The importance of brand names

A Rolls Royce engine appears to have failed on a Qantas flight from Singapore. As well as the distress caused to passengers and crew, this has resulted, at the time of writing, in an 8% fall in the company’s share price.

The incident was doubly worse for British interests as the engines are part of the Anglo-French Airbus 380, the most advanced aircraft of its kind in the world. This follows on from the fate of another iconic, world-class British company BP, whose value has been decimated by the Gulf of Mexico oil spill, and is only now starting to recover.

Even the quality-conscious Japanese are not immune to these problems, as high-end Lexus cars are recalled for safety defects and the cachet associated with the brand takes a battering.

It only serves to illustrate the importance of brand names to consumers, industry and financial markets. When things don’t go to plan, as in the examples mentioned above, fixing the defect or re-calibrating the engineering process is only half the battle. How many times nowadays do you hear the phrase ‘bad for PR’ in association with all kinds of mishaps? It seems to be applied to gaffe-prone CEOs, greedy bankers, misbehaving footballers and hypocritical politicians.

So what has all this got to do with product finishing? Surely our industry operates below the radar of such high profile incidents?

But perceptions of brand integrity work on every conceivable level. Rolls Royce may be an extreme case, but in the finishing industry, those companies with the vision to employ professional marketing in order to build a strong brand are usually rewarded with lasting success.

For instance, stop any person in the street and ask them to name a brand of surface coating and I guarantee the only name they will come up with is Teflon®. There is nothing remarkable about this process; it is a form of powder or liquid coating with both industrial and domestic applications. And yet, because of clever branding and association with household appliances, it is a name that sticks in peoples’ minds (excuse the pun!)

Three years ago, I had misgivings about re-branding our company as ‘Riley Surface World’, spending a significant amount of money in the process. Now the only regret I have is not doing it earlier, as the investment has paid off handsomely. The key is to make the name synonymous with the products or services. Riley Industries could be any industrial conglomerate. But under our new label, there is no doubt about the business that we are in.

In our industry, it is the chemical companies that do this best. They are able to distil complex formulae into cogent, end-user benefits and communicate them with clarity.

In the equipment field, companies like Wheelabrator, Rosler and Nordson also make a good fist of getting their messages across in clear and simple terms. In all cases the brand names and their associations are enhanced.

Indeed, it is to the credit of Rolls Royce, BP and Toyota that when their brands take a knock, it seems so out of character. Like Arsene Wenger allegedly ‘playing away’ with a Parisian rap artist. But let’s not get carried away!

To summarise, we may all seem to burrow away down in the grimy basement of manufacturing industry; cleaning, polishing, coating, blasting, baking and generally getting our hands dirty for insufficient remuneration. But it is those companies that build brands that are synonymous with excellence that always have and always will be rewarded well in the longer term.

Cobham Mission Equipment Project Complete

The final stage of the decommisioning program at Cobham Mission equipment has now been compeleted, with all equipment removed form site and licence surrenders approved

Family business since 1966

Our company has been trading since 1966. Indeed, if you trace back to the roots of the family business, you will see that my grandfather was a dealer in general machinery as far back as the 1930s.

When my father started Barry Riley and Sons in the mid 1960s, much of his early success was down to opportunism in exploiting the great nickel shortage in those days. By recycling and reselling unwanted nickel stocks, he was ahead of his time, as recycling has become such a major factor in our industry today.

We have only been specialists in the surface finishing sector for 44 years (not a bad innings). But as a linear family business unit, we have survived the great 1930s depression, the Second World War, post war austerity, the Cold War, numerous recessions, the 3-day week, the miners’ strike and so on.

So when there is talk of ‘double-dip’ recession just around the corner, I may be apprehensive but I have little fear.

Much of the real success of British industry has been due to family businesses. For instance, there is one that I know only too well as I live very close to their headquarters. That company is JCB, but how many people around the world who associate the name with heavy digging machinery realise that the initials stand for Joseph Cyril Bamford, the company’s illustrious British founder?

This is a great British company, which has survived some horrendous construction industry downturns, not just here but all over the world, and is still standing.

There are many reasons why a family business is often stronger than the sum of its parts. Let’s explore just a few:

In a sustainable family business, ownership is passed from one generation to the next. Loyalty is expected because of the need to protect the family’s inheritance. This often leads to a greater incentive to innovate, diversify and grow the business.

Specialist skills and knowledge are passed from one generation to the next. The surface finishing industry is renowned for its patented processes and ‘black arts’, many of which are the exclusive preserve of a particular family and bear its name.

A well-run family business will often treat its employees like members of an extended family. This engenders greater loyalty and commitment and creates a more tightly-knit unit with a fighting chance of riding out the challenges of recession, industrial decline and foreign competition.

And if, like ours, the business name is synonymous with the family name, its builds a strong and trusted brand, as the products or services are associated with real people, whether alive or dead. Just think of Ford, Austin, Morris, Rolls Royce, Marks & Spencer, Dyson, W Canning, the list goes on and on.

Of course there are always exceptions. Who could forget the misplaced honesty of Gerald Ratner, or the reckless optimism of John Delorean? But, on the whole, the family business model is a good one to follow.

So as the ominous drumbeat of government cuts, market forces and the usual prophets of doom gather at the gates, I take strength from the knowledge that my forefathers faced much greater problems and came through relatively unscathed.

I believe that the traditional British family business, both in our own sector and manufacturing industry in general, is an excellent template for companies to follow if they are to survive and prosper.

The Industrial speed dating session

I recently attended a speed dating session in Coventry. The intimate face-to-face meetings were strictly limited to 20 minutes for each couple, after which a burly organiser blew a very loud whistle telling us all to move on.

The truth is I am happily married and the event was organised by UK Trade and Industry to promote their export services provided by embassies and consulates all around the world. Each delegate enjoyed one-to-one sessions with trade representatives for a selection of countries in order to explore opportunities to develop more overseas business.

It is a practice that is not unfamiliar to me as once a year, normally in more exotic locations than Coventry, I attend a similar session with other machinery dealers from around Europe, known as the Merchants Market. Modern digital communication may have its merits, but sometimes there is no substitute to looking someone in the eye and agreeing a deal.

In our company’s early days of exporting, we were fortunate enough to receive government financial support as well as expert advice. As the recent experience of Sheffield Forgemasters has demonstrated, the massive government deficit means that those heady days have gone. UKTI is not simply holding these events for altruistic reasons. Now, in the nicest possible way, they are after our hard-earned cash!

Of all the noises coming from the very top of government now, the one that is most resonant for me is ‘Britain is open for business’. We may be technically bankrupt, but we are certainly not bankrupt when it comes to ideas, innovation and enterprise. A country that can produce jet engines, nuclear submarines and Formula One racing cars has to be taken seriously.

A major focus of the latest UKTI initiative is to find local partners for exporting companies. All the resources at their disposal are utilised in researching, marketing to and interviewing prospective companies. This work is carried out by hardened professionals that know the local language and customs. I think sometimes we underestimate the commercial clout of our diplomatic service.

Having experienced trading overseas with and without formal partnerships, I have come to appreciate how valuable they can be.

For instance, until last year we had done almost no business in France, our closest potential trading partner. I had always assumed that the French viewed British engineering with disdain and would only buy from us as a last resort. How wrong was I!

Now the power of the internet has brought us an excellent agent in France. He is well-connected, passionate about the surface finishing industry and pro-active in matching the production needs of French companies to the equipment that we have to offer. This encompasses cleaning and degreasing plants, automatic shot blasting systems, conveyor ovens and much more.

This shows, not just for our company but the industry as a whole, the opportunities that are right on our doorstep. And as long as the Sterling/Euro exchange rate is in our favour, we will always be competitive.

As a result of the UKTI initiative, we are actively seeking export partners both in Europe and other developing parts of the world. I know that investment in the kinds of professional services that our embassies offer will be money well spent. An example of how speed dating pays dividends.

Cooperation + Partnership = Good Business Conduct

After all the recent election excitement, we now have a coalition government for the first time since the Second World War. Putting any political preferences to one side, I have long believed that cooperation and partnership between people and organisations is the best way to conduct business, as well as trying to run the country.

A good example of this is the model of the trade association. Our company belongs to five of these organisations, and over the years it has done our business and me personally, a power of good.

In the surface finishing industry we are members of the SEA, IMF, BSTSA and SAMFA (South African Metal Finishing Association). In our role as machinery merchants, we are also members of the EAMTM (European Association of Machine Tool Merchants).

One of the great disciplines of belonging to these associations is the requirement on you and your company to adhere to a strict code of business ethics, and not do anything to undermine the business of another member company. Whilst some may think that this flies in the face of true capitalism, it has its place in both old fashioned values and modern business practices.

It is self-regulatory, as few want to rock the boat and become blacklisted. And as well as enhancing corporate responsibility, this check on a company’s behaviour enables it to build a strong, trusted brand name and reputation among its peers.

Another benefit is the shared responsibility for the health and well-being of an industry and its members. In essence, the creed that we are stronger together than we are when apart. Helping each other, sharing knowledge and lending expertise in lots of small ways all adds up to sustaining an industry that functions more profitably and more efficiently. This helps both large and small companies to survive the worst of recessionary pressures, take advantage of opportunities and adapt to changes in the marketplace.

In addition, the associations enable us collectively to pool our resources towards areas such as research and development (especially important in a technically complex industry such as ours), market research, export strategy, publishing and exhibitions. They can also provide lobbying power for subjects such as environmental legislation. These kinds of activities would be beyond the capability of many smaller companies

Over the past two years, I was privileged to serve as chairman of the EAMTM UK division. If you think we have had it bad in the surface finishing industry, boy you should take a look at the machine tool business! But despite the downturn, the spirit of cooperation has never been better, something for which Riley Surface World can be profoundly grateful.

Of course, an organisation that operates on a Europe-wide level is not without its difficulties. Just think of the European Union in microcosm. And yet, because we are in a globalised economy, the merging of national associations is inevitable. This brings economies of scale and creates far greater opportunities for business development and is something that perhaps our existing trade associations should consider.

So as we optimistically look forward to the next five years of political stability and economic recovery, let’s continue to operate in a way that is cooperative and inclusive towards the rest of the companies in our industry. We are all in this together now.

Birmingham - colossus of the UK auto industry

I have just seen the BBC documentary ‘Requiem for Detroit’, a hard-hitting indictment of how a once great industrial city has been turned into almost a ghost town by the inexorable decline of the US automotive industry which, apart from the music business, Detroit depended on almost exclusively for its economy.

The programme had a powerful impact on me because I grew up in, and still live close to Birmingham, the nearest kind of place in Britain that we have to Detroit.

Birmingham was once home to the colossus of the UK auto industry, British Leyland, with famous brands such as Austin, Morris, Rover, MG and the rest. This once great institution was brought to its knees back in the 1970s by a combination of the oil crisis, the recession, poor quality standards and trade union militancy.

Fast forward forty years and Ford, General Motors and Chrysler seem to have followed the same predictable route. Global competition, inflexibility, arrogance, out of date working practices and the fallout from the banking crisis have all contributed to a catalogue of woe. Almost like a car crash in slow motion.

Of course, as we know in the finishing industry, it is not just the primary vehicle producers that suffer. Detroit, just like Birmingham, is home to thousands of sub-contractors that depend on the monolithic car companies for their bread and butter.

But despite all of its problems, Birmingham has re-invented itself as a city with a much more diverse range of industries and services. Anyone entering the city now on the old elevated M6 can see Fort Dunlop, once a cathedral of tyre production and now home to scores of small business units, retail outlets, hotels and apartments.

Birmingham city centre has now been transformed and is the UK capital of conferences, exhibitions, live entertainment and waterside leisure developments. Even the old jewellery quarter has become a major visitor attraction.

And beneath the glossy veneer of new enterprises the old manufacturing skills still remain. Birmingham may not have such large plating and finishing houses as it did in its heyday, but there are still large numbers of specialist coating, polishing, blasting, peening and cleaning companies that are beavering away and serving the new industries that are filling the gap left by the decline of the motor industry. At Riley Surface World we know this is the case because those same companies are constantly knocking on our door to buy used equipment.

So if we think we have problems in the UK finishing business, they pale into insignificance when you look at the shocking decline of Detroit and other American cities. With USA unemployment at double the level that it is here, we can be proud that our enterprise and diversification has so far staved off the worst effects of the global downturn.

Manufacturing is about to make a comeback. Suddenly politicians are starting to talk about elevating engineering back to its rightful place as a high priority occupation for the new generation.

Yes, there are still many problem areas. The recent mothballing of Corus in Middlesbrough has parallels with what has happened to Detroit, albeit on a smaller scale. Nevertheless, our company is seeing constant evidence of a UK-led revival in manufacturing and its associated industries.

I am confident that, in the years ahead, Birmingham and other British cities will once again become major players in the global economy.

Changes in the course of one year

At the beginning of 2010, with the snow falling outside, salt in short supply and travelling conditions difficult, I find myself looking back to what was happening in our industry this time last year.

It is remarkable how quickly things can change in the course of one year. In January 2009, our company, like many others apart from perhaps the large supermarkets, was staring into the abyss.

Suddenly, out of the blue, turnover was at least 25% down and falling. After the worst banking crisis in modern history and doom and gloom everywhere you looked, there seemed to be no prospect of an upturn in the near future. Plans had to be put on hold, budgets chopped and exhibitions cancelled. It was time to get our heads down and concentrate on ‘the knitting.’

We all believed that we were in for a long haul of stagnation and depression. In fact, to use the old football cliché, it was a year of two halves. By the middle of June, things began to get busier.

‘Of course’, I hear you say, ‘It is no surprise that a company like yours starts to thrive in a recession. You are, after all, just glorified scrap merchants; scavengers that capitalise on other people’s misery. When things are tight, companies buy second hand. You also benefit from lots of industrial plant & equipment coming onto the market as the result of closures and liquidations.’

While this view may be partially true, it does not tell the whole story. In fact, the used machinery market mirrors economic trends just like any other business. When the surface finishing sector is busy and turning a profit, so are we. When times get tough, we also feel the pain. And whilst opportunities may arise as the result of factory closures, such as de-commissioning projects and asset sales, we still need to have a buoyant industry sector to dispose of the machinery that has been acquired and to keep sales moving.

The big difference between this and other past downturns is that this time, the whole world went into recession at the same time, so we could not utilise our normal flexibility to find new markets.

And although an upturn is welcome, it brings its own problems. Good quality finishing machinery is now in short supply and our future success depends on our ability to constantly replenish our stocks.

So as I reflect on a more optimistic outlook at the beginning of a new decade, here are some predictions from the Old Riley Almanac:

Firstly, things will not be as bad as expected. There is life out there! Manufacturing, surprisingly, is undergoing a resurgence; maybe not in the kinds of volumes that we have been used to, but certainly in niche markets where the access to finishing expertise and equipment becomes a priority.

Secondly, surface finishing technology in its broadest sense will continue to evolve and change. There will be an increased number of companies coming into this sector in the coming months and years, many of them more innovative and flexible than the traditional finishing shops. They will have their own ideas, methods of working and innovative technologies that will find new markets and breathe new life into the industry.

Finally, our old friend the internet will open up the world even more, enabling all of us to take advantage of the many opportunities that are out there. For our part, we can now buy and sell across international boundaries as we never could before, helped considerably by the continuing weakness of sterling. So as countries across the globe emerge from recession in increasing numbers during 2010, we should all be poised and ready to benefit.

Things can only get better, and for all of us in the beleaguered surface finishing industry there are reasons to be cheerful at the start of 2010. A happy new year to one and all!