Date of issue: 5th February 2007

BIRMINGHAM MANUFACTURING FIRM BUCKS THE TREND

While the CBI's latest Regional Trends Survey reports a decline in manufacturing in the West Midlands and a fall in the volume of orders - as profit margins are squeezed by higher costs due to rising energy prices - one Birmingham SME is bucking the trend.

WG Eaton posted record half-yearly trading figures and attributes its achievements to the business support and cost-effective advice it receives from chartered accountants Clement Keys and its take up of a range of support services.

The company was established in 1860 and originally manufactured leather products such as transmission belts and hydraulic seals. Today it specialises in industrial high temperature heat resistant products including heat protective clothing, insulation materials, gaskets/seals and thermal engineering products.

Although WG Eaton is operating in a declining market, it is well on course to achieve its target of a £1m turnover in the current financial year.

Chairman Peter Wall, who bought out other shareholders to take full ownership of the business five years ago, has been keen to take advantage of advice and training support available from the Manufacturing Advisory Service and the grants on offer from Business Link.

The company has secured direct financial support from Business Link towards a new IT system, website, product launches, the recruitment of a new production manager and staff training. It has also received help to implement health and safety policies and comply with employment legislation.

Mr Wall is also able to call on specialist advice from Clement Keys, which has been looking after Eaton's interests for 30 years. The firm produces annual statutory accounts, abbreviated accounts and Corporation Tax Returns and provides payroll services. It also supplied and assisted with the installation of new accounting software, which enables
WG Eaton to run an integrated accounting, ordering and supply system and produces
VAT Returns.

"We understand the business and the challenges it faces and so designed the accounting structures in close consultation with Eaton's management and staff to meet its reporting requirements," says partner Joe Bates.

"We also offer backup support when the team has to deal with maternity pay or deductions for child support, for example, and when the business amends its standard pay schedule as it did in order to pay its workforce early for Christmas."

Clement Keys reviews the accounting information and presents monthly management accounts within two weeks of the end of each trading quarter. This allows WG Eaton to review the results and make timely decisions based on the financial information.

"Clement Keys is much more than our accountant. The firm provides us with a range of vital business services so has a critical input into our overall performance," says Mr Wall.

"The regulations affecting the payroll mechanism can be challenging for an SME, but we do not have to worry about it because Clement Keys deals with such matters automatically, leaving our management team free to concentrate on running the business."

Peter Wall is a member of the CBI Regional Council and represents the West Midlands on the SME Council, which is looking to reduce the number of complex business support schemes from over 3000 to 100.

"We are trying to influence government policy and assistance for the manufacturing sector because even though the DTi is aiming to build an Enterprise Culture and improve government services for small business, getting close to those delivering the stated policy in order to influence events from the coal face can prove very difficult", he says.

A 'champion' of SMEs who is also liaising with the Better Regulation Executive based in the Cabinet office, the University of Aston regarding collaboration on research and the Department of Work and Pensions, Peter Wall has welcomed the reorganisation of the five regional Business Links under one operation, as he believes this will enable more SMEs to benefit from advice.

"The Government and the DTi do not seem to realise that SMEs are not just small 'big businesses' and require a particular kind of support if they are to take advantage of the commercial opportunities," he adds.

WG Eaton is currently being used as a typical SME model by the Better Regulation Executive and the DTI to discuss how the likes of health and safety and employment legislation affect small businesses. It is testing the development of the new government regulations for business support to ensure the DTi concentrates on the right areas as far as assistance to qualifying businesses is concerned. The Business Support Simplification Programme team has been set up within the DTi to act on behalf of the Government.

A focus on health and safety issues is enabling WG Eaton to tailor solutions for heat protection in extreme conditions, and this has had a positive impact on its trading performance. Meanwhile, the company is also reaping the benefits of investment in new machinery and a separate gasket division, which opened in 2002.

"We have now completed an internal reorganisation which has seen Clement Keys effectively take over all finance issues after our financial director retired," says Mr Wall.

"We could not have achieved what we have without its help and the support of organisations like Business Link, and I am hopeful that our experiences will help the DTi gain a better understanding of the environment in which businesses of our size operate and drive the development of support programmes that are geared more precisely to the needs of small and medium sized firms."