Time to cut your costs?

by Melissa Hancock - Monday, 28th April 2008

Gibbins recalls how in 2004, Flowcrete’s bottom line wasn’t performing as nicely as she would have liked.

“We weren't doing as well as we could have been and I was involved with a forum for the Manufacturing Advisory Service (MAS) which was set up by the government in 2002 to try and energise UK manufacturing. They initially invested about ₤80 million in it and I remember thinking: 'Right, come on MAS, I’m on this government forum – let me use you to see what you can do'."

“Oh, my goodness, they came in, they looked at the stock, they looked at stock turnover, they looked at cash flow, working capital and they just saw so much waste in my business.”

Gibbins estimates that MAS helped her shave 30 per cent off her variable costs which in turn saw her profit margin grow considerably.

“MAS is one of the best schemes this government’s ever done,” says Gibbins enthusiastically, “They’re going in to little manufacturers and they’re helping them to propel themselves forwards by kicking out waste in cost and you should see how these small manufacturers are turning themselves around now. I’m an ambassador for MAS now so I’ve seen it first-hand.”

But while Gibbins is keen to emphasise that cutting down variable costs is crucial for small manufacturers in the current climate, she points out that there’s a danger of becoming too ruthless with your cost cutting.

“Go and speak to most companies during tricky financial times and they all say ‘We’re tightening the purse strings on technical and marketing. That’s the norm. But of course you need to invest in the technical side of the business to ensure that you keep making amazing products and remain competitive.”

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