Monday Interview: Forging a new future for historic Sheffield steel giant

“WE’RE always investing in technology here. If you stop doing that, you get left behind,” said Dr Graham Honeyman, chief executive at world-renowned Sheffield Forgemasters International.

But even advanced manufacturers like Forgemasters have been feeling the effects of a slowdown in the domestic steel industry. A turnaround plan has been in place since January, to combat high energy prices and downturn in the oil and gas industries.

Dr Honeyman said:”We’ve had big orders with the US contract but not everything is hunky dory – every day is a fight.

“We have to look to the medium and long term future and prepare for it now by putting a strategy in place.”

Dr Honeyman seems typically “Yorkshire” in his approach – if there’s a problem, get on and fix it.

His turnaround plans are bearing fruit, with Forgemasters recently signing £4.5m of Russian and German steel roll contracts and a major US defence contract last month. Though the size of Forgemasters’ abilities means it naturally gravitates towards bigger projects, some of which turn out to be controversial – such as Trident and the Swansea Tidal Lagoon power plant.

Forgemasters are also involved in the development of innovative small modular reactors in collaboration with NuScale Power and supported by Innovate UK, which have been allocated £250m by the government.

“The world looks to us so it’s important to get ahead in technology,” he said. “It also means when the market changes we will be in a better position to take advantage of it.”

But this is where the importance of quality comes in, said Dr Honeyman. “People’s lives depend on the quality of our work, in nuclear and submarine components for example.

“I’d rather scrap something than allow it into the market if it is not up to our standards – it would devastate me on a personal level if anything happened.

“Competitors may beat us on price,” he said, “but if you are developing a nuclear power station you don’t want to take a risk on quality.”

Particularly in the nuclear sector has the concept of quality taken a beating. At Flamanville Nuclear Power Plant in France, major safety issues have been raised including the weakness of the steel used in the reactor – Hinckley is being delivered by the same people and using the same parts as this French site, where even its newest reactor is three times over budget and years behind schedule.

“But quality always pays off,” said Mr Honeyman.

Sheffield Forgemasters International record-breaking pour

Being such an international business, it was inevitable that there would be some fallout from the Brexit decision in June, though, as with most sectors, Mr Honeyman said it was “too early to say” what its long-term effects may be.

He did say: “The effects of the Brexit vote will take time to come out into the open, but right now we are becoming competitive overseas again as the price of our products goes down for overseas purchasers.”

But as with most things, Mr Honeyman was direct about the EU Referendum fallout. “There’s been enough talking,” he said, “why don’t they just crack on with it instead of arguing the point?”

Running a company as unique as Forgemasters – the only privately owned forgemasters of its size – brings its own challenges though.

“Other companies are in a better position to be looked after by corporations,” said Dr Honeyman.

“The pricing of competitors is horrendous – they can come in way below us, but we sink or swim. Getting other things in place is key.”

Last year, 42% of turnover came from the oil and gas sector – this year, not so much.

“When a barrel of oil gets to over $50 people start to invest in new fields and exploration because they are making a profit. But we can’t rely on this or defence and we are looking outside the UK to feed the company.”

Another issue in the sector is talent – finding the right people for the job has been difficult in almost every sector, but something as specialist as what Forgemasters do must be even more difficult.

Dr Honeyman said: “I don’t care about background or anything like that, if you’re the best at your job you’ll be hired.”

He said Forgemasters’ “sexy brand” helped with recruitment – the last recruitment round for 12 positions saw 350 applicants apply. Dr Honeyman said that the business had also dropped average age of worker from 51 to 41 whilst the rest of the industry is “flailing.”

“We avoid pinching other people though,” he said, “we train our people up to do something special.”Such was the case with Gareth Baker, operations director who came in as an apprentice 18 years ago and worked his way up.

Dr Honeyman finished: “Forgemasters is iconic, we are the best of the best. If we do something, the whole world wants to know.”

 

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