Hard Pressed to Find a Better Manufacturing Investment; Tom Fleming Looks at How Its Acquisition by a Leading Industrial Conglomorate and Incentivising the Management Team with Equity Has Seen Covpress Go from Strength to Strength
Byline: Tom Fleming
Covpress, a world class pressings supplier with a 120 year history, has won pounds 300 million of new automotive industry orders, in the wake of a 21 per cent growth in annual sales in 2011.
But the new orders at the Coventrybased firm, including work for Jaguar Land Rover, and the new X82, the Vauxhall Vivaro, set to be manufactured in the UK and France from next year, are no more than the latest feathers in the cap of the Coventry firm.
It is seven years since Grove Industries, the West Midlands-based industrial conglomerate, backed a management buy-in at Covpress, which though largely focused on the automotive market, also supplies other products such as satellite dishes and gas meter assemblies.
Covpress has prospered in that time, even successfully negotiating one of the worst ever downturns in automotive markets, caused by in the 2007/8 global financial crisis.
Now the business, which has annual sales of 64 million, employs almost 450 people at its superbly equipped factory in Coventry. The plant boasts 24 hour working of a wide range of highly automated presses and a rigorous approach to quality.
Though a handful of employees are employed in Shenzen, China, sourcing low cost tooling, the commitment of Covpress to the West Midlands remains absolute.
"We are here to stay and grow our business" said Mike Gillett, managing director, who fully demonstrates the immense pride he feels for his colleagues and workforce with every word he utters: "We are planning to invest pounds 10m over the next two years on capital equipment, tooling and the recruitment of new people" he said.
Taking a step back, Mr Gillett readily acknowledges that it was the financial stability and strategic commitment and support that came with the arrival of Grove Industries that has helped the business to create and sustain competitive advantage in recent times.
He cites the example of a recent investment of over pounds 5m in a new 2,500 tonne transfer press and a new powder coat paint shop, and the upgrading of other press production lines.
Mr Gillett says that this investment will help to position the company for an anticipated growth in the UK automotive market.
But why has Covpress performed so well against a challenging and competitive global background? "At the heart of our business is 'lean' manufacturing based on techniques that were pioneered by the Japanese two decades or so ago" explained Mr Gillett.
"My colleagues and I learned first hand about these techniques in Japan, and we have continued to implement this approach, constantly seeking out and introducing improvements. We have also worked very hard to respond quickly to any changes in markets. For example, we were ahead of the game in spotting the likely impact on our markets of the credit crunch.
"Helped by the fact that we were already lean in terms of our operations, we were able to make rapid and effective overhead reductions to allow for reduced demand.
"Equally, we were able to respond quickly when the clouds passed and were soon back to pre-recession revenues and profits as a result.
"Another critical success factor has been our focus on people. …