The Company’s strategy is articulated in its latest Annual Report.
The Company currently operates from two sites. The main coating facility and head office is in Bicester, Oxfordshire, UK with a coatings facility in Martinsville, Virginia, USA. The Company is a service organisation that coats precision engineering components supplied by customers, with the exception of certain new contracts where the Company is responsible for the product being manufactured and coated.
Challenges in Execution of Strategy
Planning increases in capacity
Whilst the Company puts considerable thought into anticipating medium- to long-term demand so as to build capacity in time to meet that demand, there are particular difficulties in this. The oil industry is notoriously cyclical and accurately predicting cycles is close to impossible. In addition, gaining volume-related supply agreements with major customers is normally not possible. The Company has had experience of customers’ best guesses of their demand being markedly both over- and under-achieved. Moreover, the lead time from order to installation of new capacity is about one year.
Together, these things make the matching of additional capacity with demand one year and beyond a very difficult process.
As volume and customer numbers increase, the matching of capacity to demand will become easier. This is because each new increment in capacity will become a smaller proportion of existing capacity and the serving of more-numerous customers will mean that peaks and also troughs in overall demand will become progressively smaller in relation to average demand. Accordingly, increasing sales volumes is the leading objective for the Company, especially since production overheads will rise at a markedly slower rate than sales.
Awareness of Hardide coating and expanding its market
Being a new product and the fact that it often performs a problem-solving role, means that awareness among potential customers for Hardide and our awareness of those customers is hard to achieve. The Company has an awareness programme designed to reach specifiers in a range of industries.
Lead time to acceptance
Nearly always, customers will do extensive testing of Hardide before accepting it and this can take considerable time. Hardide has a programme to commission tests at independent laboratories. In some cases, the results from these will be accepted by potential customers and thereby shorten the acceptance lead time.