Westwind Air Bearings is really a effective medium-size British engineering company making high-speed micro-hole drilling spindles for that world’s electronics industries. It began existence as Westwind Turbines Limited in 1963 for the exact purpose to find industrial applications for that gas bearing technology developed in the College of Southampton. The organization battled for quite some time to construct confidence within the new technology, and meanwhile it had been almost wiped out off through the bigger engineering companies in the area.
The very first commercial product spun removed from the Southampton programme would be a high-speed silent dental drill created for the Micro Turbines company of Poole, which offered the ip legal rights to some major dental supply company and acquired the first capital investment for that new Westwind company. It had been realized the development and marketing of recent industrial products would take 2 or 3 years before a rest-even point was arrived at. To provide earnings through this initial period, it had been made the decision to attempt sub-contract manufacturing for bigger companies in the region. This may have been inevitable for the short term, however it soon grew to become a significant burden that nearly collapsed the organization just like the purchase of recent products was removing.
Bigger engineering companies sub-contract manufacturing to obtain parts at less expensive than their very own in-house cost. Which means that there’s little prospect from the work being carried out at greater than a marginal profit. The truth is much worse. Big companies behave towards their suppliers such as the supermarkets. The little supplier falls right into a position of dependency and it is unwilling to voice any complaints for anxiety about losing the job. Less and less costs are required, frequently using the commitment of bigger quantities, and delays in payment grow longer and longer.
After 2 yrs it had been obvious that Westwind was taking a loss in an unsustainable rate. It had been suspected that the cost of developing new items was the reason and also the programme was scaled back, much towards the dismay from the technical department which pointed towards the steady develop in sales. It had been made the decision to attempt an in depth analysis of costs, and senior staff devoted full-time towards the task. The end result was very obvious: large losses appeared to be made around the sub-contract manufacturing, as the in-house products were creating a good profit. Stopping many of the sub-contract work switched the problem round in a single year.