IF ever there was a perfect example of the importance of research and development in manufacturing it is steel processing firm Hadley Group.
The Sandwell (Smethwick) firm – the UK’s largest cold rollforming group – employs 50 engineers in its R&D department under a professor of engineering.
The ideas they’ve come up with have helped to turn the firm into a £100m turnover concern, exporting around the world and supplying a plethora of different industries.
Chairman and managing director Stewart Towe CBE is passionate about research and how it can be used to improve products and processes.
It is the thing, he think, that gives Hadley Group the edge.
“At the end of the day we are a manufacturing company. We take metal and we put shape and holes in it. The opportunities for innovation are improvement of the production process – making it faster and making it more effectively,” he says.
“We are also looking at the product from the customer’s perspective, looking at how we can be the author of the next generation of products.
“How can we reconfigure the current product to make it simpler, so that he assembles it in four parts rather than 20, so that it is stronger and carries additional weight, so that it is lighter? All of those processes are what our technical development team are looking at in conjunction with customer development.”
Customer involvement is key here. The firm has an IT-based update system and every project manager is required to file a weekly report to the customer on how that project is being managed.
Working this closely with customers is a great way of retaining clients and also of increasing the amount of work they give you.
“Most of our competition don’t do anything like the level of R&D and process and product development that we do. Some don’t do any,” Towe says.
“We get the margin by persuading the customer that they need the next generation of product.”
Speaking to Towe, you quickly gain an idea of just how passionate he is about the business and manufacturing in general.
“I take an interest in everything that goes on in the business from the customers to the suppliers and everything in between,” he says.
And yet in the early days he looked set for a career in professional services.
He trained as an accountant with the Birmingham firm of Farmiloe & Co before moving into industry with Hadley in 1976.
He was appointed to the main board in 1978, taking responsibility for the commerical and financial development of the group and then completed the buy-out of the business from the Hadley family in April 2006.
Hadley has grown from £1m annual turnover in the mid 1970s to just shy of £100m annual turnover in 2011. It now has manufacturing plants in Germany, Dubai and Thailand and licensees throughout the world.
It has 400 staff in the UK and 100 more around the world.
Growth has been primarily through product development, not acquisition.
“We have made acquisitions along the way but we’ve always found that the home grown engineer that we’ve brought through from university or shortly thereafter is a better, more innovative employee so we tend to grow our own,” Towe says.
The combination of staff loyalty – 50% of the workforce has been with the firm for ten years or more – investment in them – there is a profit share scheme in place – and pumping money into research and development to secure the company’s future, has really paid off for Hadley Group.
So has an ability to supply to a wide range of industries.
It works with numerous sectors including transport, construction, automotive, retail and aerospace.
It could be mezzanine floor sections for the roofing industry, industrial doors, struts, support structures for champagne vines, window and door reinforcements or racking for retailers.
But Towe says there has been a move away from automotive.
“When I arrived the core products were automotive. We hardly do any automotive now because in many sectors of automotive they became bully boys and the prices were ridiculous. We moved into areas where the margins were more realistic,” he says.
“The benefit we’ve got is we having got a product. We are a processor and so we are in every area you can imagine. You name it and we’re there in some shape or form. We’ve got such a broad market to go after. We’re not limited by, say, the problems in the construction market.
“By having this broad reach of activity you are hedging your bets all the time as you can move capacity around.
“Our ace in the hole when it comes to the stability of the business is that we are so diverse. We’ve got many more activities than someone stuck in a narrow environment.”
New opportunities present themselves all the time.
“In the Middle East there is a big push, particularly in Saudi, for non-water- based construction as water is a scarce resource. If you are using steel frames you are not using concrete and have not used any water at all,” he says.
“And in the Far East a customer has come to us because Vietnam has banned the use of wood in roof building because of termite attacks. So now they use metal.
“We expect our local people to have their antennae tuned to any change in buying patterns that we can take advantage of. That’s what they are paid for.”
Hadley Group exports around 30% of what it produces in the UK and Towe’s main concern in international trading terms is the Eurozone crisis.
“The uncertainty in Europe is breeding a huge amount of uncertainty in the marketplace,” he says.
“All our customers need confidence in the medium-term future in order to place orders for products. It’s that lack of confidence that drives short termism in thinking and that causes huge ripples in the manufacturing market.”
Towe says his main role at Hadley Group now is to look at the strategic development of the company.
“It is about dealing with the transition. We are around £90m in turnover and have ambitions to be £150-200m. You need to operate differently when you are handling global customers,” he says.
“Five years ago we probably had one global customer. We’ve now got five. They have different demands. And that becomes a different management issue.”
Towe has also created space for himself for his numerous ‘extra curricular’ activities.
He got involved in the local Smethwick Regeneration Partnership in the 1990s and his expertise has been in demand ever since.
He was awarded a CBE in 2008 in recognition of the leading role he has played in regional affairs – most notably within the Black Country.
He is highly proactive at the public/private sector interface, encouraging businesses to become involved with regeneration and education throughout the region.
He was nominated as High Sheriff of the West Midlands in 2012 and since October 2009 he has chaired Business in the Community for the West Midlands Region. He is also a member of the CBI Manufacturing Council.
And in December 2010 – in arguably his biggest challenge yet – he became the chair of the Black Country Local Enterprise Partnership.
“In joining my priorities were to try and bring a cohesive Black Country together because it was quite disparate. We need to punch our weight as a sub-region and to work on opportunities with our neighbours to generate a better West Midlands economy,” he says.
“We were told to remove barriers to growth and I think we’ve done some of that but there’s an awful way to go.”
Towe says getting local authorities to recognise planning applicants as clients is a major step forward.
“Also encouraging was getting recognition from the Government in our enterprise zone application that the supply chain developmentt is just as important as the JLR engine plant itself.”
Towe is also pleased that the four Black Country boroughs are now talking about a combined authority.
“We need to remove barriers to growth,” he says. “If it is a lack of development land is a barrier we need to remove that. If you ignore that there is no growth.
“But if you have not got the skills to put into the factories we’ve failed there as well.”
One suspects that’s not a problem Hadley Group is likely to face anytime soon.