Strategy

The Group today has key strengths in Ceramic and Carbon materials science and associated technologies and products, in application engineering, in the ability to solve difficult problems for its customers, and has strong reputation, brand loyalty and customer relationships. These key strengths, together with the Group’s skilled and engaged employees form a good foundation on which to build. 

The long-term strategy is to focus on building three distinctive core capabilities: materials science, applications engineering and customer focus. The Group will apply these capabilities to a portfolio of scalable global businesses where technical expertise and differentiation is valued to solve challenging problems for its customers. Through this, the aim is to strengthen the Group to deliver resilient financial performance and faster growth.

The Group has set six key execution priorities:

Move to a global business structure

The Group is changing its organisation structure, moving from the current regional model to a global business structure. The Group will be organised around two global divisions and six business units:

  • Thermal Products division. Organised in two global business units:
    • Thermal Ceramics
    • Molten Metal Systems
  • Carbon and Technical Ceramics division. Organised in three global business units:
    • Electrical Carbon
    • Seals and Bearings
    • Technical Ceramics
  • A single global business unit: Composites and Defence Systems.

This re-organisation will improve global coordination across the Group and will strengthen accountability within each global business unit. There will be a simplified approach to global customers and markets, increased efficiencies driven through best practice sharing, and better leverage of R&D across regions. There will be greater operational focus, including better capacity planning and management of the manufacturing footprint, better alignment of technology development priorities with customer needs and growth opportunities in global market segments. The Group will ensure that the key benefits the regional structure delivered will not be lost. The Asia/Rest of World region is an important growth driver for the Group and the investment in capability and capacity will continue and there is a dedicated senior resource in the structure to drive Asian growth. Where appropriate, resources will continue to be shared, for example in IT and key HR functions, within regions rather than diluted or replicated.

Improve our technical leadership

The Group plans to increase its R&D investment to grow its technical lead and accelerate new product development, reducing time to market. The Group has two successful centres of excellence today, Insulating Fibre, part of Thermal Ceramics, and Structural Ceramics, part of Technical Ceramics, and two more will be established, Brazing and Joining, in Technical Ceramics, and one for carbon science that will support Electrical Carbon and Seals and Bearings.  These centres allow the Group to concentrate development efforts for these materials and capabilities. R&D investment was increased to 2.8% of sales in 2015 (2014: 2.3%) and the Group anticipates increasing this by around 1% of sales over the next three to five years funded by savings from improved operational execution. The Group will strengthen its stage gate development process and ensure it is applied consistently across the Group.

Improve operational execution

The Group has a number of opportunities to improve operational execution – both in terms of efficiency and effectiveness. The operational opportunity varies by business unit and the Group will allocate capital and target specific improvements to efficiency and effectiveness on a business-by-business basis. For example, Thermal Ceramics will target efficiency improvements through a combination of global best practice implementation, application of lean manufacturing techniques and global sourcing of raw materials; Technical Ceramics will focus on improvements in quality, yield, scrap and delivery; and, Electrical Carbon on capacity utilisation and efficiency.

Drive sales effectiveness and market focus

During 2016 the Group will focus on improving a number of aspects of its sales capabilities and process - focusing on the sales process and its efficiency, the management of key customer accounts, the management of distribution channels and deepening the understanding of end markets and their faster growing segments. The Group has a good relationship with its existing customers but there is more to be done to win new customers and take its solutions to new markets.

Increase investment in people management and development

The Group will strengthen its leadership capability and deepen functional capabilities across the business, including in sales and engineering. Senior leaders will be benchmarked externally, new talent introduced and future leadership candidates identified from within the business. Performance management will be enhanced for the Group’s top management and the structures and targets for incentive schemes will be reviewed. The Group will invest more in executive training and create clear career paths for its technologists and engineers. The intake of graduate trainees will be increased from 30 to 50 a year over the next four years.

Simplify the business

Through the re-organisation of the business the Group will focus on running each business unit on a global basis. The intent is to grow each business to global scale and to exit those products and markets where that cannot be achieved.

 

The Group will continue to refine its strategy and approach during 2016 and, in particular, will build the implementation plans in greater detail as lessons are learnt from the initial work.