22 May, 2022

Annual Boardroom Report (Jan/Feb 09)

20 May, 2009

Change and opportunity

Hydraulics & Pneumatics spoke with some of the leading suppliers and associations in the world of fluid power about the current key issues being debated and acted upon in the boardroom. 
James Perkins, Parker Hannifin’s corporate communications and brand manager Europe, belongs to a company that has an impressively forward thinking outlook when it comes to end users’ current and changing solutions requirements: “From Parker’s perspective, new developments are being driven largely by our research & development teams, working in partnership with customers across industry,” he said. “These developments are leading both to customer-specific solutions and to the introduction of new products that have the potential for wider use.”
Perkins points out that much of Parker’s attention is focused on ways to help its customers reduce energy consumption and improve their carbon footprint. “For example, our latest Stored Energy Management Systems (SEMS), with a new approach to conventional fluid power technology, is being used in buses, refuse trucks and other commercial vehicles with short start-stop cycles to improve fuel consumption and minimise emissions.” Similarly, he highlights the fact that recent developments are helping to reduce the size and weight of fluid power components, while the introduction of new control technology, in Parker’s IQAN system, is helping to enhance the accuracy, repeatability and functionality of existing fluid power equipment.
Steve Merrie, managing director of Primary Fluid Power, also cites environmental awareness and energy savings as key drivers for future design, with the expansion of more advanced electronic control. For British Fluid Power Association (BFPA) director, Ian Morris, major innovation in the fluid power industry has come from the combination of electronics with fluid power systems, bringing such communication benefits as Can Bus, remote diagnostics, radio control, record keeping and faster feedback loops.
From a mobile hose replacement perspective, Alistair Wiggins, business development director of Pirtek (UK), highlights that he is seeing a general move to better hose-routing to avoid premature failures from external damage and abrasion resistance covers being used in high wear applications. He adds that OEMs are also becoming more aware of oil contamination that may take place during a hose replacement, and in order to reduce risks from contamination hose are required to be internally cleaned before fitting. “There are a lot of mobile operators who still don’t internally clean hoses before fitting them to equipment, and this can introduce a lot of contamination to hydraulic systems, increasing the risk of equipment downtime and, therefore, owning and operating costs,” Wiggins said.
David Burton, general manager at Boge Compressors, believes that, without a doubt, variable speed (or frequency controlled) compressors and compressor control systems remain the key technological advancements in our industry. John Forman, marketing communications manager for Atlas Copco Compressors, agrees, pointing out that VSDs are increasingly being installed in other areas of the compressor – such as the dryers – rather than simply the main drive. “Indeed, around 70 per cent of all our machine sales are now variable speed drive sold into everything from process industries to manufacturing production and so on,” he said. Forman also comments that the benefits of monitoring solutions are becoming more widely recognised; for example, Atlas Copco’s AirConnect for monitoring, measuring and managing a complete compressed air system.
Systems integration improvements
From British Compressed Air Society (BCAS) executive director Chris Dee’s perspective, there hasn’t been a major breakthrough innovation in compressor technology in the past 25 years. “Even with the introduction of enhanced software development tools, variable speed drive products, control systems for compressors and improving efficiency of air treatment to reduce pressure drop – technological improvements are minimal,” he said. “BCAS believes that the focus for technological improvement will remain in the systems integration arena, where members strive to make the products more effective within their installed environment.”
And how have end users’ requirements for systems and equipment changed in recent times? According to Burton, the energy drive has made buyers more aware and conscious about the cost of compressing air. “Auditing is more often requested by the buyer before specifying what size of compressor they want to ensure only their exact compressed air needs are met in the most energy and cost efficient manner,” he said, adding: “As a result, the demand for compressor control and frequency controlled screw compressors have increased in order to optimise energy efficiency.” National Fluid Power Centre (NFPC) director John Savage believes that end users are operating on a number of fronts. “There are those that are continuously working and struggling with tried-and-tested technology, but this may be very dated and not always energy efficient, environmentally efficient or easy to maintain. At the other end of the spectrum, many system applications are being looked at with a power and motion control solution that is far more energy efficient and placing more emphasis upon a cost-effective system life and the integration of a number of technologies, of which fluid power is one. The use of system management systems in respect to both health and performance are now a major part of the system and not merely an add-on. Why? Reliability and productivity is paramount, together with 100 per cent customer satisfaction, and this can only be achieved through integrated technology.” Savage also believes that safety of machines and people is a driving force more easily met by better system management protocol.
Higher quality
Forman points out that, in general, end users don’t need as much air as they used to. “Manufacturing plants are smaller and the demands for compressed air are smaller,” he said. “You don’t have so much of the situation now where you see large plants requiring four or five compressors in a block. Also, users are now looking for higher quality air, and if you at look, say, the body shop side of the garage trade, there is now a stronger perception that higher quality air is needed because if, for instance, it’s an insurance job you only get one chance to do the re-spray and so on so you have to ensure that the air is 100 per cent pure.”
In sectors such as the food industry Forman has seen a build-up of interest for the Class O 100 per cent pure air compressor. But as for changing trends in the construction sector, he hasn’t witnessed a great deal of shift. “It doesn’t take a lot of air to run a couple of rock breakers and the requirement there is often not so much for the quality of the air, but rather how much the machine can be sold for at the end of its lifecycle,” he said.
Morris maintains that, as has always been the case, users want more overall performance for less money; and in general he believes they have got it. “Noise reduction and environmental consideration have crept in and are becoming more demanding as we all try to save the planet,” he said.
In the current economic climate, Perkins points out that Parker’s end users across the globe are under increasing commercial pressures and stresses that the company is working with its customers to help them remain productive and profitable. “In particular, as customers seek to control costs, we’re finding increasing demand to supply integrated systems and sub-systems, which cut assembly and maintenance times,” he said, adding: “Similarly, our ability to deliver a huge choice of high quality motion and control products, backed by our engineering resources and our network of manufacturing and customer support facilities in almost 50 countries, means that we’re able to offer customers a single point of supply to reduce lead times and costs.”
For Merrie, the price of the product and a maintenance free, extended warranty are the main discussion points with end users, while Wiggins believes users are expecting more for their money. “We are seeing our customers increasing the type and ranges of equipment they buy, moving into different and specialised markets such as rail and buying bespoke equipment to cater for these markets,” he said.
In BCAS’s opinion, Dee remarks that end users are becoming much more demanding and open minded in their requirements. “Instead of sending out a tender saying ‘this is what we want’, they are asking suppliers to put forward ideas to suit applications,” he points out. “As a result of the information organisations such as BCAS have made available to end users, the emphasis is on the most energy efficient and environmentally aware way to tackle each application.”
Are British fluid power solutions manufacturers and suppliers fully exploiting opportunities in markets overseas?Morris reflects that a large number do still export to a considerable degree, and points out that there are good examples within the BFPA of members exporting 75 per cent of their production. However, Morris feels that better support from Government for exports would help. “Compared to Germany, the UK often looks to be a poor relation at shows in places like India and China,” he said.
Maximising opportunities
Perkins observes that many fluid power companies are adept at exploiting export markets and points out that Parker is actively working with customers to help them maximise opportunities, especially in developing countries. “Our ability to provide local sales and manufacturing, plus technical and spares support around the world, obviously helps in this regard,” he said. “Indeed, many of our UK customers have now standardised on Parker products in machines for export as they know that their end users will benefit in the long term.” Interestingly, however, Dee points out that BCAS is not aware of the few UK-based members exploiting opportunities in foreign markets; as the reward in profitability must surpass the risk of entry.  
And how are fluid power solutions markets fairing in the current economic climate?
Morris is quick to highlight the fact that anything to do with the construction or automotive sectors is not good news at the moment, while also focusing on oil, agriculture and alternative energy as some of the best market performers. However, he stresses that, as always, it is not a black and white situation. “Remember that industrial had not seen the rapid expansion of construction; therefore any fall-off will not be so extreme.” Burton maintains that there is generally more caution being shown when it comes to upgrading equipment irrespective of the sector a business finds itself.  Although, he adds that public-sector organisations or large businesses in those more buoyant sectors such as the electronics industry are generally carrying on – ‘business as usual’ – where budgets for capital equipment are in place.
Perkins muses that although no particular markets can be said to be buoyant at present, Parker has seen steady growth in sales through its network of ParkerStores and Hose Doctor specialists throughout Europe. “These are designed to support end users and smaller OEMs in the fluid power sector; especially construction, transport, agriculture and factories, and provide an immediate and local source of supply for standard products – for example, filters, fittings, valves and cylinders, and replacement hose sets and emergency hose repairs.”
Merrie remarks that Primary Fluid Power has experienced a decline in business related to construction and manufacturing, “however, we have a clear focus on developing markets that are replacing substantial lost business”. He highlights the fact that Primary has experienced sustainability and some growth within the oil and gas sector. According to Wiggins, Pirtek is also seeing a general slowdown in manufacturing and construction, although it is performing well in the public sectors and infrastructure. Dee also highlights the continuing health of other sectors. “Compressed air is used across a wide range of sectors and, although many construction and automotive markets may be down, others, such as food, beverage, dairy and pharmaceutical are very strong at the moment.” He also cites hospitals, defence and public services, while Savage points to offshore as the strongest sector.
And what are companies doing to ensure they can continue to survive and prosper? Forman recognises the benefit of a greater value-added product and service offering on, for example, the ancillary side. “We are looking to get more of our brand on the user’s site, taking customer share rather than looking purely at market share; for example, selling not just the compressor but also the dryers, filters, drains, pipework – things that the end user might have been buying in from other sources.”
Team strength
Savage is pleased to report that, from a training point of view, many companies are continuing to invest in training. “In fact, they are using their spare time to strengthen their teams, enabling them to take up the challenge with a vengeance when the economic upturn begins,” he said. Morris believes companies will be looking at service and support as well as areas less hit, such as oil, food and pharmaceutical. However, he adds that there is a danger that all they do is lower the prices for the existing suppliers.
Perkins sees survival and prosperity tactics as manifesting themselves primarily in two ways, particularly with regard to Parker’s strategy. “First, customers are seeking to extend the operating life of existing equipment, and here our network of ParkerStores and Hose Doctor specialists plays an important role. In particular, it provides a local and immediate point of supply for standard products and replacement hose sets, thereby helping customers to maintain or repair equipment faster and more efficiently.” Perkins adds that the latest Parker technologies have been developed with the goal of low or zero maintenance. “For example, the recently launched Moduflex air filtration and drying system requires a service just once in every 12,000 operating hours, with servicing taking only 15 minutes. Secondly, customers are forward thinking and are already planning ahead for when the economic situation improves. Consequently, they are investing in our engineering expertise and our latest cost effective yet high quality products and technologies that will give them a competitive edge in terms of performance, functionality and reliability in the future.”
As for Primary Fluid Power, Merrie is focusing on costs and objectives the company can effect and control, while Wiggins informs us that Pirtek is seriously ramping up its marketing activity for this year. “This may at face value seem to contrast with the market conditions, but we believe that by putting all our efforts into growing our market share now will stand us in good stead when the market recovers. In addition, we have seen before that economic downturns can often lead to an increase in outsourcing to third-party suppliers such as Pirtek. We are also the lead sponsor of the third car, driven by Andy Jordan, in the VXRacing team in this year’s British Touring Car Championship, which will help increase public awareness of our company and its capabilities through some extensive TV coverage.”
Dee maintains that during strong economic periods, companies measure performance as a percentage return on investment, capital etc. “Weak economies require a different approach, focusing on positive cash flows and investments that may offer lower percent returns, but have a more immediate positive impact to cash flow. Cash is king. BCAS is encouraging members to increase their PR and marketing.”
And what do fluid power systems manufacturers and distributors feel about the current level of Government support for product development and innovation, staff training and general assistance? Morris reflects that support from Government is always nice, “but, in reality, if a company is going to do research, train people or any other activity they will probably do it anyway”. He continued: “I don’t think that it is the amount that matters but how it is applied. Business does not normally welcome Government interference in their operations.”
Positive moves
As a global multi-national organisation, with comprehensive in-house R&D and staff training schemes, Perkins points out that Parker tends not to rely heavily on Government-backed programmes, except where it feels they can offer commercial or technical benefits to customers. “Of course, all companies welcome any positive moves by Government to improve the performance of the manufacturing sectors, but we have generally found that the optimum results come from working closely with our customers to help them develop the most profitable or productive solutions, using our combined skills and resources. If Government assistance is also available in particular instances then this is generally a bonus.”
At Primary Fluid Power, staff training is mixed. “Our Apprenticeship programme receives support for college fees, but the funding for specific occupational training, with NFPC for example, is applied for but has never been delivered,” said Merrie. “We have not applied for grants for product development and innovation and feel there is no support for workshop and machinery investment.” Wiggins’ view is that there are a lot of promises, but not a lot of action. “We have recently opened our own National Training Centre in Birmingham with the sole aim of improving our own internal skill levels,” he pointed out. Dee believes that, as a general rule, it is not the Government’s job to support private development; “rather they should create an environment that promotes innovation, by rewarding profitability for example”.
Are current external training opportunities adequate for your staff’s requirements? From an NFPC perspective, Savage comments that the centre fully understands the present situation coming from an industry background and it is offering very flexible training packages to meet customers’ needs and constraints and providing the most cost-effective solutions to readily improve their performance. Merrie has also witnessed progression of the NFPC as the way forward for fluid power training for all Primary Fluid Power’s graduates, apprentices and technical staff. In addition, Morris has a favourable view of training, observing that it is widely available and has been, and probably still is, “a bit of a growth industry”.
As for Perkins, he reflects that, over the years, the fluid power sector has been good at promoting and providing training, through independent and trade bodies and various suppliers. He adds that Parker supports independent training where appropriate, but also provides extensive skills development programmes for its staff and training courses for customers. “In each case, our objectives are to help individuals realise their full potential and to enable customers to maximise the return on their investment in fluid power technologies,” he said.
However, Wiggins feels training is a weakness of the industry, although Pirtek remains insistent on its employees completing City & Guilds 2340 training. He adds that Pirtek set up its own fluid power centre facility because the company believes training is the cornerstone of the success of the business. “Pirtek’s National Training Centre has live, working plant and machinery for trainees to work on as we believe there is no replacement for genuine, hands-on experience,” he remarked.  
Dee points out that, as there are no NVQ or similar independent qualifications in Compressed Air Systems, BCAS has developed its own range of product-neutral training programmes that provide the underpinning knowledge that complements the product-based training for member companies and raises the awareness and confidence of end users.
Savage adds that, from a training point of view in line with the economic climate, reliability, productivity and safety must be maintained and if systems have to last longer before replacement. “This will only occur through the skills, knowledge and competency of the staff, and if investments in training fall away and become sacrificial then companies will move to a state of catastrophic failure,” he warns. “The same may well occur if a high number of skilled people are lost to redundancy. Engineers are wealth creators and we all depend upon them.”
Morris ponders change. “Much talk is made these days of the global economy as though it were something new. There is clear evidence that world trade has been going on for hundreds of years; the only difference is that it has grown and become faster; but hasn’t everything?” Morris champions international trade through a network of contacts in trade associations not only throughout Europe but as far afield as China, India and the USA. “The BFPA keeps ahead of market conditions and is able to advise and help any member looking to source product or sell overseas,” he said, citing the following examples of current BFPA activity:
International & UK Standards: The BFPA runs many committees as an external secretariat of BSI and, as such, is in almost daily contact with ISO. Indeed, the BFPA currently monitors some 600 standards for the industry around the world.
Health & Safety:  The constant introduction of regulation on industry has to be monitored almost daily. The BFPA not only does this but is involved closely with the Health & Safety Executive (HSE) to make sure that rules are workable.
Hose Accreditation Scheme: This scheme, which audits hose companies, has given assurance to customers that they are dealing with the best suppliers, as well as an increased level of confidence to the suppliers who know that they are up-to-date with their procedures.
Training: Competence training is everything today; the employer has to know that he is only asking employees to do work for which they are competent, and the employee must be able to demonstrate his abilities in a qualified form. The BFPA has training schemes in place for most aspects of the industry and these schemes are being adopted as the CETOP standard.
Politics & Government Departments: Working closely with UKTI, a division of BERR, the BFPA is an authorised trade show organiser and is in the best position to advise on grants and procedures.
Overseas trade fairs: The BFPA pavilions are a regular site at trade fairs across the globe, and many BFPA members have established good business as far afield as China by taking advantage of this low-cost method to enter a market.
Returning to the current market milieu, Dee points out that October is not, and has not been, a good month for economies. “The Wall Street Crash occurred in October 1929 and the current downturn began to bite in October 2008,” he said. “In 1929, the Board of Trade jumped into action to help industry weather the storm by encouraging industry sectors to ‘band together’. Compressor manufacturers were encouraged to form a trade association and so it was that BCAS was formed in 1930 to help develop strategies for import substitution. Some 80 years on and with the current economic difficulties, the compressed air industry is still being supported by the BCAS with the introduction of initiatives to not only guide users to members but also to enhance confidence in members through the BCAS Trusted Trader Scheme supported by advantageous insurance schemes as well as an industry Code of Practice. Charles Darwin once said that it’s not the strongest of the species that survives, nor the most intelligent, but the ones most responsive to change. It is no coincidence that BCAS has just awarded continuous membership awards to those who have been in membership for more that 50 years.”
John Forman: “We are looking to get more of our brand on the user’s site, taking customer share rather than looking purely at market share; for example, selling not just the compressor but also the dryers, filters, drains, pipework – things that the end user might have been buying in from other sources.”
James Perkins: “… our objectives are to help individuals realise their full potential and to enable customers to maximise the return on their investment in fluid power technologies.”
Steve Merrie: “The price of the product and a maintenance free, extended warranty are the main discussion points with end users.”

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