In our latest feature in City A.M. we focus on exporting with an interview with our client Cajero, a specialist manufacturer of cutting tools for the machining of composite and aerospace structures:
For a small, family-owned firm based in Kent, Cajero certainly punches above its weight. Founded in 1992, it sits at the heart of the supply chains of some of the world’s biggest aerospace companies, its main line of business the design and manufacture of the cutting tools used to construct the complex parts of airplanes.
“In very simple terms we produce drill bits, but on a completely different level to those you can find at B&Q,” says Alex Harding, the company’s managing director and the founder’s son. “They’re for machining composite materials – glass fibre, carbon fibre, kevlar, ballistic protection materials – to turn them into wing structures, window apertures, the interior panels of planes. It’s all about increasing productivity, designing a tool that will enable the client to machine a part as economically as possible.”
Also offering consultancy and technical support services, Cajero now operates in over 30 countries, from the Americas and Europe to Asia. “Most of what we do is export, and that’s been the case for some time now. It can average 85 per cent of our business each year,” says Harding. And this brings some particular challenges.
Some are industry-specific, related to working for global companies on long-term projects requiring Cajero to adhere to consistently high standards. “We have to go through a significant amount of validation and certification. And rightly so. When you’re at 30,000 feet in the air, it’s good to know that everything that’s gone into the plane has gone through stringent checks.” The United States, in particular, also has particularly strict requirements that people working on a project have the appropriate security clearances.
Another challenge is language. “We get calls from Japan or China first thing in the morning, Europe coming on stream throughout the day, North America later on. There’s certainly the occasional language barrier. That said, engineering is quite a multinational language itself. While we might not have a free conversation, when you get down to the nuts and bolts, it’s a bit more universal,” says Harding. He also says that using Skype and other digital communication tools has made it vastly easier to get business done across borders.
Given that Cajero seeks to sell in the customer’s currency, the company has to ensure that it can still provide a competitive product while factoring in conversion and bank charges. “Brexit has had a small impact,” Harding says. “But the fall in the pound hasn’t affected us in one direction. Those buying in sterling are benefiting. For those buying in dollars or euros, we’ve got a sufficient cushion in our prices to ensure that it’s manageable.”
Harding is clear, however, that his business is focused on the long term rather than short-term currency movements. And both its focus on projects that can often last a decade and the need to invest in expensive technologically-advanced equipment has meant that securing finance from banks has been difficult.
“Over the years, we’ve looked at banks, finance institutions, and other options like grants, and we’ve found the banks to be particularly wanting. They just don’t get it: their appreciation of manufacturing and engineering is woefully inadequate. They’re just too short term and it’s too costly to raise the finance on an already-expensive asset.”
It is for this reason that Cajero has used asset finance from LDF to finance the purchase of multiple machines over the past few years, with the latest deal agreed this week.
With all R&D done in-house, continued investment is vital for the long-term success of the business. “The companies we work with need to know that they’re working with a partner that delivers on what it promises. We’re not conservative, but we always pitch ourselves as realistically as possible. Our credibility matters. That’s why Cajero has been able to work successfully with so many major companies globally.”