...as IMI chief executive Martin Lamb explains to Ian Halstead... Britain's quoted engineering sector has dwindled for so long that it often seems about to disappear. The recent news that employers were recruiting apprentices from Germany and graduates from India, because home-grown talent was turn-ing to law and accountancy was deeply dispiriting. Given the constant ra-ra-ra of the professional services sector and the negative public image of engineering, it should perhaps have been no surprise. It's unfortunate though that wannabe auditors and corporate financiers can't hear the head of the Midlands' best-known engineering plc before filling in their UCCA forms. IMI chief executive Martin Lamb believes in the industry, believes in its future and - more importantly - that people make the difference. Sadly, he can't be cloned and then dispatched throughout British industry, to inspire those weary souls who see only towering hurdles and impassable obstacles. Mr Lamb's fresh-faced appearance and contagious enthusiasm may be the antithesis of George Kynoch -IMI's heavily-bearded and distinctly dour Victorian founder - but both are disciples of change. Kynoch used the mid-19th century vogue for gunboat diplomacy to turn his fledgling business into Britain's biggest ammunition manufacturer by 1880. When war-war then became jaw-jaw, he diversified IMI's operations to include soap, bicycle parts and the sale of non-ferrous metals. Critically for its long-term survival - and current expertise in metals -Kynoch also established IMI's first metallurgical laboratory. A century later though, and the conglomerate he spawned was again ripe for change when Mr Lamb became chief executive in January 2001. "We had 15 or 16 businesses, and although we generated good cash flow and had a strong balance sheet, a lot were under threat, mainly from low-cost competitors," he recalls. Much business also went through third parties, typically distributors and builders' merchants. Mr Lamb decided to slim the group down to five businesses, trading directly with customers and offering long-term global prospects. "The strategy wasn't honed over-night, I'd been on the board for the previous five years," he says. "There is no better time to make big changes though than when you are new to a position of influence." Procurement of many raw materials was switched to the Far East, and manufacturing plants established in China, the Czech Republic and Mexico. The strategy underlined the merit of embracing change, rather than sitting in a corner complaining that the world won't stop turning. "We took out between £20 million and £25 million in costs, then invested it into the businesses we were building the group around," says Mr Lamb. Five years on, and IMI's renaissance is complete. "We are fundamentally a different outfit. In 2001, a third of our sales came from the UK, with the same in the US and only ten per cent in emerging countries," recalls Mr Lamb. Now IMI generates just 12 per cent of turnover Stateside, but has more than 30 per cent in fast-developing countries. Its management structure has been refined to give Mr Lamb direct access to the core companies, as has its operational mindset. "We have to excel in two key areas - understanding our customers and appreciating their competitive pressures, then generating insights into how we can help them through innovation," he says. "Employing world-class key account managers has been critical because they now have to deal with customers at a very senior level." Mr Lamb was convinced the new strategy would increase efficiency and productivity, and develop stronger customer relationships: "My only doubt was the pace at which the company could cope with change. If things move too quickly an organisation can lose its ability to deliver." Those unwilling to adapt inevitably moved on, and people issues remain high on Lamb's agenda. "We've trawled far and wide to find innovative personnel; some from the medical sector and even the automotive industry," he says. "We now employ more R&D engineers in the UK than we did five, or even ten years ago, because we need creative horsepower in terms of engineering talent." The pace of internal change may now have slowed, but that of IMI's external challenges certainly hasn't. Mr Lamb enjoys the volatility though. "If you try to operate in a steady-state system, as many companies did in the 60s and 70s, you won't survive," he says. "Thirty years ago, you might get ten or 15 years out of a product, but today you'll be lucky to get four or five. "The internet has been critical. If I wanted to find a new widget supplier worldwide, I could probably secure an online auction, and find a company in three days." Globalisation is the biggest challenge, but Mr Lamb is politely dismissive of those who believe we can outsource low-end production to China, and keep high-value items here. "They just don't know the country, or the calibre and number of engineering graduates and scientists that it is turning out," he says. Equally, he has no truck with the assumption that outsourcing is a negative concept, or the widespread view that overseas plants should be run and managed by Western expats. "Outsourcing isn't all about lowering costs, or we'd have gone to Vietnam, or Cambodia," says Mr Lamb. "You always need a balanced position between cost, quality and service standards. When we set up in the Czech Republic we could have gone to the Ukraine, but it didn't feel right." IMI uses local construction companies and suppliers, and recruits local plant managers, whether in Mexico, China or elsewhere. "It's a mistake to try to replicate a manufacturing plant from Chicago in Shenzen, and run it on Western lines," says Mr Lamb. "We believe local face is very important. No one likes to see Westerners being parachuted in to get the top jobs." When IMI acquired a Shanghai-based business, Mr Lamb was careful to appoint a local law firm. "We didn't make the mistake of bringing in lawyers from Hong Kong who would speak the language, but not understand the culture," says Mr Lamb. It might seem he had no qualms about pointing sacred cows towards the corporate abattoir. He even relocated IMI's HQ from its historic home in Witton to Birmingham Business Park some three years ago. "We employed around 30,000 people there during the Second World War Two, but by the end of the 90s we just weren't getting a good asset return on the land," says Mr Lamb. "We also got the feeling that when visitors saw the place, they thought 'Oh ... a bunch of metal-bashers from Brum." One element of IMI will never change - its name. "At the time I became chief executive, it was fashionable for companies to invent new names, but I never considered it," admits Mr Lamb. "It's part of the history of the Midlands, is an excellent brand in most markets and heritage is also valued very highly in such countries as India. I dislike trend management. Doing something simply because it is in vogue is just not my style." ..SUPL: | 
