When the two fathers of Chris Emes and Andrew Riley handed over the reins of their Black Country engineering company in the late 1980s, they may not have predicted that the two sons would make Mechatherm into one of the UK’s most successful, medium-sized exporters.
Since 1990, exports have averaged 85 per cent of turnover. Lately – and it’s an achievement that won the company a Queen’s Award for Enterprise for international trade in 2014 – export sales accounted for a remarkable 99 per cent.
The company designs and supplies equipment such as furnaces and casting machines mainly for the aluminium industry. It’s a world leader in the increasingly important business of aluminium recycling and re-melting.
“In our particular industry, you have to be in front of clients,” says managing director Chris Emes. “You have to get on planes, visit customers, learn customs and local business practices.”
Mechatherm has built up an impressive roster of customers in India, Russia and the Middle East. And it is constantly breaking into new markets. In the past couple of years, it has won a massive order in Germany for the first time to supply six furnaces to the biggest recycling plant in Europe.
The German contract “was a tremendous feather in our cap,” says managing director Chris Emes. “We hadn’t sold a nut or a bolt in Germany before because the local competition is very strong.” It also won its first contracts in Latin America (Venezuela), the USA and a huge project in Taiwan. One key market that Emes identifies for future growth is rapidly industrialising Indonesia.
Global view, global assistance
Emes is a big fan of UKTI, which has assisted Mechatherm with market research and grants for attending trade exhibitions and trade missions. “They are really good at setting up meetings for you on a trade mission; they can bring in your contacts plus other people that they suggest.
“If there’s one thing I tell any business that is thinking about exporting, it’s that the first thing they should do is talk to UKTI.”
And Emes and his colleagues continue to learn from UKTI about international business, such as currency exchange mechanisms. Its contracts are becoming larger, more complex and have to be priced and sold on a multi-currency basis. “We have had to arrange deals that were part-dirham, part-euro and part-sterling, multi-currency deals. We need to be very adept on how we quote and estimate our costs.”
In recent years, Mechatherm has also used UK Export Finance. In the wake of the financial crisis, the banks were reluctant to help Mechatherm’s expansion plans. One big issue was the provision of so-called performance bonds, where customers can ask for a bond equivalent to ten per cent of the fee – which must be payable on demand.
“We have very few assets so we had no security, except cash, to put up to the banks for these bonds,” explains Emes, “but we needed the cash for the business. UK Export Finance, together with the banks, were able to underwrite those bonds and free up our cash.
International, and proudly local
But Mechatherm is not just an international business; it is also a proudly local one. The company takes on a steady flow of apprentices. It works closely with universities and FE colleges. Their first experience was ten years ago, when a software project conducted with a graduate from Birmingham City University (BCU) “transformed” a part of the business, according to Mechatherm’s chairman Andrew Riley.
Since then, under the auspices of the Knowledge Transfer Partnership (KTP), Mechatherm has continued to collaborate with BCU and Dudley College. At present it is working with Wolverhampton University in an aim to become the first company in its sector to achieve the cyber-security standard ISO27000. “We want to demonstrate to our clients that we can protect their data,” Riley explains.
“We’re firm believers in training up our own people,” says Riley. “The KTPs enable us to gain the knowledge and skills of the universities to assist us with engineering and systems design.”
And it helps Mechatherm’s desire to have a good, home-grown graduate recruitment scheme: “we get to look at a graduate on a fixed term contract; if we like them and they like us, we can give them a job – and our recruitment costs have been minimised,” Riley explains.
Planning for the future
Both Emes and Riley are in their mid-fifties, so succession is now being planned. As their own children are unlikely to follow in their fathers’ footsteps and join the company, the pair decided to sign Mechatherm onto the Growth Accelerator programme.
“This is a good, profitable company with plenty of potential,” says Riley, “so we want to train up the next generation of managers. Growth Accelerator fitted the bill nicely.
“We have had the four directors and 12 managers on the programme and there will be spin-off training for other members of staff in the future. It’s all going in the right direction.”
Knowledge Transfer Partnerships support businesses that want to improve their competitiveness, productivity and performance by accessing knowledge and expertise available within universities and colleges.
The Business Growth Service is now closed to new customers. Contractual commitments to existing customers will be honoured, as long as all support and related activity is completed by 31 March 2016. If you’re looking to find what business support is available in your area, your local Growth Hub may be able to help.