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HOT TOPIC Industrial Strategy How well does industry think government is doing?

Workforce & Skills United we stand In the face of industry skills gaps

Manufacturing Technologies A chill for 3D thrills Keep a cool head on 3D printing

IT in Manufacturing Extracting value How to get ROI on ERP

FACTORY OF THE MONTH Sony UK Technology Centre

ALsO IN THIS ISSUE: Guidance needed for the new D&T curriculum Health & safety training changes SME cost of compliance revealed Industrial sustainability challenges Benefits realisation for CRM In partnership with:

Gunning for growth Reconnoitring prospects for the UK defence industry

INTERVIEW Stephen Fitz-Gerald CEO, Marshall Aerospace Group

www.themanufacturer.com | October 2013 | Vol 16 Issue 8


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Welcome

EDITORS INTRODUCTION

Industrial policy fever

It’s not surprising that the political party conference season spurred an extravaganza of bold policy statements and commitments to supporting business and industry – especially as the General Election hoves into view.

24

32

64

But Labour leader Ed Miliband seemed to lose his head in the excitement of it all, making a rash promise to freeze energy prices for 20 months should Labour come to power. It sparked derisive remarks from commentators across the political spectrum, with former trade minister Lord Digby Jones branding it “social tribalism” (p12). More poignant condemnation came from Labour’s own ex-business secretary Lord Mandelson however. He said that Mr Miliband’s intentions would undo all his efforts to establish an industrial strategy in the UK that pump-primed the business environment without meddling in markets. Industry reviews of industrial strategy progress suggest that unravelling Lord Mandelson’s foundations would not go down well. A CBI/BIS conference to celebrate the one year anniversary of the industrial strategy that business secretary Vince Cable announced in 2012 showed that business leaders value the consistency of purpose that has built up around core policy areas such as support for innovation and skills development (p28). The work of the Technology Strategy Board and the Catapult centres, which both had their genesis under Mandelson, have been particularly highly commended in the last month. At ’s Manufacturer Directors’ Forum dinner on September 17 industry guests – unprompted – gave Iain Gray, CEO of the TSB, a round of applause for the contribution his organisation has made to Britain’s industrial prospects.

There’s a new vision for UK defence manufacturing. Find out more on p32

Even the defence industry, which has traditionally found it nigh impossible to elicit overt government support for its commercial ambitions, let alone to properly acknowledge its economic contribution, has moved closer to establishing a defence industrial strategy (p32).

Stephen Fitz-Gerald, CEO of Marshall Aerospace, one of the UK’s few big, privately-owned companies, says that industry and specifically defence is experiencing a phase of “unprecedented government support” (p38). Some may respond that, given the track record, this is not saying much. And certainly there’s still a long way to go before the UK’s industrial strategy can be called robust. EEF’s review of government’s progress in meeting its own key ‘Growth Ambitions’ shows there has been little headway on turning business investment intentions into action or on increasing exports (p18). Vince Cable himself admitted that access to finance problems and late payments are still leaving many SMEs hamstrung in the pursuit of growth. But, overall, after years of being at loggerheads, evidence of true partnership between industry and government is growing. Manufacturers are learning how to handle the emerging landscape of employerowned skills provision and innovation support – both for individual firms and supply chains via AMSCI – in order to break through for growth (p43). To upset this tentative trust now would be a grave mistake.

Jane Gray Editor October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 1


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Will edited until 2011 and is now working to expand the SayOne Media publishing portfolio. He is responsible for new reports and supplements, maintaining editorial standards at SayOne Media and supporting all the events. Before joining SayOne Media, Will worked for Euromoney and IPC Media. w.stirling@sayonemedia.com

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October 2013

08 News and regular columns

Manufacturing in action

A summary of manufacturing news and events with commentary on industrial research and policy 19 Naked Engineer ERP panic stations are go 22 Lean on me Lean Management Journal’s new editor Callum Bentley stirs up the employee incentive debate 24 Out & About goes to Zwick Roell, a sustainable manufacturing conference and CooperVision’s UK product launch 26 Best of Online What you wanted to read about most on ’s website last month 28 Hot Topic: Industrial Strategy 32 Sector Focus: Gunning for growth There’s new hope for UK defence manufacturing despite declining MoD budget. investigates the sector’s new strategic vision for growth and competitiveness 38 Interview: Marshalling Marshall Stephen Fitz-Gerald, CEO of Marshall Aerospace Group talks to Jane Gray about output-based contracting, service culture and the privilidges of running one of the UK’s biggest family-owned firms. 41 60 second interview: Steve Wadey, co-chair of the Defence Growth Partnership, on the DGP so far and in the year ahead

64 Sony UK Technology Centre

Pillar features Manufacturing Leadership 44 Considering consortia: could more manufacturing consortiums help UK supply chains be more competitive? Other topics in the section: Sustainability in supply chains, reforming the MX Awards, the Manufacturer Directors’ Conference 2013 and customs duty strategy

Workforce & Skills 50 United we stand: Sarah Sillars, CEO of Sector skills council Semta urges business to unite in the face of skills gaps 54 Employee of the Month: Brad Hodgson, investment project engineer, BAE Systems Other topics in this section: University Technical Colleges, the new Design and Technology curriculum, zero-hours contracts and health & safety training

Finance & Professional Services 57 Keep calm and carry on claiming: Making R&D tax claims business as usual Other topics in this section: Export market research and the cost of compliance

Sustainable Manufacturing 58 A strong alliance: BIU helps Allied Glass with its energy purchasing strategy 60 Chicken and egg challenges: Will Stirling reports on the EPSRC Centre for Innovative Manufacturing in Industrial Sustainability’s conference

6 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

CONTENTS

Manufacturing Technologies 68 A chill for 3D thrills: Manufacturers should keep their cool about 3D printing potential until market infrastructure and regulation is better established says Prof Tim Minshall at the Institute for Manufacturing Other topics in this section: Civil-defence technology development, advanced materials and more 3D printing

IT in Manufacturing 70 In its element: The implementation and benefits realisation strategy for Customer Relationship Management technology at synthetic diamond manufacturer Element Six Other topics in this section: Enterprise Resource Planning and 3D modelling 74 Last Word: Pharma love-in: Could pre-competitive collaboration stop the pharmaceuticals industry wasting billions of pounds? Will Stirling investigates

ERP2013: What, when, who? Clarifying technology priorities for investors, identifying when your business really needs to take the ERP plunge and choosing the vendor or implementation partner who will work best with your company


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NEWS DEFENCE

Read more about the UK defence sector including the implications of its new strategic vision, Securing Prosperity, on p32.

News from our focus sector DSEI, the international trade show for the defence, security and space sectors, hosted at London Olympia this year, attracted 32,169 visitors. A dedicated pavilion for UK defence manufacturers and suppliers played host to almost 150 companies, many of them SMEs. A medical and disaster relief theatre was added to the show for the first time. A fully deployable CT Scanner made by Marshall Aerospace group and Phillips Healthcare was among the main attractions in this area (p62). Helicopter manufacturer AgustaWestland confirmed revenues of £1.2bn in the year to 31 December 2012. Headquartered in Hampshire, the company employs 3,000 staff. Turnover for the same period was £1.2bn – a rise of 9% on the previous year. However, while revenues and turnover were up, pre-tax profits fell from £81.8m to £76m. AgustaWestland invested in its Yeoville manufacturing site in 2012, benefitting from Regional Growth Fund money on two expansion projects. BAE Systems announced four contracts for its Type 26 Global Combat Ship at DSEI 2013. Rolls-Royce, MTU, David Brown Gear Systems and Rohde & Schwarz were confirmed as suppliers for propulsion and communications equipment for the ship, which BAE hopes will enter service by 2020. A further 30-40 supplier contracts for Type 26 will be confirmed by the end of the year said BAE in a press briefing at DSEI. There are 70 contracts available in total. Manufacturing will start in 2016.

MBDA has secured a £250m contract for delivery of its Sea Ceptor technology to the Royal Navy

Lockheed Martin UK delivered new battlefield geospatial intelligence technology to the UK armed forces. The GEOINT capability was delivered with support from a collaborative industry team, named Team Socrates, comprising: Marshall Land Systems (container design and manufacture, plus integrated logistic support); SCISYS (software and integration); Attica Consulting (security and communications); KNK (concepts and doctrine); Polaris Consulting (whole life cost modelling) and Safety Assurance Services (safety and environmental work

Integration trials started for the Artisan radar. The new 3D radar technology from BAE Systems is capable of cutting through interference equal to 10,000 mobile phone signals. Initial use of the technology will be on the new 65,000 tonne Queen Elizabeth Aircraft Carriers which are built in Rosyth, Scotland. Integration is taking place on the Isle of Wight.

8 www.themanufacturer.com |October 2013 | Issue 8| Volume 16

MBDA was awarded a £250m contract for manufacture of the Sea Ceptor anti-air missile system. Defence Secretary Philip Hammond confirmed the contract at DSEI 2013. The local area anti-air missile systems will be used on the Royal Navy’s Type 23 frigates from 2016. The contract will sustain 250 high-technology jobs in the UK with a similar number also supported in the supply chain. MBDA said there is potential to develop the Sea Ceptor product for export as well.

Atlas Elektronik UK hosted the global launch of its ARCIMS unmanned ship at DSEI 2013. The 11m ship is already in service with an undisclosed customer and is built at the company’s site in Wifrith, Dorset. The craft is designed for minesweeping activities.


MANUFACTURING NEWS

INDUSTRIAL STRATEGY

The Labour Party announced a review of British manufacturing supply chains led by Jaguar Land Rover director Mike Wright. The announcement was made by shadow business secretary Chuka Umunna at the Labour Party conference. The Labour Party will draw on the review and on Mr Wright’s advice for policy guidance. Mr Umunna said: “I believe society and business depend on each other and that’s why I’m delighted that Mike Wright of Jaguar Land Rover, a real British success story, is leading this review into manufacturing supply chains.” Mr Wright, was one of the figures responsible for the JLR’s transition following its acquisition by Tata from Ford in 2008. He said a need for a credible and long-term UK industrial strategy is key to the country’s future. “We must continue to build on the progress made over recent years and I have been particularly pleased that all the main parties have understood that the strategy for a successful industrial policy goes beyond electoral cycles and often across political boundaries.” See p28 for more on UK industrial strategy.

INVESTMENT

Pharmaceutical manufacturer Aesica opened a new high capacity manufacturing facility in Kent. The 10,000 sq m facility is an expansion of Aesica’s existing site in Queensborough. It cost £30m and is purpose-built for the production of a solid dose medication used in treating Type 2 diabetes. Commercial production at the facility will start in November. The investment is a part of the company’s strategic plan to triple annual revenues to more than £500 million by the end of 2016 through both organic and acquisitive growth. This strategy is guided by Aesica’s private equity investor Silverfleet Capital which bought a stake in the pharma company in September 2011.

OBITUARY EIji Toyoda died, aged 100

The lean and manufacturing communities lost one of their greatest minds and architects last month. Eiji Toyoda was a founder of the Toyota Motor Corporation and the original architect of the Toyota Production System, held up as a model for lean manufacturing the world over. Mr Toyoda died of heart failure on Tuesday September 17. He was 100 years old, but despite his age, he remained an honorary advisor to the company up until his death.

Business Growth Fund has invested £4m in VTL group and appointed Michael Baunton, former interim CEO of the Society of Motor Manufacturers and Traders, as non-executive Chairman.

FINANCE

Business Growth Fund invested £4m in VTL Group. The investment by BGF, which provides minority equity invesmtnet to UK-based firms with high growth potential, marks its 10th partnership with a manufacturing firm. BGF has inject c.£45m into UK manufacturing since its establishment in 2011. VTL is a growing precision engineering company supply the automotive sector with annual revenues in excess of £50m. It was established in 2001 and is based in Huddersfield.

His passion for the motoring industry was recognised in 1994 when he was inducted into the Automotive Hall of Fame. In a statement at the time, he said: “Ever since Toyota’s establishment in 1937, I have been involved in this wonderful business, and as long as my engine keeps running, I intend to give back as much as I can for the industry’s further development.” He is survived by three sons, Kanshiro, Tetsuro and Shuhei.

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 9


NEWS

MANUFACTURING NEWS

MANUFACTURING IMAGE

EXPORTS Lord Green, UK minister for Trade, the Rt Hon Patricia Hewitt, chair of UKIBC and James Bevan, British High Commissioner to India, arrive at the launch of the first UKIBC business centre in Delhi

The Manufacturing Advisory Service secured exhibition space for SMEs at the Department for Business Innovation and Skills. MAS brought together manufacturing SMEs from across the UK to publically demonstrate the diversity, innovation and vitality in the nation’s supply chains in the glass-fronted offices of BIS on Victoria Street in London. Business Secretary Vince Cable attended the exhibition which displayed products from companies including Anglepoise, Ashwood Timber, Alucast, Ecospin, Flying Fish, Grillstream and Kleenoil. MAS has worked with all of the above companies to achieve efficiency and strategy improvements.

INVESTMENT

The UK India Business Council opened its first Business Centre in Delhi. The centre will focus on reducing the risks and costs of market entry for British SMEs in India. At the opening of the Delhi centre, UK Trade and Investment minister, Lord Green said: “The centre will help UK small and medium sized businesses work closer with more established British businesses in India and provide them with the support needed to capitalise on the huge potential of the Indian market.” The opening of the centre was attended by over 100 guests including representatives from Rolls-Royce and BAE Systems. Another UKIBC business centre with a focus on advanced manufacturing will open within six months.

TMAT announced a £300,000+ investment in tooling. The multinational manufacturer of acoustic components for tractors and excavators said the investment was necessary to meet record demand from customers including JCB and Volvo. TMAT’s investment includes cutting tools, fixtures, gauges, jigs, moulds and patterns of a specialised nature. The company’s MD Jason Lippitt said: “The investment has been to meet an immediate requirement and due to the record levels of interest and sales we’ve had over the summer.” SMEs are being targeted in data theft attacks by outgoing employees.

10 www.themanufacturer.com |October 2013 | Issue 8| Volume 16

IT

Research showed SMEs are being targeted in data theft attacks. Law firm EMW carried out research that showed a 250% rise in high court cases relating to data theft between 2010 and 2012. The majority of the victims were SMEs said EMW. The majority of perpetrators were outgoing employees who were found to be stealing data, either to take to new employers, or to set up their own businesses. EMW said the growing use of cloud storage facilities such as drop box, as well as easy access to USB drives are trends which facilitate data theft.


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NEWS SUSTAINABLE MANUFACTURING

AkzoNobel maintained a place in the top three companies on the Dow Jones Sustainability Index. It is the eighth consecutive year AkzoNobel has featured on the index which benchmarks the sustainability performance of leading companies based on environmental, social and economic performance, including forwardlooking indicators. AkzoNobel, which makes the popular domestic paint brand Dulux as well as a number of industrial coatings products, has annual revenues in the regional of Eu15bn. It is due to open a £100m, purpose-built, sustainable paint factory in Ashington next year.

SUPPLY CHAINS

The Department for Business, Innovation and Skills announced funding for the third round of the Advanced Manufacturing Supply Chain Initiative. £115m will be delivered in round 3 to support supply chains in advanced manufacturing sectors. The funding will top up the AMSCI fund which received two funding packages of £250m each for rounds 1 and 2 of the competition. AMSCI is designed to give a helping hand to UK suppliers in bidding for contracts with big companies. The initiative hopes to encourage more large firms to keep their supply chains for UK facilities local. Priority sectors under the initiative include aerospace, chemicals, electronics and life sciences.

Burton’s Biscuits is backing up capital investment with skills development for the future of biscuit manufacturing in Blackpool. Apprentices at Burton’s Biscuits’ facility in Blackpool. The firm will now expand the scheme to other sites across the country.

NEW PRODUCT INTRODUCTION

Nissan began production of the Nissan Note in Sunderland. The introduction of the new model required a £125m investment and created 400 new jobs. The new line was opened by business minister Michael Fallon who observed: “The Nissan plant here is the most productive car plant in Europe – they make more cars here than the entire Italian car industry does.” Government support Nissan’s decision to manufacture the Note in the UK with a £9.3m award from the Regional Growth Fund.

ENERGY

Ed Milliband said he would freeze energy prices for twenty months if Labour won the next election. The Labour Party leader announced this intention at the Party conference in Brighton, stunning the business and industry community. Former Labour business secretary Peter Mandelson and former Trade Minister Lord Digby Jones both condemned his promise. Energy companies were understandably aggressively opposed to the idea and industry commenter Howard Wheeldon said that Mr Miliband’s “back of a fag packet” announcement “confirmed once and for all that once again Labour intends to be the enemy of the private sector.”

12 www.themanufacturer.com |October 2013 | Issue 8| Volume 16

SKILLS

Burton’s Biscuits announced a £1m investment in developing new engineering talent. The money will fund the expansion of the food manufacturer’s apprenticeship scheme over four years and back up skills development for recent investments in new manufacturing automation and control technologies. In addition, Burton’s announced that it will now support three annual placements to students on Sheffield Hallam’s new masters degree for food engineering. Burton’s investment in future talent comes despite news in August that the company, which employs 2,000 people in the UK, is up for sale. A company spokesperson explained: “A process for the possible sale of Burton’s Biscuit Company has commenced and an Information Memorandum relating to the sale has been published. However, there is no guarantee a sale will take place.” In the meantime, it is very much business as usual they summed up.


MANUFACTURING NEWS

MANUFACTURING TECHNOLOGIES

EMO Hannover, the world’s largest international trade fair attracted record numbers of visitors and exhibitors. Over six days more than 2,100 exhibitors from 43 countries put their wares and innovations on display for just under 145,000 trade visitors from 100 countries. Around 50,000 visitors came from outside Germany with a significant rise in European visitors compared to recent years according to EMO General Commissioner Carl Martin Welcker. Half of visitors were managers with budget and purchasing authority according to an event survey. Twenty per cent of visitors said they had placed an order at the show and another 20% said they intended to finalise purchases shortly after the show wrapped up. The next EMO will take place in Milan in 2015.

INDUSTRY RESEARCH

The National Physical Laboratory and the High Speed Sustainable Manufacturing Institute announced a partnership. The two organisations will share resources and training facilities in order to better support high-value manufacturing innovation and job creation in the UK. NPL, based in Teddington, London is the national centre for research into metrology technologies and applications. HSSMI, besed in Dagenham, London is leading research into the use of simulation and virtual reality technologies for accelerated innovation in manufacturing processes and management. Graham Topley, head of NPL’s Measurement Solutions Division said: “Our objective is to strengthen links to research and industry. Working with HSSMI and its members gives us access to industry and directly supports their research needs. This is an excellent way of developing and growing a UK skill base.”

JOBS

Jaguar Land Rover announced the creation of 1,700 new jobs at its Solihull factory. The jobs will come on board as part of a £1.5bn investment in an advanced aluminium architecture for next generation JLR vehicles. Dr Ralf Speth, JLR CEO made the announcement at the Frankfurt Motor Show. The new architecture will first be used in production of the Jaguar Sports Sedan, which is due to launch in 2015. This model will also be the first to include engines made at JLR’s £500m Engine Manufacturing Centre near Wolverhampton which is still under construction.

Dates for your diary October

14-16

Scarborough Engineering Week takes place at the Scarborough Spa. This industry outreach event attracted 1,400 schoolchildren last year. The event aims to expose the productivity and innovation of industry in the regions and promote industrial careers to young people.

17

The Excel Centre in Newton Aycliffe plays host to the Durham Oktoberfest Engineering and Manufacturing Exhibition. A networking and marketing opportunity for regional and national industry, the event is focused on providing ‘meet-the-buyer’ opportunities. Buyers signed up for this year’s event include: MoD, Calsonic Kansei, Northumbrian Water, Husqvarna and more. www.durhamoktoberfest.org.uk

23

The 2nd Sustainable Manufacturing Symposium takes place at the Manufacturing Technology Centre in Coventry courtesy of the IET and Cranfield University. The symposium brings together leaders from industry and academia to help prioritise actions and strategies for manufacturers in Europe as the region’s governments seek a 20% reduction in greenhouse gas emissions by 2020. www.theiet.org/events

29

The Hinton Lecture 2013: Imagination: The key to engineering the future takes at the Royal Academy of Engineering. The lecture will be delivered by Professor Dr Uwe Krueger, chief executive officer of Atkins. His presentation will focus on the broad skillsets needed in engineering teams tackling complex infrastructure problems in today’s world, and in the future. www.raeng.org.uk/events

November

5-7

RenewableUK 2013 takes place at the Birmingham NEC. The 35th annual conference and exhibition for the renewable energy industry includes facilitated networking forums and a keynote speech from shadow energy secretary Caroline Flint. www.renewableuk.com

12-13

The Aero Engineering Show takes place at Birmingham’s NEC. The two-day exhibition provides a sector-focused showcase of technology and engineering capability in the UK aerospace supply chain. www.aeroconf.com

14

The Royal Academy of Engineering hosts the first everywoman Advanced Manufacturing & Engineering Leadership Academy. This day of workshops and interactive presentations is designed to spur the professional development of women in industry. www.everywoman.com/engineeringacademy

14-16

The Skills Show 2013 is hosted at the Birmingham NEC. The event is the UK’s biggest vocational skills and careers show. The opening ceremony also serves as the prize giving for the National Apprenticeship and National Training Awards. For information and registration go to: www.theskillsshow.com See more upcoming industry events at www.themanufacturer.com/diary

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 13


UPCOMMING EVENTS

16/10/2013

The Porsche Lean Transformation Programme

03/12/2013

The Manufacturer Directors’ Conference (MDC)

04/12/2013

ERP Connect

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

This unique two-day residential course delivered by Porsche executives provides a unique learning experience for plant managers, managing directors and similar individuals who can instigate real change within an organisation. Created exclusively by Porsche

Consulting for the Lean Management Journal, its careful selected series of modules delivered in a classroom environment, exclusive facilitated tours of assembly and logistical operations, with simulation activity and access to senior Porsche personal.

www.themanufacturer.com/porsche2013

3rd - 4th December 2013, Intrnational Convention Centre (ICC), Birmingham

Now in its fifth successful year, The MDC will bring together a wealth of knowledge from industry, government and academia through a mixture of debates, manufacturing best practice, case studies and practical workshops. #TMDC2013 will focus on key factors like the integration of supply chain, servitisation

and will bring the next generation of manufacturers together in an inaugural forum to form a vision of #UKmfg in 2023. With essential growth skills and practical ‘how to’ workshops the conference is a must attend of all manufacturing leaders.

www.themanufacturer.com/mdc2013

4th December 2013, Intrnational Convention Centre (ICC), Birmingham

The Manufacturer’s ERP Connect has changed the way UK manufacturers approach software selection by minimising the overall time and effort involved in qualifying potential Enterprise Software vendors. ERP Connect is the must attend event if you are looking to install or

upgrade your ERP system in the next 12-18 months. This unique event offers a one-of-akind opportunity for you and your team to see the best in Enterprise Software Solutions in the world, all in one place, all at the same time!

www.erpconnect.co.uk

04/12/2013

The Manufacturer of the Year Awards 2013 Gala Dinner and Ceremony, 4th December 2013, International Convention Centre (ICC), Birmingham

The Manufacturer of the Year Awards is specifically designed to acknowledge and celebrate the strength and diversity of UK manufacturing. The awards aim to spread best

practice, inspire others and show the important role UK manufacturing plays in today’s economy. Book your tables now!

www.themanufacturer.com/awards

The Manufacturer Directors’ Forum Dinners

Join industry leaders for professional debate and knowledge-based networking The Manufacturer hosts a series of invitation only private dinners throughout the UK each month. These dinners are focused on knowledge

www.themanufacturer.com/mdf 14 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

based networking and strictly limited in numbers. Apply to become part of this exclusive forum by emailing directorsforum@sayonemedia.com.


Start your journey. Want to • Access the very best solutions to advance your business? • Raise your profile in the industry and local region? • Receive free high-quality business advice? • Win a prestigious Regional Manufacturing Excellence Award? Our Partners Benchmark your business with the Manufacturing Excellence Awards, an online strategic business improvement programme from the Institution of Mechanical Engineers. As part of our commitment to promote and encourage the very best in British manufacturing, the Manufacturing Excellence Awards are completely free to enter, no matter your industry sector or company size. our online self-assessment programme is now open.

regiSter at www.imeche.org/manufacturingexcellence applicationS cloSe 25 october 2013.

Our Supporters


APPOINTMENTS

Chris Brownridge

MINI UK, BMW Group

Chris Brownridge was appointed as MINI UK’s new director, succeeding Jochen Goller, who moves to the role of senior vice president, overseeing all worldwide activity for MINI. Mr Brownridge, who takes up the role

Jeff Kennelly

company has proved to be a great asset in his current role and will be even more valuable in his new position as the MINI brand portfolio continues to develop.”

electronics. Mr Kennelly spent 16 years as an aircraft engineer at the GE Aviation facility in Nantgarw, South Wales and OnWing support in London, before moving into management in 2006. He spent time in the company’s quality division and in operations before joining the leadership

team in 2011. On his appointment, Mr Kennelly said: “I am extremely proud to be joining such a focused and technically strong team and I am very excited about the opportunities that lie ahead to grow the business”.

extensive experience in the commercial vehicle sector both from a technical and business perspective. Optare’s sales director John Horn, said: “[Mr Blunt’s] strong understanding of the needs of bus operators and in-depth practical and

technical knowledge will undoubtedly prove of value in explaining the many advantages of our low carbon, low weight products to operators across the region.”

private companies, as well as capital markets, to the company. She is a qualified chartered accountant and has an MBA from the London Business School. Tim Yeo, AFC Energy chairman, said: “Jane’s wealth of experience in the

City and the corporate sector will further strengthen our credibility with customers and investors as our commercialisation phase gains momentum.”

GE Aviation

GE Aviation appointed Jeff Kennelly as plant leader at the company’s Newmarket site. In his new role, Mr Kennelly will oversee safety, quality, delivery targets and the implementation of a long term growth plan for the Newmarket business which is focused on defence aircraft

Colin Blunt

from November, is currently BMW UK’s marketing director, a post he has held since January 2012. He joined the BMW Group in 2000. Tim Abbott, managing director of BMW Group UK, said: “Chris’s breadth of experience across the

Colin Blunt, Optare

Colin Blunt joined Optare as its new regional sales manager for the North of England and Scotland. Mr Blunt was previously at truck, bus and engine manufacturer Scania and has

Jane Dumeresque

AFC Energy

Industry fuel cell energy developer AFC Energy appointed Jane Dumeresque as its finance director and company secretary. Mrs Dumeresque brings more than a decade of board level experience in public and

Matthew Snelson, Grainger & Worrall

Casting manufacturer Grainger & Worrall appointed Matthew Snelson as its new executive quality manager as it looks to drive forward its ambitions in the automotive, motorsport, defence and aerospace sectors. Mr Snelson has held a number of senior international posts in the tier one automotive industry. In his new role, he will focus on product, process and system robustness, building on Grainger & Worrall’s performance, which saw it win a second Queen’s Award for Enterprise in 2012.

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

16 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

Ian Collier, The High Value Manufacturing Catapult

The High Value Manufacturing Catapult, appointed Ian Collier as its director of operations. Mr Collier, previously of Rolls-Royce and the Williams F1 team, will be responsible for the HVM Catapult operational model, and will lead a number of HVM Catapult business programmes covering skills and e-infrastructure. Dick Elsy CEO of the HVM Catapult, said: “Ian’s wealth of manufacturing industry experience in both large companies and specialist SME’s provides us with real bench strength in the core team. His industry-driven, pragmatic approach will provide strong delivery focus to our activities.”


SWITCH FOR ACCESS TO FINANCE

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POLICY POINT & BACK TO SCUOLER

Policy Point.

A

Back to scuoler. Gordon Attenborough sector head, design & production at the Institution of Engineering and Technology, is excited about a 3D printing event.

dditive manufacturing or 3D printing as it is often termed, is gaining traction in the public imagination and is finding its way to serious applications in industry. The IET is keen to explore the possibilities that important, disruptive technologies like 3D printing will bring to future manufacturing. And what better way to do so than in consultation between today’s experts and tomorrow’s? That is why we are hosting an expert-driven 3D-printing event – 3D-Printing: The Future of Manufacturing? – as part of this year’s 2013 Young Professionals Lecture on October 24 at the Royal Institution in London. Back in August, the IET launched a competition for innovators to design a 3D printable product which maximises the design freedom made possible by the technology while targeting the creation of a genuinely useful product. The winner of the competition will be announced at the event and their product realised. Professor Richard Hague, Director of the EPSRC Centre for Additive Manufacturing, will present at 3D-Printing: The Future of Manufacturing? He will address the cost effectiveness and environmental impact of the technology and explore its potential for creating new business models. Prof Hague will also cover 3D printing’s role as an enabler for low volume production and the democratisation of manufacturing. The lecture will draw on real world industrial and consumer examples and review research. Finally, the new 3Doodler – the world’s first 3D printing pen will be demonstrated. As the 3Doodler draws, it extrudes heated plastic, which quickly cools and solidifies into a strong stable structure. It’s going to be an inspirational meeting of minds which should help us better understand 3D printing and its role in our industrial future from a variety of perspectives.

18 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

I

n September 2012, EEF published The Route to Growth. This report called on government to develop an industrial strategy that would get its whole machinery behind measures that could develop a stronger, better balanced UK economy. A year later we published our assessment of the Terry Scuoler, progress that government has made. chief executive And progress has been of EEF, on made. The economic news has been better industrial policy in recent months and progress the past year displays incremental step-ups in the pace of government action to support investment, exports and growth. So is it a case of job done or half way done? A closer look at the growth figures and EEF’s four growth ambitions suggests not. Government has done a lot but it has still not done enough to spell out its economic priorities and unite departments behind them. There are four reasons why this is critical. Firstly, though our economy looks a bit stronger, it still faces significant risks. The eurozone is still grappling with deep-rooted problems, some emerging economies face growing headwinds and, closer to home, there’s the danger that improving credit conditions won’t be sufficient to get bigger investment intentions off the ground. Secondly, we still rely too heaviliy on consumer and public spending to drive growth. In the last three years, business investment has contributed an annual average of just 0.06 percentage points. Despite a favourable exchange rate, France, Italy and Spain, have all seen trade make stronger contributions to growth. Third, while we can see government action on all four of EEF’s growth ambitions, there has only been real progress on the first – more companies bringing new products and services to market. There has been consistent focus from government on innovation, cross-party agreement on what needs to be done to support it and stability of policy to get it done. Our other ambitions: more globally focused companies expanding in the UK; a lower cost of doing business and a more productive and flexible labour force, have not received the same coherent attention. Finally, rebalancing is difficult and requires focus. The general election is getting closer and politics will inevitably get even more complex. Can Parties maintain the focus on rebalancing which is vital to establish a strong foundation for lasting economic growth?


NAKED ENGINEER

Naked engineer Hi-visibility cock-up Hemlock Engineering’s MD sweats out an ERP emergency and discovers the value in entertaining specky young geeks in the business.

T

he Greek (FD) came haring into my office the minute that word got round that I had arrived for work uncharacteristically early. I couldn’t sleep for some reason – horrific nightmare that I’d arrived for work at 7am. “All hell’s broken loose with the new ERP system” exclaimed Jimmy, worryingly breathless. “We went live yesterday and everything’s gone to hell in a handcart since,” he spluttered. Hemlock’s eleventeen billion quid ERP system had been going pretty well. It was only eighteen months late and hadn’t yet brought the entire business to a grinding, shuddering halt. Furthermore, last month’s update had indicated there was light at the end of the tunnel, but judging by the Greek’s frantic wheezing it seemed like it had turned out to be an oncoming train. “We haven’t shipped a damn thing in 24 hours, we’ve got forty eight 18-wheelers queued up on the loading dock in Milton Keynes which we can’t unload and we’ve just ordered 20,000 pairs of hi-vis knickers from Victoria Secrets

instead of 200 hi-vis jackets from Victory Security.” I considered asking why we had a work-linked account with Victoria Secrets in the first place but thought it might push the increasingly purple Jimmy over the edge. Just at that moment Sir Patrick, in the middle of one of his MBWA (Management By Walking about) sessions, made an abrupt entry. “What the hell’s going on with this festering system?” our chairman boomed, looking straight at me. “The whole company’s at a standstill. Ops are blaming finance, finance is blaming IT and IT are blaming the vendor and say the software doesn’t work”. “It’s the vendor” Jimmy and I replied at exactly the same moment, making us sound a bit like the chuckle brothers on speed. Sir Patrick harrumpff’d loudly. “Get the bloody thing sorted or we’ll be bankrupt in a week.” And with that he turned on his heel and was away, continuing to ensure no-one could ever accuse him of being too hands-on. “Got an idea” I said to a disbelieving Jimmy. “Get me Joddrell Banks on the phone,” I yelled to Attila the PA. Jodd was a wet-behind-the-ears first year engineering spod from Oxford who we’d taken on placement with us. His

Last month’s update had indicated there was light at the end of the tunnel parents obviously didn’t like him much, but he knew more about computers than anyone I’d met. The Greek and I headed off for an early lunch at Cavendish’s after a quick chat with Jodd. Less than an hour later he called me just as we were finishing a large red one to settle our nerves. I listened intently to a stream of jargon from the other end of the line. “Server…. heap….stack overflow…..quad core… cross-platform…” I wasn’t fluent in geek but got the gist of it. “Excellent!” I said waving the empty bottle at Sam, the waitress. I wasn’t sure we could claim Jodd as ‘home grown talent’ but I was certainly going to have a go at posing as his enigmatic mentor for the purposes of my report to Sir Patrick. “We’ll let Sir P stew a bit longer though shall we?” I winked at the Greek as the cork popped on a fresh bottle. Any similarity of characters to persons living or dead is completely intentional. October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 19


Letters to the editor

Production lines

Letters to the Editor Michelle Gillam, MD, REO UK

I’ve read many articles focusing on the status of women in engineering roles which illustrate the unconscious beliefs and expectations we have as a society and our attitudes towards the gender issue. The figures for the male/female engineer ratio emphasize the chronic shortage of talent in manufacturing and trying to stop the conversation about gender differences can only deepen discrimination in our sector. I believe that successful women in engineering should act as champions for their gender and accept the weight of their individual characteristics.

By embracing what they are, women can achieve greatness and become role models for those entering the profession. However, if we decide to call a halt to the debate about gender differences in the workplace - believing that discrimination laws have fixed the problem for us - the result will be an even thicker and more impenetrable glass ceiling. The media can do its bit by highlighting the most successful women in engineering and celebrating them as role models, exactly as Eureka did in May. We need to tell the story and include the ups and downs, challenges and successes each of these women has been through. It is my belief that it is up to each successful woman to pave the way and encourage the debate to open. FURTHER READING: Positive discrimination: What women want? ’s March 2013 article investigating views on the need for positive discrimination to increase the number of women in industry – particularly in senior jobs. bit.ly/PositiveDescriminationYesorNo 60 second interview: Judith Hackitt, CEO of the Health and Safety Executive: In June, Ms Hackitt was voted First Woman of Manufacturing 2013. bit.ly/JudithHackitt

20 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

David Cliff, MD, Gedanken and vice chairman of the Institute of Directors’ County Durham and Sunderland Committee

With regards to HS2 and ‘opening up the North’ as Whitehall mandarins term it. It seems to me that many of those strategising over HS2 in London have no clue where the North actually begins, or what happens there! HS2 involves a concentrated investment of funds, opening up some parts of the country while simultaneously casting others into a hinterland of lesser developed infrastructures and reduced economic opportunity. The North East, where I have lived for most of my life, has attracted Hitachi to build trains here. Yet this investment has not been followed by significantly improved infrastructure for the region which has unmet needs for an effective motorway and the widening of single carriageway roads, particularly in accident spots. HS2 will create winners and losers as any concentrated investment does, working on the fallacious idea that we need to connect to the capital at all costs. In a modern, technologically-based society, this notion of epicentres of geographical power is becoming redundant. The reality is that the while not being particularly well served by HS2, the North East is performing stunningly well in manufacturing. Indeed, if replicated elsewhere, it would render the country ‘the workshop of the world’ again. But our political masters seem averse to dealing with the North East on a fair, equitable basis. It occurs to me that pre-1963 and the Beeching Reports, infrastructure was fairly distributed around the country. Government disinvestment ended the age of steam. What might it have been with sustained investment and technology? FURTHER READING: Opening up the North: a misguided Whitehall concept: A longer diatribe from David Cliff can be found at bit.ly/OpeninguptheNorth


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LEAN ON ME

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What was in the last issue? The September issue of LMJ examined the potential of a truly empowered workforce when it focused on a lean transformation. Case studies came from: Chippewa River Industries Toyota Material Handling UK Cimlogic View the issue on line at www.leanmj.com

22 www.leanmj.com | October 2013 | Issue 8| Volume 16

T

Callum Bentley, the new editor of Lean Management Journal, questions the role of employee reward systems in motivating efficiency and improvement.

his month I did something terrifying. Something all of us have done. It can be one of the most intimidating moments of your life yet also the most rewarding. This month, I started a new job. The unexpected twists and turns of trying to recall how to use a PC instead of a Mac, remembering where you sit and learning how to use the coffee machine can keep you on tenterhooks when you are trying to prove yourself competent. Sometimes displaying confidence in these mundane tasks can seem just as important as making a good impression with the first piece of work you submit. When you start a new job, trying your best to be efficient and effective in every aspect is at the forefront of you mind. But, for most, that excitement, that keenness to please, inevitably fades. And this leaves management with the question: How do you continuously invigorate employees to apply attention to detail, enthusiasm and a ‘fresh eyes’ approach to their work for the long term? Can management expect employees to devotedly strive for the best and seek out ways to advance the company in return for their basic wage, or is more encouragement required? And what form should it take? I broach this subject with trepidation – I’m a little early in my role to be raising the question of extra incentives. But the fact is that, for many job types, the paid wage is enough incentivise employees to get their job done, but not to go above and beyond. They will perform within set boundaries but will not strive to reform those boundaries or the task they are working on for the good of the company. Yet this is exactly what lean leaders want from their workforce.

So how do you inspire and encourage employees to develop and employ an inquiring mind which identifies inefficiency and suggests improvement? Extra cash in hand is an obvious answer, and some companies are tightly bound to financial reward systems which they feel reap worthwhile benefits. Others, meanwhile, abhor this process and feel it undermines sustainable, autonomous improvement by an empowered workforce. The debate between the two camps of lean management is fierce and LMJ will be diving right into the thick of it in the October issue. Helping the journal explore this heated area will be first-time contributor and

The unexpected twists and turns of trying to recall how to use a PC instead of a Mac, remembering where you sit and learning how to use the coffee machine can keep you on tenterhooks when you are trying to prove yourself competent

president of the US-based Ledford Consulting Network, Gerry Ledford. He will supply one of a variety of case studies which explore the pros and cons of different reward systems with regards to their impact on employee behaviour and the results they achieve. First column done and dusted! Until the next; happy reading. @LMJEditor


’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.

Zwick on a Roell

I

James Pozzi at test equipment manufacturer Zwick Roell’s new facility in the Black Country.

t’s a fruitful period for Zwick Roell, the German manufacturer of static testing machines and systems for materials and components. Demand is strong and, in June this year, prompted the company to up-sticks from its Lye Valley location in order to make a new home in more modern premises in Brierley Hill. The new site, which cost £1.4m, has a customised technical centre specifically to support better evaluation of solutions for customers as well as freshly equipped manufacturing facilities. Zwick knew that relocating was necessary in order to service demand, grow market share and up-tech its capability. But finding the right spot to move to was not easy. The firm wanted to stay local, recognising the need to hang on to its skilled production staff, but it was also picky about finding a facility in which it could optimise the efficiency of its production and test processes. John Piller, managing director of Zwick’s testing division, Identec, painstakingly viewed over 50 potential sites before finding the firm’s new home. “Some of the real-estate in this area is old, and not fit for our requirements. But within the first hour I knew we could do something with this place,” he told me as we toured. Zwick Roell employs 78 people in the UK and serves over 20 industries worldwide, finding its biggest customers in steel and automotive. More recently it has also targeted academia and the flourishing international industrial research base. Zwick’s decision to invest in its strong UK arm is a conscious effort to compete with its US-based competitors and Mr Piller said the new facility holds opportunity for further expansion. “The process is escalating with competition in price, technology and reputation. We’re planning to double the business by 2016 but the only way we can do that is through new products, and here we’re well equipped to do that.”

24 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

Manufacturing the Future GlaxoSmithKline and CMAC plan to boost UK pharmaceuticals suppliers via an AMCSI bid finds Will Stirling at the 2nd Annual EPSRC Manufacturing the Future conference.

R

esearch into additive manufacturing techniques, large complex systems, reconfigured pharmaceutical supply chains and bioengineering manufacture were some of the research

The pharma industry is collaborating more than ever and we’ve learned from from wasting vast of vast amounts of stock Dr Clive Badman, Vice-president, GlaxoSmithkline

projects on show at Cranfield University on September 17-18. The 2nd Annual EPSRC Manufacturing the Future conference showcased some of the work being conducted by the seven EPSRC Centres for Innovative Manufacturing – virtual centres which are led by British universities with strong, specific expertise in one area of manufacturing technology. The bases covered by the centre are diverse. They range from the centre for Continuous Manufacturing and Crystallisation (CMAC) – headed by Strathclyde University and involving companies like GlaxoSmithKline and


OUT AND ABOUT

Pfizer, to the centre for Through-Life Engineering Services, supported by the universities of Cranfield and Durham with partners like Babcock and Rolls-Royce. Dr Clive Badman, a vice-president at GlaxoSmithkline, presented on the CMAC project, a consortium of companies led by Prof Alistair Florence of Strathclyde University. CMAC’s purpose is to collaborate on “pre-competitive” manufacturing knowledge, to accelerate time to market in making drugs without compromising competitive advantage in the marketplace. Dr Badman estimates that the pharma industry has spent over £1 billion on continuous manufacturing, much of which it could have shared without losing competitive advantage. “The pharma industry is collaborating more than ever and we’ve learned from the waste of vast amounts of stock,” said Badman. “The real intellectual property is tied up in the molecule, but much of the manufacturing processes can be common to all. This is what CMAC will demonstrate.” The consortium has submitted a bid to the Advanced Manufacturing Supply Chain Initiative, Round 4, for money to fund the project. Dr Badman is confident it will have the effect of providing more opportunities for the partners’ supply chains in Britain (p76). Other highlights at Manufacturing the Future came from Professor Duncan Hand of Heriot Watt University. He and his team presented on new applications for additive manufacturing. Meanwhile, Dr Tony Walker, deputy managing director of Toyota Motor Manufacturing UK gave a talk on company culture and the future of mobility, with a strong focus on Toyota’s vision for hybrid cars. Today, 25% of all its European car sales have hybrid engines. FURTHER READING: Read more about presentations at Manufacturing the Future at bit.ly/MfgFuture

Seize MyDay

I

Jane Gray makes a discovery at CooperVision’s UK launch of its pioneering daily disposable contact lens product, MyDay.

t’s not being shouted about yet, much to the disappointment of management at CooperVision’s Southampton-based production facility, but MyDay is going to be made in the UK. The new type of daily disposable contact lens is made from a unique formulation of Smart Silicon which achieves what CooperVision calls a ‘triangle of no compromise’. Its complex chemical structure makes a material which optimises health, handling and comfort in a way that other products on the market cannot achieve, according to the company. CooperVision’s ambitions for MyDay are big. It has a competitive price placement strategy which it explained to a collection of opticians and optician practice owners at its London product launch in September. As the world’s first daily disposable contact lens made with Smart Silicon, MyDay could blast CooperVision into dominance in a segment where it has not previously had huge market share. Given this, the decision to open a new line for the production of MyDay in the UK is significant. CooperVision already supports 2,000 British jobs and, while the company was unable to give specifics

as yet, it did suggest the introduction of MyDay would mean more recruitment as well as investment in niche automation and production equipment - and systems integration - at its Southampton plant. But there are challenges to be overcome before the line is installed at the Hampshire factory. Talking over dinner at the impressive MyDay product launch in London’s Royal Exchange, David White, supply chain and silicon single use director at CooperVision said the increased energy requirements that the MyDay line will bring will need significant infrastructure investment. CooperVision management is talking with local and national government bodies to try and get support for this – promoting the economic benefits that the manufacture of MyDay will undoubtedly bring to the economy. But Mr White was scathing of UK government understanding of this argument when compared to other nations – specifically, Costa Rica where CooperVision is building another factory. MyDay is currently being manufactured in Puerto Rico. Its biggest global markets are anticipated to be in the USA and Japan. Asia as a whole represents a significant growth opportunity. October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 25


Best of The Stark simplicity of OEE http://www.themanufacturer.com

UK companies must embrace innovation to grow Tim Brown’s coverage of PwC’s report, Breakthrough Innovation and Growth, topped the charts for our research and publication-related stories.

T

he publication suggested that a half-hearted approach to innovation could undermine the UK’s economic recovery, future growth and competitiveness. The professional services firm’s claims were based on interviews with 1,757 senior executives globally and 201 companies in the UK, all with average revenues of £1bn. Focusing on the UK data, PwC showed that Britain’s most innovative companies grew, on average, 50% faster than the least innovative over the last three years. Yet only 32% of UK companies see innovation as ‘very important’ to their success. PwC showed that this was a poor statistic when compared to competitor industrial nations. For instance, 46% of German firms and 56% of Chinese companies rated innovation as ‘very important. Globally, an average 43% of firms agree. David Percival, a partner at PwC, said: “From medical diagnostics to aviation, whole industries have been turned upside down by innovation. Domestic and foreign competitors will soon crowd into the markets of less innovative companies. Those standing still will find themselves washed away in the new wave of growth.” PwC perceives the UK’s recent industrial, cultural and economic history to be to blame for the nation’s diminished interest in innovation. It says the move away from manufacturing towards financial services in the 1980s has led to many UK companies approaching innovation in an arbitrary fashion. Backing up this claim, evidence in PwC report shows that just 62% of UK companies believe it is important to recognise and reward innovation activities compared with a global average of 74%. To read the report in full go to: bit.ly/BreakthroughInnovandGrowth

I

Our biggest hitting feature with online readers in September was Malcolm Wheatley’s review of Overall Equipment Effectiveness, its power as an improvement tool in manufacturing businesses and the maturity of Manufacturing Execution Systems.

t’s rare that IT stories top the league tables for web stats on , so this interest in Wheatley’s article really stands out. Interviewing a range of specialists in OEE optimisation and MES delivery, Wheatley – an engineer turned journalist – showed that OEE can be used to drive improvement in a wide range of business areas, not just for optimising machine utilisation. “The beauty of the calculation is its simplicity,” he wrote, “and also the way that it automatically captures all the small losses of efficiency that conventional recording systems often miss – temporary stoppages of just a minute or so, for instance, or a short period of slow running.” Wheatley followed the evolution in technology to capture and report on OEE – particularly in MES systems. Technology vendors are frustrated with the slow realisation in many manufacturing firms that OEE does more than highlight problems with equipment. “OEE shines shines a light on an awful lot more than just downtime,” said Fraser Thompson at MES vendor Cimlogic. The ability of OEE to highlight and measure energy efficiency is a key talking point for advocates of the KPI. “Machinery or production lines don’t stop consuming power or compressed air just because they’re temporarily stopped,” Mr Thompson told Wheatley. Boost OEE, goes the logic, and energy efficiency goes up as well. Labour productivity is another area where OEE can bring gains according to this article’s contributors. “In fact, by improving the effectiveness of the equipment in your factory, you’re spreading all your overheads – not just energy and fixed labour – over more output, driving down the average cost of overhead per unit,” pointed out Mark Carleton, services director at efficiency improvement specialist Mestec, a provider of OEE-measuring equipment. To read The Stark Simplicity of OEE in full go to: bit.ly/StarkSimplicity or scan the QR code.

26 www.themanufacturer.com | October 2013 | Issue 8| Volume 16


Tracking your top reads on www.themanufacturer.com last month

R&D – It’s not what you spend, it’s how you spend it Cambashi’s Keith Nichols on maximising return on innovation investments. bit.ly/Howyouspendit (More from Mr Nichols on p73)

In love with the middle Will Stirling on the new darlings of the UK economy – the midcappers. bit.ly/Lovethemiddle

Being a solutions provider doesn’t make you special: Inspired by the Cambridge Service Alliance’s research Jane Gray writes on the normalisation of another competitive differentiator. bit.ly/Solutiondnotspecial

See more on: www.themanufacturer.com/articletype/blogs

History

OCTOBER

Popular blog contributions last month included:

Best of Online

This month in

Remembering UK manufacturing news in:

October 2003

Industry surveys deemed the outlook for UK manufacturing “bleak” in October 2003. The British Chambers of Commerce recorded the weakest figures for the sector in the third quarter of the year since 2001 and said the results confirmed the UK was “a two speed economy, with the gap between manufacturing and

services widening”. Also in October 2003, Concorde was withdrawn from service by Air France and British Airways. Efforts by British entrepreneur Richard Branson to keep the supersonic craft flying were thwarted, some said by the reluctance of aircraft manufacturer Airbus to continue providing maintenance.

October 2008

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In the thick of the global financial crash the PMI in October 2008 recorded its worst results in 17 years. The index, regarded as a key indicator of business confidence and economic health, read 41 – down from 45.3 the previous month – a reading of 50 marks growth. Despite the tumultuous conditions, few analysts had been expecting such a drop. The news was generally

gloomy with job cuts announced by Cadbury (c.600) and GKN (c. 1,400) among others. Workers also walked-out of automotive manufacturer Ford’s Southampton Transit van factory in reaction to news that production would be cut. On a more positive note, Ford announced it would invest £70m in its Bridgend engine-making facility.

October 2012 Taxi Manufacturer Manganese bronze confirmed 156 redundancies as it went into administration – the company is now back in business and employing much of the same staff under the name The London Taxi Company. In other news, Hitachi won its bid to take over the Horizon nuclear new build programme

and government awarded £37m of Regional Growth Fund money to the Nuclear Advanced Manufacturing Research Centre. A Composites Leadership Forum was also established – a planned phase in the deployment of the National Composites Strategy, published in 2009.

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 27


Industry on Indus Strategy trial On September 11, 2012 Business Secretary Vince Cable announced a new industrial strategy, designed to support the long term rebalancing and competitiveness of the UK economy. A year on, how well is it doing?

T

he Department for Business Innovation and Skills and business support body the CBI reached out to senior representatives from industry last month to help them review progress on the five pillar industrial strategy revealed by Dr Cable in September 2012. (See bit.ly/IndustrialStrat for our coverage of the original announcement.) Speaking to delegates at the review event, hosted at Warwick University, Cable claimed some good victories for his strategy. In particular he pointed to the Employer Ownership of Skills programme, the Aerospace Growth Partnership, and the £1 billion Advanced Propulsion Centre as big success stories. But Cable was not under the illusion that a few wins meant it was ‘job done’ on support for rebalancing. The Business Secretary expressed particular frustration with continued access to finance problems for SMEs and with late payments. “Cash is still king,” he told his audience, mainly made up of large manufacturing firms. “There is plenty of evidence that the large players in the market have been hoarding cash and smaller suppliers have had difficulty in getting paid.” But what feedback did industry have for government? asked delegates at the event - and a smattering of other industry leaders - to express their experience of progress with the industrial strategy:

More industry comments on the one-year review of the industrial strategy can be found at: bit.ly/IndustrycommentonIS

28 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

e Vince Cabl e th announcingent’s m rn ve Go ategy industrial str perial at Im ndon in College, Lo r 2012 Septembe

Jon Bolton

Director of Tata Steel’s Long Products Hub, President of UK Steel “Greater effort is needed to make British companies more independent and self-reliant. Therefore, it is essential that the right conditions are in place to make sure our foundation industries remain competitive and are able to underpin our future industrial production. “The CBI is right to highlight the need for more action to improve supply chains. As a foundation industry, steel will continue to play a key strategic role in any sustainable revival of UK manufacturing. That is why it is vital that targeted action is taken to identify supply chain weaknesses and tap the many opportunities that remain in the automotive, aerospace, offshore wind and nuclear industries.”


Industrial Strategy

HOT TOPIC

Industrial strategy? What industrial strategy? If the publication of an official industrial strategy from government passed you by, or you can’t quite remember what was promised here’s a quick reminder of its key commitments across five core pillars:

1 2

Access to finance: The most important promise on this point was the establishment of a state-backed Business Bank

Sectors: Government committed to establish a series of sector-focussed growth strategies for industries considered to have high value-add potential for the UK economy. With sector strategies already established for the automotive and aerospace sectors, government said the next sector strategies would be for non-health life sciences, nuclear, oil & gas, and renewable energy

3

Technologies: Synthetic biology, graphene, intelligent sensor networks, service robotics and energy harvesting were identified as important nascent, ‘horizontal’ technologies, the development of which will benefit a range of vertical sectors. They now receive priority funding via the science budget and the Technology Strategy Board, including the Catapults

4

Skills: Government promised to continue support for the revitalisation of apprenticeships and to refine and expand the Employer Ownership of Skills (EOS) pilot programme. It was acknowledged that the EOS model needed to become more accessible to SMEs – its early partners were all large firms

5

Procurement: £1 in every £7 spent in the UK comes from government. It has procurement contracts for everything from toilet roll to trains. The industrial strategy promised to do more to challenge EU rulings on procurement practices in order to justify giving more business to UK companies. It also said it would publish details of upcoming contracts earlier to allow more firms visibility of opportunities to become a government supplier

Does the industrial strategy have cross-party support? For many, the critical question about the value of the current industrial strategy is ‘will it survive the next general election?’ recently interviewed Chukka Umunna, Labour minister and shadow business secretary, and quizzed him on the topic. “I have praised the current government, and in particular Vince Cable for carrying on with many of the things that Peter Mandelson put in place – like the Technology Strategy Board and the Catapult centres which are a successor to the Technology Innovation Centres that we started to implement when we were in government,” said Mr Umunna. The shadow business secretary also expressed agreement with other core industrial policy priorities and frameworks, but there were a few points on which he said Labour would take a different approach to delivery, should they take power in 2015. Primary among these was the structure of the planned Business Bank. The Coalition’s model is “more akin to a fund,” said Mr Umunna. “We [Labour] are utterly committed to establishing a proper British investment bank alongside a network of regional banks. Without this British companies will not get the support they need in order to grow a different kind of economy. Our suggested model draws inspiration from the German Sparkassen.” To read ’s interview with Chuka Umunna in full, go to: bit.ly/ShadowStrategy

Martin Fausset

Managing Director, Ricardo UK “I am generally positive about the Government’s industrial strategy. I agree with Vince Cable’s view that this is a marathon and not a sprint. It is particularly welcome to see the Government engaging with industry to address skills development. Ricardo is benefitting from a range of government-backed initiatives. For example, we were successful in a bid to the Regional Growth Fund for support in the development of a new £10 million low carbon vehicle research facility at our Shoreham site. “We are also leading a collaborative project with grant funding from the Advanced Manufacturing Supply Chain Initiative which aims to deliver a step-change improvement in the ability of the UK supply chain to develop low cost, safety critical automotive embedded software systems. We appreciate all state-backed support but the rules for the provision of state aid need to be clear and not unduly constraining. Furthermore, government and industry alike must recognise that the UK exists within the EU market and competes globally. Our national industrial strategy must be seen in relation to, and must be as good as, those of Germany, China and our many other international competitors.”

Terry Scuoler CEO, EEF

“A year after its launch we can see consistency and continuity of purpose in the Government’s industrial strategy. This is positive, giving us a stronger foundation on which to build long term competitiveness. But there is still much to be done. “While a recovery is taking root, there has been little increase in the contribution of business investment or exports to UK growth. This does not bode well for a sustainable, balanced recovery. “Furthermore, competitor economies are making faster progress on this. Looking at six of the largest developed economies, the UK ranks fourth in the contribution of both investment and exports to growth. Despite the UK’s favourable exchange rate, net trade has made a more positive contribution in France, Italy and Spain. “The area where government has done best is in supporting more companies to create new products and services in the UK. Policies on innovation have been both coherent and consistent for a period of time.”

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 29


Industrial Strategy

Harry Swan

Duncan White

Managing Director, Thomas Swan & Co

Science and Industry Business Leader, Arup UK

“I have now attended two BIS Industrial Strategy conferences and I’m encouraged by the realisation from ministers that manufacturing and wealth creation is vital to rebalance and grow the UK’s economy. Looking forward I hope to see the discussion turned into actions, but in a collaborative way. Industry needs to do its part and not expect government to come up with all of the answers. The achievements of the Automotive Council demonstrate the power of this collaborative model and I look forward to seeing similar results within the chemicals sector. It is an exciting time for the UK but only if we stick to the plan and carry it through.”

“The industrial strategy covers many areas that are vital to Arup’s multi-disciplinary business. The Information Economy, where Arup is at the forefront of creating the new generation of Smart Cities, Professional Services, Life Science Research and, of course, Construction industry, which is our bread and butter. The industrial strategy can bring alignment across these areas. We are keen to see a continued emphasis on those elements of the strategy which focus on delivering measurable benefits for the UK economy such as targeted policy interventions to encourage global companies to invest here and focus on developing sustainable products and materials, backed by a skilled, flexible workforce.”

Tony Broughton Head of UK Operations, AstraZeneca

“The Government should be commended for taking a proactive approach and for the way it’s looking to partner with industry to support the growth agenda. It makes sense that they are working on specific high potential sectors and the emphasis on skills is critical and should be sustained. “However, pharmaceutical manufacturing is not included as one of the high potential sectors in the Industrial Strategy, nor is it directly addressed in any of the 31 Life Sciences Strategy measures. “The Life Sciences Strategy acknowledges the contribution that pharmaceutical manufacturing makes (accounting for 11% of exports in 2011), so there should be renewed focus to incentivise and grow investment and innovation in pharma manufacturing.”

HOT TOPIC

David Keene

Chairman, RDM Group “A decision by the last government in 2009/10 to form the UK Automotive Council has paid dividends in producing a coherent strategy for government and the automotive industry. This strategy was continued by the current government and has grown in scope, resulting in joined-up, strategic funding and support. The Technology Strategy Board has been an important and effective delivery vehicle for automotive industrial strategy, working collaboratively with the Automotive Council. “Cable is right to say that access to finance remains a problem for SMEs however. Although the banks are represented on the Automotive Council there is still a shortage of flexible and entrepreneurial finance to support growing SMEs. Many are now looking to alternative funding sources such as Funding Circle and Thincats, who both provide very quick solutions to finance requirements.”

Richard Martin

Chief Engineer, Nestlé UK & Ireland “I was encouraged by the consensus at the conference that the Government has a role to play in the industrial strategy of the UK and this will help to grow the UK manufacturing sector and rebalance the economy. This approach needs to be consistently applied over many years regardless of who is in government. “Food and drink is the biggest manufacturing sector in the UK but progress on

30 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

an industrial strategy to support it has been disappointing so far. “However, industry is taking responsibility for supporting its own future competitiveness. One of our major challenges in accessing the many growth opportunities before the sector is skills. In response, a new masters degree programme in food engineering has been launched with Sheffield Hallam University. The curriculum was designed by industry, for industry.”

More industry comments on the one-year review of the industrial strategy can be found at: bit.ly/IndustrycommentonIS


sectorfocus Gunning for Reconnoitring prospects for the UK defence industry

“T

he Ministry of Defence’s policy on defence industrial policy is not to have one.” This was the crisp and uncompromising statement made by one engineer and ex-serviceman while researching this sector focus on UK defence manufacturing. It’s not an uncommon sentiment in the sector – or at least it hasn’t been. But perhaps that is about to change. While all of UK industry has suffered in recent years due to lack of a long term industrial policy to support its competitiveness, the defence sector has fared worse than most. It’s not hard to understand why the idea of a defence industrial policy from government represents a political minefield. The ethics of committing to

Decisive defence dates A selection of important moments for the UK defence sector: 2012-2013

March 2012: The Centre for Defence Enterprise confirmed its 500th SME contract: CDE was established in 2008 to accelerate the commercialisation of defence technologies. Its 500th contract was placed with ITSUS a Welsh SME

32 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

support the commercial growth of arms manufacturers and the regulation of who should (or could) end up using their products are complex problems. On the other hand, the bare facts show that the UK defence industry turns over £22.5bn a year and directly employs over 150,000 people in Britain in highly skilled jobs. It’s a growth export industry, and a source of technology and knowledge transfer which can stimulate growth in other sectors too. Finally of course, the health and capability of the UK defence sector directly impacts on national security. Britain relies on the superior capability of UK manufacturers, and those in allied nations, to equip its troops effectively and to protect its citizens from threats at home and abroad.

July 2012: Prime Minister David Cameron announced his intention to establish a Defence Growth Partnership (DGP)

people are directly employed in the UK defence sector

Sept 2012: BAE and EADS announced their intention to merge: The megamerger would have formed a £60bn company employing 220,000 people worldwide. But the merger failed in early October due to lack of support from European government stakeholders in EADS

Dec 2012: Steve Wadey, MD, MBDA appointed cochair of the DGP: Business minister Michael Fallon was also appointed co-chair (p41)


Defence

SECTOR FOCUS

Under attack

Severe defence budget cuts in a post-financial crisis climate of austerity did little to nurture confidence among UK defence manufacturers that anyone in government understood or acknowledged the sector’s contributions to the economy. The 2010 Strategic Defence and Security Review committed to slash 8% from defence spending over four years, reducing the size of the armed forces, and therefore the number of troops requiring equipment, as well as scrapping key contracts for platforms – like the Nimrod surveillance aircraft. Those were dark days for UK defence manufacturers and trade body representatives who were frankly pessimistic about the sector’s ability to elicit government support. Sir Ian Godden, then CEO of the defence trade association ADS admitted to at a roundtable debate on the implications for defence policy of conflict in Libya in 2011, that he had “given up” trying to communicate the economic contribution of the defence sector to MoD. He said Liam Fox, then defence secretary, had a “closed door” policy on discussion of support for the industry on which his department relies.

The reveille

Yet even as these views were expressed, UK defence policy was at a turning point. The war in Libya in 2011 served as a “wake-up call to government��� in terms of the current and future capability the UK needs according to industry commentator Howard Wheeldon. And certainly the intervening years have been marked by improved government-industry relations – perhaps facilitated in part by the resignation of Liam Fox as defence secretary in October 2011. Today, the defence industry is enjoying what Steve Fitz-Gerald, CEO of Marshall Aerospace Group describes as “an unprecedented period of government support” which few would have anticipated a few short years ago. Prime Minster David Cameron has received praise from several quarters for his efforts to support the growth of UK defence exports which recorded a five year high in 2012. Perhaps even more significant for the future resilience of the UK defence sector however, is the recent establishment of the Defence Growth Partnership (DGP). This support organisation, made up of a collaborative team of government, industry and trade body representatives was launched in 2012, but it was only at the start of the international trade show DSEI last month, that its full executive staff were appointed (see box) and its strategic vision made public.

Dec 2012: BAE Systems hands over Wildcat technology to Oxford University: BAE spent five years developing Wilcat, an autonomous jeep, with scientists at Oxford University. BAE’s handover of the project IP was a strong show of its commitment to open innovation and technology transfer from defence to civil applications

L-R: Philip Dunne, minister for defecne equipment; Michael Fallon, business minister and Steve Wadey, MD, MBDA

Who’s Who on the DGP? Co-chairs: Steve Wadey, MD, MBDA & Michael Fallon, business minister Government & ADS leads: Huw Walters, head of aerospace, marine and defence, Department for Business Innovation and Skills; Graham Chisnall, deputy CEO, ADS and Nick Payne, director commercial strutiny & industrial policy, MoD

Team chairmen Air capabilities: Nigel Whitehead, group MD, BAE Systems Intelligent systems: Victor Chavez, CEO, Thales UK International business: Peter Rogers CBE, CEO, Babcock Technology & Enterprise: Sir Brian Burridge, VP, Finmeccanica UK Value stream competitiveness: Stephen Fitz-Gerald, CEO, Marshall Aerospace Group Skills: Allan Cook CBE, chairman, Semta Engagement: Bob Stoddart, president customer business – defence, Rolls-Royce Strategy: Paul Crawley, special advisor, MBDA

Jan 2013: The Defence Equipment Plan published: This document gives significant visibility of MoD’s purchasing intentions for the next ten years. While some criticised the plan for being over optimistic in its budgeting the National Audit Office also commended it is a sign that MoD is maturing as an intelligent customer

Jan 2013: Marshall Aerospace and Defence Group Established: The two arms of the UK’s largest privately owned defence company, Marshall Aerospace and Marshall Land Systems, merged to form a single entity

March 2013: The Cyber Growth Partnership and Cyber Security Information Sharing Partnership were established: These bodies show acknowledgement of the serious threat posed to business and the UK by cybercrime and the need for better strategic development of skills and technology in the industry

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 33


sectorfocus Rolls-Royce Defence Aerospace made £2.417bn in underlying revenues in 2012

24 Typhoon aircraft will be delivered this year. That means a two week takt time for the final assembly team at BAE Systems’ Warton facility. Read more at bit.ly/Twoweekdrum

The DGP’s purpose is set out in Securing Prosperity: A strategic vision for the UK Defence Sector (bit.ly/SecuringProsperity). This strategy includes six core strands: Skills Value stream competitiveness Air capabilities Intelligent systems Growing international business Technology and enterprise These strands represent the strategic and technical areas that government and industry have identified as fundamental to future competitiveness. They will be addressed by eight teams within the DGP – each chaired by a senior industry professional. Prior to the announcement of the senior team for DGP, industry opinion of the body’s potential was dubious. A senior figure within BAE Systems told in June that, while commitment to DGP from the Department for Innovation and Skills seemed strong, he doubted the body had thorough support from the MoD. September’s announcements have prompted more faith. Paul Everitt, CEO of ADS told that there is now a “genuine collaborative relationship… between major defence manufacturers, SMEs and the department for business as well as the Ministry of Defence and DE&S.” Howard Wheeldon added: “I am reassured that all parts of the MoD are on side and that they are determined to play their part in making the DGP a success.”

Decisive defence dates continued

May 2013: Queen’s speech cleared the way for the Defence Reform Bill: The bill will enable the reform of Defence Equipment and Support (DE&S), the equipment and capability procurement arm of MoD

There is now a genuine collaborative relationship… between major defence manufacturers, SMEs and the department for business as well as the Ministry of Defence and DE&S Paul Everitt, CEO, ADS

82% of defence exports in 2012 were in air capabilities

June 2013: Better Defence Acquisition White Paper published: This document explained government’s rationale for the reform of defence procurement which Defence Secretary Philip Hammond admitted wastes between £1.3 and £2.2bn a year through inefficient practices

34 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

However, some defence companies may be disappointed to learn that the value stream competitiveness element of the DGP has no remit to influence consultation on the reform of defence procurement by MoD. “The DGP’s focus will be on making sure industry is doing what it can to make itself globally competitive,” explained Mr Everitt. “We do not see this linking to the specifics of government procurement decisions.” (See Reforming defence procurement for more: bit.ly/ProcurementReform) Nor does the DGP have any funding as yet and Everitt says the defence industry should not hold its breath – even though the Aerospace Growth Partnership, on which the DGP is modelled, has received financial support for its initiatives after a period of bedding-in. “This is not about spending more money. From an industry point of view we need to think a lot more about how we use the resources we have more effectively,” Everitt commented.

June 2013: UKTI revealed a five year high for defence exports in 2012: Defence and security exports were valued at £11.5bn in 2012 – defence alone achieved £8bn in export revenues. Air capabilities accounted for 82% of UK defence exports in 2012


Defence

Although the Watchkeeper UAV is behind schedule for delivery to UK MoD, Thales says it will be operational by the end of 2013 and will be the only UAV certified for operation anywhere in the world. Image courtesy of Skuds

The Defece Equipment Plan has brought new visibility of MoD spending plans - but a decision on a successor class of submarines for Vanguard is still in contention.

SMEs and the DGP

One of the key measures of success for the DGP will be its ability to engage with the large base of SME defence manufacturers. There are thought to be around 2,000 British SMEs in the UK defence supply chain who struggle to cope with the unique contract, market visibility and cash flow characteristics of the sector (see Finance for defence box p36). Paul Lawrence, MD of AEF, a small manufacturer of connector solutions for electronic interference has been a single source supplier to the Eurofighter Typhoon for many years but explains that the expanded timescales for defence contracts mean a Typhoon order in the headlines today, can only be speculated about as a theoretical order three years down the line for a firm like his. “All you can do is make sure you keep engaging with new technologies and get involved in development projects for new platforms as early as possible in the hope that they will turn into order somewhere down the line,” comments Mr Lawrence. Furthermore, although Lawrence knows that there is great potential in developing AEF’s technologies for application in unmanned systems – a growth segment

July 2013: Reserves in the Future Force 2020: Valuable and Valued published: This document gave further details on government plans to reduce the size of the UK’s full time armed forces and rely more of reserves. The move toward Future Force 2020 will create greater need for service support and integration between defence industry suppliers and the military according to some commentators (p38).

SECTOR FOCUS

JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC

The amount the UK defence sector turns over in a year – he says it is almost impossible to quantify opportunities or plan capacity and capability development because of the clamp down of classified information. “Sometimes we get asked to develop a bespoke solution with capability across a certain environmental spectrum that can only be for use in a UAV, but we’re not told anything about the end application. That’s just the nature of defence.” But DGP, building on existing initiatives like the Centre for Defence Enterprise, hopes to give defence SMEs greater independence and empowerment, increasing their direct market access and accelerating innovation in critical technology areas. ADS’ community of almost 700 members SME defence firms are likely to be the first to benefit from DGP work on value chain competitiveness, but the

July 2013: First Global Intelligent Systems Conference took place in London: Hosted by ADS and Farnborough International the event is designed to promote market growth and technology transfer for intelligent and autonomous systems. ADS estimates that the non-defence market is worth £264bn per annum globally

team chair, Steve Fitz-Gerald, CEO of Marshall Aerospace Group, says he will also be looking for other engagement avenues to draw in as many innovative SMEs into the defence supply chain as possible and help them grow (p38).

Battle half won

The DGP is not a complete solution to the challenges which face the UK defence industry in a climate of declining defence budgets in traditional markets and rapidly evolving warfare technologies. Nor does it represent a true industrial strategy. What it does represent is a significant step change in the level of overt recognition given by government to the economic contribution of the defence industry. A full plan for the delivery of the vision laid out in Securing Prosperity will be presented by DGP leaders at Farnborough International Air Show 2014. This will include details on the new and existing mechanisms which will be used to tackle its priority skills, technology and market objectives. With the Strategic Defence and Security Revue looming in 2015, it won’t be long before the resilience of these mechanisms and their effectiveness in supporting commercial independence for the defence industry, are put through a thorough test.

Sept 2013: Securing Prosperity published: This strategic vision for defence growth came hand in hand with the appointment of the full executive team of the DGP. Securing prosperity targeted the exploitation of opportunities across six key themes: Skills, value chain competitiveness, air capabilities, intelligent systems, growing international business and technology and enterprise

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 35


Defence

SECTOR FOCUS

Finance for defence While Access to finance is a problem in all UK manufacturing sectors, the defence sector has some particular difficulties due the nature of its products and markets. Jeegar Kakkad, chief economist at ADS explains: “Access to finance is a problem for the defence industry, as many banks have strict ethics policies that preclude lending to defence suppliers. “While that is their right, it is unfortunate because it starves otherwise innovative, export-oriented companies of much needed growth capital. At the very least, these banks should be more transparent about their rules so that SMEs don’t waste scarce and valuable management time.” Kakkad urges banks to look again at the defence sector’s underlying levels of innovation and capability. “Given the political and industrial momentum behind the Defence Growth Partnership, there is an opportunity for some banks to support the long-term growth potential of the sector.” Peter Russell, head of manufacturing at Royal Bank of Scotland, acknowledges that the defence sector can make banks overly cautious. “I have met a number of defence based companies who raise these issues. When a bank is reluctant to support their activities on ‘policy’ grounds they have sometimes had to make alternative banking arrangements or simply been unable to raise finance.” To mitigate the negative impact this could have on what Mr Russell identifies as “a key sector of the economy”, he advises firms seek out defence experts for their finance needs. “Seek a bank who can properly evidence their credentials in supporting defence sector companies and is able to articulate what it can and cannot do,” he says. “No bank will want to fall foul of the stringent regulatory environment that surrounds much of this sector so companies must expect the rigour that goes with this. However, bank teams with the right level of knowledge and experience do exist.” Jon Bell, relationship director, aerospace and defence at Barclays, agrees. “With the appropriate partner, long lasting relationships can be formed,” he comments, advising firms to be transparent so that a specialist banking teams can properly assess each company on a case by case basis and look at: the status of export and imports partners; the nature of the equipment or products; its intended and likely use; and its potential to be sold on.

36 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

While many defence manufacturers seek to regulate cash flow with civil applications for their technologies, JCB is supplementing its civil business with a healthy trade in bespoke, modular earth moving equipment for defence. The company’s defence arm works with 57 global governments and achieved net profits of £300m in 2012. Defence orders are made alongside civil orders in JCB’s factories worldwide.

Target markets engaged

Defence budgets in the UK sector’s traditional markets are shrinking. But the same is not true the world over. India, Turkey and the UAE have all significantly increased their defence spend since the recession. India and the UAE, along with Saudi Arabia, are now the biggest global importers of arms. Given this, it is unsurprising that defence exports have become a strategic necessity for all Western defence manufacturers with a mind to survive in the long term. But competition is fierce, so understanding market dynamics is essential, especially in an industry as politically and culturally sensitive and as tightly regulated as defence. Take India, which currently holds the world’s largest defence budget. The Indian government has plans for $250bn of defence capital expenditure in the next ten years according to research conducted by PwC. The majority of Indian defence capex in 2011 went on aircraft (68%) followed by armoured vehicles (11%), ships (8%) and missiles (5%). Other key areas included investment in sensors and engines. The UK has good technology and service capability in all of these areas, but winning defence contracts in India can be complicated according to Richard Heald, head of the UK India Business Council (UKIBC). “No defence company operating in India can be 100% foreign owned,” he says. “This means some of collaborative enterprise or JV with a local firm is necessary.” Furthermore: “Any defence equipment bought by the Indian government must

have some percentage of its value, in manufacture or service, generated by domestic companies.” Finally, Indian defence procurement is ruled by a so-called L1 rule which means the lowest cost bidder will usually scoop the deal. This doesn’t always sit well with the UK’s high-valueadd manufacturing philosophy and it saw the UK lose out in 2012 when India decided to buy the French Dassault Sytsèmes Rafale aircraft instead of the Eurofighter Typhoon – 37% of which is made in the UK – because it offered a lower price point. Once these official niceties have been navigated, Mr Heald admits that the practicalities of working with Indian suppliers and partners can be “a frustration” for UK firms due to skills gaps, technical capability gaps and cultural differences. Comfortingly however, an intriguing project is going ahead to help smooth the road for UK defence firms looking to access the cash-rich Indian market. UKIBC has linked up with ADS to take its highly acclaimed supply chain improvement and benchmarking model, SC21, to India. The project is in its early stages, but is supported by a number of UK defence primes and the first steering board meeting was held in August. “The aim of the venture, involving primes, training partners, the SC21 project team and the ADS India office is to create increased UK supply chain effectiveness through the improvement of a number of strategically important far-eastern companies, located in India,” says SC21 programme lead, Phil Curnock.


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INTERVIEW Marshalling Marshall Stephen Fitz-Gerald, CEO of Marshall Aerospace Group, talks about his strategy for growth in engineering solutions and the privileges of running one of the UK’s few exemplary Mittelstand-like manufacturing firms.

“W

e are experiencing a period of unprecedented government support for the growth of the defence industry,” says Steve Fitz-Gerald enthusiastically as we huddle in the glass-fronted booth of Marshall Aerospace Group’s busy stand at DSEI, the international trade show for the defence and security industry. Mr Fitz-Gerald’s optimism is riding high on the back of his recent appointment as chair of the Value Stream Competitiveness Team within the Defence Growth Partnership (see box opposite). It’s an appointment which will require the CEO to collaborate closely with a variety of government departments but also one which endorses the transformation strategy he has led so effectively at Marshall in order to make the firm resilient in a climate of declining defence spend by UK MoD.

38 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

Service strategy

Broadly speaking, there are three things that defence manufacturers, whose industry undeniably faces some stark challenges, can do to safeguard their future. One; look for applications for their technologies and capabilities in civil markets. Two; export goods and support to foreign governments with healthier defence budgets. Three; grow and innovate the service and solutions side of their businesses. Marshall has a strong pedigree in the first two areas with the civil aerospace side of its business traditionally accounting for around 50% of revenues – civil contribution declined in recent years but is rebounding following two MRO acquisitions this year. Marshall also has a wellestablished international customer base. The Australian, Canadian and

It is a privilege and a responsibility to be invited into a heritage company and be given the support of its owners to transform it


Stephen Fitz-Gerald, CEO, Marshall Aerospace Group

Dutch governments are particularly valued and constant customers. But when Mr Fitz-Gerald joined Marshall in 2011, he did so with a mission to transform the company’s approach to the final pillar in its sustainable growth strategy – the provision of customerdriven engineering solutions. “I came to Marshall from a service business,” Fitz-Gerald explains. “Cobham Aviation Services was founded on outputbased contracting. We were focused on delivering an effect for the customer. But the industry generally is much more input driven and it was a core focus for me in my first two years at Marshall to make the company more delivery focused and more relevant to the customer.” It’s not that Marshall hasn’t got a strong service element. Its MRO offerings are a core capability, but

there’s a difference between offering support solutions, where you deliver spares and repairs and delegate responsibility for extracting value from them to the customer, and providing engineering solutions which mean accepting new levels of problem solving responsibility on a continuous basis. And there’s only one way to judge how good you are at delivering service value to a customer states FitzGerald – you must gain and record their endorsement. Any company that claims to offer service solutions but can’t display external verification of its effectiveness isn’t worth its salt he asserts before pointing out that Marshall this year received a nomination from Boeing for supplier of the year thanks to its collaborative work in improving service levels for Boeing aircraft.

INTERVIEW

What does value stream competitiveness mean? Stephen Fitz-Gerald was recently selected to chair the Value Stream Competitiveness Team within the Defence Growth Partnership (p32). “The team’s remit is about more than supply chain. It’s about the whole support, solutions and service infrastructure for defence. “Sir Andrew Pulford, chief of the Air Staff, made clear in his speech [at DSEI] how important it will be that industry develops the effectiveness of this value chain. His biggest concern is; how does he train his forces to remain relevant for the future. He won’t be able to train real-time on aircraft and will have to factor this into total acquisition costs for equipment throughout its life-span.” Fitz-Gerald says he will draw on his experience at Marshall, which partners with key defence OEM’s to deliver parts of a defined final capability for customers, to lead the value stream competitiveness team.

Aerial view of Marshall’s site in Cambridgeshire

Multi-disciplinary engineering and production teams work across civil and defence contracts at Marshall

Stephen Fitz-Gerald’s best and worst career moments Cruising at altitude: “My best moment was being asked to become CEO of Marshall. It is a privilege and a responsibility to be invited into a heritage company and be given the support of its owners to transform it. They have trusted me to meddle in their business – that’s something you don’t take lightly.” Turbulence: “I won’t go into the specifics, but the worst moments have been when I’ve realised I should have made decisions quicker. Waiting for more information does not always help to make a less risky or more intelligent decision. Sometimes, speed is of the essence, and you should not be afraid to take quick action and then correct and adjust your decision making as you go forward.”

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 39


Stephen Fitz-Gerald, CEO, Marshall Aerospace Group

INTERVIEW

M for Marshall and Mittelstand There’s been good news about the UK Mittelstand in recent months with GE Capital’s Leading from the Middle report showing that it includes more rapid growth companies in its ranks than its German role model (see bit.ly/LeadingfromMiddle for more).

BIOGRAPHY Stephen Fitz-Gerald CEO, Marshall Aerospace Group

But there’s still a long way to go in growing the number of UK firms which qualify as being Mittelstand-like before the UK can claim to have a similarly robust industrial base to its German cousin. Marshall is a prime example of the company profile we need to see more of. “We occupy a fairly unique space,” admits Stephen Fitz-Gerald. It’s something he wants to see change.

1974:

Joined Plessey Radar as an apprentice electronics engineer

1997:

Becomes group commercial director for Marconi Avionics and BAE Systems Avionics

2000:

Left BAE Systems to become director of Mysis International Banking Systems

2001:

Joins FR Aviation Group as commercial director

2005:

Becomes managing director of Cobham Flight Operations and Services

2006:

Progressed to become president of Cobham Aviation Services Division

It’s not Marshall’s ambition to simply scrape the innovation off the surface of SMEs that bubble with ingenuity Fitz-Gerald continues. “There have been too many cases in the past where big companies have swallowed up great ideas because the firm that produced the concept couldn’t fund their cash flow.”

Appointed CEO of Marshall Aerospace Group

Instead, Marshall’s is keen to see ingenuity flourish and grow up

2011:

Steve was also recently appointed chair of the Value Stream Competitiveness Team within the Defence Growth Partnership, an industry-government organisation designed to build further commercial competitiveness and efficiency in the UK defence industry while supplying UK MoD with value for money solutions to national security requirements. Steve is married with two children. He is a keen sportsman with particular interests in golf and rugby. He is also a motor cycle enthusiast.

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“Around seventy per cent of growth in the UK economy comes from companies of less than twenty people. That’s where the innovation is coming from. “The trick now is for us to work out how to draw those companies into our value chain and support them in scaling up in order to meet the demands of a major programme.”

alongside it. “That’s why we support Martlet, our innovation growth fund. Alongside other business angels this allows us to support the growth of fast moving technologies for industry with early-stage capital.” Marshall tends not to invest in innovations that are very close to its core business, explains Fitz-Gerald – “we feel that we are likely to be active in those areas ourselves” – but it does see value in increasing the exposure of its employees to other areas of “very fast moving and agile technologies”. Fitz-Gerald feels that a respect for intellectual property and innovation should be defining characteristics in a growing UK Mittelstand. They are central to Marshall’s company values he says. What else does Marshall’s have to teach companies with ambitions to step into the mid-cap arena? “Something which Marshall has in abundance and which I have never experienced to such an extent anywhere else is a spirit of adventure. I have never known a company take such a positive approach to risk taking.” A lot of this comes down to the family ownership structure comments Fitz-Gerald. The Marshall family shareholders are entrepreneurial and support short term decision making cycles while keeping long term ambitions in mind by re-investing profits to sustain momentum on ideas. “I speak with the principle shareholders almost every day, and when I want to make a decision I get support very quickly,” Fitz-Gerald sums up.

Growing confidence in complex service provision is a canny strategy from Marshall’s CEO which responds to a number of market and political factors, not least of which is Future Force 2020 – the government policy which will see the UK armed forces reduce considerably in size and become for more reliant on reservists. This new-look armed forces will require more support than ever from industry in providing services, capability and training. But the transformation provides more than simply a service delivery opportunity continues Fitz-Gerald. “Force 2020 is a two-way value offering to business. The reservist model will need see industry becoming even more closely embedded in supporting

the armed forces. But business should also embrace the opportunity to welcome more reservists and the time they will spend outside the company.” He explains, “Each reservist is allocated £20,000 worth of training by government. That’s an investment by the military in our skills as an industry.”


6Osecond Steve Wadey, Defence Growth Partnership

interview

Steve Wadey: Co-chair of the Defence Growth Partnership : How do you view the responsibility you have taken on as co-chair of the DGP? It is an honour to take on this role and that I feel a strong sense of responsibility to ensure this important partnership between government and industry creates enduring changes for the long term health of the sector. Of course this responsibility is shared across government and with senior business leaders in defence companies across the UK. How do you view the rate of progress in establishing DGP? You were appointed co-chair in December 2012 and we have only now established the rest of the senior working group and a headline strategy – is this good? I’m thrilled with the progress we have made. We’ve been focusing on developing a strategic vision and focus, and on gaining broad endorsement across government and industry.

This culminated in the publication of Securing Prosperity. This provides a solid foundation for our eight joint senior teams. They now have an ambitious programme of work through to Farnborough [International Air Show] 2014 when we will deliver a progress report and full implementation plan for the strategy. DGP has no government funding to achieve its strategy at the moment – does this matter? Do you expect funding to appear in due course? The DGP is not looking at new funding commitments. It is identifying how government and industry can work together in a genuine partnership to address the challenges facing the sector. The UK government, through the MoD, already spends around £14 billion a year on defence equipment and support and a further half a billion pounds on science and technology exploration. The UK retains the fourth largest defence budget in the world. The DGP is not about

About the DGP The Defence Growth Partnership was launched in December 2012 when Steve Wadey and business minister Michael Fallon were appointed co-chairs of the growth initiative. The DGP is designed to optimise growth opportunities for the UK defence industry as well as protecting the UK’s ability to meet its national security needs today, and in the future. A strategic vision the Defence Growth Partnership was published on Sept 11 (p32).

trying to increase the total amount of government investment in the sector, it is about finding ways to better coordinate and focus existing resources. It’s often said that the MoD’s policy on defence industrial policy is not to have one – does DGP change that? Government’s policy is set out in the National Security through Technology white paper. The DGP is fully consistent with this policy. How do SMEs fit in with DGP – can they engage directly? SMEs are a hugely important part of the overall landscape. The UK defence industry ranges from prime contractors able to deliver whole platforms, through to a huge range of SMEs supporting highly niche innovation in the supply chain. It’s very important that SMEs are involved in the DGP. Some SMEs have already been involved, but in the next phase we plan to reach out further to engage companies throughout the value chain. We are working closely with ADS who represent 684 SMEs among their membership and we are establishing a Value Chain Competitiveness Team that will seek to ensure the UK has access to a world leading value chain. This is a way we can deliver market differentiation. October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 41


Snapshots

MANUFACTURING LEADERSHIP

Directors’ Forum

Highlights from ’s Second Annual Supply Chain Excellence Dinner.

T

his event was held as part of ’s Manufacturer Directors’ Forum dinner debate series. Guests were asked to focus on energy security and sustainability in manufacturing supply chains, but a heavy emphasis also emerged on the need to formalise education engagement programmes as a critical part of supply chain strategy and management, rather than allowing them to linger as a business ‘nice to haves’. With regards to energy security and sustainability, the concept of supply chain collaboration in order to create closed loop economies and design products for disassembly was touched on. But while guests were intrigued, they admitted the issue is far from the top of their agendas. The potential for more energy conversion in supply chains was mooted with more enthusiasm. However, it was felt that knowledge-sharing networks and a higher degree of openness between businesses and across sectors is required before energy sharing and conversion can be optimised. A possible anchor for new, more ambitious knowledge exchange networks was identified in the Catapult centres which received resounding approval from all industry leaders present. In frank discussion of the barriers to developing more advanced, symbiotic supply chains, it was acknowledged that much more needs to be done to ensure fairness and ethical practice in supply chain management – particularly by large firms. This observation applied not only to payment terms, but also the way in which larger firms view efficiency improvements in the supply chain. thanks IBM for its sponsorship of this event.

GUEST COMPANIES INCLUDED

Cab Automotive · MBDA · Oxford Instruments · Siemens Industry Automation · Tata Steel · The Authentic Food Company · The Morgan Motor company For a fuller write up of the debate go to: bit.ly/Giveandtake

42 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

MX Refresh The IMechE’s Manufacturing Excellence Award scheme has had a facelift.

C

hristopher Simpson, chairman of the Manufacturing Excellence Awards, known to most as the MX Awards, explained the reasoning behind recent updates to the 30+ year-old programme in an interview with . “The MX Awards were originally designed to be a business benchmarking service,” he said. “The idea was to support manufacturers in their efforts to improve efficiency and competitiveness. “Over the years however, we found that we had drifted towards a heavy emphasis on the ‘excellence’ aspect and less on improvement. We had a strong pedigree of blue chip and confident mid-sized manufacturers entering year-onyear, but we became aware that our interface with smaller firms was not what it should be,” he admitted. To correct this drift the MX Awards team at IMechE has spent the last ear developing a new software platform for online awards submissions with the help of Professor Mike Gregory at the Institute for Manufacturing, Cambridge University. The rationale is to lower barriers to entry for SMEs while maintaining a rigorous approach to business benchmarking which can help companies mature and improve their approach to operations, business process management and competition. The awards scheme, or benchmarking service, will now be open for entry all year round and at any time of day. Another change is that, from 2014, the MX Awards will feature regional heats in addition to the well-established national competition. FURTHER READING: To learn more about the MX Refresh go to: bit.ly/MXRefresh


Breaking through for growth

What’s on at the Manufacturer Directors Conference 2013?

MDC 2013

Breaking through

for

growth

About MDC

A

fledgling UK manufacturing recovery took hold this summer and, so far, it is sustaining with PMI and CBI surveys reporting five consistent months of increasing confidence, orders, exports and output. Tracking the political and regulatory springboards and the business strategies which have helped achieve this long awaited up tick, this year’s Manufacturer Directors Conference (MDC) will uncover how firms are breaking through for growth and where they are headed. As well as traditional case study presentations, this year’s conference will feature more structured networking sessions and roundtable debates to maximise knowledge sharing among peers and subject experts. Among this year’s confirmed keynote speakers is Professor Tim Baines of Aston Business School, who will discuss the rapidly evolving field of manufacturing ‘servitisation’. Still an unfamiliar term to many manufacturers, but an increasingly important concept in the fight to sustain competitive differentiation and find ways to maximise revenues throughout product lifecycles. “Manufacturing is bouncing back but in the longer term, we have to sustain its competitiveness and people are beginning to see that it isn’t just about making bits. It’s also about competing for services,” says Professor Baines. “I’m going to discuss what it takes for a manufacturer to compete for important advanced services.”

The Inertnational Conference Centre (ICC), Birmingham where MDC2013 will take place. Image courtesy of House of Hall

The Manufacturer Directors’ Conference is The Manufacturer magazine’s flagship event.

By manufacturers for manufacturers

Speakers for MDC 2013 have been carefully selected with instruction and advice from the event’s industry-led advisory board The board comprises senior representatives from large and small manufacturing firms. Companies participating on the board this year include paint manufacturer AkzoNobel – which will open its new £100m factory in Ashington next year, defence sector prime and the UK’s largest manufacturing employer BAE Systems and Jaguar Land Rover whose explosions of job creation and investment have helped challenge the traditionally dour national press coverage of UK industry. There’s also good representation for the UK’s backbone of SME firms on the board. Among them is Norfolk-based Frankdale Foods whose managing director Robert Dale comments: “Events like MDC, offer a chance to meet like-minded industry leaders to share winning ideas, skills and knowledge. Manufacturers can draw so much inspiration from manufacturing conference like this.”

Now in its fifth year the conference continues to grow its appeal to senior industry representatives from a broad cross section of manufacturing sectors and company sizes. MDC is a learning and networking event which embodies the magazine’s core purpose: to promote competitive manufacturing in the UK. Last year the event attracted almost 300 manufacturers, trade body leaders, industrial academics and professional services experts. MDC 2013 takes place December 3-4 in Birmingham. Confirmed speakers include but are not limited to: Neil Whitehead, Group Managing Director, BAE Systems Steve Dalton, Managing Director, Sony UK Technology Centre (p64) Phil Lewis, CEO, Gardner Aerospace Gill Woodward, Global Lean Manager, Accolade Wines Professor Lord Bhattacharyya, Chairman and Founder of the Warwick Manufacturing Group Neil Parker, Market Strategist, RBS To find out more, go to: www.themanufacturer/mdc2013

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 43


Considering consortia Forming consortia can help midsized and smaller manufacturers reach the critical size or component mix required to attract OEMs. Peter Russell, Royal Bank of Scotland’s head of manufacturing & industrials, takes a closer look at how consortia could be shaped, what benefits members can expect and what hurdles they have to overcome.

U

K manufacturing is buzzing: Government initiatives such as the TSB Catapult centres, rising numbers of collaborative research projects between universities and businesses and funding programmes of considerable size – one being the Advanced Manufacturing Supply Chain Initiative that will have provided funding of over £420 million for UK supply chains by the end of this year – have helped accelerate the speed of innovation in UK manufacturing. All sectors have benefitted and smaller and mid-sized manufacturers in particular have been helped to speed up the commercialisation of products and ideas.

Two dilemmas – one solution

To start with, keep it local. You will find that there is a lot of regional support available. Tony Hague, Chairman, Midlands Assembly Network

44 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

However, midsized and smaller manufacturers with fresh or niche product ideas are still losing out on new orders because they lack the capacity to produce large orders or the range of components required to be considered as a suitable supply chain partner. Meanwhile, OEMs experience difficulties in finding suppliers that provide the perfect mix of suitable size, range of products, quality and innovation. The logical solution is to collaborate with various small suppliers to achieve the component mix needed. But this is not always an attractive option for OEMs as it increases the complexity of the supply chain. To overcome the dilemma on either side, the idea of forming consortia between like-minded mid-sized and smaller manufacturers to boost competitiveness is now spreading across all sectors, following the long tradition of consortia in the automotive and defence industries. “We are increasingly seeing companies looking to strengthen partnerships and working relationships in order to be more competitive both domestically and on a global scale,” confirms Lorraine Holmes, area director of the


Considering consortia

After five years, we can see a huge difference in how our businesses have grown. Tony Hague, Chairman Midlands, Assembly Network

government funded Manufacturing Advisory Service.

Increasing market presence and improving efficiencies

Achieving a critical size that allows access to bigger contracts and sharing resources are the main purposes of consortia. They were the underlying principles for the Midlands Assembly Network (MAN), a consortium of 10 midlands firms, when it started in 2006. Today it offers engineering and manufacturing solutions to customers across ten sectors. “First there were soft benefits such as being able to talk to other company owners in the same situation. But now, after five years, we can see a huge difference in how our businesses have grown,” comments Tony Hague, chairman of the MAN Group and managing director of PP Electrical Systems. MAN, which today has a combined sales turnover of £60 million+ and aims to add £7.5m of sales in 2013, emanated from a regional funding programme. “We became a network of firms, sharing ideas and discussing our business and the markets,” Hague looks back. “When the funding stopped, a few manufacturers in the network decided to go one step further and do business together. We had the same business ethics, and we strongly believed in collaboration.” As a first step the group recruited new members, bringing the number up to ten. In order to support the consortium’s expansion they hired professional marketing and PR firms and developed a new website. A business development manager recently joined the consortium to coordinate the marketing and sales

ROYAL BANK OF SCOTLAND

pitches. Although procurement still lies with each member, MAN shares knowledge about suppliers and material and order jointly where possible to increase buying power.

Accessing bigger contracts

“OEMs now actually approach us because they’ve heard that we are able to provide a solution rather than just a product,” Hague points out, adding that the consortium coordinates all manufacturing processes from one central point which helps considerably when minimising the management time of their customers. “There is a real momentum now. None of us could do this without the other members,” reflects the chairman.

Ensure smooth running of daily business

Apart from defining the areas of collaboration other key considerations when forming a consortium include ensuring a legal framework is in place and agreeing on a leadership model. While some consortia found a separate legal entity for their collaborative business, many others, including MAN, choose a membership model. “All expenses of the consortium are covered by the membership fees,” explains Hague. In addition to the daily communication Hague has found it useful to have a more formal communication in place as well: “Once a month we come together for a management meeting and a business development session to discuss more strategic topics.” In this context it is crucial to clarify how decisions will be taken. “We all have our own businesses and it’s natural that everyone wants it their way, but we introduced a majority vote, and we are all happy with it,” says Hague.

Finding the perfect match

In order to speed up product development within supply chains the automobile and defence industry have seen a number of OEM initiated collaborations where large manufacturers invite suppliers to join a consortium. In the High Value Engineering sector, smaller manufacturers have taken the initiative to find suitable partners themselves, providing them with more freedom

to choose. “We have looked at each member thoroughly. They need to fit – not just their business, but also their vision and their business principles,” Hague points out. Holmes adds: “There should also be no competition as that will quickly cause issues within the group and will ultimately lead to divisions.” Increasingly, consortia include nonprofit organisations such as industry associations or universities. “Partnering with universities has been a natural progression. We want to be innovative and they are very passionate about manufacturing and have good links to inventors,” shares Hague. MAN Group works with six leading academic institutions in the UK.

Support for set-up

With practical and financial support available via government initiatives, academia and private sector competitions for mid-sized and smaller manufacturers, this is the right time to investigate how collaborations could strengthen your business. “To start with, keep it local. You will find that there is a lot of regional support available”, Hague advises. He’s enthusiastic about the consortia route: “It’s the best thing that could have happened to us.”

further information To find out how RBS can support your manufacturing business contact: Peter Russell Head of Manufacturing & Industrials, RBS Corporate & Institutional Banking T: (0)20 7672 1007 E: peter.russell@rbs.co.uk If you want to know more about MAS or the MAN Group please contact: Lorraine Holmes Area Director Manufacturing Advisory Services (MAS) T: 0845 658 9600 www.mymas.org Tony Hague Chairman Midlands Assembly Network (MAN) T: 0845 034 6676 www.man-group.co.uk

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 45


Customs duty

Manufacturing Leadership

a port in a storm

Tom Lawton, head of manufacturing, and Onelia Angelosanto, senior tax manager, at professional service firm BDO, explain how keeping a close eye on customs duty planning can relieve cost and supply chain rationalisation pressures for manufacturers in a globalised economy.

I

ncreasing volumes of global imports and exports with rising costs in the supply chain have created significant pressure in the manufacturing sector to cut costs and streamline operations. A big influence in the cost effectiveness of international business is customs duty and manufacturers importing or exporting goods may find that they relieve significant pressure on their business by ensuring they are operating in the most duty efficient manner possible. Key areas to address are:

You may need to check goods are being correctly declared by the freight forwarder. Savings can also be achieved by reviewing whether imported products can be packaged differently or if the product specification can be altered at source to result in a tariff classification with a lower rate of duty at import. Where inappropriate tariff classifications have been declared and an overpayment of duty incurred, companies can submit a retrospective reclaim to HM Revenue & Customs going back three years.

Tariff classifications

A number of preferential and Free Trade Agreements exist between the EU and various beneficiary countries, for example, the EU and Generalised System of Preference agreement. The use of such preferential rates can significantly reduce a company’s duty liability. A variety of duty reliefs and regimes are also available to UK manufacturers.

The tariff classification determines the rate of duty payable at import. By ensuring the most appropriate and efficient tariff classification is selected for new and existing products manufacturers can realise immediate benefits to margins and cash flow.

46 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

Maximising the use of EU Trade Agreements and duty relief regimes

Such reliefs and regimes are designed to encourage EU manufacturing and to enable such manufacturers to compete on an equal footing in the world market. For example, some manufacturers will be able to operate Inward Processing Relief which exempts them from duty and import VAT on imported products used in the manufacture of goods destined for export or ‘qualifying sales’.

Improving the logistical chain Real savings can be achieved by operating a customs warehouse. One of the benefits is that the payment of duty and import VAT is delayed until the goods are removed from warehouse. This regime is particularly attractive where imported products are stored in distribution warehouses for some time prior to entering production.

Gaining Authorised Economic Operator status

There are a number of incentives of having Authorised Economic Operator (AEO) status. These include being able to benefit from mutual recognition agreements which can bring quicker customs clearance and reduced physical and documentary controls when importing or exporting goods from nations which have signed up to such agreements. In addition, custom duty legislation is changing in 2016. Although not yet finalised, the new ‘Union Customs Code’ will add increased financial burden, in the form of guarantees, for those companies that operate duty reliefs but do not hold AEO status. www.bdo.co.uk


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October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 47


New curriculum UTCs but no go large guidance The new D&T curriculum elevates the subject to the position of applied STEM and identifies it as a stepping stone to a career in engineering. But teachers will have no government guidance on how to deliver it.

Students sign the structural steel at Daventry UTC

Twelve new university technical colleges are up and running as the revolutionary vocational and STEM-focused education system expands.

U

niversity Technical Colleges are the brainchild of Lord Baker of Dorking. The Colleges all adhere to the UK national curriculum but augment and focus it with an emphasis on technical disciplines. These disciplines vary from school to school with some focussing on mechanical design and engineering, others on process engineering and materials development or software, environmental or bio-medical engineering. UTCs educate 14-19 year olds and 2,300 children around the UK elected to switch out of mainstream schools to join a new UTC in September. This figure does not include children who started school at the five existing UTCs: Aston University Engineering Academy, Black Country UTC, Cambridge UTC, Central Bedfordshire UTC and The JCB Academy.

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Each UTC’s curriculum delivery is shaped by a raft of employer partners who help teachers keep their lessons relevant to the real scenarios and challenges met by businesses each day and – as far as possible – the challenges they anticipate they will meet in the future.

FURTHER READING: 2,300 students to start term at new technical colleges: ’s September news story with detail on the location and specialisms of the new UTCs: bit.ly/12newUTCs Find out more about UTCs at: www.utcolleges.org

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&T might easily be termed the forgotten STEM subject. It is often disregarded by teachers and pupils alike, falling down the cracks between arts and science champions. Even vocational skills enthusiasts in industry become far more animated about the quality of education in science and maths than they do about the standard of D&T departments in schools. In part, this is because of the confused evolution of the D&T curriculum. It suffers in the eyes of serious engineers and manufacturers because of associations with basic woodwork, needlework and other handicrafts. But in recent years there have been a number of campaigns to modernise and rehabilitate D&T as an applied STEM subject. The ‘Believe in D&T’ campaign run by the Design and Technology Association won awards for its work to save D&T from being struck off the national curriculum and

This is good news for the breadth and quality of STEM education


Snapshots

since that campaign wound up, the D&T Association has worked closely with government, the Design Council and the Royal Academy of Engineering to devise a new, challenging curriculum for Gove statu rnment is the subject teachtory guida not publi D&T c ers delive nce for shing which will be urricu ri lum ng the ne w introduced to schools in September 2014. Despite upsets early this year (bit.ly/DandTundermined), the D&T curriculum put forward by this group has been broadly accepted by the Department for Education which published its own interpretation on September 11. The new curriculum will develop the concept of user-centred design and help children become familiar at an early age with applications for basic robotics and embedded electronic systems as well as the use of CAD software. The new curriculum will also include a strong pillar of food technology disciplines including nutritional design. This is good news for the breadth and quality of STEM education. It promises a pipeline of young people who are better versed in the technological and social challenges associated with modern industry. But there remains a critical problem. Government made no provision for guidance to teachers with regards to how they should deliver their new curriculum. Responding to this significant omission, the D&T Association has once again joined forces with the Royal Academy of Engineering and its E4E education programme to gather industry and education input on how to formulate guidance for teachers. The aim is to boost the ability of the new curriculum to open the eyes of teachers and pupils to career opportunities in UK industry and better prepare them for that world of work.

Coming soon:

will cover the launch of Skills Gap, the D&T Association’s new programme to bridge the gap between D&T departments and industry in the November issue of the magazine. FURTHER READING:

Workforce and Skills

Zero-hours controversy Debate over the pros and cons of zero-hours contracts continues.

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report from the Chartered Institute of Personnel and Development (CIPD), published this summer, raised a public row over the proliferation of zerohours contracts in the UK. The CIPD survey showed that over 1 million people in the UK now work on zero-hours contracts whereby they agree to be available for work as and when their employee needs them, but no specific working hours are committed to. This form of contract is seen to offer flexibility to employers, reducing the level of risk they feel in taking on new staff. Commentators largely admit that zero-hours contracts may have helped limit unemployment in the UK over the last few years. However, evidence put forward by Warwick Business School’s professor Kim Hoque in September argued that zero-hours contracts are in fact a “drag on the economy”. Professor Hoque said the model discouraged consumer confidence and spending but also claimed that it would have a long term negative impact on productivity. Workforce management experts at software vendor Kronos agree. “Whilst it can be argued zero hours contracts can offer a ‘quick fix’ for businesses in terms of flexibility, this is no substitute for control,” wrote Neil Pickering, Kronos’ marketing manager in an article for . Mr Pickering suggests that businesses, and particularly efficiency-driven UK manufacturing firms, need to have unfettered visibility of their workforce resource. According to Pickering and Kronos, manufacturers need to know what resource they have to deploy, when it is deployed, where, and how it is skilled if they are to effectively and strategically optimise productivity in the long term. This cannot be achieved while employers rely on zero-hours contracts says the workforce management specialist. “The onus is now on managers to look at more sustainable, holistic solutions,” concludes Pickering.

Coming soon:

Labour Market Outlook, the CIPD’s annual report. It was data gathered for this publication which revealed in August that zero-hours contracting is far more widespread in the UK than had previously been suspected. FURTHER READING:

Industry shapes the future of D&T teaching: Read about the outcomes of the D&T Association-E4E NonStatutory Guidance Meeting held on October 7 at: bit.ly/ShapeDandTdelivery

Zero-hour contracts a “drag on the economy”: news item responding to Warwick Business Schools announcement. bit.ly/Dragontheeconomy

Programmes of Study: You can read the new programmes of study for the National Design and Technology Curriculum 2014 at: bit.ly/DandTProgofStudy

A false economy: Neil Pickering’s article for on zero-hours contracting and best practice in workforce management. bit.ly/FalseEconomy

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 49


The answer to industry skills challenges lies in our own hands, cries Sarah Sillars, CEO of sector skills council Semta. Employers, educators and industry support bodies must unite and coordinate to dissipate threats to future industrial competitiveness she argues.

It is hugely frustrating when you hear of firms in this country having to turn away millions of pounds worth of business because they don’t have the skilled people to cope with more work

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or those who may not be aware, I would urge you to look at a campaign which has recently been launched in North East England. This is a region steeped in the traditions of engineering, dating back to the Industrial Revolution, with highly-skilled, hard-working people, passionate about their jobs and proud of where they work. Yet, just like the rest of the UK, as the economy slowly recovers

there is a real danger firms could miss out on big orders and inward investment, particularly in the supply chain, because of a skills shortages. Semta’s research suggests 8,500 people will be retiring from the advanced manufacturing and engineering sector in the North East by the end of 2016 – across the UK the number of retirees will be more than 82,000. Despite the best efforts of the previous government and in particular


Semta

Apprenticeship news and further reading Apprenticeship applications up by a third Results released by the National Apprenticeship Service on August 30 showed apprenticeship applications are rising faster than vacancies are being posted by employers. bit.ly/ Apprenticeshipsupbyathird

Cartwright brings in 40 new apprentices Body and trailer manufacturer Cartwright took on 40 new apprentices in early September. The firm employs around 400, so the move increased employment by 10% in one fell swoop. bit.ly/ Cartwrightapprenticeships

Regional winners in the National Apprenticeship Awards 2013 were announced Winners in the regional awards will go forward to compete for National Apprenticeship Service’s national prizes. The finale for the completion will take place in November in conjunction The Skills Show, the UK’s biggest careers and education fair. To find out more about the awards and regional winners go to: bit.ly/NASlatestnews

Hale Hamilton apprentices recognised at DSEI Apprentices at marine defence company Hale Hamilton, were presented with Apprenticeship Challenge Awards by Rear Admiral Parker, programme director carrier strike, during the DSEI 2013 international trade exhibition. The awards were given on completion of a special challenge designed to hone the machining, project management and team work skills of the apprentices who created a model warship and submarine using only scrap parts from the Hale Hamilton factory in London.

the current government, we still have a massive job to do to convince some businesses of the need to recruit graduates and apprentices to develop home-grown skills. Equally, while there has been some progress in convincing parents, teachers and young people themselves that the vocational route is as valid as the academic route to a career, the image of apprenticeships, not to mention the manufacturing and engineering industry, remains a challenge in plugging skills deficits. And then there is the fact that many young people who study the STEM subjects so critical to industry choose to pursue careers elsewhere – talent slipping through the net.

Proud to Back Apprenticeships: a campaign Given these hindrances, it is encouraging to see two daily newspapers in the North East – the Newcastle Journal and Middlesbrough Evening Gazette – build on previous and parallel campaigns to enhance the status of apprenticeship by encouraging as many regional businesses and organisations as possible to carry a ‘Proud to back Apprenticeships’ stamp of approval. Semta’s own employer-led regional council – the North East Skills Alliance for Advanced Manufacturing – chaired by Nissan’s vice president for manufacturing in the UK Kevin Fitzpatrick, was among the first to answer the call to action. We signed up to the campaign along with the North East Chamber of Commerce, CBI North East, the EEF, the National Apprenticeship Service, Sunderland College and, critically businesses such as Nissan, Liebherr Cranes, Ford Aerospace and British Engines. There is no reason such an impressive partnership could not be replicated across the UK, creating a strength of purpose in each region, collectively making a powerful move to speed up the work we and others are doing to increase apprenticeship awareness, quality and up take among young people and businesses.

Dissipating the perfect storm

It is hugely frustrating when you hear of firms in this country having to turn away

WORKFORCE & SKILLS

millions of pounds worth of business because they don’t have the skilled people to cope with more work. While these stories maybe relatively few and far between, in the current economic climate, the fact that work has been turned away at all, should set the alarm bells ringing. An improving economy, emerging nations becoming more competitive, highly skilled workers retiring – there is the real threat of a perfect storm which could leave our highly-valued, competitive world class manufacturing sector playing catch up rather than leading our national economic recovery and sailing buoyantly into the future. As the North East is proving – the answer lies in our own hands. We must do more to work in partnership to make more of apprenticeships. We can reduce the rates of youth unemployment at the same time as helping employers find quality candidates for hard-to-fill vacancies. If ever there was a time to bring education and industry together it is now and while competition is important there needs to be a united front. The media can be a facilitator, a conduit, a platform for debate, promoting the good work and the issues, persuading everyone of the importance of skills - but the answer lies within the sector itself. I am determined that Semta will continue to play a leading role in uniting employers to drive skills and performance enhancement. We will engage industry, educators and government in supporting this drive and play a pro-active part in any campaign, such as the one in North East England, which brings together so many organisations to ensure advanced manufacturing and engineering remains the heartbeat of the UK’s economy. Find out more: To find out more about the North East campaign log on to www.thejournal.co.uk/all-about/ apprenticeships and to find out how Semta can help your business with apprenticeships visit our new and improved website at www.semta.org.uk

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 51


A number of manufacturing sectors saw output rise over the summer, most notably computer, electronic and optical products and a separate report suggests that investment intentions among small and mediumsized manufacturers are at their highest level for six years

Alistair Barron, Director of Weather Front and Sumeet Roy, a graduate intern at the company

Softly, softly Santander helps deliver the skills manufacturers need Encouraging recent data on UK manufacturing activity underline the importance of Santander’s initiatives to equip graduates with the ‘softer’ skills employers need.

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igures from the Office for National Statistics (ONS) reveal that manufacturing output grew by 0.2% in July, after a 2% rise in June. Meanwhile, the Purchasing Managers’ Index rose to 57.2 in August, from 54.8 in July – this was the fifth consecutive month where the index was above 50, the level signalling growth. A number of manufacturing sectors saw output rise over the summer, most notably computer, electronic and optical products and a separate report suggests that investment intentions among small and medium-sized manufacturers are at their highest level for six years. The challenge now is to find sufficient numbers of suitably qualified people to fill the jobs created by this expansion.

The soft skills shortfall

Research conducted by The Work Foundation (part of Lancaster University) suggests that the transition from education to work has become harder in recent years as the labour market has evolved. Young people today are increasingly employed in jobs that require soft or people skills – which include communication, teamwork, selfmotivation and time management – from the very outset. A survey of UK manufacturers conducted by Festo Training & Consulting in 2012 identified a shortfall in the skills required to keep employees engaged and committed to their employers. It also found that these skills fall into the areas of leadership and people management to a far greater extent than pure technical skills. They have to do with how people relate to each other by communicating, listening, giving feedback, solving problems and resolving conflicts. Many manufacturing companies operate internship programmes that enable graduates to experience the


Softly, softly

world of work and gain insights into the company. But developing soft skills among the next generation of workers is an ongoing challenge. The UK Commission for Employment and Skills (UKCES) agrees. It brought out a report last year on the challenges facing manufacturers, observing that workers will require a broader spread of soft skills in the future. Greater employee responsibility, autonomy and managerial delegation will also be needed at all levels of manufacturing organisations. The report observed that problem-solving skills are increasingly needed at lower levels in manufacturing companies. This trend is expected to continue, as, for example, supply chains become more like supply networks, with staff at all levels representing the organisation in ‘sideways’ discussions, increasing the demand for interpersonal skills.

Taking action

Santander is helping manufacturers meet that demand through initiatives such as its Santander Universities Global Division, which has teamed up with 65 UK universities to offer up to 1,500 funded internships. This scheme – which has been running in the UK since 2007 – aims to provide genuine entrepreneurial internships to students and recent graduates. It simultaneously gives businesses the chance to tap into a pool of some of the brightest

Santander

young talent emerging from the Increasing SME visibility university system. Attracting talent is a considerable Each placement comes with ongoing challenge for SMEs, particularly £1,500 funding for scholarships, in sectors where highly skilled people are mobility grants, entrepreneurship required. Graduates and other soughtand other activities provided by after professionals know that working Santander, forming part of a salary for for a small company can offer unique successful applicants. rewards, but the relatively low visibility of Either the university or the employer SMEs can make it hard to match skills to then adds at least a further £1,500, or a particular company. more if they wish. The internships are open to students in their Many manufacturing companies operate second, third internship programmes that enable graduates or final year of study and recent to experience the world of work and gain graduates from partner institutions insights into the company. But developing soft across the UK. skills among the next generation of workers is an They typically ongoing challenge last for three months, with the successful applicant working full time. The Santander Universities initiative The idea behind the internship addresses this issue by pairing up scheme is to provide candidates top-flight graduates with companies with technical or administrative that could benefit from their skills. For skills that are directly relevant to a the graduate, this means real-world specific current requirement within work experience at exciting companies, the business. That could mean an HR while the business can gain a fresh graduate investigating future staffing perspective and perhaps embark on a requirements to feed into a growth plan, lasting professional relationship. or a marketing or design professional While technical abilities remain a key working on new product ideas. factor in the manufacturing sector, it is The scheme enables current and now taken as read that candidates will recent students to gain valuable have these skills. Softer skills can often industry experience and the skills they make the crucial difference, which is need as they further their academic and what makes internship initiatives like professional careers. Employers also Santander’s so valuable. gain valuable access to some of the brightest, most creative minds in UK FIND OUT MORE: educational institutions. Alistair Barron, Director of Weather If you’d like to see how your Front, benefited from the Santander businesses could benefit from the scheme taking on Sumeet Roy. Santander internship initiative visit: Mr Barron observed: “Sumeet’s www.santander-grants.com degree is essential as it shows he has an understanding of the technologies we work with. He also needs to be organised and self-motivated, as without these skills, a graduate cannot put their knowledge into practice in a work environment. “During this internship we have supported Sumeet’s learning so that he can go on to take a more independent role in the company, and play a leading role in the development of our products,” Barron summed up. October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 53


Brad Hodgson, Investment Project Engineer, BAE Systems

Employee of the Month October 2013 Brad Hodgson

Investment Project Engineer BAE Systems

CV in brief Brad Hodgson Age: 23 Education: Bowland High School and Clitheroe Royal Grammar Sixth Form. Currently reading mechanical and production engineering, at Blackpool and The Fylde College Career to date: Aeronautical Engineering, Technical Apprentice at BAE Systems, Warton (completed in March 2013) Hobbies and interests: Sports, particularly: snowboarding, football, rugby and the martial arts

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EMPLOYEE OF THE MONTH

Recently qualified as an Advanced Apprentice, Brad Hodgson already has a striking track record of applying his talent for commercial and social benefit. : What are the main responsibilities of your job and what skills are required? I work within the Investment and Infrastructure Services Function of Military Air and Information. My day to day job consists of managing site investment projects, from building refurbishments, production equipment installations and site improvement works up to new build facilities. This involves liaising with customers and identifying requirements through to delivery, handover and maintenance. The job needs good project management skills as well as cost control, stakeholder management, quality control, value engineering, contractor management and safety monitoring. It is essential to be confident, efficient and focused on deadlines. What do you consider to be your biggest personal success at BAE Systems so far? I am very proud of being named The North West’s Best Aerospace Apprentice 2012 and the region’s Advanced Apprentice of the Year, 2013.* However, my biggest success at BAE Systems has been winning a gold chairman’s award in Washington DC. It’s BAE Systems’ most prestigious global award. I received it for my involvement in the BedFlex apprentice team which designed and manufactured a piece

of physiotherapy equipment to aid the speedy recovery of soldiers who have lost limbs in combat. The product has been proven and is now being tested at Queen Elizabeth’s Hospital in Birmingham. More recently, four ex-apprentices and I have also progressed to the 2013 gold panel for another apprentice team project. This involved the restoration of a 1940’s children’s carousel for a local charity which provides free holiday experiences for terminally ill children and their families. What are you immediate and long term career ambitions? I wish to gain experience in various departments within the Investment & Infrastructure Services and Manufacturing Function and to explore the option of an international secondment in the Middle East. Ultimately, I’m aiming for senior management. What first attracted you to a career in defence manufacturing? Two of BAE Systems Military Air and Information’s sites, Samlesbury and Warton, are situated close to my home in Clitheroe, Lancashire. So I understood at a young age that BAE is the largest defence manufacturer in the country and a world leader. During my time at Clitheroe Grammar Sixth Form I explored the option of an engineering apprenticeship and discovered The Military Air & Information Apprentice scheme here [Warton] is one of the best and most widely recognised in the UK. How do you think best to get more young people interested in manufacturing? Demystify and improve the perception of apprenticeships. More people should understand them as a career stepping stone which gives education and a salary at the same time. *The National Advanced Apprentice of the Year, 2013 will be announced in November at the National Apprenticeship Awards in Birmingham.


TIO NU PD ATE .

First Aid Training Regulation update REG ULA TIO NU PD ATE REG . RE ULA TION GU LAT UPD ATE ION . REG UP ULA DA TION TE . RE UPD ATE GU . REG LAT ULA ION TION UP U PDA DA aiders have TE TE . . REG the confidence to ULA apply their skills when the TION UP time comes, rather than simply

providing them with a certificate. However, getting this wrong not only puts the organisation at risk, but more importantly it puts lives at risk – a situation nobody wants.

TE UPDA N O I LAT REGU

E Nuanced training is best PDAT Businesses can identify the type of first U N IO aider they need by using ‘Regulations ULAT and Guidance (L74)’ documents to . REG

Face up to First Aid

complete a first aid needs assessment.2 Personalisation of first aid courses, based on the specific risks identified in these assessments, is a great initiative being put forward by the HSE. When you consider the differences between an office and a manufacturing environment, for example, it is clear that safety varies significantly across different industries.

On October 1 the Health and Safety executive ceased regulating workplace first aid training Finding your training provider providers. What does this mean for Once manufacturing managers have completed a first aid needs assessment, the manufacturing industry? John they can use the guidance on ’Selecting a first aid training provider (GEIS3)’ to Cavanagh, regional commercial guide them through the due diligence training director at first aid charity so that they are confident in making the right choice of trainer. St John Ambulance explains. 3

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rom this month, employers must take responsibility for ensuring that their first aid training provider is teaching to a high standard. This will give businesses more options when choosing their trainer, but the duty of care which employers have remains, as does their obligation to adhere to the Health & Safety (First Aid) Regulations 1981. As such they will need to pay close attention to the new guidelines for the safety of their staff.

High risk environment

Many parts of the manufacturing sector are high risk working environments. According to the HSE, over the past five years 150 workers have died in manufacturing accidents and employers

have reported more than 4,500 major injuries a year. Although it is encouraging to see that fatal accidents are reducing, manufacturing companies need to understand the changes being implemented and ensure that good first aid provision is in place if the industry is to continue reducing these figures.1

Taking responsibility

As first aid training providers will no longer be able to demonstrate quality through holding an HSE license, employers will need to exercise due diligence – and satisfy various key criteria – by reviewing the HSE’s new guidance carefully. Many of the best employers already see first aid as more than a legal requirement and seek to ensure their first

Whether the HSE’s guidance will be explicit enough for employers will be more apparent over the coming months and into 2014. I strongly recommend that businesses take the time to digest the changes and work with a training provider who is an expert in first aid and can provide help around the transition. FURTHER READING: 1 Statistics on fatal injuries in the workplace 2012/13, HSE: bit.ly/HSEStats 2 Regulations and Guidance (L74): bit.ly/RegsandGuideL74 3 Selecting a first aid training provider: bit.ly/SelectingFirstAidTraining

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Snapshots

Finance & Professional Services

Cost of compliance The Forum for Private Business has published its 2014 compliance guide.

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he publication comes shortly after research from the Forum showed manufacturing SMEs shouldered a collective £913m consultancy bill in 2012 in order to ensure their firms stayed on the right side of red tape. Manufacturing SMEs pay around 5% more on external consultancy for compliance than the UK average. Furthermore, those manufacturing SMEs

which avoid using external consultants pay the price in management time. The Forum estimated that SMEs not using compliance consultancy spent a total £11.3bn in internal time costs in 2012, equating to around 40 hours of senior management time a month per company. The Forum hopes its 2014 compliance guide will help SMEs stay ahead of the game and mitigate the cost of compliance.

Breaking with tradition Research from Royal Bank of Scotland pinpoints the best ‘non-traditional’ markets for UK goods exporters.

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BS’ report In search of Export Opportunities is useful at a time when UK manufacturers are being urged to look beyond traditional export markets in Europe to access greater growth potential and support a long term rebalancing of the economy. Though it does not dig into the detail of the risk-reward profile offered by non-traditional markets for specific sectors, the report does give a firm foundation for more investigation. RBS analysed 53 non-European nations for this study. Each country was rated in terms of the opportunity it represents based on its compatibility with Britain’s most confident goods export segments, its growth, its prosperity and the ease of exporting to it in terms of trade tariffs and regulation. Mapping market size against attractiveness showed that India was the only nation under investigation to fall into the ‘large and unattractive’ quadrant, despite its status as a BRIC economy (see chart). RBS found that India’s trade tariffs are too high and its overall population too poor for the market to represent a really strong opportunity for the breadth of UK goods exporters. This impression was compounded by a lack of

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Among other topics, the 2014 guide gives details on: New rates for the National Minimum Wage and other statutory payments Guidance on the amended tribunal rules Information on settlement agreements, pensions auto-enrolment and changes to the rules on redundancy consultation timescales. For further information visit www.fpb.org.

Mapping market size and attractiveness for non-traditional markets Source: In search of Export Opportunities, RBS, 2013 Large India

Includes China, Korea, Brazil, Mexico, Turkey, Taiwan

Includes Venezuela, Algeria, Pakistan, Zimbabwe

Includes Saudi Arabia, South Africa, Argentina, Chile, Quatar and Peru

“Unattractive”

“Attractive”

Small

compatibility – RBS cited the fact that India is not a big importer of cars for instance. The number of small and unattractive markets is unsurprisingly very high – but geographically grouped small markets can combine to offer big opportunities if their total ease of export rating is high and they are close to ‘large and attractive’ markets showed RBS. This result came out most strongly in South America where Argentina, Bolivia, Chile and Peru all feature in the ‘small and attractive’ quadrant. These countries offer export synergies with highly attractive local markets like Brazil and Mexico says RBS. Unsurprisingly, the ‘large and attractive’ quadrant was topped by China, but RBS says Korea and Turkey also offer an appealing combination of scale demand, prosperity and ease of doing business. Email peter.russell@rbs.co.uk for more details.


R&D tax credits

KEEP CALM AND CARRY ON CLAIMING

Mark Evans, Managing Director, R&D Tax Claims Ltd helped Paul Darwent, Chairman, Mini Gears Ltd, claim back over £181,000 in HMRC R&D tax refunds

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Finance & Professional Services

SME claims for R&D have risen 49% since 2009 according to HMRC data. Mark Evans, MD of R&D Tax Claims urges newcomers to the scheme to now embed the claim process as business as usual and open their eyes to the Patent Box too.

ince 2009, R&D Tax Claims limited, a Wolverhampton based tax advisory firm, has helped its SMEs reclaim over £12 million in corporation tax via HMRC’s R&D tax credit scheme. Many of those that R&D Tax Claims has helped were unaware of the R&D tax credit scheme, or of its relevance to their businesses, prior to working with the firm but Mark Evans, managing director of R&D tax claims, says that the scheme’s applicability is surprisingly broad. “Most of the companies we help are in the engineering and manufacturing sector, but the scheme is not just for manufacturers. It covers SMEs that are developing their products and processes or introducing new ones. “A good R&D claims specialist will help a company identify quickly if they qualify, and we operate a no win, no fee policy with a 100% success rate. Mr Evans is happy to have lent a helping hand in raising SME awareness of their legitimate right to reclaim money spent on R&D. But a first time claim

should not be viewed as a lucky one-off he emphasizes. “Once a successful claim has been made, it’s good sense for the process to be embedded in the company accounting practices, as it’s possible to make subsequent claims. “Our client precision engineers A&M EDM of Smethwick have received their second refund, bringing their total over two years to £147,269.” Another R& Tax Caims client, Mini Gears of Stockport also recently received its second refund, totalling £181,281 over two years.

Other tax breaks

And it’s not only via the R&D tax credit scheme that companies can access recognition for investments made in continuous improvement an innovation says Evans. “The Patent Box, introduced in April, will ultimately provide a reduced corporation tax rate on a business’s qualifying profits of 10 per cent instead of the current 23 per cent,” explains Evans.

To qualify for the Patent Box tax reduction scheme, a company must be based in the UK and has to hold a qualifying patent or patent right. These patents must be granted by the UK Intellectual Property office (UKIPO) or the European Patent Office (EPO). “A company’s profits which benefit from the Patent Box scheme are a proportion of the corporation tax profit of the company’s trade, and are called its ‘relevant IP profits’,” Evans continues. “It is the calculation of these relevant IP profits which is complicated and most SMEs will need a specialised professional advisor to carry this out effectively.”

FURTHER READING: For a longer version of this article go to: bit.ly/RandDTaxClaims To contact R&D Tax Claims go to www.rdtaxclaims.co.uk or call 01902 783172.

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Energy purchasing

Sustainable manufacturing

A strong alliance Energy purchasing at Allied Glass

It is essential that Allied’s energy procurement strategy is robust and by working with an energy consultancy we have created a clear purchasing approach which is providing greater budget certainty. Gary Law, Strategic Buyer, Allied Glass

In recent years, UK manufacturers have arguably endured the brunt of the Government’s energy reforms and subsequent changes to legislation. As an energy consultancy, British Independent Utilities has directly experienced the pressure companies are under to drive down energy consumption and costs, while ensuring budget certainty.

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n 2011, Allied Glass Containers, the UK’s largest independent glass container manufacturer, turned to British Independent Utilities (BIU) to assist in the strategic purchasing of energy. With a turnover of over £100 million, Allied Glass Containers manufactures premium containers for prestigious customers including Diageo Scotland, William Grant & Sons, Morrison Bowmore and Greene King. Initially, BIU was briefed with assisting Allied Glass to choose the right energy supplier and then tasked with developing and instigating a trading plan that would deliver results over the long term. Working with Allied’s Managing Director, Finance Director and Strategic Buyer a set of defined caps, triggers and floor/target prices were outlined for a range of power/electricity and gas tradable contracts. In order to support BIU’s procurement service, Allied Glass has also adopted the company’s bespoke energy reporting software, M2M247. The unique software provides a live and interactive platform which enables customers to manage their energy procurement. Gary Law, Allied’s strategic buyer, said that this transformed the way the company manages its energy procurement. He said: “Alongside the BIU trading team, we have been utilising

Energy reduction In addition to BIU’s procurement service, Allied Glass has utilised BIU’s integrated energy services (IES) team. The IES team was appointed in 2012 to refit lighting at Allied’s Haigh Park Warehouse in a bid to drive down electricity consumption.

Problems

Old lights positioned too high and wide of the aisles resulting in poor illumination and glare for forklift drivers when stacking pallets. Old light had poor efficiency resulting in high usage Estimated annual cost/ consumption = 547,000 kWh @ £45k

BIU Solutions

Identified potential lighting solution (fluorescent with PIR control) Arranged trial in centre aisle (the one with the poorest illumination) Determined cost of full scale implementation (£38k) Estimated energy saving/annum = 173,300 kWh Cost saving/ annum = circa £17k ROI = 2.38 years Carbon reduction = 93.78 tonnes LED lasts 4 times longer

M2M247 to save time when reporting to the Board. M2M gives us one sample report which details how much energy we have bought, how much we have yet to buy, the delivered retail cost and an indication of where Allied would be against budget if buying immediately. “It is essential that Allied’s energy procurement strategy is robust and by working with an energy consultancy we have created a clear purchasing approach which is providing greater budget certainty.”


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PLAYING MUSIC? MAKE SURE YOU’RE LICENSED. 74% of factories agree that playing music increases staff morale.* If you play music in your business, it is a legal requirement to obtain the correct music licences.

PRS for Music collects and distributes money for the use of the musical composition and lyrics on behalf of authors, songwriters, composers and publishers.

In most instances, a licence is required from both PPL and PRS for Music. PPL and PRS for Music are two separate companies. PPL collects and distributes money for the use of recorded music on behalf of record companies and performers.

A PPL licence can cost your business as little as 19p per day. For more information on how to obtain your PPL licence visit ppluk.com or call 020 7534 1070. To find out more about how music can work for your business visit musicworksforyou.com *MusicWorks survey of 1000 people, conducted May 2012.

ppluk.com

01710 PPL The Manufacturer Factories half page.indd 1

05/08/2013 21:27

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 59


Industrial sustainability

Sustainable manufacturing

Chicken and egg challenges Will Stirling reports from a Mecca for industrial sustainability in Cambridge.

I

n 2011 Home Depot, a US DIY chainstore, was being pestered by The Rainforest Alliance about its use of hardwood – a dwindling commodity stocked on its shelves. In response, Home Depot hatched a plan to replace hardwood stocks with fabricated timber made from saw dust. Problem solved? Not quite. Environmental consultancy Natural Step was engaged to help Home Depot address its hardwood use. On the launch of the product

replacement plan it asked if the switch to artificial timber was going to improve the company’s total sustainability – reducing its total carbon footprint and material requirements. ‘No’, was the deflated reply. It’s a response which is indicative of a common failure to take a holistic approach to environmental problem solving says Natural Step CEO Peter Price-Thomas who presented at the EPSRC Centre for Innovative Manufacturing in Industrial Sustainability’s conference at Magdalen College, University of Cambridge, in September. Putting the challenge for industrial sustainability in context Mr PriceThomas referenced the coffee industry which, he said, is harmful to the environment on several levels. “You can’t ban coffee – some see it as basic human need,” he observed. “So how do you provide the service without the negative global impacts?”

Demand will endure and grow

Mike Barry, head of sustainability at Marks & Spencer (M&S) picked up the challenging narrative for business at the September conference. “Over the next 20 years, two billion new consumers are rightly going to want to buy things we sell,” he said. But as demand grows, and is embraced as it must be by a commercial enterprise, Mr Barry warned that: “Competition for resources will get fierce”. Add in the disruptive impact of increasing extreme weather incidents on supply chains and there’s an urgent problem right on the doorstep.

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Barry has fought hard to convey that sense of urgency in M&S’s widely acclaimed Plan A sustainability initiative and he is a veteran of business-case-first sustainability. Taking a savings-based approach, Barry showed the M&S board that environmental efficiency measures saved 15% - £135m – of total supply chain costs in 2011-2012. But Barry acknowledged that much more is needed to meet the real size of the sustainability challenge for industrialised society. His key interest is a paradigm shift in businesses models which will allow companies to continue servicing and profiting from growing demand, while minimising their aggravation of resource problems. Currently no clothing retailer practices “shwopping”, where clothes are, in effect, leased, he pointed out. “It’s a step too far for us at the moment, but we are investigating the concept. The challenge that companies like M&S have is ‘chicken and egg’; a radical change in practice will show leadership if customers follow, or could a very expensive mistake. The state of the economy has not nurtured bold decisions in this field, but we will need to be braver.”

The Centre for Industrial Sustainability Led by Professor Steve Evans, the Centre for Industrial Sustainability at the Institute for Manufacturing, Cambridge University is taking a three-pronged approach to solving industrial sustainability problems from a manufacturing point of view. Its research investigates the development of: Eco-efficiency Eco-factories Sustainable Industrial Systems – meaning the total reconfiguration of how products are made and managed through their life cycle Go to www.industrialsustainability.org for more information.


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Advanced Materials More manufacturers need to consider the potential benefits of working with chemical scientists to design advanced materials from the molecule up.

J

ohn Conti-Ramsden from the Knowledge Centre for Materials Chemistry (KCMC) issued a call to arms on www.themanufacturer.com with an article exploring the need for new high performance materials in a range of industries including electronics, aerospace and healthcare. He urged more manufacturers to collaborate with businesses in parallel sectors as well as with academia in order to develop a “holistic approach to materials and components”. Mr Conti-Ramsden gave insight into work the KCMC and others are conducting to “develop an overall product performance specification from the bottom up”. Examples include materials being developed for power electronics to allow new gallium nitride semiconductors to function when in situ inside a device. According to the think tank Policy Exchange, materials manufacturers and processors account for15% of UK GDP and play a critical role in the supply chain and future competitiveness of multiple growth industries. But Conti-Ramsden says the potential competitive advantage offered by the application of advanced materials in UK-made products is being hampered by fear of change, “timescales of development and the perceived cost advantage of products from overseas”. Conti-Ramsden urges companies to collaborate to share the risk and reward offered by advanced materials development. He assures government financial support for R&D in the area is “generous”. FURTHER READING: To read Conti-Ramsden’s article in full go to: bit.ly/Designfrommoleculeup

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Manufacturing partners needed Cambridge Design Partnership is seeking manufacturing partners for a technology transfer project which will convert its oxygen concentrator product for use in the developing world.

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ambridge Design Partnership, a consultancy group, developed its oxygen concentrator for the defence sector where it has helped save the lives of troops on the front line. It works by cycling air pressure in chambers filled with a gas absorbing substance to concentrate atmospheric oxygen to 95% purity. The military application was developed with support from the Centre for Defence Enterprise and the Technology Strategy Board. It won an award in 2011 in the Defence and Security category of The Engineer Technology and Innovation Awards. Cambridge Design Partnership commissioned Judge Busienss School at Cambridge University to research further market applications for its technology and is now seeking out manufacturing partners to help adjust the design for use in civilian hospitals in developing countries and in disaster recovery areas. For more information about the capabilities required from manufacturing partners contact David Foster at: djf@cambridge-design.co.uk

FURTHER READING: How to make innovation work for your company: Andy Dean at Pera Technology investigates the techniques needed for targeted innovation which returns on investment. This piece includes a focus section on the Centre for Defence Enterprise. bit.ly/Howtoinnovate


Snapshots

Manufacturing technologies

3D printing The London Design Festival exhibition at the Victoria and Albert Museum featured 3D printed guns.

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he two prototype guns and one disassembled gun displayed by the V&A were printed in London, based on the designs of the original 3D printed gun, made by US law student Cody Wilson earlier this year. Mr Wilson has been unable to gain export licenses for the guns he has made in the USA. The guns are made from a high-density plastic capable of withstanding the explosive force involved in firing a bullet. Wilson’s first gun was made and fired in May, provoking outrage from antiarms proliferation groups and startling the US government when designs for the weapon were posted online. US government authorities demanded

US government authorities demanded that the designs be removed from the internet, but by the time this was done, they had already been downloaded over 100,000 times that the designs be removed from the internet, but by the time this was done, they had already been downloaded over 100,000 times. Concern over the inability to protect IP and control quality standards for 3D printed products could be a major stumbling block for the uptake and application of 3D printing according to a variety of research groups. The Institute for Manufacturing, Cambridge University and the Royal Academy of Engineering are among those leading investigations into ways of establishing better governance and legal infrastructure around the use of 3D printing in order to optimise the technology’s potential (p68).

Collaborative product development Marshall Aerospace Group embraces commercial electronics for bespoke defence solutions.

D

efence electronics have traditionally been bespoke designed solutions. But Stephen Fitz-Gerald, CEO of Marshall Aerospace Group, says that fast growing demand for data capture and transfer in civil application have outpaced defence development cycles. “Take the Bowman radio as a case study,” he says. “It took fifteen years to develop and certify that device. In the same time, parallel developments in commercial communications saw a complete shift from analogue to digital on multiple communications platforms.” Fitz-Gerald says it is time for defence manufacturers to accelerate the speed of product and technology development in the defence sector by seeking out fewer customised electronics solutions. He advocates collaboration with commercial firms to develop bespoke defence products based on standard civil electronics. For Marshall, this has meant developing integrated engineering teams which work across civil and defence platforms, as well as honing skills for materials manipulation and testing. “We’ve targeted becoming very good at taking civil equipment

and making it survive in a defence environment,” Fitz-Gerald explains. A recent example of Marshall’s success in this arena was on display at the defence exhibition DSEI in September. The world’s first deployable CT scanner was designed and manufactured thanks to a collaborative relationship between Marshall and Phillips Healthcare. The system houses Phillips’ Brilliance 64 scanner technology but is easily transportable by land, sea or air and is able to perform to NHS standards in a wide range of battlefield environments. Assembly of the CT scanner in the field requires no complex craning or training and the system is able to withstand high levels of shock and vibration thanks to patented Marshall technologies. The Marshall housing was also put through rigorous testing for its ability to prevent rain and dust penetration as well as extremes of temperature while maintaining full functionality for the fragile technology within. The collaborative programme from Marshall and Phillips received a Queens Award for Innovation earlier this year.

FURTHER READING: Read more about Stephen Fitz-Gerald and Marshall Aerospace Group in our lead interview (p38).

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 63


Navigate your future It’s a little known fact that global technology giant, Sony, has its last remaining European manufacturing site nestled in the remote countryside of South Wales. And, with a history in South Wales stretching back forty years, the site has experienced highs and lows in equal measure discovers Jon Tudor.

O

nce a key employer in the South Wales area, the Sony UK Technology Centre (UK TEC) in Pencoed came under significant threat of closure in the early 2000s. To survive, and to regain the site’s reputation as an employer of choice, the site has had to significantly change its operations. Facing up to this challenge, Sony UK TEC’s Managing Director, Steve Dalton OBE, set to work on a strategic change management plan which has shaped the site to what it is today – a digital centre of excellence. A transformation in culture was key to this journey.

The spur for change

Sony established its operations in Wales and built the first of two facilities in Bridgend in 1973, a second facility followed in 1992 in Pencoed, some three miles from the original factory. Both facilities centred around the manufacture of TV sets for the booming home and export markets. Mr Dalton, a Sony employee of thirty years, recalls the old ethos at the site.

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“In those days it was very simple: we were a mass production site which was very labour intensive,” he says. Over time, advances in LCD technology and evolving consumer tastes started taking effect. As a result, TV production at the plants steadily decreased resulting in the closure of the original Bridgend facility in 2005. This represented a significant threat to the sustainability of the second factory in Pencoed, necessitating Sony UK TEC to act. “We had no choice but to take a view of business sustainability, the world of TV’s had changed and we had to do something to address this,” explains Dalton. In 2005 Dalton got to work with his leadership team to create the factory’s future vision. “The issue was business sustainability, the idea was to navigate our own future, so we consulted the workforce who were faced with the decision that we needed to change.” Dalton knew he would need something visual to communicate the change impetus and the elements needed to successfully move the site

forward in order to gain workforce understanding and buy in. He also wanted the visual aid to emphasize that the employees themselves would sit at the core of this survival mission – that they were Sony’s most valued asset. “Collectively we decided upon the Parthenon as the visual aid to use. It’s something that; has stood the test of time; has had many uses over the decades and is still standing today. “The Parthenon pillars represented the four business areas we wanted to develop as part of our sustainability strategy,” says Dalton. Additionally, the Sony UK TEC workforce said that a focus was needed on three operational areas it felt needed to be addressed for a prosperous future. Differentiation: to identify what would set us apart from the rest of the competition Financial competitiveness without compromising on quality Establishing knowledge heroes in all areas of the business such as engineering, manufacturing, supply chain, finance, and HR.


Sony UK TEC

Manufacturing Technologies

UK SONYgy Centre lo o n h Tec er Year Winon e th f Factory

ctory Best rFdas 2013 Awa

General Manager, Gerald Kelly, says: “Steve made a fundamental change in how we do business in a global market, and he set about reversing the flow. By that I mean, instead of waiting for a corporate direction on what we will do tomorrow, Steve set about proposing what we could and should be doing tomorrow. He underpinned each argument based on a convincing business case and his approach was, is, relentless.” Sometimes Dalton won his argument in weeks, really testing the site’s delivery capability recalls Mr Kelly. “In other cases it has taken up to two years but, generally, he wins the day. We knew what success would look like and what we needed to do to get there. This, coupled with a very clear vision of what our business would look like in five years time gave us our strategic advantage,” summarises Kelly. “The most important strategic goal was to change the business from what was a high-volume, low-value consumer goods manufacturer into a high-value, high-skill, and low-volume operation. “We did this by focusing on a new core business, providing full manufacture of broadcast and professional cameras and studio equipment to the broadcast industry worldwide.” But there were obstacles to achieving this shift explains Kelly. “The line up at the time were standard definition products and to be sustainable we needed to capture the next generation of high-value products, high-definition (HD).”

The site is now on its second phase of its five year visioning, with the latest vision as equally engaging, inspiring and as challenging as the first Steve Dalton OBE, Managing Director, Sony UK TEC

“We had diversified on a very small scale into broadcast cameras a number of years earlier, but we wanted to expand on this for the high-definition (HD) market. The TV studios of Europe were using these more and more and with each camera and camera system ranging in price from £30k to £100k plus.” It was the right time to capitalise and capture the opportunities that lay within the emerging high-definition broadcast camera market comments Kelly, but October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 65


doing so required vast changes in how the factory operated.

Implementing the plan

The biggest changes were in the skill sets, behaviours and values of the site, according to Dalton. “Moving from mass production, when staff, also known as team players, typically spent 30-40 seconds on one product. Today, our employees can follow a more craft-based cycle time, where one person can spend hours assembling the camera. Team players had to develop their knowledge and skill set to deal with more parts and complex, higher capability operations.” Additionally, Sony UK TEC aimed to capture the UK market for servicing Sony products and become the country’s sole Sony customer service centre, with the site managing returns

The future sees business sustainability still on the agenda for Sony UK TEC. With new Sony camera products being launched from the site, thirdparty contracts incoming, additional service business and a steady flow of increasing business tenants

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and repairs for all Sony consumer products. More recently the customer service provision of the business has expanded to provide a pan-European service for the professional and broadcast product portfolio much of which is produced at Sony UK TEC. Another aim was to develop a Contract Electronics Solutions business focused on engaging with existing and entrepreneurial companies to manufacture products on their behalf. Thus, supporting the business sustainability model and seizing new technology to further develop the site’s capability and credentials. The final part of the jigsaw was the creation of an on-site business incubation centre. Acting as an incubator for established and startup companies by working with local providers and universities. Not only did this activity provide a revenue stream but it also enabled collaboration between the residents and Sony UK TEC with an array of benefits for all concerned.

The new era

The implementation of these four areas and resulting cultural change proved inspired. “People were no longer telling us what we were going to do - we were going to find it for ourselves. This spurred a new culture of ‘Defining a New Era of Ambition’. The site is now on its second phase of its five year visioning, with the latest vision as equally engaging, inspiring and as challenging as the first,” says Dalton.

Since the 2006 launch, the site has flourished to become Sony’s largest manufacturer of broadcast and professional cameras and camera systems outside of Japan. With camera products now sold across Europe, the USA and Japan, Sony UK TEC finds itself in the unique position of exporting camera products from Britain to the Land of the Rising Sun. But perhaps the biggest encapsulation of Sony UK TEC’s recent success has been its production of the Raspberry Pi product. Previously the bare bones computer – hailed as a game changer for building computer programming skills – was manufactured in China. This summer, Sony UK TEC produced its one millionth device since taking over production a year ago. Not bad for a site once regarded as likely to close. “Our vision and ethos has been about navigating our own future, this has been essential to our ability to still be in existence,” Dalton believes. “Our people understand the focus on innovation and change. They have been through a lot they are battle hardened and, what they have done in the past seven years means they understand they have to keep moving forward. “As a team we constantly explore how we can make our processes and techniques more effective and efficient whilst maintaining our reputation for manufacturing excellence. We are always searching to do something better today than yesterday.” The future sees business sustainability still on the agenda for Sony UK TEC. With new Sony camera products being launched from the site, third-party contracts incoming, additional service business and a steady flow of increasing business tenants. But Sony UK TEC won’t rest on its laurels promises Dalton. “We continue to work closely with our marketing teams and customers to understand the technology and camera marketplace and identify what new products we believe we can manufacture for the European market that would give us an advantage.” Given the remarkable turnaround of the last ten years, you would be hard pressed to bet against further success for the next decade.


Sony UK TEC

Manufacturing Technologies

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Lester Barratt, International Key Account Manager at Sealed Air Europe, talks to The Manufacturer about Sealed Air’s relationship with Sony Corporation.

Web: www.sealedairprotects.eu Contact: protection@sealedair.com

ince inventing Aircap® in 1957, a culture of embracing new technology and innovation has been the cornerstone of Sealed Air. We now have a very diverse business operating within almost every industry imaginable, manufacturing products that really make a difference and create a better way for life. We innovate to create solutions that protect our customers products, working with them to develop their packaging function to improve their operations, protect their brand and reduce the cost of shipping their products. Our relationship with Sony was built upon a trust that together, we can solve any challenges in their operation. We needed to achieve a faster, more efficient method of packing high value items that will survive the intense shipping environment through the global carrier networks. We conducted a full on-site analysis considering the operational needs of the business, focused on protecting the Sony brand to ensure its customers’ experience when

receiving the product is everything they expect and more. The products in this application are high value, fragile and subject to damage from vibration and shock in the shipping cycle. Therefore, we found the solution with two ranges of packaging products. Our Instapak® product range provided a flexible solution for large, heavy items allowing a fast packing method, as well as a custom pack to secure the product fully with foam expanding around the item inside the carton. Our Korrvu® range provided the ideal packaging for securing the smaller items and can be used on many different products providing the opportunity to reduce the number of different size outer cartons. Both products are supplied globally to reduce damage, increase productivity and enhance the operational costs within the organisation. For more information visit: www.sealedairprotects.eu October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 67


A chill for 3D thrills Subhead if needed

Forms made during an additive manufacturing supersonic laser deposition experiment at IfM

Don’t overhype the 3D printing ‘revolution’ warns Tim Minshall, senior lecturer at the Institute for Manufacturing.

3D

printing is not a new technology. It’s a term which, alongside ‘additive manufacturing’ and ‘digital fabrication’, has been around since the 1980s and, in fact, these technologies in various guises are being widely used today for prototyping and have been adopted in certain niche markets for small production runs of high-value, high-complexity products. For example, they are used in the aerospace and motorsport sectors to design and produce lighter and complex structural components. They are used in traditional craft sectors such as jewellery, and where product personalisation to the human body is important, such as dental implants and hearing aids.

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What is new, is that it has recently become apparent that these applications may only represent the tip of the iceberg of potential for 3D printing. There is the prospect of ondemand, mass personalisation, with more localised, flexible and sustainable production. If realised in full, this could radically disrupt the organisation of manufacturing and the ways in which companies capture value. The impact of this potential transformation is only beginning to be understood but it has attracted substantial attention recently from a range of perspectives. Technology publications, economics commentators, industry press, politicians and more have seized hold of a vision of a brave new world of redistributed productivity. President Barack Obama stated in his most recent State of the Union Address that 3D printing “has the potential to revolutionise the way we make almost everything”.

The bubble before the burst But is this kind of attention positive and useful?

With media headlines regularly shouting that 3D printing is going to be “bigger than the internet”, or that it is “the PC revolution all over again”, there is clearly a danger of 3D printing technologies becoming overhyped. The consequence is that, despite significant uncertainty about where, in manufacturing networks, value will be captured, an increasing number of entrepreneurial ventures are being attracted to this area. Using a diverse range of business models, combining product (printers), consumables (printing media) and services, (such as 3D printing accessed remotely), these ventures are searching for applications where 3D printing technologies can offer value to a broad range of consumers. This diversity in business models reflects the broad range of commercial opportunities enabled by these 3D printing technologies, but also the high level of market and technological uncertainty typifying this emerging sector. Moreover, as 3D printing gains wider adoption, a number of economic challenges are also becoming apparent.


3D Printing

These include: Intellectual property issues regarding respect for, and policing of, design rights Industry acceptance for standard 3D model file types ‘Undesirable’ uses of 3D printing - such as the creation of the infamous 3D printed gun unveiled in May this year (p62) Approaches for resolving product liability for mass-personalised products None of these challenges alone is likely to prevent the uptake of 3D printing

technologies, but they may slow and complicate its adoption by firms. 3D printing technologies definitely have the potential to provide opportunities for UK firms – both existing firms and new start-ups – to create and capture value using a wide range of possible business models.

Manufacturing Technologies

But, as with all potentially disruptive technologies, there are still many uncertainties surrounding these opportunities. By overhyping them before we gain a significant understanding of their impact, there is a risk that the real opportunities for value creation and capture will get lost in the noise.

Bit by bit – a new research project on 3D printing The reality and potential of 3D printing for the UK economy will be examined in a new research project – “Bit by Bit” – by a cross-disciplinary team from the University of Cambridge Engineering Department’s Institute for Manufacturing, the Department of Politics and International Studies, and Centre for Science and Policy. As 3D printing technologies move from the domain of prototype manufacturing to product manufacturing – anything from spare parts for the washing machine to spare parts for the body – the time has come to take a better look at what kind of impact they can have on business models and production processes. These technologies have the potential to disrupt the organisation of manufacturing and the ways in which companies create and capture value, but there is also a risk of their impact being exaggerated due to the increasing media attention around 3D printing.

Additive nylon digital fabrication

On reading this article, Dr Siavash Mahdavi, CEO of 3D Printing firm Within Technologies, said: “I completely agree with the comments here. “There is a real danger that overhyping may have an adverse effect on very promising manufacturing movement. Just see how over-subscribed shares in any publicly traded 3D printing company are right now. “The general public unfortunately hear about desktop printers for the home and customised titanium implants and think that these are the same technology. Additive manufacturing, in combination with other digital manufacturing techniques, will require a skilled work force that is much more focussed on software and design. This doesn’t currently exist.” Within Technologies manufacturers specialist surgical implants and bespoke niche products for the aerospace and Formula 1 industries. www.within-lab.com

Dr Tim Minshall, the project’s principal investigator, and colleagues have been funded by the ESRC and EPSRC to carry out research to understand the real impact of these technologies. Researchers will investigate how 3D printing emerged, identify its trends, barriers and enablers, examine how companies are making money from the technology, and identify key policy support actions to underpin building value. The project, which will kick off in October, aims to help the academic, industrial and policymaking communities target the most pressing questions and challenges. If you would like to get involved or contribute to the research project, contact Tim Minshall at tim.minshall@eng.cam.ac.uk For more information visit: www.dfab.info

FURTHER READING: ‘Overhyped and underappreciated’, The Manufacturer, June 2013 How to Explore the Potential and Avoid the Risks of Additive Manufacturing, Mayer Brown, 2013 www.mayerbrown.com/additive-manufacturing Three Dimensional Policy: Why Britatin needs a policy framework for 3D printing The Big Innovation Centre, 2012 bit.ly/3DPolicy

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 69


In its element Investigating the implementation and benefits realisation process for a new CRM platform at synthetic diamond manufacturer Element Six.

P

aul Williams, head of group information management at Element Six has four rules for IT:

1. Anything we do should increase revenue or profit 2. If we can’t, then we should control costs so that savings can be used on new initiatives that will increase revenue or profit 3. Get out of people’s way; make life easier for people so that they can spend more time on activities that cut cost and increase revenue 4. Stop paying for the past and pay for the future

Moving to Dynamics CRM is saving us in the region of £70,000 per year, based on the 220 users we currently have Paul Williams, Head of Group Information Management, Element Six

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These four rules are why Mr Williams made the decision to migrate from Salesforce.com to Microsoft Dynamics CRM, and why he got in touch with Zero2Ten. Williams firmly believes that the role of IT is to help the business provide both uncompromising service to customers and value for money. “Every dollar IT spends, our sales team has to earn, so we don’t spend lightly,” he says. While Salesforce.com offered a lot of functionality, it wasn’t being fully used by Element Six employees. It was also taking the entire CRM [Customer Relationship Management] budget just to maintain the system. “We weren’t really taking advantage of the platform,” comments Williams. “We were spending all of our money just to stand still.” “We could do requirements capture for new functionality and new features but we never had the resources to do anything with it,” he adds.

Making savings for re-investment

When Williams raised this with the leadership team, executives were clear that they were happy with the amount of money being spent on CRM. This opened up the opportunity to move to a cheaper platform and re-invest the savings in customer facing initiatives and workflow improvements. “Moving to Dynamics CRM is saving us in the region of £70,000 per year, based on the 220 users we currently have,” Williams shares. “That’s a lot of money to put back into improving customer service and delivering more value.” For Williams, the new platform needed to integrate with core business applications, including the JD Edwards ERP system. And it had to be easy to use. “If people can’t use the system, it won’t add value,” he comments. “Look and feel plays a big part. “You have to give people tools that they are familiar with and that they will want to use. Along with the lower cost, Dynamics CRM’s integration with Outlook and the familiar Office style played a big part in our decision.”


Customer Relationship Management

You have to give people tools that they are familiar with and that they will want to use. Along with the lower cost, Dynamics CRM’s integration with Outlook and the familiar Office style played a big part in our decision Paul Williams Head of Group Information Management, Element Six

Because Dynamics CRM is built on a core framework, Williams says he was confident he could do more with it to extend value across the business.

Contract countdown

With the platform decision made, Williams had only four months to migrate across before his Salesforce.com contract expired. “I had worked with Zero2Ten before and knew instinctively that they could work to our tight timescales,” Williams recalls. “I like their fixed price approach; they tell you what they are going to do and they deliver it.” Williams compared a time and materials quote from an alternative supplier with the fixed price quote from Zero2Ten and found that by choosing to work with the latter, Element Six would save £19,000 on the implementation cost alone.

There were no problems at all with migration and integration. It fact it went so smoothly that I wondered if people were actually using it. Zero2Ten really do know Dynamics CRM inside out Paul Williams Head of Group Information Management, Element Six

Zero2Ten was able to meet Element Six’s timescales and budget using its remote migration and implementation services. Working to a defined process, technical teams built the basic system model in parallel with preparation for data migration. This meant that the Salesforce.com data could be migrated and surfaced directly into the actual system. “Considering our project manager and Zero2Ten were working remotely, the whole process was incredibly smooth,” says Williams. “There were no problems at all with migration and integration. It fact it went so smoothly that I wondered if people were actually using it. Zero2Ten really do know Dynamics CRM inside out,” Williams confides.

Ensuring user adoption

Zero2Ten runs a 12 month Adopt2Win programme, included in the fixed fee, which helps support user adoption of Dynamics CRM during and after implementation. The Adopt2Win programme provides a framework for measuring the sustainability of ROI. “I can see that I’m keeping my promise of getting out of users’ way and maximising the value from each licence,” says Williams. “I can see what activities people are logging and even see where managers are using the system for reporting or following updates. “With Saleforce.com, we had too many systems that weren’t integrated. Users would have to log onto their machines and then log into Salesforce. com,” Williams recalls. “Just that one hurdle meant people were reluctant to use it.” The lack of adoption with Salesforce.com meant that the cost per activity was very high for Element Six – as well as the fundamental system costs being higher too. “With Dynamics CRM, people just launch email and they have CRM right there. I can see people using the system and they’re using it for doing more things, like forecasting, that add value to the business,” Williams sums up.

IT in Manufacturing

vision is to use the framework as a basis for enhancing customer service and overall performance. “Everyone should have an opportunity to interact with CRM in a way that touches what they do for the company,” he says. Williams has plans for the use of Dynamics CRM at Element Six’s new Global Innovation Centre near Oxford. “I’d love it if when a customer requests a sample, the innovation team responsible for that product can see what the customer is doing with it and be able to contact the customer. They will be able to ask for feedback and make sure that we are ultimately delivering the highest performing products,” Williams explains. “We are also looking at how Dynamics CRM integrates with other Microsoft software, including SharePoint. We don’t just see technology layers; we see how it all fits together to deliver a service,” he states. “We don’t think about what we can implement; we think about what we as a business want to do and then we pick IT systems to match our strategic business objectives. “Zero2Ten got us up and running with Dynamics CRM in remarkably short timescales. We have a roadmap for future development and with the additional knowledge transfer that Zero2Ten provides, we’re in great shape to take even more advantage of the platform,” Williams concludes.

The future

Dynamics CRM is now being used in all of Element Six’s business functions across more than 20 sites. Williams’ October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 71


Enterprise Resource Planning

IT in Manufacturing

Measuring benefits

Benefits realisation for ERP

F How can an organisation embarking on an ERP project ensure that the benefits it believes can be delivered are actually achieved? John Donagher, principal consultant at ERP advisory firm Lumenia, describes best practice for benefits realisation.

72 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

or many firms attempting ERP implementations, realising the potential benefits of their investment can become extremely problematic. In many cases this is because business benefits are loosely identified at the start of the project in order to support the business case, but then forgotten about. In short, there is not a well-defined benefits realisation process or strategy. Clearly this means that the prospect of actually delivering expected benefits is greatly compromised.

Senior ownership

Lumenia’s experience suggests that benefits ownership is the first step in establishing a thorough plan for benefits realisation. Ownership is different to ‘buy-in’, a phrase which is often used in relation to ERP implementation strategies. Buy-in implies broad agreement with the concepts of any benefits that have been documented and the verbal expression of support from senior management for the pursuit of benefits. Ownership, meanwhile, requires leaders to take responsibility for the achievement of benefits. They must demonstrate their commitment to delivering benefits at each stage in an ERP selection and implementation project and, ultimately, be accountable for the outcome.

Ideally top level ownership of benefits should be assigned during the formation of the business case for an ERP implementation, prior to system selection. The business case should include realistic and measurable benefits, with senior owners assigned to each of them. Where possible, benefits should be measurable and linked to the business’s KPIs. However, it’s important to include intangible or qualitative benefits at this point as well – even if a benefit can’t be measured now, it should still be recognised as part of what you’re trying to achieve. One of the challenges in setting KPI targets or valuing potential savings is a natural reluctance for people to sign up to delivering something specific when they’re still unclear on what the system will actually be able to do. Usually these reservations can be overcome by being conservative with targets, setting target ranges (best/ worst case) and committing to a process of on-going re-evaluation of the benefits throughout the selection and implementation projects. One of the advantages of identifying benefits prior to system selection is that the business requirements relating to the realisation of quantified benefits can be used as one of the key drivers for the selection and implementation of a new ERP solution. The benefit owners need to be involved at various stages in the implementation to ensure the project team is focusing on benefits delivery and that the identified benefits are still achievable; this is important as decisions relating to project scope or business processes could compromise the delivery of expected benefits. Focus on benefits realisation should continue after go-live as some benefits may not accrue until the system has been operational for some time.

FURTHER READING: For more information go to www.lumeniaconsulting.com or email www.lumeniaconsulting.com


3D modeling

A 3D training environment simulated by Dassault Systèmes

Reuse me

L

To extract real value from 3D modelling, manufacturers must maximise their reuse of information says Keith Nichols, senior consultant at industry technology analyst firm, Cambashi.

ong gone are the days when it would take several minutes to produce a full hidden line view of a relatively simple 3D model; when increasing the assembly size would only end in frustration and many believed that 3D modelling lacked practical value. Suppliers have invested heavily in enhancing their capabilities through inhouse development and, more recently, through acquisitions. Today, 3D modellers have the capability to handle over 30,000 parts for a complete automotive vehicle, and three million for aircraft projects. This ability to scale up both model size and complexity at an acceptable user performance level has increased use. Building a 3D model is unlikely to become faster than its former 2D approach. But once completed, a 3D model opens up a world of further activities which can lead to significant additional benefits. 3D design modification is fast and, where common parts and subassemblies already exist, 3D models can be easily reused, saving time. The same design information can also be reused in analysis, manufacture

IT in Manufacturing

planning, and workflow simulation, or in the preparation of maintenance manuals. All of this can happen long before a single part has been made. New applications can further extend information reuse. For example, automotive manufacturers are using 3D models to create a virtual reality (VR) experience for test drivers. They can sit in a virtual car and evaluate its ergonomics when subjected to different simulated conditions. This provides the opportunity to make thousands of small refinements to the vehicle’s design before the expensive and time consuming process of building a physical prototype begins. 3D models have been used to evaluate numerous features of vehicles from rear-window visibility through to determining the best size and shape of cup holders. Ford claims that, by exploiting technology at its Cave Virtual Reality facility in Cologne, Germany, it has shaved several months off its development cycle for new cars.

3D modelling comes of age

This reshaping of the underlying development approach is not limited to the automotive industry. It is now an established step in aircraft, farm equipment manufacture and other industries. In all cases, coupling 3D models with VR is transferring customer experience of the finished product to an earlier stage of the development process. One significant by-product of using 3D models with VR is the ability to provide staff with advanced training in the operation of a product or facility before it is built. Staff can virtually walk through a digital power plant, for instance, and become familiar with its operational and maintenance procedures as well as with controls and instrumentation. In short, the reuse of information from 3D models promotes right first time design and benefits all downstream activities in producing, delivering and supporting a product. The key to realising these benefits however, is the ability to reuse information in a controlled and consistent manner. FURTHER READING: For an extended version of this article go to: bit.ly/Reuseme

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 73


ROI for ERP: Malcolm Wheatley talks to those in the know about getting what you want out of an ERP investment.

74 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

A

3 tips on extracting value

t the turn of the millennium, when Year 2000 compliance worries caused ERP fever to reach its height, analyst firm Meta Group conducted some damning research. The average ERP implementation, it found, took 23 months, had a total cost of ownership of $15 million, and rewarded the business with a negative net present value of $1.5 million. Things have moved on, thank goodness. Today’s best-in-class ERP systems are implemented quickly, built around user-selectable best practices, and arguably deliver a decent ROI. But that doesn’t mean that extracting value from an investment in ERP is a sinecure. Sure, examples of highly successful ERP implementations abound. And even the most sceptical board will these days recognise that a high-calibre, up-to-date ERP system is important. But equally, it’s not difficult to find examples of ERP in action that are frankly underwhelming. Poorly – and often partially – implemented, they cover the basics of the business, and little else. And far from being

the fabled ‘single source of the truth’, they are surrounded by other systems, both paper-based and IT-based, involving enormous integration challenges. So how does a manufacturer ensure that its ERP system falls into the former camp, and not the latter?

1. Keep it simple

The first challenge lies in ensuring that your chosen ERP system remains as straightforward as possible to implement and upgrade. In short, wherever possible, stick to the standard, out-ofthe-box solution. “Customising ERP adds cost and complexity, and makes your system more expensive and more difficult to upgrade,” says Simon Charlton, sales director at Microsoft Dynamics implementation company Columbus. “If you find yourself wanting to change the basic system, ask yourself why. There are tens of thousands of businesses using the standard system: is your business really that different?” “Modern ERP solutions such as Sage ERP X3 Standard Edition are delivered


Enterprise Resource Planning

with best-practice templates, pre-defined ‘key user’ roles, and over 400 standard reports,” adds Stephen Clarke, head of Sage X3 sales at Sage partner K3 FDS. “It’s a much better approach than starting out on a long, risky project with a blank sheet of paper.”

2. Stay current

That said, while changing the system itself is highly undesirable, it is important to change the processes within it, over time. “ERP is never a finished project,” says Paul Massey, managing director for western Europe at ERP vendor IFS.

Customising ERP adds cost and complexity, and makes your system more expensive and more difficult to upgrade. There are tens of thousands of businesses using the standard system: is your business really that different? Simon Charlton, Sales Director, Columbus

“Businesses change, processes need updating, and markets evolve. ERP must itself change to reflect this – otherwise it becomes outdated, and won’t suit the needs of the business. So periodically, do an audit, and make sure that today’s ERP system reflects the needs of today’s business.” “Inertia is a killer,” adds Gordon Fleming, chief marketing officer at specialist manufacturing ERP vendor QAD. “Too many companies put in ERP and think, ‘That’s it. Job done.’ But it isn’t. Again and again, we see similar companies, manufacturing similar things, and serving similar markets – but with very different financial performances. And the companies that are doing better are those that keep an eye on business process management.” “There’s a dichotomy between the way that businesses approach ERP, and the way that they approach improvements on the factory floor,” agrees Karen Clarke, head of

applications for UK and Eire at ERP vendor Oracle. “On the factory floor, there’s a culture of continuous improvement, while ERP often stays static. So reward and recognize people for suggesting improved or leaner ERP processes – just as you do on the factory floor.” Similarly, adds Ian Farrar, sales manager at KCS Datawright, a specialist developer of ERP for manufacturers, it’s important to maintain accurate factory floor data – again with incentives, if necessary. “Accurate manufacturing times are vital, because they determine production schedules and due date performance,” he stresses. “And accurate costings are vital, because they determine pricing and profitability. So as things change on the factory floor, make sure that those changes are reflected in the data built into the ERP system.”

3. Recognise that people matter

Finally, don’t forget the people dimension. It’s people who will implement the ERP system, and it’s people who will interact with the ERP system. “The single best way to get value from an ERP system is for the whole business to buy into it,” says Neil Ferguson-Lee, lead solution architect at Microsoft Dynamics AX implementer eBECS, recently selected as Microsoft ERP 2013 global ERP partner of the year, and 2013 Microsoft Dynamics reseller of the year. “That sounds very ‘motherhood and apple pie’, but in all the years I’ve been implementing IT systems it’s never been truer. Wherever you get islands of processing away from the main transaction engine – whether it’s spreadsheets, pieces of paper, or other systems – then you degrade the value that you get from the system, and degrade the value of the management information it delivers.” Likewise, says Ed Smith, SAP consultant at SAP Business One specialist Frontline Consultancy, use the best people you can to implement and manage your ERP system. “You can buy software from anyone,” he says. “But it’s what you do with that software, and how you implement it, that matters. Ultimately, ERP is about implementing change, and change management is never easy.” Indeed, adds Jonathan Orme, sales operations and marketing manager at

IT in Manufacturing

Businesses change, processes need updating, and markets evolve. Periodically, do an audit, and make sure that today’s ERP system reflects the needs of today’s business. Paul Massey, Managing Director, IFS.

ERP vendor Exel Computer Systems, an insistence on implementing an ERP system fully and properly can make an enormous difference to a business’s competitive edge. “Most ERP systems will meet 80% of a customer’s requirement very easily,” he says. “It’s the final 20% that requires thought and effort – but it’s usually that 20% which delivers the bulk of the value. A determination to finish the project nt for d eveyers n properly, and e t t bu st a close the gap ’s mu sers and ingham m u r i and complete ERP ber 4, B .uk m ct.co the final 20%, Dece rpconne .e will often deliver www functionality that makes a business stand out from its competitors.”

ERP 2013 ect Conn

FURTHER READING: ERP 2013: A supplement addressing ERP trends and implementation stories, circulated with this magazine or available to download at: bit.ly/TMReports

October 2013 | Issue 8 | Volume 16 | www.themanufacturer.com 75


Pre-competitive collaboration

LAST WORD

Surely Novartis doesn’t roll onto its back and let arch-rival AstraZeneca pick up and fine tune a process it has spent 10-years and several 10s of millions of pounds not getting quite right?

Pharma love-in Will Stirling on pre-competitive collaboration in a new paradigm for pharmaceutical manufacturing.

H

ad you asked GlaxoSmithKline, AstraZeneca and Novartis a few years ago to cuddle up, share manufacturing processes and collaborate on new ones, you might have been given one of their stronger tablets and told to lie down. But decades of inertia in reforming the manufacturing supply chain and huge amounts of wasted stock have caused big pharma companies in the UK to ‘open their kimonos’. In Britain alone the pharmaceutical industry has spent, arguably wasted, over £1 billion on developing continuous

In Britain alone the pharmaceutical industry has spent, arguably wasted, over £1 billion on developing continuous manufacturing processes in silos, and in wasted drug stock

76 www.themanufacturer.com | October 2013 | Issue 8| Volume 16

manufacturing processes in silos, and in wasted drug stock. That’s the verdict of Dr Clive Badman, a 35-year pharma industry veteran and leader of the EPSRC Centre for Innovative Manufacturing in Continuous Manufacturing and Crystallisation (CMAC). It’s a collaborative group that is helping restructure drugs manufacturing. Badman argues that pharma firms have flunked on competitive strategy, pouring resources into what he describes as “pre-competitive” processes which could be common to all without jeopardising competitive advantage. By collaborating on pre-competitive processes and strategies, Badman hopes pharma manufacturing can be given a new lease of life. A life characterised by rapid time to market and supported by supply chains that understand the drive towards personalised medicine and solutions provision.

The mission has momentum

CMAC, based at Strathclyde University but collaborating with several others, as well as industry, has a healthy budget of £60 million and 81 fulltime staff. Next year the acceleration of its research into commercial application will be further assisted by the creation of a new Catapult centre for diagnostics for stratified medicine – also based in Strathclyde. Like all the best ideas, Badman’s concept for pre-competitive collaboration in pharma has been pinched from somewhere else. This

time the aerospace sector provided inspiration. Big aero firms like Airbus and GKN, for instance, have cosy precompetitive arrangements which allow them to reduce the cost of innovation. Badman wants academia to underpin relationships like this with better international collaboration between universities. He is planning link-ups with the Massachusetts Institute of Technology and European universities. But what about IP? Surely Novartis doesn’t roll onto its back and let arch rival AstraZeneca pick up and fine tune a process it’s spent 10-years and several 10s of millions of pounds not getting quite right. “We are not sharing any details on molecules,” says Badman, going on to explain that this is where the true IP lies in pharma. It’s not just continuous manufacturing processes themselves which could be standardised in pharma to create a new world of more efficient, focused competition says Badman. Underlying infrastructure needs a revolution too. There is a huge, unwieldy infrastructure for making and storing pharmaceuticals around the world that almost prevents new technology being adopted says Badman. “The current infrastructure is between about 3 and 4-sigma, so there is a big cost of quality associated with manufacturing and the inventory we have tied up.” CMAC is now developing a bid for Round 4 of the Advanced Manufacturing Supply Chain Initiative, with partners AstraZeneca, the IfM at Cambridge University and several supply companies. The work this four-year AMSCI bid will fund should show pharma suppliers what capabilities they must have to be attractive partners to big pharmaceutical companies in the sector’s new world of manufacturing.


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