TM - The Manufacturer November 2015 by Optic Juice

SECTOR FOCUS UK Research and Development

SPECIAL FEATURE Cheating, recalls and global consequences What is going on inside Volkswagen?

HOT TOPIC UK Steel Crisis What is causing the collapse of UK steel?

WORKFORCE AND SKILLS The changing face of STEM How a woman’s touch is influencing Coca Cola

SUPPLY CHAIN Changing perspectives The benefits emerge from the latest Supply Chain Connect event in Liverpool In partnership with:

Where does industrial strategy fit with Labour’s radical new leader?

INTERVIEW Sarah Jardine, Chairperson, Scottish Manufacturing Advisory Service

www.themanufacturer.com | November 2015 | Vol 18 Issue 9

Leading safely Bottom line Top people As a responsible leader, you know the importance of safety and health. Now learn its value.

COM3177/061015/SHP

See training for leaders in action at www.iosh.co.uk/leadingsafely or call the Customer Support team on +44 (0)116 257 3192.

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WELCOME

EDITOR’S INTRODUCTION

This has been a tough month for UK manufacturing, in particular the UK steel industry. The news that SSI was mothballing and then closing its Redcar site seemed like the first domino to tumble, collecting Caparo Industries and Tata Steel in its path. The blame directed at the outstretched trigger finger of the Chinese, whose dumping of underpriced steel in the UK market was the first port of call for blame.

It seemed almost ironic that the wave of news continued to break as Chinese President Xi Jinping travelled to the UK for talks with David Cameron. Public outcry urged the PM to stand behind the steel industry and broach the subject of an oversupply of underpriced Chinese steel in the UK with the Chinese President.

42 SECTOR FOCUS

UK Rese arch and

Develop ment

SPECIA L FEATUR E

Cheatin g, reca lls global consequ and What is ences going on Volkswa inside gen?

But despite the effect of Chinese products flooding the UK market, the industry’s future state must be examined in contrast more with homemade factors. By simply reducing the amount of Chinese steel being exported to Britain will not even come close to fixing the monumental mountain UK steel has to climb in order to return to its profitable heyday. With no foreseeable reduction in the crippling energy prices faced by British industry coupled with the extra burden of green energy levies, it’s little wonder the industry is in the state it is. But it’s not just Britain feeling the pressure. Global steel prices have almost halved in 12 months. South Korea’s Posco, the world’s fifth largest steel producer, last month reported its biggest quarterly loss in five years.

HOT TOP IC

UK Stee l Crisis What is cau of UK stee sing the colla pse l?

WORKF SKILLS ORCE AND The cha ngin How a wom g face of STEM an’s touc influenc h is ing Coc a Cola

SUPPLY CHAIN

Changin g The ben perspectives efits latest Supp emerge from event in ly Chain Con the nect Liverpoo l In partners hip with:

Where do

es ustria str Front coverfitindimage ategy with Lalbo ur’s radi ca courtesy of Garry leader?l new Knight on Flickr

The new Labour leader, Jeremy Corbyn (p32) spoke out following the SSI Redcar announcement, calling on

INTERVIEW

Sarah Jard ine,

Chairpers Scottish on, Manufac turing Advisory Service

www.the manufac turer.com |

But I have to wonder what effect imposing export restrictions or taxes on Chinese steel would have on the UK steel industry. The Government voted in July for the extension of EU anti-dumping measures on Chinese wire rod products, and said it would consider further cases as they arise. Well, they’ve arisen. And never has there been a more opportune moment for David Cameron to create direct and immediate dialogue with the Chinese president than now.

Novemb er 2015 |

Cameron to “step in and defend those people”. He asked why the British Government couldn’t step in and do what the Italians did when a site in the south was given €100m in state aid, supposedly for environmental improvements. A bold call from Corby considering the ongoing rhetoric surrounding the controversial deal. The move by the Italian Government sparked many commentators to say it was paid to keep the site running, not for environmental measures. One of those commentators was Gareth Stace, head of UK Steel, who said his organisation had made a submission to the Commission supporting complaints that the funding was actually an illegal use of state aid. As terrible as it is to see, so many UK jobs being cut in one of the nation’s oldest and proudest industries, it must be examined whether it is in the nation’s best interests to prop up an industry that has all of the odds stacked against it. It’s a tough pill to swallow, and to witness its decline is something no one wants to see. Say what you want about Chinese steel dumping, but the fact remains that the majority of the straw sitting on this camel’s back – ridiculous energy prices, tax breaks and overheads, was grown in British soil.

Callum Bentley Editor

Vol 18 Issu e9

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 1

EDITORIAL ADVISORY BOARD

The Editorial Advisory Board ’s editorial advisory board provides insight and guidance to the editorial team on a regular basis, helping maintain the relevance and quality of the magazine’s content, both in print and online. The board also provides diverse and expert comment on key industrial developments.

Andrew Churchill Managing Director, JJ Churchill and Top 100 Exemplar 2014

Simon Edmonds Director, the Catapults Programme

Steve Evans

Manufacturing Engineer, FLAADS Manufacturing Engineering, ’s Young Apprentice of the Year 2014

Deirdre Fox

Director of the EPSRC Centre for Innovative Manufacturing in Industrial Sustainability

CEO, the Royal Academy of Engineering and Top 100 2015 judge

Campbell Ferguson Director of Strategic Business Development, Tata Steel

Tony Hague MD, Power Panels Electrical Systems, Chairman of the Midlands Assembly Network and shortlisted member of Top 100 2014

2 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

Global Manufacturing Director, Accolade Wines and Top 100 Exemplar 2014

Ben Taylor Assistant CEO, Renishaw Plc

Dave Mooney

Philip Greenish CBE

Beki Davies

Richard Lloyd

GCS&S Operations Team Leader, Spirit Aerosystems (Europe) Ltd and ’s Young Manufacturer of the Year 2014

Hywel Jarman Director of External Affairs, EEF

Managing Director, Drallim Industries and shortlisted member of Top 100 2014

Pamela Petty Managing Director, Ebac Group

Andrew Peters Director, Siemens Congleton Facility

To find out more about our Editorial Advisory Board and the work they do to improve The Manufacturer magazine’s offering to its readers, go to: www.themanufacturer.com

ABOUT US

Meet the team Callum Bentley Editor

Victoria Fitzgerald Deputy Editor

Callum joined Hennik Research in 2013 as editor of ’s sister publication, the Lean Management Journal, before taking over as Editor of in June. He has a background in news for web and print, working for major regional news organisations in Australia. Callum has a passion for the automotive and aerospace sectors. c.bentley@hennikgroup.com

Victoria joined Hennik Research in January 2014 as editor of the Lean Management Journal after spending three years in New York City as a news journalist for an international online news organisation. As ’s deputy editor her focus is on industrial policy and initiatives driving the future of UK manufacturing. As a former teacher, Victoria has a passion for apprenticeships and education. v.fitzgerald@hennikgroup.com

Managing Director Nick Hussey n.hussey@hennikgroup.com

Editorial IT Editor Malcolm Wheatley malcolm@malcolmwheatley.co.uk

Contributing Editor Ruari McCallion r.j.mccallion@btinternet.com

Reporter Fred Tongue

Federico Ercoli Industry Editor

Jonny Williamson Web Editor Jonny joined having spent the past three years working as a print and online features journalist for global media outlets covering manufacturing, commercial aerospace and business leadership. Jonny is responsible for boosting and updating ’s online presence with a strong focus on community engagement. j.williamson@hennikgroup.com

Federico joined Hennik Research after having spent two years working as a producer, presenter and editor for international media outlets’ online and mobile platforms. With a background in international news, business and tech, he is responsible for ’s multimedia production and is passionate about the food and drink industry. f.ercoli@hennikgroup.com

f.tongue@hennikgroup.com

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Sales Manager Sarah Hough s.hough@hennikgroup.com

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Tarquin Hussey The Boss

Henry is responsible for Hennik Research’s commerical activities, developing new concepts and products for ’s readership. He has vast international experience having set up offices across the globe and is keen to build a bridge between the manufacturing community and the service sector which supports it. h.anson@hennikgroup.com

Rescued from Battersea Dogs Home, Tarquin has always been part of Hennik. He can often be found asleep in his bed or attempting to raid the bins after lunch! He loves to chase squirrels in his spare time but says his favourite past time is enjoying a cuddle with anyone who happens to be passing. He is well travelled, having been to four countries, and is very much The Boss of the office!! info@hennikgroup.com

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EEF is dedicated to the future of manufacturing. Everything we do is designed to help modern manufacturing businesses evolve, innovate and compete in a fast-changing world. www.eef.org.uk

The Manufacturer is working collaboratively to drive innovation and manufacturing excellence in the UK. Our partnerships with leading industrial research centres, further education providers and trade bodies is an important part of this and is distributed directly to the alumni and membership of the following organisations:

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Our dedicated Manufacturing Relationship Managers are trained and accredited through the Warwick Manufacturing Group, to ensure they understand the opportunities and challenges you face. With our lending pledge of ÂŁ1bn per year until 2017, plus an extensive range of products and services, we are committed to support your business ambitions. To find out how we are supporting manufacturing businesses contact James Walton, Director of Manufacturing, Mid Markets, james.a.walton@lloydsbanking.com or David Atkinson, Head of Manufacturing, SME, david.atkinson@lloydsbanking.com lloydsbank.com/manufacturing

Any property given as security which may include your home, may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it. All lending is subject to a satisfactory credit assessment. ÂŁ1bn relates to a Lloyds Banking Group lending figure correct as at 31 December 2014. Please note that any data sent via e-mail is not secure and could be read by others. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278. We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk The Lloyds Banking Group includes companies using brands including Lloyds Bank, Halifax and Bank of Scotland and their associated companies. More information on the Lloyds Banking Group can be found at lloydsbankinggroup.com

November 2015

08 News and regular columns A summary of manufacturing news and events with commentary on industrial research and policy 22 Out & About visits Telford-based manufacturer of centrifugal oil mist collection units, Filtermist, to check out its new facility; stops in at Amtek Plastics in Devon; takes a look around Delcam’s Advanced Manufacturing Facility; and covers ’s Supply Chain Connect event in Liverpool 28 Best of Online What you wanted to read about most on ’s website in October 32 Hot Topic: A new kind of politics Victoria Fitzgerald looks at rebellious Labour leader Jeremy Corbyn and what his policies mean for UK manufacturers 36 Special feature: Judgement day Federico Ercoli feeds back from the highly anticipated MX Awards 2015 judging day at Leicester City Stadium 42 Sector Focus: To knowing how Ruari McCallion examines the topography of UK research & development, including government efforts to bolster its growth 48 Interview: Scotland the brave Jonny Williamson talks to Sarah Jardine, chair of Scottish Enterprise’s Scottish Manufacturing Advisory Service Board about the shape and direction of the future of the nation’s manufacturing sector 52 60 second interview: Dirk Villé, general manager of Atlas Copco Compressors UK, discusses how the firm has flourished in his tenure

PILLAR FEATURES Manufacturing Leadership 54 Don’t try to eat the elephant whole: Autodesk’s PLM Lead EMEA, Charlie Candy reveals how PLM technology is the key to lean manufacturing 58 Learn to lean: LMJ’s commissioning editor, Fred Tongue, highlights the burning issues featured in the November issue

Workforce & Skills 59 Employee of the Month: Josh Sloane, apprentice, Coca-Cola Enterprises 60 Changing the face of STEM: CocaCola Enterprises’ Maria Kokkinou stresses the importance in enticing more women into STEM careers

6 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

CONTENTS

Finance & Professional Services 63 Funding innovation: Alma Consulting Group MD Martin Hook reveals how the firm is helping manufacturers make the most of R&D tax relief 64 UK: Innovate and be rewarded: Leyton UK’s MD William Garvey, tells Ruari McCallion how manufacturers can be financially supported in their endeavours to innovate

Manufacturing Services 67 Servitization: Transforming fortunes: Columbus elaborates on how manufacturers can become more competitive in a climate where cost, customer cultivation and retention are becoming increasingly difficult 69 At your service: Vikram Singla, Product Innovation and Supply Chain Apps leader at Oracle UK weighs in on servitization’s integral role in the future of UK manufacturing

Manufacturing Technologies 72 Pinpointing productivity: PP Electrical Systems’ Tony Hague offers a solution to the manufacturing productivity puzzle 74 In the loop: Jonny Williamson chats with the team responsible for Meggit’s Closed Loop Adaptive Assembly Workbench

IT in Manufacturing 78 No hassle: RS Components discusses the true asking price of maintenance, repair and operations product procurement

Supply Chain 79 Dodging the bullwhip: Janet Godsell, Professor of Operations and Supply Chain, and MX Awards Judge, tells about WMG’s upcoming supply chain event and the importance of raising the profile of supply chain 80 Talk of the Industry: Terry Scuoler provides some insight on the principles of devolved power

NEWS

www.themanufacturer.com/news

SPECIAL FOCUS UK STEEL

October saw the UK steel industry face one of its toughest months in recent years, with almost 4,500 workers now facing redundancy.

“perfect storm” of cheap steel imports from the Chinese market, high business rates, rising energy costs, and devalued foreign currencies (particularly the Russian rouble and Chinese yuan) sparked three potentially industrybreaking announcements – all within the space of three weeks. October got off to a bad start with the news that SSI’s Redcar steel plant was to be closed, resulting in the loss of 1,700 jobs.

8 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

Despite efforts from the Thai parent company to salvage its Teesside operations, a lasting slump in the global demand for steel had already taken its toll. The closure of Redcar was followed by fellow steel giant, Caparo Industries, entering into administration. Operating around 20 sites across the UK, it’s estimated that 1,500 West Midlands jobs are now at risk. Almost immediately, Tata Steel officially confirmed media rumours surfacing that day regarding the restructuring of its Long Product Europe business. The proposed restructure is expected to see around 1,200 job losses – approximately 900 in Scunthorpe and 270 in Scotland (Dalzell and Clydebridge), as well as a small number at other Long Products Europe sites. Chief executive of Tata Steel’s European operations, Karl Koehler offered assurances that the firm had

explored all other options before proposing the restructure, but noted that the UK steel industry is “struggling for survival in the face of extremely challenging market conditions”.

Global meltdown

Steel demand has fallen sharply since 2014, causing prices to fall by almost half over the past 12 months. Many fingers have pointed to China as being a primary factor in the plummeting price. Britain in particular has felt the detrimental effects of China unleashing a flood of under-priced steel onto the market due to slowing domestic demand. In 2014, China’s excess steel capacity was around 340m tonnes, twice the amount of demand in the EU and almost 30 times higher than the UK’s steel production output of 12.1m tonnes. Chinese finished steel exports worldwide have surged by more than 50% from 58m tonnes in 2013 to 89m

MANUFACTURING NEWS

tonnes in 2014, and are already up 29% in the first half of 2015, heading towards over 100m tonnes for the year. Should that 100m tonnes line be crossed, that will see China’s exports of finished steel almost doubling in just two years. Unsurprisingly, UK imports of Chinese basic steel products have also soared over the same time period, up 23% year-on-year in the first seven months of 2015, and up 129% compared to this period in 2013. Crucially, with such a glut of excess capacity, the price of Chinese imports has consistently been below that of the market average; for example, the import price of Chinese rebar in 2015 is £309 compared to an average of £322.

UK STEEL IN NUMBERS The UK steel industry employs around people

Steel deal

As you would expect, there have been plenty of gratitude and platitudes from Westminster and several governmental ministers in particular, but as Gareth Stace – director of trade association, UK steel – notes, “Sympathy and warm words are welcome, but ministers must now get behind British steel and deliver the support that we urgently need”. So far, the Government has announced a package worth up to £80m to support those who have lost their jobs as a result of the mothballing of SSI’s Redcar plant and to invest in the future of the Tees Valley economy. The package includes helping affected workers to train at local FE colleges, offering tailored support for them via Jobcentre Plus, and providing finance for those wishing to start up their own small business, alongside helping existing local small businesses to grow and create jobs. A further £9m has been set aside to support Tata’s workers and the surrounding community, with £3m being match-funded by both Government and Tata Steel’s regeneration arm, UK Steel Enterprises. The Government is separately providing up to a further £3m specifically for re-training those affected by Tata’s streamlining of operations.

In 2013, it exported

in value

In 2013, it made a

contribution to the UK economy

China’s excess steel capacity in 2014. Twice the amount of demand in the EU and almost 30 times higher than the UK’s 12.1m tonnes

Forging ahead

Speaking after an emergency steel summit convened to discuss ways to salvage the UK steel industry, Business Secretary Sajid Javid commented that there is “no straightforward solution” to the “complex global challenges” facing the steel industry. He added that, “the Government is committed to working closely with industry on both short-term and long-term issues, and to doing everything we can to support both industry and the workers.” So, aside from providing ad hoc financial care packages, what can the Government do? Prime Minister David Cameron said he would raise the issue of China’s unfair “dumping” of steel onto the European market during Chinese Premier Xi Jinping’s October state visit to Britain. However, it’s been reported that the Government has failed to make any major progress over the issue at the time of printing.

There have been several calls – including from Leader of the Opposition, Jeremy Corbyn and industry trade unions – for the UK Government to follow its Italian counterparts and directly assume control of flagging plants; calls which can’t be acted upon, according to Business Minister Anna Soubry. “There are extremely strict state aid rules, which especially apply to the

steel industry, so we are limited as to what we can do. We can put money into research and development. But simply giving a loan or underwriting things, we cannot do,” the minister said. In the words of UK Steel’s Gareth Stace, expeditious action needs to be taken to tackle unfair trade practices, business rates fees and spiralling energy costs. “There is an urgency here and very little time before we start to see further job losses and companies facing intolerable pressure. This really is about saving Britain’s steel industry, and time is of the essence,” he warned. November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 9

NEWS www.themanufacturer.com/news

SUSTAINABILITY

Report: British sustainability can be worldleading. The Manufacturing Commission has launched its newest inquiry report, Industrial Evolution: Making British Manufacturing More Sustainable, outlining vital measures that government and industry should take to ensure that British manufacturing is here to stay. The Commission undertook the nine-month analysis because it believe that none of the existing research into the future of manufacturing adequately addressed – from a policy perspective – some of the major vulnerabilities of current manufacturing in the UK. The inquiry provides the foundations for the industrial sector and parliamentarians to work together to initiate the next industrial movement: evolution, rather than revolution. bit.ly/ BritishSustainability

The CBI argues that the alternatives to full EU membership offer more downsides than upsides.

EUROPE

CBI makes strong case for being in a reformed EU. Following the launch of the official referendum campaigns, the CBI has set out the business case for why the majority of its member organisations want to remain in a reformed European Union. Its report – Choosing Our Future – highlights the benefits of being in the EU, including access to a market of 500 million consumers; one set of rules for British businesses to work by; more international investment; access to skills for businesses to grow; lower prices and opening up a third of the world’s markets for trade. CBI members recognise that there are disadvantages to EU membership, such as burdensome legislation – particularly for SMEs, so the CBI is calling for reforms to be made. bit.ly/ReformedEUCBI

What if you had more answers than questions? FIND CONFIDENCE THROUGH TAILORED INSIGHTS To make confident decisions about the future, middle-market leaders need a different kind of adviser. One who starts by understanding where you want to go and then brings the ideas and insights of an experienced global team to help get you there.

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The UK group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 11 Old Jewry, London EC2R 8DU. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug.

10 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

MANUFACTURING NEWS

Electrical Systems Control & Automation Solutions

The RapidE would be produced in Aston Martin’s global HQ in Gaydon, Warwickshire.

AUTOMOTIVE

Aston Martin reveals electric Rapide. The luxury auto manufacturer has unveiled a fully electric concept for its Rapide S four-door saloon, the RapidE. Developed in collaboration with Williams Advanced Engineering, Chinese investment group, ChinaEquity would work with Aston Martin to explore how RapidE could be brought to production. According to the CEO of Aston Martin, Dr Andy Palmer, the RapidE demonstrates the company’s “capability and ambition” towards developing low and zero-emission sports cars. Palmer described “luxury electric vehicles” as being an “intrinsic” part of Aston Martin’s future product portfolio. bit.ly/RapidEunveil

Are you UL confident? Your outsourcing partner

Manufacturing to the right standard Education and training institutions are struggling to keep up with continuous technological advancements.

As a manufacturer of machinery, how confident are you that you are meeting the legal and technical requirements of the US and Canadian markets? At PP we offer our customers a complete design and manufacturing solution in full accordance with the UL 508A standard and we are approved to certify the control system to that standard. This minimises the massive risks and associated costs with non-compliance.

TECHNOLOGY

Employers predict schools won’t keep up with tech change. Demand for engineers continue to rise, but more than half (53%) of employers are struggling to recruit suitably skilled staff, according to the 2015 Skills & Demand in Industry report. Published by the Institution of Engineering and Technology (IET), the report reveals that 61% of employers are least satisfied with skills among graduates, and that two-thirds are concerned that the education system will struggle to keep up with the skills required for technological change. Now in its tenth year, the report also highlights that while more than half (53%) of employers say they are recruiting engineering staff this year, 64% claim a shortage of engineers in the UK is a threat to their business. bit.ly/TechChangePace

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MANUFACTURING NEWS

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NUCLEAR

Construction agreements in place for Hinkley. EDF and China Nuclear Power Corporation (CGN) have signed a Strategic Investment Agreement (SIA) for the construction and operations of the proposed Hinkley Point C nuclear power station in Somerset. Under the SIA, EDF’s share of the £18bn plant will be 66.5% and CGN’s will be 33.5%, or £12bn and £6bn respectively. Predicted to be operational by 2025 and create 25,000 jobs, the new plant is expected to produce enough energy to supply some 7% of the UK’s needs, powering around 6m homes. However at a government-guaranteed cost of £92.50 per megawatt of electricity that Hinkley produces – more than twice the current cost, among other concerns, criticism of the project has been rife. bit.ly/HinkleySIA

COMPANY ANNOUNCEMENT

JCB marks 70-year anniversary. The construction, demolition and agricultural machinery stalwart marked its 70 year of business by giving employees around the world an extra day’s holiday, and launching a limited edition version of its most iconic machine. A total of 70 ‘platinum’ edition 3CX backhoe loaders will be produced in striking livery last seen nearly 40 years ago. Complete with red buckets, full white cabs and red wheels – rather than the customary black and yellow finish, the colourful machines will also be equipped with in-cab coffee makers. Since the first machine rolled off the production line in 1953, JCB has produced more than 600,000 backhoe loaders and now sells them in 120 countries. bit.ly/JCB70years

DATES FOR YOUR DIARY NOVEMBER The Institution of Mechanical Engineers’

Annual Dinner. The Institution’s Annual Dinner will be returning to London’s Dorchester hotel, to celebrate the engineering profession this November. Hosted by Richard Folkson, President of the Institution of Mechanical Engineers, the Annual Dinner is the premiere networking event in the Engineering calendar. Entertain clients, network with colleagues and reward employees in the company of over 200 engineers and industry leaders from the most prominent international companies and organisations.The evening will include the presentation of the Institution’s Vision Awards which celebrate our most inspiring and talented members. The 2015 keynote address will be given by Professor Richard Parry-Jones CBE and the evening will also include after-dinner entertainment from Jack Dee. For more details visit: www.corporateteam.com/events/8488mx

DECEMBER Metrology for Additive Manufacturing: Coventry.

Jointly organised by the Manufacturing Metrology Group and the Additive Manufacturing and 3D Printing Research Group (3DPRG) at the University of Nottingham, this one day meeting will provide background information and a number of technology reviews on developing next-generation of metrology tools for AM. http://bit.ly/1MmSgNH

JANUARY 2016 The National Manufacturing Conference &

Exhibition. The inaugural National Manufacturing Conference & Exhibition will be held in the Aviva Stadium on the 26th of January 2016. The theme of the event “ Increasing manufacturing competitiveness in a global economy” will bring together key decision makers from Irleand’s food, beverage, pharmaceutical, life sciences, medical, chemical, electronics and engineering sectors. Keynote speakers will address delegates on topics directly affecting our ability to compete for business on a global stage. Register for the event here: http://bit.ly/1NBdcGr

FEBRUARY 2016 Southern Manufacturing 2016. Visit the UK’s

9-11

largest regional manufacturing technology, electronics and subcontracting exhibition. The event showcases thousands of engineering and electronics solutions on your doorstep and provides a full programme of free technical seminars supported by SMS, MAS-SE, Engineering Solutions and Electronics Sourcing. www.industrysouth.co.uk

If you have any manufacturing news stories please email them press@hennikgroup.com

12 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

National Manufacturing Conference 2016: London. Join hundreds of manufacturers of all sizes to network and find new business opportunities. The conference will allow you to share practical solutions, discover how to tackle the productivity slowdown, learn how to overcome obstacles to exporting, debate the UK’s future in the EU and the consequences of an EU referendum, vote in interactive sessions and question our panel experts. www.manufacturingconference.co.uk

FOR THE DIARY

UPCOMING EVENTS REFER TO ‘EVENTS’ ON OUR WEBSITE FOR FULL DETAILS THEMANUFACTURER.COM/ EVENTS

THE MANUFACTURER’S ANNUAL LEADERS CONFERENCE 25-26 NOVEMBER 2015, ICC, BIRMINGHAM Adopting a circular economy, where there is no waste and which is resilient by design, gives you the basis to create new business opportunities and strengthen your existing customer relationships. The Manufacturer’s Annual Leaders Conference brings the circular economy to the forefront of the manufacturing industry. Allowing you to discuss with experts and peers the implications, difficulties and rewards of its adoption. Attend this two-day event to gain the knowledge to drive you and your company forward in 2016. tmalc.com #TMALC

THE MANUFACTURER TOP 100

CONNECT BI

25 NOVEMBER 2015, BIRMINGHAM MUSEUM AND ART GALLERY

4 DECEMBER 2015, ROLLSROYCE, DERBY

The Manufacturer Top 100 is a list of the UK’s most inspiring individuals in manufacturing, as identified by our readers, the wider industrial community and the public. Find out the winners of the 2015 Top 100 at this year’s launch. themanufacturer/the-manufacturertop-100 #TMTop100

THE MANUFACTURER MX AWARDS CEREMONY AND GALA DINNER

Business Intelligence is having a profound impact on the economy and business models. One of the challenges of BI is knowing how to use it. Connect BI gives you an exclusive opportunity to meet directly with leading vendors to discuss your BI needs and problems. Also hear practical case studies from companies that have successfully implemented a BI project. Attend Connect BI to kick start your shortlisting process. connect-bi.com #ConnectBI

26 NOVEMBER 2015, ICC, BIRMINGHAM

THE FUTURE OF MAKING THINGS Request an invite to attend this free event for manufacturers. The afternoon seminar uncovers: the technology disrupters impacting the manufacturing industry; the three key manufacturing trends emerging as a result; and how manufacturers are embracing these trends to innovate, differentiate and compete.

The Manufacturer MX Awards is dedicated to encouraging and promoting competitive manufacturing in the UK, and celebrating the very best in the industry annually. Join us for this black-tie gala event where the winners of The Manufacturer MX Awards 2015 will be revealed. Featuring special guests Levi Roots, Entrepreneur & Founder of Reggae Reggae Sauce and Conor La Grue, Engineering Lead of the BLOODHOUND Project - secure your table and be a part of the biggest celebration of UK manufacturing!

themanufacturer.com/the-future-ofmaking-things #FOMT

themanufacturer.com/themanufacturer-mx-awards #TMMXAwards

25 NOVEMBER 2015, IET AUSTIN COURT, BIRMINGHAM

Connect with our events team on twitter: @YourTMEvents. For general enquiries or to book your place, email events@hennikgroup.com or call us on 020 7401 6033 (opt 3), stating which event you would like to attend and your contact details.

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14 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

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To notify The Manufacturer of your company’s appointments, please contact Victoria Fitzgerald at: v.fitzgerald@hennikgroup.com or: 0207 401 6033

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Conduct in precontract negotiations

Are you paying attention to Instagram?

Sophie Martyn, Solicitor at BPE shares her tips on creating effective pre-contract negotiations.

re-contract commercial negotiations are key to achieving an effective contract. Although representations made prior to signing an agreement usually do not form part of the contract itself, they can be powerful enough to determine whether a party enters into the contract. Pre-contract terms and representations can be oral or written, in letters and emails, known as “memoranda of understanding”. MoUs can often prove valuable in demonstrating a commitment to agreeing a contract. Tips for pre-contract commercial negotiations: 1. Be careful to ensure not to misrepresent the nature of the commercial opportunity. 2. Give careful consideration to what needs to be disclosed to the other party/parties. 3. Be careful to distinguish between factual statements and expressions of opinion. 4. Use clear language and provide definitions where necessary. 5. Do not rely on exclusions of liability for misrepresentations. Courts can allow evidence of pre-contractual negotiations to be admissible when

rectifying a contract, if the contract does not give effect to the parties’ true intentions. It is not worth throwing “caution to the wind”; acceptable conduct is essential to healthy pre-contract commercial negotiations and a successful ensuing commercial agreement. When it comes to agreeing the contractual terms, usually, if a contract is written, all the statements within that contract are its terms, and no extrinsic evidence can be admitted to add, vary, contradict on interpret by any other means, the written terms, in the event of a dispute. This is “the exclusionary rule”. To provide certainty, commercial agreements will often be drafted to include an entire agreement clause. These are designed to preclude the use of extrinsic evidence. The clause may also, if appropriately drafted, exclude claims for misrepresentation, by excluding reliance on misrepresentations made by the parties or their representatives, which might have induced the other party to enter into the contract. Despite this, the courts are very clear that an entire agreement clause, however drafted, will not exclude remedies for pre-contractual misrepresentations. If during pre-contractual negotiations, a party has made a false statement of fact which the other party has relied on, to enter into the contract; there is potential liability in tort for misrepresentation.

16 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

’s Digital Strategist, Hayden Richards, weighs in on Instagram for business.

any Manufacturers face new social media platforms to contend with daily. This is because the digital playground in which they operate constantly changes. Who would have thought that Twitter would actually surpass LinkedIn as the Number 1 social media site for salespeople? It is now the place to start prospecting. In a Forbes article in May 2015, Vanessa DI Mauro, CEO and CDO of Leader Networks says; “due to the fast and the collaborative nature of twitter a sales person can effectively share an idea or engage with a prospective client through a pithy missive. When the exchange goes well, it can then be moved to LinkedIn – which represents a much larger personal commitment.” Manufacturing firms therefore must adapt to keep up with changing trends, as well as diverse audiences, all of whom possess varying technical abilities. The figures involved are staggering: LinkedIn has 364 million users while Twitter has 302 million active users, but now there is a social network manufacturers may not have taken too seriously that has surpassed even these two juggernauts… Instagram. Boasting more than 400 million active users monthly, Instagram is appealing to businesses, with ‘Shop Now’ buttons and a new ad platform, tailored to sponsored posts. If you are worried about tactics to conquer Instagram fear not. Facebook has released a report examining customer response on Instagram. It says a full one in four believes that Instagram has actually changed the way they see the world. Instagram may also be inspiring people to see and seize opportunities. This offers a huge opportunity to position yourself for industrial brand and product discovery – and for brands to connect with your thought leaders and brand evangelists. It’s now up to you to decide what types of experiences will best deliver on those objectives.

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Ways that could save as much as 35% of your MRO budget. Savings that help your business to be more efficient and more successful, not only now, but into the future. The key is actionable data insights, created by examining your consumption behaviour in a different, better way. Weâ&#x20AC;&#x2122;ve already worked with several leading FTSE organisations to unlock value through innovative thinking. Now weâ&#x20AC;&#x2122;re ready to work with you. We should be talking. E: lets-talk@rs-components.com W: uk.rs-online.com/working-together LinkedIn: https://www.linkedin.com/company/rs-mro-procurement

Letters to the editor

PRODUCTION LINES

Letters to the Editor Graham Mackrell Managing Director, Staffordshire Technology Park

Shannon Murphy Assistant Head of Risk Underwriting at Euler Hermes UK

As a nation, for many years weâ&#x20AC;&#x2122;ve lamented the poor state of the UK robotics market. According to a 2014 report by the International federation of robotics (IFR), countries including China, Japan, the United States, Korea and Germany account for 70% of global robot sales. Despite this global growth, sales of industrial robots in the UK actually decreased by 16% in 2013 to just 2,486 units. To put that into context, Germany purchased over seven times as many and China over fourteen times as many. It seems to me one of the biggest obstacles to growth in the UK has traditionally been a reluctance by OEMs to invest in the infrastructure, maintenance, training and expertise required to operate an automated production plant. A recent innovation in the form of collaborative A recent robotics could drive UK adoption of innovation in the form of industrial robots. collaborative robotics Using a mixture of embedded could drive UK adoption proximity and of industrial robots optical sensors, high precision gears and smart software, the lightweight, often dual-arm robots, work alongside humans and can be trained using lead-through programming where less coding knowledge is needed. Collaborative robotics will also improve health and safety, eliminating the need for cages, cells or no-go zones, minimising the impact of human error and, in turn, accidents such as the one which recently led to the death of a factory worker in a German automotive factory. With the right change in attitude and a focus on proactive innovation, collaborative robots have the power to drive growth in the UK robotic market.

The picture across the majority of manufacturing sectors is positive. But risks present across the industry should certainly not be ignored, specifically those relating to exports. UK manufacturing growth is currently imbalanced as the rise in domestic demand is being checked by falls in exports thanks to economic stagnation in Europe and the strength of the pound. Firms across the country continue to look anxiously at the weakness in the 19bloc Eurozone which accounts for half of all An annual survey UK exports. The growth of detected 170 new protectionism measures between June across both international 2013 and June 2014 and EU export markets is also a key factor. Global trade is set to become more segmented as advanced economies put new strategies in place to preserve their market share in the wake of the growing involvement of developing nations. Closer to home, we can expect a rise of trade-restrictive measures from the European Union. An annual survey detected 170 new measures between June 2013 and June 2014. The proliferation of tariff barriers remains the most striking phenomenon â&#x20AC;&#x201C; for example, Turkey raised customer duties for footwear by 50% last August. However, non-tariff barriers are becoming increasingly important and an equally effective trade restrictive policy. Countries are progressively applying national standards regarding product quality, security food safety or environment protection to protect national producers in domestic markets. In summary, the heavy reliance on domestic demand here in the UK, economic issues in Europe and geopolitical factors across wider international markets present risks to the sector that companies need to safeguard themselves against.

18 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

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Up to speed

BLOODHOUND

The big reveal It’s a few weeks now since BLOODHOUND SSC was unveiled to a global audience at East Wintergarden in London’s Canary Wharf. Conor La Grue gives us the low-down.

he media response on September 24 was truly stunning! It kicked off on BBC Breakfast TV and culminated in the record attempt date being announced live on the 6 O’Clock News, which in live news PR terms is the top of Everest! As if that wasn’t enough, in the afternoon I spent an hour in a studio at BBC Broadcasting House in London doing all the regional BBC Radio ‘drive time’ shows, which was great as it gave me the opportunity to thank partner companies in each region in a very public way.

Sharing the adventure

The Thursday evening event was also incredible, with partners, sponsors and prospective sponsors in the room. It was amazing to see BLOODHOUND SSC in such a beautiful setting, properly lit up and displayed. It really

The components required for the rocket programme are now arriving and, with the third version of the pump now underway, we believe we have solved the challenges we have seen to date

20 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

did show off the stunning engineering and manufacturing to best effect and I couldn’t have been more proud of what we have all achieved together. The free BLOODHOUND Expo then opened to the public on Friday and Saturday. Over the two days we had 10,000 visitors come through the door to see the Car.

How do you move a priceless Car?

The whole team worked truly colossal numbers of hours to deliver the Expo and then stayed late on Saturday to get the Car safely packed away (not least because we only had use of the venue until midnight). Our haulage partner Arthur Spriggs & Sons did an amazing job of juggling trailers and tractor units to get everything packed away. (The Car trailer that they have provided is just stunning and BLOODHOUND looks very at home on its new transport.) It’s not the first time the team have worked late into the night and I know it won’t be the last, but it was great to see everyone working together and really fired up, having shown off BLOODHOUND to the world.

The countdown starts….

Now the focus is on fundraising to get the cash we need to go and break records. We also need to ‘tear down’ the Car and build it up properly for running on the UK runway, complete the rocket firing

Some of the 10,000 visitors queuing to see the Car for the first time at East Wintergarden in London in September

programme and prepare for operational running late next summer. All of this will culminate in a record attempt on the morning of 15 October 2016 – which coincidentally will be the 19th anniversary of Andy Green setting the current world land speed record in Thrust SSC. The components required for the rocket programme are now arriving and, with the third version of the pump now underway, we believe we have solved the challenges we have seen to date. We’re looking forward to quickly validating the new design and getting straight into water testing. After that we gear up for rocket firings powered by the Jaguar supercharged V8 engine early in the spring. It’s now a countdown to a new land speed record and it’s going to be very busy, but we are all up for the challenge!

Manufacturing Services Thought Leadership Network [MSTLN] Becoming a member is easy. Simply visit www.mstln.co.uk to register* and start communicating with like-minded manufacturers today.

Register now: www.mstln.co.uk | 020 3397 4930 * In order to ensure you are a qualifying company, registration will be checked and once approved you will be sent log in details

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’s editorial team is out and about at a wide variety of industry conferences, debates and factory tours month in, month out. Let’s get a snapshot of the most interesting trips in October.

Time to expand Federico Ercoli shipped up to Telford to see Filtermist’s new facilities.

fter spending £3m on a new 2770m2 premisess at the T54 business park in Telford, Filtermist’s latest investment couldn’t go unnoticed. I had to see it. Manufacturer of centrifugal oil mist collection units and fume & dust extraction equipment since 1969, Filtermist was formed in Bridgnorth, Shropshire, but has recently decided to boost its business and relocate to a new bespoke plant. The company had to leave its original home after Shropshire Council confirmed there was not an area big enough near Bridgnorth to accommodate the firm. “The original facility in Bridgnorth was getting too small for us to continue. We are a growing company, we’ve grown significantly in the past few years and we needed more space for both the administration side and for manufacturing capacity,” James Stansfield, managing director at Filtermist tells me. However, the relocation was not only necessary for the additional space, “It was also to create a flagship enterprise, somewhere we could bring customers from around the world to proudly show what we’ve achieved and who they’re working with,” Stansfield adds. With a current turnover of around £11.5m a year and 55 employees, one

22 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

The motors that drive Filtermist’s centrifugal oil mist units

can clearly see the intent is in driving forward. Stansfield confirms, saying; “We have a lot of plans. We want to grow our business by around 50% in the next six to seven years. We have plans to do that by looking at market share, new markets and new products.” Growth targets being ambitious and all, I wondered if the manufacturer’s crusade toward expansion will turn out to be the ideal smooth sailing one would hope for. “The obstacles that we face are the changes in manufacturing and advanced manufacturing techniques. We have to keep up with them,” Stansfield explains. As expected. But that’s not all. “There are always challenges from competition. We’ve been around a long time so we’ve been very fortunate to get a great reputation of quality. However, all

the countries we go to we come across local competition, some of it very low cost. We have to fight very much on quality and on the British manufacturing side of things,” he adds. “Also, you won’t believe it, but our biggest competitor is Italian,” he says smiling and almost trying to make me feel guilty for it. In all honesty, I could barely believe it myself, but that got me interested. Considering Filtermist exports its products to 60 countries worldwide through a network of 45 distributors, with its biggest market being the USA, followed by China and India, I wondered how much “damage” is the Italian direct competitor doing in the battle for oil mist collection units’ supremacy. “Oh, we’re winning,” Stansfield says. Go figure.

OUT AND ABOUT

We have been involved in re-shoring from China to the UK, this has helped with lead times and quality Mark Amphlett Sales & Marketing Director, Amtek Plastics

Bespoke tools and plastic injection mouldings

Plastic fantastic Federico Ercoli travelled to Devon-based Amtek Plastics to learn more about its latest plans for expansion.

rowth, growth, growth. A target for big manufacturers; a duty for small and medium ones. Many achieve it through production of undisputable (and even disputable) qualitative products or by offering a wide range of services. Some instead see a gap, cut themselves a portion of the market, specialise and seize the chance for development. Most of the time, the latter account for the bravest, these are the entrepreneurs, the risk takers, and the passionate. Amtek Plastics falls into this category. Started in 2006 by managing director, Stewart Little, Amtek is a Devon-based, bespoke plastics injection moulding

Amtek Plastics’ workforce in Newton Abbott’s HQ

company specialising in design, tooling, manufacturing, assembly and packaging Amtek operates within a wide range of sectors within the UK. “We don’t try and put all our eggs in one basket in terms of the industries that we are working in,” explains Mark Amphlett, sales and marketing director. “We are focusing more in the defence and aerospace industries at the moment. The transportation industries like rail and automotive, those are industries that we are enjoying working in and want to do more with in the future,” Amphlett adds. Securing contracts with clients from such big and profitable sectors can be (and it usually is) very hard,

and striving to deliver is usually the number one problem for most “young” manufacturers. But, this is not the case for Amtek. “We’ve worked with some large companies out there that historically had their products made out in China and and they’ve faced some huge issues with the supply chain. Issues which resulted in them letting their customers down. So, those companies have come to us and asked us to produce and mould their products for them in the UK,” Amphlett says. With a workforce of 25, Amtek’s growth seems more of a fairytale rather than a real manufacturing story. It seems too perfect, there must be some hiccups or bumps in the road, I thought. “We face many challenges in what we do. At the moment, there seems to be a skills shortage in the UK, so finding the right people with the right skills is very difficult,” Amphlett tells me. The skills gap strikes again. So how is Amtek addressing this issue? “We’re working closely with a university college in the local town to try and encourage some of the younger children to learn skills in manufacturing and sciences because we can see that we’re going to have difficulty employing people in the future with the right skills that we would need,” he explains. What emerged from my talk with Amphlett is that Amtek’s clear vision of the future seems to be driving the company in the best of directions. “We know where we are going to be in 10 years time,” Amphlett tells me with almost glacial confidence. “We are really looking forward to moving forward, especially with the UK manufacturing side of things. We’ve got something really good to offer down here in Devon I believe and UK manufacturers need to start to shout about what they’ve got,” he adds. November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 23

Over 100 delegates attended the event

Mark Davies - Managing Partner, Segment Pulse

Changing perspectives Federico Ercoli reports on ’s Supply Chain Connect event in Liverpool.

one meeting sessions, workshops and networking receptions. SMEs had the chance to learn directly from OEMs, which explained their procurement methods and how they developed their own supply chains among the different sectors: from industrial lubricants; to shipbuilders; rail; plastic injection mouldings; and logistics.

He came here last year and he got some business and orders out of it. He’s come here today so full of enthusiasm and guess what? He’s got more business out of it Bernard Molloy Global Industrial Logistics Director, Unipart Logistics

Joanne Sloane - Supply Chain Manager, HS2

very manufacturer will confirm: supply chain management is crucial for the success of an organisation. For both suppliers and buyers, building up and securing an efficient supply chain has been a constant challenge, most of all, for SMEs. Breaking into OEM supply chains has proven to be a constant struggle for them, and too often a reason for failure. To help SMEs learn more on how to overcome the issue, hosted its

24 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

second Supply Chain Connect event at No.1 Island in Liverpool. In partnership with the Liverpool City Region LEP and Superport, supported by nine sponsors and partners, and with over 15 expert speakers over two days, the event saw in excess of 100 attendees participating in one-to-

Manufacturing veteran Bernard Molloy, Global Industrial Logistics director at Unipart Logistics spoke about the steps necessary to close the productivity gap saying, “the challenge with the SME community is actually the investment that’s required to do things. Because when you think of what they have to overcome, finance is a critical issue. But there are also all kinds of complications in terms of employing people. Some of our archaic employment practices are a challenge.” Following up on the issue of talent acquisition, Jennifer Donoghue, director at JPS Supply Chain spoke about challenging the perceptions of recruitment in the supply chain. “It’s really

OUT AND ABOUT

Jennifer Donoghue Director, JPS Supply Chain

useful to come and hear of other people’s experiences and of people that get what we are trying to achieve and what supply chain is all about,” she explains. “It’s still a niche industry, so it can be quite a lonely industry sometimes, because people don’t actually get it. It’s good just to come together and to collaborate.” Peter McCabe, manufacturing development trainee at Rolls Royce was advised to attend to broaden his understanding for a secure future at the company. He said, “I’m here today to gain a bit of an

Dr. Mark Swift - Head of the Small Business Programmes, WMG

understanding of the supply chain. I’m new to the business of Rolls Royce and I’m sort of building on my career. As I’ll be working in the supply chain in the future, it was decided that this would be a really good opportunity for me to expand my knowledge.” If still uncertain on the benefits that come from attending the Supply Chain Connect, let Molloy’s testimony help you take away the doubt. “Somebody said to me earlier today this is the best networking event he’s ever been to,

and he meant it. It was a reasonably sized SME but he said he came here last year and he got some business and orders out of it. He’s come here today so full of enthusiasm and guess what? He’s got more business out of it.”

FURTHER INFO: Find out about more events like this at www.themanufacturer.com/events

Can we help you to make the switch to robots? Certainly. Find out all you need to know about making the switch to robots at our 2016 seminars. Being held at our Milton Keynes training centre, the events will cover what to consider when automating with robots and how to design a strategy to suit your individual business needs. You’ll also see examples of the latest robotic technology for SMEs and how it is delivering benefits for other UK businesses. To reserve your place, email robotics@gb.abb.com or call 01908 350300 ref. ‘Seminar’. Alternatively, scan the QR code below.

The Manufacturer_Robotics_switch_v2.indd 1

22/10/2015 14:56

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 25

OUT AND ABOUT

What is Delcam With more than 40 years of experience developing CADCAM software, Delcam has continually invested 50% of its software royalties in research and development, and is now a leading global solutions supplier to 50,000 customers in 80 countries. With more than 700 staff worldwide and over 150 subsidiaries and partners across The Americas, Europe and Asia, Delcam helps clients manufacture aerospace and automotive parts; moulds; tools; dies; consumer products; shoes, and medical devices.

Delcam’s current AMF capacity:

Facilitating innovation

Jonny Williamson takes a tour of Delcam’s Advanced Manufacturing Facility.

t’s often said that innovation is the key to achieving growth. But how does a company innovate? More importantly, how does a company innovate when assembly lines are already running flat out to meet existing orders? Aerospace is a sector looking to double its annual output, so arbitrarily halting production to produce a prototype or test a potential process improvement is almost impossible. That’s where offerings such as Delcam’s Advanced Manufacturing Facility (AMF) play a vital role. Equipped with some of the most impressive machining and finishing technologies available, the AMF serves a number of vital roles in its aim to become a one-stop-shop for companies to experience advanced technology. Historically, the AMF allowed the company to showcase its CAM tools to potential customers, explains Delcam’s marketing manager, Peter Dickin as he gives me a tour. According to Dickin, a live demonstration proved invaluable, especially when the technology was in its infancy.

26 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

Hermle C50U MT 5-Axis Mill-turn (Siemens 840D) DMG DMU 160P 5 Axis (Siemens 840D) Huron KX200 5-Axis (Siemens 840D) Mazak Variaxis 630 5-Axis (Mazatrol Fusion) Huron VX12 (Siemens 840D) GOM ATOS ScanBox (Structured Light Scanning) Poli Galaxy CNC CMM (Part Inspection) Poli Sky CNC CMM (Part Inspection) Romer Inspection Arm (Portable Part Inspection)

Ideally located in the same building as Delcam’s 63,000 sq ft Birminghambased headquarters, the AMF’s close proximity to the company’s developers means any software improvements can be physically experienced far swifter than otherwise, greatly streamlining the process. Today, its main – and arguably most important – activity is offering large companies with limited engineering support, capability or skill a unique, low-risk, lowcost environment to test processes and designs without taking out vital factory resources. The AMF’s 38-strong team of highly-skilled operators are on hand to help companies produce samples; offer advice on design changes to make the part more manufacturable; enable processes to become more efficient, and make

recommendations regarding tooling, parts, materials and machines. Certified to AS9100 (quality management for aerospace) and ISO 9001 (quality management system) standards, the AMF provides services including high-speed machining; advanced 5-axis milling; fixture and part manufacture; reverse engineering; component inspection; process development; technology trials; repeatability studies; robotic systems, and automation trials. Dickin tells me that companies that have embraced the AMF’s capabilities have, among other factors, successfully embraced more efficient technologies; maintained their competitive edge; improved part quality and consistency; made more efficient use of existing resources; reduced their reliance on manual operations, and increased their productivity by automating processes.

If you would like to visit your factory or business, let us know and email the editor at c.bentley@hennikgroup.com

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

http://www.themanufacturer.com

Do you feel overwhelmed by Business Intelligence (BI)?

Popular blog contributions last month included: Going mobile to solve the productivity puzzle Craig Such, managing director at Azzure IT, explains how manufacturers are going mobile to help solve the “productivity puzzle”. bit.ly/1W0lrLm

I is taking a pivotal place in a company’s success, while also evolving at a rapid pace. As industry moves further towards servicebased thinking, Industry 4.0 and increased rds XAwa volumes of big data, make #TMMhere to e h t sure you aren’t left dazed y for Twittersp erwa and confused while your s undtook to the a w ging nth, we . rivals take the initiative. g al jud o ile fin ter last m was sayin h W s In this video, Henry Anson y e r t ic s u e in L hat ind discusses why manufacturers see w should be making the most of the BI technologies available. Watch the video here: http://bit.ly/1Ly1IxX

eets w T p To

Take advantage of the options available in BI. Join at Connect BI, December 4 2015, hosted by Rolls-Royce, Derby. Visit connect-bi.com

28 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

BEST OF ONLINE

Understanding the story behind the data Making sense of vast volumes of production data is the essence of asset optimisation, says Nick Milner, director of professional services at AspenTech – a leading provider of smart manufacturing and supply chain management software, and services for the process industries. bit.ly/1W1RBvo

China’s economic slowdown & its impact on UK manufacturing Pemberton Capital’s Nick Brainsby explores the recent turbulence in global stock and commodity markets directly linked to the slowdown in the Chinese economy. bit.ly/1RjLX11

MANUFACTURING, THE NUMBERS

looks at some of the more interesting numbers in the manufacturing news in the past month.

The estimated number of new manufacturing jobs to be created if the Heathrow expansion is given the green light. bit.ly/HeathrowJobs

The number of people employed on government-funded apprenticeships during the 2014-15 academic year. bit.ly/GovApprenticeships

The number of respondents who plan to invest in “people power” to help solve the productivity puzzle, according to the latest Business Growth Service Manufacturing Barometer. bit.ly/MFGBarometer

$10bn How much supercar manufacturer, Ferrari, was valued at after parent company, Fiat Chrysler Automotive launched its initial public offering. bit.ly/IPOFerrari

£9,500,000 The amount dedicated to a new manufacturing and engineering-focused college in Leeds. The UTC will be funded by the Department of Education. bit.ly/LeedsUTC

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Corbyn gained nearly 59.5% of first preference votes in September

32 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

Jeremy Corbyn

He has been branded “revolutionary” and “chaotic” by both sides of the political spectrum, but what do Jeremy Corbyn’s policies mean for UK manufacturing? Victoria Fitzgerald reports.

n September, newly elected Labour leader, Jeremy Corbyn triumphed in an incredible first-round victory. The North London MP scooped nearly 59.5% of first preference votes, defeating rivals: Andy Burnham, who lagged on 19%; Yvette Cooper who gained 17%; and Liz Kendall who stumbled into last place with just 4.8%. He is a self-confessed champion of a “new kind of politics”, which boasts to be “kinder, more respectful” and “courageous”. With proclamations like this, it’s not surprising that Corbyn has a substantial band of merry followers, wielding banners reading “I voted for a new kind of politics”; and who wouldn’t be tempted by promises of an alternative to stuffy Tory traditionalism?

So who is Jeremy Corbyn?

The son of an engineer and a maths teacher, 66-year-old Corbyn began his political career in 1974, when he was elected to Haringey Council and later served as Secretary of the Islington Constituency Labour Party. Resolutely anti-Blair, the rebellious Corbyn has defied the Labour whip 300 times in the last decade and is, quite impressively, the five-time winner of the Parliamentary Beard of the Year award, not only this but he dresses like a high school geography teacher– a trait which many have taken as a metaphor for his sincerity and concern for more important things than fashion and external appearances.

Corbyn’s first speech as party leader

Initial reaction to Corbyn has been optimistic and questioning. EEF CEO Terry Scuoler, wholly

praised Corbyn on his success, saying, “During the campaign [he said] his door is always open to business. I’ll be knocking on it shortly. I hope he will also, as leader of Her Majesty’s Opposition, work closely with business and industry to support the efforts we are making to ensure Britain is a place where business – especially manufacturing – can grow and thrive.” After the Labour leader’s first speech in the position, Scuoler was able to pick out some more intricate details from Corbyn’s policies that needed clearer detail, “The Labour leader is right to call for a more balanced economy and the need for policies to deliver greater investment in improved infrastructure, together with a focus on developing the right skills for industry, innovation and research. “Equally, however, these policies can only be developed by an economy based on private sector growth and one which pays its way in the world.” And Scuoler hasn’t been the only one to question some of those policy details, Simon Walker, director general of the Institute of Directors asked for

more acknowledgement for the role of the private sector in the recovery from 2008’s financial crisis. He agreed with Corbyn’s enthusiasm to improve infrastructure saying he “did identify several areas of concern that will chime

Initial reaction to Corbyn has been optimistic and questioning with businesses”. Adding, “Improving our broadband infrastructure, stimulating manufacturing and building more houses are all goals we share.” Walker also urged the Labour leader to focus on making it easier for UK entrepreneurs to secure finance.

WHAT DO CORBYN’S POLICIES MEAN FOR MANUFACTURING? SMEs

Corbyn maintains he “will stand up for small businesses, independent

A CROSS-SECTION OF CORBYN’S POLICIES E REEZ ATE F SE IN R S S A SINE T INCRE X S A LL BU SMA A MODE ATION T AND CORPOR DIGITAL INFRASTRUC TURE INVESTMENT

LOYED R SELF-EMP Y SUPPORT FO THE SAME SECURIT TO T N S LE EE A Y EQUIV BY EMPLO RECEIVED

OPP OS TRADES THE TR A E AN D IN NSATLA VEST N MEN TIC T NK MENT BA L INVEST A N IO T A NA

OR LS F TRO MISES N O PRE TC REN SINESS U B

ER R OV RE OWE TRUCTU P D LVE RAS DEVO ORT INF P S TRAN

I INC NCREA OM E SE DI MINTHROU SPOSA IMU GH B M W RAI LE AG SING E

HOT TOPIC

A NATIONAL EDUCATION SERV ICE

N NO DOWTE TAX P M A CLA RPOR CO

GRE EN E NER GY INV ESTM ENT

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 33

Jeremy Corbyn

entrepreneurs, and the growing number of enterprises that want to cooperate and innovate for the public good”, by freezing rates for small businesses, clamping down on corporate tax avoidance and investing in skilled workers. This is welcome news for manufacturing companies. Tony Hague, MD of PP Electricals Systems, tells , “Assisting the SME community is key to UK manufacturing. Too many times, we talk about the big manufacturers in the UK, but forget that a massive percentage of UK manufacturers are SMEs.” So far so good, but while support for SMEs is appreciated, talk is cheap. Chris Greenough, director of Salop Design, is very specific on how support should be provided, “If we are to promote small business and clamp down on tax avoidance, we should link corporation tax to company performance in training, whether that be through their commitment to apprenticeships or upskilling. Also, linking tax to targets in carbon savings and green credentials would be useful.”

Transatlantic Trade and Investment Partnership

Seemingly, counterintuitive to Corbyn’s support for small businesses is his abhorrence for the Transatlantic Trade and Investment Partnership (TTIP). In parliament recently Corbyn cited his reservations regarding TTIP: “There are seven areas of concern: food, climate change, small businesses, policy making, medicines, jobs, and public services. All of them would be affected by TTIP, and all are examples of areas in which private businesses would become empowered to prosecute governments if they took decisions that were seen to be damaging to private interests.” And Corbyn’s scepticism is not unfounded. Potentially, Europe’s public services could become fair-game to international corporations. Additionally, speculation has arisen on whether TTIP’s ‘regulatory convergence’ agenda will align EU food and labour standards with less strict US guidelines. However, TTIP’s largest threat would be the introduction of Investor-State Dispute Settlements, which could translate into transnational corporations commanding the decisions of democratically elected governments. On the flipside, catalogues of data

34 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

HOT TOPIC

from 2014 and 2015 revealing sluggish possibility, particularly as the Labour export results, means manufacturers leader also wants to bring both are being urged to step up their energy companies and railways back game in international trade, a move into public hands, a move that City hindered by laborious administrative analysts have estimated will cost at tasks, something the TTIP has been least £124bn. Referring to energy devised to alleviate. Hague is in favour companies earlier this year, Corbyn of making international trade easier, saying; “Any deals can only eliminate Corbyn has the attention of the masses, red tape and hidden trade barriers in such an but what remains is for him to make this ‘new important global market. kind of politics’ stick UK companies have historically been more nervous in investing time and money into the US market, seen as too high risk - such an was quoted saying, “I would want attitude needs to change.” Exporting the public ownership of the gas and is a key part of UK economic success the National Grid … [and] I would and the easier trade is, the more UK personally wish that the big six were businesses can take advantage of under public control. You can do it by opportunities available in new, existing majority shareholding; you can do it and emerging markets. by increased share sales”. Hague is in agreeance but has called for “a longterm, sustainable and viable energy National Education Service Corbyn’s stance on a National Education programme considering fossil fuel, renewables, nuclear and shale gas”. Service could be another step in the On the subject of renationalising things, right direction for UK manufacturing, Corbyn is keen to take back the railways and Greenough is adamant that this too. But in the same breath he has should be well planned and heavily called HS2 a project to turn “our great involve the manufacturing community, regional cities into dormitories for London he explains, “This will only work if he business”. But many manufacturers are involves business at every stage – there keen for the HS2 project to go ahead, needs to be a much stronger and visible Greenough comments, “HS2 is not only link between local authorities and the an important commitment to bolster business community to make sure the infrastructure of the UK, but also to the skills gap is tackled in a way that create jobs and business. What is his offers long-term benefit to all involved, plan to do this – simply shelving projects including employers and learners.” is not an answer.”

Quantitative easing and a National Investment Bank

To decrease the deficit, Corbyn has been flying the idea of “quantitative easing for the people”, where the Bank of England would print money to purchase bonds issued by a Corbyncreated National Investment Bank. The NIB would then support public infrastructure projects. This has been criticised by the likes of fellow Labour MP Yvette Cooper who called it “bad economics” that increases inflation; impacts investment and currency; and ultimately makes it harder to achieve sustainable growth.

Energy and the railways

The idea of plugging NIB money into public services is an attractive

Stand and deliver

Devoid of debauched porcine-related Cambridge antics, Corbyn’s reputation is certainly a breath of fresh-air, not everyone agrees with him, but his sincerity and fearlessness is a characteristic that endears him to many. Predictably, party conferences are dense with grandiose promises and bereft of the substance to achieve them. His policies viewed through the eyes of manufacturers are largely positive with some room for natural scepticism, with support for education and SMEs counterbalanced by opposition to HS2 and enthusiasm for quantitative easing. Corbyn has the attention of the masses, but what remains is for him to make this new kind of politics stick.

Judgement day Federico Ercoli spent the day with Richard Hill, Head of Manufacturing & Automotive sector at NatWest, as the MX Awards’ judges deliberate this year’s winners.

36 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

t’s that time of the year again. For us at The Manufacturer, this is the culmination of a long year of research, planning and scrutiny, aimed at finding and rewarding the very best in UK manufacturing. And, having pledged to constantly push and strive for excellence, we decided to further strengthen the reach of the event that’s regarded as the most respected in the country. Following a merge with IMechE’s Manufacturing Excellence Awards programme, The Manufacturer of the Year Awards, our flagship event, has become The Manufacturer MX Awards or MX. The companies bring to the

table a total of four decades of awards history and account for the largest organisations to ever partner together to promote UK manufacturing. Although, we are far from being the only ones supporting the industry. Headline sponsor for the awards is NatWest; with IOSH and Unipart Group as co-sponsors; in addition 12 category sponsors; one judging day sponsor; and one entertainment sponsor; proving the MX Awards is testament of national unity for the betterment of UK manufacturing. Richard Hill, head of automotive and manufacturing at NatWest said, “We are delighted to be continuing our support of the awards - especially in their new, wider reaching format. The awards are

TMMX Awards judging day

EVENT REVIEW

It was definitely a difficult challenge. All of the companies that we saw today showed a passion for their people Shelley Frost Executive Director of Policy at IOSH

really important to UK manufacturing, and help demonstrate the true depth and expertise we have to offer in the UK. “We hope that our support for the awards can help in signposting the brilliance of companies and individuals within them. Globally we’ve got a really strong economic asset and it’s really important that we support it.” MX Awards culminates on the night of November 26 at the ICC in Birmingham. But before that, shortlisted companies across 13 categories are rigorously scrutinised through a series of site visits in September and oneon-one sessions taking place on the final judging day at the Leicester City Stadium on October 15th. The judging day comprised 154 finalists and 31 judges.

Commenting on the hardest part of judging day, Suzanne Hill, director at Assured Quality Improvements and judge of the World Class category said: “We had some excellent candidates, but they were all from very different sectors and they were very difficult to compare.” Judging on the People & Skills category, Shelley Frost, executive director of Policy at IOSH said: “It was definitely a difficult challenge. All of the companies that we saw today showed a passion for their people and all of them had a very different approach and were at different maturity levels in terms of their journey. It was really difficult to find one that was ahead of the rest.” Very optimistic was also Dr Karl Dearn, lecturer in mechanical

engineering at the University of Birmingham on the Apprentice of the Year category: “It’s really encouraging to think that what we’ve seen today is the future of British manufacturing, the real cream of the crop. These are the individuals that are going to be leading in 10, 15 years’ time, so I think the future is looking very bright.” We at couldn’t agree more and we can’t wait to find out this year’s winners. Best of luck to all the finalists and see you in Birmingham! FURTHER INFO: Book your table at the year’s biggest event in manufacturing, The Manufacturer MX Awards at: bit.ly/1IJTBNR November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 37

In association with:

BOOK YOUR TABLE This year’s winners will be revealed at The Manufacturer MX Awards Ceremony & Gala Dinner. 26 NOVEMBER 2015 THE ICC, BIRMINGHAM

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The Manufacturer MX Awards 2015 has been generously supported by a range of key industry partners to ensure this is yet another successful year of industry celebrations and recognition. We would like to thank all sponsors for their continued support. The Manufacturer MX Awards 2015 is part of The Manufacturer Live www.themanufacturerlive.com

The Volkswagen AG (VW) dieselemissions scandal has raised industry-wide questions surrounding testing and the German automotive manufacturer is set to face more than 11 million vehicle recalls and billions of dollars in fines. reports.

40 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

xactly how much damage the diesel scandal will do to VW is not yet known, with estimated recall numbers and fines continuing to escalate. Affected vehicles were initially estimated by the US EPA to sit at 480,000, although VW has since reportedly revealed that the device could be contained in up to 11 million vehicles globally. Recalls of the affected vehicles is set to commence at the beginning of 2016, according to new CEO of VW, Matthias Mueller, with the company facing strict deadlines to present recall plans.

Consequences for VW

VW announced that it had earmarked €6.5bn (£4.8bn, $7.27bn) to deal with the associated costs of this scandal, a move which heavily impacted the company’s share price. In addition to the recalls, the company could face fines of up to $37,500 per

vehicle for the emissions cheating, which could cost up to $18bn in the US alone. French authorities have also asked VW to refund state subsidies offered as part of the ‘clean-car aid’ for the purchase of diesel vehicles, according to a report from Automotive News Europe. “If state bonuses were given for the purchase of alleged ‘clean cars,’ these funds will have to be repaid,” Energy and Environment Minister Segolene Royal told BFM Television, according to the report. Cars deemed as ‘clean’ under the French ‘clean-car aid’ are eligible for government-funded discounts of approximately €1,000. According to a report from Agence France-Presse, Volkswagen said it sold 946,064 cars in France that contained the ‘defeat device’. It is not known how many of the cars sold in France will be established as ‘clean’. The EU is looking to find a solution to the VW emissions scandal

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Executives at the heart of the VW emissions scandal could face criminal charges, with former CEO Martin Winterkorn resigning shortly after the US EPA findings. Müller, previously the chairman of Porsche AG and replacing Winterkorn as VW CEO, commented: “My most urgent task is to win back trust for the Volkswagen Group – by leaving no stone unturned and with maximum transparency, as well as drawing the right conclusions from the current situation.” “Under my leadership, Volkswagen will do everything it can to develop and implement the most stringent compliance and governance standards in our industry.” Müller is the first change among many within VW’s organisational structure, with the company set to offer a new management model by 2016. According to a report from Automotive News Europe, VW’s 600,000-employee strong global workforce is beginning to feel the pinch as the automotive manufacturer scales back spending and suffers a drop in US sales. VW has announced it has slowed engine production at one of the company’s largest factories in Germany, as well as freezing hiring at its car loans unit. According to VW, the factory that is responsible for producing more than one million engines every year has dropped one extra shift per week following the scandal.

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following the damage to the influential European company. The scandal, being referred to as ‘dieselgate’ within the media, has reduced Volkswagen’s value by close to €30bn. VW hasn’t faced a recall crisis of this magnitude in its 78-year operation, with the issue compounded by growing fines and legal actions.

Inaccurate emissions test results could be more widespread across the automotive industry than once thought. A report from Transport & Environment (T&E) outlines that new European cars are emitting on average 40% more carbon dioxide than test results show. T&E works with the European Commission and outlined that despite its findings, other automotive manufacturers aren’t proven to be using devices similar to VW’s ‘defeat device’. The report found that Mercedes-Benz, BMW and PSA/PeugotCitreon vehicles used approximately 50% more fuel than claimed, resulting in higher carbon dioxide emissions. Clean vehicles manager at T&E Greg Archer said that the carbon dioxide gap could cost a typical driver €450 ($504) every year, according to Automotive News Europe. “The Volkswagen scandal was just the tip of the iceberg,” Archer said. The European Commission proposed legislation to narrow the gap and European Parliament members voted through an amendment in the hope of ensuring it is approved on schedule. Rival European automotive manufacturers to VW such as BMW, Jaguar and Daimler have claimed their diesel vehicles comply with US standards, distancing themselves from the VW emissions scandal.

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The UK has been promoted as somewhere with a lot of know-how and intellectual property resources, even if we aren’t always the best at commercialising it – but is that really the case? Ruari McCallion explores the R&D landscape, including government efforts to stimulate more researchintensive activity.

42 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

uring an event to mark the official opening of its new Product Solutions Lab (PSL) at Sutton in Ashfield, Nottinghamshire, R&D/Leverage UK’s managing director Alan Tolley observed that the company’s customers – drinks and food brand owners and plastic convertors – require much more from their tooling suppliers than simple supply. R&D/Leverage began life as a toolmaker, simply supplying machine tools for bottling, packaging and plastic conversion, to specifications provided by its customers. The firm has, over the past five years especially, moved up the value chain and is now to be found working alongside customers like L’Oreal when thinking about new or upgraded packaging – at the concept stage. The company originally established a PSL facility in 2012, with the goal of providing a secure research and development working environment to confirm the feasibility for bottle/jar shape, market evaluations, and to provide short-run production for line, filling, labeling and capping trials, and tooling qualification and process validation. It now provides a total

UK Research and Development

solution from pre-sales evaluations through product design, prototyping & tooling design to manufacture and process validation, prior to shipping the production tooling to the customer. R&D/Leverage has moved up to be more R&D-oriented and to collaborate more closely with customers in developing improved packaging and processes. It may not be engaged in what some would see as cuttingedge research but it is developing processes and products that lead to the award of patents, and which help to make a more profitable enterprise. It has recognised the advantages; other companies might have overlooked the value of what they are doing. As Leyton UK’s William Garvey says (P64),

SECTOR FOCUS

Engine assembly at the Dearman Technology Centre

Cold comfort We have some of the world’s best universities for research located within our borders – we punch well above our weight in the global league tables – and some of the brightest and most innovative companies to be found anywhere

Dearman has announced that full testing of its cutting-edge zero-emission engine technology has begun at the Dearman Technology Centre, its new liquid air R&D facility, which is located near Croydon. It houses a range of custom-built test cells, in which Dearman’s technologies will undergo extended durability testing and new applications will be developed. When fully operational it will enable the testing of four engines simultaneously, along with full system testing, supported by low-volume manufacturing and build capabilities. The company’s zero-emission transport refrigeration system is currently in extended on-vehicle testing at MIRA Technology Park, and will be commencing commercial on-road trials later this year.

engineers often don’t realise that what they are doing is groundbreaking. Normal processes that are gone through and undertaken during the course of routine product development could well be novel, innovative and of significant value. The government’s current definition of research & development is much wider than the area covered by white coats and experimental studies; benchmarking, product evolution and development are R&D and they could well qualify for incentives and financial rewards.

Get Smart

It is not as if British companies can afford to overlook such encouragement. We have some of

R&D Leverage Product Solutions Laboratory

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 43

the world’s best universities for research located within our borders – we punch well above our weight in the global league tables – and some of the brightest and most innovative companies to be

found anywhere. Look at the world of Formula 1; the majority of teams are based in the UK; in fact, the only truly successful one that is not UK-based is Ferrari. But we don’t seem to be very good at capitalising on our innovation. The EEF/Vodafone 2015

Boxing clever: tax credits and the Patent Box The Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned after 1 April 2013 from its patented inventions. The lower rate is 10% - less than half the current main rate of 22%. In order to qualify, company profits must come from: selling patented products - that is sales of the patented product or products incorporating the patented invention or bespoke spare parts licensing out patent rights selling patented rights infringement income damages, insurance or other compensation related to patent rights A company can also benefit from the Patent Box if it uses a manufacturing process that is patented, provides a service using a patented tool, makes or sells products that have been

patented by someone else, so long as it has certain rights to develop, exploit and defend patents, and national exclusivity. The intention is both to reward IP and to encourage qualifying work to be done in the UK. “The patent box system has had the positive effect of helping manufacturers engage with the patent system and thus enable them to recover greater return from their R&D,” said Paul Misselbrook, Partner in the Engineering & Physics team with Appleyard Lees, European Patent and Trade Mark Attorneys. “Historically, the UK had high levels of R&D investment but the statistics show a declining trend in recent times and it is hard to believe this won’t have a knock on effect on innovation. We work with many companies at the leading edge of their fields and see innovation on a daily basis. But it is probably right to say that many of those

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44 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

UK Research and Development

innovations are concentrated around next generation products.” “Introducing the patent box relief was motivated by a belief that creating a competitive tax system encourages investment within the UK,” Bernhard Gilbey, of Squire Patton Boggs (UK) LLP explained. “The move to link patent box reliefs to activity (the so-called ‘modified nexus approach’) will likely reduce the impact of “artificially” moving IP to countries with beneficial patent box regimes. I would expect the UK to be a net beneficiary of restricting patent box type tax reliefs to situations where the activity also needs to be carried on in a particular country to access the relief.” Companies can seek tax benefits from R&D tax credits even if they are not currently profitable, and the process involved does not have to be patented or even patentable. Developing a process or product that already exists in the industry, but where the information to resolve a technological uncertainty is not readily available is a qualifying activity, as is

Paul Misselbrook Partner in Appleyard Lees Engineering & Physics team

SECTOR FOCUS

Bernhard Gilbey Global Head of Tax Strategy & Benefits Group Squire Patton Boggs (UK) LLP

making an improvement to an existing product or process, or duplicating an existing product in an appreciably improved way. The work doesn’t even have to have been successful; a claim can be made on the basis of technological advance. R&D Tax Credits are payable as cash repayments of up to 33% of qualifying expenditure. They are available to SMEs; a similar scheme, known as RDEC (Research and Development Expenditure Credit) has been available to larger companies since April 1 2013. “Once a company stops investing there, its future is at risk,” said Misselbrook. IP protection systems, including the patent system, create a relatively level playing field across developed nations and particularly in Europe. The main differences in R&D climates between countries will often be the indirect incentives offered by the various governments. It may be the case, as Misselbrook suggests, that the effect of incentives such as R&D tax credits and the patent box system, have often simply improved the profitability of existing R&D rather than generating new R&D programmes. But if you are not claiming, you should be – and make sure you are claiming everything to which you are entitled. There is plenty of advice available, from professional advisers and specialist firms.

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November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 45

UK Research and Development

EEF/Vodafone 2015 Innovation Monitor While funding for innovation support is viewed as critical and something that must be maintained, uncertainty around outcomes leads to increased concerns about falling behind competitors. Main findings: 94% of manufacturers are engaged in innovation 65% of manufacturers developed new products in the last three years Half of manufacturers are using innovation to expand into new export markets Only 2/3 companies said that efforts to move into new export markets were successful Four in ten manufacturers lack all the resources they need Limited access to resources reduces success rates in most areas Manufacturers report increased concern about falling behind competitors for second year running Manufacturers are very ambitious about innovation, investing in it heavily and using specialist resources; but they also have to pull in staff, equipment and finance from elsewhere in the business. However, they are not always achieving the results they need. Innovation is challenging and a lack of resources reduces the chances of success. For the second year running manufacturers have reported increased concern about falling behind competitors on innovation. The UK’s expenditure on research and innovation is lagging behind that of our key competitors. Latest data shows UK Business Expenditure on R&D (BERD) is only 1.1% of GDP; the OECD average is 1.6% and Germany is at 2.02%. Innovation Monitor reported that the UK’s business expenditure on R&D is just 1.1% of GDP. The average across OECD countries is 1.6% and Germany’s is 2.02%. While this may, in part, reflect the mix of the UK’s economy – our financial and services sector forms a larger part of our GDP than most of our competitors’ – it supports findings from other sources, including the Neuenhofer Institute in Germany.

Take the money and run

It’s not as if support and opportunities are either not available or are ruinously complicated. Patent law exists to protect IP and is well known. Design Rights are a cheaper form of IP protection that SMEs may find easier to afford. The government has introduced a series of incentives to encourage an increase in R&D activity in the UK, including the Patent Box, R&D Tax Credits, which are generous and particularly targeted at SMEs, and RDEC (Research and Development

46 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

SECTOR FOCUS

Harvey Water Softeners recently invested £2.5 m into R&D, including 3D printing. A new injection moulding machine cost £750,000, £1.5m went into accompanying tools and £500,000 was committed to the automation of production processes to allow existing staff to manufacture a greater amount of product with increased efficiency. “3D printing technology can turn an idea into reality in less than 72 hours. Autodesk Inventor allows our engineers to draw a new concept as a detailed 3D CAD model in just minutes and this digitised design is then produced as an intricate prototype by the printing machine,” said Martin Hurworth, operations and technical director. “The prototype can then be tested and evaluated within the day.” The company uses Selective Laser Sintering (SLS) to develop the pressurised and watertight features of its water softeners. Hi-Res Viper stereolithography (SLA) facilitates the prototyping of the very fine details and flexible 3D printing allows the modelling of complex seals. Harvey Water Softeners received tax credits for its R&D investment and was able to reduce its corporation tax as a result of the patented status of the products it is developing.

Expenditure Credit), which is a similar scheme for larger companies. “Between 1981 and 1999 UK R&D expenditure fell as a proportion of GDP. R&D tax credits/incentives (tax benefits on expenditure) were introduced in 2000 and extended to large companies in 2002,” said Bernhard Gilbey, global head of the Tax Strategy & Benefits team at Squire Patton Boggs (UK) LLP in London. HMRC statistics say that more than £11.4bn in tax relief has been claimed since R&D tax credits were first introduced. “The number of claims rises year on year; SME claims rose by more than 23% in 2013/14 and R&D expenditure against which tax incentives have been claimed rose 7% in 2013/14 compared to 2012/13.” This suggests that that R&D activity is now growing, reversing the trend of recent years,

although Gilbey says that it is difficult to evidence the exact relationship between the tax incentive and the decision by taxpayers to carry out the R&D activity here.

Support and encouragement

Companies do not have to rely entirely on their own resources. The Warwick Manufacturing Group has been around for a while and worked on so many developments and innovations that its income from them is now counted in hundreds of millions of GBPounds. The Institute for Advanced Manufacturing, a joint venture between Unipart and Coventry University, describes itself as the UK’s first “Faculty on the Factory Floor”. It brings together engineering students, faculty and companies to work together to solve problems and to develop innovative solutions. It has over £3m leading-edge robotoc welding, metrology and automation equipment and is also intending to offer Continuing Professional Development facilities. There can hardly now be a significant university without a science or technology park – or even both. The atmosphere and environment for R&D in the UK is changing so much that it has even tempted Pfizer to invest here again. The test now is to turn the incentives into added value.

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INTERVIEW

Scotland Jonny Williamson catches up with Sarah Jardine, chair of Scottish Enterprise’s Scottish Manufacturing Advisory Service Board.

he demise of the BBC’s longrunning television series Tomorrow’s World can be held accountable for a number of things, but perhaps the greatest loss is the prime-time glimpse it offered into the fascinating world of science and technology. It may be a bit of a stretch to suggest that young people’s diminished interest in STEM subjects can be solely attributed to its cancellation, but over its almost 40-year run the programme certainly sparked

48 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

the interest of many now working in industry. This is certainly true of Sarah Jardine, someone whose passion for manufacturing can be easily traced back to a 1970s diet of Blue Peter and Tomorrow’s World. “I grew up thinking I could make anything I wanted out of toilet roll tubes, egg boxes and stickyback plastic. I loved to make things and watch Tomorrow’s World with its visions of the future,” she tells me. As the director of manufacturing for the leading Dunfermline-based medical

technology company, Optos Plc, Jardine has led the facility through awardwinning programmes of excellence and regularly hosts visitors from across the UK to experience the high-performance environment she has created. “I love understanding how to manufacture things more efficiently, seeing how processes can be improved, and knowing that the products which leave our factory are making a difference to people’s lives every day,” she enthuses. Having been an active member of the Scottish

Sarah Jardine, Scottish Manufacturing Advisory Service

SMAS can offer advice and guidance, conduct value stream mapping and help to identify the improvement opportunities that are commonly being overlooked

INTERVIEW

Optos regularly receives visits from businesses from across the UK to experience its high performance environment.

Scotland is home to more than

8,000184,000 Employing

manufacturing companies

Industry estimated to produce for the nation’s economy

Manufacturing Advisory Service (SMAS) Board for almost three years, her knowledge and enthusiasm for manufacturing excellence saw Jardine appointed as its new chair in May 2015. SMAS Board members come from manufacturing companies spanning a variety of sectors and locations in Scotland, providing the industry experience and direction to help shape the support SMAS offers. Tasked with helping Scottish manufacturers to realise the significant

opportunities available to them, and to become more profitable and internationally competitive, her continuing role at Optos provides a direct link to the challenges facing Scottish business and the support they need to overcome them.

Scottish industry

At last count, Scotland is home to more than 8,000 manufacturing companies, with industry estimated to produce £12.7bn for the nation’s economy and employ 184,000 people.

Renowned for its world-class expertise in alcoholic beverages and oil & gas – sectors which continue to grow - Scotland’s manufacturing economy has been strengthened in recent years by the emergence of industries such as renewables and pharmaceuticals. This is likely to be the future of Scottish industry, Jardine explains to me; a two-pronged approach of sustaining and driving those areas for which the nation is famous for, alongside nurturing highNovember 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 49

INTERVIEW

Sarah Jardine, Scottish Manufacturing Advisory Service

Jardine has led the Optos facility through award-winning excellence programmes

BIOGRAPHY Sarah Jardine

Director of Manufacturing for Optos Plc Holds a BSc(Hons) in Laser Physics and Optoelectronics from Strathclyde University, an MSc in Laser Engineering from Herriot Watt University 1992 began her career as a laser engineer with Thales Optronics 2000 started with Optos as senior optical engineer working on design for manufacture and service, and then transferred into manufacturing of its original ultrawidefield imaging device Since that time Jardine has held a number of positions within both operations and R&D, including Manufacturing Engineering manager, R&D manager and plant manager Jardine regularly speaks at events about her experience of developing and maintaining a culture of excellence, including the SMAS and Quality Scotland Annual Conferences Jardine also currently holds the position of chair of the board of SMAS

50 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

value manufacturing opportunities, particularly to global markets. Equally, she sees capitalising on the current reshoring trend as being important and offers a real opportunity for Scottish companies by leveraging the quality of its workforce and its diverse skillset.

Continuous improvement

Scottish manufacturers, however, are facing many of the same challenges being encountered elsewhere in the world, principally geared around productivity; efficiency; exports, and skills; many of which Jardine says can be alleviated through continuous improvement (CI). â&#x20AC;&#x153;When Optos started its CI journey about six years ago, it took me the first year to determine where to initially apply CI practices, thatâ&#x20AC;&#x2122;s where an

INTERVIEW

Electrical Systems Control & Automation Solutions

Ele ct r

l ica Me ch an

A prominent figure for both a successful company and for Scottish industry in general, Jardine humbly tells me that she isn’t enamored by the term role model, believing that most people can do what she does. However, I would respectfully disagree. Jardine can often be found in local schools or career fairs, giving talks about the opportunities careers in industry offer, and passing on her enthusiasm and experience to the next generation. “Too often, young people today think that success is having one great idea, selling it to the highest bidder and retiring at 25. That attitude is never going to lead to a thriving manufacturing sector. We need to create an environment where success is seen as having a great idea, creating a sustainable business and generating jobs for your community.”

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Continuous improvement can often be perceived as “just another initiative”, an important resistance that has to be broken down, describes Jardine. “Typically, you see 20% of people excited and engaged, 20% who tend to keep their heads down and hope it’ll go away, and 60% who are undecided. That’s a very behavioral, cultural barrier.”

Ambassador for industry

TROL & AUT ON O C L ic on

Cultural vs process

Proving that CI will have tangible benefits and that it is going to be sustained within an organisation is vital, she continues. “To be successful, companies have to prove to their workers that CI isn’t going to be pushed to one side when there’s other more pressing things to do. “SMAS practitioners have to balance cultural change with being able to quickly identify some quick process wins to drive momentum and enthusiasm, but the key message revolves around cultural transformation.” Many manufacturers will already have internal CI “champions”, a critical component for any CI journey, but Jardine says there are significant advantages to engaging with an external organisation, particularly at the start of a company’s CI transformation. “Particularly in the case of SMEs – which Scotland has a great deal of, they don’t have the resources to be able to commit somebody full-time, and when it’s an add-on to your job, it becomes the thing that gets dropped because of other business priorities,” she explains.

SOLUTI ON ION AT S M Pneumati c

organisation such as SMAS can really pay dividends. “SMAS can offer advice and guidance, conduct value stream mapping and help to identify the improvement opportunities that are commonly being overlooked. Alongside that, they will take you to other organisations and demonstrate examples of best practice from those who’ve taken a similar journey.” SMAS also plays a vital role in helping organisations to stay focused, offering support when things aren’t going so well, and keeping them on the right path, Jardine continues. “A CI journey is really from your head to your heart. You’ve got to know logically that these improvements will make a difference, but you’ve also got to believe that they are going to work and have perseverance,” she explains.

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INTERVIEW

Dirk Villé General Manager of Atlas Copco Compressors UK way we support equipment through our service division, with our SmartLink monitoring technology, for example. Monitoring and control is an area where we expect to see significant innovation in the coming years.

You started at Atlas Copco Group in 1994, how has the organisation developed during your tenure?

It’s remarkable to think that I joined Atlas Copco 21 years ago. We have grown so much since then and, by focusing on our customers’ needs, we have a much greater focus on energy management. During the past two decades, we’ve seen rising energy costs and growing awareness of environmental concerns. That’s why the introduction of variable speed drives (VSDs) into compressors, which Atlas Copco pioneered in the same year that I joined, has been so important. In one year alone, we calculated that our customers saved 16.5 million kWh of energy by using our VSD compressors. The impact has been huge.

The firm is proud of its achievements in innovation. How do you foster a culture of innovation and what potential areas exist that the company might move into next?

The quest for continuous improvement in energy efficiency is the biggest driver of innovation within Atlas Copco. This applies not only to compressors but also vacuum pumps, and we are exploiting synergies between these two product groups, which can be seen as the yin and yang of air movement. However, we are also innovating in the

52 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

What is the greatest challenge facing the firm right now?

Our biggest challenge is to develop the next generation of technicians, engineers and specialist support staff. We are fortunate to have a highly experienced workforce but it is an ageing workforce and so we must find a new generation of young people to succeed them. It is a challenge for many industrial businesses in the UK but what is important is that each plays their part. We run open days for local schools and colleges, a thriving apprenticeship scheme and an excellent graduate programme.

What has the greatest achievement been since you became general manager?

When I joined in 2013, this was already a very strong organisation in the UK. However, I am proud to have brought vacuum pumps into our product portfolio, which has been very well received by our customers. Another achievement was the introduction last year of activity-based working (ABW) at our headquarters in Hemel Hempstead. It has transformed the look and feel of our workspace and encouraged greater teamwork and collaboration. It is now recognised as a template for Atlas Copco offices globally. In addition, earlier this year we expanded our Systems Hemel Hempstead workshop, providing customised air and gas packages for

Continuous improvement is embedded in our company philosophy that there is always a better way. customers in demanding industries all over the world. It is truly a centre of excellence.

What does the future hold for both you and the company?

The only constant at Atlas Copco is change. Continuous improvement is embedded in our company philosophy that there is always a better way. We will continue to introduce new technologies to meet the needs of our customers in manufacturing, helping them to increase productivity while also making gains in energy efficiency. We see this role as vitally important as the UK economy returns to growth in a highly competitive global marketplace. Like our customers, however, we must also grow in a sustainable way, by adopting ever more efficient and effective practices.

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Don’t try to eat the elephant whole Charlie Candy, PLM Lead EMEA at Autodesk, explains how PLM technology paves the way for leaner manufacturing.

ioneered by Toyota in Japan almost 30 years ago, lean manufacturing is now a standard methodology used by manufacturers all over the world to remove waste from processes. Perhaps less well known is that Product Lifecycle Management (PLM) has the potential to be a key enabler of lean, supporting manufacturers in implementing, tracking and optimising lean manufacturing processes. PLM connects people, processes and technology to provide deeper data analysis enabling manufacturers to make better decisions, faster and utilising technology to remove waste in innovative ways. Proving its worth overseas in the 1980s – reducing time to market and waste, improving product quality, and maximising supply chain collaboration – PLM technology was embraced by UK aerospace, defence and automotive manufacturers and slowly trickled into other industries, limited in its adoption to large OEMs that sit on the top of their supply chains. These were the only companies with the stamina and resources to bear the significant investment required to achieve the

54 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

been made and changing it at this stage benefits of PLM. Despite the well becomes expensive. Many manufacturers documented rewards, PLM has not yet were (and still are) small businesses ‘clicked’ as an enterprise platform in and the technology available at the time the way ERP has. It is also not widely recognised as a critical tool for supporting just wasn’t affordable. Fast forward a few years and we have begun to see lean initiatives, with manufacturers often the tide turn. Cloud or Software as a opting for manual or basic methods Service (SaaS) solutions have made PLM for implementing and tracking lean (Excel spreadsheets, whiteboards, Access databases). This approach TSM is a shining example of how is prone to human error, resource intensive and working in such a way can bolster results in manufacturers the manufacturing process and benefit working for the data, rather than getting the the broader business and its revenue in the data to work for them. long run A big factor in the lack of uptake for PLM has been cost, despite accessible to the broader manufacturing respected industry analysts reporting market by removing upfront infrastructure significant benefits. According to investment in servers, database licenses, CIMdata, PLM can impact the overall networks, software licenses and IT product cost for a manufacturer by as resources (both internal & external). The much as 80%, in comparison to ERP other key factor is time. PLM is now a which will only have an impact of around viable option for manufacturers because 20%. The reason for this is that by the they are able to quickly get a return time the product data is in entered into on their investment, seeing payback in an ERP system, the decisions about the months rather than years. development of that product have mostly

Autodesk

MANUFACTURING LEADERSHIP

TSM’s Headquarters

Best practice PLM

Plastic blending control system manufacturer TSM is an example of a new breed of SME manufacturers successfully exploiting PLM. David Keeley, TSM’s engineering manager led the PLM initiative for the company and shared his progress, “Previously the company had basic lean principles in place on the manufacturing side of the business, such as the shop floor arrangement and consolidation of materials, but there were no controlled management processes in place besides ERP. “This meant that TSM had no way of easily managing key workflows or monitoring performance in all of the many processes not handled by an ERP system, which resulted in inefficiencies. “TSM is now using Autodesk PLM 360 to define and implement key working practices for the engineering deliverables. For example, the company previously had no formal process in place for reviewing and confirming customer orders but now PLM 360 ensures all the relevant stakeholders in the businesses can review the order. This includes categorising orders and flagging if there is any missing information which might cause delays. This allows TSM to dynamically manage the process and identifying potential risks early, before they can become issues. “Cloud also plays a big part in improving TSM’s development and delivery processes because it’s able to generate real time intelligence. For example, if there are bottlenecks in a procedure, PLM 360 provides a common view of the status of orders and requests, which helps engineers

identify what’s going wrong so that they can quickly resolve the problem. “This data is displayed live in the manufacturing facility on large LCD screens so that all employees have visibility and accountability on issue tracking. Being fully mobile means processes don’t stop in someone’s email inbox if they are out of the office, meaning employees can take part in processes and see data securely anytime and anywhere. “Working this way has meant TSM has already experienced great results. The company has been able to deliver new solutions and products to its customers, without hiring more staff, and it’s helped actually increased its orders by 32% since last year. Delivery processes on the shop floor have also improved – the standard engineering release time has reduced from 25 days to four, a massive 84% reduction, so the company is now much better at meeting its delivery targets.”

Challenges in PLM adoption

PLM is a long way from reaching full potential within manufacturing and there are a few reasons why. The initial implementation of PLM can seem like a daunting task for management teams but they need to persevere. As long as management teams take an agile approach and adjust their course when hitting a red flag, they will reach their goal of a successful PLM process. Changing company culture can also be a barrier but the essential thing to remember is change should be gradual, and keep employees in mind and active in the process. Management teams need

to ensure the whole business is aware of the process from the start, it can’t just be enforced from the top, down. Additionally, companies will outline large complex goals for PLM, neglecting some of the simpler problems. But fixing these simple problems first can often be of higher value because they offer a fast return. Alternatively, they should perform the project in small pieces, initially focusing on quick wins to get everyone on board. This makes life easier for employees, improves productivity, increases morale and supports adoption. Once the basics are mastered, move on to more complicated projects.

Technology is key for future of manufacturing

We are entering a new era of Manufacturing, with significant shifts in; customer demand and expectations, the means of production and product complexity, creating both challenges and opportunities for manufacturers. The UK has always been seen as a leader in manufacturing innovation and there are clear signs this will continue if we take advantage of this disruption. According to KPMG, growing investment in new technologies and materials, as well as good tax rates and stable markets, are all creating a fertile ground for UK manufacturing to prosper. Strengthening of output, new orders and employment are all pointing to growth in Irish manufacturing too. TSM is a shining example of how working in such a way can bolster the manufacturing process and benefit the broader business and its revenue in the long run.

Autodesk is sponsoring the Annual Leaders Conference, The Future of Making Things, Top 100 and MX Awards 2015. Book your place here: www.themanufacturerlive.com

Unipart

MANUFACTURING LEADERSHIP

Putting the ‘‘U’’ in productivity

Bernard Molloy, ‘Logistician of the Year’ and global industrial director at Unipart Logistics outlines the three key steps to greater productivity.

ndications are that there is a yawning ‘productivity gap’ between Britain and other G7 nations, the largest since estimates began in 1991. Figures released in September by the Office for National Statistics (ONS) show that in 2014 output per hour for UK workers fell 20 per cent below the average of other leading industrialised nations and that France, Germany and the US all bettered the UK by 32 – 33 percentage points. Employment in the UK may be at a record high, but if our goods and services are to remain competitive, and sustainably so, then output for each hour worked must go up. The Chancellor, George Osborne, has proclaimed that raising productivity is the challenge of our lifetime. However, the Chancellor’s announcement in the Summer Budget to introduce a ‘national living wage’ of £7.20 per hour for workers aged over 25 from next April has raised concerns over productivity for many businesses running warehouses and logistics operations. If manufacturers, retailers and logistics companies are to meet these future challenges then it will be imperative that they take three key steps to boost productivity by improving ‘employee engagement’, adopting lean practices and stimulating innovation.

In seeking examples of ‘best practice’, the automotive industry is recognised as one of the most productive in the UK. The Deputy Governor of the Bank of England in a speech to the Automotive Fellowship International, of which Unipart Group’s Chairman, John Neill, is President, said: “If productivity in the UK economy as a whole had grown in the same way as in the car industry, and employment generally had grown as it did, the economy would now be 30% or £1/2 trillion larger.” As a logistics services company with its origins deep-rooted in the ‘lean’ engineering and manufacturing disciplines of the automotive sector, Unipart Logistics has for many years realised the importance of engaging and developing our people. Seeking ways to improve productivity is built into Unipart’s DNA, a factor that plays a large part in why the company is now responsible for running the supply chains of some of the world’s most valuable brands. The Unipart Value Set has been in place since 1987, forming the basis of our culture and is reflected in The Unipart Way, our philosophy of working, which engages and empowers employees at every level of our organisation to identify and remove waste from processes and continually improve the business.

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Much of this ingrained focus on productivity is down to a practical approach to problem solving and the tools available through the Unipart “U”: a shop floor university where employees learn to analyse and resolve problems that stand in the way of them doing their jobs more efficiently. These techniques have not only been implemented in the company’s global automotive manufacturing, supply chain and logistics businesses, but they have also been adopted by blue-chip clients including National Grid, Shell and HM Revenue & Customs. The Unipart Group is now extending this shop floor faculty approach to the training of young engineers. Working in partnership with Coventry University, through the Institute of Advanced Manufacturing and Engineering, students will learn theory in the classroom and step out into Unipart’s components factory to apply it practically – making it similar to the Unipart “U”, but with a focus on skills as well as lean processes. If British companies are to close the productivity gap, then employee engagement, lean practices and innovation must become the focus of attention. FURTHER INFO: For more information on improving productivity visit our new website at www.unipartlogistics.com

IOSH

MANUFACTURING LEADERSHIP

Manufacturing a safer workplace Occupational health and safety is one of the corner stones of modern manufacturing, Shelley Frost with an Executive Director Policy at IOSH provides update on its potential to support industry.

s the world’s biggest professional health and safety membership organisation with over 44,000 members, IOSH is the voice of the profession, campaigning on issues that affect millions of working people. More than 160,000 people a year undertake IOSH courses and it is the only chartered body for health and safety professionals. IOSH members hail from a broad range of industries, including pharmaceutical; automotive; as well as firms specialising in the oil and gas supply chain. For UK manufacturing specifically, the sector accounts for roughly five per cent of businesses and 10% of employment. Unsurprisingly it is one of the largest and most diverse representative sectors in IOSH’s membership, so the organisation is keen to recognise manufacturers practising good health and safety, as well as cultivate new members from industry to share resources and exchange best practice. IOSH has charitable status and advancing OSH standards globally is integral to its core values. There are no

barriers to entry for an organisation or individual who wants to get involved, in fact, you don’t necessarily have to be a member to benefit. The charity offers free resources, such as technical guides, and a health and safety helpline. “We are focused on communicating the true value of OSH and the OSH professionals in their business,” explains Frost. “Good health and safety management is central to good business management - embracing OSH as part of their business value set and using improvement in OSH competence to drive up business reputation, underpin resilience and ultimately improve business results.” Company size is something IOSH is ardent does not have bearing on the support received as a member. Frost explains, “Our members are all individuals not companies – and membership levels relate to level of experience of the individual – not the size of organisation. IOSH does not differentiate its offering by organisation type or size. Our members work in every conceivable organisation type from the

IOSH’s vision is a world of work which is healthy, safe and sustainable, advancing OSH standards globally is a key deliverable and focusing on where we can make the biggest impact is very important

one-man-band to global businesses. If an organisation wishes to access things like our Occupational Health Toolkit or our Risk Assessment Route Finder they are available free of charge. ” And if that isn’t enough, Frost concludes, “We also continue to deliver our current business support campaign ‘No Time to Lose’ which provides advice and resources for industry on the key causes of occupational cancer including solar radiation, silica, diesel fumes, asbestos and effects of shift work. 8,000 people die each year due to work-related cancer and there are almost 14,000 new occupational cancer registrations each year. More information can be found at www.notimetolose.org.uk ” The organisation is dedicated to delivering a global framework for OSH competency, and this enthusiasm is set to drive IOSH at full speed into 2016 and beyond, Frost elaborates, “The next couple of years will be hugely busy and we are working on some very exciting and transformational projects. During 2016 we will continue to work on a set of online tools to enable the delivery of a global framework for OSH competency. “We’re working with individuals and organisations to bring to the industry a global standard for OSH measurement providing a common language approach to OSH regardless of organisation size, geography or regulatory framework.” Within that wider goal, Frost explains in more detail, “We will also be working closely with members on the implementation of the new ISO 45000 standard, which succeeds ISO18001 but adds an important new requirement; that top management has to demonstrate its leadership and commitment, by taking accountability for the effectiveness of OSH.” So watch this space.

interviewed Shelley Frost in February/March discussing how manufacturers in the UK are realising the benefits of investment in good health and safety. www. themanufacturer.com/articles/ iosh-safety-first/

FURTHER INFO: To find out how you can get involved with IOSH visit www.iosh.co.uk

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Learning to lean

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Or is it? Is it possible to get rid of all waste/overburden/ inconsistencies in an organisation? Or does lean have its limits? That is the theme for this month’s issue of the LMJ, The limits of lean. There must be a limit to how lean an organisation can be and surely lean can’t solve all the problems that face an organisation? Our contributors this month come from a wide range of fields and all have a great depth of knowledge and insight. Malcolm Jones contributes with a piece discussing the ways a company can be too lean. He writes organisations are often too lean, “in terms of people – we need to decouple people from processes to allow for process improvement.” He also suggests there are practical limits to how lean we can be with inventory and waste. This month the LMJ visited SPI Lasers to have a look at how fibre lasers are produced and see the influence that a German manufacturer of metal work machinery has had on its practices and mentality when it comes to lean. We also have an interesting piece from Mara Roberts of Columbia University concerning the mind frame needed to necessitate a transformation and how to propose one if you are the person that wants things to change. There are lots more articles and contributions that are well worth a read as well. Bruce Lee once said, “If you always put a limit on everything you do, physical or anything else it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them.” No organisation wants to have limits when it comes to business or

November

LIMITLESS LEAN

Fred Tongue provides a glimpse into November’s LMJ, which examines the limitations of lean thinking and how to tackle them.

ean is the continual improvements made by an organisation to reduce waste. The premise is simple enough, evaluate, implement, reap the rewards, rinse and repeat. The cycle continues and eventually all waste in an organisation is gone.

Is it possible to get rid of all waste/overburden/ inconsistencies in an organisation? Or does lean have its limits?

58 www.themanufacturer.com | November 2015 | Issue 9 | Volume 18

improving Can you keep on forever, your organisation it to the a or is there lim powers of lean?

2 0 15

| www.leanm

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work whether that limit is units sold, customers served or products rolled off the production line. Yet realistically every business is limited in some way, as is lean. In this issue we discuss how you can push these limits and break through plateaus. Lean demands that you constantly reassess and are brutally honest with those assessments. For many organisations they only implement certain aspects of lean and not others. This sort of picking and choosing is one of the main factors that limit the quality of a transformation. Tackling one issue and ignoring another issue will not help you in the long run so this is where honesty and re-evaluation are key to a lean transformation. This issue can help anyone struggling to make the most of lean, providing something useful to support in pushing the limits of lean.

FURTHER INFO: To read the November issue of LMJ visit www.leanmj.com

Josh Sloan, Apprentice, Coca-Cola Enterprises East Kilbride

EMPLOYEE OF THE MONTH November 2015 Josh Sloan

Apprentice, Coca-Cola Enterprises East Kilbride

EMPLOYEE OF THE MONTH

What is your role and what are your main responsibilities?

As an apprentice, I started off by shadowing the electrical engineers to get a better understanding of what they do. The first month or so is mostly about getting to grips with the business, getting hands-on learning and experiencing all the different kinds of machines and variety of roles on offer.

What are the key technical skills you use?

I feel as though getting first-hand experience as an apprentice is a really useful way to develop your skills in a different way than in the classroom. So far I’ve been able to develop my knowledge of electrical engineering and soon I will move on to operational and mechanical areas, so I will have the opportunity to learn about a wide variety of different roles in the factory.

What personal characteristics help you in your role?

CV IN BRIEF JOSH SLOAN Age: 19 Education: At School I particularly enjoyed Maths and Physics, pursuing these subjects to a higher level, along with other engineering subjects. Career to date: This is my first job since leaving school but my interests and strengths during my school studies sent me on the way to where I am now in my role at Coca-Cola Enterprises. Hobbies and interests: I have always had a passion for engineering thanks to my dad, who is a maintenance engineer at Gants whisky distillery. Because of him, I started learning about engineering from a really young age and he inspired me to look for a job in the industry. He was especially proud when I got my apprenticeship position at Coca-Cola Enterprises.

Being quick to learn is really important. There are so many people working at the factory and each with different machinery that you need to be able to get to grips with each new thing quickly. Everyone at the site has made me feel really comfortable about going to them with any questions I have which has made me feel like I’ve already learnt so much. Therefore, being quick to

One of the most rewarding parts of my job has been becoming part of the factory team and growing trust to take on certain responsibilities

take things on and not afraid to ask questions are helping me to make the most of my time here.

What do you consider to be your biggest personal success at the company so far?

I felt really proud to get onto the apprenticeship course at CCE, as a lot of people applied for this position and it was really quite competitive. A definite highlight was being involved in a recent advertising campaign for the company. Another apprentice from East Kilbride, Toby Singh, and I took part in a photoshoot at the factory which went on to feature in national newspapers, highlighting the work CCE is doing in the local communities where it operates. It was great to get involved, and share my experience as well as raise awareness of the local opportunities available within such a global brand. I found it bizarre but also exciting to see my face in the newspaper!

What are the most rewarding parts of your job?

One of the most rewarding parts of my job has been becoming part of the factory team and growing trust to take on certain responsibilities. All of the engineers have helped to guide me through my time here and I am getting some fantastic handson experience with the machinery on-site. For example, I can now set up the labeller. It’s really rewarding that the team trusts me to take on certain tasks.

Do you have a grand career ambition?

Once I’ve finished my apprenticeship, I will move on to study for my Higher National Certificate. Within 10 years I hope to move through the ranks and into management working across a variety of different sites and different departments within the company.

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 59

The changing face of STEM Maria Kokkinou at Coca-Cola Enterprises discusses the need to encourage more women into manufacturing and engineering careers.

ven with a worldrenowned product, companies succeed only with the right people at every level – from shop floor to top floor. A gender-balanced workforce brings diversity of thought, breadth of ideas and a robust decision-making process. The gender gap within science, technology, engineering and maths (STEM) careers is of particular concern. According to research conducted by WISE in 2014, a campaign to promote women in science, technology and engineering, only 13% of all those working in occupations classed as STEM are women. As a business, we have developed recruitment, apprenticeship and graduate programmes that seek to

address the gender imbalance. We have built female talent pipelines in areas of the business where we find it difficult to attract women and created community initiatives that support females in manufacturing. This includes providing mentors to support the Brunel university mentorship scheme for female engineering students in Great Britain. But we still ask, is this enough to demystify a career for women in manufacturing? The most powerful mythbusters of all are those women already working within STEM related industries. In recent weeks, thousands of female engineers have taken to Twitter to dispel the myth that all engineers are men.

New Initiatives Manager, Beatriz Coneicao

Uploading images with the hashtag #ILookLikeAnEngineer, women working in STEM-related industries or studying associated subjects have been posting selfies of themselves, describing their roles. Women from around the world who felt they didn’t fall into the stereotypical mould of what an engineer should be joined in the campaign, uploading photos of themselves and moving the campaign beyond just sexism and in the direction of greater diversity across the technology, sciences and engineering industries. The outpouring of posts illustrated the diversity issues currently facing workers and companies within these industries. At Coca-Cola Enterprises, we want the world within our business to reflect the world outside our business, and to make this a reality we know we must play our role in encouraging more women into manufacturing and engineering careers. Within our business, we have a number of women that defy the traditional perception of a career in STEM. Laurence Vanparis has been heading up the Coca-Cola Enterprises factory in Toulouse, France, since 2013. For the 46-year-old mother of two, work is not just about inspection of the factory’s two production lines but also about raising awareness of manufacturing and engineering jobs for women amongst her peers, “In what is a traditionally male dominated environment, it’s not just men that should get to wear the trousers.

YOUNG ENGINEER BEATRIZ CONEICAO EXUDES ENTHUSIASM FOR THE PROGRESSION OF WOMEN IN THE SECTOR Whilst still relatively new to her role, it was clear to see Beatriz’ natural excitement on the transformation that is happening in the workplace, “It’s fantastic to see the progression women have made within STEM-related industries – having female role models in the industry certainly helped me and I hope I can do the same for other women in the years to come. Diversity in the workplace

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The changing face of STEM

WORKFORCE & SKILLS

LAURENCE VANPARIS HAS BEEN LEADING THE COCA-COLA ENTERPRISES FACTORY IN TOULOUSE, FRANCE, SINCE 2013. “It’s time for the myths around the role of women in manufacturing and engineering to be de-bunked. As a little girl, I didn’t dream of becoming a nurse or hairdresser – I instead wanted to follow in the footsteps of my family who worked in the fishing and steel sectors. “The manufacturing world is not visible enough in high schools, especially among young girls. Here,

there are jobs for all women whether it’s a driver, manager or simply on the production lines.” Maryanne Proctor, one of our employees based here in the UK, is not only responsible for the sustainability of our North London site but also for mentorship of other women, “From an early age I knew that I wanted my career to be based around biology and ecology but never thought I would become an environment manager in a manufacturing environment. “Being in manufacturing is something I love – seeing things being made is a joy to witness. It’s this passion that I want to impart to other women who are already, or are thinking about going into the industry. Diversity within the workplace is essential to ensure that there is a breadth of skills and ideas within every team.”

Laurence Vanparis, Manager of Coca-Cola Enterprises’ factory in Toulouse, France

Beatriz Coneicao

Laurence Vanparis

And one of our younger engineers, 23-year-old New Initiatives manager, Beatriz Coneicao, recently told us: “I always knew that my career would have to be related with engineering as I am someone that likes to be challenged. It demands a lot of energy and it’s a constant process of learning but it means that each day provides a new task to conquer.”

is essential to ensure that there is a balance of opinion in the decisionmaking process. “

Having female role models in the industry certainly helped me and I hope I can do the same for other women in the years to come

It’s time for the myths around the role of women in manufacturing and engineering to be de-bunked

The virality and sheer volume of global interaction with #ILookLikeAnEngineer demonstrates that there is still a lot of work to be done in debunking current perceptions around careers in STEM – and business has a big role to play. We believe there is a clear competitive advantage to be gained from having a truly diverse workforce. Organisations that reflect the realities of the world around them are far better placed to understand the needs of their customers

and consumers. A diverse workforce means having diversity of ideas, leading to enhanced ways of working and ultimately to better internal decision-making. As a sector, we need to move quickly to prevent rising stars dismissing entering the sector on the basis of miscommunication and distorted perceptions. Employers, like ourselves, should be actively searching opportunities for those women already in STEM industries to spread the message that it is a mentally stimulating and vibrant field of work.

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 61

EAL

WORKFORCE & SKILLS

ABOUT EAL WWW.EAL.ORG.UK

The winners’ podium from the F1 in Schools World Finals 2015 in Singapore

Skills in the fast lane Inspiring the next generation of engineers remains a key challenge for industry. Natalie Wilson, Head of Commercial at EAL explains why its partnership with F1 in Schools is part of the answer.

eing judged on quality and performance against competition from across the world is something companies are well used to as the economy becomes ever more global. For the UK to remain at the forefront of advanced manufacturing and engineering it needs to fuel the imagination and help hone the skills of the next generation. We cannot afford to slip from pole position to the back of the field. It is why, as the specialist awarding organisation for industry, EAL believes supporting innovation with accredited qualifications should play a vital part in driving the skills agenda. EAL’s partnership with F1 in Schools reflects our determination to drive vocational qualifications into the classroom. F1 in Schools is a national and international competition that tasks teams of students to design, test, manufacture and race a scale model

Formula 1 car. The programme is run in over 44 countries with regional and national finals events. It culminates in an international final bringing all the winners together – this year’s was held in Singapore ahead of the Grand Prix. The F1 in Schools Technology Challenge provides an exciting yet challenging educational experience through the magnetic appeal of Formula One. Teams of learners aged 9 to 19 deploy CAD/CAM software to collaborate, design, analyse, manufacture, test, and then race miniature compressed air powered polyurethane based F1 cars. The challenge inspires learners to use IT to learn about physics, aerodynamics, design, manufacture, branding, graphics, sponsorship, marketing, leadership/teamwork, media skills and financial strategy, and apply them in a practical, imaginative, competitive and exciting way.

EAL is sponsoring The Manufacturer’s Annual Leaders Conference. Book your place here: www.themanufacturerlive.com

EAL is the specialist awarding organisation for industry qualifications. Its close working partnerships and ongoing investment in the sectors it serves and the careers of those who work within it has been a longstanding commitment to industry. Through its long-term partnership with industry and focus on engineering and manufacturing, building services and related industry sectors, EAL has built unrivalled knowledge and understanding of employer skills needs. This results in qualifications that carry weight and respect with employers and deliver real career benefits for learners. EAL’s Level 1 Foundation Certificate in Engineering Technology has three optional units (Introduction to Computer Aided Drawing (CAD), Introduction to Computer Aided Machining (CAM) and Introduction to Engineering project planning) mapped to F1 in Schools activities, helping learners achieve the qualification through activities that would otherwise not be officially recognised. The qualification is only just available and yet it has already been shortlisted for the Federation of Awarding Bodies qualification of the year. When it was presented to 47 teams from 22 countries there was interest expressed from Austria, China, the USA and Botswana. Of course this initiative does nothing more than get us on the starting grid which is why EAL recently unveiled a portfolio of schools qualifications, which would count toward apprenticeships and traineeships. In addition the EAL Schools’ Pledge, launched last year, is securing ties between educators and local businesses to ensure that industry’s needs are met and the skills gap closed. This early stage intervention can play a crucial role in helping the Government achieve its target of creating three million apprenticeships – putting candidates with accredited qualifications in pole position. Failing to engage young people, their parents and teachers is simply not an option if the UK economy is to take the chequered flag in a winning position.

Alma Consulting Group

FINANCE & PROFESSIONAL SERVICES

company this could be up to 8.8p per £1. R&D tax credits are available for some loss making companies, which result in a generous cash injection. Otherwise, you can reduce your payable corporation tax through R&D tax relief.

Why do you think companies don’t take advantage of R&D tax relief?

Funding Innovation sits down with Martin Hook, UK Managing Director of Alma Consulting Group, a European innovation funding specialist, to discuss how the firm is supporting UK manufacturers to capitalise on R&D tax relief. We know that Alma CG has worked within the automotive industry, what other industries have you been working with?

The beauty of the UK R&D tax credit and relief schemes is that they’re open to any industry: the legislation is remarkably inclusive. We work with businesses of all shapes and sizes, and across a wide variety of industries, to help them claim R&D tax relief. The eligible work they’ve undertaken also varies significantly. If you look at even a handful of our manufacturing clients you can see their diversity: from high tech night vision goggles through to biscuits and packaging.

How do you differentiate between sectors when tailoring your advice to their specific needs?

Our team includes a wide range of technical specialists such as engineers,

scientists and software experts, who then receive in-depth tax training. What this means is that we are able to offer all of our clients knowledge and services tailored to their industry. Rather than just knowing about UK tax legislation, and how R&D tax credits fits into that, our consultants have a genuine understanding of our clients’ specific sectors. So we’re able to dig much deeper into the workings of their business and projects, and can compile a much more robust and comprehensive R&D tax claim for them.

Does R&D tax relief advice differ depending on the size of the company?

There are different schemes available depending on both the size of your business and your tax position. If you qualify as an SME, you could receive up to 33.35p of tax relief per £1 of eligible expenditure. As a large

We regularly come across businesses that don’t realise this tax relief applies to them. The definition of R&D for tax purposes is actually much broader than you might think. If your business projects ever present challenges or uncertainties, which could take time and resource to overcome, then there’s a good chance you could be claiming too.

What are the outcomes for firms not capitalising on this?

The figures above speak for themselves. This is a generous tax incentive. All businesses can benefit from a cash injection or relief against payable corporation tax. You’d never willingly give your competitors a commercial advantage, so why would you ignore the benefits of R&D tax whilst your competitors benefit?

What’s next in the pipeline for Alma CG? We’ve just achieved a key business milestone, having claimed £100m of tax benefits for our UK clients. We’re also on target to have achieved nearly 400% growth over the last four years (2011 – 2015) and in this financial year alone we will be approaching 50% growth from the previous year. This means we’re on the hunt for talented individuals from all technical backgrounds to join our London-based team, and we’re busy welcoming a fascinating range of new clients too. 2016 looks set to be another great year for clients and staff of Alma CG. FURTHER INFO: To find out more about Alma Consulting Group, visit their website almacg.co.uk or give them a call on 020 30 58 58 00. November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 63

Leyton UK

FINANCE & PROFESSIONAL SERVICES

UK: innovate and be rewarded William Garvey, MD of Leyton UK, tells Ruari McCallion that the UK’s manufacturers may be cleverer than they realise. They should be rewarded for it and he knows how to get it.

content of their products could well qualify for research and development (R&D) tax credits, for example. Capitalising on innovation clearly isn’t just about patents. “How products are developed is often innovative. Benchmarking – working out how competitors are doing something and then striving to better it – that often ticks all the boxes for qualifying for incentives, albeit potentially more difficult compared to new product innovation,” he explained. “Sometimes, we in the UK are too humble about what we have.” That could indeed be so, especially if part of the process of product development, benchmarking and improvement could actually be classified as R&D. But then you come up against the potential rub: if the government is involved, isn’t it going to be complicated, bureaucratic and more trouble than it’s worth? “The government is Part of the R&D tax credits scheme saying, in effect, that you are entitled to this: tell rewards innovation and efficiency, as us how you are entitled,” well as groundbreaking R&D, and it is Garvey said. “The particularly generous to SMEs, who can get system is very effective in terms of processing a higher percentage of relief and receive and querying.” Leyton has staff who are able to help cash when they are loss making companies to process applications, as well as identify what they are doing that qualifies. They are there to government is offering.” Salt and sugar help guide clients through the minefield. have been raised as important issues in “Part of the R&D tax credits scheme the food industry and continue to pose rewards innovation and efficiency, as technical challenges in their reduction to well as groundbreaking R&D, and it is meet the growing demand by the public. particularly generous to SMEs, who can The process that a food manufacturer get a higher percentage of relief and may go through to reduce the salt hat do you call someone who doesn’t get paid as much as he or she should for developing clever ideas? A British manufacturer. The UK has a global reputation for innovation and inventiveness but we seem to be awful at commercially exploiting it. William Garvey, managing director of Leyton UK, thinks that we tend to underestimate how clever we are, at least from the perspective of making the most of government incentives. “Engineers often don’t realise that what they are doing could qualify for financial support from the government.” he said. “We have a group of experts, including engineers & scientists, who go along to companies, look at what they are doing and help them to identify what is innovative, and how to claim what the

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receive cash when they are loss making,” he continued. “One of the recent changes, to R&D Expenditure Credit (RDEC), also allows large companies to claim relief above the (tax) line in the P&L as a grant, rather than tax benefits.” The significance of this new regime is that it affords large companies with a similar cash benefit when loss making but also signals to the world the UK’s determination to attract top innovative companies. On the reverse side of the UK’s initiative to reward innovation, the Patent Box encourages businesses to patent their original ideas, by giving tax incentives on income generated by them, wherever the income comes from.

Engineers often don’t realise that what they are doing could qualify for financial support from the government

“The Annual Investment Allowance has been successful in encouraging people to look and ask if they can take advantage,” said Garvey. “R&D tax credits, R&D allowance and Patent Box should be providing tax payers with additional, if not better alternative, treatments of qualifying the costs of innovation. We are pleased to help our customers realise what sort of innovative activities they are already doing, and to help them get their rightful benefit for it.” In conclusion, the UK is the right place to innovate and the government seems to be very determined to get it right by continuously working with the relevant stakeholders, including specialist advisors like Leyton.

Fexco

FINANCE & PROFESSIONAL SERVICES

Friend or foe? I

David Lamb of foreign exchange specialists FEXCO, discusses the implications of unpredictable exchanges rates for UK manufacturers

f you spend your day running a busy production plant it’s easy to feel safely detached from the currency markets. But volatile exchange rates aren’t just a problem for City traders. In fact, manufacturers that import raw materials or components are among the businesses most likely to be affected by swings in the value of the pound. And this autumn has seen more than its fair share of swings; Sterling slumped 5.3% against the Euro in just one torrid week in August. In the current economic climate, margins are so tight for many manufacturers that such sudden swings can be the difference between making a profit and or a loss on a deal. In the most extreme cases, falling foul of exchange rate volatility can tip a struggling business over the edge. Unless you specify otherwise, when you buy foreign currency (ie send funds overseas to pay a supplier), the conversion will be made at the rate of the time and day. This exchange rate can go up or down, meaning that each time you make the same transaction, it could cost you more or less. Whatever you’re doing, importing materials or buying a new factory overseas — you need to hedge against this risk. But too few companies properly account for the volatility of the currency

markets, and fewer still make use of the various strategies that exist to limit the risk. These include: Forward contracts. With forward contracts, you buy a currency now with a small deposit – typically five per cent - that enables you to lock into a specific rate. However, you only pay the remainder when you actually need the money. The fixed rate protects you from the potential for a sharp move against you when you eventually make the payment. Forward contracts can usually be fixed for up to a year. Limit orders. This is where you set a target exchange rate, at which, if achieved in the markets, you will buy your currency. Limit orders are useful if you have upcoming payments but you are not restricted by tight deadlines and therefore have time to try and achieve a better exchange rate than what’s available at the current time. This tool provides assurance to businesses that should the ultimate exchange rate be achieved, even if that occurs in the middle of the night, their trade will be triggered automatically. Stop loss orders. This is where you set a minimum exchange rate, which, if achieved in the markets, you will buy your currency. Stop loss orders are often used where there is a high risk or concern of adverse movement in exchange rates, enabling clients to protect their bottom line and reduce the risk of exposure to such negative movements.

The pound’s steady rise in value this year has made British goods relatively more expensive for overseas customers, making life tougher for exporters The pound’s steady rise in value this year has made British goods relatively more expensive for overseas customers, making life tougher for exporters. The flip side is that for those That import materials or components, imports have become cheaper. While these longerterm trends will affect a business over time – either for better or for worse – short-term volatility can wipe out the profit on an individual transaction. Forward contracts offer companies the reassurance of knowing that when they agree a deal with an overseas client or supplier, they will know exactly what sums will be involved – and that their profit margin won’t be swallowed up if the exchange rate changes. By locking into an exchange rate, a company could miss out if the currency movements go in its favour, but that risk is surely more than outweighed by the benefit of being protected if the exchange rate movement goes against it. Small and medium-sized manufacturers are unlikely to have the cash reserves to bail them out if an overseas deal goes wrong because of currency fluctuations. More than anyone else, they should use hedging strategies to ensure that when they expose themselves to overseas markets, they’re not also exposing themselves to unnecessary currency risks.

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 65

MSTLN Conference

MANUFACTURING SERVICES

The goal of the Manufacturing Services Thought Leadership Network (MSTLN) is to raise awareness within UK manufacturing that ensuring long-term growth and competitiveness requires companies to move towards service-driven business models. Find out more at www.mstln.com and @MSTLN_UK. According to Autodesk’s manufacturing industry manager, Asif Moghal, the way we design, finance, produce and sell products is fundamentally changing

Manufacturing Services Annual Conference 2015

With a palpable buzz filling the room, the inaugural MSTLN conference brought together a cross-section of SMEs to discover the benefits of adopting servicebased business models.

haired by Dr Tim Baines, professor of operation strategy at Aston Business School, the one-day event showcased a variety of innovative firms, all of which have successfully adopted a service-focused, not solely productfocused, business model. Offering first-hand examples of the benefits embracing this new manufacturing paradigm can bring, delegates enjoyed servitization case studies including jeans; shipping pallets; hand dryers; office furniture, and rice. Baines opened proceedings by remarking, “Servitization [manufacturing services] is about manufacturers building their revenue streams through services, it’s an organisational transformation and is absolutely not about reductions, it’s about growth.” Though Rolls-Royce Aerospace’s Power by the Hour is often held up as the posterchild for servitization, Baines was keen to emphasise that the concept

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was just as applicable to SMEs as it was to large companies. “When we think about servitization, often people only consider manufacturers moving into services, but interestingly what we are seeing alongside that shift are service companies moving into manufacturing,” he added. Former CEO of MAN Truck & Bus UK, Des Evans warned delegates that, “If all you’ve got to do is think about making things, you probably haven’t got long to live.” Highlighting his past company’s transition towards a service-based model thanks to a servitization-aligned, total cost of ownership (TCO) approach, Evans noted that the decline in the UK truck industry created an overwhelming need to embrace and adapt to change; “a valuable lesson that is equally relevant across many other sectors,” he said. According to Autodesk’s manufacturing industry manager, Asif Moghal, the way we design,

finance, produce and sell products is fundamentally changing. “We are seeing manufacturing companies become smarter in themselves, in what they produce, how they produce it, and how it operates,” he observed. With an increasing number of consumers, all of whom wanting a personalised product or experience, Moghal posed the question, how do you serve markets of one as efficiently and cost-effectively as markets of many? Managing director of Lucid Innovation, Alistair Williamson offered his perspective on the internet of things (IoT), and how it was an enabler of service provision. “Too many people are focusing on making just the same as everyone else, only slightly cheaper. We need to focus on adding value. The benefit of a phone, for example, is not the actual physical product, but the range of services it offers.” “Servitization isn’t scary, it opens new doors and creates new opportunities, and, ultimately, connectivity makes servitization more accessible,” he explained. Professor of Operations and Supply Chain Strategy at the Warwick Manufacturing Group, Jan Godsell argued that too many companies look to achieve growth without considering the impact such growth may have on their current supply chain; and Frank Partners director, Nick Frank provided an interesting presentation on service thinking and imagination – both of which, he said, are key to driving business growth and innovation. FURTHER INFO: You can read a complete round-up of all of the MSTLN Annual Conference discussions here: bit.ly/MSTLN

Columbus

MANUFACTURING SERVICES

Manufacturing firms in developed economies are finding it increasingly difficult to compete on the basis of cost, customers are becoming harder to win and retain, and added value has become an expectation rather than a perk, Columbus weighs in.

hose manufacturers retaining their competitive edge are the ones that are servitizing their business models; moving away from a ‘make it, sell it’ mindset to provide more advanced service-based solutions, providing a win-win scenario for all parties. A customer only pays for the value it receives, while a manufacturer effectively locks customers into a longer term contract, gaining a constant stream of additional, incremental revenue. International consultancy, Columbus, has been helping manufacturing businesses to implement successful servitization strategies with the aid of technology for over 25 years and will be sharing recipes for success at its upcoming event, Transform 2016 in London on November 11. Managing director of Columbus, Mary Hunter, explains: “Every day we speak to manufacturers who are facing the same barriers to growth. Many are struggling

Managing Director of Columbus Mary Hunter

to keep up with changes in the market, others can’t unite their teams around strategic goals and some are just unable to adopt a mindset needed for change. “The first step to successful servitization is to think differently and be more imaginative. Business leaders need to engage with their customers and understand the extra support they require, and learn from other people’s experiences. Transform 2016 is about inspiring business leaders to help them harness change and technology and successfully grow their business in 2016.” Aston Business School has led industry research into servitization for many years and has quickly become an international authority on the topic. Professor Tim Baines, director of the Aston Centre for Servitization Research and Practice leads a team of 20 and, together with Iain McKechnie, director for Strategic Partnerships, works on the front line of manufacturing in the UK to help large and small businesses to change their business models, adopting advanced services to improve their competitive advantage. Iain will be giving a talk at the event about what servitization means to a business. “Many manufacturers are already servitizing their business models and aren’t actually aware of the theory or context behind this,” he explains. “What Aston Business School is working hard

to achieve with its partners is to educate the industry that servitization is about real world applications, not just about theory. This is a practical service model that can help manufacturers boost customer loyalty and revenue, and doesn’t require huge investment sums – but it does require a change in mindset as manufacturers move from productcentric thinking to thinking about the capability required by the customer. Servitization accelerates this change.” Digital technology is already providing manufacturers with an easy transition to a next generation servitization model and businesses like Columbus are spearheading this revolution, by helping industrial manufacturers better utilise technology to drive even greater services to their clients. This may include better analysing Big Data to provide a more personalised customer experience, utilising the Internet of Things for machine maintenance and updates, or simply selling service packages, rather than individual products. Hunter concludes: “Servitization is already happening and now is the time for manufacturers to become more innovative and think about how they can add greater value to their customers. The demand for servitization already exists and those manufacturers who don’t embrace it risk being left behind.”

FURTHER INFO: Transform 2016 takes place at The Royal Horseguards, 1 Whitehall Place, London, 10am-4pm on November 11. www.transform2016.com November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 67

Kaiser Associates

MANUFACTURING SERVICES

When heavy metal meets high tech James Tetherton of Kaiser Associates discusses the challenges and benefits of moving physical products into the virtual environment.

ith high hopes and seemingly boundless opportunities, manufacturers are jumping into the growing frenzy over the Internet of Things (IoT). Hailed the “new Industrial Revolution”, successful application of the IoT promises customers increased productivity, quality and safety, and offers manufacturers opportunities to develop new business models, and capture new sources of long-term growth and profit. However, within this land of opportunity, competitive pressures are also rapidly increasing. With the past 40 years spent putting “a computer on every desk and every home”, technology companies are now chomping at the bit to apply their expertise to new sectors and devices. OEMs are - for the first time - facing opposition not just from their traditional competitors, but from an entirely new set of threats including global technology leaders, small start-ups and pure service companies. Frequently, these new players have entirely different team structures, company cultures, skill-sets, marketing approaches and business models relative to the competitors that manufacturers are accustomed to facing. OEMs need to be on the defensive as well as the offensive. Our experience suggests that there are a number of key stages in

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deploying a new IoT strategy: Acquiring and retaining technical capabilities; Building a successful business model; Transitioning legacy infrastructure, assets and products from the physical to the virtual. Manufacturers have taken a number of different approaches to try to accelerate their success. In general, most companies seem to be considering a combination of three key strategies:

BUILD

PROS: If the intention is to apply the IoT as a core, long-term growth strategy, bringing new skills and expertise inhouse makes a great deal of sense. CONS: Integrating new talent and building capabilities often takes a significant amount of time. Given how fast the industry is changing, time is now a luxury that few companies can afford.

BUY

PROS: Relative to building in-house, acquisition offers the possibility of a significant, fast uplift in capability, along with access to established customer relationships. CONS: Acquisition (often in competition against Private Equity and Venture Capital firms) typically requires paying a high price for an attractive asset. This cost usually means companies are faced with the risk of making a few “big bets”. Equally, integrating a tech acquisition

with an OEM can be challenging due to strong differences in culture and business models.

PARTNER:

PROS: Partnership gives value to optionality – i.e. allowing OEMs to place many small bets, rather than a limited number of large, high risk investments. CONS: Since most partnerships are non-exclusive, they carry significant risks. Smart partnership agreements need to be sufficiently attractive to entice strong interest and commitment from the partner, whilst maintaining proprietary advantages for the OEM.

Regardless of whether they have chosen to build, buy or partner, Kaiser’s work with some of the “early winners” in IoT has uncovered five core attributes that consistently underpin their success: 1) Centralised leadership A central person (or group) with a clear IoT mandate, separate funding and direct line to the CEO can help to drive focus, build knowledge and drive rapid change across the business 2) Clearly defined goals Long-term success begins with a clear business model and a well-researched customer value proposition 3) Agility Keeping that long-term goal in mind, maintain sufficient flexibility to enable the offering to constantly evolve based on external factors 4) External focus Deeply invest in the capabilities necessary to understand customer needs, emerging competitors, new channel partners and potential partnership offerings 5) Carefully selected KPIs Using traditional KPIs such as market share or ROI may be too rigid for this new industry. New measures of success, such as adoption and endorsement, should be considered so as to allocate funding appropriately, support initiatives for the right length of the time, and build long-term success.

Oracle

MANUFACTURING SERVICES

Aston Business School’s Professor Tim Baines showed in a 2014 presentation that servitization can impact growth by 5-10% in services revenue in some cases, then, in an article for Raconteur in January 2014, he said profits can be 2-3 times greater than those in product sales alone

At your service Vikram Singla discusses the importance of servitization in the future of UK manufacturing.

How important is servitization in the growth and development of UK manufacturing?

According to a September 2015 McKinsey & Company article, Six building blocks for creating a high-performing digital enterprise, the average corporate lifespan has reduced from 68 years in 1958 to 18 years in 2011 and reducing even further. A recent EEF study showed the manufacturing sector, with its 2.6m workforce and 10% of GVA, must innovate to ensure its relevance in the fast changing global world. The servitization approach puts customers at the centre and ensures the systematic and ongoing evolution of the business in order to keep pace with the changing marketplace.

What value is it really adding to the sector? Aston Business School’s Professor Tim Baines showed in a 2014 presentation that servitization can impact growth

by 5-10% in services revenue in some cases, then, in an article for Raconteur in January 2014, he said profits can be 2-3 times greater than those in product sales alone. The servitization approach looks at the complete customer lifecycle and aims to deliver a consistent and differentiated experience across all the stages. This differentiated experience, derived from the manufacturer’s superior understanding of the customer, becomes much harder to replicate and provides ongoing competitive advantage.

How do you think servitization is set to develop?

Many companies start with productcentric services (e.g. maintenance and repair, installation etc.), mostly to compensate for the revenue drop in the product business. However, the real differentiation will happen when servitization becomes part of the corporate strategy. The capabilities are then designed, priced and delivered with the entire customer lifecycle in mind. The results are then radically different e.g. at ’s Manufacturing Services Annual Conference in October, former CEO of MAN Truck and Bus UK, Des Evans, revealed the firm grew its market share from 3% to 12% after adopting this approach.

What do you believe is driving the changes taking place within the sector?

The increasing sophistication of the customer is one of the mega trends of recent years. The customer now expects a capability that is clear in scope with

defined cost and time to value. The second trend is the increased rate of technological change and the associated specialisation, as well as the risk of product obsolescence. As GE’s Jeff Immelt said “Industrial companies are in the information business whether they want to be or not”.

What are the major barriers to manufacturers adopting a service model? The barriers are classical and apply to most companies that see the shift in the marketplace as a threat, rather than an opportunity to grow. a) Not appreciating the pace and scale of change in market dynamics, posing direct threat to survival, let alone growth; b) Lack of strong leadership to drive the change across the organisation; c) Not having a well thought-through roadmap to deploy change.

How can manufacturers remain competitive when technology is constantly changing the landscape?

Manufacturers need to focus on the differentiation of their offer and leverage technology as appropriate. The key is to be customer-centric and deliver superior customer promise consistently across all the stages of the customer life cycle. This focus will ensure that technology is leveraged to build better product and service offers faster than others; run business processes much more effectively and efficiently; and enable people to be more productive.

What is Oracle doing differently to support the growth of UK manufacturers?

Oracle is moving towards a service (cloud) company and provides packaged software to run the business processes at a significantly lower entry cost, risk and time to deploy. Even more importantly, this mode of technology deployment ensures businesses can keep pace with change. From an operations perspective, we support the following business processes: a) Ideation to commercialisation b) Plan to produce c) Quote to cash d) Procure to pay

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 69

CleanEarth

MANUFACTURING TECHNOLOGIES

Let the sunshine in Kevin McCormick, Commercial Director of CleanEarth Energy Ltd, explains how to put commercial premises to work generating solar PV electricity - WITH NO UPFRONT COST.

The ongoing management cost of solar PV is very low – the Sun rises in the morning, sets at night and pours massive amounts of energy onto the Earth, whether it’s cloudy or clear, day after day. Most companies are letting all that potential energy go to waste and it need not be an expensive undertaking to turn the situation round - in fact it can be at no cost and no risk.

here may not be any such thing as a free lunch but it is possible to reduce its price dramatically, through cutting the cost of electricity by up to 20%. Across the country, the roofs of commercial premises are doing a good job in protecting factories underneath from the weather but they could be doing so much more, according to CleanEarth. Hosting rooftop solar PV (photovoltaic) installations which generate electricity can help businesses to cut costs and reduce their carbon footprints. “Manufacturers should be looking at all opportunities for energy efficiency and this includes solar PV despite the uncertainty created by the expected cut to the Feed-in-Tariff following the Government’s consultation,” said Kevin McCormick, Commercial Director. Energy costs have been a major business headache for the past decade at least but as the prices of oil and gas have fallen so far, is there still the same urgency? “We firmly believe that the price of electricity will continue to increase over the long term” he replied.

A rooftop solar PV system will enable businesses to get competitive electricity prices today and into the future - in fact, for 25 years guaranteed with CleanEarth Energy

“CleanEarth offers free installation and a full service, including on-going performance measurement and maintenance throughout the contract,” McCormick explained. The company operates the system and acts like a generator and supplier. The customer gets first call on the electricity generated by the system, which is likely to cost 20% less than what they are currently paying even after the Government’s review of the Feed-inTariff. Any surplus electricity is sold to the National Grid. “Solar electricity has to make commercial sense if it is to have a long-term future,” he said. “We have seen the price of solar panels falling over the past five years and they are expected to continue to fall over the rest of the decade. It is heading towards being able to stand on its own two feet.”

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On-site rooftop generation still makes a lot of commercial sense. But will it work in the UK’s watery sunshine? “It’s about irradiation levels,” McCormick explained. “When we undertake a site survey, we use the client’s location and local irradiation levels to determine the potential

opportunity

and a solution which meets our client’s needs. McCormick’s company is offering FREE installation, service and support of an efficient and cheaper source of electricity, which also helps to reduce carbon footprint and its associated costs. The new age of solar is dawning and CleanEarth is ready to help manufacturers cash in.

Find out how CleanEarth can guarantee to make you money from your roof. Call 0800 0803 029 or visit cleanearthmanufacturer.com

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PP Electrical’s multi-award winning manufacturing facility in the West Midlands.

Pinpointing productivity Tony Hague, Managing Director of PP Electrical Systems, unpicks the productivity puzzle and puts forward a blueprint for closing the gap.

conomists have been debating for many months the possible root causes behind the productivity puzzle and how UK manufacturers can begin to embrace the missing pieces of the jigsaw. Many run off a long list of excuses and, to be fair, a few of them probably ring true with some companies. In every firm, the attitude is the same when it comes to increasing productivity. The good news is that every last management team will want to do things better and achieve more output from the input their workers are putting in. There is also a growing consensus that the only way to eradicate the puzzle is for industry to take things into its own hands and control our own destiny. A notion PP Electrical Systems’ Tony Hague subscribes to, “I think the general rule is that SMEs have always considered themselves as not being suitable for new technology and automation. ‘It’s something the big

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boys do, why do we even need to think about it?’ “This has been an easy excuse for a long-term lack of investment in new machinery and the workforce - one that is now coming back to bite and bite hard. “Years of slow spending have seen a lot of international rivals take over us and only now are we beginning to fight back. Is it too late? Probably not, but we have some ground to make up.” PP Electrical Systems, one of the world’s leading automation and control systems specialist, has been cited as a shining light in the UK’s productivity battle. The company has invested heavily in the latest technology and processes at its 4,500 sq metre facility in the West Midlands, with dedicated cells delivering solutions to customers in machine tool, food and drink, packaging, printing and scientific industry sectors. Over £1m has been spent on automated cable preparation equipment, including crimp force monitoring technology that allows 100% in-line process quality checking of every cable termination. This ensures Six Sigma levels of quality for the end customer. However, the constant spend on continuous improvement isn’t purely reserved to capital and machinery as Hague is keen to point out. “We have to invest more, but it’s not a case of investing in just one element

PP Electrical’s threepoint guide to solving the productivity puzzle. 1) Invest in automation that supports your areas of core competence 2) Invest in people and upskill 3) Consider strategic outsourcing of non-core activities of the business. You need a more integrated approach that also includes developing your people and at PP Electrical we commenced our in-house training school back in 2002. “This involved developing a structured training roadmap that challenged our people and enabled them to grow in technical and process competence, as well as confidence. “On average, each member of staff receives over 200 hours of training each year – a massive investment, but one that provides a measurable return.” Hague has also noticed a growing trend in manufacturers looking to replace 100% vertical integration of production by sub-contracting out non-core competencies, something his firm is taking advantage of. In the last twelve months, PP Electrical has secured and delivered high profile outsourcing projects to a number of world leading machinery manufacturers,

PP Electrical Systems

MANUFACTURING TECHNOLOGIES

Case study: The power of throughput

The company has invested over £1m in automation to offer levels of six sigma quality to its customers

with others in the pipeline. Such projects have delivered startling results for the customer, one of which has seen its machine build times reduce by nearly 50%. “Companies can have the ‘best of both worlds’ now,” continued Hague. “Outsourcing – when the right partner is selected – offers many benefits. It can eliminate unnecessary stock and reduction in work in progress, improves cash flow and should improve production lead times that can then translate into securing new orders on shorter customer lead times. “Our overriding aim is to help our customers build their machinery quicker, faster, better – reducing their overall manufacturing costs, improving standardisation, modularity and the ability for late customer configuration. “Importantly, it can also give you flexibility in capacity and that works equally well when volumes are ‘up’ or ‘down’, reducing the need for costly sub-contract labour as a reaction to increased build requirements and, equally, the issue of releasing labour if orders slow up.” He concluded, “It’s the one factor that hasn’t been mentioned in relation to productivity, but I’m sure it could help with efficiency gains. It certainly has for our clients to date.”

In an ever more challenging business world where ‘marginal cost down’ is the norm, it can seem counterintuitive to increase brought in costs in order to increase throughput. This can be one of the many advantages of strategic outsourcing, where a business accepts that such a benefit is more significant and meaningful than one of simple cost reduction. One of PP Electrical’s clients, a world leader in the machine tool market, had a manufacturing constraint that only allowed them to build four machines of a certain model each week. They were assembled over a number of shifts, which tied up labour and space for the duration of the build. The market demand for this successful model was outstripping production capacity and delivery lead times were extending to an unacceptable level. Our joint teams worked together to develop a complex sub-assembly, a system that included electrical controls, pneumatics, hydraulics and mechanical assemblies. We produced prototype assemblies and worked with the customer’s production line to perfect the solution, catering for variations in each machine specification…. simplifying the supply chain and maximising productivity in the process. The solution even included the design and production of specific build and transportation rigs that allowed easy transport and machine integration. The benefit to the customer was an increase of 60% in production capacity, with no additional direct labour costs or production space required. Improved throughput times and dramatically reduced customer lead times have also been secured and resulted in significant additional orders worth millions of pounds per year.

We have to invest more, but it’s not a case of investing in just one element of the business Tony Hague, MD PP Electrical Systems

FURTHER INFO: For further information, please visit www.powerpanels.uk.com, contact 01922 419109 or follow @pp_electrical on twitter.

November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 73

In the loop Jonny Williamson talks to the team behind Meggitt’s Closed Loop Adaptive Assembly Workbench, the ground-breaking first step in a project to improve production output, quality, flexibility and traceability in component assembly.

he Meggitt Modular Modifiable Manufacturing [see M4 Box Out] project combines existing and future technologies in the hopes of creating intelligent, responsive environments, revolutionising component assembly and transforming operators’ working conditions. Central to this vision is the intelligent workbench, known as the Closed Loop Adaptive Assembly Workbench (CLAAW), representing a crucial first step towards bringing M4 to life.

CLAAW

The brainchild of chief technical officer, Keith Jackson, and graduate programme engineer, Tom Newman, and designed by a Meggitt graduate team at Sheffield’s Advanced Manufacturing Research Centre (AMRC), CLAAW’s smart features and innovative technologies could bring about radical changes to component assembly. Designed to initially assemble an eBrake actuator, manufactured by the Coventry-based Meggitt Aircraft Braking

1 2 3

1. Easy-click clamp 2. Incremental encoder 3. Power-on magnetic brake 4. IR sensor 5. 3D printer cover 6. Pneumatic solenoid valve

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Systems (MABS), the workbench combines smart flexible fixturing to make assembly quicker, easier and more efficient; laser projection to identify assembly steps; and data capture to allow CLAAW to instantly switch between different products, supporting batch sizes of one. “We use one of the smallest, lightest off-the-shelf lasers as part of the intelligent workbench, to guide operators through operations; highlighting where a component needs to be placed, verifying its orientation using machine vision, and showing where, bolts for example, need to be inserted, and using two devices allows us to work in three-dimensions,” explains Newman.

Intelligent torque wrench

5 6

A cross-section of the workbench

The team has also been exploring the productivity and traceability gains afforded by the use of smart tooling, such as an intelligent torque wrench, which can be wirelessly programmed to tighten a bolt to a specific torque. “Having to report that a bolt has been accurately tightened represents an unnecessary step in an operator’s workflow. If the smart tool could automatically detect that, the system could move to the next step itself, allowing the operator to concentrate on more complex, dexterous operations,” describes graduate programme engineer, Gevorg Hovakimyan. According to Hovakimyan, there are other advantages to employing smart tools. Operational data from the intelligent torque wrench is fed back into CLAAW, and data analytics allows the detection of any issues in the product, tools, assembly process or CLAAW itself at the earliest onset.

Meggitt

Closed loop adaptice assembly workbench

MANUFACTURING TECHNOLOGIES

The three-year Meggitt Modular Modifiable Manufacturing (M4) project aims to address the challenge of how to deal with the assembly of low volume, high value products that don’t lend themselves to automation. Working with partners including the Advanced Manufacturing Research Centre (Sheffield); Manufacturing Technology Centre (Coventry); Innovate UK, and IBM, M4 looks to reinvent the factories of the future with ideas and technologies, transforming a traditional factory into a responsive and efficient environment that optimises flow. The team is also exploring further system improvements including integrating gesture recognition, enabling software to recognise operators’ gestures and remove the need to swipe a screen or touch keys with greasy or full hands.

Training

“The more contextual information you have surrounding the use of CLAAW and its tools, the more you can learn and improve operations,” he adds.

CLAAW II

The team conducted initial demonstrations of CLAAW to both MABS and the Meggitt Applied Research & Technology (AR&T) Board earlier this year, and it is now working with operators to prepare the workbench for a tour of Meggitt’s UK factories. The response garnered by the prototype system so far has been nothing short of effusive, says Jackson, with many keen to see it installed throughout Meggitt’s national – and global – assembly lines. “Crucially, people are keen to see CLAAW embedded prominently in the main stream where everyone can see and engage with it, not tucked away in some dusty corner,” he says. This represents CLAAW II; bringing the workbench into the Meggitt factory environment and developing further technologies to work alongside it. “We are being very careful from a technological perspective because you can festoon something with technology

which isn’t actually useful,” Jackson adds.

Future technology

A key factor for the projects ongoing development is data integration. The workbench already has data capture features, feeding information back from operator to design engineer and operator to operator. “Data can be collected as a component moves through its manufacturing lifecycle, so if there’s an issue further down the assembly line, or the part comes back for repair, that data can be instantly retrieved. “Data analysis also plays an important role in helping us to predict why a part may be rejected later in the process and proactively taking steps to address that,” Newman explains.

CLAAW also offers the opportunity to advance the concept of worker development, especially in regards to differentiating delivery as operators’ gain experience with a particular product. New, unskilled operators are provided with detailed, prescriptive commands supported by frequent directions via the laser pointer. As the operator becomes more skilled, such prescriptive instructions could become frustrating, so the commands are scaled back and progress is monitored more discreetly through photometry. “This could not only prove vital in terms of maintaining employee engagement, but help to more easily disseminate information or changes to assembly processes. Written messages can easily be discarded or go unread, bringing process changes directly to operator screens is far more beneficial,” says Jackson.

Cobots

Jackson’s ultimate vision is for operators to be supported in much the same way as surgeons during complex medical procedures. “When operating, a surgeon has a team of people handing them suction, a scalpel, thread, swabs and so on, helping to make them as smart and efficient as possible in what they are doing,” says the CTO. “When combined with our smart boxes – containing all the individual components required to build a part, I can imagine lightweight collaborative robots supporting operators. One holding the product at exactly the right orientation for each indivudal worker, be they tall, short, left-handed, right-handed, etc., and another passing parts to them in the correct order.” To many this still sounds like science fiction, but Jackson assures me that it is happening; with the advanced manufacturing landscape of tomorrow being realised today thanks to CLAAW and the wider M4 project www.meggitt.com/M4.

Meggit’s David Johnson will be speaking at ALC and Meggitt is sponsoring MX awards. Book your place here: www.themanufacturerlive.com

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market today. The SIMATIC IT Preactor APS product line up allows market-leading levels of customizability throughout the range and allows the products to be moulded to the customersâ&#x20AC;&#x2122; exact requirements. In the past it could be daunting for smaller companies looking to implement a scheduling solution. The new product line-up has been specifically re-designed to address this concern introducing new cost effective solutions with a fast return on investment. The new range has been

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November 2015 | Issue 9 | Volume 18 | www.themanufacturer.com 77

RS Components

IT IN MANUFACTURING

RS Components has conducted in-depth research to unveil findings that have been instrumental in the creation of a value process to help organisations unlock cost savings

RS Components, distributor of electronic, electrical and industrial components, shares insight on the real cost of maintenance, repair and operations (MRO) product procurement.

ncreasingly competition and financial pressures has caused many businesses to focus on cost savings by sourcing cheaper products and driving down product costs through aggressive negotiation. The focus has been solely on product price to generate cost savings - but there is a hidden element that is a major finance drain; and that is the real cost of MRO product procurement. MRO procurement costs are often overlooked when organisations underestimate the scale of these costs. This can be due to the complex nature of MRO procurement - multiple suppliers, a variety of product categories, diversity of stakeholders, operating sites and procurement systems all contribute to the complexity, and make it difficult to achieve a proper understanding of MRO costs and potential savings. Currently, MRO complexity is cheating organisations out of significant cost savings, and they need to recognise the reasons for that complexity to unravel it. They are overlooked usually because they form only around 20% of the total procurement spend of the organisation.

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In addition, they are not attributable to the manufactured product but are instead the products needed for the organisation itself - the maintenance, repair and overhaul of the business operations. These costs are often invisible and rarely the focus of attention when it comes to generating cost savings. Even if they are scrutinised, it is the product cost that is in the spotlight, not the procurement process. Jarn Gill, head of Corporate Sales at RS Components, explains: “Our focus on this area of research to help organisations realise MRO costs and address the process to make savings stemmed from an understanding of data capability, to analyse consumption and unveil the inefficiencies that are contributing to high MRO procurement costs. “MRO procurement cost versus product costs is 2:1. This means that if the MRO budget is £1m, more than £3m is spent on MRO procurement.” Additionally, some organisations are aware of the cost of the process but feel unable to tackle the problem, perceiving it to be too complex. Many have never been able to put a true figure on the amount and therefore it

is an issue that can often be buried or postponed, reverting the focus back to savings on product costs, which feeds the cycle of inefficiency.” RS has devised the Value Process, an end-to-end formalised process that can be applied to all customers to achieve significant savings on MRO procurement. The Value Process focuses on five key areas including: optimisation of product; inventory; supplier and process; and pricing solutions. Concentrating on fewer products, perhaps of better quality or more energy efficient to reduce energy consumption and maintenance costs, could be one simple step to facilitate the reduction stock to improve cashflow - as well as avoiding instances of obsolescence. It would also invariably reduce downtime in supplier management, ordering and invoices. This process alone has shown that savings of up to 35% on MRO can be reaped. With proper evaluation, stakeholder engagement and joined-up thinking, ongoing monitoring and benchmarking, organisations will start to see dramatic savings very quickly.” FURTHER INFO: For further information on the RS Components Value Process, visit the information portal uk.rs-online.com/ working-together

Global Supply Chain Debate 2015

SUPPLY CHAIN

Dodging the bullwhip chats with Janet Godsell, Professor of Operations and Supply Chain Strategy at Warwick University, about WMG’s upcoming Global Supply Chain Debate 2015 event and why raising the profile of supply chain is so important.

‘‘S

upply chains are everywhere,” Godsell explains. “They touch every part of our lives and we don’t see them until they go wrong.” A perfect example is the recent Volkswagon scandal, which ironically Godsell herself has been affected by. After a cumbersome trip home from the MX Awards judging day in October, the Warwick University professor came back to a letter informing her that her Audi was set for recall. Her relatives asked her why an Audi was implicated in a Volkswagon dilemma, and the question could not have been more perfectly apt for someone so knowledgeable and passionate about supply chain. Godsell’s supply experience is vast. The academic first studied as a mechanical engineer but very quickly moved into manufacturing, working for Zeneca (before the merge with Swedish Astra) and Dyson, and she explains that her experience with both companies but particularly with Dyson ignited her fervent interest in supply chain, “When I moved to Dyson, it was transitioning from an SME into a larger organisation. “Because of its size, it forced me to look beyond manufacturing, to the other operational functions: planning, procurement, logistics and how they create connectivity with customers and suppliers. Dyson is a supply chain success across customers, its supply base and its internal operations.” During her tenure at Dyson, Godsell studied at Cranfield and completed a funded project examining how to make

end-to-end supply chain customers more responsive. She explains, “Up until 2008 we could get funding to help organisations with their supply chain strategy, which is an integral part of business strategy because essentially you develop supply chain to support the customer value proposition.” Godsell emphasises the importance of this by using a major retailer as an example, “The demise of supermarkets like these is a strategic misalignment issue. All of the promotions sound wonderful, but instead of creating value, they trigger instability in the supply chain at the front end.” This instability cascades down in a bullwhip effect so areas of the supply chain have to buffer against uncertainty with excess manufacturing capacity, inventory, raw material inventory and cost. And through Global Supply Chain Debate 2015, Godsell hopes to raise its profile and support business, policy makers and academics to apply a more holistic approach in supporting a proactive involvement in the global network. The Global Supply Chain Debate is an annual event hosted by WMG. It brings together senior professionals from a range of backgrounds to discuss and debate perspectives on the supply chain, and the role that the UK can play as part of a network of global supply chains. Several big names from manufacturing and engineering will unite at the event, including Sir Michael Arthur, president at Boeing; Dame Julie Moore, University Hospitals Birmingham; and MP Chuka Umunna,

to incite change in how we view the supply chain. Aside from the big, crowd-pulling names, Godsell has been running another project to make the topic more accessible to the masses, “Through MyChainReaction.co.uk we are encouraging everyday people to share how they contribute to supply chains in different capacities. “It was launched in June 2015 and we now have 160 stories. As well as this, we have commissioned some artists to try to make supply chain more accessible. Pangaea Poetry have written five poems exploring different aspects of the supply chain and those will be presented on the evening of November 10. Also, Unfold artists will make a physical representation using data from two companies, exhibited in a 2m sq frame.” Godsell hopes the event will continue each year and build on changes already beginning to take place, the professor explains “Ideally I’d like to see the inclusion of a supply chain orientation into our industrial policy, as well as increasing the presence of people in operations with supply chain expertise at board level.”

FURTHER INFO: Share your supply chain story at mychainreaction.co.uk and for more information on the event visit www2.warwick.ac.uk/fac/sci/ wmg/research/scip/gscd/

Jan Godsell is chairing Annual Leaders Conference, with WMG sponsoring ALC and MX Awards. Book your place here www.themanufacturerlive.com

Terry Scuoler - EEF

TALK OF THE INDUSTRY

Central to the success of devolution will need to be early action to repair the weak relationship between local authorities and businesses

The new face of accountability The transfer of decision making and funding from central government to local areas in England has been a long-held political aspiration, but one that has long been stuck on the drawing board. EEF CEO, Terry Scuoler explains.

here is, however, now a new momentum behind the principle of devolution. With strong political backing we are now moving quickly towards new governance arrangements across England which will soon come with their own tailor-made arrangements. This will inevitably lead to a new face of accountability for local areas. The process of devolution, however, must not lose sight of the ultimate outcomes of stronger local economies through better regional growth leading to higher productivity and more and better jobs. These outcomes will be enabled by decisions made by officials within local authorities, but ultimately they can only be delivered by businesses. Businesses want to help shape local policy decisions. Historically, however, the relationships between local decision makers and the private sector have been weak with a belief among business that it is more about power than growth. For many,

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relationships have been purely transactional on issues such as planning and, as businesses watch devolution unfold from afar, they have not been wholly sold on the potential benefits that this process could bring fearing that it may result in duplication, additional bureaucracy and cost. Central to the success of devolution will need to be early action to repair the weak relationship between local authorities and businesses. This will ensure confidence in the delivery of outcomes for both parties. An opportunity exists for this relationship to be repaired through devolution deals. As different local economies

have differing policy priorities and varying capabilities to deliver change, however, there shouldnâ&#x20AC;&#x2122;t be a single blueprint for devolution across England These deals will be a bottom-up exercise outlining the case for the devolution of greater powers, financial freedoms and policy control to local authorities and away from central government. They will also set out how local decision makers intend to deliver better outcomes than central government can in the devolved areas. For this to succeed, businesses must be seen as partners in the negotiation and delivery of devolution deals. The initial focus for devolution must be on areas where tangible outcomes can be delivered in the near-term, particularly transport infrastructure. Alongside this, new governance arrangements must have businesses integrated into the framework including establishing an independent businessled overview and scrutiny committee in areas that move towards combined authorities and metro mayors. As a default, that committee should be the business-led Local Enterprise Partnership, although it is clearly right that individual combined authorities and deal areas should be able to devise their own arrangement. This is provided that it meets the criterion of being able authoritatively and effectively articulate the business voice and hold elected mayors and combined authorities to account for their economic decision-making. The pace of change at local level is set to accelerate and will not be without its pitfalls. Ultimately, however, it is the private sector that will deliver better regional growth and it must now be at the heart of any future devolution deals.

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The Institution of Engineering and Technology is registered as a Charity in England & Wales (no 211014) and Scotland (no SC038698). The IET, Michael Faraday House, Six Hills Way, Stevenage, SG1 2AY, UK.