Full Steam Ahead

Specialist exhaust and catalytic converter manufacturer the Klarius Group says it is celebrating significant success following a one-year programme of investment and review of production practises. It is only 14 months since Klarius purchased the emissions control activities formerly belonging to ArvinMeritor Light Vehicle Aftermarket Europe, but the company can now boast a greater than 90 per cent market coverage for replacement exhausts, catalytic converters and filtration systems. Furthermore, the company’s Timax exhaust and catalytic converter brand is the market leader in the UK by a substantial margin.

This period of strong growth is the product of a £1.6 million investment across the business and a systematic overhaul of company manufacturing processes. “One year ago, all the pieces were in place for the company to achieve its growth aims, but we needed to revamp the production methods,” comments Klarius Group chairman, Tony Wilson. “Managing director Andrew Jones was brought in to implement ‘lean’ manufacturing systems, a process that involved completely changing the layout of our production facilities and manufacturing products in small, customer specific batches.

These lean production methods have brought about a sea change for Klarius, explains business development director Paul Hannah. “At the point we acquired the company some 14 months ago, the company as it then was and our competitors were geared to a market of 20 years ago – producing a large volume of a small product range. We have changed that to meet the demands of today’s market, a wide range of products, with much lower volumes of each item produced using lean manufacturing techniques.

“Gone are the days when a customer must telephone us and order 100 units of a particular item,” Paul adds. “These days they can pretty much order any batch size. To give an example of the changes made in this area, one year ago the average batch size was between 120 and 150 units. Today the average is 20 units. Furthermore, a year ago we operated three warehouses that stocked around 3,800 product lines. Today we operate a single warehouse containing 5,000 product lines and a delivery performance of over 98.7 per cent.”

Much of the aforementioned investment went into a new technical development centre that has provided the facility to introduce new products rapidly. “Our investment was in part driven by a desire to have the ability to develop a range quickly,” Paul explains. “A year ago it took some seven to eight months to develop a new product; today this time is three to five weeks. This difference is due to both massive changes in the technical team’s structure, and our new machinery. When walking through our facilities, the difference can be clearly noted: a year ago we only had capacity to test a new product on one car. Today, on any day of the week, you can see five to six cars undergoing testing.”

New plant machinery has also enabled Klarius to change the way things are done. “Part of the investment also went into upgrading our machinery to operate according to lean manufacturing techniques, and the changes have been remarkable,” says Paul. “Previously it took between seven and nine hours to re-tool a machine in order to produce a different product. Today this time is down to 10 minutes.”

The business development director emphasises that the benefit derived from the company’s investment in its facilities cannot be overestimated. “The investment has enabled us to completely reorganise how we do things,” he says. “We believe what we are now doing is industry beating. In this last year we have released two new catalogues as our development is proceeding at such a pace. We have added over 700 new exhaust references, an amount we estimate to be five to ten times higher than the industry average.”

What is clear to see at a glance is that, in the midst of what are being described as some of the worst market conditions in years, the three UK Klarius factories (in Cheadle, Staffordshire; Glasson Dock, Lancaster; and Adlington, near Chorely) are working on overtime. “We keep hearing news of doom and gloom, but during the last few months our facilities have also been working Saturdays,” comments Paul. “We’ve had to make some tough choices, but we have focused consistently on delivering what we promised.” At present, exports from these UK factories account for 35 per cent of total turnover, and this is an amount growing considerably. Klarius also operates a forth production facility, in Italy. This factory, in Finale Emilia, near Modena, specialises in high performance exhausts, for vehicles such as Ferrari, Lamborghini and Ducati motorcycles.

The Klarius Group is seeing sales of its catalytic converters growing at the expense of exhaust sales, and with these products the company claims to be leading the UK market in the continued application of European Type Approval standards, which are currently not enforced in the UK, to its entire product output. This rigorous process ensures a greater lifespan and level of fuel efficiency than in non-standardised equivalents. “We have for some time lobbied in support of tighter standards to be applied, as using the wrong exhaust always uses more fuel,” reports Paul Hannah. “Changing to the correct cat can save between five and ten per cent on fuel costs.”

The company is awaiting impending changes to the type approval situation. “We are looking forward to the next few months,” Paul adds. “During the past years there has been a proliferation of cheap and dirty systems on the UK market, catalytic converters that were not European type approved or built to OE standards. Unlike other European markets, where it is very difficult to sell a non-type approved cat, in the UK the priority has been upon getting a car through its MOT.

“As of January 2009 legislation will forbid the use of non-type approved catalytic converters on vehicles manufactured since January 1, 2001,” he continues. “We are absolutely looking forward to this. For professional manufacturers like ourselves, this is a delight.” The introduction of this legislation will also be more widely welcomed within the fast fit Industry, Paul explains:

“Most petrol vehicles sold since 2001 were supplied with sophisticated systems featuring on-board diagnostics. These tend not to tolerate inferior quality cats, and now vehicles of this age are for the first time failing their inspections in volumes. Workshop technicians report a reluctance to fit cheaper cats not made to OE standards as the MIL warning light tends to illuminate as a result, an issue resolved by changing to a type-approved cat.”

In terms of the exhaust market, Tony Wilson reports the steady decline over the last few years has occurred simply due to rising product quality. “Original Equipment exhausts are now built to last longer while the life of replacement products continues to increase,” he explains.

The Klarius Group holds a catalogue of over 4,500 exhaust and 1,000 catalytic converter references, available to customers from the company’s Cheadle, Staffordshire based distribution centre. The Blackpool headquartered company, which employs 950 people and in the last financial year generated a turnover of £140 million, currently holds more than 40 per cent of the UK market share with its Timax brand of exhausts and catalytic converters. And to give an idea of the market dominance enjoyed by Timax, Paul Hannah comments that the bulk of the remaining 60 or so per cent is divided up amongst no less than four competitors.

In conclusion, Tony Wilson comments that the key to maintaining a sustainable exhaust market over the coming years will lie in the ability of distributors and manufacturers to give retailers the confidence to tell their clients when a new exhaust will be available and fitted. “It is critical that manufacturers adapt and build a capacity to despatch goods overnight to meet demand,” he says. “This is one of Klarius’ key strengths – a ‘one-stop’ shop for exhausts with 95 per cent market coverage and an accomplished distribution network that regularly meets next day delivery demands.”