Innovative New Business Model Drives Growth and Prosperity
Square One Law talks to Brian Palmer about the challenges of growing Tharsus.
The Blyth-based Tharsus Group has certainly come a long way in the last 16 years with Brian Palmer at the helm. It started life as a conventional “metal bashing” company, then diversified into various market sectors, acquiring businesses along the way and now its main area for future growth is specialising in a new business model known as Original Equipment Design and Manufacture (OEDM).
The Tharsus Group was formed last year and consists of three companies – Tharsus Direct (supplying cable management systems), Tharsus Vision (provides cost effective and innovative advertising display solutions) and Tharsus Engineering Limited (specialises in OEDM). It has an impressive list of facts and figures that clearly endorses the success of its development and growth.
- 42% turnover in exports and exporting to 11 different countries
- 100,000 sqft of manufacturing facilities
- 1 in 10 employees is an apprentice
- 20% annual growth year on year for last 10 years
- 6% turnover spent on research and development
- Winner of SME Manufacturer of the Year Award 2012
- Winner of Cranfield Best Factory Award 2013
- Brian Palmer named winner of “Investor Director of the Year, 2013” by the IOD
Chief executive, Brian Palmer started his career as one of the first graduate trainee engineers with Nissan in Sunderland after obtaining a 2:1 BSc Hons degree in mechanical engineering from University of Manchester Institute of Science and Technology.
Brian Palmer explains:” Nissan was an excellent training ground and one of the key things it taught me was that you can still improve everything you do, whether it’s engineering design or running your business.”
Brian has always been entrepreneurial and bought the first Tharsus company, a small engineering business in Hebburn, with a partner who was the FD, in 1997. The company was doing less than £1 million turnover when he bought his partner out and led the management buy-in team of the Tharsus Welding and Sheet Metalwork Company, now part of Tharsus Engineering. It was at this time he met Alan Fletcher who advised him as his lawyer throughout the transaction and has continued to be his lawyer and adviser as the company has grown.
Brian said,” What I like about Alan is that he has always taken a long term view, not looked at short term fees. I like the fact he gives a balanced opinion and advises what I should do rather than just identifying the risks.”
Brian grew the business very quickly and admits, without a great deal of focus in those early years.
He acquired the company Direct Message in 2007 which became Tharsus Vision giving him a base at Blyth as well as Hebburn.
Brian comments: “ Pre-recession we diversified and identified several lucrative markets away from the metal bashing business. These were in three main areas, telecoms, defence and outdoor advertising light boxes. Our telecoms contract meant we supplied most of the cable management systems serving the UK’s telephone infrastructure for the roll out of high-speed broadband and this helped our early growth. Another contract was for the London Underground’s advertising screens. It was probably the biggest outdoor advertising contract in the UK with about 5,000 units to be fitted across the whole of the underground system.
“When the recession first happened we didn’t feel the initial affect as these contracts were still being fulfilled, but by 2010 we were experiencing a downturn as all these sectors underwent fundamental changes that led to decline. The telecoms contract had been completed, there was a strategic review of the defence budget which called for huge cuts and the outdoor advertising market virtually collapsed overnight as businesses slashed their advertising budgets. As a consequence we lost half of our turnover and had to cut our workforce by a third.”
Brian continues: “We could see that if we had only been in one market we would have gone under. The challenge for us was to evolve and rebuild the business with our very skilled workforce – we had to think of a way that we could use the same skills but apply them to different designs and sectors.
We came up with the idea to develop a contract-based niche service known as the original equipment, design and manufacturing (OEDM)”
OEDM is all about making better products for their customers. Tharsus forms exclusive and transparent partner relationships and their OEDM service allows their customers to focus on building the value of their IP and their priorities while Tharsus concentrates on developing the product that they rely on for the success of their business.
In April 2012 Tharsus’ new factory at Cowley Road in Blyth was commissioned and this marked the next step in the development of the business.
Brian said: “Our original vision was to create a truly flexible facility with design and development collocated with manufacturing, in line with modern production principles, to ensure an on-going feedback loop and a smooth transition from engineering and prototyping to assembly.
The factory, with its cell-based layout, has been critical to the successful introduction of Tharsus’ original equipment design and manufacture service.”
A good example to demonstrate that the approach works, is the Safetykleen M190 high power parts washer. Following a competitive global procurement process, Safetykleen appointed Tharsus as design and manufacturing partner, with full responsibility for upgrading the product for relaunch into the market. As the project developed, it became clear that a full, ground-up redesign of the product was required rather than simply an upgrade. Virtually nothing other than the footprint remained from the original product in the final design and fully resolved product.
Brian explains: “We undertook a full high-level needs analysis and a comprehensive product review and identified a number of areas in which the Safetykleen M190 could be improved to create efficiencies in manufacturing, enhancements in safety, potential reduction of lifetime costs and increased performance.”
Having redeveloped Safetykleen’s M190 parts washer from the ground up in less than 4 months, the time from commissioning the factory to full production volume was an impressive 6 weeks.
Brian continues, “Our customers rely on the equipment we build for them but, critically, they need to focus their resources on core technology and market development activities. When you design a product, you design it with logistics in mind. There’s naturally a difference in cost for manufacturing goods around the world but the UK has an advantage, and can be very competitive, especially with the problems in the Eurozone continuing at the moment.
“Our business model takes the strain of design, development and manufacturing for our high brand customers which is more cost effective than the alternative of using separate design houses, test houses, certification bodies and contract manufacturers. Also the customer retains the IP to the solutions we provide which makes our business model unique.”
Tharsus currently employs 150 people and has invested £3million into its new headquarters in Blyth of 31,000sqft and has a second factory of about 35,000sqft nearby which does the specialist engineering and fabrication for defence, security, subsea and transport.
“To be world class we need a modern site and skilled workforce. Shortly we will be moving the metal work plant to Blyth as well and by bringing both areas of the business together on one site we will not only increase the high standards of the site, but also it will help improve all our facilities and standards.”
“Blyth has got a great labour pool for manufacturing and if I had my time again I would have employed more apprentices in those early years. Apprentices have always been a really important part of our business as they help form the backbone. They tend to be committed long-term to the business and understand the ethos of the company and that’s really important. We take on older apprentices too, as we think there are older people out there without skills that can be trained to become really valuable members of the workforce.”
Alan Fletcher has been Brian’s legal adviser throughout Tharsus’ growth and development and said, “Brian is constantly looking at what next and how to grow the business. He has spent a considerable amount of time gearing up the management team and now has David Williams, ex 3i, as his chairman. The new business model is attracting high quality brands and Tharsus fully understand the importance of building those long term relationships.”
Brian concludes: “Metal bashing contracts have always been short term, but it is still an integral part and primary manufacturing skills are very important to our business. However the OEDM model brings in longer term contracts and is highly scalable. We are now seeing customers having the confidence to sign up on larger, long term contracts. Our business, just like Alan’s at Square One Law is not about price, it’s about outcomes.”