07 May 2014
Forget the traditional image of a struggling manufacturing sector, says a new report. UK manufacturers are today upbeat about their sector, which has become increasingly innovative and diverse, despite the economic slump in recent years. Manufacturers are positive about their businesses now, but they do have concerns about the skills shortages and are calling for increased dialogue with government to ensure the sector can fulfil its great potential for growth in the future.
An insight into modern manufacturing, a report published today by Engineering the Future, an alliance of professional institutions including the Royal Academy of Engineering, the Institution of Engineering and Technology (IET) and the Institution of Mechanical Engineers (IMechE), paints a surprisingly positive picture of the state of today’s manufacturing industry, while revealing some challenges and constraints ahead.
The report tells the story through the words of manufacturers themselves. Through a series of interviews, the report finds that UK manufacturing is a vibrant and resourceful part of the economy that is well-placed to deliver growth in globalised markets, to the benefit of the UK economy as a whole.
However, the report highlights that manufacturers are very concerned that, as their workforce retires, they will not be able to get the engineers they need – the shortage of skilled workers was an issue that most of the interviewed companies highlighted as the main area of concern.
After the recession, most manufacturers have learnt to redesign their business strategies to account for similar events in the future. Most manufacturers now keep their edge by focussing on slimming down their procedures, cutting down waste and increasing production efficiency.
Manufacturers believe that Government support for their sector is effective, but improvement could be made. For example, an increased and more consistent dialogue between Government and manufacturers would be beneficial to ensure that the UK is creating the right environment for the sector to flourish and that all the support schemes available have the appropriate processes in place. For example, smaller companies say that many of the schemes available are just too complex and time-consuming in terms of the amount of paperwork required.
Andrew Churchill, Managing Director of JJ Churchill, one of the companies interviewed in the report, said: “This report specifically recognises the enormous diversity of our sector, but from that variety has drawn some common themes. From my perspective, I’m not looking for the government to either plan for me or run my business, but there remains some key areas where their engagement is essential. These include the on-going need for a clear, top-level vision from government together with consistency and predictability of any intervention; the vexed skills issue and global competitiveness of the UK as a manufacturing base as described by fiscal attractiveness.“
Nigel Fine, Chair of the Engineering the Future Plenary which produced the report said: “It’s great news to see that the UK’s manufacturing industry, which is often perceived as struggling, is in such fine form. The priority now must be to make sure it stays that way. A two-way dialogue between government and manufacturers will ensure that support can be consistently delivered to improve this valuable part of the economy. We should celebrate the diversity and success of our manufacturers in spite of such a challenging economic situation over the last few years.”
Case studies featured in the report include:
Vitsoe, a German producer of high-end furniture, which, having gone into receivership, left its UK importer with a choice to make: follow the German firm into closure or take on the manufacturing itself. Choosing the latter, through the courage of their convictions Vitsoe negotiated design rights and moved production of their contemporary furniture to London.
Meanwhile, Autoflame Engineering Ltd, manufacturer of industrial and commercial boiler control systems that reduce fuel usage and cut emissions, achieved steady growth during the recession and even took on more staff. They credited their success to their efforts in maximising internal efficiency, driving down waste and improving cost control. The company maintained its forward drive by patenting their products and using the patenting process to drive further innovation.
Moving to more favourable markets helped the survival and growth of Logicor, a company providing environmentally-friendly research and development support to industry, especially creating and supplying ‘green’ patents. Throughout the years, Logicor monitored government programmes in energy conservation worldwide, moving into a new market with their products after new initiatives were launched, sure that there was a need for their services.
For others the secret has been to respond creatively to the crisis, reinventing their sale pitch. British icon Brompton Bicycles, for example, increased its spend in developing new markets during the crisis. Marketing its products as a way for new customers to save on commuting costs, Brompton successfully managed to increase its Spanish distribution network ten folds while the Spanish economy shrank.
Others relied on investment to keep ahead of competitors, like JJ Churchill. The family-owned precision engineering business found that spending on long lead-time equipment when prices were lower allowed them to overtake their competitors thanks to increased capacity and capabilities, especially once the recovery started to be felt. They also found that the investments had a positive impact on the staff’s morale.