MANUFACTURING

POLYMERMEDICS

Britain’s manufacturers have hit a record high level of output and orders in this last quarter. Output volumes have reached the highest level ever recorded, UK and export orders are soaring and the 2021 growth forecast sits at +7.1%.

A strong domestic market and improving export sales have expanded order books at a record rate and you would think that all this extraordinary buoyancy in the industry is all good news? Not quite. The most recent data certainly continues to support the fact that manufacturing is recovering post Covid and yet, there is another side.

Raw material prices are still rising sharply as manufacturers feel the impact of ongoing supply-chain disruptions and rapidly expanding shipping costs and add in inflation, growing to a record high on balance, you have a formula of rising costs that tops every manufacturers concerns.

Further to this, there’s also the additional barrier of labour shortages with recruitment across the sector struggling at every level.

Jon Hurrell, CEO of the Cornwall Manufacturers Group, says: “Our members have never seen a time like it. Many are having difficulty filling vacancies and with expectations for employment to expand substantially by the end of this year, Cornwall is awash with opportunities for those with skills in engineering and manufacturing. However, the lack of a skilled workforce in our specialist sector is the crux of the problem.”

It’s recognised that UK manufacturing and engineering has a big skills shortage. According to a recent Government study, 186,000 skilled engineers are needed annually until 2024 to plug the skills gap, and almost 20% of the current workforce is due to retire by 2026 according to the Engineering Construction Industry Training Board (ECITB).

SMITHS METALS

JON HURRELL

So, what can be done?

Jon continues: “We’re absolutely delighted by Truro and Penwith’s new £7 million technology Valency centre, opening up real opportunities for the county’s students to fulfil a rewarding career in engineering, through the excellent provision of courses at the college, but the issue is now. For manufacturers to optimise the opportunities available to them, as the industry benefits from onshoring, we need immediate vacancy fulfilment.”

Truro-based Kensa Heat Pumps, one of the UK’s market leaders and manufacturers of ground source heat pumps is a perfect example.

MD James Standley confirms: “We are recruiting for 20 positions across multiple sectors within the team, ranging from assembly workers to production planners to R&D engineers and business systems analysts.

“Our growth has been exponential and we want to capitalise on our commercial success by expanding production but to do that we need the right people in the right seats and currently, it’s been difficult sourcing the skills required. Fulfilling production demands now is our immediate concern.”

Kensa is atypical of key subsector growth with many subsectors within the industry forecast to grow further in 2021. However, growth for industries like automotive have been recently downgraded due to supplychain challenges and with a number of members manufacturing for the car industry in Cornwall, the regions rollercoaster continues.

Contrastingly, business optimism remains high with manufacturers seeing more opportunities than risks. Investment intentions have jumped to its highest balance ever, with many manufacturers now investing in plant and machinery to deal with new demand.

One of the ongoing issues for Cornwall manufacturers, when it comes to growth, is expansion opportunity. With the need for housing prioritising over industrial development space and no evidential forthcoming funding for industrial developments, how can Cornwall’s manufacturers make the most of strong order books and growth opportunities when there is increasingly less available and affordable land to develop further?

Thomas Smith, head of commercial agency at Miller Commercial, looks at the supply challenge facing manufacturers looking for new industrial premises.

A drive past just about every industrial estate in the county and the ominous lack of agents’ boards tells you all you need to know about the occupational market for industrial premises in Cornwall…there is no supply. And that is not set to change for the foreseeable.

In many ways this is great news. If this can be taken as a barometer for the health of the industrial and business sectors for the rest of the country then we have good reason to be optimistic for the future of the economy. On a more local scale, as these estates support many grass roots businesses and essential services to local commerce, we can feel reassured that Cornish business is in a good place. But for those companies, manufacturers, traders and producers that are growing and are in need of more space for production lines and warehousing, let alone all those entrepreneurs or new entrants to the market looking to get started, the lack of supply means a real barrier to business development.

How can we tackle this challenge?

There is no simple supply tap that can be switched on. Many legitimate reasons exist why land cannot simply be turned over to development; a balance between preserving our natural landscapes and the need for more developable land is paramount, but so too is the balance between the need for commercial and residential land, where an acute shortage of appropriate housing has never been so stark.

The planning system will mean that any scheme from application to delivery could take many months, possibly years. Furthermore, given Cornwall’s natural landscape as well as its mining heritage, there are also many areas that cannot be developed safely, without meeting significant and project-limiting cost.

But landowners take note. With limited supply and continued strength in demand, the market has appreciated and schemes that once may not have been viable could now stack up in terms of the cost of build against the likely returns on offer. If you have found traditional high street finance an issue, there are a number of lenders and brokers that we work with that could provide the funds to unlock latent value held up in hitherto unused land so don’t let that be a barrier.

At Miller Commercial, we have a large waiting list of occupiers looking for new light industrial and general business premises. So, get in touch and ask our team how your land could be used to un-block the supply of commercial premises and allow the local economy to keep growing and local businesses to keep flourishing.

Thomas Smith ts@miller-commercial.co.uk 01872 247013

Eric Nicholls, chairman of the Cornwall Manufacturers Group, says: “Manufacturers have proven their resilience again and our members played a crucial part in the road to recovery post covid with many classified as essential workers due to their products being identified as core to the UK’s economic recovery.

“It’s clear to see that their laser focused vision and determination has overcome enormous hurdles to deliver growth and yet disheartening to still have a skills gap across an industry that rewards with valuable jobs, personally and Cornwall’s 1,100+ financially. Don’t forget, an entry manufacturers level salary for manufacturing contribute £800M is 30% higher to the economy than the average wage in Cornwall!” Cornwall’s 1,100+ manufacturers contribute £800 million to the economy every year and evidence suggests this is going to increase as we move forward to 2022. Eric concludes: “If we can secure expansion and growth opportunities for these businesses in Cornwall, preventing them from having to move out simply to secure affordable and suitable industrial sites, we can grow our GVA even further.”

It seems increasing costs, rising inflation and

Nestled on a farm in the heart of North Cornwall, St. Eval is the home of highquality candles, home fragrance and hand care inspired by nature. Recently honoured with a Queen’s Award for Enterprise for Sustainable Development, St. Eval treads softly on the earth; respecting and renewing, with people and planet at the heart of the business.

Crafting candles is a fine art and one which St. Eval has been perfecting for over 28 years with superior quality and meticulous attention to detail. The mindful practice which comes with producing the finest quality candles, is fused with innovative technology to maintain the high standards for which St. Eval is renowned. Each candle goes through rigorous testing in its candle laboratory on-site, to ensure those standards are maintained throughout.

St. Eval has grown significantly over the last year with the rise in products focused on wellbeing, self-care and home improvements and the company now employs over 50 staff and currently, sustainably produces over 20,000 scented tin candles and 20,000 tealights a week in its core range.

Subsequently, this progressive and innovative company has invested in a new modern workspace and manufacturing facility that will further double its footprint, its candle output and provide a healthy, wellbeingthe ongoing battle to attract and retain skilled workers locally will continue to stress-test regional manufacturers.

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focused environment for its staff, as well as offering electric car charging points. It is also creating a beautiful wildlife, conservation area, a pond and planting trees and a chamomile meadow for staff to enjoy during their breaks.

St. Eval’s Christmas Collection is home to rich, comforting fragrances perfect to celebrate the season. Choose from a great selection of corporate gifts, from small gift boxes to larger gift hampers, filled with beautiful scents to captivate your senses.

New for 2021, St. Eval’s Lavender & Sage Botanical Hand Care range is made with a unique blend of 100% naturally derived ingredients and pure essential oils for calming, balancing, and healing effects. This range is vegan friendly and paraben-free with recyclable packaging: kind to your skin and kind to the planet.

At Cornwall Stairs we are committed to providing bespoke quality staircases. Using the finest materials and latest technology and machinery, all our staircases are created by a team of superb craftsman.

One of the main fundamentals of Cornwall Stairs is our ability to deliver all aspects of our staircase design and manufacture in house. Our premises in Hayle Cornwall is home to our showroom, offices and factory. With everything under one roof we can deliver a commitment to quality from start to finish.

Due to our varied customer base, each staircase we make is tailor-made to fit each individual client brief. From a one-off luxury bespoke set of stairs for a self-build to generic sets of stairs designed for a large housing development, we can cater from one end of the spectrum to the other and everything in between.

Our build procedure consists of four main stages. The first stage usually starts in our showroom and design team, building ideas to address the look, features and materials of the stairs. We can produce 3D imagery of all our stairs so our clients can see what it will look like in their homes before manufacturing commences.

The second stage involves a site survey (by one of our stair designers) to ensure measurements are correct and fit with the chosen design. Then using the latest software, we will create a 3D design image for your approval, prior to production.

Our directors, with over 60 years’ experience between them, are passionate about providing excellent customer service and delivering beautiful and practical staircases time and time again.

The third stage, the manufacture, takes place in our onsite 12,000 sq. ft workshop, fully equipped with state-of-the-art woodworking machinery and computercontrolled CNC machines which give incredible accuracy. These are operated by our qualified and experienced Joiners who take the machined components to their workstations where each bespoke flight is then constructed and fully tested.

All the materials used are sourced from high standard mills and suppliers using the highest quality sustainable timber and other materials.

The final stage of the construction of your stairs is the onsite delivery and installation.

We include delivery of each set of our stairs as standard for each client, by our own delivery team. Installation is not compulsory, but it is recommended as our team of joiners and carpenters are highly trained and experienced in all elements of stair fitting.

cornwallstairs.co.uk | 01736 758582

The last 18 months has been a rollercoaster ride for many businesses and the manufacturing sector has faced so many challenges, with unpredictability and uncertainty being a huge challenge for us all.

We feel fortunate that the print sector has bounced back fairly quickly, with general marketing and promotional print being in demand.

Fortunately, the print and paper supply chains have coped well despite the range of issues being faced by many due to the pandemic, Brexit, labour and driver shortages.

We have taken this opportunity to find out what is important to our customers.

During the pandemic, people and businesses have had time re-evaluate what’s important to them. There has been a new found appreciation and connection with nature, the outdoors and wildlife.

On the back of this, we have seen a big increase in new customers coming to us looking for an eco-friendly printing company. As we have been committed to sustainability for many years, we are well into our journey to reduce our impact on the environment.

When we built our new sustainable factory in 2013, we made a conscious decision to embrace all elements of sustainability and reduce our impact on the environment.

We have heavily invested in a range of projects, from energy efficient presses, installing a 150kWp solar panel system through to improving our ISO environmental processes and last year we carbon balanced our entire operation in association with the World Land Trust.

Our next steps on this journey takes us on a Carbon Net Zero programme, for which we are being supported by the SW Manufacturing Association.

The support provided by the Cornwall Manufacturing Group and staying in touch with colleagues in manufacturing businesses across Cornwall has been invaluable.

sapc.co.uk

Having traditionally operated as a key supplier to automotive industry giants such as Jaguar Land Rover, Nissan, BMW, Vauxhall and Honda, it is now a more diverse range of market sectors that is driving growth for WES Engineering Solutions.

As a leading manufacturer of resistance welding consumables since 1983, WES has ridden the UK automotive industry wave for nearly 40 years through major booms in production to the lull that we are currently experiencing. Commercial director, James Gazzard, explains: “Despite low production levels in the industry currently we can clearly see a new dawn on the horizon for car production in the UK, focussed on EV production, and we are aligning ourselves with the new technologies.”

In order to reduce the reliance on the automotive sector, WES purchased local precision engineering company Hardmetal Engineering in 2003 which specialises in producing high quality, intricate parts for a range of sectors.

“Our Hardmetal division is the perfect platform to access exciting new markets as we can offer improved component life for critical applications in a range of industries such as oil and gas exploration, nuclear power, satellite production, scientific instrumentation, process automation and renewable energy,” adds James.

Moving onto 2016 and the company diversified again, adding another local company to its group - British Classic Car Parts - which designs and manufactures a range of brake calipers and leaf spring suspension for classic cars.

Operations director, Daniel Hutchings explains: “BCC has fast-tracked us into designing our own products which helps to smooth out the peaks and troughs that you get with subcontract engineering and the bigger batches allow more lights out production.” There are exciting times ahead with further growth planned through new product development, accessing new markets and further acquisitions if the right opportunities present themselves.

“Our employees are central to our success and with more growth to come we are focussing on staff development, working conditions, and creating a really positive culture so that we can attract and retain the best talent available locally,” adds Daniel.

WES is currently recruiting skilled engineers in their CNC Milling, manual milling, CNC lathes, grinding, and EDM sections, visit wesltd.com for more information.

Founded in 1937, Teagle Machinery designs and manufactures innovative agricultural machinery. It is best known for its market leading range of ‘Tomahawk’ Straw and

Silage Bale Processors, recently celebrating production of the 20,000th model in this range.

With an impressive archive that spans more than 75 years, the company founder Tom Teagle was one of

Cornwall’s foremost inventors whose natural design vision, working from the farmhouse kitchen table, created innovative machinery that started the business.

This included horse drawn tipcarts, potato planters, fertiliser spreaders, hedge trimmers, concrete mixers and even a 49cc two-stroke cyclemotor, some of these product lines are still in production today, although they would not now be recognised by the founder of the company.

The founders grandson, Roger Teagle took the mantle of company chairman in 2021. As the business turns to its third generation, it does so with a renewed appetite for development of the product line-up, site facilities and manufacturing plant equipment. Teagle is now one of the largest manufacturers of agricultural machinery in the UK, employing around 200 staff, with turnover in FY 2021/22 set to be the highest in the company’s history. Investing for future growth has always been a priority for the business. To meet increases in both sales volumes and the expectations of the farming sector for a high-quality product, Teagle has recently committed to a £2.5 million investment in buildings and plant for an industry leading powder coat paint plant, scheduled for commissioning in June 2022. This will be followed by expansion of welding capacity with the addition of further robot welding cells.

To meet this growth, Teagle continues to recruit in all areas of the business, providing opportunities for skilled team members to work in fast-paced environment that changes with the agricultural seasons.

Located near St Agnes, the production site is based around the farmhouse that the Teagle family moved to over 100 years ago. The site has around six acres (25,000 sq m) of manufacturing halls that process around 2,000 tonnes of steel each year to finished product.

This manufacturing ethos is central to the success of the company which sees over 80% of sales value added on site, providing a high degree of control on quality and costs. In the last 12 months this has offered the company an advantage, as relatively low reliance on long supply chains for components has minimised disruption on the final assembly lines.

When specialist knowledge is required, or there is insufficient design/production capacity, Teagle prioritises partnering with local businesses in the south west; in particular for the development of solutions for software, electronics, and hydraulic systems. In the last 12 months Teagle purchased around £2.5 million of goods and services from local businesses.

The company’s future growth will be realised not only through continued product innovation, but also outward-looking sales ambitions. Teagle has exported products since early in its history, but as competition and the sophistication of products has developed, it has been necessary to put down roots in some key marketplaces.

Working with a committed network of dealers and distributors, the company employs full time sales staff in the US, Russia, Ireland, France and Germany, as well as holding a European Parts Distribution Centre in northern France.

This has stood the company in good stead for the exit from the European Union and ensures that retailers not only sell product, but can provide first class spare parts and service support to farmers in over 50 countries around the world.

Furthermore, this presence offers invaluable feedback from customers in each region, from local trends, competitor information and opportunities for product development. This strategy for geographical spread also provides resilience in order intake; with downturn cycles in one region typically being met by an upturn in another.

An eye to the future of agricultural engineering highlights the challenges in recruiting skilled labour on farms, and the environmental pressure that is pushing rapid advances in the technology and sophistication of machinery. 2022 will see Teagle launch its first fully automated electric drive bale processor. This promises improved animal husbandry through more frequent replenishment of calibrated straw for livestock bedding or as a feed ingredient. Increasingly, there is also interest in this product for processing biomass materials for briquetting and pelleting as renewable energy sources.

As a family business with strong links within the local farming community, Teagle works closely with Spare parts and farmers to test new products, listen to service support new ideas, and get feedback on current to farmers in over product performance 50 countries and reliability. Many of the Research and Development team, which makes up around 15% of the staff on site, are also from a farming background. This provides firsthand feedback from customer to manufacturer which Teagle, as a relatively agile business, are then able to react to meet the needs of a changing environment.

Bishop Fleming has an extensive manufacturing client base across the firm and prides itself on building relationships with its clients by getting out to see them in their factories and really getting under the skin of the business.

Clients range from eco-friendly tyre-recycling businesses and not-for-profit renewable energy projects, to car manufacturers and welding/fabrication companies to brush distributors and producers of freeze-dried microorganisms.

This variety gives the chartered accountant and advisory firm valuable insights into a wide range of businesses, allowing it to acquire broad expertise and experience and so no matter what size, stage or type of business you operate, they can provide a service that is tailor-made to meet your needs and fulfil your objectives.

To take this a step further it recently held a series of roundtable discussions with several manufacturers. Naturally, a frequent topic of conversation centred around the coronavirus pandemic, which has dominated all walks of life for the past 18 months. As manufacturing businesses come in all shapes and sizes, some have been impacted more than others, but all had to face many challenges as a result of Covid, from shortages in supplies and reductions in order volumes to operational challenges in creating a Covid safe working environment for their employees. In many industries the demand for products and services has remained consistent over the pandemic, if not increased. For them, many of the challenges have centred on workforce availability and self-isolation requirements. One commentator said his company’s processes are very manual and labour intensive and therefore in a period where they saw a higher demand for

A key ingredient some products, they, at its peak, had over 20% of for a successful the workforce out of action future is innovation because of self-isolation or showing some symptoms. An interesting observation that was shared by a couple of the businesses in the room was the impact that people returning from furlough has had on the wider workforce. The furlough scheme has been a saving grace for many businesses who have sought to preserve their knowledge and skills. However, some reported unrest and a feeling of antagonism from those staff that were not able to work from home in the same way as office staff, for example, were able to.

For many manufacturers, a key ingredient for a successful future is innovation and over the past 18 months, this has never been more apposite.

“Never waste a crisis”, as one attended succinctly put it. There was a strong feeling, that those businesses who used the pandemic as an opportunity for learning and improvement are those that are going to come out the other side with a stronger, more resilient business.

Simon Hyde, CEO at FAUN Zoeller (UK) said they had used the pandemic to make a conscious effort to focus on what they could do rather than what they couldn’t do. This led to a full office refurbishment project in order to revamp the working environment for staff, to ensure that when people returned from furlough they were able to instil a new “output-focused working culture” which focuses on what people are doing rather than where they sit.

Neill Smith, head of manufacturing support services at the Manufacturing Technology Centre (MTC), said many of the businesses they work with used the pandemic as an opportunity to adapt the ways in which they work. And innovation has been at the forefront of many manufacturers’ minds.

Simon said: “If innovation isn’t in your board agenda, then you are not going to be around in years to come”. With a focus on the green agenda, decarbonisation, and the introduction of AI, innovation, he says, forms 90% of what he does in a day.

One of the most relevant topics at the moment is how manufacturing companies are considering what a low carbon future means to their business with aim to reach net zero by 2050.

While manufacturers understand and accept the importance of lowering their carbon footprint, it can be a difficult and expensive process, with many barriers to overcome.

“Operating in the ceramic industry, similar to the steel industries there is a considerable demand for high temperature heat and therefore the significance of their gas bill as a company makes it very difficult for them to become carbon neutral through simply using sustainable energy,” said Graham Brown of Morgan Advanced Materials.

“With a business target to become carbon neutral by 2050 they are looking at additional measures such as carbon capture to prevent emissions into the atmosphere.”

Bishop Fleming corporate and business services partner, Ally Allington, explains the latest R&D tax relief available to manufacturers

The Research & Development (R&D) tax relief scheme is designed to encourage innovation and global competitiveness by allowing companies an enhanced corporation tax deduction on the money invested in qualifying research and development within the UK.

The regime is commonly misunderstood, and potential claims can fall by the wayside without the support of an experienced tax advisor.

The Covid-19 pandemic has meant businesses are experiencing unprecedented challenges and there has been a significant impact on the manufacturing sector, due in part to the industry’s heavy reliance on logistics to fulfil customer and supplier expectations. With heavy transport delays and a reduced workforce that historically has not worked from home, every business has in some way become more resilient by embracing technology to work remotely.

For years, manufacturers have had the oversight to track the particulars of a project and scale operations up or down accordingly. Many manufacturers have successfully implemented automated inventory management techniques which are designed to order materials when quantities drop below a chosen level. For such methods to work properly, businesses require meticulous planning and the ability to accurately produce timely forecasts.

The bespoke technology involved in this process, and the systems implemented to address the rapid changes required to comply with Covid-19 protocols, has led to expedited R&D expenditure to remain operational and competitive.

Qualifying R&D activities include attempts to innovate, to seek a material improvement in a technology or process, and can include those that already exist. Manufacturers have seized opportunities during the pandemic to invest in R&D for both their ongoing product line and to adapt their businesses to innovate their operations and produce new products such as PPE and Ventilators.

Some common areas where R&D activity may be present for manufacturing companies include:

• Integration of existing machinery and/or technology to improve processes

• Bespoke tooling design and manufacturing

• Taking existing technology from a different sector and incorporating it into an untested environment

• IT functions – including bespoke stock management systems, novel websites etc.

In terms of costs that can be claimed on qualifying R&D activity, these include staff costs (for example: salary/bonus/ employer NIC’s/employer pension costs), consumable costs used up in the R&D activity (including the cost of raw materials used in the testing stages – even if they are subsequently sold as scrap) and potentially sub-contractor costs.

We have a proven track record of supporting our clients with Manufacturing sector specific R&D claims and would welcome the opportunity to discuss innovation and investment in your business.

Waste management also has an important part to play when it comes to the sustainability agenda.

While many materials used in production processes are recyclable, finding companies that can process some of the more complex waste streams can be a challenge.

And one of the challenges is in ensuring that suppliers have the same drive towards sustainability, and therefore it is vital that open conversations take place about the way in which goods are packaged etc.

Circuit boards are a good example of this. They are recyclable, but businesses can often find it challenging to recycle them properly unless they can guarantee the volume and consistency in order to attract the interest of specialist recycling businesses.

And of course, change is also driven by the consumer, which took another step forward recently with BSI’s introduction of its new

Ally Allington Corporate and

Business Services Partner aallington@bishopfleming.co.uk 01872 247066 Reduction Verification Kitemark scheme.

This scheme focuses on CO2 emissions and has been designed specifically with the Government’s Carbon Reduction Commitment Energy Efficiency Scheme (CRC) requirements in mind, so that only greenhouse gas emissions from energy use are taken into account without complicating the measurement with the impact of other sources of carbon such as transport.

A company achieving a reduction of at least 2.5% per annum calculated from three years’ worth of data will be awarded the prestigious BSI Kitemark.

As we move towards a form of certification in this area, such accreditations will form part of consumers’ choices when purchasing products.

The group discussed the challenges that the smaller companies within the supply chain may encounter with this shift, given the increased cost of production.

It was suggested that in order for there to be a big impact in this area, there needs a broader societal shift where consumers recognise the costs of their choices.

For example, where we look at containers in the food industry, is takeaway/microwavable food simply too cheap and are we likely to see changes in pricing going forwards so that the full cost of the environmental impact of food packaging etc is passed on to customers?

If not, then it will be down to companies to cut already squeezed margins in order to recognise the full environmental cost of their goods.

Kevin Connor Audit Partner kconnor@bishopfleming.co.uk 01872 247054

Freya Ronayne Audit Manager fronayne@bishopfleming.co.uk 01752 234326 Alison Oliver Audit Partner aoliver@bishopfleming.co.uk 01872 247085

Ashleigh Ingram Tax Associate aingram@bishopfleming.co.uk 01752 264052