| 14 July 2010 | |
INTERVIEW: Mike Conlon |
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Twyford managing director Mike Conlon has just made one of the toughest decisions he will face as boss - to start consultations on closing the historic Alsager factory, potentially ending hundreds of years of production in the Potteries. Andrew Davies went to meet him...
Back in the summer of 2007, Twyford Bathrooms' then sales and marketing director Mike Conlon was handed a unique opportunity to head up the company he had joined a few years earlier in 2001.
Managing director Alan Brown was being promoted to a senior position at parent company Sanitec, opening the door for Conlon to take over the reins of a well-known and powerful brand at the peak of a bustling market.
"I am very excited about my new role," read the official statement at the time of the handover. "It is a thrilling time for Twyford Bathrooms as we continue to grow our market share in both the UK and Ireland as well as overseas."
But his enthusiasm may have been a little premature as just months after his appointment the thrill was gone and the global economy took a sudden and ultimately catastrophic downturn. This led to Sanitec needing a full refinancing package in 2009 and with the collapse of the UK house-building sector, one of Twyford's biggest customers, the company had to examine its own structure closely to manage costs - "a real baptism of fire", Conlon now describes it.
That process has now unavoidably led to one conclusion and at the end of May Twyford announced that it was entering consultation on the closure of its historic Alsager factory in the Potteries. Already significantly downsized in 2007, Conlon says that, put simply, manufacturing in the UK simply isn't viable anymore thanks to European market pressure.
However, if the final decision is taken to close, and it's hard to see what will prevent it, it will end a legacy in the region started up by Joshua Twyford in 1680...
Q What's the wider background leading up to the Alsager decision?
A It's driven purely by the economicic environment. If you take 2007 as a starting point, the European market has dropped 19% in terms of volume, and Sanitec is a big European player. The decline that the UK market has had is well documented and therefore we had to review the capacity within the group - the reality is that since we downsized the factory in 2007, it's running at about 50%. And what we make in the UK is 12% of what we sell in the UK.Since Twyford joined Sanitec [in January 2001], we've looked at the maximum efficiencies we can get from utilising the supply network. We design products for the European market that conform to British standards and requirements but we can make them in a number of different places. So if you look at the economics, and the long-term forecast of the products that are made in Alsager and what the market is likely to require going forward, you end up a the point we're at, which is starting consultation [on the closure].
Q Economics aside, it's a very difficult decision to have to face closing such an historic site?
A It's clearly a very sad and hugely regrettable day, and that certainly isn't rhetoric. The guys on the shopfloor and the operations and manufacturing management have worked wonders to get the efficiency to the point where it is, so it's not a reflection on them, but it is a huge consequence for them. We've been manufacturing on that site since 1959 and, if you go back to the very beginning, nearly 300 years in the region altogether.
Q Why is it not an option to invest and make it as viable as Sanitec sites elsewhere in Europe?
A We have invested heavily in the past, in terms of automation and when we downsized in 2007 we spent millions moving a kiln from the part of the factory that was going to be closed to increase efficiencies. But when you've got a high fixed cost base, you have to analyse that cost over the number of pieces you can put through the factory.Factories can manufacture various types of products, but even if we fully loaded Alsager to 100% production it's still not economically viable.Obviously we're in consultations with the unions and we'll take on any suggestions they have and review the situation, so it's not a foregone conclusion, but we're pretty much at a point where we can't see a viable economic alternative [to closure].Alsager is set up to make 550,000 pieces a year so it's not a big factory compared with those around Europe which can make two, three or four million pieces. The overheads you need to make that much more product is not exponential, so you get to a point where greater efficiencies and greater size pass on the benefits that the market demands.
Q It's just the factory that may close, not the head office, so if customers won't notice any immediate difference, do they care where products are made?
A I think customers are very keen on quality, support and investment in terms of brand and their business. Over the past five or 10 years, they have become far more globalised in their view, and quite rightly so. If you can buy British-made products then maybe that is a decision-making criteria, but I would suspect that it's not, or certainly not as much as it was. So provided you can give them the quality, the assurance, the supply and the service level that they need, I think they all accept that it's a global market.
Q What does this mean for Twyford as a brand?
A You have to divorce the decision about Alsager with Twyford the brand, as this is not a reflection on the UK business. It's a tough market without doubt, but the business continues to grow. We've got some very exciting investments planned in new products and what we're doing with the brand. Some of the products we've brought to market have been revolutionary - we were the first to bring rimless product to the commercial market and there are possibilities of bringing that to the domestic environment. In water saving, we were the first to launch four and two litre flushing, and we've got new designs coming into retail and commercial. So the continued focus is on the consumer and commercial market while continuing to cement relationships with core markets like housebuilding and general merchants.So the commercial side has lots of strengths, opportunities and plans. Sadly the manufacturing element, which happens to be on the same site, is now in question. But the head office, logistics, supply chain and warehousing all remain in the same place.
Q You became managing director a couple of years ago, you really picked your moment...
A Yes (laughs), in the past couple of hundred years I don't think you could've picked a worse one. I took over in the summer and then a couple of months later came the worst recession in a generation. I don't think the two are linked.It's a huge learning curve that you need to pick up really quickly. Perversely enough, coming from a mostly sales and marketing background, I think that by default you ensure the companyfocuses on the customers and the market and don't retrench into internalisation. But yes, a real baptism of fire.
Q What lessons have you learnt?
A As an organisation, we were very successful and profitable because we focused on core market sectors, and we had great relationships and those areas were growing. But, in hindsight, should we have looked into the consumer RMI market earlier? The answer is probably yes, but hindsight's great, isn't it? The lesson is that you can always learn and ensure you continue to have one eye on the future as well as reaping rewards of the present.
Q Does the retail sector only see Twyford as a commercial product?
A A lot of the strength of the business has built up with project work and, by definition, over the past 20 or 30 years that's been schools, hospitals and other high-traffic areas. The two biggest house builders in the country use us as their biggest supplier, so that's a lot of Twyford product in people's houses.The challenge is to move it to the next stage where consumers choose Twyford when they're refurbishing. Do I see Twyford moving to the top end of the market? I don't think we should try to be things we're not. But is it a consumer brand? Yes, people have been buying Twyford for generations.




