UK industry combats economic uncertainty with outsourcing

Image card optimised (25)
Image card optimised (25)

Strategic outsourcing is increasingly being used by manufacturing companies looking to mitigate risk, according to one industry CEO.

Tony Hague, CEO of PP Control & Automation, says recent uncertainty, Brexit and global trade wars are making firms reassess how they balance short-term term pain with the medium and longer-term picture and how they can best manage capacity and inventory whilst protecting their cash.

He warns that if companies react to the uncertainty by cutting too deep, too soon it can remove their ability to respond when things start to pick up, leaving them unable to meet existing or new customer demand.

“Placing this risk with a strategic outsourcing partner is a viable way of avoiding ‘Russian roulette’ when it comes to the future of your business,” explained Mr Hague.

PP C&A currently works with over 25 companies on this basis, spanning over 12 different markets. The company has developed relationships that allows its clients to focus on their core competencies, leaving PP C&A to take care of non-core manufacturing processes.

He continued: “The customer benefits from reduced operating costs, the elimination of unnecessary stock and reduction in work in progress and, importantly, improved manufacturing lead times.

“This is massively important at the moment. Quite often in these volatile times, sales order lead time can be the difference between an order being won or lost for a machine builder. They also gain immediate ‘agility’ with the ability to reduce and increase volumes at the press of a button - ideal in this current economic climate.”

PP C&A has seen demand for its strategic manufacturing outsourcing solutions rise significantly, with the West Midlands-based firm increasing annual sales to £26 million in 2019 - a record year.

The company, which employs more than 220 people at its 5,500m2 facility, delivers added value design, engineering and complex assembly to clients involved in aerospace, food processing, machine tools, packaging, printing and advanced technologies.

With renewed financial backing from the Canadian-based investor, the company has added £3 million of turnover over the last year and is now exploring the possibility of future acquisitions and a joint venture to establish a manufacturing footprint in North America.

“In our world, there are few costs for the customer to pick up when establishing a strategic outsourcing partnership. In fact, once an agreement is in place, we will take on the majority of the up-front costs, investing time and money into production engineering, setting-up test jigs/rigs and taking on supply chain management,” added Mr Hague.

“Now, imagine if they didn’t pursue an outsourcing partner? If sales increased rapidly they would have to invest in new machines/buildings or costly subcontract labour to cope with the peaks. When times are tough and volumes drop, this could well turn into redundancies and capital equipment lying idle.”

He concluded: “Whilst strategic outsourcing is a great way of mitigating risk, it shouldn’t be viewed as a negative measure. In fact, it is actually the opposite.

“By managing your costs, production capability and retaining the skills you need, you will create a platform that allows you to immediately take advantage of increased sales and market share once confidence and demand returns.”

PP Control & Automation

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