Not many small engineering companies have trebled in size over the past eight years. Constant planning and a commitment to apprentices have been central to the success of Norwich-based Milltech. Managing Director Mike Ottolangui tells the story.
The company started with one machine in 1993. We bought it when it had 12 employees and about £1m in sales. The founder had taken it as far as he could. He had done a fine job getting it to that point but it was still a bit of a “Fred in the shed” operation. There wasn’t a single computer in the business.
Darren and I remortgaged our houses to buy the company in 2004. Since then, it has more than trebled in size, and we have paid off the debt and the business generates cash.
When we did the deal, we identified oil and gas as the main industry to focus on. We thought it would be recession-proof – and it nearly was! We decided to stay away from sectors that could be vulnerable from lower-cost competitors in emerging economies. We wanted to service small-volume orders in highly technical industries.
Milltech is a specialist machining and sub-assembly/assembly sub-contractor. We make oil and gas valves, and hydraulic valves and manifolds for companies across the broad energy sector – from oil and gas to renewables to fracking. Right now, we are seeing growth coming from large corporations refurbishing their North Sea equipment.
We have got a really good fix on what is happening in the business. We had an aggressive business plan and got there in four years. We update our three-year plan every year. Planning is really important. You have to think ahead. For example, when the recession hit we built an extension to the building. So when the recession was over, we were ready to go and we didn’t lose any people.
Every year, we document everything that we have achieved over the past 12 months. Once you put those things down on paper, it reminds you of all the positive things you are doing in the business and makes you feel much more confident that you can achieve your next set of goals.
Our margins are good; that’s because we are innovative, not just technically but in our working practices. Many companies in our line of business will have one man per machine – and that man will stay all day with that machine. We have more machines than men. The guys are a team, so they may run two or three machines. We operate flexible working hours; this is more convenient for the machinists and it also means that we can stretch our working day without increasing our headcount.
Both Darren and I are apprentice-trained engineers. We both served good solid apprenticeships, so we are passionate about providing them here. We do it because we care.
We have engaged with a local comprehensive – Sprowston High School – who are really supportive. It seems to us that industry is still not being promoted as a career in schools. Very few careers teachers push youngsters towards industry. However, the Formula One in Schools project has been absolutely fantastic. (There’s one disappointment: we get young lads who want to learn the technical and machining skills but we don’t get girls applying.)
We have four apprentices at the moment, and another two have just qualified. In all, 14 members of the workforce have been trained, or have been apprentices, in the business. Of course, there’s a lead time involved with training youngsters – the apprenticeship takes about five years. But now some of our earlier apprentices are part of the management team, which is very rewarding. That also means there is a strong Milltech culture.
All the apprentices start with an equal standing but you can quickly see where they will end up. We have got some very good craftsmen, another is showing great leadership potential. Some will just want to be skilled people on the factory floor, while others want to make the move to management. There will always be superstars and midfielders – you need the mix.
We do all this off our own bat, because we recognise that the lack of skills is the biggest barrier to our growth. However, this shortage forces us to be innovative and to invest in people and manufacturing technologies.
There is a lot of growth out there. We have only scratched the surface of UK demand. We have been successful so far but we’re never satisfied; we’re both engineers, so we always think that we can do a better job.
You can find out much more about finding and hiring apprentices, as well as the employment grants that are available at www.gov.uk.