UK: HUNTLEIGH'S PAINLESS ROUTE TO STARDOM. - Innovation, resilience and product pride have taken this medical group right to the top.

by Jim Levi.
Last Updated: 31 Aug 2010

Innovation, resilience and product pride have taken this medical group right to the top.

Rolf Schild's long career as combined inventor, engineer and industrialist has reached its zenith at a time when most businessmen are settled in to retirement. Now aged 70, the executive chairman of Huntleigh Technology is still as dedicated to improving his company as ever. And it shows: the stock-market performance of this healthcare equipment group outstripped all others among the top 1,000 UK companies last year.

By concentrating on three niche areas of expertise in the medical equipment field, Huntleigh has grown at high speed. In the process, Schild, a strong-willed German Jew who escaped to Britain just before the war when he was a boy, has become a role model for aspiring entrepreneurs.

Huntleigh's success is a tribute both to Schild's inventive genius and to his remarkably resilient character. In August 1979 he, his wife and daughter were kidnapped by bandits from their holiday home in Sardinia. Schild was released first, then his wife and finally his daughter. The nightmare lasted seven months. But the story did not end there, as Schild then pursued a number of newspaper magnates through the courts for what he thought was irresponsible coverage of the story. Lesser men might have retreated into their shells after these ordeals. But Schild saw no alternative but to continue his work. Within five years he had launched his family business on the stock market. He was then 62.

Since 1987, Huntleigh's profits have increased from £107,000 to £5.5 million and sales have risen from £10 million to just under £30 million. Better still, Schild is confidently laying down plans to double the company's production capacity at its main Luton plant by the end of this year.

Kleinwort Benson's Anthony Dew has followed Huntleigh's fortunes and predicts that its profits will reach £7 million this year and £8.8 million in 1994. He believes that the company 'is doing everything that a UK manufacturer which is developing products for world markets should do. It gets the product right and then markets it correctly. It is known throughout the world for its healthcare products. That is a remarkable achievement for such a small company.'

Three-quarters of Huntleigh sales are exported. The mainstay of the business is a range of mattresses designed for patients at risk from bedsores. This accounts for half the company's total turnover. There is nothing like belief in your own products to boost sales. A few years ago when Schild underwent a quadruple bypass heart operation he took his own designed Nimbus mattress into hospital with him. 'The medical staff were so impressed they ordered a couple and threw out the competition,' he says.

Bedsores, or pressure sores, as the medical profession prefers to call them, are a major problem in hospitals. This was not openly acknowledged until the mid-'80s because they were seen as a sign of nursing staff neglect. They can start within half an hour of a patient entering hospital and can break the skin to form ulcers within an hour and a half. 'The patient is very quickly at risk,' Schild says. Today the cost of treating the problem and the savings which can be made by preventing pressure sores are discussed openly. 'For a long time the extent of the condition was not appreciated. But treatment, just for one patient, can cost up to £20,000,' says Schild. 'So the problem is obviously worth preventing from a financial point of view, quite apart from the fact that the designs help to alleviate pain and discomfort.'

Bedsores are mainly associated with geriatrics, but Schild says that even children can develop them in hospital. 'I have even been asked to design a bed for horses,' Schild says. 'A valuable racehorse could certainly develop this type of ulcer if left to lie for five or six hours. In the US, where we make half our sales of these products, it is a $1-billion-a-year market. But the Americans are used to spending big bucks. Nevertheless, they could probably get the same result by spending half that.'

He believes that, in theory, every hospital bed should have some sort of pressure sore prevention mattress. But, realistically, Schild and Huntleigh managing director John Wotton estimate that the worldwide potential annual sales of Nimbus-style support systems is of the order of £1 billion a year.

Huntleigh is already the market leader in Europe for support mattresses and among the top two or three worldwide, yet its annual sales, including other healthcare products, are a tiny fraction of the market it is aiming at. 'There is competition, particularly in the US, but nobody else has succeeded in developing these bed products in quite the way we have, with automation built into the system,' Schild claims.

The potential for the mattress range alone explains Huntleigh's recent success. Its also explains the company's willingness to expand production at a time of patchy economic recovery in the UK and the US, and deep recession throughout Europe.

This summer Huntleigh is converting a warehouse next to its Luton site to create more research and development facilities, as well as more manufacturing facilities to meet demand.

In America, plans are afoot to start the group's first overseas manufacturing operation in a joint venture with a local company. 'Our plan is to develop products specific to the US market place,' managing director Wotton says. 'There, the emphasis is on prevention and we should be able to develop certain products specifically suited to its market, using US materials which may be less expensive than in the UK.'

In the UK, market share is increasing rapidly as the group has extended its marketing drive by employing a team of ex-nurses and training them as sales advisers to hospitals. The company also has a rapidly-growing mattress rental operation. In the past four years the overall sales force has risen from just three or four people to over 60. In the US, Australia and Germany, where Huntleigh has its own subsidiaries, there are plans to build up the local sales forces along similar lines.

Huntleigh has two other broad product areas. One is a range of compression devices for treating lymphatic and vascular problems and preventing deep vein thrombosis. The latter causes 20,000 deaths per year. Schild believes many of these are preventable. The second is a new range of electronic diagnostic tools launched last year. These products are made in a state-of-the-art factory in Cardiff and are designed to provide general practitioners and other people in the primary healthcare market with additional aids for screening patients.

Wotton, who joined Schild in the late '70s after a career in international marketing in the pharmaceutical industry, says of Huntleigh's achievements: 'In any business you make your own luck and success. The recession has been used by a lot of industrialists as an excuse for their own failure and complacency.' He used to meet businessmen on the export circuit who warned him that he could not successfully penetrate the Japanese home market, especially not with electronics products.

'Our Queen's Award for Technology this year was based on electronic products we sell to Japan,' he says. 'We are competing directly with local Japanese manufacturers in their own home markets.' He believes Huntleigh is successful in Japan because 'we have taken a long-term view'. Huntleigh, he says, made quite sure that the products they delivered in Japan 'were compatible with the needs of the market place. For example, our mattresses were about eight inches shorter than the product sold in the US and Europe because that is what the market wanted.'

Continuing success in Japan, he believes, is a question of getting to know the market, discovering niches that can be exploited and then 'expanding out of those niches'. Schild says the relationship with its Japanese distributors goes back a long way and is built on trust. 'The Japanese market, currently about 5% of our total sales, could easily become as big as the US market for us,' he believes.

The Huntleigh founder has been inventing new products for the medical world since the 1950s. He devised the original iron lung for the treatment of polio victims, one of his most impressive feats. Schild went on to make a personal fortune when he and his partner, Peter Epstein, launched their SE Laboratories company on the stock market and sold it to Thorn EMI in the mid-'60s. Huntleigh was formed in 1975 when development of the Nimbus mattresses began.

Schild remains very much the hands-on engineer. He is constantly inventing and developing new products with his team of 40 technical staff, led by technical director Stephen Cook. A constant theme of successful innovation runs through the Huntleigh story: thanks to Schild's ability to invent products that work well and sell well. It certainly seems as if the kidnapping had the effect of binding the family closer together. Huntleigh has a family business dynasty in the making. Schild's two sons, David and Julian, are both directors and he and his family retain a majority of the shares.

Julian, who is finance director, was only a teenager at the time of the kidnapping but had the tricky task of negotiating with the kidnappers while his father was being chased around Europe by the press. He stresses that his father 'has never lost his pride in being an engineer. Huntleigh is much more like a German business,' he says. 'Engineers in Britain who become successful businessmen tend to give up engineering and just become managers. Engineering is still both work and a hobby to my father. He travels the world visiting a network of friends searching for new ideas.'

The growth of the business has been entirely organic. No acquisitions have been attempted, although a joint venture with Slumberland has been finalised, and overseas manufacturing is planned both in the United States and Japan through local joint venture partners.

'We are cautious on aquisitions,' Schild admits. 'Our expertise is formidable in many ways and we do not feel we have to buy a lot of expertise.' He takes the view that many companies have failed 'after they have been successful and made money because they made just one acquisition too many'.

The long-term plan, according to Wotton, is to have 'corporate footprints' in all the main markets for healthcare as well as in Eastern Europe. Although new product developments will come out of the group's considerable research and development effort - almost 10% of turnover has been earmarked for this - the company will try to avoid becoming involved in too many clinical areas.

'Our policy is to take materials we understand and add value to those materials in a way that gives us a good cash flow and profit from our design,' says Schild. 'If you start to diversify into other areas, although the engineering may be OK, you may suddenly find that the distributor has not got the expertise to handle the product. Distribution is a key factor for a company like ours where we cover more than 50 countries and where many of our distributors have been with us for more than 10 years.'

Staff turnover is relatively low at Huntleigh, even though it is 'not among the biggest payers in the world'. The reason for this is almost certainly to do with the importance of the company's work. Huntleigh certainly takes its role very seriously. This is reflected in a growing emphasis on service in the business, where the sales staff of fully-trained nurses are taking on a more advisory role.

Wotton explains, 'More and more of our business is in the rental of our products which implies a larger and larger service and advisory element. One way this company is going to grow is by looking at the whole area of patient management, whether in the home, in hospital, the nursing home or the hospice.'

The company's assessment of hospital patients' needs by its medically-trained staff may not necessarily involve recommending the use of a Huntleigh-made products, Schild stresses. 'What counts for the company is having a reputation for integrity and professional services based on our products giving real value for money.'

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