600 Group closes Polish manufacturing facility

600 Group is the home of the Colchester-Harrison brand, under which CNC turning centres and vertical machining centres are sold, while manual and CNC/manual lathes are sold under the separate brands of Colchester and Harrison. Gamet Bearings, Pratt Burnerd workholding and Electrox laser marking machines are also part of the group's activity. Machine tools represented 39% of the group's £50.6 million revenue in its last financial year, ending 2 April 2012, with precision engineered components (bearings, chucks and collets) accounting for a further 20% of the group's turnover. The Polish facility was acquired in November 2010 for €1 million, following the termination of the group's relationship with China's Dalian Machine Tools, which had been the source of semi-finished manual machines. Tarnow concentrated on conventional machine manufacture, which accounted for some 85% of its output, according to 600 UK managing director Mike Berry. He says the company "has contingency plans in place for the medium term" and is working with companies with which it already has relationships to support continued production of machines previously made at the Tarnow factory. But this move marks a move back to externally sourced conventional machines and some Alpha CNC/manual lathes, with the company distributing these. The Heckmondwike, West Yorkshire factory continues with Tornado CNC lathe manufacture (parts and assembly), accessorising of externally sourced machines, finishing of some Far East sourced (not China) CNC/manual Alpha lathes, the manufacture of workholding and machine spares, with engineering and sales support functions also based there, Mr Berry explains. As recently as the group's 2011 annual report (covering 52 weeks to 2 April, 2012), the Polish facility was considered pivotal to the group's strategy. "The acquisition of the machine tool facility in Poland should prove to be transformational for the Group," wrote then group chairman Martin Temple CBE. And previous chief executive David Norman added: "The machine tools business is undergoing significant change, following the acquisition in November of FMT Colchester in Poland. The Group's reliance on outsourcing has reduced and a business model centred on the manufacture of our own products and supplying them through our international sales organisation has become the cornerstone of our strategy for this business area." He concluded: "The successful integration of FMT Colchester in Poland, introduction of lean manufacturing techniques and capacity improvements throughout our European factories will be the basis for further profitable development of the Group which should provide a sound platform for future growth." Mr Norman had led the company from its loss-making period of 2008/9 to a position of underlying profit during the last two years. When he took over as chief executive in August 2008, the company was reportedly making 5% of its products, relying on Chinese and Taiwanese suppliers. In October 2011, he was quoted as saying that by April this year, the company intended to be making around 60% of the 1,000 machines it produces annually itself. Over the next year, it also planned to transfer some work to Poland from the US and Australia, according to the chief executive. But in the recent statement announcing the closure of the Tarnow operation, chief executive Nigel Rogers, appointed in March this year following Mr Norman's departure, said: "The strategic review has clearly identified areas where we need to rationalise our operations and reduce costs in order to improve the performance of the Group. This will protect the brand heritage, and maintain the reputation that the Group has for quality and reliability. "We have listened carefully to the considered views of our key distributors across Europe over the last few weeks, and customer demand for our products remains strong. Our priority now is to improve lead times and delivery performance so as to drive increased revenues." The statement additionally adds that group head office functions will relocate from Leeds to Heckmondwike, releasing the freehold office building in Leeds with a current net book value of £0.4 million for disposal. Savings of £600,000 for an investment of £200,000 for the group are also stated as being possible. The impact of the review and restructure would be reflected up in 600 Group's accounts for the year to March 2013, but Mr Rogers said: "We are confident that the implementation of the strategic review will result in significant improvements in the trading performance and future prospects of MTUK [machine tools and precision engineered components business in the UK and Europe] and the Group, and will provide a further update in due course." In other news, the group has disposed of its 600 SA (Proprietary) Ltd mechanical handling and waste operation, for £1.86 million, while its Shepshed, Leicestershire property has also recently been sold, for £1.2 million.