by Real Business - Thursday, 30th August 2007

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James Dyson isn't very happy with his local MP. The inventor of the world-beating bagless vacuum cleaner recently wanted to expand his factory to increase production at his Wiltshire base in tranquil Malmesbury. James Gray MP came out against the proposal, on the grounds that "we don't need any more jobs in the area." Gray said the new factory should go somewhere such as Birmingham where they need the jobs. Slough, even. The planning authorities refused the application on various grounds (road congestion, environmental reasons, housing issues and, not least, having to move the gas main). The local landowner, the Earl of Morton, also became embroiled.

Dyson was aghast. For the best-known defender of the UK's beleaguered manufacturing base, this was yet another body blow. To Dyson, Gray has missed the point entirely. Dyson makes vacuum cleaners - and now washing machines. Successful production relies on togetherness. Scientists, engineers, the people who make the various plastic bits, people who work on the factory floor - all need a sense of what they are doing and how they fit into the wider operation. Move the mouldings part to Birmingham and something vital would be lost. Plus, says Dyson, how on earth can the local MP turn down the prospect of jobs?

Gray, however, is unrepentant. "He already employs 2,000 people," he says. "And that's enough. If he ever pulled out, it could be a problem. Can you imagine a company in London that employed five million people and wanted to double its workforce? It's just not feasible."

This is the first time that Dyson has spoken of this spat. But it's certainly not his first fight for his rights. For despite a placid, elegant exterior, James Dyson has a reputation as someone who doesn't mind a ruck if he feels that he - or UK manufacturing in general - has been wronged.

His most famous confrontation, of course, was with Hoover in a long court battle over patent infringement. The dispute centred on Dyson's Dual Cyclone - a bagless cleaner that operates by using centrifugal force to separate dirt from air - and Hoover's Triple Vortex vacuum cleaner, a bagless cleaner that operates by using centrifugal force. On October 3, 2000, Dyson won a patent infringement case against Hoover. On January 12, 2001, Dyson failed in its attempt to stop Hoover using the "Vortex" trademark on its bagless cleaners. The labyrinthine legal semantics, and mutual disrespect, are ongoing.

So, doesn't he ever get sick of the confrontation, the court cases? "Well, we haven't had that many actually," says Dyson. "People think we're always suing people, but actually, we're not. I try to avoid court cases, I'm not trigger happy at all." He certainly comes across as cool and calm. Sitting, relaxed, in his glass-walled office, sporting his bright red socks and with a kindly, thoughtful face, he doesn't strike you as the sort of man who likes a dust-up. Okay, most of his legal proceedings have been high-profile, but then again, he adds with a smile, "we've had no low-profile ones."

FRIENDS AND FOES
Ask anyone about this well-spoken designer whose vacuum cleaner patents have generated £2bn-worth of worldwide sales to date and who is, behind Richard Branson, probably Britain's best-known entrepreneur, and two words crop up again and again: persistence and determination. This is the man who made more than 5,000 vacuum cleaner prototypes before the final Dyson was launched.

"He is determined in a gentle way," says Sir Terence Conran, for whom Dyson worked early in his career. "He does things from the heart and is passionate about what he does." Of course, he adds, Dyson wants to make money - "who doesn't?!" - but it's more the belief in his talents and those around him that drives him on. It's also a belief in the future of manufacturing in the UK. Conran: "While everyone else gave up on it when Thatcher was in power, he stuck to it. He also understands, like me, that design is fundamental. He knows it's real and important. He's managed to build a large business because he is an inspiration to those around him." Asked to sum up Dyson in three words, Conran answers: "A. Creative. Entrepreneur."

Fellow British inventor Trevor Bayliss has his own theory about Dyson's success. "In the old days, if I told people I was an inventor, they'd look at me as if I had syphilis! But [Dyson] is much more handsome and eloquent than me."

Rivals paint a different picture. One white-goods executive describes Dyson as extremely competitive, "a man of steel" even. He dismisses the "designer first, businessman second" theory. "He's got great self-belief, which could be called arrogance." In a terse statement, Hoover's executive vice-chairman Alberto Bertali says of Dyson: "We respect Dyson as a competitor, especially his approach to the floorcare market."

Even in Dyson's own words, a steeliness is apparent. "We're very, very clear about where we're going," he says. But soon the ardent designer reappears. He is driven, he says, not by the desire to make money, but to invent and create. "It's like painting," he gushes. "You could paint pictures because you want to be in business or because you want to paint pictures. I do it because I love it."

THE NEEDHAM FACTOR
One man who knows Dyson very well is Richard Needham. A former Tory Northern Ireland and DTI minister, the fact that Dyson managed to acquire his services was something of a masterstroke. While Dyson invents, designs and single-handedly fronts the operation, Needham runs key elements on the business side. He is widely regarded as a tough character. And he gets things done. Needham became involved with the company after serving as the local Conservative MP for the area. Today, as a non-executive director, he is Dyson's right-hand man. Needham compares Dyson to former deputy prime minister Michael Heseltine. "Both are extraordinary people. Both genius." Dyson is more than just a designer, says Needham. He's an electrical engineer, mechanical engineer, he has great marketing ideas, is great at PR and "he looks good." Needham: "There's a whole range of things he can do. He would have been a success whatever he did. He's very similar to Heseltine in that respect. They both excel in several disciplines."

Needham plays a key role in the Dyson story, although his presence is strangely low profile. He doesn't appear anywhere on Dyson's web site, which is dominated by James Dyson's impressive life history. Needham has a range of responsibilities at Dyson. He first had the idea to start manufacturing in Malaysia. And, as a former overseas trade minister, he has worldwide business contacts. As James Gray, the present local MP, puts it: "There's no-one he doesn't know in business." Needham picked off Gordon Thom from the UK embassy in Tokyo for a top job at Dyson's Japanese office. He also runs specific projects such as chairing Dyson's remuneration committee, reviewing pensions and human resources. Dyson says it's Needham's experience that sets him apart. "He has wide-ranging contacts and experience in UK and overseas businesses," says Dyson. "He has a special interest in overseas expansion."

Even his admirers call Needham "a tough cookie" (when Northern Ireland minister, he was famously caught calling Thatcher "that cow" while speaking on his mobile) and he's known to have quite a temper. Local councillor Jo Price, formerly of the local planning authority, was one of those who declined permission for Dyson to build a second factory. The decision wasn't taken too well. Needham was, says Price, "absolutely seething" when he heard the news.

Look closely at Dyson the company, and you find a heavy-hitting team. In addition to Needham, former British Airways chief executive Robert Ayling and serial non-executive Allan Leighton are also paid advisers. James Dyson clearly knows how to assemble more than just vacuum cleaners. "In a fast-growing manufacturing company expanding overseas," says Dyson, "it is important to have help and advice from non-execs who've been through similar experiences."

Fellow washing machine entrepreneur Martin Myerscough (the man behind the new Titan washing machine) agrees that inventors need a commercial sidekick. "You need someone who understands the business at an early stage," says Myerscough. (His answer was to hire Michael Hearn, former CEO of Servis washing machines.)

"It helps to have someone with broad political and business experience," says Needham of his own role. "It's an icon company, so relationships with government departments, civil servants and relationships locally are crucial. With my contacts in government and with the local area (as former MP), I can do this."

The mixture of Needham's influence and Dyson's inventions has enabled Dyson to crack Japan, traditionally an almost impenetrable market for foreign electrical manufacturers. Today it's one of Dyson's most successful markets (it has the ninth largest brand share in Japan). MD of Dyson Japan, Hiroko Wada, says: "People who use our vacuum cleaners say they are delighted with them, but always with an element of shame about how much dust it picked up!" A ray of export light in an otherwise gloomy European manufacturing picture.

Needham also understands manufacturing, having previously worked in the tobacco industry, as an engineer and having once run a printing business. Having worked at government ministries, he also knows how to get big and unwieldy operations to work effectively. Needham puts it down to being multi-skilled. "I have political and diplomatic skills, organisational skills, a business background, plus marketing and selling skills," he says. The biggest challenge when he arrived at Dyson was the pace of change. "When I first got there, Dyson had about a £6m-£8m turnover. Now it's £300m worldwide. Handling change is hard. It's handling the people, the processes and ensuring the same spirit applies. It's very important. You have to ensure you cut out excess bureaucracy and eliminate inefficiencies of growth." Keeping the management structure lean is vital, says Needham. No manager at Dyson has more than four people reporting to them. "It stops people arguing and helps keep the company young," he adds. "Of course, the further up the mountain you get, the harder it gets. Especially as the people at the top start throwing rocks at you."

MADE IN ENGLAND
The Dyson plant, under Needham, is a tight, modern manufacturing operation. A 24-hour production line and the continental shift patterns - where workers do four days of 12-hour shifts, including a nightshift, then they take two days off - mean that more gets done, quicker. There's a "continuity of production," says Needham. And he reckons such systems are crucial if the UK is to retain its position as a manufacturer. He adds: "Of course, it's difficult for people to change, but a vast majority agreed they'd be better off - particularly because they would have longer off work. We must be flexible as a workforce," he says, "especially as we are competing against lower wages elsewhere."

The Dyson plant employs many of its temporary workers through Securicor Recruitment Services (SRS) and has done for the past two years. The company says: "In any manufacturing environment there are peaks and troughs and our use of temporary workers allows us to align the supply of people with the needs of the business." Dyson says that a particular advantage of using SRS is that the plant is located in an area of exceptionally low unemployment (0.9 per cent, compared to a national average of 3.2 per cent) and it needs help to source significant numbers of temporary workers. It's a smart, though not particularly unusual, move. As well as the ease of hiring, it means that, because Dyson doesn't employ the workers directly, someone else can deal with all that annoying employment stuff.

The company's accounts confirm that this is an exceptionally successful private company. And they reveal that James Dyson himself is very much its central cog. Hardly any borrowing, coupled with an impressive increase in gross margins (from 38.8 per cent to 39.1 per cent, according to the latest figures available), show a tight, profit-orientated regime. James Dyson owns all the company - rare in such a large private company (Mark Dixon of Regus was another pretty well outright owner before he floated the serviced-office business on the stockmarket). The accounts also include a statement of intent that Dyson will pay creditors on time. Another rare thing.

THE FUTURE
So what about the future? Vacuum cleaner sales continue to impress and now Dyson has entered the washing machine market with his Contrarotator. This, says Dyson's figures, had achieved a 22 per cent value share of the £500-plus market by June 2001. (Again, though, Dyson is fighting his detractors. A Which? magazine report questioned the washing prowess of the new machine and once more Dyson was on the offensive, fighting his corner.)

Another Dyson invention, an environmentally friendly fuel filter, had to be scrapped after years of development. "It's one of the few ideas we've given up on," says Dyson. "We worked on it for 12 years and dropped it. The problem became harder as time went on because they made the diesel particles smaller, on the basis of if you can't see them, they won't do you any harm. But actually, that's making them more and more dangerous. Ours became a rather complicated and expensive solution and we felt it was uncommercial."

Such flexibility is an important part of Dyson's mentality, says Needham. "I can tell him if I don't agree with him about something. He's prepared to take advice and to change his mind. Many people when they get to that age are inflexible, but not James."

Dyson expects to be working in 20 years time, "still inventing and continuing to be creative. I don't imagine myself not doing that." But his family history doesn't bode well. Both his parents died in their forties so, as he cheerfully admits, he's already done "quite well." He shrugs off the succession question, saying he "hasn't got time to think about things like that." He continues: "I think I've dealt with that, because there is a very good team running this place. There are a lot of engineers and scientists driving things forward. So in that sense, I don't think I'll be missed very much. I mean, it's not a one-man business by any stretch."

James Dyson must be doing something right. His local land-owning earl, his MP, a former trade minister, Terence Conran and even the local cabbie sing his praises. One of the few complaints, though, was from that local taxi driver, who asked to remain anonymous. Now that Dyson has created full employment in the area, he grumbles, "there's no one left to drive the cabs."

The Dyson plant has life-size rust-coloured metal sculptures dotted around the place in groups of twos and threes.

"The thing is, if you build a modern building, you have a moral obligation to spend some of the money on sculptures to support sculptors," Dyson explains. "Also, it's good for the soul to have a bit of art around. But there's symbolism in the figures. They're made from re-casted hot water cylinders, pressed into a mould. The act of squashing makes them all appear slightly different.

"So there's a little pun in there that they are mass-produced but all different. Which is sort of an analogy to our production."

Jamie Oliver is associate editor of Real Business.

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