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Accelerating UK Manufacturing Growth

After attending the Cranfield University Manufacturing Debate, I wanted to share some of the insights from the event. 

As always, the standard of the presentations was very high, but the one that stood out for me was that of John Reid. Currently the General Manager at Michelin Tyres Dundee and Director for Michelin Tyres Plc., John took over a facility in Dundee which had merely survived for neigh on 10 years. When he took over, rather than continuing with another restructuring strategy, he took the plant from surviving to being successful. In short he reduced over 40 KPI’s to 3 and secured investment in a business the group were thinking of closing down. He took a long failing plant to being the number 1 performer in the Michelin Group with commitment to further investment in the Dundee facility. 

It is abundantly clear he is passionate about his people and business, and the next journey for the Dundee facility is going from success to excellence. When listening to him I thought what a great person he would be to work for. If you could bottle what John has and sprinkle it across everyone who works in the manufacturing sectors, I am pretty sure it would be in a much stronger place.

The most interesting topic for me was the question around whether we define the manufacturing sector in the right way when it comes to measuring the true value and impact that the manufacturing sector has on the UK economy. In short the answer was “no”. If you factor in the total value, from R&D to design and engineering, through to production and servicing, then the number of jobs created jumps from 2.1m to 5.7m. The effect on GDP also jumped from 10% to 14% -19%, dependent on whose research you reference.  

This leads in to a number of other conversations: 

  • Is the manufacturing sector defined and valued correctly? 
  • Does it need its own rebranding exercise, so that it can better attract talent from other sectors, as well as promote itself better to the outside world?

 

Digital

It was quite clear that manufacturing has entered the digital age and the 4.0 industrial revolution is upon us, described as a “once in a lifetime opportunity”. Whilst the big players, such as Rolls Royce and Siemens, are at the forefront of the digital transformation, research indicated UK owner managed businesses are slow to adopt, trust or even believe the role of digitisation over the years to come.

 

EU referendum

The overwhelming majority believed remaining in the EU was better for UK plc, a show of hands offered around 5 out of 150 who were for leaving the EU. The reasons to remain according to Rt Hon Anna Soubry was predominantly the free movement of workforce and the benefits to R&D and academia. 

 

Sector challenges

Interestingly, Terry Scuoler from the EEF does not think this government is doing enough to reignite the industrial strategy for the UK. In fact, he feels the coalition with Vince Cable had a much better impact on creating and driving the UK’s industrial strategy. Unfortunately, Anna Soubry had to leave early so were not able to hear her point of view on this. 

Anna Leach from CBI had many interesting points to add but most worrying was the UK’s focus on High Value Manufacturing (HVM), which could mean we become too specialist over the next 10 years or so. The same old issues came up about the challenges for UK manufacturers, skills shortages, access to finance, crippling energy costs, short term government thinking and commitment to government investment. My question to the panel was after attending the event for the last three years, and always discussing the aforementioned themes year in year out, I asked whether we were measuring how we are performing in those areas in the UK and as Brian Holliday from Siemens pointed out, how do we compare in those areas year on year versus the other manufacturing nations. Brian Holliday put this back to Rajkumar Roy, Director of Manufacturing at Cranfield University to see if we could have some stats on these areas next year. 

As always, there were many more interesting discussions. 

Having attended a number of similar events hosted by other manufacturing bodies, such as the SMMT, FT and The Manufacturer magazine, I have started to recognise that the sector is great at promoting the many brilliant things going on across the sector, but promoting the sector at these events means they are preaching to those already converted. How do we get these conversations outside of the sector? How can we ignite the same enthusiasm in non-manufacturing savvy people, be that students, parents, education bodies or other organisations.

I truly enjoyed the event but I left with more questions than answers. What I left wanting to know was: What are we doing to reduce the increasingly strong inhibiters to the UK manufacturing sectors? 

 

Claire Lauder is the Director of Manufacturing & Engineering at Interim Partners. 

Comments

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Francis O'Malley

27 Jun 2016 12:23 PM

Hopefully better late than never!

Yes, an excellent presentation by John Reid, just wondered if he had any external help in his transformational exercise.
As regards the 'inhibitors', here are a few thoughts:

1. manufacturing is not perceived to be sexy and still viewed as a Cinderella industry despite the rhetoric from politicians; needs to be more actively promoted, especially in export markets via the embassy network.

2. needs to be given greater prominence in our educational system, e.g., promoting the notion of higher apprenticeships at a young age as an alternative to gaining a (sometimes meaningless) university degree and racking up a load of debt in the process. Succession is a major problem on the shop floor.

3. serious encouragement/inducement to be given to exporting, something a lot of UK companies are not very good at, for a variety of reasons. Witness our trade deficit with the EU alone.

4. current fall in the value of sterling should be a boon to exporters - but how many are in a position to take advantage of this?

Here's to the next time.

Francis


Claire Lauder

08 Jun 2016 12:01 PM

James & Peter - apologies for the delay in responding.

In answer to your question as to whether the debate addressed ways to accelerate Uk manufacturing growth, the the short answer is no. However I do believe the catapult centers are a great addition to UK manufacturing businesses.

In terms of the issues, the same ones are talked about year in year out, and I believe unless a "body" starts measuring how we are performing in those areas then they are only going to get worse.

The sector has a massive PR issue with the wider public, both in attracting talent from a young age as well as getting government commitment. I think re-categorising the sector to include technology and services is a smart move. There is nothing wrong with our service economy growing if it is servicing things that UK manufacturers engineer or manufacture.

So, no, the debate did not provide the magic formula to accelerate manufacturing growth in the UK but I see the NMD as a small part of a wider community at coming up with the answers.


James Middleton

02 Jun 2016 18:09 PM

Claire
Unfortunately the same issues exist as they did 30 years ago when I started out in manufacturing engineering; skills shortages, access to finance, crippling energy costs, short term government thinking and commitment to government investment. I do think that Vince Cable did start making the right impact as he was from a manufacturing background. Having government ministers from manufacturing backgrounds has to be key to changing the environment. Too many career politicians or those from other backgrounds do not really understand the sector.
James


Peter Alderslade

01 Jun 2016 11:39 AM

This is a new report on "Building The Northern Powerhouse". It proposes a different approach to our government, reflecting a German success:
http://www.centreforcities.org/wp-content/uploads/2016/06/16-05-31-Building-the-Northern-Powerhouse-Lessons-from-the-Rhine-Ruhr-and-Randstad.pdf


Peter Alderslade

01 Jun 2016 10:12 AM

Claire, thank you again for your annual conference report. Considering:
1) The subject was “Accelerating UK Manufacturing Growth”.
2) The Office For National Statistics shows UK manufacturing has declined since at least the 1970’s.
3) Government policy has been to grow and rebalance the UK economy since at least the coalition.
4)
• In 2015, there were 5.4 million businesses in the UK.
• Over 99% of businesses are Small or Medium Sized businesses – employing 0-249 people
• 5.1 million (95%) businesses were micro-businesses – employing 0-9 people. Micro-businesses accounted for 33% of employment and 18% of turnover.
• In London, there were 1,434 businesses per 10,000 resident adults. In the North East, there were 629 per 10,000 resident adults.
• The service industries accounted for 74% of businesses, 79% of employment, and 71% of turnover.
• The manufacturing sector accounted for 5% of businesses, 10% of employment, and 16% of turnover.
Do you feel the conference went any direction to developing a strategy to “Accelerate UK Manufacturing Growth”?


Claire Lauder

31 May 2016 10:01 AM

Thanks Tom, Peter and Philip for your comments.


Tom Pickering

28 May 2016 12:37 PM

Claire, good job great to see your passion for manufacturing is undiminished.
Manufacturing requires a joined up strategy including gov because so heavy on startup costs.
I agree this niche focus on high technology manufacturing is myopic because contrary to the generalisations the UK is very good at volume manufacturing too.
In terms of contribution to the UK is far more about supply chain than manufacturing.
Michelin type turnaround is much easier than SME which is where the challenge is.
The key is great leadership and it's about people, which often is missing as a focus in engineering.
Good job thanks for the summary, agreed it's the same of issues that are raised, but if you do what you do you get what you've got.
Best TP


Peter Wells

27 May 2016 15:57 PM

Claire
Government input seems below par, the Business Secretary appears to have been on the back foot over the steel industry, disappointing that Ms. Soubry had to leave the conference early...I thought that's what Junior Ministers were for.
Mind you, the Government appears more widely distracted just now, struggling to make positive points to support remaining in the EU.
The trade discussion is a great case in point - surely it can be definitively stated whether our opportunities for trade (and thence our manufacturing sector) are better for remaining or leaving.
Remain argue that we will be destroyed by tariffs if we leave, yet the EU steel industry is mortally threatened by supplies from China (outside the EU and with no EU trade deal) seemingly able to supply competitively despite any tariffs and additional costs of transportation.
Leave point out that Europe is ex. growth for ten years now, while every other continent on the planet has pushed forward economically. Are we missing better trade deals with the wider world?
Conversely, if our trade deal with the EU (single market) is as good as the Remain lobby state, why is our manufacturing not already accelerated. Good lord, we should be production limited, beset as we are by a captive market of 500 million souls!
Yet many countries outside the EU export more to it as non-members, than do we as fully paid up members.
Where will your answers be found, Claire?
Maybe from the EU, but not a great bet - the Euro crisis persists, the immigration crisis continues to escalate, the French are setting fires again and many young persons are (and may remain) unemployed. Can we establish the root cause of our so low exports to the EU and resolve issues? Would our trade opportunities with ROW (still growing) be better if we left the EU? Can the Govt. help improve competitiveness - interest rates are low but energy and travel costs are high, infrastructure is poor and the regulatory burden is heavy.
Or, are we suffering because our products are not attractive or from poor management and productivity?
I was most interested in your comments about the definition of manufacturing. It is important to measure the value accurately but who will do it? In our current world of misleading statistics, who is best placed to provide a credible, independent valuation of the UK manufacturing sector?
Maybe some possibilities to answer your question will open up later this summer

Best Regards

Peter


Philip May

27 May 2016 12:15 PM

Thanks for sharing Claire, all really interesting.
I was so pleased to see you mention a re-branding of "manufacturing". To many that word still conjures up a picture of old fashioned, maybe even Victorian, plants.
On this blog we know better but we really do need to market the sector better. It would make it much easier to attract the best talent.
Whilst others can help us in our mission it starts with us.
Phil


Leon Labovitch

23 May 2016 12:29 PM

What are UK manufacturers proactively doing to attract, retain and engage high calibre engineers in the face of worldwide competition?