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Latest News The North East maker behind big brand products

November 24th 2014

Blyth-headquartered designer and manufacturer Tharsus Group has achieved 20% year-on-year growth on average over the last decade. EY Director Simon Whiteside met Chief Executive Brian Palmer to talk about the company’s history, unique model and growth strategy.

The North East maker behind big brand products

 Tharsus Group has reinvented itself more than once since Brian Palmer took control of the company in 2003.

From a traditional “metal basher” employing 30 people, today the 165-strong business is a leader in the niche original equipment design and manufacture (OEDM) market, providing contract-based services to design, develop and produce other companies’ products for them.

“I joined Tharsus in 1997 when it was a fairly unsophisticated sheet metal engineering firm, but it had a strong client list and real expansion potential,” says Brian.

“After the buy-in, we made a number of strategic acquisitions to diversify our business into product engineering for high growth markets like defence, outdoor advertising, and telecoms.

“We managed to pick up some landmark contracts, like producing the first advertising screens for the London Underground and cable management systems for the roll-out of high speed broadband.”

The downturn impacted heavily on Tharsus’ growth and, by 2010, fundamental structural changes in many of its target markets saw the company’s expansion stall and workforce reduced. Brian and his team needed to again diversify.

He comments: “We identified an opportunity in the OEDM market, where we could apply the skills of our technically gifted workforce to deliver products for firms looking to outsource design and production.”

Tharsus is now a cost effective one-stop shop for its high brand customers; designing, developing and manufacturing technology-led and often highly complex products. But there is more to its model.

“Our approach is unique because our clients retain the IP relating to the products we develop and make, and we only negotiate exclusive partnerships. We won’t work with our customer’s competitors,” explains Brian.

“Outsourcing design and manufacture also lets the companies we partner with focus on other core areas, like building their brands.”

The business’ state of the art production facility in Blyth, which opened in 2012, was a critical part of its establishment as one of the leading OEDM firms in the country.

Brian comments: “We wanted to create a flexible, integrated facility, where design and development were closely linked with manufacturing.

“We now have a factory that’s based on modern manufacturing methods. It ensures a seamless transition between design, prototyping and assembly that is responsive to changes and improvements.

“This kind of flexibility and responsiveness is vital for our clients and their commercial success – particularly when there’s a need to go to market quickly with a new or re-developed product.”

A client list which includes Rapiscan, GE, 3M, Weeingtech and Safetykleen stands testament to Tharsus’ standing as one of the North East’s most innovative makers.

The business, which has won multiple industry awards, now has 70,000 sq ft of manufacturing facilities and invests 6% of its turnover in R&D.

Tharsus’ focus on technical excellence enables it to compete for contracts with UK and overseas-based customers, with the company exporting 42% of its products.

Brian continues: “Labour is often cheaper overseas but, within the overall process of design and manufacture, it’s a relatively small cost.

“By focusing on efficiencies in the supply chain, including through innovative design which enables efficient packaging densities, we’re able to be competitive manufacturing right here in the UK.”

Brian, who started his career amongst Nissan’s first graduate intake in the region in the 1980s, believes that the North East is a good place to do business for manufacturing firms, given its sector heritage and skilled people.

He continues: “The North East has a strong skilled and graduate workforce and a good local supply chain for the industry. This has been critical to our recent growth.

“As a business we’re committed to the region and developing our workforce here. One in 10 of the people we employ are apprentices who are gaining valuable on the job training.

“There are also great incentives for companies to carry out R&D and innovation in the wider UK, not least patent box and R&D tax credits.”

However, when it comes to routine manufacturing, Brian thinks the UK’s policy makers could do more to drive expansion in the sector.

“With no or slow rates of tax depreciation the current corporate tax regime means it can often be more cost effective – particularly over a product’s lifecycle – to site manufacturing functions overseas,” says Brian.

“We need policy makers to think about how we can incentivise UK businesses to re-shore their manufacturing operations, potentially through targeted tax relief.”

He continues: “This might mean measures that enable greater cost effective flexibility with real estate, enhancing tax reliefs that favour manufacturing activities specifically or addressing the impact employment taxes have on the UK labour cost.”

Despite these general industry challenges, Tharsus is an innovative UK manufacturer going from strength to strength.

Brian expects to reach sales of £30m over the next two years, fuelled by recent senior appointments and major new contracts wins, including one with a FTSE250 listed business.

He concludes: “We’re focusing on further developing areas like customer experience and technical capability to drive our expansion.

“We’ve also spent the last few years making investments in people and technology, which are now bearing fruit and accelerating our growth.”

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