Think Smart: Act Local

Think Smart: Act Local

Kevin Priestley, the managing director of an innovative engineering company which made the lecterns in the Scottish Parliament, says the tide has turned as the nation learns to love manufacturing once again. He spoke to Carlos Alba in his North Ayrshire factory.

Kevin Priestley sees himself as a barometer of Scottish manufacturing. As managing director of the fabrication firms NPI Solutions and Vacion, fluctuations in the country’s output is reflected in his order book. He’s also outspoken in his defence of engineering in Scotland

His companies manufacture and fabricate components, assemblies and fixtures for a range of clients, as well as the nuts and bolts and shells and casings for all manner of products in the defence, medical and aerospace industries.

Medical and leisure products are going through a purple patch while defence and aerospace equipment is out of fashion. As the economy seeks to rebalance away from its over-reliance on financial and soft services, he is expecting growth in commercial and capital equipment orders over the next 12 to 18 months.

Earlier this year, he launched Vacion, a company that manufactures a range of tracking systems for cameras to capitalise on the boom in video production encouraged by smartphones. His products, allow photographers and film-makers to take the kind of tracking shots that are a staple of movies. They can move the cameras from left to right or take shots that pan up and down

Irvine-based NPI also has a Dragons’ Den type function, producing prototypes for novel technologies devised by scientists, engineers and entrepreneurs. Among the prototypes he has manufactured is an electric bike that is a third lighter than any other model on the market, a machine that disinfects hospital wards using a dry purifying technique, an electric beater for Persian rugs and an electronic device for measuring the reversing space for HGV trailers

Priestley is that rare beast – a maker of things.  In a country that created its heavy industrial identity in the 19th and early 20th centuries as the workshop of the world, producing ships, liners, cars, steel, coal and latterly oil, it’s strange that Kevin should have spent most of his professional life feeling like an anachronism.

“For a long time I felt that what we did was sort of old fashioned. Our factory is dusty and noisy and much of what we produce is heavy and industrial. It’s light years away from the iPod and cappuccino view of wealth creation which, for a long time, was viewed as the future of the Scottish economy,” he says.

“With the 2008 crash and the fallibility of over-reliance on financial services and other intangibles so shockingly exposed, I think a lot of people have come round to the view that, if we are to turn things around and refloat our economy, we need to get back to basics and to start to produce things again. There’s a limit to the number of insurance policies and cheeseburger’s we can sell to each other.”

Scotland’s manufacturing sector is already showing signs of growth, with confidence on the rise despite weak domestic demand. The CBI Scotland industrial trends survey showed an improvement in exports over the previous three months, as well as a pick-up in business optimism.

The report coincided with official figures showing a rise in the country’s manufacturing export sales in the opening three months of the year. Sales of goods abroad grew by 2.5%, largely driven by food and drink and by the combined petroleum, chemical and pharmaceutical sectors.

NPI’s main customers are OEMs, medium and large product manufacturers, defence industry contractors, design agencies, contract manufacturers, printed circuit board manufacturers and entrepreneurs. Typical existing customers include Raytheon, Chemring , BAe Systems in the defence sector,  Teknek, makers of capital equipment, New Brunswick Scientific , in the medical sphere, and  Invotec and Linn Products in the commercial areas.

Priestley believes the UK’s reliance over the past two decades on intellectual capital and service at the expense of manufacturing was based on a set of economic assumptions that no longer stand.

“Purchasers, especially small and medium sized companies, are starting to question the value of offshoring all of their manufacturing requirements,” he says. “The huge savings made in the past by outsourcing production to China are no longer as commonplace. While it may still be 20% cheaper, by the time you have factored in transportation and reliability costs, there’s really not much in it anymore.”

Priestley adds  “There is a trend emerging towards re-shoring production from the Far East. Localisation is gaining ground as the risks of international supply increase along with transport costs and the wage gap is closing, reducing the overall cost.”

“There is a triangle when purchasing manufactured goods – cost, time and quality - and it’s rare for the buyer to have all three points satisfied, especially when dealing offshore.”

Founded in 2001, NPI Solutions now has a turnover of more than £2m and employs 35 people. Priestley’s first business was Evolvon, which designed and manufactured tooling for the electronics industry, and printed circuit board heat sinks for the printer circuit board (PCB) industry.

His background was in traditional engineering – his first job was with Enco Industries, founded in the boom years of IBM and the rise of Silicon Glen and within ten years he had progressed to senior management level.

Starting out in business when financial support for entrepreneurs was not always forthcoming was a leap in the dark. It was not easy trying to convince banks to lend to fledgling businesses – especially in what was seen as ‘metal bashing’.

“I had been with a well-known high street bank for many years without breaking their terms all the way through our relationship,” he said. “When I decided to go it alone I asked for a £5,000 loan, believing there would be no problems but they refused which came as a real surprise. I could probably have got a £15,000 loan for a car but to invest it in myself was considered too high a risk. I moved my account to a different bank which gave me the funding I needed with fewer questions.”

While running Evolvon Priestley decided to set up another business that became NPI, which was funded differently. He worked part time on the new business with the fundamental rule that he would not seek outside funding as he considered the strings too onerous. Each step was carefully considered and, by the end of the first year, it had become a basic manufacturing company, turned a moderate profit with no borrowings.

In the company’s first year of trading, Priestley received a telephone call from a company which knew NPI for its manufacturing abilities and willingness to take on difficult projects.

“They asked if I could bend pipes and weld steel. My answer was, of course, yes although at that stage we didn’t do very much of either - machining was our strength.  After a few weeks of discussion we had our quote accepted. We had won a significant contract to supply the Scottish Parliament with all the metalwork for the 131 lecterns that had to be made for MSPs,” says Priestley.

“This single contract moved us on significantly, with all the earnings again being put back into the company and no wages being paid. Had we known in advance the complexity and high visual standards that had to be adhered to we would most likely have declined to quote as I suspect others had done before us, but it was from this platform that we became a ‘real company’ employing people that relied on us for a wage.”

NPI aims to increase turnover to £5m and remain profitable within the next three years. With Vacion, Priestley predicts a turnover of £500,000 in its first year of operation, rising to £2m at the end of year two.

“The economic climate hasn’t helped us in this task but I refuse to allow that to be an excuse. We can predict with confidence what is probable within the economy looking forward and we have based our strategy around this model, so far this has stood us in good stead,” he says.

“There was a time when “Made in Britain” stood for poor workmanship, this is no longer the case and hasn’t been for a long time. The difference is that now it is believed by the customer rather than just a sound bite being delivered by politicians. It’s not only UK purchasers who attach a value to products made in Britain, even in China, the rising middle class strive to own certain brands that are manufactured in the west and have a heritage. A great example is the Brompton Bikes, despite there being numerous folding bikes manufactured in China, Brompton exports into China and even has a retail outlet in Shanghai – in part because it is designed and manufactured in the UK.”

The home market has also become aware of the carbon footprint that supply companies have. This adds yet another reason to purchase from companies located in the UK, according to Priestley

“There are some products that are more appropriate to be manufactured overseas, we shouldn’t shun all imports as being low quality or bad on some level but conversely we shouldn’t assume that imported means low cost or the only way to be competitive, things are not as clear cut anymore.

“Attracting and retaining new customers is my number one priority, through this I will gain the increased turnover that we have targeted. Cost control, cost reduction and increased efficiency is my next priority as this will aid profitability and attracting and retaining effective team members is essential as they are the lifeblood that will give our customers confidence and allow us to deliver an exceptional customer experience.”

He has managed to sidestep the problems of Scotland’s acute skills shortage in the engineering sector. He is taking on modern apprentices to work in the factory.

“Apprentices, internal training and staff retention are all important and collectively ensure that the varying demands that companies like NPI experience can be satisfied. We also try and engage with schools wherever there is an opportunity, taking work experience pupils from secondary school or participating in events where outside industry are invited to assist in some manner,” he explains.

“Diversifying our offering by creating new services or own products will make a significant contribution to our sales targets and prevent us from becoming stale, offering the same menu without development. And expanding our geographic footprint will allow for a more stable operation rather than being over-reliant in any one area.”

Kevin Priestley has a personal interest in young companies seeking to commercialise novel technologies.

“It’s very satisfying being asked to produce the first of something and knowing that, before long, it might become a commonplace part of its industry. These products can be functional or artistic in nature. Sometimes the simplest thing can become the most successful and part of the joy of being a manufacturer is trying to gauge how useful a product might become.”

He says there are no magic bullets to making profits. Knowledge is a big contributor to success and it needs more than one individual to be pushing in the right direction.

“The biggest ingredient that can help towards these goals is full alignment within the management team along with ability and drive to get things done while all the time keeping the strategic priorities of the company in focus.”