600 Group - A sense of direction

Publicly quoted The 600 Group announced its 2012/2013 results in June (year ending 30 March), happily able to highlight that the company has moved back into profit, hitting almost £4 million – this after a loss last year of almost £15 million. That positive performance was on the back of revenue up by more than 11% to £41.8 million. The 600 Group – which is home to well-known brands Colchester (CNC and manual lathes), Harrison (CNC/manual combination lathes and manual lathes), Pratt Burnerd (chucks, collets, workholding), Gamet (precision bearings for machine tools) and Electrox (laser marking equipment) – has had a troubled time since the recent high of its 2006/2007 fiscal year, when turnover reached more than £78.7 million (although profits were just 3% of that, at £2.4 million – the latest result saw profits at 9.5% of sales, by comparison). The group then hit a low in 2009/10, with turnover having fallen to just over £45 million and with losses of £8.7 million racked up – not bad, though, since it notched up a loss of £8 million in the previous year on a turnover of more than £76 million. Financial year 2010/11 saw the company climb back into profit (£2.95 million), with turnover recovering to more than £50 million before the next year's £15 million losses kicked in, as noted above. Roller-coaster years, for sure. Chief executive Nigel Rogers, appointed in March 2012, met with the engineering press for the first time in June to talk about the company and where it is now headed. He took over from David Norman, who was himself appointed in August 2008, taking over from Andrew Dick who, as chief executive, kicked off a major strategy change in 2006. Mr Norman steered the company following the disastrous Dalian sourcing project that started in 2007, but then plumped for manufacturing in Poland, acquiring an existing, previously state-owned armaments manufacturing facility, in November 2010. The group's chairman at the time, Martin Temple CBE, described this move as "transformational for the group". It has not proved to be so; not in a positive sense, anyway. The company's financial reports (http://is.gd/YPr4Am) track changes made under Mr Rogers in detail, but suffice to say that there have been divestments of property and businesses, with a clear focus now on the company's core strengths and activities. That means, for example, recognising brand strength. So, the bringing together of the brands Colchester and Harrison in late 2006 into the single Colchester-Harrison marque, with the CNC Tornado lathe range thus badged, has been cast aside – they are Colchester Tornado CNC lathes now – there never was any major Harrison CNC lathe heritage anyway. In the same vein, Alphas will be badged Harrison. Manual lathes always retained their separate brand identity, it should be said. Vertical machining centres are still badged with the combined brands, but these are only sold to order and not a core product. The design and manufacture of ever more complex CNC Tornado lathes – which reached its zenith with the 8-axis twin-turret, twin spindle, Y-axis CNC lathe in 2008 – has been eschewed in favour of eight models of 2- and 3-axis CNC lathes. The company had 19 different models of CNC lathe at one point, with 11 different turret designs; just too broad, 600 UK managing director Mike Berry offers. And, in looking back 10 years, such 2-/3-axis machines accounted for over 80% of sales, he adds. MULTIPLICITY OF VARIETY A similar situation of product multiplicity existed with Pratt Burnerd. Here, the strength is in manual chucks, which account for 80% or more of business. Manual chucks are fitted to traditional lathes, in the main. So, post Dalian and Poland, the company is now bringing in its own design manual/Alpha lathes from Taiwan and finishing them at a newly restyled, reduced-in-size, re-organised Heckmondwike, West Yorkshire manufacturing facility (the Harrison facility of many years' standing). Taiwan has a well established supply chain developed over several years, which supports many machine tool brands, observes Mr Rogers. Castings for the Tornado CNC machines are sourced locally, with machining undertaken in-house. Heckmondwike is also the manufacturing home of Pratt Burnerd, while Electrox is based in Letchworth, Herts, and was never part of the Dalian or Poland projects; Gamet is based in Colchester and was similarly unaffected, except by reduced demand for the group's lathes. The site area used by the group's 600 UK operation at Heckmondwike is now 75,000 ft2 (including a 15,000 ft2 car park), not 225,000 ft2, with proportionately reduced overheads, and a modern look and feel to the extensively refurbished area. It has outsourced from Heckmondwike certain operations, specifically machine guard manufacture. Dual source supply is a theme where outsource is applied – nothing from China, though, it is emphasised. Fundamentally, the company can now deliver high quality lathes of the type for which it is recognised, on lead times that are acceptable to the market. Throughout, the company has managed to retain the loyalty of its customers and distributors, says Mr Rogers. "Our lead times were too long, but we weren't getting cancellations. Even with the closure of Poland, when we had to cancel some orders taken from distributors, they didn't cancel, but re-ordered. That told me we had high quality products and loyal customers," he says. And that high quality and loyalty includes all its lathes and chucks. Indeed, The 600 Group brands have long histories and they are global, highlights Mr Berry. Pratt Burnerd traces its roots back to 1850; Colchester hails from 1897; Harrison from a year later; and Gamet bearings was established in 1956. Collectively, the lathe brands have delivered over 1,000, 000 lathes and, it is estimated, there are 100,000 running today. Within that, the company claims to have the most well recognised training brands in its manual Colchester and Harrison stables, with the Colchester Student and Harrison Master the respective flagships. In fact, by units, variable and geared headstock manual machines account for 75% of machines sold, with these typically subject to multi-unit orders, too. LONG-TERM SUPPORT Recognising the importance of supporting this global population of lathes, the spares stockholding has been boosted at Heckmondwike to some £4 million, with machines supported officially for 20 years, but with 50-year-old specimens also still being cared for, according to Mr Berry. In terms of its global presence, The 600 Group has distribution in more than 100 countries and earns most of its income from sales outside the UK. This country was the destination for just £6.6 million of its last year's sales, so a UK-centric view of The 600 Group might not afford the kudos the group deserves. The UK take is almost matched by 'other European' markets, but it is North America that is by far and away its largest customer - sales are more than £22.6 million. However, North America is served by the group's Clausing Industrial activity that also sells factored machines and products, not only machines and engineered products passing through Heckmondwike on their way to the US, it should be understood. So The 600 Group's global sales figure is slightly flattering, in terms of own product manufacturing activity. An Open House held in June provided the full stop to Mr Rogers' initial grappling with The 600 Group's troubles. The results are said to have been very positive – "exceeding our expectations in both number of attendees [170+] and number of companies, while there was a really positive response to the changes at the factory," reports Mr Berry, highlighting also that the company is winning market share and that there are products in the pipeline (see box, below). A WINNING STRATEGY THIS TIME? So, across several shaky years, it could just be that The 600 Group has settled on a winning strategy – doing that which it was known for well and where the demand has always been; employing facilities of a size that befit its current, not its historical, situation; offering competitive product on acceptable lead times. As Mr Rogers offers, what he has done is "not rocket science; it's just getting on and getting things done". Perhaps, but it has taken some seven years to arrive at this point since major strategy changes were first set in train. Box item [] Colchester and Harrison manual centre lathes – 330 to 550 mm swing; 625 to 3,000 mm centres. Unchanged since 1973, the range will be seeing some styling updates, but no alteration from its fundamental strengths versus the lower-cost competition. Smaller machines are available ex-stock, with a two- to three-week delivery elsewhere. [] Manual/CNC teach lathes (Harrison Alpha) – 350 to 1,000 mm swing; 625 to 6,000 mm centres. Now available with 370 mm spindle bore, this has opened up the oil and gas industry to the company. A key strength is the four programming approaches available – ISO code CNC; Alpha Link offline programming; Manual Guide i control interface; and Alpha assisted manual turning. A new simplified programming approach, Alpha i, is to be introduced. Additionally, C-axis will become a feature across all models – currently only on larger ones. Delivery times are 10 weeks maximum. Capacity for Alpha and conventional machines is 30-35 machines/month on a single shift. [] Colchester Tornado is an eight-model CNC range, 125 to 350 mm chuck size. The existing range has been redesigned, in modular style, with the latest machine the 42 mm bar diameter, 3-axis Tornado T2M. It has full C-axis on its single spindle, spindle disc brake and driven tooling for easier radial and axial milling, drilling, boring and tapping. The market for these machines is Tier 2 and 3 subcontractors, says the company. Tornado is about to be relaunched in America, too. Capacity is eight/month on single shift working. Delivery times are between 10 and 12 weeks, [] Pratt Burnerd's latest development is the Gripfast HSQC combined chuck, collet and mandrel for CNC machines. Fast change-over is the key; better than 30 seconds is reported. The next development will be combination scroll and independent chucks. Half of all Pratt Burnerd go to North America, but there will be renewed emphasis in Europe. [] Gamet specialises in super-precision bearings, selling them to Swiss grinding machine makers, for example. It exports to 40 countries, with sales having been expanded over the last few years. Within its top 10 customer list, eight countries are represented. [] Electrox laser marking equipment, which contributed £6.9 million to latest sales. The company operates out of Letchworth, Herts. [] The company also offers RK International's Europa turret mills to UK educational establishments. RK International is a 600 Group product distributor. First published in Machinery, August 2013