Successful strategies for survival
By Virginia Marsh
Published: June 6 2011 17:38 | Last updated: June 6 2011 17:38
We profile three companies that are defying the downturn through innovative thinking
Malcolm Staff is unequivocal: if Halifax Fan, the industrial fan maker of which he is managing director, had not expanded to Asia, it would have shrunk to a spare parts and maintenance operation with a fraction of its staff.
Five years on, the business won in Asia has not only helped the company achieve record growth during a global economic downturn, but has also revitalised its UK operations.
Set up in Yorkshire in 1965 to supply the once-strong local textile industry, Halifax Fan produces industrial fans for installation both within machines and in plants, for cooling purposes and to extract gas and other emissions. Choosing the right fan is critical, Mr Staff says, as fans typically account for 20 per cent of industrial energy use.
Halifax Fan – which was acquired by five private investors six years ago – had already started its journey east pre-recession, following customers to China. The downturn led it to speed up development of its Shenzhen facility, set up in 2006-07, moving further labour-intensive production there.
The group implemented a 5S lean manufacturing programme (a commonly used workplace management technique) in both the UK and China, attended trade fairs in Vietnam, Indonesia and China, and invested in technology to boost design, customer management and communications.
It also cut staff in the UK, where its Brighouse plant now employs 44, down from 53 three years ago. In China – where Mr Staff has been based since the start of this year – the company has 36 staff, up from just one five years ago.
The biggest change in the UK workforce has been its composition. With the Yorkshire operation concentrating on final assembly, testing, research and development, and producing specialist fans, it has needed more skilled workers and, in particular, stronger engineering capabilities. The old divisions between the shop floor and management have blurred: former factory workers have been offered training and many now work in office-based jobs.
As well as generating a stream of new business, the Asia operations, including a sales office in Bangkok, have driven forward the UK-based R&D team, pushing it to more demanding applications.
The experience in Asia has also given the once highly UK-centric company the confidence to pursue other markets – the US and Russia, in particular. It is targeting petrochemicals businesses, a sector in which it specialises, with the UK arm leading both the sales and marketing effort as well as the resulting production.
"It is very nice to see individuals that five or six years ago didn’t travel further than London, preparing to go to Pittsburgh tomorrow,” says Mr Staff. "The whole culture has changed.”
Curiously, he says, many of Halifax Fan’s high-specification global customers still prefer their fans to be made in the UK, and are prepared to pay premiums of 10-20 per cent and sometimes even more.
"We tend to forget that Brand Britain is worth shouting about,” he says. "It is so disappointing to go to trade fairs and find just one or two British companies but dozens of other Europeans. Italian, French and German companies, in particular, are better supported [by their governments].”
Looking ahead, despite China’s low labour costs, he says the UK operation can remain "very competitive” in niche fans.
For now, however, the unclear outlook for the UK economy is a challenge. "We used to have a pretty good idea of how sales in the UK were looking 2-3 months out,” says Mr Staff. "Now we are in a ‘hold’ position. We just don’t know, because businesses don’t know when they will have the funding to buy new equipment.”