Grundfos in Sunderland is celebrating 40 years of manufacturing innovation, as Lee Carlin explains to Peter Jackson
Prominently displayed in the reception of pump maker Grundfos’ Sunderland manufacturing base are the group’s corporate values – Be, Think, Innovate. According to general manager Lee Carlin, innovation is a theme that runs right through the Danish headquartered global group.
He says: “The strapline Be, Think, Innovate was created by the founder’s son when he was chairman of the group. It stands for being responsible, thinking ahead and innovation is the essence of everything we do. Innovation flows through our business.’’
He points out that much of the equipment used in the manufacture is designed and built in-house – much of it in Sunderland.
This kind of innovation, he argues, is achieved by focusing on people in the business with extensive training.
“We offer training not only to benefit the company but to benefit the individual as well, to take them to the next stage of what they want to do.’’
The Grundfos Group employs 17,500 people in 80 companies worldwide. It has an annual turnover of £2.6bn and produces 16 million pumps a year. This means, says Carlin, huge opportunities for the 190 staff employed in Sunderland and the 150 sales and marketing staff in Leighton Buzzard.
“The only thing that will hold you back in Grundfos is yourself,’’ he adds. Like most modern manufacturers, Grundfos uses the Kaizen approach – the Japanese pioneered philosophy of continuous improvement – and lean manufacturing but it does have its own methods.
“Our approach is based around what we call Grundfos shopfloor excellence, GSE,’’ says Carlin. “That basically takes all the lean manufacturing principles and puts it into a way of working around the Grundfos culture. It’s about getting everybody involved, so that everybody who works on the line has an input into any potential issues. We do that throughout the site and throughout the group. It’s the approach that’s innovative.’’
Grundfos is one of the world’s leading pump manufacturers. It supplies pumps and pump systems for domestic, commercial building services and process industry applications, as well as being a major supplier to the water supply and treatment industries and provider of packaged fire sets.
Circulator pumps for heating and air-conditioning as well as other centrifugal pumps for the industry, water supply, sewage and dosing are the main products. Today Grundfos is the world’s largest manufacturer of circulators, covering about half of the world market of these pumps.
In addition to pumps Grundfos produces standard and submersible motors as well as electronics for monitoring and controlling pumps.
This year it is celebrating its 40th year of manufacturing in the UK. It began operations on rented a rented site in Washington and it grew until it reached the point where it needed a dedicated Grundfos facility and moved to its present site on Ferry Boat Lane in 1980.
In 2008 the Sunderland site reached a record turnover of £103m but the following year had to shed 60 jobs as the production of an upgraded version of its cold water pump was moved to a plant in Hungary. Then it became clear that there had to be a change to the business model.
Carlin explains: “I came into the business three years ago with the brief to create a new vision for Grundfos Sunderland. We come from a heavy manufacturing base of two or three volume products and in recent years that has evolved into producing more value added type products. Instead of a single pump we now sell three or four pumps linked together for boosting applications. It’s a journey to evolve from high volume manufacture – which we still do and still will do in the future – to get a competitive edge in creating value added packages, systems and fully integrated solutions for the growing commercial market in the UK.’’
Over the next two or three years Grundfos’ strategy is to maintain the high volume manufacture centred on a new A rated, energy efficient domestic circulator which was introduced in January. Grundfos has about 65% market share in the UK, in this market.
“We want to maintain that but also to expand into the engineer-to-order business,’’ says Carlin. “There are a number of different areas we’re looking to grow that in.’
These include fire-fighting and commercial and industrial applications. “One of the things that makes this packaging unique in today’s market is health and safety. Large contractors on these big sites don’t want to have subcontractors hanging around doing lots of small fiddly work on site. They would much rather it was done in a closed environment like here, tested to a certain standard here, then shipped and then literally plug and pump when it’s installed.’’
The change of strategy inevitably involved changes for the staff.
“The key thing for me is all around the people,’’ says Carlin. “We have a high proportion of our staff who have well in excess of 20 years service in Sunderland. It’s about working with those people who have worked with Grundfos for so many years and know the values of Grundfos but also bringing new people into the business with different competencies to be able to support the new types of business.
“Getting that mix right between the established Grundfos employees and the new Grundfos employees has been a challenge but it has been a really worthwhile challenge.’’ He tries to promote from within wherever he can but the change of business model means that is not always possible.
“The reality is that if we want to excel in this new form of business there are certain competencies for which we have to go external. But it’s also good to get new people into a business and have a fresh pair of eyes because any business can get stale.’’
Grundfos employees have had to adapt to different approaches to design. Carlin explains: “For the big packages the innovation comes in the design element. It’s about taking the concept that the customer wants, their specification and moulding it into a very commercially attractive proposition for them.’’
Conventional wisdom has it that it is the SMEs unencumbered by bureaucracy which are nimbler and better able to innovate. Does he feel handicapped by being part of a global group?
“To have the resource [of the Grundfos group] available and at your fingertips is a real benefit. We have four technology centres around the world – two in Europe, one in America and one in China. Because we are continually evolving on this site to get hold of that type of talent and that resource literally a phone call away is invaluable. There’s always a specialist you can get hold of somewhere in Grundfos whether it be about the smallest microchips and sensors right up to the large scale engineering.’’
Peerless, a Grundfos company in the US, has developed a speciality in the kind of engineer-to-order business – particularly in firefighting - that Sunderland is seeking and the two businesses are beginning to work together.
Carlin says: “We have a slightly different business model to some other large organizations. We don’t tend to compete with each other, we often help each other out in terms of capacity, moving things around the group in a way that is most economically viable. There’s a big culture within Grundfos about sharing knowledge.’’
The change is beginning to pay off and Grundfos has worked on some major projects.
“Grundfos has some interaction with most of the large, prestige projects in the UK. There’s always a big degree of our pumping solutions,’’ says Carlin.
He reels off T5 at Heathrow, the Tower Bridge development, a development on the Tottenham Court Road, and St Thomas Hospital.
One of the biggest has been the London Gateway Project, a major deep sea container port on the north bank of the Thames.
It is designed to provide significant improvement in handling speeds, which will provide a sizeable reduction in the time spent in port. Europe’s largest logistics park will be adjacent to and integrated with the port.
Grundfos’ involvement is a single surface water pumping station. Surface water will drain into a collection chamber, the level in the chamber will be monitored by an ultrasonic level controller and the water will then be pumped out into the Thames Estuary to prevent flooding of the site.
The control panel is arranged for fully automatic operation and is situated in the surface water pumping station which serves the Phase One Container Yard, Petroplus site and the adjacent railway.
The control panel controls three Grundfos 355kW Peak Flow Pumps which are each capable of pumping 1800 l/s each weighing 6600kg. There is also a Low Flow Pump which is 55kW with a flow rate of 300l/s.
Last year Grundfos reported a 6% hike in pre-tax profits despite suffering a sharp loss in sales in the depressed European market and turnover was £97.2m, a drop of just £264,000, in line with the previous year. Profits also rose from £5.3m to £5.7m.
“We’ve made steady progress this year,’’ says Carlin. “Because we had the introduction of the new product come through in January, we had a difficult time in the first half of the year because we sold so many of the old products the previous year and that transition period has taken its toll. But I think we are starting to see some growth potential coming through. I think we will probably be on a par with last year. For the market conditions that’s not bad.’’
Also he feels the strategic innovation is starting to bear fruit.
He says: “We are definitely seeing more long term orders for the larger engineering solutions that we are starting to produce.’’