Jan 2020 - 05: Moving up the value chain

Moving up the value chain.
The UK aerospace sector, and particularly the many SMEs are facing a variety of challenges.

These range from the uncertainty caused by Brexit, to consolidation of supply chains and the steep production ramp-ups driven by record growth and back-logs.

Now more than ever, to survive and grow, companies need to be competitive.

This is well-recognised by government which, as part of the Aerospace Growth Partnership, has invested in programmes to help companies to innovate and grow.

The stakes are high.

In 2018, total UK civil aerospace turnover was worth over £35 billion, and the sector had approximately 17% of global market share.

As the crown jewel for UK exports, 90% of domestic aerospace production is exported and more than 3,000 aerospace companies operate in the UK.

The sector provides over 282,000 direct and indirect jobs.

Sharing in Growth, is one such government-backed programme that is supporting innovation and growth in this supply chain.

This productivity and competitiveness programme for aerospace and advanced manufacturing has proven so successful, that the government has twice re-invested to the tune of £86 million.

And, when in late 2019 a similar transformative improvement approach was required in the offshore wind sector, Sharing in Growth was selected to develop the pilot. 

New places are still available on the Sharing in Growth programme that provides funded support with a value up to £300k per year for three years.

It's endorsed by many of the big players such as Airbus, BAE Systems, Boeing, Bombardier, GE, GKN, Leonardo, Lockheed Martin, MBDA, Rolls-Royce, Safran and Thales.

The Sharing in Growth programme is supported by the Regional Growth Fund and more than £150 million in private investment. 

To qualify, companies need to be aerospace suppliers, have genuine ambition to grow and be able to release their teams for on-site coaching, training and mentoring.

As Sharing in Growth is a not-for-profit organisation, the advice and guidance provided is entirely independent and geared towards the company’s particular needs.

Sharing in Growth's CEO Andy Page says “Structurally the UK needs more midcap companies who have the capability and capacity to supply primes and tier ones.

The Sharing in Growth programme is creating a virtuous growth cycle where improved people development drives productivity and competitiveness,.

This, in turn, wins contracts that provide the funds to invest in people, technology and infrastructure to win even more business.” 

Participants in the programme have secured more than £4 billion in contracts since it was established in 2013 and many are growing at five times the rate of their peers.

Sharing in Growth helps companies tackle their individually diagnosed barriers to growth through training, coaching and mentoring and, on average, double their turnover.

For many participants, the Sharing in Growth programme has helped them transform, moving up the value chain, from reliance on the uncertainty of short-term contracts to long-term strategic supply partners. 

Founded in 1979, Walker Precision Engineering or WPE, is a Glasgow-based family company with a reputation for cutting-edge innovation.

Back in 2015, its £15 million turnover depended on winning short-term contracts.

These were mainly in the defence, commercial aerospace, food and telephonic sectors for internationally recognised companies such as Rolls-Royce, Raytheon, Thales and Kongsberg.

However, to fulfil its growth ambitions, WPE knew it needed to move up the value chain and become a long-term strategic supplier by investing in its people, processes and plants.

Today, the business is now Walker Group, formed of WPE, Walker Precision Engineering Polska and Walker Guidance Systems or WGS.

These three state-of-the-art manufacturing hubs employ over 300 highly skilled staff.

The group continues to serve key markets such as aerospace and defence and is on track to exceed a £25 million turnover during 2020.

It 's also rapidly gaining recognition as a centre of excellence for the space industry.

In 2015, the company’s gaze was firmly fixed at ground level.

Short-term contracts made investment difficult.

Its small company culture was very informal and lacked real role definition, leading to an inefficient crossover of responsibilities.

With a fragmented organisational structure, lengthy lead times, delivery challenges and decisions based on assumptions rather than integrated data, the company applied to join Sharing in Growth.

Using Sharing in Growth's expertise, Walker implemented radical operational change including visual management boards to monitor and control its processes and better display its production progress to customers. 

As people are essential in delivering excellence, Walker boosted its skill pool by hiring new staff while also developing its more experienced employees, increasing its yearly apprentice intake by 20%, and financing degree and industry qualifications.

By 2017, the wide-ranging improvements had given Walker the confidence to create Walker Guidance Systems.

It did this by acquiring a temperature-controlled precision machining and assembly centre from global player Leonardo.

They then went on to secure an additional £4 million investment from the Business Growth Fund for plants and technology to increase its capacity and expand its offering to clients.

In Glasgow, Walker has invested over £2 million in its NADCAP-approved wet processing facility.

At WGS ultra-high precision machining was introduced with a £900,000 robotic assembly line being commissioned.
With this more advanced capability, Walker moved into the latest generation of satellite and satellite constellation programmes.

It's now supplying Teledyne for the Airbus joint venture OneWeb constellation of 650 satellites.

Walker Precision Engineering has secured a considerable forward order book, with significant long-term agreements required for sustainable growth.

Mark Walker, the Managing Director of Walker group says: “In these past four years, Sharing in Growth has supported Walker in its journey, providing conscientious coaching and mentoring to facilitate the company’s growth plans.

We seek to fully embed a high-performance culture across the group, delivering excellence in everything we do and through Sharing in Growth’s lessons, we have identified gaps in our leadership to make changes to support this goal.”

Surface engineering specialists Poeton Industries joined the Sharing in Growth programme in 2016 and have invested heavily in their people, their plants and in their brand.

As a result, they have improved productivity by 50% in focus areas, secured some £30 million in contracts and are on target to increase their annual turnover from £12 million to £20 million by 2021.

With a rich, 120-year heritage Poeton positions itself as a ‘global partner not a local supplier’ and has a vision to deliver excellence as the surface treatment partner of choice.

As the saying goes, ‘a vision without a strategy remains an illusion’ so the Poeton leadership team spent time and effort to develop its corporate planning and governance as part of its platform for success.

To engage its 260 staff in its growth strategy across sites in Gloucester, Cardiff and Poland, Poeton worked with Sharing in Growth to determine its vision, mission, values and goals for each part of the business.

The goals were then defined by five-year strategic objectives covering what needed to be achieved in the next year, in years two and three, and then in years four to five. 

These were developed into the annual policy deployment, a cascading set of goals with clear targets that aligns the actions of the entire company.

Poeton used the Sharing in Growth X-matrix, a one-page document that includes annual objectives, improvement initiatives and key performance indicators.

This makes it clear who is responsible for delivering what and when.

At each level of responsibility, business measures were drawn up to track and show monthly status against plan.

Where actual fell short of plan, a standard process was used to solve problems and report of countermeasures. 

Delivery of the KPIs was backed by site-level project plans that document what had to be achieved by when.

For example, detailed plans were needed to ensure that the sales and operations strategy were aligned to deliver growth.

This meant mapping out a four-year plan of how the factories would need to change and what capex investment was needed. 

Sean Needham, Group Operations Director at Poeton says: “To ensure everyone could see progress – or problems – and make a contribution, a management review and control system was implemented with clear status available on display boards in an operations information centre.

A similar approach was taken with the development of a business development information centre to chart progress towards sales targets.” 

A Sharing in Growth lighthouse cell has also been implemented to deliver operational improvement.

Here Sharing in Growth gives training and coach in a particular area to establish best practice.

Those who have been trained, can then help roll-out similar initiatives elsewhere in the plant so that learning is embedded and shared. 

Poeton used a lighthouse cell implementation in its thermal spray facility with stunning results.

Not only did it turn the area from loss-making into profit but it also halved lead times and raised delivery performance from 65% to 95%.

It worked so well that the company held a customer open day where companies like Rolls-Royce and Safran witnessed how the facility has been transformed.

The building layout has been redesigned to better utilise the space, lean manufacturing techniques have been implemented and equipment upgraded to ensure Poeton can offer world-class levels of quality and service. 

Darren Burge, Managing Director at Poeton says: “Supported by invaluable guidance from the Sharing in Growth experts, our thermal team have achieved a successful transformation that we’re all very proud of.

In every sense, the full range of benefits in working with Sharing in Growth are evident; from effective planning and optimised flow management to 5S and improved equipment availability through planned preventative maintenance.

This has resulted in us taking a significant stride towards our goal of becoming world-class.”

The overall results on the Sharing in Growth programme have so far been impressive for Poeton.

They’ve signed their first long-term agreement with customers worth £15 million, their turnover is up by over 20%, and their value added per person is up by more than 70%.