The Manufacturing Report

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If you take any notice of the great chef, farmer and all round foodie, Hugh Fearnley-Whittingstall, you should always know the provenance of the meat you buy! It was with this theme in mind our ‘The Big Question’ asked six designers if it was important to know the manufacturing origins of the products they specify, and more specifically the badge Made in the UK.

Commercial interior design is an amazing sector and we wanted to give the ‘makers’ their moment in the SPOTLIGHT.

This report puts the focus on the UK, although we also take a look on page 53 at some of the key overseas manufacturers. We don’t profess to have created the most scientific or indeed 100% comprehensive report but we do hope it will give you some food for thought.

The headline figure for the UK furniture manufacturing industry just passed the £8 billion mark in 2015, up 4.6% on 2014. The bad news for the bosses at UKTI is that imports grew by 8%, with China being responsible for a significant chunk of the pie, and rising.

Our interview with Steve Dixon, the supremo at Johnson Tiles, shows that changes to China’s market economy status could have significant effects on the UK sector, potentially putting UK manufacturing companies in a weaker position compared to the government-supported Chinese equivalents.


Skills

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A reoccuring theme throughout our research has been skills. Something that has been at the heart of German economic psyche since the Second World War are apprenticeships. The current UK government has come alive to the value of young people training and is saying all the right things about boosting numbers and driving up the quality of UK apprenticeships. The need to move away from ‘invisibles’ (banking, shipping, finance) and towards making things has even got David Cameron talking about the ‘Germanic approach’.

Whilst on the face of it the government push for apprentices is working, rising significantly since the coalition came to power in 2010, once the surface is scratched it is clear that the aim of boys and girls making things and learning their trade has been hijacked somewhat. It was widely reported that one in ten new English apprenticeships were created at the supermarket, Morrisons.Hardly the beacon of craft the government had in mind.

Whilst great British firms like Jaguar Land Rover follow a similar model to the typical German model of a three year tenure and at least one day a week of classroom teaching, it appears the majority don’t.

You will see from page 47 that the vast majority of the manufacturers we featured do invest in apprentices and most have indicated they are growing those numbers. The Specialist Joinery Group in Craigavon, Northern Ireland, whose recent work has included Estée Lauder (coming soon) and National Grid have just opened a dedicated Apprentice Training Academy to nurture fresh talent. Of their workforce, the group employs 18 apprentices. Speaking to Mix, Group Managing Director Ciaran O’Hagan explains: ‘We view our Academy as an investment in our ability to deliver client satisfaction. Whilst providing apprenticeships is a fundamental step in retaining our craft skills base, it also delivers wider benefits in terms of employee engagement, retention and commitment. Many former Specialist Joinery Group apprentices can now be found in strategic management roles. The motto is ‘look after your staff and they will look after your customers’.’

Training and developing staff is a key theme in many of our Spotlight features and no doubt will also feature in our Mixology 2016 awards as companies show that they are doing their bit for both their teams and the community

Jonathan Hindle, MD at KI, gives his view and provides some context from a manufacturer’s perspective. ‘Hopefully it is clear to everybody that we need to invest in UK manufacturing as a whole to better balance our economy. The statistics for the wider economy still make bleak reading – a widening trade deficit of around £85bn in 2015, declining exports and near-record imports. China alone accounted for around £18bn of this deficit, despite exports increasing by over 13% compared to 2014. Encouragingly, exports to the USA increased by 16% and by 30% to Saudi Arabia over the same period.’

The current head of Department for Business, Innovation & Skills (BIS) is Sajid Javid MP. The Secretary of State is responsible for strategy and policy across BIS.

Some of the department’s main policy areas include business law, enterprise and business support, trade policy, science and innovation. Steve Dixon from Johnson Tiles gives Mix Interiors a wide ranging interview on the potential dangers of the current path taken by the government. The following page sees industry luminaries also add their very experienced opinion to what the Government should be focusing upon.


Advice to Government

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With the EU referendum just a few months away (we’re still waiting for Number 10 to apologise for the clash with Mixology!), political debate is everywhere. It’s in pub conversations, on daytime TV and in even permeating our workplaces.

So with the heart of this issue dedicated to manufacturing, it’s therefore the perfect time for us to discuss the issues currently – and deeply – affecting the UK’s manufacturing sector.

We travelled to the Potteries to meet with Stephen Dixon, Managing Director of one of the UK’s leading manufacturers, Johnson Tiles, and President of the British Ceramics Confederation, who is keen to explain what these issues currently mean to our businesses – and how they could continue to negatively impact on British manufacturing.

AMAZING INVESTMENT

‘We employ around 400 people and have been making tiles here for a long time – since 1901,’ Stephen tells us. ‘We make about 3 million tiles every week. That should put us in a really good light in terms of the government. We’ve invested around £50 million over the past 15 years on the manufacturing plant alone – so really driving what is a world-class, state-of-the-art manufacturing facility.

‘In that 15 years we’ve doubled the amount of tiles we produce per tonne of carbon we consume. We’ve essentially doubled our energy efficiency. All our lighting here has are either LED’s or extremely high-energy fluorescents. We’ve changed all our lighting over the past four years and that has halved our electricity bill. We also have heat recovery on our kilns. Any surplus heat that does come off them is channeled back into the system.

‘We’re doing this because we should be doing it. Making tiles – making anything for that matter – in the UK isn’t easy. It’s a challenge. We are one of the most expensive labour rate areas in the world. We are significantly more expensive than the majority of Europe – we are 25% more expensive than Spain and 50% more expensive than Portugal. Therefore, we have to be efficient and we run the plant very, very efficiently.

EFFICIENT & SUSTAINABLE

Energy is our second biggest cost behind people. It’s a big deal – just short of 25% of our manufacturing costs – and we do everything we can to minimie that cost. I can’t categorically prove this, but I’d guess we are probably the most energy efficient tile factory in the world. You’d have thought then, that this is something that would have been supported by our government. At present, we don’t feel it is.

‘There are things called Climate Change Agreements currently in place and very intense energy users get these – and we also get 100% allowance. These are run by Europe – and I’m not going to Euro-bash here. The issue here is not with Europe – it’s more with our own government.

‘Europe has put a proposal on the table that basically means that we would keep those allowances beyond 2020, when everything else is going to change. Our own government has turned around and said ‘No, we don’t want to do it like Europe has proposed, we want to do it another way’. That essentially means that we would lose 75% of those allowances – and that would cost us £2.5 million a year.

‘The government is basically shifting the allowances from heavy users to very heavy users – such as steel. If you are a very intense user then you’ll still get your allowances. In fact, you’ll get more than was being offered by the European Union, so us heavy users will effectively be helping to pay for or subsidising very intense users such as steel. This is the politics around the jobs losses that the steel industry has suffered. This is not just about tile companies – it’s about the brick manufacturers and sanitary ware manufacturers as well. I don’t think the government really appreciates what it’s doing here – and that’s why we’re down in Westminster doing the lobbying we are. The local MP’s are very supportive.

FURTHER CHANGE

‘What we’re doing is, through the BCC, trying to get all the MP’s to work as a cross-party group to lobby government – to make them aware of what they’re actually doing here.

‘We’re not being greedy. We’re looking to simply maintain what we’ve got today.

‘Then there is something called Renewables Compensation – which applies to electricity – and that is even more bizarre! This is again the   government’s interpretation of European legislation.

‘As things stand, because of the fact that we make more profit than the other leading tile manufacturer in the UK, they’ll get compensation and we won’t. In other words, the more successful you are, the more you get penalised!

If you manufacture tiles in Italy or Germany, you already get Renewables Compensation under European legislation. The governments there already give to manufacturers – so even though, in theory, we are all working under the same legislation, it is the British government’s interpretation that we believe is at fault here. They are simply not supporting manufacturing in this country in a consistent way.’

WHAT THE FUTURE MIGHT HOLD

‘If proposals stay the way they are it won’t put us out of business – but we would have to consider outsourcing more of our production. It’s a huge deal and was raised by our local MP recently.

‘Then there is the issue of giving China market economy status. It currently doesn’t have that status. The organisation that measures these things recently found that China categorically failed four out of the five measures. However, this is really a political decision to try to get investment out of China into Europe. If that status is granted, China will essentially have carte blanche to export products into Europe at whatever prices they want. The government is saying that this means goods will get cheaper in the UK.

‘What they’re not saying is that the anti-competitive situation that arises in China – which is effectively government funded – could well put both UK and European manufacturers way out of business. If you look around the UK, this will mean the loss of thousands and thousands of jobs. We’ve got some very big issues going on right now and the UK government needs to understand just what this could mean to not just businesses like ours, but to British families and entire communities.’


Best Advice

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It is fair to say that with the advent of the internet, advice and great quotes can be easily found. However, the following gems are a little closer to home, kindly given us by some of the leaders of the UK manufacturing industry. We wonder which of the following would be appropriate for your place of work.

Many years ago, a demanding customer told me: ‘If a manufacturer wants to do something they always can’. NO is never an option.
JOHN IRWIN, Tangent

To really know your markets, understand their unique requirements and expectations – by having satellite offices and local sales people strategically placed in key markets.
ELAINE PATTERSON, Ulster carpets

I’ve heard many pieces of advice over the years, and have managed to ignore most of them! But, one that has always stuck with me is ‘Whatever you do, enjoy it; be positive and try to win.’ It’s not always easy to achieve all three but I always try to apply this to whatever I do.
RICHARD SCOTT , Herman Miller

Change before you have to.
EWAN TOZER, orangebox


Biggest Regret

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Regrets are like hard foot skin, most of the people who suffer from it tend not to bring it up in conversation. Mick Jagger’s view on regrets is ‘The past is a great place and I don’t want to erase it or to regret it, but I don’t want to be its prisoner either’. We asked some of the leading manufacturing heads about their regrets – we’re grateful that they were kind enough to share with us.

I’m fortunate that with a great family, enjoyable career and some wonderful life experiences, I don’t have any big regrets. Though, as a child, I always wanted to be a pilot – sometimes I do wonder how life would be different if I wasn’t making office furniture!
Richard Scott, Herman Miller

Not starting the business 10 years earlier.
Brian Murray, Boss

That we didn’t move to comprehensive UK manufacturing earlier.
Jonathan Hindle, KI


Company Spotlight

CARLICK

The company was originally established in 1973 as a family business, manufacturing contract furniture for the hospitality and leisure sector. In 2007, the business was acquired by its current executive management team in a multi million pound buy-out backed by private equity funding from North West entrepreneur, Martin Ainscough (whose family sold its share of their share of the ubiquitous yellow cranes for £255m – in business terms minutes before the financial crisis).

Today, headed up by MD Neil Harrison, the business is operated by a management team with over 30 years combined experience in the contract furniture sector and it has become a supplier of choice for many of the leading PLCs, operating multiple branded chains within the bar, restaurant and hotel markets.

The £8m+ turnover* company now employs a workforce in excess of 100 employees and operates from a modern 85,000 sq ft facility based near Manchester city centre and, according to our research, is doing very well.

PLEDGE

Pledge is keen, and rightly so, to state its manufacturing credentials. The company has the capability to produce in-house both metal and wooden components as well as upholstery and assembly. As we hear regularly from readers, clients are keen to make specific requests with both fit-out and product design and therefore the nature of Pledge’s manufacturing approach is clearly set to take advantage of this trend.

Director of the £12m** business, Stephen Russell enthuses about the future. ‘From our 160,000 sq ft factory, based on a nine acre site in Bedfordshire, the company designs, produces and deliveries in excess of 3,000 chairs per week.’


Open Sesame

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We’re in east London’s Lime Wharf with Opendesk Creative Director and Co-founder Joni Steiner, who’s been telling us about the company’s brilliant approach and business model. This is manufacturing, but not as we know it!

This is a truly original approach to furniture production. Designed so that it can be downloaded and made locally, Opendesk furniture is fast, affordable, sustainable and made on demand. In other words, the company designs a range of furniture centrally, and then partners with hundreds of small local manufacturers around the world – who make the items whenever someone places an order. The designs are emailed to the local manufacturer, who feeds them into a digital cutting device – and hey presto!

With sustainability and social impact very much at the forefront of specifiers’ minds, could the Opendesk philosophy be about to revolutionise furniture production?

‘Things are really hotting up for us right now,’ Joni tells us. ‘We want to rethink how things are made and distribution channels and how you can take care of everybody in the ecosystem of making stuff – the designers, the makers and the customers can all have a great experience. Everyone can feel that everything is really working in their best interests.

‘Our idea is that the designers set their own design fee for a piece of furniture and then get paid when it gets made – unlike the companies who dictate that. As far as the makers are concerned, the market will give you a price in your particular area.

‘So, if you’re in Brazil, the price will be Brazilian-based, whereas in Europe it will be a different price, and different again in Asia. We’ll let the makers decide.

‘We have a two-week lead time express service – called Fixed Desk – where we’re given a pre-arranged instant quote, a ‘buy it now’ price for this item in this area. We’re really want to test how this convenience model works for consumers. We’re hoping consumers will say ‘I really want a desk and I really like the idea that it’s made on demand locally – that means that some local workshop gets paid for it and the designer gets fairly paid and I get the thing quickly’.

‘It doesn’t matter whether the customer wants it to be 2m or 2.1m or in the future wants it in birch, ply, pink – knock yourself out! The computer doesn’t mind what length it’s being cut. The pricing is based on the length of time it takes the machine to cut out the components. So there is a relationship between the complexity of design and the cost. As a designer, you get almost instant feedback on the price of things. We’re really excited by the fact that you can start to customise and make on demand.

‘We spend a lot of time figuring every aspect of the design out – we do everything. We prototype everything – we know everything works. We hone the design so that we can send our makers what is essentially a CAD file – but it’s done in a way that is the most universal way of working.

‘We’re trying to do something that we think is interesting. Everyone here is really into that idea – whether they are a designer or working on some kind of diametric 3D model or coding. There is a great energy here.

‘We built our first desk in my mate’s studio in Hackney Wick – we did everything, right down to delivering it! Nick (Ierodiaconou) – who is the other co-founder – and I studied architecture originally. We both went to Bath University, then went off and did our own thing for a while, got some experience, and then started up an architecture firm called Architecture 00 – which was a slightly experimental studio which did architecture, but also some other stuff. This is part of that ‘other stuff’.’

Joni tells us about the amazing network of makers the business has already discovered – from Milan to Scottsdale, Arizona – before revealing how, after been invited to talk about the concept in New York, he tested the Opendesk model for himself. ‘I found this workshop in Brooklyn, and basically sent through the files and headed to New York ‘empty handed’. We then had the product made in Brooklyn, just four miles away from where the talk was,’ Joni smiles.

The Opendesk client portfolio continues to expand – and already boasts the likes of Nike, Greenpeace and Accenture. ‘ We think this is more than just about a desk,’ Joni grins, ‘and if anyone thinks that the products might be a bit rough around the edges, our clients aren’t the kind of companies who would put up with that!’


The next 12 months is vital for us all!

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We asked a number of the UK manufacturing bosses about the next 12 months.

Investment is the lifeblood in manufacturing as companies aim to stay ahead of trends and developments. Brian Murray stating that Boss Design Group’s priority is to ‘To invest even deeper in design and R&D’, at Mix we have seen some very high level appointments in the last six months, so investing in people is also a clear priority for th company, we suspect.

Ulster Carpets, meanwhile, is spending £35m on its manufacturing infrastructure. Elain Paterson tells us that they are investing in state-of–the-art dyeing technology as well as ‘Improving capacity and efficiency, whilst also reducing the environmental impact of the process’. Jonathan Hindle from KI, a big supporter of UK manufacturing at all levels, agrees that key is ‘Investing in our people’s expertise and growing our local manufacturing capacity’.

Cost efficiency is vital for all but particularly for the fabric giant that is Camira. Alan Williams, Operations Director at Camira, suggests that his top priority of the next 12 months is ‘With input from all of our great team, to continue to search for and unlock efficiency savings throughout our operations, whilst developing people and our lean manufacturing systems’.

Silverline tells us that its most recent investment, in its 125,000 sq ft Mildenhall factory, was in a £350k laser cutting machine which was purchased specifically to stay ahead of market expectations.

Overseas trade is clearly a boardroom topic for many. Ewan Tozer makes it clear that a key priority is to establish the Orangebox brand in North America – no doubt we’ll hear more in our NeoCon review in the July issue. Another great brand that has invested heavily in 2016 is Herman Miller. Richard Scott, VP International Operations, tells us: ‘From a business perspective, I really want to continue to build on Herman Miller’s investments and growth, both in the UK and beyond. We have been through significant change in the last couple of years, and have a strong foundation to build on our world class operations.’

Understanding the customer and developing the product accordingly is a theme reiterated by many. John Irwin, the new boss at Tangent, suggested that in the market where a competitor can match almost any product, his priory is to collaborate with customers to understand the challenges they face and that ‘The next priority is to then convert this insight into exceptional, quality service, with the aim of raising the profile of Tangent’. Rodney McMahon from Morgan continues the vital theme of spending time with customers and will continue to ‘Understand their wants and desires in this fast changing market and challenging political, socio/economic circumstances’.