John Smedley stitches rebound into 200-year-old knitwear brand; Toyota’s ‘kaizen’ philosophy of efficiency has helped Smedley achieve productivity gains of 5 per cent in a year

August 11, 2013 12:53 pm

John Smedley stitches rebound into 200-year-old knitwear brand

By Jonathan Moules, Enterprise Correspondent

AGM-74

Toyota’s ‘kaizen’ philosophy of efficiency has helped Smedley achieve productivity gains of 5 per cent in a year

John Smedley’s descendent has revived the fortunes of his eponymous 229-year-old luxury knitwear brand by embracing the productivity improvement techniques of the Japanese car industry. Ian Maclean, a seventh generation offspring of Smedley’s 18th century founder and namesake, is now its managing director. He was persuaded by an ex-managing director at the Derby factory of Toyota UK to adopt the Japanese company’s “kaizen” philosophy of making multiple incremental efficiency gains along a production line. “Our business is quite like the car industry in that, like the car companies that build different cars on the same chassis, we can make different garments from the same basic body shape,” Mr Maclean says. “What is amazing about manufacturing is that if you squeeze a little bit more profit from each step, the overall profit gain can be very large.”Advances have been made along the length of Smedley’s production chain, from training staff in additional skills so that they can switch between tasks, to better management of the yarn purchase.

Productivity has risen 5 per cent in the past year following these changes, enough to push the business from a £1.9m loss reported in 2010 to a £1.5m pre-tax profit for the 12 months to the end of March.

“Our factory manager estimates that we can add another 8 percentage points to that, which means another 20,000 to 30,000 garments,” says Jeremy Hope, Smedley’s finance director.

“When we get past a certain tipping point in production, each of these additional garment runs are a lot more profitable because the costs per item of manufacture are much lower.”

Despite the radical change in management approach, the physical fabric of the factory on the banks of the River Derwent is little changed from when John Smedley began production of his fine gauge knitwear in 1784.

Back then Mr Smedley and his neighbour Richard Arkwright employed the cutting-edge technology of steam-powered machinery. It is now a world heritage site.

Although Smedley has only 380 staff today, it has a global reach comparable to much larger British brands, such as Burberry and Pringle. A fifth of sales are to Japan, but it also exports to 40 other countries.

Smedley recently received its first royal warrant from the Queen, thanks in large part to the opening of its first shop on Brook Street, not far from Buckingham Palace. The royal family may have already been buying Smedley-made garments, but they would have done so through other retailers, such as Harrods, Mr Maclean explains.

Having made a mark on productivity, Mr Maclean is focusing his attention on raising turnover, which has remained flat at about £15m for the past three years.

“The effect of deflation from low-cost garment manufacture has been brutal for our industry,” he said. “Without growing our sales we are not going to survive.”

He plans a bigger push to sell Smedley garments direct over the internet. “The best way for us to tell our brand story is through the web, since we can’t afford the kind of fancy advertising that big brands do.”

John Smedley

Amalia Brightley-Hodges speaks to sixth generation family member, John Maclean about the family’s long running history in the world of luxury knitwear and the company’s vision for the future of John Smedley Ltd…
John Smedley was established in 1784 , at Lea Mills, in Matlock, Derbyshire by John Smedley and Peter Nightingale, Great Uncle of Florence. Their base, Lea Bridge provided an ideal setting for the mill as the brook which ran through the village provided motive power and a constant source of running water.

Towards the end of the 18th century John Smedley was running the business alone, although the Nightingale family retained an interest in the property. His son, also called John Smedley, then took over at the age of 34 after finishing his apprenticeship at the mill.

It was the second John Smedley who truly took the business forward with his great vision and energy and moved all manufacturing processes onto one site using only the very best raw materials, and investing in new machinery.

After 11 years in trust following the death of the third John Marsden-Smedley, the company was passed onto the fourth John Bertram Marsden-Smedley who became Chairman and Managing Director at the young age of 21 for an astonishing 70 years. After his extraordinary time at the helm of the business, John Marsden-Smedley was succeeded by Ian Maclean who had married his grand-daughter. Together with the Sales Director, Charles Scott, Ian Maclean moved John Smedley away from being heavily involved in underwear manufacture and took the business to where it is today – renowned for the design and manufacture of high quality outerwear.

John Smedley is proudly run by several members of its sixth generation. Andrew Marsden-Smedley became chairman in 1981 and is still the company’s President. On his retirement as Chairman, Andrew handed the business down to Lowry Maclean. In 2000 Tony Langford was appointed Managing Director and afterward Chairman, the first non-family member to be introduced to the Board.

Today, Ian Maclean, 7th generation family member is chairman, and John Maclean is current Vice President. “Working in the business has meant that I’ve got to know my entire family extremely well because relationships and communication are so key, in a family business probably more than others. John Smedley is the glue that holds the family together. We could have sold the business ten times over but each time we’re approached we decline. Firstly because they would move the business overseas where production costs are far cheaper but quality cannot be assured. Secondly it is doubtful the site in Derbyshire would remain in production which would in turn impact out employees badly.”

The workers on the factory floor are also often members of the same family, bringing a true sense of community to the business. This environment also means that employment is very rarely an issue as skills are passed down through the generations. The company realise the value of treating employees well and NVQs are offered to all employees because it is crucial to keep young people filtering through the ranks.

When talking about the current running of the business, John is clear on the requirements from family members thinking of joining the company. “In the past we’ve not had any formal succession plans in place but the individual needs to be able to juggle the needs of the family, keeping them happy through good times and bad and steer the non-family members responsible for running the business. Succession is a tricky subject and there’s a great need for respect in these situations. We bring in non family members because they are specialists in what they do and can provide an alternative insight to the expertise we have in-house.”

So how does this, already global brand, continue to grow and be innovative?

“We know that the current economic climate isn’t perfect, it’s tough but probably worse for others as we are at the top end of the market. We’re in it for the long term clients know we’ll be around through thick and thin.”

At John Smedley they have embraced the world of e-commerce and since their first online sale 8 years ago, web sales have soared. John Smedley exports to 37 different countries and 60% of their garments are exported. Their staff travel around the world to gauge trends, fashions and cultures and there is no knee jerk reaction to the market place.

“We pride ourselves on our heritage, our stability as a business and our respect for the past but at the same time we are continuing to drive forward, invest in the latest technology and expand into new markets.”

John Smedley are renowned for knitting fully-fashioned, fine-gauge products, mostly 30 gauge, an ultra lightweight fine knit that is rarely produced by other manufacturers. Once knitted, the body panels and sleeves are linked together by hand, stitch for stitch, to create the impeccable neat seams which remain one of the hallmarks of real luxury knitwear.

From the design stage through to each area of manufacture the company strives for the best, and successfully combines tradition with modern techniques to produce garments unparalleled in design excellence. And the company still has its base at Lea Mills, extolling the family virtues that were responsible for the growth of the Smedley business into the force in fashion that it has become today.

Ian is leading historic family company back to the future

Wednesday, September 21, 2011

Derby Telegraph

ON the table is a John Smedley cotton shirt dating from 1912, still in pristine condition.

Since it was made, the Derbyshire business has survived numerous global catastrophes.

Ian Maclean, managing director of knitwear firm John Smedley, talks to Oliver Astley.

The latest worldwide financial crisis has hit sales at the luxury knitwear manufacturer and the fight is on to bring back growth to a business that employs close to 400 people and is still owned by the family that founded it in 1774.

And, for the first time since the late 1950s, a member of that family has stepped into the breach.

Ian Maclean left a successful career and a comfortable lifestyle in Herefordshire to become managing director at John Smedley, where he is faced with serious challenges.

He said: “There have been record price increases in wool and cotton, fuel costs are going up and consumers don’t want to pay more, so we are feeling squeezed.

“Since the 50s, the family has brought in people to run the business and I could have let someone else take the pain but looked at the top people here and thought they were the best team I’ve seen in my 20-year career.”

Ian is no newcomer to the business, having been non-executive chairman for the past decade.

Nor is he a newcomer to the sharp end of the rag trade, having spent 15 years at US outdoor wear specialist Orvis.

And five years in investment banking should mean he can make the numbers add up.

“It is a classic turnaround situation and the first thing we have done is get our costs under control to stabilise the business, create a buffer of profit and cash which can be used to invest to grow the business,” said Ian.

Painful decisions have already been made and there have been 60 redundancies.

The stabilisation process under way, it is now time to grow the business at a time when disposable income is being squeezed everywhere.

This is the tricky bit.

“Internet sales are doing very well so the website has been developed to appear in different languages and different currencies,” said Ian.

“It gives us a brand presence and an ability to sell direct, giving us a great return, so the web is a priority.”

The growing middle class in China is a market that the company is targeting and it currently has a Chinese-speaker helping the brand with its social media presence there.

“Burberry and Mulberry can open hundreds of shops in China but we simply do not have the means to do that, so we have to be a bit smarter,” said Ian.

Another plan to grow sales is to work more closely with the firm’s Italian partners.

Ian said: “We have a close relationship with a distribution partner in Italy.

“We have around 100 retailers in Italy, and have done for many years, but we want to find out how to take that number to 200 or 300 because we are still primarily a wholesale business.”

Significantly, John Smedley’s Italian friends understand what sells there.

“Italian style travels around the world so if we get it right with our Italian customers they not only have the infrastructure to sell more widely within Italy but it will sell across the whole world,” said Ian.

Among ideas being explored are a range selling at a lower price point and introducing a distinctive logo that consumers can associate with the John Smedley brand.

“Everyone wears polo shirts, from children to grandfathers, and we only have a tiny proportion of a market compared with people like Lacoste, Fred Perry and Ralph Lauren,” said Ian.

“In the John Smedley archive there is a polo shirt from 1934, so the company has a sportswear heritage to exploit.”

However, the lack of brand awareness is a stumbling block to building sales.

Ian said: “There are no logos on our garments so it is a very anonymous type of product but it is logos that people recognise and catch the eye first.”

If Ian and his team manage to knit together new products with smarter marketing and branding then the next chapter in John Smedley’s history could be an exciting one.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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