Port Talbot’s Future

blast furnace production, metallurgy

In the UK, recent news has been dominated by the likely sale and closure of the Port Talbot steelworks. This is the last of the heavy industries that provided by far the greatest part of employment in the UK coalfields. (The coal being the original source of energy for those industries.) The pervading view is that this is a national tragedy. There are however selective memories at work here. At the end of 1985, the National Union of Mineworkers lost its battle with Margaret Thatcher over pit closures, and over the next 10 to 15 years the coal industry in the UK effectively ended. The Yorkshire coalfield, and in particular the Leeds, Bradford and Huddersfield area, already hard-hit by the loss of the textile industries in the post war years, was affected worse than most. Few shed tears for either the weavers or the miners, and the region was left to pick up the pieces on its own. So is the West Riding of Yorkshire now a howling wasteland?

I was there whilst this unfolded. With the exception of my father, every male in my family was a miner, and every woman a weaver. In the area I was raised, textiles and coal provided around half of total employment. In less than two working generations this work disappeared almost entirely. But to answer that question above, within 20 years of that momentous defeat of the NUM, most of the West Riding coalfield area was back to full employment, male and female employment had in total increased dramatically, and the jobs that replaced them were more productive and therefore better paid.

So we have an experiment, which ran in real time through my life, and mirrors almost entirely what is happening in South Wales. So what can Port Talbot learn from this historical experience? The first is that in the long run, this is an opportunity. Rather than battling to maintain the status quo, work to improve the future. Blast furnaces, used for smelting ore to produce iron, will soon anyway become obsolete. We have already made most of the steel the world will ever need, and we can recycle what we have much more cost effectively than making new steel. Just as wool blanket looms became obsolete (duvets), there isn’t going to be the need for many new blast furnaces, and due to the high energy costs in the UK they won’t be built there. Those whose only skills are operating a blast furnace will need to acquire new ones. For those who can’t, and fortunately they will be few, better provisions can and should be made. Certainly better than those provided to the people that truly did suffer when the Yorkshire mines were shut down.

The biggest learning is that we need to facilitate new businesses in the area for the long-term, and to assist people in moving to new areas to find work in the short term. The short-term answer in the Yorkshire coalfield was that our age group left. Including me. Initially to light manufacturing industry in the midlands, and then, when it became clear that high labour content manufacturing was going to move to Asia, I followed it there. Like the Irish and the Scots that have long dominated the mobile workforce of the UK, Yorkshiremen and women became nomads.   (Fun story: Ex-pats form tribes that hang out in the same bars, restaurants, sports clubs etc.   In Shanghai, our tribe of around 30 individuals had four Huddersfield Town fans!).

So how do you facilitate these long and short term solutions: Strangely enough, we seem to have forgotten how to do this as well. It is clear that Port Talbot needs a better enterprise zone.   A no corporation tax, low-cost energy, National Insurance contribution free zone that will attract investors to the area. It might not help those blast furnace operators, but it may keep down-stream steel operations in the area. And as in Yorkshire, a whole new bunch of industries that employ increasing numbers of more productive and better paid people. For those who have to move out of the area, make it easier for them. Give every person who wishes to leave a Port Talbot postcode a one off grant to relocate, and priority on any local housing authority waiting list in the postcode they want to move to. The UK has done this before, it works and it isn’t difficult or expensive, compared with the cost of keeping an obsolete technology turning out products nobody wants to buy.

Yorkshire was big enough with a strong enough economy to do this without help, but there were hard times for some, and many of us had no option but to leave. We don’t need to re-run the bits of the experiment that lead to these hardships for the people of South Wales.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us.

About:  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Supply Chain News: Major New Client Signs With Cosmapec!

This blog has been quiet for the last couple of weeks, but for a very good reason.  In February, Cosmapec signed a contract with a Philippines based company to develop programme management controls for a food processing plant construction project.  This is the biggest single project Cosmapec has undertaken to date, and will require my involvement on a full-time basis until mid-May.  It is an exciting project, in a fast-developing sector within the food industry.  We are very pleased to have been selected to take this important role in assisting the company achieve some challenging objectives to significantly expand their manufacturing capabilities.

The assignment is squarely in line with Cosmapec’s core customer proposition:  To quote from our website:

“Offering retailers, marketers and manufacturers a reliable, high quality alternative to in-house resources for sourcing, supply chain and manufacturing process development in Asia Pacific and developing markets.

Providing high levels of practical experience, know-how, contacts and confidentiality.”

Initial work is now underway, and the tight project timelines have generated a busy work and travel schedule which makes blogging challenging in the short term. Which is a great problem to have!

At the current point in the project, we are defining project controls and governance, which I blogged about in 2014, and is worth re-visiting again: Here is the opening paragraph:

“Your project scope is clear, the work is planned, and the resources are in place.  You have made a good start to the journey, but how will you navigate the long road ahead?  In many ways the answer is to plan for failure, or more specifically how to avoid it, and governance is the key activity.  What is governance, who does it, and who benefits from it?  Simply put, governance is how the project owner gets the information needed in order to keep the project moving towards a successful outcome.  Large projects typically impact across many operational areas, and as such a separate organisation structure is required to ensure work is completed as planned, and information flows to the key decision makers and the project owner, commonly referred to now as the sponsor.  Often overlooked is how to deal with the many issues that can lead to project failure. Which is where the project sponsor earns his or her money.”

This was one of the most popular early posts, please do go and check it out if you haven’t had the chance to read it before.

Thanks for your patience and understanding whilst blogging is a little less frequent, normal service will be resumed soon!

 

Are you working on project governance?  Please do share your experience in the comments section so all readers can benefit from your knowledge.

If you want to learn more about the Cosmapec approach to supply chain development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

About :  Rob Ward has extensive global experience working in supply chain organisations.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains.

Process Integration or Functional Excellence – A Working Example

Last week’s article on the merits of integrating processes or optimizing functions proved to be very popular, with a high increase in traffic to the blog.  One particular question I received deserves further development.  The question asked was, “Could you provide examples?”  So this is a follow-up article to give further insight through a real world scenario from my personal experience in facility leadership roles.  When discussing examples, it is important to understand why the situation developed, because rarely is it the case that it has been done out of neglect or malice, but usually because past events continue to dictate behavior, even if the current reality has significantly changed.

In this particular case, attempting to solve quality and customer service problems associated with a facility start-up in a rapidly expanding market, the management had developed teams dedicated to the individual processes in the facility. They believed that low operational equipment efficiency was the root cause of the problems and were striving to reduce set-up times, minimise unplanned downtime and eliminate rejected production.  Each filling and finishing line had its own dedicated operators and mechanics:  The warehouse, batch processing and quality functions supporting these lines were also included in the process based organisation.  This had clearly achieved its initial aims, quality and customer service were excellent, however costs had run out of control.  The facility had been established to take advantage of low labour costs in the country, but the total costs were now higher than any comparable facility, and productivity as measured by output per labour hour was well below the groups average.  All this in one of the newest and most automated factories in the network.  So what was going wrong?

Multiple reasons were identified, but the over-riding issue was the focus on having dedicated process teams, with no flexibility to move between processes.  The teams were staffed to deal with peak demands, but these happened only on one to two days a week, and demand troughs were 75% lower than the peaks.  This resulted in the highest skilled and highest paid operators doing non-productive work such as cleaning and maintenance for more time than they were making products.  The first step to resolve the situation was straightforward, move work between days of the week to smooth out overall labour demand.  The second was to return to a functional organization with mechanics and operators in separate teams, and the supporting groups were restored to traditional departments.  As part of this change, each group was re-trained to be able to work across several different processes.  The net effect was to reduce headcount by between 25 and 75% in each functional group as a result of these two changes.  The third change was to increase the productivity element in the annual bonus calculation and this further incentivised the new functional groups to work together in the new organisation.

To add a little twist to the tale however, once this had been achieved it was again found necessary to split the workforce into a process organization, but based on two groups of processes rather than individual processes.  One group was mostly semi-automatic processes, and required high staffing levels of mostly unskilled labour, however the second group of processes required highly skilled mechanics, filling line operators and batch processors.  This allowed further control of costs by focusing skilled workers only on those processes that needed them.  Knowing that a functional organization structure often leads to communication difficulties between the different functions, the factory was also re-engineered to establish kanban based control of material flows.

Functional excellence or process integration is in some ways a false distinction, the real question is have we organised the work to add maximum value at the best cost, and understanding that is the key to success.   The example outlined above was not an overnight change to the organisation chart, it took two years to complete.  It affected the working processes of the entire facility, and some of the management team and the process operators decided to leave rather than complete the journey.  But it was highly successful and the facility is now one of the most productive in the group.

Thank You from Cosmapec Supply Chain Management! What the Future Holds.

 

Last week’s website launch for Cosmapec produced an almost overwhelming response from friends and colleagues around the world. This blog had more than three times the regular number of viewers, our facebook pages saw 298 views in total and although we are still compiling stats on the website usage, we know from the comments we received it has seen a lot of traffic.

So a big, big thanks to everybody who took the time to discover a little about Cosmapec, who we are and what we do. Your comments and messages of support were very much appreciated and we hope you will continue to look us up on a regular basis to check our progress.

This is just the beginning of our journey, and as we begin to work with clients we expect more surprises and changes in direction than is possible to predict right now.  The future of this blog will now change focus a little, and whilst I will continue to share with you our philosophy of how Cosmapec can support our clients needs, I will also be covering where our journey is taking us.  And finally, for us to offer the most up to date service to our clients we will cover the trends in supply chain management that are shaping how the industry continues to improve the value that it offers to the end consumer.

Although the list is not exhaustive, the key trends in supply chain management for the next few months that I will cover are:

  • Strategy, leadership and transformation.
  • Corporate culture and its impact on employees and customers.
  • Economics, and how the rapidly developing world is changing the range of available supply chain solutions, especially ‘off-shoring’ and ‘re-shoring” decisions.
  • Lean manufacturing, continuous improvement and supply chain optimisation.
  • Project management, change management and how to create the roadmap to success. And how to know when its heading for failure.

In next week’s blog I will look at the continuing growth of China and India’s economies, the renaissance of Western manufacturing, and what all this means for supply chain management.  Recent news has indicated that on one measure, China’s GDP is now equivalent to the US.  India is heading into an election where it is widely expected that a business friendly Prime Minister will be elected and rapid economic growth is expected to accelerate.  US manufacturing costs have improved to the point that that they are almost at parity with China and the UK has the lowest cost manufacturing base in western Europe.  All of which means there could be some big strategic changes in the air for supply chain managers.  Check back here for more discussion next week.

Are Your Supply Chain Needs Being Satisfied?

Are you looking to enter new markets, but can’t find people with the right experience you need?   Are long-term overseas assignments just too expensive for you? Or not able to persuade your staff to leave behind friends and family and move overseas?

Getting the right people for a new market entry is the most challenging aspect of the project. Even if you have been able to get the person you want, expatriate assignments have an extremely high failure rate. If these problems sound just too familiar to you, then we may well have the answer to your needs.

On April 8th, we will be launching Cosmapec Supply Chain Management to provide management consulting services to companies entering Asia Pacific and other developing markets. If you check back to this blog on April 8th you can link to our new website where you can see what we can help you with.

 

We have organized our services around the typical new market entry needs for getting products to the consumer, and for an example here are the Manufacturing services we provide:

“Manufacturing – Development and Operations

Creating and operating a manufacturing base is challenging even in a familiar environment. In a new or developing market, establishing manufacturing operations either as fully-owned manufacturing facilities or through third parties can be a minefield.   We have the experience of establishing manufacturing operations across Asia Pacific and in developing markets in Eastern Europe. Not only do we have the expertise to help you manage manufacturing operations, we can help you design, build and start-up your manufacturing facilities.

  • Manufacturing strategy – make vs. buy
  • Site selection and facility design concept
  • Client-focused construction management
  • Engineering and procurement support
  • Operations start-up
  • Manufacturing optimisation and cost control”

 

Our services for Planning, Sourcing and Delivering, the remaining elements of supply chain operations are equally comprehensive.

If these sound like the answers to your needs come back here next week for more details.