News & Views

Tech champion plans hiring spree - but questions remain over future ownership

Renishaw is stepping up its recruitment efforts after emerging from a difficult period linked to a possible takeover.

Renishaw is embarking on a recruitment drive for young graduates and apprentices as a company admired as model for UK manufacturing and innovation seeks to rebound after months of uncertainty.

The company – which faced the prospect of a takeover earlier this year and has suffered from a weak global economy – has made a "good recovery", according to chief executive Will Lee. It plans to hire a record number of graduates and apprentices from next summer.

However, it remains to be seen how long the business's two main owners – both in their 80s – retain their shareholdings, with the most likely buyers being US-based engineering businesses. A world leader in high-precision measuring instruments, Renishaw bases most its manufacturing and research in the UK, even though 95 per cent of its sales are in other countries.

Dick Elsy, former chief executive of the High Value Manufacturing Catapult, a government/industry research centre, who is now chairman of automotive test systems maker AB Dynamics, describes Renishaw as a "a gem of a technology business" and "just the sort of company that the UK needs in its industrial base".

In an interview with Made Here Now, Lee said Renishaw plans to hire about 100 graduates in the year from next summer, up from about 70 this year. Apprentice intake is likely to be about 75 in 2022/23 up from about 55 in the 12 months to next June.

Will Lee, chief executive, says the company is on track for a “good recovery”, helped by the global drive to accelerate automation and digitisation.

The numbers for both have been rising gradually over the past decade – the intake in 2011/12 was about 25 graduates and 20 apprentices. Most of the new recruits will be in engineering or technical roles and will be based at least initially in the UK where the company has 3,100 employees.

Lee said he was happy with Renshaw's UK-focused approach to manufacturing and innovation. "When it comes to questions about shaving a pound or two off manufacturing costs [by shifting to lower cost nations] and maintaining production close to where we have design and technology expertise, the latter always comes out as the winner."

He said the company gained "real positives" through keeping most of its research and development efforts in the UK, much of this involving cadres of relatively youthful recruits who it puts through training programmes. "We are very fortunate in the quality of people we can recruit." Lee joined the company aged 21 in 1996 as part of its graduate programme, after a physics degree at the University of Oxford, and an MBA from the University of Bath.

Renishaw entered a difficult period from March 2021 after its main owners and co-founders Sir David McMurtry and John Deer put Renishaw up for sale. The effort was abandoned in July after the co-founders together with the rest of Renishaw's directors failed to find a suitable purchaser.

The company is admired for its technology acumen and has moved into new areas such as 3D printing and neurosurgical tools.

Lee said discussing a potential sale with outside groups had been "extremely rigorous" and had "many positive effects". He added: "We put ourselves in the shop window and asked others to judge us on our strengths and weaknesses. We learned a lot about ourselves. We emerged ….in a better position than we were in before."

Lee played down the impact of the sale discussions on Renishaw's employees. "After a week or so, it was back to business as usual. Our employees have remained focused and resilient." It is thought a range of engineering and technology businesses from around the world – especially from the US – expressed interest in Renishaw. Lee declined to give details.

The future for Renishaw has become the subject of a broad debate as the government has become more concerned about the long trend of UK technology-based businesses being bought by overseas groups.

In the past year the British engineering groups Cobham and Ultra and the medical division of Smiths Industries have been acquired by US businesses. But in recent weeks, ministers have ordered a review of the proposed $54bn takeover of the UK-based semiconductor designer Arm by the US chipmaker Nvidia. It is also examining the planned sale to a Chinese owned company of Newport Wafer Fab, which makes semiconductor materials.

Hermann Hauser, partner in the Cambridge venture capital firm Amadeus, and a veteran observer of technology trends, said he was pleased Renishaw had aborted, at least for now, the plan to find a new owner. He thinks it is important for Renishaw to stay UK-owned. "We [the UK] need to be able to make our independent decisions without coercion from other nations, " Hauser said.

Against the trend towards offshoring, Renishaw sees “real positives” about keeping most of this company’s manufacturing and development in the UK.

Renishaw is renowned for having bucked the "offshoring" trend of the past 20 years that has led to many manufacturers based in Europe and the US to shift much of their production elsewhere. Valued at £3.8bn, the company employs almost two-thirds of its 4,900 global headcount in Britain, mainly in Gloucestershire and South Wales.

The company has a good reputation for employing and promoting young people, and for big investments in new products. In recent years, it has added to its core metrology business by developing new types of 3D printers and medical devices called stereotactic robots, for assisting in brain surgery. Renishaw is a sponsor of Made Here Now, which aims to encourage more young people to work in manufacturing.

A key part of Renishaw‘s long-term recruitment efforts involves going into schools to tell youngsters about technology.

While Renishaw is quoted on the London stock exchange, McMurtry and Deer between them own 53 per cent. Explaining the decision to end the sale discussions McMurtry said in July: “At the start of this process we [McMurtry and Deer] made it very clear that, with the board, we were focused on ensuring that we find the right new owner for our business…. We remain fully committed to Renishaw and have indicated … we have no intention of selling our shares on the market for the foreseeable future.”

Addressing the longer term, McMurtry said as he and Deer “consider the future of our shareholdings”, they would follow “an orderly process that continues to take into account the interests of all stakeholders”. McMurtry is executive chairman of the company and, with a 36 per cent stake, the single biggest shareholder.

Lee said Renishaw was being assisted by the trend towards greater automation of production processes as businesses use digital techniques to improve efficiency and planning. He said: “We are seeing lots of opportunities due to the growth in plant automation. Whenever you automate a process, for instance by adding robots or employing more sophisticated machine tools, you invariably need better measurement systems to ensure the machines work as they should.”

While Renishaw specialises in selling measurement systems to businesses in engineering industries including automotive, it has also benefited from growing investments in the semiconductor sector. Many chip production processes require highly accurate measurement systems, which benefits Renishaw through its divisions making positional metrology products known as encoders.

Renishaw has also seen growth in demand for its specialist software, which allows machines used in production processes – making car parts, for example – to communicate with each other.

On any repercussions from the UK's exit from the European Union, Lee said: “Brexit has caused us a lot of hassle, for instance by requiring more paperwork [to cope with new trading rules]. But overall, the impact has not been too negative...the outcome has been as good as we felt it could be."

Of Renishaw's revenues of £565m in the year to June 30, about half came from continental Europe and the Middle East, a similar amount from the Asia-Pacific region, with more than 20 per cent from North and South America.

Further ahead, it remains possible that McMurtry and Deer will return to their previous idea of trying to sell out, even though they would probably retain their previous stipulation that an acquirer would have to “respect the unique heritage and culture of the business [and] its commitment to …local communities”.

Bill Whiteley, who had a spell as the senior independent director at Renishaw and is a former chief executive at specialist UK engineering company Rotork, said he thought the co-founders "could considerably dilute their holding over the next few years without jeopardising the company’s future". He added: " I would personally like to see it remain independent and believe it would prosper best on its own."

Sir Vince Cable – a former UK government business secretary and a big admirer of Renishaw – said one option could be for employees to take control through a management buyout, while selling to a foreign owner or a private equity business should not be ruled out. "There are good and bad foreign buyers, and good and bad private equity," Cable said.

For the immediate future, Lee said McMurtry remained committed to the company, and continued with his longstanding interest in devising new technical ideas. On speculation about what might happen later, Lee said: “We are getting on with the job of running Renishaw…. You can never predict future events.”