Going for 40 at 40 - successful subcontractor aims for growth

KMF is a company that sticks to its knitting, explains managing director Gareth Higgins, son of one of the firm's founders, Mick Higgins (the M in KMF). Its focus is the manufacture of sheet metal parts for a variety of enclosures, chassis and bracketry, using punch presses, lasers, press brakes and welding processes. "Our competence is sheet metal work and we have stuck rigidly to that. Therefore, we target parts that are predominantly metalwork and we want to offer value-added services in parallel, assembling parts to our chassis etc," Mr Higgins explains. It's a strategy that has worked. KMF, which has a main factory area of 100,000 ft2 at its site in Newcastle under Lyme and employs 320 people, expects to turn over £30 million this year, but has set its sights on £40 million in three years' time. Growth in areas of defence and aerospace is a particular target, with this resting on its recently established Advanced Solutions business, housed in a new 8,000 ft2 building across the road from the company's main site. It is here that those value-added services are to be concentrated – more of that later. Image: The new Advanced Solutions building, where value-added services are to be grown But growth will also come from its existing business, with two particular areas highlighted: self-service kiosks and racking for so-called 21CN (21st century networking) – modern voice/data internet infrastructure. Space vacated in the main site following the move of some business to its Advanced Solutions building will help it achieve that, too. RAPID GROWTH KMF has grown rapidly over the past 10 years, with turnover climbing from around £3 million to some 10 times that today. Growth was initially kick-started via a contract for the production of distribution and panel boards for Schneider Electric, with the company then picking up similar work from other leading distribution board manufacturers. This element of the business continues today and represents a significant part of its operations, totalling around £8 million. The initial Schneider contract was conditional on the company moving to a new factory and investing in paint plant. A rule adopted by KMF was that one customer would never be more than 25% of turnover, however, while investment has remained a strong theme – £1-1.5 million each year. A new laser profiling building is currently being completed that will contain two automated Trumpf laser profilers. Together with the Advanced Solutions facility, the company has invested £2.5 million this year, in fact, while its link with large customers that have established overseas activities has prompted KMF to set up a Slovakian facility. On the kiosk side, the company has made 900 coffee vending machines for Coffee Nation over 10 years, but is now making 30/week. This contract is similar in size to the Schneider Electric business, but there's plenty of growth in kiosks for other duties, from post offices to supermarkets, explains Terry Kimberlin, UK sales manager. There is also value-added assembly attached to current and future kiosk business, but that is undertaken in the main site, with more room available for the separate assembly operations now available. Added to this is a wide assortment of parts for over 100 customers that the company serves each month, drawn from a customer base of around 250, and where some orders may be just hundreds of pounds, says Mr Kimberlin. Having grown to its current £30 million level, the company finds itself in a unique position, it is explained. Mr Higgins again: "We can take on any size of order. With a turnover of around £2.5 million/month, dropping an order of, say, £100,000 into our factory isn't an issue. Most of our competitors are around the £2-5 million turnover mark and they can't take on such a large project. We can accommodate a million pound customer very quickly." Supporting its growth to current levels and the maintenance of its demanding customer base is a top-notch service level. Average lead time is around two weeks. In fact, 40% of sales are received in the month that they are delivered, according to Mr Kimberlin. "That was frightening 10-15 years ago, but we are used to it now – it is the nature of reduced lead-times." The managing director adds further: "What makes us unique here is the fact that we don't carry finished stock, yet we have customers on two to three-day lead times. And while we have computer systems, this performance is really supported by our people." In fact, Mr Kimberlin affirms that there isn't a computer system that is dynamic enough. "Our business moves so quickly, you couldn't get a system to keep up with it; it is people that keep work moving through the factory." And supporting this people-based system are visual indicators, such as full trolleys that need moving or empty spaces that need filling, that convey the necessary messages. KMF DIFFERENTIATORS Investment in its people is a further differentiator between KMF and its would-be competitors. Having built its own apprentice school just two years ago, it is now about to build its own dedicated apprentice workshop to deliver better hands-on training, while business improvement techniques training has been rolled out wider, with lean manufacturing practices adopted across the board. The company has 22 apprentices on its books across all four years, taking on six this year, having stepped up from a four-a-year intake. All of this – investment in plant, buildings, people and process development – is visible in the company's latest venture, its Advanced Solutions operation. First off, the investment in this has been £1 million (it includes press brakes, bush insertion and surface texturing machinery, for example), while the £5 million turnover facility is run by KMF-trained past apprentice Stefan Rduch, who will drive its anticipated 25%/annum growth. On business processes, continuous improvement has been taken to a higher level through the adoption of aerospace-biased SC21 principles, with this rolled back through the main factory. Further, the Advanced Solutions facility made the highly unusual, and challenging, decision to go for SC21 Silver, bypassing bronze level (AS9100 accreditation is anticipated for October for the whole company). The Advanced Solutions unit currently employs 30 people and has three customers for – a series of mass spectrometer chassis assembled here from KMF sheet metal parts, with electronics additionally added; first class aircraft seat carcases assembled from KMF-manufactured parts; and, via a particular quirk, number plate recognition cameras that are mainly assembled from bought-in parts. Image: The assembly of products having KMF-manufactured sheet metal parts as a main component is the focus within Advanced Solutions Image: Assembled chassis This brings together three groups of people that previously worked separately and will see them cross-skilled to offer flexibility as volumes rise and fall across each product, explains Mr Rduch. Attention to process detail, foolproofing and avoidance of assembly damage are evident, as are visual production flow management and kan ban, with continuous improvement highly visible via the new, improved in-house manufactured notice boards. "Everyone has to raise an improvement issue each week," highlights Mr Rduch, adding that this is the same now in the main factory. "So far, in four months, there have been 180 issues raised," he offers. Any issue has a red tag physically attached to it to provide visibility and the value of issues solved forms part of the Advanced Solutions manager's quarterly board report. With a target of £40 million not far from its grasp, the company won't be waiting till its 50th anniversary for £50 million; that seems sure. Although, with all available space now used, that may present a new challenge. First published in Machinery, October 2011