Weir Group has made a strategic decision to turn the strength of Sterling to its advantage by buying more components from non-European suppliers which could lead to substantial cost savings for the company.

The Glasgow-based group has told its core pump, valve and material handling subsidiaries to source more materials from Eastern Europe, India, China and South America, providing quality can be matched. Where the price is the same, Weir will continue to purchase goods from existing suppliers, mainly in Europe, but with two-thirds of its orders coming from export markets, Sir Ron Garrick, managing director, feels that the group must be able to buy as well as sell effectively in the global market.

Weir has strong buying power, with 30 manufacturing plants in 14 countries, and has carried out a 12 month global sourcing exercise. This has identified new more cost-effective suppliers of castings, electric motors, gearboxes and fabrications stretching from Brazil to Rumania. "The aim is to get cost out without prejudicing quality or delivery," said Sir Ron. "In today's global market, we must continue to seek ways to improve our competitiveness and efficiency."

Weir has identified a series of initiatives which should save about £4 million this year alone and subsidiaries are being encouraged to keep their manufacturing facilities up-to-date. For example, Weir Pumps, the group's flagship company, has just drawn up plans to invest £14m in new manufacturing technology at its Glasgow headquarters over the next three years. The investment boost, the largest by any subsidiary in the group's 127-year history, could also involve further investment in the latest design and information technology to strengthen its position as one of the world's biggest pumpmakers. The group has spent a further £62m on new plant and buildings in the last four years, during which time it has invested an additional £183m on 18 value-enhancing acquisitions to bolster core businesses.

Sir Ron said: "We now have an excellent range of products throughout the group. We spend a lot of money re-designing our ranges to achieve significant cost-savings, both in software and hardware, and we now want to maximise the benefits. There's no doubt that the market is there. There's a lot of potential to increase marketshare, especially when you consider that a recent independent report indicated that world sales of pumps, which account for 50 per cent of the group's activities is still good and we would not be undertaking such large investments if we did not have faith in our future prospects. It is not all doom and gloom in the engineering sector, and this latest investment confirms our commitment to the UK".

Weir's order intake is averaging £50m a month, and it is on course to match 1997's record £642m, which should be well beaten if the MOD orders for the Astute and Upholder submarines are placed in the next few month.

Weir Group Plc .
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