Interview by Metal Finishing News

Head over to Metal Finishing News website to read the interview here.  You can also read the same interview here (PDF format).

The quality standards of service

A question came into my head recently whilst staying at a budget-priced national chain hotel (which I will return to later): are surface finishing companies in the manufacturing or service sector? It is a distinction that is not always obvious. An electro-plating sub-contractor is an important cog in the production cycle, but at the same time has to deliver a high level of service to the primary manufacturer. The company will not simply be judged on the quality of finish it provides, but on a whole range of other criteria, such as price, delivery, courtesy, communication skills etc.

If we accept that, by and large, we are in the service sector, what is the quality of service that the industry is delivering? If you have any doubt about how quality standards have improved in the UK, let’s consider the example of that budget hotel again. Twenty years ago or more it was unheard of to have a good experience in such an establishment. They were not quite Basil Fawlty but not far away. The offer was uncomfortable beds, indifferent food, surly staff and prohibitive pricing. Not only that, but most places did not accept credit cards.

The business has now been transformed. The beds are plush, the food is varied and delicious and smiling, highly trained staff do their best to pander to your every need. All in the name of customer care.

In the same way, manufacturing standards have overwhelmingly followed the quality model. In the UK for instance, the old ramshackle motor industry dominated by British Leyland has been supplanted by gleaming new organisations such as BMW Mini, Honda, Nissan and Toyota, all with quality written through them like the proverbial Blackpool rock. This also extends to their dealerships which are, of course, totally in the service sector.

As consumers we no longer expect or tolerate poor standards of service and quality. From hotels and garages to supermarkets and steak houses, such is the level of competition that they all have to conform to the highest quality standards or go to the wall.

So where does this leave the surface finishing industry and companies such as ours that are suppliers to it? There has been an unfortunate tendency in the past to regard many finishing processes as ’black arts’; dependant on the deft touch of experienced operatives with their bag of tricks to produce a satisfactory result.

What the British finishing industry does best is to harness the technology to achieve innovative finishes that are the envy of the rest of the world. It is one of the reasons that we still have cutting edge industries in this country like Defence, Formula One and Life Sciences.

So the technology must be matched by a service philosophy that is the equal of those slick budget hotels, restaurants and fast fit depots that can be found on the outskirts of every large town. Manufacturers need to know that not only will the finish be of the highest standard, but it will be supplied on budget, on schedule and with a seal of customer care.

The UK is now a service-led economy. We have to maintain our competitiveness and ensure that our finishing standards continue to be the envy of the world. We should learn from the best of international service standards and couple our undoubted technical know how with the desire to please that is the hallmark of a quality industry.

REMATEC exhibition in beautiful Amsterdam

I am writing this article having recently returned from the REMATEC exhibition in the beautiful city of Amsterdam. Having seen a marked decline in other trade shows this year, it was very refreshing to see how buoyant this event still is, reflecting the healthy state of remanufacturing in general.

So why are remanufacturing equipment suppliers and contractors bucking the global manufacturing downturn? Recent studies suggest that there are over 70,000 remanufacturing companies in the USA alone, turning over $50 billion per annum. The market is huge, encompassing automotive, aerospace, marine, electronics and many more sectors too numerous to mention.

The first answer is clearly to do with cost savings. With budgets everywhere under pressure, the cost of remanufactured goods is 40 – 60% less than new. And such is the quality on offer that it is often difficult to tell the difference between new and remanufactured products. When you throw in the fact that most items are supplied with a warranty, it makes an attractive proposition.

Secondly, this trend is being driven by legislation. For instance, EU regulations dictate that only 15% of a car can end up in a scrapyard. That percentage will drop to 5% in 2015, a requirement that should boost the industry’s growth, since remanufacturers need a steady supply of broken-down goods for the process to work efficiently.

Finally, there are the environmental issues. Materials represent 70% of costs for a new product, but only 40% for a remanufactured one. And because there's less casting and smelting, a particularly power-hungry aspect of production processes, energy costs are up to 85% lower than in manufacturing new products.

The growth of remanufacturing is forcing OEMs to rethink their entire business models. Until recently, many products such as cars, photocopiers, white goods and other electronic items were designed with built-in obsolescence. So consumers could be persuaded to buy new models every 2 or 3 years. The shocking decline in the auto industry means that manufacturers will not be able to constantly develop new models because there will not be markets for them. Instead they will have to be designed with future remanufacturing potential in mind. In the long term, this will benefit both manufacturers and consumers.

What does this mean for our industry? I believe that there is already increased demand for efficient, environmentally-sound surface technology equipment. The plethora of new cleaning and degreasing equipment suppliers is evidence of this. This trend also extends to powder coating, specialist coatings, shot blasting, polishing, heat treatment and many other surface finishing processes.

Machine tool suppliers are also acutely aware of this trend. Remanufacturers require machines for grinding, milling, lapping, honing and many other metal cutting and forming processes. The fact that the machine tools themselves are being remanufactured produces a product cycle that feeds upon itself. We are remanufacturing the machines in order to remanufacture more machines, and so on!

At Riley Surface World we are seeing a deluge of enquiries from remanufacturers of all types and sizes. From one man doing up alloy wheels in his garage at home to large aerospace companies applying new specialist coatings to old parts, the scope is enormous. Those of us that depend on surface finishing for our livelihoods ignore the potential of remanufacturing at our peril.

Two exhibitions in Germany

I recently spent a week in Germany visiting two exhibitions that are of international importance to our industry: the Surface Technology Show at the vast Hannover Fair and the Resale exhibition of second hand machinery in Karlsruhe.

Firstly, let me pass comment on how enjoyable it is to visit Germany nowadays. Despite being half German myself, I had always thought it was a rather dour and over-regulated country, expensive and unwelcoming. Not true. The food is wholesome and tasty; the beers and wines are very drinkable; the service is generally impeccable and most people have a sunny demeanour. And, despite our weakened currency, everything comes at a very reasonable cost.

Surface Technology at Hannover is, as you would expect, dominated by German-owned manufacturers and chemical producers. This year, there was only a sprinkling of overseas exhibitors, lending the show a slight global flavour. This included one very enterprising UK barrel plant supplier, Eagle Engineering, flying the flag for British excellence.

In stark contrast to the last event in 2007, the hall had only a steady trickle of visitors, rather than the torrent normally expected, a symptom of German and international downturn. However, fewer numbers can be an advantage for both exhibitors and visitors. For exhibitors, there is more time to evaluate the quality of the enquiries and to establish more precisely what information they require. For visitors, they have the exhibitors’ full attention and an unhindered view of their presentations.

For my part, two days at Hannover was time very well spent. It was an opportunity to re-kindle relationships with manufacturers, something that is of vital importance to our business as we rely on them for spares, manuals and general technical support. It was a chance to establish new partnerships with manufacturers from emerging countries. And I could research the latest trends in machinery development and take advantage of buying and selling opportunities. Even in a recession, there is always the prospect of a deal!

And so to the Resale show in the charming city of Karlsruhe. In the past fifteen years, this has become a global event, with 60% of visitors coming from outside Germany. My company first exhibited in 2004, and has subsequently had several successful and enjoyable visits. In particular, we had enjoyed a high level of enquiries and business from India, Pakistan and South-East Asia.

This has all changed. The combination of European recession and the trends for Asian companies to produce their own equipment, hold their own trade shows and generally keep business in-house has eaten into the cash-cow that Resale used to be. For UK dealers like us, it is now a shadow of its former self.

So what is the future for exhibitions in the Surface Technology sector? With Surface World at the NEC now fast approaching later this year, it is a valid time to pose the question. In my view, events like these deserve our wholehearted support. In a globalised world, where internet trading dominates our daily lives, there is no substitute to interacting with real people, discussing real issues, making real friendships and forging real and longstanding business relationships.

Riley Surface World will certainly be represented at this year’s event and will be taking full advantage of the opportunities that it brings for us. It would be very sad to see the demise of the trade show, so long may they continue.

Good Old Days vs The Dynamic Today

Riley Surface World occupies a unique place within the UK Surface Finishing Industry. While there are many companies that supply machinery and install plating and finishing plants. We are the only company that relies almost entirely on the buying and selling of capital equipment for our income.

Ever since our inception back in 1966, we have pursued a very simple business model. Redundant equipment from electroplating and surface treatment companies is inspected, valued and shipped to our large warehouse. If all goes to plan, another company in need of the same equipment visits us, inspects the machine, agrees a price and it is shipped out again.

If only it was that simple! We now live in a world where there are a myriad number of ways to buy and sell and choice of places to go. One way in particular that has become increasingly significant is the online auction.

Back in the good old days, industrial auctions took place in draughty factories and were frequented by rogues, vagabonds and thieves! They were on opportunity to meet up with fellow dealers, lament the passing of time, compare business successes, kick a few tyres, share a bacon sandwich and do a deal.

But times have moved on. The man in the bowler hat with the hammer has been replaced by the techno wizards of the online auction houses that now spread their networks across continents. The global success of eBay has spawned a new generation of companies specialising in asset realisation and disposal. Equipment is traded all around the world at the click of a mouse, from widgets to aircraft carriers.

This is a development to be embraced rather than feared. It is good for sellers because it exposes their goods to a worldwide community of relevant purchasers. So polishing lathes or stoving ovens that are surplus to requirements in Birmingham can find new homes in Brazil.

For buyers, tracking down machinery that is suitable for your coating or finishing operation is no longer a chore. The use of universal search engines such as Google or Yahoo will pinpoint the sites where the products are for sale. The elegance of the bidding process determines a fair price that is agreed by both sides, removing the reticence of some to barter with the seller. It is the very essence of market forces at work.

New electronic payment methods such as PayPal and NOCHEX overcome many of the hurdles such as letters of credit that can prove to be a nightmare for exporters. The language of auctions is universal; everybody understands the value of money. And with many of the established auction houses now offering a ‘self-upload’ facility for equipment, you don’t even have to speak to the auctioneer to get your machine sold.

Riley Surface World has for some time been allocating time and resources in order to utilise the power of many online auction sites. They represent the new frontier in global trading. Buying and selling goods online is dynamic, immediate, profitable and makes good business sense.

The green shoots of recovery

I am writing this column at the very start of 2009. Companies are going into administration or announcing large job cuts on a daily basis. For the first time for some years there is bad news from manufacturing as I hear about the problems at Wedgwood, Jaguar and Nissan.

There is no doubt that this is going to be a very tough year. So why, paradoxically, do I feel an air of confidence about the prospects for our industry? Let me give you some optimistic predictions to try and lighten the gloom.

First and foremost is the old spirit of British innovation. The recent anniversaries celebrating the lives of great figures such as Charles Darwin and Isambard Kingdom Brunel are good examples of how Britons have always been at the forefront of science and technology.

You only have to look at more recent examples such as Tim Berners Lee, the founder of the internet, and the great inventor James Dyson to know that UK pioneering innovators are alive and well.

In recent years the UK has mainly withdrawn from volume manufacturing (the largely foreign-owned automotive industry being a notable exception). I do not need to go into the reasons why. Instead we have concentrated on design engineering and specialist niche product development.

Surface Finishing has always been a key area in such activities. From micro-chips to pre-fabricated buildings, all require new and original methods of plating, coating, anodising and other specialist surface treatment processes.

British surface technology expertise, supported admirably by Great British institutions such as the SEA and IMF, has never been in greater demand. Our universities are world leaders in the development of new, eco-friendly coating and finishing processes.

This expertise is sowing the seeds of a remarkable and fast-growing crop of new, specialist product finishing companies. Many are independent whilst some are in-house divisions of larger manufacturers. It is those that are at the cutting edge of the latest technologies that will enjoy most success.

At Riley Surface World we are dealing daily with enquiries from companies applying specialist coatings to plastics, aluminium and other lightweight materials. Anodising still continues to be a very popular process due to its versatility and depth of applications. And the UK is still very much at the forefront of this kind of activity.

I believe that the true potential of this unrivalled resource will really begin to blossom during this recession. One of the few reasons to celebrate the current downturn is that the UK is finally becoming competitive again. The fall in sterling and other price reductions are not just for the benefit of those rich foreigners who arrive in their droves to shop at Selfridges and Harrods. Multi-nationals are increasingly looking to the UK for all or part of their surface finishing resources.

In the surface finishing industry, we are beginning to see, in the infamous words of former chancellor Norman Lamont, ‘The green shoots of recovery’. Nearly every day we talk to young entrepreneurs with requirements for finishing equipment. The market for conventional wet-finishing plants has almost disappeared. In its place there is greater diversity, innovation and specialisation. Much of this is driven by environmental legislation and the needs of the internet generation.

So good luck to everybody as we enter the most challenging market that we have seen for over twenty years. Remember the words of another politician of the recent past: ‘There is no reverse gear.’