Demand sees Kostal step up a gear

AUTOMOTIVE supplier Kostal UK is embarking on the largest expansion opportunity in its 20-year history following a number of new contract wins.

The Rotherham-based firm, which manufactures automotive switches for premium vehicles such as Jaguar Land Rover, Porsche, Bentley and Audi, is preparing to double in size over the next two years and is forecasting a 20 per cent increase on its £40m turnover this year.

It has already created about 35 new jobs with more to come.

Most of the growth will come from a new contract with its number one customer, Jaguar Land Rover, which has given out more than £2bn of supply contracts to over 40 UK companies for its new Evoque model.

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Kostal UK, which is a subsidiary of German manufacturer Kostal, has also won a new export contract with Ford for mainland Europe and the US.

In addition, it has benefited from expanding its business with Porsche and working with new clients, such as Mercedes.

The company makes any kind of switch one might activate in a car console.

Managing director Martin Wood said: “We didn’t expect the market to come back as quickly as it did following the financial crisis so that has surprised us.”

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During the recession, the company focused on survival above all else and reduced its workforce due to the fall in demand for new cars.

However, it now faces a new challenge – responding to rapid growth in orders with an under capacity headcount.

Gary Sylvester, manufacturing executive manager, said: “Certainly in 2008 and the beginning of 2009 we had a lot of difficulty with the recession and had to reduce our workforce as a result of losing a lot of business. But since 2010 and into 2011 we have seen a very dramatic increase in our business turnover as a result of increasing manufacturing quantities.”

Kostal UK, which employs 350 staff, has already recruited about 25 production staff and 10 engineers this year. It is planning to repeat that over the next three to four months.

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Mr Sylvester said: “The challenges are...finding the capacity, finding the skilled people, and finding the investment to fund that in advance of us getting revenue from the business that will come in the second half of the year.”

Recruiting technical staff is one of the most difficult aspects of the growth plan, particularly in the current market.

Mr Sylvester said: “We’re finding that more difficult than we have previously. I suspect there are a few more opportunities in the market and also people who are currently in employment are somewhat reluctant to move as the economy has not turned round at the moment. People still want the security of employment they have had for some time.”

Kostal also has an apprenticeship programme, with 15 apprentices currently going through the system.

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Mr Wood said: “We have a strong apprenticeships programme that will be delivering more qualified apprentices in the future but in the short term our in-house development isn’t enough. We need production staff and engineers to supplement the existing team.”

He added: “We are very much part of the framework of South Yorkshire businesses that are very much focused on apprentices and work very closely in terms of getting the right engineering skills into the region so it becomes less of an issue.”

In addition to the challenges facing the company as it expands again, the firm and its counterparts are also facing the rising price of raw materials and the economic fall-out from the Japan earthquake and tsunami.

“The increasing costs of materials always affects any manufacturing industry,” said Mr Wood.

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“The electronics supply chain will also be constrained with what is happening in Japan going forward, although we’ve not seen evidence of that yet.”

However, the company, which spends about seven per cent of its global turnover on research and development, remains optimistic about the future.

Mr Sylvester said: “We’re doing very well at the moment. I’ve been here for 15 years and it’s certainly the most exciting piece of expansion and growth I’ve seen and it’s also the largest expansion opportunity we’ve had in the whole 20 years that the company’s been in the UK.”