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www.themanufacturer.com | July/August 2013 | Vol 16 Issue 6

Manufacturing for the final frontier

T GUS /AU UND Y L JU UTBO RT I O REPO RT II s: A P 3

Apprenticeships focus

GTA Renaissance: Reviving employer-led rigour in apprenticeship frameworks Employer evidence: How and why employers across sectors are delivering their apprenticeship programmes

Interview Alex Mardapittas CEO, EMSc (UK)

Workforce and Skills

Stop failing young talent: Britain’s substandard careers advice system

Finance & Professional Services

Regulation update: Competition laws are set to change

Sustainable Manufacturing

Mission Critical: The threat posed by critical raw materials

1 E 20 Export l C N g s externa FINA l & ment inancin part F 3 uirein a ies Interna ser req e last ce Th inan f

IT in Manufacturing

Serve up profit: Manufacturing, ‘servitisation’ and IT infrastructure

Manufacturing Technologies

Four steps to effective automation: Avoid sabotage by getting people on side

Factory profiles Porsche Leipzig Xaar

In partnership with:


it’s worth reading the small print When it comes to selecting your energy supplier it’s tempting to choose the lowest fixed price available.

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Editor’s comment

You, your employees and your robots As this issue went to press comment was fizzing on twitter about a report from Business Birmingham and YouGov which finally shored up a so called trend for ‘re-shoring’ manufacturing to the UK (p5). Talk of this has been eking into industry publications for several years now, but has stayed stubbornly in the realms of anecdote, with little hard data available on the extent of the trend or where the biggest opportunities might be for reshoring. Perhaps the exception is in the Automotive Council’s 2012 report which identified an annual £3bn worth of products and components, currently sourced by OEMs from abroad, which could be purchased from UK manufacturers with a little capability building. We heard at the SMMT Summit that Joe Greenwell will lead the charge on turning this theory into practice (p18).

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Much of the excitement over re-shoring is to do with the promise of job creation. Business Birmingham said that around 200,000 jobs could be created in the next decade from the re-shoring intentions it identified. But with manufacturing technologies for automation and autonomous systems advancing apace, surely celebration of re-shoring as a cure for high unemployment rates is premature? The arguments around the impact of technology on employment are complex and, unsurprisingly given high unemployment across much of the world, have added a potent flavour to industry debates of late. In June, the Work Foundation asked “Will robots and enhanced humans steal our jobs?” (p16) while GE explored the economic impact of the industrial internet on job profiles and business models at its Minds and Machines event at Battersea Power Station (p6). The stance of The Economist’s Kenneth Cukier is that the “algorithm between employment and technology which drives towards unemployment is fundamentally flawed.” And many representatives of manufacturing technology firms would agree (p96). Rather than bringing unemployment, automation enthusiasts hail the creation of a raft of new jobs in the fullest sense. They point to the existence of job titles today which did not exist 10 years ago – certainly not in manufacturing – such as data scientists or social media and service business managers. The trouble with this optimistic argument is that these jobs are generally out of reach for the operator who had their job pinched by the robot, and certainly unattainable for the worryingly high number of NEETs in Britain (p100).

55 92

GE’s chief economist Marco Annunziata says there needs to be a huge improvement in “basic scientific literacy” across Europe if the region is to stabilise its approach to employment and technological advance for economic benefit. Never chary is creating an Automation in pitching in to such debates, Advisory Board to guide our coverage of investment, technology and skills issues around automation.

Cover image: Could you push your product over the final frontier? p20.

There’ll be more news on the make-up and objectives of this board at our annual Manufacturer Directors’ Conference and Manufacturer of the Year Awards in early December – remember, the awards deadline is fast approaching! Jane Gray, Editor

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The team Nick Hussey, Chairman

Editorial

IT Editor Malcolm Wheatley

Nick has 20 years of experience in the publishing industry spanning titles in the UK, US, Asia and Australia. In addition to his commercial experience Nick has also worked in government, spending a year as Managing Director of Manufacturing Insight, a programme aimed at changing the image of Manufacturing. He holds several non-executive directorships and is a founder member of the IET’s Manufacturing Policy Panel. n.hussey@sayonemedia.com

malcolm@malcolmwheatley.co.uk

Associate Editor Roberto Priolo

r.priolo@sayonemedia.com

Reporters James Pozzi

j.pozzi@sayonemedia.com 

Design

Art Director Martin Mitchell

m.mitchell@sayonemedia.com

Tim Brown, General Manager

Designers Alex Cole Nick Bond

Tim joined SayOne Media in 2009 after working as a journalist for six years in Australia on a range of lifestyle and business magazine publications. Tim launched a new website for in late 2009 and has interests in the automotive industry and business development. In June 2013, Tim was appointed General Manager of SayOne Media. t.brown@sayonemedia.com

design@sayonemedia.com

Sales and Events Head of Events Jon Tudor

j.tudor@sayonemedia.com

Subscriptions Manager Grace Gilling g.gilling@sayonemedia.com

Project Director Matt Chilton

Henry Anson, Sales Director

m.chilton@sayonemedia.com

Henry is responsible for SayOne Media’s commercial activities, developing new concepts and products for ’s readership. Henry is keen to build a bridge between the manufacturing community and the service sector which supports them. h.anson@sayonemedia.com

Sales Manager Benn Walsh

b.walsh@sayonemedia.com

Sarah Hough

s.hough@sayonemedia.com

Marketing Manager David Farrow

d.farrow@sayonemedia.com

Conference Producer Eva Lindsay

Will Stirling, Editorial Director Will edited for two and a half years and is now working to expand the SayOne Media publishing portfolio. He is responsible for the launch of new reports and special supplements for and for the maintenance of editorial standards across SayOne Media publications. Before joining SayOne Media, Will worked for Euromoney and IPC Media. w.stirling@sayonemedia.com

Jane Gray, Editor Jane joined SayOne Media in 2009 for the launch of the Lean Management Journal, sister publication to . Reporting for , Jane focused on industry skills development features and lean enterprise until she became editor in June 2011. She is a trustee of the D&T Association. j.gray@sayonemedia.com

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In order to receive your monthly copy of kindly email g.gilling@sayonemedia. com, telephone 0207 401 6033 or write to the address below. Neither The Manufacturer or SayOne Media can accept responsibilty for omissions or errors. Terms and Conditions Please note that points of view expressed in articles by contributing writers and in advertisements included in this journal do not necessarily represent those of the publishers. Whilst every effort is made to ensure the accuracy of the information contained in the journal, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrieval system or transmitted in any form or by any means without prior written consent of the publishers.

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Contents 04 News and regular columns A summary of manufacturing news and events along with commentary on industrial research and policy

15 The Naked Engineer

Searching for SME handholds on government’s stab at industrial strategy

17 Lean on me

Roberto Priolo set some summer howework for lean leaders

20 Lead Space Invaders: Jane Gray finds out who’s manufacturing for the space sector and why more UK companies should think about pushing their products over the final frontier

28 Interview Powersurge: Alex Mardapittas tells Jane Gray why escalating energy prices make him happy and urges UK government to take a lesson from Germany’s vulnerable low voltage grid

33 60 second interview: Judith Hackitt, chair of the Health and Safety Executive and recently nominated First Woman of Manufacturing

Pillar features 40 Manufacturing Leadership

Still learning lean: Highlights from Lean Management Journal’s fourth annual conference

44 Workforce and Skills

Stop failing our Youth: Sarah Sillars, CEO of sector skills council Semta, drags the UK’s poor careers advice system into the light and shows how it is failing young talent

46 Employee of the Month: Lloyd Marshall, Build Support Engineering Manager, Astrium 50 Apprenticeships Focus

GTA Renaissance: Group Training Associations are making a comeback as a trusted means of cutting through skills delivery confusion for SMEs

54 Employer Evidence: A range of manufacturing employers share how and why they support apprenticehsips

66 Finance and professional services

Regulation update: Forthcoming changes to the penalties for breaking UK and EU competition rules – what do they mean for manufacturers?

68 Sustainable Manufacturing

Mission Critical: How to cope with the threat posed by critical raw materials

IT in Manufacturing 76 A Business Superfood: Investigating how Papaya can enhance your business

through supporting people and process understanding

85 Serve up profits: Malcolm Wheatley investigates

the significance of business IT in the ‘servitisation’ of the manufacturing sector

96 Manufacturing Technologies

Four steps to effective automation: Defying the stigma of job loss, Marc Wellington defines the importance of people in getting ROI from automation investments

Manufacturinginaction Factory case studies featured this issue:

58 Xaar 70 Porsche

OUTBOUND REPORT FINANCE 2013 Financing exports: Internal & external requirements SME case studies highlight what financial infrastructure and strategy should be in place for international expansion and insights from industry banking experts show manufacturers where they can seek assistance

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Manufacturing The hustle and bustle at Le Bourget this year

Paris Air Show highlights The biennial Paris Air Show was held at Le Bourget from June 17-23. It attracted 2,215 exhibitors from 44 countries as well as nearly 140,000 industry visitors. Around $150bn worth of contracts were signed during the show, mostly accounted for by dominant OEM’s Airbus and Boeing, though notable deals were made by smaller players such as the Brazilian aircraft manufacturer, Embraer. Knocking back suggestions that the trade show is merely a high profile battle ground for aerospace

titans, industry commentator Howard Wheeldon, formerly of trade body ADS, said “despite concerns in defence and despite all the joys to be found in the commercial aerospace sector Le Bourget has done just about everyone proud.”

Some highlights from the show include: Airbus racked up orders for 466 aircraft amounting to $69bn Airbus exhibited its new A350 XWB aircraft for the first time at a public event Boeing booked orders for 442 aircraft valued at $66bn New orders and agreements for engines and services won by Rolls-Royce reached $5bn

Our favourite online features and blogs in June:

The double edged succession sword: Why manufacturers who are concerned about keeping their businesses in the UK are opting for employee ownership as a succession plan

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UK trade association ADS hosted a pavilion at the event to support the marketing of UK aerospace SME capabilities. Over 90 companies exhibited at the ADS stand out of a total 129 UK-based aerospace exhibitors at the show. There was a notable absence of any US-owned military planes this year, largely due to defence budget cuts said commentators.

COMPANY GROWTH

Editor’s choice

Making it Out of Africa: Roberto Priolo shares manufacturing insights from a trip to Tunisia

AgustaWestland received good orders for its AW169, AW139 and AW189 helicopters UK Government used the show as a platform to announce a £90m investment in aerospace technology development

Measurable employee empowerment: How metrology training changed the career prospects of Barrie Hanson at medical device manufacturer Owen Mumford See more at: www.themanufacturer.com

Magma Ceramics and Catalysts secured £600,000 for the development of a new manufacturing facility in Vietnam. The company, headquartered in Dewsbury, West Yorkshire, acquired a 6000m2 facility in Vietnam’s Dai An Industrial Zone as a base for expansion of its South East Asia operations. The site will manufacture refractory ceramic products for the glass, alloy and steel industries in the region as well as Vietnam’s burgeoning petro-chemical industry. Since a management buyout in 2010 Magma has grown from a turnover of £1.6m to a turnover of £6m. The bank HSBC financed the Vietnam acquisition.


News RE-SHORING

Spending round Chancellor George Osborne made his spending round announcements in June, prioritising investment in infrastructure, science and education over public services. The Chancellor committed £50bn of capital infrastructure investment in 2015, (£100bn was committed in the longer term) including money for roads, railways, bridges, broadband, and schools. This will amount to over £300bn of capital spending to the end of this decade government assured. “Today we raise our nation’s game,” said Mr Osborne. “This means that Britain will spend, on average, more as a percentage of its national income on capital investment in this decade despite the fact that money is tight, than in the previous decade when government spending was being wasted in industrial quantities.” Mr Osborne’s measures were broadly welcomed by industry with the CBI and EEF both extending favourable reviews. “The Government has set out much greater clarity on its priorities,” said Terry Scuoler, chief executive of EEF before tempering his support by observing that this Government’s investment in infrastructure will only see a proper return if cross party consensus on infrastructure priorities is gained. Juergen Maier, MD Siemens Industry, UK & Ireland responded to the spending review saying: “We have been calling for greater investment in infrastructure, science and apprenticeships for some time – this will help not hinder growth, so this should be welcomed. I also welcome the increases research and development spend - but we what we need now is more clarity on where this investment will go. We need much more detail on the level and focus of investment in skills – as this is becoming ever more urgent. “There were also some important gaps today – we need to hear more on the creation of a business bank, and the £2bn growth pot for LEP’s is much short of the £49bn Lord Heseltine and industry recommended.”

SKILLS

CHEMICALS

EU leaders earmarked Eu6bn (£5bn) to fund work training at the completion of European Council talks in Brussels. Lending to small businesses will also receive an extra Eu10bn in funding via the European Investment Bank. The measures are in reaction to woeful employment statistics in the EU, which showed nearly a quarter of people under 25 in the EU have no job. In Italy, unemployment for under-25s was 38.4% in April.

The Chemistry Innovation Strategy was launched to drive innovation in the chemical and chemistry using industries, targeting growth in the UK economy. It targets chemistryreliant industries such as the aerospace, automotive, energy, construction and food and drink sectors and aims to create secure supply chains to reduce reliance on imports. The Innovation Strategy will form part of the UK’s Chemistry Growth strategy which will be launched over the coming weeks.

A third of UK companies plan to ‘re-shore’ component procurement. A survey carried out by Business Birmingham and YouGov found that 32% of senior decision makers in the British manufacturing industry plan to source more components from UK suppliers over the next five years. The survey also found that manufacturers plan to take on more staff to cope with the expected surge in demand that this re-shoring will bring in its wake.

COMPANY GROWTH Bus manufacturer Alexander Dennis announced a sharp rise in turnover and profits following strong international sales last year. The Falkirk-based company reported turnover climbed from £357m to £481m last year, while pre-tax profits grew by 56% to £24.2m. Alexander Dennis performed particularly well in its key markets of North America, Australasia and Asia Pacific, where total international turnover rose by 270% to £137m. Marshfield Bakery announced that it had increased turnover from £700k to £2m in under three years. In that time 22 new jobs have been created and 13 new products launched in addition to the 155% increase in turnover. Chris Smith, Marshfield Bakery director, acknowledged the assistance of the Manufacturing Advisory Service in achieving this growth. “MAS helped us address fundamental issues of capacity and process planning, including making better use of floor space and identifying key process bottlenecks,” he said.

CONTRACT WIN German manufacturing giant Siemens was contracted to build 1,140 train carriages for the cross-London Thameslink route. The deal, which is worth in the region of £1.4bn, was confirmed more than three years behind schedule, and two years after Siemens was identified ahead of Derby-based Bombardier as the preferred supplier for new rolling stock for the Thameslink project. This resulted in 1,000 job losses for the Canadian-owned train maker.

FUNDING Chancellor George Osborne announced a £185m budget increase for the Technology Strategy Board to build on existing support programmes and boost economic growth. The funding will see established, successful business support programmes benefit from the budget increase and new programmes are set to be developed. Areas set to benefit include the Biomedical Catalyst, additional support for innovations in energy and biotechnology and the network of Catapult centres.

For all of the latest news in the manufacturing world visit www.themanufacturer.com

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Manufacturing News The UKmade car from Drayson Racing broke the electric land speed record in June

AUTOMOTIVE Drayson Racing set a new electric land speed record with the company’s Lola B12 69/EV vehicle hitting a top speed of 204.2mph (328.6km/h). Behind the wheel was Drayson Racing Technologies chief executive Lord Drayson as the electric car reached record speed at a RAF Elvington racetrack in Yorkshire.

FUNDING A National Centre of Excellence for Power Electronics is to be established using £18m of funding from the Engineering and Physical Sciences Research Council (EPSRC). The research council’s investment will be spread as a series of grants, each involving multiple universities. The Centre will have its coordinating hub at Nottingham University.

ENERGY The Department of Energy & Climate Change released the proposed strike prices for renewables in an effort to drive encourage investment in energy infrastructure. The strike price will be valid from 2014–2019 for renewable electricity including onshore and offshore wind, tidal, wave, biomass conversion and large solar projects. View the strike prices here: bit.ly/RenewablesStrikePrice

MANUFACTURING TECHNOLOGIES An industrial internet could add Eu2.2trn to European productivity by 2030 according to a report released by GE. The report, The Industrial Internet: Pushing the Boundaries of Minds and Machines, was released at an event held in Battersea Power Station, London in June. Key report findings were presented by GE CEO, Jeff Immelt who also outlined GE’s strategy to leverage the industrial internet in order to further servitise its business (p39). Other keynote speakers included Kenneth Cukier, The Economist’s data editor and GE’s chief economist Marco Annunziata who both addressed the potential impact of the industrial internet on jobs and refuted that increasing levels of machine intelligence and learning would lead to higher net unemployment.

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AE Direct Mail Ltd CID £0.3 million Acquisition

STAG Group Ltd CID & Inventory £5 million Acquisition

Aug-12

Surepharm Services Ltd CID £1.9 million MBO Sep-12

Wood Auto Supplies Ltd CID & Credit Protection £2.5 million MBO Oct-12

TCL Packaging Ltd CID, Credit Protection, Plant & Machinery & Inventory £2.45 million MBO Oct-12

Oct-12

Zones (UK) Ltd CID £5 million Refinance

Ainscough Crane Hire Ltd Syndicated ABL Facility £105 million Refinance Dec-12

Meat Processers CID £5 million MBI

Retail Food National Wholesaler ABL Club Facility £30 million Growth Funding Mar-13

Oct-12

Recruitment Agency CID £7 million Refinance Jan-13

Investment Casting Manufactures CID & P&M £1.67 million Refinance Jan-13

Steel Processor and Distributor CID & Inventory £21 million MBO

Europcar Equipment finance £75 million Fleet Funding

Food Processing CID £0.75 million Growth Funding

AFI Uplift Group ABL £50 million Acquisition & Working Capital Finance May-13

Mar-13

Mar-13

Mar-13

Jan-13

Adhesive Products CID £6 million MBO June-13

Our customers see us as more than just an alternative to banks. As well as getting to know you, we bring a whole new level of insight, knowledge and expertise to your business. As part of the global GE family, our strengths transcend more than just the financial world, Through our Access GE offering, we share the best practices, insights and expertise of GE to help our customers take on their toughest challenges, beyond just financing - making your capital work harder, go further and do more. We don’t just finance businesses, we help build them too. To see how GE Capital's Invoice Finance and Asset Based Lending expertise can help companies make the most of their opportunities, contact us on 0870 8500315 or visit www.gecapital.co.uk


Manufacturing News SKILLS

The WorldSkills UK team, ready to do battle in Liepzig The WorldSkills Competition 2013 took place in Liepzig Germany. Over 1,000 young people from 53 nations competed for medals in a range of vocational disciplines at the event which is described by organisers as “the Olympics of vocational skills”. More news on the performance of UK stars in the engineering and manufacturing categories, no available at time of writing, can be found at www.themanufacturer.com.

ECONOMY Gap closing between UK mid-market and German Mittelstand The revenue growth of UK mid-market firms is close to matching that of the German Mittelstand, according to a comprehensive report on the European midmarket by GE Capital. Perhaps surprisingly, the UK is home to the highest proportion of ‘growth champions’ – firms that have posted revenue growth of more than 10% in the last year – across the big four EU markets of France, Germany, Italy and the UK, where the research was focused. These champions represent 17% of UK midmarket firms, compared to 13% in Germany, 11% in France and 13% in Italy. Forty-nine percent of UK mid-caps have recorded flat or falling growth, while this group makes up 52% in Germany and 66% in Italy. Download the report here: bit.ly/GEmidcapreport

INNOVATION An £11.7m fund was announced to support SME innovation in the use of composite materials. The Composites Innovation Cluster (CiC) was launched as part of the Advanced Manufacturing Supply Chain Initiative and is expected to create 200 direct jobs, 1,000 indirect jobs and £190m in revenue from new composite projects, according to cluster partners which include: research group Axillium, Cytec Industrial Materials and Composites UK, a national trade association.

HEALTH & SAFET Y

Rocket scientists - participants in the National Physical Laboratory’s annual competition The National Physical Laboratory hosted the 14th Water Rocket Challenge in June. This year’s event was entered by 60 teams and attracted several hundred spectators. The Challenge is designed to enthuse young people about applied science by asking them to build their own rockets from a standard kit of two 2 litre water bottles, a tennis ball, plastic fins and plenty of duct tape. Participation from parents is encouraged at the event which offers a British Science Association Bronze CREST Award as a prize. Registration for 2014 will open later in 2013.

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An Ayrshire concrete manufacturer was fined £10,000 after a worker became entangled in machinery. The employee, Christopher Fay, suffered serious injuries to his arm when was drawn into a concrete rolling device. Precast Concrete pleaded guilty to breaching Regulation 5 of the Provision and Use of Work Equipment Regulations 1998. On the day of the incident the machine was restarted remotely by an employee who was unable to see Mr Fay and other staff working at the roller. The Health and Safety Executive also revealed that the ‘hold to run’ control switch, a safety feature of the equipment in question, has not been properly maintained.


neW fOr 2013

How to develop and grow your export market

EXPORT CONNECT 2013 16th October 2013, London Regardless of whether you currently export, plan to increase your export activities or are simply looking for the latest information, advice and best practice on how to export, your attendance at this event is essential. This conference will provide delegates with the road map to enable them to successfully export into new markets and how to increase their market share in existing ones. The essential information, contacts and best practice provided by senior manufacturers, industry experts and peers will provide a strong platform to enable further overseas growth.

Hear frOm Leading experts incLuding: Lord green of Hurstpierpoint Minister of State for Trade and Investment

Brain palmer Chief Executive, Tharsus Group Ltd

regiOnaL / cOuntry spOtLigHts: Each spotlight will focus on either a country or region and will have a panel of experts leading the session. They will begin with a short summary from each expert about their experience, this panel will then facilitate a discussion and answer audience questions. These experts will cover a variety of subjects including finance, logistics, cultural, regulatory differences and opportunities within that country for e or region. These sessions will enable delegates to gain an understanding of how to begin exporting or improve current activities within a given market.

cy Wilkinson Managing Director, Cressall

@themanufacturer #tmexport2013 Call: 020 7401 6033 Email: events@sayonemedia.com http://bit.ly/export2013 Researched and delivered by:

OnL xcLu and ine OffsiVe e t newhe late rs s vis st i expbit.ly/ t: ort2 013


Manufacturing News Datesfor yourdiary July

15-17

Trade Association UK Space sponsors the UK Space Conference 2013. Held this year in Glasgow, the event welcomes delegates from industry, business support groups and government to discuss opportunities for maximizing the potential of this high growth sector. Recently named ESA astronaut Tim Peake is a keynote speaker. For more information go to: www.intellectuk.org

16-17

Global Intelligent Systems takes place in London. Trade body ADS has partnered with UK Trade and Investment to deliver this event which aims to develop thinking and highlight opportunities around the application of intelligent and autonomous systems in civil applications. Speakers come from across sectors, representing both industry and academia. For more information go to: www.gisfarnborough.com

18

The Institution of Engineering and Technology hosts Engineer’s Question Time in Cardiff. This event forms part of the Cardiff Science Festival and calls local engineers to spark public debate on industry challenges and developments. More information available at: www.theiet.org/events

31

DEADLINE FOR ENTRY TO THE MANUFACTURER OF THE YEAR AWARDS 2013. More information about categories and criteria at: www.themanufacturer.com/awards

September

10-13

DSEI, the primary UK trade show for manufacturers in the defence and security sectors, takes place in London. As well as the exhibition, the show will include theatres for special themed presentations on land, sea and air systems. Key topical issues such as the application of unmanned systems will also be addressed in individual theatres. More information at: www.dsei.co.uk

16-20

Cranfield University hosts Cranfield Manufacturing Week, celebrating and promoting the multidisciplinary research that the university supports for the sector. This series of seminars and facilities tours comprises two important conferences: the 2nd EPSRC Future Manufacturing Conference and the 11th International Conference on Manufacturing Research. Find out more at www.cranfield.ac.uk

22-24

Fashion SVP takes place in London. This is an exhibition where “fashion meets manufacturing” say the organisers. A key topic for discussion in the exhibition seminars will be the trend for ‘nearshoring’ by fashion retailers and potential near-shore suppliers are encouraged to exhibit. More information can be found at: www.fashionsvp.com

25-26

The TCT Show + Personalize takes place at the Birmingham NEC showcasing the latest advances in technology and applications for additive manufacturing and 3D printing. The show is in its eighth year and attracts around 200 exhibitors. The trade show includes a strong industry conference programme. More information at: www.tctshow.com

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FACTORY CLOSURE Q Cold, a food manufacturer and packaging firm, went into administration following the loss of an unnamed key supply contract. The Herefordshirebased firm was “a solid, profitable company,” said Chris Stirland, partner at FRP Advisory who has been appointed as an administrator for the company. However, after the termination of a key supply contract with a major customer, the company’s turnover was cut in half. Combined with an ongoing dispute with HMRC over reimbursement for overpaid VAT monies, this put an unacceptable squeeze on cashflow continued Mr Stirland. Around 40 redundancies are expected as a result.

EXPORTS A record £4.3 billion worth of support was extended to British Businesses to boost exports in 2012-2013. This is the highest figure in 12 years according to UK Export Finance. Support has been given in the form of export credit guarantees and insurance on transactions ranging from as little as £4,000 to as much as £2 billion. The aerospace industry alone received support worth £1.83 billion. The outgoing minister for trade, Lord Green, said: “It’s particularly pleasing to see more SMEs taking advantage of the services and products UKEF offers.” Alongside the announcement of this record investment in UK export growth, UK Trade and Investment revealed that 2012 was a record year for UK defence exports. Despite perceptions that defence manufacturing is an industry in decline exports leapt 62% to £8.8bn last year. For more on manufacturing exports see our Financing exports: Internal & external requirements report, circulated with this issue or available to download at: www.themanufacturer.com. Also look out for news on our Exports Connect event on October 16: www.themanufacturer.com/events


Accelerated Growth Series: Export Connect 16th October 2013, London

Regardless of whether you currently export, plan to export your products and services or are simply looking for the latest information, advice and best practice on exporting around the world, your attendance at this event is essential. This event is aimed at those responsible for seeking company growth and market development. The conference will help managing directors, commercial leaders and export champions explore and validate potential export opportunities and understand the implication of regulation, cultural, financial and logistical challenges associated with given countries.

33 60

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UpcomingEvents www.themanufacturer.com/export2013

16/10/2013

Future Factory Series: Innovation in Manufacturing

16/10/2013

The Porsche Lean Transformation Programme

03/12/2013

The Manufacturer Directors’ Conference

04/12/2013

ERP Connect

16th October 2013, London

Innovation is critical to the success, sustainability and growth of any organisation. The ability to create innovative products now while developing desirable products for the future is crucial to any organisation seeking growth and sustainability. This one-day conference unites the research and development community with the manufacturing industry to provide delegates with the knowledge and expertise they need to nurture innovation in the workplace.

www.themanufacturer.com/innovate2013

16th & 17th October 2013, Porsche, Leipzig, Germany

This unique two-day residential course delivered by Porsche executives provides a unique learning experience for plant managers, managing directors and similar individuals who can instigate real change within an organisation. Created exclusively by Porsche Consulting for the LMJ, its careful selected series of modules delivered in classroom environments, exclusive facilitated tours of assembly & logistical operations, with simulation activity and access to senior Porsche personal.

www/themanufacturer.com/porsche2013

3rd - 4th December 2013, Hilton Metropole Hotel, Birmingham (NEC) Now in its fifth year, the MDC will bring together industry leaders to define the way forward for UK manufacturing. It will focus on strategies for growth, priorities for investment and ways to create and retain a capable, resilient workforce. With the leading manufacturers speaking, breakout streams and plenty of networking sessions, this conference is a must attend for all senior manufacturers.

www.themanufacturer.com/mdc2013

4th December 2013, Hilton Metropole Hotel, Birmingham (NEC) The Manufacturer’s ERP Connect has changed the way UK manufacturers approach software selection by minimising the overall time and effort involved in qualifying potential Enterprise Software vendors. ERP Connect is the must attend event if you are looking to install or upgrade your ERP system in the next 12-18months. This unique event offers a one-of-a-kind opportunity for you and your team to see the best in Enterprise Software Solutions in the world all in one place, all at the same time!

www.erpconnect.co.uk

The Manufacturer and LMJ events feature key decision-makers, professionals and academics in the field. If you would like to get involved and have a unique story to tell - I would love to hear from you. Jon Tudor Head of Events, The Manufacturer Email: j.tudor@sayonemedia.com

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ManufacturingAppointments Mark Skinner BAE Systems Maritime Services

BAE Systems Maritime Services appointed Mark Skinner as head of manufacturing to manage multi-disciplined teams across four UK locations. With 20 years’ experience in defence and aerospace manufacturing, Mr Skinner is now responsible for a £100m business including the manufacture, upgrade and support of products for land, sea, air and high integrity environments. Mark has a

diploma in management studies and an MA degree in business management. He worked in the police force before joining Marconi Underwater Systems in 1993, progressing to become operations director in 2006 with responsibility for the UK’s £440m lightweight torpedo manufacturing programme. This appointment made him the youngest director in the history of the business.

Dr Peter Woods GB Innomech

GB Innomech appointed Dr Peter Woods, currently programmes manager with the company, to take charge of one of its three business divisions: developing automated manufacturing systems for the assembly and test of medical devices. In his new role, Dr Woods will lead the design and build of automation equipment for developers and manufacturers of products, such as drug

delivery pens, contact lenses, diagnostic kits and surgical instrumentation. Tim Mead, commercial director at Innomech, said: “Peter is the perfect person to develop Innomech’s profile and sales in healthcare and also to consider opportunities in other sectors, such as food production and aerospace components that could benefit from our expertise in working to pharmaceutical industry standards.

Hamid Khajehpour Jungheinrich UK

Jungheinrich UK appointed Hamid Khajehpour as warehouse management systems product manager. Mr Khajehpour has worked in the logistics and IT sectors for over 20 years, with

extensive experience in the design and implementation of warehousing and distribution operations and associated IT systems at both national and international levels.

Dr Linda Bell PhosphonicS

Precious metal recovery specialists PhosphonicS, a leading precious metal recovery specialist, appointed Dr Linda Bell as chief executive officer. Dr Bell joins from

FTSE 250 global packaging group, DS Smith, where she was managing director of the liquid packaging and dispensing division with responsibility for six European sites.

Jaguar Land Rover appointed Wolfgang Stadler as director of manufacturing. Mr Stadler will be responsible for JLR’s global manufacturing operations and will report directly to Dr Ralf Speth, chief executive officer. Stadler joins JLR from BMW Group and replaces Paul Cope who is retiring at the end of the year after 37 years in the automotive industry. Dr Speth said that he looked forward to working with Stadler at “an exciting time when Jaguar Land Rover is restructuring and going for sustainable and profitable growth simultaneously.”

Bosch Rexroth, which has its UK headquarters in Glenrothes, Scotland, appointed Alastair Johnstone as its new managing director. In his new role, Mr Johnstone will have total business responsibility for all locations in the UK, whilst retaining his original responsibility for the manufacturing sector. Mr Johnstone, who first joined Bosch Rexroth in 1998, has worked in a number of senior management positions over the course of his career, including roles in quality, manufacturing and general management across a range of sectors and for many market leading organisations.

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Bury-based safety seal manufacturer Roxtec appointed Phil Ridley to replace the retiring Mike Elkins as its manager for engineering, procurement and construction (EPC) manager for international projects. His new role will include liaising with UK-based designers and engineers working on international projects in the oil and gas, power and process industries.

Industrial IT solutions provider SolutionsPT appointed Wayne Ashworth into the newly created position of product manager, responsible for industrial communications, encompassing industrial IT security and mobile.

Plastics engineering company Algram, appointed Catherine Harris as its managing director. Having joined Algram ten years ago as finance manager, Ms Harris was promoted to the role of operations director in 2008. Former managing director Steve Brown remains in director’s role at the company.

To notify The Manufacturer of your company’s appointments, please contact James Pozzi at: j.pozzi@sayonemedia.com or: 0207 401 6033


Supported by:

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Gordon Macrae, Special Projects Manager, gripple Ltd


PolicyPoint

E

Employers struggling to get staff need to do much more to than complain about the problem says Dr Tony Whitehead, IET director of policy.

mployers are increasingly struggling to recruit engineering, IT and technical staff with the right skills, but many admit that they are doing nothing to fix this problem. The findings are revealed in the Institution of Engineering and Technology’s (IET) eighth annual Engineering and Technology: Skills and Demand in Industry report. In spite of confidence being down, just 20% of employers said that they plan to retrain existing staff – even though this is a key way of preventing them from leaving the engineering profession after having gained their primary qualifications. Almost a quarter of companies said they are planning no actions to recruit the staff they need. While some employers seem to recognise the need to engage with the education system, a third of those that don’t said it was because they see no benefit in doing so. Many schools, as well as further and higher education While some employers seem institutions are taking positive to recognise action to improve what is the need to widely acknowledged to be a engage with substandard national approach the education to careers advice. And the system, a third engineering institutions are of those that promoting engineering don’t said it was careers to students, parents because they and government. see no benefit in There are some very good doing so examples of companies getting involved in local schools and working with colleges, but our report indicates a large minority of companies do nothing. They know they will have difficulty recruiting engineers, but expect someone else will sort it out. You wouldn’t leave it to chance to acquire the materials, finance or machinery that you need. Why hope someone else will supply your most important asset – your people?” The report also highlights that recruitment of female engineering, IT and technical staff remains very low. Only 7% of the engineering workforce is female. But, in the face is this persistent weakness in the UK’s industry demography, over a third of employers are not taking any action to attract women into engineering – 36% of organisations do nothing at all to improve workforce diversity. With 56% of the engineering workforce over the age of 40, these are challenges employers must take ownership of, and quickly.

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BacktoScuoler

O

Terry Scuoler, chief executive of EEF asks why reductions in sickness absence in manufacturing have stalled.

ur tenth annual sickness absence survey, sponsored for the last three years by Westfield Health, showed that 40% of our members are experiencing increased longer-term sickness absence. Just 24% say it is decreasing. Companies are justifiably concerned about this. Absence incurs cost in lost productivity, sick pay, overtime pay and temporary cover, as well effecting customer service. And the increasing levels of longer term absence are frustrating for employers following well thought out strategies to tackle the issue. Many say they conduct return to work interviews, sickness absence line manager training and provide employees with occupational health services. Some also offer health screenings, counselling and subsidised private medical insurance. But despite this, overall sickness absence has plateaued at just over 2% since 2011 having fallen from 3% in 2007 and the proportion of employees with zero sickness absence rates has stuck at 51% over 2011-2012, having seen a 10% increase over the previous five years. The Fit Note is failing to deliver on To make progress on its objectives sickness absence we must tackle the structural problems associated with long-term absence. However, our survey indicates that manufacturers are increasingly negative about one of the key initiatives designed to do this – the Fit Note. Now in its third year, this consultation tool for GPs to help patients return to modified work after a period of health-related absence, was initially met with employer optimism. But this is waning. Only 26% of employers say that the Fit Note has helped employees return to work earlier - 40% said it has not. Furthermore, 49% say it has not improved the advice their employees receive about the return to work process. Indeed GPs are now rated as the second biggest barrier to rehabilitating employees. In short, the Fit Note is failing to deliver on its objectives and EEF is calling for renewed government action to ensure that the advice provided by GPs really helps get recovering employees back to into appropriate work as quickly as possible. The DWP must monitor the data generated by the Fit Note to assess the quality of advice and government should sit down with employers and the representatives of the medical profession, including the Royal College of GPs and the British Medical Association, to understand what is holding up progress.


Monthly columns

Thenaked engineer: stripping industry issues bare Post-spending review blues from an MD who’d like a map of the future that has a path from the present.

A

t last, the 2015/16 spending round is over. No more spin, no more speculation and no more ridiculous hype – back to the day job. So the Chancellor walked a tightrope by choosing to get rid of another £11bn of departmental waste and freed up £100bn for investing in improving energy and transport infrastructure. Now don’t get me wrong, if all this spend signals a process of recovery that, in time, will create growth I’m all for it. But I’d like you to tell me when I’ll see a crumb! Basically, what my complaint comes down to is that I still don’t see a plan that’s connected with reality. I wouldn’t change my job for the world, despite the mindbending worries that come with late payments from major customers and the frustration of wondering when the umpteenth announcement that government has cut red tape is actually going to change the volume of paperwork and hoop jumping I do every day. But it could just be a hell of a lot easier. It’s not that I’m ungrateful for the efforts being made - and I have to admit government seems to be trying pretty hard – to open up new routes to finance for what must seem like business small fry to some. The new Business Bank will provide £1bn of long term funding for small businesses – great idea. And although I’m not quite as young and dynamic as once I was, I won’t be churlish and say that schemes like the growth voucher and start up loans initiatives for would-be entrepreneurs aged under 30 doesn’t sound like a fair idea – good luck to ‘em. But while this kind of thing gives the impression of a government that understands SMEs are the ones who could pack some economic punch, given the right conditions, I think that saying they amount to a joined up industrial strategy is tempting flight of fancy.

I don’t want handouts. We’re champing at the bit to grow, and as that growth comes, we know its our achievement, not a charity case. But the current so called industrial strategy is like a climbing route with long stretches where there are no handholds when I look at whether we can scale the path. Take exports for example. The Coalition plan is that it wants Britain to double exports to £1 trillion by 2020 and to have 100,000 more SME companies contributing.

The current, so called, industrial strategy is like a climbing route with long stretches where there are no handholds…Take exports for example… Fine, good idea. But I go to UKTI and find myself dealing with an overpriced service working beyond its capacity because of past cuts to staff. I’m not saying it hasn’t helped anyone and I don’t want something for nothing. But if I’m going to take on the risk of new markets, I want more than an expensive agony aunt – UKTI’s been good at listening to us but not so great on delivering. Perhaps a healthy slice more budget would help them. I’m not talking about throwing money around will-nilly. But UKTI needs to be able to get its hands on better qualified people with more relevant experience and less civil service mentality. To get those people, the department needs to be able to offer more money to business-minded people. I say give it to them, and make sure they perform. The way I see it is that every £10m added to the UKTI budget needs to benefit the economy by £1bn in five years’ time – and I’ll stick around to see if that comes through, even if the politician with the courage to approve it doesn’t.

For more on SME exports, see our Finance Report 2013 Part III, circulated with this issue or available to download from www.themanufacturer.com

Have your say at www.themanufacturer.com

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Production lines Letters to the editor

2 new messages X

Geoff Mulgan, CEO, Nesta

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o one can be in much doubt that robots, in all their forms, will continue to transform the business of manufacturing. With ever more sophisticated sensors, processors, limbs, levers and vehicles, the prospect of factories made up of robot swarms is no longer fanciful. But seen in a longer perspective, the surprise is how hard robots still find complex tasks. Nearly a century after the word ‘robot’ entered the English language and 80 years after science fiction films first portrayed intelligent robots, there’s still much they can’t do; from cleaning machines to cleaning homes. We have driverless cars but not robots that can navigate a typical home. That’s one of the reasons why robots haven’t destroyed employment, as the annual Work Foundation debate suggested they might yet still do. This year the debate asked: ‘Will robots and enhanced humans steal

our jobs?’ In response, I would highlight that while huge numbers of jobs, across sectors, have been replaced by automation, overall employment rates are higher now than 40 years ago. There have been many losers – but overall people have made automation work for them. Looking to the future that’s why I predict that alongside further automation workers will want more of what robots have – seeking out prosthetic limbs, replacement eyes and even memories. I believe the relationship between enhanced and nonenhanced employees will become a bigger debate than the relatively clear cut relationship between pure man and machine. Employers have hardly begun to think about how they’ll handle such an environment: will they only employ enhanced humans? Will they pay for the enhancements? The prominence of such questions for businesses may be nearer than many think.

X

Will Searle, Managing Director, Axillium

I

read and listen with continued interest to the many different ways in which the manufacturing sector is seeking to address its skills challenges. Today, “schools, science, transport links and reliable energy are what enable business to grow,” said Mr Osborne. “Britain was once the place where the future was invented, from the railway to the jet engine and the World Wide Web. We can be that country again.” In my travels over the past six months to manufacturing debates, summits and symposiums, I hear the same repeated calls for “more skills and more training” or “more apprenticeships” from businesses of every size and sector. These are calls that have echoed around industry forums for longer than many can remember and continuous improvement of industrial education is fundamental to UK manufacturing success. BUT, in response to the multitude of voices asking for short term help we must also ask: ‘Do we

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have the basic components to meet capacity against continued demand?’ Quick fixes and investment dumps into the promotion of apprenticeships and other training, fail to address a fundamental shortage of ‘feed stock’ for advanced manufacturing businesses. This is critical to the long term sustainability of UK manufacturing growth. With regards to this long term view, I believe industry leaders should stop challenging government on action for skills, and applaud it for hearing and responding to the demand signal for a next generation engineers and STEM skilled employees. The University Technical Colleges, among other long sighted skills programmes from government, give industry a golden opportunity to establish and support the next generation of engineers – developing teaching programmes which will enable them to go ahead of us into the next age of industrial innovation and competition. Well done Mr Osborne & Mr Cable. Now please let us keep up the good work!

If you would like to respond to one of ’s articles or comment on current manufacturing trends and events please email your letter to j.gray@sayonemedia.com


Monthly columns

Leanonme Roberto Priolo, editor of ’s sister publication Lean Management Journal, gets past the lip service paid to people engagement in lean initiatives.

‘P

eople’. This word is probably the most commonly used by lean folks around the world. A lot of the organisations I speak with pride themselves of their “unique” focus on people development – but just how proud should they be? Shouldn’t this be a given rather than something which makes a company stand out? It’s not that easy though is it? Every organisation is different, and so are the circumstances in which an organisation interacts with the world around it. Therefore, the way a company develops its people must be tailored to those unique circumstances. There are also different approaches required to getting engagement at each and every level in the organisation – but a common understanding of values and objectives needs to run through these nuanced approaches. As I attend conferences, read books and articles and chat with lean practitioners there is constant reiteration of the need to gain commitment from both leaders and operators/ front line workers, largely accompanied by debate as to which group should be driving commitment. Does lean success spring from a top down or a bottom up momentum? Or do we perhaps need to more radically alter our organisational structures and think outside these hierarchical constructs? Deming teaches us that it’s the system’s fault if

things don’t work as planned, but that we often blame individuals or groups of people instead. If companies are going to achieve change and create new cultures, those cultures, and the systems they are based on, must be developed by everyone who will have to be a part of them. Lean Management Journal will focus on this challenge in its September issue. In addition to interviews with operators and managers, we will have contributions from several organisations around the world. They will all talk people, change and culture. We’ll run a case study coming from Wisconsin, USA in which Kelly Sullivan will tell the touching story of the Community Rehabilitation Programme, a network of centres that works with people with disabilities and uses lean thinking to manufacture products for a number of different companies. One such centre is Chippewa River Industries. Perhaps paradoxically for an issue dedicated to people empowerment, the September issue will also include several contributions on the role of IT in enabling lean success. Daryl John Powell and Pauline Found will discuss how IT can support the ‘respect for people’ principle of TPM while software provider Cimlogic, will look at the implementation of an OEE/MES system with a focus reconciling the apparently conflicting needs of the lean manager, the IT manager and the operator.

See LMJ September for contributions from: The Community Rehabilitation Programme, Wisconsin, USA Daryl John Powell, Trondheim Norwegian University of Science and Technology and Pauline Found, Cardiff Business School OEE and MES software provider, Cimlogic

End-to-end

Deming teaches us that it’s the system’s fault if things don’t work as planned, but that we often blame individuals

Conflicting needs are a very common problem that organisations on a lean journey face. LMJ touched on this in its July/August issue, which focused on the importance of seeing the whole value stream. How often, when trying to extend our lean efforts to other areas of the business, have we found ourselves entrenched in politics and resistance? The case studies in the summer edition of the journal go a long way towards explaining how important an end-to-end view of a company’s operations is in appreciating where unintended consequences can be provoked. California-based MS Aerospace, just to mention one, taught us a lot about systems thinking and how to make lean an all-encompassing approach to doing business rather than a cost-cutting exercise limited to specific areas in an organisation. The summer holidays are upon us. I hope I have given you a few things to think about to help you fight off boredom during lazy afternoons by the beach.

For more information about LMJ, please contact the editor, Roberto Priolo, on r.priolo@sayonemedia.com

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On the road again

AND ABOUT

’s editorial team is out and about at a wide variety of industry conferences, debates and factory tours month in, month out. Let’s get a snapshot of the most interesting trips in June.

Unison’s tube bending machines

Lord Green and Unison’s team of directors open its new factory

Tube bending innovator showcases expansion James Pozzi shares in the celebrations at tube bending specialist Unison as it unveiled its new facility in its 40th anniversary year.

U

nison is a confident SME innovator and manufacturer of all-electric tube bending machines. Based in remote Scarborough, it might be considered particularly vulnerable to the many problems that beset UK industry, particularly access to skills and international markets. But Unison is not one to be stumped by adversity. It tirelessly engages with local and national education institutions to market its career opportunities – it is a key supporter of the Scarborough Engineering Week for example. And despite Scarborough’s less than convenient location, it maintains rigorous standards as a high quality, delivery conscious supplier to international customers. These standards have made its celebration of 40 years trading this year all the more satisfactory for doubling up with growth investments which will secure a vibrant future. In June, Unison welcomed journalists from the national and trade press to the opening of its new 2,200 square metre facility in style by flying us in from South London’s Biggin Hill Airport.

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The factory is just a stone’s throw from Unison’s old site and will see production more than double while accelerating machine building times by 15%. Managing director Alan Pickering proudly conducted tours of the facility, explaining the benefits or the carefully designed flow line for building machines and exhibiting a new gantry crane to ease handling and installation of large components. New production methods have cut assembly time for machinery down from 12 weeks to 10. The freshly opened factory also houses a new £300,000 five-axis CNC machining centre, which speeds the fabrication, metalwork components and tooling required for the bending machines. Unison now employs 60, including several apprentices, and is expecting growth of 15% this year. More ambitious plans for expansion lie ahead, with Unison having recently entered the Indian market and hoping to make inroads into North America, Brazil and Russia. The day of the factory opening concluded with a dinner where Lord Green, the minister of state for trade and investment was guest of honour. The peer believes Unison sets a good example to other SMEs looking to grow through exporting products. “Unison has demonstrated world class product design and manufacturing and it has done so in an area people don’t normally think of as a centre of engineering while looking at growing through the export market,” he said. @themanufacturer


Out and about

Gear change Jane Gray grabs highlights from the fourth annual SMMT International Automotive Summit.

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roduced by the Society of Motor Manufacturers and Traders, a trade association with a membership of around 550 automotive companies, this year’s event was once again held in Canary Wharf, the heart of the financial services sector with which manufacturing is trying so hard to choreograph a balancing act. The event was attended by around 250 leaders from the UK and further afield and included focused sessions for car retail, technology and supply chain professionals. Twitter coverage from the technology stream suggests the disputed relevance of electric vehicles to the future of mainstream independent transport networks was flavour of the day, with an aftertaste of autonomous driving. The outlook for the former was rosier than I have heard at previous automotive discussions which dismissed electric propulsion in favour of increasingly efficient, but essentially traditional internal combustion engines. Delegates here hailed an era of mass production of electric vehicles in the UK and predicted an increasing role for hybrid electric propulsion. Supply chain discussions expressed the frustration of SMEs who feel celebrations of a British automotive renaissance clash harshly with persisting problems below tier 1 in gaining access to finance for targeted investment. One presenter said this would be aided if there were a mechanism for OEM demand aggregation. Another speaker showed the potential for achieving this through a supply chain mapping initiative which has collaborative input from Jaguar Land Rover, Toyota and Aston Martin. The project owes its genesis

Big dreams in sleepy Surrey Marc Sobbohi heads to Woking to attend the opening of Semmco’s new facility

T

hose who complain that manufacturing does not have a strong allure to young talent often say that the sector would benefit from a bit more mentoring and public activity from its big success stories and potential celebrities. It looks as though Ron Dennis, McClaren Group’s executive chairman, has taken the message on board. His attendance at the ribbon cutting for

Stuart McConie and Ron Dennis

Andrew Palmer’s speech left many feeling like crash test dummies - but the message was optimistic if challenging

to Lord March, the owner of the Goodwood estate. Comfort to struggling automotive suppliers also came from business minister Michael Fallon’s speech which revealed Joe Greenwell, previously of Ford UK, will head up the new Automotive Investment Organisation which will attempt to re-shore the manufacturing of an estimated £3bn worth of components and products which UKbased OEMs currently source abroad. The highlight of the conference however, for hard hitting insight into global automotive industry challenges was the keynote delivered by Andy Palmer, vice president of Nissan Motor Company. @janefagray For highlights from this presentation go to: http://bit.ly/smmtsummit

Semmco’s new manufacturing facility lent a touch of glamour to the SME’s milestone. A Woking man and fierce patriot, Mr Dennis said he was happy to endorse the success of a local manufacturer with strong leadership. “When you see someone who is entrepreneurial as Stuart [McConie, Semmco MD] is, who has vision and really recognises the relevance of the workforce to his and the company’s future. You want to nurture that, you want to be supportive of it. “You’ve got to remember where you came from and you’ve got to help people fulfil their own dreams.” And Semmco, based in sleepy Surrey, has big dreams. The company primarily makes access platforms for trains and aircraft. Its client list includes British Airways, Virgin Atlantic and First Scot Rail. But the company also makes other products such as breathing

protection equipment. In 20 years it has grown from a twoman band to employ 29 staff. Production output has doubled in the past three years. Semmco’s new 13,000 sq ft manufacturing facility is a physical signpost to its next big growth target of increasing exports from 22% of the company’s £2.5 million turnover to 30% in the next couple of years. Managing director Stuart McConie explains: “The export market has been good for us over the years and we’re developing some opportunities with airlines, particularly based in the Middle East and Australasia, where we see the growth coming.” @themanufacturer For more SME export growth stories see our Interview (p28) and our Financing Exports report, circulated with this issue or available to download at www.themanufacturer.com

Have your say at www.themanufacturer.com

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Jane Gray finds out about manufacturing for the final frontier.

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he shuddering earth of the world’s 22 rocket launch pads are all well out of sight for the UK – and therefore it can be easy for the nation’s space sector to churn along out of mind. But a flurry of announcements this year is bringing an end to the eclipse of the industry. In January, science and universities minister David Willetts allocated £25m to the development of the UK’s national space programme and the sector is also closely linked to the successful exploitation of the £189m pot that Mr Willett’s set aside for the improved exploitation of big data since satellites play an important role in capturing data for myriad applications.

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– the amount ringfenced by government for development of satellites and commercial applications of space technologies in January 2013

The space sector also has its own Catapult centre now. The Satellite Applications (Sat Apps) Catapult opened its doors in May and has well defined targets to meet in supporting sector growth and improving the visibility of opportunities in the industry to SME firms in particular. Those opportunities are broad ranging and, if growth targets are met, will be worth £40bn in GDP by 2030, moving from a base of around £9bn today. A GDP value of £40bn would see the UK holding 10% of the value of the global space sector in 2030, and the outlook is good for achieving this – not least because of the news in May that ex-pilot Tim Peake will become the first official British astronaut to visit the International Space Station in December 2015. Leaders in government and in science related industries have high hopes that ‘Major Tim’s mission will replicate the ‘Apollo effect’ experienced in the USA in the 1960s and encourage the most talented minds in Britain to pursue STEM careers, benefiting not just the space sector specifically, but engineering and manufacturing in general.


story

Manufacturing for the final frontier

“Astrium is a pan-European business and does a lot of work on European Space Agency [ESA] programmes both in the UK and elsewhere. If you take the UK business alone however, we are very heavily commercial – commercial work accounts for around 70% of what we do. This is because, historically, the UK government has not invested as much as some other ESA members.”

Astral opportunities

Sherborne Sensors supplies custom sensors to space technology providers such as Swiss/German group RUAG Space. About 10% of Sherborne’s revenue is from the space market.

The compartmentalised nature of the industry makes opportunities difficult to root out. Good marketing is essential in the space industry Robin Butler, Sales and Marketing Director, Sherborne Sensors

the number of people employed in the UK space sector

Manufacturing satellites is not high volume, but it is high value. Peckham says Astrium makes around five geostationary telecommunications satellites a year in the UK, each with a price tag of around $150m attached - not including launch costs or the value of launch equipment and control systems. “If we are providing these as well the value is probably double,” says Peckham. The figures are tantalising for governments seeking ways to inject economic dynamism, but what’s the trickle down like to the supply chain? “Typically we subcontract about 70% of the manufacturing and development for one of these satellites,” says Peckham. “But the space supply chain is global and only a relatively small segment of our supply chain is based here.” That’s something the Satellite Applications Catapult has been tasked with changing as government seeks to capture more value from the multi-million pound orders being built for global clients within its jurisdiction. Stuart Martin, CEO of the Sat Apps Catapult, located at Harwell near Oxford, says “Fundamentally we are here to get more businesses to consider how they can benefit from a growing demand for the types of information and services that satellites can provide to everyday industries, from shipping to farming to insurance.” Many of those already working with the Sat Apps Catapult are in the

business of data processing and service delivery, but Mr Martin firmly states that manufacturers too should get involved with the centre. “We are working with the whole value chain – not just satellite OEMs but also suppliers of sensor technology and with the capability to develop materials for space. It’s a unique environment. The conditions of heat and cold are extreme and once a satellite is launched, you can’t do maintenance and repair so there’s a lot of work to be done with manufacturers around redundancy, reliability and right first time.” A large chunk of the Sat Apps Catapult’s engagement with manufacturing is done in partnership with the High Value Manufacturing Catapult, an exciting example, says Martin, of the way in which these technology centres can cross pollinate to make commercial technology development and exploitation really robust. The

Manufacturing Technology Centre, near Warwick, is proving a particularly strong early partner, with programmes well underway for the improved exploitation of composites in space. Martin says other technology interest areas where the Sat Apps Catapult is working with UK suppliers include heat shield technologies and radiation protection equipment, but there will also be a need in the future, to work with manufacturers of earth-bound products to integrate satellite communication devices more smoothly into production processes. “We’re interested in looking at how to build satellite antenna into cars, planes and ships more attractively – and during primary production. At the moment a lot of satellite communications systems are retrofitted, particularly in the maritime sector, changing this will mean changing production processes.”

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story

Manufacturing for the final frontier

“Astrium is a pan-European business and does a lot of work on European Space Agency [ESA] programmes both in the UK and elsewhere. If you take the UK business alone however, we are very heavily commercial – commercial work accounts for around 70% of what we do. This is because, historically, the UK government has not invested as much as some other ESA members.”

Astral opportunities

Supplying the space sector isn’t all about clean rooms shows Sherborne Sensors’ metal plant

The compartmentalised nature of the industry makes opportunities difficult to root out. Good marketing is essential in the space industry Martin Butler, Sales and Marketing Director, Sherborne Sensors

the number of people employed in the UK space sector

Manufacturing satellites is not high volume, but it is high value. Peckham says Astrium makes around five geostationary telecommunications satellites a year in the UK, each with a price tag of around $150m attached - not including launch costs or the value of launch equipment and control systems. “If we are providing these as well the value is probably double,” says Peckham. The figures are tantalising for governments seeking ways to inject economic dynamism, but what’s the trickle down like to the supply chain? “Typically we subcontract about 70% of the manufacturing and development for one of these satellites,” says Peckham. “But the space supply chain is global and only a relatively small segment of our supply chain is based here.” That’s something the Satellite Applications Catapult has been tasked with changing as government seeks to capture more value from the multi-million pound orders being built for global clients within its jurisdiction. Stuart Martin, CEO of the Sat Apps Catapult, located at Harwell near Oxford, says “Fundamentally we are here to get more businesses to consider how they can benefit from a growing demand for the types of information and services that satellites can provide to everyday industries, from shipping to farming to insurance.” Many of those already working with the Sat Apps Catapult are in the

business of data processing and service delivery, but Mr Martin firmly states that manufacturers too should get involved with the centre. “We are working with the whole value chain – not just satellite OEMs but also suppliers of sensor technology and with the capability to develop materials for space. It’s a unique environment. The conditions of heat and cold are extreme and once a satellite is launched, you can’t do maintenance and repair so there’s a lot of work to be done with manufacturers around redundancy, reliability and right first time.” A large chunk of the Sat Apps Catapult’s engagement with manufacturing is done in partnership with the High Value Manufacturing Catapult, an exciting example, says Martin, of the way in which these technology centres can cross pollinate to make commercial technology development and exploitation really robust. The

Manufacturing Technology Centre, near Warwick, is proving a particularly strong early partner, with programmes well underway for the improved exploitation of composites in space. Martin says other technology interest areas where the Sat Apps Catapult is working with UK suppliers include heat shield technologies and radiation protection equipment, but there will also be a need in the future, to work with manufacturers of earth-bound products to integrate satellite communication devices more smoothly into production processes. “We’re interested in looking at how to build satellite antenna into cars, planes and ships more attractively – and during primary production. At the moment a lot of satellite communications systems are retrofitted, particularly in the maritime sector, changing this will mean changing production processes.”

23


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story

Manufacturing for the final frontier

Making contact With the Catapults’ success rates linked firmly to the economic impact they can display, engaging with SMEs, a high growth potential segment, is very important to all of the above work says Martin. “Again this applies to the whole value chain and we are working with SME manufacturers of, for example, electronic control systems as well as SMEs at the application end of the value chain.” One way in which the Sat Apps Catapult plans to reach out to SMEs and highlight their potential to play in the space sector, is through partnership with relevant

Once a satellite is launched you can’t do maintenance and repair so there’s a lot of work to be done with manufacturers around redundancy, reliability and right first time

Clyde Space Most players in the space industry are multisector suppliers, but Glasgow-based Clyde Space is proving that a single minded focus on technology development for space can be both possible and profitable.

“W

e are unusual in that we manufacture 100% for the space industry,” says managing director Craig Clark. “Most other companies in the sector, particularly SMEs, tend to have space as a subsector business while their bread and butter is in something relevant like defence.” Clark started out with the intention of splitting his business across the space and renewable energy sectors. “A satellite is basically a renewable energy system in space – it’s a stack of solar panels, batteries and powered electronics. So we thought we could spin out some of the technology. But it just proved a distraction,” says Clark.

Stuart Martin, CEO, Satellite Applications Catapult

trade associations. Its work with Northern Defence Industries (NDI), a small association representing the interests of SME defence aerospace and security companies is leading the way. NDI’s chairman, Mike Maiden says that not enough of his membership realise the opportunities available to apply existing offerings or develop parallel ones for the space sector, or how much value this might bring. “There are a lot of clever ideas, designs, people currently working in the aerospace and defence sectors who could be applying their abilities in the space sector as well,” he comments. “This doesn’t just apply to traditional manufacturing. Companies that have branched out into security for example might

Clyde Space’s core business in in solar panel and battery production but strong investment in R&D has allowed the development of a new altitude determination and control system which allows operators of satellites in low earth orbit (around 2000km above Earth) to direct their craft accurately, despite travelling speeds of around 17,000mph (8km per second). Excitingly, Clyde is also preparing to launch its first full satellite, a remarkably light craft that weighs in at just 4kg. “It’s like launching a laptop into space. But this is just rammed full of technology,”

says Clarke. The UKube-1 project will act as a demonstrator for an array of the company’s satellite operation technologies, but will also support six other projects from paying partners including Astrium, the University of Bath and Glasgowbased software company Steepest Ascent. The satellite’s development has been supported by the UK Space Agency, the Technology Strategy Board and the Science and Technology Facilities Council. Developing miniaturisation techniques and finding innovative ways of applying standard telecommunications and gaming technologies have been focus areas for this project, which is driven by a desire to make space missions more affordable says Clark. The MD has high hopes for uptake, with a target to manufacture 100 satellites a year from around 2015. Clyde Space currently turns over around £1.5m and is looking to double this within three Clyde Space’s years on the back of UKube-1 its innovations. Clark satellite weighs confidently states that just 4kg it will lead the nanosatellite market. Craig Clarke is concerned about a lack of entrepreneurship in the UK space sector

25


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story

Manufacturing for the final frontier

find they have software capabilities that they could bring to bear.” The challenge in realising all of this opportunity is in communication and increasing visibility says Mr Maiden. Existing suppliers into the space sector agree. Sherborne Sensors, for example, has supplied advanced sensors to the space sector for 10 years and the work now accounts for around 10% of the company’s turnover. Sherborne is looking to grow this contribution says Robin Butler, the company’s sales and marketing director. “There are many opportunities that align easily with our core competencies,” he explains. “We’re looking for more work supplying to communications satellites, space capable weapons platforms, ground based systems for space platform communications, space platforms testing and more.” But finding that work is not always easy, even in a sector with an average annual growth rate of 7.5%. “It’s a narrow, vertical market,” says Mr Butler, “and the compartmentalised nature of the industry makes opportunities difficult to root out. It’s also hard to make yourself visible to others. Good marketing is essential in the space industry.” NDI, with its strong experience in supporting SMEs knows however, that marketing and market research can be weak points for busy firms at the smaller and of the spectrum. Hoping to act as a bridge between SMEs and new business, it is in talks with the Sat Apps Catapult to take a space opportunities road show around the UK, spreading the message to SMEs on their doorsteps. “Our focus will naturally be on the north of England,” says Maiden, “We are discussing ways in which we can work with the Satellite Applications Catapult to promote education about space sector opportunities, but also ways in which we can encourage companies further up the supply pyramid to come and clarify where the plug in points are in their supply chains.” One

Astrium UK builds around 5 geostationary satellites a year. Each at a cost of around $150m.

of the difficulties in doing this effectively is associated with the distinctly global nature of the space industry. “Only the US could really say it has a national sector,” asserts Maiden. “This makes it difficult both to locate supply chain potential and acts as a barrier to entry for firms who are daunted by the dedication of time, money and resource associated with establishing international business.” Other potential barriers to entry into the space sector exist around niche standards and accreditations, though Mike Lawton, product development director at lithium ion battery manufacturer and space technology company, ABSL (see box p21), says that most defence and aerospace manufacturers would find themselves well on the way down the compliance road. “An established aerospace supplier would no doubt have a recognised quality assurance system in place - you’ll almost certainly be ISO90001 accredited,” comments Mr Lawton. “That is suitable proof of a company’s ability to reliably hit quality standard in space. Where the sector varies is in its testing

requirements. Suppliers must comply with the ECSS guidelines on product testing – but these are freely available from ESA’s website.” Again, aerospace firms would likely be most the way there, according to Lawton. Space tests tend to be more aggressive versions of what is required in aerospace for vibration and thermal testing and monitoring, although tests for performance in a vacuum and under radiation are also involved. Refreshingly though, it seems there is relatively little complaint or government bashing in the space sector around the rules and regulations which govern the commercial sector, or the competitiveness of the UK manufacturing environment. Access to funding from ESA is a problem for SMEs according to Craig Clark at space-tech manufacturer Clyde Space (see box p25). It’s a sticking point which he feels may be holding back a wave of space entrepreneurialism. But Lawton counters that there is an ESA programme for SME support called the Innovation Triangle Initiative which is designed to get more small companies flourishing across member nations. Furthermore, with successful SME leaders like Mr Clark lobbying through the Innovation Growth Strategy, an initiative led by the sector trade body UK Space, the end may be nigh for the need to apply to the UK Space Agency for a licence for commercial satellites. The need to license science and education satellites was recently removed and this has made it significantly easier and less expensive to launch UK missions according to Clark. Such behind the scenes work to iron out the administrative creases for space sector companies should help smooth the way for new entrants to the market.

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Powersurge High energy prices are the bane of British manufacturing – or are they? Alex Mardapittas, CEO of EMSc (UK), a manufacturer of voltage optimisation equipment, has rather more ambivalent views on the escalating cost of energy which is bringing his company steady international success.

W

hen the Climate Change Levy was introduced in 2001, the cost of energy in the UK was startled into a leap from around 0.4 pence per kilowatt hour to around 1.5p/kWh. While many companies, not least high energy consuming manufacturers, choked and sputtered on the hike in running costs, Alex Mardapittas, CEO of EMSc (UK) saw an opportunity to put his technology to the use it had been meant for but never been valued for up to that point. He explains: “Before the climate change levy, not many people were interested in investing in energy saving technologies. We had taken the Powerstar product

28

to market in 1999, but over three years we had been selling it to businesses as a problem solving device to mitigate the impact of either high or low voltage on their plant and equipment.” This impact can be significant (see box opposite) but Mr Mardapittas originally developed Powerstar, based on a 1906 technology he read about at Pilkington Glass, as an energy saving device – not an efficiency problem solver. “From day one I had always wanted to sell the energy saving benefits,” he says. “But it’s hard to make the business case from this point of view when the cost of energy is low. The pitch was more along the lines of, ‘We’ll save you

£10,000 in maintenance costs by perfecting the voltage supply to your motors. Oh, and by the way we’ll also save you 50 quid on energy.” But the Climate Change Levy turned the business case on its head. “Overnight we saw the payback period for investing in our kit become 15 times less,” recalls Mardapittas. “Now we barely mention the equipment benefits in a UK pitch. All anyone is interested in is how much it will reduce their energy bill.”

Energised growth And so 2001 marked the beginning of a period of sprightly growth for EMSc (UK). Energy prices continued to rise and, as organisations across the

I like competition, it raises market awareness. ‘A lone wolf is always hungry, a pack of wolves always eats well’


Interview Alex Mardapittas, CEO, EMSc (UK)

public and private sector caught on to the erosion of bottom line via energy consumption, orders rolled in. Between 2007 and 2012 the company went from £1m turnover to £15m. While some manufacturers today complain that demand is present but growth hampered by a lack of skilled people, Mardapittas says he is lucky. “We saw our biggest growth at a time that others were in recession. So as other engineering firms in Sheffield were laying people off, I employed them – and there is nowhere better in the world to find engineering talent, particularly for steel product, than Sheffield,” he asserts.

Going global Britain remains EMSc (UK)’s major market, but the product is rapidly building its export portfolio. Indeed its impressive growth in one market earned it the title of UK Trade & Investment Exporter of the Year for 2013. Mardapittas explains: “We launched an attack on the Australian market in October last year and in six months saw 200% growth.” Prior to October 2012, EMSc (UK)’s Australian business was achieving revenues of around £250,000. “Australia has always been a market with a lot of potential for us,” says Mardapittas, “because the immense distances its grid has to span mean that the voltage is very high.” The spur to the market however, was the introduction of carbon taxation in January 2012. “Just like the UK saw ten years ago, this is raising energy prices and putting investment in energy saving technologies at the top of the agenda,” observes Mardapittas. Worldwide, the CEO is looking out for governments pushing out such incentives in order to find his next growth opportunities. “We have targeted another 100% increase in turnover within the next five years and, although the UK is still important to us, I know that we cannot achieve that step change here.” The USA, certain European nations and China are prominent growth markets for Powerstar. There is also interest in the Middle East which is pushing through ambitious industrial rebalancing strategies to reduce reliance on oil & gas. But although some government incentives have been put in place in Saudi Arabia and Qatar to reduce emissions, energy prices are so low that EMSc (UK) tends to find itself selling on the old efficiencies model which used to be so prominent in the UK.

Voltage volatility Although it is now primarily marketed as an energy saving technology, Powerstar is, at its core, a voltage optimisation product. This means it can protect plant and equipment from the impact of high or low voltage in the national grid, smoothing and perfecting supply to vulnerable equipment. Voltage varies nationally and regionally. Sheffield’s high voltage is one of the reasons Mr Mardapittas chose to locate his business there. Its average voltage of 251V is 4% higher than the national average – a capacity hangover from a more virile industrial age. High voltage is more common than low voltage and can cause a variety of problems for manufacturers. It can damage electrical equipment or cause equipment to shut down when a surge comes through the lines. It also causes heat problems in drives and motors which shorten life expectancy and increase the need for maintenance.

Germany’s energy slump Incidences of low voltage a relatively rare but have one straightforward and debilitating effect. Machinery simply stops working. Mardapittas says that EMSc (UK) has not historically sold many units designed to solve low voltage problems, but that recently this has changed in one particular market. “A few months ago we saw a big upswing in enquiries from Germany. “Almost every enquiry was driven by concern about low voltage,” says Mardapittas, and the reason for the sudden sense of vulnerability to grid instability is very plain. “Its a direct result of the move away from nuclear power and towards a heavy reliance on renewable energy,” observes Mardapittas. “There is a lesson in the concerns of German industry for the UK government as it forms its energy strategy,” he sums up.

Cultivating competition Considering the potential obstacles which might stop EMSc (UK) achieving its next tranche of growth, Mardapittas is concerned by the difficulty of shipping his heavy products - Powerstar units range from 200 kilos up to 6.5 tonnes. Another worry is the cost and security of the copper which is used extensively by EMSC (UK). But what bothers Mardapittas most

EMSc (UK) saw 200% growth in six months in its Australian market after its government introduced carbon taxation

29


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Interview Alex Mardapittas, CEO, EMSc (UK)

is the dearth of competition he sees globally. “I like competition, it raises market awareness,” he says. “If you go into a market alone it takes a lot of hard work and expense to communicate the benefits you can bring. “I am a Greek Cypriot by birth and there is a Greek saying that goes: ‘A lone wolf is always hungry, a pack of wolves always eats well.’ It worries me that there is so little competition for us globally.” Mardapittas is not mollified by the idea that less competition means less threat to the company’s intellectual property. “I am not worried about IP. If people try and copy our product it means there is appetite in the market.” With regards to China in particular, Mardapittas pours scorn on the idea that manufacturers should avoid the market for fear of counterfeit. “We have been identified by the Chinese government as a ‘champion product’ for energy saving. This is a great honour – there are just seven other products which have been given this champion status. What would it say about us as a company if we turned around in the face of this opportunity and said we would not sell to China in case someone tried to copy us?” Furthermore, although Powerstar is a patented technology, Mardapittas points out that you have to have very deep pockets to fight a patent battle. “Perhaps one day when we feel our markets are being damaged by copies we would pursue a patent battle. But not now.” Happily, it looks as though Mardapittas’ hunger for competition will soon be satisfied. Web analytics show that two large German engineering firms in particular have been visiting the company’s website to investigate product information. Mardapittas is swift to emphasize that these companies do not include Siemens, the manufacturing technologies giant, to whom EMSc (UK) is a preferred partner.

Biography Alex Mardapittas, CEO, EMSc (UK) 1998:

Moved to the UK from Cyprus

1987:

Graduated Kings College London with BEng in Electrical Electronic Engineering

1993:

Completed fellowship at the Brunel Centre for manufacturing metrology at Brunel University, then went on to work in professional computer software training and development

1998:

Took Powerstar voltage optimisation product to market

2001:

In parallel with the introduction of the Climate Change Levy, established EMSc (UK)

2007:

Turnover exceeds £1m

2012:

Turnover exceeds £15m

2013:

Following 200% growth in its Australian business, in the space of six months, EMSc (UK) is awarded UKTI Exporter of the Year prize

Alex Mardapittas is married with two children.

Keeping ahead Having asked for competition, Mardapittas is also keenly aware of the need to keep one step ahead of it. EMSc (UK) invests around 15% of turnover annually in R&D and partners with Sheffield Hallam University and the University of Warwick on key projects. “The best thing we ever did was partner with Warwick to develop an algorithm which explained a certain aspect of our products,” says Mardapittas. “We could demonstrate the aspect but we did not understand it mathematically and as an engineer I believe that if you cannot simulate your product or process with a mathematical model then you do not fully understand it.

“I think this is overlooked by some manufacturers. It is time consuming to collaborate with universities, but knowledge is power,” sums up the CEO, who snubs common complaints about the UK as a manufacturing environment, optimistically embracing it as a knowledge hub and anticipating a rosy future as the Patent Box fosters innovation.

See ’s Energy reports 2013 for guidance on energy procurement, generation and optimisation. The three part series will be circulated with the magazine or can be downloaded from www.themanufacturer.com

Have your say at www.themanufacturer.com

31


Interview 60 second

Judith Hackitt Chair, the Health and Safety Executive Judith Hackitt became the first female chair of the Health and Safety Executive in 2007 following a 30-year career in the chemicals industry. In May she was recognised as the First Woman of Manufacturing 2013 at an awards ceremony in London. : An obvious first question – how do you feel about winning this award? I’m humbled to have been chosen. The judges said that it was a tough decision and I am very much aware of the strong peer group in the other nominees. We’ve come a long way in encouraging more women to study engineering and go into industry since I first set my sights on it, but there are still not enough. Too often, women are not valued for what they can bring to the workplace in terms of a different perspective. That value is very real. : Were you ever actively discouraged from following a career in engineering and manufacturing? In the early ‘70s when I was at grammar school my senior mistress told me she thought engineering was not a good career for a girl. Others too told me that it was not possible. Clearly it is and I am determined to help many more women realise that possibility, because engineering is a wonderful career to follow. : What were the highest and lowest moments of your industrial career? The highest moments always came alongside working in a

team. There are some truly great people in industry and the sense of achievement from working together is always a real buzz. In terms of types of work, I found managing projects through from design to commission and, during my time with Elementis, identifying potential business acquisitions, extremely exciting. The lowest moments came in previous recessions when I had to make people redundant. That is always an extremely difficult thing to have to do. : You worked in Brussels as a member of the European Chemical Industry Council. What’s your view of the influence Brussels has over UK regulation and the prospect of a referendum on Britain’s membership of the EU? Being part of the EU has brought a lot of benefits in terms of trade. I understand the concerns about some of the negatives, but a balanced view needs to be taken. With regard to health and safety regulation, I agree that in the late 90s and early 2000s we saw a lot of regulation coming out of Brussels. But today there is not so much. The key thing when it comes to any European regulation is for us to be involved early and influence the shaping of regulation. That is something HSE

does. We try our best to ensure all regulation is risk based as opposed to hazard based and that what is formulated is proportionate to a real need. : What attracted you to apply for your current job at HSE? Having worked in industry for over 30 years I had a profound belief that safety is fundamental. Doing things safely and right is never an add-on to any job in manufacturing. I have never seen health and safety as being a barrier or a burden and I would like all businesses to feel like that. Health and safety should be seen as an enabler to successful business. : The Fee for Intervention, introduced last year, is an initiative from HSE which has been criticised in industry as a barrier rather than an enabler. What’s your response? We heard, and are very aware of, the concerns of people who were worried it would make HSE less approachable. As Fee for Intervention beds-in however this is not proving to be the case. We are open to giving advice to people who want to do the right thing.

The First Women Awards are hosted by Real Business magazine and the CBI in association with Lloyds Banking Group. They recognise women who has driven change and achieved firsts in their fields. Categories range across sectors and include the First Women of Manufacturing, Engineering and Science & Technology. To read more about this year’s winners see news coverage at www.themanufacturer.com or visit www.realbusiness.co.uk.

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Enthuse young people to take up vital careers in engineering With not enough young people taking Science, Technology, Engineering and Mathematics (STEM) at further education, many UK companies are facing a skills shortage. Independent, educational charity, The Smallpeice Trust is passionate about closing this skills gap and enthusing the next-generation of engineers. Last year, a record 20,353 students participated in our university-based residential courses, in-school STEM Days and Clubs. Encouragingly almost 50% of our students were girls. Working in partnership with some of industry’s leading organisations, we offer students an engaging, hands-on introduction to the rewarding careers available to them. A corporate partnership offers a range of benefits including the chance to:

• Build a future talent pipeline and help you to achieve your HR objectives • Get employees involved to boost job satisfaction, motivation and skill development • Enhance your brand and profile amongst enthusiastic girls and boys, their families and their communities • Bolster your corporate social responsibility agenda • Maximise potential for PR and marketing opportunities • Offset charitable giving against company corporation tax From sponsoring STEM Days and Clubs, to mini competitions and residential courses, there are many ways in which your company can get involved with The Smallpeice Trust. Smallpeice corporate supporters include: ARM, Babcock, BAE Systems, EDF Energy, Google, National Grid, National Nuclear Laboratory, Senergy, Southern Water, Ultra Electronics Controls… and many more.

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“At Babcock, we are very keen to encourage young people towards a career in engineering and the courses run by The Smallpeice Trust are a fantastic way of demonstrating the variety of options open to them as they start to think about their career choices. The wide choice of courses offered by The Trust gives students the opportunity to broaden their horizons outside of the normal curriculum.” Rosemary Prout, Graduate Training Manager Marine and Technology Division, Babcock International Group To find out more about the benefits of becoming a Smallpeice Partner, contact our Chief Executive, Dr. Andrew Cave on 07885 227 342 or email andrewc@smallpeicetrust.org.uk.

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Big things happen with The Smallpeice Trust


EEFInsight ISO14001 revisions Greg Roberts, EEF consultant and UK expert on the ISO Technical Committee for the revision of guidance to ISO14001, highlights the increased prominence of environmental management in company strategy that will come into play when the new standard is published in early 2015.

I

SO14001 is the international standard for Environmental Management Systems (EMS). The standard is a core certification for many manufacturers and its requirements are currently under review, with new rules for compliance expected to come into force in early 2015. Attending the fifth ISO technical committee meeting discussing changes to the standard, which recently took place in Botswana, it was clear that some of the most significant changes will be around the role of business leaders in enabling certification and sustaining compliance.

Build up to change There are a number of milestones to pass before the new ISO14001 comes into force in 2015. The most imminent is the publication of the next draft of the standard later this year. Like the last draft, only controlled distribution is likely to be permitted. For example EEF was able to distribute the previous draft to its members only and hold a roundtable discussion on the proposed changes. This event was attended by a cross-sector representation from EEF’s members including Schneider, GSK, ABB, RollsRoyce, Saint-Gobain, Calsonic Kansei, Honda and Chemring. The event generated lots of constructive feedback which contributed to the UK response tabled at the Botswana meeting.

Realistically, [consultation on the next ISO14001 draft] will be the last opportunity to influence the standard’s development Greg Roberts EEF Consultant

EEF will hold a similar event later this year so that UK manufacturing continues to have a voice during the revision of the standard. Realistically, this will be the last opportunity to influence the standard’s development. Once the process nears its climax during 2014 there will be less scope for influence. EEF has been very vocal in the need for manufacturing to be involved and start making changes now (The Manufacturer, March 2013), so that modifications can be transitioned rather than forced, budgets for 2014 planned, capacity built and kudos gained from being an early adopter. Manufacturers should understand that all the proposed changes to the standard will add real business value and the earlier they are adopted, the earlier the company benefits.

What’s first? The change that will require the greatest lead in time but which has the potential to benefit manufacturers the most, is the emphasis that will be placed on the need for leadership and commitment by top management. This change is seen as critical, firstly to invigorate stagnant EMSs where top management involvement is minimal, and secondly to ensure businesses are able to respond to the threat environmental issues present in top level strategic issues,

for example, via supply chain disruption, increased taxes and resource costs. Among other requirements ISO14001:2015 will ask top management to ensure the EMS is aligned with the strategic direction of the organisation and integrated within business processes. In order to make this happen the business case for EMS will need to be developed or rewritten so that the specific opportunities and risks associated with environment are acknowledged at a senior level. EEF is already helping organisations to develop the strategic integration of ISO14001 through its IEMA accredited Leading Environmental Sustainability course. This course helps business leaders to understand the drivers for embedding environment as part of the business strategy to ensure the sustainability of their organisation.

For more information about the Leading Environmental Sustainability course and other ways that EEF might be able to help you comply with ISO14001:2015 contact Greg Roberts at groberts@eef.org.uk or visit www.eeftraining.org.uk

Have your say at www.themanufacturer.com

35


Manufacturing leaders and finance experts debated the issues around access to finance for industry at a Manufacturer Directors’ Forum event.

T

he south-west of England is not the most industrialised area of the country. Its widely-held image is of rolling hills between pockets of modest urbanity. Its natural beauty undoubtedly attracts visitors and the area has a strong tourist trade, but those who live in the West also work in pharmaceutical companies, engineering businesses of all sizes, and one of the country’s largest auto companies – Honda – in Wootton-Bassett near Swindon, the location of a

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Manufacturer Directors’ Forum dinner in May. Echoing a concern of business leaders across the nation, attendees at this dinner swiftly settled on the challenges faced in their banking relationships and, in particular, in accessing finance. “There seems to be a disconnect between what the banks are saying – that they are lending more than ever, with 95% of applications approved – and the experience of businesses on the ground,” said Henry Anson, sales director for The Manufacturer magazine, who chaired the event. While readily conceding that the banking industry had gone through “a hell of a shock” and had probably deserved at least some of the strong reactions that have been witnessed of late, a deep and perhaps overlooked issue was raised by Mark Bryant, business director at the Business Growth Fund.

Finance: confusion and choices “There has been a confusion between debt and equity,” said Mr Bryant. “Overdraft facilities, for example, are a short term facility and not appropriate for long term strategic funding.” While loans are familiar territory, experience indicates that banks still tend to lend on the strength of security first, rather than commercial prospects. Of course, as the banks are now operating on margins of 2% or 3% they must not only act responsibly but be seen to do so, which means they are caught in

Our bid for funding had to be written to emphasise the importance of R&D. We had to show that getting the funding would help us to safeguard jobs, both on our shopfloor and in the supply chain Andy Dyke, Supply Chain and Logistics Manager, DTR VMS


Manufacturing Leadership

something of a cleft stick. Bryant talked about the need for better understanding of various financial options and very prominent among them is that debt should not be used for risk financing. The Business Growth Fund was set up by banks to provide long term growth capital, investing initially £2-10m for a minority equity stake. “If we can predict the financial circumstances, then we can manage risk,” said Mike Franklin, operations director with DTR VMS, a Chippenham, Wiltshirebased firm producing noise and vibration reduction products to the automotive industry. Anecdotal reports included difficulty with obtaining credit insurance, even for larger organisations. Markets, too, are changing; long-term customers in the domestic arena may have cut or eliminated spending entirely. Ian Pain, managing director of Horstmann Defence, said that his company had built its export side and, as a niche, specialist player, was in a position to see growth even in the generally contracting defence industry. It is also looking to grow into a market that is new to it – the auto industry – and has found the support of the Regional Growth Fund in the SW helpful in moving towards volume production. If there is flexibility and companies are neither required to take on debt nor to give their business away, then there is definite interest in growth finance he showed.

Input and advice

competitive if considering the total cost of purchase,” said Andrew Phillips. Ian Pain pointed out that there are very few manufacturers of iron castings left in the UK and sourcing from Korea has proved to be faster and still cheaper than alternatives nearer to home. It can also be difficult to find businesses operating in the right area, though it was admitted that this is where MAS could be useful.

“We have had a lot of input from Wiltshire County Council,” said Andy Dyke, supply chain and logistics manager with DTR VMS. “R&D is a key area and our bid for funding had to be written to emphasise the importance of R&D. We had to show that getting the funding would help us to safeguard jobs, both on our shopfloor and in the supply chain.” R&D led naturally to the topic of patenting and to the ‘Patent Box’, which came into force in April 2013. “The Patent Box is prompting people to patent items they would not have considered in the past,” said Andrew Phillips, of the Manufacturing Advisory Service. And there are areas where the thought of applying for tax relief may not have occurred; process improvement, for example, can qualify for tax credits.

Brexit, onshoring and nearshoring The consensus among the guests was that there is now a 50/50 chance of a ‘Brexit’ from the EU. Attendees’ businesses were either already dealing with markets outside the EU or are actively seeking them. Even the traditional view of the importance being within the EU as an attraction to potential foreign investors failed to generate much excitement. What has been noticed, and has affected some of the participants, is the return of activities that had gone to the Far East. The possibility that ‘onshoring’ had contributed to the underpinning of the UK’s economy in the face of difficulties elsewhere was suggested, but it was also proposed that the real trend was for ‘nearshoring’, to places like Poland. “The cost of materials is similar around the world but what varies is the cost of transport for example. Agile manufacturers in the UK can pick up business by being

One-stop shop

The Patent Box is prompting people to patent items they would not have considered in the past Andrew Phillips, Manufacturing Advisor, MAS

“MAS provides a national service delivered locally by experienced advisors, who help manufacturers to grow their business. If you put an enquiry for a product or service to us from anywhere, it will be sent to a network of advisors across the country,” said Andrew Phillips. “It is a free service and we have found that it has been useful in establishing supply chains for anything from large diameter precision machining through to flexible electronics.” The effect of the erosion of mid-sized engineering companies on the supply chain became apparent in the subsequent discussion. The businesses that seem to fill that gap are from the former Rover supply chain, which probably continues to exist because of the actions of Accelerate West Midlands, a now defunct initiative, in the early 2000s. A startling statistic that emerged towards the end of the discussion related to investment in automation in the UK. Germany’s GDP is 50% larger than the UK’s but its investment is 10 times higher. Britain registers behind Greece and Portugal for investment. But, as one participant observed, it’s a tightrope – take on debt to invest or risk falling behind. The Manufacturer extends its thanks to Thomas Eggar LLP and Business Growth Fund for sponsoring this event.

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30/04/2013 16:40:27


Bookreview Made to Serve

Made to

Serve Doroteya Vladimirova, visiting fellow at the Centre for Business Performance, Cranfield University, School of Management, reviews a new book Made to Serve: How manufacturers can compete through servitization and product-service systems

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n increasing number of manufacturing firms are adding services to their traditional product offerings in response to economic and competitive pressures. Some companies have enjoyed marked success in combining manufacturing and service activities, blurring the distinctions between the two. However, for every success story, a number of cautionary tales exist and there is a general lack of knowledge in industry around what servitisation entails. The authors of this book, Tim Baines and Howard Lightfoot, aim to fill this knowledge gap.

What is the book about? The book is a comprehensive practical introduction to one of the most important trends in manufacturing: servitisation. It introduces and explains in detail the main concepts of servitisation and product-service systems to establish a common understanding of the terminology. The book focuses on ‘advanced services’ which are delivered through product-service systems. The authors explain that advanced services are also known as outcome, capability or availability contracts, whereby the manufacturer delivers services that are critical to their customer’s core business processes. Case studies from renowned manufacturing firms across industry sectors including Caterpillar, Rolls-Royce, Alstom, MAN, and Xerox are presented as exemplars. The book is divided into four parts: Part 1: An introduction to the business context for servitisation from economic, environmental, market and social, technology innovation, and knowledge perspectives. Part 2: Entitled ‘Competing through services’ this section tackles the servitisation process and the business implications of advanced services. Part 3: A focus on the service delivery system, this part explains the technologies and practices that are key in delivering advanced services such as: performance measures and demonstration of value, facilities and their location, vertical integration and organisational structure, information and communication technologies, people deployment and skill sets, and business processes. Part 4: Assists in assessing an organisation’s readiness to servitise.

Why is the book important for UK manufacturing? UK manufacturing firms predominantly create and capture value by manufacturing and selling products with limited extension into service provision. In recent years, the level of servitisation among manufacturing companies has risen notably in developed economies like the USA, Sweden, Norway and France, as well as in China. The UK has the ninth-highest level of servitisation internationally reaching 39% of manufacturing companies in 2011. However, it is important to note that only 15% of firms in the UK are reported to derive 25% or more of their revenue from services. It appears that most UK manufacturing firms venture into the provision of services half-heartedly. Made to Serve clarifies the distinction between this half-hearted provision and the successful delivery of valuable advanced services. It a framework for assessing the feasibility of a service led-business and deploying a servitisation strategy.

The UK has the ninth-highest level of servitization internationally reaching 39% of manufacturing companies in 2011

Who is the book for? Servitisation is most readily applicable to manufacturers of high-value durable goods. It extends the scope of their offerings to include services that accompany products throughout their lifecycle. It is no surprise that this book is largely based on evidence from such companies. Top managers of large manufacturing companies (typically with strong engineering heritage) would find the book a valuable source of ideas for integrating products and services in their organisations. Although small and medium-sized enterprises have not been investigated by the authors, their work provides valuable insights into servitisation in general, as well as a series of strategies which could be applied to smaller manufacturing firms. While the main focus of the book is on advanced business-to-business services and it does not claim to be a complete guide to transforming a manufacturing organisation into a servitised one, Made to Serve is a must-read for any manufacturer striving to increase the profitability and competitiveness of their organisation.

Dr Doroteya Vladimirova is an expert in industrial transformation, servitization, and product-service systems. She is co-author of Organisational transformation for effective delivery of integrated products and services: thoughts on practice published by Cranfield University in 2011.

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Delegate comments I’ve learned more in the last few days than I expected - and I expected to learn a lot. I have loads of best practice to take away and use to drive change in my organisation Always a top event in terms of interesting topics and variety; very good speakers; good organisation and opportunities for networking

Speaker comments I’ve been to a lot of lean events and haven’t really learned anything new. There were loads of interesting new things at the LMJ

Mauro Pino, Head of World Class Manufacturing at Chrysler Group at LMJ Annual Conference 2013

Still learning lean Roberto Priolo wraps up the key findings from cross sector lean leaders and continuous improvement professionals at the fourth annual Lean Management Journal Conference.

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any lean implementations end up failing because of their excessive focus on tools. There is no silver bullet that will automatically bring consistent, sustainable success to any organisation. Constant development of processes, in response to changing business, technological and social environments, is the hallmark of the competitive and engaged organisation. This was the central message of the fourth annual LMJ Conference.

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The event received strong, positive feedback from delegates, which reflected the growth of lean thinking across diverse sectors; from health care through financial services, city administration, government departments and manufacturing, all expressed a keenness to learn and a need to sustain workforce engagement with continuous improvement.

New environments Coverage of public sector lean implementation was noticeably stronger this year than at previous iterations of the conference.

I was impressed with the range and balance of speakers, in terms of industries, sectors and styles. You created an event where public and private sectors genuinely interacted and learnt from each other – not an easy task Nancy Bartlett of The Bartlett Alliance flew in from Texas, USA to deliver a presentation on the transformation that the city of Irving went through in response to the global economic crisis. By working hard to change the culture in the municipality, Irving saved over £45 million in five years and thousands of employee hours. Core to this magnificent success was a cultural realisation of the need for better horizontal integration of public services, followed by unified engagement in the execution of this. Everyone from the water utilities to the police department got involved in streamlining processes, weeding out non-value-add activities and aligning value-add areas. Among the greatest achievements coming from this has been significant crime reduction which has raised the standard of living in the city. Six-sigma toolsets were key in this police department-led lean programme. The UK Department of Work and Pensions also contributed to public sector presentations and a fascinating session from London Underground, this year celebrating its 150th anniversary, showed that change can be embraced in the most image-bound and long-lived organisations.

Back to its roots Manufacturing companies naturally gave very important contributions to the conference, with speakers from Volvo, Chrysler and Toyota representing some of the highlights of the first day in this two day event. Mauro Pino, head of World Class Manufacturing at Chrysler Group, took the audience through the


Event review Lean

Figure 1: World Class Manufacturing Pillars as practiced by Chrysler Group

Management Commitment

Clarity of Objectives - KPI

Commitment of Organisation

Route Map to WCM

Competence of Organisation

operations in culturally diverse factory locations from California to Sweden and Brazil. Toyota Material Handling’s Tony Wallis provided a fantastic close to the first day of the conference with an insightful and

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principles which have guided the organisation’s operations day-in-day-out since its merger with Italian car manufacturer Fiat in 2009. Chrysler adopted the WCM principles already adhered to in Fiat in all its North American plants. World Class Manufacturing is a unique blend of technical and managerial ‘pillars’ that make up the structure of a business that has risen from its ashes in the past four years. (See fig 1) Other car makers too showed that lean is still evolving, even in the very sectors and organisations which were first to embrace it. Torbjorn Netland University and Ebly Sanchez, of Volvo reviewed the development of the Volvo Production System which provides and template for consistent manufacturing processes across global truck production operations. The system is the bedrock of

Allocation of Highly Quality People

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Motivation of Operators

engaging explanation of the culture in the organisation where lean was born. Despite recent recall difficulties, it is still an education to hear from lean leaders in the original lean organisation.

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Ready for the upturn? In the last three years, KimberlyClark’s global lean initiatives have delivered $230 million in savings and eliminated 375,000 hours of waste across 25 factories. Richard Castillo, the EMEA Efficient Workplace platform leader for KimberlyClark Professional, discusses lean and manufacturing in the United Kingdom. “The tentative return to job creation in the sector in May also suggests that manufacturers are becoming more confident in the outlook.” Similarly, Stephen Gifford, director of economics at the Confederation of British Industry (CBI), supports this sense of optimism: “Manufacturers remain optimistic that demand will pick up in the next three months, despite a recent history of disappointed expectations. This tallies with what we’re hearing from some businesses about confidence returning. With orders improving and the global economy heading for calmer waters, it looks like conditions for manufacturers may be on the up.”

S

ay it quietly, but it’s starting to look better for UK manufacturing than it has in a very long time. The press has been buzzing with news of the growth in our industry – it’s at its strongest in over a year. And it doesn’t appear to be a temporary blip either. Rob Dobson, senior economist at Markit, has predicted manufacturing growth will continue through the summer: “Output is also likely to be raised further in the coming months, as firms refill warehouses after stronger than expected demand has led to a sharp depletion in finished goods stocks.

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No let up on lean Of course, this is all great news. But it’s important not to get complacent. The increasing adoption of lean thinking in manufacturing during the downturn stands to offer even greater value as things steadily improve. In fact, as we all ramp up for better times, there’s no better opportunity to take a look at the processes driving each part of your production forward and check for where you can create additional efficiencies. Obviously, lean approaches aren’t new, yet they continue to make headlines in saving businesses time, resources and cold hard cash. In fact, we’re now seeing a real shift as companies go from “fix-it” type projects to culture-


Profile

Kimberly-Clark changing ones that are truly in line with continuous improvement values.

A broader view of lean While some changes and opportunities are industry-specific, viewing all processes, equipment and tools from the bottom up can provide opportunities across most manufacturing segments. Gerry Susman, director of The Penn State Smeal College of Business, Centre for the Management of Technological and Organisational Change (CMTOC), said: “Problems are similar across industries, and most problems have a human resource or organisational aspect to them. Most people can read about practices; the big challenges are usually implementation.” And who wouldn’t agree with that?

Making lean work in the real world We’ve taken a look at our own approach at Kimberly-Clark Professional, as well as some of our customers, to see how applying lean techniques can deliver efficiency gains right across businesses. While lean is often seen as a large all-encompassing project, some of the most fascinating and impressive improvements come from looking at the smallest details – areas of process that have never been examined under the lean lens. For instance, we heard from an automotive engine company that had a long-term goal of eliminating engine defects. They established that a certain type of wiper used for cleaning was causing lint to be caught in the fuel filters. So they stopped using that wiper and changed to an alternative product. Problem solved. Or so they thought. In fact, they continued to see lint contributing to defects in their engines.

It was only when they examined another part of the line and realised that these same wipers were being used instead of appropriate bench-top protectors that they eliminated the problem – saving time, money and moving them closer to their goal of eliminating defect waste.

Becoming and efficient workplace These stories aren’t uncommon. Every day, more and more companies are discovering new savings, efficiencies and opportunities to reduce risk by taking a fresh look at their industrial supplies and PPE. We’ve seen it ourselves at Kimberly-Clark Professional. So far, we’ve realised $230m in savings and eliminated 375,000 hours of waste by applying lean and continuous improvement techniques across 25 of our factories. To do so, we evaluate the full process down to the supplies and personal protection equipment (PPE) used in every task. We are now combining lean techniques with the evaluation of supplies and PPE. It’s something we launched last year as part of our Efficient Workplace programme. Based on our own experiences and working with a wide range of manufacturers across multiple sectors, we offer a credible second pair of eyes, helping you to: Save time (from trial and error) Be more efficient Reduce overall costs Our goal is to identify waste and provide counter measures to reduce or eliminate it. If your workplace is trying to tell you something, make sure you’re listening hard.

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Stop failing young talent Semta’s chief executive, Sarah Sillars, OBE, examines the UK’s poor careers advice services. They are blocking many young people’s paths to fulfilling careers in engineering and advanced manufacturing she says.

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ot before time, young people have a national voice and the ear of Government but how long will it be before everyone starts listening? Time and again, when talking to bright, talented youngsters, I hear tales of academic snobbery – career advisers actively obstructing them from taking a vocational qualification and a career in industry. Many are being driven into higher education so schools can simply tick a box to say a pupil has gone to university – but it shouldn’t be about the school. It is about the young people and ensuring we have a highly skilled workforce in engineering and manufacturing now and in the longer term. Of course industry needs the best graduates – far too many of those taking STEM subjects are lost to other sectors of the economy – but we cannot allow the poor advice to supress the

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ambitions of our young people who can’t or don’t want to go to university. We need a huge shift in emphasis to redress the balance and build a proper skills pipeline where young people are inspired to follow a career path without incurring massive debt. Youth unemployment is high yet companies report vacancies as difficult to fill – if ever there was an opportunity to bring together education and industry, to ensure we create a positive environment for learning while earning, it is now. And it is not just our sector. The Chartered Institute of Personnel and Development (CIPD) has called on its members to deliver CV workshops and mock interviews as part of Inspiring the Future – an initiative set up by the Education and Employers Taskforce in 2012. The campaign already encourages businesses to visit schools to deliver career talks,

Apprenticeships are already giving people like myself an excellent start to their career Jordan Phillips, Technical Apprentice, Nestle

I have been with Vauxhall for a year and a half now and, in that time, the company has both fully supported me and funded my successful participation in a Level 3 Diploma in Business Administration and a Level 3 NVQ Lizzie Moffatt, Business Administration Apprentice, Vauxhall Motors UK


Workforce and Skills: Semta

advising students on what educational or training paths they could pursue to work in those industries. A report from the CIPD, Employers are from Mars, young people are from Venus, highlighted a lack of careers advice and guidance in schools as one of the core problems, adding that many young people were leaving education without an understanding of the world of business.

Apprentices speak out It is something the young people on the Industry Apprentice Council (IAC) have set as a challenge to overcome. The IAC is made up of 14 apprentices from some of the UK’s biggest employers and aims to highlight the benefits of apprenticeships in order to help change perceptions and show they are a first class route into a highly skilled and fulfilling career. Brought together by EAL (Excellence, Achievement and Learning Limited), the specialist awarding organisation for industry qualifications, and IMI Awards (The Institute of the Motor Industry), the leading awarding body for the retail motor industry, the apprentices are keen to get their voices heard. They have been less than complimentary about the advice they received. One member said: “I didn’t want to go into higher education. I thought going into an apprenticeship I could earn a wage and learn a skill and that was a good option. But at school I didn’t get any information about apprenticeships and careers fairs seemed to be people ‘out on a jolly’ rather than finding out more about apprenticeships.” It is a complaint I hear time and again – a damning indictment of the ignorance which still exists about the true value of apprenticeships. The IAC has already been sharing its combined experiences, ideas and recommendations in Parliament – including speaking

with Skills Minister Matthew Hancock at the All Party Parliamentary Apprenticeships Group.

Another IAC member, Jordan Phillips, who is a technical apprentice at Nestle in York, a young man on the front line, speaks for many. He said: “A degree is often seen as the number one pathway into a fulfilling career. However, the IAC feels strongly that this is not the only pathway and that apprenticeships are already giving people like myself an excellent start to their career. “We have a goal: changing the way schools, parents, employers and individuals see apprenticeships. We want to help improve careers advice in schools so that young people are aware of all the opportunities that are available. The IAC is rapidly becoming recognised as the voice of apprentices and I’m incredibly proud to be part of it.”

In a recent article in the Huffington Post – Lizzie Moffatt, a business administration apprentice at Vauxhall Motors UK, described how her teachers treated her when they found out her career intentions. Lizzie said: “My teachers were aware that I wanted to undertake a degree through the Open University and noticeably offered me far less support and guidance than my fellow students, who wanted to go to conventional universities. I accepted that, but felt very aggrieved by the resentment and hostility that I was shown when I announced that I was leaving 6th form to begin an apprenticeship with Vauxhall motors. “Throughout my time in education, apprenticeships were perceived to be for people who were not academic or motivated enough to go to university; they were and still are perceived to be second rate. “I have been with Vauxhall for a year and a half now and, in that time, the company has both fully supported me and funded my successful participation in a Level 3 Diploma in Business Administration and a Level 3 NVQ. I am now undertaking a degree in Business Management. “I have a number of friends who have started their university degrees and they‘re finding it difficult to cope with the expense. In contrast, I have been able to buy myself a brand new car and pay for summer holidays, while still receiving the same level of higher education. Furthermore, and as equally important, is the fact that unlike my friends I am also gaining invaluable workplace experience. “

We need you The words of the youngsters send a powerful message – we need to listen and support them and their peers in their efforts. There are countless examples of apprentices doing brilliant things – they are the new high achievers. Together they are making millions of pounds for the UK’s economy and growing skills at home saves millions of pounds in recruitment costs. Semta believes in building engineering skills for the future. But we need your help to make it happen. We simply cannot allow poor careers advice to be continually served up if we are to make the most of the abundance of talent which undoubtedly exists in classrooms throughout the UK.

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f o e e y o l Empmonth the st 2013 ugu A / y l Ju

Lloyd Marshall Build Support Engineering Manager, Astrium With the space sector due to grow from £9bn to £40bn GVA by 2030 the industry will require a big intake of talented, ambitious young technicians and engineers. Astrium is working hard to attract and nutrture them says Lloyd Marshall. What is your role and what are the main responsibilities? I am responsible for a team which provides technical support, guidance and verification for the engineers and technicians building Astrium’s satellites. My team consists of 14 engineers and 14 quality inspectors working in four spacecraft cleanrooms at Stevenage, Oxfordshire, as well as sites across Europe when required. What are the key technical skills you use? Troubleshooting! If any technical issue arises in the satellite build we need to problem solve quickly to put things back on track. I also need to be the champion of change, and conduct coaching, project management and strategic thinking.

What personal characteristics help you in your role? Good time management is vital so we can address all needs quickly. Good communication skills are also necessary as well as creativity, flexibility, a positive attitude and willingness to learn. What do you consider to be your biggest personal success at the company so far? I have had many personal successes at Astrium but the biggest was helping put together the case for increased investment to enhance capacity from four to six spacecraft a year. And I also got to have lunch with HRH The Duke of York when he came for a visit! What are the most rewarding parts of your job? Seeing individuals develop and become competent engineers.

CV in brief: Lloyd Marshall Age: 29 Education:

1st class honours degree in Aerospace Technology with Management (BSc), Completed a Manufacturing Apprenticeship receiving a HNC in Manufacturing, Level 3 BETC National Certificate in Manufacturing Engineering (Double Grade Distinction), NVQ Level 2 in Performing Engineering Operations, NVQ Level 3 in Technical Services, Level 3 in Fabrication and Welding, Completed Course in Employment Rights and Responsibilities

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Career to date:

September 2005 to July 2011 - Manufacturing Engineer within Process and Technology Group July 2011 to May 2012 Manufacturing Engineer within AIT Engineering May 2012 to present Build Support Engineering Manager with AIT engineering

Interests:

Spending time with my wife and two girls, running, cycling, fishing and photography

Have your say at www.themanufacturer.com

Seeing the engineering challenges being overcome individually or as a team, providing technical support and guidance in delivering a range of spacecraft on quality, on cost, and on time. What will your next career move be? At the moment I have two possible routes I would like to explore. I either want to understand more on the project requirements and application, perhaps becoming a project manager or to focus more directly on the operational resource management and become an operations manager. What first attracted you to a career in manufacturing? From a young age I have always been interested in how things work and my first memory of engineering and manufacturing was playing with Lego and Meccano. How do you think best to get more young people interested in manufacturing? We have a very active STEM programme with our ambassadors reaching out to hundreds of schools a year and hopefully inspiring students to look at space manufacturing as a career. Our successful apprenticeship scheme also means people who might not have thought of the space industry realise there are many opportunities here. has launched a new award category for The Manufacturer of the Year Awards 2013. The Apprentice of the Year Award is open to apprentices across sectors and in all business functions. Put forward your star performer by July 31 for a chance to have trained our first winner! www.themanufacturer.com/awards


Industry & Education Bridging the gap

Prospective students sign the structural steel work of their new school - due to open this September

Bridging the gap David Edmondson, principal designate of Daventry UTC, explains the education vision which is driving his new school.

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eptember 2013 will see 12 more University Technical Colleges (UTCs) open across England, bringing the total to 17 operational examples of this new concept in education. Encouragingly, Chancellor George Osborne approved funding for the creation of a further 20 UTCs per year in his June spending review announcement.

Rounded education UTCs offer students aged 14-19 the opportunity to follow a high quality, technically contextualised and integrated course of study. Education at a UTC is rounded, adhering to core national curriculum requirements but enhancing them through engagement with business and demonstrations of how those subjects will be used in later life. UTCs do not ‘trap’ young people into narrow career options as some believe, but develop confident, innovative young people with an awareness of the importance of applied knowledge. Through linking core curriculum learning to an innovative, experiencebased technical curriculum and through engagement with the UTCs’ employer partners, students get to see and feel how their education is relevant to more than simply an exam grade. Located in the heart of the East Midlands, Daventry UTC has gained a set of diverse industry partners who are essential in achieving its education vision. Sponsored by Moulton College and the University of Northampton, Daventry UTC will deliver a blend of

education with the technical side focussing on skills for sustainable and related new technologies. Technical elements will integrate with the study of up to 9 GCSEs and a Level 2 Technical Diploma in years 10 & 11. In years 12 & 13 (6th form) students will undertake a Level 3 Technical Diploma and have the opportunity to complement this with up to 3 A Levels. Some students will even be able to study selected foundation degree modules and apprenticeship delivery via the UTC is planned for the near future.

Employer engagement Daventry UTC currently has 12 industry partners, with more interested to join, and they sponsor the technical ‘Challenge Projects’ that are the backbone of the integrated curriculum. Developed collaboratively by industry partners, exam awarding bodies and UTC teaching staff, these projects ask students to work in teams alongside

industry mentors and university ambassadors to solve technically challenging problems. They contextualise their academic studies and, in tandem with workbased placements, bring their learning to life. UTCs are forward looking in developing projects and programmes of study with industrial partners. The colleges are equipped with the most up to date technologies for delivering practical training, and we seek to include learning on developments which will shape business and industry in the future, when our students emerge from education. A good example of this is Daventry UTC’s partnership in the Advanced Manufacturing Supply Chain Initiative, through which we have engaged with the Composites Innovation Cluster to create a curriculum for the next generation of composites engineers. Industry partners of Daventry UTC have got involved for a number of reasons; they want to assist more young people in pursuing a technical career, promote awareness of STEM subjects and their application, improve the image of industry in association with those applications and mitigate succession risks through priming a pipeline of potential employees they can have confidence in. Daventry UTC has a catchment area across the East Midlands concentrating in Northampton but also reaching into Oxfordshire, Leicestershire and Warwickshire. Recruitment has been extremely positive. We plan to open this September with 120 students enrolled at year 10 and are currently just short of that target. Both parents and students are excited by the idea of learning through seeing and touching the effects of their study in real world scenarios. They feel elevated by the close engagement with employers which shows respect for the ability of students to innovate, make valid contributions to current challenges and, one day, be a part of the working world.

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of the State

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APPRENTICESHIPS

Focus 2013

Appetite for apprentice training is growing. In May, the National Apprenticeship Service (NAS) reported that it received almost 370,000 online applications to its advertised vacancies for apprentices in the first three months of 2013 – a record quarterly result. Focusing on engineering, manufacturing and technology apprenticeships, NAS said applications were up 10% over January to March 2013 compared to the same period last year – but that growth in advertised vacancies in the sector was slower. In order to match growing demand for apprentice vacancies from young people, more SMEs need to start taking them on as well as existing supporters increasing their intake. But many business leaders are disenchanted with the UK’s skills provision systems. Several 2012 reports, including the Richard Review of Apprenticeships and a Federation of Small Businesses report, The Apprenticeship Journey, found that this is linked to experiences of providers having too much control over course content and funding for training. In the manufacturing sector, there is also concern that the apprenticeship ‘brand’ has been undermined by its expansion to other sectors, and there is a feeling of nostalgia for a time of greater simplicity and rigour in training provision under the guidance of the Industrial raining Boards. With a view to inspiring greater employer confidence in today’s apprenticeship frameowrks, and encouraging more SME manufacturers to recruit apprentices, TM has sought out spokespeople from the Group Training Agency network, a revitalised group of employer-led training bodies with its roots in the perceived heyday of manufacturing and engineering apprenticeships, and employers with up to date experience of apprenticeship delivery. Over the next few pages they will give insight into the opportunities for gaining transparent, high quality and bespoke training for apprentices in England as well as expressing why investment in apprentices matters to the future of their organisations.


Apprenticeships starts over the last 4 years

520,600 457,200

239,900

279,700

THE GTA RENAISSANCE

James Pozzi discovers how Group Training Associations are blending old and new approaches to apprenticeship training to ensure employers get the best employer-driven apprenticeships from sources which understand industry’s tradition of quality and rigour in vocational training.

I

ncreasing numbers of young people are choosing to take apprenticeships rather than follow the well-trodden path of academic education. This is good news for employers in need of vocational skills, but many companies are confused and sceptical about the training provision landscape in the UK with its horror stories of fudged funding applications and poor quality training which is out of step with today’s business realities. The manufacturing sector is, perhaps, particualrly prone to such disillusionment regarding apprenticeships – but GTA England, the association representing England’s Group Training Associations, says that renewed efforts are being made to draw on the strengths of a long established industry training delivery system which uses employer leadership to enshrine up to date industrial education. 50

Cleveland Systems apprentices

rEGrouPinG

Since its launch in the summer of 2009 GTA England has sought to renew awareness of GTA’s which became lost to the view of government, its agencies and even industry, during the recent period of declining interest in vocational training and focus on university education. Formed 46 years ago under the Industrial Training Act to support groups of employers without the capacity to deliver skills training programmes by themselves, GTAs were a well utilised, employer-led means for training delivery in the 1960s and 1970s. The network fell into disrepair when the political zeitgeist started pushing for ever higher proportions of young people to go to university, but today it is reforming. GTA England now has 26 members operating from 40 sites across England.

The impact of training and development on our site’s performance has been quite phenomenal

Tony Stubbs, Plant Manager, Tata Global Beverages


APPRENTICESHIPS GTAs

3,700 Number of advanced manufacturing/ engineering/construction apprentices to enroll with GTAs in 2011/2012

GTA EnGlAnd obJEcTivEs

Gaining recognition for its valuable work in offering quality assured, relevant vocational training, GTA England recently secured a national funding contract to provide greater leverage and capacity for its members to deliver tailored training for employers. With GTA England revitalising existing links to government departments, the National Apprenticeship Service and the Skills Funding Agency, the outlook is promising for creating a range of centres offering diverse and trustworthy training which will match employer needs on a regional and sector basis. Last year GTA England published its strategic plan, outlining its objectives up until 2015. Goals included increased collaboration between GTAs, employers, government and agencies. It also plans to develop the GTA network through recruiting more, quality proven members and facilitating the foundation of new GTAs and regional centres of technical excellence. The value of GTAs to vocational education in England was endorsed last year by a study from Professor Lorna Unwin, chair of an independent commission into apprenticeships. She identified them as a key remedy to the skills gaps that are hampering the UK’s economic recovery. Following Prof Unwin’s findings, a new £10m GTA-led centre was opened in Basildon, Essex, taking on 300 apprentices.

WhAT GTAs offEr

For both apprentices and employers GTA training delivery has considerable benefits. They are not for profit organisations and offer considerable learner support structures

SW Durham training centre

including one to one mentoring and coaching which ensure the trainee is happy with their progress and the direction the training is taking them in. At the same time, training packages are tailored to employer needs, not off the shelf, so they too know that they are getting value.

EmPloyEr influEncE And rElEvAnT TrAininG

Stuart McCord, managing director at NLT Training, at GTA with centres in both Chesterfield and Scunthorpe, explains how employers engage with and shape GTA training: “The manufacturer becomes a member of the GTA and this puts them in a position to influence what is done for training rather than sitting on the outside. GTA’s are employer-owned and led organisations, principally training for their member companies,” he said. GTA facilities benefit from considerable capital and infrastructure investment – which again is influenced by employer members – so courses are always taught using relevant technologies. A region which has experienced a healthy intake of apprentices in the last five years is the North West which, alongside the Midlands, is deemed as territory where GTAs have remained strong despite a parenthesis in broader UK interest in vocational training. North West Training Council, a GTA based in Merseyside, welcomes the reinvigoration of the GTA network. With an intake of

around 500 apprentices annually, it supports a range of apprenticeship courses at a variety of levels and for all age groups. It also assists in the delivery of Engineering GCSE courses for local schools.

AccEssibiliTy To smEs

North West Training Council serves sectors from automotive, to construction, but today also offers training for increasingly popular business apprenticeships and other disciplines outside production and engineering. Furthermore, the GTA has a good record of engaging with SMEs in its region, a target group for increased apprenticeship uptake. Last year, 72% of the employers it engaged with were SMEs according to Paul Musa, chief executive of North West Training Council. Mr Musa still feels that there is room for improvement in SME engagement with apprenticeship delivery and he is pleased to be a part of GTA England’s efforts to shape government policy to make high quality apprenticeship training options more visible and accessible to smaller employers. Mark Maudsley, CEO of GTA England, confirms that GTA England has been consulted regularly during recent efforts to better define skills requirements and appropriate training structures for apprenticeships. The association has also been involved in reforms to funding mechanisms to give more control to employers and gave input to respond to the Richard Review of Apprenticeships, published last autumn. 51


The manufacturer becomes a member of the Gta and this puts them in a position to influence what is done for training rather than sitting on the outside

the Czech Republic, Poland and India. This makes a very strong case for us in terms of group investment.” Charl Erasmus, chief executive of the Newton Aycliffe-based SWDT, says the fact everyone employed in a GTA, up to board level, has a technical background gives them a strong insight into what employers need from their vocational training.

Stuart McCord, Managing Director NLT Training

More than apprenticeships

While apprenticeships start a person’s vocational career, GTAs are well aware of the need to continuously upskill employees as market requirements and technologies move on relentlessly. To this end, GTAs offer bite sized training for established workers. A notable success story for workforce upskilling sprang from a partnership between Tata Global Beverages, at its plant in the North East, and local GTA South West Durham Training (SWDT). The union, aimed to equip the factory’s 400 employees with new skills needed to improve efficiency and drive down production costs – and it has since paid dividends. Tony Stubbs, plant manager of Tata Global Beverages, says that the company has reduced its cost base by £2m over the past four years and has seen productivity at the site increase by 15%. “The impact of training and development on our site’s performance has been quite phenomenal,” he asserts. “The efficiency levels we have been able to achieve through lean manufacturing techniques put us some way ahead of other Tata sites, including those in

Mr Erasmus says the GTAs offer a more focused alternative to colleges when it comes to apprenticeship training and believes the reinvigoration of the network over the last couple of years, increasing visibility of tailored learning environments for apprentices, can be linked to a parallel upswing in apprenticeship starts – although he acknowledges that escalating university fees and a fiercely competitive job market are also likely factors.

Flexibility and responsiveness

For those who have opened their eyes to the relevance of vocational training, especially in the current economic climate, the level of flexibility available to both trainees and employers via the GTAs often outstrips other forms of provision, says Alan Gildersleve, chief executive of Bedford Training Group. “The fact we take on apprentices monthly rather than for a set period like in colleges is favourable both parties,” he observes. Mr Gildersleve, whose organisation has provided apprentices for Cobham, Railcare and the Aircraft Research Association, adds: “In some periods employers can’t take

anyone on, but if they were to be awarded a big contract, this would change instantly and they’d need people. We can respond quickly to that need.” The GTAs represent a quality network of skills providers with a strong leadership from technically experienced individuals and close engagement with current employers. While changes are underway to the rules governing the establishment of GTAs – for instance abolishing the need to be a registered charity – employer leadership is being reset in stone as a guiding principle. Maudsley hopes that the changes will allow greater freedom for GTAs to grow while protecting the requirement for local SME representation on GTA boards. He urges more employers to come on board and take ownership of the skills gaps. For while apprenticeship starts are swelling, data from sector skills council Semta indicates that just 17% of engineering and manufacturing companies are supporting apprenticeships. And this is despite the fact that in a recent government report, skills gaps were rated above resource security and economic uncertainty as threats to the businesses surveyed – businesses which also rated apprenticeships more highly than all other qualifications.

GTA members feATured in This ArTicle: (1) bedford training Group: formed in 1971, currently has 400 apprentices on courses ranging from 1-4 years, providing employees for Aircraft Research Association, Cobham and Railcare. (2) nlt training services: formed in 1970 with training centres in Scunthorpe and Lincoln, trained 380 apprentices last year. (3) north West training council: formed in 1964 in Bootle, trained 579 apprentices last year, providing training for 370 employers in the Cheshire; Merseyside; Greater Manchester; and north and mid Wales regions. (4) sandwell training association: formed in 1963 in Cradley Heath, trained 140 apprentices last year in Level 2 and 3 Apprenticeships.

Automotive apprentices at sW durham Training

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(5) south West durham training: formed in 1967 in Newton Aycliffe, trained over 500 apprentices last year. Its partners include Tata Global Beverages, Warburtons and BNL.


APPRENTICESHIPS GTAs

Training, hard-wired to industry Founded to forge an alliance between like-minded Group Training Associations. Our aim is to leverage our scale and resources to meet the UK Government’s challenge for growth: www.gta-england.com

s.W. durham training ltd

To find out how apprenticeships can help your business please contact one of the following companies:

sandwell training association

Grainger house, cradley road, cradley heath West Midlands, b64 6aG tel: email: Web:

01384 566981 bdteam@swdt.co.uk www.sandwelltraining.com

bedford training Group

durham Way south, aycliffe business park newton aycliffe, co. durham, dl5 6at tel: email: Web:

01325 313194 bdteam@swdt.co.uk www.swdt.co.uk

north West training council

dunnings bridge road, bootle, Merseyside, l30 6xt tel: Web:

0151 523 0808 www.nwtc.co.uk

nurturing local talent

bedford training Group, 59 brunel road bedford, MK41 9tJ

devonshire house, station road, brimington, chesterfield, s43 1JU, UK

tel: Fax: Web:

tel: email: Web:

01234 843804 / 07557 987314 01234 851232 www.btg.org.uk

0845 40 80 378 info@nlt-training.co.uk www.nlt-training.co.uk

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APPRENTICESHIPS: EMPlOyER EVIDENCE Sumitomo (SHi) Demag uK

asked a range of employers supporting apprenticeships how they feel about the importance of their schemes and who has helped deliver them. Marc Sobbohi collates the responses.

Turnover: £10m Number of employees: 24 Apprenticeship intake per year: 1 Training provider/s: Aylesbury Training Group

charlie yates, apprentice

HaywarD tyler Turnover: circa £40 million and growing Number of employees: 300 Number of years apprenticeship programme has been running: 5 Apprenticeship intake per year: 2-3 and growing Meena Bali-Khan, HR manager, Luton site: “One of the special selling points for our apprenticeship scheme is that we assign a buddy for each apprentice as well as a more official mentor. A buddy is a co-worker with adequate experience who has a proven ability to pass on their knowledge. Buddies report the progress of the apprentice in terms of skills learnt, attitude and interaction with internal and external customers on a quarterly basis to the mentors. This is seen as a valuable process for appraising and supporting the apprentices in each area that they work in.” Ewan Lloyd-Baker, Group CEO added: “Well run apprenticeship schemes are great for the company, great for the individual, and great for the engineering and manufacturing sectors as a whole.

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Nigel Flowers, managing director, Sumitomo (SHI) Demag UK: “I was an electrical engineering apprentice in 1976/77, spending my first year at Aylesbury Training Group. The attraction of apprentice training has since fallen away, Stuart Brooks, Parts apprentice replaced with more trendy occupations and the rush to a University education. I fully support University education – but for the right occupations and for the right people. Apprenticeships are a unique way for young people to get practical qualifications which stand them in good stead for the future; and one which makes them highly employable. From the business perspective, the advantages of apprenticeships are equally compelling; low net training costs, the benefits of developing an apprentice on your specific products and company culture - there is no better way to manage succession planning. While the decision to employ an apprentice should not be based on government support, additional finance will accelerate the adoption of apprenticeship schemes. But it is quite shocking when you discover that 16-18 year olds on a technical apprenticeship are supported by central funding at £3,300 per year while nail and beauty is supported at £5,705!”

monDelez international Turnover: £22bn Number of employees: 7,000+ across the UK and Ireland Apprenticeship intake per year: 22 in 2013 Training provider/s: Primary providers are Birmingham Metropolitan College and MGTS alex Flemming,

Andrew Peckston, manufacturing development manager and apprentice apprenticeship programme lead, Mondelēz International: “With youth employment a major concern at the moment, exam results around the corner and the value a university degree under debate, there has never been a more relevant time to raise the profile of apprenticeships and the positive impact they have on individuals and businesses. “Developing progressive apprenticeships is something we feel passionately about at Mondelēz International. Our apprentices have made a huge impact on our business, working on and developing some of Britain’s most iconic FMCG brands, including Cadbury Dairy Milk, Bassett’s and Kenco. Through our apprenticeship programme we’re able to ensure we create a sustainable base of specifically-trained employees, with the right mix of both the practical skills and academic qualifications we need. From the outset, we focus on mentoring our apprentices and provide training specific to our business, enabling them to develop into highly skilled employees who are really valuable assets to our future.”


APPRENTICESHIPS Employer evidence

PacePacKer ServiceS Turnover: £2m Number of employees: 17 Apprenticeship intake per year: 1/2 Training provider/s: Colchester Institute Source/s of funding: Essex County Council Apprenticeship Scheme (a regional opportunity for firms to gain up to £2,500 to support apprenticeship delivery)

andrew lufkin, engineering apprentice

Dennis Allison, managing director, Pacepacker Services: “Pacepacker had little knowledge of how current apprenticeships work. We contacted Colchester Institute to gain an insight into how we would manage a scheme. “Under their scheme, we were able to pick the skills we wanted before developing a framework of activities which could be assessed as part of the apprentice’s college course – it was a big undertaking. The apprentice started with us at the beginning of the academic year and attends regular study periods at college during the three year scheme. “Apprenticeships offer a route to harness fresh new talent, ensuring that our workforce has the practical skills and qualifications we need now and in the future. The mixture of on and off the job training ensures they learn the skills that work best for our business. This has led to numerous benefits including increased productivity, improved competitiveness and a committed and competent work-force.”

FeSto Turnover: £29m Number of employees: 114 Apprenticeship intake per year: 2 Training provider/s: Tresham College and Festo Gary Wyles, managing director, Festo Training and Consulting: “Festo works closely with local colleges, universities and schools to provide apprenticeships, graduate training programmes and a greater awareness of STEM subjects. Many of these students go on to work with Festo as part of their career. Festo apprentices are in the four year Higher Apprentice programme and we would expect to contribute £4000 to £5000 to each individual’s education during their completion of this scheme. “It is important that employers taking on apprentices today acknowledge that many more than in previous times have chosen the route instead of going to university. Consequently, many apprentices are more demanding of their trainers than they have been in the past. In addition, young people generally are used to immediate feedback due to their engagement with communications technology which is still alien to many businesses. I believe organisations need to invest in training for managers to be able to coach our youth effectively, as well as share their technical skills. Without this, apprenticeships run the risk of disappointing individuals with high career potential.”

winKwortH Turnover: £5-6m Number of employees: 45 Apprenticeship intake per year: 2 Training provider/s: Reading College Grant Jamieson, managing director, Winkworth Group : “Now we understand the way the system works we can move forward - we’re at the end of the beginning. As a former Royal Aerospace Establishment apprentice, a former government establishment with experience of training apprentices for nearly 100 years, I have found it alarming that the frameworks and knowledge accumulated in such government establishments haven’t been harnessed and used in support of the apprenticeships of today. This is a sad loss. Vince Cable - if you’re reading - now would be a good time to address this.”

aPPrenticeSHiP FunDing Where no source of additional funding has been stated it is worth noting the in England and Wales the following rules apply: For apprentices 19 and under at the start of each academic year the educational cost is covered 100% by government For apprentices 20-24, 50% is paid for by government and 50% by the employer There is no standard funding to cover the educational costs of apprentices over the age of 24 SME employers may also be eligible for the Apprenticeship Grant for Employers, a £1,500 incentive to increase the number of apprentices being recruited between the ages of 16-24. More information about funding, recruitment and provision can be found on the National Apprenticeship Service Website: www.apprenticeships.org.uk

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Xaar The innovation

Cambridgeshire-based Xaar is leaping the hurdles many businesses trip on as they race for growth. James Pozzi talks to the company’s leaders about the strategy behind its success.

X

aar was formed in Cambridge in 1990 to acquire, develop and commercially exploit a new digital inkjet printing technology arising out of work done by Cambridge Consultants. But even its most ardent backers would have been hard pressed to envisage what it would become in just over 20 years. Fast forward to 2013 the company has cemented strong foundations from which it is

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rapidly expanding. As a result of a £22m investment in its Huntingdon manufacturing site last year, it recently announced the creation of 70 jobs – potentially rising to 100 before the end of the year, taking overall employment to around 700. Xaar is a profitable and highly competitive independent manufacturer and supplier of industrial inkjet printheads and after first being listed on the London Stock Exchange in 1997 is now a FTSE 250 company. Xaar maintains plants in Huntingdon and Järfallä, Sweden. Revenues have grown 100% over the past three years, and are forecast to grow another 50% in 2013. To make this trajectory sustainable Xaar is growing its R&D facilities in the UK and expanded its sales and support operations beyond Europe into Asia and the Americas, with offices in China, India, USA and Brazil. Today over 90% of product manufactured in the UK is exported, including a substantial proportion to China. The company produces over 200,000 printheads every year. So how has this British success story avoided or overcome the growth hurdles which seem to stunt so many UK businesses at various maturity stage gates? Its absolute commitment to designing solutions which provide transformational benefits to end users is fundamental. Industrial Inkjet printing and manufacturing is revolutionising various markets because the quality, flexibility and above all, reliability of Xaar printheads has surpassed other digital solutions. In doing so, the


Printing technologies Xaar

technology has ousted traditional (analogue) printing and manufacturing processes and at a lower cost point.

Technology development Xaar is methodical in overcoming technology development and adoption challenges. It carefully identifies the barriers to adopting various inkjet and other digital technologies and then designs and manufactures printheads that overcome the short-comings in the original innovations. Combined with an extensive patent portfolio, Xaar has developed and introduced technologies such as TF Technology™, XaarDOT™, and the Hybrid Side Shooter™ architecture onto the digital inkjet printing platform. Its industrial inkjet printheads are being used to reshape manufacturing processes in a wide variety of applications including wide-format graphics, labels, packaging, ceramic tile decoration, decorative laminates and outer case coding. Additionally, it also serves advanced manufacturing applications which require printing with specialist fluids, such as flat panel screen displays, solar cells and semiconductors. Of these, the ceramic tile decoration market has proved particularly lucrative. Xaar’s operations director, Ted Wiggans, who joined the company in 2011 possesses over 30 years’ experience in manufacturing, believes Xaar’s decision to enter the ceramics sector in 2008 is a key factor in the company’s sustained success and will continue to pay dividends. Now a major player in a market that has a global production of 10.5 billion m2 ceramic tiles in 2011 — a rise of 10% over 2010, Xaar is investing in all aspects of its business to accommodate demand. Wiggans explains: “In ceramics specifically we offer higher quality output, with lower costs, less breakage and more supply chain flexibility – it is such a compelling proposition that the whole industry is converting to inkjet, and largely to Xaar inkjet for the technology benefits we offer.”

Exports The company’s Xaar 1001 inkjet printhead, with its patented TF Technology™ integrated ink recirculation technology, is considered one of the industry’s top models. Mark Alexander, who serves as Xaar’s director of marketing, believes the printhead model was the catalyst that revolutionised digital decoration of ceramic tiles on an industrial global scale. “The Xaar 1001 features a number of major innovations that have transformed the market’s perception and experience of digital decoration,” he says. “Built to withstand harsh industrial environments, the Xaar 1001 has become the industry’s printhead of choice and enables tile manufacturers to reduce costs, streamline production processes, and develop new products and business models.” Such is the current demand for the Xaar 1001; capacity is being boosted by an additional 75% from December 2012 to July 2014. Xaar’s export figures, often a problematic arena for UK businesses, also make

Xaar at a glance Locations

Cambridge, UK (R & D), Huntingdon, UK, Järfallä, Sweden (Both manufacturing)

Total revenue for 2012

£86.3m

Products

Inkjet printheads (Xaar Electron, Xaar Proton, Xaar 1001, 500, 318, 128, 126)

Employees

550 (expected to increase to 700 by end of 2013)

Recent investment in capacity and capability improvements

£32m

impressive reading. China produces 46% of the world’s ceramic tiles and 64% per cent of Xaar’s total revenue in 2012 came from the industrial sector which includes ceramics. This amounts to £55m worth of business. Markets closer to home are still very important however. Wiggans says its biggest market - the Eurozone - possesses the greatest capabilities in inkjet producing as good as if not better than any other world region. “Approximately 10% of Xaar’s turnover is in the Americas, and is limited by the fact that there are not many inkjet equipment manufacturers in either the US or Latin America”, he says. Alexander adds that while Xaar has been a successful exporter, it has faced and continues to address challenges like most other businesses. These lie in adapting to the different requirements of local regions, in particular challenges to resources qualifying locally sourced

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inks to work with its range of printheads. “As ink development and printhead development continues apace the number of inks that need approval multiplies,” he says. Investing in manufacturing efficiencies has freed up resource for ensuring compliance and targeting

Our view is quite simple: real engagement with the workforce is the key to success Ted Wiggans, Operations Director, Xaar

product development. “We continue to invest in automated tools as well as more people to make the process more efficient and in particular have developed some technology we call Complex Rheology which enables us to better predict and optimise ink jetting performance.” Alexander also says that Xaar works with global OEM customers to develop tools which ease and customise printhead set up for specific applications.

R&D and manufacturing A key focus of the recent investment and a major source of new employment has been Xaar’s R&D

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department. The number of R&D staff on the Science Park in Cambridge increased by 50% last year and a new building was commissioned to accommodate this. This is the result of a sustained investment, with Xaar putting 8-10% of its annual revenue into R&D. Given the highly precise process of printhead manufacturing, the company has needed to maintain its production standards, and now boasts among the most innovative lines in the world at its Huntingdon plant. Alexander, a big advocate of manufacturing in the UK, says it’s a “complete fallacy” that it is an uncompetitive location to produce goods. Wiggans explains that when Xaar established production in the Huntingdon site in 2006, a move which made co-operation between the nearby R&D centre simpler, it made sure that it accounted for sufficient space to add manufacturing lines when the time came. In 2010, when the market for Xaar’s printheads grew considerably, Xaar installed an additional manufacturing line as well as specialist equipment in high-tech clean rooms.

Driving efficiency “Keeping R&D and manufacturing together makes sense from a process efficiency point of view as well as product development,” says Wiggans. Xaar is deeply involved in continuous process improvement allowing the company to gain efficiencies and embed best practice. Last year it implemented a world-class manufacturing programme known as the Infinity programme. The main aim of Infinity is to engage the entire operations workforce (engineers, operators, supervision and management) in improving business


Printing technologies Xaar

performance, with the target being cycletime reduction. Wiggans explains how staff made a number of visits to other companies to study best practice models, with recent visits including Parker Hannifin, Renishaw, Coopervision and Analog Devices. The level of communication with other manufacturers and all staff departments is something that Xaar prides itself on. Daily production and project meetings support this communicative ethos. This is complemented by regular business updates to all staff to co-ordinate with any updates to the London Stock Exchange. “Our view is quite simple: real engagement with the workforce is the key to success,” says Wiggans. On site production manager Paul Smith says the introduction of the plant’s world class manufacturing programme has helped give him a more proactive role within the company. “Given the scale of the ramp up and the culture of change it has been a highly rewarding period. For me job satisfaction has been gained from continually achieving production targets against this background of rapid growth, change and recruitment,” he says. Adding that he has seen a steady stream of promotions and job changes throughout his tenure.

Job creation As a leading recruiter throughout the region, production staff numbers increased by almost 47% to 290 by the end of 2012 in Huntingdon specifically, and now exceeds 350. During 2012 Xaar’s overall headcount increased by 18% to over 550 people and is expected to exceed 700 by end 2013. This has seen a combination of local and overseas staff arrive through its doors, with employees from the USA to China currently working at some UK plants. Wiggans feels looking to the overseas market isn’t a reflection on

£55m Xaar’s annual turnover in the ceramics market

the quality of engineers available in the UK, but as is so often the case in modern manufacturing, he feels there are not enough quality level engineers suited for roles throughout the world. Xaar actively manages the performance of its employees and encourages on-going personal development and training with external bodies. Additionally, it runs management development courses for those who take on management responsibilities. Matthew Waine, who started at Xaar as an operator over three years ago, is now in a more senior role supervising daytime shifts. “At Xaar, there is a very open culture,” he says. “This has been driven from the top down which helps when approaching departments with issues or suggestions. Xaar is a non-blame, non-judgemental organisation which actively encourages communication and positive dialogue between work colleagues which makes it an ideal place to work.” It offers an attractive flexible benefits programme, coupled with competitive salaries and participation in its bonus scheme. With permanent staff potentially earning over 10% of their annual salary as a bonus, it’s a key factor in the company’s high retention rate. “Basically our setup is such that bonuses are regularly handed out and made crystal clear to everyone in the company,” he says. “If a worker doesn’t get his bonus then people at boardroom level won’t have done either. This has worked to great success and we have a high rate of retention.”

Future growth Xaar’s desire for growth isn’t set to stop with the latest expansion. Alexander said there are plans to invest an additional £30m in the next two years, which also includes ventures into the emerging 3D printing market. Alexander added that while this is a future market with potential, Xaar will retain its key focus in inkjet printheads for the key industrial markets. Plans are afoot to launch new products and variants in 2013 utilising the capability of Xaar’s Platform 3 technology - used by the Xaar 1001 printhead - whilst continuing to develop Platform 4, a new technology platform. Options are not something Xaar are currently short of. Having invested to stay ahead of the curve, the old business adage of speculate to accumulate is fitting for a company reaping the rewards of an ever-growing presence in an industry still ascending to its maximum potential.

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Health & Safety: Confined Spaces

Open your eyes to confined space hazards A number of people in the UK are killed in confined spaces incidents each year, with many more seriously injured. These incidents occur across a range of industries and it is important for both employers and employees to understand what a confined space is and the dangers that may be hiding. Arco Limited offers insight on the hidden dangers of confined spaces What The Law Says The Confined Space Regulations 1997 and the Approved Code of Practice must be considered before any attempt to enter a confined space. The requirements of the Health and Safety at Work Act 1974 and the Management of Health and Safety at Work Regulations 1999 would also have to be considered in the preparation of any risk assessment and safe system of work including training as a minimum.

Confined Space Identification A confined space is a place that is substantially, though not always entirely, enclosed and where there may be a reasonably foreseeable risk from substances or conditions in the space or nearby. It is

often a combination of these two circumstances that leads to the increased safety and health risk. Some confined spaces are easy to identify, for example, enclosures with limited openings such as reaction vessels, enclosed drains, sewers, storage tanks, boilers and ductwork. Others may be less obvious, but can be equally as dangerous, such as opentopped chambers, lofts, gas storage areas and unventilated or poorly ventilated rooms.

Confined Space Hazards And Risks Lack or excess of oxygen: A level below 20.9% can seriously affect the functioning of the brain and can lead to death. Conversely, levels above 23.5% increase the risk of fire, particularly in clothing Poisonous gas, fume or vapour: Consideration should be given to the possibility of gases trapped in residues and sludge, scale or animal waste which may not have been identified by atmospheric testing and may be disturbed by someone working in the confined space. Flammable substances: These can be gases, fumes, vapours and dusts and may come from the confined space contents or from materials being used to clean the confined space which have a flammable liquid base or from propellant gases of aerosol sprays for example.

Excessive heat: Heat may come from equipment that has not cooled properly before entry or by the use of steam cleaners. It can cause heat stress, leading to heat stroke, unconsciousness and even death. Reduced physical dimensions: These can be hazardous simply because they can make the way in and out of a confined space difficult to negotiate and make movement inside restrictive.

Safe Working Systems Including Training Employers have a legal duty to ensure that a safe system of work is implemented and realistic training is provided. It is likely that training will need to cover avoiding entry to a confined space, understanding of the work to be undertaken, the necessary precautions that must be taken, understanding safe systems of work and what to do in emergencies. Training should also take into account the practical use of safety features and equipment and involve demonstrations and practical exercises to help participants fully understand.

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I DIG IT

Assembly line of backhoe loaders at JCB World HQ, Rochester

JCB had a barnstorming financial year 2012, posting the best revenues in its 66-year history. Oxford Economics has published research into the digger maker’s total contribution to the British economy.

T

he Staffs-headquartered digger maker commissioned Oxford Economics to assess its total economic contribution, direct and indirect, to Staffordshire, the West Midlands and the UK. The research was based on 2011 financial data. The world’s third largest manufacturer of construction equipment, had its best ever financial year in 2012/13, posting record revenues of £2.75bn and record earnings of £365m, measured by EBITDA. Following the year end report in April, the Government issued

JCB’s export revenues of

£1.35 bn assist the UK trade balance, accounting for

41% of all UK exports of civil engineering and contractors’ equipment.

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a letter to congratulate the company on its wealth creation. JCB’s founder and chairman Sir Anthony Bamford said the company was enjoying “very strong growth in both traditional markets and the emerging economies”. Emerging market sales were buoyed by a mega-order for 1,000 backhoe loaders from the Brazilian government in 2012 worth over £60m. JCB sells over 300 different machines to customers in over 150 countries through its network of 770 dealers and 2,000 depot locations globally. The construction equipment maker has grown to become one of the UK’s most respected manufacturing companies since it was established in 1945 in a farm shed in Uttoxeter. Eleven of its 22 factories are located in the UK. JCB is a leading exporter, with over 75% of its UK production sold to overseas markets, and the company accounts for 0.6% of all manufactured goods exported from the UK. JCB employs over 10,000 people around the world, of which 6,000 work in the UK.

The wider UK contribution JCB states it is “a productive and lean manufacturer of addedvalue products that generate profits, on which the company pays corporation tax, with retained profits reinvested back into the business to fund R&D and sales growth.” Many raw materials and components used by JCB are purchased from UK suppliers, who generate sales and make profits as a result of the trading relationship. For example, through its suppliers JCB contributes £598m to the GDP of the West Midlands. The company contributes to the economy on numerous levels. There is a direct impact through its manufacturing and service operations in the UK, an indirect impact through the UK supply chain, an induced impact through spending by JCB employees and suppliers’ employees and a further catalytic impact through the company’s wider R&D activities. The firm’s UK dealers also make a large contribution to the UK economy, generating more than £129m revenue and employing 2,180 people.


Economics JCB

Oxford Economics analysis: An assessment of JCB’s total economic contribution JCB commissioned Oxford Economics, an independent research consultancy, to assess the company’s economic contribution to the UK based on 2011 financial data. Oxford Economics concluded that JCB contributes:

£1.4bn

24,000

of GDP

jobs

£545m of tax revenues

The split is as follows:

£414m

Direct impact (JCB) 5,980

£461m

Indirect impact (supply chain) 8,370

of GDP

of GDP

jobs

jobs

£145m

of tax revenues

£141m

of tax revenues

Induced impact (JCB & supply chain employees’ spending) £254m 7,020 £104m of GDP

jobs

of tax revenues

Catalytic impact (R&D “spillover” benefit) £152m £62m of GDP

of tax revenues

JCB dealers (combined direct, indirect & induced impact) £129m 2,810 £93m of GDP

jobs

of tax revenues

Direct impact (JCB) above does not include output VAT collected by JCB on sales to UK customers (£108m)

Value added output

Staffordshire – Total economic contribution

The value added output per JCB employee (i.e. productivity) is £69,100, compared with the UK average GDP per workforce job of £42,300.

JCB’s total economic contribution (direct, indirect & induced excluding dealer operations) to the Staffordshire economy is: £484m of GDP, 8,200 jobs, £171m of tax revenues This is equivalent to 19% of Staffordshire’s manufacturing sector GDP. In terms of the Staffordshire economy as a whole, JCB accounts for 3% of the county’s entire GDP. Staffordshire accounts for £105m (or 16%) of JCB’s purchases from UK suppliers.

Direct taxation components JCB’s total direct contribution of £145m is made up of corporation/business taxes and employer NICs, together with income tax and NICs paid by JCB employees. This would cover the wages of 5,000 averagely paid full-time nurses, according to Oxford Economics.

UK procurement JCB spent £669m on goods and services from its UK-based supply chain in 2011.

Manufacturing sector GDP JCB’s total economic contribution (direct, indirect, induced & catalytic - excluding dealer operations) is equivalent to 0.9% of UK manufacturing sector GDP. This would cover the wages of 15,000 averagely paid full-time nurses.

West Midlands – Total economic contribution JCB’s total economic contribution (direct, indirect & induced excluding dealer operations) to the West Midlands economy is: £598m of GDP, 10,770 jobs, £207m of tax revenues This is equivalent to 4.6% of West Midlands’ manufacturing sector GDP. In terms of the West Midlands economy as a whole, JCB accounts for 0.6% of the region’s entire GDP. The West Midlands accounts for £255m (or 38%) of JCB’s purchases from UK suppliers. This summary was taken from the original report of the economic analysis by Oxford Economics published in April 2013.

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Regulation update: Competition law breaches

Competition law breaches Changes to the penalties for breaches of competition law have been proposed by the UK Government and European Commission. They are set to greatly increase the number of court actions, and the size of damages awarded. UK manufacturers should beware says Guy Lougher, partner at law firm Pinsent Masons.

W

hile changes to the penalties for breaches of competition law are still in a mooting stage, there appears to be strong commitment to them, with the UK government leading the way in terms of toughness. Historically, manufacturers have been involved in the majority of the European Commission’s cartel decisions, so the forthcoming amendments should not be overlooked by the sector. In summary, the proposed changes in the UK are:

Diversity of representation and optout not opt-in Today, Which? is the only organisation allowed to bring a damages actions in the UK before the Competition Appeal Tribunal (“CAT”). Which? acts on the behalf of consumers against businesses found by a UK or EU competition authority to have infringed competition law. In the future however, a much broader range of representative organisations, including trade

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associations, will be able to bring actions on the behalf consumers and businesses. Furthermore, while Which? must currently persuade consumers to opt-in to a damages claim, future representative bodies will be able to ask the CAT to deem them the voice of all customers who might have been affected. Customers will have to actively opt-out of this representation arrangement if they do not agree with the claim.

Higher damages awards Following from the above changes, the CAT will calculate damages as if all potential customers are deemed to have been included in the action. If the claimant bringing the action cannot identify all the customers adversely affected – so cannot pay them their share of the damages – remaining damages will be allocated to a specified charity (currently, the Access to Justice Foundation). This means that the damages paid will, in many cases, exceed the amount that manifests as compensation.

More cases The CAT will also be able to hear so-called ‘standalone’ cases, where the defendant has not been found to have infringed competition law by a UK or EU competition authority. This is likely to increase the number of cases brought before the CAT.

Faster cases The UK reforms would introduce a ‘fast-track’ procedure for simpler cases, with priority given to actions brought by SMEs. All such cases will be cost- and evidence- capped, to encourage SMEs to bring cases, especially against larger companies.

Injunctions available In order to protect vulnerable businesses, the CAT will be able to issue injunctions, requiring an immediate cessation to anti-competitive behaviour. All cases on the fast-track will be considered for injunctive relief early in the process.

UK tougher than EU The proposed EU reforms complement, but in some respects do not go as far, as the proposed UK changes. For example, the EU proposals envisage an ‘opt-in’ rather than an ‘opt-out’ regime. The EU law proposals aim to encourage businesses involved in cartels to inform on their co-cartelists and apply for leniency to the competition authorities. Importantly, the EU changes would introduce a presumption that a competition law infringement has caused harm to the claimants, which the defendant would then need to rebut. This would likely increase the number and size of damages awards. If the EU proposals are adopted, then the already extremely tough UK regime would be further strengthened.

What should manufacturers do? The reforms will increase the level of litigation and the size of damages received by claimants. Victims of competition law infringements, especially SMEs, will find the changes welcome, but companies condemned for such breaches will have their financial exposure to private actions substantially increased. Manufacturers should make sure they have rigorous policies and procedures in place to remain compliant with competition laws as the penalties for transgression are about to become much more severe.


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Mission Europe is short of a number of materials on which manufacturing relies. Catherine Joce of the Chemistry Innovation Knowledge Transfer Network urges manufacturers to reduce their reliance on these critical raw materials by finding alternatives.

M

anufacturing processes are fed by materials. Ensuring reliable supply chains for these materials is absolutely critical to all areas of manufacturing and the Technology Strategy Board has identified “securing UK manufacturing technologies against scarcity of energy and other resources” as a key strategic theme for UK High Value Manufacturing. Depletion of supplies or interruptions in supply chains are not only problematic when they happen, but even the hint of unreliability makes planning and pricing difficult. Right now, there are 14 materials in particular – dubbed ‘Critical Raw Materials’ (CRM) by the European Commission – which are heavily relied upon but have little or no production in Europe and are vulnerable to supply chain interruptions (see box opposite). The vulnerability may be because the primary source of a material is from politically unstable regions (e.g. tantalum from the Democratic Republic of Congo) or because one country has a monopoly of supply (e.g. rare earth elements from China). Manufacturing industries, including aerospace, automotive, electronics and construction, depend

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on these CRMs. Magnesium is used for steel production; platinum group metals are needed for catalytic converters, fuel cells and hard drives; tungsten is used to make hard metals for drilling and cutting; and tantalum is used to produce electronic components. Business leaders know that unreliable access to these materials is a threat to their competitiveness and, more fundamentally, their ability to continue making their products at all. According to a 2011 PwC report, 80% of senior executives from global manufacturing companies cite mineral and metals scarcity as a pressing issue. Manufacturers need solutions. We see three potential opportunities for addressing this.

Mining, recycling and substitution Broadly speaking there are three options open to mitigate the threat posed by CRMs. Increased extraction is one option to address the materials shortage and Scandinavian countries with natural resources are increasing mining of some of these materials. But many are not mined at all in Europe and mining operations raise social

and environmental concerns. Mining will inevitably play a role, but it cannot provide a complete solution in either the short- or long-term. Recycling has been used to increase supplies of metals for years and is becoming a viable option for less common, higher value materials, thanks to improvements in the chemical processes involved. Many metals are far more concentrated in certain waste streams than in the Earth’s crust. For example, recycling of high value catalysts used in chemical processes is already common. A key opportunity (and challenge) for the manufacturing industry is integration of secondary sources of materials into their production processes. However, there are still plenty of metals for which no economically viable recycling process exists and there will always be issues around collection, sorting, contamination and standardisation between virgin and recycled material. Perhaps the most exciting solution to the CRM challenge is substitution, i.e. finding an alternative way of producing your finished product which does not rely on a CRM. One approach to achieve substitution


Energy

Sustainable Manufacturing: Resource Security

could be finding an alternative material. UK Company, Nexeon, has replaced graphite in the anode of rechargeable batteries with a modified form of silicon. Graphene, a novel material which is stronger than steel and more conductive than copper, could well replace many CRMs in areas such as electronics. But a more innovative way to replace a material would be to substitute it for an entirely new technology. For example, substituting traditional

incandescent lightbulbs, which rely on tungsten, for light-emitting diodes (LEDs). In the future, there will be less demand for hard disc drives, which use neodymium magnets, as memory storage technology transitions to solid state memory.

Working together to address the problem

What are the Critical Raw Materials? The European Commission has identified a list of 14 Critical Raw Materials. These are: Antimony Beryllium Cobalt Fluorspar Gallium Germanium Graphite Indium Magnesium Niobium Platinum Group Metals (platinum, palladium, iridium, rhodium, ruthenium and osmium) Rare earths (including yttrium, scandium, lanthanum and the so-called lanthanides (cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, rebium, thulium, ytterbium and lutetium) Tantalum Tungsten Taking into account that both the economic importance and availability of any materials are highly dynamic, the European Commission plans to revise its critical raw materials list every three years. The first revised list is expected by the end of 2013.

Depletion of supplies or interruptions in supply chains are not only problematic when they happen, but even the hint of unreliability makes planning and pricing difficult

However, many potential substitute materials and technologies are at early stages of research and development. And while there are some great illustrative examples, progress in finding alternative to CRMs has been fragmented. Solutions will require an interdisciplinary approach, involving collaborations between materials scientists, chemists, computational professionals, engineers and manufacturers. Discussions between academia, business, industry bodies and policy makers will be necessary if we are to reduce our CRM reliance. We need to work together to prioritise ‘at risk’ products or processes, identify achievable solutions, and create targeted collaborative projects that can bring the right people together to solve the problem. If manufacturers want to mitigate the effects of CRM vulnerability, they need to become part of the solution.

This involves exploring new models and adopting and commercialising alternatives themselves. But it also involves working with everyone involved to ensure they understand the problems manufacturers face. There are a number of international projects aimed at achieving this by providing forums to collaborate, share knowledge and set priorities, for example the FP7 European Commission project CRM_ InnoNet (see box below). Getting involved will help manufacturers find partners to solve CRM problems, and it will also help them feed into future policies in this area, providing focus for innovators to develop solutions, help academics identify useful research, and help governments set funding priorities and provide legislative support. We are only just scratching the surface of addressing the CRM problem and the first step is understanding the market need and developing a cohesive policy approach which supports business and researchers to develop solutions. Done right, this will mean manufacturers benefit from more secure supply chains as well as new opportunities to commercialise the solutions. But ultimately manufacturers are the end user, and they must drive the agenda.

CRM_InnoNet CRM_InnoNet is a European Commission FP7 project on substitution of Critical Raw Materials, co-ordinated by Chemistry Innovation. This 18 month project is bringing together companies, academia and industry bodies to provide comprehensive mapping of CRM use in Europe, identify the biggest challenges in CRM, and create a roadmap and policy recommendations. The goal is to ensure the right funding is available and create a better environment for innovators to exploit the opportunities for substitution of CRM. This project recently launched an Innovation Network for CRM substitution to gather stakeholder views and identify issues and solutions. Manufacturers are encouraged to get involved to help set the agenda for using substitution to address CRM challenges. www.criticalrawmaterials.eu

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directly linked to its production philosophy – which is why the company keeps all planning and control of logistics in-house. At an operational level, several service providers support delivery of the logistics strategy, including rail partners that operate Porsche Leipzig’s private railway station.

Lines of communication

Porsche’s

supply

Around 500 vehicles roll off the production line at Porsche Leipzig every day and at any given time the site only carries one day’s worth of parts. Tim Brown talks to logistics experts at the factory about how they have optimised supplier processes to provide a true just-intime, just-in-sequence delivery of goods.

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I

n April last year, Porsche celebrated 10 years of production at its Leipzig plant. The site was constructed to manufacture the Porsche Cayenne SUV, which commenced in 2002. In 2009 the site started making the four-door Panamera too and more than 500,000 Cayenne and 100,000 Panamera vehicles have been produced to date. “Ten years ago, nobody could have guessed at the success story of our Leipzig plant,” said the President and CEO of Porsche, Matthias Müller, at the company’s 10th anniversary celebrations. “Saxony has become the Swabian company’s home away from home and we still have a lot more plans in store for the location.” These plans include starting production of the Macan, a new SUV model, at the end of 2013. The bodies of the Cayenne and Panamera models are made off-site and delivered to the factory for assembly. But, with advent of the Macan, Porsche is investing Eu500 million to develop new body and paint shops at Leipzig. It will employ 1,000 extra staff to work in its augmented facilities. The increased capacity and product range will see a big increase in the number of suppliers for the site – up from 150 in 2002 to 600 by the end of this year. But Porsche says its logistics strategy and minimal stock storage will remain the same. Michael Weihrauch, head of logistics at Porsche Leipzig, says the company sees logistics as being

Clarity of purpose for production and supply at Porsche Leipzig is founded on effective reporting and communication. The company’s SAP logistics system was introduced in 2008 in the lead up to production of the Panamera. From in-house logistics, to production, to communication with suppliers, everything is linked through its SAP base. “Everything we produce, our suppliers can see,” says Mr Weihrauch. “This is the basis for their good performance. We have a permanent information flow to them and this brings perfect material flow to the factory.” There are two primary parts to the Porsche IT system, one is the in-house ERP system and the other controls the information flow to the suppliers. The in-house production and logistics system is about 70% standard with approximately 30% customised. By comparison, about 80% of the just-in-time and just-in-sequence system, which controls the information to the suppliers, was customised by Porsche. But this customisation has not forced big compliance and adaptation expectations onto suppliers. The German automotive industry uses the VDA standard which incorporates quality requirements and a uniform language to assist in ordering and 90% of Porsche’s suppliers work within this standard. “We don’t know what ERP systems our suppliers are using and it is not important for us,” says Weihrauch. “What is important is that we can communicate with them using the standard VDA language or other modern automotive standards.”


Profile Porsche Leipzig

An artist impression of the Porsche Leipzig facility including the new body and paint shop

Planning for production In order to keep its suppliers up to date, Porsche Leipzig provides a weekly production plan and a 9-month forecast which provides the basis for planning. It also provides a daily ‘call-off’ which looks three weeks into the future and provides a date and a time for the goods to arrive. “You can only really get to the point of an inventory range of one day when you supply daily figures,” says Weihrauch. “With this information they can manage production and capacity requirements.” As with many of today’s automotive companies, Porsche’s production plan is dictated by its customers. The company does not produce cars for stock so when a customer orders a car, Porsche must provide the suppliers with the information at the right time to manage the requirement. The loading sequence, for example, for the Cayenne and Panamera bodywork, which are delivered to Leipzig by train, corresponds exactly to the production sequence. “We have very stable production because we have stable information,” says Weihrauch. “Every customer pulls on the supply chain and receives a place in the sequence. The planned sequence must be the actual sequence. Many factories find this very difficult due to influences from the suppliers. At Porsche everyone in the factory understands we need to produce the cars in time and in sequence. This, along with the quality of the cars, is our

primary goal. We have over 90% stability of the supply chain.” If a transportation carrier has a problem with missing goods from a supplier, Porsche is alerted five days prior to its planned arrival. The firm operates a 24hour control centre, as do its transport carriers. “If there is an issue we can then get in contact with Porsche Stuttgart and make arrangements to organise emergency stock and fly it in if necessary,” says Weihrauch. 

In the warehouse Logistics are generally thought of as external processes that move stock in and out of the factory but, for Porsche Leipzig, picking and storage processes in its warehouse are essential to the integrity of the overall logistics model. In the early 1990s Porsche started to change its way of warehousing based on the Japanese standards of lean production and supply. It strives for transparent working methods which support a constant flow of material. A symbolic manifestation of this mentality was the decision to saw off the metal shelving in the warehouse at eye height – an act now famous in Porsche’s history. Reducing warehouse capacity means Porsche has reduced the number of steps involved in handling incoming inventory. Prior to the company’s existing lean methodology, it utilised a total of seven steps for the logistics of incoming goods: transporting; unloading; buffering in the incoming goods area; transport

of the material into storage; transport of stock out of storage; order picking; and assembly line supply. Today it has reduced the number of handling steps to just four, removing the need for the buffering and storage steps. For order picking Porsche Leipzig uses pack trolleys which hold stock for the next 10 to 20 steps of production for a single car. The trolleys are attached to the line and move along with the vehicle. If an order picker can’t find the right part for the trolley they are picking for, they press a button for an alarm and the logistics team uses what it calls ‘hunters’ to search out the missing part. Porsche invested in a pick by light system about four years ago and today makes about 90,000 picks per day with a maximum of 10 mistakes. With the introduction of the Macan, Porsche expects the number of picks per day to increase to about 300,000. The introduction of the Macan will put pressure on production at Porsche Liepzig. But with a strong logistics teams, comprising experts from Zuffenhausen and Leipzig, the company is confident that it will meet be robust in meeting future manufacturing challenges.

Your chance to visit Porsche Leipzig Lean Management Journal and The Manufacturer have teamed up with Porsche Consulting GmbH to provide business leaders and managers with a unique two day residential course at Porsche Leipzig. This lean transformation training programme will inspire and educate senior manufacturing and improvement leaders. Included in the package: Exclusive behind the scenes access to the Porsche production line and lean logistics operations Access to senior personnel at Porsche Leipzig Porsche Race Track Experience – drive several high performance cars around a purpose- built race track See more at: http://bit.ly/PorscheLean

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The world has changed since we last invested in new ERP systems. We wanted something that was flexible, user-friendly, and easy to reconfigure as the business itself changes. The era of the ‘green screen’ has had its day Kevin Wood, Finance Director, Thwaites

Brewing up

success

For family-controlled regional brewer Thwaites, a move to Microsoft Dynamics AX – aided by Dynamics AX implementation experts Columbus – signals a break with the past, discovers Malcolm Wheatley.

W

ith a heritage stretching back to 1807, Daniel Thwaites is the north of England’s major independent family brewer, making a range of award winning beers, including Lancaster Bomber, Nutty Black and Wainwright, the UK’s leading golden ale.

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Based in Lancashire, Thwaites has an estate of 320 pubs stretching from Carlisle in the north, to Birmingham in the south. What’s more, a full range of drinks are supplied to independently owned pubs, clubs and restaurants in the north of England and beyond, as well as a wide range of bottled beers to most major supermarkets.

Nor is Thwaites solely a brewer and pub operator: Shire Hotels, the company’s hotel and spa division, comprises a collection of six 4-star regional hotels and spas. The company also has a developing range of coaching inns. Trading as ‘Thwaites Inns of Character’, each offers traditional hospitality based around locally-sourced food and a wide range of cask ales. Historically, the hotel division was set up and managed separately, says group finance director Kevin Wood, with the inns being established on the same basis. They even have separate ERP systems: JD Edwards in the brewing and pub businesses, and Microsoft Dynamics GP – the former Great Plains Software solution – in the hotels and inns. With the formation of a centralised finance and IT function, the structure of the business has changed over recent years, explains Wood. The two separate ERP systems remain, however, which creates undue complexity and duplication of costs. In particular, he notes, reporting and analysing the performance of the group was a cumbersome process. On joining the company as group finance director in 2010, Wood implemented a new reporting and business intelligence system to provide that viewpoint: drawing data from the two ERP systems, it provided the holistic 360º view that the business needed. Even so, he explains, a more significant problem was the imminent ‘end-of-life’ of the respective systems. The JD Edwards system in use in the brewery, for instance, was a traditional ‘green screen’ one and was almost 16 years old. While the Great Plains system in the hotels and inns, meanwhile, dated from 2002.

Out with the old... And so, relates Wood, by early 2011 the search had begun for a replacement. An early decision was that the business required a single best-inclass ERP system which would not only provide the so-called ‘single version of the truth’ that senior management wanted, but also rapidly accelerate the provision of timely information on which to make decisions. “It was taking us too long to produce our month end accounts,” says Wood. “We knew that we wanted a modern system, and one which produced meaningful information when we wanted


IT in

Manufacturing

it, in a rapidly changing business and in a difficult economic climate managers need information at their fingertips rather than waiting for accountants to produce it for them.” But which single system? A search of the marketplace very quickly eliminated all but two solutions: on the one hand, Microsoft Dynamics AX, implemented and supported by Dynamics AX experts Columbus; and on the other, the latest version of the JD Edwards ERP system, now owned and marketed by Oracle. “It was a two horse race,” sums up Wood. “JD Edwards was perceived the low risk, safe and easy option, as it was already in the business, while Dynamics AX had more upside and expansion potential, giving us the opportunity to move forwards faster. Which to choose? It was, says Wood, a difficult decision. “The world has changed since we last invested in new ERP systems,” he explains. “We very much wanted something that was flexible, user-friendly, and easy to reconfigure as the business itself changes. The era of the ‘green screen’ has had its day.”

... and in with the new That the eventual decision went Microsoft’s way owes much to the strength of the Microsoft brand, explains Wood, and to the very detailed technology roadmap and future path of the Microsoft offering. “Everyone is familiar with Microsoft products as they use them every day and therefore we expected the training and user adoption of AX to be very straight forward”. “There was a published road map, backed by Microsoft’s name, and from it we could see the direction in which we were heading,” he sums up. “In the end, it was their clear vision for the long term future of the system that won the day.”

And key to the project’s success, he knew, would be the implementation consultancy support and assistance from Columbus, a global expert in Microsoft Dynamics and related products and a firm with proven food and beverage industry credentials. Implementation began late 2011, and the new system is scheduled to go live in October 2013. The important thing, he explains, is the cross-company ‘buy in’ to the new system, and to the benefits that it will bring – not just in terms of faster

reporting but also in terms of efficiency improvements. Wood says cost savings are anticipated from a move to a single, modern system. “In any big ERP implementation, you will inevitably encounter ‘blockers’ – people who don’t want the new system, and would sooner stay with the one that they already have,” he sums up. “At Thwaites, I really can’t think of anyone who falls into that camp: we’re all really looking forward to the transformation that it will bring.”

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Closing the

gaps Phil Lewis at Infor explains how a new generation of enterprise software for manufacturers can drive growth.

F

or UK manufacturers, there has never been a more pressing time to identify and exploit incremental improvements in business processes and operations. According to the Markit UK Manufacturing PMI of 3rd June 2013, “After returning to growth in April (2013), May saw operating conditions improve at the fastest pace in over a year, with growth of production and new orders both accelerating.” In addition, the PMI records not only show lower input

costs for some sectors, but also reveal job creation within manufacturing for the first time in four months. These conditions point to a positive outlook for UK manufacturers, but they remain fragile. Only those manufacturers who examine their business processes and operations and

identify the improvements that can exploit this nascent growth will survive. To do this, there are four main areas many manufacturers are now looking at to ‘close the gap’ by finding the often small, incremental changes and evolutions that can deliver further ROI and improve the speed, and agility of operations. The software that underpins so many of these processes is an obvious starting point.

Gaps between systems Manufacturers now deploy a bewildering array of applications across operations, logistics, finance, HR, marketing and other departments. The alphabet soup of ERP, SCM, CRM, and HCM is now familiar parlance to most IT directors. Amidst this plethora of systems, one of the most common challenges is integration - getting the systems to talk to each other in order to complete the processes they support. Linking the manufacture and distribution of a given order is a start, but many manufacturers now realise they need to incorporate a much wider array of concerns. A classic example is increased production for a promotion of a given product, fusing customer demand with manufacturing, staffing, and logistics and of course invoicing. When each of these functions is handled by a different application, the gaps that can arise can become costly. Infor’s next generation of business software – Infor 10x – is equipped with ION, a lightweight middleware solution that simplifies integration between Infor and third-party applications to provide a sturdy foundation for growth with a state-of-the-art framework for managing business process flows, workflows, and alerts.

Gaps between processes Manufacturers are classic examples of businesses that mix structured and unstructured elements within standard business processes. For

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Manufacturing Infor

example a structured component may be the creation of a purchase order (PO), raising an invoice or issuing a Bill of Materials. These parts of the process are structured by virtue of the technology that creates and issues these documents with the additional benefits that information is captured, stored and classified, ready for analysis and retrieval. By comparison, the unstructured part of the process could be the approval of that PO or invoice, typically because such approval may happen over a phone call, email, text message or even via a post-it note. Typically these unstructured facets happen at the point of human interaction. Despite the fact that the real decision resides within this unstructured element of the process, it is often incredibly hard to track and record beyond this point. This gap is expensive - a 2012 report by the McKinsey Global Institute found: “The average interaction worker spends an estimated 28 per cent of the working week managing e-mail and nearly 20 per cent looking for internal information or tracking down colleagues who can help with specific tasks.” That is a huge loss of productivity. Infor 10x features Infor Ming.le, a comprehensive platform for collaboration and business process improvement. Incorporating innovative social media concepts into a business environment, Infor Ming.le lets customers capture corporate knowledge, tie ‘human’ communications to automated business processes, and follow news, workflows, and content in real-time. All comments, approvals, notes and details are captured in a single place with direct access to the underlying applications to which they pertain. A hypothetical example could be that a sales executive at a manufacturer of disk brakes receives a rush order from a major automotive OEM. He

The average interaction worker spends an estimated 28 per cent of the working week managing e-mail and nearly 20 per cent looking for internal information or tracking down colleagues who can help with specific tasks McKinsey Global Institute, 2012

enters this into Infor Ming.le and receives an alert that the order will not be able to be fulfilled in the timeframe requested by the customer. Embedded intelligence in Infor Ming.le also shows that the OEM is one of the company’s top three customers. Because Infor Ming.le draws information from multiple applications into a single platform, the sales executive is able to directly view the production schedule and see that maintenance work on a large piece of equipment is causing the delay in fulfilling the order. Wanting to please a top customer, but not knowing who in the company handles production scheduling, he shares the purchase order with a message through Infor Ming.le to the production group. Infor Ming.le, knowing who at the company is responsible for production scheduling at the plant assigned to this order, alerts the production manager directly in her Infor Ming.le feed. The production manager sees that the scheduled maintenance is preventative and adjusts the schedule so it can be conducted once the order is complete. This triggers an alert back to the sales executive who lets his customer know that the order will be delivered on time. Through Infor Ming.le, the sales executive and production manager were able to solve a critical business issue despite not knowing each other, in a matter of minutes. In addition, all actions and interactions were transparent to all users and saved to the original purchase order providing a clear audit trail.

Gaps in understanding Silos of information remain a key concern for many manufacturers. Individual instances of data are useful but all too often, it is a case that when placed alongside each other in the correct context, the result is greater than the sum of its parts. This requires powerful analytics and business intelligence (BI)

integrated with simple and intuitive methods of displaying the information. Furthermore this analysis and display needs to be available anywhere manufacturing decision makers are no longer chained to a desk. This makes the issue of the interface a critical concern. As decision makers have become accustomed to simple, intuitive apps on a smartphone or on their Facebook account, questions have begun to be asked as to why business software cannot look and feel as inviting and easy to use. Infor 10x not only delivers pervasive, in-context business intelligence embedded throughout role-based workflows, it also enables manufacturers to build customized mobile dashboards that allow employees to take action on items using mobile devices, as well as present business intelligence information in highly visual, easyto-understand ways. Designed by top New York designers from Hook & Loop - Infor’s own in-house creative agency - the consumer-level user interface of Infor 10x delivers a unified experience across all systems. Beautiful, familiar, easy to use, and in line with employee expectations, a better interface means less training time and increased productivity. Closing these gaps in understanding, processes and systems will be the hallmark of successful manufacturers in the coming months. Integrated, contextually-informed processes that span structured and unstructured facets will be the cornerstone of profitable manufacturing growth. Discover the future, today – visit go.infor.com/10x

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Jane Gray considers a new tool for collating business process information, establishing best practice as standard and strategically managing talent.

A business

superfood

P

eople and processes are the most fundamental of business assets. Unless you understand them fully, growth will be painful and messy as your business jars through maturity levels or simply stops short of them. The multiplicity of ‘valleys of death’ in business growth has been a popular subject for the steering committee of the Associate Parliamentary Manufacturing Group’s inquiry into Industrial Culture and Competitiveness, the outcomes of which will be published this autumn. Commentators such as Prof Steve Evans, Centre for Industrial Sustainability and Paul Davies head of policy at the Institution of Engineering and Technology have made frequent observations on the stalling stages UK companies in particular seem to hit as they struggle to develop processes and skills programmes which will support their ambitions – especially in disciplines such as financial and risk management. The trouble is, business processes are very hard to visualise, or mentally piece together. And keeping track of what talent sits where in relation to those processes, and who may need more training to deal with expanding responsibility, let alone legal and regulatory changes, is equally like grabbing at clouds.

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We want employees to feel the same about the technology they use at work as they do about their home PC, their Xbox and their smart phone Nick Edwards, Papaya

It’s a frustration that Nick Edwards, founder of software company Papaya, hopes to solve. Mr Edwards established Papaya four years ago and, he explains, named the company as an acronym of the concept which drives its functionality: People and processes are your assets. “Of course people think it is named after the fruit, but that works for us too because papaya has all sorts of health benefits and I like to think we are a kind of ‘superfood’ for business,” he jokes.

What does it do? The Papaya offering is tricky to define under any of the ubiquitous software acronyms which commonly come with startling price tags attached. It is akin to some business process management systems, but also

to human capital management and even some ERP systems. Essentially though, Papaya allows companies to define and join up all the processes within the business, detailing what and who each one involves and where individual processes touch others. It allows a user to understand what skills and regulatory requirements are associated with a process and ‘nudges’ them with notifications on their profile login if they need to take action to attain a necessary qualification or obtain new certifications. Importantly, the system is user-centric in its design. “We want employees to feel the same about the technology they use at work as they do about their home PC, their Xbox and their smart phone,” says Edwards. And accordingly, the Papaya system interface is strongly


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redolent of the latest Microsoft operating systems, with panel navigations which can be personalised by users according to their job role, current priorities, targets or projects. Edwards is ambitious and enthusiastic about the possibilities that diverse technologies represent for his product. For instance technologies of the kind now being associated with big data and the creation of advanced, data-driven service systems (p39). These systems are mostly associated with a few large multinational companies, but Edwards is intrigued by the possibility of using the technology to service individual employee and everyday business needs. For instance he shares, Papaya is partnering with Sheffield Hallam University to investigate the incorporation of radiography technologies which may one day offer a health and wellbeing tracking capability. “We’d be able to capture information on nutrition for instance, and this could feed into a company’s processes to support CSR.” Such a capability would also help employers advise and work with employees to avoid the development of long term health issues – and absence, which as EEF has recently noted is a challenge once again raising its head for the manufacturing sector (p14).

Why are manufacturers interested? Papaya is a product for all sectors, but Edwards says that manufacturing implementations are more exciting, and ultimately often bring more value because they include a complex set of physical processes as well as less tangible business ones. Manufacturing also tends to have more demanding health and safety or sector specific standards requirements with attendant document management challenges says

Customer comment: Bringing all of the business disciplines together from one system allows us to be smarter. Papaya provides real time information at the click of a button. I have saved around four working days a month by not having to gather and chase information which is now automatically collated and converted into the reports I require. Driving our inductions via Papaya allows huge time savings whilst and gives a great overview of individuals’ strengths and weaknesses Group safety officer at a European packaging company

Edwards, and then there’s the people. “Manufacturing companies tend to have a very high staff to management ratio. And seasonally affected manufacturing often has a very dynamic employment base. This means that there is a lot of potential value in standardising processes related to workforce management, such as induction processes.” Edwards says this has often been a real draw for manufacturing customers who are keen to cement parallel efforts in establishing lean cultures and embedding them in standard operating procedures that employees can own. Accessibility-wise, Papaya is flexible. It is a cloud-based application but it is possible to work off line so that audits being conducted remotely in instances where there is no internet connection. Work can then be saved and the system updated later. Papaya has also partnered with certification and accreditation bodies to link directly into the resources which will help improve individual and business capabilities. This includes online training packages. The price structure for Papaya is also attractive. Its cost effective price structure is relative to the number of users or employees in an organisation, making it easily accessible to SMEs but scalable to large organisations. Additional consultancy fees for

implementation are charged per project, not on a time basis.

What’s the catch? “No catch,” shrugs Edwards, “though of course there are challenges, the biggest of which is always the transfer of existing information about people and processes into the new system – essentially data entry. We are developing a back-end application which allows us to pull data and drop it into our system and we offer human labour to help with the data transfer process. “What I really advocate though,” and Edwards’ eyes light up, “is that companies hire an IT or business management apprentice and makes them responsible for this. We all know that apprenticeships are fully back on the radar and are a fantastic way of developing loyal, keen-to-learn employees. While initially you’d be giving this apprentice quite a mundane task, over time they’d become invaluable for the end to end knowledge they would gain of the strengths and weaknesses in the business.” Edwards is so enthusiastic about this idea that he is even developing an offering whereby he will fund part of the training cost for customers who take on an apprentice to assist in a Papaya implementation. It’s a novel approach which exposes a real passion for developing people and processes for the creation of jobs, productivity and, ultimately, wealth. @janefagray

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Manufacturing: ERP for SMEs

Suite success Described as SAP’s “best kept secret”, sales of SAP Business One to small manufacturers are soaring. Malcolm Wheatley discovers why.

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ill Newton, head of Business One for the UK and northern Europe at SAP, is a man on a mission. And chatting to him recently, it didn’t take long for him to pepper me with statistics outlining what that mission means. Most of the facts that he outlined were news to me, and – I’m guessing – will be news to most readers. But then all are to do with, to quote Mr Newton’s phrase, SAP’s “best-kept secret”, its software for small manufacturers, SAP Business One. It will surprise many to learn that a full 50% of SAP’s customers are SAP Business One customers. Think of SAP offerings, and one tends to make a mental leap directly to company’s flagship SAP Business Suite software, which goes back to the early 1980s and is embedded in the infrastructure of so many global blue chip firms. But clearly, that’s a thought process that’s no longer quite so valid. The user ‘cockpit’ in SAP Business One

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SAP Business One, in short, is an ERP system aimed at smaller companies. It’s intended, out of the box, to meet the needs of small, but ambitious companies, providing them with pre-built templates of proven best practice that will get a company up and running quickly, and without fuss. A figure of two to eight weeks is quoted, which is indeed, impressive.

Rich functionality But that power, that best practice, and that speed of implementation aren’t achieved by compromising. Not only is the basic SAP Business One product a fully functional ERP suite, even offering ‘on-the-go’ access via a mobile app, but an ecosystem of several hundred partners have also developed ‘add-on’ solutions for specific industries or functions. For example, says Newton, many manufacturers will want to take a look at an addon for discrete and process manufacturing industry from SAP Business One partner be.as [sic], which offers industry-specific

50%

of SAP’s customers are SAP Business One customers

extensions for advanced MRPII, rough cut capacity planning, quality control and product configuration. Also included – proving that SAP Business One is no cut-down compromise – are advanced planning and scheduling, product costing, time and attendance, and advanced warehouse management. CompuTec, another partner, offers another rich set of functionality for manufacturers in the food and beverage industry, with its complex mix of regulatory requirements, recipe management issues, shelf-life controls, traceability and ‘coproduct’ requirements. 20-employee Worcesterbased LFI, for instance, uses just this solution in its business producing powder blends for its food industry customers – baking powders, bread mixes, raising additives and so on.

Flexible deployment Furthermore, says John Hamman, SAP’s head of manufacturing industry business development, SAP Business One plays an important role in helping supply chains and business networks stick together, and supporting subsidiaries in punching above their weight in business relationships. Among the 39,000 SAP Business One customers worldwide are over 2,000 businesses that are subsidiaries, joint ventures or affiliates to large firms. SAP Business Suite user Jaguar Land Rover, for instance, uses SAP Business One in just this way in its operations in Brazil. “What we’re finding is that companies are seeing that SAP Business One is offering them the functionality they need, at an affordable price, and is also giving them flexible deployment options,” he says. “On-premise or in the cloud, as a service, SAP Business One offers both.” No wonder, perhaps, that Mr Newton is beaming as he shares one last statistic: last year, sales of Business One in the UK were up 34% year-on-year.


The Porsche Lean Transformation Programme

16-17 October 2013

Porsche Plant, Leipzig, Germany This unique two-day residential course by Lean Management Journal and Porsche Consulting takes you to the heart of world class manufacturing and logistics. Delivered on site at the most advanced car production plant in the world, this will provide manufacturing executives with the opportunity to really transform their own manufacturing and logistical operations.

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• Hands-on simulation activity of lean production and logistics • Insight into Porsche’s supplier development, logistics approach and implementation • Understanding the behaviours of the operational leadership team to sustain lean manufacturing • Porsche Race Track Experience – your chance to drive several high performance cars around purpose built race circuit used for F1 testing

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Porsche Consulting


Releasing the

transformational

Chief Information Officer New research by ERP specialist Epicor Software Corporation probes the role played by today’s manufacturing CIOs. Malcolm Wheatley takes a look at the research.

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ecent years have seen an evolution in the role of the most senior IT executives in British manufacturing companies. Gone is the computer systems manager of yesteryear, and in his or her place has first come an IT director, and then more latterly a Chief Information Officer, or CIO. The change of title is far from purely cosmetic. In fact, the difference harks back to 1980, when the role of CIO was first defined. Simply put, it recognises that information is a resource, that how it is managed and leveraged can have an impact on competitive performance and critically, that managing and leveraging of information is the responsibility of the CIO. In other words, a fully-engaged CIO will do far more than just keep a manufacturer’s ERP, Product Lifecycle Management and CRM systems running smoothly. But are all CIOs fully engaged in managing and leveraging their business’s information resources so as to maximise competitive performance? And if not, why not? And what are the barriers to full engagement? Research carried out by Epicor in recent months has probed these questions. A key focus: examining the extent to which CIOs can be classified as either ‘Improvers’, focused on the

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At a time when IT functions and the CIOs heading them should be taking a much more strategic viewpoint, they’re still bogged down in firefighting Martin Hill, European Vice-President of Marketing, Epicor Software Corporation

traditional IT virtues of controlling costs, increasing efficiency, and optimising processes; or alternatively as ‘Transformers’, focused instead on bringing the power of technology to bear on business problems. For Transformers, in other words, technology is the means, not the end. By putting a set of broadly comparable questions about the CIO’s role, pressures, priorities and personality traits to both CIOs and their non-CIO colleagues within manufacturing companies, the survey sought to shine a spotlight on the role of manufacturing CIOs in 2013.

Change imperative And one thing was clear at the outset: it’s not difficult to see the forces at work in shaping the CIO’s agenda. An impressive 100% of CIOs, for instance, considered that within their organisations, the demand for speed, re invention, agility and innovation has increased over the last five years. Just as importantly, 100% of non-CIOs were unanimous in expressing the same sentiment. Among the top-level business drivers shaping CIOs’ present focus, the CIO’s role was seen as central in the drive to expand into new markets by eight out of ten individuals claiming the job title


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(83%) and two-thirds (67%) of non-CIOs. Managing changes in the organisation’s business model was also seen as central to CIOs’ present role, with twothirds of CIOs (67%) and over half the non-CIOs (56%) expressing this view. Two-thirds of CIOs (67%), for instance, reported being involved in initiatives to optimise and streamline the supply chain. Non-CIOs largely verified this claim with 56% reporting that their organisation’s CIO was involved in such an optimising and streamlining initiative. What’s more, CIOs and non-CIOs alike were clear about the growing importance of certain personality attributes. Of greatest importance was the ability to work at a strategic level, cited by 100% of CIOs and eight out of ten non-CIOs (78%). Next on the list: the ability to successfully function as a ‘change agent’, cited by 56% of non-CIOs and 67% of CIOs. Two other increasingly important attributes complementing the non-CIO’s role as a transformative change agent were good communications skills (33% of CIOs and 44% of non-CIOs), and the ability to work proactively (50% of CIOs and 33% of non-CIOs).

Improver vs. Transformer But on the critical question of whether CIOs are Improvers or Transformers, the answer, it seems, depends on who you ask. While the majority of CIOs saw their role as that of an ‘influencer’ – a position part-way on the spectrum from ‘Improver’ to ‘Transformer’; the view from non-CIOs was more polarised, with 30% seeing their CIO colleagues as Improvers and Transformers respectively. Less than a quarter (22%) opted for the middle ground of Influencer. What to make of this? A clue comes from a view as to how the role of the CIO has changed within the last five years. Opinion was unequivocal. Two-thirds of CIOs (67%) and nine out of ten non-CIOs (89%) asserted that yes, over the past five years of significant economic and financial turbulence the role of the CIO had undoubtedly changed. And how had it changed, precisely? Drill down into the detail, and provide respondents with a spectrum of choices, representing a journey from Improver to Transformer, and the answer becomes clear. No less than two-thirds (67%) of non-CIOs describe their CIO has having evolved from Improver to Influencer. CIOs themselves affirm the same progressively transformative trend, albeit from a less transformative starting point. In short, what we see is the role of the manufacturing CIO becoming more transformative. They’re not Transformers yet, in other words, but the evolution is underway. And, what’s more, it is an evolution that is welcomed by both CIOs and their peers within the manufacturing businesses in which they work.

Chief Information Inhibitors Under-investment and outdated technology are holding back CIOs, says Martin Hill, European vice-president of marketing at Epicor Software Corporation. “It’s clear that there’s pressure for manufacturing CIOs to be Transformers. In 2013, with the challenges faced by the manufacturing industry, the ‘hands off’, technology-focused IT manager is an unaffordable anachronism. All C-level executives, including the CIO, need and want to be focused on transforming their business. “But what’s keeping more CIOs from taking this more strategic, proactive viewpoint? “The answer, we believe, is often outdated and overly-complex technology. Simply put, the majority of CIOs have to spend too much time, money and energy just keeping the lights burning to focus on a more strategic role. “In other words, it’s not that CIOs don’t have the inclination to function as Transformers – it’s that the technologies within the business are holding them back from doing so. Faced with an imperative to become Transformative, they are forced to slip back into Improver-mode, simply to keep things going. “Is there a solution? Yes. For a start, outsourcing infrastructure and application maintenance and management to third parties would ease the workload. But the broader picture calls for something more radical. “Business software, such as ERP and HCM, is now built to anticipate the business world ahead. New agile platforms make it simpler and quicker to adopt new functionality, altering the ease and rate at which the business can be transformed. With simpler deployment and ease of maintenance, CIOs can now concentrate not only on what they run – or what they run on – but more on what they need to do as a business. Furthermore, they can stay one step ahead of business needs. “However, at a time when CIOs should be taking a much more strategic viewpoint, they’re still bogged down in firefighting. “Epicor aims to put the right tools in the right hands, to move manufacturing businesses forward.”

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Lean on your ERP system ERP technology seemed diametrically opposed the values of lean manufacturing when Keith Nicholl, business improvement manger at KMF Precision Sheet Metal, first encountered it. But the recent implementation of a new ERP system has proved this need not be the case.

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he roots of lean manufacturing are firmly based on simplicity, transparency and visual communication to enable people at all levels within an organisation to make the best decisions at that point in time. Staffordshire-based KMF Precision Sheet Metal, has been on its lean journey for over six years. Within that time it has developed and deployed the following process to actively support site-wide engagement: A clearly displayed Annual Policy Deployment is broken down into functional business objectives, owned by heads of department. The business objectives are then shared with working teams from all levels to define improvement activities which are set on a quarterly basis. Weekly progress reviews take place at set times and culminate in an A3 sized summary which visually communicates the what, why, when, how and who of activity, along with important results and learning points. These A3 summaries are then presented to other teams at the end of the quarter to share and promote best practice. This process has produced significant bottom line benefits for KMF. It has improved communication and morale among its 380-strong permanent workforce and made KMF a more attractive proposition for its ever growing customer base, vital in the competitive field of subcontract sheet metalbased manufacturing. Keith Nicholl, KMF’s business improvement manager for the last six years is a self confessed technophobe and has spent the last 15 years of his career getting people to break away from their desks and computers. He is committed to the ‘gemba walk’. Lean manufacturing only works if you can “touch and taste the problem,” he says.

Challenge But in 2011 Nicholl was also tasked with heading

up the company’s site-wide implementation of a new ERP system. The implementation process can only be described as “testing and challenging” says Nicholl. “Implementing a full ERP system in a big bang style was probably the most difficult change process that I have ever been involved in,” he reflects. “My lack of technical knowledge and therefore the lack of understanding of the detail of many of the stages of the project were personally very frustrating.” But despite this KMF went live with Epicor 9 (version 700a) October 1, 2012. And thanks to a strong working relationship between Nicholl and Jeng Chyuan, KMF’s system analyst, the system is deemed a great success internally – and with customers. “As with any successful project, the skill is to surround yourself with the very best people. That’s where Jeng came in,” says Nicholl. “He is a highly technical person, very competent in making the system work the way KMF needed it to.” The combination of change management principles and people skills with vital technical knowledge has achieved “a very stable, very reliable and very agile system which, along with lean values and practices, is at the heart of everything that KMF does and plans to do for the foreseeable future,” says Nicholl.

Information is everything The main learning point for the previously committed technophobe was to see that the simplicity of lean and the complexity of a high-end ERP suite can complement one another to optimise the bottom line. And although the system has delivered on promises to speed up some processes and eliminate other wasteful ones, Nicholl says it is in business information management and business intelligence that the


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best synergies between lean manufacturing and ERP have been realised. “It’s obvious really, especially in hindsight. If lean is ultimately founded on communication and systems such as Epicor ERP are built around information management then the two have to be mutually beneficial to an organisation,” observes Nicholl before qualifying “but only if deployed and used in the correct manner.” The way that the data within ERP systems can be turned into really meaningful, timely and accessible information is what makes ERP systems an invaluable tool to businesses that operate within tightly competitive markets. KMF has used various mechanisms to extract, manipulate and utilise information from Epicor. Data such as sales orders, delivery volumes and material stock turns are displayed on live dashboards. Information on changes to existing order lines or part parameters are emailed directly and instantly to key personnel to ensure that the correct processes have been followed and that changes are made for the right business reasons. Analysis of new business, individual sales team members and market penetration is delivered via custom designed Crystal Reports which pick out key information and present it in the way preferred by the sales team. It’s the way that the information can be joined across functions, which in traditional systems is often disjointed, that really brings home the power of the system says Nicholl. “The use of advanced business intelligence modules (EPM within Epicor9) makes slicing, manipulating and drilling down into data easy. It makes data very user friendly and very useful.” Linking this capability to lean principles of empowerment and waste reduction Nicholl

How to

J

If lean is founded on communication and systems such as Epicor ERP are built around information management then the two have to be mutually beneficial to an organisation

ust how do you achieve an implementation which draws out the synergies between lean manufacturing principles and ERP capability? The key is sensitivity and acceptance that there is no one size fits all says Nicholl. “Every company is different and ERP has to fully align with a real understanding of the way that your company operates.” Failure to understand and take account of what makes a company ‘tick’ will have a big negative impact on how well the system is embedded he asserts. Nicholl gives an example from the implementation at KMF: “The company operates on a high degree of flexibility. Therefore a system with lots of well intentioned preventative controls to eliminate errors was decided against. Instead, KMF’s system alerts the user that what they were attempting is not in line with policy, but allows that it can be overridden.” A more rigid system would have been rejected by users says Nicholl. “We knew we had to avoid employees coming up against a ‘computer says no’ scenario when they knew their decision was what the business required in that instance.”

Live dashboards display sales data, delivery volumes and stock turns to staff at point of use

Keith Nicholl, Business Improvement Manager, KMF Precision Sheet Metal

says “We now have the tools to get the right information out to the people who make local decisions. They are better informed at the right point in time and don’t have to waste time asking someone else for the latest report.” “Businesses operate through the decisions that people make,” sums up Nicholl. “Lean tools and techniques support this by providing clear, concise information at the point of use. ERP systems take this information, and importantly the manipulation and presentation of this information, to a new level.”

Learn from experience Keith Nicholl shared his ERP implementation lessons with delegates at ’s last ERP Connect event. For information on the next ERP Connect conference in December see: www.erpconnect.co.uk The Manufacturer has launched the WhichERP? diagnostic tool to help UK manufacturers find the right ERP system for them. Visit: www.whicherp.net

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IT in Manufacturing interview: Malcolm Fox, Epicor

Quick fire Q&A between manufacturing IT leaders and journos

Malcolm Fox, the California-based Brit serving as Epicor’s vicepresident of product marketing, talks global technology uptake, customer understanding of ERP purchases and the next decade in ERP development. Epicor has 20,000 customers in 150 countries – how does ERP uptake vary globally? The South East Asia and Pacific regions are both very vibrant for us right now. The Americas are also extremely buoyant, particularly in the south and in growing economies such as Brazil. We’ve seen a big upturn in North America in the last 12 months, where companies are looking to get the ball rolling again through investment. Europe isn’t matching other continents, partly because of ongoing uncertainty in the Eurozone impacting on already differing attitudes to the software adoption.

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…Differing attitudes? There is an emphasis in Europe on getting the maximum out of existing products across a set lifecycle rather than buying new ones, and this isn’t a new thing. Speaking as a Brit in America, the Americans have more of a ‘let’s go for it’ mentality. But while a cautious approach is stronger in Europe, it can’t always be typified by geography. Some industries are naturally more aggressive than others in adopting ERP. Examples are the aerospace and defence sectors, both of which are faced with some tremendous pressures in supply chains. When the industry of the customer is heavily influenced by having a technology advantage, then they are more likely to get the benefits of using the technology to improve their own businesses. Once willingness or capability to invest is in place, how strong do you find product understanding in your customer base? Every business is aware of the importance of ERP, but I think it’s fair to say that not everyone gets the fundamentals of it. I think many organisations see a glitzy demo but then are faced with the reality of trying to implement with limited resources, and so never reach that nirvana. They are happy to replace what they had before and lose sight of some of the business benefits. We strongly encourage customers to think about why they are involved in ERP, what are they going to get out of it. It’s not just a case of ticking a box. Things need to be done to improve the business as a result of, and alongside an implementation, such as getting more agility through using lean six sigma. Cloud computing has been hailed as a new paradigm in business IT for some time now, but in reality, uptake seems stunted by scepticism. Why do you feel this is the case? It’s understandable that there are nerves about it in some quarters. The idea of storing sensitive data remotely can be unsettling for a business. But the cloud depends on circumstances. It’s far bigger than just one entity, for example there are multi-tenant, private and hosted versions of it. Payroll, introduced some 40 years ago,

Europe isn’t matching other continents [in ERP uptake], partly because of ongoing uncertainty in the Eurozone impacting on already differing attitudes to the software adoption

was an early indicator of this, and that’s part of everyday business practice. For us, cloud computing will see a move from up front license ways of procuring software to subscriptions. What will most influence the development of ERP technology in the next decade? Undoubtedly the growing expectation from the consumer for everything to be easier than it is. One of the challenges we face is providing a broad solution with a lot of capability and functionality in it while making it really user friendly. This hasn’t been the case in the past. ERP developers have a lot to be learn from companies such as Apple, which has perfected commercialising its products. We need to help customers realise that they often already have the answer to their problems in their hands. For Epicor in particular, some of the most exciting new capability is springing off the back of our acquisition of Solarsoft last year. This has add new solutions around manufacturing execution, manufacturing intelligence, process manufacturing and areas of distribution.


IT in

Manufacturing

Serve up

profits

Offering services alongside existing products can see manufacturers jumpstart revenue growth by 10%, says a recent study. But what are the IT implications? Malcolm Wheatley talks to those in the know.

P

art of an initial fiveyear £450 million maintenance outsourcing contract signed with the Ministry of Defence in 2009, defence manufacturer BAE Systems’ Typhoon Availability Service is an initiative to save the taxpayer £2 billion over the 25-year anticipated operational lifespan of the Royal Air Force’s Typhoon Eurofighter multi-role jets. But the contract is not solely about cost saving. Aircraft ‘uptime’ has also improved, adds Cliff Wren, part of the Defence Equipment and Support division at the Ministry of Defence. “[There has been a] measurable performance improvement,” he says. “When

we started the contract, things like the ‘Aircraft on Ground Awaiting Spares’ metric was typically in double digits, whereas now it’s around 4%. That is a dramatic improvement, and it has been delivered with significant cost reductions.” Stripped to its bones, BAE Systems’ Typhoon Availability Service is an example of what’s

being called ‘servitisation’ – an ugly word, but for a growing number of manufacturers, an increasingly beautiful concept (p39). Simply put, it’s the process of not just offering services alongside a manufacturer’s normal range of manufactured products, but doing so in a way that adds more value than a service offering on its own.

In this respect, IT is like lean: it will help deliver some benefits of servitisation, but manufacturers won’t get the complete set of benefits unless they change the thinking in the organisation Tim Baines, Professor of Operations Strategy, Aston Business School

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By offering services as well as tangible products, manufacturers are creating a second, diversified source of income – and one that is arguably more stable, and predictable Alan Charnley, Managing Director, Xerox UK

For the Royal Air Force, for instance, handing over maintenance to the manufacturer of the aircraft doesn’t just deliver a reduction in labour cost, but instead delivers a reduction in overall cost. It achieves lower inventory holdings, slicker supply chain management, and supplies a predictive simulation technology that helps the company anticipate and plan for maintenance. Plus, of course, there’s the increase in front line aircraft availability. Indeed, taken to extremes, servitisation separates the product from the service: aero engine manufacturer RollsRoyce, for instance, famously offers ‘power by the hour’ – charging airlines a fixed dollar price per flying hour, instead of requiring them to purchase each engine that they use. Copier manufacturer Xerox, and locomotive and rolling stock manufacturer Alstom, are other well-known examples of servitised businesses.

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Coincidentally, Xerox was both a participant and a collaborator in a just-published study from a 12-month research project by Aston Business School into the extent of servitisation in British manufacturing industry. Entitled Servitisation Impact Study: How U.K. based manufacturing organisations are transforming themselves to compete through services, and based on researchers talking to 33 key executives from 28 manufacturers that have ‘servitised’, the report identified several key findings. Chief among them: manufacturers that incorporate useful services with their existing products are realising business growth of 5-10% a year. The services model triggers product and process innovations, it found, resulting in significant year on year growth in the amount of business carried out with both new and existing customers. In time, this diversification adds business resilience, with revenues from products and services typically split 50/50 among mature servitisers. Also key: customers derive significant benefits too, reducing costs by up to 25 30%, and improving their financial structure, risk profiles and efficiencies around asset management. And the impact on the manufacturing industry, British competitiveness and the overall

economy is obvious. “The servitisation model offers an ‘alternative way’ for industrial strategy in the UK,” concluded the study’s authors. “If properly embraced, servitisation can create longer term relationships between suppliers and customers, built on trust, and delivering more balanced and sustainable growth across the UK economy.”

Servitisation setup But if manufacturers want to offer services on top of their existing products, they’re going to have to ask themselves some tough questions about their IT readiness. Will their existing ERP systems cope? What new modules may be required? What role will CRM play? And what changes will be required to support customerfacing sales staff? To be sure, a lack of IT readiness isn’t the only barrier to the greater adoption of servitisation. Tim Baines, professor of operations strategy at Aston Business School, and an author of the aforementioned report, sees a parallel with the early days of the adoption of lean manufacturing, back in the 1980s and early 1990s.

Mindset matters “Companies would put in some kanban systems, and imagine that they’d gone lean,” says Professor Baines. “In this respect, IT is like lean: it will help deliver some benefits of servitisation, but manufacturers won’t get the complete set of benefits unless they change the thinking in the organisation. What’s really required is a mindset change: thinking about things from the perspective of the customer, and how best to add value to the customer experience.” And that change of mindset, adds Baines, won’t necessarily be one that is easily accomplished. Again harking back to the early days of lean, he points out that books, papers and case studies aplenty highlighted the potential of lean – what held businesses


IT in

Manufacturing

Manufacturers aren’t stupid: they see the opportunity, but it’s the cost of delivering on it, and obtaining the right systems Matt Birtwistle, Solution Delivery Manager, Ebecs

back was the absence of the necessary mindset, and indeed some would argue this is still commonly the case. (See Lean Management Journal, May 2013, www.leanmj.com) “Industrialists would simply say: ‘It won’t work here – we’re a different culture’,” he observes. “They focused on the barriers, not the opportunity. And it took time for that to change.”

Infrastructure investment That said, there are signs that change is underway, albeit, as the Aston report notes, very slowly. “An increasing number of our customers are talking to us about servitisation,” says Jonathan Orme, sales operations and marketing manager at Exel Computer Systems, whose EFACS E/8 ERP system powers the businesses of dozens of manufacturers with operations theoretically suited to deploying the concept. “They might not use the word ‘servitisation’, but they undeniably want to roll out services alongside their existing product offering.” As a result, he adds, Exel has been deliberately expanding its own product offerings to meet the demand, offering a field service module, a CRM module, and a help desk module. Microsoft Dynamics AX and CRM specialist eBECS, too are experiencing a similar level of interest, says eBECS solution delivery manager Matt Birtwistle. “Manufacturers tend not to come to us asking directly about servitisation, but instead have specific niche questions about aftersales maintenance, contract management, and warranty support,” he notes. “Put them together, and you’ve got a service

organisation and the question becomes how to support that. Manufacturers aren’t stupid: they see the opportunity, but it’s the cost of delivering on it, and obtaining the right systems.” And whatever the nature of those ‘right systems’, they are all the better for being integrated as part of an ERP suite, recommends Mary Hunter, managing director of Columbus, another Dynamics AX specialist with a deep bench of manufacturing industry expertise. “Standalone systems don’t see the full picture,” she says. “CRM as part of an ERP system sees the entire customer transaction history, for instance, which can prove vital in a service context. For additional service-based offerings, you need specific service-oriented capabilities, but they need to be part of the broader ERP suite, and not a standalone ‘bolt-on’.” Indeed, she points out, Columbus itself offers one such integrated solution: Asset Service Management for Microsoft Dynamics AX, a fully-integrated additional module for Dynamics AX, intended to meet the needs of discrete manufacturers moving towards becoming full-service, end-to-end providers. It includes capabilities for dealing with warranties, spare parts, and cost effective scheduling and despatch for service calls. While it is not a full-blown example of servitisation at work, Ms Hunter points to Warringtonbased Wheelabrator Group, a manufacturer of surface preparation equipment such as shot peening, blast finishing and polishing machinery, as a business using Dynamics AX in conjunction with Columbusdeveloped modules to augment a core manufacturing business with service capabilities. Wheelabrator’s ‘Wheelabrator Plus’ offers aftermarket replacement parts supply, service and technical support, including on- or off-site operations and maintenance training, as well as equipment service and

maintenance packages tailored to deliver minimum downtime and maximum productivity. Also on offer: an upgrade and renewal facility, and a relocation service, assisting manufacturers by disassembling Wheelabrator equipment, and then reassembling and recommissioning it in its new location. That said, even this kind of comprehensive, service-centred set of offerings is not yet at the end of the servitisation spectrum populated by, say, Rolls-Royce, with its ‘power by the hour’ rentalcentric business model, although it’s not too far away from BAE Systems’ Typhoon Availability Service. Indeed, to servitisation purists, such part-way ventures may not even be valid examples of servitisation ‘proper’ at all.

The road ahead But, as with lean manufacturing, the difficulties involved in reaching the end-state in one move are readily enumerated: servitisation, as with lean, is almost certainly a journey, and one in which manufacturers and their customers both need to gain confidence as to the rationale of the business model. The prize on offer is almost certainly worth the necessary investment in management time, systems, and capability building, says Alan Charnley, managing director of Xerox UK. “Figures show that only about a third of British manufacturing industry offers some sort of service offering alongside their products, whereas in the United States, the figure is 55%,” he notes. “So there’s a demonstrable gap to be closed. And by offering services as well as tangible products, manufacturers are creating a second, diversified source of income – one that is arguably more stable, and predictable.” It’s a tough argument to counter. And as a result, despite the headwinds, servitisation would seem to have a promising future.

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IT in

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ITnews... SUPPLY CHAIN MANAGEMENT

Value chain disruption ‘endemic’, says survey According to a survey commissioned by Oracle, supply chain disruption “has now become endemic.” Two-thirds (63%) of businesses across Europe reported recent disruption to their value chain due to unpredictable events beyond their control. Top of the list: economic disruption (24%), adverse weather (19%), and the bankruptcy of suppliers (16%). Those British businesses to have experienced disruption in the last 12 months took an average 63 days to get back to normal operations. The cost amounted to an average of £275,000 per incident, including lost sales, lost customers, product recall, and the work involved in rebuilding the value chain. Despite this, three-quarters (75%) of organisations admitted to not carrying out risk assessments of their value chains, leaving them exposed to financial loss. Vulnerability is further fuelled by a

lack of IT systems providing supply chain visibility and collaborative transaction tools. “It is clear that many businesses have yet to get to grips with their value chain,” says Dominic Regan, senior director for value chain execution at Oracle. “The survey paints a picture whereby poor risk assessment and a lack of supply chain visibility are putting businesses at risk of significant operational disruption and financial loss.”

SIMULATION

Witness 13 speeds predictive simulation Predictive simulation specialist Lanner has announced details of WITNESS 13, the latest release of its flagship simulation platform. Designed with speed in mind, WITNESS 13 is intended to deliver faster answers and a speedier time-to-benefit. In addition, for organisations running high volumes of predictive simulations using complex models, Witness 13 will include multi core computing support, enabling multiple simulations and replications to be run in parallel, further enhancing speed. “In the face of increasing complexity, organisations need to be fast and agile – without compromising quality or integrity,” said David Jones, Lanner chief executive. “Witness 13 represents our most capable and flexible version to date, and has the potential to generate both the most robust and the fastest simulations achievable.”

ITNIBS New research has identified the true costs of sales order processing. The work came from backoffice automation specialist ReadSoft and highlighted the costs and delays associated with manual sales order processing. Top findings include the fact that 53% of businesses still receive orders in paper form through the mail, 93% of businesses reported having to deal with some form of paperwork when processing sales orders and 51% complain that sales order processing is time consuming. Manual keying costs for sales order processing cost companies an average £89,000 per annum and cause errors, bottlenecks and delays according to the research. “To regain control, companies need to embrace a working environment where automation begins to resolve these issues from the moment a sales order arrives,” said Simon Shorthose, managing director for ReadSoft UK.

Have your say at www.themanufacturer.com

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IT in

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ITnews...

ITNIBS

IT EYE Mike Evans at industry technology analyst Cambashi tracks the progress of software companies in focussing their attention on the customer – and their customers Dassault Systèmes is announcing a Compass Dashboard interface to the 3DExperiences they started to introduce last year. This is more than simply a new user interface to Product Lifecycle Management systems such as Enovia. Over a decade ago, most businesses introduced Enterprise Resources Management systems unifying departmental systems that tracked manufacturing, distribution and financial activities. At first, the management view of these activities continued as complex printouts where it was difficult to find the key information. Companies like SAP quickly realised that this information needed to be presented to decision makers in a better way. Key success factors for each part of the business could be quantified as targets and progress tracked. This is shown to managers visually as a dashboard, focusing their attention on improving the key success factors. SAP acquired software developer Business Objects which had itself acquired Crystal Reports as technology to develop these dashboards. Today, managers can drag and drop various tools mining the information to customise their dashboard. Not only can

they see history but they can model what-if outcomes by interactively changing parameters in business rules. Until now, this functionality has been limited to the transactional information in a company - sales, on-time deliveries etc. But of course, a lot of important business information is not captured in structured transactions. The end to end business processes that understand customer demand and develop products and processes to meet that demand are full of unstructured information and uncertainty – there is no single version of the truth, that much touted dream of software providers. Current dashboards don’t address this but Dassault Systèmes’ dashboard does unify information from internal applications’ databases with external information from the Internet. Just like SAP, the technology comes from acquired software developers, in this case Exalead and Netvibes. Similar drag and drop interactive customisation and information mining tools are provided. It’s a big challenge for manufacturers today to understand customer demand and meet it. We know that endless hours are spent in meetings arguing what requirements are really from customers. While this is a first shot, any technology that focuses attention on the customer requirement is a step in the right direction. @Cambashi

Oracle released MySQL Cluster 7.3 which enables faster and simpler development of new web and mobile services. MySQL Cluster 7.3 is an open source database which makes it simpler and faster for businesses to build highly-available and fault-tolerant services across clusters of commodity hardware. “The latest MySQL Cluster 7.3 release blends the agility, performance and scale demanded by web, mobile and emerging application workloads, with the data integrity and high availability only offered by relational database platforms,” commented Tomas Ulin, vice president of MySQL engineering at Oracle.

QAD announced enhancements to its QAD Enterprise Applications ERP system. The upgrades support emerging regulatory requirements for unique device identification (UDI) for medical device manufacturers. The enhancements make it simpler to achieve UDI regulatory compliance and ensure product integrity from component to patient, with backward and forward traceability according to QAD. “QAD customers can now accurately track, trace and identify the components and resources – including the items, parts, machines and labour – involved in their manufacturing processes,” said Dave Medina, vice president of life sciences at QAD.

IBM I celebrated its 25th anniversary with strong endorsement from Infor. IBM first launched its operating environment IBM I in June 1988 as the AS/400. Twenty five years on, it remains a “future proof” platform according to research by enterprise applications vendor Infor, an IBM partner with more than 16,000 customers worldwide using the platform. The AS/400 evolved into the i Series, System i and latterly simply ‘IBM i’, but has retained its core values of reliability and low total cost of ownership, said Infor researchers. “The IBM i platform is holding its own among younger technologies,” observed Paul Field, Infor general manager for System i. “The reliability, cost effectiveness and security of the platform combine to make it virtually future proof at twenty five years old.”

Have your say at www.themanufacturer.com

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Event review: ERP technology

Racing

ahead Two days after Kimi Raikkonen’s podium finish at the Canadian Grand Prix, Lotus Formula 1 opened the doors of its Oxfordshire headquarters to The Manufacturer magazine’s guests and gave a glimpse of how Microsoft’s Dynamics AX system has helped one of Britain’s iconic motor racing names regain its glory days.

S

ince rebranding for the 2012 following its purchase by Genii Capital, Lotus F1 has invested heavily in information technology, increasing capability in Enterprise Resource Planning (ERP). To this end, it began a partnership with Microsoft in March 2012, targeting improvements to organisational flexibility and efficient working throughout the team. The event was sponsored collaboratively by Microsoft and PLM vendor PTC and was opened with a presentation from the event compere, Peter Thorne, managing director at Cambridgebased industry technology analyst firm Cambashi. Mr Thorne drew a picture of increasing complexity in information flows and integration between different manufacturing enterprise systems. Ian Wilkinson, sales excellence programme manager at Microsoft UK gave the next presentation, detailing the spread of Microsoft Dynamics AX around the world. Speaking of a “big shift” of power in the direction of consumers, Mr Wilkinson highlighted huge increases in increased data usage in domestic and commercial environments.

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In the UK, 20 houses now generate more key internet traffic then all UK houses in 1998. To support the exploitation of data, Wilkinson said Microsoft’s R&D budget now stands at $9.5bn (£6.4bn).

User presentations

The technology allows our staff to do what they are employed to do with minimum time wasted Michael Taylor, IT/IS Director, Lotus F1

The first industry case study was from Andrew Grant, management information systems manager at electronic and information technologies company Selex ES, discussed the fluctuating fortunes of the defence sector, one of his company’s primary industries. He shared the influence of Dynamics AX on an array of aircraft. Selex has also used ERP technology to pick up information about product lifecycle to incentivise supply chain improvements. The final presentation of the day was the eagerly anticipated talk by Michael Taylor, Lotus F1’s deputy IT/ IS director, who gave insight into how the team has utilised Microsoft Dynamics to enhance its racing performance since go live in November 2012. The technology has enhanced vehicle simulation technologies for the team. These have become increasingly important following the outlaw of inseason testing. The Lotus F1 driver simulator went live last year, dramatically reducing the time consuming process producing prototype drawings

– it used to produce around 11,500 drawings a year. But such rule changes have not only changed life for the design engineering team. The whole engineering process has been affected and Mr Taylor said Dynamics has helped define priority tasks for the team during a period of change for the industry. “The technology allows our staff to do what they are employed to do with minimum time wasted on every day operational activities that the business needs in order to run effectively,” he said. It also gets performance enhanced parts to the car earlier through streamlining processes and drawing on simulation results he added. At the conclusion of this event, delegates were given a tour of the team factory. The 90-minute viewing combined insight into the manufacturing processes and their reliance on supporting software. A popular feature was also a static vehicle, based on site, simulating a lap of the Italian Grand Prix which accounts for every corner, curb and bump of a circuit some 900 miles away using advanced simulation technology. With the team stating its intent to recapture a world championship title in 2014 and competing in an industry where every thousandth of a second counts against rivals with larger budgets, Lotus F1’s desire to stay ahead of the curve could yet end up with that treasured world crown.


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Value Verified

A new programme grounded in the expertise of two leading research organisations is designed to help UK manufacturers improve their competitiveness through better measurement. Phil Cooper from the National Physical Laboratory outlines the initiative’s objectives and benefits.

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T

he progress made in manufacturing thanks to new production techniques and technologies has seen the role of metrology – the science of measurement – grow in importance to the sector. Metrology applications range from using laser trackers to underpin large volume measurement – in sectors such as aerospace and nuclear, to freeform manufacturing’s reliance on white light fringe projectors and other coordinate measuring systems to provide material traceability for hard to measure freeform shapes. The National Physical Laboratory (NPL) has underpinned many of these advances. As the UK’s National

Measurement Institute it is responsible for developing and maintaining the nation’s measurement standards, for the advance of scientific understanding, the public good, and competitive advantage. Targeting the latter responsibility, a partnership between NPL and the Laboratory for Integrated Metrology Applications (LIMA) at the University of Bath has been struck to develop a Product Verification Programme (PVP).

Why the PVP matters Product verification is critical to advanced manufacturing processes. It signifies the ability to manufacture products and components to the original design


Manufacturing Technologies: Metrology

How the PVP will help Product verification activities account for up to 20% of the cost of finished products

specification on a right first time, right every time basis and relies on gathering accurate and timely evidence that specifications are met. It is founded on good measurement capabilities and practices. NPL’s work with major manufacturers at the head of international supply chains has shown that product verification activities account for up to 20% of the cost of finished products. Therefore, any solution to make this more effective can boost business for the UK supply chain and add billions to the UK economy. The best way of showing the importance of accurate product verification is to model what happens when the process breaks down, and something is delivered to market with hidden flaws. For example, in 2010 a leading car manufacturer had a problem with an accelerator pedal that saw several models, and millions of cars, recalled across the globe. The cost in rework terms was over $100 million, but the total cost of the measurement failure, including the subsequent changes that needed to be made to the manufacturing process, is estimated at more than $4 billion.

Product verification benefits NPL and LIMA believe that, through working within this new, structured approach to product verification, manufacturing companies will receive four key benefits: 1. Lower costs of product quality noncompliances. This will also lead to the reduction of unnecessary delays in meeting delivery dates and reduction of expensive re-work and scrap 2. Improved productivity and inspection processes via the adoption of affordable best practice and proven technologies. This will bring cost efficiencies 3. Reduced costs and time in identifying suitable suppliers through access to an established network of market leading service and equipment providers 4. Improved competitiveness in globalised marketplaces involving complex quality assurance demands

Good measurement brings confidence to validation procedures and helps avert such mistakes. The Product Verification Programme will help improve approaches to measurement throughout supply chains, increasing the resilience of UK advanced manufacturing firms and reducing their overall exposure to supply chain and quality risks. The programme supports cost reduction and product quality improvements through innovation and best practice.

There are three major strands to the PVP:

1

The product verification health check: a new service delivered by NPL and LIMA, this helps companies in the high value manufacturing supply chain identify changes that can bring products to market faster and reduce waste. The product verification follow-on services: these will provide manufacturers with the measurement capabilities to make products right first time, to the original design drawings, thereby driving up capability in the UK supply chain. A product verification community: this group of interested individuals will share information and support complementary activities such as R&D or standards development.

2

3

The PVP will not be a static programme, but will evolve over time to respond to the changing needs of the sector. It will advance alongside the UK’s high value manufacturing companies – throughout the supply chain - to ensure they can consistently prove the quality of products to global customers. The cost of engaging with the PVP will vary from company to company. NPL will look to provide assisted funding to businesses in the UK wherever possible, particularly SME’s.

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4 Steps to effective

A

Marc Wellington, Festo Training and Consulting, considers the reasons why some automation projects fail to return the expected benefits and sets out a four stage process for protecting ROI on automation investments.

utomation projects can remove time intensive, procedural processes from people, improve product quality and reduce unit cost. In short, they can make a manufacturer competitive. But they can also fail to return these benefits, becoming expensive elephants in the board room. The sticking point, especially in the UK, is that any successful automation project requires employee commitment, yet when the word ‘automation’ is uttered, what people hear is “job loss”. Sometimes they are not wrong, but starting off with this mind-set means that automation projects are more likely to fail. Engaging employees in automation is essential and this means that managers need to address their fears and concerns. The introduction and implementation of automation must be carefully considered so employees welcome the

After a camera was installed, it was found the machinery was being sabotaged. An employee was worried about his job and thought this was the best way of securing his future

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initiative and do not try to sabotage the process. As an automation partner, Festo is regularly on site with many different manufacturers and has seen firsthand why projects sometimes fail to deliver the ROI promised. Let’s look at the typical process involved in an automation project: 1. Cost analysis – the starting point in terms of making the figures stack up. Unfortunately the equation will often only be calculated as ‘man hours saved’, giving credence to the belief that automation equals job loss 2. Strategy and project plan approval 3. Machinery specification – and key dates for installation 4. Communication – employees will be told this is happening This is a fairly logical approach to automation but it really misses the point. The success of the project, both in the long and short term, relies on the people behind it. A recent example demonstrates this. Festo Training and Consulting was working on the installation of special purpose equipment into a manufacturing facility where unexplained breakdowns were persistently disrupting production. After a camera was installed, it was found the machinery was being sabotaged. An employee was worried about his job and thought this was the best way of securing his future. This is an extreme case but it shows clearly how lack of engagement can have serious consequences.


Manufacturing Technologies: Managing automation

An alternative approach Instead of using the traditional automation project logic, try the following: 1. Identify: When identifying the needs of the organisation it is imperative that clear KPIs are defined and aligned to business needs. All stakeholders should be included alongside the project team including the senior team, suppliers and employees who operate machinery. Including employees is important in order to achieve acceptance of the project’s aims. Furthermore, operators know the manufacturing process from the inside and can add value to the machinery specification process. Early engagement of suppliers is equally important in the identification of business needs. Unless you really understand what the business needs, you can spend a lot of money and a tonne of time on projects that just don’t deliver. Festo worked with a successful midsized family-owned firm recently. It was expanding into new markets and growing its product range – the need for extra capacity and capability was continuous. Like many firms it had bolted on new buildings and new machinery. It was about to commit to another expensive new machine and additional factory space to relieve a bottleneck in production which was being blamed on a high value but apparently inefficient machine. But this was an incorrect diagnosis. On investigation, it was found that the machine was only operating at halfcapacity because there was no raw material available. The bottleneck was the transportation of raw material within the building. Because the team had been so set on finding an equipment solution they had failed to engage people close to the process and therefore risked making an expensive error trying to address an illusory business need. 2. Develop: Next is the involvement of stakeholders in the development of the core skills, knowledge, processes and tools required for the project and testing of key elements. A key part of this stage is to define the remit, inform the specification and liaise with the machine builders. Engaging a cross-section of employees means that the automation equipment will be fit for purpose and there’ll also be advocates across the business. Festo trains around 42,000 people every year and is a strong believer in youth engagement. It is a regualar sponsor of the WorldSkills Competition - pictured

About Festo Training and Consulting Festo Training & Consulting specialises in the development of people, organisations and technology. It offers a range of open courses, structured development programmes and tailor-made, customer-specific projects. Operating in 176 countries, Festo trains over 42,000 delegates worldwide every year. It is has a 1* Accreditation in the Sunday Times Best Companies Accreditation Scheme. www.festo-didactic.co.uk

3. Engage: As the project is delivered, communication is fundamental and the top rule is to involve your people and listen to them. If people have already been involved in identifying business needs you’ll likely have a core team of people who are on-board. Utilise them to help spread the word, as communication is better coming from peers and colleagues than from management. Also, think carefully about how you tell them. Face to face is always best although it is time intensive. Leaders need to speak personally, be open to questions, and have a timeline of when key decisions will be made that impact people. It’s important to remember that people listen through the filter of ‘what does this mean for me?’ 4. Apply: This is about the application of skills and knowledge through feedback, coaching and continuous improvement. Part of the develop stage is to assess where people need to improve their technical skills and where talent can be redeployed internally. All training needs to be timely, because as much of 50% of acquired knowledge can be lost within a few weeks if there is no opportunity to use it. However good the initial training, there will be new situations and questions that arise. These should be handled through clinics and workshops and through coaching. If managers are equipped to effectively question people to find out the answers themselves, it is far more effective than telling or showing them how to do something (time and time again). This is not the end of the process, as we need to sustain the change. Few projects are selfcontained and company-wide initiatives are a great way of getting people engaged and to introduce continuous improvement, which is where the real value lies. By taking these four steps you can create a culture where your people make your business grow and prosper.

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Manufacturing technologies: Metrology

The Sprint finish Renishaw’s new Sprint scanning system has been designed to measure the operation of machine tools more accurately and efficiently than incumbent touch-trigger systems and features adaptive machining capability. Will Stirling reviews.

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enishaw will launch its Sprint high-speed analogue contact scanning system for CNC machine tools at EMO in Hannover in September. Revealed in mid-May but showing for the first time at EMO, the Sprint system incorporates new on-machine analogue scanning technology that improves process control, enabling fast and accurate form and profile data capture from both prismatic and complex 3D components. Consulting with big customers in key sectors like aerospace, the Sprint machine tool scanning system has been designed to provide a quicker, more accurate measuring capability for high value CNC manufacturing processes.

Applications For blade manufacture, Sprint offers strong features for blade tip refurbishment and root blending applications. The high-speed measurement of blade sections coupled with high data integrity, even on leading and trailing edges, ensures the indication of true part condition leading to an adaptive machining capability. Automated routines, such as set-up, blade alignment, blade scanning and data collection generate significant accuracy and cycle time improvements over touch-trigger systems.

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For multi-task machining applications, the Sprint machine tool scanning system offers users new process control capabilities, including repeatable diameter measurement cycles. By using master part comparison, the SPRINT system becomes an “active” control that enables measure-cut processes to be automated for accurate diameters on large parts. This capability can result in the size of diameters being automatically controlled to within a few microns of tolerance. Measurement functionality such as part run out, machine centreline and circularity, also serves to significantly enhance the manufacturing capability of multi-tasking machine tools. Another feature is the system can run a rapid health-check of a CNC machine tool’s linear and rotary axes in seconds, making it possible to implement a daily machine monitoring regime with little or no operator involvement. Each Sprint application is enabled and supported by a software toolkit package which is dedicated to a specific industrial task, for example, the Sprint blade toolkit. The toolkits include onmachine data analysis tools which

run automatically in-cycle and provide measurement feedback to a CNC machining process.

Technology core At the core of the Sprint system is the OSP60 scanning probe. The OSP60 probe has an analogue sensor with 0.1 μm resolution in three dimensions, providing exceptional accuracy and the greatest understanding of workpiece form. This analogue sensor in the probe provides a continuous deflection output that is combined with machine position to derive the true location of the part surface. Measuring 1,000 true 3D data points per second, the system’s analytical capabilities can be applied to workpiece measurement, inspection, adaptive machining and onmachine process control, whilst optimising machine utilisation and cycle time. This new scanning technology opens up new process control methods not previously possible with other measurement methods. The Sprint scanning system has been designed for automated process control with no requirement for operator intervention. @WRStirling


Manufacturing Technologies

An additive acquisition In May, Renishaw GmbH acquired the assets of LBC Laser Bearbeitungs Center GmbH creating a new business, LBC Engineering. Will Stirling takes a look at what the acquisition will mean for Renishaw’s additive manufacturing capabilities.

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BC Laser Bearbeitungs Center pioneered additive manufacturing techniques for tool and mould making and this new deal will allow Renishaw’s German business, a leading manufacturer of laser melting systems, to offer more additive manufacturing services. These will range through design and simulation, and the contract manufacture of metal prototypes and production parts. “LBC Laser Bearbeitungs Center is an expert in conformally cooled moulding technology that allows better cooling in tool manufacture,” says Renishaw’s group communications director Chris Pocket. “They design channels that follow or track the surface of the tool uniformly, to allow a very evenly cooled surface of the tool.” The new company, LBC Engineering, comprises former employees of LBC Laser Bearbeitungs Center GmbH, which will continue to offer services to its customers. It will, however, be fully integrated within Renishaw GmbH at its offices in Pliezhausen. Rainer Lotz, managing director of Renishaw GmbH, said: “This acquisition has given the Renishaw Group excellent additional skills and experience, which will allow us to further develop

To increase our market penetration in the highly specialised field of additive manufacturing it was clear that we needed to bring additional applications expertise within the Renishaw Group Ben Taylor, Renishaw

our additive manufacturing business for a wide range of applications. “The customers for our laser melting machines will benefit from the additional expertise, allowing them to quickly integrate this exciting new technology, with its many benefits, into their everyday processes.”

Complementary capability LBC Laser Bearbeitungs Center was established in 2002 as a service provider for laser inscription and 3D laser engraving, and is seen as a pioneer in the field of metal-based additive manufacturing. The company has mainly focused on the additive manufacture of conformally cooled mould tools and tool inserts for injection moulding and die-casting applications. Component design and simulation to maximise the economic benefits of the laser-melted inserts is an important aspect of the service. Laser melting is an additive manufacturing process capable of producing fully dense metal parts direct from 3D CAD using a high powered laser. Parts are built from a range of fine metal powders that are melted in a tightly controlled atmosphere layer-by-layer. “Renishaw hopes to realise synergies for additive manufacturing with LBC’s cooling techniques in order to meet increased customer demand for stable processes and industrial use of additive manufacturing machines,” says Ralph Mayer, an executive shareholder of LBC Laser Bearbeitungs Center GmbH. “Renishaw offers extensive technological knowledge and highly effective research and development from which our existing customers will also benefit.” Ben Taylor, assistant chief executive of Renishaw, says it was clear the acquisition was needed to increase Renishaw’s market penetration in the highly specialised field of additive manufacturing. “The creation of LBC Engineering launches us into the mould and tool making sector where we believe there to be significant potential for additive technologies, where it can complement existing subtractive machining processes,” he explains. “It also gains us vital skills that we believe will give added confidence in AM to manufacturers of production parts.” @WRStirling

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lastword The

Business needs meat, not Neets

Will Stirling suggests the Work Programme, to reemploy the unemployed, is irrelevant to manufacturing. To really help the “M” in SME grow we need to divert this £5bn fund into good schools-company engagement programmes.

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ata from the Work Programme was mauled in the press in June. Despite creating 132,000 jobs that lasted six-months or longer – the qualifying period for training providers to get paid – most newspapers condemned the government’s initiative to get long-term unemployed back to work. Some said it was “worse than doing nothing”. The first official data showed only 18,270 out of 785,360 long-term unemployed adults referred to the Work Programme completed six months in work between June 2011 and the end of May this year. This means the six month employment rate in the first year of the Work Programme was just 2.3%, significantly below the target of 5.5%.

Absolutely 100%, work placement and job schemes need to be employer-led. You must cater for the needs of business or it will fail Kevin Parkin

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But Britain’s biggest employer body the CBI defends the Work Programme. “The Work Programme, with its cousin the Youth Contract, is working and is proving popular with companies,” said the CBI’s head of public services Jim Bligh, though he admitted that the apparent success of the work programme depends on who you speak to. While companies like Premier Inn have employed hundreds through the Work Programme and Youth contract, manufacturers with advanced skills needs are likely to find apprenticeships more suitable he said. asked a sample of SME No kidding. manufacturers what they thought of the Work Programme. Put simply, the answer was “Nice idea, but we are here to make money, not reduce unemployment.” In a very competitive labour and product market, firms simply don’t have time or resource to take a chance on hiring a NEET someone Not in Employment Education or Skills. Kevin Parkin, managing director of Knight Warner, a Derbyshire industrial automation company, said: “Firms like mine sympathise with the rationale, but we need people who are workready and have the right attitude to helping the business. So many do not have this.” That’s why Parkin and Business Education South Yorkshire set up Workwise about five years ago. The scheme provides 14-18 year olds with a chance to work in local companies in school time and the holidays, showing them what employers really need from them. “Absolutely 100%, work placement and job schemes need to be employerled. You must cater for the needs of business or it will fail.”

Have your say at: www.themanufacturer.com

Manufacturer’s organisation, EEF, has no statistics on the efficacy on the Work Programme but has looked into member feeling on the Youth Contract. EEF employment and skills policy adviser Verity O’Keefe comments: “The sense here about the Youth Contract is that members are far more interested in money being spent on readying new hires for work [ensuring basic work skills like phone manner as well as literacy and numeracy] than the £2,000odd per head cash incentive for hiring a Neet.” At GE Capital’s ‘Leading from the Middle’ summit on July 2, CBI director-general John Cridland said a key problem mid-sized firms with turnovers of £15m to £800m have in their quest for growth is fishing their way through “an ‘alphabet soup’ of skills schemes, some governmentbacked, to help people train up for jobs that employers need.” He observed that the work afoot to simplify this confusing skills cauldron seems to be diverging from the pressing need of ‘Ms’ to attract talent which is targeted by overt career marketing from large firms. “These two compatible movements are diverging, while they must be better synched,” he said. We need growth – right now while we ride a wave of midmarket performance which could soon outstrip the vaunted German Mittelstand according to a GE Capital report (p8). Given this, why not ditch the vilified Work Programme and redeploy the £5bn budget set aside for it into more schemes like employer-led Workwise? The Neet problem is big and society sympathises with the predicament of long term unemployed. But the reality is many SMEs, who want to grow can ill afford to be charitable to Neets at this moment. @WRStirling


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The Manufacturer - July/August 2013