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Reducing break even point and maximising flexibility

Optare's new approach

ix months ago I met up with new CEO comes in, and suddenly there's

S Optare Chairman, John Fickling

and Commercial Director, Glenn
Saint at Rushton Hall near Kettering to
a whole new direction. One of the key
messages I'd like to get across is that
there's an awful lot of good in Optare
hear about their plans for the future. I've that perhaps hasn't been wholly
just returned to the same venue to meet recognised lately that I'll be reinvigorating
Jim Sumner, the new Chief Executive and taking to a new level. There are a lot
Officer, who brings to the role a proven of good things that the company stands
track record and an assuredness that has for. One point I'll make is that, while I've
been missing since Optare plc was had to make a few changes at senior
established from the amalgamation of level, which goes with the territory, I've
the Darwen (encompassing East Lancs been taken aback by the enthusiasm and
and Leyland Product Development) and the quality, the commitment and energy
Optare concerns. Jim was joined by of the people in the company, just by
Glenn Saint and together they shed light giving them a little bit of direction and
on where they are aiming to take Optare leadership. That's really for me been the
in a market that looks very different to most encouraging thing without a
the one the industry was contemplating shadow of a doubt in the last two
at the turn of the year, when John months. I know that with that sort of
Fickling observed that the bus industry culture in the business, we can go
had been 'relatively unscathed by the forward. It is one culture now, with a lot
economic downturn'. more of a consistency across the
It was my first meeting with Jim business; it has taken a while to get to
Sumner whose appointment was that point but we're definitely there now.'
announced in April. A Chartered Jim Sumner, Optare CEO. 'Glenn and I spoke quite a lot before I
Engineer, a Fellow of the Institute of Continuous Improvement Manager for CCL came on board and one of the things
Engineering & Technology and a Director of the Industries, where the operation's main UK facility that was soon apparent to me was that we'd tied
SMMT, he had previously been MD of Leyland was later named as 'Britain's Most Improved' up a lot of our cash in inventory and work in
Trucks Ltd, a company he joined ten years earlier as factory. progress, and that's not a healthy thing for any
Operations Director. Under his management it rose Asked to move to Paccar's DAF Trucks operation business to do in the current climate. This was one
to take a 27% share of the UK market and earlier by its President, Aad Goudriaan, one of his early of the first things addressed in a project called
this year won a Queens Award for International tasks was to close down Foden. Moving to 'WIP-out' that you'll have seen in our press
Trade in the Queen's birthday honours list. Leyland, in what he describes as 'a great journey' releases, bringing build times down from six to
Perhaps it was in Jim's genes that he should be he headed the team that grew truck production three weeks. Most of the ideas were already there,
successful in the commercial vehicle sector, as he there from 10-15 a day to 140 a day and a it was just a case of bringing the leadership, having
£1billion turnover. had the vacuum of no CEO, and giving people the
One of the first things I asked Jim confidence that the CEO was behind them. Clearly,
was what had persuaded him to I've been able to bring something from my
leave a position where he was secure experience to the party too. At Blackburn the work
and extremely well regarded in progress was 29 vehicles, which was crazy for
and move to Optare.
'You get to the point where
you need a new challenge and
Optare is perhaps the closest
you can get to the old Leyland,
with the old Charles Roe plant
and Leyland Product
Development. It fitted the bill
for me. British manufacturing
has let itself down and we
can't afford to let British
companies of the pedigree of
Russell Richardson returns Optare fail. I'd like to put
in a consultancy role Optare on the map even
focused on planning and more. I believe that's what I
future product specifica- did at Leyland and can do
Glenn Saint. tions. here.'
'I was drawn to the fact that
shares a name with, and is related to, James it needed help. All the feedback that I got Recently pictured outside 10 Downing Street when Jim
Sumner, one of the founders of the Leyland was that it had great people. The board did Sumner discussed with Gordon Brown his plans to
marque. Jim joined Leyland Truck and Bus as a have a good strategy, it had just got into a promote green technology manufacturing, the Solo EV is
technician apprentice at the age of 16 and bit of a mess. It pushes all the buttons for attracting interest from around the world.
completed a degree while with them. Subsequent me and I'm personally extremely optimistic
roles included European Sales Manager for the output level of the business. We're building
about what we can do.'
specialist valves sold into the process & petro- about four a week at the moment and we've got
'It's always a concern for stakeholders when a WIP down to 12 units now, with a three week build
chemical industry for Delta Plc and UK Group

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time and we're going to continue to reduce it, as made some very pertinent comments about the will be crucial to winning UK orders and creating an
we develop the OPS Optare Production System.' challenges facing our industry and what we are edge in export markets. Part of it will see the ability
'The clever thing is getting everybody to organise seeing is a trend, driven by the uncertainty, towards to build any member of the range at either plant,
spot or short depending on the need at the time, which, in
lead time theory at least, could mean the return of double
business. deck production to Leeds.
People are For the time being the existing Leeds and
finally making Blackburn sites will remain home and two plants
their minds up remains the long term aim. The move to the former
that they need Walker Steel site in Blackburn is now definitely off
a new bus and and all equipment that was on that site has been
going out and returned. New UK locations will be under consider-
saying who's ation but only if they offer a strategic advantage. A
got it? That factor here may be the Government's known liking
could be stock, for the idea of establishing low carbon manufac-
or from the turing company clusters, which might be ideal for
factory direct if where Optare wants to position itself as a leading
you can offer a green technology manufacturer and the market
short lead leader in low carbon and zero emission buses.'
There are no plans to rationalise the Solo range, indeed the flexibility the modular time, with
construction method offers is seen as a strength. pretty much
New technology
their work in team based roles, planning the roles the specifica- Optare has always striven to be at the forefront
in a way that drives the lowest work in process. If tion they are looking for. I think that's one of our of innovative trends and Jim stressed that this
you've got 29 vehicles in build the tendency is to key strengths.' would continue to be the case.
try and build the easiest, it's a function of the 'Having been largely concentrated on diesel and
Lower cost base petrol technologies, there's now a technology
production mind. As soon as you lay down a flow
Jim accepts that mistakes were made in 2008 divergence going on across the world, ranging from
line that is very stage specific you can't cheat the
but isn't one for dwelling on them. He believes a lot staying where we are to the ultimate in battery
system, and you have to deal with any issues there
of good was also done because, 'for all the technologies. There are probably four or five
and then. If there's a shortage or a problem you
challenges the company faced and paid the costs technology groups on that spectrum that have
have to address it. If you take something off line
of in 2008, one thing it did do was reduce its break been around for a few years but with the pressures
you create ill discipline and when you take that
even point which was extremely important for the and commitments through Government, and the
away it creates a lean process. It's very painful but
business. We've helped that further in the last few arrival of the Obama presidency bringing the US on
it drives disciplines we needed. It not only improves
weeks with the final closure of the Hellaby site. We board regarding climate change goals, they are
quality, it drives delivery, it drives reliability and it
still have our service centre there but it's not having a profound influence and impact on the
releases cash back into the business. This was the

Export markets are to be addressed with renewed vigour. New eco

options and the relatively low value of the pound are factors that should Pictured in Berlin during the 2008 BusEuroTest, the Versa is proving
help in this regard. The first Solo EVs are likely to be export orders. popular with operators of all sizes.
missing ingredient that Optare needed to stabilise
opening for manufacturing again,' he confirmed. business at the moment. I think that change is
itself operationally.'
'Without wanting to be provocative, I think the catching a few people in the business asleep at the
Among Jim's key aims are to make Optare the
real winners in what are going to be challenging moment.'
benchmark for quality in the industry and for the
years will be the manufacturers who can reduce 'An advantage for Optare, which is the only zero
people in the workforce to enjoy coming to work.
their break-even points and be flexible to the emission bus builder in the UK, is that it has also
Glenn thought the changes had, 'resulted in a
market. One of the pluses we have, literally in the been doing a hell of a lot between fuel cell and
big difference in the culture and got people's heads
bag, is that we have already done the deep restruc- zero emission. It would be foolhardy to only
up at both sites. We approached Blackburn first
turing which is costly. Others have still to do it. concentrate on one form of technology such as
but it's also in place in Leeds now, where build
Along with reduced inventory, low cost base is hybrid. The hybrid of the future may not be diesel-
cycle times are down from five weeks to an
going to be crucial. Having taken the pain in 2008 electric it may be fuel cell-electric. I'm getting a very
average of 2.5-weeks. It follows on from what we
and finessed things since, we are now able to strong sense from talking to operators and to
said we were about this year, which was stability
concentrate on the flexibility side.' Glenn and his team that operator appetite for
and improvements in production.'
In this context flexibility means many things, spending the money on a hybrid bus isn't
'It has released £7million in cash which takes
from the breadth of the modular Solo range, which necessarily the way forward. Rather than spend an
some time to feed through the system but it makes
will not be rationalised, to the ability to deliver at extra £80-90,000 achieving a 30% fuel efficiency
a big, big difference,' said Jim. 'The other thing is
short notice and to a particular specification. For saving, if you could instead spend a fraction of that
that, by bringing the lead time down and being
Jim, the challenge will be to deliver flexibility and at and get 20%, or maybe 30% or more, then it
more dependable with our delivery promises, it
the same time maintain the lower cost base that would open up all sorts of new doors.'
opens up an opportunity. Colin Robertson has

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'Optare will be the leader roles, Terry was Engineering

in green bus technologies Director at Plaxton from
and will do what it has 1998 and in 2004 took a
always done through its similar position at Enterprise
history and offer choices. It Bus, joining Optare in 2008.
will not prescribe. As we did Former Product
with EGR and SCR we will Development Director, Mark
back both horses,' said Jim. Houlton, is to leave the
Glenn added, 'we'll offer company.
informed choice on tech- In a further move that will
nologies going forward. If be widely welcomed, Russell
we are going to meet those Richardson, former Optare
emission targets operators Chairman and still 'Mr
are not going to do it purely Optare' in many people's
by buying new. They're going minds, will be assisting the
to have to address their Body on chassis double deckers will continue to be an important market for Optare, though the company on a consultancy
existing fleets as well. Just plan is that these will ultimately be offered alongside the company's own integral design. The basis with particular focus
replacing five per cent of the Olympus, tri-axle Olympus and Visionaire models all continue. on planning and specifying
parc every year is not going future products. Russell
we felt we'd lost a bit of strength in some areas, so
to get the reductions being looked for.' commented, 'I was pleased to be asked to assist
we've supplemented them with the appointment
Demand for low carbon vehicles is not going to Optare and to be able to make a contribution to
of Rick Betton as Director of Independent Sales
go away. I think we're in a unique position to the company's future. I believe Jim Sumner has
and Richard
made an enormous positive impact on the
Matthews as
business so far and that together we can build an
Parts Sales
even stronger product range.'
Director. After the
restructuring the Considering the recent team changes as a
parts side had whole, Jim observed, 'Maybe there were a few
perhaps been left people before who didn't really understand the
a little bit out in industry and appreciate how it works. The senior
the cold so we've group we have in place now are all either
put it under experienced wholly bus or truck and bus people.
Glenn and his We have a nice mix of individuals who are coming
team, with up with blue sky ideas and those who are trying to
Richard heading it remind us of the benefits of what we've got. You
up, which has need that balance. Bring too many wildcards in
brought a single and people loose confidence in what was good
face to the about the business.'
customer and a Products
team spirit. That Questioned on forward orders, Glenn said, 'we
sales team to me, have Olympus orders in Blackburn that we will be
Extensive work to reduce the amount of work in progress in the two manufac- is the best in the
turing plants has seen production times reduced from six weeks to three weeks industry, I'm announcing that take us a good way through
at Blackburn and five weeks to 2.5 weeks at Leeds. quarter four. At Leeds I'd say we're on a normal
invigorated when basis. Orders are coming through on a rolling basis,
I see them so we've certainly got our production capacity in
capitalise on that in the coming years. We welcome working together. There's an energy through the
the £30million towards encouraging low emission the right place for the coming months.'
team and they're out there fighting for business, He confirmed that all current products are
buses. We think it is the start. We want to be at the which is hard to come by.’
forefront of that, going forward.' ongoing, including the double deck Olympus,
Glenn added, ‘We've integrated the whole sales Visionaire and Olympus three-axle models. 'We are
Having earlier emphasised the advantage to the team
company of having already restructured the organi- including
sation, I asked Jim and Glenn how much of what parts, and
they were doing now is redoing things that had they all sit
already been restructured? together,
'There were a number of restructurings that took work
place and I would say that we have finessed a few together and
things, just to give us better alignment. I'll give you they present
a few examples' one face to
We clearly needed to do something better on the customer.
the customer service side, and to help reinforce Name
and help me understand intimately what is going anyone in the
on in the market, because it is so important that I team and
do, I have promoted Mark Wallis to Customer they'll have
Service Director reporting directly to me. His organ- years of
isation, which had been restructured, largely experience.
remains intact, the finessing comes in having him Our
report to me. I get an e-mail from Mark at 9pm restructure Glenn Saint reported that the hybrid Tempos running in London are delivering what
every day, which I don't always look forward to, has focussed was expected.
because things do sometimes go wrong. It means on experienced people and putting them in front of definitely going to continue with body and chassis
I'm absolutely in tune with and aware of what is customers.' with our existing chassis partners: Volvo, Scania
going on and all my decisions are informed by
what is actually happening. It helps guide me Product development and ADL, though we will also launch an integral
Ultimately, Optare will succeed or fail on the design. It is totally market driven.'
because I'm all about customers and customer
strength of its products and to this end Terry Development of the integrated double deck
service.'
Gallagher, 59, has been promoted from Head of design that was announced as the Rapta but may
'Maybe not as a result of the restructuring, but
Design to Engineering Director. Among previous not ultimately carry that name is linked with the

Page 16 Bus & Coach Buyer 24 July 2009

Optare FP 1030 20/7/09 14:10 Page 1

Where will an Optare bus take you?

The Award-winning Solo model range – arguably Britain's most successful
midi-bus – delivers big bus technology and unrivalled accessibility to the small
bus sector, through a unique combination of tried and tested componentry, and
state-of-the-art design features. Up to a tonne lighter than competitors, but with
no compromise on strength, the stylish and reliable Solo delivers significant
fuel savings over the life of the vehicle. To see where an Optare bus could take
your business contact us today. Call 0113 264 5182 (Leeds) or 0845 838 9901
(Blackburn) or email [email protected] www.optare.com
004-024_BCB_1030 22/7/09 9:14 am Page 18

m a n u f a c t u r e r

operation. He was in a green low carbon economy and they are keen
also more optimistic to support. There will be no takeover because too
about likely demand many shares are in the hands of people who are
for the smaller bus not prepared to sell.'
sector commenting, 'I Jim and Glenn promised at the outset that they
would say that at the would be candid and they were completely
double deck and large straightforward in saying that there was something
single deck end of the important they weren't telling me, at least not until
market, if I was in a a launch event on 3 September. For now, all I know
different company, I'd is that, in addition to existing eco drive options like
be planning for my those in the Tempo hybrid and Solo EV, the
business to be able to company is 'close to concluding a very exciting
cope with a 50% drop range of developments and technology agreements
in that segment.' to position Optare as the market leader in low
Although the coach carbon and zero emission buses.' It will be
market is seen as par- 'embracing a suite of new technology packages
ticularly difficult at providing steeply reduced emissions across its
The long standing relationship with the Spanish manufacturer, Ferqui, is to present, Optare plans entire bus range.'
continue, though there is recognition that the coach market is very difficult at to maintain its rela- 'We will position Optare in a space in the market
present. New models such as the Iveco-based Viedo may help. tionship with Ferqui. that is not being properly addressed at the
development of TfL's new bus for London, for Export moment. Where we are going is not necessarily
which Optare is one of the approved tenderers. where the rest of our competition are,' said Jim.
'We recognise where the UK market is where it
Further development of the vehicle is currently held is and that we need other strings to our bow. Conclusion
awaiting the outcome of the bid. We've not exploited overseas enough, especially I still don't quite know how they managed it (and
Latterly built at Blackburn, Jim felt that the I did ask) but what a coup for
significant fuel economy advantages of the Tempo Optare getting Jim Sumner on
single deck bus had not been effectively promoted, board. If only they could have
promising that this would be addressed. Remote enlisted him from the outset,
telematics were being used to monitor Tempo and the task he faces would be a
Versa fuel usage in real time. lot less challenging. I found the
The hybrid Tempos running in London were old urge to reinvent the wheel
running well and delivering good reliability. Though and decry everything on which
it was too early for conclusions on fuel and Optare had been built
emissions, they were delivering what was profoundly disturbing, as was
expected. the profligacy in committing
Market large sums of money unneces-
sarily on projects such as the
Total production for 2009 is expected to be in
new look Solo and last year's
the region of 600-650 vehicles across the two
overblown show stand. Having
plants, which represents a drop of around 25%.
met Jim I feel reassured that
'Next year is quite difficult to predict', said Glenn,
the bluster and waffle
'because it is hard to know what the big groups will
Jim believes the fuel economy advantages of the Tempo have not approach has been left behind
do and it partly depends on rail. With the DDA
been marketed as well as they might have been and plans to promote for good, replaced with a team
requirements they should be buying buses again,
it more heavily. culture in which existing
but whether the rail market will allow that remains
strengths are recognised and
to be seen. I wouldn't want to second guess what with Solo, and a greater element of our business decisions are made on an informed basis with the
is happening in board rooms at the big five. It must will be export going forward,' said Jim. 'The value needs of the customer in mind. This doesn't mean
be a very challenging time for them.' of the pound will help and so will the range of the company will stop being innovative, far from it,
Jim noted that what big group business was driveline technologies we will offer.' He revealed but the emphasis will be on supplying technology
being done was on an area by area, contract by that with UK operators waiting to see what the that delivers for the customer at a price that is both
contract basis, which he felt suited Optare's type of details of the competitive and sufficient to enable Optare to
Government's £30m maintain investment. Optare has never really
scheme are, the first Solo capitalised on its export potential; now it has a
EV electric bus orders may man at the helm who really knows something
well come from America, about making it overseas.
though there is also con- Time and again the twin aims of maintaining
siderable interest in the flexibility while reducing the company's break even
vehicle from Europe and point were stressed, and these will be crucial in a
from South Africa in the market that will almost definitely be bad and may
run up to the 2010 World be dire next year. There have been those predicting
Cup. imminent doom for Optare and hitherto, while
Independent wishing them well, I haven't been wholeheartedly
able to counter the arguments. I'm not underesti-
There have been
mating the challenge but now I'm heartened. It isn't
rumours that the company
that senior board members have been investing
will look to amalgamate
their own money in shares, though I do like to see
with another manufacturer
people putting their money where their mouths
or seek a takeover by one
are, it's the feeling that the right things are being
of the major players,
addressed, valid input will be heeded wherever it
something that Jim denied
comes from and that belief, involvement and ‘buzz’
unequivocally, saying, 'we
at all levels of the business is back.
want to remain
Announced as the Rapta at last year's NEC show, development of independent. Our investors By Stuart Jones
Optare's new integral double deck project is linked to TfL's new bus for are in it for the long term.
London competition for which Optare is one the approved tenderers. They passionately believe

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