Japanese or German products instead because they worked right from the start and they kept on working - the door handles didn't fall off. The commitment to quality of some of our finalists was staggering. Most had BS5750 or equivalent, but - more importantly - they were all really dedicated to quality and service. Even if their procedures were not all graced with the Total Quality tag, the finalists, generally speaking, had captured the spirit of the approach far more successfully than the sort of company that says it did Just-in-Time last year, this year is doing Total Quality and next year might try Activity Based Costing. The secret of success lies in an attitude we encountered time and again; that is, not implementing things slavishly, but extracting the applicable essence for a particular business.

All in all we had 188 excellent entries, which gave us 11 first-class finalists and one superb Factory of the Year. But once the cheering has died down, there are some hard lessons to be learnt. If the rest of the British manufacturing industry made as big an effort as our finalists, the UK's persistent visible trade deficit would diminish rapidly. What's more, the jaded consumers who prefer to stick to the Japanese and German brands that they know and trust would once again buy British. As well as fewer imports, there would also be more exports, since factories as good as these can not only compete in the global economy, but can win. Our finalists prove the point: tiny Willett Systems exports 90% of its output, Kodak 80%, Ketlon 40%, Kimberly-Clark 75% - even HD Plastics, a manufacturer of ordinary black domestic rubbish sacks, manages to find an overseas home for 20% of its products.

But there is more to be gained from improving our factories than this. As James Bentley, managing partner of KPMG's Centre for Manufacturing Consultancy points out, the effects of a sophisticated approach work right back through the supply chain, bringing employment, prosperity and an improved balance of trade.

Despite the tough times in the automotive sector, for instance, leading component suppliers - such as engineering plant winner Ketlon - are growing. A key weapon in their armoury is the slicker management of inventories and working capital. The best companies in the business have inventory turns of 12, double the sector's average. If every company in the sector could raise its performance to those of the best, says Bentley, a massive two billion pounds would be released for investment in new products and better factories. "By the year 2000," he estimates, "the UK could be Europe's second largest producer of cars and components."

Our three electronics industry finalists all displayed impressive purchasing and logistics strategies. If the electronics sector as a whole could slice just 2.5% off its foreign material spend, Bentley says, the country would save £0.5 billion of foreign currency.

Much of British manufacturing industry may be in the doldrums, but business is certainly booming for our finalists as they reap the rewards of their investments in improvement. We were given details of overtime, recruitment and growth. These are prizes that the rest of the country can share in. Jobs, higher earnings, export success and a strong and stable currency - Britain's best factories are leading the way.

Winners

Factory of the Year 1992 - Kodak - Annesley plant

Best Household Products Factory - The Peugeot Award Kodak - Annesley plant

Best Process Factory - The KPMG Peat Marwich Award - Kimberly Clark - Flint Mill.

Best Electronics Factory - AT and T Istel Award Oki (UK)

Best Engineering Factory - The British Nuclear Fuels Award Ketlon (UK)

Best Small Factory - The Development Board for Rural Wales Award HD Plastics.

Runners-up - Certificates of Commendation

Best Household Products Factory - The Peugeot Award - Board Products (Eastern)

Best Process Factory The KPMG Peat Marwick Award - The Robert McBride Group - Barrow-in-Furness

Best Electronics Factory*

The AT and T Istel Award Varian Oncology Systems (UK) Philips Components

Best Engineering Factory - The British Nuclear Fuels Award Lucas Aerospace - Defence Fabrications

Best Small Factory - The Development Board for Rural Wales Award Willett Systems

* Shared award.