Deciding to let a new generation of managers take control can make all the difference. One company shows how new blood brought new hope
By Michael Becket
M ANAGEMENT succession is a worry for major corporations but deciding when to let go can be vital for small businesses, especially if they are owned by the family that runs them.
It was precisely that problem facing Ellison Circlips, the Bingley-based engineering outfit established in 1953 to make sprung clips which keep in place many moving parts, including in car gearboxes and cassette recorders.
Arthur Ellison, the founder, handed over to his sons. Michael Ellison, now chairman, suddenly found the business slipping into the red. In the year to March 1993 the loss grew to £180,000 on £8.3m turnover. Some senior managers were "getting a bit long in the tooth", said Mr Ellison.
He himself was 55 at the time. The rest of them were 58 to 67.Kicking out senior people was not a choice. Instead, they were made part-time to give room for a younger team, and eventually the older men themselves suggested it might be time to call it a day.
Belt-tightening was overdue too. The company had overtraded and desperately needed money. The banks were no help. They were worried the motor industry-Ellison's major customer-was in decline.
"I could see it was a good business but it just needed an injection of capital," said Mr Ellison. His brother put in £80,000 and he invested £500,000.
At the same time he gave the young guard promotion. And the business has come round under Simon Ellison, Michael's son, who was made managing director. Last year it returned to profit with £701,000 pre-tax and this year that grew to £1.2m. Part of the reason was the paring away to concentrate on the circular clips; but much was due toinnovation. The company now is unique in having in-line continuous production. It also produces stacks of clips-instead of a random heap- ready for installing straight on to a machine tool. And because it has continuous production, it can test every clip. As a result it guarantees every one.To create the innovative continuous production it had to build some of its own machinery and has a series of patents.
