Engineering a big future
The Engineering Technology Group has ridden out the recession and undergone substantial expansion in recent years. Ed Hill of Production Engineering Solutions visited the company to hear how it has steered its way to success.
A leopard doesn’t change its spots but in business a makeover can have tremendous benefits for trade. Just consider how BMW has transformed Mini in recent years.
The Engineering Technology Group’s (ETG) origins date back to 1996 when it was started by Paul Rhodes. The business initially began as a distributor for German machine tool maker Chiron-Werke. Since then more machine tool brands have come under its portfolio including Nakamura-Tome, Handtmann, Stama, Feeler and its most recent acquisitions Hardinge Bridgeport and Quaser.
In the last 18 months the business has transformed itself and more than doubled in size. The Hardinge deal has been a major factor in its expansion. In 2013 Hardinge UK’s own sales and service division was transferred completely to ETG. A new subsidiary was created, ETG Bridgeport, to continue to market the machines in the UK for the American manufacturer.
Increasing the volume
The deal came at an ideal time for ETG which had been looking to increase its volume of machine tool sales. Much work had already been done to restructure the business during the economic downturn of 2008/9. A refinancing agreement backed by Santander in 2011 along with a management buyout a year later, making director John Temple the majority shareholder, also marked a change in direction.
Mr Temple, now CEO of ETG, explains: “We wanted to elevate the status of the group as a whole and the connectivity of the various brands and subsidiaries involved. At that time we were a business selling a lot of turnkey solutions. We were very good at turning those enquiries into projects and then fulfilling the contracts. What we were not so good at was selling in volume. That restricted our growth in the market and the footprint we could achieve.
“Hardinge have adopted a third party distribution model already in the US. They are now focussing on the development of their products and manufacturing capabilities globally, as opposed to the downstream marketing side of the business. When we began discussions it became obvious that we really represented what they were looking for. It was an ideal opportunity for both of us.” The acquisition of Hardinge’s UK operation doubled ETG’s sales and service teams. Hardinge staff were incorporated into ETG and transferred from Leicester to its Southam, Warwickshire headquarters. The new members of the sales team were asked to not only sell Hardinge machines but the whole ETG range.
“The transfer and amalgamation has gone spectacularly well. We now have a team of people who are completely merged both in engineering and sales. The benefits that we expected for our other brands have also come sooner than we expected. For example, last year was our best for selling Nakamura machines. The Hardinge sales team were part of a big organisation that could only sell one type of machine, now they have a whole new bag of products to offer customers.”
The deal with Hardinge also gave ETG the opportunity to revive one of the best known names in metalcutting, Bridgeport.
“We do focus on nurturing our brands,” Mr Temple asserts. “Bridgeport is an iconic name and we felt it deserved to be brought back into the spotlight. One of the first things we did was re-launch the renowned Bridgeport Knee Turret Mill at MACH. It has been imitated down the years but it is still being made in Elmira in the US in a way that no one can truly copy. We hope to sell many of these machines not only to machine shops but also colleges and educational establishments. There is also still a lot of demand from Europe for spare parts, which we can source or manufacture.”
ETG has always believed in preserving the distinct nature of its primary brands. Each agency is set up as a quasi-subsidiary company within the group. Technical support is backed up by service engineers specifically aligned to each machine tool manufacturer.
All its manufacturers have a distinct offer for ETG customers: whether it is Hardinge and Bridgeport’s robust 3, 4 and 5-axis machining centres; Nakamura-Tome one-hit, multi-tasking mill-turn machines; the highly productivity Chiron range; Stama’s innovative milling and turning designs; cost effective Quaser high speed VMCs or mid-range models from Feeler. More specialised designs such as Handtmann’s large format centres, primarily used in aerospace, complete the selection.
Another major part of ETG’s business is Hyfore Engineering. This branch of the group specialises in manufacturing a wide range of workholding products and automation systems from its facility in Coventry. A new arm, Hyfore Developments, offers bespoke prototyping, a component verification service and low volume manufacturing for ETG’s customers. It also provides a subcontract inspection, measurement and reverse engineering service using its metrology equipment.
Mr Temple says ETG’s philosophy is to offer its customers a ‘cradle to grave service’. As part of this approach ETG Finance Solutions was set up to help customers invest in new capital equipment and other strategic business decisions.
ETG Engineering Solutions is at the heart of the group’s activities. As the service division of the business it provides the aftermarket products that support the machine brands. “We are probably known just as much for our aftermarket services as our machine sales,” Mr Temple states. “We have a wide range of support options to provide the level of assistance our customers need these days. It’s about creating long term relationships with customers. We are not just a ‘box shifting’ operation.”
ETG’s own image has been revitalised to reflect the group’s overarching capabilities. New branding for the company as a whole, along with an increased presence at recent MACH shows signals its intention to be a major player in the UK machine tool market.
“We now have around 20 service engineers and we are building a sizeable applications team. We aim to be the largest independent machine tool supplier and we believe our multi-brand approach makes us distinct from the competition. The customer has one point of contact but can expect to get the best solution because we have access to all these different brands, technologies and capabilities.”
The diversity of brands means that there is no shortage of options available. “We worked out that we could offer around 2,000 discrete alternatives for our customers and their machining requirements. To make our product range more accessible we have introduced an on-line Machine Selector Tool on our website. This allows customers to enter the details and specifications that they need from a machine and then produce all the options that are available from our range. If a machine falls into those specification areas, we can use this as a basis for a quote.”
ETG sells machines to all sectors of manufacturing. The company’s recent growth has been driven primarily by the upsurge in the UK automotive sector. Aerospace and medical are also big markets for the supplier, along with general subcontracting.
The company continues to have ambitious plans for growth. It is currently in the process of finding new premises to help strengthen its aftermarket side of the business and undergoing a recruitment drive to help consolidate its sales and support services.
ETG’s workforce has grown from 60 to 115 in the last 18 months, including a new Field Sales Manager for Scotland and an Operations Director. It has also taken on six new apprentices to fill the skills gap.
“These recruitments have had a major impact on the business. We are operating in a much more structured and streamlined way. We want to ensure that our systems and procedures are consistent otherwise we are not using our resources wisely.” Mr Temple adds.
The company has also extended its reach to include a new business in Eire; opening a machine showroom in Newbridge, County Kildare and making it the only independent machine tool distributer to have its own showroom in the country.
For ETG the future certainly looks bright and plans to double its size again in the next 18 months seem credible given its recent performance. Turnover for last year was around £30 million with more than 150 machine sales.
Mr Temple concludes: “Now that we appear to be out of the recession some of the caution about investing in equipment has definitely changed. Not only has the volume of investment changed but also the quality. Subcontractors are upgrading to better, higher spec machines, not only to increase capacity but also to give them the best quality, best practice solutions.
“In the automotive sector for example, companies who five years ago would never have considered investing in a Chiron machine solution are now looking at the longer term and realising they will require machines of that capability and quality.
“I believe we are the fastest growing company in this sector at the moment and that hasn’t happened by accident. It’s because of the nature of the business and the fact we are very entrepreneurial and constantly looking for new opportunities.”