W hat a difference a year makes.
This time last year Railtrack was still solvent, George W Bush had yet to be declared US president following a farcical election, while a slide in technology stocks meant Marconi’s share price dropped 67p in one day to 743p. A year can be a long time in business, and economic and political changes can often have a dramatic effect on the fortunes of a company or individual.
A little over a year ago we spoke to five entrepreneurs from the engineering sector, each of whom were forging successful careers despite their relatively young age.These talented engineers were involved in vastly different businesses – a mainstream manufacturing company, an internet start-up, a technology-based business and two family firms – but all were united in their drive and ambition, and willingness to work long hours and learn a range of skills to help speed their career development.
A year on, we ask them how their careers and businesses have been affected by recent events, including the internet stocks crash, the global slowdown and the recession in manufacturing, as well as longer-term problems such as the continued strength of sterling.
For some the change in their circumstances has been dramatic, but each has reacted to difficulties thrown at them with the same entrepreneurial spirit that saw them rise quickly to the top in an industry where youth can often be a barrier to promotion.
Here they tell their stories…
Case Study One:
Job title: European business
Director of Amtico, the vinyl flooring manufacturer. Age: 36
Michael Gansser-Potts was a member of the team that led the management buy-out of Amtico from its parent Courtaulds in 1995, and by last year the company had reached a turnover of £68m.
Since then, the global slowdown has begun to affect Amtico. Its growth rates have slowed in the US, and a fragile European recovery has been stifled before it gathered any momentum.
The past 12 months have been tough, and the general outlook is more pessimistic now than it was last year, says Gansser-Potts. ‘Our view, however, is that the US will pick up again soon, and that the rest of the world will follow, so the outlook may not be as pessimistic as some would have us believe.’
While the company’s business year has been tough, it has made one significant investment for the future – the creation of a new company in Sweden, of which Gansser-Potts is chairman. ‘For the last 20 years we have sold our products through two distributors in Sweden. The distributors have managed a tolerable co-existence over the years, but in September 2000 it became clear that they were not prepared to carry on working side by side,’ he says.
The agreed solution was to create a three-way joint venture company, Amtico International AB, in which each party took an equity stake. The new company started trading on 1 April 2001 and is already proving successful.
Case Study Two
Job title: Founding director of TradingParts.com, a provider of software for engineering component procurement sites.
When we spoke to Chirag Shah last year, supply chain software provider TradingParts had only recently been founded. Since then it has grown significantly, and has been pushing to establish leadership positions in the UK in its target sectors of vehicle manufacturing, consumer goods manufacturing and engineering, Shah says.
‘Our greatest challenge in the last 12 months has been convincing companies that a new, entrepreneurial company can provide valuable business benefits to them. I think many large corporations in the UK are much more conservative than their US counterparts, and probably miss opportunities to gain competitive advantages.’
A defining point for the company was the crash of high-tech stocks in the first quarter of this year. Shah believes many corporations were confused by the huge number of software/e-marketplace companies in the market and the recent shakeout has helped them to separate the wheat from the chaff. TradingParts now gets much more interest from clients simply because it survived and is growing rather than scaling back, he says.
‘We still suffer slightly from what we call the ‘walking wounded’. These companies, on their last legs, undertake desperate pricing measures in a last-ditch attempt to buy customers or earn marginal revenues to make the next funding round… But I think corporations are much wiser to these now.’
Case Study Three
Job title: Managing Director of the Doherty Group, a family-owned precision turned parts manufacturer.
Last year Jim Doherty was hoping to expand the group, including a possible move into new markets. But instead, the uncompetitive exchange rate and high cost of manufacturing in the UK forced the company to move its production to Hungary.From 120 people employed at WH Doherty two years ago there are now about five. All production cells have been shipped out to the company’s Hungarian plant, Doherty Hungary Kft, where they are working three shifts, five days a week and generating enough cash to re-invest and expand the business at a rate the firm has never known in the UK, Doherty says.
‘WH Doherty is now being run by my general manager as a batch production and technical development business to support N&J Engineering and the volume business in Hungary. We also want to retain this foothold in the UK so that if the opportunity, market or politicians allow it we can start volume manufacturing again.’
Doherty now runs N&J Engineering, which buys precision components from all over the world, including the UK, and then stocks and distributes them. He would like to see a much greater proportion of N&J’s supplier base in the UK, but its customers want the prices and quality levels available from overseas, he says. ‘The Doherty Group has had to change very quickly to survive. To a large extent that has meant turning our backs on our home patch.’
Case Study Four
Job title: Chairman and chief executive of fridge-e, manufacturer of chilled food packaging.
Until last year Paul Dolan was CEO and technical director of Friobox, which produced packaging for transporting chilled goods to companies in the pharmaceutical and biomedical industries.
He has since left, after a boardroom battle over whether to locate the company in London or Barcelona. At that time, the company had signed a contract with a major courier and was about to float on the stock market with another company, Aerospace Composite Structures, with a valuation of £100m.
But the start-up folded recently. ‘Since then I have started a second company, called fridge-e, which focuses on providing packaging for the food industry in the UK, allowing 36 hours of transportation time while food is kept chilled or frozen.’
After several months of product development, the new firm is already supplying to the specialist food industry. ‘The move has given me the freedom to develop the product and the company as I want.’
Over the last two years, Dolan has also been working on a further venture providing school uniforms through a website he set up with a team including an engineering friend and a small, family-run school uniform distributor.
The site – www.schooluniformsonline.co.uk – is making profits which are being pumped back in to improve the site, he says. ‘It has been fantastically successful. Our latest contract was in California, and we have also sold in Brazil, Australia, Germany and the rest of mainland Europe.’
Case Study Five
Job title: Chief executive of Pel, a family firm manufacturing shop fittings, furniture and stadium seating.
Nigel McGinnity took over as chief executive of Pel five years ago, when the company was losing £4,000 a week. By last year he had managed to turn it into one of the most profitable shop fittings companies in the UK.
Earlier this year he led an MBO of the group, with funding from venture capitalist Lloyds TSB Development Capital.
The company wants to increase its turnover from around £70m this year to £150m-£200m, and is planning to make a number of acquisitions. But first the group needs a short period of adjustment, McGinnity says. ‘The management buyout took a lot of time and resources, so we are having a six-month void of activity to allow us torefocus on the business.’
While continuing to manufacture shop fitting equipment and stadium seating, the group’s main business is now retail and building services project management. Its customers include Gap, House of Fraser and Marks & Spencer. To reflect this restructuring, the company will be changing its name to Support Services Group.’A number of years ago we were a manufacturing company with a services division. We now provide support and services.’
The company, which was bought by the McGinnity family in 1989, now has a workforce of more than 350 staff. It is one of the biggest companies in its sector, and the most profitable, with a £160m order book.