Ormandy Group has grown into a £25M turnover business in just eight years. HVR asks managing director Paul Cooper how they did it, and why even the recession can’t halt the company’s progress
Yorkshire-based Ormandy Group www.ormandyltd.com is just eight years old, but already includes iconic industry names such as Hartley & Sugden and Rycroft. Its development has been startlingly fast, fuelled by a mixture of impressive organic growth and strategic acquisition.

The key to its success was the original strategy and the fact that the group of founding directors boasted more than 150 years of combined experience in the water heating industry when they started the company in 2001.

They were all convinced that the best prospects for growth lay in a business that could deliver bespoke, complete m&e packages manufactured off-site to detailed designs created in close partnerships with project design teams and end clients.

At the time, the industry seemed to be moving in the opposite direction towards a more streamlined off-the-shelf, product-by-product approach led by large multi-national groups which were able to outsource much of their manufacturing and were totally focused on distribution channels.

Economic storm

The management team at Ormandy felt there was a big future in a more traditional approach to manufacturing linked to partnerships with contractors, consultants and end clients. Today, Ormandy manufactures equipment for all market sectors from HVAC through to off-shore marine and is weathering the current economic storm.

Managing director Paul Cooper set the wheels in motion when he resigned as managing director of Rycroft and set up home in the iconic Hartley & Sugden factory in Halifax. From that standing start, the group has grown to £25M turnover, it has 209 staff and operates from three production centres at Halifax, Bradford and Burgess Hill in Sussex. It has made six major acquisitions in that period as well as seeing healthy organic growth.

The most symbolic acquisitions were the aforementioned Rycroft from Baxi two years ago and Hartley & Sugden - complete with its 120 years of commercial and industrial boiler manufacturing heritage - in 2006. The stainless-steel fabricator Newade was also bought in the same year, and late last year Ormandy picked up market-leading plastic-piping supplier Aquatherm.

These purchases were not spur-of-the-moment, opportunistic moves, but complemented the original vision of a business able to provide complete packaged solutions as well as individual components for a wide range of m&e projects.

'Manufacturing in our market is no longer about products, it is about solutions,' says Cooper. 'As a specialist in off-site fabrication of m&e plant rooms, we have evolved into a one-stop-shop solutions provider.'

'As a result of our growth and acquisitions, we don't just have one solution which we try and make fit a project; we can offer a whole range of options,' he explains. 'There is a place for companies focused on delivering products to market via a two-stage distribution arrangement. But we felt there was considerable potential for a business able to work in partnership with design teams and end clients to deliver complete packages. 'I like to think that our track record shows we got it right.'

Despite its rapid growth and highly acquisitive approach, Ormandy is, in many ways, a traditional manufacturer - a rare beast in the UK. It is totally employee-owned and continues to invest in traditional engineering skills.

For example, it employs 19 coppersmiths, 19 Class 1 welders, 31 fitters and assembly workers, eight electricians and, importantly, has 11 apprentices on its books. 'It is central to our whole strategy for us to have a strong core of UK-based, in-house skills,' says Cooper. 'Many of these are no longer available off the shelf anymore, so you have to grow your own.'

Export backlash

'I think one of the things you will see in the wake of the recession is a backlash against companies bringing everything in from overseas,' he adds. 'The current state of the pound will also breathe life into UK exports - not right across the economy - but certainly in our markets.'

As well as Cooper, the group continues to be run by its founding directors David Dutch (technical director); Phil Cooper - no relation (sales); Stuart Goodison (commercial); and Chris Eames (production). In total, 16 employees hold shares ranging from members of the board through to shop floor personnel.

The original shared vision remains firmly intact and is thriving because the off-site approach has even more to commend it during a recession, according to Cooper.
'We simplify the supply chain and eliminate many of the problems that lead to costly delays and defects on site. The packaged solution is appealing to a lot of clients because it means they are dealing with fewer suppliers and off-loading many of their design headaches,' he says.
'This approach not only improves margins for all concerned, but removes huge elements of risk from the procurement process.'

The recession has slowed the whole market down and Ormandy has come up against the problem of contractors seeking to keep much of their work in house to try and keep their workforce busy, but there is still market bucking growth in off-site fabrication - possibly as high as 25% per annum, according to trade association Build Offsite.

However, traditional contractual wrangles still dog the sector. 'We still have the crazy situation where a consultant puts a specification together and then five different sub-contractors start chasing around the country for separate quotes from dozens of manufacturers,' says Cooper. 'Competitive tendering is an incredibly wasteful process - and it is the client who pays in the end, both financially and through delays to his project.'

He believes that consultants should take an overview of the whole design and then go directly to the specialist for the detailed elements. 'We have built up a team of experienced engineers for this very purpose,' he says. 'We don't believe it is sensible for a manufacturer just to produce bits of equipment any more - they need to be part of the design process and the overall quality control.'
'We will produce the detailed design and make sure it works. If we supply a pre-fabricated system to site, the unit is factory tested and the contractor only has a minimum of pipework connections to make. Our own engineers are then available to ensure a smooth commissioning process.'

And Ormandy's success proves that this approach works. For example, it has secured a series of lucrative contracts with the MoD - including the opportunity to supply equipment for the two new aircraft carriers being built for the Royal Navy.

These will be the two largest and most powerful warships ever built in the UK and Ormandy is supplying water treatment, boosting and hot-water equipment. The 65,000 tonne ships - HMS Queen Elizabeth and HMS Prince Of Wales - are due to enter service with the Royal Navy in the next decade and will cost £3.9B.

Water treatment plant on board the carriers will produce more than 500 tonnes of fresh water daily. Ormandy is supplying two ship-sets each comprising three hydrophore units and water treatment plant, duty / standby pumps operating at 12 litres per second at 8barG with three 500-litre accumulators.

Also included in the contract are three calorifier packages for each ship with two 1,400-litre stainless-steel vessels, 240kW immersion heaters and two 500-litre expansion vessels.
There is also considerable business to be had in the healthcare and education markets with the Building Schools for the Future programme proving particularly helpful to Ormandy's continued growth.

Cooper believes that public-sector spending, which will have to be scaled back in the near future, will see the heating industry through to the revival in the private sector, but when that revival comes clients will be even more focused on value for money. And that means contractors will be under more pressure to avoid returning to traditional tendering, which can add more than 10% to the overall cost of a project, according to Cooper.

'By shopping around and setting different suppliers against each other, you might think you have saved yourself a few pounds, but it's a false economy,' he says. 'You have to factor in the cost of sending your people round to all these suppliers and the time spent on the process - not to mention the long-term costs of reduced quality as the suppliers try to come in under your budget.'

The compressed timetables on many projects also lead to essential commissioning being squeezed or missed completely. Ormandy overcomes this by delivering its plant rooms pre-commissioned with all components and pipework having had full functionality tests and the controls system being proved before they leave the factory.