Invest to Grow: Investing in in-house manufacturing capability
Fracino
This case study is part of the Greater Birmingham Chambers of Commerce’s Invest to Grow campaign. Invest to Grow aims to inspire and inform businesses around investment in R&D, innovation, technology and machinery and how it can help boost productivity through case studies, expert opinion pieces and briefing information. Click here to find out more and don’t forget to join the conversation on social media with #I2G18. Part 2 of Invest to Grow focuses on investment in technology and machinery and is sponsored by MCS Corporate.
Fracino is a multi-award-winning third generation family business and the UK’s only manufacturer of traditional coffee machines.
It was founded by my father Frank Maxwell back in 1963 and has traded under the Fracino name since 1990. Today we sell thousands of machines every year to customers including Subway®, Patisserie Valerie, Living Ventures Restaurant Group, AMT Coffee, Pizza Express and Pathfinder pub chains.
Around 2009-2010 Fracino experienced a period of rapid growth in sales, particularly on exports after I identified an opportunity in 2008 to take advantage of the weak pound.
As a result, we were faced with the challenge of needing to step up production while also maintaining the highest level of quality control. We took the decision to review our supply chain and move more manufacturing of components in-house.
Between 2010 and 2017 we undertook a major investment programme, investing in high quality machinery to make automated in-house production as efficient and cost-effective as possible.
The first issue we came up against was a lack of space for the new equipment. Fortunately, we found a large property on our existing industrial estate which would give us enough space and room to continue growing.
We were able to fund the move though Directors’ loan accounts and reinvesting cash from within the business but this didn’t leave us a lot leftover for the equipment. Fortunately, our sheet metal machinery provider Amada offered us a finance package which enabled to get us started at a very competitive rate. With the savings achieved thanks to this initial investment, we saw a return in 18 months and paid the loan off 3 ½ years early! After this initial investment all other equipment was financed by reinvesting profits and using up our capital allowance to the full.
Among the technology and machinery we invested in were:
Amada Fibre laser robot welder (we are still the only company in the UK to have this facility)
Tower load /unload laser cutting system
Fully Automated CNC Tube bender from coil
Induction brazing system
Star CNC Sliding Head lathes (3)
Our production of components is now so efficient that just c.25% of our staff work on this side of the business, with 75% on assembly and other functions.
This investment has enabled us to achieve 66% growth in people and turnover in just 8 years. We have been achieving double-digit sales growth annually since 2009, we now export to over 70 countries worldwide (including Italy) and have grown our team to 70 strong.
To other businesses considering investing I’d say; you have to invest to move forward if you don’t you will just fall backwards and not be competitive. If you reinvest the profits the business will grow and generate more profits and so it goes on.
About Fracino
Operating one of the world’s most advanced and efficient espresso equipment manufacturing facilities, Fracino has revolutionised its 45,000 sq ft production operation with a multi-million pound investment programme.
Producing almost 5,000 machines a year, the third generation family business embodies the UK’s production skills and expertise as the sole manufacturer of traditional espresso machines.
Singled out by former Prime Minister, David Cameron, for its exporting success in selling coffee machines to the Italians, celebrities, sports personalities have savoured their coffee from Fracino’s espresso machines which have taken centre stage in high-profile soaps and been viewed by millions of people across the UK and Europe.
With a 700-plus network of UK distributors and a global distribution network, Fracino has recently been voted the industry’s top coffee equipment brand in Out of Home’s annual State of the Nation survey.
Displaying the Made in Britain marque on every machine that leaves the factory, Fracino has produced 13 different machine models across 2008-2017.The business has received high-profile innovation accolades from bodies including the EEF, the manufacturer’s organisation and been named Innovation Partner of SUBWAY®.
Adrian Maxwell
MD, Fracino