Exec Digital speaks to Business Development Executive Geoff Gamage and General Manager Charlie Warner to find out how Maxell Europe is driving the firm’s diversification beyond its traditional media products
By James Hurley
In 1984, Maxell established facilities in Telford specifically to manufacture video cassettes for the merging market followed 4 years later by a further expansion of the facility to manufacture both audio cassettes and floppy discs.
As media steadily migrated to digital formats, and low cost manufacturing became an increasingly viable option, the company moved some of its manufacturing operations for new products abroad. Products then began to come over from the Far East in bulk, leaving the Telford operation to simply load magnetic materials, print and package them.
This left a fairly sophisticated manufacturing operation facing a crisis. To take advantage of this capacity, the company now operates an extensive OEM moulding shop that offers a precision injection moulding, as well as an assembly and packaging service, to the automotive, pest control and health-care industries.
Catalyst for change
Maxell’s plant in Telford was purpose built for the manufacture of VHS video cassettes in 1984. To take advantage of tariffs set up by the EU to reduce imports from the Far East, the company went through a period of ramping up its UK capacity, and, four years later, a significant extension was completed which allowed the facility to manufacture the other main magnetic tape products, floppy disks and audio cassettes.
“Those three principle products were the backbone of the company approaching the new millennium,” remembers Charlie Warner, who has been with the company since 1983. “As time moved on, technologies changed and cost has been driven out of the product to the extent that it became profitable to outsource the manufacture of the raw components to the Far East.
We quickly realised that was going to leave us with a large number of injection moulding machines that would be redundant unless we found a new use for them.
“With the decline in our traditional product, we began to realise that the skills, technology and machinery that we had in house could be put to better use. At the same time, it was considered unlikely that our European base would be used for any new products because of the cost benefits of low cost manufacturing bases in the Far East. Our future was very uncertain.”
This, says Warner, left the company looking for a catalyst for change. “An opportunity arose in 1998 via one of our partners who supplied the metal components that were used in our cassettes. They were also doing work for the Rover group, and they asked us if we could over-mould a car horn button. We proved we could do this competitively and to a high standard, and that was a turning point.”
OEM work
While the core operations of the company remain focused on its own branded products, the balance in Telford did begin to gradually shift towards winning third party injection moulding and packaging contracts. By the year 2000, when Maxell had accepted more OEM work and was seeing that its existing magnetic tape products were certain to disappear, it rebranded itself as MMS (Maxell Moulded Services). “Now everything we manufacture in this division is OEM. Our customers are placed in a variety of industry sectors, primarily in the automotive, pest control and medical sectors.”
While manufacturing for the medical sector currently represents only a minority of its activities, the company is hoping to see expansion here shortly, thanks to another outmoded media. “We used to produce mini-discs, which required a sterile environment. This means we have two clean rooms, which is a facility you won’t find in every manufacturing area,” says Gamage.
Eastern influence
Maxell is 51 percent owned by the Japanese battery and multi-media giant Hitachi. While it has clearly been all change at the facilities in Telford in recent years, the company has retained something of the culture the Japanese ownership inspired. “Work practices utilised during the exclusive manufacturing of Maxell products have certainly carried on into our third party work,” says Business Development Executive Geoff Gamage. “We pride ourselves on following the manual to the letter.
There are no corners cut. We’re offering added value in terms of service and we’re finding that a lot of the business that was in danger of being moved over to Eastern Europe or the Far East is now starting to drift back. A lot of our potential customers are waking up to the fact that cheapest isn’t always best. Using a ‘local’ company means that they can manage their products more efficiently. They know they will have to pay a few pence more per piece, but at least they know will get a quality service that they can manage better. There’s a lot to be positive about. From here, we even export products to the Czech Republic and the Far East.”
Warner agrees, recalling his early years with the company working along side other new members of the organisation who were sent to Japan for training for periods of up to three months returning with a completely fresh outlook. “Coming from a typically British industrial environment, it was a complete eye opener. Even back in 1983, the world wasn’t quite so open and transparent as it is today, and it was quite obvious that the culture in the Far East was focused in a different way. I felt that in Japan, engineering and technology was supported by the government and the society.
The cultural effects of this training remain with me, and others, who were fortunate to have such an experience. Today, we’re aiming to offer our customers high quality parts at competitive prices, but also with excellent customer service.”
Existing capabilities
While Japanese owned companies are famed for their technological and manufacturing excellence, the ingenuity of the reinvention of the facility in Telford is that, for the most part, it has required very little capital investment in the facilities. “Where we can, we try and attract business that we can utilise our existing plant and facilities. We’ve got a number of highly skilled engineers here and they have been able to design and construct new machinery from what once was redundant equipment,” explains Charlie Warner.
“Where we have gained new business - particularly in the automotive sector -we have invested in equipment to fulfil demand. But we want to cement our relationships, and we’re very cautious about making long term investments.”
Geoff Gamage describes it as a “chicken and egg situation”. “If we get the opportunity to take on a new contract we will look at the commitment from both sides. If there’s sufficient margin to invest in any new equipment that might be needed, we’ll look at it on a case by case basis.”
Alongside Maxell Europe’s MMS operations in Telford, the company has launched a packaging division, which was named Maxell Packaging Services (MPS) last year. “We shouldn’t forget that our mainstream products are still a big part of our business here. With MPS, we’ve been able to utilise the skills and machinery that we had used in video packaging for our OEM customers. It’s very important for us to grow that facility as well.
Through use of the clean rooms, we’re also looking to develop a packaging service for the food, medical and pharmaceutical industries. The brand Maxell is still very important to this particular site and a lot of what we do is still for Maxell branded products from the re-pack point of view. Our new services simply run alongside that. We’ve also been able to offer our abilities to outside companies during times of additional demand.”
While traditional business still represents approximately 80 percent of the operations in Telford, it has been a time of remarkable reinvention in Telford, and the development of the operations over the coming years are likely to be intriguing.
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