Recovery accelerates at Redcar car parts maker

SOMETHING powerful is stirring on Teesside, but it is happening out of sight.

A ripple disrupts the surface of Ian Malcolm's morning coffee as he sits behind the boardroom table and talks about the revival of his business.

A few seconds later it happens again, and then again, as a tremor from downstairs builds until the glass in the bookcase begins to rattle.

Neither the ElringKlinger (GB) boss – who is one of North-East industry's most engaging talkers - nor the rhythmical thud, misses a beat. Bang, bang, bang – Mr Malcolm hammers home his views about the “madness” of a possible EU exit, the urgent need to nurture young talent, and how the region must promote itself better - punctuated by the sound of machinery to remind you that the most important business of the day is happening downstairs on the factory floor.

The thudding comes from the firm's presses which punch out gaskets and heat shields that are fitted to some of the most famous car brands in the world - Ford, Jaguar Landrover, BMW, Honda.

The sound of the press is ElringKilnger's heartbeat. It signifies that things are being manufactured and people are busy at work.

"I like to hear it because every time it goes it is making me money," says Mr Malcolm, managing director of the Redcar firm.

All across the North-East, in factories, chemical plants, and steel mills, people are making things. The service sector dwarfs the manufacturing industry in terms of its contribution to the wealth of the local economy, but people in the North-East are reared on stories about the great things we once made - ships, bridges, even the machines of war. Companies such as ElringKilnger are fuelling hopes that manufacturing could also be a fundamental part of our future.

But that will not be achieved without a struggle, says Mr Malcolm, who holds strong views about how firms in the North-East automotive industry, and the region at large, must band closer together.

The recently history of ElringKilnger (GB), part of a German multi-national which has been manufacturing in the North-East for more than half a century, is typical of the sector.

The recession took its toll, but the business has rallied strongly with staff numbers, turnover and investment all on the up.

“Things are very positive now,” says Mr Malcolm, as he guides me around the plant which thrums with life. He adds: “I set a target in 2012 of moving business from £13m to £26m in five years. We are going to hit that.

“I have already set us another target to double turnover from where we were last year, so over the next five years we will be in the region of £30m to £35m. Given in 2009 that number was £8.5m you can see how far we have come.

“We have moved from 80 employees then, to 220 today, and that will continue to grow as well. It is good for the North-East. We are an unsung hero.”

Last year, the unsung hero completed a 4,000 sq m site extension to its Kirkleatham Business Park site. At the rear of the plant in a field of rapeseed that abuts the Wilton chemical complex stands a wind turbine capable to supplying up to 60 per cent of ElringKlinger’s electricity. Back on the shop floor Mr Malcolm, a father of three boys who lives in Darlington, guides me past a £1m press producing parts for General Motors. He encourages me to join him on a stone slab as he peers over a makeshift barrier that cordons off part of the factory where a pit has been dug for a £2m press to be installed this summer.

These types of investments will push the firm forward, but Mr Malcolm, a shrewd Scot whose background is in accountancy, is wary of potential hazards.

“The Conservatives promising a referendum on EU membership is singularly bonkers,” he says, “I think it is bad for business. Why? In a word ‘uncertainty.’

“So much of the focus for the next two years is going to be on whether we stay in the EU. The probability, this is my personal view, is that it will not be decided on the facts but it will be decided on the heart.

“I think that 4 million-plus votes for Ukip (in this month’s General Election) is an indication of that. I think the potential outcome, particularly if it’s not decided on the facts are potentially dangerous for business. UK Plc will become a nobody because you suddenly have everyone around you on the other side of the fence.

“You can look at Switzerland and say they do quite well, but I think that if we had always been out of the EU that is one thing. But coming out, throwing your toys out of the pram because you are not getting what you want is a different scenario.

“Human nature is such that if we make that move the EU will say, fine, get on with it, but don't expect any support from us. That is such a risk. In my opinion a risk not worth considering.”

He explains what that risk represents to his business.

"Everything that we do on this site here in Redcar can be done by somebody else in our group. We have plants in France, Spain, Italy - about 10 in Germany alone."

The risk is that Britain's exit from the EU could prompt ElringKilnger's German parent company to pull orders back onto the Continent and undo the progress made over the last five years.

At present, the Teesside firm is attempting to do the opposite and secure work that would otherwise go to suppliers overseas. It is part of wider efforts to rebuild the domestic automotive supply chain that was all but killed-off when the behemoths of British car making slumped in the 1970s and 1980s.

An estimated £5bn of parts that could be made in the UK are bought from overseas suppliers.

"There is an increasing call for re-shoring. OEMs (Original Equipment Manufacturers) often make a big song and dance about it but they are often very closed about working to achieve the result," says Mr Malcolm. "There has to be some joined-up thinking.

“Say we were to introduce plastic moulding. The investment required to start it doesn't make sense for one product at 200,000 units a year. You need to say if we go down that road then Nissan, Toyota.. we need a contract with all you. That gives you a critical mass to put the investment in and we all win. But I think we are long way from that,” he adds.

Mr Malcolm hopes the newly-launched North East Automotive Alliance (NEAA), which ElringKlinger has joined, will help.

“All of the meetings for NEAA have so far been in Sunderland," he explains. "Last time we met I said I am happy to host one down here, that I haven’t got a very big meeting room but I suspect half of the members wouldn’t turn up anyway.

“Someone in the meeting asked me – ‘does that mean you think we have a split region?’ And I said: ‘Absolutely, I think we are split and we need to do something about that.’

“We often get left out on Teesside. There is an awful lot of good stuff happening down here. I have been to a couple of events about this Northern Powerhouse and you think, hang on a minute does this really include us or is it all about Manchester and Sheffield?”

At a regional level Mr Malcolm is full of praise for Tees Valley Unlimited “they do an awful lot of good” but in areas such as skills training he bemoans a lack of coherence.

“Last year we were looking to revamp our apprenticeship programme. I looked around and within a 15 minute drive I could go to colleges in Redcar, Middlesbrough, Stockton, Hartlepool, TTE in Middlesbrough, the list goes on. If I travel half an hour I’m into Darlington College, SWDT etc. All these providers, all competing for my business.

"I don’t have time to go to all of them and try to work out which one is going to deliver. A bit of joined up thinking would say we have a number of industry clusters – chemical process, steel, automotive – let’s have some clusters of education provision to match them."

Getting and retaining the right staff is crucial to a firm like ElringKlinger that has a strong focus on apprenticeships. On the current payroll more than 20 people have at least 25 year’s service.

At the other end of the scale is Antonia-Lee Walker who has joined the firm as technical support assistant within the new product introduction department.

"I think it’s important that more women pursue careers in engineering and manufacturing, and that companies recognise young females’ interest in the industry – something that I felt ElringKlinger understood,” she says.

Ian Richardson, from Guisborough, who has been with the firm 14 years says: "It is an excellent company. I have worked my way up from operator to shift leader. There are opportunities to get on, the business likes to promote from within and that is important for morale."

Mr Malcolm adds: "We have had some tough times. There is pressure on us now to seize the opportunity. We have to drive that pressure. I have a superb team here and we need to inject even more energy into the business."