Hereford Furniture Digby Jones: The New Troubleshooter

Lord Digby Jones is a champion of British business.

British manufacturing has got so much to be proud of.

We make furniture, we make shoes, we make high performance motorcars,

we make volume motorcars, we sell them around the world.

But it's a constant battle to keep one step ahead of our global rivals.

Manufacturing at the right product in the right market

at the right time, it matters enormously.

To survive, British firms will have to be at the top of their game.

You're not trying to say, "I'm the cheapest."

You're trying to say, "I'm the best."

Now, that is what manufacturing in the UK in the 21st century is about.

And Digby's determined to play his part.

In a career that's taken him from his parent's corner shop

to the House of Lords,

he's helped transform some iconic British companies.

Now, in a new challenge, can he help three ambitious companies

from the worlds of furniture, fashion and electronics to succeed?

We don't do cheap any more, we can't.

We actually do quality, brand and innovation.

That's what's going to make the profit that pays the tax,

that builds the schools and hospitals.

He's demanded access all areas...

Wow! This is pretty big.

..and he's not afraid to ask the tough questions.

What part of this do you not understand?

Ding-dong! Alarm!

Tonight...

..can Digby help solve a furniture company's urgent problems...

This range that we do...

..is slowly killing us.

..secure the future of the business...

We're now getting into the realms of making it real. So, exciting.

..and help them to strike out in a new direction.

I'd go with it.

But it won't always be easy and there are difficult decisions ahead.

That's why it's time to call in Digby Jones -

The New Troubleshooter.

Every home needs furniture.

So someone has to design...

..make and sell it.

And in Great Britain, over 180,000 people do just that.

Including the men and women of this company,

Hereford Furniture.

-All right, Dave?

-All right, Mike?

Mike Muxworthy's the boss.

We manufacture wooden cabinets.

Is this going on?

We're manufacturing predominantly bedroom furniture.

We're specialising these days mainly in painted furniture...

..which is becoming very, very popular.

To give his retail customers and their own three West Midland shops

plenty of choice, they supplement what they make

by importing furniture from China.

I now have back-ache,

which is what you expect at my age, unloading this kind of thing.

Carrying some of Mike's workload is Kate,

his sales and marketing manager, who's also his youngest daughter.

-No, you can't have a wage increase.

-SHE LAUGHS

Over 1,200 furniture manufacturers went bust during the recession,

and having made a loss of £80,000 for the first time last year,

they're thinking about their future.

We've had our fingers burned that many times.

It's a worry at the minute.

The question of survival is there,

so it's always at the back of our minds.

We have every confidence in the company,

but we are also aware that things could fail.

But with the future of over 40 staff on the line,

failure is not an option for Lord Digby Jones.

You're giving me loads of reasons why you can't.

His mission -

to turn survival into success and secure the future of the workforce.

But do they think he's the right man for the job?

If there's anybody out there that can give us a hand,

which I think this Mr Digby can, it'll be more than welcome.

He might be able to make it better than what it is.

Anyone could be useful around here, but he definitely could.

Could show our boss a few things.

He'd walk around here in five minutes and know what it's about.

-Basically.

-THEY LAUGH

This is almost the last stop.

I'm nearly 60 and I want to go out, when I do finally retire,

leaving a fantastic business that we've built from nothing

to something that hopefully will become a household name nationwide.

It's a big dream, but you've got to aim high.

Aim for the stars and you get somewhere just below -

that's what we've got to keep doing.

Digby Jones is making an early start.

He has five months

to help turn around the fortune of Hereford Furniture.

Championing small and medium sized businesses

like them is his passion.

Put together, they employ 14 million people

and turn over £1.6 trillion a year.

Small business in communities are the bedrock of providing profit

which delivers the taxation which we all need.

The days of thinking that every businessman or woman

who succeeds is for some reason a fat cat, I hope, are over.

But to help this business succeed, Digby needs to get under its skin.

He's been doing his homework.

The business has been doing reasonably well, actually,

for a few years, but in the last year or so it's now losing money.

They've gone off in all directions.

And they tend to have done things

because instinctively it seemed like a good idea.

I might be wrong, but off the page it looks like that.

And if I'm wrong, why are they losing money?

Big questions for the bosses, but they'll have to wait.

Digby wants to hit the floor

and meet the guys at the heart of the business.

-We'll go into the mill first.

-Right down to the mill.

Ops manager Tony Lewis is showing him around the factory.

-This is Gary, this is our sawman, Gary Cooper.

-Hello, Gary.

Don't worry about that. Where there's muck there's brass, lad.

Don't worry about that at all.

15,000 pieces of furniture come out of this factory every year.

I'm a sawyer. My job's a sawyer.

At the moment I'm cutting T&G for drawer bottoms.

How long have you been doing this for?

-With this firm, nearly seven years.

-Have you really?

Next, Digby is taken to see the company's jewel in the crown.

-This is our paint shop.

-Ah, right.

White wood comes in built, comes in on the line there,

and any indentations, any marks we fill.

The quality of the paint finish

adds 25% to the final price-tag of the furniture.

I love it. I love the sense of achievement you get

when you see the final product going out the door to the customer.

We've got such a good finish on the paint now,

and the stain finishes.

This, to me, summarises all my beliefs.

I was born into a community of manufacturing,

a spanner's throw from the Austin motor company and I'm just thrilled

to bits that that kid in Birmingham some 50 years ago,

actually, can still today come to places where they make things.

And I love that.

If I stop a man with a drill it's always worrying.

-I'm Digby. You're...?

-I'm Tom.

'Do I think there's something to work on here? Yes, I do.'

Will I enjoy doing it? You bet I will.

If there was one thing this business could do

that would make your job more efficient and easy, what would it be?

-It would be organisation, I think.

-Yeah? In what way?

Just...this is the production area and we all work together,

the spray shop all work together,

and then the machine shop work together,

but no-one works as a whole together.

When you probe and ask the questions,

they know this could be done more efficiently.

They know the systems in place are not conducive

to productivity enhancement and greater efficiency.

Digby knows that tackling inefficiency

is one thing vital to the company's future.

To find out what other issues he'll have to deal with,

it's time to meet the management.

In the factory showroom, Mike wants Digby to see their flagship range.

This is the future.

This is what we paint.

The customers can have various different heights, widths,

different colours and they can have it delivered whenever they want it.

He's seen the product,

now Digby wants to understand the business structure.

I look at this company

as we've now got three divisions within one company.

The one we're most proud of is, I guess, our manufacturing process.

To complement what we manufacture we import products from China.

We can get nice products made in China and they're beautiful quality.

Then, a third string to the bow,

we've started our own retail operation.

We've got three shops, and between what we manufacture

and what we import, we can fill quite large shops

and give the customer, the final customer, a real good choice.

But you sell through other routes and channels as well?

Our biggest market, still,

is through independent retailers throughout the UK.

By manufacturing, importing and retailing,

they are effectively three businesses in one.

It's a huge challenge, but can they cope?

If I look around here, how many different products have you got?

I think we have something in the region of...

in terms of all options, colour choices...

in the region of 15,000...

-What?!

-..product options.

I think that's a bit on the high side, a bit on the high side.

But we've certainly got too many.

If it's a bit on the high side, by how many?

-I would say we've got 2,000 variations.

-Oh?

2,000 to 15,000 isn't a bit.

I think... I think that's completely wrong.

During the recession what's kept us alive is we've got choice.

We've got as much to offer anybody.

You can come in to our shop and you'll find something you like.

However, this range that we do...

..is slowly killing us.

Brutally honest words from Mike,

but how seriously is it affecting the company bank balance?

-Digby, Jakob Reilly. Reilly.

-Hello.

-Nice to meet you.

-Good to see you.

Jakob Reilly's family own 75% of the company,

with Mike owning the other 25.

So with their own financial security at stake,

it's vital they don't continue to lose money

like they have in the last 12 months.

You're looking at sort of 300... Just under £300,000 less. Why?

It's too easy to be an importer, to be honest.

There is a glut of imported products on the market.

So, did the market contract or did your share of the market contract?

-Our share of the market contracted.

-Why?

-Too many new players coming in.

And why on your own "made here" has it gone backwards?

That's got nothing to do with imported furniture at all.

Why have the sales of your Made In Hereford product gone down?

OK. The reason we've gone down is the number of accounts

-that we've lost that have gone bust.

-Selling your manufactured goods.

Looking at this, surely there's an alarm bell ringing somewhere?

Of course. None of us, really,

have been involved in a loss-making business before,

so we are entering new ground.

And it's quite scary ground, I have to admit.

But we are 100% behind Mike.

We know that the backdrop that he's working against is extremely tough.

It's clear Digby has a lot to think about,

but he wants Mike and Kate to think about one thing straightaway.

I want you to just think about how you would answer this question.

You're trying to make stuff, you're trying to import stuff

and then you're trying to retail stuff.

Now, if you can pull it off, fine,

but you're going to dissipate your talent,

dissipate your working capital.

This business really can't go on doing three things.

It's got to focus.

It's perfectly obvious they haven't drilled down

into which of those three is making them real money,

which isn't, which is subsidising what.

So, they've responded with a bit of inspiration, a bit of flair

and they've got themselves to a position

where they like where they are in terms of what they do,

but they don't like the result - which is losing money.

So, they've got some big questions.

When somebody really points it out, you do sit back and you think,

"How have we let this happen?"

It's not from a desire to want to make a loss.

We've got a desire to make a profit, make a good business

and make employment here in Hereford for all the people.

Hopefully, Lord Jones will steer us in the right direction.

Over the last 20 years, some of the biggest players

in the furniture industry have faced financial difficulties.

But we still spend around £7 billion

on British-made furniture every year.

That's equivalent to just over £100 for every man,

woman and child in the UK.

So, how can a medium-sized company like Hereford Furniture

compete with the big household names?

Digby's going to ask Paul Van Der Heyde,

who knows what he's talking about.

He's head of the British Furniture Confederation.

I'm an ignoramus of the sector, so I have this idea

that the market is swamped by flat-packs from Sweden.

-Would I be right?

-I think you're wrong.

And we can talk about particularly a large Swedish retailer.

They have, I think, been a very good influence on British furniture.

They woke up people to the prospect that actually,

changing your furniture can be a good thing.

And they haven't won the battle.

They represent a very small percentage of our UK furniture.

So, five years on from today,

do you expect the import side of the sector to be greater than today,

-proportionately, or less?

-I hope it will be less.

I think the cost of bringing furniture in from overseas -

be it just the logistics costs or just the timetable -

costs of bringing it over get more and more difficult

so the opportunity is there for us to grab

to make sure we make more of what people want in the UK efficiently.

So, a chance of survival. But what do people want?

As author and editor-at-large of one of the UK's biggest design mags,

it's Henrietta Thompson's job to know.

And she's seen a growing trend in Hereford Furniture's target market.

I think what's been interesting in the last few years

is that there's been very little in the middle market.

For that middle class customer.

I think it's been very, very high-end,

where you buy your Italian leather sofa for thousands and thousands

or it's been...it's been very low cost.

-Flat-packish.

-Flat-packish.

So, it's quite a good time, at the moment,

to be in the game of selling people furniture?

You think the buying appetite has changed?

I really do, actually.

I think that people are increasingly wanting

to express their personalities through their homes.

I think that people are really more design aware

then they've been...well, ever, really.

And there's more exciting stuff to choose from.

And do you think that people will pay more for quirky and a bit different?

Innovation doesn't have to be quirky. It can be clever.

It can just be doing something differently,

it could be a new material.

And whether people pay more for that? Yes, if it's done well enough.

So, there is a market ready to spend on the right product

but to beat the foreign names, UK manufacturers like Hereford

will have to work hard to attract customers.

But are Mike and the team doing enough?

After a final fact-finding tour

of their shops in Sutton Coldfield and Kidderminster...

We have the Union Jack here as well. Marvellous.

..Digby's ready to thrash it out with Mike, Kate

and shareholder, Alan Reilly.

We need a big conversation now.

I've had a good look at the factory, I've had a good look at the outlets.

First up, that nagging point for Digby.

You are a manufacturer, you are a retailer, and you import.

I wonder whether it is possible for you

to effectively succeed in all three.

Tell me why I'm right or why I'm wrong.

I feel we've got something very, very special.

And my answer is,

why not? We can do it.

Why not? Because you haven't persuaded me

that the specialist knowledge needed to make a success of retail,

the specialist knowledge needed

to make a success of import and distribution

and the specialist knowledge needed to be a manufacturer...

I don't think you've persuaded me that you've got sufficient ability

within the three of you to make a success of it two or three years out.

I think as far as...

By the way, you might have specialist knowledge

to do one of those things extremely well.

So, I'm not saying you're not good enough.

I'm saying, are you good enough to do all three?

But Digby has to move on to immediate worries.

The business wants to be a recognised, household name,

but they don't display their brand on their furniture.

I can't understand for the life of me

how a company that wants to promote the brand Hereford

is prepared to have its products put somewhere

without the name Hereford on it.

At the moment, with our current supportive network of customers,

we're not brave enough to brand everything as Hereford Furniture.

Our brand and our pockets are not deep enough

to be able to say, "Right, 50% of our business,

"we're going to say you either brand it or you don't buy it.

"You're not buying? Fine, OK."

So, suddenly, my losses of £80,000 will be a loss of £200,000.

-Mike...

-Digby, what are we doing...

..how can you hope to build a brand when,

by your actions, you value it so little?

Right. What we are going to do,

and this is an announcement that I can make here and now.

We are introducing Hereford By Design.

And Hereford By Design products will only be sold to companies

that are prepared to sell it as branded product.

When did you think of this?

It's been mulling around for a number of months.

-When did you...

-On Monday...

-After I visited you!

-Yes.

-Well, that's all been worth it then, hasn't it!

HE LAUGHS Quite right too!

See? You're getting value for money already!

But the time for laughter is over.

With four months to make a difference,

Digby's revolution must begin.

Managing production and range can have a dramatic effect on profits.

In the late '90s, consumer goods giant Unilever cut 700 brands

from its portfolio and saved over a billion pounds in the process.

Digby thinks that if Mike did the same,

he could make huge savings too.

And as one of Britain's best-connected business leaders,

Digby knows just the man to make it happen.

PHONE RINGS

-Good morning, Stewart.

-Good morning.

He's been friends with Stewart Towe

since playing rugby at school together 40 years ago.

What this is about is, instinctively,

there's a better way of becoming more productive,

more efficient in how they make the stuff.

In 1976, Stewart joined a steel rolling business

and 30 years later, he bought it.

His focus on efficiency helps the company

hit clear profit of £7 million a year.

We can get one man on each shift

producing around half a million pounds worth of product every month.

I think there's a bit of a lack of crackle.

The workforce, they haven't had pay rises for a couple of years,

they're under the cosh a bit and I could just do with you

smelling it and saying what you think.

Look forward to seeing the process and taking it forward.

All the best to you. Take care.

Mike's modest 36,000 square foot factory

produces a huge range of furniture.

It can't cope.

This is the biggest single threat to the business.

We are struggling,

there's not a lot of orders in and we've got a lot of problems.

You lose confidence in yourself and your own ability.

We can't carry on. Our planning system is chaotic.

If we don't change, we will fail.

So, let's at least plan what we're going to do

and give ourselves a chance than carry on in this chaos.

Stewart sets about his investigation.

Four hours of walking the floor...

..and meeting the workers.

It's communication between, like, management to supervisors

down to us on the thing, like.

We need to plan a bit better, really.

If we were just building for stock it would be so much more efficient,

when you start doing just one bed, two chests, one wardrobe.

Without the money to refit the factory, efficiencies have to come

by reducing the range the workforce makes.

Creating that balance between the number of products that you offer

and the efficiency and effectiveness of the factory

is perhaps one of your biggest challenges.

Absolutely. I would say the biggest.

And if that's the challenge,

Stewart's there to help Mike find the solution.

Specifically, what have you in your mind

as to the areas you're going to limit?

So, is it about drawer configuration?

Sizes? Colours? What do you think is the main aspect?

What we've got to do is to cull some of the ranges

and be quite hard in culling.

If we had a maximum of 20 pieces in the range...

-As against a current number of approximately how many?

-A thousand.

Radically, Mike is considering dropping

49 out of every 50 product options.

I mean, it's very interesting when we talk

that we're all singing from the same hymn sheet.

-Absolutely.

-Which is great.

Now we've just got to have the courage of our convictions

-to just get on and do it.

-Get on and do it! Absolutely.

That's going to be the key to the next couple of months.

And probably for the future of the business.

All Mike has to do now is tell the lads on the floor.

Hello, gentlemen. Can we just have five minutes?

What we will be doing, probably from the new year,

is we will cut a lot of the ranges and we will only build for stock.

The big thing for us, I guess,

is we've got to try and get the customer to order what we make.

We're going to get 40% more out.

So, you'll need a faster screwdriver, Dave.

-OK.

-OK. Thank you, gentlemen.

That means we get a bigger bonus, Mike, yeah?

-Pardon?

-Does that mean we get a bigger bonus next year?

Well, one thing that would be nice,

-you know we have this share of profits?

-Yeah.

Well, this year, of course, we've got a share of losses.

So, I'll be coming round with a little cup saying,

-"10% of our losses, please."

-I've made no losses!

With that gentlemen Mr Digby coming down,

I think they're starting to listen to him a bit.

We're just mere mortals, us.

With somebody with power like that, maybe they'll listen to him.

If Hereford Furniture wasn't here, where would I get a job?

63 years of age, nobody would employ me.

It's important that he makes the right decisions

for everybody that works in the factory.

So, Mike has committed to a plan

which should make them more efficient.

Digby wants more. Have they crunched their numbers?

I just would like you to comfort me

that there is some pretty hard analytical financials behind this.

They're talking figures again,

so Mike has brought co-director Jakob for support.

When you say the financials,

if we reduce the number of models we're doing,

which means that we can then manufacture for stock,

-we will get 40% more through the works in one week.

-Right.

From a cash-flow point of view, that's sustainable, is it?

-We think so, yeah.

-You've run the numbers on that, have you?

Haven't done a cash flow forecast, no.

-Based on what they're going to do?

-It's something...

We are stepping somewhat into the unknown.

I understand that, but can you give me a bit of paper, Jakob,

that actually says THAT is the financial implication?

-Not at the moment.

-Right, when would you be able to do that by?

We don't have enough accounting resource in the company.

We are very small. We have a book-keeper, she's very, very busy.

-Mike, we would have to sit down and do it.

-We can do it...

You're going to have to do it, you know,

I might be the pain in the bum that has to tell you this

but actually, I'm the least important person for why you need this paper.

-The real people are you.

-Yeah.

Because if you get it right and you get the template,

you can feed in figures and you can feed in things,

so you know where you are.

And good quality, profitable businesses go bust

simply because they're not managing their cash.

Do you know something that struck me early doors today

was that they knew they were coming to this meeting

and they knew the financial ramifications of this big change.

They didn't have one figure they could tell me

was a material evidence of change

that they expected or that was happening.

It's very strange in a business.

-I don't understand the need...

-Why we would need to budget.

I mean, we do a budget every day, every week.

I know where the turnover should be, where we need to be.

-Yeah.

-Budgets are always down to guesstimates anyway.

I think he's talking from the perspective

that that's the formal way of doing it.

That's the textbook way to plan

when you make a big change, and he's not wrong.

You never know. You might find that having done it, you think...

"Why haven't we done it before?" OK.

If it's not too onerous, if we can do it and it's easy to do,

-then why not continue doing it? We'll see.

-OK, OK. Right.

With the range reduction under way,

Digby wants to sort out their second big issue.

Mike and the team want to launch a new,

exclusive brand called Hereford By Design.

But is it a brand that the UK market actually wants?

Digby needs to see proof and if that wasn't hard enough...

..they have to prove it to Emma Bridgewater too.

Starting from her kitchen table in 1985,

Emma now has 250 staff and a turnover of £14 million a year.

Her brand is so strong that people around the world

are happy to spend up to £20 a mug.

Digby thinks that's a lesson for all manufacturers,

including Mike and Kate who, along with shareholder Louise Powell,

have prepared a presentation.

We're obviously making some drastic changes to the business.

Emma's been there, she's done it, she's created a brand.

And if we can take a little bit of her success away with us,

I think we'd be very happy.

For Digby, getting the rebrand right

is about more than just a new name for Hereford Furniture.

They're going to rationalise the range,

they're going to narrow it and focus it.

That's going to work for lots of back office reasons,

it'll make them more money, enhance productivity,

but it'll only work if they get customers buying.

It'll only work if they can communicate with the customer

and say, "This is why it's good for you, Mrs Customer, Mr Customer."

That is something you've done really well.

Whether it's the end user or whether it's a shopkeeper,

you've got to know a lot about what's motivating them,

what's making them tick.

And finding that out and responding to that is something that...

when we started to understand that,

that was a massive big, big step change in our business.

This is their moment to impress.

Nationwide, our brand is invisible, it is unknown.

Consumers have absolutely no awareness of Hereford Furniture.

We need a vehicle for change to get from where we are

to where we want to be - the vehicle that we have is Hereford By Design.

What we're going to do is take our current ranges and upgrade them.

They will become premium ranges that have additional features.

-This is very nice and clean and...

-But it's not high design.

-Have you got plans to make them stand out?

-We have.

We now have soft close drawers that have integrated

to raise the quality and appeal.

And that's very nice. I know. I take that.

How are you going to make that something that I don't walk past?

Soft closing drawers and smooth paint finishes

clearly aren't doing it for Emma.

But Louise is ready to play their trump card.

When we were looking at our brand strategy,

I had a feeling or concept I wanted to put over in everything we do.

My mother's Danish.

Now, I couldn't find a word in the English language

but there is the perfect word in the Danish language.

The word is hygge.

It's about social interaction, it's about belonging.

It's about being at home and wanting to be there.

It's a warm, glowing, lovely feeling

and that's what we would like our brand to encompass,

this feeling of hygge.

You've given us some interesting high aspirations,

but not hearing a connect about how you're going to make sure

the design changes are actually going to have

a "buy me" effect on the customer?

The tiniest design detail can make all the difference

when it comes to brand, as Emma is keen to point out.

This is all sponge decorating in here.

What Hannah does is to do the whole pattern

-and sign it.

-That's my initials on the plate.

-It's quite a nice thought, isn't it?

-Yeah.

That they're signed by you. I really love that.

Saying, "Wow! Hannah's done this."

"Hannah's doing lovely work." Exactly right.

It says this is handmade, unequivocally.

And each of the people who works on it owns that part of the process.

Tour over, and it's time for feedback.

Do Emma and Digby think that the Hereford By Design brand

is strong enough to go to market?

How are you going to give the word Hereford the wow factor?

Why is Hereford going to be something where I go...pow!

When I say I want more, I want design.

And by that I don't mean a smooth paint finish.

Go mad. Where's the red? Where's the dark blue?

But how many do you sell?

-Well, you don't know and neither do I.

-Yeah.

That's no reason why you shouldn't be offering some dark blue,

some dark purple, some orange.

Extraordinary colours and they might be in tiny numbers,

they might only be ones.

Until you do something like that, nobody talks about you on Facebook.

Because if people are going to start talking about you,

which is the desired intention,

the word Hereford - is it the right word?

Because one thing you did influence both of us

-this morning with was that.

-We loved that.

With a great respect, Hereford doesn't carry, for me,

a cache that's going to make me go "wow".

That just sounds sensible, doesn't it?

It sounds what this is - functional, decent, value for money and boring.

-THEY LAUGH

-Thank you!

It is really interesting to compare. Which do you like best?

So, why would you want to go on doing this?

The Danish brand idea has struck a chord

with everyone at the table and the conversation is about to take a turn

that could change the face of Hereford Furniture forever.

So, if we're at a point where we don't have a recognisable brand,

because we're at a point of zero,

do we go straight to this rather than going Hereford By Design?

-How bold do you feel?

-And then eventually go for this?

Digby, last time we met you said you've got to be brave.

-I'll go with it.

-EMMA GASPS

Well, there we go! That's fantastic!

Because it gives us a skeleton and it gives us personality.

-You can't wait to get at it.

-Yeah, let's go!

It's been decided, they're going to ditch their

Hereford By Design brand and want to replace it with Hygge.

The one great thing about this wonderful Danish word

that doesn't have a definition in English is that it's going to excite

in people the question, "What's this about? What's this mean?"

It therefore demands an answer and you get an excuse to start

talking about your product and your brand and your beliefs

and you begin to create a feeling more than the product on its own.

And I think that's inspired today and I take my hat off to them.

-Okey-doke.

-All right?

-Yeah.

I know we have obstacles that we need to overcome in production,

but it's certainly a vehicle by which we can do that.

We've got to do it, we've just spent the last six weeks

rationalising our products and rationalising colours.

And I think that's a fair enough, from a production point of view

but it's when we talk about we're making for stock for three days,

-and two days a week we can...

-We can make specials.

Exactly. And if those are going to have a higher price point

and be real specials and exclusive to our company then yeah, why not?

It doesn't matter if you paint them pink with yellow spots!

-Or Emma Bridgewater polka dot!

-Or any other kind of spots! Yeah!

It's 24 hours since the visit to Emma Bridgewater

and Kate's still buzzing about their new Danish brand name.

It's a concept that we are trying to register

which is a little bit difficult when you try and pin it down to words,

meaning and classifications.

She has spent the last hour on the phone

to the Intellectual Property Office.

It's quite a straightforward process but you need to register

both the name and format that you'd want it to look like.

We don't want to limit ourselves

in terms of just applying it to furniture, for example,

when in the future we could look at using it for our advertising

or for home accessories.

So, we are getting into the realms of making it real.

So, exciting.

But Kate's excitement is not shared by her dad in the boardroom.

What's that?

All that is is the month's P&R, which we know is out because...

Digby wants Mike and Jakob to prepare a cash flow forecast

to support their range reduction.

The point seems to be lost on Mike.

The end goal of this exercise is to make Digby happy.

Could there be any other benefits too?

I don't think so because I know what I'm expecting.

We know the business extremely well

and you know what the break even figure is,

so it's quite simple that if you can sell more

without increasing your overhead, you'll be better off.

If you sell less and you don't reach your overhead, you will lose money.

So, we've spent probably five hours doing a projection and forecasts

and it hasn't really proven anything, it's only a guesstimate.

If we sell X amount we will make a profit.

If we don't, we won't. End of.

A week later, and Digby has received Mike and Jakob's figures.

But they haven't given him enough detail.

When I first came to see you that morning -

what seems like an eternity ago, but was only a few weeks -

but when I came to see you and I looked through the figures

and I then look through these tonight,

I'm not seeing that much difference actually.

Well, you're seeing a reduction in stock, actually, of £200,000.

I am. That's true.

If I'm being polite, I'd say it needs a bit more work.

If I'm being harsher, I'd say take it away and think again.

When are you able to come and show us how to do it?

Sure, that's the next step, isn't it, really...

A frustrating conversation for Digby,

but now his thoughts turn to the company's new Danish branding idea.

The brand can be British,

although it comes from a different country in its stem, if you like.

There's nothing wrong with that.

You can't get much more British than Norwich Union,

and yet Aviva is a Spanish name.

So, there's nothing wrong with taking

a Scandinavian name and going out to market "from Britain",

proud of its British heritage.

Nothing wrong with that at all.

It's how you do it and what you do it and whether you get them

to buy into it and whether you get them to go forward.

I think Kate gets it. She's there.

But the guy who's built the business up,

he's having a bit more problem getting there.

He knows he should. He's not lying to me or to himself.

He knows he should.

It just takes a little bit longer to get the water wings off

and leave the side of the pool.

There's only two months before Digby's consultation ends,

and with major changes happening,

he wants to know how it's going down with the men on the floor.

Could we get all the guys in the mill together

and bring them here for two minutes so I can have a chat with them?

Mike has moved key staff around

to try and improve communication and productivity.

But has it worked?

I mean, you are aware that we've hopefully got a change going on

in the way...what you make for.

You make for stock and it's all changed.

Am I getting a nod?

It's changed since Dave's gone over there.

It's easier to talk to Dave now,

cos he's taken charge over there and it's easier for us to talk to him.

-What do you think, Dave?

-I think it's gradually going to get better,

me being from the spray shop anyway. I know what it's like.

I think the trouble is when an area gets behind,

they seem to blame another area.

That's where the bitchiness comes from.

So that we are against each other, sort of thing.

I think if there's any problems, I think people think

you're having a go at them and they're taking it personally.

When it's not actually personal. It's not like that.

This is a real eye opener for Digby.

If Mike's going to push through with changes, he needs his staff on side.

At this late stage, Digby can't let communication issues ruin his plans.

It is clear to me that there is a changed air down there.

One or two of them said to me, "I can see there are changes coming in.

"We're making more for stock and stuff." Do not be complacent.

It's going in the right direction but you've got a long way to go

on the communication issue. They've all said that.

Shouldn't be seen by you as a criticism you should run away from,

you should actually think, "Actually, I'm quite pleased about this

"and I'm heartened and I'm going to do more."

With Digby's words ringing in his ears,

Mike sits down with the senior team for an honest chat.

We have got to work together.

It's not loads of things, it's not all the time. It's the odd thing.

I don't think it is, but we need to get it right.

I'm thrilled at the way we've got the leaders of the teams

to understand the issue and to have the courage to turn up

and say, "Hey, I want a bit more of the old up-down communication."

I'm very pleased about that.

If something goes wrong there's just a knock-on effect.

So, if someone does something wrong...

I think we need to get rid of negativity.

So much negativity it's unreal.

-Morale's low, isn't it?

-That's the main reason, yeah.

Not being harsh on you, Mike, but when you come round there,

everyone is negative when you come round, I think.

When I come down? You think I'm negative?

No, not negative. They just seem like they don't want to talk to you.

"Mike's coming. Shoo him away, like..."

That's the feeling I get from people down there.

Mind you, in a way I'm quite happy.

I don't want people to talk for the sake of talking.

But equally, I try to pass the time with everybody.

But, OK. I'll spend a little bit more time on the shop floor.

-OK, guys, we really do have to go and do some work.

-Right. Let's go.

The chairs are not very comfortable!

As the team gets back to work,

Mike takes a moment to think about the future.

I'm very keen that we've got three young guys -

and they are young guys - who are part of the management structure.

I think they will work well together.

But we just need them to believe in the job.

We've got a way to go, but we're getting there.

We're getting there.

Mike's thoughts soon turn to his role.

The industry has changed a lot in the 30 years

he's been working with wood.

When we come to IT and internet sales,

and you don't actually see the customer...it's all...

There's a lot of whizz kids out there,

and we need a whizz kid to come in.

Five years ago I would sit in a meeting and I would have

an opinion and my opinion,

I thought, was very valid and very strong.

Now I sit in meetings and I really don't know

what they're talking about, they could well be speaking French.

And I do believe as a company evolves, as a company changes,

the management has to change with it.

Good afternoon. Hereford Furniture.

My baby is this business,

and the business is growing up and maybe it's time

the business left home, or maybe Daddy leaves the business.

We've got to see it grow and flourish.

In a month's time,

Digby Jones will visit the furniture factory for the last time,

but he won't be leaving without tackling their communication issues.

So, in an effort to bring morale up, the machines are shutting down.

The lads on the floor are going on an awayday.

It's a big cost but I hope it's worth it.

Some will look at it as a waste of time,

some will look at it as it's better than doing their normal job

for a couple of hours and some will really buy into it.

So long as we get 50% buying into it we'll have succeeded.

And Mike's right.

Some of the team aren't exactly excited about the prospect,

paid or not.

If it weren't for this, I'd be sat in front of my telly.

To be honest, I've worked 48 years and had nothing like it before.

I don't know what it's going to do. I honestly don't.

They're going to Hereford College of Arts,

where Digby hopes the creative atmosphere

will help them put aside their doubts and differences.

Handling the 21 sceptical students

are senior lecturer Delyth Done and her team.

What we really wanted to do today is to give you a chance

to create something which is really about you marking your quality

and for you guys to work collectively

so it really feels like your stamp, that marks you being craftsmen.

So, a stamp to go on the furniture as it leaves the factory.

A mark of their quality craftsmanship. A symbol of pride.

What do you what to do? Anyone?

A point that seems lost on the lads.

I see it as everyone thinks it's a day off. That's what I think.

Everyone comes here, let's all have a good chat and everything.

That's what I see it as.

We've cut out our logo, mine and James's.

There it is. It took all of three seconds.

We make everything out of wood

so we could have maybe a tree or something.

An hour later, after a slow start, the designs are finished

and uploaded onto the computer, ready to be made into stamps.

When I was at school, it was a green and black computer screen.

They didn't even have a computer when I was at school.

As the stamps are 3D printed, the mood is changing.

Stop the clock! There we go!

This afternoon's been good, really. Better than I expected.

Actually couldn't believe we worked together, which usually we don't.

So, yeah. It's all right.

Just want to see what the finishing bit looks like now.

OK, everybody. We've got our prototype stamps.

And as the final results are being stamped...

Go, Keith.

-Woo!

-There we go!

..the boss arrives.

CHEERING

Boo, hiss!

Who was that?

-MIKE:

-Did you make these today?

These were all made, yep.

-We came up with the designs for each of them.

-Fantastic.

The detail that you get on them is amazing.

It's definitely a start. I don't think it's solved every problem,

because we need a lot more things like this to happen,

a lot more time to bond, really,

cos a lot of the areas just don't have the time to do that.

Also, we need everyone to be in it 100%.

I think it was quite productive in the end.

Everybody worked together and, as I say, they opened up,

and then we got some decent sort of results in towards the end.

I've got the proof in my pocket of what we've done.

I just want to point out - that one's mine.

THEY CHUCKLE

It's five months since Digby first visited

the furniture factory in Hereford.

Today, he's back for the final time.

Today, I look forward to seeing Lord Digby.

I hope he'll like what we've done,

and, yeah, today should be a good day.

Maybe we should speak after he's gone.

Digby wants to revisit every area of the factory,

but first, Kate wants to show him

what she's achieved with their Danish brand concept.

What our Hygge website will allow us to do

is to be more creative in the designs

and to try new products

that in the past we would have been reluctant to be daring.

When the website goes live, it'll be a full online showroom,

store and social media hub,

something they've never had before.

Now they need to secure their trademark.

So what happens if you don't have Hygge?

We're currently waiting for the decision from the IPO

and if the name is not available and we're not allowed to use it,

we will continue with the website exactly as it is

and it's just the name that we'll change.

But the feeling of Hygge and for furniture to have a meaning,

that is what we will continue.

-So the dream will become reality?

-Yes.

I'm a convert, you've got me. Well done.

A big step forward for the new brand...

..but what about the product range

that only five months ago Mike said was slowly killing them?

Well, his retail customers have been officially notified

that the range has been reduced.

The results are obvious on their new mezzanine stock level.

Here we've got all the stock items that we need.

What we've really done is alter the way we do the planning.

So instead of planning each job -

we do one of this, one of the other,

we're now saying, "Right, these are the items we sell.

"We'll make 5, 10, 15 whatever it is."

So we're really on the change now.

But can the lads see the change?

I've not got to cut loads and loads of different things now,

which is better for me.

One-off things, I just cut lots more so I can build a stock up,

gets ahead of it then.

-And are you seeing that happening now?

-Yes, I am.

We are starting to get lists where it's all truffle, all off-white.

In that way, it is working, yeah.

Have any of you got anything else, an idea or a thought?

Nothing production-wise has changed at all.

-Nothing?

-I don't think so, no.

It's still exactly the same.

So why did he say just now that it has changed?

These boys are saying it to be polite,

that's what they're saying it for.

Has the list changed, Chris?

We are getting lists in now where you're doing

a list of off-white and a list of truffle.

We never used to do that.

Mike's doing really good stuff here,

but if I've got a bloke in the spray shop who doesn't actually believe it,

then something's going amiss in between.

It's like having a fabulous engine,

but nothing's connecting it to the wheels,

therefore they're not going round.

I can't see how they can say nothing's happened,

when everything has changed, everything has moved.

Ah, cos you're in your helicopter,

and you're looking at all of this

and you can see in an instant

that things have changed.

You've just walked me through evidence of change.

You need to reinforce it all the time.

-If we haven't got them on side...

-They're not offside.

They're not agin you. They're really not agin you.

I can see just how successful you've been in other areas

and I take my hat off to you.

Well done, Mike. Now your challenge, my son,

-is to get them to believe in you.

-Absolutely.

Time for one last conversation,

and one last chance for Digby to ask one familiar question.

Where are the financials, Michael?

And because Digby has seen huge changes,

he's convinced it's more important than ever

they produce accurate forecasts.

If you get this right,

and I have every confidence you're going to,

you're going to be branded,

you're going to be more efficient and productive

and you're going to start being attractive.

Nobody is going to walk through this door and say,

"I'll tell you how attractive you are - can I write you a cheque?"

When they ask to see the financials of what you're going to do next year,

"I need to know what I'm going to invest in,"

and you go, "Well, it's up here."

Digby, why do I want to sell it? We are a family company.

Make me an offer I can't refuse, it's yours.

I couldn't make you an offer you can't refuse,

cos I don't know what the offer will be,

cos you're showing me nothing that says I can make the offer.

-I don't need to show you. I don't work with a bank.

-But, Dad...

We work with family business.

It's family money.

-We have tried...

-You and I should both shut up. Go on.

-We all keep saying, "Fail to plan, you plan to fail."

-Yes.

So let's give it a try,

because we see ourselves being successful, so let's plan.

The trial we've done for Digby, we missed in month one by over 100k.

In January, we were following our old model.

Our new model came into effect as from 1st February,

so we are now seeing the benefits of that.

I know we've only just started it, but we are seeing the benefits.

It's a deficiency in the business that I think,

and I think your daughter is telling you, you ought to rectify.

The good thing this business has, on that subject,

is instinctively, in your gut,

rarely have I met somebody who understands it so well

-in the unwritten form.

-You do.

It's just that the business is a bit vulnerable

if that bus comes along and takes you into the hereafter.

You've just got to do it.

And you, Kate, are the future for this.

In his darkest moments, just think... Remember Digby sitting here,

say, "Dad, he said don't stop this."

And when you feel like saying,

"Oh, but, Kate, that's all about tomorrow,"

-we're old men, mate.

-We are.

-She's the future, not us.

-Absolutely right.

Though it's the end of our time with Digby

and the end of this process, it's the start of something new

and the start of our journey with the changes that we've made.

Yep.

'It's small, medium-sized businesses employing one more person

'that solve unemployment.

'It's small and medium-sized businesses'

that grow because they take risk and they change,

and then they take on another person.

They make more money, they pay more tax,

they build more schools and hospitals.

That is why it's important that small and medium-sized businesses

in our nation survive and prosper,

that's why it's important that Hereford Furniture does well.

These guys pull this off,

of course, they'll have done right by themselves, by their investment,

by their courage, by the people who work here,

but they'll have done right by the city of Hereford

and they'll have done right by our country.

And, frankly, you can't ask for more than that.

Next time, Digby helps a textiles company shape up

to take on the economic might of Asia.

It has "What part of this do you not understand" written all over it.

-It's down to resources and money.

-Don't tell me you can't afford it!

You got a chequebook in there as well, Digby?