Should You Outsource?
Outsourcing is an established model in hi tech sectors and there are plenty of fabricators and installers who ‘buy-in’ so why isn’t it more established in extrusion?
Apple is famous for the clean, minimal design of its products. It’s spent time and money carefully cultivating a premium brand image, selling at high margin and with low operating costs. And it leaves manufacture to big sub-contractors like Foxconn, which means it doesn’t have to spend what would run to billions on site, plant and logistics.
It’s also not in the business of hiring hourly staff – besides in its shop fronts. Dealing with thousands of staff in factories is a headache Apple avoids by using Foxconn.
Apple sticks to its strengths – effective brand building, exemplary customer service and cuts the investment needed to bring manufacturing engineers in-house. It sells millions of products each year without making one, itself.
So, what of our own industry? Clearly there are plenty of installation businesses who are no stranger to buying-in. Fabricators too, buy-in specialist products but outsourcing, although it exists, is far less prevalent in extrusion.
It’s there in building plastics and ancillary products but systems companies have been less willing to embrace an outsourcing model, so why, when it has potential to significantly reduce their own operating costs?
“While the margins have been there, there has recently been a reason for systems houses to look at alternative or hybrid systems of manufacture”, says Chris Byers, Managing Director, Euroseal. “What has become increasingly clear is that those margins have become increasingly eroded by increased material and energy costs.
“This is something also not helped by continuing uncertainty around Brexit and more difficult trading conditions – let’s not forget that most polymer used in the UK window system production is imported from the EU.
“There’s also pressure to invest. Window system extrusion has moved forward and that requires investment in lines and capacity. That means significant capital spend at a time when continuing market uncertainty makes investment in big ticket items far less appealing.”
This is exactly what’s driven investment in turnkey contract manufacturing in the tech sector. Apple avoids all of this by focusing on product marketing and sales. Foxconn delivers the product and takes care of manufacturing investment.
“It’s important to emphasize here that we’re not talking about offshoring of manufacture, although the industry imports its fair share of hardware and slabs from the Middle East”, says Byers. “It’s always an option for systems companies but the longer the supply chain, especially one stretched out over long geographical distances is always fraught with risk.”
He continues: “Outsourcing much closer to home eliminates those risks and supports a genuine partnership so that your outsourcing partner is really just an extension of your in-house operation.”
This is the rationale for outsourcing – risk elimination. Manufacturers may not acknowledge it every day but production is fraught with risk. The cost of controlling inventory, transportation costs, capital tie-up and salary overheads are all effectively side-stepped, allowing companies to focus on innovation. The key thing is trust, something which Apple has with its turnkey provider Foxconn.
Euroseal offers a complete extrusion service, from initial concept to delivery. This includes, design and CAD creation and manufacture of tooling, to extrusion, quality control, personalization and packaging, plus shipment either for own distribution or direct to customers. It also offers financial support to its customers to invest in tooling on larger volume runs.
With nine extrusion lines including five high capacity twin screw machines and four single screw machines, including co-extrusion, it also operates one of the UK’s most technically advanced extrusion facilities.
This gives it the capacity to extrude profile from 40g to 6kg per metre and 0.7mm to 10mm thick, to exacting tolerances, with twin screws running to more than 200kg per hour and manufacturing a diverse range of thermoplastic extrusions, including rigid profile and co-extrusions in PVC, wood composite, HDPE, Polystyrene, Polypropylene and ABS.
This includes construction products including curtain walling pressure plates, conservatory and window profiles, and cladding; and electrical extrusions; automotive profiles; hygienic wall and ceiling profiles and garden decking.
It is also one of the few UK specialist extruders to have partnered with UK window systems companies. It’s been successful in doing this because of the investment it has made in its own process controls and systems.
“We work to BSi Kitemark standards, providing a complete audit trail for every profile we extrude. This includes printing bar length every 0.5m with the date, time, the machine it was extruded on and by which operative – everything is auditable and transparent”, says Byers.
“This gives our customers full visibility of everything that we do, so much so, that we supply daily and weekly production data using the customers’ own documentation.”
Euroseal also reversion tests profiles, for example on window beads to a tolerance of 2% and has a freeze testing facility and shadowgraph overlay facility, which automatically checks dimensions of extruded profile against CAD drawings, guaranteeing accuracy of extrusion to minimum and maximum tolerances.
“Quality control is key – we have an LAB metre, which measures the exact colour of the extrusion against an agreed standard. We extrude to the exact standards set by our customers, operating inline with their controls and checks as an extension of their own operation.
“This means our customers can bring new product to market more quickly either by extruding it through us or by shifting-out part of their pre-existing production to us to release capacity on their own lines without major investment costs. This can often be on a sub-contract basis over an agreed period of time – it helps alleviate the pressure.
“The point is we take care of it. We do everything that they would do as part of their own extrusion and quality control process. It’s a genuine turnkey solution.”
For more information call 0121 344 4100 email sales@euroseal.co.uk or visit www.euroseal.co.uk.
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