Shakespearean tragedy avoided

It is easy for engineers to anthropomorphise a factory. The throbbing rumble and whirring of machine tools give a factory life and, when a factory falls silent, it can feel sombre and funereal for the passing of a once great manufacturing beast. In a forge, more than with any other process, you can feel that beast's very heartbeat as the multi-ton hammers pound their work with a seemingly relentless pulse. But for Shakespeare Forgings, that pulse faltered and could well have stopped completely, if not for a doctor and his Indian remedy. The doctor of metallurgy in question, Steve Potts, along with three middle managers, bought the company, which had been trading as United Forgemasters Ltd, from administrators in January 2002 and reverted to the company's original Shakespeare moniker. With a previous background mainly in the coal mining industry, Dr Potts had been working as a consultant at the forging manufacturer and saw potential in existing automotive contracts. Crucially, he had a plan to meet the price squeezes being forced on the business by car manufacturer demands cascading down through the supply chain. Image: Forging at Shakespeare - given new life through an Indian partnership Dr Potts, now managing director of Shakespeare Forgings, explains: "We had been left in no doubt by a Tier 1 automotive customer that a contract worth £2 million per year would be in jeopardy, if we did not find a way to reduce our prices." The managing director had already formulated a plan to literally forge a partnership with a lower wage-cost company abroad. His experience working overseas in the mining industry gave him an immediate shortlist of China and India. Comparing the two, it was clear that India had distinct advantages. "The main drawback to China," according to Dr Potts, "was the language barrier, with very few people able to speak English. And, although it is possible to work through an interpreter, the subtle nuances of speaking directly to people are lost, producing a barrier to building trust." CRICKET AND ETIQUETTE Conversely in India, the English language is widely spoken and it is even common practice to conduct business in English. Shakespeare Forgings sales agent Alan Cummings smiles as he recounts: "It was easy to build up trust and feel at ease when dealing with our India colleagues. You soon found yourself in humorous banter about each other's national cricket teams and recent match performance." There is a common misconception, perpetuated by the tabloid redtops, that the historical legacy of the British Empire has left India resentful or suspicious of the UK. In reality, the Indian culture warmly embraces its links to the UK, and doing business with India is made easy because the legal system and the etiquettes of work have a shared ancestry with the UK. And Dr Potts is very clear about the benefits of working with India: "Without the support and investment from India, quite simply this company would have closed." Finding a suitable partner in India saw Dr Potts taking advantage of a DTI-sponsored mission, through which he was able to contact and visit some 13 different forges, of which four had the automotive quality standards he was looking for as a prerequisite to doing business. After talking through his vision of the working partnership, which centred at the time around a cradle-to-grave philosophy and retaining a working UK factory, two companies remained under consideration. The decision to team up with El Forge was clinched by the quality of its die shop, which Dr Potts describes as "world-class". Another perception of outsourcing to India, often unfounded, is quality of work and, with a PhD in metallurgy, Dr Potts is quick to explain that the high quality standards at India's state-of-the-art facility are maintained with "metallurgical and inspection equipment that I would be envious of here in the UK." For El Forge, the benefits of the partnering opportunity were the credibility Shakespeare Forgings gave them in the UK market and an instant entry into the European automotive supply chain. The opportunities were such that it was decided to fully cement the relationship with El Forge to take full financial ownership, while still allowing Shakespeare to maintain its day-to-day autonomy and work as if in a partnership. So, in July 2005, El Forge took a majority share holding in Shakespeare giving the UK site a much needed level of stability. And in September 2006, El Forge acquired the remaining shares to take 100% ownership. Many UK workers would be wary of such foreign investment and control; all too often, it seems a UK company has been stripped of all but a superficial UK presence, a mere brand name through which to import. El Forge has adopted a different philosophy through a hands-off approach, as regards UK operations, provided the business doesn't make a loss. Dr Potts can understand the scepticism this garners from others, but he points out that the actions of El Forge speak volumes of their "honourable" intentions. COMMITMENT CONFIRMED "Shortly after taking ownership in 2007," explains Dr Potts, "El Forge demonstrated its commitment by purchasing a new 'brown field' site and moved Shakespeare on to it. And currently El Forge has reinforced that commitment, as the local council is in the process of purchasing the current site to allow for the building of social housing. El Forge could easily have taken the opportunity to close the facility in the UK, but instead has purchased another site to relocate to." Which actually increases capacity available in the UK. Dr Potts' original vision for the two countries to work cooperatively was a cradle-to-grave concept. "The UK would do the initial die making, process development and prototype manufacture. Once approved, the volume manufacture would be done in India, with production returning to the UK towards the end of the product lifecycle for the small volume requirements of aftermarket." A seemingly simple, elegant plan, it has, however, been thwarted by the costly automotive PPAP (Production Part Approval Process) requirements, which require long quality sign-offs when production and processes are moved, although one customer has invested in two sets of dies, allowing components to be made at either location. So, instead, the work between the sites splits along volume, lead time and customer cost requirements. Mr Cummings explains: "Customers are quoted prices from each site and there will be a natural crossover point between the two, depending on volumes and lead time requirements." These crossover points tend to result in the UK site focusing on niche, low volume, short (8-week) lead time parts, while India focuses on high volumes, longer (18-week) lead time forgings. With such a long lead time from India, a 16-week firm schedule is a requirement from the customer. Fortunately, as component variations come at later assembly and machining stages, rather than the raw forgings, this stable schedule demand has not proved the problem it often does in some long lead supply chains seen at other companies. Image: Volumes and lead time dictate place of manufacture In fact, surprisingly, lead time does not feature among the three potential obstacles that Dr Potts has identified as possibly disrupting the smooth running of the India supply line in the future, namely the price of oil for shipping, the currency exchange rate and the high carbon footprint of such an operation. With substantial contracts from Tier 1 and Tier 2 automotive companies benefiting both India and the UK, the Shakespeare Group, as a subsidiary of the larger El Forge Group, has annual sales in the region of £3.5 million, of which £1 million is sourced from India. The Shakespeare Group also contract manages, for a small commission, a further £2 million of work for the El Forge group. It is clear from these figures that what could have been a Shakespearean tragedy has many more chapters to be written, in India ink. First published in Machinery, May 2011