How do you transform a company based on volume manufacturing into one that is also able to create value-added products? It’s a transition Blackburn furniture manufacturer Allermuir is currently undergoing.
Established in 1971 by Alberto and Joan Vaghetti, Allermuir was a two-person welding business doing out-source work for a local Lancashire manufacturer. Today it is a 4m turnover, 75-employee operation producing both low-cost products (such as stacking chairs) and value-added products designed by the likes of Fred Scott and Neil Poulton.
Today the company is privately owned by the Vaghetti family and is run by Vasco Vaghetti, managing director and son of the founders, and his wife Janet, who is sales and marketing director. Furniture industry insiders told me that Vasco a renowned metalworking expert is reserved and tends to focus more on the internal workings of the company, while Janet is the dynamic and conversational “face” of Allermuir.
At the interview they’re playing to type. Janet is refreshingly forthright and holds forth with enthusiasm on all things Allermuir; Vasco is off somewhere in the factory complex and, I’m told, unlikely to make an appearance. Instead, we’re joined by design development manager Tim Lishman, a graduate of Kingston School of Art and Rodney Kinsman’s studio at furniture company OMK and now a three-and-a-half year veteran at Allermuir.
The company’s move into premium furniture began in 1988, the year Vasco took over as managing director and Janet came into the business full-time. A solid business producing low-cost furniture for locally based office and leisure clients, it diversified with a low-investment range by David Grimshaw. This was then built into a successful portfolio of Grimshaw-designed lines Nico, Siena, Janus and Berlin, with the Peter Christian-designed Wafer range added along the way.
Growth was consolidated by the involvement of the celebrated Fred Scott, whose Nile and Pharaoh lines necessitated a major increase in tooling and moulding costs. Buoyed by the sales and critical success of Scott’s lines Nile and Pharaoh won a Best in Show at SIT 95 and Scott’s Nile chair won in the Furniture category of the 1997 Design Week Awards – Allermuir upped its investment in new ranges from leading designers.
These design lines now account for approximately 35 per cent of turnover, with the remaining 65 per cent produced by the company’s low-cost lines. The Vaghettis are growing both sides of the business, but expect the design lines to steadily increase share of company turnover to at least 50 per cent.
The move into design-led products shows imagination, ambition and a steady nerve, although Janet Vaghetti says it came from a “common sense” approach to business rather than MBA-fuelled management thinking. “I just did it. That sounds boring, but it’s the truth.
It was just a feeling,” she says. But, between a whiff of opportunity and profitable commercial operation there are many obstacles. In the case of Allermuir, one of the key challenges was to attract the type of designers willing to risk their reputation on a company in transition.
“It was difficult at first because some of them wouldn’t take us seriously,” says Vaghetti. “Perhaps we looked a little old-fashioned. Things were changing, but it’s difficult to change them overnight.”
She and Vasco were assisted in their mission by a new corporate design programme which addressed everything from sales literature to the lorry driver’s clothes. This also helped the company attack the preconceptions of British architects and interior designers – their core customer base – whose gaze was fixed southward towards the furniture companies of Germany and Italy, according to Lishman. “There’s an awful lot of pompousness and snobbery around. We’re a British manufacturer from the north of England we have had to breakdown a lot of prejudice. When I started here I found it difficult to believe that British architects and interior designers would be so reluctant to use a British manufacturer,” he says.
Along with market preconceptions, the company also had to change the skills set of its employees. “There wasn’t resistance, there was ignorance,” says Lishman. “I don’t mean that in a nasty way; I mean that they [the employees] just didn’t know it was something new and it was more complex than what they were used to. It required less speed. In the lower end of the market the cost is so tight that there is a culture of getting the numbers out in a set time or your profitability goes. When you’re talking about a product that requires a lot more finesse and care you have to slow down, and thus you are talking about a more valuable product.”
While the new challenges have made employees and trusted business partners sparkle, potential sub-contractors have disappointed. “British manufacturers who we want to subcontract are not always as interested as we are in developing a new product,” says Lishman.
“We go to some of these manufacturers and we get ‘ooh, that’ll be difficult’ or ‘no we can’t do that’. What they’re really saying is ‘this is what we do, do you want some of this?'”
Allermuir can’t afford to accept this. As a manufacturer it has made a profound leap in self-awareness it has realised it must produce what the market wants, not the products that its machines can make. It may be a centre of metalworking excellence, but it needs all sorts of other knowledge and craft to make its products too, not least woodworking skills. Limp responses from potential UK suppliers mean that it has been forced to look towards the Continent for subcontracted expertise.
In fact, this is one of several developments moving the company away from its self-declared position as a very British manufacturer making products by British designers. Vaghetti admits Britishness “was my thing… I needed something to say, a message”.
But greater corporate self-confidence, overseas sales successes and a major investment in trade shows and advertising have fostered a more expansive, international outlook. The current Allermuir client list includes Brussels Airport, the Jumeirah Beach Hotel in Dubai, Noodle Box in Hong Kong and the Park Hyatt in Hamburg; its recent showing at Milan has stimulated major interest in the US, the Arab Emirates and Germany; and of the latest designers to be added to its partnership roster, one is a Dane, Pernille Svane Hansen, another Paris-based Brit, Neil Poulton.
“We would be limiting ourselves now if were to say we would only work with British designers,” says Lishman. Business growth is the key dynamo here. “We’re growing up and we have to broaden our offer. Greater costs mean that the export market is now essential for us. With each new project we have to think ‘is this just a UK product or is this going to take us somewhere?'” says Vaghetti.
It would be tempting to tell this as a basic before-and-after story: Allermuir was a relatively small operation hooked into the bad old model of micro-margin volume production, now it has embraced the lush delights of value-added, design-led products. That’s far too simplistic. The company’s volume business is highly successful and is the financial powerhouse supporting the fledgling design lines.
If the latter are successful, Allermuir will be a more balanced company with the potential to exploit higher profit margins, but creating design-led lines of furniture can be very, very expensive. “There’s an enormous investment involved,” says Lishman. “Profitability is a long-term goal. Take the tooling costs away and each new product is more profitable than the old style [volume] products, but it has to pay back all of the investment costs, including the greater cost of the marketing literature.
“If we were a public company with shareholders expecting payback we wouldn’t have got anywhere on this,” he continues. “It has essentially come from Janet and Vasco’s pocket. That market [volume] is buying us the time to establish ourselves with the reputation and product range to launch [the design lines] into the export market. That will move us away from depending on just one area. In five years’ time things could be enormously different. That area [volume] may, by way of natural wastage, have disappeared. But with recession cycles you have to be careful about putting all your eggs in one basket.”
Formal interview over, a polite, cool-suited Vasco appears from thin air, rather like the shopkeeper in Mr Ben. We chat briefly about the company, but it’s clear his mind is on the many technical conundrums waiting for him downstairs. He melts away just as quickly. Lishman has darted off to see a plastics expert about the new Poulton-designed B-Series, Janet is talking about their successful showing in Milan the previous week and the marketing department is humming with activity next door. The atmosphere is good.
It’s clear this company has the range of skills and personalities, the energy and the commitment to make its design-led ambitions a dynamic commercial reality. It deserves to succeed.
The Allermuir story
1971 Alberto and Joan Vaghetti establish welding shop. Request to make a chair effectively creates Allermuir
1976 Vasco Vaghetti leaves school at 16 to help parents run business
1988 Alberto Vaghetti retires, Janet Vaghetti joins Allermuir full-time. Turnover at 1m
1989 Company moves to new purpose-built factory
1991 Second factory taken over
1993 First David Grimshaw-designed lines introduced.
1994 Fred Scott lines introduced
1997 Export drive begins. Appearances at International Contemporary Furniture Fair in New York and Dubai Index
1998 Neil Poulton-designed B series in production. Appearances at Milan, Cologne and ICFF. Turnover reaches 4m.