The trade show season

The summer is nearly over, days are getting shorter and the pace of work is quickening as we head towards another year’s end. After an enjoyable summer break touring in the USA, I am now focussing on the autumn/winter period ahead, both for Riley Surface World and the finishing industry in general.

Autumn is always an exciting time in our industry. New projects start to take priority and deadlines get shorter as the proximity of Christmas looms on the horizon. It is also a time when some of our leading trade exhibitions are taking place, with the opportunity to see new innovations and make new contacts.

The trade show season kicks off in Stuttgart, Germany with Parts2Clean in October. The European solvent directives have had a huge impact on product cleaning technology and practices. Manufacturers and finishers are now heavily regulated on the chemicals they can use and the ways that they are applied. This has brought about new innovations in cleaning technology, many of which will be on display in Stuttgart. I am certainly looking forward to seeing what’s new this year.

In November, we in the UK have our own Surface World exhibition in Birmingham. This show has been rejuvenated in the last 4 – 6 years, thanks to a terrific marketing effort by the Surface World team. An event that almost died a few years ago now attracts many more exhibitors and visitors. It has also found a new dimension by incorporating Correx, the corrosion control exhibition and conference.

The fortunes of the Surface World show have coincided with an upturn in the UK finishing industry, largely due to a long-awaited increase in manufacturing output. For the first time since the early 1980s, manufacturing’s share of our domestic output has risen to 12%, on a par with the USA and France. Germany still leads on 21%, but even there the figure has declined from its post war peak of 35%.

Germany, of course, is still the powerhouse of European manufacturing, and does a great deal more to promote itself around the world than the UK has done in recent years. A good example in our industry is its presence at SF China, the third and by far the largest finishing industry trade show in Shanghai later in November.

This year, German companies are combining under the banner of their own trade association to host a national pavilion at SF China. The companies represented will cover sectors such as electroplating, organic coatings, cleaning, blasting, peening and vibratory finishing. Germany is serious about doing business with China, something that our own trade associations and government agencies should take note.

Designing things and finishing them are the two great strengths of British manufacturing and engineering. We have not always been so good at the bits in between, but working practices imported from countries such as Germany and Japan have made us a lot better.

Recognising our longstanding skills in the automotive sector, UK Trade and Investment is making strenuous efforts at this year’s Frankfurt Motor Show to attract inward investment from parts makers such as Bosch to our newly established Enterprise Zones. Car production in the UK is set to increase to 2.5m units per annum by 2015, taking it back to its 1970s heyday. The creation of automotive centres of excellence on a macro level must surely benefit the finishing industry in the longer term.

So with the trade show season underway and with the London Olympics to follow next year, now is the time for all of us in the finishing industry to go out and sell everything that the UK has to offer.

If you are looking for new or used process equipment and machinery, head over to www.rileysurfaceworld.co.uk.  We have over a 1000 machines in stock. Make sure you use the search box at the top of the page, which is powered by Google search technology, to find the machine you are looking for.

Trade convention in Budapest, Hungary

I have just returned from a visit to Budapest, Hungary, taking part in a trade convention that included many aspects of industrial plant and machinery. It was a revelation to see such a modern, dynamic city in a country that has suffered from so much conflict and oppression over the past century.

Unfortunately, the weather we experienced was similar to that of the UK throughout June and July; rain of monsoon proportions. However, staying indoors enabled us to focus on business and understand the common ground that we had with our Hungarian hosts.

During all the upheavals in Eastern European countries following the 1989 revolution, the issues in Hungary had a much lower profile than, for example, East Germany, Ukraine and Romania. This is because changes were introduced to its political and economic structures as early as the 1970s, making the transition to democracy and capitalism much smoother than elsewhere.

Hungary experienced market liberalisation in the early 1990s as part of the migration process from a socialist to a market economy. It was hit particularly hard by the global financial crisis in 2008/9, but is now recovering strongly, with an industrial production growth rate of 11%, one of the highest in the world outside China and India.

It has been a member of the EU since 2004, but not part of the Eurozone. Because it was able to devalue its own currency and set its own interest rates, recovery has come much more quickly – Greece, Ireland and Portugal take note!

A legacy of the Soviet era is that Hungary has a strong specialisation in machinery production, both industrial and agricultural. Its scarcity of natural resources and traditional reliance on farming resulted in State-sponsored programmes to build production machinery for other Eastern Bloc countries. This background has given it a head start in that particular sector, together with a skill-set that is easily adapted to other large-scale manufacturing.

The 21^st century, the main areas of Hungarian industry are, as well as machinery, steel production, energy, mechanical engineering, chemicals, food and drink and, last but by no means least, automobile production.

Hungary, with its strategic Central European location and industrial competence, now boasts car plants from four major brands: Mercedes Benz, Audi, Opel and Suzuki, as well as a whole host of sub-contract companies.

There are parallels with our own economy here. Since the 1980s, both the UK and Hungary have disposed of inefficient state-run industries in favour of home-grown enterprise and foreign investment by global companies.

In the UK, we have BMW Mini, Nissan, Toyota, Honda and Tata (controlling Jaguar and Land Rover), as well as SAIC, the Chinese owners of Rover. Both countries now produce a greater volume of vehicles than at any time in their histories. Furthermore, both have manufacturing growth rates that are outperforming their European neighbours.

This volume of manufacturing activity creates work for thousands of sub-contractors. Both the UK and Hungary have a large reservoir of skills and knowledge, particularly in the finishing sector, that make a major contribution to the efficient operations of their foreign-owned automotive companies.

We can feel a great affinity with the Hungarians and learn a great deal from them. It is enlightening to know that a country once best known for Paprika, Bulls Blood wine and the Danube has now become a powerhouse of Central European industry and a shining example to us all.

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If you are looking for new or used process equipment and machinery, head over towww.rileysurfaceworld.co.uk.  We have over a 1000 machines in stock. Make sure you use the search box at the top of the page, which is powered by Google search technology, to find the machine you are looking for.

A week in Mexico

I have just spent an enjoyable week in Mexico at the annual conference of the MDNA (The Machine Dealers National Association of the USA). It was a useful week in several respects. I was able to expand my social circle within the US machinery industry, acquire many new business contacts and practice my ever-improving Spanish! My overall objective was to find a strategy to exploit the American market from both a buying and selling point of view.

Historically, our countries have always been strongly intertwined. Ever since the descendants of the Pilgrim Fathers voted to speak English rather than German we have been friends, notwithstanding the small matter of the Civil War. Certainly for the entirety of the 20^th century the USA was our major ally and prime trading partner.

The growth of the EU and our increasing inclination to face East rather than West has seen that bond begin to unravel. But cultural and emotional links are still strong – look how many Americans and Canadians enthusiastically lined the routes at the Royal Wedding!

When contemplating doing business in the USA, there is a temptation to be bamboozled by the sheer size and scale of the market. We think that because they like us, talk a version of the same language, watch the same movies, eat the same kinds of food, then the business culture will be the same as well. And yet subtle but important differences need to be taken into account.

Firstly, you must take heed of American self-sufficiency and insularity. It used to be the case that their manufacturers produced primarily for home consumption. Their great industries, such as automotive, aerospace, computers, food & drink, produced goods for the people, employed the people, provided their healthcare, education and pensions, with little or no outside help.

All of this has changed. The great manufacturing powerhouse that was America is in deep crisis. It all started with the emergence of Germany and Japan after World War Two and has now taken on a new dimension with the growth of China, Brazil and India. Many American citizens have become heavily dependent on the State and the US economy is heavily dependent on imports, not a healthy scenario.

So where are the opportunities for our own industry? Well, for starters, many of our UK finishing sector OEM companies have been American owned or represent American manufacturers. Just think Wheelabrator, Westinghouse, Donaldson Torit and Harper Canning.

The USA relies on its UK subsidiaries and many other independent partners as its gateway to the lucrative European market. In the UK we are on Europe’s doorstep as a prominent if semi-detached member of the EU. We are governed by the same rules and regulations, we have reluctantly embraced metrification. Sometimes we can even talk some of their languages, and they can certainly talk ours!

From our company’s point of view, the great opportunity is in buying redundant US finishing machinery from OEM manufacturers with European links in order to repatriate them for sale in the European market. Due to the downturn in their manufacturing, they currently have a great deal of equipment that is surplus to requirements. On this side of the pond, we are growing again, even if it is from a smaller base, and the European market is ready and waiting. All we need is reliable partners to assist with inspection, purchasing and logistics.

Every other UK company has a different pitch to make. We have a solid and trustworthy base in engineering, innovation and specialist skills, particularly in the finishing sector. We can coat, paint, polish, clean and apply our finishing skills to many American products and prepare them for the European market.

The opportunities are there, we just need to exploit our already strong relationship to help to bring them to fruition.

The Chinese are coming

The Chinese are coming. This is the mantra that is being repeated everywhere you look at the moment, on our TV screens, internet and in conversations in the workplace.

A recent television documentary about the Chinese in Africa came to the conclusion that they were a threat to every indigenous industry and to every walk of life, from railroad builders to diamond miners and even chicken farmers. The decimation of much of American industry is largely attributed to China, whilst here in my home city of Birmingham, the monolith that once was Rover is now firmly in Chinese ownership.

I seem to recall similar alarm being expressed in the 1970s when Japan was on the rise. Everything from screws to aircraft carriers were going to be made in Japan, with a corresponding decline in home manufacturing and a marked loss of quality in the goods that were produced. Remember the Datsun Sunny? Outdone in shabbiness only by the Austin Allegro!

The reality is that Japanese engineering excellence, quality controls and manufacturing facilities have become deeply embedded in the UK industrial landscape. There are the major car plants at Nissan on Wearside, Toyota in Derbyshire and Honda in Swindon, all employing thousands in their direct workforces and generating work for thousands more sub-contractors, including many in our own industry.

Meanwhile, the perception of Japanese goods has evolved from cheap, basic and reliable to competitively priced, ultra-reliable and highly desirable, all in a generation. Indeed, brands such as Lexus, Sony and Toshiba have now become aspirational in their respective fields.

This cycle is now being repeated for China and it must be embraced, for the domination of Chinese products in every walk of life is an inescapable fact. Most of the technology, processes and machinery that our surface finishing industry employs, both in the UK and Europe, already have Chinese-made equivalents that are available at vastly reduced prices in comparison to their European, American or even Japanese counterparts. This equipment is no longer simply for production in South-East Asia. It is set to become the technology of choice in nearly all industrialised countries.

Chinese industrial plant and machinery is mainly produced by vast, state-sponsored enterprises that benefit from being part of a command economy. But unlike the grossly inefficient industries of the old Soviet empire, these companies are run on capitalist principles.

By contrast, British manufacturing is undergoing an SME-led private sector rebirth. Where once there was British Steel, British Leyland and British Rubber, now there are hundreds more specialist manufacturers producing everything from farmers’ tyres to non-standard socket sets, and from bullets to balustrades. Just as there is no limit to the relentless rise of Chinese production and control, there are also no barriers to British design, innovation and enterprise.

And as China creates so much wealth, so the affluent Chinese consumer is criss-crossing the world absorbing new cultures, enjoying new experiences and acquiring designer clothes, handbags and sunglasses. Remember the news reports about Selfridges on Boxing Day?

We cannot compete with China on its own terms, but we can take full advantage of its low-cost, high-value technology to forge our own future based on specialist products and services that, with help from government and the banks, we can sell on to the whole world – including China itself!

The spur of recovery

I had my knuckles metaphorically rapped recently for describing our company to a prospective customer as ’A little family business’. Colleagues tell me that I need to get out of this habit and start talking the company up rather than down. ‘After all’ they say ‘our publicity states that we are a world leader in what we do, we are no longer that small’.

Talking ourselves down is a very British trait. In the days when we still had the semblance of an Empire and our industry, along with our navy ruled the waves, we still had the stiff upper lip and a reticence towards blowing our own trumpet.

Of course, there are always exceptions to the norm. Who will ever forget Harry Enfield’s ‘Loads of Money’ character in the Thatcherite 1980s? Or the misplaced hubris of the dotcom generation? Sometimes, self-confidence can be mistaken for conceit unless it has solid foundations.

So are there good reasons for talking ourselves up again? Public sector cuts are starting to bite, house prices are on a downward spiral and unemployment is rising rapidly. Even Tesco had a poor Christmas. Despite it all, either by accident or design, the UK economy is rebalancing itself. Manufacturing is growing at 5.6%, the fastest rate apparently since Victorian times and the heyday of the Industrial Revolution. The UK monthly purchasing managers’ indices (PMI) is running at a very healthy 58.3, better than China or India. Something significant is afoot.

Those wishing to inject a note of caution say that manufacturing only accounts for 13% of our economy, way down on the glory days of the 1950s and 60s. Furthermore, overall growth in the UK economy during the final quarter of 2010 was a much more modest 0.5%. But the spur for recovery has to start somewhere, so much rather manufacturing than anything else.

As long as we can maintain low interest rates and a weak pound, our manufacturing growth will lead to success in export markets, essential if we are to become a world player again. The much-maligned banks and government agencies should give their full backing to this sector, as it gives our country the greatest hope of a long lasting recovery.

As UK manufacturing recovers, it is time for the surface finishing sector to start talking itself up again, as we are the best in the world at what we do. You may be a little family business in a niche industry on a small island in a very large world economy. But it is those kinds of companies that have made us world leaders in the past and will do so again.

The more new products that are produced in this country, the more pre-treatments, special coatings and finishes will be required. It is essential that we try to maintain our capacity for this kind of work, so that the experience, innovation and skills base are not lost to other countries.

Our company will do its best to keep the industry supplied with high value, low cost equipment to keep the wheels turning during this critical phase of growth. It is up to others to keep talking the talk on behalf of all of our excellent British finishing companies.

So, from this world-class little family business in the heart of the Black Country, let’s hope for sustained growth and prosperity in 2011 and a happy new year to all!