There’s a new generation of an emissions-cutting engine crank case valve taking shape at LAP Electrical in Birmingham.
The Tier 2 supplier is working directly with Ford’s engineers to develop the valve, which will be a key component in a new range of engines due to be launched in 2010.
It’s a contract that in normal circumstances would help to secure the company for the foreseeable future.
Unfortunately, explains LAP executive chairman Tony Greenfield, he and his partner, managing director Gerry Carty, need to finance capital expenditure of more than £80,000 and find between £40,000-£50,000 more for tooling before production can begin.
Some of the cost will be clawed back when production starts – but not yet.
And this comes at a time when LAP is facing a six-figure financial loss thanks to a savage recession that has already sent many of its competitors into oblivion.
The stark truth is that despite counting Ford, Land Rover and JCB among its customers, LAP is one of hundreds of cash-strapped British automotive supply chain companies fighting to survive this “once in a hundred years” downturn.
Which is why Mr Greenfield was angry when he read in the Birmingham Post that regional development agency Advantage West Midlands and the European Regional Development Fund were promising £3.5 million of aid for component companies.
Like many of his counterparts at companies throughout the region, he is deeply sceptical about such announcements.
But Mr Greenfield got even angrier when he found that the money is actually intended to meet consultancy costs.
“This is just propaganda and spin,” the 70-year-old businessman said as we talked in his office at LAP’s factory in Old Walsall Road, Great Barr.
“Small businesses don’t see any of this money and if they do it is a pittance. I believe the money goes on administration and bureaucracy.
“They say it will help up to 130 companies, so why don’t they just give us all about £30,000 and let us get on with it.
“This money is said to be to pay for consultants, but we don’t need consultants coming in to tell us how to run our companies, we need hard cash to help us handle new projects and protect jobs.”
Mr Greenfield and Mr Carty are more than capable of running the business - they’ve doing so since staging a management buy-out of one of Lucas’s operations at Great King Street 20 years ago in August 1989.
The operation was based on Lucas’s old windscreen wiper motor operations but LAP has since diversified into a 13-strong list of products, ranging from the positive crank case vent valves it makes for Ford to low pressure fuel lines; from LED light bars to emergency lighting beacons; from specialist MOD products to reversing alarms.
The pair, both graduates of the Lucas management training school, moved the operation from Great King Street to Old Walsall Road, taking 62 people with them.
Over the years the payroll rose to 130 at its peak while annual sales rose from an initial £2 million to some £8 million.
The recession has forced the partners to cut staffing levels by 25 per cent while sales for the current year, which ends on July 31, will be down by about 30 per cent.
Then there’s that six-figure financial loss to take into account.
Bad debts are on the rise – LAP has been hit for the third time by the collapse of LDV – and many of the company’s own suppliers are folding.
Then there’s a host of other costs to meet: paying for the annual renewal of accreditations such as ISO 9000, for example, and plugging a pension scheme deficit.
Mr Greenfield is proud of the fact that since its inception LAP has had at least one trainee engineer on its strength. He names former apprentices who have gone on to hold senior technical posts at companies such as Jaguar.
But no longer. “Our last engineer went on to get a BSc but we can’t afford it now,” he said.
On the topic of training, Mr Greenfield believes that in many cases taxpayer money channelled into “upskilling” workers at companies such as LAP is mis-spent.
“I don’t think we can ‘upskill’ our workforce any more than we already have.
“Automotive manufacturers went through that process in the last recession and we got all the quality accreditations. We already have all those skills.”
What is needed, he went on to say, is help with the £4,000 bill that LAP faces for sending one employee on a computer-aided design course.
“We can’t get anything for that – there is no money available.”
Mr Greenfield also wants to see cash made available for management training: not the sort that helps managers do what they are already doing, but to teach them how to develop their businesses further and help ensure employment in the future.
“We want funds to sustain the business and to help to move it on.”
Despite everything, Mr Greenfield is confident that LAP does have a future.
“We are surviving because we are a well run company and don’t have any debt,” he added. “Because of that we can face up to the business pressures we are under."