Farewell to summer and hello to a new season of optimism

I am writing this month’s blog at the tail end of my summer holiday on the southernmost tip of Spain, just 12 miles across the straits to North Africa. Such a tranquil setting is the perfect backdrop to reflect on the busy trading season that we are about to embark on, as well as the prospects for our industry as a whole.

The beginning of September has brought a raft of good news stories for the global economy and the UK in particular. Vodafone selling its American business delivers a whopping £85 billion to shareholders, the majority of whom are in the UK. As is the norm nowadays with multinational companies, they will be deftly avoiding UK capital gains tax. However, an injection of liquidity on this scale into the economy is sure to have a positive effect.

There is further good news on the European front, as Microsoft buys Nokia for £5 billion. Even footballers are changing hands for staggering sums of money, with the total spent by Premier League clubs in the transfer window being somewhere north of £600 million. Rolls Royce and Bentley dealers should brace themselves for the invasion!

Which brings me nicely to the recent edition of BBC television’s Top Gear, which focussed on the current state of the UK car and commercial vehicle industries. Who could fail to be impressed by that huge fleet of British built vehicles that lined the Mall? Clear evidence, if ever there was any doubt, that Britain is a world class player in the automotive business once again.

To build on this success, we need a high percentage of the billions of pounds arriving in shareholders’ accounts to be re-invested in our manufacturing base. By creating opportunities for well-paid and highly skilled manufacturing and engineering jobs, we will begin to reverse the downward spiral of a low skill, low pay economy.

The banks also have an important role to play in this. I recently heard a respected economist liken bankers to toddlers. They run around in an excited frenzy, causing mayhem until they run out of energy and leave the room in a total mess. They then lie down and pretend that none of the mess left behind was their fault, and in any case, someone else will always clear it up for them.

The recent troubles at the Coop Bank illustrate that there will be consequences for banking profligacy in the future. Hopefully, this will encourage them to take a longer term and more measured view of their actions. Whilst there will always be a place for new shopping centres and housing developments, increased importance must be given to new manufacturing facilities, in order to harness the skills and talents that, as a nation, we have always possessed.

From high value consumer products to components and sub-systems for the automotive and aerospace industries, we still design and manufacture a great deal in the UK. All of these products and parts require surface preparation, cleaning, deburring, powder coating and all of the other processes that our own industry does so well. The greater the emphasis for investors on British made goods, the greater the benefit will be for industries like our own.

Tomorrow I will be leaving my Spanish sojourn for the grit, grime and graft of good old Birmingham. It is a journey that, for once, I will make with a great deal of optimism for the months and years ahead.

An important date for your diary - Surface World exhibition, NEC, Birmingham, UK, Sept 24 - 26, 2013.

The SurfaceWorld show takes place at the NEC, Birmingham, on 24 – 26 September 2013. I’ll repeat that just in case you missed it: The Surface World show takes place at the NEC, Birmingham, on 24 – 26 September 2013.

Now I’m not just saying this to get some cheap publicity for our company’s stand. Just for the record we will be there as always and would be delighted to meet as many of you as possible. On the contrary, I am reminding you all for the benefit of a successful event and for the good of our industry in general.

For the past ten years, the show has been held at the beginning of November and has steadily grown in size and visitor numbers, being particularly busy on the last two occasions in 2009 and 2011. There is no doubt that there are risks inherent in a change of date. For a busy industry like ours, with very little spare human capacity, visitors become easily conditioned to a regular date in the calendar. They will have it in their real diary, Outlook organiser or in the back of their minds for many months, or even years in advance.

The change of date to September, when some may still be on holiday, the cricket season is still in full swing and the Last Night of the Proms has not yet happened, requires a great deal of PR, communications and good old-fashioned arm twisting from the organisers to get the punters flowing to Birmingham.

All of us that exhibited in 2007 experienced the consequences of just a slight change of date, in that case to the last week of October. The clash with half term week took its toll in terms of visitor numbers and results.

My company, Riley Surface World had an even worse experience when we exhibited at USETEC, Cologne in 2012. This is a long-established and successful trade show for used industrial plant and machinery with an international audience. Until last year, it was always held in the third week of April to coincide with the Hanover Fair, the giant industrial show with a global reach. This enabled the huge number of regular visitors from all around the world to take in both shows in the same week.

Last year, some bright spark decided to move it back to early March to coincide with another large industrial exhibition that was in Cologne at the same time, thinking that there would be a natural synergy between the two shows. They could not have been more wrong!

Visitor numbers were down by more than half, as many regular attendees had clearly not got the message about the change of date. Furthermore, the expected overlap of visitors from the neighbouring exhibition never materialised. Either they did not have time to visit both shows, or the prospect of viewing used machinery was not to their liking.

And just to rub salt in the wounds of dispirited exhibitors, the hoteliers of Cologne had chosen that very week to double or even triple their room rates. It’s what they call market forces!

The surface finishing industry is in a very good place to take advantage of all the good things that are happening in the UK economy. Apparently, there was no double-dip recession last year, manufacturing output is showing a steady increase and we are now producing more cars per year than the French. As Raymond Blanc would say: ‘Voila!’

With all the good news around, don’t let’s forget to support our only local, specialist trade exhibition. And just in case you haven’t got the message, Surface World is on September 24 – 26. See you there!

Why buying and selling used equipment makes sense for surface finishing companies

Running a modern surface finishing plant requires a complex and diverse range of machinery, equipment and consumables, combined with human metal finishing expertise and experience. The products and processes are frequently changing, either due to new products and finishes being introduced or to comply with legislation. So there needs to be constant changes to plant configurations, process stages, control systems, transportation systems and ancillary equipment.

This means that metal finishing plant owners, managers and engineers face a multitude of tasks and challenges in order to implement the necessary changes. For instance, changing from an electrolytic plating process to electroless nickel requires modifications to pre-treatments, power supplies, chemical feeds, water treatment and extraction systems.

The introduction of new products to an established plant can often have implications due to product size; for instance, a manufacturer of bathroom and plumbing accessories introducing a new range of shower enclosures. This would increase the work envelope size and require a switch from decorative chrome plating to anodising or powder coating, entirely different processes with radically altered plant requirements.

Ancillary processes

A complete surface finishing or plating facility usually consists of a central, multi-stage wet treatment plant, with ancillary stages either inserted into the production line or operating as stand-alone processes. Products are invariably subjected to pre-treatments, such as ultrasonic cleaning, de-ionised rinsing and phosphating to prepare the surface for plating, anodising or powder coating.

In addition, there may be requirements for polishing, deburring, de-flashing, heat treatments, shot blasting, peening and the complex and diverse area of mass finishing. All of these processes have their own individual technologies and pieces of machinery, including manual and automatic variations. They also require different levels of expertise in terms of sourcing, commissioning and operating the equipment required.

Environmental considerations

No surface finishing plant arrives without a plethora of environmental and health & safety directives that companies are obliged to adhere to. These include the use of prohibited or restricted chemicals, wastewater disposal procedures, fume and dust controls, safety apparel and many more factors to take into consideration.

Asset realisation and procurement

When a company undertakes changes to surface finishing plant and machinery, either in a specialist electroplating plant or as part of a manufacturing facility, it is faced with a number of asset realisation and purchasing options.

Firstly, there are the options available for the safe disposal of the redundant machinery, taking into account the value to be recovered and the procedures to be undertaken.

With the globalisation of manufacturing and product finishing processes, it is quite possible that the potential buyer for the redundant equipment resides thousands of miles away on another continent. Specialist expertise is required to achieve the sale in terms of international marketing, finding and evaluating the prospective customer and completing all legal documentation.

With the speed of change in a modern, globalised industry, the adaptation of an existing plant can often be a quicker and more desirable option than commissioning a brand new plant from a process plant manufacturer. Environmental considerations are also in favour of the recycling and remanufacturing of used plant and machinery wherever possible.

De-commissioning and relocation

Next, there is the safe de-commissioning of the plant, the disposal of all hazardous substances and complying with national and international legislation. In the UK, this can include the surrender of the PPC licence to the Environment Agency. The plant then has to be moved and re-commissioned in its new location, with all the logistical hurdles to be negotiated. Once again, there is a duty to comply with local environmental and safety regulations.

New v used, the pros and cons

Companies face a number of choices when purchasing new or replacement surface finishing plant and machinery. The taboo surrounding used machinery is mainly something of the past, when there were few reliable and trustworthy suppliers of such products. Many of today’s industrial machinery merchants are world-class companies that are well-capitalised, employ knowledgeable staff and harness the power of the internet to achieve a global marketing reach.

You only need to see the thousands of serious buyers flocking to the USETEC exhibition in Germany every year to realise that the used machinery industry has moved on considerably from its rust-bucket reputation.

The used machinery dealers, auctioneers and strategic industrial asset management consultants of the 21^st century employ sophisticated online marketing services in order to achieve their clients’ asset realisation objectives. Many are working on behalf of blue chip companies, for whom only bona fide suppliers with the appropriate credentials will suffice. It is essential to understand fully the client’s business plan and technical aspirations in order to put a successful marketing plan in place.

Our company, Riley Surface World, operates through three distinct sales and marketing channels for the benefit of both sellers and buyers.

Retail machinery

Firstly, there is the retail channel. We carry large, physical stocks of individual machines for which there is a regular market demand. These include cleaning systems, ovens, polishing & linishing, shot blast machines, dust extractors, chillers and much more. In most categories, the buyer has a choice of brand new products, nearly new machines that require minimal updating or older machines that can be made roadworthy with some refurbishment. In most cases, the level of budget available determines the choice of purchase. Older used machines will often be heavily discounted, and can be acquired ‘run & checked’ or refurbished if appropriate.

Direct from Site Clearance

There are also cases where it is not feasible to take equipment into stock. This often applies to complete electroplating or powder coating plants. It can also be appropriate for very large or specialised items of infrastructure that can best be marketed ‘in situ’. These events are known as Direct from Site Clearances, with a time limit on the sale depending on when a factory has to be vacated or converted to new production processes.

Riley Surface World works on a commission of the selling price in return for photographic, technical and marketing services. The company will also charge a fee if there is de-commissioning and dismantling work involved. There is no buyer’s premium charged for this kind of sales event.

Online Auction

Finally, there are online auctions. This channel applies both to complete plants and factory contents, as well as stock clearances of individual pieces of surface finishing machinery from the retail channel. The great advantage of online machinery auctions is that the bidding process tests the true commitment of buyers. It also serves to realise the true market value of the machines being sold at any one day or time in the used machinery calendar, adding credibility to the adage: ‘The market doesn’t lie’.

Online auctions are normally subject to a buyer’s premium, although this does not always apply to individual stock items being auctioned.

Conclusion

The surface finishing industry operates with a mixture of traditional and modern technologies. The principles of electroplating have not changed a great deal from their 19^th century origins. However, modern plants incorporate a great deal of digital technology, robotics and new developments in chemistry, power supplies and fume abatement to name but a few. The constant evolution of this technology has created a marketplace within the industry for good quality plant & machinery that is surplus to requirements in one company, but is needed by another company. Often these requirements cross national boundaries.

Companies such as Riley Surface World, along with other specialist machinery merchants and auctioneers, exist in order to serve the needs of the industry and provide a point of contact for all companies that have plant to sell, or who are in the market to purchase new surface finishing machinery. We provide a vital service, not just to the surface finishing industry, but to the economy as a whole.

What Big Data means to the surface finishing industry

One of those catchphrases that emerge from time-to-time in business circles is ‘Big Data’. Its genesis would appear to have been the huge amounts of personal data held by social media organisations such as Facebook, Twitter and Linked-in. However, it has taken on great significance for all companies, large and small.

What the experts in digital marketing are saying is that success in business no longer depends on one powerful message being delivered to millions of consumers through the mass media. The theory goes that we all, as individuals, have different preferences in our daily lives, and that it is the prerogative of brands and companies to deliver messages to us that will chime with our personal aspirations.

So far, so good. But there is also a backlash taking place against those global giants with the fastest and biggest computers that are holding all of this valuable data. It goes something like this: Information is more important to the economy than manual labour, and yet we are expected to surrender information generated by or about ourselves – a valuable resource – for free.

For instance, digitisation has allowed banks to repackage the information contained in a mortgage debt and sell it on as an increasingly complex product, whilst excluding the indebted homeowner from a percentage of the profits.

Jaron Lanier, in his book ‘Who Owns the Future’ imagines a world in which participants achieve economic dignity by being awarded ‘nano-payments’ for all of their contributions to the Big Data that is circulating around the internet, a form of global digital democracy.

‘All very worthy’ I hear you say, but what does all of this mean for our highly specialised and technically sophisticated industry? Well for starters, the data that we accumulate is of a business, rather than personal nature, but it is no less valuable as a result. Business-to business data provides us all with privileged intellectual property, which we have a duty to use responsibly.

At Riley Surface World, we place huge importance on the quality, accuracy and security of the data that we hold, and treat it with great respect. We make great efforts to fine tune the information that we send to our opted-in members, in order to ensure that it matches the requirements that they have requested. I have to admit that we don’t always get it right, but we are constantly putting new processes in place to try and achieve this goal.

What our own ‘Big Data’ is telling us is that the applications for, as an example, automated vibratoryfinishing, no longer can be put into the predictable slots or traditional industries that used to be involved in the process. Enquiries for such equipment can nowadays emanate from a wide spectrum of manufacturers, re-manufacturers, sub-contractors, cottage industries, hobbyists, researchers and much more. This is without going into the geographical spread, which can range from Bradford to Brisbane and everywhere in-between.

We can often get sucked into a collective feeling of despondency due to the general state of the economy. As I am writing this, commentators are once again talking about ‘triple-dip recession’. However, one economist that I heard on the radio this morning pointed out that the majority of the world is booming. In the UK, our currency is weakening, something that will benefit our exports, and we are sitting on a wealth of knowledge that is unrivalled across the globe. This particularly applies to the surface finishing industry, where we are world leaders.

How we accumulate, protect and manage our data is something that will have a far greater impact on our future success, prosperity and reputation than almost any other measure.

New Annual Investment Allowance is welcome news for manufacturers

The beginning of 2013 has brought some welcome news from the government for any company involved in manufacturing. Improvements to capital allowances, bank lending, and corporation tax rates, set against the background of a growing manufacturing sector should give us all reasons for good cheer.

In his autumn statement, Chancellor of the Exchequer George Osborne announced a temporary increase in the annual investment allowance for plant and machinery from £25,000 to £250,000.

Starting on 1 January 2013 and for the next two years, £250,000 worth of investment will qualify for 100% relief. The chancellor said. ‘This capital allowance will cover the total annual investment undertaken by 99% of all the business in Britain. It is a huge boost to all those who run a business, who aspire to grow and expand and create jobs.’

The allowance, introduced in 2008, was reduced from £100,000 to £25,000 from April 2012.
Today’s announcement will be welcomed by many SMEs. Leaders of 14 trade bodies last year wrote to The Sunday Times urging the government to increase capital allowances.

Critics have pointed out that cuts in the main rate of corporation tax have not benefited smaller companies, some of which have been worse off as a result of recent changes to the capital allowances regime. This new allowance should address this problem.

Chris Sanger, head of tax policy at Ernst & Young, said the announcement represented the fourth change in five years:

‘The last government introduced the allowance at £50,000, increasing it to £100,000 and it was cut by this government to £25,000 from April 2012. Whilst such rapid changes could look incoherent, these incentives are clearly linked to the state of the economy and can accelerate investment,’ he said.

The introduction of the 100% Annual Investment Allowance, together with April’s long awaited reduction in corporation tax will make the UK the most favourable regime in the EU for manufacturers and sub-contractors. It provides the incentives that are needed to invest for expansion and to seek new market opportunities.

Another measure that should be a great help to SMEs in 2013 is the Funding for Lending Scheme (FLS). Banks and building societies can borrow in the FLS at cheaper rates, for periods of up to four years.

The Scheme delivers credit easing to the whole economy, and has strong incentives for banks and building societies to increase lending to UK businesses. Those that lend more, can borrow more in the FLS, and can do so at lower cost than those that scale back lending.

For companies in the Surface Finishing industry, all of this will come as welcome news. Many SMEs have been reluctant to invest in plant and machinery during the recession. This is either because of shortage of demand or uncertainty about the long term prospects for growth.

The widespread availability of good value redundant finishing plant and machinery, together with the increased capital allowance, means that companies’ budgets can be made to go much further.

Many of us, like my family, have been in the surface finishing business for several generations. For us it is not just a way of making a living. We share a passion for a business at which the UK has excelled historically. This more favourable environment should give all of us the incentive to do even better in 2013.

Electroplating. Past, present and future.

The origins of electroplating go back to the early 19th century, and have been variously attributed to Michael Faraday, Luigi Brugnatelli and Allisandro Volta (after whom the the electric unit ‘volt’ was named). However, it was the Elkington Brothers of Birmingham that submitted the first viable patent for gold and silver plating in 1840. This development was rapidly followed with processes for plating in bright nickel, brass, tin and zinc. As with much of the world’s manufacturing technologies, electroplating was founded in the white heat of the Victorian industrial revolution.

The explosion of the automotive and aeronautical industries of the early 20th century, as well as those serving the construction industry, saw another surge in electroplating processes, particularly in the use of chrome plating on steel.

However, things did not radically change for over 100 years. It was the growth of the electronics industries in the 1940s, accelerated by the technological and communications demands of World War 2 that saw new chemicals, pre-treatments, cleaning systems, acid bath preparations and more accurate DC power supplies come into force.

This barrel plating plant was relocated from the UK to a large automotive sub-contract electroplating company in Durban, South Africa.

Change driven by legislation

Whilst technology and the demands for new consumer products have always been the main drivers of electroplating advances, from the 1970s onwards environmental and health & safety practices have had increasing influences. Legislation both at home and overseas governs waste water and chemical disposal, water recycling, dust and fume extraction and energy efficiency to name just a few. These regulations impose challenges on electroplating companies to maintain high standards of product quality, whilst at the same time being aware of potential harm to the environment and the health and safety of employees.

In this respect, we are not talking about some vague notion of how to prevent global warming. The dangers inherent in allowing toxic chemicals into public water systems were illustrated in a dramatic way by the year 2000 film ‘Erin Brockovich’, starring Julia Roberts and Albert Finney, which was based on a true story. The film highlighted the dangers of not properly controlling the safe disposal of hexavalent chrome (CR6) as a passivation agent. Similar issues have recently emerged in relation to the use of cadmium in the aerospace industry.

Modern electroplating plants are light years away from the dirty, smelly, polluting monstrosities of yesteryear. As well as being environmentally sound and energy efficient, they incorporate a number of improvements in order to achieve a higher quality of finished result. New practices enable greater plating speed, better ‘throwing’ power (the ability to produce a more uniform distribution of metal on products of irregular shapes), as well as a far greater variety of robust and decorative plating finishes.

This precious metal plating plant was relocated within the UK and reconfigured for zinc plating

New materials and processes

In addition, the electroplating of materials such as platinum, osmium and ruthenium are now used widely in electronics for connectors, circuit boards, contacts etc. Keeping up with the ever more demanding needs of the electronics, computing, aerospace and automotive industries is what is driving through improvements to electroplating worldwide, creating ever more sophisticated materials and processes.

In the UK, a particular growth area for electroplating is in the medical prosthetics sector. Hip, knee and whole limb replacements are heavily dependent on the precision surface finishing of metals such as titanium, platinum and rhodium.

The development of more sophisticated and specialised electroplating processes for niche industries has brought about a major change in the structure of companies supplying the industry. Until the 1980s, the surface finishing requirements of Britain’s manufacturing and engineering sectors were largely served by electroplating sub-contractors (otherwise known as ‘jobbing shops’) that dominated the industry. The decline of heavy engineering throughout the 1980s and 90s saw a parallel downsizing of electroplating sub-contractors, with many disappearing altogether.

As the UK economy has moved towards more high end and specialised manufacturing, such as the hugely successful Formula One industry, many bespoke and confidential metal coating processes have moved in-house. Today’s electroplating operations are more likely to feature clean room environments populated by people in white coats, with correspondingly safe and efficient working practices.

Modern plants include computer controlled automation of product transportation, chemical dosing, pre-treatments and other critical process stages. PLC controls are replacing manual systems and modern rectifiers are delivering far more reliable current densities to ensure consistent results.

This general purpose plating plant was relocated from Ireland to Pakistan to be used by a large fasteners manufacturer

Recycling of redundant plant and machinery

The restructuring of the industry has created a large number of redundant electroplating plants and ancillary equipment that need to be put to good use. Just as legislation requires the safe recycling of chemicals, waste water etc., there is also a duty of care to the environment in relation to the de-commissioning and recycling of complete process plants. 

Developing countries such as India, Brazil, South Africa and Turkey are emerging markets for recycled electroplating plants. At Riley Surface World, we are seeing an increased demand for used process plants both at home and overseas.

A good example is this fully automated barrel acid zinc plating plant (pictured) that was de-commissioned in the UK, shipped to Durban, South Africa and re-assembled there for inline production. The client, one of South Africa’s largest plating specialists, enjoyed the benefits of a modern, efficient European plant at a fraction of the cost of having it built locally from scratch.

Another recent development is the adaptation of used electroplating plants for different applications within the UK. Wet treatment lines are relatively easy to re-design and re-configure, sometimes with the introduction of transportation, heating and PLC controls to an outdated manual plant. 

There are two good examples of this. Firstly, a precious metal plating plant (pictured) which was sold, relocated and converted to zinc plating for a global remanufacturer of automotive parts in a different part of the country. Secondly, we assisted an Irish company, by auction, to exit electroplating and to sell and relocate two modern electroplating plants (pictured) to a large manufacturer of fasteners and die castings for the automotive industry in Pakistan.

Even effluent treatment plants can be subjected to the resale and recycle process. Our company recently carried out the sale of a substantial K-Pack dissolved air flotation facility (pictured) from the paper industry to the oil industry in the UK.

There has been much speculation in recent times about paint and powder coating overtaking electroplating as the metal coating process of choice for many companies. Whilst this may be viable for lots of products, there is no substitute for the fine layers of coating and the range of quality finishes that electroplating can achieve. As a new industrial revolution takes shape in the re-balancing of the UK economy back towards manufacturing and exporting, electroplating is once again coming into its own, in ways which the Elkington brothers could hardly have predicted.

    

            

Advanced Engineering delivers all round success at NEC

Riley Surface World has just completed its first participation in the Advanced Engineering exhibition at the NEC, Birmingham, UK. This is an annual event covering the sectors of Aero, Automotive and Composites Engineering, all of which are industries where the UK currently excels.

Both exhibitor and visitor attendance numbers were impressive and there was a general buzz of activity and air of optimism around the hall. The organisers can take great credit for working closely with government agencies and trade associations to create networking events. During these forums, component suppliers and sub-contractors were able to network with and understand the requirements of large manufacturers such as Jaguar Land Rover and UTC Aerospace.

This year, the exhibition made a special effort to attract companies from the surface engineering sector and this certainly paid off, with market leaders such as Wheelabrator, Guyson, Carbolite and Turbex all in attendance, as well as many of the chemical producers and suppliers. Britain’s reputation of engineering excellence depends on many specialist skills and processes, with surface finishing being a prominent contributor to making us a world-class manufacturing nation.

From the point of view of Riley Surface World, we felt privileged to be in such exalted company. It also opened up our eyes to a world outside what can sometimes be the rather narrow perspective of our highly specialised industry. Our experience since the turn of the new century is that surface preparation and coating processes have become much more diverse and dispersed across a much wider spectrum of manufacturing industry.

This makes it all the more necessary to engage with events such as Advanced Engineering, reaping the benefits of broader horizons and gaining valuable contacts from companies and organisations that we would not normally meet.

To those that are sceptical about events of this kind, I would simply urge them to give it a try. It is only a 2 day exhibition, so it does not eat into resources as much as 3 or 4 day shows. Modern communications may be very sophisticated, with lots of ways to contact people using social media and the like. However, there is still no substitute for meeting the customer, looking them in the eye and shaking hands on a transaction that is beneficial for both parties.

The exhibition also re-acquainted us with our local Black Country Chamber of Commerce, which is a valuable source of support, both in financial terms and in the level of expertise that they can offer to SMEs.

We have enjoyed great success over the last 10 years by transforming our business from a traditional machinery merchant into a virtual business that is driven by network solutions, and has become further internationalised. None of that would have been possible without the support that our local government agencies, working in conjunction with UKTI, have given us.

Advanced Engineering was a hugely successful event, and as our economy re-balances away from services and the public sector towards manufacturing and exports, it can only go from strength to strength in the future.