Back to the future

Manufacturing is back as the lion of the British economy, with the UK home to some of the sector’s most exciting developments. We open up the engine that’s driving the recovery

Manufacturing has bucked the trend recently by growing steadily, and prospects for 2011 appear to be strong for the sector. This may surprise some, as for many years manufacturing has had a hard time and is often perceived as being in decline.

Indeed, a lot of the UK’s heavy industries have departed and the number of jobs in the sector has reduced in the past 30 years. Exporting has also been difficult as the high value of sterling has made competing against other markets more difficult. But more recently there has been a resurgence aided by a weaker pound, innovation, enduring brands and an understanding that manufacturing is a critical part of Britain’s economy.

Driving force

Jaguar Land Rover (JLR) recently announced a £1 billion deal to sell over 40,000 cars to China. JLR’s CEO Ralf Speth believes that his operation is stronger than ever.

“JLR is investing heavily in a future that will see significant growth, thanks to expansion of our strongest-ever vehicle line-up, the creation of thousands of new jobs and investment in infrastructure, research and development and advanced technologies,” he said.

The car industry as a whole in the UK is currently performing well. Although the number of UK-owned brands has dwindled in recent years, there are many companies still involved in car making, and numerous big-name manufacturers have plants in the UK.

“The automotive industry is doing very well at the moment,” says Professor David Bailey of Coventry University, who specialises in business strategy and economics. “The Nissan factory in Sunderland, for instance, is growing and has had an excellent period. We often forget about how good we are at car making, the UK is the second largest producer of premium cars in the world, behind only Germany.” Professor Bailey also sees a future in the areas of renewable-energy based products and low-carbon vehicles such as electric cars.

The future for UK manufacturing is most likely to be focusing on high-value goods and premium products. However, global competition makes it difficult for UK businesses to compete on price with other regions. “Manufacturers in low-cost and labour-intensive industries are suffering and will continue to do so,” says Bailey. “There will always be some demand, but not that much. I don’t think the UK can compete with the likes of India and China head-on in areas such as textiles. However, we can compete in terms of quality, niche products and high technology as opposed to low cost.”

Although competition from overseas is fierce, the UK’s innovating companies are always on the lookout for business partners, and will tend to think locally to begin with.

Innovation

“Innovative companies need to work with other firms, sometimes quite traditional ones, in order to get their products right,” says David Caddle, programme manager for Manufacturing Advisory Service (MAS) South East. “They don’t necessarily want to be sourcing from all around the world when they are doing this. They are keen to find local, agile businesses. This represents a real opportunity for small businesses.”

Birthplace of the Industrial Revolution, Britain has a strong international reputation for business innovation. The products of companies such as JCB, Aga and Dyson can be found across the world. Silicon Fen in Cambridge is home to a large cluster of innovative digital technology manufacturers, including industry leaders Autonomy and ARM.

Smaller companies looking to export can benefit from this as customers will know they hail from a country with a strong skills base and a history of excellence. It is also encouraging that big UK businesses are keen to make major purchases from British manufacturers. Recently, JCB agreed a £14 million order with Manchester-based plant hire company Hewden for a fleet of products, one of the biggest business deals in its history.

Skills and challenges

The big issue, particularly among smaller manufacturers, is the lack of skills available. Employers are concerned that there are not enough young people coming through with the skills needed to take over from older workers. Such issues need to be addressed and employers are well advised to make links with local advisors and educational establishments as they may well need them in the future. The Government also appears to be alert to the fact that skills are in demand and has said it will increase funding to enable a further 75,000 adult apprenticeships. Companies training 16-18 year olds will also continue to receive full Government funding for training, so employers will only have to pay them wages. Also, in 2010 the Apprenticeship Training Associations (ATAs) were launched to help SME employers. Another scheme, the Make It Campaign, is supported by many UK manufacturers, including BAE Systems, Sharp, Sellafield and Robert Wiseman Dairies. Since 2006 it has helped 60,000 youngsters to participate in manufacturing activities, designed to overturn negative perceptions held by young people about working in the sector.

Key advisers

Any manufacturing business can benefit from expert advice and opinion, and there are a number of low-cost or free options – some of which are funded by the Government – to consider.

EEF – the manufacturers’ organisation: Dedicated to helping manufacturers, the EEF works to promote and improve the sector. Members can attend networking events, seminars and conferences. www.eef.org.uk

Manufacturing Advisory Service (MAS): Set up in 2002, MAS is a government-funded programme that works directly with growing manufacturing businesses to help them to become more productive and grow. MAS has several bodies that operate at a regional level including the EEF, the Manufacturing Institute, Regional Development Agencies (RDAs), Solutions For Business, Business Link, as well as a number of private companies. As the Government’s spending cuts come into force, some of these bodies may have their funding cut and in the case of the RDAs will be replaced by other agencies. However, the Government has pledged to continue to support MAS and it has secured funding. www.mas.bis.gov.uk

UK Trade & Investment (UKTI): UKTI works with businesses to increase their export performance and progress overseas. ukti.gov.uk

Investors in People (IIP): IIP promotes a standard among businesses focusing on staff and management in order to improve companies and increase productivity.www.investorsinpeople

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