Filtronic Defence plc

Source: Manufacturing Digital

Date :28/09/2007 16:22:03

Filtronic steps up a tier

From being a components and subsystems supplier for decades, Filtronic Defence’s capacity for integrated systems delivery is being recognised by its end customers, says Managing Director Keith Ferguson

Written John O’Hanlon: produced by Alex Smith

Filtronic plc, a world leader in the design and manufacture of a broad range of customised RF, microwave and millimetre wave components and subsystems, has been supplying microwave components and integrated subsystems to the defence industry for over twenty years and is an approved supplier of electronic modules to the majority of the world’s prime defence contractors.

Its products are largely used on the Radars, ESM (Electronic Support Measures) systems and ECM (Electronic Counter Measures) systems that protect modern military platforms from hostile threats. It is able to offer complete RF solutions for complex naval systems through airborne Radar Warning Receivers for fighter aircraft to small hand held devices that protect the foot soldier. Direct customers tend to be the first tier of prime contractors in UK defence procurement. Accordingly Filtronic’s two biggest customers are Thales and Selex, formed from BAE Systems and Finnmeccanica.

Keith Ferguson has been running the UK defence entity of Filtronics for some five years now, at a time of conspicuous change and growth. When he took over he inherited a workforce of 300 people across three sites. On his watch output has increased by 60 percent and the number of employees has halved. And as of last month and following an investment of some £500,000 at the Shipley, Yorkshire site, he has consolidated all of his operations there, apart from a team located in Australia largely carrying out government research into new types of radar systems for their embryonic next generation systems.

Concentration

Some 60 defence jobs that used to be located at Filtonic’s Newton Aycliffe site have been reabsorbed by other departments there, while Shipley has been positioned to concentrate on the division’s core capabilities, he says, with headcount coming down to 160 as he shifts non-core capacity to ‘tried and trusted subcontractors.’

The recent investment has gone into the installation of manufacturing and test equipment, equipping a complete new clean room for manufacturing, and installation of air handling and venting units for bulk gases like liquid Nitrogen and liquid CO2.

Because so much of what Filtronic manufactures for the defence industry is bespoke, low-volume and high-value, it’s difficult to talk about lean manufacturing in the sense it’s normally understood, says Ferguson. “We’re concentrating on elements of our manufacturing when targeting cost.

You can look across different bespoke products and try to achieve some commonality, or elements of routine in production. But it’s mainly a question of identifying what is appropriate for what is going through at any given time.”

For example, the circuit boards in the radio frequency and microwave products are populated by hand. “There’s a very good reason for that,” he says. “It is because they are produced in such small volumes and each run is fairly bespoke.

If we were to try to tool any of our automated machines we simply wouldn’t get the return on investment. You have to use the right tools depending on the problem you’re dealing with on a daily basis. So where appropriate we use high volume manufacturing techniques, but we do you use a lot of manual techniques as well.”

There is also a lot more specialisation in defence products than in civil telecommunications, though to look at they might be almost identical, he adds. “In our case we are always striving to meet an ever more demanding customer requirement and specification.

We work at the outer limits of performance, whereas if the product is for the communications industry you’d probably spend a lot more time and effort trying to build in design margins!” It’s a constant judgement call to decide how best to balance the conflicting demands of specification and margin, and happiness ensues when the two both benefit. It does happen!

Even when Filtronic gets it just right, remember radar and the war. Defence drives innovation like nothing else, and high speed obsolescence is an occupational hazard. “Our products are going through another customer design cycle almost before they have left our premises,” Ferguson laments. But it helps address this if the manufacturer can build in flexibility in his design for manufacture. “If we have a pretty good idea that a component is going to be superseded we can build in the ability to replace it at a later date, and save the customer some money down the line.”

Supply chain challenges

The defence arm’s volumes don’t give it the clout with suppliers that the telecoms branch has either. There’s a balancing act to play out between the customers’ demands and expectations and the suppliers that are further down the chain who are not so dependent on the defence marketplace. “Having an integrated supply chain in the defence marketplace is a bit idealistic, to tell the truth. You have to understand your suppliers and their dynamics. You cannot dictate to them.”

As a result, he admits that he and other manufacturers in this sector are sometimes obliged to consider solutions that are anathema to the lean lobby, such as strategic stocking in order not to have to keep key customers waiting when they want something in a hurry.

This might apply to key components of key materials, and there are some ways to reduce its impact, Ferguson explains. “Wherever possible we’ll try to push that back down the supply chain, so we might fund one of our suppliers to keep stock of a component, just so that we can react quickly to the market, or to give us some protection against obsolescence.

That gives the customer some protection too because we are able to respond to his market demands. By doing that we win more business. We’re taking a risk but it’s a calculated risk. It flies in the face of standard lean practice, but some elements of lean can still apply to what we do in the business.”

Moving up the food chain

And of course the concentration of capacity while reducing the headcount dramatically is proof that the operation is now about as lean as it can be. Keith Ferguson is looking forward to a new relationship with the market, but first he looks back. “When I look back, 30 years ago we were a pure component play company. Fifteen years ago, we were into assemblies and small level subsystems.

Five years ago we were heavily into the subsystems business. But look where we are today! We’re actually teaming up with some of the prime contractors to bid direct to the MoD for systems.” Filtronic, in other words is getting its name onto the box at last.

In recent months Filtronic placed a bid to the MoD for a major system. In the event that job went to Thales, but it did Filtronic some good nonetheless because it was the first time the company had put its head over the parapet in this way, and made the MoD appreciate the Filtronic name. “It has got us on to their list.

We’re now recognized as a prospective supplier to the MoD so now we can talk to some of the tier one primes on a more even footing. And we have prime contractors now, not just in the UK but worldwide, talking to us about teaming arrangements. That in turn gives us more control over the programmes we are bidding, and more visibility. It’s higher risk but also higher margin business.”

This evolution of the business takes Filtronic into what Ferguson calls ‘antenna to digit solutions’. It’s a bit like a PC, he says. Five years ago Filtronic might have supplied the hard drive: now it supplies the whole box. But not the operating system. “The tier one customers take our enabling engine and put their own software on to it. That would interface with our embedded software and enable them to produce something that their end customer wants. They win, we win.

“That means our customers don’t have to keep such a large team of systems engineers and systems integrators; they can concentrate on what they do best, which is processing information that comes from a receiving antenna (and that we are handing off to them in a digital format). And we can concentrate on what we do best, which is RF and microwave signal processing and conditioning.”

Tests for the times

Things are different as you get to the higher up the pecking order, and automation can help. As Filtronic moves up into complete system front ends there is a lot more to test, for one thing. “To test every electrical aspect of a component might take a few hours: to test an entire system or subsystem might take a few days, and the only way you can do that is with a lot of automation.

Testing is highly iterative work and it eats up a lot of the time used in manufacturing, and if there is a lot of human intervention that’s costly and less reliable; so we’re trying to embed a lot of software in the product so that we can interface that with the equipment that we use, so that the alignment and test on our end product is as automated as possible. We can drive out cost in that way.”

One of the key things Ferguson has done over the last two years, and one that perhaps best illustrates the changed culture in the business, is the shift of emphasis from manufacturing to engineering. Manufacturing is still important, R&D is still important, but the integrated design teams that include both the manufacturing engineers and people from the shop floor have been elevated to the same level. “We get our manufacturing engineers involved in the products lifecycle right from the outset.

That’s not just when an idea hits the floor but it can be when the customers first concept comes through the door. The people who are going to make the product at the end of the day are the ones to stop us designing in features that are actually difficult to implement on the manufacturing floor.”

And by involving the suppliers in at this point further grief can be avoided, he insists. “If we bring them in at an early stage it can make the cost of manufacture a lot lower. It’s probably going to make a more reliable product, fewer piece parts usually, and quite often we get better performance.”

Finally, with fewer people it follows they have to do more – or have the ability to. That in turn means cross training, and whether that means on the job training or going outside to access the skills Keith Ferguson is determined to invest in his staff by giving them more skills. “That means that they will be more flexible for me. The bottom line will be better, and we can pay them more. It’s as simple as that.”

Links

Filtronic Defence plc