Bridge club: Companies in the North East are expanding their horizons to embrace new products
Sitting on the boundary of County Durham and Northumberland, Consett enjoyed the fruits of being a steel town in the 18th and 19th centuries, but then experienced deprivation as that UK industry sector later became dominated by Sheffield.
The Consett Iron Company was established in 1864 as a successor to the original Derwent Iron Company that started up in 1840, when the first blast furnaces were introduced. Over the next 100 years, Consett developed into one of the world’s most prominent steel-making towns, and became synonymous with the industry – making the steel for the Blackpool Tower and early nuclear submarines.
Residents comment on the unearthly glow that the works used to cast over the town, which was renowned for the cooling towers and other plant dominating the skyline. At the height of the sector’s boom, a pall of red dust hung over Consett – composed of atmospheric iron oxide from steelmaking.
In 1980, under a Thatcher-led Conservative government, Consett’s steelworks was closed for good, leading to industrial unrest, the loss of 3,700 jobs, and an unemployment rate of 36% the following year – double the national average. The decline was characterised by local people as ‘the murder of a town’. Since then, regeneration projects in the 1990s have aimed to improve its fortunes.
Tobias Heintz, managing director of Pinnacle Re-Tec – an small manufacturer that reverse-engineers pumps and pump components for sectors including oil and gas and power generation – based his business on an industrial estate in Consett when he set it up seven years ago, having formerly worked for the Weir Group in Glasgow. Heintz describes the region as beautiful and unpretentious, with normal people doing normal things. “The people are dedicated and hardworking,” he says.
However, as elsewhere in the country, skills are a problem. Half of Pinnacle’s workforce of 34 is aged over 60, Heintz says, and half are under 30, with very few between either age group – a sign of the decline of apprenticeships during the industry’s lean years.
However, he is positive about the young people the firm employs. “I don’t see any of the traits that are mentioned negatively about the younger generation,” he says. “I don’t see any trace of them in the candidates we’re hiring, or in the people that are being sent to us. The college sends great kids, and we take them onboard.” The challenge will be finding more as the business expands, he adds.
Pump primer: Reverse-engineering at Pinnacle Re-Tec begins with scanning and CAD models
Pinnacle Re-Tec uses traditional measurement technologies such as Vernier calipers, micrometers and CMMs to measure components from pumps or complete pieces of kit that have been damaged, create CAD models, and produce new versions to order, through casting and machining. The castings are outsourced to local suppliers when possible, although some larger items are shipped in from Heintz’s native Germany.
The key is making sure that the pump components are manufactured to the original design without access to engineering drawings – and more swiftly and cheaply than the OEM can manage.
Reverse-engineering is kept as
simple as possible, with the minimum number of points taken from original equipment, so laser scanning isn’t used, because it generates high volumes of data. “You can ascertain diameter with three points, so all of our scanning is done with mechanical probes,” says Heintz. “We can manipulate them and bend them the way we want to. We build up a minimal model that’s less complex, with smaller files, and it’s far easier to manipulate. It’s all about simplicity – the less data you have, the better.”
An impeller blade might be captured once, for example, and then replicated over and over again, with each blade being placed equidistant in the computer model. Reverse-engineering a design is the quickest part of the process, sometimes taking a matter of hours, but producing large castings can take weeks or months.
“For medium-sized castings I go to Germany, because they provide a better service when it comes to delivery times,” he says. The business makes its living by producing parts on time – because delays to oil or electricity production caused by pump failure are so expensive – and penalties are written into its contracts if components are delayed.
Heintz admits the company’s services, many of which are exported, aren’t cheap, but knows he has a big selling point in being able to outmanoeuvre OEM pump manufacturers in responsiveness. “There are companies that can make an impeller, or shaft, or casing. It’s not so difficult to get it right, but we have to get it right every day, with every single part. We are very accurate, and high-speed. And if the main oil transfer pump at an installation goes down, you will hear about it,” he says.
Germany is where Heintz trained – he also has an MBA from graduate business school Insead – and he holds the protected title of the traditional engineer’s degree Diplom-Ingenieur, which is equivalent to a masters degree. Heintz acknowledges that this gives engineers in Germany an advantage over their peers in the UK.
Internationally, however, he believes British engineering is regarded as among the best in the world. “Most countries have a good view of British engineering – perhaps better than the Brits themselves.” Heintz also believes that the UK engineering environment has improved. “I remember chatting with a guy from the Treasury in 2004 and he was saying that we didn’t need engineering any more. The climate for small engineering businesses has improved. The help we get for exporting is miles better, through UKTI and UK Export Finance – tools the like of which German manufacturers have had for decades.
“The government is now publicly pushing engineering. There are a lot of clever people in this country who might have chosen a career in the City. Those people may go into engineering.”
Another small company in the region that’s doing well is Tharsus, a contract manufacturing firm based in Blyth, Northumberland, 20km north-east of Newcastle on the coast.
As we went to press, the company was waiting to find out whether it had won the award for best SME at this year’s IMechE Manufacturing Excellence Awards. Such an achievement would represent a real turnaround at Tharsus, which had to lay off half its staff during the recession and has reinvented itself as a state-of-the-art design and manufacturing collaborator that brings innovative ideas to fruition.
Tharsus’s roots are as a ‘metal-bashing’ shop with a 50-year heritage, founded in 1964 and now wholly owned by Brian Palmer, a former automotive engineer who began his career at Nissan in nearby Sunderland. In Blyth, which like Consett is deprived, the company is providing employment for 140 people, with the promise of more to jobs to come and land next to its facility available for expansion.
Tharsus saw a 75% drop in orders at the height of the financial crisis, says Palmer. “Traditional sheet metal working isn’t a scalable business model. There’s a handful of firms with turnovers of more than £20 million. This is now a knowledge-based business.”
That business includes making 12 component washers a day for Safety Kleen and a hush-hush project developing a robotics system for a FTSE 250-listed firm, as well as manufacturing products for Rapiscan, which produces security equipment for airports. Metal fabrication remains part of the business, but a small one. Tharsus’s growth is being generated by further diversification into contract manufacturing and innovation.
“For a traditional metal basher to convert to the kind of business we are isn’t an easy step. We spent a lot of money getting to where we are. We want to prove that we did the right thing,” says Palmer.
There has had to be a willingness to embrace new markets and ideas, and to take risks, he says. There has also been a desire to embrace a flexible, lean and scalable production environment, to share some of the upfront risk involved in developing new designs, but to also ensure a sound commercial model is in place to exploit manufacturing.
It has not always been easy to convince others of the business case, admits Palmer. “It probably took us two years to understand it. There were a lot of channels in the market that have turned into blind alleys – but you need to go down them, and engage with customers on the way.”
But Tharsus has the engineers to succeed, he says. “If all we did was quite conservative projects, with surefire commercial winners, this wouldn’t be an exciting place to be an engineer. But it is.”
Rescue remedy: Fire services globally use Dräger equipment
Former MX finalist Dräger – which picked up the overall winner award at the
IMechE Manufacturing Excellence Awards in 2012 – manufactures compressed-air breathing apparatus just down the road from Tharsus. Part of a German, family-owned multinational manufacturing firm, the company is the design authority for that type of equipment in the group.
As well as manufacturing, Dräger carries out research and development at the Blyth facility. The company makes high-specification, composite material-based breathing cylinders with glass-fibre protective layers, using a high degree of automation on the factory floor to reduce labour costs. The breathing-apparatus business was originally established on the site more than 50 years ago and has since been acquired by the German firm, says Michael Norris – an American and former Cummins man who runs Dräger in the UK.
“Because there’s such expertise here, there has never been the need to think about going anywhere else for this work,” he says. In fact, some work that was taking place overseas is now coming back to the UK plant, including electronics work that was being carried out in Malaysia.
“The technical side is less a driver than the economic side,” says Norris, citing the inflation of overseas wages as a key factor, as well as the rising cost of materials and transport. “After a while, that disparity between wages here and overseas changed. If you put the systems, products and processes in place, people are just as capable of manufacturing overseas as they are here. If you don’t provide good leadership or infrastructure, most issues lie in the systems that allow people to do their jobs. If quality issues exist, it’s because you didn’t put the processes in place.”
Automation should be used on the shopfloor to take out variation in a process and thereby improve it, he says. This process would continue to enhance quality and bring down cost at Dräger.
Norris, from Ohio, has worked in the British engineering industry for 20 years. “There’s some brilliantly talented engineering creativity here, but getting ideas to market is a struggle,” he says.
Successful companies can’t rest on their laurels. Efficiency improvements have to be made continuously, he says. “The best way of ensuring you become obsolete is to think you’re too bloody good.”
Seta helps employers in region to plug skills gap
Robin Lockwood is the chief executive of training organisation Seta, which for decades has been helping engineering companies in the North East make their workforces more skilled. Seta is a not-for-profit group training association and also a registered charity, set up to service the training needs of engineering businesses.
Seta is the largest engineering training centre in Tyne & Wear and has its own workshops, which include state-of-the-art CNC lathes and machining centres.
From its Washington base, it offers engineering apprenticeships, traineeships, and both standard and bespoke commercial training courses.
Lockwood says Seta is working with several new companies that wouldn’t previously have taken apprentices on. “That’s an indication that people see the need to do something about skills, and are in a position to make a long-term commitment to skills.” It doesn’t make sense to think of the engineering industry in the North East as a homogenous group, he adds, and some firms are faring better than others – those in automotive, for example – although the overall picture is much brighter than it was during the financial crisis.
Seta says many engineering and manufacturing companies in the UK are struggling to find workers with the technical skills they need. Other companies might have the right skills, but are concerned that they have an ageing workforce. “These two problems could seriously restrict a company’s ability to step up production as the economic recovery gathers pace,” the organisation says.
Lockwood says the pool of workers available to industry has diminished. “Almost all our employers tell us they’re struggling to fill key posts. The workforce is ageing: there are lots of companies with talented, skilled people in their early 60s. What do they do next? Apprenticeships can provide workforce continuity.”
Seta delivers traditional engineering apprenticeships of up to three-and-a-half years, where most of the time is spent on on-the-job training. “We’re one of the original group training associations that was set up in the 1960s,” Lockwood says. “The key is to work with employers to make sure that training fits what they’re looking for.” The organisation has a contract with the Skills Funding Agency, which ensures that for 16-18 year-olds, apprenticeships are funded to level three. For 19-year-olds and over, firms are expected to provide half of the funding.
Companies are obliged to pay salaries to trainees. This can be a barrier to widespread adoption of apprenticeship programmes, especially for small employers. “It’s about empowering and equipping youngsters for a career in industry, where they have to graft,” says Lockwood.