Reidsteel is one of the few examples you will find of an engineering company that has turned down a multi-million-pound windfall in order to stay right where it is 鈥� in this case, the centre of Christchurch, Dorset.
Earlier this year the company revealed that it had reversed a decision to sell its existing site 鈥� for which it had secured planning permission for 170 new homes 鈥� and relocate outside the town centre. Developers had already put forward exploratory bids of more than 拢10m, a substantial sum for a company with an annual turnover of 拢30m, but when a site adjacent to its existing premises became available, the company reconsidered.
According to managing director Simon Boyd, it makes perfect sense. 鈥淭his is really good for the company and really good for the local economy,鈥� he argues. 鈥淭he prize for the company is that we can raise productivity by a minimum of 100% and we can improve our efficiency 鈥� again by a phenomenal amount 鈥� by having the latest technology and the latest manufacturing techniques.
鈥淭hrough taking this option we can stay in our existing offices and get the new manufacturing facility up and running while still manufacturing on our old site. We can self-fund the development of the new offices and the demolition of the old ones. That鈥檚 much more viable than taking a quick buck. Simply not having to move is itself worth a small fortune.鈥�
According to Boyd, the financial advantages of staying put far outweigh those of moving to a greenfield site earmarked for industrial development, even when the company had planning permission for 170 new dwellings. This permission was all the more valuable as there was no requirement for social housing, so every dwelling could make a profit.
The proposed move was never the first choice, it seems. The company did need to expand and had invested 拢1m in drawing up plans to move out of Christchurch because, Boyd says: 鈥淭here seemed to be no option. We never wanted to leave the town because it鈥檚 a unique place and we were always worried about the effect on our people but we were constrained by the site.鈥�
At this point it became uncertain whether the owners of the proposed new site would be able to deliver it and the land next to the existing factory suddenly became available. This was big enough to fit the new facility, which was already designed, so now Reidsteel is leasing these buildings with the option to buy once planning permission is granted.
鈥淲hat鈥檚 the point in the financial reward we would have got from moving if it hurts our people?鈥� asks Boyd. 鈥淏ecause our company is its people, and we鈥檝e invested in their training and upskilling,鈥� he says. 鈥淲e鈥檙e putting our money where our mouth is, though there are financial advantages to this strategy.鈥�
The vision is for both customers and staff to share the benefits of greater efficiency. The improved profit margin would deliver cheaper products to customers while staff share in the profits.
鈥淧rofit share pulls people back into one team, and that鈥檚 what we believe in and what we鈥檙e applying throughout the company,鈥� concludes Boyd.
Meanwhile, it is clear that Boyd has long been frustrated by the limits for the existing facility. 鈥淭he market for our greater capacity is already there and the work has already been rejected,鈥� he says. He describes how the company was shortlisted for three bridges in North Africa totalling 28,000 tonnes of steelwork when the existing plant can, at best, only produce 100 tonnes a week.
鈥淲e could only fulfil a contract like that by subcontracting and that would increase our exposure and our risk, so we have to decline them, and we鈥檙e sick of doing that,鈥� he says.
The projected improvements in efficiency are enormous. To name just two: weekly output will rise from 100 tonnes to 300 tonnes while the number of times a piece of steel is handled after coming through the factory door will fall from 16 to just three.
The types of job will change too, says Boyd. There will still be fabricators and handlers, but they will work more efficiently indoors rather than outdoors, while better paid, more productive roles will be created such as CNC operators. 鈥淲e will need more people but not as many people per tonne of steel as we do now.鈥�
Yet, tempting though these gains might be, the current climate is one in which many of Reidsteel鈥檚 customers are postponing their own development plans. As Boyd readily recognises, Covid and Brexit have combined to create shortages of raw materials as both mining and refining have slowed down.
But he is committed to the Brexit agenda, 鈥榯aking back control鈥�, and says that the result of the referendum in 2016 was crucial to the company鈥檚 decision to expand.
鈥淲e were stuck in a protective regime that didn鈥檛 allow us to flourish and damaged many aspects of our international trade. When the vote to leave came into reality, we pushed the button and started to invest in our future because we can see real opportunities in this country and across the world,鈥� he argues.
鈥淲e鈥檝e got about 60 buildings in the Caribbean, buildings in Nepal, Indonesia, Malaysia and Afghanistan, all built to British Standards and British codes.鈥�
It is from markets like these, rather than Europe, that Boyd believes the company鈥檚 long-term growth will come and justify this bold investment.
Company history
John Reid & Sons is an export-focused business that has been in the same family since it was founded more than a century ago 鈥� a rare beast in the UK economy.
Colonel John Reid founded the company in France when he was demobilised after the First World War, selling steel-framed barns. The story goes that the business diversified after aviation pioneer Louis Bleriot crash-landed in a field with one of these barns in it.
After using the 鈥榟angar鈥� (an old French word that, until then, simply meant a shed) as a workshop, Bleriot ordered three more.
The company focused on exports through the 1930s, constructing churches in Peru and stations on the Djibouti to Addis Ababa railway, until it was forced back to Britain, and to Christchurch, by the Second World War.
Based on a four-acre site near the town centre, the company has grown steadily so that it now employs more than 130 people and has a turnover of 拢25m. To date, it has exported to more than 140 countries and won the Queen鈥檚 Award for Exports four times.
More locally, it designed and built all-seater stands for football clubs such as Aston Villa and Notts County when the Taylor Report into the Hillsborough disaster led to this being mandatory.
Reidsteel鈥檚 speciality is disaster-resistant structures, designed to withstand the impact of hurricanes, tsunamis, flooding and earthquakes. But it also produces steelwork for other structures such as aircraft hangars, bridges and industrial units.
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