[speaker001:] see if I can get this in focus for you.... Can everyone see that?... Okay? First of all, who are we? [cough] We are the largest independent manufacturer of high speed diesel engines. And the horsepower range we work from is from seventy six, to two thousand horsepower. And that is in fact from four cylinder to twenty four cylinder engines. Er you'll see further on in the presentation, the product we produce at, which is the ten litre and the fourteen litre engine. And this actually goes down to about a hundred and eighty horsepower in some applications. And in fact we're now approaching the five hundred horsepower in the fourteen litre. This is Incorporated Internationally. Sales in nineteen ninety one was three point four billion dollars, and in fact the figures for nineteen ninety two are just published in May of this year, is four point seven billion dollars. We produce annually, two hundred and eight thousand engines, in fact that's now approaching two hundred and fifty thousand engines. We employ twenty three thousand people worldwide. Our annual research and development exceeds two hundred million dollars.... in the U K consists of Engine Company Limited, and there are three manufacturing sites that manufacture diesel engines. We've got which I'll go on to expand in a minute about. We've got another plant at Darlington that produces a smaller series of engines. Erm eighty to a hundred and forty horsepower. And a plant at Daventry down in the Midlands that does the big ones, two thousand horsepower. A few years ago we bought a company called who manufacture all the filters that we use. Erm oil filters, air filters etcetera. We actually bought them over about seven or eight years ago. We now own them. located at, actually reconditions engines which are ten or fifteen years old. There's also a market there for people who can't afford to buy new product, and obviously still the engine's still got life in it. So with reconditioning, and new pistons and new liners etcetera, you get another ten years out of the engine. So you've probably seen them if you've ever been up past. On the motorway heading for. They're on the right hand side., again located in the Midlands down at Wellingborough. Are actually our distributer. Who go out in the field and do field service support for our customers. were a separate independent company up till about three years ago, who produced nothing but turbochargers. Erm turbocharging in diesel engines really came on about ten years ago. It's fairly new. Er although most people think it's been there for a long time, it hasn't. Turbocharging really only took off about ten years ago. This was a private company set up to produce turbochargers, which again, because we were one of their biggest customers, we eventually became partners and then bought them over. is a n a new company to us. Er I'll go on to explain in the product range one of their new products we're introducing this year. Is an electronic engine. And this company U K has developed the new control systems for it. Er and Holdings I'm sorry I know very little about. I know they remanufacture components for us, but I know very little about them. As far the United Kingdom's concerned, nineteen ninety one almost five hundred million pound sterling turnover. Producing thirty seven thousand engines. With almost five thousand employees. And as at the end of nineteen ninety one, we have almost two hundred million investment in the U K. The first plant that opened outside the main plant in Columbus, was at. And it opened in nineteen fifty six. Er there's various reasons why it was located at. One of the main ones being which we know now as. But er were one of our customers, buying engines from our mother company in the States. Er the company was also at that time, looking to expand anyway into Europe. Erm and I think Margaret had quite a lot to do with it being located at as well. So for various reasons, we actually found ourselves at. Nineteen fifty six. The plant itself erm now worth thirty million pounds. There was a seventeen million pound extension built in nineteen Started in nineteen eighty one, finished nineteen eighty five. We currently employ just over six hundred people. Although when I joined the company fifteen years ago, we had only fifteen hundred people. Er six hundred and fifty thousand square feet. Almost, and as I say we do fourteen litre and ten litre engines. The ten litre engine is actually a metric engine. Er it was introduced in nineteen eighty three. Brand new engine, introduced in nineteen eighty three, and we decided at that time to go metric. Er a hundred and eighty to now we've gone up to about three seventy horsepower with turbocharger. And in some cases we have a double char tur turbocharger. There's a photograph of the product. Erm this here's the turbocharger arrangement. The fourteen litre engine is an old imperial engine. And when I say old, that was designed and developed in nineteen thirty five in the States. The basic engine has not changed at all. Er sure there have been some improvements in the materials that we use. And that's just material technology advancing. But the basic engine design has not changed. On both products, what we are now going to is an electronic engine. We currently have a pressure regulated fuel injection system, developed by. [cough] own patented design. What we're now going to is electronic fuel injection. It gives a much better fuel economy. And again, that's a photograph of the fourteen litre engine. Our main markets. well you can see from that, the main markets are actually the world. We are very heavily into South Korea and China at the moment. Erm about ten percent of the product goes to Africa and Australia. Again, we're getting heavily into the Middle East. And that's mostly for generator sets and pumping station equipment. Er the European Market is mostly either on or off highway. There are only really two main markets in Europe and that's either the trucks or the excavators and the diggers off highway applications. Er a typical example of an application, an E R F thirty eight tonne tractor unit. Erm that one in actual fact has a ten litre pardon me engine in it. E R F currently produce about six trucks per day, and they're all powered. So every time you pass an E R F on the motorway or it passes you, it's one of our engines from that's powering it. Er a company called in Finland, who are the biggest truck manufacturer in Finland. Er and it's mostly fairly heavy lorries that they produce for as you can see, forestry work. Erm I think that's their principal industry in Finland is the forest. Again we are the the sole supplier to them. These are various other applications. You'll recognize this one here. This is the local Sprinter class rail car er diesel rail car which runs on our local railway network. They are all powered by, throughout the U K. Er something like four hundred and seventy five of these units running, all powered. These are standby generator sets. [cough] For all sorts of applications. Hospitals, pumping stations whatever. Off highway applications in terms of diggers, erm and power equipment. And we do some marine not a lot of marine erm For some strange reason, our design of engine does not lend itself too well to marine applications. Er we there's a lot of cast iron and steel in our engine and marine engines don't like that, they prefer brass.. Er typical example of our technical investment, [cough] Nineteen ninety one, we were round about a hundred and fifty million. This year, the plans for nineteen ninety three, ninety four are two hundred and fifty million. Reinvestment in er in new equipment and research and engineering development. An aerial view of the plant. [cough] When we came here in nineteen fifty six, this was the original building. And in fact it was an old woollen mill called the. From nineteen eighty one to eighty seven, we expanded into this. Erm it's a simple flow system, raw material comes in at one end and flows through the plant, through the machining areas, through the assembly, and the new product, the finished product comes out the end. The other building you see in the top left here is the Hilton. That's the present. Er a typical view down the assembly track or the beginning of the assembly track. You can see the engine block. Very little built on to it at that stage. And the main things that we point out there are we have a nice natural flow system. We have material feeding in from each particular station at the side. operator doesn't have a lot of movement, minimum movement. Erm there are twelve stations in that particular piece of assembly track. The track is continuously moving, and it pulses every ten point six minutes. So every ten point six minutes, another engine comes off the end. Er a view of part of the machine shop. Just showing the general layout and what we are trying to do in terms of housekeeping and cleanliness. Machine shops and engineering works tend to be regarded as very dirty filthy places. And I'm afraid the nineteen nineties, that's not the attitude we want to adopt. Er we pride ourselves on our housekeeping, it's a selling factor for us, and we have customers come round and look at the plant and they always commend us quite highly on our housekeeping. Again another general view of a machine shop. You can just imagine, this place is cutting cast iron and metal all day, every day. So it looks quite good. Er the finishing end of the assembly track, and you can see the engine is almost in a completed state. Sixteen stations on this piece of piece of track. Again pulsing at ten point six minutes. So again, a completed engine every ten minutes.... And just a wee Some of the achievements we've had in the last ten years. Eight occasions, we've won the Queen's award to industry. So we can't be doing too badly. Any questions gentlemen or
[speaker002:] Yes. Yo you mentioned the fact that you had increased your capacity, but decreased your your er employee
[A. Ritchie:] Yes.
[speaker002:] Erm in so that it's our fault really that we can't give work to our our er people. Is there no way you can adopt a a a more way to to utilize the men rather than.
[A. Ritchie:] There are There are various ways to that. Obviously it's quite an emotive subject when [cough] as you say you're reducing putting people out the door. Putting people out of work. The counter argument to that is, if you don't become more efficient, then you will lose the business anyway. And your competitor will take over. And all your people are out the door. So it's a cleft stick. And it's difficult, very difficult to strike the balance. Erm, what we have tried to do at, there are You've probably seen or heard in the last five or six years, the influence of Japanese technology. And you can't transpose totally Japanese technology into the Western hemisphere, but they have some good ideas. Er and and you have to pick the ideas that you think can apply to to your application. And we've adopted two or three of these. One is what they call, cising or continuous improvement. And as you continuously improve an area, the people that that frees up, the additional labour, go on to do additional improvement work. So you can still support those people, and still get the benefit. So you're still reducing the cost of the product all the time, er and you can still retain the people. Now there's obviously a saturation level. Where you have more people that what you have improvement work for them to do. Erm how far down the road that is, we don't know. But we've been honest with our people, we have not paid anyone off, in the fifteen years I've been at, that didn't want to go. It's all been voluntary redundancy or voluntary termination. But yes it's a very very difficult situation. It's survival on the one hand against moral issues on the other hand. Difficult.
[speaker004:] manufacturing cars you know, and it's all these robots they're doing all the work. Could the robots er take over er diesel engineering? Is it not a possibility?
[A. Ritchie:] Well there are some other slides I could have got which We have a conrod line which manufactures the conrod, right? And you can imagine the conrod in your car is about this size. Four of them in your One in each cylinder, goes up and down. The one in the diesel engines like this, you can hardly lift it. We have a conrod line that manufactures them. And in fact we manufacture conrods for other plants in the corporation. Er the cost is fourteen million pounds for that machining unit for conrods. And it's six cells of about five or six machines in each cell. And they are fed by a robot. Traditionally we had something like eight five, eighty seven people working in conrod manufacture, we now have fourteen operators, supported by six technicians. And the robots are doing that. So yes, we took on board robotic technology if you like, to reduce costs. In terms of engine assembly, no. Er that will always be done by hand. There are alw there are always applications that you cannot robotize. Erm and we pride ourselves on the skill and the quality that we build into the engine and you can't do that with robots. Robots' ll do whatever you ask them all the time, but they don't think. Erm and because of the way of things, you don't always get the components the same way every day. You always get one reject. So the robot would pick that and use it. Whereas the man will pick it and discard it. So... there are applications you can use them and some you can't.
[speaker005:] Your continuous improvement in in the factory a lot over the years. What is your relationship with the unions in the in the plant?
[A. Ritchie:] Erm initially, [LAUGHTER] initially very bad, I have to say that. As I say, it's a very emotive subject. But if you are honest and up front with them, and tell them exactly what you're doing and why you're trying to do it, eventually over time, you get them And we started this in nineteen eighty five, eighty six. And I would say, Now we are starting to see the fruits of that. And it's taken that length of time to break down the seventy or eighty year barriers that are in existence between workers and management. Erm and i think there will always be, for some time yet, a wee bit of distrust there, on both sides. Erm quite a lot you just have to be honest with people and tell I mean we've got It's unfortunate we can threaten people if you like, it's the wrong word to use. But you say to them, You know, look at, erm one week they announced, I can't remember the figures, twenty three million investment. Four months later they closed it just like that. again, they closed and then reopened. So there're examples in the area where if we don't pull our socks up and and actually start working, then it could happen to us as well. But no, it was very difficult at first. It's still difficult at times, erm there is nothing forced into them, it's all through mutual discussion. Erm there had been one or two occasions where we have to be the management if you like, and say, No I'm sorry, that is what we are doing. Erm we've had enough discussion, we now need to go that way. But those occasions are very few and far between now.
[speaker006:] , where does the material come from for?
[A. Ritchie:] For the the engines themselves? The componentry? Erm we produce about thirty percent in house. And that's from U K sources of raw material. Like castings. We do a lot of machining of castings. Er of the other seventy percent, er about twenty five percent of that will be from bought in finished material, from companies in the U K. Pardon me, one or two in Scotland but not too many unfortunately. The remaining forty five, fifty percent, is actually bought in from America. Remember we have got seven manufacturing site in the States that manufacture the same product for the American market. They therefore have bigger buying power, than one company in Scotland. So they can buy as seven companies at a much cheaper rate and ship it across to us, and the sea freight is still doesn't add to the cost that much. Er so unfortunately, fifty percent of material comes in from the States.
[speaker007:] How many of your What percentage of your staff on the shop floor are tradesmen?
[A. Ritchie:] Erm very few. We have most of our maintenance staff are time served fitters or electricians. In the actual machine shop and the assembly operators themselves. They are I would say, ninety percent semi- skilled. we have trained them in er in fact in the operations they're doing. You have to remember that was on old coal mining area. And again, I think one of the main reasons round about nineteen fifty six, that went there, was the pits were closing, and there was obviously erm government attractions to pull companies in. Much more then than there is now. So we have a lot of ex-miners. Erm... but I would say it's mostly maintenance trades. We have gone slightly the other way with obviously robotics and the electronic age and this sort of thing. A lot of our machine tools are C N C, so we need to employ the skills there. Erm but these are mostly technician people. I would say in the majority, it's semi-skilled.
[speaker007:] And a supplementary question going on from that. Do you employ apprentices?
[A. Ritchie:] Yes we do. Erm unfortunately not so many. We've taken apprentices every year since I've been there. Erm when i started fifteen years ago, it was an intake of about twenty five er lads at a time, we're now down to about unfortunately eight or nine craft apprentices. And I think about three technical apprentices. We have... erm... one female apprentice who's time was just out there last year. She's a maintenance technician, and she actually won the Scottish whatever it is, Apprentice Award. So we're quite proud of her, and she gets on great with the guys. And she's the only female on the floor. We have girls in the offices and women in the offices obviously, but she's the only tradesperson if you like, on the floor. But yeah, we're still taking them on but not in so many numbers.
[speaker008:] Alec, erm do you have er company comparisons. You've got seven or more plants in the States elsewhere er you know on criteria such as erm quality and productivity, cost and so on. If so, how do make out in the company league table?
[A. Ritchie:] Right. [LAUGHTER] We have, we started again, nineteen eighty nine, we decided taking on board some of the Japanese ideas which we felt we could use. And discarded the rest which we felt did not transpose. We erm developed what we call C P S. Which is the commons production system. To functional excellence. And there are ten measures within that production system. Erm and these measures are criteria for every plant worldwide. Now we have plants in India, Brazil erm we now have one in China, we were about to open one in Russia but it burned down. Part of the deal, I don't know if you tread about it in the paper. Six hundred and thirty million we lost. Erm and it's the same criteria worldwide. We have corporate headquarters obviously dictate policy. And you have to adjust that policy at local level. Because some of the ideas and and and beliefs in America for example, don't hold good up in. And vice versa. But the basic top level objective policy is set plan you know, worldwide for each plant. And against that, these ten measures are measured. erm in fact housekeeping in one of them would you believe. Housekeeping is one of the measures. Erm out of the ten, I would say, we have got about seven above target, and three below target. And the ones that are below target funnily enough, are productivity, which is still measured, and I don't agree with that. Productivity's an old fashioned measure. What you could actually measure is delivery to your customer. But we still measure productivity. Erm and we are slightly below target on that. We are above target in quality. We are above target in housekeeping. So in a sort of worldwide league table if you like, we're well above average. And you're right because these are the things that when when your vice president and you president come every year, as they do, on their annual visit, and they go to Gleneagles for their game of golf first. Erm... they are in the plant I don't know, maybe four hours or six hours. Two or three of those hours are spent reviewing the financial results. Obviously we still need to make money. That's why we're in business. The other two or three hours are on the floor. And it's that three hours that's the impression that they take away with them. That's the only chance you get in that one whole year, to impress these people. So when they're sitting in their corporate offices, making decisions about, Well where will we send the work. Well last time I was at it was dirty. Guys were hanging about, standing all over the place, not their backside. That's the impression they have of. And this is the m the message you have to get across to the people. And we are we are getting there. We're getting there. And one of the things we did this year for example. Which I find very difficult, is we actually went no smoking on the first of January. Erm and that was after we put out a referendum around the plant and we got a seventy eight response saying, No smoking. So there's a mass exodus to the car park now at lunchtime.
[speaker001:] [LAUGHTER]
[A. Ritchie:] Anything else?
[speaker009:] In the you mentioned smoking. What about the standards of lavatories and that?
[A. Ritchie:] I'm not sure I understand your question.
[speaker009:] Er are the toilets kept up to a high standard?
[A. Ritchie:] Well I'll let my son answer that, he's actually been in the plant a couple of times and What's your impression of the place?
[speaker010:] Er they're alright.
[speaker001:] [LAUGHTER]
[A. Ritchie:] Yes it's fine. I mean it's In actual fact the the number of people I've had in and One thing I should say, if you feel you would like a visit one evening, to the plant, then I'm more than welcome to try and organize something for you. But the number of people that I've had in erm both customers and visitors like yourselves, that have been so impressed by the standards of housekeeping and cleanliness and tidiness, for an engineering facility. Erm it really is quite outstanding. And we are not the best. There are people better.
[speaker001:] what about future development. Everything seems to be on a big scale, there's no question about scaling down?
[A. Ritchie:] Well in fact, what happened erm last year is we reduced the size of our machine shop. We lost twenty three thousand square feet last year. And this was mostly because of old machine tools being tossed away. Erm for example we have a flexible machining system of six machines that replaced forty two. So that obviously reduces your floor space. And what we are trying to do is attract other business into that floor space. Erm we started a contract a year and a half ago with M O D to produce a power pack for a fighting vehicle. Called the A S ninety fighting vehicle, built by ship building down at Barrow. We're doing a hundred and seventy nine of these for the British Army. A big big contract worth a lot of money. Erm there's a repair programme for South African Railways, to repair erm all their tractors, big things. Er again we're hoping to attract that in maybe next year. So no, we don't want to scale down. We want to increase, we want er we want to be at for as long as we can. Provide employment for as long as we can. For as many as we can.
[speaker001:] What about scaling down the engine size? What about getting into the car market
[A. Ritchie:] No. No it's we're not we're not in there's there are people who are more established at that Bill, better at it and longer at it than we are. We are high speed diesel manufacturers in the big range. In the range that you saw. Erm we we there's a company called. erm American company who have a big holding in Germany, who produce combine harvesters and this type of stuff, agricultural equipment. We got into a partnership with them to develop a small engine a couple of years ago, for their application. It was down round about the forty two, forty five horsepower mark. But no, we just we couldn't get the cost right. We just couldn't compete at that You need to produce thousands and thousands of these things, to get the economies of scale. And er we just couldn't do it. And we d actually from that. Okay, well.
[speaker001:] [recording ends]