Due Diligence - Restructuring - Environmental Compliance
Manufacturing
Manufacturing is a very broad category to cover and understand and the following descriptions are often applied to help simplify understanding of the type of manufacturing activity undertaken.
Heavy manufacturing is similar to base chemicals and can be typified by large capital plants in continuous shift operation. The products can range from iron and steel, metals refining, through to ship building. The plants are inflexible in nature and are energy intensive. The operational fixed costs are normally lower than for the less asset intensive manufacturing operations but higher than for the base chemicals sector on a relative basis. Energy efficiency is lower in these industries than for the comparable plants in the chemical industry. Review of these assets must concentrate on the process flow sheet, energy and material conversion efficiency, manpower efficiency and operational controls and the feedstock and product advantage.
Large scale assembly plants are manufacturing business such as vehicle assembly, aerospace manufacturing, appliance manufacture. These businesses are typified by very large units for assembly covering vast areas, with considerable manpower, and often centre on an industrial park concept. Tier suppliers for sub-assemblies and components are encouraged by the OEM to establish their production facilities around the main assembly plant to reduce the logistic hurdles for just in time deliveries.
Light engineering and manufacturing businesses are typical of the Tier suppliers making components and sub assemblies for large OEM’s or can be small manufacturers of specialized equipment. They tend to operate in a small niche and can be typified as having a market focus “an inch wide and a mile deep”. These assets are normally much more flexible and can often be seen as workshops with various machining centres and work stations. Capacity is driven by change over and set-up time, man power efficiency, first run on specification performance, work flow through the factory. Raw materials are a much lower proportionate cost in the final product with capitalized machining costs and labour as much more important.
Specialty or high technology manufacturing is typified by high levels of intellectual property contained within the manufactured product or process. These businesses tend to be self evident in that the type of manufacturing environment is very different from classical workshops. Examples include semi-conductor and electronics manufacture or turbine blade manufacture. The assets are often very complex and involve a multitude of technologies. Semi-conductor plants are part chemical plants and part component assembly in nature. The management controls often involve the control of toxic chemicals and hazardous environments not normally found in light industry. This type of business is know-how driven and the analysis should focus on the product development cycle, research & development, client certification of products and the intellectual knowledge in the business. The manufacturing sites will retain many of the labour efficiency measures and control needed in the large assembly industries.