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Case Study: Independent Forgings

Published: June 2005

The Company

Independent Forging & Alloys (IFA) Ltd is a specialist open die forging group based in South Yorkshire. Its management team led by Managing Director Martin Burnham like to call IFA the "world's largest blacksmiths"on a site whose metals industry credentials date back to the 1500s.

Martin launched a successful management buy-in in March 2001 of the open die forging division of Doncasters to create IFA which is based at Victoria Forge in Sheffield.

The company uses a range of equipment from hydraulic presses to forge hammers to manufacture a range of industrial fittings and fixtures. It also offers a fast-track
supply of various components to customers and can offer rapid supply to the prototyping and machine testing industries. Meanwhile, IFA's service centre has also
established a reputation in the industry for providing fastest turn-round service for forging, heat treatment, machining, cutting and inspection.

Operating across the globe IFA has customers in the oil and gas; power generation; marine and defence; and aerospace industries.

The Challenge

In the first four-and-a-half years before Martin and his colleagues acquired the business its turnover had shrunk from £7 million to £2.6 million, jobs had fallen from 100 to 30 and only its 40-year-old 1,500 press was operating.

In order to operate on a global basis and ensure the new company was a success it was crucial that IFA began to invest in its plant and machinery to ensure that it could deliver on key orders and offer a genuine world-beating solution to key customers.

Martin's philosophy is simple. He says: "You don't have to accept your fate. You don't have to be led by the market conditions.You can take the lead."Instead, you create a niche business, combining a manufacturer's skills with a stock holder's optimism, response times and drive to go out and find business."

"You need to spend time developing a reliable supplier base - we buy metals world wide and we look carefully at our suppliers - and you need to look for markets worldwide."

Martin and his fellow directors accepted that if IFA was to deliver on the business plan they would need to invest in the business - but for this they would need to raise further investment capital.

The Solution

Martin and his team were introduced to South Yorkshire Investment Fund which brought together a group of funders - including Barclays Bank and the Invest for Growth team which is operated by Business Link South Yorkshire to consider IFA's proposition.

Investment Manager Allan Wood said: "We invest in good businesses and good people.The management team at IFA is clearly of high calibre and collectively they had more than 200 years experience of the metals industry.

"Working together with Martin and his team we assessed their long-term business aims and it was clear that they were determined to meet all their exacting targets."

Since then SYIF has been a regular investor in IFA by committing to £50,000 loans in both 2002 and 2003. It also provided a £500,000 mezzanine loan as part of a £2 million total finance package with Barclays Bank in 2004.

Progress to Date

In the four years since the management buy-in turnover has grown by over 200% to £7.7 million, while the total number of jobs has risen to 87.

The investment from SYIF and others has been used to acquire and install a GFM radial forging plant capable of making forgings of between 2in-8in diameter.

Martin said:"We have put in more equipment than we could possibly have hoped, and we have a rolling programme under which we look at investment for the next three years on an annual basis."

A ring rolling mill has been installed and a seven-tonne forge have been bought back into use. There has also been a programme of continuing investment in IFA's Rolls-Royce and NADCAP-approved heat treatment facilities - so much so that the company which once relied on its former owners for heat treatment is now doing some of their work.

Martin said:"SYIF has been very supportive throughout.They were very quick to respond to the tight timetable. This new machine represents a strategic step forward for us and we are confident that we can use it to develop new markets."

The Fund recently invested a further £80,000 in IFA as the company sought to introduce a new electrical supply into the Victoria Forge site following the recent installation of non-destructive testing facility and two ten-tonne cranes.

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