A UK metals group is on course to forge a successful year despite the economic downturn.
Doncasters is a UK-based precision metal components maker with a history stretching back over 200 years, and it currently lies fifth in the Daily Telegraph top ten of privately owned manufacturing firms. In the midst of a global economic downturn, the multinational, now owned by a Dubai-based equity group, believes it is still heading for strong growth.
With a robust standing in the aerospace and power-generation sectors, boasting high-profile customers such as Rolls-Royce, GE and Siemens, the British firm is eyeing a buoyant 2008.
"While you can never entirely predict the future, the credit crunch has so far shown no signs of denting what continues to be a very positive time in the aerospace and especially the industrial gas turbine sectors," says chief executive Eric Lewis.
"In fact, many OEMs [original equipment manufacturers] are already sold out for the next few years, meaning suppliers such as ourselves will actually need to increase capacity to ensure we can service growing demand and increase our market share.
"That isn't to say we are taking future growth for granted. The 11 September 2001 terrorist attacks and the Enron scandal meant that the early years of the 21st century were a challenging period for the group. But we are confident that the lessons learned during that time have also made us a stronger, leaner operation that is far better placed to ride any unforeseen market traumas."
Lewis joined Doncasters in 2001, just after it was bought by the private equity arm of Royal Bank of Scotland. "We were busy integrating another business, Ross & Catherall, into the company," he recalls. "We were just starting to introduce lean [manufacturing] techniques across the group when the 9/11 catastrophe hit, with its obvious ramifications for the aerospace industry."
In order to survive these difficult times, the company made a number of changes to the business, including the creation of separate aerospace and gas-turbine divisions to better serve customers, and cutting out all non-core business operations. "We also focused strongly on improving operational efficiency across the group, ensuring we were getting the most out of our assets, both in terms of equipment and personnel," Lewis adds.
"By introducing concurrent engineering techniques and rapid-prototyping expertise, we have successfully reduced our time to market from 15 months to typically just five to nine months. Process improvements such as lean, value stream mapping, kaizen, six sigma and benchmarking techniques were also embedded throughout the organisation."
With all of these changes now paying dividends, Doncasters currently has more than 130 new products on the stocks that will convert into sales over the next two to three years. And it points out that its aircraft clients' order books are full until 2013-14, largely driven by growth in the Middle East and Far East.
Amid these expectations of growth, Doncasters' investments for the future include £16m to expand the capabilities of its Blaenavon plant in Wales, where it makes components for gas turbine engines. The investment enables the company to undertake post cast processing work in-house rather than continuing to sub-contract it to a specialist supplier. The move has created around 125 new jobs at the facility, which has a total of 340 staff.
This was on top of a £4m investment in the development of the company's engine components strategy at the Welsh plant, which has won the accolodade of the group's Forging Centre of Excellence.
Originally, Doncasters had considered locating this work in low-cost Poland, so why did it decide to stick with the UK? "Among other considerations we quickly realised that, while cost will always be important, it counts for little if it is not matched with excellent customer service levels, on time in full deliveries and the quality required to be a leading member of the precision engineering community," Lewis explains.
"As the new facility is intended to add real value for our customers, bringing specialist post-casting expertise in-house that was previously outsourced to another supplier, it made perfect sense to locate the new site alongside a pre-existing facility. This decision will allow us to maximise efficiencies in the production process, becoming a genuine supply-chain integrator and offering best value to our customers."
But Lewis still lays great store on making the most of the global market and tries to balance the use of national and international resources. "Two of Doncasters' core markets, aerospace and power generation, are by their very nature international. The fact that we have sites around the globe means we are never over-exposed to the financial fortunes of any single country."With regard to offshoring, we expect to see the manufacture of easily-commoditised components moving to lower-cost economies in the near to medium term. We have two such facilities in Mexico and China ourselves.
"If we weren't there, our competitors certainly would be, and balancing the appeal of lower-cost manufacturing centres with our commitment to sustain current capacity allows us to offer our customers the benefit of lower costs combined with real expertise and quality service.
"However, we recognise that it is not offshoring but skills that represent the biggest threat to the engineering industry," he adds. "While commoditised products can be easily offshored, more complex components and intellectual property is much more difficult to move overseas.
"Investing in the skill set of our workforce and attracting the very best engineering skills to the sector will therefore have a significant role to play in protecting UK plc's interests."
Another key investment area for the company is its staff. There is already a global shortage of skills across the sector, and it is expected that this will be the single greatest challenge facing the industry over the next few years.
To combat this, two years ago Doncasters set up a further graduate development programme to run alongside its advanced apprenticeship programme. This scheme seeks out the highest calibre individuals to coach through the business, developing them commercially and helping to shape the industries future.
"With graduates of both schemes now beginning to be integrated into the business, we are really beginning to reap the benefits of this investment," Lewis enthuses. "Getting good-calibre people on board and retraining those already employed is essential for the successful operation of any business and we are committed to continuing our proactive approach moving forward."
But it doesn't end there. In order to meet increasing demand, Doncasters plans to invest signifcantly in capital expenditure across the group, with spend expected to increase fourfold over the next few years.
"There is currently real potential within the airfoils and superalloys markets and we have identified and subsequently launched a £205m programme of investment across the company that will see us through to 2011," Lewis explains.
The investment includes plans to develop facilities for non-destructive testing, welding and heat treatment for the post processing of cast turbine airfoils, and expanding the capability to deliver engine-ready components.
Doncasters is also investing in state-of-the-art technology for producing forged and rolled large rings and casings, with a new facility expected to be established by 2010.
"While the wider economy may be experiencing challenging times, aerospace order cycles and increasing global energy requirements mean that, for the time being at least, the biggest challenge facing Doncasters is that of gearing up to meet the challenges of growth," Lewis insists.
It's certainly an optimistic outlook in the face of a predicted UK recession, but Doncasters appears to be among a special band of UK manufacturers that are well placed to weather the global economic storms.