Maxsys Fuel Systems Ltd

Business seeks viable alternatives to price cutting

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Courtesy of Maxsys Fuel Systems Ltd

The UK manufacturing industry is undergoing a severe recession. Any business involved in production is facing serious competition from countries that can produce goods at much lower prices due to cheaper equipment, labour and general costs.

Globalisation has meant that companies have had to expand their focus to include new and expanding markets. Assessing where manufacturing functions are best located and how production processes can be carried out the most efficiently and cost effectively, is key.

Production lines in India and China in particular are forcing the UK to cut costs further in order to compete with their market. This has led to UK business outsourcing some of its processes to the Far East.

In a 2006 survey by EEF entitled ‘Where now for manufacturing?’ findings show that 48% of respondents see China as the biggest threat to their activities. It is also seen as the biggest increasing threat over the next five years. However, only 12% saw competitors producing higher-value-added goods as a significant pressure.

But all is not lost for UK business. Paul Finnegan, Commercial Director at energy efficiency technology specialists Maxsys Ltd, believes that the UK can continue to fight back as it has before. “Whereas in the past there was a popular view that the quality of goods produced in the Far East was inferior to that from the UK, there is now a general consensus that their products are matching the quality of UK produced goods. So we need to work harder to keep up with the ‘world’s new workshop’. Business needs to seek viable alternatives to outsourcing and becoming more cost efficient is a vital aspect of this.”

Reducing energy bills can have a significant impact on overall profitability. In the EEF report, it is stated that nine out of ten companies surveyed say that energy costs have risen in the last 12 months, which is no surprise, but it also reports that four fifths of respondents expected gas and electric prices to rise further in the next 12 months.

Despite the overwhelming concern over energy costs, only two-fifths of these companies had invested in energy efficient equipment in the last 12 months, and only 24% of companies surveyed take part in Climate Change Agreements which give companies an opportunity for an 80% discount on the Climate Change Levy.

When asked how they dealt with price hikes, nearly three fifths of them had reduced their energy use, but despite this nearly half of firms said they were absorbing the costs through lower profitability – only around a quarter of them had managed to raise their prices in response to the higher cost of energy.

UK business must rise to the challenge and develop strategies that combine an increase on innovation with measures to cut costs aggressively. One way they can do this is by using energy efficient technology.

One such technology is the Maxsys Fuel System, developed by Maxsys Ltd which offers a money-back guaranteed minimum 5% saving on gas and oil fuel costs. For example, for a business that spends £1m a year on energy bills, this represents a significant saving of at least £50,000 every year.

Toray Textiles, a leader in advanced synthetic fabric manufacture, has achieved energy savings of over 5% a year through the installation of the Fuel energy saving solution at its textile production facility in Mansfield.

While the UK textile industry may have shrunk, Toray is a good example of a progressive UK manufacturer that has invested in the latest technology and deployed innovative process engineering. Today Toray employs 350 employees and generates annual turnover in the region of £30 million.

Having weathered the storm of low cost overseas competition, soaring energy costs are the last thing required by any UK business. With this in mind, Toray Textiles decided to investigate the Fuel System from Maxsys as part of its strategic commitment to cut unit energy consumption by 2% each year. The Fuel System operates by applying a precisely calibrated magnetic field to the fuel supplied to the burners. This pre-treatment process enhances combustion, thereby producing a cleaner burn and reduced carbon emissions. Maxsys Fuel sSystems are designed for installation into vertical or horizontal pipes, there are no moving parts and no electrical supply is required.

“The impact of energy prices means we are always looking to be proactive in energy management,” says Toray representative, Mike Fisher. “We have year-on-year objectives and targets, one of which relates to our boiler efficiency and to reduce the amount of gas consumed. We knew that Fuel System would provide benefits in this area.”

Singh observes that in the current business climate, keeping production costs as low as possible is without doubt the single key factor to success. “Despite the ongoing allusions to concern over climate change – and the legislation that has been put in place to combat environmental issues - it is fair to say that in my experience, the ‘green factor’ comes a very poor second to savings on the bottom line for both successful companies and those struggling to survive financially.”

“There is a significant emissions saving that goes hand in hand with our Fuel System, which was always the key message in our marketing materials. We have recently focused more on the financial savings our customers enjoy every year. Since that subtle but significant change, interest in our technology has increased two-fold.”

Until legislation affects more of a financial challenge to the industry, cost cutting will remain top of the agenda. For if profit margins continue to reduce, the results will be felt by customers, or in the most drastic cases, cause UK businesses to cease trading altogether.

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