International Business Festival 2018

LIVERPOOL 12-28 JUNE

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MANUFACTURING'S 'MOMENT OF TRUTH'

Nick Peters, The Manufacturer
10 September 2017

Manufacturing in the UK is enjoying good times but, as Nick Peters reports, pressures from within and without threaten its prosperity.

One afternoon in early September, I picked up an SUV from the car hire office and set out on a road trip.

My companions on this trip would be three experts in manufacturing whose job it would be to test the evidence submitted by companies entering The Manufacturer’s MX Awards programme. Chart showing world manufacturing output, by leading countries

These awards fall across several categories involving design, people management, innovation and so on. Our category was World Class Manufacturing.

If, dear reader, the thought is running through your head, “but I didn’t think we made things anymore”, then I regret I must chide you for falling into what has become a (forgive me for saying it) lazy assumption that has gripped our nation since the alleged deindustrialisation of the 1970s and 80s.

Yes, manufacturing as a percentage of GDP has fallen, as a result of two phenomena: the stripping out of some badly run industries that could only survive with government cash; and the explosion in the services sector, which inevitably reduced the proportion of GDP attributed to making things.

So, back to the road trip, which I hope will give you a real sense of what manufacturing in the UK today is all about, and why we need to recognise it, applaud it and encourage it. (For reasons you will understand, I cannot go into the details of individual company performance as the awards are not announced until November 16 at a great gala dinner in Liverpool.)

Wheels and deals

We started in Birmingham, the heart of the West Midlands and the beating heart of UK manufacturing. First stop was ZF Lemforder, which makes suspension assemblies for Jaguar Land Rover. So closely aligned is the company’s production line to JLR’s that they make these assemblies at the same time and pace as the cars themselves. It’s a six-hour cycle, demanding perfect performance and synchronisation. Next up, Dura Automotive which makes a wide array of parts for car companies from Rolls-Royce Motorcars through to Mini and many others in between.

The following day, we hit Cambridge to visit the world-leading Domino Printing company. They make the printers used by manufacturers, notably in the food sector, to print BBE (best before end) dates on anything from beer cans to packs of butter. It is a global business, with factories in Asia and the USA, but the IP that makes their printers best-in-class is British. Then on to John Guest, a family business started in the 70s, which makes the snap-fit plastic pipes and joints that most will recognise from the plumbing department of the DIY store. But they also work on highly specialised products for companies seeking new ways of improving reliability, hygiene and efficiency. Again, global in reach, UK-owned.

McLaren's factory [Image: McLaren]

The third and last day of our trip began in Woking at the home of McLaren Automotive, which makes supercars and sports cars that are in demand all over the world. Their futuristic HQ has been likened to a Bond villain’s lair, a cool example of brilliant (UK) design in perfect harmony with the beauty of the product. And finally, to the Russell Finex factory in Feltham, Middlesex, where they make sieving and filtering equipment, predominantly for the global food and pharmaceutical sectors (think grading and sorting), but also for the world’s cruise fleets.

UK world class

Again, I am not permitted to reveal particular strengths and weaknesses among the competitors, but I hope I have driven home how these are UK companies making products largely containing British IP that are standouts in their fields. And the underlying virtue they all share is an absolute passion for what they do.Bar chart showing output of manufacturing sub-sectors in 2014

I have written about businesses of all shapes and sizes in my career but never have I encountered the sort of drive and commitment I have found in manufacturing. Perhaps it is something to do with being personally invested in the product that makes it special.

Among the more successful UK manufacturers, it almost certainly has to do with the adoption of strategies that can be lumped together under the title ‘lean’ that emerged from top Japanese and American companies over the years, that drive efficiency into every part of the business. And that includes listening to the people who understand best what works and what doesn’t, the ones on the shop floor.

Modern manufacturing is highly democratic and well-ordered, as well as being (where possible) incredibly clean and smart. The dark satanic mills of days gone by are just that – a memory.

All of the above means the best of UK manufacturing is constantly striving for excellence because how else can it pay its way? New technologies that permit the capture of huge amounts of data from sensors at every stage of production and the digitisation of processes (Industry 4.0 or the Fourth Industrial Revolution), together with additive manufacturing (3D printing in metal and other materials) are completely changing the way they do things.

So far so good. Three cheers for UK manufacturing! But, sadly, not everything in the garden is rosy.

Investment, strategy

Two critical failings have hobbled manufacturing for the last 40 years or more, holding it back as if trying to run the 100 metres with a ball and chain attached to both feet. These failings are mutually reinforcing, creating a chronic weakness that at this critical time in our nation’s history must be seen as an existential threat.

Firstly, and arguably most fundamentally, government policy towards business in general and manufacturing in particular has been weak and contradictory. It is the fault of both main parties, with only the Lib Dems’ Vince Cable attracting any respect as a business secretary who understood that manufacturing needs stability, encouragement and investment. Not in the notorious ‘picking winners’ way of old, but in terms of education, training, R&D support, taxes, rates and monetary policy.Graphic showing the UK's top export destinations for manufactured goods in 2015

Yes, manufacturers have enjoyed a boom time since the EU referendum vote because the pound has devalued, boosting exports, but arguably the exchange rate was being kept artificially high because that favours the financial sector, which is seen as the belle of the ball by Westminster. Manufacturing is the poor, ignored wallflower.

With this indifference over the years, manufacturers have become overly cautious, unwilling to invest at the same rate as our global competitors. One shocking statistic: the UK has 32 robots per 10,000 workers compared with 172 in Germany. Companies must also shoulder blame because they have taken advantage of low-cost labour to boost short-term profits rather than invest in the long-term. This, coupled with an education system that disfavours technical skills, is partly why we have such poor productivity in the UK.

This is why all eyes should be on the government’s industrial strategy white paper in November. If the government does as it promised, and produces policy that starts to build trust and respect between manufacturers and government (a very large reason for German success), then we will not only make up some of the lost ground of the last 40 years but perhaps get ahead. We are a nation of extraordinary ingenuity and brilliance, as I discover day in day out. It would be a national tragedy if all our efforts failed to attract the political backing it so desperately needs.

Nick Peters is editorial director of The Manufacturer www.themanufacturer.com, which hosts its Manufacturing Innovation Summit at the International Business Festival on June 20.

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