Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum submitted by Dennis Eagle Ltd


  2000 will be a record year for Dennis Eagle in terms of volume output and gross profit levels. This has been achieved on the back of a strong UK market (in which we enjoy a share of 40 per cent in our specialist niche) and a recovery from 1999 where customers deferred orders due to uncertainty over ownership.

  Export business has declined to less than 10 per cent of turnover as a result of the loss of competitiveness in Europe due to the relative strength of sterling.

  Market pricing in the UK has declined by 13 per cent in 18 months due to products imported from the Eurozone. In spite of aggressive action on controlling costs, unit margins have declined substantially.


  Future prosperity is linked to being able to grow export volumes and profitability. This requires significant reductions in material cost and productivity to achieve acceptable profit margins in the current economic climate.

  Considerable investment is being made in new product development that will reduce labour hours per unit substantially. Unless increases in volume are achievable it is inevitable that we will be forced to shed labour in the second half of 2001.

  We have exhausted the capacity of our UK suppliers to improve productivity and cost. In addition, we are facing a serious shortage of potential suppliers, especially in the area of high quality fabrications. 2001 will see the implementation of an international sourcing strategy starting with India, Czech Republic and Turkey. We are satisfied that we can achieve substantial cost savings from quality suppliers in these and other overseas markets. Inevitably this is exporting engineering jobs abroad and exacerbating the position in terms of the shortage of quality engineering suppliers.


  As a niche market supplier, we are often less affected by more economic factors than volume manufacturers since there is less competition. However, the long period of high sterling has led to a permanent reduction in prices.

  A lack of engineering skills to work on the shop floor is a real barrier to expansion. We rely on a highly skilled workforce, but the calibre of individual who previously opted for a career in an engineering organisation is, increasingly, opting to continue in further education as university places have been expanded. If we, as a country, are unable to attract your people into craft engineering positions then the consequence will be in continued export of jobs to other countries and an increase in the importation of finished engineered goods.

11 September 2000

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