In the internet age, in which virtually everyone has the capability to contact everyone else, the power of personal recommendation still carries weight.
Ten specialist UK manufacturers have formed an unusual consortium in which they abandon the normal codes of commercial confidentiality, passing to each other contact details about customers and suppliers, with a view to building up sales for the group as a whole.
The most important pieces of information passed on invariably come not through electronic networks, but via scraps of market intelligence communicated during informal monthly meetings at each other’s premises.
“We had a few arguments to start with but we’ve gradually built up trust and learned to work with each other,” says David Spears, managing director of Brandauer, a parts manufacturer which is one of the 10 members of the five-year-old alliance, called the Midlands Assembly Network (Man).
Steve Blower, managing director of Wrekin Circuits, a maker of printed circuit boards, says: “Normally in business you win sales solely as a result of your own endeavours. With our system, you have the combined efforts of 10 companies working on your behalf.”
The businesses – all based in or around Birmingham – are each in a specific area of metals-related manufacturing with a set of skills that does not conflict with other members.
“It’s important that no-one competes with each other directly, which is a vital factor in keeping disagreements to a minimum,” says Gerry Dunne, managing director of Westley Engineering, which makes metal pressed parts.
Mr Spears says of the individual enterprises in the group that all are “widget makers with the ability to do something different”.
His 149-year-old business last year made 1.4bn tiny metal components for goods such as electric sockets and plumbing fittings, with 30 per cent of its expected £10m sales this year likely to come from China.
The companies – which typically make parts according to specific customer orders with each new batch resulting from a new design – have a monthly meeting somewhere in the Midlands.
Each is allowed to send two people to thrash out grievances – such as complaints that sales leads have not been passed on quickly enough – and discuss common issues.
“Two years ago during the recession we were all going through a torrid time, and it was hugely helpful to meet to compare notes,” says Alan Rollason, managing director of Ace Chemical Etching, which makes small electric circuits.
Of the others in Man, the biggest is PP Electrical Systems, a 190-employee company making control panels, and with sales last year of £24m. Between them, the 10 companies had combined revenues in 2010 of about £65m, and have some 650 employees.
Customers of the individual businesses – whose other members are in sectors from aluminium casting to making electric wiring harnesses – include the US industrial group Honeywell, the Rolls-Royce aero-engine company and Yamazaki Mazak, the big Japanese machine tool producer.
In the Man system, the network received about 50 inquiries for orders a month via a special website. The individual businesses take it in turns to receive calls on a general phone number to handle general queries and complaints.
But the most important part of the process is that each member is expected to scout for business on behalf of the others, using its network of customers.
“If my company is working for a specific business which needs a manufacturing competence that I can’t provide, I will suggest to my customer that I know someone else who might be able to do the job,” says Justin Anstey, business development manager at Barkley Plastic, a maker of injection mouldings.
In a similar manner, the group co-ordinates a data base with details of trusted suppliers, to enable Man businesses to tap into an extended global supply chain.
Each of the 10 pays £10,000 a year to finance a shared website plus general marketing efforts, such as taking stands in trade exhibitions. Bureaucracy is minimised by each group handling sales gained via the network individually, with no pooling of accounts data or information about prices.
Mr Spears says the efforts have paid off – and could form the basis for similar collaborative groups elsewhere. “Since Man started, we’ve together won contracts worth tens of millions of pounds which, without the power of the group, individual businesses would probably never even have heard about,” he says.
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