OPERATIONS MANAGEMENT BBA VI
Case Study: 2
Fenner is the world largest manufacturer of conveyor belts. In
2005 it produced over 5 million
meters of conveyor belting in its 12 manufacturing facilities on
five continents. Its belts are used
in material handling operations in a vast range of industries,
including underground and hardrock
mining, power generation, grain, forestry, package handling,
food processing, baggage handling,
moving walkways paper handling, computer peripherals, copiers,
electrical/mechanical
equipments, agricultural machinery, heating, ventilating, air
conditioning, truck/bus,
pharmaceuticals, machine tools, mobile hydraulics, off highway
machines, mechanical handling,
construction equipment, process industries, oil, gas and
aerospace.
Currently business is booming for the company which is
headquartered in Yorkshire, England.
Announcing its half year results to 28 Feb 2006, the company
announced a more than doubling
its pre-tax profits, up to 11.9 million pound from 4.2 million
pound a year earlier. As the FT
reported on 11 may 2006, buyout energy markets helped the
company to produce a very strong
set of interim results. Revenues jumped 33% to 182 million pound
from 137 million and earnings
per share rose to 5.34% from 2.58%.
The FT commented: Demand for conveyor belts which account for
about 2/3rd of Fenners
turnover, is booming with the order flow more than double that
of 2 to 3 years ago. These results
clearly demonstrate the operational gearing of Fenners business
and with the coal sector
seemingly entering a super cycle with oil prices so high the
prospects look very good.
The FT went on to note that Fenner was the largest supplier to
benefit from the booming oil and
mining sectors. This was particularly the case with china where
coal consumption to feed its
power stations had doubled in the past few years to about 2
billion tons of coal a year twice
that of USA. The high oil price was also driving more coal
mining projects elsewhere in Asia
and North America. The company was also supplying the large
oil-sands projects in Canada.
Mark Abrahams, Fenners Chief Executive said, I have been with
the group for 16 years now
and this is the best trading I have seen. He announced that
Fenner planned to expand its
manufacturing by as much as the third over the next 3 years. The
company would be making
capital investments of about 18 million pound a year on
expanding its factories and building at
least 1 new factory in China. He said a third of the investment
would be targeted at China, the
worlds fastest growing economy. The company already has 1 plant
near Shanghai, with the
