When you are one of the world’s best known brands in boating, its tough to stay at the front of the game. Lewmar is a leisure marine equipment supplier that designs, manufactures and distributes a wide range of products, including anchors, winches, windlasses, hatches, hardware, rigging, steering and thrusters.
The financial wall was their closest neighbour all but a few years ago, even before the GFC. But now there has been a dramatic turn around.
What’s most incredible about Lewmar is that they have resisted the trend to send all their manufacturing offshore and that they continue to make the vast majority of their products in the UK.
The turn around is not only remarkable, it is commensurate with the brand’s long-standing reputation for products that hang on and don’t give in.
Certainly many industry commentators felt Lewmar would not be able to survive the GFC and the downturn in boat building that came from the crisis. This may very well have proven to be the outcome for Lewmar had the company followed its existing path. However there was one significant change.
Peter Tierney - .. .
One of the major stakeholders in the company, as it was, installed Peter Tierney as the new CEO and he set about deploying his 20 years of experience as a Corporate Doctor to turn the company and the iconic brand around – quickly!
The company had been in existence since 1950, when it started as an anchor and winch manufacturer. In the ensuing decades its product line and distribution grew as the word got out and several ownership changes also occurred. Lewmar became a publicly listed company in the 1980's when it floated on the London Stock Exchange.
From 2000 onwards, the company embarked on a series of acquisitions. First was Simpson-Lawrence anchoring, electrical and plumbing which merged with Lewmar, then Whitlock, the world's leading steering systems company was acquired, followed by Titan, the leading manufacturer of winch handles.
In the end the company was labouring under its group structure with five or six autonomous operating businesses. One was in Australia, two were in France, one in the UK, one in the USA and one in Holland. All of these companies had Managing Directors, inventory and full support structures within themselves, and then on top was the corporate headquarters in the UK. Profits were skinny and we had entities and operations around the globe. As the boom times began to fade, a crisis loomed.
As Peter Tierney says, ‘We inherited a company that was set up as a group structure. However, the reality was, it wasn’t a large corporate entity; it was actually a relatively small company. We turned the company upside down and into a single company again.’
Actually the company was delisted and rationalised most of the overseas operations turning them exclusively into sales offices, with the exception of the South of France and the East coast of the United States.
‘Essentially we have a single management team. It’s a small management team and we run it as a single company out of the UK. When we arrived, we were a business turning over 60 million pounds, but making significant losses. If you move the clock forward to now, we have a headcount of about 270 people and revenues of about 45 million pounds annually. We have gone from a company that was very unhealthy and making significant losses to a smaller company that is a profitable, on-going business and doing well’, Peter explained.
Peter talks a lot about 'we', when he mentions the business and the reason for this is simple. He means the collective and not just him. Peter is in his mid-forties and is a mechanical engineer by profession. He added an MBA to that and has been with GE, Scotland’s oil and gas sector and part-owned and ran a large Canadian helicopter maintenance business, which was sold just prior to Peter taking the helm at Lewmar.
This last business has significant parallels with his new one, when you consider the engineering specifications, costs, inventory and safety aspects the two sectors share.
The other two members of the senior management trio are the Financial Director, Phil Castell and the Marketing and Sales Director, Matt Johnston. Together with a single new largest shareholder, they have control of the business.
What they have, now that the worst of the GFC is behind, is a strong company ready to take on the new challenges. As it turns out all the key players in their market sector survived, so it is important to be fit and healthy and as Peter explains, ‘There is no question that there is not as many boats being built and that the market is smaller.
‘We have ended up in a situation with the same number of players fighting for a much smaller pie. To operate profitably best use of materials, improved processes and better design are needed to reduce costs, all the while improving quality.’
A lot of management time has been freed up with all of this restructuring. ‘We are working on the fundamentals in this business and the fundamentals in this business are going to be customer service and quality.
‘We have a significant focus on product development because this is the lifeblood of our future. I still see us fundamentally as an engineering company. If you were to walk about this facility, actually go down onto the shop floor, you will see that we are fabricating, bending, heat treating and machining, right here’ said Peter.
‘As we have become progressively healthier, we have re-invigorated the business and re-invested our own cash into our future. We have started to inject time, money and effort into the important areas of the business and we are doing well. All our costs and debts are covered. The bad days are behind us.’
‘On the whole, I think we have built really good products and some, an example would be our winches, have an outstanding record. We have a seven-year warranty on our winches. It isn’t there because of some maverick marketing strategy, we put it on it because so many people run really old boats with our winches onboard which have never broken down nor been serviced’, Peter enthused.
‘Lewmar’s quality, process, production and receipt of goods control systems would certainly support that premise. In the last year Lewmar have signed a significant number of contracts with some of the big OEM boat builders, who have a very rigorous process of reviewing and evaluating a product supplier against the others.
They come in here with an army of auditors and specialists and they measure it, weigh it, count it, test it, try it, put it through the rigours for about two months and then they eventually get to the point where they say, yes, we are going to put this on the boat.
This is a regular set of tests that these products have gone through and shone, to the point where the boat builders would not sign the contract and put it on their boats, if they weren’t happy. They have made a decision that says we are going to go with Lewmar, we know who they are.’
Lewmar’s own internal Quality Department has a new Head and they will maintain vigilance over any outside work, to ensure the overall standards are maintained.
Historically Lewmar probably had an engineering group of maybe five or six individuals, who were actually sitting doing the development and drafting.
That is now up to about 12 or 13 people, as they build on their experience and skills base. ‘Our strategy is to take each one of our platforms forward, so we are looking at developments’ Peter commented.
‘Cost containment is huge within our sector, probably intensified in recent times, but our focus is on maintaining quality.
As part of our drive forward we have intentionally employed some engineers who are fresh from their degrees. They bring intensity, a youthful impetus and excitement with their new design dimension to the organisation.
Previously this did not exist because we were seen as a 50-something company, maybe even 60-something, in terms of our stale attitude. We probably weren’t seen as particularly cool’, Peter comments frankly.
‘So we have been bringing on our youth and balancing it with experience. There is a real buzz within this organisation about creating that single company where there is one chief executive, one finance guy, one sales guy, and one engineering guy.
We have brought a cohesive buzz to the organisation and we have a great sense of pride that we have saved the organization, restructured it and started to generate enough cash that we can inject money into our product development for next year and the year after.’
Lewmar has also put a huge amount of effort into production control and planning.
New skills and systems have been added to ensure their performance continues to improve along with the market climate. In terms of where Peter would like to see Lewmar in a couple of years, he says, ‘I want us to be more efficient terms of delivery. This is an inventory intense business where we have a catalogue and lead times. We have a huge amount of aftermarket clients who would like ten of some item today, because they put in an order for ten of them today. The science behind our inventory management and inventory forecasting is a huge issue.’
As a result of the restructuring programs, reinvigorating the esprit de corps and reinvesting in new R&D, there are new products being revealed at the 2010 METS event, which bare testament to this.
See this link HERE for more information.
There’ll be more on how Lewmar has regrouped and reinvigorated itself in Part II. www.lewmar.com