Birmingham established its reputation for engineering expertise on the back of thousands of small businesses.
As the years rolled by, these start-ups expanded into larger entities offering a greater range of services, and thereby jobs.
Small one and two man concerns developed into firms employing up to 250 employees, using the latest equipment, and offering a personal service to customers. Companies were able to pass on the benefit of years of experience and skill, a valuable, but uncharged for commodity.
Then some 25 or 30 years ago, these customers, who by then had themselves grown into large organisations, decided that they did not wish to have a multiplicity of suppliers, taking the view that cost savings could be achieved by reducing to just three or four suppliers.
Sadly, as a result, many family businesses fell by the wayside, for being axed, they had little chance of re-establishing in a highly competitive and hostile market. Those companies that survived, of course, had greatly increased turnovers. However, their customers ruthlessly drove down the prices that they were prepared to pay, which again resulted in many bankruptcies.
This policy of selecting preferred sources also acted as a deterrent to potential start-ups, forcing highly skilled workers to seek jobs outside their industry.
However, there is, by some more enlightened end users, a move to give opportunities to the small operation. It is being realised that although such a policy takes more administration, they find that they gain by getting cheaper prices because overheads of such suppliers are lower, and, more importantly, small companies can often offer suggestions for design alteration resulting in further cost saving.
I am delighted to see such a change of heart, and hope that this trend will continue, for it means that there are opportunities for small entities to quote for and obtain work from larger organisations, many of which have for many years set their face against small companies. Such operations have the ability to be more flexible to customer demands, and moreover, just at the moment, there is encouragement from Government in the form of loans and grants.
A positive sign for manufacturing regeneration.
* Russell Luckock is chairman of pressings firm AE Harris
