Secrets of a recession-savvy manufacturer

Investing in equipment, processes and people can be the key to weathering periods of recession. Here’s how test equipment manufacturer, Megger, is using the current downturn as an opportunity to boost productivity, with help from Juki A recession is a difficult period for any company to navigate and because there has been a long period of continuous growth in the UK, many staff and managers have never had to tackle this kind of business environment before. There are two key areas to balance: cash-flow and investment.

Cash-flow issues affect everyone, but are particularly important for smaller companies with lower reserves. For manufacturing companies, a key factor in beating a recession is investment investment in new products and investment in equipment, processes and people.

Heres why. In recessionary times, prices fall. Its a buyers market. That means that new equipment can be purchased and installed at prices that are very attractive. Unfortunately, the price pressures also work in the other direction and it is certain that whatever product or service a company provides, their customers will be looking for savings.

Those companies that have invested wisely will of course be in a position to respond, as their new equipment and other resources will have helped them to reduce costs and become more competitive. Not only will this see them in good stead while the recession lasts, it will also put them in a superb position to move forward when it ends.

To see how these ideas are translated into practice, take a look at the actions taken by electrical test and measurement equipment manufacturer, Megger.

The first step was the implementation of a company-wide SAP enterprise resource planning (ERP) system. By streamlining administration at every level and providing managers with accurate information about resources and performance, productivity has been greatly enhanced.

Its not the only step that Megger has taken to boost productivity and control costs. The company has also invested in a new surface mount assembly pick-and-place line for automated assembly of printed circuit boards.

According to Meggers production manager, Tony Hawkins, the new Juki SMT line was chosen against stiff competition from a number of suppliers. The final decision to invest in Juki was made because of a number of factors, not least of which was Jukis machine reliability, including a three year warranty. Coupled to this was the fact that Juki has a direct presence in the UK, so that any future production and technical demands could be easily resolved.

As well as investing in the latest equipment, Megger is also investing in new products and in its people. The company’s new product development programme has increased significantly in recent years backed by investment in staff skills ranging from NVQs in lean manufacturing for production staff to marketing diplomas for engineers and managers.

Of course, a recession is not just a good time to invest in new equipment; its also a good time for well-resourced companies to consider buying other organisations. Megger has done exactly that with its acquisition of Programma, a Swedish specialist in the development and manufacture of test equipment for electrical power applications and PAX Diagnostics, a specialist in transformer diagnostic equipment.

With its company’s history spanning over one hundred years, Megger has weathered many recessions, including the Great Depression of the 1930s. The companys current aim is to tackle this recession with the right mix of investment, skills and products to come through with an even greater market share and the potential for continued success.