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Hesco Bastion is one of Leeds’, even Yorkshire’s, most famous companies but it very nearly went down in 2011/12. Michael Hughes, Hesco’s CEO and an Entrepreneur in Residence for Connect Yorkshire, told the fascinating story of Hescos near death and resuscitation at our February Masterclass which we held on 8th Feb at Carrwood Park.

Jimi Heselden

Hesco Bastion was founded by ex miner Jimi Heselden when he invented a “coil” to join big barriers together to protect his seaside property from falling into the sea.

This invention was patented and vigorously protected by Heso until it expired in 2011. Although the first sales were to the civil market, flood defences etc, the business took off when the US military became interested. Camp Bastion in Afghanistan covered approx 20 sq miles, the perimeter and many other were supplied by Hesco.

At its height Hesco turned over £120m and was very profitable. It had built itself a strong brand in a niche market space synonymous with quality, support and saving lives.

Jimi gave large sums to charities and supported much charitable work especially in East Leeds.

Tragedy Struck on 3 fronts with a few months

Jimi died in a tragic accident

The patent expired

The US army started to pull back from Afghanistan

Revenues dropped by over 80%.

The Challenges

Mike Hughes is a chartered accountant who was known to Jimi’s family and was asked to come in for a couple of days a week after Jimi died. It wasn’t long before he became CEO and introduced far reaching changes. He described these under 6 headings:

Structure

There were 3 disperse businesses with different owners and CEOs. He combined the 3 into one and lost 2 of the 3 CEOs.

People

The runaway success had led to complacency and arrogance. The people were in denial that change was necessary. Mike changed this from autocratic to collaborative, created a vision for the future and gave the place confidence. Hesco made over 50% of the staff redundant, Mike saw every one.

Financial

As the profits rolled in, there had been very few financial controls beyond what the bank balance was. So new systems, processes and procedures were introduced. There was a huge reduction in costs across all parts, many on the shop floor were on £60+k pa!! Pay cut by 50%, and a focus on cash.

Commercial

It took nearly 3 years to work through the products in the supply chain.

They had to create a sales team. There was no sales dept so they converted the technical support team to sales which has not been easy-and is still ongoing.

They re-branded to modernise, revitalise and be relevant to the new model.

They have created, and are continuing to create, new products and to seek new markets and new business.

Innovation

It was vital to develop some new products so a development team was created and work was started with partners to develop new products so the product mix is now less military and more civil such as flood defences in the US and oil & gas in the Middle East.

Operational

Big changes were needed to the wages, hours, conditions and representation of the workforce. The factory itself needed changes to improve the layout, health and safety and improve the quality of the products.

Take-aways

Mike’s key messages were:

Empower people, make a plan, be decisive, cut deeper than necessary and live the values which are

INTEGRITY INNOVATION   INCISIVENESS

Now

Sales back up to £60k. 98% export and only 30% military. Most services now in-house whereas they had been outsourced.

Nick Butler

09/02/18