The Manufacturer - January Edition 2010

AUTODESK INVENTOR TAKES YOU BEYOND �D TO DIGITAL PROTOTYPING

www.themanufacturer.com January 2010 Vol 13 Issue 01

Autodesk® Inventor® software creates a single digital model that enables you to design, visualise and simulate your products. Inventor helps you to reduce product costs and get innovative designs to market faster.

Power

ism ney

Find out more about Autodesk Inventor and how it can take you beyond 3D to Digital Prototyping.

Accessing the potential nuclear power bonanza

www.autodesk.co.uk/beyond�d

Finance and taxation R&D tax credit scheme mishandled?

People and skills

National Skills Strategy reviewed

Innovation, design and the product lifecycle Simulation and the virtual factory

Autodesk, AutoCAD and Autodesk Inventor are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product offerings and specifications at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2009 Autodesk, Inc. All rights reserved.

www.themanufacturer.com January 2010 Vol 13 Issue 01

Image courtesy of Prensa Jundiai, Brasil

Interview Nick Vermont

Regional CEO, McCain Foods

Source of Supply INDUSTRIAL BAR CODE SCANNERS

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Editor’s comment

Opportunities at the core Welcome to the first issue of 2010.

December’s Energy Choices conference, hosted by the Nuclear Industry Association, was devoted to civil nuclear energy opportunities.

Lord Mandelson announced a package of measures to support the UK nuclear industry including a new Nuclear Advanced Manufacturing Research Centre, the creation of a Nuclear Low Carbon Economic Area in the North-West, and encouraged greater input from universities and leading companies like RollsRoyce to enhance the nuclear expertise of UK manufacturers. Between eight and 10 new nuclear plants are planned, we will hear in April if the first one is approved with construction due to start in 2012. Eight or more new nuclear power stations presents a bonanza of opportunities to engineering firms and our article on page 14 discusses some of these with the NIA. The Manufacturing Advisory Service London can advise on tendering for contracts and accreditation.

There was a lot of bad press in 2009 about Her Majesty’s Customs and Excise’s handling of the R&D tax credit scheme. Some companies have found the process of claiming tax relief more difficult this year and there is a perception the qualifying criteria have tightened. The article in our new Finance and Professional Services pillar on page 30 investigates what happened and shows that it’s essential for both the private sector and HMRC to have clear definitions, especially over latter phase prototypes that are sold.

To what extent has the new National Skills Strategy attempted to understand the real needs of industry and the specific skills shortfalls in manufacturing sectors? Several leading industry figures comment in the People & Skills article. While there are reservations about any regional-based structure for applying the strategy, the overall message is that it is a well-conceived document with merit and clear purpose.

I would like to welcome Anand Sharma as a new columnist in The Manufacturer.

The consultant and author is taking over the monthly lean column, while I’m pleased to say that Professor Dan Jones, who has written this column for over five years, will still contribute to the magazine with a more detailed article every quarter. Anand is the co-founder and chief executive of TBM Consulting and is highly respected amid the lean communities of the US and Europe.

Will Stirling, The Manufacturer

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1

News and features 04 News

Manufacturing news

09 Manufacturing appointments On the move

Find out who’s heading where in manufacturing

11 Lean column: Business as unusual

2010: Are you geared-up for growth?

Anand Sharma discusses leveraging lean to assist during the economic recovery

12 The big picture

Don’t stop thinking about tomorrow Gaining a competitive edge necessitates keeping one’s eye firmly on future

13 Economics

A happy New Year?

Manufacturers should start to enjoy some growth in 2010

14 Lead story

Power is money TM looks at the opportunities presented by new nuclear build

18 Interview

Hello, Mr. Chips TM interviews Nick Vermont of oven chip trailblazer McCain

22 Leadership and lean It’s time to share

Knowledge-sharing between sites is crucial

25 Special feature Kingston Smith Quarterly tax update – January 2010

Maureen Penfold discusses Pre-Budget Report tax changes

26 Innovation, design and the product lifecycle The rise of the virtual factory

Manufacturing process simulation is saving companies thousands of pounds

2

Contents Finance and professional services 30 Defining R&D

When does a prototype qualify for R&D tax relief?

People and Skills

Skills for growth 32

TM weighs up the reactions of some key industry commentators to the Government’s latest National Skills Strategy

Employee of the month 35 John Baxter of ENER-G

IT in manufacturing 36 IT News

Keeping you abreast of what’s new in manufacturing IT

Special feature Institute for 40 manufacturing Institutional excellence

IfM is an institution at the forefront of global manufacturing practices

Manufacturinginaction Sponsored by TBM Consulting Group In for the long haul – Schmitz Cargobull 46

Schmitz Cargobull discuss the impact of the recession on production and the future aspirations of the UK division of the company.

A clear way forward – Saint-Gobain Glass 50

TM discovers that it is the way in which they engage with the environment that sets Saint-Gobain Glass apart.

No fatigue for Instron – Instron 54

Instron is a world class manufacturer of testing instruments and systems that has recently diversified into the biomedical market.

Laser precision – Oclaro 57

Oclaro, formed by the merger of Avanex and Bookham, the process has been one of growth, innovation and improved product performance.

3

Newsinbrief First trainees graduate from BAE Systems Aero Academy The first 16 new aircraft maintenance technicians have graduated from BAE Systems’ training academy in Doncaster, where up to 500 aircraft maintenance technicians are to be trained over the next five years. Having completed their eight-month basic training, the students will now move to an RAF base for a further 12 months of training. After gaining their National Vocational Qualification, the graduates will join the BAE Systems team working hand-in-hand with the RAF in supporting the RAF’s fast-jets.

ERP Connect 2010 In April 2010, The Manufacturer will launch a new series of ERP Connect events. We aim to bring the “voice of the customer” into contact with ERP vendors and system integrators, presenting an opportunity for manufacturers and software companies to collaborate on the progress of IT in manufacturing — and create continuity between IT strategy and broader business issues. For sponsor enquiries please contact h.anson@sayonemedia.com and for delegate or speaker enquiries please contact j.gray@sayonemedia.com Midlands food academy opens The new West Midlands Regional Food Academy (Wmrfa) has opened at Harper Adams University College in Shropshire to support SME food companies in the area.

The Wmrfa houses a range of food technology facilities, including a product development kitchen, processing hall, cheese room, taste panel room, focus group room, instrumental analysis room, seminar room and a central teaching theatre, which will seat 100 students and allow hands-on demonstrations for training courses, school visits and public events. £30m for electric car charging points The UK’s streets and car parks could see thousands more charging points for electric and plug-in hybrid cars thanks to £30 million of Government funding. The initiative – entitled Plugged-In Places – will support the development of between three and six electric car cities and regions across the UK, which will act as trailblazers for electric car technology. The experiences of these locations will inform the future development of a national charging infrastructure.

4

Keeping the wheels rolling The automotive industry has called on Alistair Darling to keep current support measures and abstain from implementing more regulation ahead of the Chancellor’s Pre-Budget Report.

The Society of Motor Manufacturers and Traders (SMMT) published an open letter at the beginning of this week ahead of Darling’s Pre-Budget Report (Dec 9). The SMMT says private demand should be aided by keeping VAT at 15% into 2010 and deferring the third stage of increases to DVLA first vehicle registration fees.

It wants companies to have their enhanced writing-down allowance increased to 60 per cent in order to stimulate commercial car sales and says the expensive car cap in the tax system of £80,000 should be reinstated. The organisation then called on government to increase its efforts on low carbon vehicle and infrastructure research, step up biofuel programmes and speed up the release of cash through the Automotive Assistance Program (AAP).

“The Pre-Budget Report provides an important opportunity to sustain the recovery and support the longer-term competitiveness of the UK motor industry,” said SMMT chief executive Paul Everitt.

“It is essential that existing support schemes begin to deliver more quickly and help to encourage investment in R&D, skills and productivity. Measures that help to signal a long-term commitment to manufacturing and help to stimulate key parts of the market will boost business confidence and the attractiveness of the UK to inward investors.”

Car sales increased more than 57 per cent last month to 158,082 units. Of these, 21.6 per cent were sold via the scrappage scheme.

1,700 Teesside steel jobs lost Steel giant Corus has announced it is to mothball a Teesside factory, resulting in the loss of 1,700 jobs.

The Tata-owned firm first warned of up to 2,000 job losses earlier this year after its main customer – a collective of four international slab buyers – pulled out of a ten year commitment that begun in 2004. A buyer for the operations was sought to no avail.

Corus chief executive, Kirby Adams, told the Corus staff how many of them are to lose their jobs from the Redcar, Lackenby and South Bank operations, all now set to cease by the end of January.

“We are acutely aware that this will be devastating news for our employees, our contractors, their families and the local community,” he said.

“We extend our sincere gratitude to all of them, as well as to the management team and the trade unions on Teesside, who have all worked night and day to try and avoid this outcome. This is the last thing we wanted and we feel deeply about what is happening. Sadly, it has become unavoidable, through no fault of our people on Teesside.”

Alan Clarke, One North East Chief Executive, and chairman of the Corus Response Group, said: “This announcement is a devastating blow for the dedicated workforce at Teesside Cast Products which has remained professional and worked tirelessly in the face of uncertainty since May and also the local management team and trade unions, which have worked extremely hard to find a viable future for the plant.”

ManufacturingNews Dauntless leaves Clyde for last time

Dauntless, the second of the Type 45 anti-air warfare destroyers for the Royal Navy, has left the Clyde for the final time.

BAE Systems employees from the Clyde yards gathered at the quayside to wave the ship off on her delivery voyage to her home port of Portsmouth. The occasion marked the culmination of five years of work for the employees at the Govan shipyard, having built the state-of-the-art warship for the Royal Navy.

Reflecting the close partnership developed with the Royal Navy during the build and subsequent sea trials of Dauntless, Commanding Officer Captain Richard Powell granted Honorary Membership of the Wardroom to two BAE Systems employees ahead of the ship’s departure.

Angus Holt, UK Programmes Director at BAE Systems’ Surface Ships business, said: “This is a fantastic day for our workforce, both on the Clyde and in Portsmouth, who have each played a vital role in creating such a remarkable ship for the Royal Navy.

“I’m proud of the dedication that the team has shown to ensure that Dauntless is built to highest possible standards and of the achievements

of David and Joe who have worked tirelessly with the ship’s crew to get us where we are today.”

Commenting on his Honorary Membership, David Connelly said: “It’s a real honour to receive this award from the ship’s Captain. Joe and I have worked on Dauntless since her first steel cut back in 2004, and have an enormous sense of pride in the ship.”

BAE Systems signed a £309m, seven year support, contract with the Ministry of Defence earlier this year in a move that will provide the high quality through life support for the Type 45 fleet that is essential to ensure that the Royal Navy can continue to deliver the high demands placed upon it around the world. Once in service, the fleet of six Type 45 destroyers will provide the backbone of the UK’s naval air defences for the next 30 years and beyond.

Each destroyer will be able to engage a large number of targets simultaneously, and defend aircraft carriers or groups of ships, such as an amphibious landing force, against the strongest future threats from the air. The vessels will contribute a specialist air warfare capability to worldwide maritime and joint operations until 2040.

Newsinbrief New lithium-ion battery Nexeon — a company formed following a breakthrough discovery made at Imperial College London — has revealed its plans to commercialise a new lithium-ion battery technology. The development will lead to batteries with significantly higher energy density and longer lifetime between charges. Longer operating times and brighter screens for laptops and smart phones, and cordless tools with more power on tap are just some of the benefits expected.

Business minister hails Modec deal Business Minister Pat McFadden has welcomed a landmark joint-venture between Coventrybased electric van maker Modec and US firm Navistar. The deal signed last week will see the two firms collaborate on producing all-electric trucks for sale in North and South America.

Earlier this year President Obama awarded a £23 million grant for the joint venture. Modec is the first company in the world to design and build an electric commercial vehicle from scratch rather than bolting a battery onto an existing vehicle.

Launching Lean For all involved in continuous improvement, process excellence and change management.

SayOne Media has recently launched The Lean Management Journal. This publication aims to break down silo thinking and encourage end-to-end awareness of process excellence across the entirety of your business. See how lean principles have evolved outside manufacturing learn from the fresh ways in which the principles are being applied.

Visit www.leanmj.com to get your free trial issue or contact b.walsh@sayonemedia.com to subscribe.

Efficient ‘flybus’ in pipeline The government-backed Technology Strategy Board is to help fund a new £1m Britishled ‘green research’ programme involving a flywheel-based mechanical hybrid Kinetic Energy Recovery System (KERS) for fitment to buses and commercial vehicles. Transmission specialist Torotrak (Development) Ltd, the world leader in full-toroidal traction drive technology, will head the new “Flybus” programme. Other consortium partners include Ricardo UK, Optare plc and Allison Transmission Inc. The subsequent companies will support the project with hardware and integration expertise.

5

Datesfor yourdiary Reviewoftheyear January

14-15

The Manufacturing Technologies Association will be featuring at Autosport 2010.

Contact Christel Moustacas on 020 7298 6416 or cmoustacas@mta.org.uk

21

The Manufacturing Institute will be running a seminar based on Lean principles for the pharmaceutical sector.

Contact: georgina@healthcare-events.co.uk

21-23

ADS will be featuring at the Bahrain Airshow. www.farnborough.com/Site/Content/bahrain

February

2

BT is holding a free event focusing on inclusive design. Speakers include Stephen Timms MP and Professor John Clarkson. Contact Katie Shaw on 020 7544 3080 or katie.shaw@fishburn-hedges.co.uk

2 & 10

EEF are holding Carbon Reduction Commitment workshops at Sheffield and Cambridge. http://www.eef.org.uk/events/current

10-11

Southern Manufacturing & Electronics 2010 provides a unique focus for industrial and precision engineering activity in the south of the UK. To register online for tickets, or to find out about exhibiting at this event, visit www.industrysouth.co.uk or call 01784 880 890

11-12

MAS South East are sponsoring the seminar programme at Southern Manufacturing, being held at Aerospace Boulevard, Farnborough. Contact Nicola Lyons at nicolalyons@mas-se.org.uk

23-28

UK Pavilion will be featuring at the Singapore Airshow. For more information contact Neil Semple on neil.semple@ukti.gsi.gov.uk

March

2-4

CRR are hosting the Inaugural International Remanufacturing Congress exhibition. Contact Lesley Maddox-McNulty on 01296 423915 or Lesley.maddox@remanufacturing.org.uk

3-7 16-18

The ADS will be featuring at the India Aviation show being held in Hyderabad. http://www.india-aviation.in/main.htm

The Institute for Manufacturing will will be hosting a three day training course focusing on Technology & Innovation Management, to be held at Jesus College in Cambridge. Contact ifm-events@eng.cam.ac.uk

6

Celebrating 100 years of steel wheel production at GKN Wheels One hundred years ago, GKN Wheels — known then as Joseph Sankey & Sons Ltd or ‘Sankeys’ — patented and produced the first pressed steel wheel. In 1908 ‘Sankeys’ developed and patented the first pressed and welded, detachable motor car wheel, known as the ‘All Steel Wheel’, but it was not until June 1910 that the wheel went into production at the Hadley Castle Works in Telford — the home of GKN Wheels today.

After the Second World War, a new wheel shop was built at the Hadley Castle Works, and this was extended significantly in the 1950s. In 1961, the GKN Board approved a £3.5m capital investment at the site for the production of road wheels for cars, trucks, buses and tractors, as well as for cabs for Leyland. By the 1970s, the Hadley Castle Works had replaced the Albert Street Works as the centre of manufacturing operations, and GKN’s off-highway wheel production was officially born.

Morgan Motor Company – 100 not out The Morgan Motor Company turned 100 years old in 2009. The company was founded by H.F.S. Morgan, a clergyman’s son, who opened a garage and workshop in Malvern Links in 1906 and started serious manufacture in 1909.

Morgan’s long history is sprinkled with events; new model launches — from the famous original threewheeler, now reproduced as a £2500 child’s toy, to the brand new Aero Super Sport set for launch in January 2010 — racing successes, stories, and famous people.

ManufacturingNews a round-up of some manufacturing celebrations in 2009

Hozelock tops Manufacturer of the Year Awards The Manufacturer magazine named Hozelock the 2009 UK Manufacturer of the Year at its annual awards banquet held in November.

Birmingham-based Hozelock, a market-leading garden

watering, spraying and aquatics company also scooped the awards for Design & Innovation and Supply Chain & Logistics at the awards ceremony held at The Tower hotel in London.

Hozelock has enjoyed a very strong period of growth despite the recession, as a result of extensive marketing and promotional activity. Industry analysts, GfK, reported that the garden watering business grew by 14.8% in 2009, with Hozelock increasing its market share to almost 70%.

Sky’s the limit as Cobham turns 75 It was Sir Alan Cobham’s vision for air-to-air re-fuelling which resulted in the formation of Flight Refuelling Ltd in 1934 — the forerunner of Cobham plc.

However, the adoption of Cobham’s ‘looped hose’ re-fuelling system by the US Air Force in 1949 truly set the company on the path to production

on an industrial scale. It also inspired the development of the Cobham’s revolutionary probe and drogue method of re-fuelling, which is still manufactured in its fourth generation form today.

In its 75th year Cobham enjoys a position in the FTSE 100, employs 12,000 people on five continents and has an annual revenue approaching £2bn.

Only four chief executives have overseen the company since 1934, a quite remarkable achievement in such modern times.

McCain Celebrates 30 Years of Oven Chips Since launching in 1979, McCain Oven Chips have been saving people around 20 minutes of tedious peeling and chipping at teatime — giving back extra time to spend with family.

Since its launch 30 years ago, the McCain Oven Chip has revolutionised more than just mealtimes, winning a place in the hearts of the nation as a quicker and healthier way to enjoy one of Britain’s best loved foods.

Simply prepared, McCain Oven Chips use potatoes that are just washed, peeled, cut, cooked and then frozen.

Manufacturing

output

Manufacturers downbeat about future output, says CBI UK manufacturers predict production will fall a little over the next three months, having expected a pick-up in output in the two previous surveys, said the CBI this month.

In the latest CBI monthly Industrial Trends Survey, 18% of manufacturers anticipate the volume of output will rise over the next three months, while 25% think it will fall. The resulting balance of -7% is the most negative since July (-14%) and is a set back to firms’ output expectations in the past two months’ surveys.

The lack of a sustained pick-up in output reflects the ongoing weakness of demand. A balance of -42% of firms said total order books were below normal, which was a slight improvement on November (-45%), and the least negative since December 2008 (-35%).

Export order books weakened again, however, reversing part of the improvement seen in November. A balance of -41% said they were below normal compared to -37% last month.

Said Ian McCafferty, CBI Chief Economic Adviser: “Manufacturing prospects were starting to look up, but have dipped again in this latest survey. Output had been edging higher after the rapid stock depletion earlier this year.

“But with demand moving only slowly in the right direction, order books remain very weak and firms now expect production will fall back slightly in the next three months. This highlights the fragility of the recovery and the likelihood that economic activity will continue to bump along the bottom early next year.”

Manufacturers expect that prices will fall in the next three months, and this survey’s balance of -6% expecting a fall is in line with the previous two months.

7

ManufacturingAppointments UK Appointments Briggs Equipment Ben Wilson

The UK’s leading materials handling supplier and national service provider, Briggs Equipment, is pleased to announce the appointment of Ben Wilson to head up its national accounts business.

Formerly sales manager at Cummins UK,

Wilson brings a wealth of senior sales experience to Briggs Equipment. Wilson will be responsible for driving growth in the national account team including strengthening those business relationships and their performance.

Michelle McDowell has been elected as the Association for Consultancy and Engineering’s first woman chair. She assumes office on 1 January 2010. Michelle has been vice chair for the last year, sits on the board of BDP and is chair of their civil and structural engineering group. McDowell will be focusing on the challenges facing the engineering sector: infrastructure investment, planning regulations, the move to a low carbon economy and the potential skills shortages.

Unilever is to appoint a new chief financial officer before the end of the year following the resignation announcement of current CFO, James Lawrence, who has been with the company since September 2007. Mr Lawrence is credited with helping restore the City’s confidence in Unilever by communicating better with investors and analysts. The company is yet to announce his replacement.

The Findus Group has appointed Nick Jackson to the new role of consumer development director. Jackson will be responsible for consumer insight for the Findus Group and its key food brands — Young’s Seafood and Findus. He will manage the development of new categories, enabling the group to build its portfolios effectively in line with changing consumer demands. Prior to this announcement, Jackson spent 16 years with global consultancy firm Bain and Company.

Consumer minister Kevin Brennan has announced the reappointment of Dr. John Fingleton as the chief executive of the Office for Fair Trading (OFT) for a further five years from October 2010. Fingleton has worked as an academic economist at the Financial Markets Group at the London School of Economics, and at Trinity College Dublin. In 2005, he was appointed Chief Executive at the Office of Fair Trading in the UK. In that role, he has overseen a range of consumer and competition enforcement activity including actions on bank overdraft charges and on pricefixing in various sectors.

Advantage West Midlands has strengthened its board with the appointment of four talented individuals — Professor Madeleine Atkins, Kumar Muthalagappan OBE, Jonnie Turpie, and Roger Phillips. The new board members have three year appointments, lasting until 13 December 2012.

IQMS, a leader in the design and development of Enterprise Resource Planning (ERP) software, announced that it has expanded its UK office with the addition of Bhups Sanghera as technical support and implementation specialist. The appointment of Sanghera further underscores IQMS’s assurance to continued growth in the UK market by extending support for both new and existing customers. Sanghera brings more than 13 years of knowledge and expertise to IQMS’s UK team. Previously, Sanghera served as a consultant for ERP software.

r e c r u i t i n g f o r S u c c e ss

Look out for our recruitment feature coming up next month in The Manufacturer.

To notify The Manufacturer of your company’s appointments, please contact Daniel George at d.george@sayonemedia.com and 01603 671300

9

10

businessasunusual 2010: Are you geared-up for growth?

Anand Sharma, Chairman and CEO, TBM Consulting Group

One

Anand Sharma is the new monthly lean columnist for The Manufacturer. He is co-founder and CEO of TBM Consulting Group, Inc. He was named a “Hero of U.S. Manufacturing” in 2001 by Fortune magazine and was awarded the 2002 Donald Burnham Manufacturing Management Award by the Society of Manufacturing Engineers. He will be leading a workshop on “Leveraging Lean for Growth” in Manchester, May 5-6 2010.

thing no one needs is yet another reminder from the media that we are in the midst of an unprecedented and enormously challenging business environment. Preliminary projections have annual GDP for 2009 falling by 4.75% in the UK, by 4.1% in the European Union and by 2.4% in the United States. That doesn’t sound so bad, you might think. But the ripple effect in most Western markets, as many of you are all too aware, has contributed to sales declines of 15 to 30% on average, and as high as 50% for some industries.

Stuck with excess capacity and inventory when consumer demand evaporated, many manufacturers struggled over the past year to right-size their operations fast enough to survive. Isolated from real demand signals and saddled with long lead times, they worked to months-old sales forecasts.

Supply chains that extended to the Far East made it impossible to immediately turn off the flow of parts and materials, further increasing cash flow pressure.

Absent cash or available credit, a fair number have gone out of business.

Many of these failures could have been prevented if managers had taken steps years ago to make their operations more reliable and responsive to market fluctuations by applying lean management methods and tools. With last year behind us, what matters in 2010 is how your company capitalises on the growth opportunities that are sure to arise — without increasing your cost base.

Just as legacy, command-and-control management systems harking back to the early 1900s contributed to the inability of so many companies to respond to the early signs of an impending recession, these same management systems will inhibit the ability of many manufacturers to ramp up rapidly when things turn around.

Companies that adopted lean principles and more participative management systems stand to benefit because they have not lost critical skills and capabilities. But even among lean companies, in their pursuit of operational excellence too many leaders remain fixated on cost and fail to see speed as a strategic weapon. If the standard industry

order-to-shipment time is six weeks, shipping quality product in one day — or six hours! — is an order of magnitude difference that the market will recognise and reward. This kind of responsiveness is impossible with traditional management systems.

It requires flexible processes, a flexible and multiskilled workforce and effective teamwork that tap into the experience and creativity of people who are personally engaged with satisfying the changing needs of the customers.

Compared to 20 years ago when I founded TBM, I spend much less time today in both Europe and the United States convincing managers that batch processing methods create a lot of waste that can be permanently eliminated with a different mindset and lean production processes. There are hundreds of case studies demonstrating that reduced lead time; increased reliability and flexibility; 5S; rapid changeover; standard work; pull; one-piece flow; root-cause analysis; and other continuous improvement tools can have an immediate and long-lasting impact on productivity, quality and customer satisfaction. What’s missing is how to get from being a baseline user of the wellknown process improvement tools in a few isolated areas to an advanced management system that leverages them to drive breakthrough growth and enhanced profitability.

Even as the world economy sank into the recession, a select few manufacturers were able to respond quickly to declining order volumes, reduce output and inventory to appropriate levels, and minimise working capital requirements. Many of the companies we work with used this unique opportunity to re-connect with customers and uncover unarticulated needs and thus gain market while their competition remain internally focused on slashing costs. Not only have they remained cash-flow positive, they’ve leveraged the crisis to improve their profitability at lower sales levels — and even bought out their less agile competitors. These manufacturers are positioned for strong growth when markets turn around, whether that happens in 2010 or the year after. When the next recession comes, I sincerely hope you are among them. end

Our regular lean columnist Professor Dan Jones will henceforth contribute a quarterly feature on lean subjects.

11

The big picture Don’t stop thinking about tomorrow

Dominic Oughton Institute for Manufacturing

A clear strategic vision is vital to the development and success of any enterprise, whether an individual business or a whole industrial sector, but how do you ensure your plans help you stand out from the crowd? Dominic Oughton from the University of Cambridge’s Institute for Manufacturing (IfM) says gaining a competitive edge necessitates keeping one’s eye firmly on future.

Fleetwood

Mac may seem an unlikely source of inspiration when discussing industrial strategy, but when developing a long-term vision, the words “don’t stop thinking about tomorrow” should be etched into your brain. By this I mean organisations should be focused not on what products, service or innovations should be introduced to capitalise on a current market trends — but what opportunities are likely to arise three, four or five years from now.

The global economy means that firms need to develop distinctive offerings which can provide longterm sustainable growth. In the face of increasing pressure on traditional industries from developing economies, businesses have been seeking to develop leading positions in emerging and knowledge-based industries. In some instances, thinking about future opportunity tends to result in a “me-too” rush to invest in the “latest” technology fad, in a race where the biggest spender is likely to prevail. Organisations, therefore, need to set their horizons further.

Indeed, focusing on future market requirements and the existing capabilities of your company or organisation can produce startling results. Apple’s development of the iPod was largely driven by the convergence of trends towards personalised consumerism, digital media, the availability of processing power and new business models.

Matching these to identify and define a new product space that built on the company’s brand identity and technology capabilities resulted in an iconic product that changed an industry.

Planning while keeping future opportunities in mind may seem obvious, but how to go about defining a strategy which encapsulates it is less apparent. For example, what kind of process can be utilised to help predict the future? The answer lies with mapping out the company’s goals and identifying how future market requirements intersect with existing competencies.

First is the need to capture stakeholder aspirations and develop criteria by which success can be measured. Organisations also have to understand the trends and drivers that will influence the future market needs. Looking beyond the immediate context to

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For more details visit www.ifm.eng.cam.ac.uk

grasp the developing broadscale global environment is essential in exploring the huge range of potential opportunities. Thirdly, organisations need to fully understand capability and the resources that can be drawn upon to exploit these global opportunities, both within the company and beyond through approaches such as open innovation.

The key phase is to identify the leading strategic opportunities for the business where market need and capability coincide — building a distinctive, sustainable world-class market position which meet significant global needs. The final step is implementation; mobilising the organisation and gathering external resources to fill any gaps towards making it happen, then monitoring progress and success.

A multi-national engineering firm used this approach to identify a significant new business opportunity. It identified environmental drivers as a need to reduce the weight of vehicles, the need to manage resources and growth in emerging BRIC economies. These dovetailed with the company’s unique net-shape manufacturing capabilities to prompt the establishment of a green-field production facility in South America to manufacture light-weight car components.

The approach is equally applicable at the sector level, as demonstrated by IfM’s collaboration to develop a long-term strategy for the Australian Automotive Industry. The project identified future trends in local and global markets in the immediate and long-term future, and then matched these to the capabilities in the existing automotive supply base, the broader industrial sector and throughout the research and science communities. It has lead to a policy document outlining a strategic vision which could see Australia becoming a dominant force in the production of zero emission vehicles.

Ultimately, it is no longer enough to base strategy on existing products and markets — you are likely to come up with a plan which fails to differentiate you from your competitors. When contemplating strategic development, keep in mind the words of Fleetwood Mac; don’t stop thinking about tomorrow, because yesterday’s gone, yesterday’s gone. end

Economics

A happy New Year?

Steve Radley, chief economist, EEF

In

After enduring the worst recession since the war, manufacturers should start to enjoy some growth in 2010. Moreover, as the United States and other parts of Europe return to growth, we should start to see the cheaper pound stimulating a recovery in exports.

essence, we expect manufacturing and the economy as a whole to expand by about 1.5% in 2010. This is a very weak recovery by past standards — when we might have been expecting the economy to expand by about 5%. However, this forecast is line with the consensus that the economy will see a long slow recovery, reflecting the view amongst business that while the worst may be over, they are not particularly feeling particularly confident they will see much growth in the short-term.

Yet when economists agree on something, there’s a strong chance that they will be wrong, and, unsurprisingly, there are substantial risks to look out for this year. One of the most important risks is whether credit from the banks will be sufficient to support the recovery. Past experience shows that the early stages of an upturn are when businesses are most vulnerable to going under, as their cash flow comes under pressures and their need for working capital grows.

EEF’s latest evidence suggests that fewer companies are reporting problems with the cost and availability of credit. But given the loss of lending by foreign banks and the long struggle by our domestic ones to rebuild their balance sheets, there must be question marks over whether the supply of credit will be sufficient and over the terms on which it will be provided.

The second big risks lies with the painful measures which the next government will need to take to scale back its current massive level of borrowing. December’s Pre-Budget statement gave a hint of what is to come, but we are likely to see much more in terms of tax rises and spending cuts over the course of this year and beyond. That much is obvious, but manufacturers will be watching anxiously to see how it’s done. Will the tightening in fiscal policy stop the recovery in its tracks? How much of an impact will the cuts in government spending have on key public sector markets such as defence? And how much of any increase in taxation will be borne by business and by manufacturers in particular?

We will also need to watch out for what happens to consumer spending. With rising house and share prices partially reversing the hits to wealth seen over the previous 18 months — and the rise

in unemployment slowing — there are reasons to be a little more positive about the prospects for increased spending by households. But the threat of higher taxation, the need to pay down debt and more restricted credit are all likely to bear down on households and limit the rise in spending, For manufacturers there are additional uncertainties; surrounding, for example, the pace of recovery in international markets, whether the pound will remain as volatile as it has over past year and whether the UK government takes a proportionate response to the deal on climate change agreed at Copenhagen.

Looking beyond these concerns and uncertainties, however, it is important to remember the strides UK manufacturing has made in recent years, and the many ways in which it can contribute to a re-balanced economy if given the right backing.

Before the recession hit, many manufacturers were reporting their best year for at least a decade and, in some cases, on record. These results were achieved on the back of significant improvements in productivity and a renewed focus on the areas that would underpin their competitiveness such as deign, innovation and developing service offerings and niche markets. It is vital, therefore, that we keep the profile of manufacturing high and champion its achievements and the importance of giving it the right backing.

For EEF, this involves supporting Manufacturing Insight in its campaign to send out a positive image for manufacturing — particularly to students and those who are advising them. But we will also be running our own high profile campaign centred around the role that manufacturing needs to play in our economy.

This will culminate in our own Manufacturing Week at the start of March when we will publish our Manifesto for Manufacturing and hold a number of high profile events across the country. In particular, we will be providing a range of opportunities for manufacturers to engage with current MPs and potential new ones.

In a year when we will see a General Election and significant change in Westminster, it is vital that we carry our message to those who will be taking decisions affecting the future of manufacturing in this country. We urge as many of you as possible to get involved. end

Have your say at www.themanufacturer.com

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Power

ism ney After 15 years in limbo, new civil nuclear power is firmly back in the limelight. With foreign companies charged with the construction of new plants, the question is what opportunities are available for home grown manufacturers in the nuclear supply chain? Tim Brown reports.

On

November 9, energy and climate change secretary Ed Miliband told the House of Commons that the UKâ&#x20AC;&#x2122;s need to increase low carbon energy capabilities would inevitably involve more nuclear energy. The subsequent publication of a draft national policy statement (NPS) for nuclear power generation paves the way for a new generation of nuclear power stations.

Nuclear power provides 80% of the UKâ&#x20AC;&#x2122;s low carbon electricity. It is the only low carbon base-load supplier (that operates 24/7) and is the only technology with a proven capability to provide large scale low carbon electricity.

Nuclear power prevents the release of around 40 million tonnes of CO2 every year in the UK alone. Renewables and fossil fuels with carbon capture and storage capabilities have an important role to play, and a balanced low carbon energy mix will include all of these options.

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Leadstory Power is money

The draft nuclear NPS approves the building of 10 new reactors by 2025 at sites already suggested by the nuclear industry including: Braystones, Cumbria Sellafield, Cumbria Kirksanton, Cumbria Heysham, Lancashire Hartlepool, County Durham Wylfa, Anglesey Sizewell, Suffolk Bradwell, Essex Hinkley Point, Somerset Oldbury, Gloucestershire The Infrastructure Planning Commission (IPC) has been tasked with approving the planned build. Importantly, the planning period has been reduced to about one year, a drastic shortening when compared to the six years it took to approve previous British nuclear power stations. There has been opposition to the IPC from environmental groups such as Friends of the Earth, who object to the risk that sensitive decisions that could potentially ruin the local environment will be taken by an unelected and unaccountable body. The Tories have also hinted that if they win power they will abolish the commission and return responsibility for big infrastructure decisions to ministers. It is unclear what this would mean for the current schedule of new nuclear build.

Regardless, the Government has set no limit on the number of nuclear power stations that can be built in the UK. Utility companies including EDF, Horizon Nuclear Power and GDF Suez have already announced that they plan to build between eight and 10 new nuclear reactors over the next 10 years, the construction of which represents a market of between £24bn and £30bn. This market would create a large number of opportunities for small and medium-sized enterprises to provide goods and services as part of nuclear supply chains.

French utility EDF Energy, who is partnered with Areva, will construct the first nuclear projects starting in 2012. To date EDF have awarded 40 contracts with UK companies for preparatory work on the new build projects. These include among others: Fugro Seacore, headquartered in Cornwall, which will carry out investigative studies of the seabed off the coast near Hinkley Point; Bristolbased Structural Soils who are undertaking onshore investigations including soil and geotechnical studies; and Jacobs Engineering UK who are producing site and preliminary works assessments at Hinkley Point.

As well as a range of other support vehicles, the Government will provide capital investment of up to £15m, to establish a Nuclear Advanced Manufacturing Research Centre (NAMRC) to advise and provide support for new nuclear power stations.

This group will include different UK manufacturers and experts from British universities. Business

Construction site of EDF Group’s new EPR at Flamanville in northern France.

Photo Courtesy of EDF

secretary Lord Mandelson has said that the new NAMRC will be based in South Yorkshire alongside the Advanced Manufacturing Research Centre. The NAMRC will be led by the University of Sheffield in partnership with the University of Manchester, with Rolls-Royce as the lead industrial partner.

The Cabinet Office has said that NAMRC will “promote the development of cost-effective civil nuclear technology” and the Department for Business, Innovation & Skills said that the centre will combine “the knowledge, practices and expertise of manufacturing companies with the capability of universities.”

The Nuclear Industry Association and MAS London The Nuclear Industry Association (NIA) is the trade association and representative voice of Britain’s civil nuclear industry. It represents more than 160 companies including operators of nuclear power stations, those engaged in decommissioning, waste management, nuclear liabilities management and all aspects of the nuclear fuel cycle, nuclear equipment suppliers, engineering and construction firms,

15

nuclear research organisations, and legal, financial and consultancy companies. The Manufacturing Advisory Service (MAS) London is working with the NIA to assist companies to monetise the opportunities available within the nuclear industry.

The combined groups are able to offer practical help with elements of nuclear sector contracting including cost analysis, partnership development and quality accreditation plans.

NIA and MAS defines the nuclear supply chain into four tiers: Tier 1 – Utility, Nuclear Technology Vendor or Architect Engineer. Utility has responsibility for overall Project Quality Arrangements.

Tier 2 – Major Supplier of plant, equipment or services contracted to Tier 1 for bundles of equipment or services responsible for application of quality systems.

Tiers 3 and 4 – Smaller suppliers providing specialist services, elements of plant or equipment to Tier 2 contractors delivering quality assured products to specification provided by Tier 2.

Specialised welding is essential in nuclear construction

According to the NIA, the American Society of Mechanical Engineers (ASME) and RCC-M (a set of design and construction rules for mechanical components of pressurise water reactor nuclear islands) are the most widely recognised nuclear construction codes. But the relevant accreditation requirements for supply to nuclear power stations are highly dependent on what section of the industry the suppliers are in. The NIA says that more dialogue between top tier developers and potential supply chain companies is critical to understand developer requirements. EDF says that there is no special accreditation but there is a process where they will review the organisation of the potential supplier on a quality assurance and technical standpoint.

For more information on the accreditation process, contact: info@maslondon.co.uk or visit: www.nia.org

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Don’t miss the nuclear bonanza The potential opportunities for UK manufacturers to supply to the nuclear industry are wide and varied.

Harold Bolter, former director of information at British Nuclear Fuels and author of Inside Sellafield and The Tenth Child highlights that almost every kind of manufacturing discipline will be incorporated into these power plants including infrastructure, electrical, mechanical, computing and more.

“There is also a raft of ancillary non-reactor based manufactured products that will be required for nuclear build,” says Bolter. “You’re going to need protective clothing, protective footwear, monitoring machines (radiation monitors, whole body monitors), fencing, security systems plus all the technology needed for the control rooms and the emergency rooms.”

Business development manager for pipe manufacturer Pipex, Patrick Forster, suggests the best place to start for companies interested in supplying to the nuclear industry is to attend nuclear supply chain seminars. “There is a lot of it happening and there are plenty of organisations that are involved in setting up these supply chains. It is just the case of doing some digging and finding them.”

Dr Tim Stone, senior advisor to the Secretary of State for energy and climate change and founder of the global infrastructure and project group at accountants KPMG says that in terms of the engineering aspects of construction, there are two very different categories. “The products that go into the nuclear island clearly must be designed to very high nuclear standards but the non-nuclear elements of the civil engineering is relatively straightforward work,” he says. He adds, however, that the approach to nuclear construction is very different to other forms of construction and must be completed with “incredible precision in terms of the original specification.”

Tristram Denton from the NIA says that the UK nuclear industry is among the most highly regulated industries in the world. “Any nuclear facility built in the UK goes through the most rigorous safety assessment,” he says. “The Nuclear Installations Inspectorate and Environment Agency will only allow new facilities to be built — or existing ones to continue operating — if they are totally assured of their safety.” The responsibility, therefore, for the success of these projects will rely on the fastidiousness of the suppliers and developers involved.

EDF Energy representative Jonathan Levy concurs, saying that working on a nuclear site requires particular levels of expertise, competency and quality control. “Even for companies supplying non-nuclear equipment or skills, the fact that they are working on a nuclear site means special arrangements apply. These skills and competencies already exist in the UK and we will work with the supply chain where possible to help companies attain the necessary standards. Above all, safety

Lead story Power is money

is our primary concern. EDF Energy already maintains a zero harm policy which we will expect to be adopted by all staff and contractors down the supply chain.” His advice for prospective suppliers is to implement plans in certain key areas including: training and resourcing; quality assurance; developing relevant experience; and developing relevant partnerships.

Pipex’s Forster describes construction for nuclear as “the same as any other large industrial job. Anything that is outside of the nuclear island tends to have similar requirements to other power generation schemes,” he says, “but you do have to be seismically qualified for some areas of the site.” While the required work might be comparable to that needed for the construction of other kinds of power stations, he concedes that nuclear construction work is not always straightforward and likens the high-level of sophistication required to that of offshore work.

Both Harold Bolter and Tim Stone say that a certain level of strengthening of the UK skills and manufacturing base will be required to satisfy the needs of the nuclear industry over the next two or three years. Bolter says that while he agrees that UK industry is up to the task of adequately supplying the ambitious levels of planned build, he concedes that fulfilling the projects’ needs will be a challenge.

“One of my concerns is that Britain has, over the last decade, moved away from manufacturing to more of a city-based economy. I just hope that our industry is in a position to pick up this business.” With construction not planned to commence for at least a couple of years, Bolter says that industry should have enough time for preparation. But it must clearly act soon to align and convert the necessary skills.

Areva and Westinghouse New nuclear power station designs by construction companies Areva and Westinghouse are being assessed by the Health and Safety Executive and the Environment Agency. The HSE has cited several issues with the current designs, which may potentially delay the projects. Regardless the first Areva EPR (European Pressurised Reactor) design is expected to start construction in 2012. The NIA’s Denton says “the first new nuclear power plant is due online towards the end of 2017. Industry is confident that this is a realistic deadline.”

For companies interested in supplying to Areva and/or Westinghouse, early approval is crucial.

The first step in approval is to register via the weblinks below. These sites indicate the standards needed to become approved suppliers to the two build companies.

To register initial interest, go to: Areva — http://suppliers.areva.com/UK_ supply_chain_EPR Westinghouse — http://supply. westinghousenuclear.com

At the Areva UK Suppliers day held in Birmingham in March 2009, Luc Oursel, president and CEO of Areva NP, told attendees: “We can’t achieve our objectives without you. We need you.

The available market for UK companies is some 70% of the total EPRTM reactor scope. The first wave is likely to be between four and 10 EPR reactors in UK. We need also significantly more suppliers if we are to deliver our target of 30 per cent of the worldwide new build programme.”

Additionally, Areva has signed memorandums of understanding with Rolls-Royce and Balfour Beatty, while Westinghouse has signed MoUs with Rolls-Royce, Doosan Babcock and BAE Systems.

These companies will be taking steps to secure their supply chains in the contracts. Rolls-Royce has confirmed its intention to base its planned new civil nuclear factory in South Yorkshire. This factory is part of an investment programme that Rolls-Royce announced on 28 July 2009, which included £45m of investment from the Government as part of the Advanced Manufacturing Fund.

We can’t achieve our objectives without you. We need you. The available market for UK companies is some 70% of the total EPRTM reactor scope Luc Oursel, Areva NP

Plan ahead today Worldwide electricity demands are expected to nearly double by the year 2030. The International Atomic Energy Agency is projecting an increase of a minimum 45 to a maximum of 257 new nuclear power plants worldwide by 2030.

Areva estimates the UK nuclear new build programme could be as much as 20 to 25GW, an opportunity that represents between 10,000 and 15,000 British jobs in manufacturing and construction for 25 years. This will be followed by over 60 years of plant operations and plant support. The nuclear build programme therefore clearly represents a very big UK supply chain opportunity.

The nature of nuclear power intrinsically requires a high level of dedication and expertise.

UK manufacturers must now prepare themselves to capitalise effectively on the new opportunities.

A lack of previous experience does not prevent entry in to the nuclear industry and assistance and information is available at several industry seminars as well as from industry and government bodies.

What is most clear is that interested parties need to begin their nuclear preparation now in order to secure future nuclear business. end

Have your say at www.themanufacturer.com

17

Hello, Mr. Chips In the year that the humble but revolutionary oven chip turns 30, TM interviews Nick Vermont of oven chip trailblazer McCain, and finds out that process technology and a willingness to confront the health agenda has helped McCain to be a world-leader in this important food manufacturing market.

It’s

an educated guess, but very few people in the UK over the age of two will not have eaten a McCain chip. And, rather worryingly, there are allegedly some children who would prefer these chips to their Daddies.

The frozen food manufacturing company, headquartered in Canada, is synonymous with the oven chip – a concept it pioneered – but also produces many other potato products, frozen vegetables, pizzas, appetisers, desserts and more.

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In 2009 the McCain oven chip, a perennial of so many British dinner tables for decades, turned 30 years old. Chips get a bad press, particularly at the height of the war on fast and unhealthy food in school dinners during 2006/07. But it is poignant to note that McCain’s success is in large part due to its decision to make a healthy alternative to the “bad” deep fat fried chip, a staple diet of low and middle income households in the 1960s and 1970s.

Nick Vermont is a company man. The chief executive of McCain for GB, Ireland and South Africa joined McCain just over 26 years ago, arriving after three years at Travellers Fare, the catering division of British Rail. In 1991 he was made managing director of PAS, a subsidiary of McCain that packs frozen potato products for supermarkets and other companies in their own labels, where he stayed until 1998. “This was a fantastic training ground in operations and manufacturing general management, because I came from a marketing background.” He has been with McCain Foods GB since 1983, is a member of the Food and Drink Federation council and chairs the British Potato Council’s marketing committee.

Interview Nick Vermont

Vertical integration Weather, Vermont says, is the single biggest constraint on raw materials. Most of McCain’s potatoes are on a contract – at this time of year the company will agree with its growers on the crop that they will grow next year and deliver over the year.

“But they are to a point constrained by the weather,” says Vermont.

To mitigate fluctuations in supply, McCain GB owns a seen potato business in Montrose, and a large proportion of its growers grow exclusively for McCain.

“We are a very vertically integrated supply chain,” he says. “Our seed potato business would supply the seed to most of our growers, for most of our contract material.” When McCain started in the UK in 1969 most of the varieties grown here were not suitable for making chips, so it invested in seed development to get the varieties established.

“If you don’t have a good base raw material in any industry, you will struggle,” says Vermont. “Our business is basically a high volume, low margin business and success or failure is about how effectively you source raw material and turn it into the finished product.”

Manufacturing innovation Vermont is straight-up about the simplicity of making chips. “We take potatoes, wash them, peel them, cut them into strips – it’s essentially like how you’d make chips at home, but very highly automated, with loads of PLC control, cameras and smart electronics that measure performance.”

But he picks out two main drivers of innovation at McCain GB, where both have been consumer-led.

The first, health, has two parts. First is health and product quality that is driven by coating technology.

The Home Fries oven chip, the biggest selling product, uses a very thin wash of potato starchbased batter which allows the product to eat like a fried chip but is cooked in the oven. This product won the Queen’s Award for Enterprise: Innovation in 2003 for its coating technology. “Before then you had oven chips but this was a leap forward in quality and performance. Oven chips are quite sensitive to time and temperature in cooking, whereas home fries are more forgiving, a more robust product.”

Coating technology began life in North America as a method to keep fries more crisp for longer, but McCain applied it here to a retail product. “We were the first to do so in the UK,” says Vermont.

The second part of the health driver concerns obesity. Technologies are now used to ensure the absolute minimum amount of oil is put into the product in the manufacturing process. “Post-frying we use an array of techniques to remove all the excess oil. We can control this accurately and leave the right amount of oil for each product,” he says.

After health, Vermont highlights process efficiency and waste reduction programmes as being a main business driver. “Why is this consumerled? The consumer is increasingly concerned about

Biography Nick Vermont 1980

Degree in Business Studies at Kingston University

1980

Joined Travellers Fare (the catering division of British Rail), working as Product Manager in Marketing Department

1983

Joined McCain Foods GB (Marketing Department)

1985

Transferred to McCain Canada (Marketing)

1987

Returned to McCain GB as Marketing Manager

1991

Appointed Managing Director of PAS (Grantham)

1998

Became Managing Director of McCain GB

2005

Appointed CEO covering GB, Ireland, Eastern Europe and South Africa, and PAS (Grantham)

2005

Chairman of the Marketing Committee at the British Potato Council

2006

Appointed to the Food and Drink Federation Council

sustainability of agriculture and, especially in the last 18 months, he is looking for value. We conducted a lot of value work streams looking at energy, water usage, raw material usage, to specifically drive out waste and effectiveness there.”

Blow me over, it’s a gas McCain’s biggest and most visual example of resource efficiency are the three wind turbines and the anaerobic lagoon at the Whittlesey plant in Cambridgeshire. The 80m turbines, once the highest onshore turbines in the UK, produce 60% of the site’s electricity needs, each powering a 3.3MW generator.

At the size of four football pitches, the anaerobic lagoon uses starchy water, a bi-product of the manufacturing process, to produce methane that is used to drive a generator which produces another 10% of the site’s power. Where does the initiative

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for such projects come? “Energy, water and raw material usage are global work streams, but each regional business has the flexibility within their remit of trying to be more efficient, to adopt global best practice but if there are also opportunities locally, to pursue those. The wind turbines were a local initiative, the lagoon is a global one.”

Are there plans to install more such plants at

Ataglance McCain Foods (GB) Ltd First UK manufacturing plant opened in 1969 at

Scarborough.

Uses about 750,000 tonnes of potatoes a year, about

13% of the total GB crop.

Single biggest buyer of potatoes in Britain.

Four main UK sites: Scarborough (head office), Hull,

Whittlesey and Wombourne. Also a seed potato business in Montrose.

Employs over 2,000 people.

Turnover approx £300 million. Growth of 2%-5% across the three core businesses – retail, general catering and quick service restaurants – in 2008/09.

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other UK sites? “We continue to look at this, but planning for wind turbines and lagoons is not easy, and not all of our sites are well-suited. We’ve got other initiatives at other sites which we are in the planning stage.”

The health agenda McCain pioneered the oven chip as a healthy alternative to deep-fat frying. Nevertheless, when the chips are down, a chip is a chip. How has McCain GB tackled the healthy eating lobby? “We started marketing the health benefits of oven chips back in 1986. Oven chips have 40 per cent less fat than deep fried chips, and we started to prepare oven chips in sunflower oil. In 2006 – at height of the postJamie Oliver inspired health frenzy – we decided to move all of our products in both retail and catering to sunflower oil.” At this time McCain reformulated all of its products to remove any artificial ingredients, when it launched our “It’s All Good” campaign. “To remind people that potatoes are basically a healthy vegetable and sunflower oil is one of the healthiest natural oils there are. As the market-leader we saw a duty to fight back against the negativism.”

Vermont is clearly proud of McCain’s food standards. “We were the first food manufacturer to put both Food Standard Agency traffic lights

Interview Nick Vermont

and the Guideline Daily Amount declaration on the front of our packs, in September 2006,” he says “It shook some people that there wasn’t a single red on any of the McCain portfolio at the time. The Rustic Oven Chips get four green lights – for salt, fat, saturated fat and sugar. People have come around to the idea, but had you landed from Mars you wouldn’t have expected to see that with all the tabloid headlines.”

Vermont says consumer feedback prompted McCain to publish both standards – the FSA and GDA – on its food, which is non-mandatory.

“Healthy eating is really about giving consumers the correct information so they can make the right choices for their lifestyle.”

Now and tomorrow McCain has fared better than some companies in discretionary sectors in the recession, Vermont says, clocking between 2% and 5% growth across its three core categories in the last year. But he’s not complacent. “Unless you’re innovating, unless you’re providing value for money, you get into trouble. As a premium product you have to make sure you’re driving value for the consumer.” Its three categories are retail, food service (general catering market) and quick service restaurants.

In 2010 Vermont hopes McCain GB will continue to look for green energy opportunities, and the company will continue to supporting its numerous CSR activities including the McCain Community Fund and youth education programme. “We think of ourselves as a consumer-led company. Future success will continue to be driven by looking after our consumers’ needs through the right kind of innovation, while continuing to drive efficiency and sustainability which is good for us, our consumers and the environment at large.” end

Happy birthday!

30 years of the Oven Chip

In 1979 McCain Foods (GB) launched the 5% Fat Oven Chip, offering a healthy alternative to one of the nation’s favourite foods. Revolutionising the food manufacturing landscape, McCain offered consumers both a healthy and convenient product — changing the way people cooked and helping to address the ever-increasing obesity challenge facing society.

Simply prepared, oven chips use 100% British potatoes which are washed, peeled, cut, cooked and then frozen. Containing only 5% fat (less than 1% saturated fat), no added salt or cholesterol, they have 40% less fat than the average homemade deep-fried chip. The Oven

Chip has been responsible, in part, for the dramatic reduction in the number of chip pan fires recorded since its launch — as well as saving consumers time out of the kitchen which would have been spent peeling and chipping.

76 employees still work for McCain since the first Oven Chip rolled off the line. They have seen many changes to the production process — from removing potato defects by hand to using an automatic defect removal system that uses a specialist camera to spot the defect thereby minimising loss of raw product.

It comes as little surprise that McCain has sold over 200 billion chips since 1979, thus increasing production by over 400%. This success has meant that if all the oven chips sold in the last thirty years were lined end to end, they would wrap around the world over 350 times or get you to the moon and back 17 times.

Today, as the UK’s number one provider of frozen chips and potato products, the company has focused on constantly innovating to provide high quality products through its dedicated Innovations Department in Scarborough. This team ensures that consumers can enjoy potatoes’ natural, nutritious and great taste, while assessing that where product reformulation options are possible, or indeed needed, all opportunities are pursued.

Have your say at www.themanufacturer.com

21

share It’s time to

The modern factory engineer is as likely to be devising a value stream map, or filming a production process to be intranet-cast to a Chinese sister factory, as he is operating a machine tool.

Steve Burgess, continuous improvement project engineer at GKN Wheels, says knowledge-sharing between sites is crucial.

With

six sites worldwide — where each one manufactures various types of product but using similar technologies — creating commonality and sharing best practice are vital elements in the continued development of GKN Wheels’ business.

Being part of GKN plc, the off-highway wheels business is able to tap into the knowledge and expertise of other group companies operating in the quality-driven automotive (GKN Driveline) and aerospace sectors (GKN Aerospace).

The central engineering source at GKN Wheels Telford is responsible for spearheading a number of initiatives designed to promote best practice and assist production managers in applying lean thinking and achieving performance and/or productivity gains.

At a time when the opportunity for capital investment is limited due to pressure on costs, the main focus for sharing best practice is how to get the best out of existing manufacturing systems.

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Over the past year, the business has been concentrating on how to improve its approach to preventative maintenance, thus improving process continuity at the same time as eliminating unexpected repair costs and downtime.

Preventing downtime The ‘maintenance roadmap’ was designed and developed to encompass all the production processes and equipment in use across each of the company’s manufacturing sites in the UK, Denmark, Italy, the US and China. Based on 22 preventative steps, the roadmap quantifies the need for spares and identifies specific areas where maintenance is needed to prevent or minimise the risk of process downtime.

Regular oil analysis is used to check that rim or disk production lines are running smoothly and thermal-imaging cameras help to identify potential ‘hot spots’ where motorised equipment is in constant

Leadership and Lean

use or at risk of overheating. In some instances, the analysis of each site’s maintenance requirements has led to capital investment in new equipment or parts. At GKN Wheels Italy, for example, specific issues relating to the plant’s electrical supply led to investment in new electrical cabinets to minimise the risk downtime caused by outages.

To get the most out of production processes, the central engineering source also gets involved in a variety of one-off productivity improvement projects. This can involve re-laying out a process area to achieve a more efficient product flow, line balancing or looking at new technologies. A recent development within GKN’s OffHighway division has led to one of GKN Axles’ production lines moving to GKN Wheels Italy. Following a re-mapping exercise it was found that it was possible to direct more product through the automated welding system, thus streamlining the process and bringing significant productivity benefits.

A global perspective As well as running site-specific local events, global changeover events are organised regularly to share best practice by improving process flow. These events involve getting together a selected group of individuals from across the business to complete a quick changeover on a selected key piece of equipment. These events are not restricted to GKN Wheels and from time to time they are organised with representatives from other GKN divisions.

Practising changeovers helps to improve setup times, therefore reducing inventory and adding flexibility in production planning. In the US, a global changeover event recently took place to test how long it would take to set up and dismantle expander blocks which are used to stretch the metal part.

Each block was removed and set by hand, which contributed to significant downtime during process changeovers, which had been taking just under two hours. By using an automated device, which had been tried and tested at GKN Wheels Denmark, the event team established that it was possible to reduce the changeover time to just 14 minutes – a reduction of 87%.

In 2008, GKN Wheels became the first business owned by GKN plc to trial ‘SharePoint’ — a bespoke intranet that aims to drive continuous improvement across its global operations by facilitating information-sharing. According to Will Logsdail, IT/PCIL director at GKN Wheels, SharePoint has transformed the way that the business shares documents by providing an ‘ITsupported backbone’ to help engage collaborative teams and drive business improvements.

The intranet site’s content is controlled and managed by managers in all areas of the business, from finance and health and safety managers to the central engineering source and production.

One of the most popular areas of the site is the new video library, which has already accumulated

approximately 100 mini-films of production lines and specific pieces of equipment in use. Creating a visual archive, which production managers and engineers can consult, has allowed companies to compare technologies and apply them locally. In particular, there have already been examples of sites adopting tried and tested handling aids for heavy steel parts, such as hooks and lifting devices.

Of course, another advantage of using video in this way is that it eradicates language barriers, which is particularly helpful when working with engineers in different parts of the world, especially in China where Mandarin is the first language.

Sharing is the key The modern engineer has arguably never had a more critical or varied role to play in driving business performance and delivering value. For a central source engineer at GKN Wheels, this can mean initiating everything from a value stream mapping exercise; organising a global changeover event; assessing the need for capital investment to getting out a camcorder to film an updated process line.

For global manufacturing businesses, the ability to extend commonality at the same time as sponsoring improvements is crucial to driving business performance. Knowledge-sharing, both within GKN Wheels and with other GKN businesses, is the key. end

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Leadership and lean

The story of the steel wheel Celebrating 100 years of steel wheel production at GKN Wheels One hundred years ago, GKN Wheels — known then as Joseph Sankey & Sons Ltd or ‘Sankeys’ — patented and produced the first pressed steel wheel. Originally manufactured for use in motor cars, this was a significant engineering breakthrough, made possible by technological advances in the production of high quality steel alloys and rolling systems.

In 1906, under the guidance of George and Frederick Sankey and the chairmanship of the company’s founder John Sankey, Sankeys entered an exclusive agreement with Hadfield Steel Foundry Company of Sheffield to obtain supplies of its special electrical steel, known as ‘stalloy’. A few years later, Sankeys obtained permission for one of its suppliers, John Lysaght & Co, to roll steel sheets under Hadfield’s patent in the Black Country and further supplies of raw steel were secured for this purpose from north Wales. Through these arrangements, Sankeys gained greater control over the supply and quality of the raw materials needed to produce the first engineered steel wheel.

In 1908, Sankeys developed and patented the first pressed and welded, detachable motor car wheel, known as the ‘All Steel Wheel’. But it was not until June 1910 that the wheel went into production at the Hadley Castle Works in Telford — the home of GKN Wheels today.

24

Learn more at www.gkn-offhighway.com

The steel supply arrangement between Sankeys and Lysaghts was further strengthened in 1920.

The companies merged and Sankeys became a subsidiary of Lysaghts, itself a subsidiary of GKN. The Sankeys brand name was retained.

During the 1920s, the Hadley Castle Works experienced financial difficulties due to unpaid orders and by trading with car manufacturers who were struggling to sell what were seen as luxury products. However, conditions improved during the 1930s and Sankeys installed three new rim-making machines at the plant as part of a move to maintain its leading position as supplier of components to the automotive industry.

In 1939, the wheel department was further extended and was in heavy use during the Second World War, fulfilling government orders for aerospace and other components. Much of the production took place at a new plant in Albert Street. At around this time, Sankeys was also producing heavy wheels for army vehicles, forerunners of the off-highway wheels manufactured today.

After the war, a new wheel shop was built at the Hadley Castle Works, and this was extended significantly in the 1950s. In 1961, the GKN Board approved a £3.5 million capital investment at the site for the production of road wheels for cars, trucks, buses and tractors, as well as for cabs for Leyland.

In 1968, Joseph Sankey & Sons Ltd became known as GKN Sankey Ltd and in 1972, the company took over manufacture of earthmover and heavy wheels from Dunlop, while Dunlop took over Sankey car wheels production. By the 1970s, the Hadley Castle Works had replaced the Albert Street Works as the centre of manufacturing operations and GKN’s off-highway wheel production was officially born. end

Specialfeature Kingston Smith LLP

Quarterly tax update â&#x20AC;&#x201C; January 2010 As it is likely that there have been a number of changes to tax that will affect manufacturers in the Pre-Budget Report, Maureen Penfold, head of manufacturing at Kingston Smith LLP, discusses the impact of these in her companyâ&#x20AC;&#x2122;s quarterly report.

VAT changes afoot The ending of the reduction in the VAT rate on 1 January 2010 came as no surprise, given that this was always understood to be a temporary measure.

However, in addition a number of other important changes to the VAT system came into effect on the same date. These changes apply to supplies made between EU member states, and can effect the liability to VAT on cross border supplies â&#x20AC;&#x201D; as well as administration of VAT compliance.

Any changes in the Pre Budget Report on 9 December 2009 will now be known, but at the time of writing were not. Nonetheless, it is almost certain that the VAT rate will have reverted to 17.5%, following the 2.5% cut in the standard rate that had been in force for the past 13 months. The original cut in the standard rate caused some confusion among businesses, and the reversion will again be an administrative headache for some.

The rate of VAT charged depends on the date when the goods or services are supplied. For VAT purposes, this means the date on which the goods physically change hands (or a service is completed) or the date an invoice is issued, or the date payment is received, whichever is the earlier. From 1 January 2010, businesses should still use the old rate of 15% if they have provided goods or services before 15 December 2009, or if they have been paid before 1 January 2010 but have not raised an invoice within 14 days.

Cross-border supplies On 1 January 2010, changes to VAT rules came into force that intended to simplify cross-border supplies of services and recovery of input tax. The change will mean that in business-to-business transactions the services are supplied where the customer is established, with the customer accounting for VAT under the reverse charge procedure. Intra EU business-to-consumer supplies will be subject to VAT in the country of the supplier as they are currently.

In addition to these changes, any business that makes supplies of services to a business customer in another EU state will need to report those supplies to HMRC, usually on a quarterly basis but they can be

monthly or annual by agreement. These reports need to be made within 21 days of the quarter or month end. Business that are currently receiving services from suppliers in other EU states should consider carefully the nature of those supplies to determine whether they should be subject to VAT in the UK through the reverse charge procedure.

Likewise, any business making supplies of services to customers outside the UK should not charge UK VAT if it is on the list of supplies such

[On VAT] The original cut in the standard rate caused some confusion among businesses, and the reversion will again be an administrative headache for some Maureen Penfold, Kingston Smith LLP

as engineering. Also, they should consider whether their systems will allow the supplies to be identified sufficiently quickly and accurately for the purposes of the new reporting requirements.

EU VAT refund procedure A new electronic VAT refund procedure has been introduced throughout the European Union (EU), with effect from 1 January 2010, and replacing the old paper-based system. UK businesses will thus need to submit any claim for VAT incurred in other EU countries on a standard form through the UK Government Gateway, rather than direct to the relevant member state. This is expected to simplify and speed up the process of obtaining cross border VAT refunds.

While the change in VAT rate is clearly the headline issue in connection with VAT, a number of other changes have occurred on 1 January 2010, or will take place in the near future. Businesses should ensure that their systems can cope with these changes. end

Have your say at www.themanufacturer.com

25

The rise of the

Dassault Systemes DELMIA simulates robot operation for wing manufacture

vir tual factory Costly product flow reconfigurations 0; Virtual factories 1. Manufacturing process simulation is saving companies thousands of pounds. And software vendors are integrating CAD to product simulation, to test multiple physical stress scenarios, reducing costly prototype tests.

Malcolm Wheatley reports on a convincing scoreline.

At

Airbus’ factory in Filton, a decision to replace a machining line with a Flexible Manufacturing System (FMS) in 2009 posed some awkward questions. Machining pre formed metal billets of aluminium, titanium or steel shipped in from external suppliers, the line typically took up to 15 hours to finish a given part — having in the process removed as much as 90% of the metal originally contained in the billet.

Replacing individual CNC machines with an FMS made obvious sense, as did replacing the heavily manual machine loading and unloading processes with a rail guided modular multi level pallet loading transport system.

In effect a robotic crane going back and forth between the machines, it would collect billets — loaded into carriers called ‘cubes’ — from an interprocess storage facility, place them into the FMS, and then return them to the storage facility’s storage racks after the completion of each operation.

26

But how many storage racks would be required?

How many cubes would be needed? How many loading stations should there be? And what would be the most effective way to schedule the machining operations? The answers to such basic questions were far from clear.

But with the cubes costing £25,000 each, and storage racks more, guestimates could prove expensive if wrong. And insufficient storage space or poor scheduling could quickly transform a state of the art FMS installation into a productivitysapping bottleneck.

Virtual factories Enter Witness, a shopfloor simulation system from simulation specialists Lanner Group. The Airbus project team electronically ‘built’ an FMS inside Witness and equipped it with varying configurations of cubes, storage racks and loading stations.

“Witness was able to rapidly calculate over a 12hour shift how long each cube had been used for, the length of time that it was inside the machine, and then explore how this would work with over 115 different parts each with differing characteristics in their cycle times,” explains Airbus project leader Rui Furtado.

“Virtually running” the FMS with a wide variety of workloads, the project team was able to ensure that the FMS as finally installed was pre-configured for success — saving on costs, boosting productivity and achieving machine utilisation rates of between 80%-90%.

Increasingly manufacturing businesses are building such “virtual factories” in order to simulate the

Innovation design and the product lifecycle

workings of complex machining operations, assembly processes, and logistics flows. The logic: trial-anderror inside a computer is a great deal cheaper, and quicker, than trial-and-error in the real world.

“We’re heading for our best year ever,” says Lanner’s chief executive, David Jones. Similar success stories, he adds, can be seen at Honda’s Swindon car plant, and at Nissan’s Sunderland plant, where simulation boosted the output of an assembly line producing the popular Qashqai model.

“The simulation of factory processes and logistics flows is increasingly widespread,” says Tom Bianchi, Simulia marketing manager at Dassault Systèmes, which offers such a capability through its Delmia ‘virtual factory’ process simulation tool. “Being able to optimise workflow and layout saves space and speeds process times, as well as ensuring that ‘as-built’ working environments allow people to work safely.”

Dassault Systemes DELMIA Simulation of aircraft assembley

CAD adds simulation No wonder, perhaps, that analyst firm Gartner have listed simulation and optimisation software as one of their ‘Top 10’ strategic technologies for 2010. And little wonder too that a growing number of vendors are entering the market, offering a variety of pricepoints and levels of sophistication. Companies such as Simul8, ProModel and Visual8 all produce simulation solutions that have delivered benefits to blue-chip customers.

But ‘pure play’ simulation vendors are under threat: increasingly, CAD vendors are adding simulation capabilities to their products, recognising that product simulation — as opposed to process and layout simulation — is a bigger market. They see it is a market in which they already have a distinct advantage, as the platform on which a product design has already been digitally developed.

Staying with Dassault Systèmes, for instance, the Enovia data management product allows manufacturers to use the same digital data to both design a product in its 3D Catia tool and then take that data into its Simulia tool to look at the loads and stresses on as-designed components to see if they can withstand the rigours of their intended service life.

Then they model in detail the consequent assembly operations and the workings of the finished product.

“It’s about complex geometries where hand calculations are difficult to carry out,” says Geoff Haines, managing director of Oxfordshirebased Desktop Engineering, a Dassault reseller and business partner. “You can go to a much higher level of accuracy than you can with hand calculations, optimising the weight without the need for such a big ‘fudge factor’.” The result is products with improved manufacturability — and improved service life.

Autodesk, also a big player in the CAD market, is yet another vendor to have developed manufacturing simulation capabilities to augment its pure CAD product range.

You can go to a much higher level of accuracy than you can with hand calculations, optimising the weight without the need for such a big ‘fudge factor Geoff Haines, Desktop Engineering “Through acquisition and organic development, we’ve now got a wide variety of simulation offerings,” says Richard Blatcher, the company’s European industry marketing manager. “We cover the spectrum from product performance simulation right through to the simulation of factory processes and assembly operations.”

And in most of the engineering-intensive industries that the business serves, he notes, there’s a distinct trend for design engineers and manufacturing to work more closely together, increasing the push to use simulation at the design stage as a way of reducing bring-to-market timescales as well as boosting quality.

Autodesk’s Navisworks, for example, takes 3D CAD designs of components, products and even factory layouts, ‘building’ them to produce photorealistic visualisations for designers to optimise.

“Optimisation used to be expensive, and out of reach for small and medium-sized businesses,” Blatcher says. “Today’s generation of simulation software is more affordable and cost-effective than ever.”

And with manufacturers’ product development cycles continuing to shrink, and their development budgets under more pressure than ever, that has to be good news. end

Have your say at www.themanufacturer.com

27

Innovation design and the product lifecycle

CAD-simulation harmonies cut the need for expertise

Dassault Systemes SIMULIA simulates engine part stress

Once upon a time, manufacturers designed products and components, and subjected them to lengthy test programmes to see how they withstood the real world — and to establish if they worked as intended.

Then

came simulation software, which allowed a lot of that testing to be undertaken ‘virtually’. The only catch: the computing horsepower required to perform the task.

“You would design something, hand it over to a specialist team who would ‘mesh’ it and then run the analysis on a mainframe,” recalls Ian Pilkington, UK technical manager at software developer PTC. “And all you’d get back was a ‘yes’ or no’.”

No longer. Not only do today’s leading CAD vendors have an array of specialist simulation tools capable of handling anything from finite element analysis to computational fluid dynamics, but the tools are fully integrated with the CAD platform itself.

There’s no need to re-code a design’s parameters into a separate specialist piece of simulation software.

The data transfer takes place in real-time, seamlessly.

Better still, bolt-on third party applications come with the same level of in-built integration, providing manufacturers with competing options on price, easeof-use and more detailed functionality.

Stourbridge, West Midlands based Vee Bee Filtration, for example, uses computational fluid dynamics simulation software from Blue Ridge Numerics linked to the company’s PTC Pro/Engineer CAD system to develop cost effective filtration solutions designed around the specific needs of customers.

Previously, says Vee Bee research and development engineer Napoleon Motaban, the need for time consuming laboratory tests meant that the company could only offer a range of standard products. “Now, we’re able to run analyses and generate design models at the same time,” says Motaban. “The CFdesign software reads the 3D CAD model directly, and you don’t need to be an expert in computational fluid dynamics to use it.”

Simulation ‘lite’ for Dummies Many manufacturers, though, won’t need to stray far from their CAD vendor of choice to gain access to simulation solutions. And often at low cost, or even for free.

A version of PTC’s simulation structural and thermal properties software Mechanica, for example, is bundled with every licensed copy of Pro/Engineer Wildfire design platform that a manufacturer uses, explains PTC UK technical manager Ian Pilkington.

And while it’s only a ‘lite’ version, it’s still very usable, he stresses. “The only real limitation is the number of surfaces: there’s a limit of 200, but with 200 surfaces you can still model some fairly complex products and assemblies,” he says. Other fully integrated Pro/Engineer simulation tools cover plastic flows, human-product interactions and fatigue analysis, and often ‘lite’ versions are available for users upgrading to the latest versions.

SolidWorks — another Dassault Systèmes brand, which target among other markets smaller manufacturers with low-cost CAD and simulation solutions — pursues a similar strategy.

The CFdesign software reads the 3D CAD model directly, and you don’t need to be an expert in computational fluid dynamics to use it Napoleon Motaban, Vee Bee Many manufacturers’ needs will be met by the SolidWorks Simulation tool bundled-in with SolidWorks Premium, the company’s flagship product, which integrates a broad range of mechanical CAD, design validation, product data management, and CAD productivity tools in a single package. Even better, for users of the SolidWorks Standard and Professional offerings, SolidWorks SimulationXpress is a ‘lite’ offering providing the ability to do basic stress analysis on individual parts.

But SolidWorks also offers three other simulation offerings catering for special needs—such as flow simulation and exotic and non-metallic materials.

“A lot of designs are based on metal as the material, but metal works very predictably,” says Tony Eckersley, simulation manager for SolidWorks in the UK, Ireland and Northern Europe. “Plastics, rubber, or composites react very differently, calling for what we call non linear modelling.” You have to use the right tool for the right job—but the good news is that SolidWorks, as with other CAD vendors, already has that tool in its armoury. end

Have your say at www.themanufacturer.com

29

Defining

R&D What qualifies as research and development for tax purposes? The Government has taken a bit of stick this year for its handling of R&D tax credits claims, but there is little hard evidence that it tightened its rules.

Can business expect to get more clarity on this expensive but valuable tax credit process? Will Stirling asks.

A

superyacht can cost £1 million per metre to build, if you choose a reputable Northern European shipyard. As these luxury goods are mainly one-offs, calculating what constitutes R&D and what is real ‘production’ for tax purposes is somewhat tricky. Particularly if the yard builds a prototype hull that is used in the development of the final yacht’s hull, which at some point is sold to another customer. A yacht uses design, materials, sea trial time etc that are consumed in development (R&D), but if the prototype is sold, it is not really consumed and should not qualify for R&D tax relief. So says Her Majesty’s Customs and Revenue (HMRC).

Stuart Lisle, a tax partner at business advisers BDO LLP agrees with this definition – but it took he and his team 18 months to do so. They submitted a six-year claim for R&D on behalf his yacht builder client in March 2008 that has only just got satisfactory closure. “The company effectively uses the ‘first in class’ hull as their prototype, but this is always sold as it costs millions to build and fit out and it would be a waste of money to discard as a prototype.” The sold prototype, in the eyes of HMRC, is seen as the first production model, which – quite correctly – should not qualify as R&D. Another client, a yacht designer, builds highly accurate, costly scale models of yachts for tank testing. The development costs of these models do qualify for R&D. But for some the distinction has never been very clear cut. Formula One is another industry where there is frequent blurring between what counts as R&D and final production. “F1, shipbuilding, any area where large amounts of expensive materials go into something that is effectively being used commercially, does that then represent something that is consumed

30

in R&D?” says Lisle, who thinks where HMRC now draw the line is correct.

Bad press For many manufacturers R&D represents a big proportion of their costs. Think of pharmaceutical companies, aerospace, motorsport – some of the UK’s strongest manufacturing sectors. The Government introduced the R&D Tax Credit Scheme in 2002, amended in 2004, and it was hailed as a good scheme for business by trade organisations including EEF and the CBI. However, this year there has been much negative press about the application of the scheme, with numerous anecdotal stories of companies frustrated by HMRC in their attempts to claim what they saw as legitimate tax relief on R&D spending. These same trade bodies, with accountants, lobbied the Government in July to revise the scheme to bring clarity to their definitions of what constitutes real ‘R&D’, and what qualifies as ‘Production’.

The main contention concerned the definition of prototypes. “You’re producing a good, but it’s something that is up for trial and you might sell it to a customer for feedback,” says Jeegar Kakkad, senior economist at EEF. “It’s not the final product but somewhere in that trialling process the prototype does, or can, become the final product. So there is a very fine line about whether a good being sold is still in the R&D stage or it is actually finished.”

The body of anecdotal complaints was large enough to suppose that HMRC tightened its qualifying rules on R&D; where in previous years they had accepted, for example, late stage prototypes and other items in an advanced stage

Finance and professional services

of development, now they did not. There was a perceived clampdown. HMRC denies this, an official stating: “Further to articles in the press recently about a “change of practice” relating to the treatment of expenditure on production, HMRC’s view, and practice, on this has not changed.

Production expenditure is excluded from being R&D by the BIS Guidelines that define R&D for tax purposes.” Easy enough to say, but a manufacturer will understandably want to test those guidelines in grey areas such as prototypes. And, as Simon Broadbent, managing director of solid-liquid separation equipment manufacturer Broadbent says, how are they or the accountants expected to know?

“They are only bean counters and don’t necessarily know all the nuances of manufacturing. There has to be some give and take in applying the guidelines.”

Bending the rules This point – understanding the manufacturing business – is crucial. One point of view claims that some companies tried to stretch the rules by submitting ambitious claims for items which would never reasonably sit inside R&D. The other says in the past HMRC coughed up for such items and it has since closed the door under instruction from the Treasury as the volume of revenue flowing back to industry rose. Kakkad has had several discussions with HMRC, the Treasury and EEF members about the perceived changes. The problem he says lies in communication. “It’s not a change in the rules, in the guidelines or HMRC’s interpretations of the guidelines. The real problem is in the application of how they enforce those guidelines — taking a blanket approach to inspecting claims whereas they should have been a little more collaborative with businesses, working with them before and after claims are submitted to identity the offenders upfront rather than a taking blanket approach that punishes this kind of prototyping activity.”

Few would dispute the authority of the basic definition, which BDO’s Lisle supports, that R&D includes items and research consumed in the development of a product, but not a stage-good that is sold commercially in that process. But claiming an R&D tax credit is not a 10-minute operation. “HMRC is generally demanding a lot more convincing evidence to support an R&D claim and it is ultimately for the taxpayer to convince HMRC that the activities satisfy the tax definition of R&D,” says Maureen Penfold, senior tax partner at accountants Kingston Smith. That seems fair enough. But some companies may feel that they’ve done their due diligence, painstakingly completed the forms with all relevant details, followed the BIS guides on what qualify as R&D and still get knocked back.

Enough stories like this in circulation puts off smaller companies from claiming, or fuels the rumour that the system is broken.

Simon Broadbent who sits on EEF’s policy committee, says the onus is on you to claim properly

but adds “this whole issue is: because the rules are not so clearly defined, the distinction between pure research, research and development, innovation and production is blurred; one man’s production is another man’s pure research. From a business point of view we will put forward documents we think is eligible for R&D under our interpretation of the rules but a professional accountant will say I’ve seen this in three or four cases and they weren’t allowed, or “I don’t know - try it”.

Work to do Broadbent points out that it’s harder for smaller businesses to produce finely detailed claims when they don’t keep the records that large companies are obliged to, so when they hear of the scheme they cannot alwas capitalise on it adequately.

Overall, however, his experience with R&D claims has been positive and HMRC sent an inspector to oversee completion of their recent 2006/2007 tax credit claim, who was competent and thorough.

It effectively uses the ‘first in class’ hull as their prototype, but this is always sold as it costs millions to build and fit out and it would be a waste of money to discard as a prototype Stuart Lisle, BDO LLP One area where Broadbent (the company) would like to have been more successful is where its customer has incurred costs trying out a prototype but there is still no true sale. “We found when we’ve tried to test a prototype at a customer site, and they have costs, if we pay those costs sometimes they’re eligible and sometimes they’re not – there’s a blur about how prototypes are tested and how eligible you are for wriggling a tax rebate on it.” Broadbent applied for a claim like this a few years ago and it was knocked back.

Whether or not it consciously or deliberately tightened the rules on R&D credits this year or not, HMRC has listened to industry and plans to publish new, clearer rules on what constitutes R&D, with an emphasis on prototypes, in the early part of 2010. end

An expanded version of this article, including advice on completing R&D tax claims from accountants Kingston Smith, is available at: http://www.themanufacturer. com/uk/magazines/themanufacturer.html An article addressing HMRC’s role in handling the R&D tax credit scheme by BDO’s Stuart Lisle is at: http://www.bdo.uk.com/news/talk-shop/governmentbe-criticised-for-their-handling-of-the-r.html

31

Lord Mandelson meets a young student at Westminster Kingsway College during College’s Week, ahead of the launch of the strategy

SkillsforGrowth In November 2009, the Government released the latest National Skills Strategy which it says will provide Britain with the talents to take advantage of global opportunities in the economic recovery. Mark Young weighs up the reactions from some key industry commentators.

We

once had a pretty sturdy racehorse.

But we let it get fat and it fell. It is the only horse we’ve got so our only option is to pick it up, make it strong again, and try and turn it into the champion it was. The world has changed now though and horses need different diets than they used to if they are to be fighting fit. The problem is that we don’t have the right food for the horse and at the moment it doesn’t look like we know where to get it.

It is superfluous to point out that the horse is our economy and the food it needs (as ordained

32

by government) is skills in high tech, low carbon industries. Late last year business secretary Lord Peter Mandelson presented a new National Skills Strategy to Parliament called Skills for Growth, convinced that he is not ‘flogging a dead horse’.

“Investing in skills is a vital part of this Government’s growth plan for economic recovery,” said Mandelson. “We need to get skills policy right in a way that no government has fully done before.” Frustratingly for Labour, if they have got it right whether they’ll be around to reap the rewards is a separate question.

The complexity that surrounds government’s skills provision structure, with many different bodies seemingly duplicated in their purpose, has formed the basis for long standing criticism.

Chief among the measures in the new strategy is the discontinuation of 30 skills quangos.

It was a move roundly applauded by trade organisations. “The complexity at times has been quite confusing for many companies,” said Angela Coleshill, HR director of the Food and Drink Federation (FDF). “Employers have been crying out for simplification of the current confused and cluttered system,” added Steve Radley, director of policy at EEF, the manufacturers’ organisation and TM columnist.

People and skills

Consult with employers first?

But Coleshill has an industry peer who has something of a vested interest in this matter.

Jack Matthews, boss of the sector food and drink skills council Improve, agrees that “employers are bewildered by the sheer number of different bodies,” but he said announcing the number of organisations that will be cut infers that the authorities have already decided which specific agencies make up that number. If this is the case, the decision will have been made without the consultation of the employers who use skills agencies and some valuable services to UK businesses could potentially be lost.

“As the purpose of simplification is to make the system easier for employees and people seeking training to use, it should be done in full consultation with them, the customers,” said Matthews. “What we must get at the end of this process is a skills system which is fit for purpose to meet employers’ needs.”

Matthews was also critical of another element of the strategy, saying government has “missed a trick” in making funding for training reliant on the attainment of full qualifications.

“Full qualifications often involve training and learning in areas not directly relevant to the specific needs of a business,” he said. “With the new credit and unit-based Qualifications and Credit

Framework, there is now an opportunity to link funding directly to the attainment of specific skills.

This would make the system more efficient and would give employers better control over how their workforce develops skills.”

Regional approach not the best In a related measure, only qualifications approved by sector skills councils will qualify for public funding from 2011. This, unsurprisingly, struck a sweeter chord with Matthews. “As employer-facing bodies, sector skills councils are in the strongest position to judge whether vocational and work-based qualifications are fit for purpose to meet employers’ needs, so this is a very sensible step. It will help ensure that funds are directed where they are needed most.”

With the new credit and unit-based Qualifications and Credit Framework, there is now an opportunity to link funding directly to the attainment of specific skills Jack Matthews, Improve

Keymeasures Key measures from Skills for Growth strategy: Three-quarters of people should participate in higher education or complete an advanced apprenticeship or equivalent technician level course by the age of 30 Over 30 Government backed skills bodies face the axe A personal skills account will be set up for every adult in the UK which will provide info on colleges and courses; £5,000 skills vouchers will be provided for every adult with no GCSEs; A focus on previously identified key industry areas including advanced manufacturing, engineering and low carbon energy, backed by £100m to support 160,000 training places; The worst performing courses will be dropped; Employer input into training programmes will be sourced through a fifth competitive bidding round of the National Skills Academies programme.

An extra 35,000 apprenticeship places will be provided over the next two years; A thousand £1,000 grants will be provided for apprentices to progress into university

Some sector skills council may have to give way in the quango cull though, with the report suggesting that a review will be made of duplicated services across the 25 individual SSCs. It looks ominous for Regional Skills Partnerships too, with the report declaring their existence as separate factions to Regional Development Agencies obsolete.

The latter is a sentiment that is sure to find favour with EEF’s director of policy Steve Radley but he was less enthused about other areas which gave continued backing for and even widened the scope of Regional Development Agencies overall. He contends that a sector-led view “will most accurately reflect the needs of business,” as opposed to an approach based on locality.

As well as 35,000 extra apprenticeship places created over the next two years, apprenticeships will be given UCAS points to allow people that have completed the programme to continue into further education and there will be one thousand grants of £1,000 to ease the financial burden of this. These are the means toward the “clear vocational route from apprenticeship to technician to foundation degree and beyond” that Mandelson sees as integral to economic growth.

“We are pleased that the strategy has recommended provision of additional funding for apprentices, and the areas of the economy that can provide the most jobs, including for example the area of advanced manufacturing,” said the FDF’s Coleshill.

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People and skills

Linking targets to sector needs Despite the recent release of Skills for Growth, the danger posed to industry by a skills gap is a subject which continues to animate across sectors.

Apprenticeships that work George Kessler CBE is deputy chairman of Kesslers International, a mid-sized designer and manufacturer of merchandising point-of-sale and display goods.

He has long been a campaigner for effective vocational training as the key driver for British industry. Regarding apprenticeships, he reiterated Matthews’ point that the skills acquired through the programmes must be driven by employer demand.

“We value the drive for apprenticeships, providing it leads to useful Level 3 and 4 NVQs,” he said. “At Kesslers it is very easy to get day release arranged for staff to work on PC skills and anthropology, but not engineering or polymer science, which might actually be of benefit to the company.”

Kessler’s overall view of the strategy is that it is a “typical Mandelson document; well thought through, one that could make a real difference.”

But he has reservations about the lasting legacy of previous skills initiatives and strategies. Often the same people seen in previous skills strategies are redeployed to a new programme with a new job title, but does the delivery of appropriate skills to employers improve? “We must take care that we are not just repackaging the same strategies in different guises,” he said. Similarly, government and industry must learn from mistakes from the past. “For example, Training for Work a funding stream which provided out of work people with vocational skills based on up-to-date real market needs,” Kessler explains. “It looked like a good initiative and it began to work in practice. But the money ran out and that was the end of it. We need to put our full and continued support for the things that actually work.”

Kessler explains. “It looked like a good initiative and it began to work in practice. But the money ran out and it was ditched. We need to put our full and

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Have your say at www.themanufacturer.com

At a round table discussion hosted by EAL, who awards qualifications in the engineering and building sectors and is part of Semta, on December 8, representatives from organisations including Airbus, the UK Commission for Employment and Skills and SMMT, the car industry trade body, strongly felt this issue was far from closed.

The concerns raised in this article were reflected during this debate, with many, including shadow minister for vocational education John Hayes advocating a more sector-driven approach over a regional structure. Other concerns were that the targets set for increasing apprenticeships were not strategically linked to sector needs or the ability to deliver. Richard Morley, managing director of steel manufacturer CMB plc and chair of EEF’s Yorkshire and Humberside Regional Council , said “my anxiety centres on the expectation that SMEs will be able to absorb this increased demand. Skills for Growth is broadly encouraging with a good focus on advanced technical skills and knowledge but I am doubtful that the mechanisms to realise the ambitious targets are achievable. Increasing manufacturing in the UK means attracting manufacturers from overseas. They will clearly look for a strong skills base and so we must ensure that we can deliver”.

A further caveat to the widely optimistic response to Skills for Growth was expressed by attendees’ concerns that the White Paper had come too late in the day for the incumbent government.

With reference to the continuity of the strategy, Hayes said that while stability was desirable a Conservative government would undoubtedly make certain structural changes.

continued support for the things that actually work.”

The reaction to the new skills strategy is mainly positive but most commentators reserved a word of caution; skills provisions need to be married up to real employer needs. This was a view summarised by the CBI’s director of education and skills, Susan Anderson: “There are tough decisions ahead for the Government, but it is right to focus on delivering valuable skills such as science, technology and engineering, and high-skilled apprenticeships,” she said. “The real test for any new system will be whether it delivers the high-quality training and skills that firms and the economy actually needs.”

Making a horse a champion is a difficult thing.

It needs natural ability as well as hard work, determination, a good diet and the best training.

Government thinks with this skills strategy it has shortened the odds for UK business; whether we are indeed first to get our noses over the line or whether once again we take a tumble half way around we will have to wait and see. end

John Baxter, ENER-G John Baxter is an experienced engineer at sustainable power group ENER-G, responsible for testing, developing and installing combined heat and power (CHP) systems for mains gas, landfill sites and biogas projects.

He

has tested more than 300 CHP units for ENER-G, which has manufactured more than 1,400 systems at its Greater Manchester production site and headquarters. John was instrumental in the development of The Varifuel hybrid AFRC technology that has radically reduced nitrogen oxide and carbon monoxide emissions for customers including major supermarkets.

Other big projects John has been involved with include developing a Perkins Digital Load Controller, the best of its type currently available, as well as product improvement on small scale CHP systems.

“Engineering has always amazed me,” says John, 28. “For example our CHP units run at 1500 rpm, which means the flywheel is spinning at 25 times a second, so on a four-stroke cycle there is a combustion stroke 12.5 times per second, per cylinder. In other words, a 12 cylinder engine will produce 150 combustion strokes every second, which is completely mind-blowing.

“Then you come to remote monitoring control electronics, which is equally astonishing, even to an experienced engineer like me. I can use a laptop in real time, anywhere in the world, to look at a CHP unit in Torquay, compare data with a unit running in Toronto, then analyse the trends and historic data, which is an amazing feature.

“If working on projects that keep lights on and buildings warm, while also offering supply security and improved cost and carbon performance doesn’t excite you, then I don’t know what will.”

The units John works on in ENER-G’s test hall are often built to unique specifications and this frequently means delivering post-test support, usually over the phone, but sometimes through a site visit.

This process means John must not only know how to use the component, but provide support at the commissioning and operational stages. This support might be as simple as having a generator relay powered and ready, to bringing the supplier into the test hall to develop their product in line with the needs of ENER-G’s customer.

“The most fulfilling CV in brief – aspect of my work is John Baxter making the product easier to maintain Age: 28 and ultimately more reliable, and at the Employment: same time achieving Feb 2007 – present – test and more unit outputs development engineer at ENER-G Group plc, Salford, than the previous Greater Manchester. year. Recent growth 2005 – 2007 – senior electrical has been astounding. instrument technician at Mirrlees Each year presents Blackstone MAN B&W Diesels, new challenges and Stockport, Greater Manchester. that makes for a

2000 – 2005 – apprentice, rising stimulating, positive, to approved electrician and charge optimistic future, hand at Interserve Industrial where what we make Services, based at BP Chemicals, really does make a Hull and BNFL, Preston. difference,” adds John.

1998-2000 – Various “The product works training roles in the industrial hard in the field and engineering field. the customer gets a Education to date: green, money-saving

City & Guilds in Computer device that functions Aided Design. for over 10 years and City and Guilds 2391, Inspection can achieve upwards and Testing. of 80,000 hours

Electrical Installation, NVQ level 3. operational running time, which makes it Interests: all worthwhile.”

Rebuilding old generating sets Commenting on regardless of condition or age; reading; learning new skills; John’s work, Steven socialising Johnson, product and production manager for ENER-G Combined Power, says: “John lives and breathes engineering. He’s often the first person to arrive in the morning and the last to leave, yet he’s equally committed to the customer and develops strong, fruitful relationships. As a highly motivated employee and technically gifted professional, he’s an easy choice for a nomination as employee of the month.” end

Have your say at www.themanufacturer.com

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ITnews...

PLM

Ricardo adopts Windchill to manage global engineering processes The Product Development Company (PTC) announced that Ricardo, a provider of technology, product innovation, engineering solutions and strategic consulting to the world’s automotive industries, has adopted Windchill for its product lifecycle management.

Ricardo has implemented Windchill to manage all CAD data for its 4 primary CAD systems across the USA, UK, Czech Republic, Germany and China. It will be used on all design projects in need of redesign or refurbishment — whether the product is new or existing.

“Historically, when Ricardo first bought Pro/ENGINEER in the early 1990s, we were on one site in one country, as a relatively small company,” says Martin Hill, Vice President, Ricardo, Prague. “We are now 1600 people in several countries, and managing design information and communication becomes increasingly difficult without PLM. Implementing a common product development infrastructure based on Windchill will increase efficiency and

Industry surveys

Sustainability

Firms look to IT to restore strength

Autodesk Chooses SAP Carbon Impact On-Demand Solution

A majority (72%) of business executives say their organisations place greater value on IT functions today than they did before the economic crisis, according to the findings of a global study produced

by Accenture and the Economist Intelligence Unit (EIU).

Autodesk announced that it has chosen a Carbon Impact on-demand solution from SAP AG. Carbon Impact is designed to help companies measure, mitigate and monetise greenhouse gas emissions and other environmental impacts across its internal operations and supply chain.

Executives expect technology spending to increase in their organisation — either selectively (47%) or across the board (10%) in the next 12 months. Non-IT executives appear even more bullish than those directly responsible for IT, as 61% anticipate technology spending boosts.

“The results of the survey show that firms recognise the need to invest in technology to defend and accelerate their competitive position, even in difficult times, which has not always been the case in the past,” said Keith Haviland, Accenture’s Global Managing Director for Systems Integration Consulting. “The turmoil over the last 18 months has underscored the need for further flexibility and scalability to stay ahead in business and drive agile business change.”

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improve collaboration across disparate sites, ultimately helping us to shorten time to market and deliver higher quality products.”

“SAP Carbon Impact meets our near-term sustainability needs, and is also flexible enough to keep pace with changing dynamics and regulations,” said Emma Stewart, senior program lead for Autodesk’s sustainability initiative.

“Having researched other vendors in this space, we feel confident that the SAP software was the best choice, and more than meets our needs now and can grow with us as our sustainability needs increase,” she said.

IT in

manufacturing

Business Intelligence

Pernod Ricard Nordic standardises BI on WebFOCUS platform Having recently completed the acquisition of Sweden’s Vin & Spirit, premium spirits and wine company, Pernod Ricard Nordic, chose business intelligence provider, Information Builders, to standardise BI across their WebFOCUS platform.

In addition to standardising on the latest version of WebFOCUS, Pernod Ricard Nordic will rely on Information Builders Active Reports for a portable

Planning/scheduling software

BI platform, delivering interactive analytic applications to 85 users. The company will also roll out its intuitive Information Builders ad hoc reporting solution, InfoAssist, to 20 key users.

“The strength of Information Builders technology combined with their understanding of our business needs made them stand out among the crowd,” said Stefan Strandberg of

CAD

Network infrastructure

Preactor International announces sustained Q3 growth

SolidWorks and Westfield Sportscars cross the finish line

Preactor International announced a continuation of its sustained growth with strong sales figures for Q3 2009.

UK-based automaker Westfield Sportscars is using SolidWorks CAD software to pack 21st century automotive technology into a 50year-old body design, Dassault Systèmes announced.

Like for like sales figures show a 13% increase in sales over 2008, with Q3 itself showing a 17% increase over Q2 2009. While the total number of companies buying Preactor in Q3 is slightly lower than for Q3 of 2008, there has been a strong increase in revenues and consultancy figures during this quarter — up 300% for the latter.

Said Mike Novels, Preactor CEO: “These figures bear out two recent Manufacturing IT surveys which both identified that Production Planning and Scheduling solutions have been either the most heavily or second most heavily invested in area of technology in 2009. This is consistent with Preactor’s proven capabilities of providing a quick yet significant ROI with a minimum disruption to ongoing business.”

Pernod Ricard Nordic. “We knew they were the best partner to help us gain a single, comprehensive view of our business.”

Westfield used SolidWorks software to develop its recently unveiled Westfield Sport Turbo roadster. “Our challenge was to take a 50-year-old car and make it as modern as possible within the constraints of an older chassis design. We used SolidWorks for most of the design engineering work,” said Westfield Design Manager Ross Dickson.

“We re-created the chassis design in SolidWorks, then used it to try and modify a variety of parts and assemblies from other manufacturers. The results make us believe that we’re a step ahead of similar cars on the market.”

Qcom managing customer wireless network support for Psion Teklogix Technical outsourcing specialist, Qcom, has been appointed to manage customer wireless network pre and post-sales support for Psion Teklogix in the UK.

The three-year contract will see Qcom delivering a range of network infrastructure services for Psion Teklogix, global manufacturer of handheld and wireless network devices — including RF site surveys and the subsequent installations, configuration and staging, trouble-shooting services and on-site support across its hardware and network infrastructure.

Paul Westmoreland, managing director of Psion Teklogix, says: “Qcom is non-competing and has the bandwidth to support us. The team is professional, and offers both a great service and flexible approach. We’ve worked with Qcom in the past, so were very comfortable approaching them for this project.”

Have your say at www.themanufacturer.com

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IT in

manufacturing

ITnews...

CAD

Direct route from CAD model to NC programme OPEN MIND has released its hyperMILL 2009.2 with CAD-integrated solutions for Autodesk Inventor 2010, SolidWorks, thinkdesign and its own hyperCAD package.

The system, launched at EMO 2009, can be accessed directly using the hyperMILL button, and is available via the user’s familiar CAD interface.

Furthermore, data import issues and read/write errors can be avoided as both the CAD and CAM systems have access to the same data model.

It is possible to switch between the

CAD and CAM systems at any time.

If changes are made to the CAD data, all defined CAM operations are updated automatically.

In addition to the solutions for Autodesk Inventor, hyperMILL integrations into thinkdesign and OPEN MIND’s hyperCAD are also available. Specifically adapted to the user interface of the respective CAD software, all integrations combine an array of machining strategies and optimisation functions offered by hyperMILL. Direct interfaces also allow seamless data imports from CATIA V4 and CATIA V5, Pro/ENGINEER, NX (Unigraphics),

Hospital information systems

Parasolid and SolidWorks. Common standard interfaces such as IGES, STEP or STL are also available for exchanging data.

ERP

Companies address IT solutions for healthcare

Epicor Shared Benefits Pragramme introduced

Siemens Healthcare and SAP AG signed an agreement whereby SAP will resell in selected target markets the Siemens Healthcare hospital information system (HIS) i.s.h.med.

Epicor Software Corporation introduced the Shared Benefits pragramme, its latest initiative aimed at helping companies eliminate risk and avoid excessive cost overruns that can plague enterprise resource planning (ERP) system deployments.

The reseller agreement, which expands the already existing relationship between Siemens and SAP in the healthcare IT market, enables healthcare providers to seek out comprehensive, efficiency-building software solutions all from one source. Healthcare providers will have simplified access to innovative information systems that link administrative and controlling functions such as billing; human resources; patient management; and business intelligence (BI) with clinical processes, thereby helping customers profit from greater efficiencies and enhance enterprise customer and employee satisfaction by leveraging enterprise resource management software from SAP. “Siemens and SAP remain focused on not only developing innovative technologies for our customers, but on creating partnerships that help streamline customers’ access to those technologies,” said Janet Dillione, CEO, Health Services, Siemens Healthcare.

“With this new reseller agreement and via SAP’s presence in key target markets, together we can help deliver a comprehensive range of solutions that contribute towards improved healthcare worldwide.”

Given that ERP is a strategic and all encompassing business application, failure to deploy in a timely and cost effective manner has been known to significantly disrupt companies’ operations. Epicor’s Shared Benefits pragramme thus establishes a partnership where Epicor and its customers equally share in the risks and rewards of the ERP implementation project.

“The ERP industry as a whole is notorious for endless implementation cycles and excessive deployment costs,” said George Klaus, chairman, president and CEO for Epicor. “Ten years ago Epicor set out to change this paradigm and lower the costs of ERP implementation through our 1:1 guarantee initiative. Today, we’re offering our customers even more compelling ways to mitigate deployment risks and improve ROI with our Shared Benefits pragramme, where customers and Epicor share equally in project outcomes.”

Have your say at www.themanufacturer.com

39

Institutionalexcellence The Institute for Manufacturing was established in 1998 to provide a collaborative environment for the creation and transfer of ideas, research and holistic approaches to modern industrial realities. A decade on, TM’s Edward Machin discovers an institution at the forefront of global manufacturing practices, and with a new low carbon building to boot.

Cambridge

University.

The Night Climbers; punting on the Cam; ferociously bright young things pouring over Darwin, Dickens, Dworkin and de Beauvoir. So far, so clichéd. Yet it would not be churlish to suggest that industrial sustainability, lean and production processes aren’t readily associated with the quads and colleges of the second oldest university in the English-speaking world.

Nonetheless, the Institute for Manufacturing (IfM), affiliated with Cambridge University’s Department of Engineering, represents one of the UK’s pre-eminent centres for tackling industrial challenges within our sector. Not only does it offer Knowledge Transfer Partnerships, undergraduate,

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postgraduate, and research — MPhil and PHD — degrees, but brings together expertise in management, economics and technology to address the full spectrum of manufacturing issues on a consultancy basis.

Design management; industrial photonics; sustainability; international manufacturing; strategy and performance; high value production; supply chain network configuration — the IfM deals with each of these, and more. However, such breadth of expertise is combined within a unique structure.

For example, the IfM is the only academic institution in the field to integrate research and education with practical application in industry. Research is thus undertaken in close collaboration with companies,

Specialfeature The Institute for Manufacturing

Mike Gregory Head of IfM

Mike Gregory is head of the manufacturing and management division of the University Engineering Department and of the Institute for Manufacturing (IfM).

Following an early career in industry, Gregory was a founder member of the team which established the Manufacturing Engineering Tripos — a senior undergraduate programme covering marketing, design, production, and distribution and service. Subsequent developments in research and industrial engagement reflected this broad view of manufacturing, and ultimately led to the establishment of the IfM in 1998.

Gregory’s work continues to be closely linked with industry and government, and has published in the areas of manufacturing strategy, technology management, international manufacturing and manufacturing

ensuring its relevance to industrial needs and providing a rapid dissemination route for new ideas.

Ultimately, the IfM’s broad expertise and integrated approach underpins its role in supporting industrial innovation and contributing to the debate on manufacturing’s position in a successful economy — enabled by, says head of IfM, Mike Gregory: “An integrated community of academics, students and industrialists with a shared passion for modern manufacturing.”

Working with the IfM The Institute’s way of working with companies and governments is noticeably distinct from conventional consultancy. As such, IfM’s practitioners work collaboratively with company and government teams and focus on transferring knowledge — as well as delivering business results.

The practitioners form an integral part of the IfM, with the approaches used based on many years of research, together with extensive application in industry. Close involvement of client personnel is required, enabling the transfer of knowledge and expertise to the client. For example: Large companies – Projects include the design of global manufacturing/supply networks, helping companies to develop strategies and capabilities to execute servicebased business models, and enhancing the management of innovation and technology.

Smaller companies – A specialist team of Industrial Fellows is involved with small and mediumsized manufacturers. They work with each company to understand its strengths and weaknesses, prioritise improvement opportunities and to introduce improvements. Typical projects include developing and implementing new business strategies, enhancing new product development capabilities and improving the performance of supply and production capabilities

policy. Moreover, he directs — with senior colleagues — the Institute’s EPSRC Innovative Manufacturing Research Centre.

External activities include membership of various government and institutional committees: chairmanship of the general engineering panel of the 2001 Research Assessment Exercise, among others. Gregory served as executive director of the Cambridge MIT Institute from 2005-2008, and is currently Springer Visiting Professor at UC Berkeley. He also chairs the UK Manufacturing Professors Forum and is a member of the UK Government’s Ministerial Advisory Group on Manufacturing.

Public sector – Projects include developing and implementing industrial and technological strategies, enhancing new service offerings and developing delivery capabilities.

Business Support & Economic Development Agencies – Projects include business improvement tools, education, mentoring and information systems to help agencies to serve the needs of manufacturing SMEs more effectively.

In-company education – The IfM runs a number of customised, in-company education programmes.

These cover a wide range of topics, including strategy for manufacturers, innovation and technology management, and operations management, to name but three.

Calling manufacturers Are you a manufacturer with 10-250 employees?

Are you worried about falling revenues, shrinking margins, rising competition? Do you need independent support designed for SMEs, provided by experienced advisers?

The Manufacturing Transformation Programme (MTP) offers practical, on-site, structured assistance for manufacturing companies who want to achieve greater competitiveness and sustainable, long-term growth. The tools and approaches have been developed by the University of Cambridge Institute for Manufacturing, and are specifically designed for small and medium-sized manufacturing companies. Crucially, a limited number of fully funded places are available for eligible SMEs.

What is involved?

The programme is delivered in three stages spread over several months, typically requiring a total of 6 days of management team time:

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Special feature The Institute for Manufacturing

Stage 1 Stage 2

(half-day) provides an assessment of the near-term issues facing the business

(one and a half days) delivers an indepth assessment of your business to identify where problems exist, prioritisation to focus efforts on the most critical areas and an action plan to bring about lasting, sustainable improvements

Stage 3

(up to four days) involves structured workshops to re-formulate your business strategy, if required, workshops to improve your New Product Introduction performance, or consultancy to strengthen areas identified in Stage 2 as being of critical urgency, such as Delivery performance, Supply management or Quality.

Stage 1 is typically delivered by online questionnaire and interview with the managing director.

Subsequent stages involve onsite interviews and structured workshops conducted with the firm’s management team. All firms on the programme will complete Stages 1 and 2 — progression to Stage 3 will be by mutual agreement of the SME management team and the IfM practitioner.

Who is eligible?

The programme is government-funded, and free places are available for a limited number of companies with 10 to 250 employees based in the six counties of the Eastern of England region.

For more details visit www.ifm.eng.cam.ac.uk/ working/consultancy/sme/

An executive course for industry

A new home

The new IfM Alan Reece Building on the University’s West Cambridge Site was officially handed over on 16 March 2009 — to programme and within budget.

The 4,400m2 structure is named after Dr Alan Reece, whose £5m donation provided the funds needed to complete construction. Dr Reece, founder of Pearson Engineering Ltd, has a long and distinguished involvement in manufacturing, both as an academic and an industrialist. A further £5m donation came from the Gatsby Charitable Foundation.

Environmental considerations were a significant consideration in the design of the building, which is heated by a biomass boiler and features a large amount of natural materials. The design takes advantage of a sloping site to provide well-proportioned social and working spaces, which are all readily accessible from the core circulation space.

“This facility is designed to be a place of collaboration,” says Prof Mike Gregory. “People are realising that manufacturing is not just about efficient processes required in making things — in food and drink, pharmaceutical, engineering, automotive, aerospace etc, which are very important — but how this is integrated, and how manufacturing and services support one another.”

With sponsors including ABB; Ford; GKN; GlaxoSmithKline; ICI; IMI; Rolls Royce; and Scottish Power, The Manufacturing Leaders Programme is a two year, part-time Masters degree course. It is designed for experienced managers identified as having the potential for leadership positions at a level where a total business perspective is critical for success.

The programme centers on transformation and equips managers to become leaders who, in turn, will transform their organisations. Key elements include (i) developing an understanding of manufacturing industry as a business (ii) developing leadership competence and (iii) practical in-company application of knowledge and insights Central to the programme are the in-company projects. An initial business audit leads to a strategic development project, and a major thesis enables an in-depth study of an area of interest to the individual and the company. The projects are supported by three residential modules in Cambridge University, each of three weeks duration — there is also an international study tour.

The primary focus of each of the modules is as follows: Module 1 – delivering operational excellence Module 2 – developing and implementing strategy Module 3 – international study tour Module 4 – the international and corporate context The programme content is delivered by subject specialists selected from Cambridge University staff, visiting academics, industrialists and consultants.

Successful completion of the programme leads to the award of a Cambridge University postgraduate degree of Master of Studies in Manufacturing. end

For more details visit www.ifm.eng.cam.ac.uk

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Manufacturinginaction Sponsored by TBM Consulting Group

Putting UK manufacturers under the spotlight

Schmitz Cargobull In for the long haul

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Schmitz Cargobull discuss the impact of the r ecession on production and the future aspirations of the UK division of the company.

Saint-Gobain Glass A clear way forward

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TM discovers that it is the way in which they engage with the environment that sets Saint-Gobain Glass apart.

Instron

No fatigue for Instron

54

Instron is a world class manufacturer of testing instruments and systems that has recently diversified into the biomedical market.

Oclaro

Laser precision

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Oclaro, formed by the merger of Avanex and Bookham, the process has been one of growth, innovation and improved product performance.

All companies featured will be entered into the MIA Award 2010

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In for the

longhaul Schmitz Cargobull (UK) is a subsidiary company of the Germanowned Schmitz Cargobull Group, the leading manufacturer and supplier of semi-trailers in Europe. TM discusses with Tom Macallan, Managing Director (UK), about the impact of the recession on production and the future aspirations of the UK division of the company.

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Trailers

Schmitz Cargobull (UK) Although trading conditions remain difficult and the economic outlook is uncertain, Macallan expects the company to continue to grow its share of the UK reefer and curtainsider market.

The company has set its sights on achieving a 40% share of the UK curtainsider trailer business by 2013 while at the same time consolidating its position as the UK and Ireland’s leading supplier of reefers.

“We believe that we will achieve our sales targets by producing a comprehensive range of trailers with the lowest running costs, manufactured in an ultra-efficient production facility and backed up by the most complete service and after sales support operation offered by any trailer manufacturer,” says Macallan.

While Schmitz Cargobull operates a Kanban system in the UK, the implementation of the multi-production line means that the system has to be flexible. We operate what we call a ‘breathing Kanban system’ which enables us to make model by model adjustments Paul Avery, general manager – operations

The

Group has manufacturing plants in Germany, Spain, Lithuania and Great Britain.

The UK factory is situated in County Durham, and a range of refrigerated (reefer), dry freight and curtainsided semi-trailers are developed and produced there.

In 2008 and 2009, approximately 17% of all the curtainsider trailers sold in the UK and Ireland were Schmitz Cargobull products. In the refrigerated trailer sector, where Schmitz Cargobull has always been strong, the company had a market share in the region of 40% during the same period

The recession and the resulting reduction in demand for new trailers presented Schmitz Cargobull with the opportunity to redesign its UK manufacturing plant without any adverse impact on order delivery times. As a result, a multi-product trailer production line – which allows both curtainsider and refrigerated trailers to be built simultaneously – was built and became fully operational at the County Durham factory in Spring of 2009.

Before the changes to the production facility, Schmitz Cargobull had operated two separate factories at the County Durham site - each producing a single product range: refrigerated trailers and curtainsiders. The new production line enables six different trailer ranges to be built on a single world class line and is achieving higher throughputs than had previously been possible using individual refrigeration and curtainsider sites. In fact, output capacity at the factory has effectively been doubled.

Not only has the new line enabled Schmitz Cargobull to dramatically expand the range and type of trailers that it builds in the UK for the UK and Irish markets, but the vehicles are now being produced more time and cost efficiently than ever before.

For example, TAKT time – the rate at which the production line moves and, therefore, the time it takes for a finished trailer to be built – is down from 75 to 55 minutes.

By the end of 2009 this figure is expected to have fallen further to 44 minutes. This means that the total capacity of the new factory will be 9,400 units per annum.

Reduced energy costs and cuts in other overheads have enabled overall production savings of around 30% to be achieved.

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Trailers

Schmitz Cargobull (UK)

The efficiencies mean that Schmitz Cargobull has been able to maintain its trailer pricing levels despite the significant increases in raw materials costs, which, coupled with the impact of Sterling’s performance in the global currency exchange markets, have seen the list price of other European manufacturers’ products rise in recent months.

The changes to the factory also allow Schmitz Cargobull to build products in the UK for markets where, historically, it has not been strong.

In all six different trailer products are currently being manufactured in the UK. As well as the three curtainsider models, refrigerated vehicle and dry freight model, for which Schmitz Cargobull is best known in the UK and Ireland, the company now makes rigid box units. ”It is far more viable to produce trailers on a shared assembly line rather than on their own dedicated facility,” explains Paul Avery, Schmitz Cargobull (UK) Ltd’s General Manager – Operations. “Refrigerated trailers are now built by the same workers in almost the same time as it takes to build a curtainsider which means we have been able to reduce the labour required while maintaining – if not, in fact, improving – build quality.

“The multi-product line also means that if there is a problem with component supply, we simply switch to building another model – so there is no downtime.”

In terms of the production process, the company follows the Schmitz Cargobull Production System (SPS) which was developed in accordance with the Toyota Production System and with assistance from Toyota consultants. “We follow this common SPS and each of the factories within the group is measured on their SPS performance and are effectively audited and put in to a league table.” While Schmitz Cargobull operates a Kanban system in the UK, the implementation of the multi-production line means that the system has to be flexible. “We operate what we call a ‘breathing Kanban system’ which enables us to make model by model adjustments,” explains Paul Avery.

The change in working processes has been embraced by staff at the factory, as Paul Avery explains: “The

staff are enjoying the variety that the chance to work on different types of trailers brings. The shortened TAKT times are, to a large degree, down to the way our workers have reacted to the new processes. In fact, all improvement activities are very much a company-wide effort.”

Paul Avery continues: “Our business is very focused on optimal performance and current productivity figures for the new line are exceeding all expectations. We recently reached and have maintained figures in excess of 110 per cent.”

Such is the design and layout of the production line that when trading conditions improve and output volume at the plant grows, the efficiencies will increase.

“Volume drives production efficiency. The higher the volumes, the more efficient we will become,” concludes Paul Avery.

The overwhelming majority of products built at Schmitz Cargobull’s Harelaw plant are produced using Schmitz Cargobull’s pioneering and patented bolted and galvanised production technique.

Essentially, the bolted and galvanised system removes the need for any welding and, therefore, results in consistently high product quality and greater production flexibility. The galvanising process – all parts of the chassis are galvanised before the build process takes place – ensures that there is no corrosion within the joint when two parts of the trailer are brought together. Schmitz Cargobull offers a 10 year anti-corrosion warranty on the Galvanised chassis as standard.

Tom Macallan expects the trailer business to continue to be tough in the short to medium term. “However, “he says, “as a result of the changes we have been able to introduce at our factory, we are ideally placed to capitalise when market conditions recover.” end

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A clear way

forward

Saint-Gobain Glass UK is a member of one of the world’s foremost flat glass manufacturing groups and produces some of the most innovative products in their field. However it is the transparency in which they engage with the environment and interact with their employees that is simple, yet staggeringly brilliant. Tim Brown talks to operations director Steve Severs and health, safety, hr, environment and quality manager, Paul Frankish.

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Saint-Gobain Glass UK officially opened the group’s first float glass manufacturing plant in the UK in April 2000. Near Selby, North Yorkshire, the 650-tonne-per-day process plant is strategically located to manufacture and supply the UK and Ireland. Globally the Flat Glass Division of Saint-Gobain is firmly established and proactive in Europe and South America and is now strengthening its presence in Asia. Its industrial capacity makes it the leading manufacturer of flat glass in Western Europe and a front runner worldwide.

“We are part of Saint-Gobain Glass within the Innovative Materials sector, one of three divisions within the global entity (along with Building Distribution and Construction Products) that constitute the French Saint-Gobain” says Steve Severs. “It is one of the 20

Innovative products Saint Gobain Glass

biggest industrial companies in France and one of the biggest 100 in the world in terms of employees and turnover.

Flat Glass accounts for about 22% of Saint Gobain turnover globally.”

An important part of the success of Saint-Gobain Glass UK has involved the company’s approach to innovation and continuous improvement (CI). The implementation of a raft of different CI schemes has seen the company successfully navigate the economic downturn and initiate improvements in waste management, resource efficiency, employee attendance and overall productivity.

As a part of the parent company, Saint-Gobain Glass also runs a structured World Class Manufacturing programme sharing best practice techniques and targeted improvement levels across the plants in order to assist one another and drive efficiency. “We are an intensive user of gas and electrical energy,” says Severs. “So our energy consumption has been subject to the global improvement approach along with a drive to increase the use of recycled glass (cullet) such that we have reduced our energy consumption from 2008 levels by 6% to a level 5% lower than our suggested optimum consumption.”

“At the site level, everyone at Saint-Gobain Glass UK is involved with continuous improvement initiatives,” says Severs. Neither the inclusion of these programs nor the means by which they encourage participation are revolutionary but they have proved very effective.

The company has engaged heavily with training and empowerment of employees to expand their core role.

This has included the training of eight staff in 6 sigma problem solving methodology, who run problem solving analyses. These ‘Green Belts’ work with a variety of teams made up of members from across the site across including operators through to sector experts and management. “That idea has given quite a wide range of people exposure to what has proven to be a very effective problem solving initiative,” says Severs.

Saint-Gobain Glass UK has also invested in Lean training. To this end, the first 28 employees that completed their training had to find a project with a target of each saving at least £1000.

According to Severs, this program was extremely successful with the average

saving garnered so far being well over the benchmark figure. “These are operators that are working predominantly alone and doing their own investigation armed and charged with the Lean knowledge and training.”

Paul Frankish says that the company also utilises a more formal Kaizan program which has tackled wider problems such as optimising material flow and movement.

This program involves removing people from their daily role and allocating them to teams to solve a particular problem which, once solved, will be incorporated across the site.

“Once the issue had been successfully amended,” says Frankish, “We make up a flyer and post it throughout our premises to demonstrate how successful the program has been with publicity concentrated upon high achieving areas with notable success.”

In addition the company runs an employee suggestion scheme called ‘My Contribution’, which is an IT based scheme so that suggestions can be effectively tracked.

“We made it clear from the outset that it would be ‘My Contribution’ and not ‘My Idea’” says Severs, “because we wanted people to take ownership of their ideas rather than simply making a suggestion. We have provided incentives to encourage interaction with this initiative such as a cash incentive to the contribution that we feel has had the greatest impact.”

These are operators that are working alone and doing their own investigation armed and charged with the Lean knowledge and training The offering of incentives at Saint-Gobain has proven to be very effective in encouraging employees to participate in helping improve the company’s operations. The initiatives range in scale and immediacy from an initiative called ‘Food For Thought’, where employees can obtain a free canteen voucher for making a good suggestion to the ‘Skywalk Competition’ which involves the awarding of an annual overseas holiday. The latter competition requires amongst other things, involvement in ‘My Contribution’ and a perfect attendance record and provides an all expenses paid trip to visit the Grand Canyon. The logic of the prize is that the Skywalk, which is a glass horse shoe that protrudes out 4000ft above the canyon floor, is made from SaintGobain Glass. According to Severs, this incentive has had a noticeable and impact on absentee levels across site.

The company’s productivity has clearly been successfully enhanced through a host of incentivised programs focused on efficiency and problem solving. However, it is Saint-Gobain’s approach to the environment that is perhaps most impressive.

Once again the company has achieved great results simply by effectively engaging with its workforce and clients through the simple offering of related incentives and training.

Saint-Gobain Glass UK introduced a waste initiative and has been nationally recognised for effectively educating their staff in the process. “We’ve done a fantastic job yearon-year reducing the total amount of waste going offsite,”

51

says Severs. “Now for every 10 tonnes of waste we reduce we plant a tree.” Impressively, between 2001 and 2009 Saint-Gobain has effected a reduction of waste going to landfill from 5000 tonnes a year to 750 tonnes per year.

“We’ve also introduced a play on words with this initiative introducing a waist initiative to encourage individuals to get healthy and lose weight. To do this we measure the waist, blood pressure and some other vitals of employees and, after six months, the employee that has improved the most receives a cash prize.”

To facilitate effective separation of recyclable waste, the company simply introduced colour coded bins. Prior to the collection of the waste, an audit is performed using a digital camera to record any waste cross-contamination. If any is found, the image of the contaminated recyclables is posted around the worksite along with the details of the added cost incurred due to having to add it to general waste.

“It is really simple stuff centring upon involvement and information of staff and ensuring we are providing them with a realistic system to be able to operate,” says Steve. “We entered the Times Top Green Company Award and came in the top 10 at our first attempt, also receiving a special recognition award for the quality of knowledge of the site staff responding to the survey. That surprised us because we just thought we were implementing very basic initiatives. In our opinion though, communication is key to inform why and what we are trying to achieve but you then also need to reinforce it, celebrate success and challenge when mistakes are made.”

It is really simple stuff but it is just about educating the workforce and providing them with the system to be able to operate The glass company also encourages their clients to recycle cullet and offers to collect material from customers.

The company has introduced a special system to help facilitate the recycling of its own glass products and offers the highest recycling payment rate in the flat glass industry.

“We take the waste back in specially adapted bags that sit on the same transport mechanism that we send the glass out on. So the transport for the waste is effectively free. We also provide a free bagging and frame mechanism to the client’s site and provide the clients with a strong price for the recyclable glass reflecting the gains we make when it requires less energy to re-melt it and promotes environmental benefits with reduced CO2 emissions. That initiative effectively runs itself with very few conformity issues.”

Saint-Gobain Glass UK is certainly a role model for other industries looking to improve their productivity as well as their relationship with their employees and the environment. By being just a little imaginative, the company has successfully implemented a wide range of programs which have benefited the company greatly and assisted it to remain competitive during this period of economic hardship. Looking to the future, Saint-Gobain Glass UK will undoubtedly remain focused on improving its operations and, with the backing of its staff, these improvements will inevitably continue. end

52

Edu The scientists and engineers of the future won’t just arrive on our doorsteps. St Gobain Glass UK believes it’s up to industry to fire youngsters’ imaginations with the thrill of making things.

For

nearly a decade, Saint Gobain Glass UK (SGGUK) has been working with schools and youngsters locally. It’s not just to maintain its standing in the community – although it takes that responsibility very seriously.

It’s also because it believes in opening young people’s minds to the excitement of science and technology and, by extension, to a career spent using them.

It is only too easy for young people to see manufacturing as boring, routine or, most damning of all, not cool. It exasperates MD Dr Alan McLenaghan: “We don’t have the media access other sectors have. We are often seen on TV as the bad guys or even the dull guys. Yet we have jobs that need high-level skills and intellect and offer great opportunities.” So McLenaghan and his team are committed to building bridges between local schools and their own operation. There’s undoubtedly some self-interest. By becoming a source of fun and stimulation, SGGUK is encouraging the glassmakers of the future. But equally, they want to find and foster a fascination for the subjects that are the bedrock of all manufacturing: science, technology, engineering and mathematics, otherwise known as STEM. For five years, SGGUK has been sponsoring STEM activities through North Yorkshire Business and Education

Innovative products Saint Gobain Glass

ucation is our business Partnership (NYBEP). NYBEP is part of a UK-wide network aimed at linking education with business to help young people develop skills they will use throughout their lives. The glass plant regularly hosts visits from local schools, over 200 students last year alone. But just as important is its participation in STEM Fairs. Run by NYBEP regularly across the region, they bring students into direct contact with local companies, each providing practical, fun experiments to illustrate key scientific principles and to show how they relate to the real world.

This year, the younger ones are exploring the principles of magnetism and the properties of ferrous metals through a game called Magic Magnets. They are also learning to understand light, angling mirrors to deflect laser beams to hit a target. After an introduction to different types of glass and their uses, the older ones are working in teams to design buildings to specification, choosing the right glass properties for the job and the budget. SGGUK’s own apprentices have not only made many of the games but are also running the workshops. It develops their skills too.

“The kids love it,” says engineering manager Mick Dickinson. “They are fighting to get a go. And they ask really interesting questions.”

For many youngsters, these fairs are probably their first chance to really explore science for themselves and it can be a turning point in their lives. “Parents don’t always realize the breadth and opportunities for young people working in big companies,” explains NYBEP’s James Curran. “STEM fairs help them find the hook. How many kids do you know who don’t enjoy learning through doing? STEM lends itself to that – it’s exploratory and stimulating.”

And a lot of the material finds its way back into the classroom. Many local schools base their curriculum on material provided by companies like SGGUK. How often have you heard employers complaining schools don’t understand what is really needed in

the workplace? STEM activities can solve that problem in one fell swoop. But – and this is the nub of the issue – employers have to be willing to go the extra mile.

In tough times, sponsorship for STEM activities is under pressure, especially at primary level. “We draw down national and local funding,” explains Curran.

“We have to relate it to local need so a lot of it gets channelled into secondary education even though we believe in engaging young people from primary school right through their education.”

SGGUK put in extra sponsorship for the youngest students, which helped to attract other local employers. “If we hadn’t secured that funding, there would have been a whole cohort of young people missing out on that early experience,” says Curran. “So the first time they would have picked up on STEM activities would probably have been in secondary school. And those 4-5 years make a huge difference.”

It’s a view entirely shared by Steve Severs, SGGUK’s operations director. “STEM fairs at primary level let us connect to the kids before they have established any prejudices and when they are still fascinated by the newness of science. It’s not a heavy sell – it’s about sowing a seed. There’s no positive stereotyping for manufacturing – no branding by Beckham for us. The headlines are all about scaleddown operations. The subliminal message is a poor future without excitement. We can stem that tide of information with the reality of the picture. We make a product they can see all around them and that will always be needed. And, by the way, there’s a great future ahead if you are one of the people making it.” end

To play your part in STEM, contact: www.stemnet.org.uk or The Institute for Education Business Excellence (IEBE), www.iebe.org.uk

53

Hydraulic module build and test cell

Precision assembly process of Load Cell element

No fatigue for Instron Instron, a world class manufacturer of testing instruments and systems, has recently diversified into the biomedical market, as TM associate editor Edward Machin discovered.

Established

in 1946 by MIT alumni Harold Hindman and George Burr, Massachusetts-based Instron is a best in class manufacturer of test instruments, systems, accessories and services. As such, the company’s remit includes the design and manufacture of an increasingly broad range of testing systems that measure the physical properties of materials and components. Additionally, Instron’s IST division manufactures systems to test complete structures and components, largely for the automotive industry.

With a sales volume that exceeds $250m, and an installed base of more than 70,000 machines globally, the business has been at the vanguard of the materials testing equipment industry since its inception, in sectors including: aerospace; transportation; consumer products; contract testing services; and biomedical.

Accordingly, Instron was the first company in its sector to use strain gauge in measuring force; solid state electronics; computerised testing systems; infrared lighting; and reverse-stress loading – enabling electromechanical

54

machines to go through zero from tension to compression testing.

The company has significant operational facilities in Boston, Frankfurt, and High Wycombe, the latter of which is responsible for selling and servicing Instron’s product testing line in Europe. Similarly, the UK facility represents Instron’s global centre of excellence for fatigue testing – i.e. the exercising of materials or components, often to a failure.

ITW In 2005 Instron was acquired by Illinois Tools Works (ITW), a $17bn diversified manufacturer of advanced industrial technologies – with a portfolio of 895 business units specialising in ‘clever manufacturing’. Indeed,

Testing instruments Instron

says manufacturing director Malcolm Buchanan: “When we joined ITW, one of the most telling comments they made was that we as a company had finally found our home, a sentiment which has proven to be not only reassuring, but ultimately correct.”

While ITW specialise in acquiring small, diverse companies, autonomy is very much the organisational model.

Consequently, Instron reports its monthly figures, sales inventories, and related information to its parent company, but remain, for all intents and purposes, an autonomous entity.

Explains Buchanan: “ITW have certain corporate mandates and guiding themes which its companies are expected to use, and if we weren’t catching the religion, so to speak, they would certainly nudge us in the right direction. However, we were converts from the outset, and remain happy to use the expertise they offer, together with the knowledge sharing visits we undertake to other companies — and vice versa — within ITW’s diverse portfolio. Crucially, however, there is no obligation to implement anything that is gleaned from such exchanges; you simply cherry pick that which fits best and use it to your advantage, which we are certainly doing.”

work to do. Indeed, this continual benchmarking is redolent of Instron’s culture of delegating down through the organisation responsibility for the cell and its performance.

As a result, we have seen steady improvement in the bottom line. However, this can be attributed to the fact that as a company we are doing lots of little things correctly, as opposed to a single silver bullet.”

Innovation One of the tenets that ITW holds particularly important is that of supporting innovation and encouraging its companies to patent their ‘clever ideas.’ Accordingly, in 2007 Instron introduced a range of linear electric motor powered fatigue testing machines particularly suited to customers with cleaner requirements – the biomedical sector, for example.

Says Buchanan: “The genesis of our linear-motor fatigue machines came from the highly advanced controller technology which we had been using on hydraulically powered testing machines.” Given that Instron had to combine such an approach with the development of its linear-motor fatigue machines, the process was “exceptionally challenging. As a company we went through

When we joined ITW, one of the most telling comments they made was that we as a company had finally found our home, a sentiment which has proven to be not only reassuring, but ultimately correct

Cellular Recent years have seen Instron move towards cellular operations, with the factory floor arranged into semiautonomous, self-contained work cells – enabling the manufacture of complete products. This allows, says Buchanan: “The avoidance of cross-charging and allocation of costs, thus simplifying the administration associated with the manufacturing aspect of our business.”

Similarly, the company has implemented backflushing and minimising the use of work orders to control and account for what occurs within the organisation on a day-to-day basis. While Instron has somewhat backed off from the more detailed, non-value added measurement, the company “concurrently undertake detailed investigation so as to understand exactly what is going on at the ‘coal face’,” says Buchanan.

He continues: “It is particularly important that we don’t assume the company has reached its cellular pinnacle, and that there is no more

a period of intense technical development, combining it with our extended supply chain only when we were satisfied that the product represented the best of breed quality that our customers have come to expect from Instron,” says Buchanan.

As with the majority of Instron’s R&D, the design expertise for its linear-motor fatigue machines was conducted by its in-house engineers. Nonetheless, given that a number of the machine’s modules — such as power amplifiers/supplies — were purchased from outside sources, Instron required its suppliers to actively push their capability boundaries, thus creating a trickle down from the design remit into the extended supply base.

Says Buchanan: “Due to the collaborative nature of such relationships, there were tangible benefits for both parties, in that Instron was exploring the capabilities and performance of our suppliers’ equipment beyond what they would normally expect from a customer. As a result, each company in the partnership learned a significant amount about the performance of their products that they wouldn’t have known without such an intense, but ultimately fulfilling, collaborative process. Coupled with the bringing to market of a sector-leading range of products, it was the receipt of such feedback that made the journey particularly pleasing for Instron, and one that we will seek to replicate in future design briefs.”

55

Instron The best medicine?

Arguably the most defining aspect of Instron’s recent developments has been the major growth the company has seen in its supply of testing equipment to biomedical organisations and companies. Such includes strength, durability, and wear testing on applications as varied as knee and hip joints, heart valves, and arterial stents.

Indeed, says Buchanan: “When we say that the company supplies testing for the majority of objects that one uses and sees in everyday life, it increasingly applies to things within you too.”

During the early part of 2009 Instron supplied a number of multi-station machines — designed to ascertain the durability of stents. To quantify, when an individual’s arteries are being restricted, medical science has developed so as to allow the placing of a device (a stent) inside the artery to hold it open. As the heart pumps, and the artery expands and contracts, the devices are being exercised at all times.

It remains crucial that those companies

56

who manufacture the products are able to accurately predict the device’s lifespan so that they can continue to refine the design – ensuring that a replacement isn’t needed any earlier than necessary.

As a result, the ingenuity of the medical profession and their requirements — including a process of extensive testing — are feeding back through the supplier chain to the components that are needed for such devices. Confirms Buchanan: “We have a growing number of customers globally who have purchased systems from Instron with this degree of cutting-edge technology.” As an organisation, Instron recognised early the sector’s considerable scope for growth. While the company’s traditional markets have been in metals, plastics, and associated materials testing, in developed territories there is less to be discovered about the behaviour of those components.

The biomedical market, conversely, says Buchanan: “Is very much in its infancy, and we feel this to be a particularly attractive feature of our continued work within the sector.

Although it represents but one component within Instron’s portfolio, biomedical testing is indubitably one of growing importance for the company. Given that people are, in general, living longer, we feel it vital to continue testing that equipment which furthers healthy human life. Coupled with the company’s world class expertise across our traditional sectors, such a mandate represents a greatly exiting future for Instron.” end

Optical components Oclaro

Laser precision Manufacturing mergers are notoriously challenging to effect without a raft of growing pains. For Oclaro, formed by the merger of Avanex and Bookham, the process has been one of growth, innovation and improved product performance. Edward Machin investigates

Oclaro emerges In April 2009, Oclaro ( i.e. optical and clarity) was formed by the merger of (i) Avanex, a leader in the production of systems integration, modules and subsystems and (ii) optical components manufacturer, Bookham. As a result of the merger, Oclaro is a best in class manufacturer of amplification, dispersion compensation, wavelength management and transmission products — including chips, direct modulated lasers and external modulators.

The merger has firmly enabled Oclaro’s position as one of the largest providers of optical components and subsystems to the fibreoptics, long-haul and metro markets. This continues the consolidation path previously established by Bookham which acquired, among others, Nortel Networks Optical Components and Marconi Optical Components in 2002.

Accordingly, says Steve Reilly, VP of Operations at Oclaro’s Caswell site: “The industry consolidation driven by Oclaro has helped us to assemble probably the best portfolio of technologies in the business. The mix of technologies and processes at Caswell gives us unsurpassed access to a formidable set of building blocks with which to create leading edge chips.” Coupled with this, Caswell is a long-established scientific Centre of Excellence, boasting the industry’s most advanced 3” indium phosphide wafer fabrication facility and 57,000 sq ft of cleanroom.

57

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Optical components Oclaro

While extensive cleanroom space is not uncommon within the industry, acknowledges Reilly: “What differentiates Oclaro from the majority of our competitors is the nature of the equipment in our fabrication facilities. During the telecoms boom, for example, Nortel Networks spent well over a billion dollars acquiring the most advanced photonics technology, systems and equipment. The best of that equipment was subsequently transferred into Caswell. ” Coupled with manufacturing and R&D facilities in the USA, UK, Switzerland and Italy, the company made a strategic decision in 2002 to move its backend operations to an assembly and packaging site in Shenzhen, China.

Says Reilly: “We largely chose to open operations in China in order to maintain a labour cost advantage. Equally, however, it enabled the company to develop a low-cost supply chain.”

In spite of the teething problems that many manufacturers encounter when moving to low-cost economies, Oclaro found that such an endeavour actually improved its products’ performance — including significantly better yields, improved cycle times and overall increased product efficiency. “It was something we hadn’t necessarily bargained on,” says Reilly. “Indeed, when undertaking such business critical changes one is naturally nervous about how smooth the transition will be in reality. That being said, it has been a great success, ensuring that the company can retain — and expand — its presence in our key fibreoptics, telecommunications and advanced photonics solutions markets.”

With the majority of Oclaro’s products assembled in China, the company, says Reilly, nonetheless looks to retain chip manufacturing facilities in Europe and North America. He explains: “Oclaro operates a vertically integrated model which, we believe, gives us a strategic advantage over our competitors, many of whom do not have front-end chip manufacturing facilities. Instead of buying chips on the volatile open market, we combine low cost assembly capabilities with frontend production. Resultantly, Oclaro has both the innovation potential and higher barriers to entry to ensure that we remain a world class manufacturer in our chosen markets.”

Asset exchange Coupled with its Caswell facility, Oclaro’s UK operations include a Centre of Excellence for Telecom package design in Paignton, Devon. Says Reilly: “During the telecoms boom, and prior to the opening of our Chinese facility, Paignton was a very high volume manufacturing site — employing approximately 8,000 staff on manual assembly operations. Nowadays, Paignton plays a vital role in ensuring that Oclaro remains ahead of the chasing pack in the development of next generation packaging” In June 2009, Oclaro undertook an exchange of assets with the Newport Corporation, a global leader in advanced technology products and solutions for sectors including life & health science; aerospace & defence; industrial manufacturing; semiconductors; and microelectronics.

Says Reilly: “With the transaction, we believe that Oclaro has become the largest merchant supplier to the high power laser diodes market. It also increases the utilisation of our wafer fabrication facilities, strongly positioning the company in terms of both innovation potential and the vertical integration of our manufacturing.”

Vertical integration systems, explains Reilly, remain vital to Oclaro’s success: “In that we produce bespoke chips which maximise end product performance and drive costs.

With our model being fabrication facilities in the West and assembly sites in the East, the latter is where the majority of variable costs exist.” Oclaro thus seeks to drive yield loss to the frontend wherever possible, ensuring that the company is not manufacturing high-cost components only to discover a process failure when added to the circuit boards. Ultimately, says Reilly: “Where vertical integration adds value is in the fact that rather than an external assembly company specifying that they require a chip with any number of requirements, we pull a considerable amount of the yield loss back into the fabrication sites.”

Gather round Little over eight months since the merger, Oclaro is understandably looking towards a bright future. Says Reilly: “The company’s strategy is to remain a predominant supplier of both optical components and subsystems. The cost involved in any such project is significant, however, given that our fellow tier one suppliers are also continually seeking to innovate, remain competitive and strategically grow their businesses.”

“That being said, Oclaro firmly believes that the future of our industry is in photonic integration, with economies of scale playing a central role in any such advancements.

While it would be naïve to assert that we are the only strongly positioned company in the space, Oclaro has both the technological breadth and front-end fabrication capabilities to ensure significantly faster turnaround than the majority of our competitors.”

Further highlighting Oclaro’s dedication to advancing industry-leading technology is the launch of Caswell Science and Technology Park, a joint initiative between Oclaro and Fasset. “Our goal is to create a science and technology cluster whilst lowering our occupancy costs.

With 12 companies currently on the 22 acre site: “The venture is symptomatic of Caswell’s attraction as a leading scientific location.” says Reilly. end

59

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AUTODESK INVENTOR TAKES YOU BEYOND �D TO DIGITAL PROTOTYPING

www.themanufacturer.com January 2010 Vol 13 Issue 01

Autodesk® Inventor® software creates a single digital model that enables you to design, visualise and simulate your products. Inventor helps you to reduce product costs and get innovative designs to market faster.

Power

ism ney

Find out more about Autodesk Inventor and how it can take you beyond 3D to Digital Prototyping.

Accessing the potential nuclear power bonanza

www.autodesk.co.uk/beyond�d

Finance and taxation R&D tax credit scheme mishandled?

People and skills

National Skills Strategy reviewed

Innovation, design and the product lifecycle Simulation and the virtual factory

Autodesk, AutoCAD and Autodesk Inventor are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. All other brand names, product names or trademarks belong to their respective holders. Autodesk reserves the right to alter product offerings and specifications at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document. © 2009 Autodesk, Inc. All rights reserved.

www.themanufacturer.com January 2010 Vol 13 Issue 01

Image courtesy of Prensa Jundiai, Brasil

Interview Nick Vermont

Regional CEO, McCain Foods