HOT TOPIC North Sea Oil & Gas Can the resource rich area survive in choppy waters?
Manufacturing Leadership Speaking of Scotland Who is speaking up on behalf of Scottish manufacturing?
Workforce & Skills Where there’s a skill, there’s a way How Nikki Hesford found the skills to pay the bills
Finance & Professional services The lending evolution How crowdfunding is helping manufacturing ideas get off the ground
Manufacturing Technologies The age of the gigafactory The future impact of Tesla’s new factories
IT in Manufacturing Only connect Can the Internet of Things help monetise servitisation-based business models In partnership with:
Can the UK industrial sector summon the energy to meet new EU climate regulations?
roup h nt G unc a l l i 0 La Va 0 : r 1 u p To o rer T tory Fac actu f – u rer 4 n 201 actu Ma f r u e e n h T a mb eM 14 – ove – Th r 20 e 4 25 N b 1 0 m r2 ear ove ct he Y mbe nce e t e n f 26 N v n o o r re P Co ture 27 N onfe – ER ufacer 26 – ctors’ C 4 n 1 a 0 2 M dinn Dire ber The vem 14 – nd Gala o 0 s 2 N r r e a e 27 lead g emb ony s for y lookin . Nov Cerem t n 7 e 2 ev dustr rward rds o end in Awa t-att turing siness f s u E of m anufac heir bu /Wo t ries .com r A se in the md drive e r u fact with xcel an anu m e to e h :t e at mor | Novemeber 2014 | Vol 17 Issue 9 See
K OLFENC E E E W C EL EX
INTERVIEW Conor La Grue Engineering Lead – Commercial, Bloodhound SSC
www.themanufacturer.com
Welcome
EDITOR’S INTRODUCTION
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Does UK manufacturing have the energy to meet strict EU climate change regulations? P36
ast month EEF released a report citing the massive potential implications to the UK economic landscape if escalating energy prices were not stopped or reduced. The report made the bold yet justified claim that a predicted 50% hike in energy prices by 2020 could see over a third of UK manufacturers investing in overseas facilities to make the most of competitive energy prices. Considering the spotlight the Government has cast on the push to reshore and bring manufacturing back to UK soil, it would seem rather counterproductive to allow the exact opposite of this to happen by standing by and allowing energy prices to continue on an upward trend. The same EEF report stated that 73% of respondents said an energy price increase of this magnitude would have a crippling effect on their businesses. The fear of a trend which already seems to be setting in, has driven some manufacturers in the UK to respond in numbers. Nearly 30 big name manufacturers have signed a letter urging the Government to ease restrictions on shale gas and allow drilling to begin in Lancashire. The group – collectively employing over 45,000 workers between them – signed a letter on October 29 calling on politicians to support industry by getting behind Lancashire’s natural gas from shale possibilities. Their support for shale gas comes as a new policy paper published by the North West Energy Task Force states that natural gas from UK shale could lead to cheaper, more reliable energy and a new £34 billion supply chain. Shale gas reserves are without doubt a resource, which if managed correctly, could help relieve the energy situation facing the country’s industrial sector. But shale gas is not the final answer to the problem. Manufacturers must start thinking smart on terms of energy production and consumption. Manufacturers must start thinking green. While other nations struggle to successfully adapt renewable resources to their future energy agenda, the UK has solid potential to make the most of these technologies and advancements. Companies such as Siemens, for example are investing heavily in new production facilities for wind farms.
However, the most efficient and effective way to store this power is still in a stage of solid development. As more money is invested by companies with significant stakes in the greater industrial landscape, these storage facilities will no doubt emerge as well – hopefully sooner rather than later. Looking at the energy situation in the UK a little further, in this issue of The Manufacturer Victoria Fitzgerald looks at the impending implications of new EU climate change regulations and how some of the more energy reliant sectors such as the steel industry are leading the charge in meeting strict energy and green targets (p36). James Pozzi looks at the state of play in regards to the North Sea oil and gas reserves – a massive point of contention in the recent Scottish vote for independence – to see whether or not what is reported about the substantial role it has to play in regards to Scotland and the UK’s economy is really as it seems (p32). As wonderful as it would be to rely completely on renewable energy to power the UK manufacturing sector, this is simply not something which is going to happen in the immediate future. But it is refreshing to see so many companies already playing their part in reducing the demand on an obviously overpriced and overstretched supply by thinking smarter about how they can reduce, produce and even give back to the grid. Happy reading!
Callum Bentley Editor November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 1
Editorial Advisory Board
The Editorial Advisory Board ’s editorial advisory board provides insight and guidance to the editorial team on a regular basis, helping maintain the relevance and quality of the magazine’s content, both in print and online. The board also provides diverse and expert comment on key industrial developments.
Andrew Peters
Deirdre Fox
3rd Year Logistics Apprentice, MBDA and ’s Apprentice of the Year 2013
Ross Meikle
Tony Hague
2 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Richard Lloyd
MD, Power Panels Electrical Systems and Chairman of the Midlands Assembly Network
Andrew Churchill Managing Director, JJ Churchill
Simon Edmonds Director, the Catapults Programme
Steve Evans
Global Manufacturing Director, Accolade Wines
Ben Taylor Assistant CEO, Renishaw Plc
Dave Mooney Managing Director, Drallim Industries
Pamela Petty Director of the EPSRC Centre for Innovative Manufacturing in Industrial Sustainability
Philip Greenish CBE Quality Improvement Manager, Hayward Tyler and ’s Young Manufacturer of the Year 2013
Director of External Affairs, EEF
Director of Strategic Business Development, Tata Steel
Director, Siemens Congleton Facility
Anna Schlautmann, 21:
Hywel Jarman
CEO, the Royal Academy of Engineering
Managing Director, Ebac Group
To find out more about our Editorial Advisory Board and the work they do to improve The Manufacturer magazine’s offering to its readers, go to: www.themanufacturer.com
ABOUT US
Meet the team Nick Hussey Chairman 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 among young people. He holds several non-executive directorships and is a founder member of the IET’s Manufacturing Policy Panel. n.hussey@sayonemedia.com
David Farrow General Manager David joined SayOne Media in 2012 managing the marketing across the business. He has nearly 25 years’ experience in the conference and publishing industry having worked for the likes of LexisNexis, Kaplan Hawksmere and Payroll World. In February 2014 he was appointed General Manager of SayOne Media. d.farrow@sayonemedia.com
Henry Anson Sales Director 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 it. h.anson@sayonemedia.com
Callum Bentley Editor Callum joined SayOne Media in 2013 as editor of ’s sister publication, the Lean Management Journal, before taking over as in June. He has a background in Editor of news for web and print, working for major regional news organisations in Australia. Callum has a passion for the automotive and aerospace sectors. c.bentley@sayonemedia.com
4
info@sayonemedia.com www.sayonemedia.com
ISSN 1477-3201 BPA audit applied for June 2009. Copyright © SayOne Media 2011. BPA Worldwide membership Applied for August 2014
Production Editor Barbara Fitzsimons
b.fitzsimons@sayonemedia.com
IT Editor Malcolm Wheatley
malcolm@malcolmwheatley.co.uk
Contributing Editor Ruari McCallion
r.j.mccallion@btinternet.com
Reporter Andrew Putwain
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Design
Victoria Fitzgerald Features Editor Victoria joined SayOne Media in
January 2014 as editor of the Lean Management Journal after spending three years in New York City as a news journalist for an international online news as features organisation. She recently moved to editor where her focus has moved to industrial policy and initiatives driving the future of UK manufacturing. As a former teacher, Victoria has a passion for apprenticeships and education. v.fitzgerald@sayonemedia.com
Art Director Martin Mitchell
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Designers Alex Cole Katherine Robinson
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James Pozzi Industry Editor James joined in 2013 after working as a regional news reporter in the West Midlands. With contacts spanning multiple manufacturing sectors, James provides the inside track on companies of all sizes across the UK and abroad, while contributing to print and online content. j.pozzi@sayonemedia.com
Eva Lindsay Event Producer Eva joined in 2012 having worked in the events industry for four years across a number of sectors, with her primary focus on defence. Drawing on her broad experience, event content team Eva will be heading up the event and helping to grow and develop the programme, with special focus on the company’s popular Factory Tours. e.lindsay@sayonemedia.com
The Manufacturer in partnership with EEF, the manufacturers’ organisation. Working together to secure the future of manufacturing.
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In order to receive your monthly copy of kindly email subscriptions@ 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.
EEF is dedicated to the future of manufacturing. Everything we do is designed to help modern manufacturing businesses evolve, innovate and compete in a fast-changing world. www.eef.org.uk
The Manufacturer is working collaboratively to drive innovation and manufacturing excellence in the UK. Our partnerships with leading industrial research centres, further education providers and trade bodies is an important part of this and is distributed directly to the alumni and membership of the following organisations:
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Getting the right contract, meeting carbon targets, monitoring consumption… We understand that you need more from us than just energy. With E.ON, you’ll benefit from a strong, long-term relationship with someone who really understands your business. And with our expert knowledge and experience, we can help you monitor, analyse and control your energy use. Our products and services are tailored around our customers, so whatever your business needs, your dedicated Account Manager will help you find the right solution. Find out more at eonenergy.com/themanufacturer Or call 0330 400 1050 We’re here Mon–Thurs 8:30am–5pm, Fri 8:30am–4pm.
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November 2014
08 News and regular columns A summary of manufacturing news and events with commentary on industrial research and policy 26 Out & About visits Wren Kitchens and catches up with the delegates who travelled to the US as part of InnovateUK’s Robotics Mission 28 Best of Online What you wanted to read about most on ’s website in October 32 Hot Topic: North Sea Oil and Gas As revenues grow in the resource rich area, a number of industry challenges could see it enter choppy waters 36 Sector Focus: It’s not easy being green Victoria Fitzgerald summons the energy to investigate the UK industrial sector’s position concerning the impending EU climate policy regulation changes 42 Interview: Feeding the beast Bloodhound SSC’s Engineering Lead – Commercial, Conor La Grue talks to Callum Bentley about what it takes to make sure the supply chain is up to feeding the ever-growing 1,000mph beast 46 60 second interview: Chris Sumner, Managing Director, FANUC UK
Pillar features Manufacturing Leadership 54 Speaking of Scotland: Nick Shields, director of the Scottish Manufacturing Advisory Service (SMAS), talks to James Pozzi about how his organisation aims to become the voice of manufacturing in Scotland 56 Is the UK manufacturing renaissance for real? Richard Hill, national head of Automotive and Manufacturing at RBS provides a forecast on UK macro issues Other topics in the section: Lean manufacturing and servitisation
Workforce & Skills 64 Employee of the Month: Paul Gurevitch-Beacock, manufacturing manager at Fracino 68 Where there’s a skill, there’s a way: Entrepreneurial lingerie manufacturer, Nikki Hesford talks about the skills that helped her become a success Other topics in this section: Rehabilitating prisoners for the manufacturing industry and women make a move on STEM subjects
6 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
CONTENTS
Finance & Professional Services 72 The lending evolution: How are manufacturers using crowdsourcing avenues to get their products off the ground?
Manufacturing Technologies 80 The age of the Gigafactory: After electric motorcar manufacturer Tesla announced the building of its new US Gigafactory by 2017, James Pozzi looks at its potential impact on wider industry
IT in Manufacturing 86 Only connect: As new servitisationbased business models emerge, the Internet of Things could provide the means to monetise them 96 Talk of the Industry: Terry Scuoler investigates how escalating energy costs pose a significant threat to both British manufacturing and this country’s ambitions for a betterbalanced economy
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NEWS Skills
Siemens and qualifications body OCR have launched a new partnership designed to tackle the skills gap in engineering and manufacturing. The UKfirst partnership will focus on the development of joint education resources for 14-16 year olds. Siemens and OCR will together deliver a curriculum in schools designed to increase the skills of prospective engineers. The curriculum will be taught by teachers across the UK to deliver a range of units from the Cambridge Nationals in Engineering Level 1/2 qualification. The modules taught in classrooms will provide teachers with a structured plan to teach students how a range of topics work together across the syllabus. This will give 14-16 yearold learners an understanding of how skills and knowledge could link together in a working environment. The skills developed will provide foundation knowledge for students’ final assessment. Starting from this autumn, the new programme will be available to every school in the country. A new boatbuilding apprenticeship will be developed as part of the Government’s Trailblazer scheme. Co-ordinated by the British Marine Federation, the scheme will be led by Berthon Boat Company and includes Sunseeker International, Princess Yachts, Pioneer Sailing Trust, Pendennis Shipyard, Fairline Boats, Broom Boats, Green Marine, English Harbour Yachts, Windboats and Cockwells. The marine industry is one of 37 sectors chosen as a Phase 3 Trailblazer, alongside others such as maritime defence, emergency services and port operations & supply chain. The changes will build on strengths of the current scheme, but the reformed apprenticeships will meet the needs of the future economy in years to come, ensure apprenticeships are more rigorous and responsive to the needs of employers and ensure they are viewed with the same esteem as University.
8 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
www.themanufacturer.com/news
Funding & finance
Coventry-based CFS Aero has secured almost £1m in funding through the Advanced Manufacturing Supply Chain Initiative and with assistance from the Coventry and Warwickshire Growth Hub. The firm is poised to double staff numbers from 30 to 70 over the next two to three years by offering new products and services to open up a wider customer base. In 2012 the company was bought from liquidators by business partners Jon Freedman and David Newhouse. The 25-year-old firm was struggling with its business model Celebrating the growth thanks to AMSCI funding is (from left) Rachael Delich (Growth Hub), Jon of refurbishing and Freedman (CFS Aero) and Natasha Lee (Growth Hub). overhauling engines and propellers on a range of aircraft. The AMSCI funding has helped to pay for the internal construction work needed for CFS Aero to move into a production line of remanufacturing turbine engines for aircraft. It is also helping to fund an extensive training programme for the company that is committed to bringing through the next generation of engineers as apprentices.
Productivity
UK car manufacturing sees its best year-to-date performance since 2008: producing 1,132,017 units – up 0.6%. The output in September fell slightly to 137,068 units, down 2.8% due to planned re-tooling for model changes. But production for the domestic market was up 17.7% in September, as the UK new car market continues to thrive. The SMMT said the drop in output in September was down to planned re-tooling of production lines as factories prepared for model changes. However, the fall in exports also coincides with fears of the beginning of another slowdown in the eurozone- the UK’s main trading partner.
Supply chain
Targeted action to revitalise domestic supply chains could inject £30bn into the economy by 2025, according to a new CBI report. The report states the action could also create more than half a million jobs across the United Kingdom. Pulling Together recommends ways to kick-start the UK’s supply chains, and solutions to reinvigorate Britain’s industrial strategy. Based on new research carried out by global management consultancy firm, A.T. Kearney the report reveals underinvestment in research and development (R&D), a growing skills crisis and weakened foundation industries that are key to advanced manufacturing – such as plastics, metals and chemicals.
MANUFACTURING NEWS
Manufacturing statistics
Manufacturing output in the UK has now surpassed levels experienced in the late 1970s, according to data released by the Office for National Statistics (ONS). The news opposes indications that manufacturing has taken a recent hit in confidence. Manufacturing output has risen, despite falling job numbers and a decline in its economic share from 36% in 1948 to 10% in 2013. Additionally, productivity in the industry has increased to roughly 2.8% yearly since 1948, compared to the service industry, which has risen 1.5% annually. Joe Grice, chief economist for ONS said: “There are several factors at work: a better quality and more skilled workforce; a shift from the production of low- to high-productivity goods; an improvement in the information technology base; more investment in research and development; and a more integrated global economy. “Exporting firms generally are associated with higher productivity and foreign-owned firms in the UK generally experience higher productivity than domestic firms.” Political uncertainty at home and abroad now tops the worry list and is set to dampen business investment and slow the pace of UK growth, says EY ITEM Club’s Autumn Forecast. Uncertainty around constitutional reforms in the UK, an imminent general election and the prospect of an EU referendum in 2017 risk undermining the strides that investment made over the past year, when it made up more than half of the growth in demand. The report also points to the growing geopolitical risks, in particular those stemming from the situation in the Ukraine, which have dented business confidence in the UK’s key European markets. The EY ITEM Club’s Autumn Forecast says business investment will grow by 9% in 2014, before tempering to 5.8% in 2015. With the consumer also pausing for breath, GDP growth is predicted to slow to 2.4% in 2015, down from the 3.1% expected this year.
The launch of the new Land Rover Discovery has resulted in £3.5bn in contracts across the UK supply chain.
Supply chain
Two weeks after making its motor show debut, the first Land Rover Discovery Sport has rolled off the Halewood production line. The occasion marks another significant milestone in Jaguar Land Rover’s product offensive which will see the company deliver 50 significant product actions over the next five years. The latest model in the Land Rover line-up, which will go on sale in 170 markets in early 2015, has created 250 new manufacturing jobs following a £200m investment in the Halewood plant. The impact of Discovery Sport has also been positively felt within the UK supply chain where £3.5bn in contracts have been awarded to 55 suppliers. Many of the companies supplying components to Jaguar Land Rover have made long-term investments in their production facilities, safeguarding and creating over 1,000 jobs in the UK supply chain. Ian Harnett, Jaguar Land Rover’s purchasing director said: “A strong, competitive supply chain, meeting our rigorous cost and delivery metrics, is fundamental to the sustainable growth of our business. With many more new products in the pipeline, gearing up to supply Jaguar Land Rover is a solid business proposition.”
Manufacturing statistics
Manufacturing led the way for continued growth in the Northern Ireland economy during September, a report by the Ulster Bank announced. The monthly Ulster Bank purchasing managers’ index (PMI) stated September as the 15th month in a row of expansion for companies in the region. And it was manufacturing that was able to help the province to this achievement. However, the survey was carried out before the announcement of the closure of cigarette factory JTI in Ballymena which will see the loss of nearly 900 jobs. Even with continued growth and a strong manufacturing sector, Northern Ireland is the poorest region economically of the UK, with an average income of £21,836. The 2014 second quarter unemployment rate in Northern Ireland is 6.9%, compared to the UK average of 6.6%. But in a sign of changing times, there were steep rises in activity and new business. And output among manufacturers grew at the fastest rate of any of the economies measured by Markit Economics, which carried out the survey.
CORRECTION An image on page 61 of last month’s edition of The Manufacturer (Varsity Blues: apprentices pip grads to the post) was incorrectly captioned as “an apprentice at GMF Motor Factors”. This was actually an AMRC apprentice called Kurtis Mayfield.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 9
NEWS www.themanufacturer.com/news
MANUFACTURING NEWS
Financial reports
Rolls-Royce Holdings has warned its shareholders of falling revenues throughout the engineering business. The decline in revenues, according to Rolls-Royce, was a result of trade sanctions against Russia finally taking their toll. As a consequence, the statement said, the company now expects group underlying revenue in 2014 compared with 2013, to be 3.5% to 4% lower. However, profit is still predicted to remain flat as the company implements cost-saving measures, or “restructuring and rationalisation” across the greater Rolls-Royce Group. “While the short term is clearly challenging, reflecting the economic environment, the prospects for the Group remain strong, driven by the growing global requirement for cleaner, better power,” John Rishton, group chief Executive, said. “The operational efficiencies already achieved and the cost programmes we will now accelerate will put us in a better position to benefit from these growth drivers.” According to the report, revenues for the group’s civil aerospace, defence aerospace, marine and power systems divisions, remained unchanged. But nuclear and energy revenue guidance would fall from 0%-to5%, down from 5%-to-10% as a result of “market conditions and the impact of the impending sale of our Energy gas turbine and compressor business.”
Rolls-Royce’s revenues for the group’s civil aerospace, defence aerospace, marine and power systems divisions, remained unchanged. But nuclear and energy revenue guidance is predicted to fall from 0%-to-5%, down from 5%-to-10%
National Apprenticeship Competition 2015 Manufacturing on the Moon Series vehicle production on the Moon
• Work in teams and build models to demonstrate your innovative ideas • Open to all UK apprentices working in manufacturing sectors including: aerospace, automotive, defence, energy, oil and gas, food, furniture, glass and process industry s
Prize
1st Prize £1000 and certificate 2nd Prize £500 and certificate 3rd Prize £250 and certificate
A team of national judges will select the winner on the 19th May 2015 Prize winners will exhibit their models at the National Manufacturing Debate 20th May 2015 For more detailed information and to register your interest visit: www.national-apprenticeship-competition.org.uk
10 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
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NEWS www.themanufacturer.com/news
MANUFACTURING NEWS
Company movements
The site of BAE systems munitions factory in Cheshire has been put up for sale at a price of £49.7m. The Radway Green Small Arms Ammunition facility near Crewe, is to be offered to the commercial investment market and is expected to generate interest from a mixture of UK and overseas investors. The plant was redeveloped in 2011 by BAE Systems at a cost of £83m providing state of the art production munitions facilities. The site has produced bullets for over 75 years mainly for British Army, and is capable of manufacturing 1 million smallarms bullets a day. The 73,000sq metre site was acquired by BAE Systems in 1987, and it has continued production of bullets and other munitions since then. Its previous incarnation was a Royal Ordnance Factory, built in 1940. The facility is let to the company until 2036, at a current rent of £2.9m per annum.
GSK will open a new facility in Singapore for producing active pharmaceutical ingredients.
Company movements
A new £19m continuous manufacturing facility in Singapore has been announced by pharmaceutical giant GSK. The investment will be GSK’s first in continuous manufacturing for Active Pharmaceutical Ingredients (API) across its global network and reinforces the company’s commitment to continuously look for ways to advance its manufacturing practices to get medicines to patients as quickly as possible. The new facility will produce one of GSK’s key respiratory API’s, a therapy area where the company has an industry-leading position. By adopting continuous manufacturing, the company stands to benefit from quicker production of the API, while maintaining the same high quality standards.
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nwtenergy.co.uk 12 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Adding value at every turn.
With access to more than 4 million product lines, Brammer is the UK’s leading maintenance, repair and overhaul technical specialist distributor – our unrivalled range is only the start of the story. Where we really add value is through our array of business solutions which help our customers improve production efficiency, reduce working capital and lower total acquisition costs. We’re committed to adding value at every turn.
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NEWS
MANUFACTURING NEWS
www.themanufacturer.com/news
Company movements
West Country-based technology manufacturer TDK-Lambda has announced plans for a new R&D centre. TDK Corporation has announced it is expanding its research and development designs ambitions further by opening a new 2,600sq ft R&D facility in Bristol. The new site will be located at the Bristol and Bath Science Park. The new R&D team will comprise eight to 10 engineers, and will work in addition to TDK-Lambda UK’s main R&D operations in Ilfracombe, North Devon. TDK Corporation, formerly TDK Electronics Co., Ltd, is a Japanese multinational electronics company. The company was founded in 1935 and now manufactures electronic materials, electronic components, and recording and data-storage media. TDK-Lambda UK was established in 1959 as Coutant Electronics and is now Britain’s largest designer and manufacturer of both standard and configurable AC-DC and DCDC power supplies. The new design group will be in conjunction with TDK-Lambda’s Advanced Technology Centre, which is already located at the Science Park. That centre was opened last year to accelerate the firm’s current and planned power supply technology developments.
SHALE GAS
Nearly 30 big name manufacturers have signed a letter urging the government to ease restrictions on shale gas and allow drilling to begin in Lancashire. The group– collectively employing over 45,000 workers between them – signed a letter on October 29 calling on politicians to support industry by getting behind Lancashire’s natural gas from shale possibilities. Its support for shale gas comes as a new policy paper is published today by the North West Energy Task Force, which says that natural gas from UK shale could lead to cheaper, more reliable energy and a new £34bn supply chain. The call comes days after politicians and power companies had to scramble to assure the public that Britain’s energy needs would be safe through the winter, and there would not be power outages due to high demand. The paper was unveiled on October 29 at the East Lancashire Chambers of Commerce’s Lancashire Manufacturers Conference. Debbie Baker, head of public affairs for GrowHow, the UK’s only remaining primary nitrogen fertiliser producer and a signatory of the letter, said: “Gas is our primary raw material. It is the single biggest factor in determining our viability as a business.”
14 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Dates for your diary November Lean Transformation: Practical: Next
17-19
Steps will be hosted by the Lean Enterprise Academy in Kenilworth to raise consciousness of developments in lean thinking, provide insight into how to get started, and to enable participants to build a network of lean thinkers. There will be six presentations, nine learning sessions and three lean masterclasses. www.leanuk.org/events/current-events/uk-leansummit-2014.aspx
18
Women in Engineering: Graduate Schemes as women remain a minority in science and engineering, speakers in Huddersfield will relate about their experiences as female graduates working as members of multidisciplinary engineering teams. They will explain how the Engineering Graduate Schemes enabled transition from the university to the working environment so they can attain their full potential. www.theiet.org/events/local/205975.cfm
19
Manufex North held in Kingston Park in Newcastle this year, will bring a selection of seminars, networking sessions, and exhibitions and events. Over 50 manufacturing exhibitors will be in attendance. Manufex North is co-located with North East Expo, the business events for small and medium sized businesses across the North East of England. www.manufex.co.uk/
20
Food Manufacturing Excellence Awards held in London will honour the best companies in 11 categories. Awards will also be made for Company of the Year, Judges’ Special Award and Personality of the Year. New this year is the Young Talent of the Year award. Winners will be announced at a black tie awards ceremony. www.foodmanufacture.co.uk/Events/Food-ManufacturingExcellence-Awards2
December Future Intelligent Cities are those which incorporate
4-5
technologies appropriate to their citizens and address the needs of their occupants. This year’s event will demonstrate these cities and will be held in London. http://conferences.theiet.org/future-cities/ about/index.cfm
9-12
MHRA GMP/GDP Symposium will provide a platform for discussion between industry and regulators on the latest hot topics and regulatory updates related to Good Manufacturing Practice (GMP) and Good Distribution Practice (GDP). The symposia is aimed at individuals from the pharmaceutical industry. This year’s event will be held in London. www.mhra.gov.uk/ConferencesLearningCentre/Conferences/ CON437760
January
19-20
19-20 ICMIA: XIII International Conference on Manufacturing and Industrial Engineering aims to bring together academic scientists, researchers and scholars to London to share their experiences and research results about manufacturing and industrial engineering. It also provides an interdisciplinary and multidisciplinary forum for attendees to discuss the most recent innovations, trends and concerns.
creation: www.intermediatms.com
Winning ways to improve quality control.
£250,000 savings from product defects. That’s what you could gain with gap onsite’s managed service. We’ll introduce ‘education’ sessions and video snapshots for temporary workers so production procedure conforms to best practice and product assembly improves. Call: 0800 999 5900, email: gary.dewhurst@gap-personnel.com or visit: www.gaponsite.com
We don’t just make up the numbers.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 15
Local collaboration Global presence
A better supported supply chain Often, it’s essential to be in two places at once – to collaborate like a local with an international supply chain. Especially if you’re a growing business that sells 20 million shoes around the world like FitFlopTM. We helped 18% of their staff save up to 93% on monthly roaming costs. Use Truphone, and you’ll be connected to over 200 countries on a single unified global mobile network. A seamless collaborative and productive experience. All on a single SIM card. Visit truphone.com/fitflop and see how we helped them.
4 201 -15
FOR THE DIARY To see THE full events listing please visit: themanufacturer.com/events
Upcoming Events
Connect with our events team on twitter: @TM_EventsTeam
PART OF The Manufacturer Week of Excellence (TMWoE) themanufacturer.com/WoE Factory Tour: Vaillant Group 25 November 2014, Belper, Derbyshire Shortlisted for The Manufacturer of the Year Award Sustainable Manufacturing Category 2014, Vaillant Group have a unique focus on sustainable manufacturing and waste reduction. Its factory tour will provide you with an understanding of how to drive continuous improvement within your business and engage your staff across all disciplines.
P are laces r out unning fast !
#FactoryTour
themanufacturer.com/woe
The Manufacturer Top 100 Launch 26 November 2014, KPMG, Birmingham On the evening of 26 November the most inspirational figures from UK manufacturing will come together to celebrate the launch of The Manufacturer Top 100. Shortlisted for Free turers* for their valued contribution to raising the profile of ac lace f u n manufacturing, exemplary leadership and dedication ma your p book emailing to the sector, The Manufacturer Top 100 will brush by ents@ . shoulders with the report’s expert panel of judges ev media ne and British engineer and TV presenter sayo com! Kate Bellingham. themanufacturer.com/woe
#TMTop100
The Manufacturer Directors’ Conference 26 - 27 November 2014, The ICC, Birmingham The Manufacturer Directors’ Conference will examine a Takel of ro number of different business cont future opportunities such as the your k your manufacturing trends for the boo ce! pla next ten years and the rapid growth of technology. The conference will feature inspirational speakers from companies such as Rolls-Royce, The Royal Mint as well as David Smith (Economics Editor, The Sunday Times). The main themes of the conference include development and utilisation of technology, creating “out of the box” business opportunities and creating engagement and business emersion. themanufacturer.com/tmdc2014
#TMDC2014
The Manufacturing Talent Challenge – Part of Future Factory Series #TMSkills
Automate UK – Part of Future Factory Series 24 February 2015, The Waldorf Hilton , London Free for subscribers of The Manufacturer themanufacturer.com/automate2015
18 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
27 November 2014, The ICC, Birmingham Over 1000 industry leaders will join together to recognise and Fastching celebrate the UK manufacturing r roa p p a ook you! industry. Join us for this black b e tie gala and hear from Jason plac Bradbury (TV Presenter) and David Smith (Economics Editor, The Sunday Times). Secure your table at the awards to be part of the glamourous reveal of this year’s winners, and be part of the biggest celebration of UK manufacturing! themanufacturer.com/awards
#TMAwards2014
ERP Connect 27 November 2014, The ICC, Birmingham Exclusively for companies looking to implement or replace their ERP system. 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. This unique event offers a one-of-a-kind opportunity for Ha you and your team to see the premier enterprise madve you righ e the software solutions in the world, in one place and cho t ERP at the same time! ice? #ERPConnect erpconnect.co.uk
MES Connect 4 December 2014, Aston University, Birmingham MES Connect provides delegates with the opportunity to meet with leading MES solution providers, condensing six months of research into a single day. Understanding how best to streamline production and access data in real time is critical to running a modern and dynamic business, and MES will be key in achieving this. mesconnect.co.uk
#MESConnect
Energy Management – Part of Future Factory Series
24 February 2015, The Waldorf Hilton , London Free for manufacturers* themanufacturer.com/talentchallenge
The Manufacturer of the Year Awards Ceremony and Gala Dinner
#TMAutomate
19 March 2015, Birmingham Free for manufacturers* themanufacturer.com/energy2015
#Energy
Lean Manufacturing – Part of Future Factory Series 19 March 2015, Birmingham Free for manufacturers* themanufacturer.com/lean2015
#TMLean
*Free for a limited number of attendees from manufacturing companies. Passes are allocated on a first come, first served basis. Subscribers to The Manufacturer are guaranteed a place. Once all of the free places have been allocated, there will be a cost of £395 +VAT per delegate from manufacturing companies. £995 +VAT per delegate standard booking fee for delegates from consultancies/solution providers. T&Cs apply.
APPOINTMENTS
Mike Peasland
Suiko
Consultancy practice Suiko has appointed Mike Peasland, former Balfour Beatty Construction Services CEO, to its operational excellence consultancy to bolster the firm’s capability in the construction sector. After commanding an enviable position in the manufacturing sector
Daragh Parker
team. With 43 years’ experience working in the construction industry, Mike’s sector expertise and knowledge is second to none. Working alongside such an industry heavyweight will be of enormous help to our building and construction practice.”
rubber technology products and helping customers develop next generation products for new and existing markets. James Dawson develops and manufactures high performance silicone and organic rubber hoses for a wide range of diverse markets, significantly
diesel engine applications. Customers include global giants Caterpillar, JCB and Cummins and many other major OEMs around the world. As part of the FTSE 250-listed Fenner Group, James Dawson enjoys significant investment for future global growth.
Cooper joined Matcon in 2002, and joined senior management as operations director in 2008. He has been at the heart of Matcon’s management and strategic development for several years and has strong customer focus, technical skills, dynamic work ethic and a deep
understanding of the business. Lee has been with Matcon since 1991 working in sales, engineering and general management before becoming managing director in 1997.
FDF, Leech said: “I have been privileged to lead FDF for the last nine years and am incredibly proud of what we have achieved in that time. “With the support of five great presidents and many individuals from member companies, plus a dedicated, expert and hard-working executive team we have made a real difference for food
and drink manufacturing and driven the agenda through initiatives such as our Five-fold Environmental Ambition, our 2020 Growth Vision and our Ingredients for Success. The time is now right for me to move on to a new challenge and I am excited about the opportunity to represent another major economic powerhouse sector for the UK economy.”
Commenting on her new role Stroud said: “I am looking forward to growing and developing my career within the commercial team at EIZO.” Rob Musson, EIZO managing director adds, “Working alongside the rest of the Commercial Sales team, Louise will be
the main contact for all EIZO FlexScan queries, orders and general product advice. With her existing knowledge of the EIZO brand and her previous sales experience we are certain she will be invaluable to our team ensuring all our customers monitor needs are met”.
James Dawson
James Dawson, the engineer of bespoke advanced silicone and organic rubber products, has appointed Daragh Parker to the newly created role of head of Innovation & Technology. Daragh has an impressive track record of delivering innovative new
Dave Cooper
for almost two decades, Suiko has now turned its attention to the building and construction industry. Mike Peasland is appointed in a senior advisory role to strengthen the team. Richard Lyle, business development director of Suiko, said: “We are delighted to have Mike as part of our Advisory
Matcon
Matcon, a specialist provider in flexible and efficient solutions for handling powders, has announced the appointment of Dave Cooper to the position of managing director. Cooper takes over from Charles Lee who has decided to step down due to family matters.
Melanie Leech
Food and Drink Federation
The Food and Drink Federation (FDF) has announced its director general, Melanie Leech, will be leaving to head up the British Property Federation. Leech has been serving at the Food and Drink Federation for the past nine years and will begin her new post in the New Year. Speaking about moving on from the
Louise Stroud
EIZO Limited
EIZO Limited has announce the appointment of Louise Stroud, the company’s new internal account manager for the commercial sales team. The team now consists of five full time team members looking after the EIZO FlexScan brand of monitors.
20 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
To notify The Manufacturer of your company’s appointments, please contact Barbara Fitzsimons at: b.fitzsimons@sayonemedia.com or: 0207 401 6033
Product sponsors of Bloodhound SSC Discover the full story at builttolast.bottltd.co.uk
MIND THE GAP & DIGITALLY MADE
Mind the Gap.
W
Skills Gap Programme Director at the D&T Association Cheryl Phillips stresses the importance of schools developing students’ practical and technical skills.
ith the growth in the number of apprenticeship opportunities within companies large and small, increasing numbers of young people are opting to take an apprenticeship. Some chose their path because they are expecting to still have the opportunity to pursue their educational aspirations whilst also working. Therefore, years of college/university and debt seem pointless when they feel they’ll end up in the same job anyway. As has been well publicised, there haven’t been as many companies who have defined the internal pathway from entry and intermediate apprenticeships to higher educational routes. This is an area the government seems keen to support and recently more funding was announced through the Employer Ownership: Improving Engineering Careers, to support the progression of individual careers and look to bring new people into engineering. If we continue on this trajectory, overtime, we could see a proportional shift towards more young people choosing to pursue a route into work and/or higher education via an apprenticeship. There are other factors which would influence this including teachers, parents and not least of all, the value that schools place upon an apprenticeship route as a suitable destination after GCSE, A-level or equivalent qualifications. A further area where schools can influence this agenda is the extent to which students are exposed to technical and practical skills. We could assume that as long as schools provide young people with core subjects employers can do the rest. Of course, it isn’t that simple. As the HR manager from Birmingham-based Brandauer told me, they need to be ‘practically minded’. It once again really highlighted the important role schools play. Employers do need to provide bespoke training but they will depend upon schools to instil other abilities. This foundation needs to, at least in part, already be present. This is concerning when a subject likes Design & Technology (D&T), which enables student to design and make, is seeing a decline. This is all influenced by league tables and the accountability measures placed upon schools. What is clear is that it would be detrimental to neglect technical skills development during school years. Clearly, employers need to be in the driving seat, but the development of skills must start at schools if the required numbers of applicants are to be achieved.
22 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Digitally Made.
C
’s digital guru, Hayden Richards, asks if Predictive Analytics in manufacturing can become the norm?
an Predictive Analytics in Manufacturing become the norm? As manufacturers continue to meet the challenges of the 21st century, they will have to find ways of dealing with the large amounts of data that they will generate as a by-product. The digitisation of manufacturing has transformed the way traditional products are currently made. Today’s manufacturers have a wide range of technological marvels at their disposal. These new technologies are massively disrupting the manufacturing landscape. To survive, manufacturers now have to be agile and flexible in order to react to both market and industrial shifts. They will also need to ensure that they are well positioned to exploit data which is now embedded at the heart of all the new manufacturing technologies we see continuing to emerge. Manufacturers have often been accused of having a traditional mind-set when it comes to adopting new technologies. Recent research from Aberdeen group tells us however, that top performing manufacturers are using analytics to improve operational processes and gain a 360 degree view while reducing industrial risk. Bala Deshpande in an article on the Simafore blog, highlighted several areas within manufacturing that predictive analytics can be used. These were: Engineering Design; Manufacturing Systems; Decision Support Systems; Shop Floor Control and Layout; Fault Detection and Quality Improvement; Data Mining in Maintenance; and Customer Relationship Management. As Big Data continues to grow in volume, it will also continue to become smarter, which means it actually knows which users need to access it and which corrective steps need to be taken as a result. Little wonder then that many top management are planning to invest in both software and hardware. The Internet of things is set to provide management with ongoing opportunities to collect information from machines. Do you really want to be left behind?
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Letters to the editor
Production lines
Letters to the Editor Steven Barr Head of the Manufacturing Advisory Service Recent news highlighting Hinkley Point’s European approval has brought the potential of the UK nuclear sector firmly into focus again, with the media keen to discuss in ever increasing detail. The current opportunity is focused on firms supplying components and services to nuclear decommissioning and in the ongoing maintenance of existing plants, which will shortly be followed by an estimated £60bn civil nuclear build programme. Our role at the Manufacturing Advisory Service (MAS) is to ensure the message gets through to all UK SME manufacturers that this is a marketplace they can get involved in. Nuclear has previously been viewed by a large part of the industrial base as a challenge too far or not suited to their expertise, but this no longer needs to be the case. MAS has joined forces with the Nuclear Advanced Manufacturing Research Centre (Nuclear AMRC) to rollout Fit For Nuclear (F4N), which lets firms measure their capabilities against industry standards and helps them bridge gaps to meet requirements. Backed by top tier partners including Areva and EDF Energy, the initiative offers a business improvement journey that will identify strategy, implement new processes, secure necessary accreditations and provide supplier matching opportunities. Thanks to new support from the Regional Growth Fund, F4N also now offers participating SMEs in England the opportunity to apply for match funding for business improvement or R&D projects. All of this is designed to prepare our manufacturing base for the £60bn civil nuclear new build programme and, through our close working relationship with the Nuclear Decommissioning Authority, significant opportunities in decommissioning and maintenance of existing stock. Whilst the former may be viewed as a long-term option, there is little doubt that the latter is happening now and we are increasingly seeing new contracts awarded in this arena. Whether you are looking to increase your market share or entering for the first time, the message remains the same…act now and put yourself in a position to reap a multi-billion dividend.
24 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Tuan Nguyen Senior Manager of DELMIA Global Enterprise Manufacturing Intelligence at Dassault Systèmes
Visibility into real-time manufacturing intelligence can let management improve and enhance lean programmes. This can be accomplished with access to real-time production information, ideally aggregated from across the enterprise. Better, faster access to information allows management to act with greater efficiency, which contributes to improved lean performance. But what if we took the idea even further? What if manufacturers could continuously improve the management process itself, in the same way that they continuously improve a production process? When something happens in the enterprise that requires judgment and decisions, a management process is initiated. Management receives information, investigates the situation, and takes action. Furthermore, there are meaningful metrics involved. If management decisions affect lean performance, and if there are metrics that can be measured, then in theory, couldn’t we use this information to continuously improve the actual management processes? I think the answer is yes. When a manufactured part begins to trend out of performance, you know this because you are tracking all such parts being produced globally. If one part from one plant is out of spec, you take action. The same approach can apply to management decision-making. If an enterprise tracked how managers performed in these situations, I’ll wager there would be significant differences discovered. These differences could be tracked by an information system - let’s call it a Management Intelligence System. We could then identify and deploy these management best practices around the enterprise, just as we deploy best production practices. In theory, this type of system could be created using the manufacturing intelligence technologies available today. It would simply require the creation of a new set of metrics. This data could be captured by the same system that managers use to investigate production issues through their computers and mobile devices. The data is there; it’s simply a matter of figuring out how to access and use it.
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ENERGY MANAGEMENT Inspiring energy resolutions in UK manufacturing
19 March 2015 Birmingham @themanufacturer #Energy
Energy management is rapidly rising to the top of the business agenda. With energy prices escalating and government regulation growing increasingly strict, now is the time to ensure you have an engaged, compliant and energy efficient business.
Book Now: 020 7401 6033 (Opt 3) events@sayonemedia.com
By discussing vital topics such as energy procurement and boardroom strategy, this year’s Energy Management conference will help inspire UK manufacturers to seek innovative and creative answers to their energy efficiency problems.
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’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 September and October.
Flying the nest Barbara Fitzsimons takes a trip to the Lincolnshire-based facility of Wren Kitchens, the factory responsible for designing, manufacturing and retailing the door panels of the company’s kitchen cabinets.
W
ren Kitchens was founded in 2009. The company’s management team has over 35 years of experience within the kitchen market in both the UK and the USA, and is headed by managing director, Armando Sanchez, a man immensely proud of his company. Wren employs 1,700 people in total, with 826 specifically in manufacturing. The company has plenty of plans for growth, having opened seven showrooms in 2014 alone, and plan for this to pick up even more pace in 2015. In only five years of business Wren has opened 52 stores.
The automated paint line is an entirely unique process. At 230 metres long, it was designed by Wren’s own engineers and their European partners
26 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
My visit to the factory in Scunthorpe, North Lincolnshire took me over 500,000 sq ft of a factory packed with machinery from all over the world. The manufacturing process itself begins in one of two ‘mega-factories’ – the other being based in East Yorkshire. The melamine-faced boards start on the cutting machine to be trimmed to size – five sheets at a time. Next, the edging is applied using a unique glue system, which is, as Sanchez testifies, a product that gives Wren the edge over other manufacturers who use hot melt systems, as it provides a much higher heat and water resistance. The automated paint line is also an entirely unique process. At 230
The rigorous quality control process
An expert spray painter
metres long, it was designed by Wren’s own engineers and their European partners. Wren uses a reverse rolling system to provide the smoothest possible finish. The pigmented high gloss paint is positively charged to give a perfect finish, and apparently will not discolour. The drying process is long and slow, using a combination of air, ultra-violet light, and a penetrating white light, followed by a very careful quality control process done by hand. Two coats of water based film protection is applied, which is new to the industry and is not removed until the product is delivered and unpackaged, to ensure perfect protection. As Wren are very conscious of the environment, this film will dissolve in water.
OUT AND ABOUT
British innovation Plane sailing takes the US by storm On September 23 delegates from InnovateUK’s Robotics Mission to the US reunited to discuss lessons learned from the prestigious trip.
H
eld at the Royal Institution in London, the informal meeting provided an opportunity to rub shoulders and chat to the tech entrepreneurs and gain insight into the US market, as well as an insight into the UK’s robotics sector. Eight companies The band of companies on the took part in the Robotics Mission mission including the Shadow Robot Company, Agilic, DrisQ and Reach Robotics. The technologies ranged from an entrepreneur that has created a new robot based on the Raspberry Pi mini-computer, to one company designing robots to help the elderly and another company creating the world’s smallest Unmanned Aerial Vehicles. The band of innovators visited three cities in five days with the aim of creating opportunities and amplifying the breadth and depth of innovation taking place in the UK. Mike Biddle, deputy director of innovation programmes at InnovateUK said the mission “was designed to open doors, build networks and showcase British innovation and Silicon Valley and San Francisco are synonymous with being at the forefront of global robotics and autonomous systems technology. “These companies will benefit from meetings with leading robotics, academic and research institutions, gaining fresh ideas and developing new partnerships and funding opportunities. It’s a springboard which can help them to launch their business, thrive and turn their innovations into tangible business opportunities.” Backed by InnovateUK and UK Trade & Investment and organised by Chinwag, the Robotics Mission featured a specially-developed programme for companies that want to lay the groundwork for expanding business into one of the largest and most dynamic robotics markets in the world. Speaking about his experience on the mission, Rich Walker, managing director of the Shadow Robot Company, designers and manufacturers of the anthropomorphic robot hand, said he was overwhelmed by the “spirit of helpfulness, openness and collaboration” on the trip.
The Royal Aeronautical Society (RAeS) joined forces with students across the country to inspire a new generation to become involved in technology and engineering.
‘‘S
chools Build-a-Plane Challenge” was launched five years ago with the aim of doing just that; aiding students to learn about aerospace, physics, engineering, technology and maths by constructing a microlight plane. The scheme was taken up by around eight schools nationwide, a lower than expected number, due to the sheer size of the project. The construction requires a large warehouse/lab to construct and house the plane and has taken several years for some of the schools. The scheme was sponsored in conjunction with Boeing, which hoped to show the possibilities of a career in aerospace and flight, as Britain has the second largest aerospace sector in the world. The students’ work was presented in a DVD, launched at a reception at the Royal Aeronautical Society’s headquarters in central London on October 13. Not only were the students encouraged to learn about sciences, technology, engineering and mathematics (STEM) subjects during the project, but also project managing, PR, IT, media and marketing. Several of the students spoke of the leadership and communication skills the project had taught them, and the head start they felt they had been given over their peers in terms of knowledge in the subjects they covered. The DVD showed the students’ journey from start to finish, and the huge effort they and their teachers put in, and also the volunteers from the RAeS who were with the teams from start to finish, bringing much needed expertise. Emma Krzyszowski, a physics teacher at North East Wolverhampton Academy, added that “the project was a great way of getting a diverse group of students involved, lauding it particularly for showing girls can get involved in STEM as well.”
If you would like to visit your factory or business, let us know by emailing the editor at c.bentley@sayonemedia.com November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 27
Best of http://www.themanufacturer.com
The Russian influence
N
ews of job cuts at the UK’s largest construction equipment manufacturer, JCB drew hundreds of clicks throughout the tail end of October (bit.ly/ JCBjobs). The company announced it is to cut 150 jobs across its UK operations. Chief executive of the construction equipment manufacturer, Graeme Macdonald said the firm was compelled to decrease its cost base as a result of a “severe decline” in world markets. A 45-day consultation will now begin to decide the fate of certain employees, the majority of which will be office-based staff, who he hopes will take voluntary redundancies or early retirement. He added that a number of sites across the UK could be affected with the majority of redundancies impacting its headquarters in Staffordshire. The “world markets” Macdonald is referring to is, to little surprise, the Russian markets. Despite many economists openly saying the Ukraine crisis and its resulting implications on Russian trade sanctions would play little effect on the UK industrial sector, already we are beginning to see some of the larger UK players scaling back operations as a direct result of the actions taken on Russia. While the Ukraine crisis is not entirely to blame for the announced job losses at JCB – a 20% fall in the Latin America construction market also took its toll – the Russian construction market also dropped by 22 per cent following the trade sanctions. Engineering giant Rolls-Royce was also forced to downgrade its projected revenue stream for the coming financial year (bit.ly/RRsanctions). As a consequence, the company said in a statement that group underlying revenue in 2014 compared with 2013, is expected to be 3.5% to 4% lower. “In the long term, the fundamentals of the business are strong. In the short term, because of the economic environment, our revenue line is under pressure. What we need to do is address the cost line,” said John Rishton, chief executive. Any cynic worth their weight will assume that “addressing the cost line” would translate to job cuts. And Rishton was not quick to rule out this possibility. After all, Rolls-Royce has in previous years cut jobs throughout its UK factories. However Rishton did point out that the business could save money in other ways, namely through improving margins in its aircraft servicing business. While these are only two examples of companies openly discussing repercussions of the imposed sanctions in Russia, it’s likely others will follow. It’s a stark reminder of how unexpected global events can have serious repercussions on an industrial sector that could often be seen as being a little too complacent when looking at the bigger, global manufacturing landscape.
28 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Tracking your top reads on www.themanufacturer.com last month
Best of Online
UK automotive manufacturing: facing up to the challenges of the future Andrew Williams and Stuart Apperley are directors in the Global Transport, Manufacturing and Logistics team at Lloyds Bank Commercial Banking. In this piece for , the two discuss the future issues the UK automotive industry faces.
Popular blog contributions last month included: Top 10 warehousing predictions for 2015 and beyond As warehousing operations come under mounting pressure to perform to support growing demands of the omni-channel customer, Tom Kozenski, VP solution strategy at JDA Software, discusses what trends are emerging and what their impact will be.
The implications of EMR on industry After many years of planning and waiting, EMR has finally arrived. Anthony Ainsworth, business energy director at E.ON, asks what that means for Britain’s energy-intensive manufacturing sector, and examines the opportunities that it offers.
Our twe your fa ets, vourites A selec of @the tion of the m os ma
te rer lastngaging twee month ts from
nufactu
followe
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www.themanufacturer.com 29
the shOrtlist fOr the manufacturer Of the Year awards 2014 is revealed, with mOre than 60 cOmpanies, acrOss 14 categOries, vYing fOr success this Year. cOngratulatiOns tO all Of thOse shOrtlisted. we wish YOu the verY best Of luck!
the shOrtlist Our 2014 independent panel Of expert judges includes:
apprentice Of the Year
Jan Ward, Chief Executive Officer, Corrotherm International Steve Whittle, Head of Business Intelligence, Rolls-Royce
Sponsored by:
Mark Jolly, Professor of Sustainable Manufacturing, Cranfield University Rachel Eade MBE, National Automotive Sector Lead, Manufacturing Advisory Service
Mark Williams, Owen Mumford Rebecca Davies, MBDA UK Yaser Rauf, MTL Group
expOrter Of the Year
For a full list of this year’s judges, visit:
www.themanufacturer.cOm/awards @tmawardsuk #tmawards2014
Jade Aspinall, MBDA UK Jodie Adcock, Thorntons Jon Taylor, De La Rue Liam Saunders, McCain Foods (GB)
Sponsored by:
CNH Industrial - New Holland Agriculture Cygnet Group Faith Products Filtermist International
Severn Glocon Group Rayovac MicroPower Division, Spectrum Brands (UK) Suresense Technologies
Headline sponsor:
ict in manufacturing
Co-sponsor:
Judging Day sponsor:
Sponsored by:
Burts Potato Chips CPL Aromas Mollart Engineering
Rage Motorsport Vortok International Wheelabrator
Official app sponsor:
innOvatiOn & design The Manufacturer of the Year Awards 2014 has been generously supported by a range of key industry organisations to ensure this is yet another successful year of industry celebrations and recognition. We would like to thank all sponsors for their continued support.
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The Manufacturer of the Year Awards 2014 is part of The Manufacturer Week of Excellence www.themanufacturer.com/WoE
Sponsored by:
B&D Electromedical Croft Filters GE Aviation Systems Newmarket Lontra
Pryor Marking Technology Worcester Bosch
leadership & strategY Coty Inc. Hub Le Bas Sertec Tube & Pressings
supplY chain excellence
The Mereway Group Volution Group Xtrac Sponsored by:
manufacturing in actiOn
Sponsored by:
BAE Systems Maritime - Naval Ships Coty Inc. Grainger and Worrall
EGGER (UK) Encirc Preformed Line Products (GB) Selex ES
Sheffield Forgemasters International Rayovac MicroPower Division, Spectrum Brands (UK)
I n d u s t r y F o r u m
Siemens Industrial Turbomachinery Stadco Worcester Bosch Xtrac
sustainable manufacturing Caparo Industries Coca-Cola Enterprises Encirc
Johnston Sweepers Pirelli Tyres UK Vaillant Group
Sponsored by:
medium sized enterprise Of the Year
Sponsored by:
Encocam Mereway Kitchens Origin Global Sidhil
thrOugh-life engineering services
Wicksteed Playgrounds Xtrac
Alba Power Babcock International Group
ENER-G Combined Power Rolls-Royce
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peOple & skills
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Dalehead Foods EGGER (UK) Ginsters (a division of Samworth Brothers) Mereway Kitchens
Selex ES Sertec Tube & Pressings
wOrld class manufacturing
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small sized enterprise Of the Year
Sponsored by:
Burts Potato Chips Croft Filters Fracino
Fraser Anti-Static Techniques J. Rotherham Group Versarien
whO will triumph? This year’s winners will be revealed at The Manufacturer of the Year Awards Ceremony & Gala Dinner.
27 nOvember 2014 the icc, birmingham Over 1000 of the industry elite will join together for a night of reward, recognition and celebration of the UK manufacturing industry. Secure your table at this year’s awards and be part of the biggest celebration of UK manufacturing!
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North Sea oil and gas
HOT TOPIC
North Sea oil & gas: alive and kicking?
As the North Sea’s offshore oil & gas sector continues to see its revenues grow, a number of industry challenges could see it enter choppy waters. James Pozzi takes a look.
T
he offshore oil & gas sector, an industry that accounted for 866,000 barrels of oil produced daily from the North Sea in 2013, is often cited for its wealth creation. The city of Aberdeen in Scotland, the oil & gas epicentre with its booming housing market and above national average salaries, is the UK’s most visible testament of such wealth. Just two years ago, the University of Aberdeen estimated oil production in Scottish waters represented about 96% of total North Sea production, while accounting for 47% of Scottish gas production. The industry was an essential tool in the political campaigning of both sides of the Scottish referendum, showing that black gold remains one of the world’s most valuable and powerful entities. But the seabed in which the oil is extracted could find itself beneath choppy waters, with a series of forecasts predicting less prosperous times on
32 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
the horizon. While revenues continue to rise, actual profits fall. The Wood Review, published earlier this year and led by oil & gas business leader Sir Ian Wood, dissected the challenges and opportunities facing the UK’s energy industries. In the government commissioned review, Sir Ian warned the offshore oil & gas sector could have just 15 years left before depleting North Sea oil reserves begin to hit jobs and the economy. This was in contrast to the figures espoused by the Scottish National Party during the referendum, which predicted a further 24bn barrels were left in the North Sea, a figure Sir Ian put at 45% to 65% too high. These gloomy forecasts were accompanied by the Office for Budget Responsibility (OBR) stating in its July 2014 Fiscal Sustainability Report that North Sea oil & gas could produce £20bn less in revenue than originally forecast over the next three decades.
In 2013, sector wages rose 15% to £73,600 per annum due to a lack of qualified staff, leaving large operators concerned that wages were rising too high Inefficiencies and skills challenges
One of the key drivers of the decrease is the perceived inefficiencies in the supply chain. According to audit firm EY, which published its UK upstream oil & gas supply chain economic contribution report in April, the offshore supply chain is worth £35bn annually. Vice-president at Hitachi Consulting David Delvin, whose firm advises on oil & gas supply chains, believes companies operating in the North Sea need to re-evaluate their ways of operating. “The success of the UK oil & gas supply chain should not be undermined but, looking to the future, significant changes must be made to both process and behaviour for
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North Sea oil and gas
HOT TOPIC
The offshore oil & gas sector accounted for
barrels of oil produced daily from the North Sea in 2013 The UK supply chain accounted for of turnover in 2012 from exporting services Compared to 2012, the total number of people travelling offshore has increased by
this industry to remain world-class in a competitive global economy,” he says. He cites the fact that the UK supply chain, which accounted for 42% of turnover in 2012 from exporting services, needs to ensure sustainability by reducing costs in an increasingly global market awash with cheaper foreign options against a backdrop of increased competition and limited collaboration. “Collaboration is certainly not uncommon in the oil & gas sector,” Mr Delvin explains. “However, further collaborative opportunities such as sharing exploration rigs, field cluster developments, exploration and drilling projects, sharing of critical spares and technology innovations need to be considered as a way of reducing costs within the industry.” Concern also lies in industry skills and oil & gas having the unflattering distinction of a workforce average age of 41 years old. While skill shortages are nothing new to any industry, the demand for talent has seen an almost unprecedented rise in average earnings. In 2013, sector wages rose 15% to £73,600 per annum due to a lack of qualified staff, leaving large operators concerned that wages were rising too high. Tellingly, 35% of companies questioned in a 2013 Oilandgaspeople. com survey believed the shortage had been caused by insufficient investment in apprenticeships because of an
34 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
assumption that North Sea Oil was in decline. But while the figures hint a sense of desperation, it could yet prove effective. Trade body Oil & Gas UK stated in its 2014 UK Offshore Workforce Demographics Report the total number of people travelling offshore has increased by 8.6% compared to 2012. Additionally, offshore workers in the 24-29 age group recorded the highest percentage growth at 14.7%, bringing the industry average age down by a year.
Scotland’s world leading role
Concern over natural reserves has led to notions of supplies running out within the next 50 years. But if the unthinkable were to happen, Nick Shields, director of the Scottish Manufacturing Advisory Service (SMAS), believes Scotland’s expertise in extracting resources could be applied to other operations across the world. “Certainly in having developed a leading capability in extracting resources from difficult environments such as the sub sea, Scotland can export that knowledge and be seen as a global centre for that capability,” he says. If resources start to deplete in the North Sea, then it’s still a centre of excellence for extraction; whether it’s off the coast of Brazil or Indonesia or wherever, people will know that the products, technology and skills to extract these resources come from Scotland.”
North Sea oil & gas could produce
£20bn
less in revenue than originally forecast over the next three decades.
But as extraction becomes increasingly difficult, the calls for more investment and innovation has also shown signs of life. One of this year’s most notable breakthroughs was from Edinburgh’s Heriot-Watt University developing a new technique aimed at adding decades to the lifespan of oil reserves in the North Sea. The technique, called a low-salinity water injection, would see a reduction in the salt levels in sea water that is already injected into reservoirs. Professor Mehran Sohrabi, the centre’s director, called for more investment in the industry to explore new innovations. “At least half of the original oil still remains in the North Sea reservoirs but there are great challenges in extracting it using enhanced oil recovery techniques,” he said. “These include limited platform space and large well spacing, making extraction too expensive to pursue. This is a massive leap forward, especially in an offshore setting. The process is relatively inexpensive, meaning the costs for EOR could fall dramatically while yields could rise.”
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M60251_279 (10/14)
sectorfocus
Victoria Fitzgerald summons the energy to investigate the UK industrial sector’s position concerning the impending EU climate policy regulation changes.
36 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
A
ccording to a report published in August by Eurosceptic lobby group, Business for Britain (BfB), green policies imposed by Brussels are endangering 1.5m UK jobs by burdening manufacturers with high energy costs. The BfB says that EU policies are responsible for up to 9% of spending on energy bills for industrial companies, and warns this could increase to 16% by 2030. The group fears that manufacturers will consider relocating operations to countries where energy is cheaper, and with more than 1.5 million individuals employed in energy-intensive industries like metals, ceramics and glass, the BfB is labelling the possible shift as “devastating”. The research also reports that the cost of the EU’s Emissions Trading Scheme, and the Renewables Obligation (RO), a UK subsidy scheme for wind farms
and other green technologies designed to hit EU renewables targets for 2020, together account for 9% of energy bills for manufacturers. The BfB however, which board members include chairman of JML and Labour part donor, John Mills and is backed by City grandees including Lord Wolfson, chief executive of Next, and Lord Rose, former chairman of Marks & Spencer, also accepts “there is good chance that the UK would have introduced similar policies” and that the UK has “in some areas gone considerably further than the EU in introducing expensive policies,” which removes some of the substance from its argument somewhat. Assessing the gravity of BfB’s concerns, EEF’s senior energy and policy advisor, Richard Warren, admits that EU policy “does impact on energy prices”. However he is quick to point out
Climate policy regulation
SECTOR FOCUS
The EU emissions trading system and energy intensive industry January 1, 2021 will mark the start of a new EU Emissions Trading System (EU-ETS) and subsequently a new framework target to guide the EU through to 2030. The aim is to ensure that EU-wide emissions remain beneath a predetermined cap and contribute to the overall EU decarbonisation target. Although this may seem like a lifetime away, the debates that will shape the future of EU-ETS are taking place right now. In the meantime, policy makers need to account for the challenges faced by Energy Intensive (EII) sectors in decarbonising, as well as understanding how the EU ETS threatens the survival of EIIs in Europe. In its August 2014 report The Future of the EU Emissions Trading System, EU-ETS exemplified the steel sector in its energy saving potential. The UK steel industry has decreased its emissions in the past 60 years dramatically and is now nearing its limit of reduction, resulting in a stagnation of improvement.
CO2 emissions per tonne of steel – 1950-2000
The report states: Source: Thyssen-Krupp presentation to Centre for European Policy Studies 24 May 2005 “Regardless off the policy measures introduced by governments, the contribution of the steel sector, using current available technologies, is governed by this scientific limit.” The problem now resides in the fact that any further reductions in emissions from the UK steel industry can only be achieved by lowering production.
EEF’s call for reform across the entire policy framework. “It is quite alarmist to say that 1.5m jobs are at risk because of EU policy,” Warren says. “If you got rid of the EU, where would the UK be now? Britain has its own climate change targets, it has the Climate Change Act, with stringent, if not
In January, the European Commission introduced the Market Stability Reserve, to help reduce the amount of pollution allowances available to emitters in cases of exceptional decline in emission levels
To plug this gap, further research and development is required for a “step-change in technologies” like Carbon Capture and Storage (CCS), the process of capturing waste carbon dioxide from large point sources and transporting it to a storage site to place it where it can’t enter the atmosphere. In fact earlier this year, UK project White Rose Carbon Capture and Storage, secured €300m EU funding to obtain CO2 and submerge it under the North Sea. Although the steel sector expects to meet the 2020 targets, there are major concerns for cutting emissions beyond this point.
Iron & Steel sector: energy savings technical potential based on the application of best available technologies in 2011
Although, the UK produces a glut of specialised steel goods, they are of the same Source: International standard available Energy from competing Agency non-EU countries, (2014) Tracking so increasing prices Clean for EU customers Energy could very easily Progress drive them into the arms of other suppliers like China, India and South Korea. The manufacture of steel in developing countries can be produced very competitively, which ups the pressure for developed markets like the UK and other EU countries.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 37
Climate policy regulation
even more stringent targets than the EU is asking. “Even if you scrapped everything in terms of renewables, you’ve still got a lot of contracts already committed to, you wouldn’t just be able to slash everything from energy bills that come from various renewables targets.” Warren told that if anyone was to agree with any of the scepticism, it should be that, “the executive summary states we should have just one emissions target for the whole of Europe and the UK government is already pushing for that. “Government has stepped in and done quite a lot, we are not 100% there yet, but we have been promised some compensation packages for energy in terms of industry. Even without the EU, we would be in a fairly similar position, it’s not as simple as to say the EU has forced this upon us. When renewables targets were pushed through, the labour government was very much in favour.” Though ‘alarmist’ in its disposition, energy targets
are placing pressure on manufacturers, particularly as energy costs continue to rise, and with European Union leaders meeting at the end of October to agree on targets to reduce greenhouse gas emissions, increase renewable energy and improve energy efficiency, industry will be poised to learn the new 2030 Targets.
Taking aim
The EU’s proposed 2030 climate and energy framework includes a legallybinding 40% reduction of greenhouse gas emissions, a 30% improvement in energy efficiency by 2030 and increasing the share of renewables to 27% of the EU’s energy mix. A meeting between member state representatives decided whether the efficiency and renewable targets would be binding. Conclusions were reached on October 23- 24 and the EU’s position was communicated at the United Nations Climate Change Conference in Paris, however, the outcomes have yet to be released. One priority was to set the target number to ‘at least’ avoid placing a ceiling on the objective, this could produce a 43-51% reduction in 2030 compared to 1990 according to EU policy and debate website, EurActiv.com. Before decisions were finalised the site released figures showing member states’ position on EU 2030 climate targets, with the UK standing against setting binding efficiency targets.
SECTOR FOCUS
Carbon leakage
This refers to describing the situation, particularly in energy intensive sector like steel, glass and ceramics, when costrelated climate policies push businesses to relocate production to other countries that have more relaxed constraints on greenhouse emissions. This then increases over-all emissions in that area. Sectors exposed to significant risk of carbon leakage that receive a higher share of free allowances are compiled on a list aimed at protecting those cited from competition from non-EU countries subject to comparable greenhouse gas emissions regulations. The draft proposal for the new list, which lasts for five years once agreed, was published on May 5, 2014. Its most recent version faced opposition from several member states, including some UK representatives, questioning whether some industries should remain on the list. The object was denied earlier in October. In January, the European Commission introduced the Market Stability Reserve, to help reduce the amount of pollution allowances available to emitters in cases of exceptional decline in emission levels. The Commission plans for the MSR is to come into force in 2021, however the UK released a statement in October calling for the scheme to be brought forward to 2017. Additionally, it urged for 900 million carbon allowances from previous backloading programmes to be
The EU’s proposed 2030 climate and energy framework includes a legally-binding 40% reduction of greenhouse gas emissions, a 30% improvement in energy efficiency by 2030 and increasing the share of renewables to 27% of the EU’s energy mix
38 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
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November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 39
Climate policy regulation
abolished or consolidated into the forthcoming MSR. Energy and Climate Change Secretary, Edward Davey said in a statement on October 20: “The MSR will address this issue by creating an allowance reserve that will increase or reduce the supply of allowances in the system in response to levels of demand, allowing the market to operate effectively as external circumstances change. “This would offer a long term solution to the surplus beyond ‘backloading’, under which allowances are being removed but are due to return from 2019.” Davey also voiced concern over “increasing costs for businesses, uncertainty for investment and ultimately higher costs for consumers” as being unacceptable. He continued: “An insufficiently ambitious cap, combined with the economic recession and other factors, has resulted in a surplus in the EU ETS of around 2bn allowances, undermining the functioning of the market. The result is that the system is not sending the right signals to low carbon investors, increasing the overall costs of meeting our future carbon reduction obligations. “However, along with Germany and others, the government believes that the Commission’s MSR proposals need to be strengthened to adequately correct the problem of oversupply and protect against future imbalances.”
Increasing the burden
With EEF’s report of a projected 50% hike in electricity prices by 2020 threatening to damage British manufacturing by hitting investment, margins and competitiveness, this is a stark warning that escalating energy costs could see manufacturers investing in facilities outside the UK, among other things. According to EEF “energy already accounts for 6% or more of turnover for 27% of firms (surveyed)”. Gareth Stace, head of climate & environment policy at EEF, said in a statement regarding the recent report: “This is a wake-up call that the tension between the pursuit of low carbon policies and Britain’s ambitions for a betterbalanced economy must be resolved. Failure to do so could hit investment, margins and competitiveness, putting the brakes on growth and leaving our economy stuck in the slow lane.
40 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
“It’s time for a fresh approach. Low carbon is rapidly becoming synonymous with anti-competitive, which is why we are urging all parties vying for government to commit to review and reform current policies and mechanisms. “Above all, we are seeking a firm commitment to implement the Energy Intensive Industries package announced in the 2014 Budget as soon as possible. High energy costs are crippling for manufacturers of all sizes, but rapid implementation of this scheme would at least reduce the burden on those who are most exposed.”
The future
It is clear that more alignment between industry, UK policy and EU policy is required to create a transparent, integrated and strategic approach to emissions targets, not to mention enforcing a reliable energy supply that is aligned with the UK’s competitors in cost. Additionally, the British government needs to be more tactical in its investment of green innovations and its protection of energy intensive manufacturers from carbon leakage, to compete fairly in the global market place. asked EEF’s senior climate and environment policy advisor, Roz Bulleid, about her concerns for discussions on the 2030 targets. Bulleid said: “There has been a lengthy debate over the status of the energy efficiency and renewables targets. It now seems likely both will apply at EU level, with only the renewables target binding. “This is not the position the UK government (and EEF) argued for.
SECTOR FOCUS
Having three separate sets of national targets has not been a cost-effective approach so far and it’s hard to see how the new EU-wide targets will be deliverable without some kind of responsibility being delegated out to individual countries.” Bulleid feels that, although not ideal, this course of action will likely be the case, and it can be argued that it will mean the same thing as an emissions-only target for industry that places increased gravity on the EU emissions trading system (ETS), which Bulleid refers to as “a bit of a basket case”. An ideal scenario, Bulleid says, is if “energy intensive industries get the full protection and allowances they need to compete globally”. Navigating the EU Green system is tricky and manufacturers need to keep their voices loud, so that the arrangements support the momentum in the sector. As for the Eurosceptics? Unanimous agreement on all issues is, and will remain a distance fantasy, but the reality is that our involvement in the EU brings optimism with difficulties. The EU accounts for 18% of global manufacturing output, the UK sells 50% of all its exports to the EU, not to mention that the EU invests £11bn a year on innovation programmes, of which 15% is invested in the UK and perhaps most poignantly, within the EU the UK is the leading destination for foreign investment. Manufacturers must take the rough with the smooth and implore Government to strike fair and supportive for the 2030 targets.
INTERVIEW
The incredible Bloodhound SSC has one almighty and unrelenting appetite when it comes to being fed by its supply chain. Callum Bentley spoke with the project’s Engineering Lead – Commercial, Conor La Grue to see what it takes to handle such a beast.
F
or those lucky enough to have stepped inside the Bloodhound SSC workshop in Avonmouth, just outside of Bristol, you would know the friendly and dynamic atmosphere that comes with the close knit team that is building the car which aims to shoot Wing Commander Andy Green past the 1,000mph mark next year. It was with this knowledge of how the team interacts with people from outside the Bloodhound bubble, that I jumped into my quite laid back first question. “Conor, how are things coming along out in Avonmouth?” I ask. I am speaking with Conor La Grue, engineering and supply chain lead for Bloodhound SSC. Without a moment’s
42 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
hesitation, Mr La Grue runs with it, as if it was the question he hoped I would ask. “We’ve just signed our biggest sponsorship deal in the history of the project,” he enlightens, his enthusiasm obvious. Honestly, this was not the answer I was expecting; instead hoping to lead him into a conversation about the milestones the team has this year ticked off. Both the vehicle’s cockpit had been revealed earlier this year, and only recently the massive EJ200 RollsRoyce jet engine had been fixed to the main structure. But it was clear by La Grue’s tone that this new sponsorship deal was big news. Unfortunately at the time of the interview, he was not permitted to disclose which company had actually
signed on, instead simply alluding to the fact that it was a “big international OEM and household name”. “What this means is that a lot of the remaining structure that we’ve had to order to finish the car, certainly for the front of the car which is predominantly composite, will be delivered before Christmas,” he says. “A lot of the rest of the car, as far as a design standpoint is concerned, will be finished by Christmas. By the end of February early March all of the primary components of the car will be here.” What this fundamentally means for the Bloodhound team is that the design phase is now wrapping up, and the physical act of bolting the machine together can truly begin. This
Conor La Grue
INTERVIEW
It’s been a real battle, the project survived and thrived through the deepest recession and it’s going against the flow and the level of support we’ve had is quite extraordinary news is doing wonders for the team’s confidence, as La Grue explains. “It’s a very exciting time for us, because we’re fully funded through this phase, and we’re going at full speed to get it done,” he says. “The feel of surety for getting the car out in the desert next year is going up and up. “This is a massive injection of funding at a crucial point from a supply chain standpoint.”
Securing the dog to the chain
Building what is essentially a missile with wheels and a steering wheel doesn’t come cheap – this is no surprise. According to La Grue, up until this point, Bloodhound SSC has spent just over £1m cash spend. On top of this the team has leveraged close to £25m of ‘in kind’ product sponsor support in the supply chain. Considering the car, according to La Grue, is at about 50% completion, there is still a lot more funding to come in to get the car in the desert in 2015. “We’ve got about the same to go again in cash parts to spend and, to be fair, we’re probably about 50% of the way through the build of the car,” La Grue says. “We’re not quite at 50% of the component part, but as far as build effort is concerned, we’re about 50%.” But is 50% where the team intended to be at this stage in the programme? “That’s the thing,” proclaims La Grue. “This latest sponsorship means this critical phase of completely finishing the design and getting most of the primary structure done between now and Christmas, which is about 80% of the car, the next 20% will be done in the first quarter of next year, most of that is fully funded so really we are masters of our own destiny for the first time in a long time. “We’re usually chasing for resource, however the bias has shifted recently
Conor La Grue (right) is introduced to Prince Phillip, Duke of Edinburgh when he toured the Bloodhound SSC facility recently.
Crazy enough to inspire If the Bloodhound SSC programme had to be summed up in one word, that word would probably be “ambitious”. As La Grue explains, the programme actually launched the same week as Lehmann Brothers collapsed. Public and private investment was not interested in pouring money into a car that aimed to break the 1,000mph mark. The programme had to find a different focus. As La Grue explains, that focus was education. “It’s at the heart of it,” he says. “Let’s be fair, the project wouldn’t have survived the recession and wouldn’t exist if it wasn’t for the education programme at the heart of everything that we’re doing. “We launched the same week as Lehmann Brothers went under, there was no appetite for multi-million pound fast car programmes for the sake of speed. But a programme to encourage kids to take up STEM subjects in school and help with the massive shortfall of engineers in the UK, that was something that big companies wanted to talk about because they were set to benefit themselves. from getting design headcount in and keeping the supply chain moving, to actually recruiting heavily for the assembly team.” It’s seems a bit nonsensical to say managing the supply chain of such a unique and highly engineered project like Bloodhound is a massive task – what part of putting this incredible
“The land speed record car is just the entertainment, the inspiration and the stimulation we need to get kids interested in how we developed it and explore whether or not they themselves would be interested in having that as a career choice too. “And we’re sharing every intimate detail of it too. We’re the highest technology open source project on the planet. Formula 1 can’t share because of the need for a competitive advantage. We share absolutely everything so big kids and little kids can geek out as much as they like and the education programme is growing all the time. “Sharing them in this way, in an open source way, is remarkable. When kids go to shows and they can see and touch an EJ200 - £4.5m if you could buy one, and we’re the only people that aren’t a nation with a typhoon squadron to have access to that engine - you watch a kid’s face exploring that engine and it’s remarkable. I would love to see more stuff like this. The reality is that a project like bloodhound is probably a once in a generation thing.” machine together isn’t? But I press on, quizzing La Grue on how he can even begin to handle the pressure, along with suppliers, of meeting such strict construction guidelines within even stricter deadlines. “I’m very lucky I’ve got great support here from the design team. And as far as design liaison and design for November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 43
Conor La Grue
INTERVIEW
BIOGRAPHY Conor La Grue Engineering Lead – Commercial
1990-1997: Weapons Engineer Royal Navy 1997-2000: Project Manager sub sea positioning and communications Sonardyne International 2000- 2001: Project Engineering Leader - NPI Centre Europe 2001-2004: Vice President Operations Vegastream Ltd 2004-2008: Managing Director Motorsport development and tuning facility 2008:
Head of Commercial, procurement and Product Sponsorship Bloodhound Programme Ltd
manufacture is concerned, we’re looking very good. I work very closely with three guys form a company called Overmarsh who are a supply chain specialist and, basically, my extended team. “I take great pride in the relationships that we’ve developed that, as a team, we’ve been able to deliver to this level of first-time quality because some of the bits are really difficult, really juicy, chewy bits, and they’re a real challenge. Some of the partners have done the most extraordinary work in the strictest of timelines and we’re getting there now.
44 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
We are starting to see the reality that we will be running next year - we’re going to get this thing finished. It’s been a real battle, the project survived and thrived through the deepest recession and it’s going against the flow and the level of support we’ve had is quite extraordinary.”
Experience counts
Now in his seventh year working on the Bloodhound SSC programme, La Grue says he is still working with individual partners who have changed companies up to three times, but are still willing to throw support behind the project when needed. He says, as with any proper supply chain management, relationship building is critical to success for all parties. “It’s a long burn project, but we’re completely blessed. Some of our key partnerships, they just keep surprising us and they’re completely invested. It’s important to them that it succeeds. They’ve aligned their brands with ours, and as with any good business and any good supply chain, it’s about those business to business relationships and developing a culture of trust. They’re an absolute extension of this team and arguably you can call Bloodhound the biggest team in the world.” While speaking with La Grue, the occasional workshop sound comes down the line, interrupting conversation – not something unusual when you are in the line of business I am. But there was reason for the sound of heightened activity at Bloodhound HQ. “Another key activity happened this morning,” La Grue says. “They bolted
a couple of key components in that link the EJ200 to the lower chassis. They’ve gone in the first time, which for me is quite extraordinary.” Quite remarkably, according to La Grue, Bloodhound has a less than one per cent rejection rate on components. Considering how many of these parts are one offs and extremely difficult to manufacture, the attention to detail from the Bloodhound design team and it’s supply partners is testament to the dedication from all parties to this project. “Those outside companies that form our supply chain and our technical partnerships, they are absolutely part of the team. It’s not one individual in any department or area, it’s completely reliant on everyone working together,” he says. “The guys in design have this uncompromising requirement that we have to meet where we have to make things as easy to make as we can, but the engineering requirement - getting a man safely to the flying mile and back again faster than a high velocity rifle round - is pretty uncompromising when it comes to the engineering and the materials.” FURTHER INFO: Conor La Grue will join a line up of other high profile speakers at this year’s Manufacturing Directors’ Conference happening at Birmingham’s ICC on November 26 & 27. To find out more or to register your attendance, visit bit.ly/TMDC2014
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6Osecond Chris Sumner, FANUC UK
interview
But things are improving. The recent explosion in the UK automotive industry, has been a key driver of sales of industrial robots in the UK. Proving that when a company has a long-term plan, automation allows them to become more effective and efficient. It’s time that other sectors took note.
Besides simply supplying automation equipment to manufacturers, what other measures in terms of training and development does Fanuc carry out?
We work with customers before, during and after a sale to ensure products are used safely and efficiently; working to ensure new operators understand machines fully. Prior to any purchase, we work with customers to understand their individual needs. Through this process, we make informed observations of where automation will deliver benefits, and how.
Chris Sumner Managing Director, FANUC UK
The UK is not renowned for its willingness to adopt automation. Why do you think this is?
The UK remains the lowest user of industrial robotics among technically developed countries in Europe. Unlike our European counterparts, traditionally there has been little incentive for companies to automate for efficiency. Take the food industry for example. Concerns around the industry’s long-term viability, coupled with an influx in low-cost and flexible labour has had a notable impact on capital expenditure in automation.
The robotics and automation industry crosses a variety of disciplines, so developing capable engineers for the future with the necessary core skill requirements is essential
46 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
How important is R&D to a company like Fanuc and is the company planning for a UK industrial sector that is embracing automation more so than it already does?
R&D is the lifeblood of robotics and automation. The UK team is responsible for R&D from a process perspective. We have application area-specific expertise, such as welding and paint, where we’re able to offer turnkey solutions and ensure the final product meets increasingly varied customer demands.
How are you developing engineering skills in house at Fanuc to move with the automation industry?
The robotics and automation industry crosses a variety of disciplines, so developing capable engineers for the future with the necessary core skill requirements is essential. We’ve been committed to our award-wining apprenticeship programme for 15 years, as well as hiring postgrads primarily in software and design positions. Through partnerships with local universities and colleges, as well as our own intensive on-the-job training, we provide a four-year programme where apprentices learn core engineering skills alongside company-specific training in robotics.
Do you think there is more the UK Government could do to help drive the push for more automation implementation in the UK industrial sector?
With the UK still lagging behind Europe, it’s vital the government supports the sector and helps companies that require financing. Across the continent we see strong tax incentives to invest in automation and we need to see that level of support, and a long-term approach to manufacturing, reflected by UK policy makers.
What’s next for FANUC UK? And what do you think is next in the robotics industry?
At FANUC, our aim is to make robotics and automation as accessible as possible to companies of all shapes and sizes. To achieve that, all of our design work and R&D is focused on making robots cost effective, while retaining the same levels of functionality. We are seeing advances in robot technology that are opening up the possibility of one-to-one collaboration between robots and the human workforce. By combining the two, the factory of the future will be one in which the precision and stamina of robots is complemented by the manual dexterity and ingenuity of humans.
What a bank should be Charles Garfit, Head of Manufacturing, Santander UK
Whether small family companies or global corporations, we approach every business customer as an individual relationship. We strive to understand your unique needs and to make banking straightforward, so you can focus on growth. That’s why our clients get a dedicated, expert Relationship Director. We believe credit partners should meet you directly, so our decisions are as transparent as possible. We work hard to do right by you and your business now and in the long term. It’s thanks to this approach that we’re proud to say 4 out of 5 of our business customers would recommend us. Simple Personal Fair What a bank should be Find out how we’re supporting businesses like yours across the UK at www.santandercb.co.uk Come and see us at Advanced Engineering UK, Stand i65, NEC on 11th/12th November or email manufacturing@santander.co.uk GfK NOP Research: Santander Customer Satisfaction Survey Q2’14. 463 out of 586 Corporate customers gave scores 5, 6 or 7 in a scale of 1 to 7, where 7 is ‘Extremely likely to recommend’. Santander Corporate & Commercial is a brand name of Santander UK plc, Abbey National Treasury Services plc (which also uses the brand name Santander Global Banking and Markets) and Santander Asset Finance plc, all (with the exception of Santander Asset Finance plc) authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our Financial Services Register numbers are 106054 and 146003 respectively. In Jersey, Santander UK plc is regulated by the Jersey Financial Services Commission to carry on deposit-taking business under the Banking Business (Jersey) Law 1991. Registered office: 2 Triton Square, Regent’s Place, London NW1 3AN. Company numbers: 2294747, 2338548 and 1533123 respectively. Registered in England. Santander and the flame logo are registered trademarks. Santander UK plc is a participant in the Jersey Banking Depositor Compensation Scheme. The Scheme offers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the States of Jersey website (www.gov.je) or on request. CCBB 0544 NOV 14 HT
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From building networks and partnerships to embracing the opportunities that current and future technology will bring, manufacturing must adapt and develop or face diminishing returns. Your people will be the final and most fundamental ingredient to business growth. As business leaders, you will learn and be inspired by leading manufacturing experts who have a proven record of accomplishment in developing teams that deliver and drive growth.
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Bring back, lean out, and serve Operations and Supply Chain Consultant Ian Machan reveals how a lean transformation, servitisation and reshoring creates competitiveness.
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eshoring of production out of low labour cost sites to a range of Western countries has become a hot topic issue in manufacturing for a variety of cost, lead-time and technical reasons. Here the topic is linked to servitisation and the application of lean thinking
What is servitisation and its link to lean?
Baines and Lightfoot of Aston University define “Servitisation as a term given to a transformation. It is about manufacturers increasingly offering services integrated with their products. Of these, some manufacturers choose to servitise by offering an extensive portfolio of relatively conventional services, while others move to deliver advanced services.” The large players that have embraced this in recent years and grabbed the headlines include RollsRoyce, Caterpillar and Alstom. However a number of SMEs have used it as a way to differentiate themselves from their competition.
We see servitisation as requiring a client to really understand their customers’ needs and maybe even their customers’ customers’ needs and finding the best way to meet them
50 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
We see servitisation as requiring a client to really understand their customers’ needs and maybe even their customers’ customers’ needs and finding the best way to meet them. This goes far beyond delivering products and information, further even than providing spares and repairs. Deciding then what products and services to deliver can lead a client to a true lean transformation, whose aims are to provide a competitive offering, reduce wasted resources over the lifecycle, and to promote growth.
Reshoring the lean way
Reshoring or onshoring is the process of bringing production back to your ‘home’ country, the opposite of offshoring. The motivations for this are many and include: The undeniable stretch in the length of the supply chain from production to customers, with all the issues that entails De-bugging product introduction and new technology has often proven to be costly across time zones and adding to the known risks of sharing sensitive intellectual property Increasing off shore labour rates, cost of transporting goods across the oceans and the pressure of green miles have made these remote sites less competitive Lower energy costs. In the US some returns to homeland are courtesy of cheaper native shale gas The decision making process to bring back a manufacturing process
The decision making process to bring back a manufacturing process can be more complex and challenging than sending it out there; the new process does not need to match the existing
can be more complex and challenging than sending it out there; the new process does not need to match the existing. The phrase ‘botshoring’ has entered the language, recognising that the return of a process can be combined with automation or robotics to minimise the labour cost element, which is probably why it went east in the first place! The transformation of your manufacturing and supply chain is therefore a set of decisions about not just where you will produce but also: How might you invest in what type of capital equipment? How will you treat the reduction of supply chain inventory? What might you do with the reduction in headcount required by the new process? What might you do with the technical and support staff that were liaising with the off shore plants? That set of decisions, and the process of delivering them are an ideal workspace for a lean approach, relevant to tier 1 or tier n suppliers, business to business or business to consumer. Combining the two transformations of reshoring and servitisation brings a manufacturing operation closer to your critical mass of people and closer to your customers. Being closer and choosing how you allocate your resources can be used to maintain the same business model or try and take advantage of a servitisation model offering advanced services. That will drive the real purpose of the re-shoring, rather than just ‘bring them back home’.
Lean and servitisation
How lean helps
Manufacturing Leadership
What’s next?
With the purpose clear, and the In my experience most businesses value understood, now we should faced with decisions about reshoring, look to apply the right lean tools to changes to business models such as deliver. Consider: servitisation and lean implementation find themselves stretched. There can The longer the process to be transferred be housekeeping activities required to back the longer each transfer step prepare for such large changes and a will be. Look to standardise and transfer lack of ‘headspace’ required to work in chunks out what it all means and how to tackle Consider moving part-manufactured goods it effectively and competitively. for finishing in the home market What are the next steps, where do we Consider upstream processing parts go from here? I’m working in association in the home market and finish assembling with Professor Tim Baines from the them off shore. Prove each step is Servitisation Centre at Aston University capable first and Dr. Benny Tjahjono at the Cranfield Value stream mapping. What steps can be School of Management to research who removed with re-design? For example if has done what already and what new products are rented to customers for use entrants need to know. then financial transactions will become We are looking for businesses flows instead of lumpy one-off transactions to contact us with their experiences so credit control and receivables processes and what they are hoping to do. With will change a good enough response we plan to Extend the reach of value stream maps run a spring 2015 forum at Aston for through modelling and simulation, so those volunteer businesses to share, allowing better visibility of process explore and learn from each other. variability. A hybrid model can include both We also anticipate some solid research service and product delivery to publish in late 2015 to help the Changing to an advanced service business whole sector. model willmachan-sweet-spot.ai alter overhead structures1 09/10/2014 16:02:19
In my experience most businesses faced with decisions about re-shoring, changes to business models such as servitisation and lean implementation find themselves stretched
So if you are a manufacturing business that is: Looking to do this, and looking for help/ involvement in this project Or preparing its structure/organisation for the change Or have been there and would like to share their learnings Please contact us via the website below to join us in building the knowledge base and finding solutions. www.machan.co.uk/reshoreservitize
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November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 51
Learning to lean
Lean Management Journal editor Andrew Putwain highlights some of the articles from the latest edition of LMJ which focuses on exploring the ideas of being a good employer in a lean enterprise.
$65 – £45 – €50
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Tapping the reservoir of continuous improvement potential: your employees 52 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
here are many ways to be a good boss; respect your employees and treat them the way you would like to be treated seems to be the most commonly regarded way to get yourself a nice coffee cup from your staff. However, for a boss undertaking a lean transformation the most
important job seems to be keeping your employees informed at every step of the journey and realise that often, no one knows how to do a job better than the person doing that job. In the latest edition of LMJ we explore this idea with articles by Jonathan Gray, the head of Hitachi Consulting and Freidemann Lutz, director of Valecon Management Consulting. You can read more about these articles and others at leanmj.com.
Friedemann Lutz, director with Valeocon Management Consulting, teaches us how to unlock the most valuable resource your company has in creating a culture of continuous improvement.
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ontinuous improvement has quite a few essential ingredients which all need to be presented together for it to be sustainable. First, there needs to be engagement by employees on all levels. Your employees a are huge reservoir of potential, most of which stays unused but can be continuously employed to improve processes and results. How to create engagement? Many Your employees are a elements can be combined. huge reservoir of potential, most Meaningful, realistic but ambitious goals are a of which stays unused but can foundation. Ideally, they be continuously employed to should stretch us outside of our comfort zone. A goal improve processes and results of improving five percent or 10% can usually be achieved by working slightly harder in the tried-and-true methods. An improvement goal of 25% or more forces us to rethink the entire process and positively challenge the old ways of working. Then success is a big contributor to creating engagement. Most people find experiencing success rewarding in itself and will engage just to have more success. That is why visualisation of results with very short updating cycles is so powerful. Knowing that I have been successful during the last hour or at least day is a powerful motivator for further engagement.
www.leanmj.com
From process excellence to business transformation Jonathan Gray, VP at Hitachi Consulting, the management and technology consulting arm of Hitachi, explores Lean Six Sigma transformations and asks how we can lower the rate of unfulfilled continuous improvement programmes.
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team is by definition, a mutually accountable group with complementary skills, committed to a common purpose. However, senior leadership teams are often treated as distinct groups of high-performing individuals, while shared goals are often distilled down to financial performance, which can appear abstract in the day-to-day. Finding a more perceptible shared objective can appear difficult. But in
fact, it is business transformation itself that should be the common goal. The goal: drive performance improvements across the end-to-end value stream and create a rewarding place for people to work. This will result in a highperforming organisation and create an environment for true continuous improvement. Integrating business transformation governance directly into the business performance management system locks improvement activities
De-proliferation: the third path of lean Author and researcher Richard J. Schonberger, Ph.D. analyses why lean fails at a supply level and how organisations can change this cycle by embracing the third line of lean.
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he effective implementation of lean progresses along three major pathways. One, the lean core, is widely employed. The second, lean in supply and distribution is treated separately and, in comparison, employed weakly. The third, de-proliferation (DP), has scarcely been recognised at all as a route to lean. Yet DP can achieve much of the lean agenda all by itself though large-scale reduction of what the lean core and lean supply/ distribution have difficulty in dealing with diverse system elements i.e. parts, stock-keeping units (SKUs),
operations, tools and machines, suppliers and customers. Separately, the three lean pathways receive only flurries of executive-level interest, resulting in a lack of impetus and staying power. Corrective action calls for treating DP as a key route to lean, and promoting the three pathways jointly as a competitive force, centring on lean’s primary mission: quicker, more flexible,
Lean manufacturing
To successfully secure business targets, teams must work together to mitigate risks and support each other in implementing end-to-end improvement initiatives directly to business results, creating pull throughout the organisation. To successfully secure business targets, teams must work together to mitigate risks and support each other in implementing end-to-end improvement initiatives. All of these rely on leaders being open to learning and change themselves, and creating a learning environment for those around them. Successful business transformation which delivers rapid results and lasting change cannot occur if all levels of the organisation are not involved equally.
Lean’s primary purpose is customer-centred. It aims to deliver the customer a quick response with high quality, and flexibility in sync with changing demand patterns
higher quality response all along the value chains to customers. Lean’s primary purpose is customer-centred. It aims to deliver the customer a quick response with high quality, and flexibility in sync with changing demand patterns. Lean does its work by reducing lead times and throughput times, while exposing issues for timely correction. Lean harnesses the pull of demand from the final user such that it ripples back along the chain. That backflow embraces three major contributory stages: design, operations, and supply and distribution.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 53
Speaking of Scotland You became director of SMAS in 2011 and the organisation held its conference this summer. What trends have you seen emerging in your three and a half year tenure as SMAS director?
Nick Shields, Director of the Scottish Manufacturing Advisory Service (SMAS), talks to James Pozzi about the future of manufacturing in Scotland.
54 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
There’s certainly been a recognition from all quarters about how important a vibrant manufacturing sector is to the economy. We’ve realised through the experience of the recession and looking at Germany emerging from recession earlier than everyone else, you can then see how a strong manufacturing sector can underpin a robust economy. From an industry perspective, Scotland’s oil & gas sector goes from strength to strength, along with very strong sectors including aerospace, chemicals, life sciences and food & drink to name but a few. There’s a focus on premium and provenance and we’re seeing businesses invest in these products and
markets. Globally there will be a billion new consumers in the next 10 years all from the developing economies, looking for high value premium products. We have seen heavy investment in industries such as Scotland’s famed whisky sector, textiles and life sciences which sells to these consumers.
What are some of the growth areas of Scottish manufacturing SMAS has identified with real potential for job creation and other economic benefits?
I believe the energy market holds great potential for Scotland. In the traditional oil & gas world, Scotland has expertise it can export around the world in accessing minerals in difficult subsea environments especially as these become harder to reach. Many of the world’s biggest exploration companies have large R&D sites in Scotland and undertake a good deal of their primary
Scottish Manufacturing Advisory Service
Manufacturing Leadership
In the traditional oil & gas world, Scotland has expertise it can export around the world in accessing minerals in difficult sub-sea environments as resources get more difficult and harder to reach
We need to look at a lot of the larger policies from the UK and Scottish governments about increasing manufacturing share of the economy from its current 12%
manufacturing here. There’s also renewables from a marine and wind perspective. Leveraging from our universities and installed base, there are great opportunities in the life sciences and medical technologies sectors.
SMAS has put greater emphasis on focusing its proposition towards leadership, people and culture. How will it address this area?
We can go into businesses and deliver a transactional project, where we tidy up their environment and reduce inventories. Unless you address the fundamental issues of underlying culture and how the business operates, then you’ll not sustain these improvements. Part of the solution is to engage with the leaders in the business to raise their ambition. To this end we hosted an influencer dinner with
Peak Scientific a high growth manufacturing business near Glasgow, with the objective of letting fellow business leaders hear how this company’s leadership and culture has helped it grow over the past 15 years from a start-up to one with £40m turnover and the ambition is to be a £250m company in the next 10 years. This will be achieved by establishing a global proposition, much like the Germanic approach. There have been instances of Scottish businesses being acquired by larger foreign firms as they don’t feel they have the global reach to grow, but Peak Scientific has demonstrated that by showing the energy and ambition to get out into these markets, you can grow a successful, global from the UK.
What is your take on the skills shortage in Scotland?
The agency in Scotland with responsibility for this area, Skills Development Scotland, published a skills investment plan for the engineering sector in August. We have some great engineering universities in Scotland but around only 40% of those graduating from here end up in engineering jobs in Scotland. While there are a lot of foreign students who may return home, we see people drift into other sectors. There is an acceptance that we don’t see the translation from the university sector into the company base. As an industry, we need to point out that careers in engineering and manufacturing
are often in progressive, modern working environments and not in the outdated perception of dirty factories. Encouragingly, the young people we engage with are very switched onto things like the environment and protecting resources. It’s all about making these young people realise that it will be the engineers, scientists and manufacturers that will solve our problems regarding sustainability, clean energy and resources in the future.
What is your long-term vision for SMAS as an organisation?
The policies of the European, UK and Scottish governments are explicitly focused on increasing manufacturing’s share of the economy from its current 12% to 20%. I see the job of SMAS is to help achieve this ambition. Whilst we have our fair share of world class businesses in Scotland, perhaps it’s in the middle ground where we are not as competitive as our European neighbours. SMAS is focused on enabling as many manufacturers as possible on their business excellence journey. We want to make an integrated offering for our manufacturing clients to help realise the significant opportunities available, so in Scotland we see even more profitable and internationally competitive businesses that replicate the success of businesses such as Peak Scientific.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 55
Positioning for growth series
Richard Hill, National Head of Automotive and Manufacturing at RBS provides a forecast on UK macro issues and explores the key challenges facing UK manufacturers in 2015 and beyond.
With the right investment, and the right support including tools, techniques and industry knowledge, there is no reason why this growth should not continue and even accelerate
56 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
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he UK manufacturing sector has been in part lucky over recent quarters, with a big piece of luck being that it is in the UK. Having demonstrated the strongest, broadbased economic recovery in the EU, coupled with government support for high value manufacturing, the UK has enjoyed a recovery in confidence and growth not seen since well before the economic crash of 2008. According to Neil Parker, senior economist at RBS, the economic setting for manufacturing will remain positive through 2015. While RBS expects that interest rates will rise perhaps as early as February next year, most companies have priced those rises in to their investment plans, and job creation is expected to remain robust. The RBS expectation is for a gradual rise in rates, away from emergency levels. However, as Mark Carney has stated, the eventual peak in official rates will be limited, and RBS thinks much lower than previous peaks, thanks to continued low inflation.
Europe needs a new solution
Europe, our main manufacturing trading partner, has not fared nearly as well,
and it now appears that the European Central Bank is moving towards the kind of unconventional monetary policy that has worked elsewhere. RBS expects that anything up to â‚Ź3 trillion of ‘quantitative easing’ could be pumped into European markets in 2015 and beyond, which could help a demand revival in Europe from the second half of next year. In 2014 manufacturing output growth has been driven by domestic UK demand, suffering from a lower than usual demand for exports in Europe. In emerging markets, RBS forecasts are positive for the near future. Chinese growth is likely to pick up back to around 8% in 2015, after a weaker 2014. India is also set for revival. After a period when confidence and the currency fell markedly, the new government of Narendra Modi seems set to enact business reforms that are sorely needed. RBS expects Indian growth to head towards 6.5% in 2015, as domestic demand and corporate investment recover. Overall the key indicators point to a slow but sure recovery in activity and demand from both developed and emerging markets. Manufacturers need
Positioning for Growth Series
ROYAL BANK OF SCOTLAND
The UK manufacturing sector has been lucky - and its biggest piece of luck is that it is in the UK
application of ‘Big Data’ analysis to manufacturing and wider business processes. These technologies are building what looks like the factory of the future - only they are building it today. UK companies are at the forefront of many of these developments, with technology leaders like Sandwell UK in automation (a business that will be worth £200bn worldwide next year), Johnson Matthey in fuel cell and low carbon propulsion, and a host of small development manufacturers working in nanotechnology including applications for the UK-discovered ultra-thin material graphene. But is UK manufacturing investing enough to stay competitive in these fast-evolving sectors?
to look not only to new markets but also to new business models in order to increase total turnover. It is a good time to be a strong, innovative manufacturer. But just how strong and how innovative are Britain’s manufacturers?
Technology is the key
Today the issue for companies that want to succeed in high-value, high-margin manufacturing businesses is how to continually innovate their products and processes, and how to finance that innovation. Innovation is the only way that manufacturers can prevent their products from becoming obsolete, it is the only way to defend markets against low-cost competitors, and it is the only way they can command the kind of premiums that make developed world manufacturing profitable. Across the sector businesses are being transformed by a new generation of technology applications. These include new materials, low carbon processes and propulsion technologies, ‘additive manufacturing’ techniques facilitated by the emerging 3D printing technologies, nanotechnology applications, and the
Investment still lags competitors but solutions are emerging
The current figures suggest that the UK still has a manufacturing investment deficit compared to direct competitors. According to the latest report from EEF and Lombard Asset Finance, capital expenditure as a proportion of UK GDP is still five percentage points below the OECD average of 18%. If we take for instance the auto sector, for many mid-sized and small component manufacturers the issue is financing, and specifically financing of tooling. Tooling means investing in unique process components that are typically high cost - a single tooling component can range from £30,000 to in excess of £1m to produce. The investment has to be financed upfront, yet it may take more than a year before it produces revenue. In the past lenders have been unwilling to finance such investments due to the unusual ownership structure. Typically the supplier is expected to fund new tooling components specified by manufacturers, however the tooling and intellectual property is ultimately owned by the car manufacturer – making tangible security for any loan difficult. However,
thanks to a deep understanding of the process, RBS has developed a solution - the recently launched bespoke tooling finance proposition. The proposition utilises the bank’s trade finance expertise and specifically a trade loan structure. The trade finance team will tailor the loan based on the schedule, contract and various stages of the tooling manufacturing process. The team will monitor and control the loan at every stage of the tooling manufacturing process – paying the tooling manufacturer as necessary at key stages, on behalf of the bank’s customer.
Time for lenders to get real
Investment in advanced manufacturing can only be achieved if there is a better understanding of the manufacturing chain from design to final production. Raising awareness means getting out into the real world: it may include joining bodies like the governmentindustry UK Automotive Council, which supports design, R&D, manufacturing and skills, at which RBS has a seat, but it should also include special initiatives like the ‘immersion day’ meetings recently originated by RBS that allow banking staff, including both customer relationship managers and credit analysts to meet manufacturers on their own ground. Such initiatives help RBS to gain deep insight into exactly how the manufacturing chain works in order to devise new solutions to satisfy what are often complex and long-term financing needs. Banking partners need to understand more than just pure finance; to work effectively with industry; they need to understand industries, policy and processes if they are to meet the financing needs of manufacturing. The other challenge that UK manufacturers must solve is that of increasing exports, and most likely that means exports to the regions of the world that are growing fastest. The pattern of growth in emerging economies has changed: yesterday November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 57
Positioning for Growth Series
ROYAL BANK OF SCOTLAND
Positioning for growth series all. According to the UK’s Department of Business, Innovation & Skills, only 17% of mid-sized UK businesses generate any sales outside of the EU (for comparison, the figure for Italy is almost double that). These businesses are cautious about the risks of exporting, and mainly by the risks of not getting paid by trade partners. Figures from the UKTI show that ‘new market’ risks are a deciding factor for 63% of companies already exporting, but the same study shows that companies that do bite the bullet and enter new markets become more productive in their first year (by up to 34%), and that exporting typically ends up driving greater levels of year-onyear growth.
it was about rapid industrialisation based on low wages, cheap currencies, and massive inward investment by companies keen to take advantage of the low-cost location. Today it is about the growth of the middle classes - in China, in India, and Africa too - and their demand for luxury goods and sophisticated manufactured goods, largely from Western manufacturers.
Exporting is good for growth
The UK’s larger manufacturers like carmakers understand this. But mediumsized companies (those with a turnover of £10m to £100m) have yet to catch up. For these companies the EU remains the focus of export efforts if they export at
Overall the key indicators point to a slow but sure recovery in activity and demand from both developed and emerging markets
58 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Service is the new paradigm
However, export markets are highly competitive; and success can only come from having the right business model and the right process structures at home. For many businesses this will mean embracing new service models, and rebuilding the integrated supply chain that many neglected in the rush to exploit low-cost manufacturing abroad. The business benefits of servitisation in manufacturing include a move to a long-term predictable revenue model, a reduction in operational costs, thanks to a stable customer base, and lower inventory costs. A recent study by Aston University suggested the cost savings might be as much as 30% for a company that
switches from a product-centred business model to a customer-centred service model. Servitisation also makes the re-shoring of manufacturing operations close to the customer more compelling. It is compelling for other reasons too: UK manufacturers are waking up to the fact that there are powerful competitive advantages in rebuilding their supply chains close to home, often in collaborative ‘clusters’. This is particularly apparent in the UK auto industry, where an ecosystem of designers, component suppliers and final manufacturers has grown up in and to the north of the M4 corridor. This so-called ‘colocation’ of all the components of the supply chain has been shown to be associated with higher margins in manufacturing. It speeds up design and process improvements which always require intensive two-way traffic between manufacturer and supplier.
Supply chain risks can be managed
Co-location also reduces supply chain risk, something that companies are increasingly aware of in the wake of events like the Japanese tsunami which severely disrupted the supply chains of several global automotive and electronics companies. To ameliorate those risks, the RBS Customer Solutions Group has recently developed a supply chain model that allows companies to forecast the impact of many risk factors in supply. Changes in material prices, currency fluctuations, and event risks are all capable of being priced in this model, making it possible for companies to make informed supply chain decisions.
RBS expertise
With rising output, rising investment intentions, and export markets growing, UK manufacturing is in a stronger position than it has been for many years. RBS maintains a national specialist automotive and manufacturing team headquartered in Birmingham - the traditional heart of the industry - with a brief to support automotive and manufacturing customers by tackling obstacles to growth head-on. It is a serious investment in banking expertise for the industry, one that is committed to providing customers with a partner that understands their operating environment, and that can help maximise business potential. It is also a sign that RBS believes that the UK is now on a long-term growth trajectory in manufacturing: with the right investment, and the right support including tools, techniques and industry knowledge, there is no reason why this growth should not continue and even accelerate. further information Richard Hill National Head, Automotive and Manufacturing, Commercial and Private Banking, RBS T: 07789 616201 E: richard.hill@rbs.co.uk
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Manufacturing Leadership
The introduction of new technologies combined with growth in computing processing power is likely to shape a new industrial revolution. Tom Lawton, head of manufacturing at BDO LLP identifys three technologies that are at the forefront of this revolution. Robotics
An increase in the use of robotics will make UK manufacturing more efficient as well as more competitive on a global scale. However, the UK is currently languishing in 19th place worldwide in the global robot density league at , barely above the world average of 58 robots per 10,000 employees. The Republic of Korea has nearly 10 times the number of the UK. However, an expected 30% growth rate in the UK over the next three years exceeds most other developed countries
There is the potential for UK manufacturers to play a major part in this global growth, but the funding and appetite for development needs to improve
60 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
and clearly demonstrates a revived thirst for the technology. Compare this to predicted growth over the same period for Germany (9%), France (10%), Italy (7%) and North America (9%).
3D manufacturing
Although the term ‘3D printing’ has only come to the fore in the past few years, the additive manufacturing process has actually been around for some time. However, for years it was written off as something which could only be of effective use in prototyping and for highly bespoke products. Manufacturers are now beginning to realise that 3D manufacturing has uses beyond one-off production exemplars. The process also has the capabilities of reducing the complexity of the manufacturing supply chain. Products will be printed directly to the customers’ demands, factories will be smaller and the process should entirely eliminate the need to hold stock. Analysts have forecast that the growth potential for 3D manufacturing is immense. IDC predicts that the market for 3D printing will grow 10-fold by 2017.
Nanotechnology
Nanotechnology is the newest and possibly the ‘hardest to grasp’ new technology under development but is also the one which has the potential to completely revolutionise manufacturing as we know it today. In manufacturing it is also known as ‘high-throughput atomically precise manufacturing’ or APM, which essentially means arranging and bonding molecules to form new structures. Ultimately, APM will be able to produce larger and larger components: the technology will start with computer chips and strong materials such as graphene, and could end up with the production of entire aircraft. Size will be its advantage: a desktop sized machine would be capable of producing a tablet computer or a sheet of material a single molecule thick. As with 3D printing, nanotechnology has the potential to localise global supply chains with very direct paths from raw materials through to finished products. The potential of the nanotechnology market is huge with most recent estimates by BCC estimating that the market will be worth $48.9bn by 2017, representing a five year CAGR of 18.7% between 2012 and 2017. There is the potential for UK manufacturers to play a major part in this global growth, but the funding and appetite for development needs to improve. Technological advancement will result in continued change and disruption within manufacturing in the next few years. With the current appetite for technological advancement together with the funding options available, the UK has the chance to take the lead in capitalising on these new technologies.
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Manufacturing Leadership
Will the lights go out this winter? David Topping, E.ON’s director of corporates, looks at the impact of security of supply on large energy users.
W
e’ve all seen the headlines about threats to the UK’s energy security, the closure of older or inefficient generation plants, and the warnings that supply could struggle to meet demand during a cold winter. The ‘will the lights go out’ debate is not about to go away; the risks to security of supply are increasing and this continues to be a concern from a national infrastructure point of view. From political tension in the Ukraine, to the growing amount of unpredictable renewable generation, to unplanned power station outages and shifts in energy consumption - our energy markets are becoming ever more complicated, with an increasing number of variables affecting both supply and demand. Each October, National Grid releases a Winter Outlook report that compares the level of power supply with forecast demand, and presents a view of system security over the coming months. The 14/15 report is due any day, and looking
back over previous years reveals some interesting trends. National demand has remained relatively flat, with the winter 13/14 peak forecast at 54.8GW compared to a forecast of 55.8GW for winter 11/12. The predicted impact of cold weather has also been fairly consistent, with an ‘Average Cold Spell’ (ACS) expected to add around 1.5GW of additional demand. It’s a trend we expect to continue, as increases in energy efficiency start to offset the impact of economic growth. Perhaps more important is the trend in generation capacity, which fell from 81.3GW in winter 11/12 to 74.7GW in the 13/14 report - again a trend we are expecting to continue – meaning the ‘surplus’ between generation and supply is likely to narrow further from the 8% predicted last year. Despite this, we’re confident the lights won’t go out this winter. Such ‘surplus’ figures present a fairly conservative view, excluding some
Capacity GW
Winter outlook - historic power figures
ACS demand Normal demand Generation capacity Assumed generation availability
It’s important for businesses to make conscious and informed decisions about the right purchasing strategy for them and to do this ahead of the more unpredictable winter period of the less predictable sources of supply such as wind generation or the European interconnectors. However history tells us that should energy demand threaten to outstrip supply, the costs of sourcing the required level of supply can be very high. A clear example came in April 13, when cold weather, combined with low levels of gas in storage, saw day-ahead gas prices jump to over £1/therm, with similar movements in power prices. Purchasing energy in the short-term markets can be a very effective buying strategy and one that has the potential to bring about savings – however it isn’t without its risks and can lead to considerable volatility in energy bills. Opting for longer-term purchasing or fixed price contracts both offer protection against this uncertainty, although this security can come at a premium. It’s important for businesses to make conscious and informed decisions about the right purchasing strategy for them - and to do this ahead of the more unpredictable winter period. From our experience, finding the right answer isn’t just based on understanding the energy markets, but understanding each business’s needs and objectives. E.ON Portfolio Solution (EPS) – an independent, wholly owned subsidiary of E.ON Global Commodities - offer market intelligence and advice on risk management strategies, working with customers to support them in creating bespoke solutions for their businesses.
FURTHER INFO: Winter period Source: www.nationalgridconnecting.com/winter-outlook-report/
62 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
For more information see eonenergy.com/EPS
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November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 63
Paul Gurevitch-Beacock, Manufacturing Manager, Fracino
Employee of the Month November 2014 Paul Gurevitch-Beacock Manufacturing Manager, Fracino
EMPLOYEE OF THE MONTH
office and factory environments. I am highly proficient in the use of Solidworks - a 3D design and modelling package, CAD/CAM programming for laser cutting and can operate about 90% of our manufacturing machinery which enables me to improve efficiency within production.
What personal characteristics help you in your role?
I believe I am level headed, there’s very little that fazes me and I thrive on pressure. When managing staff I believe I am firm but fair, and everybody knows the high standards I expect.
CV in brief Paul Gurevitch-Beacock Age: 36 Education: BEng in Computer Aided Engineering Career to date: Rojac Engineering – 2001-2010 Fracino September 2010-Present Hobbies and interests: Love to cook great food and eat great food, an avid reader, Brewing beer, and a massive film fan.
What is your role and what are the main responsibilities?
As the manufacturing manager at Fracino, the UK’s only manufacturer of espresso and cappuccino machines, my wider remit is ensuring that all our components are manufactured precisely and on time. My day-to-day role entails managing the in-house sheet-metal production, machine shop and boiler manufacturing cell. We are constantly innovating and producing new machines and I work very closely with our R&D department in designing new products and improving our current range. I’m also the factory’s health & safety manager.
What are the key technical skills you use?
Having gained almost 15 years’ experience in manufacturing, I’ve learnt many different skills for both
64 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
What do you consider to be your biggest personal success at the company so far?
My biggest achievement at Fracino to date has been setting up the sheet-metal manufacturing part of the business. When I joined just over four years ago, Fracino sub contracted all its metal work out to three different suppliers and I was tasked to bring it in house. We had just expanded into new premises and it was vital we had a seamless transition so that lead times and orders were not compromised. I used my initiative to get the infrastructure in place before the laser and press break arrived, sorted out the CAM software and managed the sub-contractors before the new equipment was up and running. Within six months my team was manufacturing components and the business was working more efficiently and cost effectively because we had ceased buying them in.
Why was it a success?
Fracino never stands still and ongoing innovation and investment ensure our operation goes from strength to strength. This year we brought the manufacturing of the copper
boilers for the coffee machines in house – again giving us more control over stock levels, and making huge time and money savings which are enabling us to re-invest into other growing areas of the business. We now manufacture 90% of our components in house.
What are the most rewarding parts of your job?
Working for a respected and expanding award winning brand where we are creating something from nothing gives me a big buzz. I am very lucky, as I seem to be in the very small category of people that love their job. I think quite simply that there is nothing better than seeing a finished product that you have played a key role in producing.
What first attracted you to a career in manufacturing?
The first thing that got me into manufacturing and being creative was Technic Lego. I remember getting a set at Christmas and all of a sudden I stopped opening the rest of my presents and just started to build, and I guess it just went from there. Manufacturing processes may have changed over the years but never the desire to create.
How do you think best to get more young people interested in manufacturing?
I believe we’re missing a trick by not educating young people in what manufacturing and engineering is really about and instilling pride in these skills. Although I’ve always been interested in making things, I never had the opportunity to develop this at school. Britain is the greatest place in the world for engineering; it is such a diverse field that there is definitely something for everyone. We just need to stimulate interest in people at a younger age.
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Keeping women in science Science and engineering are key to strengthening the British economy, yet the UK is lagging behind other European countries in regards to women in STEM professions.
O
n Friday September 26 several high-flying women in science, all at different stages in their careers, gathered at Murray Edwards College for the Women in Science Symposium. As part of the college’s 60th anniversary celebrations, the
The debate began with a discussion of female participation in schools, examining the crucial role models encouraging young girls to take up and continue in STEM, as well as the barriers squeezing them out of the spectrum
66 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
research-based meeting focused on three key areas affecting women’s progression in science, technology, engineering and maths (STEM) at each juncture in their careers. Dame Barbara Stocking, DBE, Eager listen toprofessionals president of the attracti the barriers and students ng and a retaininnd gateways college and to g wom en in ST EM former founding director of the NHS Modernisation Authority, welcomed professionals and students to the event and Professor British economy, she said: Dame Athene Donald, former diversity “The Women’s Business Council champion at the university provided the reports that equalising the labour opening address. force participation rates of men and The debate began with a discussion women could increase UK GDP per of female participation in schools, capita growth by 0.5 percentage examining the crucial role models points per year, with potential gains encouraging young girls to take up and continue in STEM, as well as the barriers of 10% of GDP by 2030.” Additionally, several secondary squeezing them out of the spectrum. schools were invited to the event to Dr Jane Crawshaw, a teacher from network and share their experience Hertfordshire and Essex High School, of STEM in their school. shared student success stories and highlighted several studies suggesting girls are more successful at science in a single sex learning environment. Another key area referenced was the undergraduate experience of women in Dr Jane Crawshaw, a this area. Professor Denise Morrey from Oxford Brookes University, the first female teacher from Hertfordshire graduate with British Rail, presented and and Essex High School, Olivia Walker, PhD student at the college, shared student success stories highlighted the importance of giving young women practical experience, she and highlighted several said: “I have been lucky enough through the college to take part in actual research, studies suggesting girls are which has consolidated my enthusiasm more successful at science for science.” in a single sex learning Finally, the conversation turned to the value of STEM in the labour market environment with Barbara Stocking underlining how the lack of women is damaging the
Snapshots
Doing time wisely Duo UK has developed a specialist NVQ with The Manchester College, education provider for HM Prison Manchester, as part of prisoner rehabilitation programme.
T
he qualification, known as a City and Guilds NVQ Diploma in Performing Manufacturing Operations, will be available to those seeking a career in manufacturing, as well as formally recognising the skills of those already working in the sector. HMP Manchester operates an in-house commercial printing operation which produces a range
We aim to give inmates an experience of real workplaces, with the aim of increasing their chances of rehabilitation and employment once they’re released
WORKFORCE & SKILLS
of lithographic and digital print products for clients such as the National Offender Management Service (NOMS), government organisations and commercial customers. A spokesperson explained: “HMP Manchester is a working prison. “That means we aim to give inmates an experience of real workplaces, with the aim of increasing their chances of rehabilitation and employment once they’re released.
Inmate workp s experie of inc laces, with nce real of reh reasing the the aim abilita ir tion chances
There’s a real lack of formal qualifications that recognise the skills needed to work within a modern manufacturing organisation
“The printing operation is an important part of that programme. “Since we set up our print operation in 2010, we’ve had considerable success but we identified quality control and manufacturing processes as areas we needed to boost inmates’ expertise in. “We also thought there was an opportunity here to ensure inmates had the chance to add a formal qualification to their CV, reflecting the skills they had learnt from working in the print operation and boosting their employability. “Consequently we nd ra b UK’s out skills , DUO got in touch with The ab melowassionate ortunity to ri B e Zo tor, is p n opp Manchester College to direc roviding a nders and p ilitate offe explain what we needed rehab and they were able to approach Duo UK.” Duo UK’s brand director, Zoe Brimelow added: “There’s a real lack of formal qualifications that recognise the skills needed to work within a modern manufacturing organisation. This is problematic for us as a business as it makes it harder for us to recognise the skills our team has developed or to accurately identify skill levels among potential new recruits.”
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 67
Nikki Hesford
WORKFORCE & SKILLS
Where there’s a skill, there’s a way Nikki Hesford speaking at the IOD Annual Convention 2013 on the main stage of the Royal Albert Hall
Nikki Hesford, director of Made in Preston, a brand that produces fashionable styles that go beyond DD, talks to Barbara Fitzsimons about the skills that make her a success.
A I always look for attitude over aptitude. Skills can be taught but a good outlook with a passion for fashion cannot
68 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
keen speaker, young mother, ex-glamour model and proud British manufacturer – these are only a few of the fundamental elements that create the driven personality that is Nikki Hesford. Ms Hesford started her business, Made in Preston, from scratch after finding difficulties squeezing her petite but large busted figure into high street clothes. She realised there was a niche in the market to provide affordable fashions for similar shaped women, and, more so, to produce them from the UK. “Initially I was importing from China,” Hesford said, “But I found it frustrating working with a market that didn’t really understand my vision. I was becoming frustrated with the quality, the lead times and the communication,” she said. These factors, coupled with the fact that Hesford never got to be personally involved in the manufacturing process, meant the reliance on foreign imports became increasingly risky to the small but ambitious business. Today, Made in Preston covers the entire production process itself, from purchasing fabric, to creating the final product, to delivering the finished
garment to the customer. Additionally, basing her business in the UK has meant that Hesford can be very adaptable to the market and its ever changing trends and to her customer’s needs. “If we see a trend, we can adapt to it in a matter of weeks,” she said. Flexibility is crucial to the management of her business, Hesford says. “The key to running an efficient manufacturing company,” she said, “is communication”. She is a trusting manager who respects her employees and keeps them well informed of her plans for the business, and thus often receives loyalty and a hardworking staff in return. “I always look for attitude over aptitude,” Hesford said. “Skills can be taught but a good outlook with a passion for fashion cannot.”
A woman’s work is never done
More specifically for women, Hesford understands the difficulty of standing out in the masculine manufacturing industry. However, she is a great believer of women simply “putting their heads down and getting on with it”. Eight months pregnant herself and still working very hard, Hesford has little patience for women who complain, and who give their gender a bad name. Hesford knows that the skills gap is, unfortunately, huge. “When sourcing seamstresses, especially those who need to have more specific skills and can use more complex machines,” she said, “I would wager I only ever find three successful applicants out of every 100”. However, in her desire to close the skills gap, Made in Preston became part of the Alliance Project, which aims to address employer’s skills shortages currently holding the textiles sector back. It also offers minor funding to assist with the training of textile manufacturers’ employees. “If more manufacturers were willing to look into such schemes, the gap could begin to close,” Hesford firmly believes. Although Hesford does not have an official apprenticeship scheme in place herself, she is keen to hire students and give them the opportunity to gain experience, some of which have now gained full time employment with Made in Preston. When pressed on what drives her success, she states simply: “My family, my drive to be a success, and my desire to be a role model to my son and to society.”
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Semta
WORKFORCE & SKILLS
Why focusing on STEM all adds up Semta’s chief operating officer Ann Watson outlines a project which is crucial to the future of UK industry
N
o one should be in any doubt, if the UK is to remain an economic powerhouse in a world where traditional competitors and emerging nations are developing at a rapid pace, then tackling the teaching and learning of science, technology, engineering and maths (STEM), particularly in Further Education, has reached a critical stage. Research by the CBI indicates 20% of the workforce - 5.8m people - are employed in STEM-based occupations. It also reported that 42% of employers currently experience difficulties in recruiting STEM-proficient staff at all levels of expertise, from apprentices to postgraduates. It is clear there is a shortage of specialist STEM teachers and tutors.
A recent report by Engineering UK revealed almost a quarter of those in secondary schools teaching maths (23%) and chemistry (24%), and a third teaching physics (34%) have no qualification in the subject beyond A-level. All very concerning when latest estimates suggest the STEM sector requires 82,000 new recruits by 2016 and 830,000 STEM professionals by 2020. Success in promoting science and maths to young people, and encouraging continued STEM study beyond school, depends on high quality teaching delivered by subject specialists. These are just some of the reasons why Semta has been commissioned and funded by The Education and Training Foundation to develop and deliver a project to drive up standards in STEM teaching and training across England.
Teachers, tutors and lecturers play a central role in fuelling the passion of young people to pursue STEM qualifications and careers
Launched at The House of Lords on October 21, The STEM Alliance brings together further education and industry to develop a higher level of competence, confidence and collaboration in STEM teaching and learning, to inspire and equip the next generation of engineers, scientists and technicians with the skills to succeed. Activities the STEM Alliance will focus on include:
What will stem from this?
70 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
Identifying and sharing good practice and the best resources Delivering a series of workshops and events for new and existing STEM teachers and tutors Increasing the number of staff entering STEM training programmes and retaining them Actively engaging with employers, including employer secondment and work placement opportunities for tutors and trainers A STEM register will be created, with the aim of signing up more than 1,000 employers to provide work-based professional development for STEM teachers and tutors. Teachers, tutors and lecturers play a central role in fuelling the passion of young people to pursue STEM qualifications and careers. Recognising the need for STEM teaching to keep pace with advances in modern industry, we are united in our aim to upskill, recruit and retain talented STEM educators - giving them the tools they need to inspire the engineers, scientists and technicians of the future. We connect forward-thinking employers, further education, training organisations and professionals to shape policy; provide industry insight; share expertise, and inform the development of world-class teaching resources. It is an exciting time for the UK’s engineering and advanced manufacturing sector and this project will complement other initiatives aimed at aligning education with employers needs to ensure we have the skilled workers required to power our economy. Together, we will help keep UK STEM sectors at the forefront of innovation.
We need your support so please get involved at www.STEMalliance.uk or call 0845 643 9001
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The lending evolution
Before the economic crash of 2008, business lending was tricky but not impossible. Banks were lending almost always unsecured but after the crash, raising capital for a company became the luxury of born-wealthy proprietors, the extraordinarily lucky and the downright dishonest.
72 www.themanufacturer.com | November 2014 | Issue 9| Volume 17
D
espite politicians across Government stressing the significance of business lending in rebalancing the economy, net lending to UK businesses has now been decreasing for almost seven years, according to the Bank of England’s Trends in Lending report 2014 released in April. Additionally, the buoyancy with which UK manufacturers began 2014 has been somewhat deflated by reports of slowing growth and stubbornly static interest rates. Nevertheless, it is paramount to emphasise that although growth has decelerated, it has not stopped. Recent data revisions by the Office for National Statistics (ONS) showed that the economy had surpassed its pre-crisis peak much earlier than previously thought. So now, more than ever is the time to invest in the continuation of the manufacturing sector’s upward trajectory.
However, you have to speculate to accumulate; so the most obvious resource is the bank, but what if the bank says “no”? Thankfully, there’s more than one way to skin a cat and fund a business, and where venture capitals and often business angels fear to tread, crowdfunding has become the latest answer to growing a business.
Crowdfunding
According to Forbes, the crowdfunding economy grew by £3bn in 2013. Its uniqueness lies in its potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives and high net venture capitalists. Crowdfunding platform Funding Tree, which offers both loan and equity options, allows investors to contribute anything from £50 to the entire investment. CEO Dillen Iyavoo sees crowdfunding as way of nurturing a business to make
Crowdfunding
Finance & Professional Services
“The thing about borrowing money is you have to service that from day one. “A business, which has begun, quite often needs a good six to 12 months to start establishing, but unfortunately has to start paying back the debt and that is a burden from the beginning. “Our offering is that we are able to support businesses throughout their entire life cycle.”
The process from business to investor
Iyavoo tells that everything is completed online. “it’s important that we offer transparency,” he says. At each stage both parties have access to all information. The CEO maintains that the likelihood of achieving investment depends on the transparency of the transaction. He says: “Culturally, when businesses become more comfortable with making their businesses more transparent then hopefully things will become a lot more straightforward.”
What’s in it for investors?
it more appealing to larger investments. “We are helping to incubate businesses and seed them up to a point where it becomes interesting for larger institutions to step in,” Iyavoo says.
Where venture capitals and often business angels fear to tread, crowdfunding has become the latest answer to growing a business Iyavoo references the public’s interest in Funding Tree’s offer of choice in equity and loan funding. “Especially in the UK, we have very much a loan culture, people tend think about borrowing money to start, opposed to raising equity and giving away a minority stake in their business.
Tax breaks are an added bonus. Terry Facey, managing director of Surrey-based Oak & Iron Furniture, who financed his company using crowdfunding, explains: “Done under the Seed Enterprise Initiative, which is a Government scheme, if you put £1,000 in, you get a tax break, you receive 50% against that and your corporation tax can be deducted. “If a business goes wrong completely you get another tax release for that too. If you put in £5,000 your loss could be as little as £1,400. “And if it’s successful, you retain it and the get benefits.” Yet, where there are benefits there are risks, explain Iyavoo. “You have to make sure the business makes sense to you, either you understand the business or the market,” he says. “Equity investments are always riskier, the chance of recovering your funds in the event of failure is very slim. We encourage investors always to diversify. However, provisions are in place to recover funds where possible.”
When you get it right
Malcolm Bird, chairman of e-Go airplanes, which manufactures light single seat aircrafts shares how the business raised a whopping £950k from
crowdfunding and angel investors via SyndicateRoom. Bird told : “Ego started in 2007, looking to exploit an opportunity when the aviation authority removed regulation concerning the very light aircraft area. We were able to create an aircraft that really had not been possible before. “In 2011 we raised the first bit of money from some business angels, which allowed us to create a prototype, which flew in October 2013. “At that point we wanted to raise some more money and included crowd funding in that process, which was successful.” The airplane manufacturer chose Syndicate Room, because, as Bird says, they were “approved by FCA and CF that allowed the buying of equity, for many Crowdfunding you buy gifts or you give gifts of money. The board thought it was important for people to own shares in the business.”
Evolving the lending landscape For people like Terry Facey, the bank “more or less forced me to take out a mortgage on my house.” Facey continued: “Instead, we did a very good five-year financials plan and a crowdfunding company accepted us. “I went to the meeting last night and pitched to about 30 investors and we have had contact from people today.” Nick Leitch, of Seneca, told : “It’s really exciting. The monopoly that the banks had has broken down. There’s more variety out there.” As the industry gains momentum, the banks are beginning to realise that the two needn’t be mutually exclusive. In fact, several banks, including Santander, are working with crowdfunding firms to support businesses up and down the UK. However, despite glowing feedback, crowdfunding is in its infancy, which makes it difficult to determine how the industry will affect companies in the long-term, particularly as the process is still being regulated. It remains to be seen how the industry will evolve or what the regulators with discover in the deep dive.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 73
Pinsent Masons
Neil Black, Partner
Finance & Professional Services
December 1 2014 will see the implementation of new rules designed to allow parents to decide whether or not they want to share the mother’s maternity leave.
T
he Department for Business, Innovation and Skills has recently reported that they are expecting around 285,000 working couples to be eligible to take advantage of the new shared parental leave rights. Whilst the changes are no doubt significant, initial take up is expected to be low. Nonetheless manufacturers need to ensure they are prepared for the change.
This is a very significant change which has considerable implications in terms of workforce planning, particularly given the complexity of the rules and a number of unanswered questions
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What is SPL?
Whilst the rules are implemented in December, the new system of shared parental leave and pay will only be available to parents of babies due (or matched/placed for adoption) on or after April 5 2015. Once eligible the following key elements will apply: The mother must take the first two weeks’ leave post childbirth but the remaining 50 weeks’ leave (and 37 weeks’ pay) can be shared Shared statutory parental pay will be paid at the same rate as statutory maternity pay (currently the lower of 90% of pay or £138.18) The leave may be taken consecutively or concurrently by both parents but cannot exceed 52 weeks in total Notice of shared parental leave must be given no less than eight weeks before the start of the intended leave. The leave can be taken in blocks, in multiples of a complete week. The employee can request continuous or discontinuous periods of leave
Each parent will notify their own details to their own employer. There is currently no system allowing employers to communicate with each other about the shared leave Each parent will have 20 ‘shared parental leave in touch’ days (SPLIT days) available to them Employees will have the right to return to the same job if the total leave taken is less than 26 weeks. Where the leave is more than 26 weeks, they have the right to return to the same or a similar job Employees will also be protected from less favourable treatment as a result of taking shared parental leave
What should I do now?
This is a very significant change which has considerable implications in terms of workforce planning, particularly given the complexity of the rules and a number of unanswered questions (such as the question as to whether enhanced maternity pay has to be offered to fathers). Manufacturers need to prepared for the introduction of this system and consider how policies and approaches might need to be reviewed in light of the reforms and their intended approach. Employers should also consider the level to which they will need to communicate changes with employees and ensure that line managers who will be dealing with requests receive any necessary training and information to equip them to do so.
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Supporting the sector C
Charles Garfit shares how Santander has recognised the value in the British manufacturing industry and what the bank is doing to support the sector’s future.
harles Garfit took up the post of head of manufacturing for the UK in January 2014, a new role specially created by the bank to support its commitment to lend an additional £500m to UK manufacturing businesses over the next three years.
Background
Santander entered the corporate commercial market place almost six years ago when it acquired the Alliance & Leicester and Abbey National building societies. Within Alliance & Leicester at that time was a small corporate and commercial bank. Garfit told that we have strategically and deliberately set about growing over the last five years, and have grown from about 1.5% market share in the UK to roughly 6%. “We have an ambition to grow to 10%, which is where we would feel comfortable.”
Increased optimism
While speaking with , Garfit said; “After the recession hit, SMEs battened down the hatches, rode out the
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challenging conditions and effectively lost the appetite to increase leverage. Today, I think the tide is changing and businesses are feeling a little more optimistic.” But that is not to suggest that manufacturers are not still facing borrowing challenges. “Manufacturers sometimes struggle in their ability to communicate with financial institutions,” says Garfit. “When presenting, businesses should be able to show three years of accounts and provide a narrative to articulate the numbers in real terms. “It is important to be able to paint a coherent picture of where you want to take the business and show your bank that you have planned for a variety of different situations and outcomes. “We love optimistic businesses, but we enjoy realistic businesses even more.”
What is Santander doing differently?
In order to achieve its 10% market share ambition, Santander has identified several key sectors it wants to target, which includes, of course, manufacturing. In addition, the bank
has set out to articulate its ambition and strategy in a number of ways. The first, and what Garfit calls ‘a tangible output’, is the creation of teams throughout the bank’s 70 regional business centres, that specialise specifically in manufacturing, ensuring businesses have access to expert resources in their local area. He continues: “What we are doing - which is somewhat unique - is not only training our relationship teams, but bringing some specialism into it.” Another element of the strategy is understanding the value of third party partnerships. One example of this is the postgraduate award programme in ‘Innovation Business Leadership’, which starts later this month, and is being run by the Warwick Manufacturing Group (WMG), and is funded by Santander. The idea is to provide business leadership training for 20 senior managers from fast growing SMEs, on campus at the University of Warwick. And it doesn’t end there – Garfit said that “WMG is a key partner of Santander, with some of our specialist relationship directors and credit partners being put through in depth manufacturing training which will further their skills in the sector and help them support even more manufacturing businesses in the future.”
The bank on tour
To demonstrate its commitment to SMEs, Santander is organising a series of summits and conferences up and down the country. The most recent one
Santander
Finance & Professional Services
The SME Summit, which had a strong manufacturing focus took place in Birmingham in October and followed on from a number of summits around the country. It was a superb opportunity for manufacturers to share their experiences
took place in Birmingham, and was the first event to boast a specific sectoral focus. “The SME Summit, which this time focused on the manufacturing sector, followed on from a number of events all around the country and was a superb opportunity for businesses to share their experiences.” In addition, the bank has recognised the importance of advanced manufacturing. During our conversation, Garfit enthusiastically references the Advanced Engineering show, which is taking place at the NEC in November with Santander as a headline partner. “It’s in the interest of our customers across the United Kingdom. We’re looking forward to hosting an exhibition stand at the show and we are looking forward to meeting lots of different businesses during the event. The advanced sector is going to be of increasing importance as the years go on and it’s a space where we can really start to add value.”
The future for Santander
Garfit makes it clear that Santander is passionate about manufacturing and will continue to do everything in its power to support the strengthening of the sector. “There are lots of exciting things happening in 2015, especially with The Manufacturer magazine. For example, we are delighted to be sponsoring the Future Factories Series; we’ve already done the first one of those and we’re looking forward to the next one in February.
at the Successful Modern Entrepreneurship Summit
Successful Modern Entrepreneurship Summit 2014 On October 15, more than 80 SMEs from across the Midlands, came together at the Successful Modern Entrepreneurship Summit organised by Santander and in partnership with The Times, to hear from some of the UK’s most successful entrepreneurs on how to capitalise on the strong resurgence in the manufacturing sector. Held at Fazeley Studies in Birmingham, the summit kicked off with a welcome address from Head of UK Banking at Santander, Steve Pateman; included a panel session to discuss today’s manufacturing opportunities with various business leaders in the sector; and concluded with a key note speech from Ian Maclean, Managing Director at 230-year-old UK knitwear manufacturer, John Smedley. Topics for discussion throughout the summit, included access to finance, cash flow forecasting, international growth, modernising / upgrading, people cost and skills and competitive strategy. Charles Garfit, Head of Manufacturing told TM that the Summit was a “superb opportunity for manufacturers to share their
experiences about what they have achieved, how they have achieved and give some tips for success”. Garfit said that he was “delighted” John Smedley’s MD, Ian Maclean, provided the keynote “given its history and having had the opportunity to bring them on-board as a customer after the business had been with its previous bank for so long. We are really pleased that they are supporting this important event and sharing their story with our customers.” Ian Maclean, Managing Director at John Smedley, said: “The manufacturing sector is often the breeding ground for the UK’s most innovative entrepreneurs and fast growth companies. “The SMEs attending this event benefitted from the advice, knowledge and experiences of people like them who have navigated the challenges and can share their success stories. “Establishing networks like this is essential for the continued growth of like-minded SME businesses. This is good for the region and good for the UK economy as a whole.”
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Lloyds Bank
Finance & Professional Services
Advertorial
Resurging and rebalancing The manufacturing sector is crucial to the revival of the UK economy. It is the growth of SMEs within the sector that Lloyds Bank say it will support an economic recovery.
Manufacturers are increasingly looking beyond just servicing domestic markets and are targeting emerging economies for growth opportunities
loyds Bank have further strengthened their 13 local manufacturing teams across the country, who offer support and guidance to these SME firms as they work towards their growth ambitions. As head of manufacturing, David Atkinson oversees the network of over 100 relationship directors and managers, who have each gained a formal accreditation with the Warwick Manufacturing Group at Warwick University to build upon their knowledge and understanding of the sector. Atkinson’s team is committed to helping local manufacturers achieve success, whether that’s making a strategic acquisition, moving to new premises or supporting a growing demand to invest in new machinery, in order to further accelerate economic recovery across Britain. Over the past year, Lloyds Bank have supported businesses from right across the UK. Deals have included a £560,000 expansionary finance package for metal presswork manufacturer HT Brigham in the Midlands, an £890,000 loan for Norfolk’s Wolf Brewery to support a new automated bottling line and a five-figure loan through the Funding for Lending Scheme for The Handcrafted Card Company in the North East. Manufacturers are increasingly looking beyond just servicing domestic markets and are targeting emerging economies for growth opportunities.
Lloyd’s teams work closely with UK Trade and Investment, UK Export Finance and their own international business managers to support these businesses to gain a foothold in new foreign markets and achieve exporting success. Lloyds Bank also recognise that the UK manufacturing industry still has challenges ahead if it is to maintain its position in the global marketplace, and the projected skills shortage of engineers is a major obstacle that needs to be overcome. To help fill this skills gap, Lloyds Bank have launched a £1m a year partnership with the Manufacturing Technology Centre in Coventry for the new Lloyds Bank Advanced Manufacturing Training Centre. The site is designed to help advise young talent and develop more than 1,000 engineering apprentices and trainees over the next five years. Lloyds Bank also committed to £4bn of new lending to the sector by the end of 2017, through their manufacturing pledge, to drive growth in the sector. Atkinson is delighted to say that so far to date Lloyds Bank are ahead of their plans to deliver this. Atkinson is excited about the opportunities that Lloyds Bank face into and they aim to anticipate and respond
L
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to the needs of manufacturers to ensure that the sector continues to grow and develop, building on its reputation. Alongside the ambition and talent in the industry, Lloyds Bank are optimistic for the future of manufacturing in the UK and remain confident that it will continue to thrive with the right support and focus.
Contact David Atkinson, UK Head of Manufacturing, Lloyds Bank Commercial Banking at david.atkinson@ lloydsbanking.com
Any property given as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it. All lending is subject to a satisfactory credit assessment. Lloyds Bank plc. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278 Please note that any data sent via e-mail is not secure and could be read by others. We subscribe to The Lending Code; copies of the Code can be obtained from “http://www. lendingstandardsboard.org.uk/” www. lendingstandardsboard.org.uk
The Manufacturer magazine in conjunction with the leading automation equipment suppliers has established The Automation Advisory Board to educate owner-managers and factory directors about what automation equipment can do and the beneďŹ ts it can bring to UK manufacturers.
For more information contact Henry Anson, Managing Director, The Manufacturer E: h.anson@sayonemedia.com T: +44 (0)20 7401 6033
Automation needs to rise to the board level in companies of all sizes, but especially larger SMEs where the capital equipment could make a profound difference to winning contracts. Companies in non-auto sectors, who are unfamiliar with the range, capability and simplicity of automation kit, need and deserve to know what automation options are available. This year it is a business risk not to be informed about the beneďŹ ts this technology can bring.
bit.ly/AABautomation The Automation Advisory Board is proudly supported by:
Telsa Gigafactory
Manufacturing Technologies
The age of the Gigafactory After electric motorcar manufacturer Tesla announced the building of its new US Gigafactory by 2017, James Pozzi looks at its potential impact on wider industry.
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n modern manufacturing, we are often told about how the factories of the future will change the industrial landscape. But now, talk of the Gigafactory is abound. This is the brainchild of American automotive maker Tesla, a company which through its CEO Elon Musk, has set out to redefine the electric vehicle landscape. And now it could be about to raise the bar for battery manufacturing, with its
Elon Musk, Tesla
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$5bn lithium ion battery manufacturing facility to be built near Carson City, Nevada by 2017. Set to be the largest facility of its kind in the world at 10m sq ft - the equivalent of 174 football fields - it will employ 6,500 once completed. What’s more, all of this will operate on 100% renewable energy, with plans to generate more than 2,900MWh of renewable electricity daily, around 20% more than it needs to run. Banking institution Goldman Sachs estimated in February that the Gigafactory will consume 17% of the
Musk has set some typically ambitious production goals that even the most profitable and efficient automotive companies could only dream of world’s lithium supply, while fellow firm Morgan Stanley cited it as a potential disruptor of trillion dollar industries including automotive and energy. Musk has set some typically ambitious production goals that even the most profitable and efficient automotive companies could only dream of. He believes ultimately, the plant could produce more lithium batteries annually in 2020 than were produced worldwide last year. Naturally, the pending arrival of the Gigafactory has led to notions over what this could mean for the overall state of lithium manufacturing. Kirill Klip, president of the International Lithium Corporation, believes the setting up of the factory could have a transformative effect on the lithium market. “All these developments are opening the vast market for lithium storage applications, in which the price of lithium can go up to meet demand,” he says. “The cost of lithium product within the finished lithium battery is currently under 2%, so the price can rise dramatically before automakers will even notice it.” Many believe that it was the state’s natural lithium supplies and not its government offering Tesla $1.2bn in incentives that swung the decision in its favour over rival bidders California, Texas, Arizona and New Mexico. But while Klip acknowledges Nevada’s lithium rich status as a bonus, he says the fact Panasonic supplies Tesla with lithium cells means sourcing it in the state isn’t necessarily crucial. But in the race to power the future of mass electric vehicle production, Tesla is not alone. South Korean giant LG Chem announced its own plans to build a Megafactory in Nanjing, China, which will produce lithium batteries for over £100,000 electric cars annually. It’s predicted that such levels of mass volume production will engineer a drop in prices of lithium batteries toward $100 per kWh, a move that will drive the mass market for electric cars across the globe.
Mitsubishi Electric
Manufacturing Technologies
A new world of communications
Mitsubishi MAPS SCADA solution translates the captured data into meaningful information
Mitsubishi PLCs offer flexible, open data gathering and are the heart of the M2M solution
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Machine-to-Machine (M2M) communications holds the key to a new paradigm of industrial automation and production. Chris Evans, Mitsubishi Electric’s Marketing & operations group manager, explains.
cross manufacturing sectors, requirements to develop new services, enhance productivity, boost efficiency and solve critical problems are common themes. There is also pressure to build better quality products with greater flexibility and often with unprecedented levels of customisation. This is reliant on two vitally important things: large quantities of data and the ability to analyse and act on the information that data provides. Previously, the amount of data available and collected was limited and tended to remain local. This placed an emphasis on operators to be local in order to make plant floor operational decisions. It also
It’s a game changer in industrial applications and it is reckoned that the M2M era will see an estimated 50bn GSMconnected devices by the end of the decade
meant that higher level decisions about production were made more on intuition than on actual requirements. The adoption of Ethernet for the backbone of industrial communications opened up data transfer between the plant floor and higher level business systems. This coupled with remote monitoring and new generations of ‘smart devices’ began providing information about status, production efficiency, energy consumption, machine availability and more. This ‘manufacturing convergence’ has brought a new model of integrated and flexible production. The final piece of the puzzle is the GSM revolution. This is the Internet of Things (IoT), also known as, M2M communications.
The age of the Internet of Things Individual devices capture an event and relay that data through a network (wired, wireless or hybrid) to an application (software programme) that translates the captured data into meaningful information. It’s a game changer in industrial applications and it is reckoned that the M2M era will see an estimated 50bn GSM-connected devices by the end of the decade, driving a new model
of connected intelligence. Experts predict that the ability to access, analyse and act upon the increased data that M2M solutions will provide could deliver as much as $100bn of annual savings thanks to improved material, energy, production and logistics efficiencies. Product quality and yields will improve, operational costs can be controlled more effectively and production can be optimised to best meet ever more demanding customer requirements. Mitsubishi Electric is at the forefront of this revolution with its M2M solution, delivering affordable, global, end-to-end data connectivity in industry sectors such as environmental monitoring, SmartGrid, pipeline monitoring, machine monitoring, mining, water utilities, telecommunication, building and facilities management sectors. The solution is built on Mitsubishi’s MAPS SCADA software and PLCs, for both control and data acquisition, to and from remote sites. M2M communications makes data the definitive management tool, enabling us to implement and operate vastly more sophisticated and complex systems, whilst maintaining a firm grip of what’s happening within those systems. As we drive towards the new manufacturing paradigm of Industry 4.0, with smart factories and products that effectively produce themselves, it is M2M that will provide the facilitator. With newly intelligent machines and advanced software analytics, the factories and plants of the future will be able to optimise themselves to increase business performance and drive down costs. November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 81
PP Electrical Systems
Manufacturing Technologies
Understanding the true cost of poor quality Tony Hague, managing director at PP Electrical Systems, asks Machinery Manufacturers: “How much is downtime really costing you?”
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ustomers becoming more demanding, wanting more for less, pressure on lower prices, purchasing departments focused on cost down results, all of this sound familiar? However, as important price may be, do you really appreciate the total manufacturing cost of your equipment and just as importantly, the lifetime cost? More OEMs are now focused on true ‘total’ cost when they consider their manufacturing and supply chain options, using valuable information back from their sales, service and installation teams to help shape future design and cost analysis. When you consider the electrical controls and automation field - speak to any machinery manufacturer, irrespective of industry or application - the biggest single contributor to field failure and resultant service visits is poor electrical connectivity. It’s a fairly obvious point to make, but the weakest part of any electrical circuit is the connection between cables and components. Traditional methods of manual cable preparation and crimping using hand tools are prone to error, irrespective of how tools are calibrated and maintained. This is because the error is usually with how they are used by the operator themselves. Quite often such defects result in a crimp ‘making’ sufficiently well that when it is wired into a control panel or cable harness and then ‘point-to-point’ tested, it will pass. However once that machine has been transported and installed, you could have an immediate problem,
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or indeed you may find the problem occurs some weeks later following the install. Having an intermittent fault caused by a poor electrical connection is a ‘nightmare’ for a service engineer. Such an issue can cause a host of problems for an automated machine and can be exceptionally difficult to locate. The result at best is an expensive service visit, but it could be far worse depending on the end customer, application and the associated costs of machine downtime. These scenarios are exactly why PP Electrical Systems has invested over £1m in the best automated cable preparation machinery, much of it unique to us in the UK.
Crimp Force Monitoring
Features include crimp force monitoring (CFM) technology, where every single crimp going on to every cable, is 100% optimised by measuring the force applied to the crimp at the point of application. The automated machinery can immediately sense a variance caused by over strip (copper conductors being removed when the outer jacket/sleeve is removed) or the crimp not being seated correctly on the stripped cable when crimped. Either way the machine will recognise a potential issue, cut off the faulty crimp and re-crimp accordingly. This removes the need to batch test crimp quality through pull off tests or crimp height tests, you guarantee 100% quality - every time. Our customers are OEMs with a reputation for optimum quality, technology and machine performance.
Many of them export equipment all over the globe and their clients are demanding and machine downtime is an absolute catastrophe for all parties concerned. A good example of this would be Mazak Machine Tools, with whom we have worked in partnership with for close on 20 years. Marcus Burton, European managing director, had this to say: “The quality of our machine tools are recognised globally and everything we strive for with our partners is focused on maintaining those levels of performance. “PP Electrical Systems’ investment in automated cable preparation and the associated levels of 6 sigma quality that is delivered, is a critically important factor in ensuring we take every possible step in offering our customers the most reliable product available.” Mazak supplies machine tools to many leading manufacturers in automotive, aerospace and medical Industry. So in summary, when you consider machinery build costs, not only consider true total costs of manufacture, but also factor in lifetime costs associated with machine performance.
Significant investment has been ploughed into automation at PP Electrical Systems
Rockwell
Manufacturing Technologies
Cracking down on energy consumption
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kzoNobel Powder Coatings produces high-quality powder coatings - a solvent-free alternative to paint, which offer many industries a tough, hardwearing and environmentally sound coating alternative. These powder coatings can be used on a large number of diverse products in both consumer and industrial settings, including white goods, office furniture, alloy wheels and aluminium windows. The company is continuously developing and innovating, with long-, medium- and short-term R&D support. As well as product innovation for its customers, the company is always striving to improve its own on-site capabilities and environmental credentials.
The challenge
According to Steve Wilburn, WWPG process engineer at AkzoNobel: “50% of the electricity used at Felling is consumed by common site services; things like compressed air, chilled water and extraction. When all of these systems are in operation, we can often see peak load conditions throughout most of the day. The biggest energy consumers are medium-sized motors, which run for long periods of time, some occasionally at full capacity. The ones used by the shared services were often running all the time, even when the particular service was not required.”
AkzoNobel Powder Coatings enjoys the easy reporting capabilities of Rockwell Automation’s FactoryTalk® VantagePoint® coupled with advanced data collection and collation hardware. “The site had two 1 MW transformers, which were running at 100% capacity and it was these transformers that triggered the initial investigation into the site’s energy use,” Wilburn explains. “We first undertook a fledgling energy monitoring programme at Felling in 2008, where we installed FactoryTalk® EnergyMetrix™ from Rockwell Automation in one half of the factory. The problem was that we didn’t really analyse the data. About the same time we also went from ‘made to stock’ to ‘made to order’ and started using less power so the urgency was not there anymore. “We then did some work with FactoryTalk® VantagePoint®, a data visualisation solution and a team from Rockwell Automation lead by Gerard O’Connell, the PEMS lead for Rockwell Automation in the EMEA region, and the true appreciation of our site’s power consumption and wastage changed almost overnight.” Through this enhanced ability to visualise the consumption, Wilburn and his team commenced a new larger scale project, with help from the engineering team at Rockwell Automation, which was intended to provide a real-time appraisal of what was being consumed by each of the primary assets in order for changes to be made that would ultimately result in less energy consumption.
The solution
The solution designed and deployed by AkzoNobel and the Rockwell Automation PEMS team comprised both hardware and software assets that would ultimately feed into an easy-to-decipher graphical front end supplied by VantagePoint®. A centralised EnergyMetrix suite is used to collect information gathered from either PowerMonitor™ 1000 units or Allen-Bradley CompactLogix™
programmable automation controllers (depending on equipment size/location). These units combine to give AkzoNobel the ability to measure and analyse water, air, gas, electricity and steam usage alongside plant operations in order to paint a clearer picture of energy usage. Energy cost savings are then derived from: analysing electrical peak demand profiles and determining if there are peaks that can be reduced; analysing alternative rate schedules; analysing ‘dead load’ and determining if additional equipment can be turned off; and verifying bills from utility suppliers and establishing targets for utility consumption. “The majority of our Felling site’s equipment is now monitored by Rockwell Automation systems,” Wilburn explains. “We are also using Ethernet; even the smaller applications, such as the PowerMonitor 1000, offer Ethernet capability. They are great products. Indeed, we are now running on Ethernet not only in the UK, but also in our German and French factories.” By using Ethernet as the communication backbone, AkzoNobel has the option to expand the application and data flow even further into the Connected Enterprise. This will allow it to exploit a broad range of additional value-added functions, including the collection of real-time performance data, historical data for performance assessments. This will also allow for maintenance schedules and connectivity beyond the shop floor into enterprise systems that can help manage the equipment even more precisely in line with other assets on site. The use of standard Ethernet within EtherNet/IP™ means that there is very little that needs to be done for these connections to be established; and full security solutions are also available for user control and to help prevent unwarranted access.
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 83
ABB
Manufacturing Technologies
The world’s fastest palletiser, the compact four-axis IRB 460, is capable of up to 2,190 cycles per hour, making it ideal for any high-speed end-of-line palletising system
RM Group’s LTF 800 Mobile Packaging System uses ABB’s IRB 6640 and IRB 460 robots as part of a system providing a versatile, efficient and easily transportable way of bagging products at source
Going mobile High speed palletising combined with versatility and easy transportation means the IRB 6640 and IRB 460 are ideal for RM Group’s mobile packaging vision.
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obots from ABB have helped systems integrator RM Group to turn an innovative idea for a mobile packaging system into a working reality. Housed in 45ft articulated trailers, RM Group’s LTF 800 Mobile Packaging System uses ABB’s IRB 6640 and IRB 460 robots as part of a system designed to provide customers with a versatile, efficient and easily transportable way of bagging products at source.
Essentially a full packaging factory enclosed in a regular truck trailer, the LTF 800 takes raw materials in one end, and delivers them fully dosed, sealed, bagged and placed on a pallet, ready for despatch
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Essentially a full packaging factory enclosed in a regular truck trailer, the LTF 800 takes raw materials in one end, and pops them out the other, dosed, sealed, bagged and placed on a pallet, ready for delivery to the store, using ABB’s robots to
do the heavy lifting at a speedy pace. RM Group has validated the system to deliver 22 bags per minute. The system can handle any type of aggregate or pellet product, such as sand, gravel, seeds, animal feed, etc., and could be modified to handle things like potatoes and onions as well. Specifically designed for applications involving high capacity production, the IRB 6640 has a payload of up to 235kg, enabling it to handle extremely heavy materials. With no tail swing, the IRB 6640 is ideal for restricted spaces such as small factory floors. Running the second generation of ABB’s TrueMove and QuickMove software, the robot offers greater movement accuracy, with less time needed for programming. New features including simplified fork lift pockets and more space in the robot foot help to simplify maintenance. Now 400kg lighter, the 6640 robot is also easier to install. The world’s fastest palletiser, the compact fouraxis IRB 460, is capable of up to 2,190 cycles per hour, making it ideal for any high-speed end-of-line palletising system. As well as improved efficiency, the system also helps users to realise operational and environmental improvements. By eliminating transportation between product sources and packing location, the system not only helps to cut haulage expenses, but can also help to reduce CO2 emissions, with no need to ferry products to and from off-site bagging facilities. Effectively a decentralised factory, the LTF800 can also help make businesses more adaptable to rapidly changing consumer demands. The trailer factory can simply be pulled up to a loading dock, plugged in and can immediately start producing finished bags of product without any waiting. “The integration of ABB Robots allows for fast, automated palletising of the packaged products,” says Llewelyn Rees, managing director of RM Group. “The IRB 6640 robots have been a complete success for RM Group, coping with the high demands and withstanding 1,000s of miles of haulage and continual labour, whilst the IRB 460 helps to deliver fast packaging output speeds with combined precision in palletising. ABB are the first port of call for every project we undertake that involves robotic automation.” FURTHER INFO: For more information, email robotics@gb.abb.com or call 01908 350300 and reference ‘RM LTF800’
Siemens
Manufacturing Technologies
Aston Martin’s manufacturing facility at Gaydon, Warwickshire
Reap the wild wind
As Aston Martin celebrates 101 years of automotive production, its sports cars, including the Rapide S, Vanquish, DB9 and Vantage, installs a new Siemens intelligence system.
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ston Martin and Siemens Industry have developed and installed a SCADA plant intelligence system. Its manufacturing facility at Gaydon in Warwickshire has installed Siemens SIMATIC WinCC SCADA as a scalable process visualisation system to control and monitor all aspects of the site’s processes from the production line to the paint shop and beyond. Aston Martin’s senior controls engineer Steve Davis explains some of the background: “Our Gaydon manufacturing facility is modern, flexible and efficient but we are always looking for improvements.
The factory-wide control system operates all equipment and provides immediate access to operational critical data
“We felt that the introduction of a plantwide integrated control and monitoring system would be beneficial. We spoke with Siemens Industry and developed a solution which had SIMATIC WinCC SCADA at its heart. We can now access status, data and reporting from up to 50 terminals across the site.” The factory-wide control system operates all equipment and provides immediate access to operational critical data. This includes trend logging of temperature curves in the paint shop’s curing ovens through to control and visualisation of activity on the two primary production lines. Equipment data can be monitored and presented as live operator-relevant information, which can be integrated into KPI reports, which can then be used for management decision-making. In addition, with access to downtime reporting capability, fault-finding and even spotting potential faults, issues can be quickly identified and corrected leading to a reduction in downtime and an increase in equipment effectiveness.
Daniel Smalley, product manager for Siemens Industry believes Aston Martin is reaping real benefits from the expansion of the control and monitoring system at Gaydon and the enhanced intelligence it brings to the manufacturing process. Smalley says: “The Gaydon site is now seamlessly joined via the userfriendly WinCC SCADA system so all elements of the production process are easily accessible via the touch displays that are strategically positioned in production areas. “Visualised real-time plant and production information at the touch of a button means the operational teams are on top of situations quickly and can respond without delay. “From a proactive perspective enhanced and predictive maintenance strategies are being implemented and, with these, reductions in downtime are actively managed meaning operational efficiencies have been further improved.” Davis concludes: “We are happy with the benefits we have seen since installing the new system. We have an integrated and plant-wide transparent control and monitoring capability for our essential processes all from a single source. It also allows for historical archiving of results achieved, downtime alarm logging and daily build logs, which is the type of critical data that can aid strategic planning and improve our already impressive efficiency record.” November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 85
Only connect
As new servitisationbased business models emerge, the Internet of Things could provide the means to monetise them, finds IT contributing editor Malcolm Wheatley.
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oming soon, to a factory near you: pieces of production machinery acquired not through capital expenditure, but rented on a ‘per use’ basis. Injection moulding machines, paid for by the stroke or by the hour, for instance. Or pallet wrappers, paid for by the number of pallets wrapped. To astute observers of business trends, the word ’servitisation’ will instantly spring to mind. And yes,
the increasingly popular strategy of servitisation is indeed what lies behind such developments. But underpinning that strategy is another mot-du-jour: ‘things’. Because if each of these pieces of equipment is to be paid for on a ‘per use’ basis, then the owner of the machine will need to capture that usage within their ERP system in order to send out an invoice. And the electronic glue that provides that connectivity is the ‘Internet of Things’- a phrase we’re all hearing a great deal more of these days, but which is still the subject of some confusion. Simply put, as consumers, we’re used to using the Internet to interact with other consumers, and to access services on remote servers: Facebook, YouTube, iPlayer and so on. The Internet of Things is the same Internet, but with devices added as well - in a consumer context, ‘things’ like home thermostats and cookers; and in a manufacturing context, pieces of equipment and production machinery.
With a rules-based parser, you’re effectively taking simple text-based automatically-generated e-mails, stripping out of them the data that you need, and then feeding it into the ERP system. The connection is perfectly adequate, but secure Kevin Stalker, Technical Director, KCS Datawright
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Only connect
Moreover, that connectivity isn’t simply in terms of invoicing production and other equipment on a ‘per use’ basis, stresses Richard Wilding, professor of supply chain strategy at Cranfield University School of Management. For example, he points out, automated re-ordering becomes possible, where devices at customer premises automatically recognise a reordering point, and trigger a replenishment order. Likewise, equipment will be able to recognise the need for maintenance either through specific sensors, or after a certain number of operating hours—and ‘call home’ to request a service. “It’s a huge opportunity for manufacturers to take a commoditised product, and create a service ‘add on’ that makes their offering unique,” he explains. In short, sums up Steve Dunbar, the Internet of Things commercial lead at Microsoft, “the Internet of Things is a game-changer - and for manufacturers, having this view of their downstream supply chain is going to deliver huge benefits.”
A different challenge
But, as those benefits begin to become apparent to more and more manufacturers, the realisation is dawning regarding the extent of the shift in focus that the Internet of Things involves. “Instead of a manufacturer connecting to devices on its own factory floor, it is connecting to devices on someone else’s factory floor - which isn’t quite the same thing,” points out Jonathan Orme, sales and marketing manager at Exel Computer Systems. “It’s not technically difficult, but it is an inherently different proposition.” Most obviously, of course, devices on a manufacturer’s own factory floor can be considered to be ‘behind the firewall’, and thus less of an issue from a security point of view. But a customer’s premises are most certainly outside the firewall - and not surprisingly, businesses will want to consider the ramifications of such a development before directly connecting their ERP systems to potentially insecure and hackable devices on the Internet of Things. And it’s this aspect of connectivity that differentiates connecting to the Internet of Things from ERP connectivity in respect of mobile devices,
IT in Manufacturing
The Internet of Things is a gamechanger: for manufacturers, having this view of their downstream supply chain is going to deliver huge benefits Steve Dunbar Internet of Things Commercial Lead, Microsoft
believes Gavin Oberholzer, business development manager at Microsoft Dynamics experts HSO. “It’s one thing to connect to a mobile device belonging to your own sales person sitting in a customer’s office, and quite another to connect to a machine tool sitting on that customer’s factory floor,” he argues. “But while it’s a leap, it will happen—it’s only a question of degree, and time.”
Secure connection
And the technology for doing that is evolving fast, explains Brian Prosser, solutions consultant at Microsoft Dynamics AX specialist and Microsoft Gold Partner eBECS. For instance, he notes, whereas a prototype technology demonstrator developed by eBECS a few years ago used a purpose built .NET program to ‘push’ data into Dynamics AX via web services, these days there is a stronger focus on security considerations. “The debate has moved on,” he notes. “It’s not: ‘Can we connect to these devices?’, it’s ‘How can we connect securely to these devices?’ Security vulnerabilities are much more prominent in customer’s thoughts today, so these days we’d probably use something like the Microsoft Azure service bus, in order to take advantage of the newer security protocols.” Microsoft’s Dunbar agrees, adding that Microsoft’s Microsoft Azure Intelligent Systems Service has been specifically developed to help businesses embrace the Internet of Things by securely connecting, managing, and capturing machine generated data from a variety of sensors and devices—and doing so, what’s more, across multiple platforms, including Linux, iOS, and Android.
That said, adds Kevin Stalker, technical director at mid-market ERP vendor KCS Datawright, don’t underestimate the value of older technologies, properly deployed. Two-way connections, such as SOA and web services, he notes, aren’t always necessary - more often, the connection is one-way, with remote devices ‘calling home’ with usage statistics, or requests for maintenance or material replenishment. In which case, he points out, simple text-based automaticallygenerated e-mails, securely parsed on receipt by a rules-based parser, will do the trick nicely - as a number of KCS Datawright’s customers have discovered, he notes. “You’re effectively taking a standard text e-mail, stripping out of it the data that you need, and then feeding it into the ERP system,” he explains. “The connection is perfectly adequate, but secure.” But whatever the means of communication, one thing is certain: more and more manufacturers are going to be exploring Internet of Things connectivity in the years ahead. Simply put, the commercial imperatives are just too strong. “The credit crunch showed manufacturers that they needed to find an alternative to selling large, expensive pieces of machinery to customers who couldn’t get the finance to buy them,” sums up Cranfield School of Management’s Richard Wilding. “For both buyers and sellers, taking those large expensive pieces of machinery, and packaging them as a service, offers an alternative business model.” A business model, which handily - the Internet of Things helps to monetise. November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 87
Data Interchange
IT in Manufacturing
25 years on, can anything new be said about EDI? Plenty, says David Eyes of EDI specialists Data Interchange. IT contributing editor Malcolm Wheatley finds out more.
M
ention Electronic Data Interchange (EDI), and many manufacturers will inwardly groan. Hailed almost 25 years ago as the universal business-tobusiness integration tool of the future, the day-to-day reality of EDI in practice has turned out rather differently. For instance, many manufacturers have EDI connections with only their very largest customers and suppliers. More often than not, those connections will utilise different EDI standards and communications protocols. And finally the specific EDI transactions exchanged with those customers and suppliers are often limited to just a small subset of the
There’s massive value to be gained in using EDI with any customer, or any supplier. And that value can be enhanced even further by using EDI as a full two-way information flow, right across the full breadth of transaction types
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overall range of potential transactions encompassed by EDI. Failure—or opportunity? Very much the latter, insists David Eyes, head of business development at Data Interchange, an international provider of EDI and B2B integration solutions. “There’s a widely believed misconception that EDI is really something for companies to use with their key trading partners,” he notes. “That’s just plain wrong: there’s massive value to be gained in using EDI with any customer, or any supplier. And that value can be enhanced even further by using EDI as a full two-way information flow, right across the full breadth of transaction types.” So how, exactly, does this value arise? And why haven’t more businesses seen it? The problem, says Eyes, is that EDI has tended to be seen as a way of receiving and transmitting information. In fact, he says, EDI’s true value arises through an enhanced ability to process information, rather than merely receive it or transmit it. “What you’re really getting with EDI is the ability to integrate customer requirements into your ERP system, very rapidly and without error, almost as soon as those requirements are recognised by the customer,” he points out. “So very
quickly, you understand your customer’s requirements, and can in turn share those requirements with your own suppliers. So you’re speeding up the supply chain, and by a significant amount.” Moreover, he adds, EDI makes it easy for a manufacturing business to further add value by making use of EDI’s twoway business processes and by removing the need for human intervention. “Customers find ASNs - advance shipping notifications - incredibly useful,” he points out. “Routinely, ERP systems produce them - but without EDI, there’s no straightforward or cost-effective way to transmit them to a customer.” Likewise, he adds, EDI is the ‘digital glue’ that permits the automation of the entire order-to-cash business process. “With EDI, you can connect orders to delivery despatches, delivery despatches to customer receipts, and customer receipts to electronic invoices - there’s a huge cash flow benefit. And what’s more, the instant exchange of data that EDI provides then allows manufacturers to identify any potential invoice payment issues at the earliest possible point.” That said, stresses Eyes, Data Interchange itself is more than just an EDI software provider with its own EDI network. Instead, he explains, Data Interchange thinks of itself as a firm of EDI experts, offering advice and insight. “We look at individual customers’ business processes, looking for ways to leverage EDI to improve efficiency, reduce risk, reduce error, and reduce waste and manual processing - which we almost always find,” he sums up.
Exel
EFACS E/8 provides group wide visibility President Engineering Group Ltd (PEGL) discuss how Exel’s EFACS E/8 aids it to handle every part of day-to-day business.
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EGL was formed in October 2010 from a management buyout of Conflow and Bestobell from Flow Group. The £20m turnover business was further enhanced by the recent acquisition of Bretby Gammatech Ltd, a specialist provider of coal monitoring products. At any one time PEGL has approximately 1200 live orders with around 900 of these passing through the machining area comprising 12 CNC units, irrespective of which company or customer they relate to. They are then separated out into distinct assembly areas, one for each business. Optimising capacity as well as smoothness of flow is essential, but complicated
by multiple routing permutations, lengthy setup times and the fact that different processes require different levels of skilled operatives. In other words, as financial director Marie Cooper states: “There’s always a lot going on which puts pressure on our capacity, visibility and ability to meet our stringent ‘On Time and In Full’ (OTIF) targets.” PEGL had been successfully using EFACS 8.2 since 1996 to handle every aspect of the business and as Cooper reflects: “It did everything we needed it to.” This changed in 2005 when PEGL had to integrate the Bestobell and Conflow businesses, but boardroomlevel issues led to the company continuing to make the best of what it had for the next five years. However, a successful MBO in October 2010 gave the newly formed PEGL the freedom to address this, and within a month Cooper had invited Exel in to discuss the new group’s requirements. They both identified that PEGL would benefit from upgrading to the latest version, EFACS E/8. The key considerations of the implementation
IT in Manufacturing
The increased visibility leading to immediate improved communication between commercial and production were that firstly, it could not impact the day-to-day running of the business; secondly, it had to have the ongoing buy-in and input from all users of the system; and thirdly had to reflect the business processes across the entire group. Even during the implementation, this led to EFACS being seen as an enabler for people to do their job better and helped move people away from an individual job to a more company oriented focus. When PEGL did go live in mid-September 2012, it was a success, with the increased visibility leading to immediate improved communication between commercial and production. Decisions that previously could be delayed for days could now be taken right there and then, while in her own department, Cooper could now access financial data much quicker and easier. Quality Control, previously reliant on manual processes, now benefitted from the Document Management and Workflow functionality within EFACS E/8 which makes it impossible for any stage to be overlooked or for anything other than the correct documentation to be available. This even extends to the shop floor where operatives can instantly access the required drawings etc. via Wi-Fi enabled terminals. Helping to keep live data completely up to date is the new EFACS E/8 Audit Trail module which is used to provide traceability about key strategic transactions across all the relevant business processes. November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 89
Microsoft Dynamics
IT in Manufacturing
Getting inside the mind of the customer
What do customers really want? A wave of emerging technologies is finally providing an answer, Microsoft’s Steve Bunyan tells IT Contributing Editor Malcolm Wheatley.
I
t’s almost exactly a hundred years since American retail magnate John Wanamaker pithily observed that half the money that he spent on advertising was wasted - the trouble being that he didn’t know which half. Unfortunately, despite all the marketing advances that have taken place since then, many businesses still struggle to understand their customers’ underlying needs and requirements. But could that be about to change? Quite possibly so, it seems - because that’s the very prospect held out by a wave of new and fast-developing technologies sweeping across the world of business today, says Steve Bunyan, market development manager for manufacturing industry at Microsoft. The technologies in question? A familiar list of contemporary buzzwords, in short: CRM; ERP; Big Data; social
Never before have there been so many ways in which customers can share their views and opinions
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listening; predictive analytics; and the Internet of Things. But take a close look at each, explains Bunyan, and you’ll see a common underlying thread. In short, he points out, they each provide a way of getting closer than ever to what customers - and prospective customers - are really thinking. And when powerfully combined together, those insights also combine together to build up a picture of customer requirements and customer buying intentions that is of unprecedented clarity. “Never before have there been so many ways in which customers can share their views and opinions,” he notes. “From social channels to the Internet of Things, and CRM systems to the latest generation of dynamic marketing systems, customers are only too keen to let businesses know what they want.” Moreover, he adds, social channels can not only help manufacturers to understand customer perceptions of their products, but also provide insights into how the market views their competitors’ products. So what can businesses do with such insights? Build better products, for one thing, says Bunyan. “Whether it’s through the Internet of Things, social channels, ERP, or CRM, there’s a wealth of information out there about product performance, product usage, and customer requirements,” he points out. “There’s an obvious benefit in being able to use this to drive new product development processes, or offer new service propositions such as servitisation.”
Better demand forecasting, too, is an equally obvious benefit, whether the insights come from clues in social channels and CRM systems about customer buying intentions, or devices at customer premises reporting via the Internet of Things that a replenishment trigger has been reached. In short, stresses Bunyan, utilising these new sources of information, and acting upon them, allows organisations to develop and market precisely targeted products and services to meet customer needs as never before. Moreover, the information that is gathered isn’t solely for the sales and new product development functions, but can better serve business process functions right across the organisation – the supply chain, warehousing and transportation activity, and many other aspects of the organisation. But the key, insists Bunyan, is to look beyond the individual technologies, and think in terms of the end objective now - acquiring that better insight into what customers actually want. “Stop thinking about buzzwords, and focus on where you want to be, understand what ‘good’ looks like for your customers, and act upon it,” he sums up.
FURTHER INFO: For more information, please visit www.microsoft.com/en-gb/ dynamics/manufacturing
Atos
IT in Manufacturing
Becoming fully connected is the only way ahead
Fully connected manufacturing
D
Simon Culshaw, delivery director for Atos believes there is only one way to satisfy customers, optimise operations and beat your competition in a world transformed by digital technology.
igital technology is transforming our personal behaviour and working lives. We are now all connected customers, informed and empowered by limitless knowledge, expecting products and services to be developed faster and personalised to our preferences. What we expect as customers, our customers also expect. Achieving success in this digital environment requires harnessing the changes that created it. Becoming fully connected is the only way ahead.
Think customer
With Make-to-Order or even Maketo-Individual production models fast becoming the norm, and with customers having zero tolerance for product quality issues, responsiveness to changing customer demands is imperative. The foundation of this is properly exploited data.
With access to huge volumes of external and internal data, many manufacturers are deploying Atos Data Analytics to extract the insight and actionable intelligence needed to understand the fine grain of customer satisfaction, wider trends in the market, and the positioning of competitors. This wealth of knowledge feeds customer centricity and helps you make better and faster decisions. Not just for product development but in predicting demand, streamlining manufacturing processes, generating greater efficiency in supply chains, and creating innovative marketing offerings, all of which will enhance customer experience and boost loyalty and retention.
Be connected
The use of this data is significantly enhanced by the integration of processes, machines, applications, people and plants across the enterprise.
This connectivity ensures consistency, providing a single and accurate view of performance across the factory floor and along the supply chain. This then enables gains in operational excellence, efficiency, scalability and cost effectiveness: all critical to manufacturing competitiveness in the 21st Century. The best and most advanced manufacturers are taking the tough but rewarding route of integrating, redesigning and streamlining processes and systems into one unified business platform. It is technology that enables this integration of operations across the value chain - from product development, through procurement, to production planning, and manufacturing execution and management systems. At Atos, we deploy our unique experience, methodologies and capabilities in all of these specialist areas to deliver the integration needed. We’ve already deployed solutions for the likes of Nestle, Akzo Nobel, BMW and many other leading manufacturers, helping to achieve significant cost, efficiency and operational benefits.
The factory of the future
We successfully integrate multiple systems, using innovative and robust methodologies such as M4MES. We deploy our MPM operational intelligence system to enable impressive improvements in line performance and reductions in production down time. We provide an end-to-end product life cycle management consulting and implementation approach.
FURTHER INFO: To discover more about Atos in Manufacturing and our Factory of the Future initiative please visit uk.atos.net or email Simon. Culshaw@atos.net. November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 91
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hat’s the ROI of an investment in a manufacturing execution system? Potentially very significant, as many manufacturers would agree. Simply put, not only do manufacturing execution systems shine a harsh spotlight on how well manufacturing processes are performing, but they also provide control mechanisms to ensure compliance with standard operating procedures and factory-floor scheduling priorities. And either way, the ROI is attractive - especially so in the case of process improvements delivered as a result of the data that a manufacturing execution system delivers on OEE, for instance. That’s the good news. The not-so-good news, as again many manufacturers will agree, is that the theoretical benefits of manufacturing execution systems aren’t always achievable in practice. “There are well-documented case studies of manufacturing execution systems failing to deliver on as much as 10-40% of their intended benefits,” warns Mike Hodge, managing director of Cimlogic, a Yorkshirebased manufacturing execution system consultancy and implementation specialist. And the result of this failure, he adds, is that manufacturers see an investment in a manufacturing execution system as riskier than an investment in other types of IT system - such as ERP, SCADA, and PLM, for instance. Which can’t be right.
Perfect execution Manufacturing execution systems are all the rage. But getting the system that’s right for your business involves some careful requirements analysis, says Cimlogic’s Mike Hodge. IT contributing editor Malcolm Wheatley reports.
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Failure mode
So what goes wrong? Several things, says Hodge, adding that only rarely does the fault lie with the manufacturing execution system itself. For while it is possible for manufacturers to make a mistake in
Not only do manufacturing execution systems shine a harsh spotlight on how well manufacturing processes are performing, but they also provide control mechanisms to ensure compliance with standard operating procedures and factory-floor scheduling priorities
Cimlogic
selecting a manufacturing execution system, it’s a mistake that in practice seems not to happen very often. “Instead, once you start drilling down into why a given manufacturing execution system hasn’t delivered, you quickly come across the same basic list of problems,” he explains. “The system’s objectives weren’t properly defined, for instance. Or the project management processes were inadequate. Or there was a lack of communication between the various parties involved—the board, the factory floor, the IT function, and individual supplier of the manufacturing execution system in question.” And the root causes behind such failures aren’t difficult to determine, stresses Hodge. Simply put, they boil down to two fundamental misconceptions. First, there’s a common failure to understand exactly what a manufacturing execution system project actually is, and what it will involve; a second, an equally common misconception that the manufacturing customer is best placed to specify what they actually want their manufacturing execution system to deliver. Heady stuff, to be sure. And in some circles, almost heresy: surely the whole point of any IT system is to give the customer what they want? Quite so, says Hodge, pointing out that what a customer really wants, and what they initially thinking that they want, are two very different things. “It’s a bit like Apple’s Steve Jobs quoting Henry Ford saying: ‘If I had asked people what they wanted, they would have said faster horses’,” he observes. “Or, as Jobs himself said, ‘You can’t ask customers what they want, and then try to give that to them. By the time you get it built, they’ll want something new.’” In other words, he stresses, a successful manufacturing execution system project first of all begins by helping the customer to understand what a manufacturing execution system is, and then helping them to understand what they want from it. Which, put another way, boils down to making sure that any investment decision regarding a manufacturing execution system reflects the conclusions of a thorough requirements analysis—and a requirements analysis, what’s more,
that has been conducted by someone who knows what they’re doing.
Back to basics
“Using a specialist partner for a requirements analysis can transform the prospects for success,” asserts Hodge. “They can look at the ‘As Is’ situation, work with senior management to define a ‘To Be’ end point that reflects the strategic needs of the business, conduct a gap analysis, look at the business’s technology road map, and determine the specific requirements for a manufacturing execution system that will precisely fit the needs of the specific business.” Moreover, he adds, the same specialist partner can work with the business to provide education and guidance on how to make best use of a manufacturing execution system, provide a sound implementation methodology, and work to build ‘buy in’ from other parts of the business - those parts of the business that will benefit from the deliverables of a properly-specified, and properly project-managed, manufacturing execution system. Which parts of the business, in particular? The list is surprisingly long, says Hodge, and includes departments and functions that might at first be thought to be entirely indifferent to a factory-floor manufacturing execution system. “Talk about better factory-floor planning and scheduling, for instance, and the sales function start to see benefits in terms of better order due-date performance,” he suggests. “Likewise, better planning and scheduling - and more reliable equipment, thanks to OEE-driven improvement exercises means that the maintenance function can at last concentrate on proper preventative maintenance, rather than being continually locked into a cycle of breakdown-and-repair.” What’s more, adds Hodge, the use of a specialist partner well-versed in manufacturing execution systems can help to avoid another common problem: ‘requirement compromise’, when the high-level strategic business requirements that are to be met by a manufacturing execution system in fact become subordinate to the tactical preferences of another business function. IT functions, for instance, are often guilty of this.
IT in Manufacturing
When an IT function says: ‘a solution must be cloud-based’, or ‘it must use – say - an Oracle database’, what they’re really doing is compromising the search for the ideal manufacturing execution system from a manufacturing point of view
“When an IT function says: ‘a solution must be cloud-based’, or ‘it must use – say - an Oracle database’, what they’re really doing is compromising the search for the ideal manufacturing execution system from a manufacturing point of view,” he stresses. “Don’t make the manufacturing execution system’s requirements subordinate to other requirements: look for the best fit with what the overall business really needs and not what the IT function prefers to support.” In short, sums up Hodge, the right partner can make a huge difference to the eventual outcome of a manufacturing execution system project - so, once again, don’t compromise. “Find the right partner, and engage with them openly, and in a spirit of mutual trust,” he recommends. “The more they understand what you want, they more that they’ll be able to help you achieve it - and achieve it over the long term.”
FURTHER READING: To get more guidance on what questions to ask in order to safeguard ROI on an MES investment – and to learn how to interpret and evaluate the answers – download Cimlogic’s free guide, 20 tips when selecting an MES system and integrator at bit.ly/20tipsMES www.cimlogic.co.uk or call 01274 599955
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 93
Scent of H success At global fragrance specialist CPL Aromas, a move to Microsoft Dynamics AX has delivered real benefits, finds IT contributing editor Malcolm Wheatley.
eadquartered in Bishop’s Stortford, fragrance manufacturer CPL Aromas last featured within these pages in October 2011. Serving customers around the world from a network of 17 factories and offices, by late 2009 the company had come to recognise that its growth was being hampered by a 12-year old ERP system that was five years overdue for an upgrade.
It was time, in short, to switch to something newer and better. And after a year-long investigation of the ERP marketplace, embracing most of the leading systems and implementation partners in the market, a decision was duly made. The replacement ERP system of choice? Microsoft Dynamics AX. But the project didn’t get off to the best of starts. An incoming project manager arrived to find that relations with the chosen implementation partner weren’t good, and that little progress had been made. Yet the problems didn’t seem to stem from the choice of Microsoft Dynamics AX, he found, and so CPL Aromas set about finding a replacement implementation partner, working its way through a rigorous evaluation process. Very soon, a shortlist of four top contenders emerged, which subsequently boiled down to just one name. “Columbus struck us as very thorough and competent, with skilled and experienced people, a proven implementation track record in process businesses like ours, and with the geographic reach to support our overseas operations,” he told The Manufacturer. “It was clear that they knew what they were talking about, and had the resources and commitment to deliver, using people with a process industry background who had implemented Microsoft Dynamics AX many times before.”
Fine-tuning
At which point, explains group finance director Mark Kalinowski, project progress accelerated, commencing with a series of modifications. Top of the list: modifications to enable the system to deliver critical cost and margin data, on an actual cost basis, and not an average cost basis; and also the ability to retain product formulae not within the Microsoft Dynamics AX ERP system itself, but within the company’s ProductVision system, widely used within the process industry as a PLM system. Similarly, he adds, CPL Aromas wanted to retain its existing systems for quality control. While these changes weren’t especially demanding, explains Kalinowski, there was a fierce
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Columbus
determination, given the global rollout that the system would entail, to make sure that there was a high level of user confidence in the system when it did eventually go live. Accordingly, it wasn’t until March 2013 that the go-live point was decided upon: CPL Aromas’ American operation, located in Somerset, New Jersey. “It had the advantage of having both a manufacturing division and a sales division, and so was fully representative of our requirements,” he explains. “But usefully, too, it wasn’t an especially large operation in the overall context of the business—a good place to start, in short.” The American go-live occurred on schedule in June 2013, and went off without a hitch. Not to say that there weren’t learning points, notes Kalinowski: in particular, it became clear that employee training was important, especially when the employees in question had limited prior exposure to the concepts underpinning ERP. Next: another combined sales and manufacturing operation, this time the company’s established business unit in the South American country of Colombia, which went live in October 2013. And again, says Kalinowski, there were learning points—this time around the complexities of dealing with the Colombian government’s strict guidelines on foreign currency transactions, and charts of accounts. “And then, in March 2014, came our biggest rollout—our European manufacturing facility in Brixworth, Northampton,” continues Kalinowski. “What’s more, because this supplies our UK sales division, as well as our French, German, Indian, and Dubai sales divisions, we took the decision to go live with these as well.”
A break with the past
Six months in, Kalinowski—and the rest of CPL Aromas—are delighted with the project’s progress. “It’s a huge change, and we’ve achieved some real benefits,” he enthuses. “Finally, we have a modern, fully-functional ERP system in operation across most of the business—and a date, in mid-2015, when the remaining operations, such as those in the Far East, will also go live. It’s enormous progress.” Moreover, he adds, intercompany visibility has improved enormously
IT in Manufacturing
It had the advantage of having both a manufacturing division and a sales division, and so was fully representative of our requirements Mark Kalinowski, Finance Director
since the implementation. Handling intercompany processing within AX means that CPL Aromas now has a clear understanding of the margins for every incoming sales order, prior to accepting it and processing. Furthermore, CPL Aromas has seen clear customer service benefits from moving to an all-encompassing, fully integrated solution—“increased levels of customer service that will help us drive our business forward in the years to come,” enthuses Kalinowski. That said, he concludes, there’s still work to be done. Right across the business, the move to a centralised ERP system has brought culture shock in some areas, with people having to place their trust and confidence in the system, rather than in their familiar manual systems. In turn, this has placed a fresh emphasis on the value of having accurate and timely data within
the system, so that the decisions that it reaches are the correct ones. “We always knew that there would be some cultural issues to address,” sums up Kalinowski. “The important thing is that we’ve made the leap from where we were, to where we now are—a modern, forward-looking company, a leader in its industry, and now one which has an ERP system to match.”
November 2014 | Issue 9 | Volume 17 | www.themanufacturer.com 95
A costly burden
TALK OF THE INDUSTRY
Further increases in electricity prices will simply add to the pressure that manufacturers are already under
A costly burden
Terry Scuoler investigates how escalating energy costs pose a significant threat to both British manufacturing and this country’s ambitions for a better-balanced economy.
A
projected 50% hike in electricity prices by 2020 would hit margins and competitiveness. It could even lead to a quarter of manufacturers considering investment outside the UK. If we need a reality check then it is this - the impact of this projected rise in prices is such that just 4% of manufacturers would be left unscathed. A sobering thought indeed. Further increases in electricity prices will simply add to the pressure that manufacturers are already under. Over a quarter of firms are already spending six percent or more of turnover on energy, while affordability is already a key concern for more than eight in 10. This is the stark warning from our latest research on manufacturers’ energy costs. And, while it probably does not come as a surprise to many of us in industry, the picture is more complex and challenging than previously imagined. There is also worryingly low level of confidence in the ability of the current range of energy efficiency
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schemes ability to deliver on-going improvements. Almost four in 10 say the schemes are overly complicated, while less than one in five say the key UK schemes provide the right incentive to improve energy efficiency. At the same time, businesses are split over the UK taking a leading role in developing ambitious climate targets. While some do recognise the benefits it brings in terms of driving innovation and creating new markets, this is more than offset by those who perceive the risk it poses to British competitiveness. Such is the concern over ambitious targets hampering our ability to compete that 46% of manufacturers want to see the UK remain in line with global competitors. In short, there is a clear risk of low carbon becoming synonymous with being anti-competitive. This tension between the pursuit of low carbon policies and Britain’s ambitions for a better-balanced economy must be resolved. Failure to do so will hit investment, margins and competitiveness, and put the brakes on growth.
The next government should ensure that energy policy supports ambitions for a better-balanced economy. As part of our Agenda for Government to 2020, EEF has three key priorities. The first is a commitment from all parties for the implementation of the Energy Intensive Industries (EII) compensation package as announced at the 2014 Budget. This should include introduction of the compensation for the costs of renewables as soon as possible and a long-term view of continued protection measures beyond 2019/20. Secondly, a fresh approach to industrial energy efficiency and decarbonisation is necessary so manufacturers remain competitive. This should include; review and reform of the current mechanisms to ensure they are capable of delivering on-going improvements across the sectors most affected they effect, a greater focus on low carbon innovation for the manufacturing sector and the establishment of an EII decarbonisation strategy centred on the findings of the 2050 low-carbon roadmaps Finally, the costs of decarbonising the power grid to energy consumers must be reviewed and reformed. The long-term focus must be on ensuring that emissions-related taxes and policies demonstrably and effectively deliver emissions reductions and are not aimed primarily at raising revenue. Importantly manufacturers are not saying “no” to low carbon, but they are saying “yes” to a more balanced approach by policy makers enabling us to move to a low carbon economy in a way that enhances our global competitiveness, not damages it. If we strike this balance right then Britain should be able to enjoy the benefits of greater innovation and new markets, while also staying in the game as a global competitor. If we are serious about rebalancing our economy this has to be our objective.
Magazine Full online access 10 Future Factory Events * Thats
ONLY
The Manufacturer, the industry’s leading magazine has just got even better value
£3,995
worth of training included in your subscription!
£95
How? It’s simple! For £95 you can subscribe to The Manufacturer receive the magazine ten times a year directly to your desk, get full online access and now you can attend any of our Future Factory Series of events for free!
Per individual subscription
There are 10 Future Factory Series events scheduled for 2014 covering a range of subjects including workforce development, automation, innovation, energy, supply chain, H&S and flexible workforce. That’s £3,995 worth of training included in your subscription.
The easiest decision YOU will ever make!
themanufacturer.com/sign-up *Terms and conditions apply