Surviving or thriving

Citation

(1999), "Surviving or thriving", Anti-Corrosion Methods and Materials, Vol. 46 No. 5. https://doi.org/10.1108/acmm.1999.12846eaf.006

Surviving or thriving

Keywords Plimsoll, Metal finishing

A company can only justify its existence by generating wealth for its owners. Yet Plimsoll Publishing, in its latest analysis of the metal treatments industry, shows that 45 per cent of the industry is consuming rather than increasing the wealth of the owners. This loss of wealth amounted to £112 million last year. In contrast, these companies are being squeezed by the 42 per cent of the industry rated strong or good by Plimsoll's analysis who are generating wealth.

The results from June's Plimsoll analysis on the metal treatments industry showed that out of the companies available for analysis, 231 have been rated as caution or danger. These companies must change radically or their survival will come into question. This is slightly better than last year's results that showed 242 companies in financial difficulties.

Perhaps it is no surprise that the smaller companies in the industry are getting squeezed the most. Almost 50 per cent of companies making less than £1 million in total sales are under financial pressure compared to 41 per cent of companies making over £5 million in total sales. This is slightly better than last year, with 53 per cent of the smaller companies in financial difficulties compared to 40 per cent of the larger companies.

On the other side of the coin, Plimsoll's latest results found that 42 per cent of the metal treatments industry was rated as financially strong or good. Plimsoll rates strong companies as companies that have been improving in financial strength over a four-year period. Good companies are maintaining their financial strength but not improving.

Plimsoll has broken down the 660 companies of the metal treatments industry into five categories of performance based on Plimsoll's method of monitoring company performance (Figure 1).

Figure 1 Performance of metal treatment companies

For those companies rated as caution or danger immediate action must be taken to ensure their survival. These companies cannot continue to destroy wealth.

Only 79 companies improved their rating out of caution or danger last year. Even though this shows that it can be done, for companies wanting to improve their rating radical changes must first take place. For many companies, what is essential is creating a return to profitability. This may mean serious cost cutting, job losses and the like in the first instance before they attempt a push for greater sales.

For those companies looking to improve their financial standings, Plimsoll has just published its "Survival Pack, Second edition 1999" which includes all 660 individually analysed companies using the normal four years of audited accounts. However, it takes the 231 companies which are under financial pressure and gives them the survival plan for turning the company around by adding a fifth, computer-generated, future year bringing these companies back to a 10 per cent return on assets. This artificial survival plan is designed to stimulate the thinking of the "busy manager". Some of them have a limited time in which to generate successful ideas.

In contrast, Plimsoll has found a band of companies to which many companies in the metal treatments industry should aspire. Plimsoll has named the top 25 most successful companies in the metal treatments industry. Success, a word often used yet difficult to describe, has been defined by Plimsoll as those companies which have combined both financial strength and terrific sales growth.

This &#eacute;lite group of companies make up about one-fifth of the top percent of all companies in the UK. To be in with these companies, you would have to have a rating of "Strong" on the Plimsoll model, an average sales growth of 17 per cent, a 12 per cent average pre-tax profit margin and an average of 19 per cent return on assets. These are real wealth creators.

The essence of competition is the survival of the fittest. To survive, your company will have to go up against "the fittest". They are stretching the boundaries of the industry. Not every company rated danger will make it next year. But trying and failing is better than never trying at all.

To jump-start your company into survival mode, Plimsoll are offering a special "Survival Pack, Second edition 1999" for the metal treatments industry. Within this pack is a bound book and electronic version of 660 of the major players in the metal treatments industry individually analysed using the company's last four years' audited accounts. In addition, there is a separate bound book of all 231 companies individually analysed and added on to each analysis is a "survival analysis" fifth year. This computer-generated future year demonstrates how to put each company back to a 10 per cent return on assets.

According to Plimsoll, the following are the top 25 most successful UK companies in the metal treatments companies:

1. 1.

   Abbey Metal Finishing Co. Ltd.

2. 2.

   Capcis Ltd.

3. 3.

   Color Steels Ltd.

4. 4.

   Corrosion Resistant Products Ltd.

5. 5.

   Frost & Sons (Moxley) Ltd.

6. 6.

   How Group Ltd.

7. 7.

   Inflite Engineering Services Ltd.

8. 8.

   John Folkes (Lye Forge) Ltd.

9. 9.

   Leamington Spa Plating Co. Ltd.

10. 10.

    Lindsay Group Ltd (THE).

11. 11.

    Mannings (Southport) Ltd.

12. 12.

    Octopus Ltd.

13. 13.

    Parstream Ltd.

14. 14.

    Powdat Enamelers Ltd.

15. 15.

    Process Services Ltd.

16. 16.

    Robert Stuart plc.

17. 17.

    Schenectady Europe Ltd.

18. 18.

    Servis Heat Treatment Co. Ltd.

19. 19.

    Southern Coatings & Services Ltd.

20. 20.

    Special Steel Co. Ltd.

21. 21.

    Trim Engineering Ltd.

22. 22.

    Uvipak (Finishing) Ltd.

23. 23.

    Verichrome Plating Services Ltd.

24. 24.

    Wandsworth Electrical Ltd.

25. 25.

    Wedge Group Galvanizing Ltd.

To order, call Jennifer Ovington at Plimsoll on +44 (0)1642 257800 and order your "Survival Pack, Second edition 1999 - Metal Treatments" for £450, including next-day delivery. Readers of this journal qualify for a 5 per cent discount if they mention the journal title when ordering.