From clay pipes to flowerpots
Naylor Industries has gone from the brink of ruin to £30m annual sales and recession-weathering performance by using design to diversify from clay pipes to flowerpots.
Some people are born to run the family business, while others have it thrust upon them. Edward Naylor fell into the second category when the untimely death of his father forced him to drop a career in the City to take the reins at clay pipe manufacturer Naylor Industries. ‘My employer gave me a sabbatical to allow me to work out what should be done with the business. 16 years on, I’m still trying to work it out!’ he jests.
He didn’t need his background as a chartered accountant to spot the firm was in trouble. While Naylor Industries had recently celebrated 100 years in business, there wasn’t much else to be cheerful about by 1993. Old, inefficient equipment, an outmoded product and pressure from cheap foreign imports were combining to paint a grim picture that will have many a British manufacturer wincing in recognition.
‘We were in dire straits. Sales were declining and we had a bad reputation for product quality. Also, clay as a drainage material was under siege from plastic and the market was shrinking. Clay pipes last much longer but plastic is cheaper and that was problem for us in key markets like construction, agriculture and utilities.'
‘We employed 375 people but our sales were only £13m. We needed better clay pipe products, more automation and new income streams,’ recalls Naylor.
A decade of heavy investment followed, with the business ploughing £18m into new plant, equipment and IT at its Barnsley HQ and three other plants in Yorkshire, Scotland and the West Midlands. There was diversification too. Naylor Plastics was set up to meet the increasing demand for plastic pipes, while Naylor Concrete Products was developed as a supplier of lintels to the construction industry. Naylor had also begun experimenting with the manufacture of flowerpots in an attempt to use spare capacity within its clay business.
By 2005 the business was back on an even keel, but still something was missing. Naylor says: ‘We lacked sparkle and self-confidence. We were competing against big corporates but we saw ourselves as second fiddle. We didn’t have an over-arching message. Marketing was home-grown and we made it up as went along – a cheap brochure was a good brochure and there was no coherent view of what we stood for. While our quality was much improved, we had to get to grips with our image.’
Just as the business started to grapple with the problem, trade body the Ceramic Industry Forum invited it to take part in Designing Demand, a support programme developed by the Design Council to help firms use design to boost competitiveness. ‘It seemed like a good time for us to do it,’ says Naylor.
The programme started with a visit from a team of design and business experts, who scrutinised the business in depth, looking for ways to improve key areas such as strategy, products, processes and branding. ‘It was a wake-up call,’ says Naylor. ‘Three leading designers pull your business to bits and they’re brutally frank. They saw a lot they didn’t like and we had to be pretty thick-skinned.’
Among the things the Designing Demand team didn’t like, says its leader, Jonathan Ball, were the lack of a systematic product development process and the absence of a coherent brand: ‘New ideas came from all over the business, but they weren’t being managed. And we felt they were missing an opportunity by not having a strategic approach to branding across the business, particularly with the flower pots.’
Naylor accepts the criticism. ‘Our product development was ad hoc. We would often make something simply because I would come in one day with an idea.’ Yorkshire Flowerpots became the focus for tackling the issues head-on. ‘That part of the business was particularly interesting because it’s a consumer product. We were basically engineers making functional products – if it did the job well, it was a good product. But there’s more to making pots than asking whether they do a good job. We had the germ of an idea but we didn’t know how to turn it into something commercially successful,’ says Naylor.
People close to the business weren’t slow to urge caution, says Naylor: ‘They said we were bonkers because imported product from countries such as China and Vietnam costs pennies and we could never compete on cost. But we had good technology, automation and kilns and we felt we could compete on quality, if only we could get the brand right.’
The first step was a brand audit. ‘We did that to understand what we had and what we stood for. It showed there were key strengths we could be exploiting better, like the fact that the products are frost proof, high quality and made in Yorkshire.’ To this day, the brand audit is a key tool in briefing designers about what Naylor stands for.
To inject innovation into the emerging Yorkshire Flowerpots brand, with help from Designing Demand the business formed a relationship with Staffordshire University, which sees final year design students working with Naylor’s manufacturing and production experts on concepts for new ranges. Naylor explains: ‘It’s been great to bring an external influence into the business. But we have to strike a careful balance between watching industry trends and being innovative on the one hand and bearing in mind that the brand audit made a lot of us being traditional and enduring. At the big trade shows, the first thing everyone asks is “what’s new?”, but at the same time the timeless classics retain their popularity.’
Naylor has also invested in exhibition stands, a dedicated Yorkshire Flowerpots website and point of sale displays, which work in tandem with PR to target both trade and consumer audiences. ‘We’ve got a story to tell about British-made quality, and without the marketing activity you lose control of that story once the product leaves your factory gates. These marketing materials mean we can tell it in our own words.’
Yorkshire Flowerpots has certainly felt the benefits of design input. Sales have risen from £500,000 in 2005 to £6m in 2008-09, with the business supplementing its own range with imported products to cover a range of price points. Customers include the Royal Horticultural Society’s garden centre at Wisley. ‘It’s nice that a recent presentation at a major trade show credited us with bringing branding to an unbranded sector,’ says Naylor.
Innovation has rippled out through the rest of the business. It’s telling that over half Naylor’s sales come from products the business wasn’t making five years ago. While Naylor used to just offer two ranges of clay pipes, it now has a 34-strong product range. The Hatherware pipe, for instance, uses porcelain grade clay to stand up to heat and chemicals that would melt or dissolve plastic pipes. Orders have come from as far afield as New Zealand, where a local authority is using them for a new sewage system because they are the only pipe capable of long-term resistance to the area’s subterranean hot springs.
The process behind these new products is much more structured than before, says Naylor: ‘It used to be very unsystematic, but now we’re much more careful in making sure we have a full business case for developing a new product. We’re not just drifting into developing products.’
Increased innovation means increased ability to cope in the downturn, he adds: ‘It’s certainly helping us at the moment. Some of our competitors have seen their turnover fall by as much as 30 or 40 per cent but we are tracking last year’s figures.’ The increased innovation has also allowed Naylor to receive external recognition- the company was recognised as Best SME 2008 in the prestigious ImechE Manufacturing Excellence Awards.
Naylor’s design investment, which Edward Naylor estimates in the ‘tens of thousands’ has been comparatively small, he says, while the payback has been ‘spectacular’. ‘If a designer effectively re-presents your business, you’re spending a fraction of what you’d spend on, say, a management consultant. A consultant may or may not diagnose an issue in the business, but the design professional will do that and add some positive value too,’ says Naylor. Any business looking to replicate Naylor’s success needs to be prepared to invest time as well as money, he adds: ‘If you’re going to do this properly you have to dedicate senior management time. My main message would be that you get out what you put in.’
The change that began with the Designing Demand programme means Naylor is a keen advocate for design: ‘Design is not just about aesthetics. It’s the creative process within the business. Design is fundamental, creating brands, products and an environment for businesses to move forward, not just sit back and wait to be attacked by cheaper competition.
‘In traditional manufacturing businesses, design is often seen as irrelevant, but our experience is different. Any business, however purely functional its product appears to be, can win by using design.’