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Business Reporter · April 2015

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Made in Britain

Opening shots René Carayol

W

HILE hosting a dynamic and powerful retailbiased leadership event recently, I had the pleasure hearing from a couple of former Marks & Spencer colleagues, Kim Winser and Peter Ruis, who had gone on to achieve much.

A lively and insightful discussion on contemporary leadership soon centred on the longevity of Marks & Spencer and how the brand was allowed to decline from the halcyon days in the late 1980s when we worked there together.

There was a time in the early Eighties when those memorable green and gold St Michael carrier bags bore the message, “All our clothing manufactured in the UK”.

This was a clear competitive advantage at the time, and relatively unusual on the UK retail high street.

With the advent of globalisation, it did not remain a differentiator for much longer. A couple of years later, the message on the bags had changed to “95 per cent manufactured in the UK”. When it was eventually changed to 85 per cent, it became obvious that it would soon disappear altogether, and it did.

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How M&S colleagues Kim and Peter prove that business leaders are still very much Made in Britain M&S had bowed to the pressure that the UK could no longer compete with the likes of the Far East as a manufacturing base for clothing, and had now officially succumbed to the pressures and advantages of a new globalised way of doing business.

What Kim and Peter demonstrated in front of an inquisitive business audience was that, while M&S may not have the UK manufacturing base it once had, boy did it produce some fabulous business leaders.

Peter went on to a leading position at Ted Baker, working for the entrepreneurial Ray Kelvin just after their flotation, prior to a stint at the iconic US denim brand Levi’s, then moving on to make his name turning around the once moribund menswear department at John Lewis.

Before long, he was on the board of John Lewis and many would say he was one of the major influences behind it shedding their stuffy middle England image to becoming nearly everyone’s favourite and trusted department store. He is now chief executive of the fast-moving Jigsaw fashion retailer.

Kim had a slightly different journey.

After being the first female divisional director at M&S, she went on to turn around the stagnating 200-year-old golfing marque Pringle. Under Kim’s astute and inspiring leadership, this nearly forgotten menswear brand had become a fast-moving British fashion icon.

Kim went on to work her magic at Aquascutum, prior to becoming chair of Agent Provocateur. As Kim openly states, she is so much more a chief executive than a chairman, and couldn’t wait to get back to actually running a business and, after a couple of close-run acquisition attempts of landmark British retailers, she decided “if you can’t buy it, build it”.

Kim is the founder and CEO of the st r ik ingly beaut if ul, simple and contemporary clothing business, Winser London. It is a totally digital and online business, which is making strides in the hugely competitive and unforgiving women’s clothing market in the UK. While Britain may no longer have a leading clothing manufacturing base, it can still be proud of its business leaders that are still very much Made in Britain.

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THE INCREASED participation of women in the workforce has been a significant contributor to the British economy.

Figures from the OECD show that, by equalising the labour force participation rates of men and women, the UK could further increase GDP per capita growth by 0.5 percentage points per year, with potential gains of 10 per cent of GDP by 2030.

But there are many areas such as technology, engineering and science where women are still under-represented.

There has been a move by the government as well as industry to encourage women into these growth sectors to help the UK reach its economic potential.

“The whole process should start from primary school, right the way through to businesses and leaders giving life stories, hints and tips of what to do,” says Esther McVey, Minister of State for Employment, at the Ever y woma n Adva nci ng Women in Technology forum.

“This push for STEM [Science, Technology, Engineering and Mathematics] technology science is the key.”

Ever y woman is one organisation encouraging girls from primary school age to get involved in growth areas such

as technology. To celebrate International Women’s Day in Ma rc h, Ever y woma n i n collaboration with Stemettes, Salesforce and Campus London, held a “ Hac k at hon”, to encourage girls and young women to code. Girls aged between the ages of five to 23 were asked to create three networking apps to connect to their friends. The winners were presented with their prize at the Advancing Women in Technology forum. McVey says: “What Everywoman is doing with the Hackhathons for girls is saying coding can be fun.”

According to government figures, only 124,000 (15 per cent) women work in the IT and telecomms professions, 40,000 or 22 per cent of women work as IT technicians and 7,000 women work a s I T a nd telecommunications directors.

T he gove r n me nt h a s also launched a Tw it ter campaign, #notjustforboys, to encourage more women to take up professions which are traditionally dominated by men.

McVey says: “What we have done for the #notjustforboys campaign is to say, know your options, know what is out there and then you can make a choice and what you can do. Know not just where the jobs are going to be in the future, but where the careers are. Where is the progression, where are the wages? Don’t limit yourself at

UK manufacturing stabilises, says survey ACTIVITY in the UK manufacturing sector remained broadly steady in March, according to the CBI’s latest Industrial Trends Survey. Output has been growing at a decent pace since last August, and despite easing slightly from the previous month, remained above average in March.

There were 32 per cent of firms that said the volume of output over the past three months was up, while 22 per cent said it was down.

Manufacturers also expected to ramp up production in the next three months, with 34 per cent of businesses predicting

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Minister calls for more women in IT and engineering positions

By Joanne Frearson

Esther McVey visits the Brompton bicycle factory in Brentford last year

Made in Britain

output to grow in the coming quarter, while 12 per cent thought it would decline.

The survey of 468 manufacturers found that total order books climbed down a little from February’s six-month high, but remained well above average, with 15 of the survey’s 18 sub-sectors reporting stronger than average orders.

Export orders weakened significantly from February’s half year high, falling below their long-run average.

Rain Newton-Smith, director of economics at the CBI, says: “Our manufacturers lost some of their steam

from last month, but they continue to move steadily along a decent growth track.

“Sluggish export performance seems to be a headache that won’t go away, with a still subdued Eurozone and headwinds from a stronger pound. But measures in the Budget to support exporters should be a welcome boost for the sector’s longerterm prospects.

“With emerging markets facing a tough time and uncertainty continuing, firms are having to work even harder for opportunities to sell their products and services around the world.”

an early age, but go forward knowing you can embrace this. “ W hat I a m doi ng i n government is mapping out where are those jobs in the next decade. There will be 12 million jobs, fundamentally in things like IT, science and technology and engineering. When we look at the number of girls who are doing engineering – only 7 per cent – that is a vast majority of girls who have not even considered it.

“Throughout the campaign we want to energise young girls and support more women to make the choices that are right for them, and have the security of a regular wage in an industry driving Britain’s growth.”

Although UK women are getting into work faster than any other country in the G7, there are still professions where not enough women are breaking through to the top jobs. It is part of the government’s longterm economic plan for women to make the most of the record number of vacancies in the economy.

Growth areas in which women are under-represented include that of engineering professionals (where only 7 per cent working in this sector are female), broadcast media (20 per cent), graphic designers (30 per cent) and science, engineering and production technicians (where 25 per cent are women).

Although organisations such as the London Stock Exchange and the Royal Society of Chemistry have recently appointed women to their top jobs after several hundred years of history, the country is still waiting for a number of significant female “firsts” in banking, broadcasting and business.

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UK manufacturing: Let’s invest, innovate and educate Discussing what UK manufacturing needs for the future

A

s we enter the feverish period of the general election and policy ideas are shaped to win votes, many pundits would agree that our long-term economic success is dependent upon investment in infrastructure, innovation and skills. The devil’s in the detail of each initiative, but the 2008 downturn brought the composition of our economy into sharp relief and, with that, a raised national sense of the importance of domestic manufacturing.

Popular support, political consensus and policy have enabled us to make progress in rebalancing over the past five years, but the job is far from finished. Manufacturing today accounts for half of UK exports, making us the 10th largest global exporter. The sector employs 2.6 million people – a figure that has been on the rise. 72 per cent of R&D expenditure coupled with 11 per cent of UK Gross Value Added can be attributed to manufacturing.

Put simply, manufacturing matters.

The coalition’s approach to advanced manufacturing has focused broadly on innovation, skills, finance and exports. There has been equal focus on the development of industrial strategies to spearhead investment in key sectors such as automotive and aerospace. These have worked well, with notable commercial success at companies like Jaguar Land Rover and Rolls-Royce.

Innovation, or fundamental research, through our universities has been further focused on commercial outcomes, while the deployment of technology innovation centres – our high-value manufacturing Catapults have made innovation more accessible to manufacturers. Manufacturers have been encouraged to innovate through R&D tax credits and the patent box, which have been popular and helped strengthen our national edge. But more now needs to be done to create long-term success and engage the many SME manufacturers that make up our Mittelstand.

R&D investment today stands at just 1.72 per cent of GDP versus 2.06 per cent average across the EU and remains short of the previous government’s target of 2.5 per cent.

Innovation is important and at Siemens, we continue to conduct world-leading software, medical and industrial product research that has strengthened our UK manufacturing footprint. The continued ringfencing of the science budget and a boost of R&D spend to 2.5 per cent of GDP by 2020 would be a welcome policy step.

Despite the deficit, national infrastructure

investment is back on the agenda, which is encouraging and benefits business. We continue to make our own contribution to manufacturing and infrastructure through the building of a UK facility to construct and ship offshore wind turbines in Hull, which will create up to 1,000 new jobs. What will make more of these types of investments a reality is a long-term focus on infrastructure.

Businesses up and down the country are welcoming much-needed investment in roads, rail, ports and communications, such as the recently announced Northern Transport Strategy, which, in addition to HS2 and the Atlantic Gateway, will provide a boost to the north and its manufacturing sector. The quality of our mobile telephony infrastructure however is a barrier to business and needs urgent attention alongside other digital infrastructure investment.

Investment in capability and capacity are crucial to improving manufacturing growth prospects, as emphasised by government initiatives to get finance moving again through the Business Bank and other mechanisms. Now the UK must address the productivity puzzle to unlock sustained wage and output growth. Excellence in manufacturing is derived from skilled people, lean processes and increasingly, the deployment of technology to enhance quality and productivity.

The UK faces a productivity challenge – we languish significantly behind other developed economies in capital plant and equipment investment in particular. Policy instruments are arguably needed to ensure we keep up pace and match productivity levels with global manufacturing leaders such as Germany – where they are already planning for a technology-driven, fourth industrial revolution that has been labelled

Industrie 4.0, with a targeted boost of up to 30 per cent in industrial productivity.

Our tax system must be part of the answer. Largely supportive of innovation, we need to turn our attention to investment in machinery – technologies that enhance productivity – to reverse the “make do and mend” mentality that can be a strength but is arguably a weakness here. Many large-scale manufacturers now need investment certainty beyond short term Annual Investment Allowances. The AIA stands presently at £500,000 but is due to fall back to just £25,000 in December. We would support calls for it to be frozen to £1million for ten years. The EEF and many industrialists are calling for review of the business rates system that should bypass new valuations for plant and machinery upgrades. For the process industries, which make the paints, plastics, adhesives and fuels for our burgeoning transport sector, the majority of the rate bill is made up of plant and machinery and an equivalent valuation methodology should apply. There should also be consideration in the Enhanced Capital Allowances scheme for productivity enhancing automation technologies that benefit SMEs and big business alike.

The engineering skills shortage has been well documented. Some 87,000 new STEM (Science, Technology, Engineering and Mathematics) graduates are required per annum until 2020. with only 55,000 presently joining. While the sector’s image problems may take a generation to address, we are starting to turn the corner with STEM uptake levels improving from schools to university scholars. As a result, we still face a skills mismatch, with more engineering jobs than applicants, particularly where advanced knowledge and experience are required, and we remain partially dependent on foreign talent. We have seen encouraging development in domestic training levels through apprenticeships, which are once again in their ascendancy. On skills, the next government needs to develop a simplified national skills landscape that enables employers large and small to help close the skill and employability gaps that businesses continue to report. We need sustainability too – time for systems and institutions to fully develop and be understood by employers, parents and students alike.

Manufacturers play a critical part of our economic success – ensuring there is strong growth, creating skilled jobs helping Britain to become a strong trading nation again.

Together we now need to take our next step, and the next government has an opportunity to help businesses large and small to invest, innovate and educate.

Brian Holliday (left) is managing director, digital factory, Siemens UK & Ireland www.siemens.co.uk

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Giving women a helping hand up the career progression ladder

By Joanne Frearson A FIRM started by two British women over frustration about a lack of resources available to females has now grown into a global business in 50 countries and is helping women around the world advance in business.

Karen Gill and Maxine Benson started global membership network Everywoman in 1999 after they felt they were being patronised by a lot of mainstream providers when they were trying to start up a firm. “We were meeting other women who were sharing those experiences,” says Gill.

“Suddenly we realised there was a need for a different way to communicate and engage with women. We did a big piece of research for NatWest and discovered, lo and behold, that the way they were communicating with women was not helpful.”

Initially, Everywoman began as an online business, but it was not growing as fast as Gill and Benson had hoped for. IBM, their first partner, suggested they host a conference, as these events were really successful in the US. Gill says: “Our first event was in London in 2001 and it was called the National Everywoman Conference, specifically for women entrepreneurs.

That day was a defining moment because that room was on fire.

“Women could not wait to get up and have their voice heard – it was like an awakening, like we really need to do something about this. That is when we knew we were on to something.”

Since then Everywoman has grown.

It now produces numerous events and awards in various sectors, including technology, transport and logistics, manufacturing and engineering and retail. Its NatWest Everywoman Awards, which has a 13-year history,

is Britain’s most successful programme which supports female enterprise.

The awards, which open for nominations on Apr i l 6, recog nise t he achievements of dozens of women from all walks of life, highlighting what impressive role models they can be.

Both Gill and Benson have also been recognised for their achievements in women’s enterprise, gaining MBEs in 2009. But despite these advancements there are still few women at the top.

Gill explains that women and men come into the workplace at equal numbers. Then women start to go to 30 per cent in management, 20 per cent in senior management, 10 per cent executive and 5 per cent senior executives. The further up the pyramid, the fewer women there are.

Benson says: “We did a piece of research looking into what female middle managers and HR professionals were telling us about the challenges they had to get women into senior positions within the workplace.

“There was an absolute disconnect.

The female middle managers knew

Karen Gill (left) and Maxine Benson of women in business network Everywoman

they were doing a good job and believed they were getting recognised for it and were subsequently expecting a tap on the shoulder, or anticipating they would get promoted.

“The conversation on the HR side of things was that the women were doing a great job, but that they did not seem as ambitious as the men.”

Everywoman provides females with the skills to take control of their experience so they can be proactive about their career progression without having to wait for that tap on the shoulder. Gill says: “We do a lot of gender intelligence workshops and we have rolled them out across

NatWest, one of our partners. It is all based on fact – biological, scientific and psychological differences between men and women. It is jaw dropping for the men in the room.”

Research shows the performance of a company improves the more diverse the workplace is. One sector that is making a push for women in the workforce is technology.

Benson says: “There isn’t any industry that is putting the focus on wanting to get women into it more than technology. The research demonstrates that groups with diverse gender produce better results in terms of innovation and

creativity. That is universally agreed across technology now.”

“The future economy is going to be in STEM careers,” Gill says. “The appalling levels of girls studying STEM subject is going to become a big danger.

The pay gap is going to widen and widen because those are the jobs that are going to be in demand, that are going to pay really highly.”

The two believe that advancing women in all areas of business not only produces better more innovative results but is an economic imperative.

Everywoman is helping women make those advancements and is now a global business.

Awards ceremony aims to unlock doors for manufacturers A NEW awards ceremony for manufacturers is helping give the sector a set of benchmarking standards to drive improvements in business practices in the industry.

The Manufacturer Of The Year Awards, run jointly by The Manufacturer magazine and the Institution of Mechanical Engineers, is a benchmarking competition that recognises manufacturing excellence and also provides companies taking part with free, targeted

business advice. The winners will be announced on November 26 at the ICC in Birmingham.

Nick Hussey, managing director of The Manufacturer, says: “We need to get manufacturers talking to each other, more often, more appropriately, with more metrics and more visibility. It is a real opportunity to share best practice, share knowledge, share business improvement and innovation techniques and also to explore new ways of working.”

As part of the awards process, experts will visit factories to provide firms with a benchmarking report based on their knowledge experience and analysis of the business in comparison to others. Hussey hopes the report will help manufacturers understand how things like new technologies such as the internet of things will impact the sector, and that understanding best practices will help them compete on a global stage.

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UK food exports doubled in last 10 years, says report

By Joanne Frearson UK FOOD and non-alcoholic drink exports has almost doubled in value over the past 10 years, while UK dairy exports are at a record high, according to a report from the Food and Drink Federation (FDF).

Food and drink is the largest manufacturing industry in the UK and the report showed UK food and nonalcoholic drink exports were up 2.6 per cent in 2014 to £12.8billion, while UK diary exports were up 8.8 per cent to £1.4billion.

The top three product categories last year were salmon, chocolate and cheese. Cheese exports, which make up a third of the overall dairy exports, were up 5.6 per cent. Demand was high in the United States and China,

which had double-digit growth for UK food and non-alcoholic drinks. The EU remained the UK’s biggest market for food and drink exports.

Steve Barnes, director of cconomics and commercial services at the FDF, says: “This performance shows that British food and drink is in demand across the globe – a testament to our quality brands and innovative products.

High demand from international markets must be at the heart of strategy for economic growth.”

Innovative products being created

by British food and drink firms are a major reason why food and drink is outperforming on exports. The FDF is interested in funding innovation in pre-competitive research in areas such as nanotechnology and understanding how that can benefit the food industry.

He says: “How can we do stuff on packaging, which will benefit the whole industry? How can we have packaging that maybe starts to tell customers that food is starting to turn, which would benefit the whole industry potentially?”

To help keep the sector growing and address the shortage of skilled engineers in the industry, the FDF has developed a MEng Food Engineering degree, covering anything from how to get bubbles in a chocolate bar to how to turn a potato into a packet of crisps

in less than 20 minutes. The FDF believes the government announcements in the Budget to make R&D tax credits easier to access will certainly help the industry create innovative products. But the FDF would also like to see access to the funding landscape for small and medium-sized firms who make up 96.5 per cent of UK food and drink manufacturing.

“If we get funding from governments for some of these initiatives it could give the whole UK industry an

advantage over its peers,” Barnes says.

“It does not operate on huge margins, it is highly competitive – because of the speed of change in this industry you have got to be very nimble to stay abreast of the trends and keep growing your business.”

Overall, Barnes expects the UK food and drink industry to continue to develop on the back of a growing population. By firms being able to create innovative products in the industry, it will only add to this growth.

Providing the B

espoke support for tooling in the UK car manufacturing industry is giving the automotive sector a boost and helping to expand the businesses of British supply chain firms.

Richard Hill, head of automotive and manufacturing for NatWest, says: “Manufacturing and automotive has been a good news growth story in recent years.

The new challenge is how to support businesses in responding to demands brought about by that success.”

Working in collaboration with the Automotive Council, which includes representatives from the industry and government, NatWest responded to the need for bespoke support, and became the first bank to launch a dedicated Tooling Proposition last year.

The initial proposition, with an allocated fund of £25million, was designed to offer a more suitable funding option for manufacturers that required bespoke tooling for the production of components.

“Tools are developed at different stages and the outlay for paying for those tooling developments varies over time,” says Hill.

“A single tool can cost in excess of £1million and, on day one, a third of the

total cost may be incurred for high-grade materials.

“With that kind of structure and outlay, funding for this had previously been absorbed into the general working capital facilities but, due to growth in the industry, this is likely to be an inefficient and potentially unsustainable option.”

Manufacturers in the automotive supply chain are often expected to fund the purchase of the tooling for up to two years before production of the agreed parts begins and, in some cases, beyond the point at which they begin to supply the parts produced – creating a significant funding gap.

Hill added: “As demonstrated with the tooling proposition, our close engagement with the automotive industry enables us to pick up where there might be opportunities and support the industry in achieving its aspirations.”

One of the first businesses to benefit from the Tooling Finance Proposition was Midlands-based DMS. The firm received a total of £250,000 to support its purchase of specialist tooling for eight different components being made for Jaguar Land Rover models.

The product allows DMS to take on more orders without the risk that funding extra tooling could act as a drag on working capital.

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From the track to the street Pioneering F1 technology is helping to boost the wider automotive industry.

Joanne Frearson reports THE ADVANCED engineering technology of Formula One British car manufacturers is being used in the development of driverless cars and to improve the parts of road cars.

As part of the VENTURER consortium driverless car trial, Williams Advanced Engineering is testing the cars in a virtual environment using the same bespoke simulator which Formula One team drivers use to prepare for each race.

The VENTURER consortium will trial autonomous vehicles in the Bristol and South Gloucestershire council areas to explore the feasibility of driverless cars in the UK. The project will investigate the legal and insurance aspects of driverless cars and explore how the public react to such vehicles.

Craig Wilson, managing director of Williams Advanced Engineering, says: “Three new government-backed autonomous vehicle projects is an exciting step for the UK automotive industry. These projects are demonstrating that the UK is determined to

make use of the latest automation and cutting-edge technology to produce engine components for performance car manufacturers.

It is a joint venture and the result of a £22million investment supported by the company’s shareholders, the Department for Business, Innovation and Skills (BIS), the local government and Northampton Borough Council.

The facility already has a forward order book currently standing at £75million and is the only site in the UK to offer plasma ion coating, a technology that reduces engine friction and weight, and therefore reducing vehicle CO2 emissions. The new AMC will also create an additional 70 jobs and apprenticeships.

“This new centre, with its state-of-the-art technology and highly skilled workforce, will be an important contributor to British exports and the local economy as part of our economic plan,” said Prime Minister David Cameron. “This has only been made possible as a result of a real partnership between Cosworth, the government, Northampton council and the local enterprise agency.

Cosworth is building an exciting future in Northampton, and is the perfect example of a British manufacturing success story.”

remain at the forefront of emerging technologies.

“For the VENTURER project we will be using Formula One-derived simulation systems and know-how to evaluate and test driverless vehicles in a virtual environment before taking to the road.”

Elsewhere, Daventr y-based MCT E ng i neer i ng wh ic h spec ia l i se s i n manufacturing visual and structural carbonfibre components for the motor industry, has taken its skills from Formula One and applied them to the automotive industry. MCT has provided carbon fibre components for Mercedes Grand Prix, Red Bull, Force India, Cosworth and M-Sport.

Steven Szmigielski, director at MCT, explains that the company has begun using its knowledge and expertise in the high-end consumer automotive sector which were seeking to incorporate the benefits of carbon fibre into their specialist cars.

Carbon fibre is also becoming a desirable product for consumers and has led to requests by them for cosmetic as well as structural parts. MCT now supplies to Jaguar Land Rover, Aston Martin, BMW and Porsche.

Meanwhile, Northampton based Cosworth has just launched a state-of-the-art Advanced Manufacturing Centre (AMC) which will

right tools for the job Grainger & Worrall, based in Bridgnorth, also took up the funding after securing a new project with a major car manufacturer.

As well as working with the Automotive Council, NatWest has a long history of working with industry and government to understand the needs of the manufacturing sector as a whole, and where its future lies.

“If you don’t collaborate you are not going to understand your current position as well as you should and you will not see the opportunities that exist for all going forward,” Hill says. “That is where our focus is.”

“We keep close to the manufacturing industry so we can adapt the way we work to best support businesses and the impact they have on the wider economy. And we’ve developed a network of manufacturing specialist relationship managers across the UK, who support manufacturing businesses, at all stages, on the ground.”

According to Hill, there is an estimated £5billion in additional supply chain opportunity available for UK business, which has been created by unprecedented levels of investment by vehicle manufacturers such as Jaguar Land Rover, Nissan, Toyota, Ford, and General Motors.

And although there has been an increase in companies reshoring back to Great Britain, the UK is still well behind other countries. For

“The challenge is how we can help small businesses become medium and medium become large”

example, in France and Germany 60 per cent of the components for vehicles are produced domestically, according to the Automotive Council.

This figure stands at around 30 per cent in the UK – and there is now a huge effort being undertaken to redress and increase UK content in line with European counterparts.

Hill says: “Due to global market forces and rapid change brought about by new technology, investment decisions are becoming increasingly complex.

“As a component manufacturer there are many significant decisions to make, not least whether to sit next to the customer or whether to sit close to technological centres of excellence.”

Increasingly, advancements in technology are changing the relationship between the car manufacturing industry and its supply chain.

OEMs are now increasingly looking to develop

partnerships within the supply chain and want to use firms closer to key production facilities.

In order to keep the industry moving forwards, Hill believes it is important that all levels of stakeholders work together and collaborate to understand the issues that could impact manufacturing in the UK and put structures in place before they become major problems.

Hill adds: “We are working at all levels – with industry, government departments, universities and trade bodies – to deepen our insight, understand today’s challenges and, more importantly, to foresee tomorrow’s challenges on the journey.”

Automotive&Manufacturing @NatWest.com www.natwest.co.uk

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Homeward bound T

echnology is developing so fast it is changing how the automotive manufacturing industry does business. Companies are no longer just looking at developing factories around the world but creating joint ventures on British soil so they can respond quickly and adapt to these changes.

Historically the trend has been for British car manufacturers to form links with global suppliers and have identical factories around the world.

Carol Burke (inset), managing director at Unipart Manufacturing Group (UMG), says: “What happened was that globalisation was used to lower costs. That was fine when the product was basic and you needed to set up a plant in China, but there has been an increasing number of recalls and problems that exist within those plants.

“Global sourcing has often been seen as an approach to driving down costs and creating strong links between companies in different geographies. UMG went down that route with global partners for many years.

But we found that technology was being developed at an incredibly fast rate and it was almost impossible to co-ordinate our own research and development opportunities with those of some of our partners.

“We revisited our strategy and evaluated the products that we were making. We found that using our own skills and resources we could move more quickly into higher-value, advanced engineering products. We recognised that we were essentially an engineering company with a unique approach, that we call The Unipart Way, which would enable us to harness the skills and innovation of our people to produce a whole new range of hi-tech products. ”To stay ahead of the game, UMG decided to invest in the facilities and equipment for sectors which needed to develop products that required more sophisticated advanced engineering capability. UMG chose gasoline direct injection (GDI) technology, which had a predicated high-growth trajectory across gasoline vehicle manufacture in Europe, the USA and Asia, and purchased a Midlands-based fuel rail manufacturer.

Burke continues: “What we saw was an opportunity – that if we could get in here and make these products successfully, we could compete against the toughest global competition. It is unusual in the global automotive industry to find those kinds of opportunities.”

The GDI products UMG made started to gain traction and the manufacturer secured a large contract with Ford.

“We started to make these products really well and are probably now recognised as the highest-quality supplier of GDI fuel rails,” she says. “We are securing new contracts on the back of that.”

Global partners can sometimes inhibit speed and agility and therefore, in order to foster creativity and innovation back in the UK, UMG joined forces with Coventry University in a bid to keep up with technology and develop new products beneficial to the industry.

In 2014, the joint venture created the £32million-plus Institute for Advanced Manufacturing and Engineering (AME) centre to train students in this area. “If you have a centre of excellence which you can control, then you will be more secure in the global marketplace,” says Burke.

The partnership is a UK first and offers students three-year BEng and four-year MEng degrees, based on activity-led learning. It brings together academia, industry and research and development on the factory floor, with the aim of developing new products, processes and technologies. Presently there are 23

By nuturing British engineering talent, we can re-energise the UK’s manufacturing sectors undergraduates and six postgraduates undertaking courses.

Burke says: “We set out to put undergraduates into a facility so they would study their undergraduate degree in a real working environment from day one. That is hugely valuable in generating industry-ready graduates.

“If we do not get enough people into our industry, then we will not be able to grow at the rate that we need to. There is a big story to be told about increasing the number of engineers and apprenticeship programmes.”

The engineers on the courses benefit from the experience of being able to work with customers, while existing UMG employees gain from access to continuous professional development.

UMG has also partnered with Coventry University to map out the technology road maps that exist for all the products in the business, so they can be prepared for the future. “We are doing research and development in the institute that underpins those road maps,” says Burke.

“It is supporting our manufacturing business and can lead to contracts for Unipart, its customers and suppliers.”

The technology that UMG is developing with

“We needed to revisit our strategy and look at the products we are making. We need to look at how we can fund our business and develop the skills needed to make them.” Carol Burke, managing director, Unipart Manufacturing Group

Above: Unipart Manufacturing is playing a major role in the development of cleaner and more efficient engines

Coventry University is not only helping British automotive companies, but is being used in other sectors. Unipart has extensive expertise in designing, servicing and manufacturing heat exchange devices that can be used in a range of industries.

Burke says: “We sense the automotive sector has a huge amount to offer industries in the UK, particularly the growth industries like power generation, oil and gas – all things that the country is going to spend an enormous amount of money on.

In the area of heat exchange, hi-tech welding technology used in the automotive sector and developed by the AME institute can be used in manufacturing for heat exchange systems in industries such as nuclear power.

“We can apply all the know-how and expertise of the automotive sector – which is often described as one of the most sophisticated engineering sectors in the world – to actually underpin growth in other industries.

“We committed to building a world-class manufacturing business in the late 1980s when people had dismissed the country’s ability to compete in manufacturing successfully. Today Britain is one of the best places in Europe to manufacture products.

“By keeping up-to-date with new technologies by making products on British soil and educating young engineers in these latest technologies, we can foster innovation. UK manufacturers can once again become a key driver in growth in our economy.”

Unipart Manufacturing is part of the Unipart Group – the leading provider of logistics, manufacturing and consultancy services employing around 8,000 people worldwide marketing.umg@unipart.com www.unipartmanufacturing.co.uk

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Callum Bentley

Editor, The Manufacturer

W

HAT IS more important, the product or the service that the product provides?

This is the paradox manufacturing businesses are beginning to address as companies revaluate the way they interact with their customers.

Servitisation (or manufacturing services when applied to the manufacturing industry) really kicked off during the last recession. Manufacturers saw their revenue streams were under attack and, in order to defend them, many accepted the move to a service-based business model. Now that we move further from recession, the same model is no longer just a defence against dropping product sales, but a legitimate way to grow a business.

At present, the UK is leading the world in adoption of servitisation. However, there are numerous reasons why the model isn’t wholly pervasive, including: lack of awareness of the idea; improper understanding of how to transition to servitisation; and shifting the mindsets of an established workforce.

In an attempt to promote the capabilities of manufacturing services and begin the process of shifting the perception, The Manufacturer recently established the Manufacturing Services Thought Leadership Network (MSTLN). A key founder and steering committee member is Professor Tim Baines from the Aston Business School in Birmingham, one of the world’s leading figures in the realm of servitisation.

Speaking to The Manufacturer, Professor Baines said t he business school had worked w it h 50

Made in Britain

9

Why servitisation is the new buzzword when it comes to improving customer experience small-to-medium-sized businesses in the West Midlands in the past three years, introducing them to the benefits of a service-based business model.

“Our work has been to introduce these companies to the concept of servitisation – in particular, advanced services – and we’ve seen a real appetite among these companies to understand the concept,” he said.

“Not all of them have been successful in developing a servitisation strategy because of various circumstances, but we’ve had about 20 of the 50 which have made real progress. We’ve measured the growth value added achieved through these companies and it is somewhere in the region of £6million across the SME companies.”

The goal these companies are trying to achieve is replicated successfully by long-time practitioners of servitisation, such as Rolls-Royce, Alstom and Bombardier.

Rolls-Royce is famous in the industrial sector for its “power by the hour” model. Kicking off in the late 1980s, Rolls-Royce reinvented the term and practice where instead of simply building and supplying its engines to its customers, it would instead demand a fixed, ongoing cost as a way of

allowing its customers to avoid unexpected repair costs throughout the engine’s life cycle.

“I am thoroughly convinced that it [servitisation] has a strong contribution to make to the future success of UK manufacturing,” Professor Baines said. “It will take an awfully long time for the ideas of servitisation to be truly embedded inside of manufacturing companies, but I’m not going anywhere in a hurry.

“The conversation has been going a little while now but, like innovation, what you’re seeing at this stage is lots of threads. It’s really in the past 18 months that those threads have coalesced as one set of ideas about servitisation. And those sets of ideas are only owned by a few people. The job is one of engagement with the community about steering the proliferation of these ideas and getting these ideas out there.”

Find out more about the Manufacturing Services Thought Leadership Network (MSTLN) at www.mstln.com and @MSTLN_UK

Reaching new heights and winning the war on space with a new forklift design

W

ith manufacturing now returning as the lion of the British economy, companies are facing the dualpronged challenge of having to create a slick, UK-based production facility while, at the same time, offering innovative products to cope with the changes and challenges in UK and global markets.

It’s a challenge which produces unique demands on individual enterprises but one which Bendi, an articulated forklift truck manufacturer in the West Midlands, is approaching with energy as well as no little success.

Like many firms over the past decade, Bendi was attracted by the cost-benefits of outsourcing some of its work abroad, but soon realised that it needed to have more control over the final product. So, with a growing order book and international costs rising, Bendi decided to return home.

Simon Brown, MD of Bendi, explains how it worked. “We invested heavily in buildings, machines and, most importantly, people, to accommodate the new products and to allow for increasing volume in existing lines,” he

says. “The increase in orders both here in the UK and in export sales has thrown up some challenges, but they are nice problems to have. We already had a highly skilled and dedicated workforce in the factory so to create even more skilled UK jobs has been very pleasing for everyone here. And we’ve managed to keep business in the UK despite not getting any EU help that other manufactures get.”

Bendi has not only established its reputation as an innovator in its field but is also recognised as the global provocateur of the “warehouse revolution” – what Brown describes as “the war on wasted space”.

The original Bendi truck was invented to do the work of several trucks but, with ever-increasing demands for greater financial and operational efficiencies, customers were soon demanding additional performance requirements: the ability to fit into smaller aisles, make taller lifts and lift heavier weights to those heights. The Bendi has evolved into a high-performance warehouse truck that can operate inside and out and deal with narrow aisles.

The shift in business from the high street to the web has changed the distribution

requirements from B2B to B2C, and put ever-increasing demands on operational efficiencies. Consumers’ expectations to “click and receive” within days mean that the ratio of picking in warehouses is increasing exponentially. It’s a dev elopment which has forced a change in the warehouse concept, and the introduction of Bendi’s latest product – the award-winning Bendi Order Picker.

Winner of the prestigious FLTA Innovation Award, the Bendi Articulated Order Picker is the first truck designed for “self-replenishment”. With two pallethandling locations, the operator can pick and replenish without the need to call for another machine, thus meaning the Bendi Order Picker can take advantage of its space-saving aisle performance, resulting in a near 50 per cent reduction in wasted space and a more efficient picking operation.

By operating efficiently in aisles as narrow as 1.6 metres and with the ability to lift to heights of more than 12 metres, there is now a Bendi to suit all applications and budgets.

01527 527411 www.bendi.co.uk

Business Reporter · April 2015

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Made in Britain

Tim Adler

“

E

XPORTS will be transmitted, not transported,” read the HSBC ad poster as I arrived back at Gatwick Airport this week.

Every business has had to reinvent itself as a digital business, taming the disruptive power of the internet. Everything has been turned on its head. Books, DVDs and LPs have now become luxury items as we consume entertainment digitally now. Small luxury items such as jewellery will be next, as 3D printers take hold. Eventually the idea of old-fashioned manufacturing and exporting goods by truck and container ship will seem quaint.

So where does this leave Britain, the birthplace of the Industrial Revolution, the grand canals and great engineers such as Isambard Kingdom Brunel, if traditional manufacturing becomes obsolete? What exactly will there be left to be Made in Britain?

Travelling around England over the past nine months for Business Reporter, it is clear to me that Britain is well placed to become one of the technological and innovation hubs of the world.

Both main political parties understand the future lies in technology and innovation. Even dear UKIP is talking about scrapping university fees for science and maths degrees. One of the most exciting innovations I have witnessed over the

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Why Britain is set global innovation past nine months has been in Driverless cars are the field of robotic process another when-not-if automation (RPA) – the technology that has automat ion of bor ing, enormous potential. repetitive tasks such as Coventry-based RDM maintaining an IT system or Group is building three handling basic customer prototype driverless enquiries. The London office pods for a trial scheme of tech firm IPsoft is in Milton Keynes this developing a tr uly year. So confident is RDM revolutionary desktop about the future of android called Amelia to driverless technology, it How Business Technology handle regular IT helpdesk covered the UK’s tech predicts it will be turning queries. A helpful blonde sector earlier this year over more than £25million by 2020. digital avatar pops up to answer your questions, Meanwhile, a visit to an Ark data centre in freeing up overstretched IT departments to do Farnborough, Hampshire, showed me how a something more creative. The implications are British company is spearheading the use of green enormous. The kind of mid-level knowledge technology when building vast server farms. If work that Amelia hopes to take the drudgery data is the new oil, then data centres are where out of represents 25 per cent of the economy, the barrels are stored. “My key word is ‘disruptive.’ according to the company.

I want to disrupt this market,” Steve Hall of Ark

told me. “This is a fantastic good news story for the UK.” The Luddite in me worried about the job implications of this new technology. What will happen to all those call centre workers? Why would you flag down a manned taxi when you can summon a driverless car with your phone?

I now believe new jobs will be created because of this technology. The truth is that our children will be doing jobs we cannot even conceive of yet. Who would have thought even five years ago that whole departments would be devoted to analysing web traffic?

Of course, all the companies above are based in the South East, and there is a danger this white heat of technology – to borrow a phrase from Harold Wilson – is too focused on the Home Counties. George Osborne has thrown his weight behind establishing a world-class medical research facility in the north along the lines of the Francis Crick Institute in London. Osborne

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to become a powerhouse has also backed the idea of creating a “northern global powerhouse” – extending the London-toBirmingham high-speed rail network to connect Manchester and Leeds. Separately, ex-Goldman Sachs economist Jim O’Neill told me in October about his proposal for fast train services to connect Manchester, Sheffield and Leeds.

The problem, as ever, is going to be finding money to support these visions. Risk-averse banks need to loosen their lending criteria. As the saying goes, a banker is somebody who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

Broadcaster Melvyn Bragg explained to me how difficult it was for him to set up even the most basic of bank accounts when he decided to go into business at the ripe old age of 70. And that was without even borrowing any money. “God help small businesses in this country, that’s what I say, God help them. No wonder they’re packing up by the million. It’s a disgrace,” he said.

Entrepreneurial tech businesses might be better off talking to private equity investors such as Amanda Staveley’s PCP Capital Partners, which has billions for UK plc through Middle East backers. Originally focused on property, Staveley comes from a tech background. She invests her own cash alongside her investors.

“You’ve got to be prepared to put your own skin in the game. It’s easier to persuade investors when you yourself are in the deal,” she told me.

Back to 3D printers, pop star and technology cheerleader Will.i.am has predicted that eventually one day we will be able to print an entire human being. Companies and researchers around the world are currently working on ways of 3D printing organs, parts of organs, blood vessels, and more. In fact, one company has already printed off liver tissue for commercial use. The commercial opportunities are huge.

So, which British company is ready to accept Will.i.am’s challenge?

The fruits of British ingenuity include (clockwise) highspeed rail links, eco-friendly server farms, 3D printing and driverless cars

People, polymers and passion: The key to enhanced performance worldwide

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K-based engineering firm Nylacast is renowned for innovative plastic solutions. The word “plastic” can sometimes be a vague term, with many perceiving it as an inferior, low-grade material generally used for large-volume production of simple items from toys to carrier bags. However, when considering the extreme, arduous environments faced within industry today, it is clear to see how Nylacast polymers are widely used and proven to increase the performance of numerous operations worldwide, while also increasing efficiency.

Established in the late 1960s, Nylacast today employs more than 440 people worldwide, most of whom are based in Leicester, where the company’s main manufacturing takes place and its products exported to more than 43 countries.

With extensive project experience stretching from the North Sea through to the Gulf of Mexico,

Nylacast exports more than 70 per cent of its engineering solutions, working directly with customers from strategically located facilities in the UK, USA and South Africa.

Specialising in the creation of engineering polymer solutions from concept to completion, Nylacast works closely with a client base consisting of blue-chip organisations in various industries.

The company works hard to understand challenging

environments and to develop materials and components which unlock the performance and efficiency of applications and projects, which is often lost through the use of traditional materials such as steel and bronze.

Through the combined expertise and knowledge of experienced industry engineers coupled with in-house chemists, the polymer specialist is able to create and custom-formulate engineering

materials which are corrosion and chemical resistant, lightweight, almost 1/7th the weight of steel and with a co-efficient of friction as low as 0.08, delivering an extremely high resistance to wear and abrasion. Mussa Mahomed, Nylacast Group CEO, said: “The advantages that engineering polymers provide to industry, such as lighter weight, greater durability and lower lifetime costs, have all contributed to our growth in export markets.”

From complex components through to high-volume products, the UK-based manufacturer has developed endless amounts of safety-critical components which impact on everyday life, from offshore and pipeline components through to wear pads in construction equipment to the worm wheels located in steering systems found in more than 60 million vehicles worldwide.

Innovation is a key characteristic for the engineering firm in addition to its main assets – people,

polymers and passion. This is evident from the number of awards the company has recently received in recognition of its commitment to the development of people and skills, such as the British Engineering Excellence Award for the material application of the year.

With 96,300 engineers, scientists and technologists needed to replace people due to retire in 2016 (Source:IER), Nylacast is physically combatting this skills shortage through its Engineering Training Academy, which opened in spring 2014. The academy delivers award-winning training, development and apprenticeship programmes to students as well as current staff. This year the Nylacast Graduate Training Programme was launched, resulting in the company training and up-skilling current staff, school and college leavers and university graduates. engineer@nylacast.com www.nylacast.com

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Made in Britain

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William Ward Businessman Ward founded the Clipper Round The World Yacht Race with Sir Robin Knox-Johnston in 1995, with the aim of enabling people from non-sailing backgrounds to participate in the sport

Roger W Smith After teaching himself watchmaking, Smith worked with celebrated horologist George Daniels, before setting up his own bespoke watchmaking firm, which produces just 10 timepieces per year

Joanne Frearson

T

HE UK HAS long had much to offer in business, culture and academia, with world-class universities, ground breaking research, hi-tech start-ups and a healthy entrepreneurial streak.

It is the home to some of the world’s best-loved designers, musicians, artists and brands.

British businesses are flourishing, both in the UK and overseas. Government programmes are helping to take UK companies to the next level internationally and showing the world what the Brits are really capable of.

The GREAT Britain campaign, launched in 2012 by Prime Minister David Cameron to capitalise on the interest generated by the Diamond Jubilee and the 2012 London Olympics and Paralympics, has now delivered a direct return to the British economy of more than £1billion. The campaign showcases the very best of what the UK has to offer in business, film, fashion, food, design, technology, sport and knowledge, examples of which can be seen in 144 countries and nearly 300 cities.

Its 26 ambassadors are at the heads of their respective fields, from designer and entrepreneur Kelly Hoppen MBE to Clipper Ventures (Round the World Yacht Race) CEO William Ward and bespoke watchmaker Roger W Smith. All have been recognised by David Cameron for their personal support and contribution to the campaign.

In an exclusive inter v iew w ith the ambassadors, Business Reporter discovered how the campaign is giving a real push to UK companies and helping them overseas.

Its latest campaign has seen some of the UK’s highest-profile business people travel to Shanghai

PM sparks campaig back into British ma to be a part of the GREAT Festival of Creativity, with the aim of building opportunities for encouraging trade, investment and commercial partnerships between the UK and China’s creative industries.

“In the last 20 years as a country, we have absolutely excelled in every single area in business whether it is art, fashion, architecture or food,” Kelly Hoppen tells Business Reporter, just before her trip to Shanghai to promote the GREAT Festival of Creativity. “We are pioneering very much as a country to help small businesses.

“I was at Downing Street and David Cameron was talking about how we are exporting a lot to China. It is such an amazing country, so much growth and to be affiliated with that and having the Chinese coming to Britain is all about growing the economy on both sides.”

Roger W Smith, meanwhile, who also was part of the Shanghai GREAT Festival of Creativity, says: “With very small and very specialised businesses like Roger W Smith, our contribution to the economy – as GREAT Ambassadors – is about supporting Britain’s reputation as a world leader in creativity, innovation and technology.

“As the world’s only maker of hand-made watches, we enrich that narrative, but the GREAT

Campaign provides the platform to link all those stories together and amplify them under a unique, consistent and powerful brand – GREAT Britain.”

The festival, a partnership between the government and the private sector, is expected to bring £150million to the UK economy over

the next five years. The festival, launched by HRH The Duke of Cambridge, also featured Jo Malone, Sir Martin Sorrell, Sir John Sorrell, Sir Tim Berners-Lee, Thomas Heatherwick, Jack Ma and Liang Xinjun. For those businesses unsure about how to set up overseas, UKTI and the GREAT campaign are also helping educate entrepreneurs in local market of other countries to overcome cultural barriers, differences in consumer tastes and customs they may face.

“It is little things like getting to know the country you are working in, no matter where it is, understand the cultural differences,” Hoppen adds. “Get as much information, be true to your brand and whatever your differences are, make sure you talk about it and if there is any heritage, highlight it hugely.

“Diversify your business. If a product doesn’t work in one market it does not mean it will not work in another. Plan and plan – get as much information from the right sources as possible.

“I use Skype to make connections to speak to people, I don’t always hide behind emails and find a mentor that is absolutely critical. People in Asia, for example, like to have a conversation and see a face – get as far up to the top as possible, be tenacious, speak to the chairman. There are certain things that are very important. When

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Why the Catapult is putting Britain in pole position

T Kelly Hoppen MBE An award-winning interior designer and entrepreneur, Hoppen has worked on many high-profile projects. She has also appeared on Dragons’ Den

gn to put the great anufacturing you hand a business card, hand it with two hands.”

The Clipper Round the World Yacht Race is an example of how to get it right globally. It has been promoting the GREAT campaign in major ports of call on six continents. Says William Ward: “We have not only developed into a successful British business in our own right, attracting overseas income and contributing millions into the local economy, but we have also created a unique global marketing platform that has helped other UK organisations and destinations grow their export markets, boost trade and tourism, and attract inward investment.

“I’m very pleased that the Clipper Race both features in the GREAT Campaign and works with it to promote the UK successfully around the world.”

Hoppen has many words of wisdom for businesses who are trying to start up or crack overseas markets. She is also the face of BTube, a new business YouTube network, which gives people all sorts of advice, from writing a business plan, trading overseas, securing funding or selling a business.

She says: “It is very frightening for young people. I say don’t be frightened, but I know it is.

But when you have knowledge about something you can be more prepared to deal with what

Above: Duncan Heath, Barbara Broccoli, Jo Malone, William Ward, Roger W Smith, Zaha Hadid, Darren Styles, Tom Daley, Louise Kennedy, Stella McCartney, David Cameron, Ken Hom, Roja Dove, Kelly Hoppen, Marigay McKee, Katherine Jenkins, Brent Hoberman, David Bailey; Opposite: the Duke of Cambridge welcomes visitors to the Great Festival of Creativity in Shanghai

happens. Don’t be frightened to ask and network your pants off. You are going to have knocks on the way. I have them every day, but you just pick yourself up and just go for it. We have to continue being focused, being positive and doing our day jobs to build our businesses.

“You have to nurture these businesses in the same way you nurture your relationships in your personal life. There is that saying it takes a second to break up and a lifetime to become a friend. It is the same in businesses. Every day is a new day.

Every day has got new problems and new greatness. You just have to embrace them and not panic.

“You can start with very little capital and there is a wealth of free resources and initiatives such as UKTI to help. This is a great sort of platform for people to start off. Small companies are getting investment. I have seen that in the Dragons’ Den where people come in and receive a small amount of money to create a bigger pot of money.”

The GREAT campaign is helping to keep British business at the forefront internationally as well as providing an economic benefit to the country. Its ambassadors are the world’s best and UK businesses wanting to grow in an international market can learn from them.

he UK excels at generating great innovative ideas, but has historically struggled to capture the full benefit of those innovations. We’ve been missing the capability to bridge the gap between invention and commercial UK-based production.

We now have the tools to do this in the form of the High Value Manufacturing (HVM) Catapult, a governmentsponsored programme with cross-party support.

The HVM Catapult was established just under four years ago and has already proved to be an unqualified success. We take much of the risk out of innovation by offering open access, world-class, industrial scale equipment across all aspects of manufacturing. The overwhelming industry demand and financial contribution for our services shows us that we’ve got our offer right.

With more than £450million of assets and more than 1,500 specialist staff, we make a real and significant difference. Our equipment, expertise and collaborative approach helps

industry take the risk to develop radically new manufacturing technologies which make Made in Britain a high-value commercial reality, based on cost and productivity.

There is no better antidote to offshoring than innovation.

We find that our offer persuades companies not to offshore in the first place.

Multinationals work with us to develop new technologies which can result in major production investment. Examples of this are the two Rolls-Royce factories that were opened in Yorkshire and the North East in 2014. Smaller companies, such as Polyphotonix, used our expertise and facilities to help to develop their optical eye mask, predicted to save the NHS £1billion a year.

This is an exciting time for us. We are competing with other nations who also covet high value manufacturing.

With our world class ability to create the ideas from our research base and our new capability to deliver them through the Catapult, the UK is in a great position.

Dick Elsy (below) is chief executive, HVM Catapult 0121 506 9780 info@hvm.catapult.org.uk

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Britain’s engineers deserve more government support

T

he Institution of Engineering and Technology (IET) has launched its general election campaign with a call on a future government to introduce policies to help ensure engineering fulfils its potential to boost the UK economy and improve our everyday lives. Calls include increased funding for innovation, for example by growing the UK’s network of catapult technology transfer centres, and for more help for smaller manufacturing businesses to grow their businesses and create new jobs.

Margaret Wood from the IET says: “We need more of the results of our worldbeating research to be exploited and developed in the UK. By encouraging investment across the product development cycle and helping companies in the UK scale up new ideas for commercial success, the government would enable manufacturing to deliver huge benefits to the UK economy.

“Smaller businesses are often behind the most exciting innovations, but lack the time

and knowledge to access government support schemes. By creating a series of local networks to advise on the support available, the government could dramatically increase take-up for these schemes. And we would see a far greater number of British ideas being developed and commercialised here rather than overseas.”

Another call is to make energy efficiency a higher political priority and introduce long-term energy policies to enable the UK to become a global leader in climate change mitigation. Dr Simon Harrison, chair of the IET’s Energy Policy Panel, says: “Global momentum towards mitigating climate change has been increasing fast, with China and the USA among other countries taking much more assertive positions in recent years. We need the UK to continue to show leadership, not only to help drive global action but also for its own economic benefits through the export of innovative low-carbon technologies, services and equipment.”

Communications is another area where the UK is well placed to become a global

leader. Professor Will Stewart, a communications expert from the IET, points out that “high-quality mobile access to data is becoming more and more critical to people in both their business and personal lives. Professor Stewart adds: “The UK is already a global leader in e-commerce and there is a genuine opportunity for it to become a leader in the next generation of mobile and fixed networks too. This includes thinking about ‘Demand Attentive Networks’, where government and the telecommunications industry focus on how to improve the quality of networks so that they can adapt in a smart way to what people are trying to do via their mobile phone networks.”

Other calls in the IET general election campaign include: Transport Long-term investment in a connected UK transport system will

improve reliability, comfort and speed; reduce congestion and emissions; and avoid big transport investments becoming white elephants.

IT A single government department to tackle cyber-security, e-commerce and privacy should be set up to create the legislation the UK needs for a 21st century digital economy.

Education To address the engineering skills gap, Ofsted should introduce specific evaluation criteria to monitor STEM teaching in schools, together with schemes and incentives to promote upskilling and retraining the work age population.

To read the full IET general election campaign, please visit www.theiet.org/ election2015 or watch our short film at https://youtu.be/AhNxBf1aI4Q

Engineering growth: UK automotive industry moves into top gear

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he UK automotive industry is undergoing a renaissance.

After years of stagnation, the industry saw a 1.2 per cent increase in the number of cars manufactured recently, making 2014 the strongest annual performance since 2007.

Domestic registrations for new cars were up 8 per cent in 2014.

Exports, too, have begun to accelerate – and China is now the largest overseas market for British cars following a five-fold increase in exports since 2009.

Naturally, more workers are needed to meet this resurgent demand, and a skills shortage could potentially stall growth in the future. We have already seen a growing demand for temporary and flexible workers outside of seasonal productions periods. The talent pool has become shallower – the number of qualified engineers working in the UK fell by almost 7 per cent between 2008 and 2013.

Our research suggests the industry will need 365,000 engineers by 2050

to meet demand. In response to this, Randstad has added Randstad Skills to its portfolio. The only UK agency accredited by the Learning Skills Council and Skills Funding Agency, it provides apprenticeships, vocational training and work-based learning aligned with the UK’s future workforce needs.

Fortunately, as the automotive industry has revived, there has been a corresponding rise in its

popularity. In 2011, 36 per cent of respondents polled as part of the annual Randstad Award said they would like to work in the sector.

By 2013, this had risen to 39 per cent. So there’s a long-term supply of willing (if not necessarily skilled) workers. But that doesn’t mean that the solution to the shortage of skills labour is for manufacturers to build a traditional workforce dominated by white, full-time, permanent

workers – to recreate a blue-collar workforce straight out of the 1970s.

If fact, there is no one-size-fits-all solution – different manufacturers (and their suppliers) will have different demands. Because of this, Randstad Inhouse Services has a service delivery model aligned to vertical markets and, by using a bespoke economic modelling tool, future labour skill shortages can be predicted and workers upskilled to meet future demand predictions.

Expert recruitment and management of the workforce can help tackle the challenges presented by the skills shortage in a number of ways. Randstad’s book on meeting the challenges of the skills shortage, Bridging the Gap, shows part-time work, fixed-term contracts, and temporary agency work are a prerequisite for high labour force participation in a modern economy – and are particularly important to attracting more women to the workforce. As more manufacturers have adopted these policies, we’ve seen the number of women in construction and engineering jobs

soar – from 6 per cent in 2005 to 16 per cent today.

Total workforce management can also increase the productivity of existing workers, help lower staff turnover and reduce staff costs. That drives improvements in the bottom line. By working in partnership with our clients, Randstad Inhouse Services have delivered cost savings of between £50,000 and £2million to 70 per cent of our clients. Employers also need to embrace talent-cyclical workforce planning, and improve their information management.

Given the skill shortage currently engulfing the industry, it’s the only way for automotive manufacturers to win the escalating war for talent.

Sally Cleary is managing director, Randstad Inhouse Services sally.cleary@randstad.co.uk 1. Automotive Council UK – UK manufacturing figures www.automotivecouncil.co.uk/2015/01/uk-carmanufacturing-up-1-2-in-2014 2. www.automotivecouncil.co.uk/2015/01/uk-carmanufacturing-up-1-2-in-2014 3. www.thisismoney.co.uk/money/news/ article-2959739/Chinese-demand-drive-rise-UKcar-sales.html

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Made in Britain

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Inspector Dogberry

BT is creating 1,000 new apprenticeships and graduate jobs for young people in the UK, in a range of areas, including software development, IT, engineering and digital technology.

The 700 apprenticeship

A report by the British Business

Bank also has plans to invest

to access alternative forms of

and 300 graduate jobs that

Bank has found that equity

£400million of new funding

finance which the big banks are

will be created are across the

investment in small businesses

over the next three years in

currently falling short on,” said

UK, in cities such as London,

has more than doubled over

venture capital as well as deliver

Vince Cable, business secretary.

Glasgow, Belfast, Cardiff,

the past three years.

the pilot for the “Help to Grow”

The number of deals

“The availability of long-term

Newcastle, Manchester

scheme, investing £100million in

finance has been a longstanding

completed in the first three

“growth loans” for high-potential

problem, but this new report

In addition to the

quarters of 2014 was up by

businesses. It will also produce

shows how we have opened

new apprenticeships,

170 per cent compared with

a regular tracker of small business

and Leeds.

up access to equity finance.

BT also reiterated its

the same period in 2011,

equity investment

The British Business Bank

commitment to tackling

while the amount

in the UK.

will play an increasingly

youth unemployment,

important role in filing in the

by providing up to 1,000

of investment increased by 125 per cent.

The British Business

“I set up the British Business

remaining gaps, including

Bank two years

investing £400million in

ago to enable

venture capital over the

businesses

International Passenger Survey figures show that overseas visitors spent £21.7billion in Britain last year, 3 per cent up on 2013 – a new record in both nominal and real terms.

The number of inbound visits reached a record 34.8 million, up by nearly two million on 2013.

Inbound tourism from North America delivered annual visit growth of 4 per cent last year to 3.7 million.

VisitBritain is currently running its Countryside is GREAT campaign in the US to boost visits to a wider range of UK locations. With the current strengthening of the pound against the US dollar, there is real potential for further growth from this market going forward.

next three years.”

vocational training and work placements for out of work youngsters in 2015/16.

Employ of the Rovers Dogberry is quite fond of taking

our customers and for our own

long drives in the countryside

employees, creating opportunities

and was delighted to hear British

for more people to be part of

car brand Jaguar Land Rover

the Jaguar Land Rover

is planning to create 1,300

experience.”

new UK jobs at its Solihull manufacturing plant. CEO Dr Ralf Speth says: “This demonstrates

By Matt Smith, web editor

Richard Branson’s blog https://www.virgin.com/ richard-branson British businessman and Virgin Group founder Richard Branson covers a wide range of subjects on his personal blog. Expect to find posts on everything from the firm’s Formula E team to the future of fundraising, the war on drugs and tips on how to grow your own business.

Kelly Hoppen http://blog. kellyhoppeninteractive.com Designer, author and former Dragon Kelly Hoppen keeps a record of her adventures on her website’s blog section. Recent posts include a tour of the Maison Objet trade fair in Paris and news on her work as an ambassador for the GREAT campaign, which you can read about on page 12.

our commitment to the UK and

BizBritain Blog www.bizbritain.org/blog.html This blog is run by BizBritain, an organisation set up to support young entrepreneurs opting not to go to university. It covers business news affecting entrepreneurs, as well as providing more practical advice on the day-to-day running of a business, from accounting software to planning for growth.

BQF Innovation Blog www.bqf.org.uk/innovation

the advancement of a hi-tech, high skilled, manufacturing-led economy.

“Jaguar Land Rover is committed to delivering more great products.

We want to offer customers greater choice, with even more exciting vehicles, crafted with that special British flair. We want

Twitter: @dogberryTweets

to improve the quality of life for

Clear (£3.99 – iOS)

Developed by Brighton-based studio Realmac Software, this minimalist to-do list has been downloaded more than 2.5 million times.

Materials World (TBC – Android, iOS)

Keep up with the latest precious metals, mining and extraction news with the Materials World app, which launched last week.

For those aiming to become the next great British businessperson, the British Quality Foundation’s blog brings together news on the performance of the nation’s businesses and food for thought on topics including leadership, entrepreneurship and innovation in business.

Top gear! Supplying the best worldwide

U

K companies are the biggest supplier of cars, engines and gearboxes to the worldwide motorsport industry. Government UKTI missions to overseas countries have been helping to grow exports in the sector, while employee shareownership schemes, apprenticeship and graduate recruitment programmes are supporting the nurturing of talent in the industry.

Peter Digby, managing director at Xtrac, says “UKTI has helped us go out and see countries. We have two offices in America and would not have opened those if I had not been on a UKTI trade mission 14 years ago to see what was there. We have also been on other missions to Europe and Asia.”

Exports now account for 70 per cent of Xtrac’s turnover.

Its biggest export markets are North and South America.

“We are supplying the world’s biggest motor race, the Indianapolis 500. Every single car uses our gearbox,”

15

he says. “We also have a growing market in South America – Brazil, Argentina, Uruguay, and many of the Formula 1 teams are also using our gear components.”

At Xtrac, an employee share-ownership scheme as well as apprenticeship and graduate recruitment programmes are also helping to grow talent in the firm. Xtrac took on five apprentices and four graduates this year.

Through Xtrac’s share-ownership scheme, the management and employees on the factory floor own 100 per cent of the company. “All the guys assist in making the decisions on the machinery,” Digby says.

“They help us form the strategy and the growth of the business and they are the ones working hard over the winter months to make sure we get everything on the grid for the first races of the season. Employee ownership helps management retention, staff participation and motivation – we really are a close team.”

01635 293800 www.xtrac.com

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How Britain can keep driving growth and innovation

U

K universities have rightly seen long-standing public investment in fundamental and curiosity-driven research. But who is looking after the more immediate innovation needs of businesses and public services? The capacity to turn innovations into wealth and social benefit relies on the innovation, research and technology (IRT) sector to supply specialist support to help pull through new technology into everyday use.

A recent independent study of the impact of the IRT sector on the UK economy (Oxford Economics, 2014) shows the extent to which the sector succeeds in punching above its weight, dwarfing the activities of Germany’s Fraunhofer Institutes. It contributes catalytic impact of over £32billion (2.3 per cent) to UK GDP, generating more than £13billion in annual

tax revenues, but consuming just 0.3 per cent of government spend annually!

The sector provides skills, facilities and knowledge to translate technological innovations into commercial business and public services. It includes Catapult Centres, independent research and technology organisations, many government public sector research establishments, some specialist private companies and university enterprise offices. It employs 57,000 scientists, engineers and technologists (equivalent to the Russell Group’s academic workforce). Its organisations have grown by 2.5 per cent yearly (mean) since 2006, and their historically high productivity has remained strong, despite national economic stagnation.

In addition to supplying practical scientific and technical skills and experience, as well as development facilities and training, the sector provides help with demonstrating performance at scale, user

benefits, and compliance with regulation and standards. Such activities are part and parcel of the progressive risk-reduction needed to reach technological and commercial maturity.

As Britain emerges from the worst recession since the Second World War, we must waste no time exploiting this world-class asset. AIRTO’s members are committed to driving 4 per cent yearly real-term growth over the next decade. The next government must, in partnership with business, ensure that our national innovation infrastructure is sustained and developed, that the necessary STEM and business skills are built up, and that, once matured, innovation becomes embedded in both our public services and business – whichever party governs us to 2020.

Professor Richard Brook (left) is president of AIRTO (Association of Innovation, Research and Technology Organisations) enquiries@airto.co.uk www. airto.co.uk

Unique packing machines – proudly made in Yorkshire

I

n 2002 Peter Krawczuk and Brian Dickinson came together to create the new Karmelle from ashes of the old company. Combining their technical skills and creative insight, they managed to extend the range of machinery to offer something different to the manufacturing industry.

“We design, manufacture, install, and commission filling, capping and labelling machines right here, in West Yorkshire,” explains Peter. “We also provide training and offer maintenance

contracts tailored to suit customer requirements. Our manufacturing base in the UK allows for quick response times for breakdowns and spares requirements as we know customer downtime can be costly.”

Karmelle offers a turnkey service to a cross-section of industries, including the food and drink, pharmaceutical, cosmetics and chemical, ranging from start-ups to multinational manufacturers.

Because Karmelle manufactures all machines in-house, it allows the company to be flexible in what it does.

This flexibility recently led to a development of a bespoke machine (as seen in the picture, left) with a footprint of only two square metres that was designed to fill 30ml miniature whisky bottles at 20 per

minute, although adjustable to different volumes and speeds, therefore suitable for various industries.

Karmelle also provides a great selection of standard semi-automatic and automatic machinery. Whether you are a local artisan producer or an overseas manufacturer, you are welcome to contact the staff at Karmelle for a free consultation. You will be sure to get the best in quality British manufacturing.

You can also come and visit our stand at the PPMA show in Birmingham this September, where some of our machinery will be on display.

01484 533356 http://karmelle.com

How embossing adds that stylish finish

W

ith a heritage stretching back to 1751, glass manufacturer Beatson Clark is one of the oldest companies in the UK. But it is also a forward-thinking business which has recently invested £20million in plant, equipment and software at its Yorkshire headquarters.

Glass bottles and jars have been popular for thousands of years, and Beatson Clark is always looking for new ways to enhance their appeal. One way it can achieve this is through embossing, which can lend a high-quality tactile feel to a container.

While embossing is common in bespoke designs, it can also be applied to standard containers. By using bespoke finish moulds

during the production process, Beatson Clark can customise ordinary bottles and jars, creating a unique design for a fraction of the price. This method also allows for smaller volumes to be produced.

Beatson Clark’s flexible approach means customised and bespoke containers are within the reach of even the smaller brands and enables them to compete on supermarket shelves. Among the British brands to have benefited from Beatson Clark’s embossing expertise are Covonia, English Provender and Robinson’s Old Tom – “the world’s best ale”.

“Embossing is a very popular option just now,” said sales and marketing director Lynn Sidebottom. “Ten out of the last 11 bespoke designs we have produced for customers have featured embossing, and our new design

software means that we can sculpt the embossing, making it more defined as well as easier to manufacture.”

Beatson Clark exports around 20 per cent of its products overseas and serves customers in three key sectors: food, pharmaceutical and beverage – with the craft brewing sector now established as one of its most important markets.

To find out more about Beatson Clark’s design and embossing options visit www.beatsonclark. co.uk or follow @beatsonclark on Twitter 01709 828141 sales@beatsonclark.co.uk

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How EU precious metals investment is roaring back

By Tim Adler PRIVATE INVESTOR gold demand in Europe has grown phenomenally over the last decade: over the last five years, annual demand for small bars and coins has been, on average, 288 tonnes.

By comparison, Chinese private investor demand has averaged 260 tonnes over the same period.

The European gold market has grown by more than 1,400 per cent since 2006. Germany alone accounted for up to 200 tonnes of gold in 2014.

Unlike the UK, German banks readily sell gold to private investors.

John Mulligan, head of investor relations at the World Gold Council, says: “It’s to do with the Eurozone crisis but also general uncertainty about what long-term assets you can trust.”

India reclaimed its place the world’s largest single consumer of gold last year. Jewellery demand in India hit a record 662.1 tonnes in 2014, despite government restrictions aimed at limiting gold imports.

Between them, India and China accounted for 54 per cent of consumer gold demand in 2014, up from 33 per cent in 2005.

However, overall global demand for the metal fell by 4 per cent last year to its lowest level since 2010, as China failed to repeat its record buying of 2013, according to the World Gold Council.

Demand in China fell 38 per cent as sales of gold bars and coins dropped due to the Communist Party’s anti-corruption drive. Chinese jewellery demand alone fell 33 per cent last year. It is important to remember though that China is still a young market – private gold investment was only allowed in 2004. Today in China there are around 100,000 banks selling gold and the same number of jewellers. Cartier has more shops in China than it does the US. The price of gold crashed in 2013 following its bull market between 2001 and 2013. Despite a brief rally since then, the gold price is at a low of $1,150 per ounce.

Gold has always been seen as a haven against the dollar. A weak dollar increases demand for gold. Recently, though, the strong US dollar has reduced the need for other assets. Currently there is talk that the US will raise interest rates, which will create more headwinds for gold.

Investment bank Macquarie believes the price of gold will drop even further when the Federal Reserve raises interest rates. The price will rise a f ter t hat, at be st, say s Macqua r ie, to $1,300 an ounce.

Peter Rose, an analyst at Fox Davies Capital, says: “I would think the price of gold would trend sideways to downwards for the coming year.”

Capital expenditure by the world’s top 10 mining companies is expected to fall to around $64billion (£42billion) this year, down from almost $80bn two years ago.

The biggest mining companies, such as Anglo American, BHP Billiton, Rio Tinto and Vale, are

Demand for gold in Europe has outstripped that of even China over the last five years

all cutting costs, while smaller miners are all looking at offloading assets to generate much needed cash to service their debt or just weather the storm.

The real growth story in precious metals is, however, in Platinum-Group Metals (PGMs), which are mainly platinum and palladium.

Platinum and palladium are used in catalytic converters attached to car exhausts, with the

The special treatment Gold, silver and platinum have long been considered precious – but their use in medical treatments has, until recently, gone unsung. But the emergence of nanotechnology has revealed a new role for these precious metals in medicine.

GOLD Scientists are investigating whether gold nanoparticles can be used to carry drugs directly to cancer cells or make them more sensitive to radiotherapy. Last year, they

average car containing about $200 worth of PGMs. The car industry uses one third of the world’s platinum output and 80 per cent of palladium output. China and India are buying more and more cars, increasing the need for catalytic converters. Demand for petrol cars is also rising as the EU demands cleaner catalytic technology, clamping down on dirty diesel cars.

“The future of platinum and palladium is

used miniscule pieces of gold to help improve treatment for aggressive brain cancers. Golden particles four million times smaller than a cross-section of a single human hair were coated with a chemotherapy drug and infused into the centre of tumour cells. When exposed to radiotherapy, the gold released an electron that damages the DNA of the cancer cell, leaving it vulnerable to attack by the cancer drug. The brain cancer stopped replicating and many diseased cells died. Researchers hope it may provide a way to target other difficult-to-treat cancers.

quite positive because of growing demand from emerging markets,” believes Matthew Turner, commodity analyst at Macquarie.

All of which suggests that the canny investor might want to invest in palladium, which is currently trading at $762 an ounce compared with $1,095 for platinum. This is the nearest palladium has been to platinum for more than a decade.

SILVER Before 1940, silver was widely used to kill dangerous bacteria, which literally fall apart when they come into contact. Soldiers in the First World War relied heavily on silver-based wound dressings.

But silver dropped out of favour with the discovery of antibiotics. Now, scientists are rediscovering its potent effects. Nanosilver is incorporated into everything from sticking plasters to catheters, and many hospitals are being fitted out with silver-based products such as door handles and light switches.

PLATINUM Since the 1970s , drugs containing platinum – the rarest and most precious metal – have been used to treat cancers. Several types of chemotherapy drugs are derived from it. Thanks to platinumbased medicines like carboplatin and cisplatin, nearly all men now survive testicular cancer and thousands of women with ovarian cancer have more effective treatment. Indeed, it was carboplatin that coated the gold nanoparticles in the groundbreaking brain cancer therapy.

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Precious metals

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Firms facing Euro crackdown

UROPEAN companies will have to source where they get their gold from, according to EU legislation currently being drafted.

MEPs amended draft legislation last month that will force companies to state whether their goods contain so-called conflict gold and other controversial minerals.

The European Parliament will vote on the new law on May 28.

Europe is a key player in the trade in minerals, responsible for almost a quarter of the global trade in gold, tungsten and others.

Europe imports about 15 per cent of the world’s gold.

Meanwhile, the UK government passed similar legislation last month, impelling British companies to volunteer whether their

supply chains are contaminated by gold or precious metals such as tungsten mined in war-torn Africa.

These conflict minerals are mined under exploitative conditions in the Democratic Republic of Congo and sold to fund warfare in the region. “Gold has got a lot of slavery in it,” says Prof Kevin Bales, a slavery expert at Hull University.

Both Europe and the UK have taken their lead from the US government, which has taken steps to stop the electronics industry using conflict minerals. The 2010 Dodd-Frank Act requires US manufacturers to audit their supply chains and report on the origins of their minerals. Since 2013, any listed US company using gold or precious metals such as tungsten (used in mobile

phones and laptops) must report exactly where it comes from.

Crucially, US companies are not at fault if they source conflict minerals. Electronics manufacturers can shrug and say that they do not know where their minerals come from. This is to stop them from being overwhelmed by litigation.

Professor Bales says: “It allowed companies to investigate supply chains without opening a Pandora’s Box of unlimited liability. The liability question has been so difficult for electronics companies, whose relationship with their mineral suppliers can be so tenuous.”

Supporters of the Dodd-Frank bill argue that the public will shun products using conflict gold and other minerals. Intel has

How lasers are heating up the platinum market Tim Adler

D

RILLING into rock using lasers sounds li ke something out of Star Trek but that is exactly what platinum miner Anglo American Platinum is doing.

The company is trialling lasers to soften notoriously hard platinum rock before sending in remote-controlled drills. The hardness of platinum rock – three times more difficult to drill than coal – has been a real problem when it comes to innovation in platinum mining.

That and how cramped platinum tunnels are compared with coal seams, which makes them difficult to access by off-the-shelf remote-control tunnelling equipment. Platinum mines are deep and the shafts are narrow, which is why there is scepticism as to how much can be automated. There is still a question as to how feasible mechanisation is.

Anglo American Platinum (Amplat) has been developing bespoke machines with manufacturers to go deep inside

tight seams. It has also been working with automated drilling and remotecontrol machines that can detonate likely deposits.

The company says it suffered between 40 and 50 fatalities each year in its South African mining operations.

Thanks to mechanisation, the number of deaths fell to just four in 2014. Openpit operations have 10 times fewer i nj u r i e s w h i le u n de r g r ou n d mechanised mines are between 50-70 per cent safer.

But Amplat is not just modernising platinum mining because of fears over worker safety. Platinum workers are poorly paid and productivity is low, hence the emphasis on automation. A five-month strike last year in South Africa, the world’s largest producer of platinum, reduced production.

Amplat does not want to be left so exposed again. However, its chief executive Chris Griffith denies that what he himself describes as compressing 20 years’ worth of innovation into just five years is mainly about cutting labour costs.

“This modernisation journey hasn’t been a kneejerk reaction to last year’s strikes,” says Griffith on the phone from South Africa. “This is a journey that started a number of years ago.

Labour productivity and the grades of

“Labour productivity and the grades of ore were declining. We knew we had to find increasingly efficient ways to improve safety and productivity” – Chris Griffith, CEO, Amplat the ore were declining. We knew we had to find increasingly efficient ways to improve safety and productivity.”

Amplat has eight mining operations across South Africa. Its Bathopele, Mogalakwena and Unki mines are completely mec ha n i sed. T he Twickenham mine project is being mechanised before any further mining

and trials are underway to mechanise Amandelbult further. Griffith admits that Amplat has had less success in trying to mechanise its older mines.

Trying to convert an existing operation or one with a narrow seam width has proved difficult, he says.

Amplat’s modernisation drive comes at a time when the price of platinum

has fallen dramatically. Global demand for platinum fell by 7 per cent last year as investors cooled on the metal, according to the World Platinum Investment Council.

Prices for platinum have fallen by 6 per cent so far this year, and the metal is trading at its lowest levels since 2009 at $1,095. Shares in Anglo American

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on conflict minerals sourcing announced plans to stop using conf lict minerals in its microprocessors. Apple has already published a list of its suppliers that may be sourcing minerals from conflict zones.

Increased pressure has also come from the California Transparency in Supply Chains Act, passed in 2010. Any US company worth more than $100million must state what they are doing to remove slavery from the supply chain – even if the answer is nothing.

“Dodd-Frank has acted as a catalyst to raise global awareness for responsible sourcing at large,” says Lina Ramos, chief business officer of Source Intelligence. “What we’re seeing in the US is that responsible sourcing has become a competitive advantage. If you

look at Apple or Intel, there’s a new reality that if you not ensuring responsible sourcing, you won’t be supplying global brands.”

The idea is to choke off money going to Congolese warlords.

The Congolese call it Loi Obama – Obama’s law.

However, locals say that Obama’s Law has hurt the very people it is meant to help. Poverty-stricken unemployed miners and their families reportedly have no choice but to sign up with militias.

Professor Bales accepts that some mines were closed down unnecessarily by panicking operators, but maintains others had nothing to fear. “Dodd Frank shook things up,” he says. “There was a lot of irrational reaction, and a fear that there was going to be blowback from Dodd Frank. It’s possible that some people were

pushed towards the militias, but these armed gangs enslave their workers anyway.”

And then there is the question of how enforceable Obama’s Law really is. Violent militias sell their conflict minerals into the black market, where they are mixed up with legitimate minerals and sold on. Gold and other minerals mined in the DRC are frequently passed off as coming from other African countries.

Meanwhile, neighbouring Rwanda comes across the eastern border – the DRC has no border guards – establishes its own illegal mines and ships DRC minerals back home, where they are sold on as Rwandan.

IT ALL sounds like a small boy’s dream. Rio Tinto, one of the world’s biggest mining companies, plans to have driverless trains carrying millions of tons of ore this year.

The $18million AutoHaul will be the world’s first automated, long-distance, heavy haul rail network. The firm has also experimented with autonomous drilling and robotic wheel-changing.

Rio Tinto has been using giant driverless trucks in its Pilbara, Australia mine since 2012. The fleet has moved more than 200 million tons of material, driving in excess of four million kilometres, the equivalent of driving around the world some 98 times. Rio Tinto’s remote-controlled trucks have a 50-metre safety bubble around them to avoid collision. The trucks are controlled by teams working out of an operations centre near Perth Airport, some 1,500 kilometres from Pilbara.

The company shortly expects to have about 65 autonomous trucks in operation – about 25 per cent of the haul truck fleet – each responding to GPS directions and linking to a ground station to deliver loads 24 hours a day with no driver or individual operator.

For all the Thunderbirds-style whizz-bangery, Rio Tinto’s automation push is also about saving money.

The autonomous truck fleet alone is expected to improve Rio Tinto’s productivity by around 14 per cent.

Amplat is ramping up the modernisation of its platinum production to improve safety and productivity

have also fallen by more than 7 per cent so far this year.

Griffith says: “Platinum demand had grown at 20 per cent per annum for more than 20 years. Demand flattened after the global financial c r i si s but t he i ndu st r y kept oversupplying metal. With growing demand no longer being there but

continued growth in supply, platinum prices fell.”

One third of the platinum produced globally is used in catalytic converters, scrubbing clean engine emissions.

More platinum is used in diesel engines than petrol ones. But with diesel cars falling out of favour – Paris has promised to ban them throughout the

city by 2020 – and regulations tightening across Europe, a sales drop will have a big knock-on effect for the white metal.

Yet the amount of readily-available platinum is running down. Last year’s strike meant Amplat and other miners had to dig in to what they had stockpiled above ground. Those stocks are now

diminished, which means Amplat must increase production. Griffith says: “Platinum group metals are in their best environment for years, but it could be some time before the fundamentals of demand start improving the price, primarily as a result of global macroeconomic instability.”

For Griffith, modernisation is not just about technology. As automation inevitably takes hold, it is also about improving the lives of miners left working. Although the industry will have fewer direct jobs, those that remain will require greater skill and offer better pay.

Griffith says: “When we realised we needed to improve the pace of modernisation, we knew that requires more than just mechanising. To have a modernised mining operation, we

All aboard the AutoHaul for an automated mining revolution Chief executive Sam Walsh is cutting hundreds of mining positions and $750m in operating costs this year, even after the Anglo-Australian group has taken out almost $5billion of costs since 2012. Iron ore – the miner’s largest source of earnings – has sunk to its lowest point in six years. The top three producers, including Rio Tinto, have flooded the market with new supply, knocking prices down by nearly 50 per cent in 2014. The benchmark price of iron ore is now $58 a ton, its lowest price for six years.

The Perth operations centre is manned by 400 staff and collects 13 terabytes of data each month, but the company only directly analyses 4 to 5 per cent of that. The data is useful for mapping and identifying potential new drill sites. “Imagine the possibilities once we develop the capabilities even to just analyse 20 per cent or 30 per cent of that data,” Rio Tinto’s iron ore CEO Andrew Harding told a recent mining conference.

Last month Rio Tinto started mining its own big data reserves.

The Analytics Excellence Centre in Pune, India, will continuously monitor Rio Tinto’s vehicles for impending breakdown. Data scientists will use predictive mathematics, machine learning and advanced modelling to identify mechanical problems before they occur.

need modernised labour relations, work ing env ironments and communities around the mines.”

Griffith has criticised the industry as a whole for failing to keep up investment in innovation solutions.

The industry only spends one fifth of what the petroleum industry spends on research and development. Given the magnitude of extraction challenges, Griffith says it is extraordinary that the global mining industry currently spends so little on R&D. Griffith says: “Mining has not invested nearly enough in research and development. Even in difficult times, Anglo American Platinum has at least maintained a baseline of R&D spending. But we haven’t spent enough as an industry to keep us abreast of technology changes in general.”

20 · Business Reporter · April 2015

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Embracing sustainability: The new face of mining

T Drilling in the steps of history in Portugal M edgold Resources Corp is a Canadian-listed resource company (symbol MEDTSX.V) with a very simple objective: to become one of the leading Europeanfocused gold companies. Run by geologist Dan James, and overseen by a highly experienced board, its hunt for the next European gold mine has led Medgold to the under-explored area of northern Portugal. Today, the company is one of only a small handful of explorers operating in this mineral-rich country.

The country’s geology is complex with huge potential for new gold discoveries. Some of the earliest evidence of mining activity there dates back to the Roman occupation 2,000 years ago. They mined gold and polymetallic sulphide vein deposits but were also astute alluvial gold miners.

It’s tempting to simply follow on the heels of the Romans and look for deposits where they mined, but Medgold has tried to avoid this.

Instead, Medgold’s exploration effort draws on the decades of expertise of a hand-picked group of world-class exploration consultants applying state-of-the-art geological concepts.

Translating these ideas into practical

boots-on-the-ground technical programmes, and making sure those programmes generate solid results, falls to Dan and his team of Portuguese geologists.

Medgold’s high-quality work in Portugal is beginning to garner recognition in the broader mining industry. In late 2014 Medgold signed a joint venture agreement with gold miner Centerra Gold, which is earning up to 70 per cent of the Lagares project by funding up to $6million in exploration over the next five years.

Centerra recently started drilling after trench sampling at Lagares returned excellent gold assay results. In March this year, another deal was agreed over the Boticas gold project with Turkish gold producer Koza Altın İsletmeleri AŞ, which plans to spend $6million over six years to earn 70 per cent. In a further vote of confidence in Medgold’s strategy, Koza are also taking a $1.5million private placement in Medgold.

Resource investment is being actively encouraged by the Portuguese government, and the modern infrastructure, transparent mining and foreign investment regulations there weigh favourably against a lack of systematic modern mineral exploration.

In September 2012 Portugal approved a new national strategy for the industry.

The policy shifted towards bringing in new mining companies, now an important part of the state’s economic planning and a pragmatic response to the harsh economic realities of the financial meltdown. The revised policy is also in line with the European Union’s overall strategy to encourage exploration and mining of metals and minerals considered to have strategic importance to the EU. Medgold’s board, led by chairman Simon Ridgway, is made up of industry veterans with a history of successfully listing, financing and running resource companies. Over the last decade Ridgway and his team have raised more than $400million to fund the exploration and development of mineral projects globally. So with sufficient cash in-hand to fund its exploration programmes, and with the support of Centerra and Koza, Medgold looks set to benefit from being able to explore in a country with huge geological potential and a very supportive government, but little industry competition. info@medgoldresources.com www.medgoldresources.com

he international mining industry has talked about the mine of the future for several years, largely focused on technology, but the future is really about people. The Lowell Institute for Mineral Resources (IMR) at the University of Arizona in Tucson focuses on creating the “new face of mining”.

The new face reflects a more diverse workforce that embraces sustainable resource development, is empathetic to community needs, uses modern technology and understands the legal and social constraints of a complex industry. The IMR, named after benefactors J David and Edith Lowell, is a leading global centre for mineral resources that bridges basic and applied research and education in the fields of science, social science, engineering, health, business, and law, and that works with leaders to adopt new ideas, policies, and technologies.

Technology diffuses quickly; what differentiates companies is the talent of their workforce in finding the best resources and extracting the most value – social and financial. The faculty and students associated with the IMR have created 13 companies, ranging from 4D autonomous environmental monitoring systems to immersive games for safety training. More than 250 faculty and students in 27 different disciplines work with more than 200

industry and government professionals on research, education and community engagement. We educate American Indian students on mining.

Our continuing professional education programme has more than 1,300 alumni. Our international mining law programme provides advanced education and policy guidance. The Pan American Hub for Compatible Mining, engaging university, industry, and government professionals across Latin America, the US, and Canada is one example of our global effort to create a new face of mining that is culturally competent, multilingual, and shares best practices.

To get the most from mining investments, look for companies that are actively engaged in working with groups like the IMR to develop the new face of mining.

Mary M Poulton, PhD is director, Lowell Institute for Mineral Resources mpoulton@email.arizona.edu www.imr.arizona.edu

Business Reporter · April 2015 · 21

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Moving projects along the development curve

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ining companies seeking to access capital in the current market are operating in a challenging environment. While precious metal prices remain reasonable, there is a distinct lack of capital as equity investors continue to be risk-conscious and selective. There are, however, pockets of liquidity available from sovereign wealth funds, family offices and hedge and resource funds that are, albeit

selectively, willing to take longer-term views.

The Endeavour Financial advisory team works with companies to identify alternatives to public markets with a common aim of moving projects along the development curve.

Debt for project development is available.

In addition to conventional debt sources (commercial lenders, export credit agencies, development banks and multi-lateral agencies), there are streams and royalties,

equipment financiers and trading houses to add to the mix. With increasing competition for product in the precious metals space, offtake has become increasingly relevant in funding discussions. What remains unchanged is the complexity of financing these projects.

Having an experienced mining finance and advisory skillset on call to source, negotiate and close financings enables executive teams

to focus on project development and managing their businesses.

For the last 25 years, Endeavour Financial has been successfully advising global precious metals companies, getting projects funded and into production.

Paul Stevens (above) is director of Endeavour Financial +44 (0)20 7590 2720 www.endeavourfinancial.com

Taking the direct approach to capital growth

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ith low commodity prices and limited funding for new mining projects, heap leaching is the quickest and cheapest way for a gold, copper or uranium project to get up and running and to generate cashflow.

Knight Piésold has extensive experience in this field, and teams up with process engineering companies to design and project manage the delivery of feasible projects. Such projects can start small and be modular, allowing for phased expenditure while cash is generated and investors can be repaid.

In many cases the top of an orebody is weathered and oxidised, allowing easy mining, and lends itself to leaching.

Knight Piésold is well positioned to advise investors and mining companies on the viability of such projects, while ensuring that the environment is protected through appropriate designs, and local communities benefit from the jobs created.

Another investment opportunity in the current economic downturn lies in the re-mining of old tailings facilities. These are often low-grade resources, but since they are on surface and already milled, the cost of mining and processing is

Specialist consulting helps in the start-up of mining projects less. In regions of concentrated mining activities, there may be 10 to 20 old tailings facilities of significant tonnage in close proximity.

By re-mining these tailings facilities and depositing them in one large consolidated facility designed and constructed in accordance with best practice, the environment is improved and closure legacies are minimised.

The win-win benefits of cleaning up the environment and liberating land for other development, while recovering gold, uranium, copper and platinum should be attractive to investors, governments and communities, and fast-tracks the permitting process. Knight Piésold has extensive tailings design and management experience, as well as environmental capabilities to support and advise such projects. www.knightpiesold.com

etal Tiger plc is a natural resources focused investing company listed on the London Stock Exchange AIM Market with the trading code MTR and two investment divisions: Direct Equities and Direct Projects.

Metal Tiger takes a contrarian view. Natural resource sector valuations have fallen dramatically in recent years, deterring many from investing in the sector. Very good companies and projects are accessible cheaply and Metal Tiger believes now is the time to invest for potential multiple returns on money invested.

The company’s Direct Equities division researches and invests in listed natural resource explorers and developers where Metal Tiger considers the market valuation is very low compared with business assets and potential. The company’s first investment in Kibo Mining was able to achieve a return on capital invested of more than five times in just a few months using this investment approach.

Currently held investments include Kibo

Mining (LON:KIBO), Eurasia Mining (LON:EUA) and Ariana Resources (LON:AAU) and a general portfolio of junior resource equities.

The short-to-mediumterm returns from Direct Equity investing provide financing for the Direct Projects division, which seeks larger scale return on capital through investment in highly attractive mineral exploration and development opportunities. Direct Projects underway include exploration for Spanish gold and tungsten, Thai gold, antimony and copper, and Tanzanian gold and uranium. Metal Tiger also has working collaborations over new natural resource project opportunities in Turkey and Russia, two countries that offer dramatic resource exploration potential.

Metal Tiger is a proactive investor at the heart of the London resource market, taking positions when others are shunning the sector and recognising that the current low valuations offer active investors unparalleled opportunities for significant capital growth. www.metaltigerplc.com

22 · Business Reporter · April 2015

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on ls t h a lig et t o m Sp ious ec r p

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The future

Heavy is the head that wears the crown

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s the director of Williams Mining – a talent sourcing agency, specialising in the African mining industry – I occupy a peripheral position that allows me to see trends that those within the sector might not be aware of. Here I will briefly explore the elevation of the chief financial officer (CFO) to the position of the chief executive officer (CEO) and explain why this transition is becoming increasingly popular in the African mining industry.

Recently, in response to radical financial challenges, executive management committees are constantly looking to implement cost-saving knowhow, and this shift is reflected in the boardroom. Since 2012, of the 17 new CEOs who have been appointed among the sector’s 37 largest mining companies (ranked by production and revenue) 15 have come from a financial background of some variety. Prior to 2012, within the same 37 companies (excluding mergers), only four CEOs were financially experienced.

Let’s look at some reasons for this shift: • Huge write-downs experienced within mining projects. Such as Rio Tinto’s exit last year from its Mozambique coal assets, which resulted in the write-down of more than $3billion.

• Underperforming mining operations where high production costs outweigh commodity prices and production output.

• An overreliance on China’s demand.

With China undergoing its slowest growth rate in years, prices for commodities such as iron ore and copper have fallen.

• The occasional volatility of numerous African governments, taking a tougher stance on royalties and tax, challenging shareholders and investor confidence.

With financial professionals at the helm, certain companies seem to be taking a more conservative approach to expansion: choosing to optimise current assets, as opposed to pursuing new ones. The nationalisation of staff is becoming exponentially more apparent

Derek Williams is the director of Williams Mining +44 (0)20 7383 9046 derek@williamsmining.com

The debate Why invest in precious metals?

Alasdair Macleod Head of research GoldMoney

With thanks to

in mid-tier African mining companies, saving further cash that would have previously been spent on expensive expatriate salaries.

Furthermore, these mathematicallyadept executives are highly capable when it comes to cutting a mining company’s two biggest costs: power and labour. With the implementation of strategies such as these, the problems listed above become manageable, helping to restore investor confidence and, over time, shareholder value.

Cameron Parry CEO Metal Tiger Plc

The answer is very simple. Every other investment depends, to some degree, on currencies not failing. Gold and silver have been money for millennia, while currencies come and go. There have been some 56 acknowledged instances of hyperinflation, nearly all of which were since the First World War, so paper currency is not risk-free.

The quantity of precious metals is limited to mine output, in contrast to paper currencies and bank credit which can be expanded at will. Holding precious metals securely outside the banking system is a form of insurance against a future financial or currency crisis.

Obviously we all hope this protection will never be needed.

It so happens that at a time of increasing systemic and inflation risk, low interest rates have driven all asset values higher except precious metals, which have declined over the last three years.

So, insurance has become much less expensive relative to the risk being insured.

The precious metals sector is traditionally cyclical, both for the resource equities and the underlying commodities. Past experience has shown that the cycle for resource equities can be severe, and we have seen decimation of stock prices from those experienced around the top of the last cyclical bull phase in 2011.

Experience also shows that cyclical sector lows present a tremendous opportunity for capital appreciation if one is able to identify the precious metal equities with the ability to survive the downturn, and even better those equities able to continue operations and move their assets forward.

Careful stock selection is key. Management, finance and forward strategy all play a part. But, surely as has occurred in previous cycles, severe sector under valuations spawn new bull phases and investors with the stomach to acquire good resource shares now could do very well indeed.

+44 (0)1534 633900 www.goldmoney.com

+44 (0)20 7099 0738 info@metaltigerplc.com

Flying high in Nicaragua

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ondor Gold PLC (LON: CNR) is a junior exploration company listed on AIM focused on revitalising the historic La India gold mining district of Nicaragua. To date the company has produced a global N.I. 43-101 mineral resource of 2.33m ounces of high-grade gold including open-pit resources of more than 1Moz at 3.0g/t gold.

The Dec 2014 N.I. 43-101 pre-feasibility study demonstrated the 675,000oz open pit reserve could produce 80,000 oz gold p.a. for seven years, while two preliminary economic assessments completed at the same time show the addition of two feeder pits would increase open pit production to 100,000oz p.a. for eight years, while the inclusion of underground resources would increase annual production to 140,000oz gold. All-in sustaining cash costs are under US$700 per oz gold for each production scenario, which is significantly below the industry average. The IRR is more than 25 per cent.

Nicaragua is a miningfriendly jurisdiction; gold is the second largest export. In 2015, Condor is de-risking the project by applying for permits and acquiring surface rights. Condor has recently started a 4,000m drilling programme aimed at demonstrating further upside in La India Project.

Condor owns 100 per cent of a 280km2 mining district and Condor’s geologists believe there is scope to significantly increase the size of the gold resource and reserves.

Condor’s market cap is only £28m, valuing the current resource at only US$15 per oz in the ground compared with a gold price of around US$1,200. Recent M&A activity has valued gold exploration companies at between 5 per cent to 10 per cent of the current gold price.

Mark Child is executive chairman and CEO, Condor Gold +44 (0)20 7493 2784

Business Reporter · April 2015 · 23

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iven its reputation, people ask us, why invest in gold mining in Zimbabwe? Our answer is, where else do you get a 267 per cent rate of return?

Caledonia Mining, which is listed on the Toronto Stock Exchange and on London’s AIM, is investing $70million in our Blanket Mine. We wouldn’t invest this money unless we felt confident in our operation’s stability. This investment will double current output to 80,000 ounces by 2021.

Our production cost will drop to $450 an ounce compared with $640 an ounce today.

We have been in operation since the 1990s, mining diamonds, gold and even marble. Over the past seven years, we have sharpened our focus to our Zimbabwe gold mining operation. Unlike some rivals, we are one of the few Zimbabwe gold producers fully compliant with local majorityownership requirements. As such, we are fully indigenised with the local community. Although Caledonia only owns 49 per cent of Blanket, it is a controlling share. Our partners are our mineworkers and the local community, owning 10 per cent each, Zimbabwean businesses (15 per cent) and the

In focus: Why what’s good for us is good for Zimbabwe

government (16 per cent).

Politically, we have de-risked ourselves because we’ve jumped through the hoop of indigenisation.

This is not creeping nationalisation. Our structure compares favourably with national economic empowerment in South Africa, where typically businesses need to be 26 per cent locally owned. In reality, this can mean a couple of oligarchs, with little money going to the community or local workers. By contrast, Zimbabweans understand that what’s good for our operation is good for them. It is a structure that we’re proud of and one that works.

Our business is highly cash generative, earning $20million a year. However, gold mining cannot stand still. Mining has been going on at Blanket since 1906. We’re getting to the point where we need to mine deeper, where more high-grade ore lies.

We believe that Caledonia represents a unique investment opportunity, one that’s a compelling story.

Mark Learmonth is chief financial officer, Caledonia Mining +27 11 447 2499 marklearmonth@ caledoniamining.com

Invest for a sparkling future

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he diamond dream is very much alive, with global demand for diamond jewellery growing by 3 per cent in 2014 to a new US$81billion high, driven primarily by the economic recovery in the USA and the strength of growth of middle classes in China and India. The diamond industry therefore faces an exciting future, but this cannot be taken for granted.

Investment across the pipeline will be required to capture this opportunity.

At De Beers we’re committing billions of dollars over the coming years to a number of investment projects. Leading the charge are our three flagship projects: in Botswana and South Africa, where we are extending two of our current mines, and in Canada, where we are developing a new mine.

These are vital, not just to our own success, but to ensuring that the countries in which we operate benefit from the natural resource that we mine. At Jwaneng, the world’s richest diamond mine by value, in southern Botswana, the Cut-8 project will extend mining

operations until at least 2025 and generate somewhere in the region of 110 million carats in the process.

Of the 1,400 jobs created by Cut-8, almost 90 per cent will have gone to Botswana citizens, helping ensure that our presence benefits local communities as much as possible.

Our work here builds on the strong foundations of our 45-year partnership with the government of the Republic of Botswana: a prime example of how business and government can work together to foster prosperity for both sides.

For every five dollars generated through our mining and related activities in the country, four of these are fed back to government revenues through taxation and dividends.

In South Africa, where De Beers’ story began some 126 years ago, our biggest-ever investment to build a new underground mine beneath the current open-pit mine at Venetia is on track to open in 2021. When operational, around 94 million carats will be mined up to 2040, seeing it replace the current open pit as South Africa’s largest mine. Most of the 3,000 people working on the

project have been sourced from the surrounding Limpopo province.

They have been given the relevant training by De Beers and will go on to help develop the country’s growing technical skills base once the project is complete.

Thousands of miles away, deep in the Arctic Circle, in Canada’s Northwest Territories, the construction of a new open-pit mine, Gahcho Kué, is underway.

The mine is expected to deliver 53 million carats over its 12-year life when production begins in 2016.

Fundamental to how we work in this part of the world is ensuring that Aboriginal and local businesses are involved significantly with the plans

for Gahcho Kué and any future projects in the region.

While these may be three of our largest projects to help secure supply, there are other investments that are helping maintain consumer confidence in diamonds. Central to these is our investment in technology, particularly devices focused on identifying all synthetics and simulants, therefore ensuring consumers can have full confidence in their diamond purchase.

For De Beers, partnerships across the diamond pipeline are key: business, government and community. Only then can we ensure that diamond dreams become lasting realities for all.

Mrs Lynette Gould is head of media relations, The De Beers Group of Companies +44 (0)20 7430 3509 www.debeersgroup.com