EEF: Reacting to the Crisis.2nd Oct 09

Update : Recession :

Impact and Priorities.

Impact:

Impact on the Economy;

Key issues:-

Loss of Volume.ie 50% + in some cases.

Lack of Overhead Recovery.

Operational costs as a % of reduced business increased.

Immediate cost reductions- job losses.

Unfortunately:-

Most businesses are “Lean”

Any job losses is reducing skills base.

Key concern: Companies ability to recover in the upturn.

Impact:

Where to start.

The key was to establish that we cannot conduct generic training requirements.

Training/Skills needs must be aligned to growth strategies.

Key issue;-

How do you discuss growth strategies when the business has fallen by 50%?

“EVERY COMPANY MAKES THE SAME PRODUCT”Key issues :-•Identify which of the following 4 scenarios a company fits.•Identify the intervention value via 7 QCD.•Identify resulting business growth not captured by 7 QCD.

“GOING BEYOND LEAN”The Lean must not focus on the labour element of productivity.This represents only 5%-15% of product cost. Identify Potential Growth from capacity released.Therefore the potential growth can focus on generating sales. Ie the constraint is in the market. Assist companies to release the potential within re diversification/innovate.

Material Flow

Material ‘Pull’ Systems

‘Waste’ Elimination

Problem SolvingTeamworking

Process Improvement

Error-proofingPreventive Quality Approaches

FMEAs

SPC

ChangeoversTakt Time

5S

Visual Management

T.P.M.

OEE Measurement

Synchronised Manufacturing

One Piece flow

Theory of Constraints

Fixed CostsVar Costs20-30%

Lab 5-15%

Materials50-80%

Current Lean thinking/application is too narrow.

Cost Reduction is not sufficient in isolation.The Focus too narrow.What about the other opportunities from 85% of the Operational Cost.Ie Adding Value,Value Engineering etc

Impact:

ProAct and our Approach

The contribution of the ProAct Scheme in maintaining and building the skills base within the automotive sector will be considerable.

Impact:ProAct Rationale

• For companies that may be faced with redundancies or short time working without ProAct assistance

• At least 20% of the employee’s time must be devoted to Learning and Development activities

• The support is intended to last 12 months

• If the employee ceases to be employed by the company during this time, or if they resume to full-time working, ProAct support would cease

Impact:Key Facts.

• Up to £2,000 per employee to cover training / re-training costs

• This amount is fully funded and paid directly to the training provider

• Up to £2,000 per employee to cover their wage costs whilst they are being trained

• The wages subsidy is paid to the employer in quarterly instalments (starting after 4 weeks) provided the individual is still employed by the company, and is still undertaking the training identified

Impact:

Solutions Snapshot

•Their need to get more from less in years ahead

•The challenge of eliminating outdated ways of working with a fresh outlook and an approach that was different form previous years

•The importance of training to achieve outcomes, these were crucial in successfully achieving their aims and not just to have an enjoyable development programme

•The fundamental imperative of getting all key stakeholders involved as early as possible in the design of the programme

•Developing people who had primarily been promoted for their technical ability.

Impact:

We need to quickly establish;-

Where are we

Where are we going.

How are we going to get there.

Snapshot of where businesses are based on the ProAct criteria.

Where are you - Where are you going – How are you going to get there.1 2

Sales

LOSSContribution

Reduce CostsIncrease ProductivityGO TO 3

Operational Costs

3 4TIME Line TIME Line

TIME Line TIME Line

Where are you - Where are you going – How are you going to get there.

1 2

Sales Sales

Pressure on Margins

LOSSContribution

Reduce Costs Reduce CostsIncrease Productivity Increase Productivity

Operational Costs Operational Costs

3 4

Sales Sales

Operational Costs Operational Costs

TIME Line TIME Line

TIME Line TIME Line

Where are you - Where are you going – How are you going to get there.1 2

Sales Sales

Pressure on Margins

LOSSContribution

Reduce Costs Reduce CostsIncrease Productivity Increase Productivity

Operational Costs Operational Costs

3 4

Sales Sales Increase Sales

Heading for 1 above

Operational Costs Operational Costs

TIME Line TIME Line

TIME Line TIME Line

Where are you - Where are you going – How are you going to get there.1 2

Sales Sales

Pressure on Margins

LOSSContribution

Reduce Costs Reduce CostsIncrease Productivity Increase ProductivityGO TO 3 GO TO 4

Operational Costs Operational Costs

3 4

Sales Sales Increase SalesGO TO 4

Identify Business RiskCustomersMarkets%Sales/Cutomer

Heading for 1 above DiversificationAcquistion

Operational Costs Operational Costs

TIME Line TIME Line

TIME Line TIME Line

Where are you - Where are you going – How are you going to get there.1 2

Sales Sales

Pressure on Margins

LOSSContribution

Reduce Costs Reduce CostsIncrease Productivity Increase ProductivityGO TO 3 GO TO 4

Operational Costs Operational Costs

3 4

Sales Sales Increase SalesGO TO 4

Identify Business RiskCustomersMarkets%Sales/Cutomer

Heading for 1 above DiversificationAcquistion

Operational Costs Operational Costs

TIME Line TIME Line

TIME Line TIME Line

Sustainability Theme

Time

£

Sales

Operating Costs

Area of failure

Sustainability Theme

Time

£

Sales

Operating Costs

Area of failure

SUSTAINABILITY

VMoC QFD

CANDO VSM

CAE

TPM

DFSS

SMED

NPD/I

6 Sigma

+ -

Business Improvement Model

Business/Sales Enhancers

SALES

Customer

FEEDBACK LOOP

STRATEGIC BUSINESS MODEL

+ -

ADAC

MIP

Q C D F S

1 2 3

1

3

2

Constraints in Process

Constraints in Marketplace

Clearing constraints in process will naturally push the constraint of capacity back into Marketplace and vice versa.

Aim is to throw the constraints between process and market. If a continual MOVING imbalance is achieved then the company is moving towards sustainability.

Aim: Clear them andCreate constraint in

Market

Aim: Clear them andCreate constraint in Process

Theory of Constraints

Impact:

Skills Analysis/Outcomes

•Align skills with Growth Strategies

•The team leaders were able to manage their teams through significant change more effectively and confidently.

•Subject matter experts were used as trainers

•Colleges and Universities worked closer together.

•Established a bank of expertise – utilised across the sector as a whole.

•The self awareness of the individuals increased significantly and this improved dramatically the coaching relationship between themselves and their line managers.

Impact:

Key Wales Findings

•Output shows modest signs of improvement, with 73% reporting increases or stable performance, compared to 50% in previous quarter.

•Employment seems to have stabilised for most of EEF members.

•77% report increased or stable new export orders, compare to 53% in the previous three months.

Impact:

• Nidum pioneers major skills upgrade with Welsh Assembly Government

• Nidum Precision and sister company Magor Designs were recently confirmed as one of the pioneering SME's in Wales  on PROACT, a major new strategic development initiative from the Welsh Assembly Government.

• The PROACT programme provides Nidum and Magor with over £50,000 of training development support over the next 12 months to broaden and up skill the capabilities of the 30 strong work force. The customised programme has been constructed sourcing from the very best public and private sector training resources in Wales, including Bridgend College School of Engineering, and the best manufacture based equipment training in the UK.

• "Our teams are delighted and privileged to be selected for the pilot phase of PROACT", commented Ewan McConnell, Managing Director. "We are a service business that runs through its people and this is a tremendous opportunity to strengthen and broaden our skills and capabilities in depth across the team. This means that, as the economy improves we shall be equipped to offer an even broader range of service and capabilities to our customers. This complements really well the improvements to the work shop that we have been working at through 2009".

• Nidum was introduced to the PROACT concept via the Welsh Automotive Forum, who were central to developing the initiative in partnership with the Welsh Assembly.

• Tim Williams, Chief Executive of the Welsh Automotive Forum  confirmed " Nidum  and Magor are highly skilled support organisations to the Welsh manufacturing base, the long term success of the sector is dependent on companies like these continuing to develop and refine their expertise. I am delighted that the Welsh Automotive Forum has been able to play a part in ensuring Nidum and Magor were able to take advantage of the major opportunity this programme offers".

Impact:

Quote

John Griffiths – Deputy Skills Minister AC/AM

Welsh Assembly Government

The ProAct Scheme

From letter of thanks to CEO Wales Automotive Forum

“The scheme has been a good example of what can be achieved when everyone involved pulls together to achieve a common goal”

Impact:Next StepsWe need to get closer to our Customers

Understand the “Voice of the Customer”

Need to ;-

Find

Win

Grow

New Customers.

Through:

Commercialising Innovation/TTM.

WE NEED TO RELEASE OUR CAPACITY TO ACHIEVE OPERATIONAL GROWTH.

Impact:Next Steps

Greater R&D Technology

Technology Adoption by industry.

Opportunities:-

Low Carbon Economy

Supply Chain

High Value Added:Improve Business Performance

“Survival goes not necessarily to the most intelligent or the strongest of the species, but to the one that is most adaptable to change.”

Charles Darwin

QUESTIONS