AMBI-RAD: Kaizen thinking fires productivity
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Letting shop-floor workers contribute ideas is saving thousands, Ambi-Rad founder Mike Brookes tells Peter Marsh.
Mike Brookes, founder and co-owner of Ambi-Rad, when asked why he failed for many years to introduce new ideas aimed at increasing competitiveness, gives a simple answer: he was too busy expanding.
His Midlands engineering company is a European leader in gas-fired "radiant tube" heating systems. But Mr Brookes found little time to think about how to increase quality and productivity on the shop-floor.
"We were a top-down company with all the new ideas coming from the directors," explains Mr Brookes. "We worried about the pounds, rather than the pennies."
Such stories of companies lacking the interest or resources to tackle deep-seated manufacturing problems concern Stephen Byers, the trade and industry secretary. Mr Byers believes many big companies compare well with international rivals on competitiveness, but that there is a long "tail" of underperforming smaller businesses. Yesterday he announced a series of measures to help them improve, for instance by receiving grants to help with internal training.
He is particularly keen that smaller manufacturers should take on board "kaizen" or continuous learning programmes of the kind initially introduced by Japanese groups in the past 20 years.
The competitiveness problems were highlighted in a report last year by the European Commission which showed the productivity of UK companies in engineering, a broad and representative sample of manufacturing, was 27 per cent less than the European Union average. That put Britain in 11th position out of 15 in the EU productivity league table.
At Ambi-Rad, rather than wait for the government. Mr Brookes decided two years ago that it was time to take action. He set about implementing "kaizen" thinking under which workers low down in the company hierarchy are given more control over decisions and encouraged to come up with suggestions for quality and efficiency improvements.
Most of the 150 workers at Ambi-Rad's main plant in Brierley Hill, near Wolverhampton, have been divided into eight groups which are each responsible for specific aspects of making the company's heaters.
Team leaders facilitate new ideas and act as a link between the shop floor and senior managers. One recent idea came from Jean Cockin, an assembly worker at Ambi-Rad for 13 years. She suggested punching holes in a piece of metal in a different place so as to shorten the overall production process. The proposal was implemented, leading to a small but worthwhile improvement.
"I feel I am much more involved," says Ms Cockin. "As a problem occurs, rather than carry on regardless, we are now encouraged to think of a way round it."
Some of the ideas are very simple, but according to Mr Brookes, suggestions from people like Ms Cockin have taken £300,000 a year off the company's costs. The kaizen scheme has enabled Ambi-Rad to maintain profits at a time of severe difficulties in the engineering business. In the past two years, many comparable UK companies have seen orders and earnings hit by the strong pound and weak demand in important markets.
"It's been hard going but partly because of the new manufacturing ideas we have kept pre-tax profits at above 10 per cent of sales, which is bloody excellent by the standards of other engineering companies," Mr Brookes says.
This year Ambi-Rad expects to have sales of £18m, more than twice the figure five years ago, and exports.roughly a quarter of its turnover.
Mr Brookes wants savings from kaizen-based ideas to reach £500,000 annually over the next few years: From a combination of improved competitiveness resulting from this thinking, new products and a stronger export effort; he reckons Ambi-Rad can increase sales 25 per cent in the next three years, while keeping the profit ratio roughly similar.
As for Mr Byers, he hopes that if enough other companies can introduce similar techniques, the UK might be able to narrow the productivity gap with other nations.