In my work advising on R&D tax relief, I come across a large number of companies in the manufacturing sector which devote significant time to the development of prototypes, improving production methods and generally proving concepts in order to win new work.
Many see this as part and parcel of the commercial reality of life in the worldwide manufacturing sector. What they don’t always see is that this research and continued development is greatly valued by the Government because it drives innovation and stimulates the economy – and is why the R&D Tax Relief scheme was developed to reward those taking on the risks of innovation.
Shropshire based Spencer Manufacturing Ltd is a great example of such a business. A family run company, it has almost 70 years’ experience in the manufacture of wire mesh products, wire formed metal assemblies & tubular fabrications.
Ownership and management passed to Gordon Hawkins in 1992, with son, David, joining the company in 2005 and stepping up to Managing Director in 2006.
The company’s ethos has always been to engage collaboratively with customers to develop innovative and cost effective solutions. It is this drive to meet and exceed customer requirements, and a commitment to innovation and quality that has made Spencer Manufacturing one of the UK’s leading companies in the sector.
The rise of globalism has brought with it a need to drive this approach even harder:
“If a customer wants high volume, labour intensive products at the cheapest possible price, then generally they will source from the Far East.” says David. “We position ourselves to take on the more challenging, low to medium volume design led jobs that others may think are too difficult & where we can really add real value.”
This approach takes the form of detailed technical discussions, to fully understand customer requirements. Some customers may come with a relatively detailed idea of what they need, but require assistance in overcoming particular technical hurdles; whereas others will bring nothing more than a concept.
In addition to this, David and his team also sit on an education group committee. Made up of teachers and equipment distributors, the group assesses requirements for school equipment and contributes to the development of cost effective alternatives to products currently available on the market.
The company is also a long term collaborator with a multinational household appliance and power tool manufacturer, regularly accepting challenges for the development of parts to integrate within their product range.
Not surprisingly, Spencer Manufacturing has to develop potential solutions at its own expense in order to win work. This can involve periods of detailed investigation, development and testing; pulling in staff from all levels. Often the process requires several attempts, as some proposed solutions do not meet Spencer’s high internal standards – or the customer imposes additional requirements late in the process.
Examples of regular, ongoing development work include:
- Alloy grips for riot shields;
- Compressed stacking stool frames for safety compliant storage, at a reduced cost to the client;
- Height adjustable desk suitable for any use (standing, sitting, wheelchair user);
- Tablet arm, retrofitted to an existing swivel chair;
- Improvement of manufacturing processes, reducing the number of jigs and operations.
Other projects have involved the company in extended periods of R&D, such as:
- Development of unique jigs and welding processes to produce cricket face masks with a tolerance of less than 1mm (firstly in steel, then in titanium – the latter bringing a raft of different challenges).
- Creation, from scratch, of a new type of replenishment trolley for an international supermarket chain. This involved materials investigation (strength vs weight) as well as efficient configuration.
Speaking about recent work to improve on tube frames for school chairs, David said
“It’s this kind of project that gives me a buzz. You have to prove your concept to win the work & this often requires a significant amount of research and development.”
Like many others in the manufacturing sector, the team at Spencer view this as the inevitable cost of doing business – sound familiar?
What they, and so many others, had not appreciated was that they were involved in high levels of research and development, and eligible for valuable tax relief.
We worked with David to help identify the range of projects that had been undertaken in the previous two accounting periods, together with related staff and materials costs. All of this information was collated into detailed reports which were submitted to HMRC, resulting in a significant cash benefit to the company. Not surprisingly, this money will be used to fund future R&D projects.
If any of this sounds familiar, please contact us to see how we can help your company. We offer a success based service, with a no obligation initial phone consultation.
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