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Manufacturing Strategy & Action Plan for England’s Northwest 2009

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CONTENTS .......................................................................................................................................

Executive Summary

1.0 Purpose of the Strategy………………………………………………………4

2.0 Policy and Context ……………………………………………………………5

3.0 Evidence Base……………………………………………………………….11   

Key facts and figures Key manufacturing sub-sectors in brief Sector-wide Trends, Drivers, Issues and Opportunities

4.0 The Strategic Framework………………………………………………….20

5.0 Priority Actions…………………………………………………………...…24

6.0 Monitoring and Evaluation………………………………………………..28

7.0 Appendices Appendix 1 - RES Actions relating to Manufacturing Appendix 2 - Key Manufacturing Sub-sectors/Cluster Strategies Appendix 3 - Action Plan Glossary

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EXECUTIVE SUMMARY Manufacturing is a major generator of wealth for the region. It is the most productive broad industrial grouping in the Northwest, and the only one which generates more GVA per employee than the national average. The sector also accounts for a large proportion of the region’s employment and makes a considerable contribution towards the region’s balance of trade.

Northwest manufacturing has a number of strengths and assets which can and should be exploited to encourage further growth. A strong HEI base, a high proportion of knowledge intensive businesses, strong skill sets in key sub-sectors, such as chemicals and aerospace, and the presence of global businesses, are amongst the factors which place the region in prime position to take advantage of the opportunities that globalisation presents.

However, the sector faces significant challenges brought about by factors such as increasing competition, off-shoring and rising energy costs, as well as the current economic downturn. This document presents a strategic framework and identifies key action areas to support the on-going growth of the ‘modern’ manufacturing sector in the Northwest in this context.

Our vision for the sector is that: ‘The modern manufacturing sector of the Northwest will be innovative, enterprising, highly skilled, and well led. It will continue to be the most productive element of the regional economy, and a major creator of wealth for the region and its people. The continuing success of the sector and its recognition in international markets will ensure that a wide range of companies choose the Northwest as their preferred location, making the Northwest the UK’s premier manufacturing sector.’

Realising this vision will necessitate focusing activity and resources on achieving:  The Strategic Impact of this strategy which is to raise manufacturing’s contribution to regional GVA;  And the Strategic Aims which are to increase the share of high value adding employment and retain ‘good’ employment in the region.

Actions are proposed under specific strategic and cross-cutting themes which were highlighted in research undertaken by SQW in 2007/81 as the key issues/areas of opportunity for the sector: Strategic themes

     

Cross-cutting themes

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  

Improving the image of Northwest Manufacturing Increasing capacity and capability to innovate Improving the interactions of business and education establishments on manufacturing issues Ensuring that places, spaces and infrastructure are fit for purpose for manufacturing Increasing new enterprises in manufacturing Improving access to actionable information on markets and change (including legislation) Ensuring a highly skilled workforce at all levels Vertical and horizontal co-ordination between businesses A more responsive public sector

The Modern Manufacturing Strategy and Action Plan for the Northwest.

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1. PURPOSE OF STRATEGY …………………………………………………………………………………………………

The following section explains the purpose of the Strategy, its scope, and its aims.

1.1

This strategy provides a framework for the development of manufacturing in the Northwest, its overarching aim being to ensure that public sector support facilitates the sector’s growth, and that public sector interventions are directed towards resolving issues emanating from market failure.

1.2

This document draws primarily on the findings of a study undertaken by SQW in 2008, ‘The Modern Manufacturing Strategy and Action Plan for the Northwest.’ As the title of the study suggests, the definition of manufacturing adopted for this strategy is a ‘modern’ one which recognises manufacturing as a process, with production being one essential element of the process: ‘The full cycle of activities, from research, design, development, production, logistics, after sales service, maintenance/repair, to end of life management.’

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This differs from the traditional definition of manufacturing which focuses on just the production element. It is important to note that manufacturing is a broad industrial grouping which cuts across a range of industry sectors, many of which have their own discrete sector or cluster strategies. (This is discussed further in sections two and three of this document).

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This strategy seeks to build upon existing activity and ensure that any additional support is directed towards filling gaps in provision. In addition to this, it aims to ensure that the right mechanisms are in place to facilitate co-ordination across manufacturing between businesses, stakeholders and programmes of activity to enhance the sector’s economic performance.

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2. POLICY CONTEXT ...................................................................................................................

Various levels of policy provide the context to, and have helped inform, the development of the Northwest Manufacturing Strategy and Action Plan. An overview of the key policy and strategy documents is provided in this section.

National The Overarching Economic Framework The Macro-economic Framework Over the last decade, the UK Government has focused on encouraging growth and prosperity in the UK through:   

maintaining macroeconomic stability to enable business and individuals to plan for the future implementing microeconomic reforms targeted at addressing market failures in the principal drivers of growth – competition, enterprise, innovation, skills, investment and employment; and devolving decision-making to the regional and local levels where appropriate to ensure strategy and delivery are focused on local economic conditions.

The Five Drivers of Productivity The Government identifies five drivers of productivity in ‘Productivity in the UK: Evidence and the Government’s Approach’2 published in 2000. These drivers are: enterprise, skills, innovation, investment and competition; areas where improved performance can have a significant impact on the economy as a whole. It is for this reason that, in recent years, these drivers have played an increasingly prominent role in directing public sector intervention.

Reference is made to indicators which reflect regional performance in relation to these drivers in section three of this document.

Longer-term Opportunities and Challenges In November 2006, HM Treasury published a report entitled ‘Long-term opportunities and challenges for the UK: Analysis for the 2007 Comprehensive Spending review.’ This paper highlighted five key challenges that are expected to impact upon the UK and its future economic growth potential in the long term:    

Demographic and socio-economic change – meeting the challenge of an ageing population Globalisation – increased competition from emerging markets – China and India Innovation and technological diffusion – the pace of innovation and technological diffusion is a key driver of productivity in the economy Increasing pressures on natural resources and global climate change – further industrial restructuring may be required as a result of further climate change mitigation policies

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HM Treasury 2000, ‘Productivity in the UK: Evidence and the Government’s Approach.’(www.hmtreasury.gov.uk/media/D/C/ACF1FBA.pdf

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

Continued global uncertainty – addressing the continued threat of terrorism

From the factors listed above the impacts of globalisation and of innovation and technological diffusion are considered to be most significant as far as this strategy is concerned.

New Industry, New Jobs In April 2009 the Government published ‘New Industry, New Jobs.’ This report forms the Government’s strategic vision for Britain’s recovery, with a focus on re-establishing normal growth rates and rebalancing public finances. The paper highlights the need to remove barriers which are holding back British businesses and building on our strengths in the global economy.

Reference is made to changing social and economic conditions occurring globally, such as: growing populations; new technologies; changing demographics; and rising prosperity in some third world countries; which will present new opportunities as well as challenges to British businesses and the British economy as a whole.

High level skills and creativity and technological change are highlighted as being critical to success. The Government sets out in this paper how it will:   

Adapt and strengthen Britain’s general competitiveness policies in critical areas like innovation, skills, finance, infrastructure and access to global markets; Use its role and influence in the market in a new and more strategic way; Use a new approach to targeted interventions to ensure that Britain continues to retain and develop strengths in high-value areas of global growth or rapid and fundamental technological change.

Sainsbury Review of Science and Innovation Lord Sainsbury of Turville published his review of the UK science and innovation system in October 2007. The review examines the role of science and innovation in ensuring the UK remains economically competitive in an increasingly globalised economy.

The report highlights the need for UK businesses to focus on producing high-value goods, and services, as opposed to competing on cost, in order to sustain their own and national competitive edge.

The report concludes that the UK is well placed to maximise the opportunities that globalisation brings, identifying a number of key strengths: a growing share of high-technology manufacturing and knowledge-intensive services and a strong university base with increasing levels of knowledge transfer.

Manufacturing Policy in the UK National Manufacturing Strategy Manufacturing plays a significant role within the UK economy. In 2002 the Government published a Manufacturing Strategy for the UK. The Strategy identified seven key pillars which continue to be priorities for Government support:  

Macroeconomic stability – allowing businesses to plan for the long-term Investment – supporting investment in capital equipment and processes, leading edge technology, skills development, and research and development

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    

Science and innovation – helping manufacturers exploit the UK’s strong science base to create innovative, high value products Best practice – helping companies to raise productivity through continuous improvement and ‘lean manufacturing techniques.’

Skills and education – supporting the development of a skilled and flexible manufacturing workforce Modern infrastructure – providing effective transport and communication networks Right market framework – providing the supportive business environment that manufacturing needs to compete globally

Retaining high value manufacturing and improving productivity across manufacturing were considered to be pivotal in maintaining a strong manufacturing base in the UK. The Strategy was reviewed and further refined in 2004 when the following priorities were presented:        

Promoting science and innovation High skilled, high performance workplaces Encouraging intelligent public procurement Encouraging high value added investment Promoting best practice Improving understanding of manufacturing Better regulation Modern infrastructure

This paper highlighted the need for improving skills, innovation, capital investment and the role of public procurement. It emphasised the buoyant outlook for manufacturers which were responding to the changes taking place in terms of technology, global trade relations, and restructuring of manufacturing in both the UK and abroad.

The most recent review of the Manufacturing Strategy was undertaken in 2008, which identified five inter-related dynamics that have been, and continue to be, instrumental in reshaping global manufacturing:     

The increasing prevalence and complexity of global value chains, underpinned by developments in information and communication technology, and consequent fragmentation of processes, encouraging specialisation The accelerated pace of technology exploitation as the pace and demand for change implementation has increased The growing importance of investment in intangibles such as design, branding and research and development The increased recognition that investment in people and skills is among the most important for companies to make The move to a low carbon economy as the response to climate change creates both new challenges and opportunities for manufacturing firms.

The Strategy identifies a number of policy proposals each relating to one of these factors.

(See www.bis.gov.uk for further details)

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Regional Regional Economic Strategy (RES) The 2006 RES identifies the priorities for the Northwest in relation to economic development.

The RES recognises that the region has £13bn GVA gap, of which £10bn relates to productivity issues, whilst £3bn is due to equity issues. The strategy includes 122 actions devised to close the GVA gap, several of which relate to manufacturing (see appendix 1).

Cluster strategies Action 8 of the RES states that the Agency will seek to: ‘Undertake cluster programmes in priority sectors to develop higher value activity, improve productivity and identify future growth opportunities from converging market/technologies for: biomedical; energy and environmental technologies; advanced engineering and materials: chemicals, aerospace, automotive, advanced flexible materials; food and drink; digital and creative industries; business and professional services.’

A number of the sectors listed above have a manufacturing component. The Agency tasked the Regional (or sub-regional) Cluster Organisations to undertake mapping exercises and to develop individual strategies for the clusters. (Further details regarding clusters are provided in appendix 2).

Each of the cluster strategies has been developed via an independent process with a focus on the needs of businesses identified as being within that cluster.

There are some factors which the clusters have in common:     



    

The presence of ‘global’ businesses is seen as a strength to be exploited.

There is a regional specialism to the clusters, e.g. chemicals and textiles.

In many higher value adding clusters the existing skill-sets of the workforce are seen as strengths (e.g. within chemicals and aerospace), whilst skill sets across the other clusters are considered to be in need of improvement.

There is general recognition that the region has a strong HE base.

Although the region is seen as having a strong HEI infrastructure its utilisation and the role that HEIs play is more generally seen as a weakness by businesses. The failure to connect research excellence within HEIs and the needs of businesses within the region is perceived to be a weakness across many of the cluster reports.

The supply chain linkages within the region are often seen as weak although the nature of the weaknesses vary from cluster to cluster. For example, within aerospace there is an identified need for improvements within both design and production capabilities within the supplier base.

Opportunities for the clusters are largely associated with existing regional strengths that can be exploited.

Improving performance and productivity through raising skill levels is considered to be an opportunity across all clusters.

Improving supply chains and links between businesses and HEIs is also viewed as an opportunity.

Increased internationalisation and globalisation is viewed consistently as a threat by the clusters.

Clusters also identify potential threats related to not maintaining existing strengths, not addressing existing weaknesses or seizing opportunities.

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Northwest Enterprise Strategy The Northwest Enterprise Strategy (2008) provides a framework for encouraging enterprise in its broadest sense in the Northwest. This means not merely focusing on encouraging new business start-ups but on developing an ‘enterprise culture’ in the Northwest to stimulate increased productivity in the region. This will be achieved through maximising the competitiveness of existing businesses and supporting a growing supply of entrepreneurs.

The strategy recognises the importance of enterprise in closing the region’s GVA productivity gap, and the significant role enterprise has to play in improving communities and increasing the region’s business base. The strategy does not make specific reference to manufacturing, however, the RES priority sectors, many of which have a significant manufacturing base, are identified in the strategy as a target segment for enterprise development activities. (See www.nwda.co.uk/enterprise for further details).

Northwest Science Strategy 2007-2010 This strategy is an update of the UK’s first regional science strategy developed by the Northwest Science Council in 2002. The Science Strategy makes specific reference to manufacturing. It highlights the retention of original equipment manufacture as a priority for the region.

The strategy is built on 3 foundations: (1) an internationally excellent science base; (2) exploitation of science and (3) skills. These foundations link to sectors which are identified as offering emerging opportunities: bio health, aerospace, chemicals and nuclear industries, and strategic science sites. The overall aims of the strategy are to:     

Grow and maintain world-class infrastructure for the academic and industry base Enhance the creation and exploitation of knowledge Develop, attract and retain high quality people Close the R&D funding gap between the private and the public sector Promote the image of the Northwest as a vibrant hotbed of scientific endeavour.

Northwest Innovation Policy The Northwest Innovation Policy (2008) was developed by the Agency and its partners to encourage increased innovation in the region. Improving the overall levels of innovation in the Northwest necessitates reducing barriers to innovation through raising awareness of its wider benefits, increasing access to, and the exploitation of, knowledge, and also increasing motivation and capacity to innovate throughout the region’s businesses.

Internationalisation Strategy for the Northwest The region’s Internationalisation Strategy has, as one of its six key areas of action, the development of internationally competitive sectors. This includes attracting inward investment, helping businesses in the sector gain access to international markets, attracting and retaining workers with the skills they need to compete and develop international supply chains. A second action area of the Internationalisation Strategy which relates to manufacturing is maximising the International potential of science and innovation, research and development, and education in the region.

Climate Change Action Plan 2007-2009 The plan’s immediate vision is to reduce carbon dioxide emissions by influencing the attitude and behaviours of all interest groups. It aims to reduce energy demand and to promote low

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carbon technologies whilst ensuring that mechanisms are put in place to adapt to future climate change.

The plan comprises 27 actions of which some are relevant to manufacturing:    

Action 2 - ensure that all regional and local plans, strategies and policies have sustainable energy and climate change impacts at their core Action 21 - ensure all regional strategies prioritise an increase in energy efficiency and reduced demand, climate change adaptation, low carbon transport and energy generation.

Action 19 - identify and support the largest public, private and domestic sector greenhouse gas emitters in the region to identify and implement the best opportunities to reduce their contribution.

Action 25 - develop a regional low carbon fund to better coordinate and increase the availability of funding for research, development and commercialisation of low carbon technologies and low carbon fuels.

The Sustainable Consumption and Production Action Plan The Agency is in the process of producing an action plan focused on encouraging sustainable consumption and production. This document is due to be completed in autumn 2009 and is expected to contain actions which relate directly to the manufacturing sector.

Prior Northwest Manufacturing Action Plan In February 2006 Deloitte completed an evaluation of the previous manufacturing action plan for the Northwest. Amongst the key findings were:   

The future of manufacturing in the region is perceived to be positive Manufacturing needed a ‘voice’ in the region The Manufacturing Advisory Service (MAS) and Agenda for Change are important programmes supporting the sector

Key recommendations included:      

Communication between the NWDA and beneficiaries required simplification Any new strategy and action plan should be closely aligned with the new RES Stakeholders should be more integrally involved in future strategy development and activity Programmes supporting manufacturing need communicating more broadly within the region A common entry point for support is required Programmes should be demand led.

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3. EVIDENCE BASE …………………………………………………………………………………

This section provides an overview of the manufacturing sector and presents the key trends, the drivers of growth, challenges and opportunities for the sector.

Key facts and figures National Manufacturing accounts for 13% of UK GDP and has increased its productivity by 50% since 1997, outperforming the rest of the economy. The sector generates £150 billion per annum for the UK economy.

The UK generates the 6th largest manufacturing output in the world and attracts more foreign direct investment than any country apart from the USA. Manufacturing accounts for 75% of business research and development in the UK and half of the UK’s exports.

The UK is a world-leading exporter of high-tech goods. In 2006, 25% of UK goods exports were high tech, compared to 22% in the USA, 15% in France and 11% in Germany.

Regional Manufacturing is a key contributor to the region’s economy. In 2006 it was responsible for generating around £20.3 billion of the Northwest’s GVA. Manufacturing in the Northwest has a high location quotient relative to England, and has specialisms in a number of manufacturing industries – in particular, the manufacture of aircraft, motor vehicles, chemicals and pharmaceuticals as well as food and drink related industries.

However, manufacturing has declined in employment terms, dropping 5% between 1998 and 2006 from 19% to 14% of total employment in the Northwest. The sector’s proportion of total regional GVA also decreased between 1998 and 2004 from 32% to 19%.

The Northwest also saw decreases in manufacturing’s share of the business base between 1998 and 2006. The percentage of businesses in the manufacturing sector in the Northwest in 2006 was 7.7% which represents a decrease of 1.8% since 1998.

Nevertheless, the Northwest manufacturing sector has shown a slightly higher degree of resilience than England, with employment falling by 24% between 1998 and 2006 compared to 29% nationally.

Cambridge Econometrics reported in the Region’s Economic Forecasting Panel (March 2007) that manufacturing is the most productive broad industrial group within the regional economy generating in both the Northwest and the UK in 2005, approximately £45,000 per employee.

(C.f. ‘other services’ at £35,000). Manufacturing is the only broad industrial group in which the region’s GVA per employee is on a par with that nationally.

As far as business size is concerned the Northwest has a lower proportion of small manufacturing enterprises (employing 0-9 people) at 73% than England (76%) but higher proportions of larger manufacturing workplaces than England (27% employ more than ten people in the Northwest compared to 24% in England). Also, 1.3% of manufacturing workplaces employ more than 250 people in the Northwest: this compares to 1.1% in England.

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Business density statistics show that the manufacturing sector is still very significant in many local authority areas across the Northwest and the actual density of manufacturing businesses has not diminished significantly in some areas even if manufacturing as a proportion of the total stock has decreased.

Key Manufacturing sub-sectors/clusters Five out of the six priority RES sectors have a major manufacturing component. A number of the region’s strengths in manufacturing lie within these sub-sectors. An overview of the key sub-sectors is provided next.

Aerospace The aerospace cluster in the Northwest is primarily based on airframe and aero engine system and component manufacture. Key players in the region include Rolls Royce, Airbus and BAE Systems. The cluster has a strong international dimension and is a major contributor to the Northwest economy. Skill levels in the sector are high which is reflected in the average GVA per head of ÂŁ70,000, significantly higher than the regional average for all sectors.

Prospects for future growth are considered to be positive, a focus on improving competitiveness, and ensuring that the industry continues to be innovative and at the forefront of technological development, are identified as key in attracting investment. Other opportunities include using the defence platform capability to develop other capabilities; the development of high end design and systems, and the development of the NW Composite Centre and links to advanced materials production.

A full SWOT analysis for the aerospace cluster is provided in appendix 2.

Automotive The automotive cluster accounts for approximately 4% of the region’s manufacturing GDP and comprises around 500 businesses ranging from volume car manufacturing to various components of the supply chain.

Activity is concentrated around four key sites for vehicle manufacture in Merseyside, The Wirral, West Lancashire and Cheshire, where respectively Jaguar/Land Rover, General Motors, Leyland Trucks and Bentley Motors are based. The cluster produces a range of vehicles from prestige and racing/rally cars to trucks.

Amongst the key long-term issues faced by the sector are the cost of raw materials and competition from low cost locations in Eastern Europe. The automotive sector is also deemed to have a weakness with regard to linkages with HEIs in the region. This is reflected in the lack of specialism within universities to collaborate with the sector, especially on logistics and production projects.

The sector is also facing a shortfall of essential skills due to the contraction of the UK manufacturing sector and the resultant drop in the training of apprentices. Recruitment and the development of skills are considered to be a major challenge for the sector.

Currently, as this strategy is being developed, the automotive sector is experiencing significant difficulties as a result of a large drop in sales, with calls for government intervention being made by industry on both sides of the Atlantic.

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A full SWOT analysis for the automotive cluster is provided in appendix 2.

Chemicals The region’s chemicals sector is considered to be a vital component of the Northwest economy.

It consists of around 650 businesses which generate an estimated turnover of £10.1 billion equating to £2.8 billion GVA. The chemicals sector has a cross-cutting role in terms of supporting the broader manufacturing sector and playing a key role in supply chains within other sectors in the Northwest.

In terms of geographical location, the bulk of the sector is located in a number of small clusters along the M62/M56 corridor. The region has the largest chemicals sector in the UK and makes a significant contribution to the balance of trade.

Chemical companies generally fall into one of three categories: core, downstream, and distributors and traders. Employment is concentrated in the downstream category, primarily in pharmaceuticals, performance and speciality chemicals; and soaps, detergents and cleaners.

Northwest universities have generated a considerable number of spin outs in this sector.

Research and innovation into chemicals in the region is also strong, as is R&D through the presence of AstraZeneca, Unilever and Shell UK. Amongst the key challenges the sector is currently facing are: legislation changes, increasing pressures from lower cost production centres overseas, energy price volatility, lack of recent capital investment, and developing the skills of the existing workforce.

A full SWOT analysis for the chemicals cluster is provided in appendix 2.

Biomedical Technology There are around 350 biomedical businesses in the Northwest, employing circa 20,000 people. Of these, 164 are ‘core’ R&D-based biomedical companies working in drug development, diagnostics, devices and healthcare which employ around 15,000 people. The cluster has a major pharmaceutical presence with several key players such as, AstraZeneca (including Medimmune), GSK, Sanofi Aventis, Eli Lilly, BMS and Novartis.

As with other sectors such as automotive, there is a real threat of manufacturing moving overseas due to cheaper labour costs. However, the pharmaceutical industry is undergoing major restructuring and additional supply chain opportunities may stem from the trend towards outsourcing amongst biotechnology and pharmaceutical companies, particularly in R&D, clinical trials and production. The region has a particular strength in biomanufacturing which offers considerable potential for inward investment.

A full SWOT analysis for the biomedical cluster is provided in appendix 2.

Advanced flexible materials Advanced flexible materials (AFM) manufacture remains concentrated in central Lancashire and the northern part of Greater Manchester. The concentration of the industry in the region is the most significant in Europe and accounts for two-thirds of UK manufacturing capacity.

There are 481 AFM companies which employ 37,000 people in the Northwest. The companies’ combined turnover amounts to £3.97bn with 70% of sales generated by exports.

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The key issue for the sector appears to be responding to the contraction of basic textile manufacture (in response to lower cost centres outside the UK); shifting to higher value added manufacturing; and final product production. There is a synergy with other sectors in the region, for example, advanced flexible materials are important to the aerospace sector.

A full SWOT analysis for the textiles and advanced flexible materials cluster is provided in appendix 2.

Energy and Environmental Technologies Energy and environmental technologies are becoming increasingly important sectors of the economy with the need for sustainability with regard to environmental impact, carbon costs and energy supply. There are 12 key sub-sectors within the Northwest sector:            

Air pollution control Cleaner technologies and processes Decommissioning and decontamination of nuclear sites Environmental consultancy Environmental monitoring, instrumentation and analysis Energy management and efficiency Marine pollution control Noise and vibration control Remediation and reclamation of land Renewable energy Waste management, recovery and recycling Water supply and wastewater treatment

This sector employs 87,000 people and consists of around 5,000 businesses which contribute £11.25 billion towards the regional economy in 2006.

Envirolink, the Regional Cluster Organisation for the sector, has identified key areas of opportunity for the region: energy efficiency, water and wastewater, renewable energy, waste management and recycling, and land remediation.

Particularly noteworthy is nuclear related activity. The North West has a world leading nuclear energy sector with the highest concentration of nuclear R&D in the UK and is home to major energy businesses such as Westinghouse, British Energy, Amec, and Urenco. Virtually all the UK’s fuel manufacture and reprocessing is based in the region and over half of UK employment in civil nuclear is based in the North West working in about 300 businesses. This means that the region is well-placed to take advantage of the nuclear new build programme which will get underway in 2012 in the UK. Food and Drink The food and drink sector in the Northwest accounts for 10% of regional GVA, generating more than any other region in the UK. The sector employs around 450,000 people in three key areas: food retail and food service; food manufacturing and processing; and primary production.

The region has a significant presence of global organisations and high profile brands such as Kelloggs, Nestle, Heinz, Princes Foods, Premier Foods, Halewood International and Interbrew, as well as a number of other corporate and retailer branded goods. The sector also has a large SME base, which adds value and grows through innovation.

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Amongst the key challenges for this sector are: recruitment of graduates and shortage of technical staff, increasing globalisation of the food market, and the importing of low cost labour.

A full SWOT analysis for the food and drink cluster is provided in appendix 2.

Digital and Creative Industries Although not usually seen as a sector within manufacturing, digital and creative industries do have a manufacturing element and are a significant growth cluster in the Northwest. This sector consists of 31,000 businesses, employing some 320,000 people, the biggest digital and creative industries cluster in Europe outside of London. It is responsible for generating 16% of the region’s GVA, but employs only 10.6% of the region’s workforce.

The ‘Digital Britain’ White Paper published in June 2009 will lead to greatly increased investment in fixed line and mobile broadband networks and drive new opportunities for supply and manufacture of network and consumer hardware and electronics.

Amongst the key issues facing this sector are: new technologies – threatening traditional media forms which are already strong in the Northwest and access to finance. Whilst, MediaCityUK in Manchester is seen as one of the region’s primary opportunities for growth.

A full SWOT analysis for the digital and creative industries cluster is provided in appendix 2

Manufacturing Sector Trends, Drivers, Issues and Opportunities The following section provides an overview of the key factors – drivers, issues and trends currently affecting the manufacturing sector in the Northwest and those which are expected to continue to impact upon its performance in the future. An assessment of the region’s performance against the five drivers of productivity is provided, followed by an overview of the main manufacturing ‘sub-sectors’ in the Northwest, and an outline of the sector’s key strengths and weaknesses, the threats it currently faces, and the opportunities which must be exploited to ensure the continued, long-term sustainable growth of manufacturing in the region.

Drivers of productivity and manufacturing As mentioned in section two, the Government identified five key drivers of productivity in ‘Productivity in the UK: Evidence and the Government’s Approach’3 which was published in 2000. An assessment of the Northwest’s performance against the five drivers follows.

Enterprise Between 1999 and 2005 the Northwest witnessed less start-ups per 10,000 population (using the VAT registrations measure) than the national average. The number of manufacturing business start-ups also declined during this period.

At a sub-regional level, Greater Manchester and Lancashire have seen higher levels of manufacturing start-ups compared with the region as a whole. Whilst Cumbria and 3

HM Treasury 2000, ‘Productivity in the UK: Evidence and the Government’s Approach.’(www.hmtreasury.gov.uk/media/D/C/ACF1FBA.pdf

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Merseyside have had relatively low rates of VAT registrations among manufacturing businesses.

Over the same period VAT de-registrations have been consistently lower than in England indicating a lower rate of churn than for England as a whole. However, overall de-registrations have been higher than registrations with the result that the total stock of manufacturing businesses has decreased.

Greater Manchester has a relatively high rate of de-registrations and as a consequence, despite a high level of start-up activity (i.e. new VAT registrations), has experienced a decline in the number of firms in the manufacturing stock. Cumbria and Merseyside have particularly low levels of VAT de-registrations suggesting that businesses are surviving better in these areas. Taken together, the data on registrations and de-registrations illustrates that some areas have a higher degree of market ‘churn’ than others.

Skills gaps in manufacturing The National Employers Skills Survey (NESS) undertaken in 2005 found that 14.7% of employers in the manufacturing sector in the Northwest had skills gaps within their workforce, which is on a par with the national average.

Amongst the skills deficits cited were:   

Some soft skills/capabilities such as customer handling and oral communication Basic skills such as literacy and numeracy Important workplace skills, particularly relevant to manufacturing such as team-working and problem solving

Other skills requirements emerging from other sources of evidence include technical skills and management skills.

Innovation and manufacturing knowledge intensive businesses Overall the proportion of employment in manufacturing knowledge intensive businesses has been declining in the UK. However, the Northwest has a higher percentage of employment in knowledge intensive businesses than in England as a whole.

At a sub-regional level, Cheshire and Warrington and Lancashire have a significantly higher proportion of employment in manufacturing knowledge intensive businesses relative to the England average. This is largely due to the industrial mix and the presence of major employers such as Astra-Zeneca and BAE Systems.

R&D Investment in manufacturing Manufacturing businesses in the Northwest invest heavily in R&D. However, this is concentrated within individual sub-sectors of the economy, with chemicals accounting for a significant proportion of total manufacturing R&D. The level of investment overall however, is low in comparison with the East and South East of England.

Competition: trade dynamics Trade figures for manufacturing indicate that in the Northwest the sector which exports the most goods is chemicals. Transport and machinery also make a significant contribution to the

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balance of trade. The region, therefore, has some competitive advantages in some areas upon which it can build.

Trends and Future Opportunities Key messages from SQW’s analysis of econometric trends and projections produced by Cambridge Econometrics include: 

Recent trends  Overall, manufacturing in the region between 2000 and 2005 declined with a reduction in employment and GVA  Where productivity gains were made this generally resulted from businesses reducing headcount  Some sub-sectors have experienced significant change: pharmaceuticals has witnessed considerable growth in the five year period to 2005, whilst textiles has declined



Future projections  Manufacturing is projected to continue to decline in employment terms but to increase GVA between 2005 and 2020  The majority of sub-sectors will continue to adjust – pharmaceuticals and electronics are expected to see strong GVA growth whilst a number of traditional, labour intensive sectors (e.g. textiles) are projected to shrink



Productivity  Manufacturing generates more GVA per employee than all other sectors that account for a substantial proportion of employment in the region. This is expected to continue and the gap between manufacturing and the average productivity in the Northwest is projected to increase.

Manufacturing SWOT Analysis A review of key strategic documents, statistical and econometric analysis, and a business survey form the basis upon which the SWOT analysis below was developed.

Strengths

Weaknesses

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Manufacturing is a well established sector in the region - where there is a wealth of knowledge and experience which can be exploited





 Supply chain linkages between large production The region has specialisms in a number of major industries businesses within the region and their suppliers are sectors which: said to be poor – this is for both manufactured - represent high value added sectors components and for services that support - are strongly represented within the region manufacturing production (e.g. design). Key issue is - have the potential to add further value to the capacity of the business base to supply the regional economy (including the infrastructure in which they are located).

Strengths in some high performance sectors –



Although the region is home to a strong HEI base, businesses, particularly SMEs, perceive that it is difficult to collaborate with HEIs

17

such as pharmaceuticals which has seen substantial expansion in recent years, and chemicals, which has high GVA, high R&D investment, and a high positive balance of trade



A declining manufacturing base



Lower R&D investment than in the South East region, especially with regard to public sector R&D spend



The region is home to a number of leading international businesses



Poor perception of the sector amongst a range of audiences



Strong skill sets in some clusters – e.g. chemicals and aerospace



A lack of ‘voice’ or one single organisation to represent the sector



The region has a very strong HEI base with a  wide range of institutions reflecting the entire variety of HE missions from world class research to provision of learning and teaching  A resilient manufacturing base in some parts of the region

 





 

Strong performance in some sub-regions across a host of indicators – especially in Cheshire and Warrington

Lack of understanding and awareness amongst many audiences (especially public sector) of the potential which manufacturing has to boost regional GVA Considerable sub-regional variations in performance - Cheshire and Warrington very strong but Lancashire, manufacturing is still considerable, is increasingly weak on a number of indicators except enterprise



Shortage of particular skills-sets within the workforce

 Higher spending in R&D relative to most other English regions – especially by manufacturing businesses

Relatively low levels of enterprise – e.g. start-up activity



A high concentration of employment in knowledge intensive manufacturing businesses – above national average

Survey revealed difficulty in attracting skilled young people to the sector, whether through graduate recruitment or apprenticeships



The increasing cost of labour, particularly in light of the cheap labour available abroad

Above national average levels of enterprise in Lancashire



A business support infrastructure that is regarded positively by businesses who use the services

The ‘shrinking’ of electronics over the period 2000-2005 suggests a particular weakness in this high value adding sub-sector



Some businesses in the sector remain unaware of the business support infrastructure available



A number of the key issues affecting the sector are external – e.g. taxation



Limited availability of fit for purpose premises



Infrastructure – transport, housing stock, etc



A lack of cross-cluster communication



Businesses consider existing public sector organisation to be too complex and that there are too many public sector initiatives, their origin and purpose often not being clear

Opportunities

Threats





Building on cluster strengths: - being able to produce additional products at different parts of the value chain to those already being produced - increasing productivity further

Failing to improve skills: - will result in productivity improvements not being achieved and further impacting on competitiveness (recognised in the national policy, regional policy and within the clusters) - reduces the ability of businesses to adapt to the

18



Manufacturing remains a high GVA sector in the economy – retaining the ability to produce high GVA can improve regional economic performance 



To utilise the existing R&D base for greater benefits (e.g. reducing the reliance on a small group of major firms within certain sectors)



Utilising the region’s science base to support cluster activity better, and link the research capabilities of HEIs with the needs of SMEs and the broader business base



Globalisation – as an opportunity for regional businesses to reduce costs (in outsourcing and off-shoring) and to increase exports of value goods and services



There is the potential to improve the manufacturing sector’s performance through interventions and policy changes (e.g. encouraging increased collaboration between HEIs and businesses)



Improving skill-sets to meet the demands of manufacturing businesses targeting those skill areas that are most needed



Responding to environmental concerns as an opportunity



Increase the benefits of business support interventions (e.g. skills development) by extending them to a greater number of businesses



increased pace of change (particularly in terms of technology and market demand change) Failure to innovate – exposing the region to competition on cost (identified as an issue from the national policy perspective) and failing to retain the existing research base that is present in the region



Globalisation: - risks of businesses (especially those currently operating in high value aspects of the value chain) re-locating overseas - supplier side competition for materials, investment and people - demand side competition from foreign lower cost production



Increasing regulation and environmental concerns



A considerable negative impact on local economies where manufacturing dominates should it continue to decline



Risk that with R&D concentrated in certain sectors (most likely, individual firms), the R&D base of the region could be ‘shocked’ by sudden departures/ closures



A continued failure to supply NVQ4+ trained individuals to manufacturing businesses could inhibit the performance of the sector – especially in Lancashire where the share with NVQ4+ has grown least



A continued decline in new start manufacturing businesses will see the overall stock further reduce

 Concentrations of employment within large business To demonstrate the value of manufacturing - and lobby(including for some high GVA and knowledge intensive greater support of manufacturing within central businesses) that might be exposed to future shocks Government 

Taxation and regulation – businesses see these are key threats to their viability

19

Strategic impact, aims and considerations SQW’s analysis of available evidence resulted in the identification of a strategic impact which a modern manufacturing strategy should achieve: Strategic Impact: to raise manufacturing’s contribution to regional GVA Achieving the desired strategic impact will require the region to focus on two overarching strategic aims: Strategic Aim 1: Increasing the share of high value adding employment Strategic Aim 2: Retaining ‘good’ employment A number of key factors are considered to have a significant impact on the success or otherwise of the region in achieving the above mentioned vision, strategic impact and strategic aims. These are:   

Globalisation – which is seen as an opportunity and a threat Environmental sustainability – especially the promotion of the carbon economy Sustainable business – developing innovative businesses with the capacity to react positively to economic shocks and utilising local assets to promote sustainable businesses

These are major issues which the sector is currently facing which, it is felt, no single stream of activity can appropriately address; however, need to be considered as an integral part of an action plan for manufacturing.

Strategic and Cross-cutting Themes Six strategic themes and three cross cutting themes have been identified which are based on the key ‘issues’ for manufacturing. These themes represent the priority areas of activity to be addressed by the strategy.

The strategic and cross cutting themes are presented below together with related strategic objectives.

Theme 1: Improving the image of Northwest manufacturing Strategic objectives to be achieved: 

To promote manufacturing in the Northwest to high calibre young people, internationally mobile research and managerial ‘talent’ and, prospective investors as a high value adding, innovative and influential sector.



To develop and sustain strong influence on the implementation of national policy in favour of manufacturing in the region.

Theme 2: Increasing capacity and capability to innovate Strategic objectives to be achieved:

21



To improve innovation performance of manufacturing businesses in the region over the next 10 years, as measured by the parameters of the Community Innovation Survey



Through awareness raising and effective/efficient access, increase the level of take-up (i.e. market penetration) of innovation support initiatives by manufacturing businesses in the region

Theme 3: Improving the interactions of business and education establishments on manufacturing issues Strategic objectives to be achieved: 

Increase the level of take-up by manufacturing businesses of initiatives which support knowledge/technology transfer from the university sector to industry



To implement and sustain fora and associated means of communication to improve the mutual understanding of needs and opportunities, and to enhance collaboration between manufacturing businesses and universities within the region

Theme 4: Ensuring that places, spaces and infrastructure are fit for purpose for manufacturing Strategic objectives to be achieved:   

To ensure that the stock of employment land and the type of premises available within the region are fit-for-purpose for a modern, high performing manufacturing sector To ensure that planning policies in the region acknowledge and are responsive to the requirements of a modern, high performing manufacturing sector Through integrated infrastructure development and demonstration, promote the Northwest as the premier European location in which to locate high value adding manufacturing

Theme 5: Increasing new enterprises in manufacturing Strategic objectives to be achieved: 

To increase the number of new start manufacturing businesses with high value added potential (including university and corporate spin-outs)



To raise productivity in the region by increasing enterprise within businesses to consider new business forms and new business activity

Theme 6: Improving access to actionable information on markets and change (including legislation) Strategic objectives to be achieved: 

To ensure that manufacturing businesses are aware of and can gain ready access to strategic technology and market intelligence that is relevant and actionable in their business context

22



To promote, disseminate, support and sustain the adoption of leading practices in supply chain development and management by manufacturing businesses in the region, taking into account all linkages within the manufacturing value chain

Cross-cutting themes A: Ensuring a highly skilled workforce at all levels Strategic objectives to be achieved: 

To increase the uptake of training of existing employees and improve the level of qualifications held by those working in manufacturing in the region over the next 10 years



To increase the number of graduates in Science, Technology, Engineering and Maths (STEM) subjects employed in manufacturing, as a proportion of the manufacturing workforce in the region, over the next 10 years



To increase investment in, and take-up of, management development provision within the manufacturing sector in the region over the next 10 years

Cross-cutting theme B: Vertical and horizontal co-ordination between businesses Strategic objectives to be achieved: 

To increase collaboration between businesses and to monitor and measure GVA value of these collaborations to the economy

Cross-cutting theme C: A more responsive public sector Strategic objectives to be achieved: 

To have public sector institutions collectively recognising that manufacturing is important and modifying ‘generic’ activity to be more responsive to manufacturing’s needs

23

5. PRIORITY ACTIONS The priority action plan is provided below. This action plan focuses on new actions but does include the Manufacturing Advisory Service as an enhanced activity and one which cross across several of the strategic themes. Further details including the evidence supporting the action, as well as the market failure, are to be found in appendix 3.

Theme

Action

Lead

All Strategic Theme 1:

1. Deliver the enhanced Manufacturing Advisory Service (MAS) 2. Establish a Manufacturing Forum comprising senior representatives from industry which will be the focal point for the sector in the region.

TMI NWDA

Improving the image of the Northwest Manufacturing Sector

3. Undertake a Marketing and PR Campaign to:

NWDA/ TMI

   

Raise awareness of the significance and value of the sector amongst the public sector and media To promote the sector’s strengths to international business leaders and decision makers to encourage new investment and re-investment To promote ‘modern manufacturing’ in order to change outdated perceptions of the sector amongst young people, parents, teachers and educational staff To raise awareness amongst young people of the career opportunities offered by modern manufacturing (linked to Cross-cutting theme 2) NWDA/ TMI

4. Develop the manufacturing portal to   

Promote manufacturing as a career choice to young people in the Northwest Promote the Northwest manufacturing sector to encourage further investment by businesses in the region To demonstrate Northwest manufacturing innovation excellence (linked to Strategic theme 2)

(N.B. the portal is envisaged to be a key component of the marketing effort to promote the sector to key audiences highlighted in action 2.)

Strategic Theme 2: Increasing capacity and capability to innovate Strategic Theme 3: Improving the interactions of business

5. Extend the ‘Make it’ programme to raise awareness amongst young people of the career opportunities offered by modern manufacturing 6. Audit of existing services and opportunities available to businesses from HEI and Research Institutions, including the access arrangements and key contact points 7. Ensure that any Innovation Advisory Service in the region is resourced to service the manufacturing sector and capable of responding to manufacturing business needs 8. Facilitate increased contact between academics and industry

TMI NWDA/ EEF NWDA/ BL

NWUA/ NWDA

9. Develop an awareness programme about Knowledge Transfer Partnerships and to provide facilitation to encourage manufacturing firms and colleges to collaborate

24

and education 10. Develop and invest in work experience programmes for academic and establishments on teaching staff manufacturing issues 11. Create a framework in which educational establishments and manufacturing businesses can work together to devise a shared vision and develop services which support and meet the needs of manufacturing businesses in the region, such as the provision of a ‘One Stop Shop’ for manufacturers

Strategic Theme 4: Ensuring that places, spaces and infrastructure are fit for purpose for manufacturing Strategic Theme 5:

12. Encourage more college business partnerships such as that created by BAE Systems in Barrow in Furness.

NWDA 13. Develop consultative mechanism to ensure greater co-ordination between spatial policy and economic development needs 14. Work with local partners to audit current employment sites and premises and initiate a consultation exercise involving local businesses to assess need

15. Ensure that cross-sectoral initiatives to increase enterprise (e.g. Enterprise Culture related activity) have a manufacturing component

Increasing new enterprises In manufacturing Strategic 16. Commission a targeted world-wide benchmarking programme and make Theme 6: data available to businesses and business organisations Improving access to actionable information on markets and change Cross-cutting Theme 1:

NWDA

NWDA

17. Work with the Department for Business, Innovation and Skills (BIS) to consider revised and funded Foresighting programmes

18. Introduce a skills simplification programme

19. Promote existing initiatives including the advantage of apprenticeships to Responsive manufacturing employers skills and education 20. Develop a roadshow which promotes manufacturing in the Northwest in HEI provision to both regionally and nationally meet the needs of manufacturing 21. Facilitate a joint programme with Higher Education, Further Education and schools at a sub-regional level to develop an infrastructure which supports progression in technical training Cross-cutting 22. Encourage collaborative activity between businesses via the manufacturing NWDA Theme 2: portal Vertical and horizontal co-ordination between businesses

25

Cross-cutting Theme 3:

23. Raise awareness amongst the public sector of the value of manufacturing (this action relates to actions 1 and 3)

A more responsive public sector

24. Encourage local (sub regional) investment from public sector partners in facilitation and the establishment of a one-stop shop support service for manufacturing businesses

26

NWDA

6. MONITORING AND EVALUATION Monitoring 6.1

It is proposed that the Manufacturing Forum will provide on-going direction to, and oversee the implementation of, the MSAP. It will also be responsible for identifying specific organisations to deliver each action. The Manufacturing Forum will comprise of primarily private sector individuals plus a small number of senior public sector representatives from key delivery bodies. A Working Group composed of public sector delivery organisations will report into the Forum and will deliver the strategy.

Key Performance Indicators 6.2

A range of indicators to measure success and monitor progress have been identified. These are given in the table below. The primary indicator, however, will be GVA per head for manufacturing.         

GVA per head and total GVA for manufacturing Number of new start ups/survival rates (new VAT registrations) Business density Levels of innovation as measured by the parameters of the Community Innovation Survey New/improved products Number of employees undertaking training Enterprise – Global Entrepreneurship Monitor annual survey of entrepreneurial attitudes and perceptions Number of businesses assisted through Business Link Northwest Business Link Northwest customer satisfaction results

The Manufacturing Forum will review all Key Performance Indicators (KPIs) for actions, ensuring that they are specific and measurable, and deliver the primary indicator – increased GVA for manufacturing.

27

1. APPENDICES Appendix 1 - RES Actions relating to Manufacturing RES Action 4. Review business support and needs of, and focus support on: Priority sectors Potential high growth knowledge-based Companies Medium sized companies Businesses in the rural economy

11. Develop skills and procurement initiatives, connect jobs with people and influence government policy to support: Maritime, distribution, aviation, logistics construction: design, building construction civil engineering and maintenance Visitor economy

Reason Knowledge-based businesses are more innovative and internationally competitive, and can exploit growth conditions in key sectors and locations. Medium businesses account for a major proportion of the workforce and have high growth potential and distinct structures, motivations and characteristics. The rural economy is undergoing many changes and support is needed to manage this change.

These sectors account for 52% of North West employment, have a widespread local presence and a large impact on growth across the region. There are key opportunities via the public sector from the Gershon/Lyons reviews and from its procurement and investment decisions. care opportunities arise from reform of the NHS, childcare and an ageing population.

Retail Public sector Care/healthcare 27. Deliver the skills required by priority sectors 28. Deliver the skills required to maximise the economic impact of key growth opportunities

Developing appropriate skills for priority sectors is essential to support growth Exploiting growth, including supply chain opportunities, will be crucial to the future of the region. Appropriate skills are essential.

28

Appendix 2 – Key Manufacturing Sub-sectors/Cluster SWOT Analyses Aerospace SWOT Strengths

Weaknesses



Location of major global players (BAE Systems, Airbus,  Lack of major composite manufacturing Rolls Royce) capability amongst sub-contractors



A number of defence platforms are built within the region



Lack of sub-design and manufacturing capability



University base



Lack of hard metal machining capability



Although universities are present the level of Aerospace related research is low

Opportunities

Threats



Exploiting the potential of major business in the region



Risk that a major business in the cluster may leave the region



Using the skills base of the region to attract inward investors



Failure to establish composites technology



 Using the defence platform capability to develop other capabilities

Environmental pressure reduces demand for civil aerospace goods



 Development of high end design and systems opportunities

Increasing competition from overseas manufacturing





Failure to supply future skill sets

The developing NW Composite Centre and links to advanced materials production



Exchange rates, especially against the dollar



Possible development of a ‘super-cluster’ linked to new technologies, supply chains, etc

Automotive Strengths

Weaknesses



Presence of 5 successful global vehicle manufacturers in the region



Lack of regional autonomy – business decisions made outside of the Northwest



Availability of trained / semi-skilled assembly production workers



Lack of adequate regional infrastructure to support the business plans of the vehicle manufacturers



Presence of major global tier 1 / 2 suppliers





Exporting strength of the region’s vehicle manufacturers and regionally based tier 1 / 2

Design authority of the volume vehicle makers lies outside the region

29

suppliers 

Strong presence of Bodybuilders and Vehicle Converters



Good operational performance of vehicle and component manufacturers



Absence of a Northwest supply chain to the region’s vehicle manufacturers and tier 1 / 2 suppliers



Skills shortages, especially technically qualified engineers



Poor linkages with design base in the region and with academia

Opportunities

 Threats







Potential for additional activity to support vehicle manufacturers on supplier park developments

 Cascade best practice in relation to culture change and lean manufacturing across all  business sectors to enhance productivity gains



Diversification for non vehicle manufacturers into other markets and product sectors



Network of universities with engineering and manufacturing bases

Increased global sourcing of components from outside the region Rising energy costs Exchange rates impacts on the profitability of producing within the region



Design capability is leaving the region



Impact of current economic climate





Major reorganisation or closure of Tier 1 / 2 component suppliers Development of commercial and specialist vehicle vehicle/motorsport sub-clusters sectors  Overseas sourcing to low cost manufacturing areas





Increased environmental taxes for prestige cars from Bentley, Jaguar/Land Rover

N. B. The SWOT analysis produced by SQW for the MSAP evidence base has been updated as part of the cluster strategy review for Automotive by the Automotive Alliance.

Chemicals Strengths

Weaknesses



Historically high level of capital investment





Significant R&D base, innovation and patents – Incubator/innovation facilities

Little supply chain linkage within the region and little understanding of supply chain opportunities



Skill development of the existing workforce



High level of innovation





Ageing asset base

Skilled workforce and good training infrastructure



Lack of investment to upgrade those ageing assets



Strong research base in HEIs



Strong levels of business formation

30



High level of exports



Specialist major companies located in the region



Strong support infrastructure in other sectors (e.g. engineering design, logistics)

Opportunities  Intensification of links with HEI base and knowledge transfer – and encourage innovation 

New legislation creating opportunities for new goods



Improving supply chain linkages



Improving performance and efficiency through application of best practice and networking



Environment or ‘green chemistry’ opportunities including renewable or nuclear

Threats  Energy cost increases and volatility are an ever increasing issue 

Restructuring in the economy is taking place with some contraction amongst larger firms - this is masked in statistics



Increasing pressures from lower cost production centres overseas

Biomedical Strengths  Excellent clinical research base

Weaknesses  Weak linkages between HEIs and SMEs



Specialist premises and early stage support infrastructure





Major pharmaceutical and chemical presence



Growth in start-ups

Lack of specialist ‘stage two’ business premises

Opportunities Threats  The science and clinical base has potential for  Failure to build on excellence in key areas IP and growth  Inability to attract key staff to the region (due  Opportunities for further world class to funding and facilities) specialisms  Manufacture moves overseas  Attracting more international ‘players’ to the Northwest – attracted to the HEI base  New start businesses sold off to overseas buyers  Biomanufacture – an opportunity for traditional forms of inward investment

31

Advanced Flexible Materials Strengths Weaknesses  Diverse product and market mix, many  Increasing cost of manufacturing in the UK – AFM companies aim to have no more than Fuel, raw materials and employment costs 20% of sales in either one geographical market or one product mix, so as to spread risk  An ageing workforce and senior management structure  Export focused, with 70% of sales generated From exports  Lack of a pipeline of skilled staff  A sector ‘ripe’ to take up new technology, the initial work conducted on plasma  Poor sourcing and NPD policies commercialisation and 3D weaving has demonstrated very high levels of interest  Lack of HEI provision both regionally and in new technology nationally 

The sector possesses a skilled workforce



AFM companies are very resilient through stron balance sheets and private ownership (hence no shareholder pressure on dividends)



Deeply embedded and strong supply chain relationships

Opportunities  To embed AFM products and supply chains within the region’s advanced manufacturing sector

Threats  Pace of technology introduction in lower cost manufacturing countries 

IP control amongst AFM businesses

Growing and developing exports into new markets



Continued and deepening recession



Strong offer into the environmental sector





Ever increasing cost of manufacturing in the UK

Joint ventures and collaborative working



 Raise the profile of the sector

Lack of contingency planning amongst AFM business



3D weaving ‘replacing’ traditional composites processes, this eliminating the use of autoclave processing



Energy and Environmental Technologies Strengths

Weaknesses



Large and diverse industry covering a wide range of the main sub-sectors



Fragmented industry – large number of small businesses



10% of UK industry based in NW, regional strengths in



Limited number of major global players



waste recycling and reuse

32



energy efficiency and



renewable energy generation

 water and waste water technologies



Exports generally a small proportion of total sales and only 7% of UK ETS exports



Poor market intelligence



A significant group of medium-sized businesses



Lack of finance



Some large, international firms (e.g. in consultancy/services)





Staff/skills shortages (e.g. in sales/marketing)

Existing links with the HE and FE sectors



Strong local market for environmental improvements

 Substantial R&D strengths Opportunities

Threats





Competition from outside the NW – UK and overseas



Regional/national market barriers to uptake/adoption of ETS



Current recession: External: - markets could weaken, - lack of capital for investment, - poor service from banks Internal: - reduced investment in skills, innovation, marketing will weaken

Growth potential in the local market as well as elsewhere in the UK and overseas (predicted doubling in global market size in coming decade) in key markets: 

waste recycling and reuse



energy efficiency and



renewable energy generation



water and waste water technologies



Scope for a more integrated, collaborative approach to solving environmental problems



Government’s Low Carbon Economy Strategy – opportunity to grow through innovation and diversification of indigenous businesses into ETS sector

Food and Drink Strengths  Strong presence in the region – including a range of global businesses active in R&D

Weaknesses  Low levels of enterprise



 Large number of SMEs

Shortage of technical staff and difficulty recruiting graduates



Topographic nature of the region lends itself to  a varied primary production base

Rapidly changing market – increasing automation and market-led competition



Multi-cultural society in the region – creating demand for new food and drink products

Opportunities  Multi-cultural diversity and new product demand 



Lack of engagement with HEIs

Threats  Importing of low cost labour having a negative impact on the sector

Procurement opportunities in the region – e.g.  regional sourcing of food by NHS 

Increasing globalisation of the food market Volatility in commodity markets

33



New market niches 

Health food



Speciality goods



Non-food crops and associated industries e.g.

Biofuels



Food security debate

34

Appendix 3 – Action Plan

Aiding the delivery of a number of Strategic Themes Manufacturing Advisory Service

Strategic Theme 1: Improving the image of Northwest manufacturing Supporting evidence There are three specific points to note from the evidence base: Manufacturing is a ‘promotable’ industry. As Government reviews and the wider literature review show, manufacturing is inextricably linked to science, innovation and high value adding activity. The statistical assessment shows that manufacturing is the only sector in the region which is more productive than the comparable sector nationally, whilst the econometrics show how that productivity is likely to keep on increasing relative to other sectors.

Although manufacturing has these positive aspects, the perception of the sector (its image) is poor amongst a range of audiences, be they potential employees (especially amongst the young), potential financial investors, potential foreign investors and customers, and among Northwest residents themselves. This view was confirmed in SQW’s consultations with key stakeholders and the results of the business survey undertaken in 2008.

There is no single organisation or voice representing the manufacturing sector in the region, and promoting its strengths.

This leads to a lack of focus, the dissemination of a disparate range of views, and a reinforcement of negative perceptions, especially in the media where the portrayal of manufacturing is generally negative and often inaccurate.

Rationale for public sector intervention There is clear information and co-ordination failure as the difference between the perception of modern manufacturing and the reality of the status and performance of the sector is so wide. Improving the image of manufacturing should be the responsibility of all associated with the sector. In order to achieve significant change in the medium term there needs to be consistent and collaborative action involving both the public and private sector.

Key issue to address

Existing Activity

Need for optimisation

New Action

There is no focal point for the manufacturing sector or one agency tasked with its promotion

The promotion of manufacturing falls to individual agencies including NWDA, TMI and the key business organisations

There is no one common message which supports manufacturing in the Northwest. As a result the region may not punch its weight with policy and decisionmakers, whether in Government, in parent companies and with foreign investors and companies

1.

Establish a Manufacturing Forum comprising senior representatives from industry which will become the focal point for the sector in the region. This Forum should take overall responsibility for the delivery of the MSAP

Despite it’s significance in terms of productivity and GVA performance, there is a negative perception of manufacturing among the public, in many parts of the public sector who fail to realise its continued significance manufacturing, and in the media

NWDA, The Manufacturing Institute, Engineering Employers Federation, CBI, and IoD are all important lobbyists on behalf of manufacturing at the national level.

While the region has strong lobbying channels, there is a need to relate these more specifically to manufacturing in the Northwest to ‘sell’ manufacturing to the wider public sector in the region

2.

Undertake a Marketing and PR Campaign to: - Raise awareness of the significance and value of the sector amongst the public, public sector and media - To promote the sector’s strengths to international business leaders and decision makers to encourage new investment and re-investment - To promote ‘modern manufacturing’ in order to change outdated perceptions of the sector amongst young

35

The Northwest, and it’s sub-regions, are international centres of manufacturing – there is very little awareness of this amongst key investors in the region, the UK, and overseas

TMI promotes manufacturing in the Northwest internationally and the NWDA has an International Strategy and a strong policy and infrastructure to encourage Inward Investment

Both indigenous and foreign owned companies need to have a consistent (and evidenced) message which demonstrates to their HQ or parent companies that the Northwest has the right environment, infrastructure and services to make it a premier location for manufacturing businesses

Manufacturing is negatively perceived by young people, their parents, teachers and educational staff, and students are discouraged from considering manufacturing as a career path

There is a low take-up of STEM subjects in statutory education and few educational staff have first hand industrial or manufacturing experience.

The introduction of the new Diploma options may encourage a broader range of students to takeup STEM subjects

Although some businesses do great individual work, and some intermediary organisations sponsor their own projects, there is a need to coordinate the activity and to promote it widely to students, teachers and lecturers.

people, parents, teachers and educational staff - To raise awareness amongst young people of the career opportunities offered by modern manufacturing

3.

Develop the ‘Made in the Northwest’ manufacturing portal to: - Promote manufacturing as a career choice to young people in the Northwest - Promote the NW manufacturing sector to encourage further investment by businesses in the region

The Northwest region has both national and regionally –focused SET and STEM programmes but these are relatively new and may not have a direct link to manufacturing

4.

Extend the ‘Make it’ programme to raise awareness amongst young people of the career opportunities offered by modern manufacturing

TMI, the membership organisations and individual businesses run and take part in schools awareness-raising initiatives and work experience programmes but these are not provided consistently across the region

36

Strategic Theme 2: Increasing capacity and capability to innovate Supporting evidence The economic importance of innovation is emphasised in the Sainsbury Review. For the Northwest to achieve the objectives set by the Regional Science Strategy and, importantly, the productivity imperatives of the RES, it must play an active role in the ‘race to the top’ that Sainsbury promotes. However there is some evidence that this message is not universally understood by business.

SQW’s research and evidence from regional cluster activity clearly identifies that while strong linkages between the region’s university presence and businesses are essential to drive innovative behaviour, this is a key area where improvements can be made.

Secondary statistics suggest that the Northwest has the third highest private sector spend on R&D in manufacturing amongst the English Regions. However, and as identified from consultations, this is dominated by the activities of a small number of very large businesses4 and primarily within the pharma and chemicals industries. Public sector investment in R&D in the region falls below the national average.

The region has a number of organisations with a remit to support innovation and NWDA has recently introduced a number of initiatives to promote innovation and innovative behaviour but it is too early to report on outcomes. Historically, manufacturing businesses appear unaware of these initiatives or find them had to access. This may improve when an Innovation Advisory Service is in place and operational.

Rationale for public sector intervention Information asymmetries remain the key market failure justifying public sector intervention in supporting the development of innovative capabilities and capacity: it is also widely acknowledged that the public sector has a role to play in demonstrating to businesses that they need to innovate to remain competitive in a globalising world. Linked to this are the co-ordination failures between the sources of innovative capacity and where that capacity can be used to deliver a productivity gain and economic advantage. In addition to these, for many businesses, it is the barriers to entry that inhibit them from taking the first step to being innovative – very often, they have not the experience, capability and resource (including finance) to begin the innovation process.

Key issue to address

Existing Activity

Need for optimisation

New Action

Ensure that the Northwest takes full advantage of the opportunities available from the Sainsbury Review of Science and Innovation

Businesses have the opportunity to take advantage of Knowledge Transfer Partnerships (KTPs) currently – however, the programme is to be significantly extended as a recommendation of the Sainsbury Review

There is a need to ensure that Northwest businesses are aware of the extension to opportunities and are in a position to respond

5.

Audit of existing services and opportunities available to businesses from HEI and Research Institutions, including the access arrangements and key contact points

Manufacturing businesses are unaware of the support programmes and mechanisms available in the region

There are a range of initiatives in place and a number of organisations funded to support the innovation process

Better promotion and co-ordination of initiatives is required if the full benefits of investment are to be achieved

6.

Ensure that any Innovation Advisory Service in the region is resourced to service the manufacturing sector and capable of responding to manufacturing business needs

4

With Astra Zeneca identified often as the largest contributor – research undertaken by Regeneris Consulting suggests that 1/3 of all private sector R&D activity in the Northwest is undertaken by Astra Zeneca.

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Strategic Theme 3: Improving the interactions of business and education establishments on manufacturing issues Supporting evidence The Northwest has a number of important universities with excellent research capabilities in relevant areas and is a recognised knowledge centre. Consultation evidence suggests that there is a disconnect between what the business base might require to improve competitiveness and what the universities can or are wiling to provide. Businesses state that they find universities departments difficult to contact and access.

Current funding regimes for HE and FE do not promote interest in supporting manufacturing. At present, FE tends to specifically focus on supporting the service sector.

Teachers and lecturers have limited experience of the modern manufacturing sector and continue to promote negative images of the sector which persuade young people that manufacturing is dirty and dangerous with low pay and limited career prospects.

At present, schools have no role model to support the importance and benefits of training in STEM subjects.

Rationale for public sector intervention A consideration of market failures within this context needs to recognise the role of the universities in an increasingly global economy. In addition to the role of universities in providing a public good, there is an increasing recognition of the role they can play in achieving economic growth. There are information and co-ordination failures between business and the wider educational sector including FE colleges and schools

Key issue to address

Existing Activity

Need for optimisation

New Action

Businesses state that they find it difficult to obtain information about university activity and need help to access the relevant departments

There is a range of published information produced by the universities about their activities but this does not provide the level of information needed by business.

Relevant activity in universities is usually promoted on an individual basis. There is a lack of coordination between the institutions and this is confusing for business

7.

Facilitate increased communication between academia and industry

8.

Develop an awareness programme about KTPs and provide facilitation to encourage manufacturing firms and colleges to collaborate

9.

Develop and invest in work experience programmes for academic and teaching staff

Improve the knowledge and awareness of manufacturing among academic staff in universities, colleges and schools

Academic staff have little hands-on experience of manufacturing

Action needs to be taken to prevent the promotion of negative images of manufacturing through a lack of awareness and understanding of the sector

10. Create a framework in which educational establishments and manufacturing businesses can work together to devise a shared vision and develop services which support and meet the needs of manufacturing businesses in the region.

There is a perception that FE Colleges do not

Courses need to be provided to support

11. Encourage more college business partnerships such as

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provide courses which meet manufacturers needs and prioritise the service sector

upskilling and reskilling in technical areas

that created by BAE Systems in Barrow in Furness. The partnership could be based on delivering courses which meet the priority needs of local manufacturing businesses (identified from horizontal clustering).

Strategic Theme 4: Ensuring that places, spaces and infrastructure are fit for purpose for modern manufacturing Supporting evidence Consultations identified concern that planning policies and the provision of wider, ‘public goods’ infrastructure, are not adequately meeting the needs of manufacturing businesses within the region. Some areas have a shortage of employment sites; available premises are not ‘fit for purpose’. Existing traditional locations for manufacturing businesses make local access to the transport network difficult. New investment locations, industrial sites and business parks are not sited on public transport networks.

While not a universal concern, the existing infrastructure deficits can detract from investment proposals, especially from overseas investors, and deters high calibre recruits from locating in the Northwest. Improvements are required in the quality of workspace available to manufacturers, the housing stock, schools and in some areas the cultural provision and green infrastructure.

There is a disconnect in priorities between major public sector programmes such as the planning framework, economic development policy, and public sector provision of infrastructures.

Rationale for public sector intervention High performance workplaces have been acknowledged by Government as a key area for policy focus. Provision of infrastructure is largely the responsibility of the public sector as the use of the infrastructure is not often charged for on a use by use basis and is therefore unlikely to be funded by the private sector.

Key issue to address

Existing Activity

Current planning policy and activity is not responsive to the needs of the manufacturing sector. The current RSS does not provide sufficient scope for Local Authorities to support expanding companies in the manufacturing sector Too many indigenous manufacturing businesses occupy old sub-standard premises.

There is considered to be a lack of suitable high quality accommodation for modern manufacturing and a shortage of employment sites in the right locations to support business expansion

NWDA has invested in new premises throughout the region. This investment has been aimed primarily at new starts and high growth businesses

Need for optimisation

New Action

The development of the IRS must ensure that there is greater coordination of policy between spatial planning and economic development policy

12. Develop consultative mechanism to ensure greater co-ordination between spatial policy and economic development needs

NWDA should work closely with SRPs and Local Authorities to maximise the opportunity offered by existing sites and planned developments

13. Work with local partners to audit current employment sites and premises and initiate a consultation exercise involving local businesses to assess need

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Strategic Theme 5: Increasing new enterprises in manufacturing Supporting evidence Although the statistical evidence (VAT registrations) shows that the number of new manufacturing businesses is declining (from 3 new VAT registrations per 10,000 working age population in 1999 to 2.4 registrations by 2005), new enterprise remains an important aspect of the Northwest RES and is an area of strength in some high value clusters.

Consultations have identified that many new starts in the sector are not confined to the narrow, SIC-based statistical definition of the sector but in supporting sectors (industrial services) key to supporting manufacturing’s future development given labour cost sensitivity surrounding production.

Rationale for public sector intervention The creation of new enterprises is widely acknowledged as a key means of achieving economic growth, i.e. there is an economic growth rationale for support. In many cases those involved in setting up new enterprises require access to information and advice. For potential high growth businesses, there may be a requirement for substantial financial investment at a stage when the risks and uncertainties associated with the business are too great for private investors to accept. There is also the logic of achieving agglomeration benefits by enabling enterprise that supports the existing, or developing, strengths of the regional economy.

Key issue to address

Existing Activity

Need for optimisation

New Action

Enterprise and entrepreneurship are essential if the number of high value manufacturing jobs is to be increased

NWDA has developed an Enterprise strategy which aims to increase the level of enterprise in the Northwest

The promotion of manufacturing should be an integral part of the regional Enterprise strategy and associated action plan

14. Ensure that cross-sectoral initiatives to increase enterprise have a manufacturing component

Strategic Theme 6: Improving access to actionable information on markets and change (including legislations) Supporting evidence Lack of awareness of trends and market opportunities as a result of information deficits or failures leads to loss of competitiveness and business failure. This issue was stressed repeatedly in stakeholder consultations and was also raised in a number of Steering Group discussions. ‘Information failures’ are discussed in terms of the rationale for public sector intervention within other Themes. There is a wealth of information available but the construction of the evidence base for the MSAP has identified that there is a lack of co-ordination between knowledge and data producers and no simple conduit which enables easy access for businesses who may wish to use or exploit information.

Some existing mechanisms for data capture in overseas markets are not sufficiently flexible to ensure timely reporting of trends in new markets such as environmental technologies.

There are no consistent and readily accessible regional mechanisms to support knowledge transfer or supply chain development in those sectors such as food and drink and environmental technologies where no traditional mechanisms exist.

Rationale for public sector intervention Government has identified responding to technological change (and its importance to globalisation and competitiveness) as a key issue Information failures and co-ordination failures are the most obvious market failures that can be associated with the provision and improved access to actionable market information. The reasoning behind this Strategic Theme is to ensure that decision makers have the necessary information to make well-based decisions about the future direction of technology and market developments, help to mitigate risk, and to plan the best outcomes for their business and for region as a whole. Other failures are applicable too: obtaining information can often be of considerable cost and is perhaps best provided at the regional level to achieve scale economies.

Key issue to address

Existing Activity

Need for optimisation

New Action

There is a lack of consistent support and resource to gather

Some clusters have direct support from

Specialist resource needs to be available for all priority

15. Commission a targeted worldwide benchmarking programme and make date available to

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specialist international and leading edge data crucial to growth especially in the high value manufacturing sectors

UKTI Professionals National programmes such as NATS (the National Aerospace Technology Strategy) provide a mechanism to support manufacturing businesses in the sector to undertake research

manufacturing sectors, with an accessible low cost resource available to all sectors of manufacturing

businesses and business organisations

16. Work with BIS to consider revised and funded Foresighting programmes

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Cross Cutting Theme A: Ensuring a highly skilled workforce at all levels Supporting evidence Improving the supply and, importantly, the quality of individuals to meet the demands of manufacturing businesses stands out as one of the most significant issues emerging from the evidence base.

Overall, the Northwest has a deficit of the most highly qualified individuals, with a greater proportion of the working age population having no qualification than nationally and fewer having Level 4 (degree level and above) than the national average. That said, only 14.7% of Northwest manufacturing businesses reported skills deficits in the 2005 national employer skills survey (NESS). What is clear from the NESS evidence is that it is specific types of skills that are in short supply: technical, practical, job-specific skills – 59.9% of Northwest manufacturing business felt these needed improving (relative to 58.8% nationally) problem solving skills – 54.7% in the Northwest compared to 40.9% nationally customer handling skills – 38.3% in the Northwest and 31.3% nationally and management skills – 30.2% in the Northwest and 28.1% nationally.

Seven of the top ten ‘most important’ issues identified by businesses in SQW’s online business survey were skills related: again, a deficit of technical skills is seen as most important, with management and leadership skills coming second.

However, manufacturing businesses noted how it may not be the training of individuals that is the issue, but instead the 5 attractiveness of the sector to those that manufacturing businesses would most like to recruit . The evidence from consultations reinforces the view that there are supply-side issues in terms of the quality of provision with ‘skills across the board’ in need of improvement, but particular talent is required to respond to the fast-paced change of modern manufacturing.

Perhaps more significant with regards to skills and ‘human resource management capability’6 is how improved skills and capabilities at all levels can enable improved economic competitiveness – for this reason, skills is an important crosscutting issue that enables the achievement of other objectives. Businesses at sub-regional consultation events were quite clear – ‘skills are very important, everyone knows it, there’s lots going on, but it isn’t necessarily meeting the needs of businesses’.

Central Government economic policy highlights skills as a driver of productivity and the need to improve skills cascades down through other policy mechanisms: it has a place of importance in the Northwest Regional Economic Strategy. In a globalising world, with ever more rapid technological change, the UK is being urged to participate in a ‘race to the top’7 in terms of innovation and science: this has strong implications for the skill sets at all levels that will be necessary if manufacturing in the region is to take part successfully in this race.

Rationale for public sector intervention Provision of basic skills can often be described as providing a ‘public good’, enabling the population as a whole to have a good standard of living and a full and worthwhile life. Work undertaken by the Sector Skills Development Agency has identified four specific market failures that justify public sector support in providing skills. In the main these relate to information failures of one type or another. For example, the employee, employer and industry may not fully appreciate the benefits that can be accrued from improved skills and capabilities, or might see the short term costs (and risk) as too great to justify the long term benefits. There is also the case that there are scale diseconomies in individual businesses or people attempting to improve their skills and capabilities alone. For the public sector too it has often been recognised that there is a role in responding to institutional failures, where the activity of one part of the public sector (e.g. in education provision) to does not align with achieving the outcomes felt appropriate by another part of the public sector (e.g. the right education provision required for achieving regional economic growth). Responding therefore to co-ordination failures between supply and demand requirements is likely to be the essential justification of the response promoted by this strategy.

5

Indeed, in discussing the content of the Sub-regional Manufacturing Strategy for Lancashire it was noted that many people obtain qualifications relevant to manufacturing, but then move into financial services or other ‘service’ sector occupations rather than using their skill-sets within manufacturing.

6 This term was suggested by SQW’s Expert Panel involved with the development of the MSAP in order to be more applicable to the requirements of ‘modern’ manufacturing – it is not simply qualifications that matter, but the ability to manage the acquisition, development/re-fresh and application of skills and capabilities in ways that are aligned to the changing needs of the industry, and of a company and its markets.

7 Sainsbury Review of UK Science and Innovation, October 2007.

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Key issue to address

Existing Activity

Need for optimisation

New Action

Existing skills provision is too complex and unfocused. Despite the existence of a range of employer-led focus and advisory groups, training provision does not met the current needs of manufacturers

NWDA is reviewing skills provision

Manufacturing requires a package of focused skills initiatives which provide training at all levels and help employers with progression and CPD

17. Introduce a skills simplification programme, including a review existing employer-led advisory groups and consider one group (the Manufacturing Forum) which is focused on the common requirements of the manufacturing sector. Link to proposed Foresighting activity to determine future skills needs

Lack of information to employers about current initiatives and programmes

18. Promote existing initiatives including the advantages of apprenticeships to manufacturing employers

Shortage of technical and supervisory skills’ including among the existing workforce

19. Develop a roadshow which promotes manufacturing in the Northwest in HEI both regionally and nationally

Failure to attract and retain high calibre candidates to relocate in the Northwest

20. Facilitate a joint programme with HE, FE and schools at a subregional level to develop an infrastructure which supports progression in technical training

Cross Cutting Theme B: Vertical and horizontal co-ordination between businesses Supporting evidence Genuine clustering, and the benefits that can accrue, are dependant on businesses working together to achieve benefits as both individuals, but also as a ‘clustered’ group.

Businesses recognise the potential of clustering as a means of improving competitiveness rather than increasing competition and that this aspect should be reflected in the MSAP. Collaboration can operate in two ways, horizontally (between businesses or sub-sectors/clusters) and vertically (within value chains).

Businesses recognise the benefit of individual firms within a value chain working together to improve product, process or customer service and to minimise costs, maximise efficiencies and increase profitability margins. This extends, therefore, beyond just the manufacturing ‘production’ businesses, to those ‘industrial services’ that support the production of value when applying the modern definition of manufacturing.

This initiative can build on the supply chain development initiatives underway in some clusters. But can also be promoted on a local geographic basis.

Rationale for public sector intervention The requirement in not to respond to a natural failure of market operation – but to actually make the market more effective and efficient by encouraging businesses to come together, so that they, themselves, can start to drive change and achieve economic growth benefits.

In essence, the role of the public sector is to respond to the coordination failures that inhibit businesses working together.

A coordination failure is where there can be a case for governmental and other bodies, such as NWDA, to bring partners together and coordinate policy responses in order to improve the overall effectiveness of interventions within the market (such as the Northwest region) and then increase economic growth.

Key issue to address

Existing Activity

Need for optimisation

New Action

Businesses need assistance to derive maximum benefit from clustering

Supply chain development is a priority for NWDA. Some activity is underway in the priority

Supply chain initiatives should be extended to develop horizontal as well as vertical

21. Encourage collaborative activity between businesses via the manufacturing portal

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cluster groups and there is a plan to extend this to all priority clusters

collaboration

Cross Cutting Theme C: A more responsive public sector Supporting evidence The needs of the modern manufacturing sector are covered by a wide range of public bodies and organisations. There is a lack of consistency between major public policies such as planning and economic development Public sector bodies do not recognise the real value of manufacturing to the regional economy.

Rationale for public sector intervention Institutional failures are the most obvious market failures that can be associated with the need to improve public sector co-ordination to support manufacturing – indeed; it fundamentally recognises the role of the Strategy itself. As defined in the market failure report included within the evidence base of the study, an institutional failure is: resultant of where public sector agencies are not necessarily ‘geared-up’ to deal with issues of regional development even though their influence on it can be profound – e.g. mainstream service providers such as health and education and those agencies that procure and invest significantly from or in the region – for example, the R&D work of the defence and health agencies.

The rationale for this key to success is therefore simple, it is to make the existing public sector infrastructures work better for manufacturing in the Northwest – especially given the sector’s importance in terms of productivity and GVA.

Key issue to address

Existing Activity

Raise awareness of modern manufacturing in the public sector

NWDA has a team of sector specialist and key account managers

Encourage existing subregional public organisations to collaborate to make them more responsive to the needs of manufacturing

NWDA has International and Inward Investment strategies and dedicated staff to promote and deliver these Specialist agencies focusing on Inward investment exist at subregional level

Need for optimisation

New Action 22. Raise awareness amongst the public sector of the value of manufacturing (this action relates to actions 1 and 3).

Individual initiatives need to be better coordinated to assist indigenous companies with investment proposals and promote the advantages of the region to overseas investors

23. Encourage local (sub-regional) investment from public sector partners in facilitation and the establishment of a one-stop shop support service for manufacturing businesses

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Glossary AFM BIS BLNW

Advanced Flexible Materials Department of Business, Innovation and Skills Business Link Northwest

GVA HEI MAS SME RES

Gross Value Added Higher Education Institutions Manufacturing Advisory Service Small to Medium sized Enterprise Regional Economic Strategy

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