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Many will have read the comments made by Professor John Bryson at the RGS conference earlier this month, where he said that a skills shortage threatens the survival of UK manufacturing within the next 5 years. But is this just scaremongering in the face of savage Public Sector spending cuts, or a realistic assessment?
Today, Jaguar have unveiled a World first at the Paris Motor Show. An electric powered supercar capable of speeds over 200mph and unbelievably capable of covering more than 550 miles without needing to be recharged through a plug – the nearest competitors can manage is 100 miles! And guess what? The technology was designed by a British Engineering business based in Shropshire – can it really be possible for the UK to have companies with such advanced engineering teams faced with such dire outcomes?
And what about the skills required for the Aircraft Carrier projects – if BAE Systems have already invested £1bn in the project and have 10,000 people involved, how much have other key suppliers invested, and how many people do they have involved?
I think these predictions are designed to make a point and to caution a Government poised to slash spending in University research budgets. UK manufacturing is now generating more in terms of value than at any since 1966 when manufacturing employment peaked, by focussing on high value, precision engineered products – not something that can have been achieved without a steady flow of new entrants to industry.
What are the views of the interim community specialising in manufacturing and engineering – are you really a dying breed and all set to retire in 2015 along with the designers and manufacturers behind the Jaguar success story and the Aircraft Carrier projects?!
Tom Legard is Head of Manufacturing at Interim Partners.
October 1st, 2010 at 8:48 am
Tom,
Good article! But the UK still has a long way to go to catch up with its international competitors in having a coherent manufacturing policy and an investment community which fully understands and supports it. We need global players in physics- and chemistry-based manufacturing, preferably with a higher UK-ownership base than is currently the case, as well as an innovative niche-playing SME sector. The continuing erosion of manufacturing companies represented in the FTSE 100/250 is a warning sign.
Best regards
Gareth
October 1st, 2010 at 9:11 am
However, let me make you notice the examples are about R&D and design, not actual manufacturing. For instance, in Spain, the textile industry remains as bigger efforts were made to improve product and process (i.e. SCM) design. Manufacturing?: let better productivity countries do it.
October 1st, 2010 at 2:33 pm
Sweeping generalisations about the demise manufacturing are the breeding ground for bad decision making. Sure some products should be made overseas. Sources of competition are in design - manufacturing, technology, supply chain, value engineering and our ability to work together. At present extended supply chains are very fragile at responding to falling demand, causing many business failures, far more its about using regional manufacturing supply chain and design as tools for effective working capital management and serving local markets. An award winning UK electronics manufacturing plant I ran could compete globally where labour costs were <20% of the value add, and I focussed the entire engineering team on value engineering and taking labour out accordingly.
Automotive requires a short supply chain that cannot be served from the far east, and with rising near east costs manufacturing are forcing sourcing products with high labour content to N Africa, and or back to the UK.
Its about how you arrange these elements of the supply chain that creates a position of competitive advantage, and manufacturings position in that chain justified accordingly.
October 14th, 2010 at 1:14 pm
The history of the British Manufacturing Industry can be summed up in four words; ‘Exquisite Engineering, Lousy Marketing’!
The evidence for this is the number of large corporations in any one sector. For these you have to look to the United States, Germany and Japan to note household names and, in the Subsea Oil and Gas Industry, it’s necessary to look to the United States, France, Italy, Norway and Denmark. It’s interesting to note that two of those nations have no hydrocarbons and another two have populations of under 5 million persons and their industrial heritage is Fishing and Farming! However, the future looks no brighter: we have China and India to anticipate!
It seems that British Manufacturing Companies just don’t have the mindset to become Dominant Operations. The aspirational Business Model appears to be to sell-out to become a foreign-owned, Corporate Subsidiary.
Size means influence and, in Oligopolies, that means orienting Standards towards in-house Proprietary Technology. Ownership means Control; this means the right to make decisions on Investment, Headcount and the Type and Location for Product Development. On the downside, foreign ownership means that in times of cutbacks satellite operations tend to get clipped first and any profits usually find their way back to Corporate Headquarters. Accordingly, Tax is paid overseas rather than to HMRC. So, as well as considerations of corporate continuity and security of Employment there are fiscal ones, too.
My own convictions are that British Manufacturing can yet become an even bigger contributor to the Strategic National Interest but only as long as it embraces Corporate and Competitive Marketing Innovations as well as Technological Innovations!
October 15th, 2010 at 11:34 am
A good article. Professor Bryson correctly points to a thriving UK manufacturing sector and reminds us of our world class organisations, producing design intensive, high value products. Skill shortages, yes of course there are, and always have been, and it is so, of course the Professor is right to issue this warning, and there is a political element to his timing (as Tom has said) with the axe poised over research funding. Is it all going collapse in 2015, no.
Being something of a manufacturing enthusiast over many years (yes I remember the bad old days) there is another reason why our manufacturing sector is so strong, and that is foreign ownership, by and large the japanese and Germany companies that own our motor industry, the Indians who own our steel industry, take along term view, they are not hampered by the short termism that plagues UK owned industry, where the institutional shareholders call the tune and take much needed dividends when profits should be ploughed back into the business for the development of products and systems.
Great news today from Jaguar/land Rover as the midlands plants threatened with closure are reprieved.
Ray Gentle
October 20th, 2010 at 9:03 am
Thank you for comments which make for interesting reading.
Ray Gentle makes an interesting point from a perspective I hadn’t thought about, mainly because it is much easier and cheaper for non UK copmpanies to a buy a British companies. Pilkington Group is a classic example of being ‘bought’ by the smaller NSG. In this instance, it was prohibitively expensive and legally very difficult for Pilkington to acquire NSG despite a sound business case, hence the reverse takeover, with another great British business falling into foreign ownership.
It’s an emotive area, but will the Ken Clarke’s of this world just shrug their shoulders and put it down to the free market, should there be a hostile bid for Rolls-Royce for example? Sadly, I think as with Cadbury (and Tomkins, Chloride and Delta in the manufacturing sector so far this year), that would be the response.
Do foreign owners really take a longer term view? Kraft took a short term view with Terry’s of York hence the angst show by Cadbury workers; the breakup of ICI has left the Teeside Chemical plants teetering; and TATA shut the Redcar steel works - only a rescue deal by Thai owned SSI will save it.
I think the comments regards lack of coherent Government strategy and manufacturing becoming an even bigger contribution to the economy are also extremely pertinent - my worry is that the current strength in the manufacturing sector will used as an excuse in Whitehall to change little and do even less.