Renold chases low cost manufacturing

Reporting a slight increase in revenue but a dip in 2009 profits today, the company said it had strengthened the business over the last year, reducing costs by improving its access to low-cost manufacturing facilities. Following its acquisitions in China and India, the company subsequently closed its Polish facility. Renold said a reduction in demand had resulted in surplus manufacturing capacity, leading it to close the manufacturing facility in Poland with production ceasing at the end of June. "This facility had played a part in reducing manufacturing costs, but following the recent acquisitions of businesses in China and India, it was no longer considered a low-cost location," said chief executive Robert Davies. The acquisition in China has allowed Renold to be cost-competitive with other manufacturers in the region and increased capacity and the acquisition in India extended the scope of products that could now be produced in low-cost countries, he went on. Reduced hours of working had been implemented in most facilities and agreement was reached to implement a 10% reduction in pay for directors, the senior management team and most staff with effect from 1 April 2009. Looking forward, Renold said it would continue to focus on cost reduction and on expanding geographically. "Thus far, the emphasis has been on moving the appropriate manufacturing capacity to low-cost countries - a strategy which will continue to yield growth in our core developed market territories. In addition, now that we are physically present in these low-cost markets, we are in an excellent position to expand our highly regarded product range into them. We estimate that an annual industrial chain market of circa £400 million exists in new territories where we have a current market share of less than 1%," Davies said. Revenue for the year ended 31 March was £194.7 million (£172.6m) producing an operating profit of £7.6 million (£12.2m).