BPE: manufacturing success
PUBLISHED: 13:55 10 October 2016 | UPDATED: 10:08 28 October 2016
How is the manufacturing sector reacting to a changing world? What might the next few years look like for the UK’s engineering and manufacturing businesses? With deep rooted experience and knowledge of manufacturing BPE is the UK’s only dedicated legal service in Science, Technology, Engineering and Maths (STEM).
Rob Bryan, BPE partner, has been providing legal guidance to public and private clients in the sector through periods of boom and bust, and considers the challenges Brexit now presents.
“Although we are still in very early days, and there isn’t much data to go on, trends in the advanced manufacturing sector suggest that things are looking positive,” says Rob. “Taking figures from the UK Manufacturing Purchasing Managers’ Index (UK Manufacturing PMI), production increased in August, with the index reporting a figure of 53.3.
“This marks a rise from 48.3 in July, the biggest increase month-on-month in 25 years. The index is a complex algorithm based on five indices from 600 industrial companies and any figure over 50 indicates growth, so 53.3 is a positive indication, and also beats the long-term average of 51.3 of the last eight years.”
People and Skills
The free movement of workers is a key issue that the Brexit negotiations will have to consider, and an issue that will have heavy implications on the manufacturing sector as a whole.
Free movement is a fundamental element of EU membership, and the manufacturing sector typically employees a large number of migrant workers from right across the EU. Any significant restriction on the ability of these workers to take employment in a post-Brexit UK could result in employers struggling to source the skilled workers the industry needs to thrive.
It’s worth acknowledging that there is an opportunity to invest in robotics in many areas of the manufacturing workflow, but this won’t meet the shortfall of STEM roles. STEM skills are at a shortage in the UK, and being able to meet this need will be key to the industry’s response to the departure from the EU. There are a number of initiatives to bolster this shortfall, but whether they will bear fruit in time is as yet unknown.
Driving innovation forward
Irrespective of Brexit, innovation is inherently necessary for a strong sector, and the UK has some great examples. Aston Martin has been using innovative techniques to form lighter stronger aluminium panels that are a key element of the new DB11 supercar chassis, reducing the weight, improving performance and fuel efficiency.
Similarly, Delta Motorsport, based in Silverstone, Northampton, has been attracting interest from as far afield as China for its low cost Micro Turbine Range Extender (MiTRE) technology. By keeping the battery cells of electric vehicles charged and slowing the power drain, the technology stands to enable electric vehicles to benefit from the same range as petrol and diesel vehicles.
“So far, so good,” says Rob.
But what’s the point of view from government and from business? BPE invited a client and a partner to share their views. Craig Peterson is Managing Director of Future Advanced Manufacture, an advanced engineering firm based in Staverton, Gloucestershire, and Zoe Webster is the Head of High Value Manufacturing at Innovate UK, the UK’s innovation agency.
Craig Peterson reflects on the changes that have affected the manufacturing industry in Britain, but cautions that, at this point, they have to be seen as subjective. “The full ramifications of the decision to leave the EU will not become clear for some years. Early indications, however, suggest that Future is already seeing the benefit of a weaker pound.
“September saw a major Swiss aerospace engineering group sign a contract with us for the long term production of airliner components. This is the first such long-term production contract to come from outside of the UK for Future,” says Craig.
Hopefully this will be the first of many such orders being placed with UK manufacturing firms from outside of the UK. Craig also highlights possible negative effects as well. “Undoubtedly there will be supply chain impacts where materials purchased from oversees become more expensive. That cost will have to be absorbed or passed on, but it is hoped that this will not be too burdensome.” In the long term scenario however, diversification is key, and the expanding range of markets that Future is active in should allow the firm to balance any offset in the bottom line and continue its growth.
The recent volatile conditions in the oil and gas market had a big impact on the manufacturing industry, and those who were proactive and pushed ahead with other sector accreditations (like Future) will benefit. Those who were ‘late to the party’ and who are now rushing through their own accreditations may still struggle.
Aerospace portfolios and contracts are to a large extent built on reputation and heritage or legacy performance. By diversifying early, Future has that legacy performance and reputation in place so can thrive where others may struggle.
Future’s significant investment in industry accreditations, new technology, training and expertise has led to rapid and continued growth in its R&D order book. In turn, this demand has signalled the forthcoming development of a dedicated Future R&D Centre of Excellence.
Craig comments: “The challenge for us will be to retain and recruit the skill sets required to continue to thrive in the aerospace market. The potential impact of restricted movement of skilled workers across borders is a very real concern for the next few years.”
Innovate UK view
The perspective shifts when looking at the industry from a government overview. Innovate UK is tasked with supporting UK businesses to innovate and grow, and has supported both the Aston Martin and Delta Motorsport projects mentioned earlier. Zoe Webster sees the opportunities for innovation and collaboration in order to respond to the demands of consumers.
“There’s a lot of fantastic innovation happening in the UK across all sectors, for example in new medical devices, low carbon energy solutions and driverless cars to name but a few. While the inventiveness is strong, the successful commercialisation of these ideas is less so. A great idea is not enough – it needs to be ‘manufacturing-ready’ with a supply chain set up for the scale required.
“More demanding customers, whether individual consumers who want greater personalisation in products or services, or OEMs who need to reduce the environmental impact of theirs, place the requirement on manufacturing businesses to be more agile and more innovative in coming up with new manufacturing processes, technologies and business models. There are some great examples of businesses doing this in the UK, but we need many more to follow suit,” explains Zoe.
“In the past year ‘Industry 4.0’ has become a more frequently used term to describe the impact of digital advances in manufacturing. Digital technologies could help manufacturers connect with customers and partners more effectively and respond more quickly to changing supply and demand conditions.
“Anticipating a post-Brexit world may open up new innovation opportunities further afield. Part of Innovate UK’s role is to work with the Department for International Trade (DET) to explore those opportunities and the two organisations will be jointly hosting ‘Innovate 2016’ in early November at which a spotlight will be placed on UK innovation.
“There are pockets of collaboration between SMEs and larger companies in the supply chain which is really encouraging, particularly in automotive and aerospace, but we need to see more of that across all sectors. Innovate UK is helping people to connect, helping companies in manufacturing supply chains work together to satisfy the needs of the big tier one and OEM customers,” says Zoe.
What happens next?
Rob explains: “Pulling these different strands together, we highlight three themes focussing on the importance of a skilled workforce, the need for invention and being innovation ready.”
With a possible threat to the free movement of workers across EU borders, the UK manufacturing industry may have a shortage of workers with the skills needed to get their firms ‘innovation ready’ - ready to take inventions coming from the R&D sector and manufacturing them using innovative techniques and cutting edge technology into products that today’s consumers demand.
“So while things currently appear positive, the longer term effects will remain uncertain until more is known about the shape and conditions applied to any post-EU relationships and the restrictions on movement of workers between countries. When that is known, the landscape of the manufacturing industry will be a great deal more predictable. But for now at least, the future appears promising, and BPE will be here to offer support and guidance over the coming months and years.”