AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
How the West was won By a Northern star
Focus on manufacturing With Forum and features
Luxfer group finance director Andy Beaden at New York Stock Exchange flotation
In association with
2
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Update
Forum: Manufacturing
Ready, get set...
Pushing aside the gloom and doom to make growth room
It would appear that a second Industrial Revolution is under way – and that, once again, manufacturers in the North of England are in the thick of it. The difference this time, though, is that we find ourselves in a global market, not setting the pace but playing catch-up with the teams that have pushed us into what is effectively the third division – the Germans, the Americans and the Chinese. We still have our Richard Arkwright-style pioneers to come up with innovations such as graphene, along with our traditional skills in terms of making things, but first time round we were clearly ahead of the game and this time we are not even on a level playing-field with the competition. Every time there is a ripple in the world’s economic pond – the slowdown in China being the latest – it has the potential to turn into an economic tidal wave such as that which has engulfed the Redcar SSI plant. All this and more is aired in this issue of Super North – an issue dedicated to manufacturing, which has been showing a resurgence in recent years. But now things are cooling off and there is a need for an increased level of support from the Government – which, because of its austerity drive, is increasingly failing to live up to its promises. British manufacturers are now not only faced with increased taxes (see elsewhere on these pages), but also spiralling energy costs as renewable energy falls out of favour (see page 8). There are, however, companies out there showing it can still be done, even if they have to go the US to make it happen (see pages 6-7), and areas such as Lancashire are on the rise again as they embrace the second Industrial Revolution (see pages 10-11). The North has shown the world in the past what it can do, now it is up to Whitehall to hand over the powers via the Northern powerhouse to enable the region to at least compete on an equal footing as it attempts to do it again.
Inside
The Challenge of Change A Deloitte view on rising to it Page 4 If you can make it there... Luxfer’s Big Apple bite Pages 6-7 Lancashire gets moving LEP that means business Pages 10-11 If you want to know more about Super North, freephone 0800 027 0403 or contact animmo@supernorth.co.uk @thesupernorth
No one denies these are hard times for the makers but bosses are optimistic, reports Mike Cowley
A
lthough the UK manufacturing sector – particularly in its Northern heartland – has enjoyed a resurgence in recent years, it remains at number 15 in the global league table and conditions are not currently seen as favourable for any significant move up and out of what is known as the third tier. That is why the recent announcement of the cooling-off of PMI (purchasing managers’ index) figures is starting to ring ever-louder alarm bells. The key issue facing the manufacturing sector today is that it is increasingly played out on the world stage, with the supply chains now being in many cases truly international. So economic blips overseas – the downturn in the Chinese economy having been the most significant one of late – are causing ripple effects that soon reach our shores. Then of course the downturn in Europe – the UK’s biggest market – has had serious negative consequences, with the slowdown in demand being matched only by the worsening exchange rate between the euro and the pound, seriously impacting on our competitiveness. Over and above all this however is the fact that UK manufacturing does not find itself on a level playing-field in terms of the leading manufacturing nations – and the top three of the US, China and Germany in particular – because the political climate in these and other countries is more favourable than it is at home. Despite the Government having taken a very public stance of being pro-manufacturing, its apparent approach of robbing Peter to pay Paul belies this – as seen in its decision to cut the tax incentive allowances for industrial plants while claiming these will be offset by cuts in corporation tax, something which has caused various corporate eyebrows to be raised. The fact that the Government has also recently taken what has been described as “a wrecking ball” to renewable energy – leading to significant cutbacks at Drax power station – is causing serious concern for manufacturers in terms of the increasing energy overheads that are being passed along the UK supply chain. All these issues and more were debated at length at a specially convened Super North
Meeting of minds: Forum listeners and contributors focus on talking heads
manufacturing Forum for The Times held at the offices of Deloitte in central Manchester. Chaired by the inimitable Alasdair Nimmo of Super North, the Forum attracted a panel of heavy hitters from the sector, including manufacturers along with high-ranking financial and legal consultants. Andy Beaden of Luxfer Holdings, a global materials technology company based in north Manchester (see pages 6-7) aired the first grievance of the day in the form of concern about exchange rates and cuts to manufacturing tax breaks. “Exchange rates are a big issue when you are talking about a 20 per cent movement, giving the Germans an advantage,” Mr Beaden said. “Compared with the US or Japan, incentives for manufacturing itself are not great. From the recession through to last year, you could get a 50 per cent tax reduction for your capital investment in the US, but in the UK we’ve cut from 25 per cent to 18 per cent. That’s an entirely opposite policy.” Mark Stephenson of Deloitte also expressed concern about the tax situation. “The UK tax policy has in a lot of ways come forward to support manufacturers, but now we’ve seen some retrenching,” he told the Forum. “The example about allowances for machinery, because of the way it works, is really a significant increase in tax. “While we have seen a tax system which supports a UK-based manufacturer in terms of corporation tax, we’ve seen overall tax bills that will go up. It’s all part of a complicated picture.” Jonathan Watkins of DLA Piper then raised the issue of the cost to manufacturers of IPO (initial public offering) protection in the UK. “While there is a need to keep cutting-edge technology confidential,” he
said, “it is important to understand the local market. “What is a sensible approach in the UK can be entirely different in different countries. Patent protection is hugely expensive and time-consuming. In some cases it is better to go down the IPO protection route, in others it is not.” It was far from all doom and gloom at the Forum however, thanks to upbeat reports by representatives from both BAE Systems and the National Graphene Institute. David Baird of BAE Systems said that his company is currently working on the biggest defence project in the world, with a substantial part of the work taking place in the North West. “There are around 3,500 aircraft on order, replacing the F-15 and F-16. We have a fuselage which comes from the North West. This year we are looking at around 40 to 50 aircraft and 80 by 2017 – and then one aircraft per production day.” The impact of this on the regional economy will be significant. “If you look in the North West,” Mr Baird said, “we have around 11,500 people. And for every direct employee, they generate roughly £90,000 into the economy, which is twice the average.” This, in turn, will mean significant business for the BAE Systems supply chain in the North, which has been expanding in line with the company’s own success. “We have a large supply base in the North which we rely on,” Mr Baird added. “We are making sure we have a vibrant North West base and the journey we’ve been going on is recognising that we can’t stand back and let them fail.” James Baker of the National Graphene Institute had a similar success story to tell about the wonder material which some pundits are describing as the greatest technological breakthrough this century and which has
Super North is an independent supplement distributed in The Times. It is produced by Super North publications, who can accept no legal liability for any errors. The content has been obtained from sources that the publisher believes to be correct.
Editor: Frank Simpson
3
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Forum Top-table participants, from left... Jonathan Watkins, DLA Piper partner and head of the Manchester Corporate Team. James Baker, business director, National Graphene Institute. Mark Stephenson, Deloitte international partner and manufacturing lead. Alasdair Nimmo, Super North, chair. Andy Beaden, group finance director, Luxfer Holdings plc. David Baird, programme manager, BAE Systems.
already won the Nobel Prize for two professors from the University of Manchester. “Graphene is stronger than steel and more conductive than carbon, and it has the ability to change the world,” Mr Baker said. “There are lots of applications to transport, and as a membrane it will only allow water molecules to pass through. It could change the world commercially, but it also has the ability to transform the world.” He went on to tackle the concern that the potential for graphene might be achieved in the rest of the world, rather than in the North where it originated. “If you look at quantity,” Mr Baker said, “the UK has got 100 patents where China has two or three thousand. “Does that mean we are losing the race? No, we’ve got the world’s leading scientists in Manchester, we’ve got engineering expertise here and we’ve got the National Graphene Institute. If you can bring these together, we can create a new IPO and take it to market. A good example is taking graphene and applying it to LED [light-emitting diode] light bulbs. They will have created a new industry within the next 18 months.” Asked where Northern manufacturers saw their end markets today – at home or abroad? – the panel to a man came down on the side of exports. David Baird summed up the general feeling when he said that in order to succeed manufacturers had to be like his company – part of an ever-increasing global market. Mark Stephenson echoed this sentiment. “The UK as a home market is increasingly
difficult for manufacturers,” he said. “In terms of the export markets, the biggest is still the EU, which has brought some problems. “We haven’t done well in China – that honour has gone to Germany. But exports to the US are still strong, that is a prime location for UK manufacturers. Manufacturing
Jonathan Watkins: Vital differences
is the most globally connected industry of all and it is difficult to succeed without an international focus.” However, Jonathan Watkins said that despite the difficulties faced, he found that “UK manufacturers seem to be steady and confident, still investing and happy with their market”. One traditional sign of how buoyant a market is lies in mergers and acquisitions activity. From the chair, Alasdair Nimmo asked how much of this is being seen in the
Northern manufacturing community – and where is the money coming from? “I think we are lucky up North in that we have a strong private equity community, whereas more traditional lending has been difficult,” Mr Watkins said. “We’ve also seen some of it coming from the US, as some of the assets are cheaper than they were before.” Mark Stephenson agreed that more deals are being driven locally. “Obviously the last five years has been slow,” he said, “but for the last 12 months we’ve seen a very slow pickup with some acceleration at the beginning of this year. Prior to the summer, we have seen deals roughly twice what they were – but they are still slow. It has been US money driving UK manufacturing and that pipeline is stronger than it has been.” The continuing problem of finding and retaining talent for the manufacturing sector also found its inevitable way on to the agenda. While the education system is increasingly looking at how it can help manufacturing, many of the larger companies are training their own people, either through their own academies or via apprentice schemes – BAE Systems being just one of those with a foot in both camps. “We have taken on 140 apprentices this year,” David Baird said, “and we are starting to get into schools when [pupils] are aged nine or ten and getting them into our factories to see that a career in manufacturing means working in a clean, exciting and wellpaid environment. “But we are also working on upscaling the existing workforce, as keeping the knowledge
It has a better image now and attracts a higher share of the most talented people
is very important. That’s why we spent £5 million this year on postgraduate schemes.” He went on to say that BAE Systems has introduced a groundbreaking scheme involving a 1,000 square metre facility “where schoolchildren can come in for Saturday morning clubs or any out-of-school club, getting them engaged and excited about manufacturing as a career”. Mr Stephenson argued that more should be done to tackle the image problem of manufacturing. “In the past this has been seen as dirty and not a place that the brightest people should aspire to,” he said. “Some strides have been made to overturning that view. It has a better image and is attracting a higher share of the most talented people. “Progress has been made with policymakers, promoting the so-called STEM [science, technology, engineering and mathematics] skills in universities and within the education system as a whole. The supply of talent in the industry isn’t where it needs to be, though, as we still see an increasing amount of businesses opening their skills academies and there is a feeling they are not getting what they need from education itself.” Time and again, the debate turned to the need for the Government to create a better climate for manufacturers than currently exists – a move that manufacturers believe will play significant dividends for the UK economy. “Manufacturing is hugely efficient and the value per head is very high,” Andy Beaden noted. “Although it has been suggested that it might only be 10 per cent of the economy, this is a nonsense argument because it is much greater. “The value of manufacturing is often misperceived. I see it as an essential link within any major economy. You show me another major economy with a strong manufacturing base where that country isn’t a success. We still have a problem with accepting and understanding that. The current Government should really look at what others are doing to support their manufacturing base.” Of course the answer to many of these problems facing manufacturers almost certainly lies in devolution to the Northern powerhouse in a region where manufacturing has always been recognised – and still is – as the key driver of the economy.
Seeking new ways of working with global supply chains
U
nable to take up her invitation for a seat on the Forum panel, the Deloitte manufacturing lead for Yorkshire and the North East, Kate Darlison, felt that the debate was of sufficient importance for her region for her to issue the following statement to Super North: “The recent cooling in PMI (purchasing managers’ index) reflects wider economic concerns, particularly in reaction to the volatility in China and continued weakness in Europe, and we are seeing evidence of the impact of these challenges in our region.
“Slowing growth in China and reported lower manufacturing output is a concern for industry in Yorkshire and the North East. The supply chains of a number of manufacturers in the region depend on Chinese manufacturers and will be impacted to varying degrees. Despite operating in unpredictable and unforgiving times, however, members of the region’s manufacturing community are committed to seeking new ways of working with a global supply chain to deliver greater benefits and to minimise risk.
“The challenges we discuss with manufacturers across the region are based around the pressures of being part of large national and international supply chains: cost, deadlines, availability, skills, innovation and access to finance. “We are seeing manufacturers across Yorkshire and the North East remaining optimistic about long-term prospects, with many investing in talent initiatives particularly and also in innovative use of technologies to drive growth and increase performance. In the North East, Office for National Statistics figures for
the region showed that a further 8,000 manufacturing jobs were created in the last year, while across the wider region skills are being developed that will be needed for the future. “We still expect that the manufacturing sector will see an uptick in mergers and acquisitions volumes in the market across Yorkshire and the North East. Driven by a strong sector performance and the continued good availability of finance – which has certainly been visible across the region – we expect deal activity to increase and valuations for quality assets to hold up.”
Kate Darlison: More activity expected
“ Now we’re exporting, the world is our playground” Barry Leahey, Sales and Marketing Director at Playdale Playgrounds
When Barry wanted to sell overseas he took advantage of expert advice, tailored to his business. To arrange a face-to-face meeting with an International Trade Adviser: visit www.greatbusiness.gov.uk/ukti
5
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Co-operation
Man of steel made in Sheffield Master of the Company of Cutlers David Grey is also a top manufacturer in his own right, says Mike Cowley
W
hen people hear the name Company of Cutlers linked with Sheffield, they could well believe it to be an organisation which simply represents the manufacturers of knives, forks and spoons – and possibly scissors at a pinch. The reality is that any such assumptions would be wrong on two counts. Firstly, forks and spoons are not defined as cutlery, as technically it applies only to knives. Secondly, there are only a few scissors manufacturers left in the Company of Cutlers (such as Ernest Wright and Son Limited, a family firm with roots going back several generations), and today most of the 380 freemen (Company members who are free to trade) are leading manufacturers including Tata Steel, Sheffield Forgemasters and Rolls-Royce. Steeped in a history stretching back 500 years and more (a man known as Robert the Cutler appears in a 1297 tax return), the Company of Cutlers was established by an Act of Parliament in 1624 which made it illegal to manufacture anything with blades unless you belonged to the Company. Although based in Sheffield, the actual title of the body is the Company of Cutlers in Hallamshire – with Hallamshire being the ancient administrative unit centred on
Master and Mistress Cutler: Royal moment
the medieval parish of Sheffield. (There is also a Company of Cutlers in London, formed 200 years before Sheffield to represent sword and cutlass makers.) It took a further Act of Parliament in the 1800s for the Sheffield version to expand its membership from the traditional artisan craft base of sharpening implements to anyone involved in “the transformation of steel”, something that any manufacturer could rightly claim. Since then, the Company of Cutlers in Hallamshire has evolved constantly in order to remain relevant, just as the manufacturing sector of a city built on gritstone (perfect for sharpening knives) has reinvented itself as the home of advanced manufacturing. The South Yorkshire city now has its own Advanced Manufacturing Research Centre, with a £100 million manufacturing facility having recently been added to Sheffield University. One man who has been on hand to witness this for the past three decades – and
David Grey: knack for success
If Northern cities act collectively we will be able to redress the current economic imbalance
also to take an active role in events – is David Grey. He is the current Master Cutler – a title denoting that he heads the Company and speaks for the city’s manufacturers during his yearly term – and he is also a serial manufacturing entrepreneur in his own right. Having arrived in Sheffield in 1971 at the age of 15 – it was the family’s first permanent home, as his father had been in the Royal Navy for 25 years – Mr Grey has not only seen this proud traditional manufacturing city endure the industrial traumas of the 1970s and 1980s, but has also watched and assisted the recent resurgence as manufacturing has forced its way back on to the national economic agenda. David Grey started out as a trainee accountant, then switched to selling industrial bearings – and when he spotted something that his firm wasn’t doing well he set up on his own to do it better. This was made possible by a £1,000 loan from his mother in 1981 – jokingly referred to as “running-away money” – and a further £1,000 from the bank at a time when a manager could take a punt on a likely lad without having to resort to ticking boxes for head office before processing a loan. Working on the principle that if he found a manufacturing need he would fill it, Mr Grey built or acquired 24 companies over the years with the help of “a very good bank”. Of these companies, 20 have since been sold, leaving Mr Grey’s OSL Group with four highly profitable ones. So he still has the knack of making money, something he learnt as teenager when he ran a mobile discotheque and got away with charging £30 for an event. Having served on the Local Enterprise Partnership (LEP) looking after inward investment – he chaired the board which distributed £32m in Regional Growth Fund grants – Mr Grey decided he could better serve the city he loved through the Company of Cutlers. Working closely with the LEP – which is designed to promote growth – the Company adds a unique dimension of support for the manufacturing community in that it is there to promote the wellbeing of the sector. Apart from being the best networking club in town – all freemen have to be directors of manufacturing companies – the Company is also keeper of the world-
Congratulations to Mr Grey ... from Mrs Grey renowned Made In Sheffield brand. It still has officials known as searchers, with the historic right to enter premises and check for substandard products, although this right would be lost if exercised. The Company also works closely with Sheffield City Council to provide education about the benefits of a career in modern-day manufacturing. It offers the Cutlers’ Company Passport, a two-year programme where youngsters have to demonstrate skills other than those needed to pass exams. Abilities in terms of innovation, problem-solving and working in teams are in order, serving as lessons in enhanced employability. Equally important as its educational initiative, however, is the Company’s political lobbying power (see panel below). This has seen a number of senior politicians – including the Chancellor, George Osborne – attend the Cutlers’ Feast, the highlight of the social calendar for the Company of Cutlers. David Grey’s work for the city has not gone unrecognised: he was awarded an MBE in the 2010 New Year’s Honours list for services to industry and regeneration in Sheffield. It is his work for the Company of Cutlers in Hallamshire which has provided the most personal satisfaction, however. On being elected as Master Cutler, he said that joining was the best thing he had ever done except for marrying his wife Ruth.
Decision-making acceleration is called for W
hile the Company of Cutlers in Hallamshire is apolitical, it has become a highly effective lobbyist for local manufacturers – campaigning on a number of issues which, in turn, have seen it become a strong backer of the Northern powerhouse and of Sheffield’s own bid for greater powers. High on the list of matters which the Company believes devolution needs to address is the current high cost of energy, something which is
blunting the effectiveness of Northern manufacturers. By coincidence, on the same day that the Master Cutler, David Grey, told Super North that if one of the local steel-producing plants relocated to manufacturer-friendly Germany “it would save £30 million a year in energy costs”, there came news that the Sahaviriya Steel Industries plant in Rotherham was suspending operations due in part to the crippling costs of energy.
“Our energy prices relative to what our competitors in Europe and the US are paying are simply making us uncompetitive,” Mr Grey says. “As we are running at 96 per cent capacity in this country, we don’t have any leeway.” The Master Cutler has similar concerns that the skills base needed is not growing fast enough, although he concedes that there is good work going on in terms of apprentices. Mr Grey calls for increased support of manufacturers, pointing to the fact that Germany
is now a leading economy due to manufacturing having been its focus for many years. “For 30 years we have been arguing the need to put manufacturing back in the centre of the economy,” he says, “rather than relying on financial services.” Mr Grey also calls for an acceleration of the decision-making process. “We need to move forward quickly on skills, infrastructure,” he says. “It should be HS3 before HS2, energy costs, access to market. It’s
as though they have just woken up to the problems.” He does however see a solution in the Northern powerhouse initiative: “If the Northern cities act collectively, we will be able to redress the current economic balance between the North and London and the South East. We will be acting in the best interests of everyone up here, just as the Company of Cutlers has been doing for hundreds of years for Sheffield.”
6
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Cover feature
If you can make it there: how Luxfer took a bold bite into the Big Apple Don’t know it? This man believes its huge range deserves your attention, writes Mike Cowley
W
hen the bell rang to mark the opening of trading in the world’s largest stock exchange in New York on October 3, 2012, it heralded the listing of a manufacturing group whose headquarters can be found in a nondescript redbrick building in Salford Quays. The flotation of the North of England company came just three months after its better-known neighbour Manchester United made its debut there to a fanfare of publicity – the kind which Luxfer Holdings plc has never seen, despite itself being a £300 million turnover company. For Luxfer is a name virtually unknown to today’s public apart from in the global materials technology sector, where it is a key player in supplying components and chemicals to blue chip manufacturers. It is however an innovator with a range of extraordinary products for sectors including healthcare, environmental, aerospace and automotive – and some of the products, unbeknown to most of us, impact on our everyday lives. While graphene, developed down the road in Manchester, has yet to realise its full potential despite the excitement that surrounds it, Luxfer has been constantly developing products that rival the potential impact of the substance that has won a Nobel Prize for its creators. Luxfer’s Manchester-based Magnesium Elektron has invented a new biomedical material called Synermag®, which one customer is using to develop a new generation of bio-absorbable cardiovascular stents that eventually dissolve in the body, doing their lifesaving work as quietly and efficiently as does Luxfer itself. Much the same can be said for the special chemical compounds used in the catalytic converters of petrol-driven cars to remove toxic fumes (but which are not being used in diesels made by Volkswagen).
The company’s magnesium powder technology is also helping to look after the UK’s military pilots, in that it is used in countermeasure flares that protect aircraft from heat-seeking missiles. Other magnesium powders are used in heaters for selfheating meals required by the military and in disaster relief. At the same time, Luxfer handles the “ordinary” – producing chemicals used in adhesives, ceramics, printing inks and reflective road markings. All this and much more is handled at a 35-acre site in Swinton that houses the two divisions which design and make high-performance materials and chemicals: Magnesium Elektron and MEL Chemicals – and where around 250 people are employed, 40 of them in research and design and in technical, and where the group, in one form or another, has had a presence since 1936. The Swinton base forms the innovative heart of a group which today operates 21 manufacturing plants, not only in the UK but also in the US, France, Germany, Canada, China and the Czech Republic, as well as being part of joint ventures in the US, Japan and India. So it is a global manufacturing success story for a group that has a current market cap of around $300m and a credit rating that has gone from junk bond to investment grade in the past five years, with Luxfer also being funded via loan notes through the US insurance giant Pricoa Capital. Yet it was a credit rating that fell on relatively deaf ears when the company was considering a flotation in London in 2010-11, with group finance director Andy Beaden and chief executive Brian Purves soon realising that the political climate was not right for a manufacturing company looking for more equity in the UK. “At that time, there appeared to be little appetite for a flotation for a manufacturing company because it was looked on as a dying sector,” Mr Beaden recalls. “That’s why we opted for New York, as the US is very much up for industrial technology. And, as it happens, the US is our biggest market.” This was also in part because Luxfer – in its previous incarnations – has been an Anglo-American operation (see panel opposite). So Messrs Beaden and Purves began to plan the New York Stock Ex-
change flotation bid, no easy project in itself given that IPOs (initial public offerings) in the US do not come easily, being much more highly regulated than in the UK. In all, it needed a year and several roadtrips – through 20 cities taking in a series of 50 Dragons’ Den-style meetings across the US – to let investors know what Luxfer was all about in order to get them on board. But come on board they did, and when that NYSE bell finally rang in October 2012, the company knew it had arrived in terms of raising equity. “It would have been easier to do it in London,” says Andy Beaden, “but on the positive side it has seen a lot of Americans invest in industrial technology in the North West [of England]. There is nothing wrong with attracting inward investment, and we are proud of our investor base.” Around the same time, Mr Beaden had also been building up a UK banking syndicate for Luxfer based in Manchester and which now includes Lloyds, Yorkshire, Santander and RBS, with the Bank of America joining the willing support party. “Manchester has a vibrant banking sector, so there is no need for a large corporation to go to London any more,” he says. The difficulty for Luxfer has always been explaining to financiers what they do, the sheer complexity of the operation making it a difficult message to communicate. However, Mr Beaden, as a chartered accountant, has developed an affinity for and understanding of manufacturing that has enabled him to successfully bridge the gap. Born and brought up in Stockport, where he still lives, he started his accountancy career at KPMG, which he joined with a degree in econometrics from the University of Nottingham. He soon found himself heavily involved in auditing blue chip manufacturing clients such as AstraZeneca and Siemens, an activity he enjoyed as there was always an end product. Mr Beaden then worked for Great Universal Stores (GUS) before joining Luxfer to help shape its financial destiny. It was his knowledge of advanced information technology (IT) reporting systems that brought him into Luxfer – a system which he helped to implement in his first two
Set to be a part of it: Luxfer’s Andy Beaden, right, and its chief executive Brian Purves on the New York flotation trail
We opted for New York as the US is very much up for industrial technology
years there and which now enables him to enact his key head-office role today, overseeing the worldwide operations of the diverse group. Luxfer’s approach to global management, however, while relying on IT, is not entirely remote, as each year Andy Beaden and Brian Purves visit every far-flung part of their corporate empire. The Luxfer management team also places considerable emphasis on the importance of teamwork, ensuring that everyone is on board to take their knowhow and discoveries from the laboratories through to market. “What we do well at Luxfer is to appreciate each other’s skills,” Mr Beaden says. “I continue to be amazed at my colleagues’ abilities.” As a staunch supporter of the North, he believes that this route should be followed by all regional companies hoping to expand internationally, placing particular emphasis on exploiting their manufacturing unique selling points (USPs) to find their way into other markets. Luxfer is an excellent example of this, in that its magnesium alloy and chemical divisions both regularly open up new frontiers. Its Magnesium Elektron division holds more global patents on specialised magnesium alloys than does any other company. Its lightweight corrosion-resistant and flame-resistant products have set an innovation standard in demanding aerospace and automotive components, including lightweighting in aircraft interiors – seating is the primary target area – to reduce fuel costs and help to meet environmental emission standards. Throughout its more recent history, the operation has pushed the metallurgical boundaries of magnesium alloy technology to take full advantage of magnesium’s unique chemical and physical properties
7
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Cover feature
Getting right back to its roots A
including its strength, its high specific stiffness (18 times stiffer than steel and double that of aluminium) and high machinability. The result is that the range of products in which the company’s solutions can be found appears endless – and possibly is – with critical aerospace, automotive and military applications including helicopter transmissions, jet engine transmissions and components, generator housings, power take-off systems and a range of other equipment running at high temperatures. Its ultra-fine magnesium powders are used in military flare systems, including illumination and counter-measure flares. Biomedical application – an important growth area for Luxfer – takes in lightweight orthopaedic devices and the patented Synermag® magnesium for cardiovascular stents and implants that dissolve once the job is done. Magnesium Elektron alloys are also found in seawater-activated batteries for military applications such as driving torpedoes and powering sonar buoys that locate and track submarines. Then of course there are less exciting but no less useful applications such as products for graphic arts, with alloys being used in photoengraving plates to produce high-quality foiled, embossed and die-cut media including greeting cards and packaging. Meanwhile, also at the Swinton site, MEL Chemicals is a global producer and supplier of inorganic zirconia-based chemicals. With their low relative toxicity and tolerance of high temperatures, these Luxfer Group solutions are again on the money. MEL Chemicals zirconium products are found in catalytic converters for petrol engines, in technology that controls pol-
lution at petrochemical plants and in filters that remove heavy metals from both drinking water and waste water – they are particularly effective with arsenic. Advanced ceramics serve as another target for Luxfer chemical products that are resistant to electrical charges, heat and wear, making them suitable for tape casting, injection moulding and isostatic pressing techniques. The company’s zirconium products are also used in medical implants. Nanotechnology has become a key market for Luxfer, with its nano-zirconia and nano-stabilised zirconia being in demand. All of these products are highly complex and can only really be appreciated by companies working in the specific sectors where they are problem-solvers. The common denominator is that they share the Luxfer know-how. What particularly pleases Andy Beaden about Luxfer’s success story is that much of this can be directly attributed to the company’s Northern roots – which is why he believes that Northern manufacturers, with generations of such developed expertise, all have the potential to expand. “Companies should stick with what they are good at and simply look for other related markets in order to expand,” Mr Beaden says. “And what may be a niche part of a business today could well be its future. Here in the North we have a tradition of making things, so it should be second nature to us. “Whereas the climate for manufacturing has improved in the UK, the Government still has some way to go before it provides a platform for the sector to realise its full potential. That will hopefully get even better for the North with devolution to the Northern powerhouse and so avoiding situations like we faced in having to go to New York to float.”
lthough few people outside the high-performance materials sector will have heard of Luxfer Holdings plc, they are more likely to be aware of the household-name company from which the group evolved. Originally part of British Aluminium, Luxfer in its current form is the result of a management buyout in 1996 after its parent group was effectively broken up, and the reason it is headquartered in Salford is that its chief executive at the time lived in Lytham St Annes. The group’s history can be traced back to 1897, when the company was founded in Chicago, and since then it has constantly evolved and repositioned itself to meet the demands of a volatile market – a lesson for many manufacturing groups today. Here are some of the historical highlights: An innovative founder Luxfer was founded by James Gray Pennycuick, a Scottishborn inventor and entrepreneur whose dream was to bring more light into a world that at the time had to rely on sunlight by day and firelight by night. Mr Pennycuick was living in Boston, Massachusetts, at the time he filed his patent for a “vault light” that used prismatic glass tiles to refract and redirect sunlight into dark interior spaces. The name “Luxfer” comes from the Latin words “lux” (light) and “ferre” (to carry or to bear), so the name means “light-bearer”. Frank Lloyd Wright joins the company In 1897, the company hired an unknown 30-year-old American architect named Frank Lloyd Wright to create decorative designs for its fourinch-square Luxfer prism tiles, the company’s most popular product. Although he created 41 patented tile designs, only one – the well-known “flower” pattern that is now a much sought-after collectors’ item – was actually produced. Frank Lloyd Wright, who was to become one of the world’s most famous architects, also designed a ten-storey skyscraper with a façade consisting almost entirely of Luxfer tiles. Luxfer comes to London Also in its first year of operation, the Luxfer Prism Company filed patent applications to protect intellectual property in Europe, Canada, Mexico, Russia, India and Australia, and began opening foreign branches, the first of these being in London in 1898. The move into metal The company’s first move into metal came in the UK, when it began to manufacture case-
Brian Purves makes contacts on floor of New York Stock Exchange
ment windows out of Luxfer prism tiles. This was followed by pavement lights – metal-framed glass inserts in walkways that illuminated open spaces below, some of which can still be seen in London and Dublin. First World War When war broke out in 1914, the British Government called on Luxfer to make screw pickets to support barbed wire entanglements to protect the trenches. After the war ended, the company began diversifying its range into a growing number of metal products. Magnesium arrives In 1920, the then company chairman saw the potential for magnesium and entered into a contract with IG Farben of Germany, who had developed a process to allow magnesium to be produced in commercial quantities. A change of name In 1929, the British Luxfer Prism Syndicate became Luxfer Limited – an indication of its diversification away from glass prisms. The 1930s This period saw Luxfer Limited begin manufacturing steel shelving, cabinets and other office equipment, and by the end of the decade metal products comprised most of Luxfer’s offerings in the UK. Around the same time, Luxfer glass-producing operations around the world ceased doing business, while 1935 saw the beginning of Magnesium Elektron, with a magnesium production plant being opened in Manchester and capable of producing 1,500 tonnes a year. Demand was so great that this soon expanded to 9,000 tonnes. After the Second World War When the war in Europe ended in 1945, the London area, as well as other parts of the UK, faced housing shortages because so many homes had been damaged or destroyed by bombing. The solution was prefabricated, factory-made houses, for which Luxfer manufactured ready-made windows.
Luxfer went on to develop an innovative extrusion process for the quick application of putty to these windows – and later adapted the process to make a variety of products including steel and aluminium tubing. The 1950s Luxfer tubing products were widely used in cars, aircraft, scaffolding and many types of home and office equipment, including Hoover vacuum cleaners. Between 1950 and 1953, Luxfer developed a new process called cold-indirect extrusion, an engineering milestone that led in 1958 to the manufacture of seamless, high-pressure aluminium cylinders. Today, Luxfer is the world’s largest producer of high-pressure aluminium and composite cylinders. Magnesium alloys also became well established in the aerospace industry, and through its Manchester plant the company became a world leader in high-strength alloys. BACo and British Alcan In the 1960s, the British Aluminium Company (BACo) acquired a majority share in the company. Alcan Aluminium eventually acquired BACo and changed its name to British Alcan. 1996 – Luxfer Group is formed The company in its current form was created from a management buyout of downstream operations of British Alcan. The founders of the new company initially called it British Aluminium Limited, resurrecting the venerable name, but they soon changed this to Luxfer (already the name of Luxfer Gas Cylinders, which had been part of the buyout) to better reflect the international scope of the new company. 2012 – Luxfer Group was floated on the New York Stock Exchange The flotation in October 2012 took the company to its next stage in its long history.
8
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Power
Hit by high price of energy? Now you only have to ESCO DLA Piper experts are seeking out specialist suppliers to aid clients, says Michael Cape
W
ith the Government doing an apparent volteface on renewable energy subsidies, energy savings companies (ESCOs) are being called on to play an increasingly important role in the North, mitigating the conventional high energy costs that are affecting manufacturing growth in the region. The drip feed of news concerning the scrapping of environmental policies – the ending of onshore windfarm subsidies, potential curbs on money for solar, the dropping of regulations to make all new homes “zero carbon” – has served to place ESCOs in the commercial spotlight. The specialist energy team at DLA Piper is a leader in the sector and is based in the North, working out of offices in Manchester and Leeds while covering the whole of the UK. The team reports that major manufacturers, realising that ESCOs offer a range of ways to slash electricity, heat, lighting and refrigeration costs by up to 40 per cent, are increasingly looking at specialist suppliers as a viable option. “The recent changes in renewables subsidies have seen renewables obligation certificate (ROC) subsidy support for onshore wind close a year early, as well as abolishing FIT (feed-in tariffs for small green energy plants) preaccreditation – and the associated tariff guarantee – across all technologies,” says Natasha Luther-Jones, co-lead of the DLA Piper team and its UK representative on the EMEA (Europe, Middle East and Africa) energy sector group. “A wide-ranging analysis of costs in the solar market is also expected to result in a significant reduction in the FIT rates for solar projects,” she adds, “and a reduction in the ROC rates for new ROC-accredited solar projects is also anticipated.” Offering services which range from an audit of energy use to installing plants on-site – biomass boilers, biorefineries, CHPs (combined heat and power) – to provide an alternative to taking power directly from the Big Six energy providers, it appears that the time of the ESCOs has come. Add in the benefits of converting waste into power on-site – waste which manufacturers have traditionally had to pay to be taken away to landfill – and no self-respecting financial director could afford to have ESCOs off their radar. “The fact that investment is out there for the installation of major plants and projects worth between £4 mil-
lion and £250 million means they are being looked on as ever more viable,” says Darren Walsh, DLA partner and co-lead of the energy sector team in Manchester. “The only downside to a funded deal is the need to commit to the ESCO for 20 years, but this will come
Co-team leader: Natasha Luther-Jones
with a guarantee that prices will always be significantly less than from a conventional electricity supplier.” Meanwhile, the services on offer from ESCOs are as varied as the solutions needed by manufacturers with high
Advice: Will Shotton of H2 Energy
I see this as an opportunity to help shape the Northern powerhouse ...as I’m a Northern boy to my bones
energy uses – the common denominator being that they will save money. And as the ESCO sector continues to evolve to meet demand, the available innovative solutions evolve as well. One newcomer to the market which has come up with a breakthrough for the food manufacturing industry – and which thus far has no competition – is H2 Energy. The entrepreneur behind the company is process engineer Will Shotton, who spent two years working on the breakthrough concept while designing and developing a biodiesel plant in South America. DLA Piper has been sole adviser to H2 Energy since its inception, and the energy team has helped Will Shotton and the business to develop bankable solutions to drive business growth. “We work in close partnership with DLA Piper who are our trusted advisers,” Mr Shotton says. At the heart of the revolutionary system is the biorefinery, a multi-stage mechanical, biochemical and biological process which – “based on how the human gut digests food” – converts waste to biogas and biomethane which is then used to generate renewable energy. H2 Energy is based in Liverpool, where the city council recognised the employment potential of this hi-tech engineering business by kick-starting it with a £1m grant. Notwithstanding the current political musical chairs around renewable energy policies and green subsidies, H2 Energy is not dependent on these subsidies and they do not drive the economic model. “What drives it is the amount of food waste,” Mr Shotton says. If this is indeed the case, then H2 Energy’s target market is truly huge. While there has been much publicity about supermarket waste, with some 200,000 tonnes of food dumped annually, this is minuscule in comparison with the 20 million tonnes of waste from the food manufacturing industry chain. This waste is currently costing manufacturers £100 per tonne to transport to landfill. What H2 Energy is offering will not only eliminate the need to remove it from site, but will convert the huge mountain of food waste into energy. Will Shotton cites the example of one chicken abattoir disposing of a million birds per week, resulting in 40 tonnes per day of unusable waste in the form of entrails and feathers. One H2 Energy biorefinery will grind this waste, add enzymes, pressurise the material and then microwave it. The end result is a “soup” made up of sugars, proteins and amino acids which, after fermentation, produces a biogas which powers special generators to provide the total energy requirement of the plant. H2 Energy has already hooked its first major customer in the form of 2 Sisters, one of the UK’s biggest food groups. It owns a range of producers including Premier Foods, and has 47 sites in the UK
Co-team leader: Darren Walsh
It comes with a guarantee that prices will always be less than from a conventional electricity supplier plus two more in the Netherlands – all of which will now be serviced by the Liverpool firm. Of the 14 million chickens processed every week in the UK, 2 Sisters is responsible for six million of these. The first major H2 Energy plant is due to open in Carlisle on at the start of October a 2 Sisters site dedicated to making food for Marks and Spencer. With the plant having been designed at the University of York and fabricated in Liverpool, a significant Northern supply chain is being established. This has not gone unnoticed by the food manufacturing sector, and H2 Energy has already signed contracts with five other groups. While H2 Energy currently has no competition in the sector, Mr Shotton is well aware that this situation is likely to change. That is why his company has established a research and development facility in Runcorn, where scientists are ensuring that H2 Energy maintains its “technological differentiations”. “The competition will have to play catch-up all the time,” Will Shotton says – and such has been the impact of H2 Energy on the sector that he is already receiving invitations to meet Government ministers including the secretary of state for energy. Mr Shotton sees this as an opportunity to help shape the future of the Northern powerhouse – because, as he says, “I’m a Northern boy to my bones.”
9
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
LEP profile
How Leeds has taken a lead: as engine room of the powerhouse The region’s vital Local Enterprise Partnership is breaking down barriers, reports Mike Cowley
I
n terms of manufacturing, the Northern powerhouse initiative requires an engine room to make it work – and while many of the regional cities would like to lay claim to that status, there is really no need to look any further than Leeds and its surrounds. Leeds City Region not only boasts the UK’s second-largest financial centre outside of London, but when it comes to the increasingly important manufacturing sector it is the UK premier league leader with 132,800 people being employed.
It is the region’s Local Enterprise Partnership (LEP) that is making the running for Leeds. Why? Because Leeds City Region LEP has been successful in bridging the once-yawning gap between the private sector and the predominantly Labour-controlled public sector, thus breaking down the “us and them” mentality barrier. Forget David Cameron’s recent openmicrophone gaff which suggested that Yorkshire people were at each other’s throats – and for which the Prime Minister then had to call on Geoffrey Boycott to bat on his behalf; the reality is that local politicians and the business community are now working cheek by jowl. As a result, Leeds City Region LEP has been able to call on the best of the available talent from both groupings. Typical of these is Eric Hawthorn, chair of the
Whitehall is too far off to know what’s happening... we have the opportunity
LEP’s Business Innovation and Growth Panel. A successful entrepreneur who has been there, done that and is still doing it, Mr Hawthorn is also an outspoken advocate of the benefits of LEPs, seeing them as the major achievement of the public and private sectors working together. The founder of Radio Design has ticked – and is still ticking – all the boxes for his own company, in that it has just picked up its second Queen’s Award for Enterprise for being a global player in telecommunications, and it is now set on doing the same for what remains the industrial heartland of the UK. Even while globetrotting between his company’s subsidiary in India and its base in China, and even though he is a Scot, Mr Hawthorn is constantly making the case for his adopted Yorkshire – arguing in support of a manufacturing heritage that goes back to the Industrial Revolution, a work ethic that is second to none, and an education infrastructure which has numerous Further Education colleges geared to making things. While there are some big names in manufacturing in Leeds City Region – Northern Foods, Siemens, David Brown Gear Systems and BorgWarner – most of the 7,000 companies in the sector are small or medium-sized enterprises (SMEs) which offer enormous growth potential so long as they can access the necessary support. Now that manufacturing has forced its way back to its rightful place on the national agenda, Leeds City Region realises it has the potential to ride the crest of this particular wave. So what were once the region’s dark mills have mostly been converted into modern hi-tech factory units. Radio Design is itself housed in the historic Salts Mill in Saltaire, where you will also find the research and development centre for Pace, the world’s largest manufacturers of set-top boxes. A breakdown of manufacturers in the region currently shows that 40 per cent are in the hi-tech sector, and this figure is on an upward curve. This is all being underpinned by a number of business initiatives, key among them being the LEP’s grant funding programme. Here the import-
Eric Hawthorn: Convinced of Leeds’ central powerhouse role
ance of manufacturing can be judged in that, out of a total of £23.5 million in grants to date, 68.7 per cent has gone to the manufacturing sector. Not that these have been no-stringsattached handouts, as for every £1 of LEP funding the recipient businesses have had to provide at least £4 of private sector investment. In terms of employment creation, this is expected to lead to a total of 3,322 jobs at an average cost of £7,000. Eric Hawthorn is convinced that Leeds City Region LEP – along with the other LEPs across the North of England – is central to Northern devolution. “The Government has finally realised that Whitehall is too far removed to know what is really going on,” he says. “So with the Northern powerhouse we have the opportunity to rebalance an economy of which 25 per cent still remains in London.”
Innovation? They’ll have a hand in that... R eliance Precision is as far removed from a traditional engineering company as you can find. It does not do standard – rather, it sets standards as one of the new breed of hi-tech companies in Leeds City Region. When asked if the Yorkshire company produced anything “ordinary”, managing director Andrew Wright struggled to come up with an answer. The bottom line is that Reliance provides specialist aspects of engineering that its clients would like to do in-house but cannot manage for one reason or another. The company typifies much of the engineering activity taking place in Leeds City Region, where manufacturing SMEs (small or medium-sized enterprises) specialise in solving the world’s problems through innovative engineering solutions. With a team of 20 research engineers making up 10 per cent of its highly skilled workforce, Reliance has helped to solve problems in making a variety of highly complex products that range from bionic hands to space satellites.
The bionic hands – going by the trade name of bebionic – stand out not only because of what they allow the wearer to do thanks to Reliance making the fingers work (they can be seen on YouTube being used to tie shoelaces), but also because they are cost-effective. This has been a joint project with a second Yorkshire company, Steeper Group, another of the county’s innovation success stories. Reliance also played a key role in the Rosetta space mission, manufacturing the custom-built gears for the satellite. No wonder the Huddersfield team was thrilled to watch last year’s landing on comet 67P/Churyumov–Gerasimenko, knowing that the components it manufactured back in 1999 were performing perfectly around 500 million kilometres away. Throughout the satellite’s journey, the gears played a vital role by rotating the two 15-metre solar panels, enabling them to continually face the sun – a crucial
function given that Rosetta had no internal batteries and relied entirely on solar energy for its power.. Since the Rosetta project, Reliance has continued to support the space industry by supplying gears for a range of satellite operations. All of this becomes less surprising when it is realised that this is the company which as far back as 1929 came up with an electric washing machine. Built in the shape of a cooper’s wooden barrel, it used an electric motor to power a paddle. These days, motors – and questions about how to make them work better – remain central to the work at Reliance. The company is also an innovator in mass spectrometry, a key field where science meets engineering – and all these skills are underpinned by Reliance’s apprenticeship programme. “If I had to go out and look for someone with the skills I need,” Andrew Wright says, “I probably wouldn’t be able to find anyone.”
Bionic hand whose fingers can tie laces
10
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Partnership
The enterprising LEP that literally means business This Lancashire economy driver is promising a new North-ignited industrial revolution, says JA Leah
L
ancashire is known as the birthplace of the Industrial Revolution, which in the period between 1750 and 1850 transformed the life of the UK – and, in turn, the rest of the world. Now the Northern county is at the heart of another revolution based on the same skills – innovation and making things – that Preston-born Richard Arkwright and his peers demonstrated almost 250 years ago. The result is that Lancashire has once again become a major player in business and manufacturing, not only in the North and the UK as a whole, but also on the international stage. Now the Lancashire Enterprise Partnership (LEP) is working to take the economy of the county to the next level. The LEP is driving an ambitious multi-million-pound investment programme which will create 50,000 jobs,
build 40,000 new houses and boost the Lancashire economy by a further £3 billion. To do this – according to its chairman Edwin Booth – the LEP has turned the county’s economy “into a business”. Just how successful that business is can be judged by the statistics. Lancashire is already the second-largest economy in the North – worth £23bn – with over 40,000 companies, many of them world-class, and it is a significant exporter. It is the UK’s number one hub for aerospace, with BAE Systems, Rolls-Royce and Aircelle all making a home there. As a result, Lancashire has attracted a booming supply chain sector which currently employs 20,000 people. BAE Systems holds the UK’s largestever manufacturing contract to build the fuselage for the F-35 superfighter, a fitting achievement for the only region in the UK where it is still possible to construct an entire aircraft from start to finish. Combine aerospace with the county’s strengths in the automotive and chemical
sectors and it is clear that Lancashire is one of the UK’s key centres for advanced manufacturing. PACCAR (Leyland Trucks), Piolax, Sanko Gosei and Erlson make up the automotive sector, while Edwin Booth admits to nursing an ambition to see Lancashire have its own car-manufacturing plant, with TVR having announced its intention to again build a range of cars in the UK. Chemicals – with an emphasis on polymer science-based sectors – and energy also have a formidable line-up in the county, with players such as Victrex, Vinnolit and AGCE being joined by Westinghouse Springfields Fuels, Halite and EDF with the Heysham 1 and 2 nuclear reactors. It is an energy sector underpinned by substantial onshore and offshore production, and all the manufacturing sectors can call on top-class support from Lancaster University and the University of Central Lancashire. Now, through the LEP, the public and private sectors are working together – backed by massive Government funding – to support and encourage business in the county. Under its business plan, the LEP has set up an Enterprise Zone as a focal point to drive each sector.
Enterprise Zone: Samlesbury – due to have its own training facility
It’s about knowing how to get the best out of funds
There two current sites – Samlesbury (which will have its own advanced training facility) and Warton – which are anchored by the BAE Systems world-leading aerospace business. Two more sites – at Blackpool Airport and at Hillhouse, on the former ICI site at Fleetwood – are in the pipeline, and both are targeting companies to broaden the Lancastrian economic base. Lancashire is about much more than just advanced manufacturing, however, and the LEP recognises that the future of an economy is dependent on having a flourishing small and medium-sized enterprise (SME) sector. The LEP’s Boost Business Lancashire is a single gateway with skilled advisers to match business needs. The support it provides stretches from technical advice to raising funds
Getting hard results from softer fabrics L
ancashire-based Panaz bucked the downward trend in the textile sector in the 1980s, and has since gone on to become a world-beater. With founder and chief executive Tony Attard at the helm, the Burnley firm has spearheaded the design and technical advancement of flame-retardant textiles for the worldwide hospitality, leisure and cruise sectors – and, increasingly, for the healthcare sector. Things looked much less rosy 30 years ago, however, due to the threat posed by cheap foreign labour and the inability of the textiles sector to counter this by embracing new technology, particularly in potential growth areas such as fire-retardant fabrics. Tony Attard was among the first to realise that technology developed in Germany had the potential to change all that. This new process introduced the fire-retardant element as the polyesters were being manufactured, but the end product was too coarse, limiting its use.
Mr Attard came up with a breakthrough method which ensured that the finished fabrics were soft and malleable – of the same sort of quality to be found in the fashion industry. “We were not the first to use the technology in the UK,” he recalls, “but we were the first to enhance it, to pick it up and run with it and score a try.” The company he founded has gone on to export to 46 countries, operating worldwide through subsidiaries in Europe and the US (which accounts for more than 40 per cent of its export market) and has a global network of agents. It has also picked up two Queen’s Awards for Enterprise along the way, thanks to its ongoing research and development. Panaz has recently spent £3 million on a new headquarters building in Burnley for its 85 staff, to celebrate both the company’s 30th birthday and its turnover having soared by 13.5 per cent last year.
The future looks bright with the introduction of a breakthrough fabric known as Shield. This is highly effective against infections such as those caused by MRSA, the antibioticresistant bacterium which kills thousands of patients every year. Shield is causing considerable commercial excitement in America. Tony Attard is a strong advocate for the Lancashire Enterprise Partnership (LEP). “The importance of the LEP is the cohesion it brings to Lancashire,” he says. “I am very anxious that what is happening is pan-Lancashire rather than being in silos around the county, and the LEP does a really good job in making that happen. “I have always maintained that people working together is better than working separately. Take the Northern powerhouse: if we all worked together we could compete with London, and the Lancashire LEP can help us do just that.”
Tony Attard: Praising cohesion
11
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Partnership
How Victrex manufactured a true material advantage
Victrex plant: One of the North’s most remarkable success stories
linked to a broad range of local and national programmes. “Whereas we once had 80 or 90 bodies in Lancashire offering business advice – with no one knowing where they had to go – we now have the one,” says Andy Walker, head of business growth at Lancashire County Council. “There has been considerable progress since the Lancashire Enterprise Partnership was established.” Through its Growth Deal funding, the LEP is supporting business and manufacturing by projects such as an Engineering Innovation Centre and also an Energy Skills HQ, through which Blackpool and The Fylde College will provide training for future energy sector employees. Meanwhile, the LEP’s City Deal funding is being used to ensure that the county’s infrastructure underpins business growth – with, for example, massive new roadbuilding schemes. “Like any business – and the LEP looks on Lancashire as a business – it’s not just a case of getting funds but knowing how to get the most out of them,” says Edwin Booth. “Every time we’ve approached the Government we’ve done so just as a private business would do, to secure a contract.
W
Edwin Booth: Stronger together
“There is no reason why there shouldn’t be a second Industrial Revolution – albeit with different disciplines involved – or why Lancashire shouldn’t be at the front of it. That is what the LEP is working towards. The Northern powerhouse will help all of us, because together we are much stronger and Lancashire is going to be very much part of it.” www.lancashirelep.co.uk
Good for the automotive sector: Smooth motorway links on the road to a bright future
hen the giant ICI plant was winding down its operations at the Hillhouse Business Park near Blackpool, the outlook looked bleak for the area. However, an enterprising management team spotted an opportunity which the company hadn’t seen for one of the products, and acquired the rights with a management buyout in 1993. Today, the company called Victrex is one of the most remarkable success stories in manufacturing in the North, while the business park is on the way to becoming another flourishing site in the Lancashire family of Enterprise Zones. Victrex is the developer and manufacturer of a breakthrough high-performance polymer material known as PEEK plastic, which has unique selling points compared with metal alloys in that it offers the same strength but is lighter and more costeffective to produce. It is used extensively in some 15,000 aircraft – including the Boeing Dreamliner – for everything from acoustic blankets to ensure in-cabin noise reduction to the brackets for pipes and cables. Each Dreamliner alone uses one tonne of Victrex PEEK. Another major market for Victrex is the automobile industry, where PEEK can be found in the anti-lock braking systems (ABS) of more than 200 million cars worldwide. At its global headquarters and principal manufacturing site at Hillhouse, Victrex employs over 600 staff and exports
Kenny Gilmour: Opportunities
97 per cent of its production around the world to support the aerospace, healthcare and energy sectors (with 75 million of its seals being used in the latter). One billion mobile devices currently use Victrex technology, and the company now operates at the forefront of advanced materials technology and is booming. It has recently opened two new production facilities at a total cost of £111m and substantial further investment is on the drawing-board to meet ever-increasing global demand. With its own apprentice and graduate programmes in place, its highly skilled workforce is underpinned by close links with academic institutions such as Lancaster University and the University of Central Lancashire in Preston. Having already received some funding from the Regional
Growth Fund through the Lancashire Enterprise Partnership (LEP), Victrex and the LEP are bidding to secure Enterprise Zone status for the Hillhouse site, which will help to further accelerate and incentivise business investment plans. The proposed 133-hectare Hillhouse site is already occupied by 40 businesses, including AGC Chemicals, Addison Engineering and Vinnolit, and has been a centre for advanced chemical manufacture since the 1950s. Under the new proposals, the LEP and local partners plan to build on Hillhouse’s hi-tech chemical and polymer heritage, but will also target firms within the wider energy and advanced manufacturing sectors to complement Lancashire’s overarching Enterprise Zone strategy. This includes forging links between the Energy Enterprise Zone at Blackpool Airport – soon to be formally announced – and the Advanced Engineering and Manufacturing Enterprise Zone sites at Samlesbury and Warton, which have a strong aerospace presence. In terms of employment growth, the LEP forecasts that if adopted as an Enterprise Zone the Hillhouse site could potentially double the number of local jobs to more than 3,500 within the next ten to 20 years. “What we like about this LEP project,” says Kenny Gilmour, operations director at Victrex, “is that the more hitech companies who join us on the site, the more the opportunity for cross-pollination of the skills we all require.”
12
AN INDEPENDENT SUPPLEMENT, DISTRIBUTED WITH THE TIMES
Super North
Commercial report
The future’s here: in North East’s advanced economy Latest evidence comes with three sophisticated investor commitments, says Frank Simpson
T
hree huge new investments into the North East of England economy provide fresh endorsement of the region’s world-leading reputation for advanced manufacturing excellence. Taken as single investments, the new Hitachi Rail Europe, next-generation Nissan Juke and Reece Group announcements would have grabbed business news headlines, but all three were unveiled on the same latesummer day, now acknowledged as one of the red-letter days in the North East’s recent industrial history. More than £200 million has been invested by these global players into their local facilities, which will in turn create hundreds of new jobs and – in Nissan’s case – secure 34,000 posts in its regional supply chain and at its Sunderland plant. Such investment in manufacturing, technology and innovation aligns perfectly with the Strategic Economic Plan of the North East Local Enterprise Partnership (LEP) – an ambitious ten-year vision for greater economic prosperity founded on more and better jobs for the region. Hitachi Rail Europe’s vote of confidence in the North East economy is on a grand scale. Its £82m Newton Aycliffe factory will build the next generation of trains for the East Coast and Great Western main lines, and has “Nissan-like” implications for the local workforce in County Durham. The reopening of the former Vickers tank factory on Newcastle’s Scotswood Road, to house the Reece Group and its world-renowned innovative engineering business, is a highly symbolic moment for manufacturing in the North East. The Prime Minister stressed the impact of the Hitachi Rail Europe investment on the wider UK manufacturing base during the opening of its production factory. “It’s great in terms of jobs for local people and it’s great for skills,” Mr Cameron said. “The sort of highly skilled manufacturing work that our country needs as we rebuild our manufacturing base. “It also means the potential for thousands of jobs in the supply chain. We want this to be the start of a great revival in terms of manufacturing in the North East.” Look behind these headlines and there is a cohesive package of cutting-edge industry, world-leading academic knowledge and business collaboration in the region. Firms applying innovative approaches to all areas of their manufacturing processes are driving prosperity in the North East’s key industrial areas of marine offshore and
subsea, pharmaceuticals, digital and creative and life sciences. It can be seen in product design, in the materials that are used and in the delivery of manufacturing capability. It is also at the heart of a revolution in everyday travel – in an area which led the world in the development of rail passenger travel, engineering and scientific discovery during the Industrial Revolution. For Stephenson’s Rocket, Swan’s electric light bulb and Armstrong’s first hydroelectrically lit home, read electric vehicle (EV) charging point networks, hydrogen-fuelled cars and fleets of hybrid buses, taxis and public works vehicles. The North East has taken up the challenge of providing a cleaner, greener future for our transport systems, homes and cities. The area is home to the most comprehensive regional EV recharging network outside of London, with more than 1,100 EV charging points in place in the region through the Plugged-in Places project. It has the highest percentage of low carbon vehicle drivers in the country, with a high number of EVs registered on North Eastern roads. And the North East accounted for 26 per cent of European EV production in 2014. An advanced manufacturing cluster of innovative firms such as Sevcon, Smith Electric Vehicles and Hyperdrive is thriving, making EVs and the component parts and powertrains that propel them. Nissan in Sunderland, Europe’s most productive car manufacturing plant, is home to the electric Nissan LEAF and to EV battery production. In Tees Valley, the UK’s largest integrated chemicals complex makes the North East the natural testbed for hydrogen fuel cell vehicle development, while the £9.8m Skills Academy for Sustainable Manufacturing and Innovation at Gateshead College is
That’s LEAF: Nissan drives its Northern workforce to new heights
10,000 jobs are to be created in the North East through the growth of the automotive sector
training the workers needed to seize opportunities in low carbon vehicle development. “The North East has the whole package for Ultra Low Emission Vehicles (ULEVs),” said Dr Colin Herron, managing director of Sunderland-based low carbon technology company Zero Carbon Futures. “We have the capability here to manufacture and demonstrate this technology – and, because of the work we have done in installing the vehicle infrastructure, we are now applying this on a national scale and outside the UK. “We are the sole site in the UK to make volume EVs and one of the few in Europe for the mass production of lithium-ion batteries. We are developing hubs specialising in this to bring together academia with industry supporting the North East Automotive Alliance (NEAA) objectives. We are also addressing the skills equation, preparing the workforce to manufacture ULEVs and associated technologies on a bigger scale.” Roger O’Brien, director of the University of Sunderland Institute for Automotive and Manufacturing Advanced Practice (AMAP),
heads a team providing research and knowledge-based solutions across all industries. He is acutely aware of the strength that major new investments bring to a region heavily reliant on manufacturing. The AMAP team helps regional manufacturers to address the challenges presented by advances in processes, materials and technologies in a fiercely competitive global environment. “Advanced manufacturing is vital to the future of the North East economy,” Mr O’Brien says. “We have 14 per cent of our workforce engaged in manufacturing, which is the highest of any region in the UK. We are working with employers to help secure these jobs, providing long-term continuity of employment by ensuring that we as a region are investing in innovation and new technology to keep ahead of the competition. “Renewable energy, subsea and offshore industries, along with automotive and passenger vehicles, are key growth areas for the North East. We are working with them to help their manufacturing processes improve, to be in a better position when markets in some of these sectors pick up.” The growing support of schools in pushing manufacturing as a career option is encouraging AMAP, with many advanced manufacturing jobs now requiring knowledge acquired in STEM subjects (science, technology, engineering and mathematics). The North East is laying the groundwork to fill the thousands of highly skilled manufacturing posts that will be vacated by an ageing workforce. The newly created NEAA has a clear vision to stimulate industry growth by boosting apprenticeships and increasing the appeal of automotive manufacturing to school leavers. It is the voice of a sector of 280 automotive supply chain companies, generating £5.1 billion in exports each year and directly employing 26,000 people. “Advanced manufacturing skills are a really big issue for us,” says NEAA chief executive Paul Butler. “We estimate that more than 8,000 people are due to retire from the industry in the next five to ten years and 10,000 jobs are projected to be created in the North East through the growth of the automotive sector. “Our skills strategy looks at school engagement to raise awareness of STEM subjects and apprenticeships, working with more companies to take on young people.” Paul Woolston, chair of the North East LEP, adds: “A thriving advanced manufacturing sector is one of the keys to the North East being able to reach its target of creating 100,000 new jobs over the next decade, as detailed in the North East LEP’s Strategic Economic Plan. “It is a sector that we have identified as a smart specialisation area, a real industrial strength creating competitive advantage in the global economy. Automotive manufacturing is a pillar on which to build new North East growth, together with the clusters of firms in pharmaceuticals, energy and low carbon industries.”