The 600 Group plc has released details of its recent significant restructuring and new product supply arrangements. It is the UK’s largest machine tool company operating from a number of locations worldwide and sells its products into more than 180 countries.
Transformational change needed
David Norman, CEO of The 600 Group plc, said: “At the time of my appointment in August, it was clear that both the cost infrastructure of the Group and the machine tools’ supply chain were in need of urgent attention. Considerable action has subsequently been taken and continues to be required to effect transformational change within the Group’s operations, whilst concurrently taking additional defensive actions in light of depressed market conditions. We have also moved to a simpler business model which supports our commitment to manufacturing and supplying high quality customer focused products.”
A significant feature of the Group’s strategy was the outsourcing of a large part of production and supply from China. Regrettably, the levels of quality originally envisaged were not achieved and, despite a major effort by the engineering and quality teams, the result was an unacceptable level of warranty claims. Under these circumstances the supply chain was re-engineered and new outsourcing arrangements were put in place, resulting in a return to historic levels of product quality.
Additionally, significant investment is being made in the manufacture of workholding equipment and machine components, with a state of the art machine shop in Heckmondwike, which is now one of the largest of its kind in the UK. This focus on the development of the Group’s UK manufacturing base is likely to continue.
Simpler Business Model
The Group is moving to a simpler business model eliminating duplication and ensuring more consistency for customers. Product sourcing is now under the control of a single product management team, working on behalf of the entire Group. Sales and marketing effort will now be directed towards 600 Group brands, including Colchester-Harrison, Electrox, Pratt Burnerd and Gamet Bearings. The Group will continue to sell a limited number of other products complementary to these core ranges.
Principally, target markets will continue to be Europe and North America, where back office and logistics functions will be further centralised under two strong continental organisations The Group’s other activities are centred on Australia, Africa, the Middle East and the Indian subcontinent, utilising the Group’s wholly owned subsidiary companies servicing these territories.
David concluded: “Major restructuring and significant cost reductions have been necessary to ensure that 600 Group is in the right shape to weather the current market and has a strong platform from which to grow the business.
We will increasingly be going to market as a group rather than a collection of companies. Central product management will control the Group’s marketing strategy to achieve maximum leverage of Group brands. The associated sales volume benefits will drive our outsourcing arrangements in addition to strengthening our manufacturing base in our three UK locations, Heckmondwike, West Yorkshire, Colchester, Essex and Letchworth, Hertfordshire. There is still a great deal of work to do but I believe that the Group will soon be in a position to take advantage of any recovery as well as opportunities which may arise from the global downturn.”