The Manufacturer September 2013

Manufacturing Leadership Supply Chain 2023: Strategies for a decade of change

Workforce and Skills Manufacturing Matchmakers: Traineeships as a passport to skills security

Finance & Professional Services Exposed: Risk management & insurance for industry

Sustainable Manufacturing The case for the Catapult: Why invest in a new Energy Systems centre?

Manufacturing Technologies Activate!

Rethinking the relevance of automation

IT in Manufacturing Virtual Reality: Plant & process simulation matures In partnership with:

INTERVIEW Jonathan Neame CEO, Shepherd Neame

www.themanufacturer.com | September 2013 | Vol 16 Issue 7

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50 United Kingdom

Welcome

EDITORS INTRODUCTION EVENT REVIEW

Report 1 | Report 2 | Report 3

And now for something completely different

Notice something unusual?

That’s right, we’ve chopped the top off our magazine, played with the design and invented new features.

This all suggests that the team had time to kill over the summer holidays, or it would if the manufacturing sector hadn’t kept us busy by making an energetic return to health (p12).

34

50

There’s logic to our design changes, and we hope you like it.

We want to give you a magazine that is handier and more accessible. There is an unwieldy volume of industry news, reports, case studies and other information tipped into the public domain every month. The new-look aims to make this more manageable by cherry-picking the most useful findings and mixing them with concise, expert analysis, industry opinion and clear directions to quality sources for further reading. This should provide a better foundation for strategic decision making in manufacturing businesses.

We also want to support the industry’s assault on its negative, or amorphous, image with the public – particularly young people. By keeping the magazine’s design fresh and dynamic, linking it to the digital world and putting it into schools, colleges and universities as well as manufacturing firms, we can show a wider audience what manufacturing and engineering careers offer. That’s often high-paced, challenging opportunities for ambitious individuals with engineering, technology and business acumen.

To celebrate our new look in style, it seemed appropriate that our first Sector Focus project should concentrate on Britain’s diversifying alcoholic beverage industry where we found optimism and innovation in products, production and markets despite declining volumes (p34).

82

But the alco-bev industry’s focus on innovation is not unique. Increasing investment in all kinds of innovation was a hot topic in UK manufacturing throughout July and August. HMRC showed that more SME firms are claiming tax credits for R&D work (p12), Government invested an extra £7m in the HVM Catapult and launched two new centres to promote commercially focused industrial innovation (p61) and EEF, with NatWest, published its Innovation Monitor 2013.

The latter report showed that 71% of manufacturers plan to spend on R&D to exploit exports, a finding which supports hope for further reductions to the UK’s huge trade deficit, which in fact fell to £8.1bn in June after a 5.9% expansion of exports in Q2 (p30).

www.them anufacture r.com | Septembe r 2013 | Vol 16 Issue 7

EEF economist Felicity Burch said that the Innovation Monitor 2013 deliberately focused on intangible forms of innovation investment. But there is evidence that investment in ‘harder’ innovation assets like IT infrastructure and automation technologies, which can transform processes and free up employee time for value add activities, is also rising (see our Automation 2013 supplement).

Manufac Leader turing ship

supply chain 2023 Strategie : s of changefor a decade

Workf and skiorce LLs

Man

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finance profes & sionaL services

exposed: Risk man agemen insuranc e for indu t & stry

sustaina ManufacbLe turing the

It is high time. UK manufacturers have a recent parlous record for capital investment, as ’s Will Stirling outlined in his blog of August 21 (bit.ly/MfgInvestment) and this poses a threat to their competitive future. Seeking to accelerate industry education on the breadth of new, flexible and cost effective automation technologies, has launched an Automation Advisory Board (p60) from which you’ll hear lots more in future issues and online.

case Why inve for the catapult st Systems in a new Ener : gy centre?

Manufac technoLoturing gies

activate !

Rethinkin g the relev of auto ance mation

it in Ma nufactur ing

virtual rea lity: Plant & proc simulatio ess n matures In partners hip with:

Find out about the challenges and opportunities for British alco-bev intervieW makers on p34

Jonathan CEO, Shep neame Neame herd

www.the manufac turer.com |

Septem ber 2013

Jane Gray Editor | Vol 16 Issu

e7

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 1

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ABOUT US

Meet the team: Nick Hussey Chairman

Editorial

IT Editor Malcolm Wheatley

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Will Stirling Editorial Director

Nick has 20 years of experience in the publishing industry spanning titles in the UK, US, Asia and Australia. In addition to his commercial experience Nick has also worked in government, spending a year as Managing Director of Manufacturing Insight, a programme aimed at changing the image of manufacturing among young people. He holds several non-executive directorships and is a founder member of the IET’s Manufacturing Policy Panel. n.hussey@sayonemedia.com

Will edited for two and a half years and is now working to expand the SayOne Media publishing portfolio. He is responsible for new reports and supplements, maintaining editorial standards at SayOne Media and supporting all the events. Before joining SayOne Media, Will worked for Euromoney and IPC Media. w.stirling@sayonemedia.com

Tim joined SayOne Media in 2009 after working as a journalist for six years in Australia on a range of lifestyle and business magazine publications. Tim launched a new website for in late 2009 and has interests in the automotive industry and business development. In June 2013, Tim was appointed General Manager of SayOne Media. t.brown@sayonemedia.com

Henry Anson Sales Director Henry is responsible for SayOne Media’s commercial activities, developing new concepts and products for ’s readership. Henry is keen to build a bridge between the manufacturing community and the service sector which supports it. h.anson@sayonemedia.com

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EXPORT CONNECT 16th October 2013, London Regardless of whether you currently export, plan to increase your export activities or are simply looking for the latest information, advice and best practice on how to export, your attendance at this event is essential.

This conference will provide delegates with the road map to enable them to successfully export into new markets and how to increase their market share in existing ones. The essential information, contacts and best practice provided by senior manufacturers, industry experts and peers will provide a strong platform to enable further overseas growth.

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September 2013

08 News and regular columns

Manufacturing Technologies

A summary of manufacturing news and events with commentary on industrial research and policy 20 Naked Engineer How to survive a management training initiative and win government innovation funding in your spare time 24 Lean on me Roberto Priolo ponders the value of lean assessment tools for companies travelling towards their True North 26 Out & About ’s trips to Wyke Farms, Stannah and Taiwan’s low carbon automotive cluster 28 Best of Online What you wanted to read about most on ’s website last month 30 Hot Topic: Focus on exports 34 Sector Focus: Liquid Markets Popping the cork on Britain’s thriving booze industry, looks at the challenges and opportunities for manufacturers of alcoholic beverages in the UK 40 Interview: My round Jonathan Neame, CEO at Britain’s oldest brewery, hails a new golden age of beer around the world and outlines key strategies to keep a heritage-bound family business moving forward 43 60 second interview: William Chase, CEO of Chase Distillery calls foul on ‘’fake’’ craft manufacturers

66 Activate!: Ken Young at the Manufacturing Technology Centre explains the expanded relevance of automation technologies to manufacturers and urges doubters to take a fresh look Other topics in this section: Additive manufacturing, equipment and technology for the alcoholic beverage industry and technology trends for Industry 4.0

Pillar features Manufacturing Leadership 44 Manufacturing Directors’ Forum: Highlights from recent meetings of our peer networking community Other topics in the section: Supply chain strategy for the next decade and challenger banks

Workforce & Skills 50 Manufacturing Matchmakers: Government’s new Traineeships and sector skills council Semta’s plan to make the scheme work for manufacturers employers with talent recruitment concerns 54 Employee of the Month: Rupert Hodgkins, bottling hall manager, Shepherd Neame Other topics in this section: New apprenticeship pathways, manufacturers as school governors, tackling skills gaps and developing leaders & managers

Contents

IT in Manufacturing 70 Virtual Reality: The benefits of process simulation and factory planning in the digital realm. Malcolm Wheatly explores a maturing technology and the manufacturers embracing it Other topics in this section: Enterprise Resource Planning, Overall Equipment Effectiveness & Manufacturing Execution Systems and outsourcing IT management 84 Last Word: EOS, SOS. Does the advent of Employer Ownership of Skills spell the end for the Sector Skills Councils?

OUTBOUND REPORTS ENERGY: Purchasing strategies For manufacturers concerned by escalating utilities costs and the need to get value for money from their energy contracts

AUTOMATION Tracking an upward trend in automation investments and the British Automation and Robot Association’s work to uncover more automation potential across the span of British industry.

Finance & Professional Services 55 Better late than never? Late payment trends and Experian’s tips to help SMEs get paid on time Other topics in this section: Alternative finance, insurance, R&D tax claims and tax strategy

Sustainable Manufacturing 61 The case for the Catapult: Why do we need a new Catapult Centre for Energy Systems?

62 Seduced by Swindon: Reasons to establish a manufacturing footprint in the UK’s leading hydrogen technology town September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 7

NEWS MERGERS & ACQUISTIONS

British Engineering firm Invensys was sold to Schneider Electric in a deal valued at £3.4bn. The news was met with consternation in some quarters. German-born Bob Bischof, a partner at investment firm SCCO, said it “beggared belief” and was indicative of short-termism in British industrial strategy. Others dismissed this as hyperbole. Sir Nigel Rudd, Invensys chairman, said: “Basically this is an American company – 95 per cent of the sales are outside the UK: all of the product development is in the US. This is not a UK company.” Invensys employs 1,100 people in the UK. Other manufacturing M&A activity recorded by in August included: The sale of British firm Stage Technologies to US firm Tait, a global leader in the stage and set engineering industry for live performances. Tait’s acquisition includes Destar Engineering, a subsidiary of Stage Technologies Ideal Stelrad, a Yorkshire-based boiler and radiator manufacturer was acquired by private equity firm Bregal Capital Atlas Copco bought Crawley-based Edwards Group in a $1.2bn takeover which will enhance Atlas Coco’s capabilities in vacuum pumps for semiconductor production

REGULATION

EEF launched new REACH training and consultancy services. The new services have been created in the wake of research last year which showed that 50% of manufacturers either think the regulations are irrelevant or unimportant to them. REACH is the EU Registration, Evaluation, Authorisation and restriction of Chemicals scheme which seeks to control or ban the use of certain substances in all kinds of manufacturing including; automotive, aerospace and electronics as well as pharmaceuticals and chemicals. The deadline is now past for registering substances manufactured or imported in quantities of 100 to 1,000 tonnes per annum and EEF’s new services seek to ensure compliance. Greg Roberts, EEF’s environmental consultant, said: “Many manufacturers do not fully appreciate the business risk presented by REACH. Many declare compliance to customers but do not have robust processes in place to provide adequate assurance.”

8 www.themanufacturer.com | September2013 | Issue 7| Volume 16

An apprentice working at Airbus’ Broughton factory.

The firm was described as “the best brand we have” by EADS CEO Tom Enders.

BUSINESS STRATEGY

EADS announced it will rebrand as Airbus as of January 2014. The decision was taken in order to help streamline an inefficient pan-European business network at the multinational aerospace firm. Tom Enders, EADS CEO described the rebranding as “an evolution not a revolution”. He said it would bring the whole company under the “best brand we have”. The biggest changes resulting from the restructuring and rebranding initiative are likely to be for EADS’ defence divisions, all of which will be regrouped into a single arm.

The new defence group, including the space technology company Astrium, will be headquartered in Munich, the current headquarters for the group’s main defence company Cassidian. “Pooling the space a defence entities is the group’s response to the changing market environment with flat or even shrinking defence and space budgets in the western hemisphere,” said an EADS spokesperson.

INDUSTRY IMAGE Mondelez International, which makes Oreos and other confectionary in the UK found just 8% of young people would consider a manufacturing job.

Less than 10% of young people in the UK would consider a job in manufacturing revealed a study by global food manufacturing firm Mondelēz International. The study surveyed 1,600 16-18 year olds across the UK and found the majority would prefer to work in service-based industries.

Desk jobs were highly favoured with 76% believing office roles were better paid and 84% thinking a desk job is more glamorous. A 73% majority also said a desk job would be more likely to impress their parents than a job in manufacturing.

Two-thirds feel there are only a few jobs available in manufacturing, while 45% acknowledge they know little about the industry. Diane Tomlinson, HR director UK & Ireland at Mondelēz International, said young people need more education on working life in manufacturing. “We know that those who work in the industry find it an enormously fulfilling and stimulating career. Manufacturing represents a big part of the UK’s economy and opportunities are rife for young people to begin their careers in what is an exciting and innovative industry.”

MANUFACTURING NEWS

Old and new: Dormer’s original site (above) on Summerfield Street in Sheffield and its existing purpose build facility at the AMP (above, right).

IT IN MANUFACTURING COMPANY ANNIVERSARIES

Dormer Tools celebrated its 100th birthday on September 4. The engineering firm, which specialises in cutting tools, started life as The Sheffield Twist Drill Co in 1913 and now has subsidiaries in 25 countries. Dormer is using its 100-year anniversary as a key marketing tool and has invested in a new centenary website. Dormer is part of the Sandvik Group and is now located on the Advanced Manufacturing Park in Sheffield, a site it moved to in 2009.

Part of a successful international group, a rapidly expanding multi-site manufacturing company based central south of England is seeking an:

OPERATIONS DIRECTOR

to lead its manufacturing development and ensure international production and distribution is operated to the highest quality and as efficiently as possible.

Salary in the range £70-80k plus Company car or allowance and generous pension benefit.

For a detailed job description, email: dan@access2hrservices.co.uk or call 01722 325833 Applications should include a cover letter and CV, and be sent to dan@access2hrservices.co.uk

Lighthouse Systems, a Manufacturing Execution Systems software provider, gained ISO9001 accreditation. The certification for quality management encompasses the design, development and production of the MES software, Shopfloor-Online. Garry Marshall, technical director, at Lighthouse said the ISO9001 mark was testament to the robust development processes the firm follows. “It’s an important milestone for us, notably in the development of our capability to respond to the requirements of manufacturing businesses especially in highly regulated industries such as Life Science,” he added.

The ideal candidate will be a senior management professional, as well as highly competent in manufacturing and distribution and will possess the following attributes: Expert in LEAN manufacturing with considerable experience in leading, planning and executing LEAN development projects within a manufacturing or logistics environment Graduate with an engineering degree Consummate people manager having successfully managed teams to improve performance Creative thinker able to adapt past learning to new environments and cultures Experienced believer in systems and keen to embed a systemsbased approach into an international company

Deadline for receipt of applications: 30th September 2013 September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 9

NEWS EDUCATION: EXAM RESULTS A Level and GCSE results were released in August providing mixed messages on the development of future engineering and manufacturing talent for UK industry.

A Level results showed a big upswing in students taking science and maths subjects, which was welcomed by many in industry including EEF’s employment and skills policy advisor, Verity O’Keefe who said: “Industry is crying out for talented young people with the right skills to help fuel the growth we’re now seeing in manufacturing. So the fact more and more young are people studying maths and sciences is good news.

Those that do will significantly boost their chances of a successful career in industry.”

However, while the popularity of STEM subjects increased, the level of top grades awarded declined this year. Ms O’Keefe also said that STEM subjects are still male dominated and that more girls should be encouraged to study these disciplines.

MANUFACTURING NEWS

HEALTH & SAFETY

Health and safety negligence cost a Lancashire limousine and hearse manufacturer over £23,000 in fines and costs.

Woodnall Nicholson, based in Bolton was ordered to make the payment after seven employees were diagnosed with Hand Arm Vibration syndrome as a result of almost daily use of hand-held equipment including vibrating grinders, saws and pneumatic tools. Symptoms of HAV syndrome include tingling and numbness in the fingers, lack of sensation, loss of strength in the hands and pain in the fingertips during cold weather known as Vibration White Finger. An investigation by the Health & Safety Executive found that Woodnall Nicholson was guilty of negligence since the long term implications of using the above equipment should have been anticipated by the employer. A court ruling resulted in a £10,000 fine and the requirement to cover £13,485 worth of prosecution costs. Woodnall Nicholson has now purchased lower-level vibrating tools and reduced the amount of time workers spend using them.

WOMEN IN MANUFACTURING

GCSE results showed a record decline in the number of A*-C grades awarded with just 68% of students achieving these pass rates. Science subjects saw a 7.6% decline in A*-C grades following moves to make to make the exams more rigorous and just 58% of students studying maths scored A*-C grades.

John Cridland, director general of the business organisation the CBI was measured in his response to the results for key GCSE subjects. He congratulated those who had done well and said that some decline in top grades was a positive sign of greater rigour and ambition in the exam system.

However, he also said that struggling English and maths results were disappointing and showed “a failure in our education system during the early and primary years to help young people that need the most support. In maths, for instance, there is an alarming drift in the performance of children from poorer backgrounds between the ages of 7 and 11 – and too few catch up by the time they are 16. Improving attainment in our schools is critical to the future success of our economy and society.”

There was bad news for applied or vocational STEM subjects at GCSE too with the number of Design and Technology GCSEs taken this year dropping by 8.6%.

Of the 219,931 children who sat the D&T GCSE exam 61.8% achieved A*-C grades compared to 62.7% last year.

The Design & Technology Association, which has advised government on a new, more challenging and industry focussed curriculum for D&T, said the decline in study and results was disappointing but not unexpected given the confusion caused by the mooted introduction of the English Baccalaureate system.

10 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Zara Phillips (central above) supported the launch of Jaguar Land Rover’s new bursary for female engineering students.

Jaguar Land Rover has initiated a £9,000 bursary scheme for female engineering students. The bursary is being jointly supported by the automotive manufacturer and the charity Wise. It aims to raise the proportion of female engineering students in the UK which is now just 13%.

Zara Phillips provided an impetus behind the formation of the bursary. She launched a campaign in May to see more support for female engineering students in the UK “The UK has a rich heritage of women in engineering, encouraged by the success of the ATS,” she said. “I’m delighted to be supporting the Range Rover Evoque Wise Scholarship which provides young women with the opportunity to progress their career.”

NEWS INNOVATION

Manufacturers will spend on R&D in order to open up new export markets reported the EEF Innovation Monitor 2013. The survey showed strong commitment to investing in innovation to find new routes to growth. Over 70% of respondents said they plan to spend money on R&D projects to help them break into new export markets – a substantial increase from around 55% in the past three years of results recorded by the monitor. EEF CEO Terry Scuoler welcomed the news, but cautioned that the UK is making up for a period of low investment in this area and that government support streams for innovation are uncertain beyond 2016 (p18).

SME claims for R&D tax credits have increased 49% since 2009 according to data from HM Revenue & Customs and the Office for National Statistics.

Over 10,000 SME companies in the UK claimed R&D tax credits in 2011/12. In 2008/9 the figure was just over 6,000.

It is unclear however, whether the rise in SME claims is conclusive evidence of increased levels of investment in R&D, or whether it only indicates a rise in awareness about the availability of the tax credit scheme and how to apply for it. Since the R&D tax credit regime was introduced, in excess of £6bn has been claimed back on improvement and innovation work conducted by UK firms.

See p58 to learn how SME Quantum Engineering recently received a £21,500 R&D tax repayment.

Manufacturing output increased in the UK and across Europe in Q2.

MANUFACUTRING PRODUCTIVITY

Manufacturing output reached a two-year high in the three months to August according to the CBI’s Industrial Trends survey of 400 UK manufacturers. The survey reported a 16% rise in output volumes and a further 25% growth is expect over the next three months said CBI. Data released by Eurostat in August also showed that manufacturing output rose across the Eurozone in Q2 with the strongest increase in durable consumer goods.

INNOVATION The team of director at Cutting Technologies which has developed new capability in laser cutting latex.

MANUFACTURING TECHNOLOGIES Formaplex bought the UK’s first DMU 100 eVo CNC machine. The investment from the Havant-based advanced manufacturing company was part of a wider technology spending spree which will increase the company’s CNC capacity by a third. For the first six months after installation, two new 5-axis CNC machines will work solely on projects for Formula 1 clients before taking up work on Formaplex’s broader portfolio, including machining of metallic tooling, manufacture of components, composite moulds, wind tunnel tooling and jigs and fixtures. Luke Newman, technical sales manager at Formaplex said that the technology upgrade was necessary because component design has become more complex.

12 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Cutting Technologies has branched out into latex fetishism. The company has refined a technique for cutting latex on its large bed laser cutting machine. The knowledge transfer project has allowed the company to start supplying to the high end fashion market and fetish

clothing designers with the company’s handiwork recently displayed at the Paris Couture Fashion Week in Charlie Le Mindu’s Gold Sabah collection.

The Yorkshire laser cutting specialist traditionally supplied services to the electronics industry, cutting neoprene rubber sheets.

MANUFACTURING NEWS

INNOVATION

BAE Systems unveiled a new wheelchair racing wheel, developed in partnership with UK Sport. The new sporting technology was developed as part of BAE’s research into market application innovation - programmes which investigate the potential to apply its technologies and know-how in new growth markets. Paralympic athlete Shelly Woods supported the product launch of the new wheel. “Paraylmpic sport is growing year on year, and being able to make use of the best in British engineering, thanks to the partnership between BAE Systems and UK Sport, can help keep British athletes at the forefront of this fiercely competitive environment,” she said.

Government awarded £7m of extra funding to the High Value Manufacturing Catapult. The money will be matched by industry and European competition funding in line with the centre’s tri-funded finance model according to Simon Edmonds, CEO of the national Catapult network. The additional funding will boost capacity at the seven HVM centres and encourage new programmes in miniaturisation, embedded electronics and intelligent systems said Business Secretary Vince Cable. In the same announcement, Dr Cable revealed that two new catapult centres are to be established using some of the £185m of funding awarded to the Technology Strategy Board in the last spending review. One new catapult will focus on diagnostics for stratified medicine, the other will support the commercialisation of smart energy technology in future energy systems.

See p61 for more on the Energy Systems Catapult.

MANUFACTURING CONFIDENCE

The MAS Barometer showed growing confidence among manufacturing SMEs. The Manufacturing Advisory Service survey of 682 firms showed that 67% expect an increase in sales turnover this year – the highest expectation of growth since the survey began. MAS showed that higher levels of confidence are manifesting in new investment plans among SMEs. Fifty per cent said they will spend more on equipment and machinery in the next six months to aid growth. This represents an increase of 12% on the previous Barometer.

Dates for your diary SEPTEMBER

10-13

DSEI takes place at the ExCel Centre, London. As the largest integrated defence and security exhibition displays the latest equipment and systems for the entire sector across land, sea, air and space. A particular technology focus will be placed on the development of autonomous systems at this year’s event and ministerial announcements are expected relating to the Defence Growth Partnership. For information, visit: www.dsei.co.uk NB: ’s October issue will include a Sector Focus on British Defence Manufacturing.

16-20

Cranfield University hosts Cranfield Manufacturing Week. This week long celebration and showcase of the multidisciplinary research supported by Cranfield, in collaboration with industry, includes two conferences: the Second EPSRC Manufacturing the Future Conference (Sept 17-18) and the 11th International Conference on Manufacturing Research (Sept 19-20). For information and booking go to: bit.ly/CranfieldMfgWeek

22-24

Fashion SVP takes place at London Olympia. An event for manufacturers and buyers of textiles, this event attracts an international audience. A seminar programme accompanies the exhibition at Fashion SVP. Nearshoring and the importance of British manufacturing in sourcing strategies will be hot topics at this year’s event. Go to www.fashionsvp.com for booking.

OCTOBER

2

The Institution of Engineering and Technology hosts a seminar titled Growing your Manufacturing Enterprise: innovation, investment, development. The event will be chaired by The Technology Strategy Board’s Will Barton and is targeted at SMEs interested in defining better R&D strategies.

For information go to: bit.ly/IETGrowSMEs

17

The Excel Cnetre in Newton Aycliffe plays host to the Durham Oktoberfest Engineering and Manufacturing Exhibition. A networking and marketing opportunity for regional and national industry, the event is focused on providing ‘meet-the-buyer’ opportunities.

Buyers signed up for this year’s event include: MoD, Calsonic Kansei, Northumbrian Water, Husqvarna and more. For information go to: www.durhamoktoberfest.org.uk

29

The Hinton Lecture 2013 will be delivered by Pofessor Dr Uwe Krueger, Chief Executive Officer of Atkins in London. His presentation will focus on the broad skillsets needed in engineering teams tackling complex infrastructure problems in today’s world, and in the future. He will caution for a balance in industry between science, safety and economics. To register, go to www.raeng.org.uk/events

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 13

UPCOMMING EVENTS

16/10/2013

Accelerated Growth Series: Export Connect

16/10/2013

Future Factory Series: Inspiring Innovation in Manufacturing

16/10/2013

The Porsche Lean Transformation Programme

03/12/2013

The Manufacturer Directors’ Conference

04/12/2013

ERP Connect

16th October 2013, London

Regardless of whether you currently export, plan to export your products and services or are simply looking for the latest information, advice and best practice on exporting around the world, your attendance at this event is essential.

This event is aimed at those responsible for seeking company growth and market

development. The conference will help managing directors, commercial leaders and export champions explore and validate potential export opportunities and understand the implication of regulation, cultural, financial and logistical challenges associated with given countries.

www.themanufacturer.com/export2013

16th October 2013, London

Innovation is critical to the success, sustainability and growth of any organisation.

The ability to create innovative products now while developing desirable products for the future is crucial to any organisation seeking growth and sustainability.

This one-day conference unites the research and development community with the manufacturing industry to provide delegates with the knowledge and expertise they need to nurture innovation in the workplace.

www.themanufacturer.com/innovate2013

16th & 17th October 2013, Porsche, Leipzig, Germany

This unique two-day residential course delivered by Porsche executives provides a unique learning experience for plant managers, managing directors and similar individuals who can instigate real change within an organisation.

Created exclusively by Porsche Consulting for

the LMJ, its careful selected series of modules delivered in classroom environments, exclusive facilitated tours of assembly & logistical operations, with simulation activity and access to senior Porsche personal.

www.themanufacturer.com/porsche2013

3rd - 4th December 2013, Hilton Metropole Hotel, Birmingham (NEC)

Now in its fifth successful year, The MDC will bring together a wealth of knowledge from industry, government and academia through a mixture of debates, manufacturing best practice case studies and practical workshops. #TMDC2013 will focus on key factors like the

integration of supply chain, servertisation and will bring the next generation of manufacturers together in an inaugural forum to form a vision of #UKmfg in 2023. With essential growth and practical ‘how to’ workshops the conference is a must attend of all manufacturing leaders.

www.themanufacturer.com/mdc2013

4th December 2013, Hilton Metropole Hotel, Birmingham (NEC)

The Manufacturer’s ERP Connect has changed the way UK manufacturers approach software selection by minimising the overall time and effort involved in qualifying potential Enterprise Software vendors. ERP Connect is the must attend event if you are looking to

www.erpconnect.co.uk

14 www.themanufacturer.com | September2013 | Issue 7| Volume 16

install or upgrade your ERP system in the next 12-18months. This unique event offers a oneof-a-kind opportunity for you and your team to see the best in Enterprise Software Solutions in the world all in one place, all at the same time!

APPOINTMENTS

Roger Evans MBE

Schaeffler UK

Schaeffler UK appointed Roger Evans MBE as its new managing director. Mr Evans takes over from Kate Hartigan, who has retired after serving more than 19 years at the company. In addition to his new managing director role, Mr Evans will

Neil Coggins

achievements during her 19 years at the company have made a decisive contribution to the sustained growth and profitability of Schaeffler UK.”

most recently he served as chief project engineer for the UK. Paul Hughes, Yamazaki Mazak’s general sales manager, said: “Neil understands the needs of the customer and can apply his application

knowledge in his new sales role with a view to offering real application expertise to Mazak’s customers in the aerospace, medical and subcontracting sectors.”

2013. Mr Hemsley, previously chief loglstics officer for The Royal Bank of Scotland (RBS) Group’s International Banking division, takes over from Ian

Isaac, who has been interim managing director since May.

Cowley will be responsible for further establishing Motorex as a major supplier of high quality industrial lubricants, oils, greases and metal working fluids to the

UK manufacturing industry. Mr Cowley has over 20 years’ experience in the oils and lubricants industry.

Yamazaki Mazak

Yamazaki Mazak appointed Neil Coggins as its new sales area manager for Wales and Shropshire. Mr Coggins, joined the company since 1990 after joining Mazak as an application engineer,

Richard Hemsley

Lombard

Lombard, the UK’s largest asset finance provider, announced the appointment of Richard Hemsley as it’s new managing director with effect from September

John Cowley

continue in his current position as plant director of Schaeffler UK’s automotive production plant in Llanelli, South Wales.

On assuming his new position Evans paid tribute to the work of his predecessor: “Kate’s commitment and outstanding

Motorex

John Cowley was appointed technical field sales engineer at Motorex, the largest independent oil blending company in Switzerland. Based in Felixstoe, Mr

Swindon-based sportscar manufacturer McLaren Automotive appointed Mike Flewitt as chief executive officer. Mike joined McLaren Automotive in May 2012 as chief operating officer, a role which will now become defunct at the company. Before joining McLaren, Mike was vice president, manufacturing, Ford of Europe, and corporate officer, Ford Motor Company. Other career highlights include jobs with TWR Group, AutoNova AB and Rolls-Royce and Bentley Motor Cars.

Hitachi announced Klaus Dieter Rennert as its new chief executive for Europe. Mr Rennert has over 30 years’ experience in Hitachi engineering projects in Europe, South Africa and India. He hopes to continue the work carried out by his predecessor as the company looks for growth in Europe which Rennert described as “one of the key regions for growth” for Hitachi’s Social Innovation Business model.

To notify The Manufacturer of your company’s appointments, please contact James Pozzi at: j.pozzi@sayonemedia.com or: 0207 401 6033

16 www.themanufacturer.com | September2013 | Issue 7| Volume 16

The United Kingdom Warehousing Association (UKWA) announced two appointments within its management board.

Tony Mohan, regional sales manager for Bibby Distribution became the association’s vice chairman and Peter Masters, managing director of family-owned Miniclipper Logistics, was elected to the UKWA board to represent members who operate storage facilities of 200,000 sq ft or less. Founded in 1944, UKWA has over 600 members.

Tim Cooke was appointed business development manager at Shropshire-based power equipment manufacturer REO UK. Mr Cooke previously led RS Components’ sales leadership initiative. He will now work to expand REO’s power quality components supply to OEMs, as well as installers and system integrators. Stationed in the UK, Cook will also be responsible for collaborating with REO subsidiaries in Europe, the US, China and India.

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POLICY POINT & BACK TO SCUOLER

Policy Point.

T

Back to scuoler.

Gordon Attenborough, sector head of design & production at the Institution of Engineering and Technology, says it is time to think horizontally.

he Office for National Statistics’ figures on manufacturing output in recent months may have been something of a surprise. But, like the summer heat wave, they were nonetheless, welcome.

Equally, Mark Carney’s revelation, that the Bank of England would not raise interest rates until unemployment fell to 7% was unexpected but heralded a further ‘hoped-for’ period of financial stability and looked to lift the mood, increase confidence and encourage business to reinstate investment plans.

With the holiday period at an end, manufacturers must seek to build effectively on this foundation for cautious optimism, even though the overall position remains fragile.

A ‘more of the same - done better, faster, cheaper’ approach is unlikely to engineer the kind of manufacturing renaissance the UK economy needs on its own. Regaining competitive edge against global competition for the long term will require new methodologies for the identification and exploitation of innovations and market opportunities.

Engineers have great problem solving abilities and, backed by strong commitment to R&D, UK engineers can lead the field when it comes to invention and innovation. In particular, they succeed at a granular level in building knowledge, skills and competencies for niche solutions which address specific opportunities within tight, vertical sectors.

It’s the latter aspect which now needs to change.

The concept of knowledge transfer – applying and adapting an innovation from one sector to another – isn’t new, but there needs to be a more systematic, intelligent exploration of pre-existing solutions, skills and knowledge which seeks to effectively exploit them across sectors.

Innovating horizontally offers massive growth potential and we should be debating and developing how to manage cross-sector knowledge transfer on a much more consistent and coherent basis.

18 www.themanufacturer.com | September2013 | Issue 7| Volume 16

R

ecent news has shown UK manufacturing returning to growth and the trade deficit slightly shrinking.

But, as the past three years has taught us, recovery is an uncertain process and, unsurprisingly, this influences manufacturers’ The need for strategies.

In particular, it has innovation affected innovation, support is far including new product, service and process from over says developments. The Terry Scuoler, last three years saw manufacturers focus on chief executive using innovation to satisfy EEF existing customers, but the EEF/NatWest Innovation Monitor 2013 shows that weakness in traditional markets will lead companies to reach further afield for opportunities in the next three years.

This may mean exploring new geographical markets, but our monitor also shows increasing efforts to deploy existing technologies into new sectors. For example, some defence companies – hit by cuts to government budgets – are looking to develop their existing offerings in areas such as security and civil aviation.

But following through on these ambitious innovation strategies is challenging. Innovating successfully can feel like trying to hit a constantly moving target – which is moving faster all the time as product lifecycles shorten, heightening the range of resource related and technical barriers manufacturers face, such as limited access to facilities, expertise and regular cash injections.

Encouragingly, many manufacturers have been taking steps to overcome these barriers themselves, working with partners such as customers or universities to share knowledge, facilities and equipment. Government is also helping. Knowledge Transfer Partnerships are well used by manufacturers according to our monitor and the Catapult centres should further facilitate engagement between companies and researchers with recent increases to the innovation policy budget seeking to ensure these schemes deliver for business.

But it is not “job done” on innovation support. There remains a high degree of uncertainty about its longevity.

While science spending is ring-fenced, innovation has no such protection and there is no commitment to funding beyond 2015/16, even though it is equally important for the UK economy.

Where people meet production Everywhere a person touches a part or a process. That’s where waste, inefficiency and risk hide.

It’s also why The Waste & Hazard Walk

by KIMBERLY-CLARK PROFESSIONAL is so valuable.

We can help. Invite us in for The Waste & Hazard Walk and we’ll walk your operation together, looking specifically for the way your people are using industrial supplies and PPE. We’ve done it in our own factories and we’ve done it for dozens of world-class automotive, aerospace and metals manufacturers.

And every time, The Waste & Hazard Walk identifies significant opportunities for savings, safety, efficiency and continuous improvement.

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Request a Waste & Hazard Walk today. kcprofessional.co.uk/efficient Or search for “The Efficient Workplace”

NAKED ENGINEER

Naked engineer Extracurricular bid winning Hemlock Engineering’s hard working MD survives a management training ordeal and completes a bureaucracy test out of hours.

M

ade it into the Hemlock nerve centre at a bright and breezy 10.45 after an extended session in Cavendish’s the night before with Jimmy El Greco. We hit the bar hard to remind ourselves we were grown men after three days of touchy-feely management training at the behest of our glorious leader Sir Patrick. He didn’t attend.

Spending four hours of my life completing a psychometric test, apparently devised by the Spanish Inquisition, seemed wasteful given we were also on deadline for the delivery of a biblical-sized grant application for our latest renewables conspiracy

20 www.themanufacturer.com | September2013 | Issue 7| Volume 16

It made my skin crawl to hear our tutors, aka play leaders, liltingly plead with us to “split into three groups… if that’s ok?” and to “put these blue circles in these red squares…does that make sense?”

Thank Christ we managed to get away without a group hug.

Still, spending four hours of my life completing a psychometric test, apparently devised by the Spanish Inquisition, seemed wasteful given we were also on deadline for the delivery of a biblical-sized grant application for our latest renewables conspiracy.

We’d managed to con (as in convince, of course) the Technology Strategy Board that our scheme was worth supporting. They said they “liked the buzz” around Hemlock’s new very 21st century engineering centre – I didn’t mention that this might have something to do with the dodgy hardcore I suspected Bob the Builder had poured into the foundations. I hear rumour he’s got ‘arrangements’ with the local nuclear decommissioning contractors.

TSB’s approval got us quite chirpy until we realised we had to spend as much time, effort and money claiming the sodding grant as it was worth.

It involved more bureaucracy than a French planning application and Jimmy and I found ourselves completing the marathon form filling exercise late into the night after play group. Eventually managed to fax the application off at

11.45 – 15 minutes before deadline; a just-in-time finish which made a change from our just-too-late SOP and which allowed us to congratulate ourselves with a few swift bottles at Cavendish’s before closing time…thank God for late opening.

Somewhat bleary-eyed, but satisfied in the knowledge that I had sacrificed my liver on the altar of sustainability – sustainability of pen pushing jobs that is – I went for my ‘Seven rules of management magic’ debriefing session with Sir P. I discovered my management style is “overly assertive, intolerant, and dismissive of other’s opinions” – absolute bollocks if you ask me.

A couple of days later Jimmy trotted into my office, where I was still nursing my pride – not sulking as Atilla the PA expressed it. He was waving a letter with a ‘TSB’ heading – I flinched before I realised it wasn’t the bank this time.

‘Would you look at this,’ blurted Jimmy.

‘They’ve accepted the whole claim!’

“Bloody hell” I spluttered, jolted out of my introspection and liberally dispensing coffee all over my keyboard in the process. “That’s a triumph of presentational box-ticking over content. Just don’t tell Sir P. He’ll use it to pay for another one of his damn management initiatives.”

Any similarity of characters to persons living or dead is completely intentional.

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Letters to the editor

Production lines

Letters to the Editor Brian Palmer Chief Executive, Tharsus Group

In a rush to emphasize their part in the UK’s ‘advanced’ manufacturing revolution and to gain competitive advantage, I have noticed more and more of my peers describing themselves as ‘innovative’. Unfortunately, more often than not, these companies are using the term as a marketing tool while not truly understanding or applying innovation in their business.

Innovation is the application of new solutions to meet new requirements or existing market needs. It is not continuous improvement, as some companies seem to think.

Companies should not be embarrassed by lack of innovation. Not every company is required to be innovative, though it should also be said that innovation is not the reserve of multi-national corporations. SMEs can be market disruptors just as companies like Dyson can. However, this cannot be achieved by applying existing, traditional, ideas to a business or product in order to achieve slight changes.

The UK has a hard-earned reputation as a global hub for manufacturing innovation, but we have to make sure that status is not watered down by inappropriate use of the term in marketing.

Do you really innovate?

Do you need to?

Come and join the debate and learn about structured innovation for defined benefits at ’s Inspiring Innovation conference, October 16, London

http://bit.ly/TMInnovation 22 www.themanufacturer.com | September2013 | Issue 7| Volume 16

John Elliott Chairman, Ebac

Like motherhood and apple pie it is very difficult to say anything negative about innovation. However, it is my firm belief that the idea we can innovate our way to economic health is pie-in-the-sky.

We have the luxury of over consuming in the developed world because the developing world over produces. This imbalance in world trade is at the core of the financial crisis – which will re-emerge worse than ever if we do not address our trade balance and use the millions of able bodied but unemployed people we have in this country to make the things we currently import. This requires no manufacturing innovation.

My company, Ebac, is about to start making washing machines and fridge freezers. products which complement its current lines of water coolers, dehumidifiers and air source heat pumps. We have a strong workforce which enjoys making things, but which is not necessarily what government would call highly skilled.

More ventures like ours however, would make a real difference to Britain’s economic outlook. I am not saying we can domestically manufacture everything we consume. But we can seek balance. High tech innovation will not bring us balance.

It should be the cherry on the cake. But we gave the cake away.

Kirsty Davies-Chinnock Managing Director, Professional Polishing Services

A recent news item published

by The Manufacturer showed it was shown that manufacturing business owners worked 41% more hours than the average employee in Britain.

This owner dedication was praised with the caveat that a healthy work/life balance should be considered, and a side note that financial gain was being put ahead of free-time.

This will not surprise many SME owners. Those of us who survived the last recession and are enjoying high-growth today know exactly the price of profit and know that, in an SME, responsibility for it sits unequivocally with the owner-manager.

As the MD of a manufacturing company who has grown year on year since 2010, with 20% growth achieved in our last financial year, I am all too aware that the time needs to be put in at the top to ensure growth. Complacency is no longer allowed – something I admit I was guilty of in the easy days before the recession wiped 40% off our turnover overnight.

Having come through this by blood, sweat and tears it is unsurprising that I and others are reluctant to throttle back on the hard work we are putting into our businesses.

As the pressures of the recession ease and growth sustains, we simply aim for more, and our own hard work is emulated, often surpassed by loyal members of the team.

UNLOCK THE POTENTIAL IN YOUR PEOPLE No one speaks the international language of beauty quite like Revlon. To stay fluent and satisfy demand in over 100 countries, CIO David Giambruno chose proactive, easy-to-use Microsoft Dynamics business solutions. Now he’s quickly transforming multiple, fragmented systems into a unified view. This gives Revlon’s teams the real-time data and flexibility to get beauty products manufactured in the U.S. moving across the globe. And Revlon is realising its mission of making the world a much more glamorous place. microsoft.com/uk/dynamics

LEAN ON ME

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What was in the last issue?

The July/August issue of LMJ shook up accepted organisational structures to follow the true flow of value in companies.

Case studies came from: MS Aerospace Stockholm City Archive Solar A/S View the issue online at www.leanmj.com

This is Roberto’s last LMJ column for The Manufacturer. Callum Bentley is the new commissioning editor of Lean Management Journal and Jon Tudor becomes managing editor. Roberto is leaving to join the Lean Global Network.

L

Roberto Priolo, editor of ’s sister publication Lean Management Journal, looks at the importance of assessment tools in keeping lean journeys travelling in the right direction.

osing your bearings in unfamiliar territory is a discomforting experience. It can make you lose confidence and the will to move forward.

In the physical world, a compass can be a real comfort to explorers when they are lost. In business, lean can help your company find its True North – its competitive direction of travel.

But even with lean principles to guide you it’s easy wander off course or loose sight of how far you have moved in your journey. This is why tools to asses performance are critical.

There are various types of tools to assess your lean maturity. Many of them raise eyebrows within the practitioner community, provoking scorn for companies that take a ‘checklist approach’ – how many kaizen events have you completed in the last year? Did you apply 5S in every department? How many red tags did you put in your office? In how much detail did you value stream map your supply chain?

While these are all important questions to ask yourself, thinking that ticking a certain number of boxes

Lean assessments play a critical role in helping us to understand which areas of our implementations have become misaligned with the organisational vision, or which projects need some extra energy to help them keen up.

means that you are succeeding in introducing lean thinking in your organisation is a gross mistake.

Assessments, in the form of certifications for individuals or companies as a whole – think Shingo or a university’s certification programme – are, in some ways, a similar approach to measuring progress against defined targets.

But the point is that targets should be set by ourselves, or at least be adapted to our specific circumstances. And that is why off-the-shelf assessment methods often fail.

On the other hand, one of the most commonly recited lean mantras is “You can’t improve what you can’t measure”.

Lean assessments play a critical role in helping us to understand which areas of our implementations have become misaligned with the organisational vision, or which projects need some extra energy to help them keep up.

There’s a difficult line to walk between immobility through over management and misguided flexibility resulting in lack of direction.

As is often the case in lean, a bespoke approach, but one applied with understanding and rigour, will reap the most benefits.

The October issue of Lean Management Journal will look at the complex universe of lean assessment.

Logistics and freight company Panalpina will explain its approach to self-assessment in its many locations around the world, while Canada-based Productivity Alberta and UK-based Renault-Nissan Consulting will share their experience of developing value-add assessment tools for other organisations.

Happy reading.

24 www.leanmj.com | September2013 | Issue 7| Volume 16

’s editorial team is out and about at a wide variety of industry conferences, debates and factory tours month in, month out.

Let’s get a snapshot of the most interesting trips in July and August.

Blessed are the cheese makers Jane Gray finds out how Wyke Farms is making cheddar despite hard times for the UK dairy industry.

A Wyke Farm’s £3m investment in automated cutting and packing equipment was installed with assistance from Smurfit Kappa

26 www.themanufacturer.com | September2013 | Issue 7| Volume 16

light dabble in the most prominent news and issues for UK agriculture swiftly leads to commentary on the woes of milk producers and the generally meagre margins to be made in the production of dairy products.

But while Wyke Farms has had its fair share of price disputes with both customers and suppliers in its time, the family firm’s commitment to growing a brand with strong provenance, ethics and commercial clout is proving a tenacious force for profitability.

The enthusiastic and approachable MD Richard Clothier was recently nominated for a Personality of the Year Award by Food Manufacture magazine for his staunch refusal to enter into cost curbing battles with other suppliers for a spot on Morrison’s shelves. But bold though this action was, his commitment to his business is even more tangible in the recent investments to increase productivity and reduce the environmental impact of the

company’s growth. £3m was recently invested in automation equipment for Wyke’s Wincanton packaging plant where an intricate choreography of cutting, packing and labelling devices has brought multiple benefits.

Prime yields from the 20kg blocks of cheese fed into the line have gone from around 80% to 98% while automated packing equipment using specially designed cardboard packaging has reduced weight by 25% helping toward the company’s stringent carbon and energy reduction policies.

Extra capacity has also been created by freeing up 16 operatives from the line to work in other, value add functions in the business. £5m has also been invested by the 240 employee firm in the first phase of a two part green business strategy. Interested parties can learn more about this business plan in ’s November energy supplement – or by visiting the firm for the official opening of its biogas plant on September 22nd. @janefagray

OUT AND ABOUT

Made in Tawain Forget the associations you might have between this provenance and shoddy quality or low value products says James Pozzi.

C

ourtesy of the Taiwanese External Trade Development Council (TAITRA) I embarked on a jam-packed schedule of industrial tourism on the world’s most manufacturing dominated island in July.

Long associated with the cost effective mass production of everything from electronics to household appliances, children’s toys and cheap souvenirs for

seemingly every other nation, Taiwan is now leading the way in high quality manufacturing and design.

Our trip centred on the growing concern that is Taiwan’s electric automotive sector.

We got inside recently formed automotive OEM Luxgen. Set up by the Yulon Group to compete both domestically and in the Chinese market, it invested £50m in R&D last year and has its sights set on South America. Next up was Reduce Carbon Energy, producers of high-end lithium-ion batteries for some of the world’s largest automotive companies. It has drawn on 3D printing and cloud software to enhance production and customer service levels.

A strong Taiwanese influence on global automotive supply chains flows from GPS navigation systems, including in-car

infotainment. Four visits to companies in this sector showed that each faces the same challenges when exporting to Europe – tough safety regulations and a culture which is relatively unreceptive to the idea of watching television from behind the wheel. Apparently it’s all the rage in Asia and the Middle East.

The week concluded with a pit stop at Federal Tyre, Taiwan’s largest tyre manufacturer now in its 60th year. Like many Taiwanese companies, Federal is intent on rebranding its image outside Asia by casting off association’s with cheapness in favour of exclusively catering for higher-end automotive customers.

While business is seemingly booming, the lingering threat of manufacturers relocating to even more cost effective China remains a concern for Taiwanese industry. But the way of doing things on the island is unique; a hybrid of Chinese, Japanese and American practices forming a strong manufacturing culture. @themanufacturer

A lift to Andover Will Stirling meets the family at Stannah.

H

idden in a non-descript industrial estate in Andover is Stannah, the family-owned lift company that is gearing up to raise sales above £200m this financial year. This is the kind of company I love.

Synonymous with the stairlift as Hoover is to vacuum cleaners, it is one of the UK’s few, big privately owned Mittelstand-like manufacturers. It exports most of its range of lifts, escalators and micro-lifts to 44 countries. Its biggest export market? Germany.

The company has its roots in the 1860s, when Joseph Stannah built his first crane for lifting ships’ cargo. Five generations on, it is still family-owned and managed, with brothers and joint managing directors Jon and Patrick Stannah steering the ship. Making lifting equipment in the 1960s, it saw an opportunity to make a better ‘dumbwaiter’ and then developed the ubiquitous stairlift in the 1970s.

The Andover site, one of 11 in the group, is split into two parts, stairlift assembly and a much noisier metal working shop, packed with Trumpf laser cutting machines, manual and robotic welding and an automated paint line. The factory seems fit to bursting, and operations director Kim Saville is building up for a reconfiguration to meet orders, introduce more lean and manufacture a next generation product, the Sadler.

Moving to new, larger premises is not an option, says Ms Saville – Andover will remain home. @WRStirling

Stannah is dedicated to its Andover home-town, contributing the Pride of Andover Awards and Prince’s Trust programmes in the area

Go to www.themanufacter.com/articletype/interviews for ’s interview with Jon Stannah.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 27

Best of ONLINE http://www.themanufacturer.com/articles/ftse-100-manufacturers-rd-spending-averages-below-5/

Disappointing R&D investments from FTSE 100 manufacturing

T

he biggest manufacturers listed on the London Stock Exchange spend on average 4.92% of their annual turnover on research and development, increasing to 5.71% when excluding food, beverage and packaging manufacturers – still rather paltry when compared to dynamic young SME companies like EMSc UK which invests 15%.

Furthermore, Sobbohi’s digging showed that when the three pharmaceutical companies are removed from the list of 18 manufacturers in the FTSE 100, average R&D expenditure falls to 2.72% of turnover.

This information sits in interesting contrast to the fact that UK manufacturing overall accounts for 72% of all R&D investment in the UK – and to government rhetoric about the UK being a global hub for R&D. Engineering companies showed the biggest range of R&D spend, from 1% to 7.6% of annual turnover. Aerospace manufacturer Meggitt which, with a £1.606bn turnover, is small compared with some of its peers on the FTSE 100, leads the engineering sector in terms of R&D spend. It comes out just ahead of big players Rolls-Royce and BAE Systems with 7.6% invested annually.

Apart from food and drink manufacturing, one of the sectors with the weakest average R&D investment in the FTSE 100 was chemicals – perhaps surprising given that its sister industry, pharmaceuticals, is the highest investor on average.

Our most popular story in July/Aug was a report from ’s Marc Sobbohi on weak commitment to R&D demonstrated in the annual reports of leading manufacturers.

The two chemicals firms who make it onto the FTSE-100, Johnson Matthey and Croda International, spend an average of just 1.57% of their turnovers on R&D, but Alan Eastwood, senior economist at the Chemical Industries Association told that an investment of below 2% is fairly common in the chemicals industry, which has posted flat growth in recent years.

It is hoped that industry leaders like GSK will use R&D investment to increase UK production, Mr Eastwood told Sobbohi. “Glaxo is doing a lot of R&D in the UK that will be exploited around the world, we hope that the Patent Box legislation will encourage them to exploit more of it here in terms of actual production.”

The low average investment from leading manufacturing firms mystified Jason Lippitt, managing director of TMAT, a rapidly growing manufacturer of acoustic equipment, who believes that, regardless of size or resource, strong R&D is essential for the competitive health of manufacturing.

“As long as you have that spirit of innovation and you design a crystal clear strategy, you will find better ways of doing things, of improving products for customers.

If that’s your passion, you’ll find the resources to develop that idea,” he said. Of course some FTSE manufacturers do not have to worry greatly about funding R&D from their own balance sheet. Rolls-Royce, for example, said that of the £919m spent on R&D in 2012 37% was funded by government.

For the full story on FTSE 100 manufacturing investment in R&D go to: bit.ly/FTSE100RandD

28 www.themanufacturer.com | September2013 | Issue 7| Volume 16

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

Bloodhound gang Connor La Grue’s update on the manufacture and build process for the Bloodhound Supersonic Car which aims to exceed 1000mph in its land speed record attempt next year.

We know our style Phil Frame from North Edge Capital stood up for his firm’s unstinting support of the manufacturing sector, marking it out from recently joined passengers on the bandwagon of economic rebalance.

What goes up must come down Huw Chandler at Insurer XL group called, again, for a UK ban on Chinese lanterns (or sky lanterns) in the Wake of the Smethwick recycling plant fire.

See more on: www.themanufacturer.com/articletype/blogs

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History

September

Blog contributions which received the most hits in the month to mid-August were:

Best of Online

This month in

Remembering UK manufacturing news in:

September 2003

The trade union Amicus led a march past the Labour Party conference in Bournemouth to protest against the loss of 2,500 manufacturing jobs a week in the UK. Harry Jones, who worked at TRW Automotive in South Wales at the time, told the BBC: “We want

to wake Tony Blair up and get him to realise how many manufacturing jobs are being lost overseas to almost Third World countries like the Philippines.

I’m not far off retirement, but there are youngsters coming in and there will be no jobs left for them.”

September 2008 Brothers Lehmen collapsed sparking a worldwide economic crisis. The credit service organisation Experian recorded 1,782 insolvencies in the UK in September 2008 as markets collapsed.

Building and construction companies bore the

brunt of the first wave of the recession with 278 companies going to the wall in September.

In manufacturing the toll included: 59 engineering, 39 diversified industrials, 16 packaging, 13 electrical, 11 food and nine plastics companies.

September 2012 Lib Dem Business Secretary Vince Cable revealed an industrial strategy for the UK. Split across five pillars which reflected where government felt it could make the biggest contributions to UK industrial competitiveness.

The strategy committed to action on: Access to Finance, Sector support, support, Technology Skills and Government practices. procurement Significantly, Mr Cable said the strategy showed government was no longer afraid to “pick

winners”. The strategy applied to manufacturing, but also to construction and creative industries.

In the same month BAE and EADS announced their intention to merge in a deal valued at a round £30bn. The mooted mega corporation would have employed 220,000 people globally but the merger failed in early October due to an inability to reconcile political and national security concerns – particularly those of German Chancellor Angela Merkel.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 29

Exports H O T

UK e incre xports 5.9% ased by acc in June to O ording NS

30 www.themanufacturer.com | September2013 | Issue 7| Volume 16

T O P I C

O

n July 7, The Sunday Times published its International Track 24 200 sponsored by HSBC and compiled by Fast Track.

The high profile supplement named the UK companies with the fastest growing international sales over the past two 17 years of trading. The top 34 companies, 15 including eight manufacturers, all achieved triple digit growth.

6 Manufacturers made up the majority 18 2 5 7 12 of the list and the map opposite highlights all the manufacturing firms 10 13 2322 21 3 1 which made it into the top 100.

8 14 19 Ranging from electronics firms to 16 clothes manufacturers and precision 4 20 9 11 engineering to confectionary making, the breadth of their activities shows that manufacturers in any sector can succeed internationally if, as Alcohol related Manufacturing The Sunday Times’ editorial leader companies featur suggested, they are bold but balanced; Times Internationaed in The Sunday l Fast Track 200 taking the time to clearly assess risks and adapt to REF: Company Rank Location changing conditions while Paragon 4 Bedfordshire 1 Electronics aggressively pursuing a clear Oliver Twinsafe 12 Cheshire 2 international business vision.

Dow the full nload Matrix Polymers 22 Northampton 3 Interestingly, despite list from T he S Canburg 28 Wilts 4 continued instability in the Internaunday Times MTL Group 30 Rotherham 5 tio eurozone and constant 200 at: nal Track Berwin & Berwin 32 Leeds 6 b promotion of rapid growth In ternati it.ly/ Tandom 33 Cheshire 7 markets by bodies such as Track2 onal Metallurgical 00 UK Trade and Investment Erben 39 Ipswich 8 (UKTI) as representing the Formaplex 45 Hamps 9 best export opportunities, Worcs 10 Samuel Taylor 48 most on the list said they 49 East Sussex 11 Britannia Superfine were focused on European Sheffield 12 Abbey Forged 50 and US markets for Products their success.

57 Leicestershire 13 The Nutall It’s a lingering comfort Group Dunstable 14 Fielding Group 71 zone which galled Nick Baird, 72 N Ireland 15 AJ Power chief executive of UKTI, as London 16 Dreyfuss Group 73 he wrote for the supplement.

74 Co Durham 17 GT Group The trade support body’s 75 Cheshire 18 Oliver Valves 100 most valuable export 76 London 19 Swan Mill opportunities, all worth over Holdings a quarter of a billion pounds, 77 Somerset 20 Deltaform are also all outside Europe 81 Cheltenham 21 Summit 22 23 24

Medical Severn Glocon Tyrrells Crisps ACE Winches

91 99 100

Gloucester Herefordshire Aberdeenshire

Source: The Sunday Times International Fast Track 200, 2013 (Sponsored by HSBC, researched by Fast Track)

July brought widespread news that the UK is finally beginning to address its export challenge and highlighted the broad range of UK manufactured goods with hungry international markets.

Exports

and the US. “Still not enough businesses export. And if they already do, not enough of them are going where the growth is,” he wrote.

UKTI and others have been cracking this whip over the heads of UK companies since 2011 when prime minister David Cameron set a challenge to see 100,000 more firms start exporting in order to grow UK exports to £1 trillion a year by 2020.

But due to a persistently sluggish global economy, volatile commodity and raw materials prices, many firms have remained stubbornly risk averse and, where there have been bouts of manufacturing optimism recorded in surveys like the Market/CIPs Purchasing Managers Index (PMI) and the CBI Industrial Trends Survey, growth in orders has stemmed from domestic markets.

July brought a break to this trend. The CBI recorded the strongest growth in export orders for two years and the Markit/CIPs PMI also reported export growth. The impression of improving confidence was backed by figures from the Office for National Statistics in August which revealed the UK’s trade deficit had

see growing confidence in the first half of 2013

60%

Source: Wester Union Business Solutions International Trade Monitor

CONFIDENCE

in the UK

of manufacturing importers and exporters are confident in the UK economic climate

ce inl nfiden o ona C Internati Trade

narrowed by £0.6bn in June thanks to increased exports. Commentators were hopeful Q3 would prove even stronger.

It seems that manufacturers are tentatively beginning to capitalise on what Mike Rigby, head of manufacturing at Barclays bank called “a consistently benign backdrop,” in recent months.

That said, there remain many companies who will take some convincing that conditions are yet favourable enough to dip a toe in foreign waters. Small and medium sized doubters are still struggling to catch the wind of export-driven growth for the UK, finding it hard to follow the UK’s exemplary range of larger manufacturers as they sail through the breakers of regulation, finance and resource

The CBI recorded the strongest growth in export orders for two years and the Markit/ CIPs PMI for also reported export growth and an overall impression of manufacturing confidence at its highest since early 2011

UK SME MANUFACTURERS

66% 57% are confident that business will growing in its international activity in the next 6-12

HOT TOPIC

are confident that international trade conditions will improve over the next 12 months

% believe the UK economy has 74 remained stable or

improved over the last 6 months

% believe the general 3 1 business environment in the UK will im prove

% believe the general business 55 environment in the UK will stay the same

To discover your export potential and build a market strategy attend ’s Accelerated Growth: Exports Connect event, London, October 16 (p14)

% believe the general 13 business environment in the UK wil l get worse

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 31

Exports

availability which can knock a smaller firm down in the shallows. The CBI said in early August that smaller firms were made particularly nervous by political and economic conditions abroad.

But Western Union’s International Trade monitor’s half year results, released in July, suggest that smaller firms are about to make a bigger splash on the export scene. Forty four per cent of those surveyed said they plan to expand their business to emerging markets in the next 12 months and 73% expressed confidence in current international trade conditions. Fifty seven per cent said they thought these conditions would only get better in the coming year.

“The key now is to deliver programmes that help them make the most of their international trade opportunities,” said Jonathan Rees, UK managing director, Western Union Business Solutions.

“Access to trade finance and support in managing cash flow – especially in light of volatile currency markets – is vital to help SMEs in particular operate on a global scale.

73%

HOT ToPIC

FURTHER READING:

Outside-in

D

emonstrating maturity in international markets through export is an important means of attracting inward investment as well as tackling the UK’s massive imbalance of trade. Inward investment protects and creates jobs which are connected to a bigger business world.

Block Bribery Blame: , July 2013 bit.ly/Briberyblame Financing Exports: internal & external requirements, , June 2013, bit.ly/ FinancingExports

In July, a report from UKTI showed that Britain is doing remarkably well at attracting foreign investors.

Foreign Direct investment projects in the UK rose 11% in 2012-2013 against a global trend of declining FDI. There were 522 FDI-backed projects in UK advanced manufacturing and life sciences in 2012-2013 supporting 62,803 jobs.

Sources of FDI largely emanated from the US, APAC and Japan.

Read more from the UKTI Inward Investment report 2012-2013 here: bit.ly/UKTIFDI

TOP 5

ern f conc areas o SME to cturers Manufa

1glohObeavealtrahllof

l economy

of manufacturing importers and exporters are confident in international trade conditions

35% expect to see their cross-border trade with emerging markets to increase in the coming 6-12 months

eape competitors 2Ch r

44%

3insEuroztabonilitey

expect to expand their business to emerging markets in the next 6-12 months

rency

4Cvourlatility

5 loCusss tomer

41% wish to see the pound strengthen

32 www.themanufacturer.com | September2013 | Issue 7| Volume 16

40% wish it to remain the same

19% wish to see it weaken

sectorfocus

Gin slinger: Head distiller at London-based Sipsmith, Chris Garden, scrutinises the colour and viscosity of the latest batch.

Whatever your views on the morality or health implications, there’s no denying that alcohol equals big business the world over. This summer, ’s editorial team took on the heavy burden of investigating the challenges and opportunities for alcoholic beverage manufacturers in the UK – someone had to do it.

34 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Liquid Markets I

f you enjoy a pint, like unwinding with a cab sav or have secret scrumping tendencies it will warm the cockles of your heart, like a fine single malt, to know that the alcoholic beverage industry generates almost £38bn annually for the UK economy and employs two million people. The global industry will reach a value of $1 trillion in 2014, according to MarketLine research, equating to 210 billion litres of all your, and more esoteric, tipples.

If you’re more inclined to point out the immense cost to the NHS of alcohol abuse and the burden on police time caused by drunken behaviour then it might cheer you rather more to know that the industry faces considerable regulatory and market challenges.

Between 2004 and 2011 total alcohol consumption in the UK dropped 13%.

Alcoholic beverages

SECTOR FOCUS

End of the bottle

Taking the challenges first, the global financial meltdown, instability in the Eurozone, government austerity and the generally doom-laden economic outlook have taken their toll on consumer spending confidence across the world’s largest single beer consuming market – the EU. While we celebrated news of manufacturing growth in July and August, we should remember that wages across the EU, and especially in the UK, are declining, Discretionary spending on luxuries like alcohol, particularly if consumed in pubs, bars and restaurants, remains limited.

With on-trade retail of alcohol taking a particularly hard hit, winning space on the supermarket or off licence shelf has become more competitive. Furthermore, whichever outlet you focus on, it helps to be able to pay your way and booze production is dominated by big brands and conglomerates. Three leading companies hold 40% of the global alcohol market with top dog Anheuser-Busch InBev holding 20% alone.

Despite a growing fashion for craft manufactured drinks, establishing a brand remains a real challenge for new or smaller players in the alco-bev industry.

Even in the micro-brewery-rich beer industry, four manufacturers account for almost half of all beer consumed in the UK, with Molson Coors being the largest.

James Watt, MD of award winning Brewdog, based in Aberdeenshire, says that the stranglehold these companies have on the market was compounded by the UK Government’s U-turn on minimum unit pricing and the ban of multi-buy offers in July. It allows the big players to go on heavily discounting their drinks in a way smaller firms can’t he says.

Speaking for the niche spirits manufacturing industry, William Chase, founder of Hereford-based Chase Distillery which makes vodka – Britain’s best selling spirit – as well as gin and liqueurs, told that “Companies like Diageo have so much cash to throw at marketing to the consumer and, often more importantly, distributors and bar owners. We can’t compete with that, so where they pay hordes of brand ambassadors £100,000 a year to mix cocktails for buyers, we try to be different by bringing them here, and showing them the whole story from field to glass. But that means having a factory you’re not afraid to show people around.” Not to

There’s been lots of ccomplimentary press coverage of Britain’s burgeoning micro-brewing industry, but let’s not forget the big hitters which make significant individual contributions to GDP. In 2011 Molson Coors committed to investing £15m a year to 2015 in its Burton brewery, already the largest in the UK, to increase productivity and modernise the site.

This year, the earmarked £15m is being spent on a new energy centre for the plant which will be operational in 2014. A new, more efficient and versatile bottling line has also been introduced.

Investment in technologies to reduce the environmental impact of beer production is a priority. Like all large brewers, Molson Coors faces big challenges in the need to reduce energy consumption, carbon emissions and water usage.

Across its UK facilities Molson Coors has targeted reductions of: 25% in energy intensity, 15%in greenhouse gas emissions and 20% in water per unit of production by the year 2020.

5% Cask ale volumes grew 5% in 2012 against a 2% decline for all beer

Cask ale is selling well against a general decline in beer consumption. One reason is the current fashion for niche beers.

The biggest UK alcohol export segment by value is for Scotch whisky. In 2012, around £4.3bn worth of whisky malts left Britain - mainly Scotland - and made their way to customers around the world

mention investing in an in-house bar and visitor facilities all of which are financial hurdles for newcomers looking to make their mark.

Having a good ‘brand story’ is often paramount to small producers, allowing them to offer chain pubs and supermarkets a way of ‘uninstitutionalising’ their own image as well as appealing to the growing consumer interest in provenance.

But even within this marketing niche, frustrations are fermenting. Chase says “fakes” are attempting to exploit a craft beverage craze with essentially mass produced products. “This isa particular challenge for our gin segment,” says Mr Chase. “Gin has grown in popularity at home and abroad recently and lots of new names have come onto the market, trying to sell a cosy story. But the fact is that a lot of these are just buying in cheap grain spirit and adding a few flavours, then outsourcing bottling and sticking a pretty label on. They don’t understand the process. They haven’t really made September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 35

sectorfocus anything, and what they are selling is based on mass produced petrol.”

Chase admits that this problem may be particularly acute in the spirits industry where consumers tend to be very vague about how drinks like gin, whisky and vodka are made and what from (see box).

Another marketing challenge, for companies of every size, is inherent in the need to strike a balance between product promotion and being seen to advocate irresponsible alcohol consumption.

Finally, perhaps the most obvious burden on any manufacturing of alcoholic drinks, tax. To counter the £38bn generated by the UK booze industry each year, the sector pays £16bn in excise duty and VAT. Micro-brewers have been cut some slack on tax requirements. Progressive Beer Duty, introduced in 2002, exempts manufacturers with volumes under of 5,000-20,000 hectolitres a year from higher tax rates on their products. It has been a significant factor in the proliferation of micro-breweries in the UK. Around 80 new operations emerge every year and envious peers in the wine and spirits industries say it is time to extend the favour to them too.

Bigger firms are not so keen. Many larger brewers, particularly in the cask beer segment, say Progressive Beer Duty is uncompetitive, favouring smaller firms at their expense, without benefitting overall volumes and perpetuating an unsustainable saturation of the market with start-ups.

While the argument on either side matures, duty is an inescapable, margin-hungry reality for all producers of alcoholic drinks and a strain on cash flow since tax is paid to HMRC when orders are dispatched – not when invoices are paid.

36 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Making

Chase Vodka is the UK’s only single estate spirit. It is made only from the Lady Rosetta and Lady Claire potatoes grown on the Chase Estate, varieties which have high starch content – essential for quality vodka production.

Contrary to popular belief, not all vodka is made from potato spirit. The technical definition requires only that vodka be made from a starch spirit base with a 96% ABV. For this reason, many vodka producers opt for cheaper grain spirit as their base product despite its relative lack of depth or flavour.

A 3.5 tonne batch of potatoes makes 770 70cl bottle of vodka at Chase. This equates to 4.6kg of potatoes per bottle, a resource intensive ratio which poses a big challenge to company growth.

The production process flows through: Wash, peel and mash Enzyme treatments – two temperature controlled phases to break down the starch molecules One week fermentation of the potato wine (at this stage the product will be around 9-10% ABV) Stripping – alcohol is removed from the mash in a nine metre tall semiautomated stripping column.

The alcohol extracted will be around 85% ABV Rectifying – a second distillation phase in Chase’s unique 70ft rectifying column (p43). After extraneous alcohols such as methanol are removed, the resultant spirit will be 96.6% ABV Carbon treatment and filtration: borehole water from the Chase Estate is

added at this point to dilute the alcohol. The final product for Chase’s award winning signature vodka is 40% ABV Bottling – currently managed manually, Chase is due to install an automated bottling line this autumn Additional production stages are required for Chase’s flavoured vodkas and liqueurs.

Its marmalade vodka is boiled in a vacuum-sealed vessel William Chase purchased from L’Oreal where it was previously used for cosmetics production.

The potato wash and peel equipment came from Tyrrells, Mr Chase’s previous crisp making enterprise.

There are plans to install a demethylating column to follow the rectification process. This will increase productivity by 80% according to distiller Alex Davies.

All of the bespoke distilling equipment at Chase Distillery is provided by Christian Karl, a German supplier.

Alcoholic beverages

A record year for Scotch whisky exports has helped a revival in barrel making in Scotland.

Malted grain is used to make beer, whisky, shakes, malt vinegar, confections such as Maltesers and several other derivatives

A cup of cheer

It’s enough to make UK brewers, vintners and distillers turn to the bottle in despair if it weren’t for the fact that many British producers, seeing silver linings around the industry clouds, are investing in production technologies, increasing capacity and breaking into new markets.

While overall UK alcohol consumption may be falling, producers are targeting increasingly educated drinkers with higher quality, premium products. They are investing in product innovation to launch new drinks that encourage consumers to try different tastes, particularly evident in the cider industry at the moment. And they are increasingly reaching out to consumers outside the UK, contributing to government’s target of getting 100,000 more firms exporting by 2020 (p30).

The biggest UK alcohol export segment by value is for Scotch whisky. In 2012, around £4.3bn worth of whisky left Britain - mainly Scotland - and made their way to customers around the world. Surprisingly,

It might also surprise you to know that manufacturers of alcoholic drinks, and of the production or supply chain technologies required to deliver them, are tapping into funding from the Technology Strategy Board in order to drive hi-tech advances in the sector

Dorset-based Furleigh Estate produces 40,000 bottles of English sparking wine a year on average

while China is often noted as a big market for niche spirits and particularly whisky, the biggest global market is still the US, followed by France which, incredibly, consumes more Scotch whisky per month than Cognac in a year.

The Scotch whisky industry, a recognised national treasure, benefits from significant government support at home and abroad – notwithstanding the Scottish government’s best laid plans to take a stance against chronic problems with alcoholism and the allegations of discrimination against imported goods, reported in the national press, in response to plans to introduce minimum alcohol pricing.

SECTOR FOCUS

Scotch whisky workers on larger distillers have had to become fully automated to sustain demand

800m

£

£800m a year is spent on advertising and marketing alcoholic drinks in the UK. Molson Coors allocated £4.5m to marketing its new Carling British Cider product in 2013.

Distilleries old and new are receiving capex grants to help boost productivity in the glens. Harris Distillery on the isolated Isle of Harris was awarded £1.9m by government to modernise production, increase capacity and keep the local economy ticking over. And as the popularity of Scotch increases around the world, government and industry agencies are also working hard to hammer out the playing field with international competitors in the spirits markets. In August the Scotch Whisky Association announced that it had made new free trade agreements for Scotch whisky producers in the promising markets of Honduras, Nicaragua and Panama with similar agreements due to be firmed up with Costa Rica, El Salvador and Guatemala later this year.

While other alcohol segments do not receive such a largess of state backing, firms across different categories are tenaciously investing for growth and finding ways to exploit government funded business support.

BrewDog, never chary to hide its distaste for ‘‘the establishment’, supports its expansion via its ‘equity for punks’ scheme whereby members of the public buy shares in the company at £95 a pop which is valued at £111m (p55).

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 37

Alcoholic beverages

Furleigh Estate installed its bottling line with assistance from Defra

Will Chase built up his distillery’s production capability on the back of the sale of his first manufacturing venture, Tyrrells crisps. The last of the Tyrrells money to go to Chase before, in Mr Chase’s words, it “stands on its own two feet” is being spent on £500,000 worth of bottling and labelling equipment this autumn. Banks are baking booze-maker too, with Penderyn agreeing a £900,000 finance package with HSBC in June.

Orchard Pig, one of many small Somerset-based cider producers, used money from a regional agency to work with Manufacturing Advisory Service consultants on the formation of a business plan and Furleigh Estate, the only English producer ever to win a gold medal at the international sparkling wine competition, Effervescence du Monde, found it could tap into funding from the Department for Rural Affairs (Defra). It has just received the last instalment of a grant which covered 30% of the cost of extending its temperature controlled storage facilities, buying new vats and presses and commissioning a new bottling line.

The Defra grant recognised the importance of Furleigh’s wine production to local farmers explains Rebecca Hansford, co-founder of Furleigh Estate.

“We’ve encouraged neighbouring farmers to plant grapes in order to boost the harvest we can get from our own vines,” she says. It’s a piece of supply chain innovation and collaboration which has mutual benefits, boosting Furleigh’s volumes and securing a new income stream for farmers with a local, fair paying customer.

It might also surprise you to know that manufacturers of alcoholic drinks, and of the production or supply chain

38 www.themanufacturer.com | September2013 | Issue 7| Volume 16

technologies required to deliver them, are tapping into funding from the Technology Strategy Board in order to drive hi-tech advances in the sector. For instance, a TSB-led £50,000 project is investigating solutions to a problem that costs the UK beer industry £50m a year – missing casks. Using tagging and tracking technologies within the developing ‘internet of things’ TSB hopes to help brewers overcome this unnecessary additional cost to their operations.

Another programme, with over £100,000 of TSB backing, is exploring the use of new plastics as potential replacement materials for stainless steel beer kegs.

Brewdog has expanded capacity using an alternative finance initiative ‘Equity for Punks (p55)

SECTOR FOCUS

Burton Brewery.

Courtesy of david. nikonvscanon

Down in one

So, taken in balance, while the UK market is heavily taxed, burdened by low consumer confidence and shrinking in terms of overall volumes, British manufacturers of alcoholic drinks have lots to be positive about.

Their domestic market is embracing more diverse product ranges and generally trading-up to premium quality drinks which, even after the tax man, distributors and supermarkets, or other traders, have taken their cut, offer higher margins. Financial support is available if you have good management and a nose for such things, and while certain processes will never change, innovation is taking place in products, processes and supply to ensure a sustainable future for production and distribution.

And then there’s the world to explore.

While wine producers like Furleigh worry about preserving the quality of their products on the water, most alcoholic drinks can travel well and have a ballooning global middle class with a growing thirst to quench.

Here’s to the health of the industry.

FURTHER READING: To read more about the British alcoholic drinks manufacturers visited and for insight into the companies visited during this sector focus go to: www.themanufactuer.com Some key features include: Whisky in the jar and billions in the trade balance: bit.ly/WhiskyExports Regulation in alcohol nation: bit.ly/AlcoholNation Con Artisans: bit.ly/ConArtisans Gin proving the tonic for Sipsmith: bit.ly/Sipmsmith Sparkling prospects: bit.ly/SparklingProspects

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INTERVIEW We could not have achieved what we have in the pub management market, and we couldn’t contemplate the export plan we have without getting a grip on our data

Jonathan Neame, CEO of Britain’s oldest brewery, talks to Jane Gray about family management and the challenges of future proofing a heritagebound company.

40 www.themanufacturer.com | September2013 | Issue 7| Volume 16

My round “I t’s a good time to own a family business in the UK,” says Jonathan Neame while being quizzed on the challenges of keeping a company with a heritage dating back to the fifteenth century moving forward.

“The UK used to have extremely adverse tax laws for family firm,” he says.

“In the 1960s, estate duty was very high and that ‘did’ for many family businesses, certainly in the brewing industry.

But today, privately controlled family businesses are inheritance tax free and there are other benefits in a newly benign fiscal environment which help family firms promote continuity.”

But despite his seat in a CEO’s chair that was occupied by four generations of Neames before him, Jonathan Neame is pragmatic about succession planning in general. “The business has to come first,” he says. “You can’t run a business for sentimental reasons. If you want to keep a company under

family management you have to be sure that there is sufficient passion, but also sufficient capability.”

By which he eludes to the quality of management. Happily for the Neame family, around nine of whom still work in various jobs at the company, annual turnover of £133m and operating profits of £12.7m in 2012 indicate that beer still runs in the blood. Although no doubt support from 1,170 employees across the business helps keep the family firm open-minded.

“But balancing old and new is a constant challenge as we grow,” continues Mr Neame, who took the job of managing director just as the company faced up to an important decision over whether or not to relocate for expansion.

The brew’s home

The choice to remain on the six acre site in the town centre of Faversham, Kent is a prime example of the concessions that sometimes must be made to preserve

Jonathan Neame, CEO, Shepherd Neame

points of heritage that younger firms might not consider so deeply, says Neame.

“Any drinks manufacturer will naturally be concerned by the need for a quality supply of water. But we have access to an aquifer from the heart of our site which has superb mineral qualities that really affect the flavour of our beers. It’s what has kept a brewery on this site for hundreds of years. And it is something the company can’t afford to change.”

Instead of relocating, Shepherd Neame has had to be cunning in modernising production facilities within its shell of listed buildings. It has done well, with the site now housing a highly efficient bottling line installed in 2009, and a water treatment facility that has helped reduce the amount of water required to produce a single pint of beer to three pints from five and a half.

This is an efficiency measure most UK brewers are struggling to address.

But optimising the limited footprint of the brewery has not all been about plant investment, says Neame. “Overhauling all our internal processes so that we could implement our SAP ERP system is one of the most valuable things we have done in my time at the company.”

“Getting a system like that in place is profoundly difficult,” he winces. “But the quality of management information it gave us was transformative. Five years on we are still gaining incremental benefits in production and elsewhere and I expect to continue doing so for some time yet.”

Investment in IT may not be at the top of every CEO’s agenda, but Neame says he regards it as “critical,” saying that the company “could not have achieved as we have in the pub management market and could not be contemplating the export plans we have without getting that grip on our data.”

hard to invent new marketing styles and packaging to appeal to consumer tastes that it has never encountered before – while always striving to remain true to its heritage brand.

Adjusting to the varied demands of a more globalised industry is difficult for a brewer which has traditionally worked within an established national network of regional control. Shepherd Neame’s stamping ground was always Kent and Sussex, Adnams and Greene King ruled Suffolk and the Fens, Badger held the South West and so on.

But now things are different and, to allow focus on getting the product right for a more varied customer base, Neame recently decided to make several radical

INTERVIEW

We are at the dawning of a new golden age of beer around the world changes to the company’s warehousing and distribution strategy.

“As the balance of our business changed from regional to national and then international, and as our pub and grocery interests grew, it became obvious that it was time to rethink our route to market,” he says. “The decision to select one external partner for national and international distribution is a big

The energy ultimatum Asked what he believes is the biggest single challenge for sustainable brewing in the UK, Jonathan Neame is clear.

“It is not just brewing but all UK industry. The biggest barrier to growth and competitiveness is the cost of utilities.

“Brewing is hit particularly hard by increases in the cost of energy in the UK. Both directly and indirectly, the brewing process is energy intensive, with indirect contributions coming

from the malting process and glass production for instance.

“The government has got to get its act together on energy policy. I am not at all convinced by the current strategy. It is not viable to rely heavily on wind and nuclear.

“I’d like to investigate the new technologies coming through for selfgeneration, but at the moment I don’t see anything which is economically viable while meeting the planning permission requirements of our listed site.”

Shepherd Neame has an in-house micro brewery where employees are encouraged to develop new products (p54)

Beer abroad

Execution of export plans will be essential to the future of the business, says Neame. “We’re only exporting about ten per cent of our total volume at the moment, but that will undoubtedly grow in the next few years as we see strong demand from regions that have no cultural link with the UK. Previously our modest exports have mainly satisfied demand from expat communities.”

Japan and Brazil are two particular hotspots for the development of the brewery’s international trade says Neame.

He says that the company is working September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 41

Jonathan Neame, CEO, Shepherd Neame

INTERVIEW

Shepherd Neame is the last remaining UK brewer to use oak mash tuns for production.

BIOGRAPHY

Perfect pint and off-barrel

Jonathan Neame CEO, Shepherd Neame 1985:

Graduated Pembroke College, University of Cambridge with a 2.1 MA Cantab Classics

1987:

Qualified as a Barrister at Law following study at City University and Inns of Court School of Law.

1987:

Joined COBA Group, as a strategic consultant.

The London-based firm specialises in mergers and acquisition work and due diligence investigations into major capital projects.

1991:

Joined Shepherd Neame as company secretary

1994:

Became tenanted trade director and subsequently trade director

1999:

Appointed managing director of Shepherd Neame

2003:

Appointed chief executive

Jonathan Neame is also chairman of the British Beer and Pub Association, non-executive director of St. Austell Brewery, a small Cornwall-based producer, and a member of the Kent Ambassador network for the support of economic prosperity and quality of life in the county.

Jonathan Neame is married to Lucie and they have one daughter, Violette.

His favourite Shepherd Neame ales are Masterbrew and Spitfire.

42 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Jonathan Neame’s best and worst business moments departure for us but, we hope, a means of accessing a very big opportunity.

“We have to think about our ability to get our products to where demand is growing, quickly and efficiently. Our new distribution partnership will support that,” says Neame, who adds that it is critical for a brewer to have a partner it can trust to transport and store its products appropriately as it extends and diversifies its reach.

All hail the age of ale

There is an urgency in Neame’s tone as he describes the range of strategies designed to keep his long-lived company alive and well. And it’s not hard to see why.

Volumes of beer consumed in developed markets have declined sharply in the last decade and they continue on a downwards trend. “Even Germany’s volumes contracted by around four and half per cent last year,” he says. Then there is the consumer’s move away from drinking in pubs, meaning that around 50 pubs close in the UK every week – a worry for a brewery which owns around 350 pubs in the South East.

And yet, Neame is optimistic. “It will be a difficult change for some, but the future of the industry will be value-led not volume-led,” he states confidently.

“It will all be about pace, relevance – and appealing to women,” he continues.

Surely daunting prospects for Britain’s oldest brewery with a management which remains male dominated to this day?

Best: “I tend to live for the day, but I can honestly say that I feel more motivated and excited about the potential of this company now than I have done at any stage in my career.”

Worst: “We had some family challenges in 2003 – well publicised at the time – which were very uncomfortable. In addition, the industry has declined against most metrics in the past 20 years and really went through the mill with the introduction of the smoking ban.”

The “challenges” referenced above relate to the resignation of Stuart Neame, then vice-chairman, after a fall-out with his cousin and the current CEO’s father, Bobby Neame, who was chairman until 2005.

I feel more motivated and excited about the potential of this company now than I have done at any stage in my career But Neame is not to be put off. “After some very hard years there’s clearly an exciting future in brewing. We are at the dawning of a new golden age of beer around the world.”

6Osecond William Chase, CEO, Chase Distillery

interview

William Chase takes a stand against fake craft manufacturers : In 2010, after just two years of production, Chase Vodka won an award in San Francisco for Best Vodka in the World. What makes it so special?

William Chase: Our vodka is single estate.

This means we produce our 96% proof base spirit only from the Lady Rosetta and Lady Claire potatoes grown on our farms here in Herefordshire. These are good varieties because they have the high starch content you need for high quality vodka.

Most other vodka producers use cheap grain spirit which they buy-in to make their drinks. It’s mass produced petrol with no depth of flavour.

Our production process is fairly unique as well. We have the tallest rectifying column in the word at 70ft. The height creates room for more bubble plates – we have 42. You get a distillation of alcohols at every plate and so, because we have more than anyone else, we create a much purer product at the end. : But vodka’s not known as a drink people consume for appreciation of quality, is the extra effort you put in worth it?

Most other vodka producers use cheap grain spirit which they buy-in to make their drinks. It’s mass produced petrol with no depth of flavour William Chase

WC: If you’d asked me a few years ago I’d have said no. It costs 25p for a bottle of grain spirit and it costs us around £5 to produce a bottle of our single estate spirit.

So on the face of it, being committed to being single estate doesn’t make sense. But then you look at consumer buying habits in the alcohol segment over the last few years. There’s a huge amount of trading up and exploration of new drinks.

We’ve seen it in the real ale category, and now cider is booming with lots of new, premium brands.

When I set up Chase, I could see that more educated consumer growing in the spirits segment. Particularly with regards to gin, but also vodka. You could see a fashion developing around drinking neat spirits, and that’s when quality starts coming into its own.

This is particularly true in export markets which account for around 30% of our turnover today but will be 70% in three years. : How difficult is it to market your single estate/quality USP?

Our interviewee William Chase is founder of the successful crisp brand Tyrrells and, more recently, of Chase Distillery, a niche producer of premium potato vodka, gin and other spirits.

A true entrepreneur, Mr Chase says he was driven to the vodka making venture by a desire to “see if I could do it again,” after his success in making Tyrrells a world-renowned brand.

Scan the QR code for a longer online interview with William Chase bit.ly/ConArtisans

WC: Very. Our major challenge is that other brands in the premium or niche categories are often fakes – people who are adding a few final flavours to a cheap bought-in spirit in a kitchen-table operation and posing as artisan manufacturers, They’re not really manufacturing anything. They know very little about the process, it’s all outsourced and there’s nothing niche about the base product at all. But they invent a brand story that sounds cosy.

That’s artful, not artisan.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 43

Directors’ Forum

Manufacturing EVENT Leadership REVIEW

Manufacturer Directors’ Forum Summaries of two dinner debates attended by members of our networking and knowledge exchange group.

Birmingham, June 26

Portsmouth, July 16

What is World Class Manufacturing? Guests at ’s Directors’ Forum Dinner in June debated the point long into the night.

A

strong introduction from Lander Automotive’s Roger Whitehouse explained why the world’s most thoroughly documented example of lean manufacturing, the Toyota Production System, has become such an important touchstone in attempts to define ‘world class’ operations.

Guests included Caterpillar’s Tony Carr, who was able to describe the pillars of the official World Class Manufacturing system as practiced by his firm. But the wide spread use of ‘world class’ as a descriptor in industry marketing was agreed by all to require better definition.

Some favoured sticking to straight forward measurement of industry specific performance against key metrics such as cost, quality and delivery. Others firmly maintained that being truly world class requires more subtle characteristics including commitment to ethical treatment of staff.

Frank Walsh, plant manager at Royal Mail highlighted the need to be careful in the expression and formulation of KPIs in order to drive the intended behaviours or results. Steve Knight, a consultant with business improvement specialist Newton Europe agreed, adding that prioritisation of problem solving activity was a hallmark of world class companies which have a clear vision of how operations should support company growth. further reading: Read ‘Who’s got class? online for more detail from this dinner debate: bit.ly/Whosgotclass Guest companies included: Automotive Insulations, Caterpillar, Drallim Industries, Lander Automotive, NSK Europe and Royal Mail.

thanks Newton Europe for its sponsorship of this Manufacturer Directors’ Forum.

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Manufacturers in the south of England shared tips on the best local training providers and advice for a growing firm looking to invest in ERP software.

Alphsat at Astrium’s Porstmouth site during payload assembly integration phase

S

imon Taylor of satellite manufacturer Astrium kicked off discussion at this Directors’ Forum dinner which was designed to help local business networking and knowledge sharing on ways to tackle challenges and opportunities in the marketplace.

Mr Taylor’s insights prompted an exchange of experiences in addressing skills shortages, gaining buy-in for lean improvement programmes and overcoming market saturation or stagnation through diversification and exports.

Tyrone White, manufacturing manager at Eaton Hydraulics particularly recommended Peta (Portsmouth Education and Training Association) as high quality local partner for engineering apprenticeships. Meanwhile, discussion of how to maximise the benefits of lean improvement activities through working with suppliers and observing peers proved fruitful for Eaton and Di-Spark. The two are now in the process of arranging exchange visits to each other’s plants.

Another topic for consideration by the eclectic group of regional manufacturers was raised by Wayne Palmer, MD of SME Thinking Space Systems. Mr Palmer asked peers for advice on scoping out and managing the implementation of enterprise resource planning for his rapidly expanding firm. He received animated input on the pitfalls of customisation and under estimating management resource. further reading: Read ‘Salad leaves and satellites’ online for more detail from this dinner debate: bit.ly/SaladandSatellites Guest companies included: Astrium, Eaton Hydraulics, Di-Spark, Thinking Space Systems, WPL and VitaCress

thanks Business Growth Fund and Thomas Eggar for their sponsorship of this Manufacturer Directors’ Forum.

Peter Russell, Royal Bank of Scotland’s head of manufacturing & industrials, examines some of the ways in which manufacturing supply chains are evolving to enhance integrity and improve competitiveness for an impending decade of change.

46 www.themanufacturer.com | September2013 | Issue 7| Volume 16

S

ince the European horsemeat scandal broke, the debate around how well companies know their own supply chains, how they can maintain quality across long, sometimes global supply networks and how best to manage them to meet ever changing market conditions has heightened.

After Europe’s consumers learnt that some of their daily meat supply involved unscrupulous Romanian slaughterhouses, meat traders in Cyprus and the Netherlands and a processing plant in Luxembourg, a sharp focus has been brought on what distinguishes successful supply – and not only in the food industry. What is the maximum level of complexity a supply chain can manage? How can supply chain managers maintain a sufficient level of oversight and control, ideally without adding additional costs?

Overhauling long, often global, supply chains to ensure transparency and consistent quality is a considerable task, and corporate decision makers might question whether the impact of any adjustments would justify the necessary investment and effort it would require.

But PwC’s recent global supply chain survey1 features the responses of over 500 supply chain executives across a range of industries and delivers a clear message: Companies that beat the competition on supply chain performance achieve significantly better financial results.

The survey examined those companies in the top quintile and those in the bottom quintile per industry sector, measured in terms of financial and operational performance. The successful companies deliver on time in full on 95.7% of occasions and have an impressive 15.3 inventory turns, while the not so successful companies achieve only 3.8 turns.

That means greater efficiency and customer satisfaction without driving up working capital, which significantly impacts the bottom line - a fact the survey confirmed.

What will supply chains look like in 2023?

With market volatility increasing and ever changing customer demands there is no straight forward answer to this question. However, six key areas seem to be emerging which UK manufacturers are focussing more and more upon in an effort to ensure they retain market competitiveness in the coming decade.

Supply chain 2023

1

Work more collaboratively and invest in suppliers

UK supply chains should consider reviving manufacturing cooperatives that bring specialised suppliers, service providers and associated institutions of one industry together, ideally in one geographic centre, suggests Professor Rajkumar Roy, head of the Manufacturing and Materials Department at Cranfield University. “Such cooperatives can win more business. Member companies can bid together and reduce operational costs through joint procurement. They can also share development costs whilst boosting creativity,” he points out. The High Value Manufacturing (HVM) Catapult Centre, part of a wider Catapult network managed by the Technology Strategy Board, could support the suppliers in the future.

Prof Roy also urges companies to invest in their suppliers: “The FTSE 100 firms have significant cash holdings. They should be encouraged to invest money in their suppliers,” helping SMEs to grow in order to boost innovation and to help create new jobs.

2

Review re-shoring options

An all-party acceptance that UK manufacturing is not only a key industry for growth, but also a matter of national pride, has spurred the creation of comprehensive support, on a financial and practical level, for the re-shoring of UK manufacturing supply chains.

Financial incentives, easier supplier communication and enhanced creativity through closer collaboration are benefits of localised supply says Prof Roy. Re-shoring also reduces the risk of losing intellectual property to suppliers abroad.

3

Identify further cost saving potential

Rising logistics costs have increased pressure on supply chain managers to justify the economic rationale of offshoring. According to a report about the logistics management of UK firms by transport management firm 3t supply chain, managers are seeking to optimise transport ways and vehicle utilisation.2 Currently, the distance a haulier travels between one delivery and the next collection accounts for over a quarter of all kilometres travelled whilst the average vehicle utilisation in the UK is around two thirds of truck capacity – tackling this inefficiency could lead to reduced costs via lower energy consumption as well as lower carbon emissions.

4

Royal Bank of Scotland

Nurture supply chain talent

The war for manufacturing talent is in full swing. With the government bringing apprenticeships back, manufacturers themselves must start developing more apprenticeship programmes to create the highly skilled workforce that will be required to perform the tasks needed by companies looking out towards 2023.

Professor Roy asserts that University Technical Colleges will play an increasing role in supplying the future manufacturing skills profile.3 The number of UTCs in the UK will soon rise to 45 after the government approved a further 15 earlier in this year. The revolutionary schools are a manifestation of growing collaboration between universities and corporates to combine academic and practical knowledge to educate future talent says Roy.

Looking at the last 15 to 20 years, this is clearly the best time for UK manufacturers to rebuild their supply chains in the UK. There are no excuses, but plenty of opportunities

6

Introduce quality benchmarks and ethical standards

With customers rediscovering product quality and trustworthiness as major purchasing criteria over pricing, the need to instil a sense of quality accountability with every single supplier is more pressing than ever.

The aerospace, defence, security and space trade body ADS launched the SC21 programme to provide a common set of best practice toolkits to improve the supply chain performance across its sectors and to offer certification for quality suppliers.4 Other manufacturing sub-sectors, including food, are investigating how they can adopt similar programmes to achieve these all important benchmarks.

Sources: 1. PwC, Global Supply Chain Survey 2013, October 2012 2. 3t Logistics Ltd, March 2012 3. University Technical Colleges, March 2013 4. ADS, November 2012

Head of the Manufacturing and Materials Department at Cranfield University

5

www.rbs.co.uk/ supportingukbusiness

Increase transparency

High complexity that requires more communication and more control and hence increases management time and costs, represent a classic dilemma for any supply chain manager overseeing a growing number of suppliers of different sizes in different locations.

However, supply chain managers are looking to new technology applications to help improve transparency and manage complexity while actually reducing costs.

Radio-frequency identification (RFID), for instance, allows multiple supply chain partners to interact in the design, manufacturing, delivery and service of complex customer orders.

According to the aforementioned supply chain survey from PwC, more than half of all respondents said they’re implementing or plan to implement such new tools to improve visibility and provide more process automation.

further information To find out how RBS can support your manufacturing business contact: Peter Russell Head of Manufacturing & Industrials, RBS Corporate & Institutional Banking T: (0)20 7672 1007 E: peter.russell@rbs.co.uk For information about the EPSRC Centre for Innovative Manufacturing in Through-life Engineering Services and Cranfield University contact: Professor Rajkumar Roy Head, Manufacturing and Materials Department Director, EPSRC Centre in Through-life Engineering Services, Cranfield University T: (0)1234 758555 E: r.roy@cranfield.ac.uk

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 47

EEF insights

Manufacturing EVENT Leadership REVIEW

Personal banking

The Challengers Rob Lankey, commercial mortgages managing director at Aldermore and leader of the bank’s manufacturing services, explains the role of challenger banks in Britain’s return to growth.

48 www.themanufacturer.com | September2013 | Issue 7| Volume 16

F

ollowing a bleak period of seven consecutive quarters of negative growth, I was delighted to see positive figures return to the sector in the second quarter of this year.

Manufacturing is on the mend.

As Britain’s leading challenger bank, Aldermore has worked with a host of manufacturers over the last few years.

Only founded ourselves in 2009, the height of the recession, our experience of the difficulties faced by manufacturing in the global financial meltdown was very fresh and vivid.

We can blame the wider economic climate for some of the trouble with demand and confidence manufacturers have had to cope with. But, significant blame rests at the door of the financial sector, which failed manufacturing and other SMEs across the country in many ways.

Aldermore was founded to challenge the way traditional finance works, putting customers at the heart of everything we do and delivering tailored services, not off-the-shelf products. In difficult economic times, it is ludicrous that manufacturers seeking finance should receive a “computer-says-no” answer to a request for finance.

But this has too often been the case with traditional banks, a frustration Aldermore has responded to by promising that every application for finance with us is reviewed by a human being. A human being furthermore, with manufacturing expertise, who is able to make an informed financing decision based on real-life circumstances, not solely on the balance sheet column in a spreadsheet.

That is what banking should be.

Challenger banks like Aldermore are uniquely positioned to change the way manufacturers work with their banks. The personal approach and expertise we offer has only been possible because we are ourselves a child of the recession. We understand the marketplace and have built a bank to deal with the realities our clients face on a day-to-day basis.

This is true across a number of different areas of our bank. Manufacturers have turned to our invoice finance division for a common sense approach to releasing additional cashflow; they have

The financial sector failed manufacturing and other SMEs across the country in many ways [in the recession]. approached our commercial mortgages team when looking to buy property; our business savings team has helped them secure rates among the best in the market and products that are delivered in flexible wrappers to fit business needs; and they have gone to our asset finance team to support investment in growth infrastructure.

The decade before recovery

Despite July’s relatively robust productivity, serious challenges remain for UK manufacturing. Insolvency levels are still 21.8 % above those seen in 2007 and, although there is slow growth in the economy, GDP growth is forecast to remain below or around one per cent in 2013.

A return the heady days of four per cent growth we experienced a decade ago will need more banks to find better ways of supporting manufacturers through the next ten year horizon, as Aldermore is already doing for thousands of SMEs in the sector.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 49

Participating companies will not be expected to pay any salary to the trainee while on the programme.

We aim to make Traineeships in AME a passport into work, matching talented young people with employers, ensuring we create a skills pipeline to replace the estimated 82,000 highly skilled workers due to retire by 2017.

Traineeship benefits for manufacturing

Manufacturing matchmakers

Bill Twigg apprenticeship director of skills body Semta explains a new initiative to help ensure quality entrants into advanced manufacturing and engineering companies.

T

here is little doubt one of the biggest barriers to recruiting apprentices - or for that matter graduates - is the time the whole process can take with no guarantee the right person ends up in employment.

Particularly for small and medium sized companies without a human resources department, it is a daunting, time-consuming and potentially costly process.

That is why we are about to launch guidance for employers, training providers and the trainees themselves – a simple, practical approach to working in the Advanced Manufacturing and Engineering (AME) sector and the support available.

Traineeships are a new government funded initiative to get young people between the ages of 16-24 into work. They will allow candidates to be vocationally developed for the job in a college or by a skills provider, then introduce them to an organisation for a minimum six weeks work experience

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It is great way for employers to check out a candidate before offering them full-time employment and for the potential employee to reaffirm it is the career for them.

And the beauty is the Traineeships can be constructed to be relevant to a specific industry as well as the wider sector.

They will be available to businesses operating in a wide range of disciplines including aerospace; electrical and electronic engineering; maintenance engineering; mechanical engineering; motor vehicle manufacture including motorsport engineering; ship/boat building maintenance and repair.

We have consulted employers and they can see Traineeships will give them access to good calibre pupils for their Intermediate and Advanced Apprenticeship vacancies and the confidence to employ those who have successfully completed a Traineeship from day one on completion of the programme.

Through the rigorous selection and monitoring process they can be confident the participants are suited to the company and to further

Semta

WORKFORCE & SKILLS

Those who do Traineeships will be young people who know what engineering is about and what is expected of them in an Apprenticeship programme Bill Twigg, Apprenticeship Director, Semta

training and are less likely to drop out early. Those who do the Traineeship will be young people who know what engineering is about and what is expected of them in an Apprenticeship programme.

Indeed, I believe those who complete the scheme will have the potential to progress rapidly through apprenticeship training, becoming an asset to the company.

How Traineeships work

All Traineeships will require industry experience.

Best practice is viewed where there is a clear relationship exists between a provider and employer giving each trainee a minimum of 180 hours (30 days) work placement.

The work experience period will form a critical part of the Traineeship and will be strongly linked to the NVQ/ vocational training element of the programme.

On successful completion of the Traineeship in Engineering, candidates will be issued with a Traineeship Completion Certificate by the provider clearly stating the achievement of each student, certified by the industry awarding bodies EAL and City & Guilds.

It is important participants get involved in all the day to day activities in an engineering environment such as design, problem solving, machining, assembly, planning, testing and inspection skills. The work experience often will be a combination of group activities and individual tasks and projects.

Trainees will benefit from mentoring support from engineers at their work placement company throughout their time on the scheme.

Working in a company gives trainee’s a real insight into the hundreds of different job roles, progression routes and working environments in engineering.

And it will teach them other aspects of the business – how to maintain equipment, the costs and how orders go from sales through to manufacture and are then dispatched to the customer.

Such insight will be invaluable as well as ensuring the trainee has a full understanding of how the whole operation works and where and how they fit in.

Most importantly of all, where a successful match is achieved between employer and trainee on the Traineeship programme, once the candidate has reached the required standard on completion of their full time studies, they will have the opportunity to progress into full time employment as semi-skilled operative, Intermediate or in some cases Advanced Apprentices.

The guidance and programme itself is designed to make it as easy as possible for employers to recruit the right people – it is a simple but effective process to keep the talent skills pipeline flowing and Semta’s skills experts will be there to support the employer, training provider and trainees every step of the way and Semta’s Apprenticeship Service will also be running this programme to demonstrate best in class Traineeships activity for the Sector.

I urge all employers in the sector to see how the Traineeship programme can help them and those in the supply chain and to contact Semta for more information.

Read about: Traineeships: Framework for delivery, Matthew Hancock MP, Department for Education and Department for Business Innovation and Skills.

Manufacturers back traineeships, James Pozzi, The Manufacturer

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 51

‘Allo Guv’nor What one London school is hoping to achieve by appointing an advanced manufacturing CEO to its board of governors.

Paul Jackson, CEO of Engineering UK, supported the launch of the new Engineering Environmental Technologies apprenticeship pathway

Enviro-tech rush Less than two months after its launch the Higher Apprenticeship in Engineering Environmental Technologies scheme, developed by City & Islington College, London, had 40 company-sponsored places confirmed and 53 pending.

T

he new Higher Apprenticeship course was unveiled in June and City & Islington College announced the above subscription rush in mid-August. The course is targeted at the construction, manufacturing and building services sectors, with individual pathways for apprentices in each area.

Using money from the Higher Apprenticeship fund, the pathways have been shaped to supply growing demand for high level environmental engineering skills to tackle the impact of climate change and satisfy legislation.

Paul Jackson, CEO of EngineeringUK, which promotes engineering careers through initiatives like the Big Bang Science Fair, was quick to congratulate City & Islington College on its wave of apprentice recruitments. “It’s crucial to the economy that higher level skills are in place. This year’s EngineeringUK Report identifies the need for close to 70,000 people qualified in engineering disciplines at level three and above each year, more than double the existing numbers,” he said.

The majority of early sign-ups to the new course have come from the building services sector, but manufacturers who have committed to training apprentices on the scheme include: NE Plastics (Kent), Studio Tone (London), Clement Clarke International (Essex) and Cummins Turbo Technologies (West Yorks).

Delivery of the Higher Apprenticeship in Engineering Environmental Technologies is not limited to City & Islington College. The course can also be accessed at: Wirral Metropolitan College; Uxbridge College; Carshalton College; Basingstoke College of Technology, City of Wolverhampton College, Barlows Electrical, EAGIT and JTL Training.

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rnest Bevin School confirmed in July that Dr Siavash Mahdavi, CEO of Wandsworthbased Within Laboratories, a 3D printer producing bespoke surgical implants as well as aerospace and Formula 1 components, will join its governing board in October.

Richard Glasson, chair of the board of governors at the school, located in Tooting, South London, said he was confident Dr Mahdavi would make a valuable contribution to the school and widen the outlook at it students – all boys up to sixth form.

Himself an employer, Mr Glasson said it is critical that young people get regular and varied insight into real workplaces and get to meet with successful business people in a variety of different environments.

On the importance of engineering and manufacturing careers, Glasson commented: “My brother is an engineer and it has often struck me how the intensity of training, depth of knowledge and ability involved in being a successful engineer is undervalued while other career options, which require much less discipline are admired.” He said he hoped Mahdavi’s involvement with the school would help its students gain a more educated understanding of the importance of industry.

Glasson also emphasized that Ernest Bevin will encourage Mahdavi to highlight all possible career routes into industry – not just university. “The boys have a wide range of abilities and learning styles. Some show their talent through focus on ‘pure’ subjects like maths and science, others are enthused by more applied, hands-on, study like they get in our D&T department. We want them all to find the best next step for them in their education.”

The Manufacturer introduced Dr Mahdavi to Ernest Bevin earlier this year as part of its Back2School campaign to see more manufacturing leaders take up positions on school governing boards around the UK. FURTHER READING: Read about why Dr Mahdavi’s was keen to become a school governor bit.ly/MfgBack2School

Snaphots

Workforce & Skills

Skills gap sorted A new programme will target the relationship between teachers and employers to give young people a better chance of understanding how their education and abilities could lead them into manufacturing. has gained insight into a new skills initiative designed to make better links between the delivery of the national curriculum and the creation of skills needed by manufacturing and engineering employers.

Skills Gap, from the Design & Technology Association (D&T Association), will officially launch in October, but was given a sneak preview of the programme which has been developed in line with the new D&T curriculum up to Key Stage 3 – a programme of study the D&T Association heavily influenced in partnership with the Design Council and the Royal Academy of Engineering.

The structured programme will help teachers tick the boxes they need to for curriculum delivery while targeting education at the defined skills gaps of partner companies and giving children direct experience of engineering problem solving over an extended period – not a one-off day event.

Look out for more detail on the Skills Gap pilot programme online and in the November magazine.

The making of management and leadership Manufacturers are failing to differentiate management and leadership skills and risk creating a vacuum of both at middle and senior levels while they focus on shop floor skills gaps.

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ecent research from industrial automation firm Festo highlighted a feeling of insecurity among manufacturers over the quality of management and leadership skills. Thirty eight per cent of manufacturers surveyed earlier this year said lack of management skills were of great concern.

Gary Wyles, MD of Festo’s training and consulting business, said the problem is compounded by a failure to differentiate between management and leadership skills, a lack of sophistication in coaching mechanisms and demand for middle management to continue ‘mucking-in’ to plug gaps in shop-floor technical skills.

To read the Wyles’ blog ‘Don’t Mistake Management For Leadership’ go to: bit.ly/MngmentVLeadership

FURTHER READING We’re not the only publication putting out quality content on the wide range of topics we cover for UK manufacturing. Here are a few workforce and skills-related articles that caught our eye elsewhere: The Guardian: ‘Why don’t parents get the value of apprenticeships?’ bit.ly/GuardianApprenticeships The Telegraph: ‘What’s the point of women only business awards in this day and age?’ bit.ly/TelegraphWomenAwards BBC: ‘Are there too many managers?’ bit.ly/Toomanymanagers The CBI: ‘Straight A students on front pages for getting on vocational courses; that will be true progress’ bit.ly/CBIVocationalSkillsBlog EEF: ‘Manufacturers are crying out for young, skilled talent’ bit.ly/EEFAlevelblog You can find all of ’s workforce and skills-related news, features and blogs at www.themanufacturer.com/topics/workforce-and-skills

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 53

Rupert Hodgkins

Employee of the Month September 2013 Rupert Hodgkins Bottling Hall Manager Shepherd Neame

EMPLOYEE OF THE MONTH

Highlighting the value of investing in young talent, Shepherd Neame celebrates the contribution of an employee who joined as a graduate just six years ago, but is now responsible for the company’s production technology gem.

What is your role and what are the main responsibilities?

I am responsible for management and quality control in our bottling hall. Installed in 2009, the line is capable of producing 27,500 bottles an hour and we can fill and package up to 65 million bottles a year covering 82 different SKUs for off-trade and on-trade customers in the UK and abroad. It takes a sound combination of engineering and brewing expertise to ensure the beer is treated in the right way, from filter to bottle, in order to maximise shelf life and maintain flavour.

What personal characteristics help you in your role?

Open-mindedness and flexibility. I enjoy taking on new projects whether in brewing, plant design, changing processes or people management.

CV in brief Rupert Hodgkins Age: 32 Education: Masters in Biochemical Engineering at University College London, Institute of Brewing & Distilling (IBD) Diploma in Brewing, currently taking IBD Master Brewer modules.

Career to date: Joined Shepherd Neame from university in October 2007 as an assistant project engineer. Worked as trainee brewer, then as a shift brewer before returning to the engineering department as a process development engineer Hobbies and interests: home-brewing, cooking and travel.

54 www.themanufacturer.com | September2013 | Issue 7| Volume 16

What’s been the highlight of your career so far?

We brew Asahi Super Dry under licence in the UK and I was chosen to spend a month with Asahi Breweries in Japan, working at the Shikoku brewery.

Why was this so important?

It was fascinating to see how the Shikoku brewery was run; how their engineering and production teams work together. It was a valuable opportunity to be completely immersed in a working culture distinctly different from our own.

Furthermore, I was encouraged to record my impressions in a report to the head brewer here and share my experiences with colleagues.

The report contributed to major developments in production and distribution at Shepherd Neame and led to the company winning awards for process excellence.

What are the most rewarding parts of your job?

There is always something new to learn.

I’m working on a new piece of plant to enhance water recovery at the moment and I’ve had the chance to experiment in the micro brewery, creating a traditional porter using smoked malt and local hops. Shepherd Neame really values ideas and imporvement.

What’s next in your career?

I am happy to continue learning my trade and am studying to become a Master Brewer. Ultimately I’d like to gain the knowledge and experience required to be a production manager or director.

What first attracted you to a career in manufacturing?

I enjoy producing something tangible. There is never a question about the value of the work you are doing because you can see the end result right in front of you.

How do you think best to get more young people interested in manufacturing?

Show them how rewarding it is to take great British raw materials and to work as a team to create quality products that are enjoyed locally, nationally and abroad.

Snapshots

Better late than never?

Credit tacker Experian showed late payments worsened in Q2 2013 compared to last year, but are still much better than in 2009.

O

n average, UK invoices were settled 24.6 days beyond terms between April and June this year. A record which is worse by a day compared to the same period in 2012.

It won’t come as a shock to many SMEs to learn that it’s companies with over 500 employees that are the worst offenders. Last quarter they paid up for goods and services 33.9 days after they were meant to.

Companies in the spirits wine and tobacco industries were the fastest payers for the period according to Experian, the sector generally paid only 8.7 days after terms – though by contrast, breweries were 20.7 days behind schedule. Across engineering and diversified industrials the average late payment was 19.8 days after terms.

Max Firth, UK Managing Director for Experian’s Business Information Services division commented on the UK’s payment

Finance & Professional Services

5

performance saying: “Between March 2009 and June 2012, the UK’s largest firms saw the biggest improvements in their payment performance. Although these firms are paying their suppliers faster than they were in 2009, the slowdown in payment over the past 12 months will be felt by the wider supply chain.”

Mr Firth advised smaller firms to invest time and resources to protect against late payment. His tips for getting paid on time are:

Set out clear terms. Be open from the start on your terms for paying invoices or resolving queries. Lay out upfront terms for each relationship covering goods/ services receipt, invoicing and credit and agree them with your customer.

6

The devil is in the detail. Issue invoices as soon as you can and ensure that all the relevant details such as names and addresses are checked and credit terms are clearly marked. Use email to save time and money.

1

Go on a ghost hunt! When you are taking on a new customer, make sure that you are dealing with a real business - around 40% of all the businesses that register themselves never actually go on to trade. Conduct a site visit if you can or use tools such as Google maps to confirm their address and trading status.

7

Follow up quickly. Don’t leave it any longer than five to seven days to follow up an invoice. All too often invoices are not received or there is a query that could be holding up payment.

8

Address issues early. Continually monitoring all your customers once they are on board means that you can identify and address any payment issues early on. If you have hundreds of customers, use a credit management system like Experian’s Business IQ to tell you on the same day that a firm’s credit status has changed.

2

Do some digging. Before entering into any agreement, check out a potential customer’s credit status to ensure that they have the ability and the inclination to pay their bills.

3

Don’t write off bad scorers.

Remember that businesses with poor credit scores can improve. Use this insight to set credit limits that are more appropriate to them or ask for a deposit or full payment up front if necessary.

9

Chase them! Take records of all conversations and any promised payment. Mail monthly reminder statements and keep calling until you get an answer.

4

10

Use the grapevine to your advantage. Make better use of your personal and professional contacts and ask for their insights into current or new customers.

Know your customers. By speaking to your customers regularly and understanding their processes you can avoid many payment problems and encourage healthy communication.

Equity for Punks round III Credit tacker Experian showed late payments worsened in Q2 2013 compared to last year. Are SMEs powerless in the face of this persistent problem?

T

he anti-establishment management of Brewdog, the UK’s fastest growing food and drink company for the last three years running, launched another round

of ‘Equity for Punks’, its alternative finance scheme which supports expansion investments by selling shares directly to the public.

The company has funded £2 million worth of investment through the scheme so far and hopes to raise £4m in this round of share sales which is open until January 2014. £1.5m of this will be used to scale up production at the firm’s brewery near Aberdeen, the rest will largely be used to expand Brewdog’s network of branded bars.

So far it has 11 across the UK and one in Stockholm. There are 42,105 shares

up for grabs in round III, selling at £95 a pop. Investors will join 6,291 existing punk shareholders.

To buy-in to the brew go to www.brewdog.com

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 55

I

Exposed Corner cutting and ignorance of risk complexity are leaving manufacturers exposed to potential business failure finds insurance broker MCM.

56 www.themanufacturer.com | September2013 | Issue 7| Volume 16

magine you are a Rolls-Royce supplier.

You deliver a part which, during testing, breaks and seriously injures one of their employees – or one of your own employees. Or perhaps it simply disrupts production by causing significant damage to property. Would your insurance cover you for the damage or losses incurred?

Since all manufacturers are required by law to take out employers liability insurance and are contractually obligated to obtain product liability cover, you might easily assume the answer is yes.

Not so according to Steve Whetham, a director at insurance broker MCM. “Standard insurance contracts might prove unresponsive in any of these scenarios due to insufficient cover or limitations and exclusions in the contract,” he says.

“Commonly, manufacturers will carry up to £2m worth of product liability cover

and £10m of employer’s liability, but the biggest UK pay out awarded for a claim for a single personal injury stands at £26m.” Also some policy wordings have efficacy exclusions, exclude manual work away (or abroad) or exclude certain high risk elements.

It’s clear such significant gaps could spell the end for most businesses.

But Whetham says that a thorough assessment of full risk exposure is something many manufacturers are often unaware of or unwilling to undertake when it comes to renewal or review of insurance policies.

Many believe that it would lead to unpalatable insurance premium hikes and do not realise how small nuances in policy clauses could impact their insurance. “You need to disclose your full risk profile to be sure your cover is valid. And increasing limits of indemnity can be much less expensive than you would think.”

Insurance for manufacturers is extremely complicated. There are so many potential risks and liabilities.

Graeme Trudgill, Head of Corporate Affairs, British Insurance Brokers Association

Risk management and insurance

Finance & Professional Services

Commonly, manufacturers will carry up to £2m worth of product liability cover and £10m of employer’s liability, but the biggest UK pay out awarded for a claim for a single personal injury stands at £26m Steve Whetham, Director, MCM

Product recall insurance All manufacturers should ensure their risk management policy considers their need for this less common, but highly valuable form of insurance says MCM. In 2011, the UK hit a 10 year product recall high with 291 recorded in research by the law firm RPC. While this number dropped slightly in 2012, to 260, product recalls remain far more rife than many might suspect – they are far from being restricted to headline hitting cases like those recently suffered by Britvic, Boeing, Toyota and numerous manufacturers of ‘beef’ products who are now struggling to shake off tarnished reputations and recover losses in the wake of the horse meat scandal.

Product recalls can happen to any manufacturer at any time, often not due to a fault in their own product, but due to contamination or damage from another component in their supply chain.

Steve Whetham, a director at insurance broker MCM comments: “A client of ours recently recalled an order it had delivered to a client plant in France Graeme Trudgill, head of corporate affairs at the British Insurance Brokers Association (BIBA) backs Whetham up. “Insurance for manufacturers is extremely complicated. There are so many potential risks and liabilities and the level of exposure will vary depending on the nature of your property, your production processes, raw materials, market applications and more.”

“That said, our network of brokers should be able to find a supplier and product which fits your particular risk profile, considered level of risk aversion and budget,” continues Mr Trudgill, who emphasizes that all accredited brokers are bound by agency law to act in the interests of the client – not the insurer.

because it was discovered that an externally supplied adhesive might contaminate the plant requiring its entire system to be cleaned and millions of pounds in lost production.”

The firm’s swift implementation of its product recall process allowed the company to escape potential liability for such a loss. But its decision to invest in product recall insurance also meant that it avoided shouldering the £125,000 cost of returning and disposing of the contaminated products and resupplying approved replacement products.

Many manufacturers pride themselves on the quality assurance procedures and might, therefore, feel that such insurance is not for them.

But “while your QA procedures may be excellent, can you honestly say the same for all of your suppliers?” asks Whetham.

With many manufacturers having almost no visibility of their supply chain past their tier 1 group it’s a worrying question.

“The important thing to remember is that having a policy which responds in time of need could mean the difference between success and failure. Your insurance cover should reflect and enforce a wider risk management strategy,” he sums up.

Proper risk modelling is relatively nonintrusive promises Whetham who urges manufacturers not to underestimate the valuable risk transfer mechanism that appropriate insurance can offer in return for the investment of a relatively

insignificant percentage of turnover in premiums.

Tony Sedgwick Logan, general manager at Aflex Hose, a client of MCM comments “We have dealt with MCM for a number of years and obtain comfort from their thorough review of business risk exposures and pro-active advice.”

Pardon the interruption

So where might you want to increase your levels of cover?

With late payments and defaults still rife in the post-recession climate, the option of insuring against bad debt – typically for around 3% of turnover – sounds attractive.

An area which BIBA is particularly keen to promote however, is Business Interruption (BI) insurance which can cover a wide range of losses in the event of a disaster which requires the relocation of the business or the replacement of key equipment. “BI can also cover you for loss of income,” comments Trudgill. BIBA advises that any quality BI policy should cover a two year period after the initiation of a claim. But most existing policies only apply for 12 months and Whetham says many manufacturers have insufficient interruption costs insured.

With the Business Continuity Institute reporting that three in four UK firms experienced a supply chain disruption in 2012, and that the financial cost of these disruptions is increasing, Business Interruption insurance is coming into its own as a means to support business confidence.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 57

R&D tax credits

Report | Report 2 | Report 3 EVENT Finance &1 Professional Services REVIEW

get involved with our clients and become a partnership.

“As a subcontractor, you are reliant on your clients giving you work, and if you can help them achieve what they want, they’ll stay with you. Recently we’ve brought work back into the UK from Italy, and unlike many companies in our sector we didn’t experience a downturn throughout the recession and 2012 was our best year yet.”

Reward in waiting

Mark Evans, managing director, R&D Tax Claims and Jim Simpson, managing director, Quantum Precision Engineering

Quantum leap The realisation of R&D tax credit benefits has put a £21,500 boost behind further innovation at Birmingham based Quantum Precision Engineering.

58 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Q

uantum Precision Engineering design and develop high precision components and CNC turned parts for UK manufacturers involved in all kinds of specialist engineering and manufacturing from gas controls to sports air rifles and tableware. It even made parts for the Olympic torch. “And as there were 12,000 torches made, we had a nice order for 144,000 parts,” says Jim Simpson, Quantum’s owner-manager who established the firm in 1979 with a single machine and one apprentice.

The firm now employs 10 people and takes R&D, especially in collaboration with customers, very seriously.

Development projects can be time consuming, “Trial, error and modifications can take many man hours, including liaising with the client, going back to the drawing board, onto the machines – eventually we get it right and bring the concept to fruition.”

But the time invested is essential to the company’s success and future growth, continues the MD. “R&D enables us to

But despite such commitment to R&D, Mr Simpson says he was not aware of the R&D tax scheme until a colleague recommended he contact R&D Tax Claims, a Wolverhampton-based R&D tax specialist, “and even then I didn’t think we’d qualify as we saw ourselves as subcontractors.”

However, as Quantum clearly carry out significant R&D for its clients and has been careful to record this in its bookkeeping, filing a significant claim was a hassle free process for the team at R&D Tax Claims.

Mark Evans, managing director of R&D Tax Claims says Quantum represent “the unsung heroes of hi-tech manufacturing”; contract engineers who cannot shout about their product or brand, but whose precision parts are an indispensable to the bigger industrial picture.

“Quantum did not suffer in the downturn because they are committed to R&D, a dedication which enables their clients to improve, and innovate.

“A helping hand from HMRC in the shape of an R&D tax credit is an acknowledgement of the importance of the work that UK engineers and manufacturers produce,” sums up Mr Evans.

Read about: Scan the QR code for a fuller account of Quantum Precision Engineering’s R&D tax claim process and the activities which qualified for relief. bit.ly/ QuantumleapRandD FURTHER READING: Finance 2013: Making the most of manufacturing tax breaks, , May 2013 http://bit.ly/Finance2013TaxBreaks

Tax strategy

Finance & Professional Services

Tax and transparency: a strategy quandary

R

Heather Self, Legal Director at Pinsent Masons, considers the need for carefully expressed tax strategies in the midst of media hype over tax shirking.

ecent media heat over corporate tax avoidance, concentrating on US-owned big brands including Google, Apple and Amazon, have made it clear that UK tax rules are no longer fit for purpose.

They were conceived before the internet was born, for a world where selling goods in a national market necessitated having a significant physical presence in that jurisdiction.

That world has gone and the rules need to adapt to reality – a change process the UK cannot undertake alone. The OECD reported to the G20 Finance Ministers in July with its Action Plan for reform of the tax rules as part of its Base Erosion and Profit Shifting (BEPS) project. It set an ambitious target of achieving change within two to three years.

But there is a lack of understanding amongst MPs, the press and the public as to how the UK tax system operates which hampers progress. There’s an obsession with judging a company’s ‘fair share’ of tax contribution on turnover, a measure which bears little relevance to profit.

There’s also been undue condemnation of firms who have not paid corporation tax because they have claimed capital allowances on infrastructure spending. This does not brand them a tax avoider – a point the CBI has attempted to clarify with limited success.

Manufacturers under the spotlight

Manufacturers have largely escaped media attention, so far, on this topic. Unlike internet selling, manufacturing still does generally require a significant presence in a jurisdiction, and the need for a cost efficient, trained workforce rules out using most tax havens.

However, even if they have not been involved with aggressive tax planning, manufacturers are at risk from allegations that they are not paying enough corporation tax as a result of using

losses from previous years and claiming capital allowances or reliefs like the new patent box.

What companies need to do now

To avoid adverse media scrutiny of tax policies a coherent tax strategy is essential. This should take into account the PR implications of tax planning.

Those responsible for tax planning in the past need to clear out any ‘skeletons in the cupboard’ and settle outstanding issues.

Companies also need to be more transparent with shareholders, customers and the media about tax strategy and

Even if they have not been involved with aggressive tax planning, manufacturers are at risk from allegations that they are not paying enough corporation tax group structure. You can take part in the debate on how best to do this through a BIS survey which seeks to understand the costs and benefits to UK companies of proposals for transparency (scan QR code below to go to the survey).

Finding the right approach to transparency will not be easy as Vodaphone found this to its cost when it attempted country by country reporting, setting out its tax contribution in different jurisdictions including corporation tax, VAT and employment tax as well as payments to governments for mobile phone licences.

While its openness was welcomed by many, the press focused almost entirely on the fact that it has paid no UK corporation tax for the last two years due to infrastructure spending. Such a response only goes to emphasize the careful thought that all companies need to put into expressing their tax strategy.

BIS Survey: Scan the QR code to take part in the BIS Tax Transparency survey. bit.ly/TaxTransparencySurvey

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 59

??????

How can you deal with the skills shortage?

How can you improve quality?

How can you grow your business?

How can you increase your company’s competitiveness?

How can you give your staff greater job satisfaction?

How can you decrease wastage in production?

The Manufacturer magazine in conjunction with the leading automation equipment suppliers has established The Automation Advisory Board to educate ownermanagers and factory directors about what automation equipment can do and the benefits it can bring to UK manufacturers.

where the capital equipment could make a profound difference to winning contracts.

Companies in non-auto sectors, who are unfamiliar with the range, capability and simplicity of automation kit, need and deserve to know what automation options are available.

Automation needs to rise to the board level in companies of all sizes, but especially larger SMEs

In 2013 it is a business risk not to be informed about the benefits this technology can bring.

Automation is not the question, it is the answer!

For more information contact Henry Anson, Managing Director, Sayone Media (publisher of The Manufacturer) E: h.anson@sayonemedia.com T: +44 (0)20 7401 6033

The Automation Advisory Board is proudly supported by: ABB, Festo, Rockwell, Kuka, Omron, Staubli

Automation can provide the answer to all these questions and many more…

See page 66 of this issue of The Manufacturer for the first in a series of automation thought leadership articles from AAB.

Energy Systems Catapult

The case for the Catapult

T

he decision to establish an Energy Systems Catapult is a pertinent response to a clear need.

The Catapult’s are designed to help turn ideas into reality, bridging the gap between concept and commercialisation by bringing a critical mass of activity and expertise to particular sectors. They are longterm strategic investments for effective innovation that will benefit the whole economy as well as individual firms.

As the energy system changes over the coming decades in order to deliver affordable, secure and low carbon energy, the integration and control of new energy systems will become a critical new market in the UK and abroad.

These systems will be more complex due to greater contribution from a bigger variety of renewables which will mean managing more variable supply patterns. There will also be new demand services around electric vehicle charging and electrification of heat, for example, which will make balancing supply and demand challenging.

A worthwhile investment

It is worth our while to lead the field in overcoming these challenges. The future market for energy networks and storage alone is estimated at £1.6tr to 2050. We want UK companies to be able to access these markets and this Catapult will help them to do so.

The UK has a burgeoning SME base in smart energy solutions and system integration & control is a key area of expertise. But TSB knows

Sustainable manufacturing

Rob Saunders, head of energy at the Technology Strategy Board, explains the requirement for the newly announced Energy Systems Catapult from its own energy programme that there are numerous small businesses with groundbreaking smart power technology ideas who often struggle to commercialise their technologies.

It is difficult to understand the role and impact of new technologies in a complex system, and it’s challenging to get radical technologies proven in a regulated asset-base The Catapult will provide a place for innovative UK companies to go to for help to overcome these issues, perhaps through leveraging system modelling and simulation, enabling testing and providing links to critical regulatory bodies such as Ofgem and Government.

While the Catapult will focus on helping SMEs bring new products to this emerging market it will seek out work with larger businesses such as Siemens and Alstom to help join up the supply chain and heavy energy users like Network Rail to develop understanding of future demand patterns.

Collaboration with the existing UK and international research base in this sector will be essential. TSB has identified key pools of existing academic expertise in UK universities including Imperial, Cardiff, Manchester, Nottingham and Stathclyde, and the Catapult will try to bring these institutions on board with its challenge to commercialise their research through partnership with industry. Of course the Energy Systems Catapult will look also to capitalise on obvious synergies with the existing Catapults for offshore renewable energy, future cities,

transport systems and connected digital economy.

The next steps are broad industry consultation to develop the detailed scope for this centre, then the recruitment of the right team in place to make it happen. TSB aims for the centre to be operational in 2015.

Catapult update Business Secretary Vince cable announced plans for the Energy Systems Catapult in mid-August.

In the same announcement he revealed that a Catapult centre dedicated to Diagnostics for Stratified Medicine would also be launched and that the existing High Value Manufacturing Catapult has been awarded £7m of additional funding.

To read more about the announcement go to bit.ly/Catapultannouncement

The future market for energy networks and storage alone is estimated at £1.6tr to 2050. We want UK companies to be able to access these markets and this Catapult will help them to do so

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 61

Hydrogen power

Sustainable Manufacturing

“Need to know” facts about Swindon

Seduced

by Swindon

Cars queue to fuel-up at Swindon’s open access hydrgen station - a national first

As Swindon ramps up its hydrogen transport cluster, Forward Swindon explains why ambitious manufacturing firms across sectors should consider establishing a footprint in the town.

S

everal years ago, the South West Regional Development Agency decided that it wanted Swindon to lead the way as a demonstrator town for hydrogen transport technologies.

And despite stumbling blocks for adoption of the technology among manufacturers and infrastructure providers, it has remained committed to proving hydrogen power can provide effective, low carbon transport for domestic and commercial purposes.

In 2011 Britain’s first open-access hydrogen refuelling station was opened in Swindon, realising the defunct RDA’s ambition to place the town at the centre of an M4 ‘Hydrogen Highway’ between London and Swansea.

A pilot project with local businesses now aims to prove that hydrogen power, currently as a dual fuel option, can provide low cost, low carbon, effective logistics. Participating companies are refuelling a range of vehicles at the centre from converted Ford Transit vans to forklift trucks.

BOC, the industrial gas supplier, operates the centre which is based at Honda’s Swindon plant. Forward Swindon part funded the initiative and

62 www.themanufacturer.com | September2013 | Issue 7| Volume 16

hopes that it will inspire a wave of hydrogen projects across the country, establishing the infrastructure network needed before wider manufacture of hydrogen-powered vehicles can kick off.

Economic Strategy for Swindon

But Swindon’s love affair with hydrogen technology is about more than simply its application. The town has a growing cluster of manufacturing and technology businesses in the hydrogen power supply chain.

Furthermore, Swindon has a clearly expressed ambition to become a preferred location for a wide range of advanced engineering, manufacturing and technology companies. This vision is set out in its recently formed Economic Strategy for Swindon and led to the establishment of the town’s advanced manufacturing workshop. This aims to fulfil a gamut of requirements for a robust local advanced engineering and technology base including training the next generation of skilled engineers, sourcing suitable development land, and working within the Local Enterprise Partnership to identify central government funding opportunities.

Costs: Swindon commercial property rents are on average 50% less than other M4 towns and it takes just one hour on the train to get to London from Swindon.

Made in Swindon: Eleven per cent of Swindon’s workforce is employed in manufacturing, higher than the national average, and it is home to many leading names including Honda, Intel, Johnson Matthey Fuel Cells and Plessey. Find out more about the range of manufacturing based in Swindon at bit.ly/SetupinSwindon Innovation: Swindon is ranked amongst the top 10 most innovative towns in the UK according to the 2011 BIS report Distribution of Innovation across UK Industry. The town is also one of the top locations for startup businesses in the UK. 1,500 new ventures were launched in Swindon last year.

Work ethic: Swindon’s workforce is highly productive: it has the highest GVA per head in the South West. GVA per hour in Swindon is 12.5% above the national average.

FURTHER READING: For more detail on the benefits and opportunities for manufacturers considering investment in Swindon go to www.swindon.uk.com or scan the QR code.

PLAYING MUSIC? MAKE SURE YOU’RE LICENSED. 74% of factories agree that playing music increases staff morale.* If you play music in your business, it is a legal requirement to obtain the correct music licences.

PRS for Music collects and distributes money for the use of the musical composition and lyrics on behalf of authors, songwriters, composers and publishers.

In most instances, a licence is required from both PPL and PRS for Music. PPL and PRS for Music are two separate companies.

PPL collects and distributes money for the use of recorded music on behalf of record companies and performers.

A PPL licence can cost your business as little as 19p per day. For more information on how to obtain your PPL licence visit ppluk.com or call 020 7534 1070.

To ďŹ nd out more about how music can work for your business visit musicworksforyou.com *MusicWorks survey of 1000 people, conducted May 2012.

ppluk.com

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September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 63

Snaphots

Manufacturing Technologies

brew for you Report review: Additive The Mossbrew’s equipment manufacturing and demand for brewing kit Highlighting a July report from legal services firm Mayer Brown entitled How to Explore the Potential and Avoid the Risks of Additive Manufacturing.

T

his report briefly explains the range of existing additive manufacturing technologies and their application across a range of sectors including aerospace, construction biomedicine and internet commerce.

The main body of the reports addresses the potential impact additive manufacturing will have on a range of legal frameworks including intellectual property, product liability, and insurance validity.

The report, while enthusiastic about the opportunities presented by additive manufacturing, warns that persisting uncertainties around technology limitations and the business models required to successfully exploit additive manufacturing, should temper commercial investments.

“It is likely that cheap access to additive manufacturing will further strengthen the power of internet distribution brands and channels at the expense of the originators of novel products,” comments one report author while another highlights that automotive and life science manufacturers will be among those most heavily affected by new product liability issues likely to arise with increased use of additive manufacturing technologies.

Read about: To read the full report go to: www.mayerbrown.com/additive-manufacturing

in the UK

W

hile overall beer consumption in the UK is in long term decline, the relative share of cask ale is rising at about 5% a year. Master brewer Graham Moss is capitalising on this trend. His company, Mossbrew, manufactures brewing equipment, packaging full brewery kits in five sizes from Pilot (100 L ) to Large (1,600L), the latter retailing for about £40,000.

From complete novices to more expert brewers, Mossbrew has everything you need to make beer commercially. Datasheets and instruction guides educate on sanitation, engineering standards, fermentation, malting and transportation. Mr Moss’s pragmatic tips even cover the likely ratio of investment to return, business risks, wastage and failure rates.

Engineering plays a big part in successful brewing says Moss who emphasizes that breweries “come under the same regulations as food factories and commercial kitchens.”

Engineers considering a punt in the crowded brewing market should note the engineering and health & safety standards required for: service pipework, brewing water supply and brewhouse vessels, fermentation vessels and finished beer vessels.

Read about: For more about UK alcoholic beverage making industry see our Sector Focus (p34)

Laser-cask Distiller William Grant and Sons’ work with M Squared Lasers for the advance of 21st Century whisky making.

T

his £1.1m research programme is part funded by the Technology Strategy Board and aims to create a step-change in process efficiency for maturation of distilled spirits, including whisky.

By applying a disruptive laser technology solution to quickly and practically detect evaporative ‘angels share’ losses and tiny leaks from the highly variable wooden casks,

64 www.themanufacturer.com | September2013 | Issue 7| Volume 16

the research partners hope to achieve production efficiency gains of around 10%.

The technology would also help William Grant and Sons, one of Britain’s biggest whisky producers, to improve energy and environmental efficiency.

For more information, contact Rod Alexander rod.alexander@tsb.gov.uk

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Those who lead in automation will lead in the competitive battles ahead for global manufacturing says Ken Young, technology director at the Manufacturing Technology Centre and a member of ’s new Automation Advisory Board.

66 www.themanufacturer.com | September2013 | Issue 7| Volume 16

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anufacturing in the UK is undoubtedly experiencing a resurgence. Tough times have led to leaner operations, diversification, focus on ‘value add’ and, we are now seeing strong evidence, growing exports.

But global competition remains fierce in manufacturing – all world leading manufacturing companies are using the above strategies to find or maintain competitive advantage.

To fully optimise every competitive weapon in their arsenal, more UK manufacturers need to consider another approach too – automation.

Too often, British manufacturers have overlooked this option, and the UK is falling ever further behind the rest of the developed world in its adoption of automation technology. Reluctance to invest in the past has often come down

to a feeling that the solutions on offer are; not right for the manufacturing processes (often low volume and niche in the UK), too expensive, or will cause labour disputes. Other reasons often quoted for a lack of interest in investing in automation include: Stories of bad experiences from early adopters Lack of automation skills in the business Failures in the market of key systems integrators Low manufacturing confidence leading to postponed investment plans Inconsistent Government industrial policy obstructing a clear vision for the future of manufacturing in the UK All of these reasons or perceptions may have been true at one time, but the rate of technological advance means

Automation

Some key reasons to adopt automation technologies in a manufacturing business

1

Automating a process drives a deeper understanding of it and that allows a company to get more from it than previously possible. This can manifest in tighter control of tolerances, costs or simply an ability to turn the process on and off as demand fluctuates without massive cost or disruption.

2

The manufacturing environment is very different now and recruitment and retention of skilled staff aren’t easy. While manufacturing was shrinking there were always plenty of people looking for jobs, now there are very few and the price of employing them is rising.

MANUFACTURING TECHNOLOGY

The Automation Advisory Board In order to drive the issue of automation into the board room The Manufacturer has set up an ‘Automation Advisory Board’ (AAB).

This will create and disseminate material to help board level decision making on automation issues and change the perception of it as an engineering tool to a strategic tool.

Our aim is to ensure that UK industry does all it can to remain competitive against our major rivals both within Europe and across the developing world.

For more information on the AAB go to p60

3

Automation can greatly enhance the experience of working in manufacturing and help to attract and retain top quality employees by taking away the hard, dirty and repetitive aspects of the work. If used appropriately it releases the workforce to concentrate on improvement activities and developments for the future.

A word of warning Automation should not be regarded as the cure-all for a manufacturing firm’s problems. It is a tool to help drive technology, skills and appropriate behaviours into a business. It is hard to do properly but if best practice is applied the end results makes it worthwhile.

Automation can change the nature and quality of job in manufacturing

To avoid disappointment in an automation investment:

1

Establish some automation capability within the business by selecting a few capable staff and getting them to work with an implementation partner to select some appropriate areas to start

2 3

Build capability with small projects and ensure that your workforce is fully bought into the automation concept or strategy Gradually roll out automation into key parts of your business. Don’t go for short term payback, look for maximum long term benefit.

that there is now a far broader scope of increasingly flexible and cost effective automation options available to manufactures – and case studies show that redeployment of staff can actually lead to more jobs in and around the manufacturing sector.

Furthermore, it is now clear that there has been a massive change in the way manufacturing is viewed by political and financial leaders. Government has finally recognised the importance of the manufacturing sector and is supporting it and many sectors are seeing larger

order books than ever before, a boost which is feeding down into the supply chain and giving confidence to investors and manufacturers alike to buy new technologies, recruit appropriate staff and train existing employees.

Automation can bring competitive advantage by reducing cost and improving consistent quality. But it can also act as a strategic tool to drive the business, giving it a sustainable leadership position.

While this can be difficult to display on a spreadsheet, it needs to be understood at board level that strategic automation investments are about long term competitiveness.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 67

As motor driven systems use around 60% of the electrical energy in industry, implementing variable speed drives to control electric motors still represents one of the biggest potential cost savings

Industry 4.0

S

ince the first Industrial Revolution, technology has been the primary enabler of productivity in manufacturing.

Early developments were mechanised – such as Edmund Cartwright’s loom in 1784 which enabled textile production beyond labour based methods. A second productivity leap occurred in the late 1800s with the introduction of electrical energy and labour division concepts that became central to mass production after their first use in the slaughterhouses and meat packing businesses in Cincinnati around 1825.

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We are entering the age of Industry 4.0.

Brian Holliday, divisional director at Siemens Industry explains the technology trends shaping this new paradigm for highvalue, flexible production.

It wasn’t until the 1960s, that a third significant productivity change was achieved. This was when factories began to exploit intelligent manufacturing technology and programmable automation and robotic systems were introduced, transforming primary adopters in the automotive and electronics sectors.

Today, industry is experiencing another step change in productivity, driven by market trends for globalisation, individualisation, and the need for resource efficiency, but also by technology developments linked to computing, the Internet of Things and

the pace of change in miniaturised microprocessors.

These advances will transform the usability and value potential of industrial automation technologies and manufacturers should remain alert to the following five technology trends in order to optimise their technology base for competitive advantage:

1: Industrial Software

Industrial software is multifaceted – let’s focus on three key areas: i) Design – PLM (Product Life-cycle Management) software has matured, enabling incredibly complex design and collaboration projects. Users have traditionally been indiscrete manufacturing sectors, using the software to develop the end-products, but recent developments have applied PLM to process engineering, and plant simulation and design too, reducing capital costs in process manufacturing and infrastructure (p70). ii) Integration – The extended use of PLM software for plant design is leading to tighter integration of product and production processes, a trend that looks set to offer users significant benefits as the tools develop. In plant control systems too, device integration levels are notably increasing, enabling users to easily connect to a broader range of industrial technologies. iii) Operation – Industrial software is increasingly being used for operational monitoring and control. Downtime can be measured and leveraged to drive productivity improvement and optimised production scheduling can be achieved in complex multivariate applications, with companies like Preactor having led the way. Central plant systems like SCADA – for supervisory control – have matured too and are able to address bigger data and safety functions at the human-machine interface (HMI) or operator level

Automation

MANUFACTURING TECHNOLOGY

Explaining industry 4.0 Recent press coverage in Germany has highlighted the work of the Forschungs Union, an advanced research group focused, in part, on the developments required to achieve the next productivity leap in manufacturing. It has defined the step change as the fourth industrial revolution – Industry 4.0.

The new paradigm rests on much of the technological progress highlighted in this article and hints at the smart factory of the future, operating using higher levels of autonomy through distributed decision making.

Middleware, such as Manufacturing Execution Systems, are increasingly linking ERP to shop floor systems

The increased integration of plant and operational IT is also evident with middleware such as Manufacturing Execution Systems bridging ERP to shop floor systems and driving consistency in production management.

2) Energy monitoring and control

As the cost of energy increases, monitoring and management have become critical to industrial users.

In manufacturing and infrastructure alike, one of the fastest payback methods from an energy reduction investment is to exploit the automation system as the backbone of an effective automatic monitoring and targeting system.

As motor driven systems use around 60% of the electrical energy in industry, implementing variable speed drives to control electric motors still represents one of the biggest potential cost savings.

Meanwhile, monitoring plant energy use with sensors helps prioritise replacement, repair and management activity, potentially reducing unplanned downtime and overall lifecycle costs.

However, one of the most underused energy management measures is the off switch. Technology can help here with network connected devices enabled to shut all networked equipment down, even for short periods such as a lunch break or shift changeover.

3) Industrial wireless & distributed intelligence

Industrial wireless technology has developed rapidly over the last 10 years reducing cost and improving flexibility in both factory and process automation systems.

Typical examples include wireless instrumentation with the reduced need for cabling or civil works or connecting wirelessly with devices on moving machinery instead of using and maintaining mechanical slip rings.

With transmission speeds exceeding most determinism requirements and increased data throughput, wireless technology use looks set to grow. With increasingly interconnected devices, there is also a trend towards more autonomy – devices that operate independently of temporary communication losses.

4) Safety systems

Industrial safety systems reliably protect people, machines and the environment from possible malfunctions in the production process.

Until recently, safety systems were hard-wired and separated by regulation from plant control systems.

This approach had the benefit of wide acceptance and a skills base to support it, but suffers from inflexibility and diagnostic difficulty in larger systems.

Through international standardisation and technology developments, safety

Higher levels of distributed intelligence will be made possible through miniaturised processors, storage units, sensors, and transmitters that will be embedded in all conceivable types of machines, unfinished products and materials, as well as smart tools and new software for structuring data flows.

Germany’s National Academy of Science and Engineering (acatech) believes deploying these new technologies and processes will lead to a 30% increase in industrial productivity and revolutionise mobility and healthcare. functions such as an e-stop can now be integrated into Programmable Electronic systems. Combining control and safety has the advantage of reducing the number of overall system components as well as cost and complexity for users.

5) Cyber security

With IP (Ethernet) connected industrial systems and well publicised industrial espionage cases, security is no longer optional.

Cyber security systems are needed for know-how, access and copy protection.

Much development has occurred to protect industrial users through communication technology, software encryption and chip-level hardware protection in control systems but user measures, such as physical security and strict enforcement of security policies, like preventing the use of USB memory sticks which can propagate viruses, will always be needed to accompany security technology.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 69

A 3D plant simulation in Autodesk’s FactorySuite

Virtual

What’s the attraction of using simulation techniques to model production lines or plan factories and warehouses? Malcolm Wheatley investigates as manufacturers turn to the technology with increasing frequency.

A

t Nissan’s Sunderland manufacturing plant, it’s been going on since 1999. At Ford since 2000 and at BAE Systems – a more recent convert – since 2009.

The ‘it’ in question? Computerbased simulation but, emphatically, not the simulation of products under development. Instead, the simulation in question is of manufacturing processes, warehouses, and material replenishment processes. Systems, in short, not things.

The technology aims for improved product manufacturability, slicker replenishment processes, and assurance that theoretical capacities will actually be achieved in practice, under conditions of peak demand.

Peter de Strijker, technical sales specialist at CAD and simulation vendor Autodesk explains that simulation technologies can do this by virtually recreating product flows, enabling you to quickly find bottlenecks, or determine the optimum location for equipment.

Furthermore, once a factory or production line is in place, a manufacturer can use products like Autodesk’s FactorySuite 3D digital factory layout tool to “compare the as-built factory or process with the virtual one, in order to fine-tune it, and bring it closer to its theoretical capacity and throughput.”

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Automotive manufacturer Ford uses Witness, a simulation technology from Lanner Group to test its factory layout options says John Ladbrook, a Ford UK manufacturing engineer, and the company’s technical simulation specialist.

“We’ll evaluate different layout configurations, helping us to identify the best layout, not just in terms of the manufacturing process itself, but also material flow.” He says both are key to efficiency and the simulations highlight potential disruptions and detractors from safety and efficiency which might otherwise be glossed over.

At Nissan simulations are used to trial continuous improvement ideas, particularly at times of peak demand when such experiments, though essential to competitiveness, would absorb scarce manufacturing resources.

Time-to-answer

Manufacturers which have invested in simulation technology are finding they turn to it more and more says Lanner Group’s business development director, Oliver Bird. And while the skills required to manipulate simulation used to be very niche there has been a recent revolution in usability.

“The big news in simulation is that the technology has caught up with

If you have a simulation, why wouldn’t you want to put it on an HMI, and move from the virtual world to the physical one?

Leslie Lee Research Director, High Speed Sustainable Manufacturing Institute

the fact that most companies have neither the people or time to devote to building complex programming-intensive computer models,” says Mr Bird.

“Today, the demand is for user-friendly simulation tools that provide answers quickly,” he sums up.

Why? Because simulation users are finding that reduced time-to-answer equates to a commensurate reduction in time-to-market. In particular, simulation can deliver improvements in the speed and cost of manufacturability

Process & plant simulation

The big news in simulation is that the technology has caught up with the fact that most companies have neither the people or time to devote to building complex programmingintensive computer models Oliver Bird Business Development Manager, Lanner Group

Lanner Group’s WITNESS software is used by Ford UK to simulate processes and material flow

Simulating the use of such purposedesigned stillages and containers under varying conditions of demand and usage allows manufacturers to accurately finetune the numbers required. This supports confidence in the company’s ability to handle the projected workload and potentially saves money by eliminating ‘just in case’ ordering.

Material difference assessments, either during the design or immediately prior to product launch.

“Traditionally, this has entailed building physical mockups. These can now be built virtually,” says Colin Clemson, product sales representative with the DELMIA manufacturing simulation division of Dassault Systèmes, whose simulation technology is used extensively by Ford and Jaguar Land Rover.

“Not only is building a virtual mockup quicker and less expensive, but building it early enough provides opportunities to review the design to make it even easier to build.”

Nissan, meanwhile, have achieved reduced time-to-answer on purchasing decisions for equipment such as bespoke racking, containers and stillages, required when it introduces a new product - in particular, the racks, containers and stillages cycling between suppliers and automotive customers in closed-loop circuits.

Constructed to careful designs in order to maximise the cubic utilisation of transporter trucks at the same time as delivering maximum protection for the parts in question, these specialist containers can cost hundreds of pounds each.

IT in Manufacturing

A similar logic underpins the growing use of warehouse simulation, explains David Vessier, head of simulation at TGW Logistics Group, a supplier of automated warehousing solutions.

Using AutoMod, a 3D graphical simulation tool, Vessier’s team has routinely carried out simulations while fulfilling contracts to build automated warehouses for companies such as Marks & Spencer, Weetabix, KimberlyClark and Coca-Cola Enterprises.

TGW carries out warehouse simulation for three distinct reasons, explains Vessier.

First, simulation provides an element of internal quality control to the warehouse designs that the company is proposing to its clients.

Second, the clients themselves may request a simulation, or want to have a model developed for them for subsequent use by their own people – a trend that is growing, he notes.

And thirdly, simulation helps to optimise the use of resources, ensuring that the warehouse is equipped with the right number of fork lift trucks, for instance.

“We have a list of ‘what if’ scenarios, where we run simulations to examine the consequences,” says Vessier.

“We cycle through the test scenarios, and look at the impact on critical key performance measures.”

Impact of Automation

The increasing automation of warehousing and manufacturing is driving the next wave of development in simulation, says Leslie Lee, research director at the High speed Sustainable Manufacturing Institute.

The basic idea: produce simulations which are portable enough to actually form the basis of operating instructions.

A simulation of a robotic cell, for instance, or a process line, could actually then serve as the design for the thing, eliminating duplicated effort, and enabling the fine-tuned simulated process to be seamlessly translated to the factory floor.

“If you have a simulation, why wouldn’t you want to put it on a human-machineinterface, and move from the virtual world to the physical one?” asks Mr Lee. FURTHER READING: See a longer online version of this article for more detail on the use of process and factory simulation technologies at Ford and JLR. The former used simulation to optimise the size and location of materials ‘marketplaces’ in its factories. The latter has integrated process simulation capability into a wider product lifecycle portfolio for accurate visibility of cost per vehicle among other benefits. bit.ly/VirtualRealityMfg

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 71

Know thyself Phil Lewis, business consulting director at Infor, investigates the rapid development of microverticals and what it means for manufacturing

M

anufacturing is a broad church. It covers a huge array of wildly differing disciplines but all too often is presented as a vertical in its own right, instead of the huge umbrella term that it actually is.

Even some of the immediate sub divisions of the manufacturing industry are still too large to be treated as an individual market on their own.

Process manufacturing spans food and beverage, chemicals and plastics.

And within that, food and beverage includes meat processing, baking and brewing. Discrete manufacturing spans aerospace, automotive, hi-tech, capital equipment and a host of other industries that have staggering revenues.

And this is without even touching on the evolution of services that many manufacturers are currently evaluating, which in some cases will rapidly redefine what a manufacturer, as a company, is actually all about.

So to talk of manufacturing as a market on its own, as opposed to the reality of it being an umbrella of many different industries that are all united by the idea of actually making something, is a huge misunderstanding.

Refining manufacturing

And nowhere has that misunderstanding been more pronounced than in defining and supporting the business processes behind specific manufacturers through IT.

72 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Industry micro-verticals

Consider for example the processes in two, supposedly closely linked industries - let us say the production of bread and the production of milk.

According to the traditional viewpoint, both of these processes belong to the food and beverage segment of process manufacturing and their requirements for data collection and reporting to efficiently and effectively deliver a product to market should be quite similar.

Reality Check

Butr of course they are not a baker needs to track oven temperatures and the time it takes to get up to heat. A baker has massive seasonal peaks in demand for speciality products across Easter and Christmas, and has to schedule the input of a lot of different ingredients for premium ranges.

By comparison, a dairy producer has to grade a single output product by fat content, account for production and tanker capacities, and allow for some production runs with no output to enable cleaning and back flushing.

Whilst similarities do occur - both types of manufacturer have to offer support to retailers, enable traceability and optimise formulae and recipes - these are the demands of better business and governance, not the sources of competitive advantage that mark one baker, or dairy producer, out against its competition.

Systems for your competitive edge

To find this edge, you need to identify and then optimise the specific, specialised processes that mean one manufacturer - or rather, one baker, one dairy producer or one automotive parts maker – can be different and better than its peers.

This is no small task. Being able to identify and optimise industry specific processes and content at this level demands a great deal of specialisation.

The analytics that need to be applied to set objectives, then track and measure improvements are often idiosyncratic.

As a result, the software that underpins these processes needs to be tightly focused on the specific industry. In practice, this approach is now being seen across a lot of enterprise software.

Infor recently announced 160 enhancements that are specific to

various industries and geographies within Infor LN. Examples include a new level of asset and cost control for companies that require advanced project management, capabilities in quality management and finance, and production control advancements for automotive suppliers.

Elsewhere, new cost controls for warranty and claims management sit alongside support for reporting for the United States Department of Defense as well as added visibility into contract profitability and funding analysis.

The march of progress

However, this cannot be at the expense of integrating the software into other areas of the business, or the supply chain. It is therefore imperative that the software that supports manufacturers is not only specialised by specific industry, but also able to easily and quickly integrate with legacy systems or additional applications.

The evolution of mobile, cloud and social technologies has made this integration aspect all the more important.

Infor 10x unites a multipurpose middleware platform featuring social, mobile, analytical, and cloud capabilities with Infor’s industry-leading suite of solutions.

With 10x, Infor has made major advancements in the emerging ION technology platform and achieved greater adoption of those technologies by

IT in Manufacturing

Gone is the age when huge, monolithic ERP systems tried to cover every base and confidence arose from having a huge solution that could theoretically - do everything adding in the underlying transactional applications specific to an industry.

By packaging the integration between relevant applications to allow rolebased workflows, 10x enables the highly specialised scenarios needed for an industry-specific solution without extensive deployment or customisation.

These “industry content packs” feature robust analytics to support cross application and cross functional business processes.

What does this mean for the manufacturers in the specific industries?

In a word, confidence.

Manufacturers should be confident that their software seamlessly supports the core activities that define their competitiveness.

They do not need the distraction of superfluous, excess functionality.

Gone is the age when huge, monolithic ERP systems tried to cover every base and confidence arose from having a huge solution that could theoretically - do everything.

Instead, manufacturers know who they are and what they do - and they need software and processes that reflect that.

Confidence now comes from focus and aligning software and processes to what makes a given manufacturer - be they a dairy, brewery, bakery, automotive, electronics or aerospace company - who and what they are as a business.

Discover the future, today – visit go.infor.com/10x

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 73

Smarter working Aided by implementation experts Columbus, office furniture manufacturer Orangebox made a strategic move to Microsoft Dynamics AX. It was a decision with far-reaching consequences finds Malcolm Wheatley.

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n late 2011, when Hengoed, South Wales-based office furniture manufacturer Orangebox opted to replace its venerable Fourth Shift ERP system with Microsoft Dynamics AX, hard-nosed financial benefits weren’t high on the agenda.

“We were achieving 20 stock turns, we had two hours of work-in-progress, and we were achieving a three-week lead time in a make-to-order business that dealt with literally billions of combinations of colours and fabrics,” says Ewan Tozer, commercial director of the business known for the ‘smartworking’ collaborative working spaces that epitomise Orangebox office furniture.

“So we weren’t surprised when a consultant told us that we were a very efficient business, and predicted an ROI of zero.”

But efficiency improvements weren’t the objective. Instead, Orangebox, already a highly customer-focused business, was targeting a more strategic set of benefits: a better platform on which to grow the business, an enhanced service offering, and a move away from a legacy system which the business had outgrown.

“While stock turns are important, our delivery performance and flexibility matter much more to our customers,” says Tozer. “We wanted people to be able to make better decisions, and be better informed, and we saw Dynamics AX as a decision making tool as well as a transaction engine. And by making better decisions, and working more productively, we’ll build a better business, delivering growth and unrivalled service in our chosen market.”

And measured against that particular benchmark, he stresses, a move away from Fourth Shift was imperative.

“We have ambitions to become a multi-site, multinational, multilingual and

We weren’t surprised when a consultant told us that we were a very efficient business, and predicted an ROI of zero Ewan Tozer, Commercial Director, Orangebox

Enterprise Resource Planning

multi-currency business – and there was no way that Fourth Shift was going to support us in those ambitions. It’s a legacy system with a shrinking customer base, and with an unclear development path and future.”

In contrast, he relates, it was clear that Microsoft Dynamics AX 2012 did have a very clear development path and future, as well as a fast-growing user base, extensive support through a global network of partners, and a wealth of industry-specific functionality.

Challenging vision

“We went to look at Dynamics AX in action as more of a proof-point, really,” says Tozer, summing up the evaluation process. “On paper it looked the right choice and when we saw it, we realised that it was the right choice. At which point, we didn’t look any further: the more we looked at AX, the more we saw a good fit, coupled to an acquisition cost that seemed to be very reasonable valuefor-money.”

Finding an implementation partner was less straightforward thanks, in large part, to Orangebox’s insistence on continuing to use a third-party product configurator package, Eden, in which it had invested significant intellectual property.

The plan: continue to use Eden as a ‘front end’, capitalising on twelve years of knowledge based rules that the business had built up within the package, and seamlessly translate Eden derived product design and configuration decisions into XML, to be passed to Microsoft Dynamics AX. “If people were used to working in Eden, then they would continue to work in Eden, and Eden would be the only IT experience that they have,” explains Tozer. Bills of material, inventory levels, purchase requirements, goods inwards transactions and production schedules – these and more would operate seamlessly behind the scenes in Dynamics AX, driven by top-level sales orders generated in Eden.

As a vision, it was ambitious, but do-able, judged Tozer. But finding an implementation partner to help turn that vision into reality proved problematic.

“We started by talking to half a dozen potential implementation partners – but only a couple of them really got their heads around our brief, and what we wanted to do,” he recalls.

Then came manufacturing specialist Columbus. Tozer relates his relief at finally finding someone who would fully buy-in to the vision – despite the inherent challenges it offered.

“We got on very well with the Columbus people. They could see what we were trying to achieve. Columbus was a Microsoft Gold partner, and had useful experience in the make-to-order business.” Even so, he explains, the challenges of delivering on that initial vision should not be underestimated.

“The two-way integration between Microsoft Dynamics AX and Eden was critical to the make-to-order service we offer our customers, as was the integration to our chosen barcoding solution and we hadn’t anticipated that the integration would be as complex as it turned out to be.”

Smooth switch

Nevertheless, on the last weekend in November 2012, the move to Dynamics AX went live – without a hitch, and with a seamless start to operations the following Monday morning. Furthermore, without exception, stresses Tozer, the entire workforce are delighted with the move.

Customer-facing staff, for instance, have retained their familiar Eden screens, with the inbuilt business rules and logic built up over twelve years’ use. On the

IT in Manufacturing

We started by talking to half a dozen potential implementation partners – but only a couple of them really got their heads around our brief, and what we wanted to do Ewan Tozer, Commercial Director, Orangebox

factory floor, barcode devices linked to Dynamics AX are the order of the day, replacing terminals and keyboards.

From raw materials receipt to manufacture and despatch, Dynamics AX tracks order progress, with plans underway to extend barcoding to capture the moment of delivery, thus automatically triggering invoicing.

“As a solution, it’s quicker, it makes it easier to find, filter and sort the information that we need, there’s been a massive reduction in bespoke reporting, and we’ve a consistent look-and-feel across everything we do,” he reports.

“We’ve done exactly what we set out to achieve, and given ourselves a solid foundation on which to build the business, going forward.”

Orangebox overhauled IT infrastructure to support its ambition to become a multi-site, multinational, multilingual and multi-currency business

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 75

Enterprise Resource Planning

IT IN MANUFACTURING

Don’t make a meal of ERP

B

John Donagher, principal consultant at technology advisory firm Lumemia, explores the key challenges for food and beverage manufacturers when budgeting for an ERP implementation.

The only reliable way to accurately estimate ERP project cost is to carry out a detailed project scoping exercise, led by someone with extensive ERP strategy and implementation experience

76 www.themanufacturer.com | September2013 | Issue 7| Volume 16

udgeting for an ERP project can be a complicated task. Without a proper understanding of the project scope and a host of other considerations it is difficult to make a sensible estimate of cost.

For food and beverage companies this poses a particular risk since there are lots of decisions to be made around functional scope and many of the functional requirements of the sector are poorly supported by the larger ERP vendors. Consequently, it’s often necessary to consider niche or bestof-breed solutions as part of the overall solution – a trickier budgeting prospect than sourcing one system.

Let’s look at five areas most likely to need best-of-breed treatment in food and beverage companies:

1

MANAGING FARMERS/ GROWERS Many companies source raw materials directly from farmers or growers. Spot prices and contracts are both used, with payments often linked to the quality of the material provided.

Functional requirements across different food sectors have similarities, but industry-specific complexities and regulatory requirements also need to be accommodated. Many ERP systems have good solutions for financials, manufacturing and distribution, but this area is less well served.

2

MIXING & BLENDING This is a feature for products where batches are blended together to meet a desired set of characteristics. In many industries this is virtually an art, with seemingly subjective characteristics, such as taste and smell, coming into play.

Systems are required to support the blender’s decision-making and ensure batch traceability is maintained. ERP systems designed for process manufacturing often provide batch traceability, but blending solutions are much less common.

3

DISASSEMBLY (INVERTED BILL OF MATERIALS (BOM) Most people are familiar with BOMs, but meat and poultry processors have to work in reverse; inverted bills of materials are used to represent how the carcass is broken down into the individual consumer products which you find on the supermarket shelf. Figuring out the optimum way to do this to meet customer requirements and minimise waste is very complex and poorly supported by many ERP systems.

4

RECIPE MANAGEMENT AND NEW PRODUCT DEVELOPMENT New products are constantly being developed and introduced. Functional requirements to support this activity include the ability to manage trial production runs; approval of stages of development; nutritional analysis; evolving BOMs, recipes and product costing.

Some ERP systems are very strong in this area, while others will struggle.

5

SALES FORECASTING Most ERP systems provide basic forecasting solutions that deal effectively with simple forecasting requirements. Often that’s sufficient, but some companies may need to go a step further, with the ability to have multiple collaborators, inputs from customers’ EPOS systems, forecast accuracy measurement and management of multiple interdependent product lines and brands.

A single system from one supplier often fails to meet all of the functional requirements for a food and beverage business.

The only reliable way to accurately estimate ERP project cost is to carry out a detailed project scoping exercise, led by someone with extensive ERP strategy and implementation experience, to ensure that project cost assumptions are both complete and realistic. www.lumeniaconsulting.com

Overall Equipment Effectiveness

IT IN MANUFACTURING

Stark simplicity On the factory floor, Overall Equipment Effectiveness is a powerful improvement tool, one furthermore, which delivers improvements far beyond machine utilisation. Malcolm Wheatley explains.

T

o its many adherents, the charm of Overall Equipment Effectiveness (OEE) as an improvement metric is its sheer uncompromising starkness. Simply put, work out the theoretical maximum output from a piece of equipment or production line, and then express the actual output as a percentage of that theoretically achievable output.

The beauty of the calculation is its simplicity, and also the way that it automatically captures all the small losses of efficiency that conventional recording systems often miss – temporary stoppages of just a minute or so, for instance, or a short period of slow running.

“With OEE, there really isn’t anywhere to hide,” enthuses David Espley, a Staines upon Thames manufacturing consultant, who as operations manager, helped introduce the measure at Hoechst Trespaphan’s Swindon flexible packaging plant in the mid-1990s.

Systems (MES) will deliver OEE as a standard report. For those who want just OEE, specialist dedicated factory-floor terminals offer an entrylevel capability.

And if the wherewithal to measure and manage OEE has evolved over time, so too has the understanding of what the technique can deliver. And it’s this broader remit for OEE that is increasingly setting the agenda today, say insiders.

“People tend to think about OEE as highlighting problems with equipment,” says Fraser Thomson, a consultant with Yorkshire-based MES provider Cimlogic. “In fact, OEE shines a light on an awful lot more than just downtime.”

Energy efficiency, for one thing. Machinery or production lines don’t stop consuming power or compressed air just because they’re temporarily stopped points out Thomson.

Boost OEE, goes the logic, and energy efficiency goes up as well.

By improving the effectiveness of the equipment in your factory, you’re spreading all your overheads – not just energy and fixed labour – over more output, driving down average cost per unit Mark Carleton, Services Director, Mestec.

While comparable Japanese plants were achieving OEEs of around 85%, the Swindon plant had been struggling at around the 30% level – although some of the data from which to calculate the OEE figure was not actually recorded by the plant’s performance systems at the time. “This, of course, was something that was illuminating in itself,” observes Espley.

A bigger picture with better clarity

Today, the paper-based approaches to OEE systems that characterised many mid-1990s OEE implementations have largely gone. OEE calculations are now built into SCADA systems, for example, and most Manufacturing Execution

Labour productivity also rises with OEE. While a production line or piece of equipment isn’t running, goes the argument, the people associated with it aren’t producing anything: improve OEE, and those people will spend more time producing, and less time standing idle.

“In fact, by improving the effectiveness of the equipment in your factory, you’re spreading all your overheads – not just energy and fixed labour – over more output, driving down the average cost of overhead per unit,” points out Mark Carleton, services director at efficiency improvement specialist Mestec, a provider of OEE-measuring equipment.

Put like that, it’s difficult to see why OEE isn’t even more widely used.

See overleaf for more on OEE as Malcolm Wheatley interviews Manufacturing Execution Systems provider Cimlogic.

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 77

Future Some manufacturers are taking a shortsighted approach to systems designed to deliver improvement reckons Cimlogic’s Fraser Thomson. Malcolm Wheatley finds out more.

C

imlogic’s Fraser Thomson tells an interesting story.

What’s more, says Thomson – who’s a long-serving consultant with the Yorkshirebased Manufacturing Execution System (MES) consultancy and implementation specialist – it’s a story that’s far from unusual.

When recently visiting a prospective customer, he heard at length about a number of manufacturing problems the business was facing; problems which manifested as below-target output levels, low productivity and poor due-date performance.

Which was why, of course, the company in question was looking for a production performance system, and recognised in Cimlogic’s TrakSYS MES offering, a potential solution to its problems.

But after talking to management at the company, Thomson suspected that the manufacturing performance problems he was hearing about were symptoms, not causes.

What seemed to be happening, in short, was that end-of-line

78 www.themanufacturer.com | September2013 | Issue 7| Volume 16

rejects – over-weight and under-weight filled tubes of the ointment that the business produces – were being scrapped.

The result was not only waste in the form of the scrapped tubes, but also waste in the form of consequent rework. Scarce capacity, in other words, was being dissipated on producing replacements for the scrapped tubes, Production thereby sapping productivity and Improve OEE causing lower-than-target effective Consider impact on quality machine utilisation.

“Cure the defect problem, Engineering Quality and you would also cure the Reduce equipment Reduced waste/ manufacturing performance breakdowns rework problem – and TrakSYS could Focus on the areas Perform QC Checks certainly handle the quality relevant to OEE before adding too dimension as well as the Impact much value manufacturing performance dimension, as any good MES solution can,” sums up Thomson.

IT “But the company didn’t see it Provide a secure Planning that way: they had a manufacturing infrastructure Ensure on time performance problem, for which Provide data delivery they wanted a manufacturing access across Optimise the plan performance solution. And they had manufacturing based on OEE a quality problem, for which they wanted a separate quality solution. If they had a single solution to do both, they told us, ‘it would open a whole can Cimlogic model for collaborative problem solving through MES deployment. of worms.’”

Overall Equipment Effectiveness

Divided loyalties

For Thomson and his colleagues, such stories aren’t new. And in their view, they point to a deep-seated lack of appreciation of just what modern MES tools can deliver, as well as deep-seated structural and reporting problems within many manufacturing organisations.

In short, says Thomson: “Manufacturers know that they need to improve productivity and machine efficiencies, but each department within the business seems determined to deal with its own pain point in its own way.”

And in taking that attitude, he asserts, they’re failing to appreciate that tackling problems holistically, with an all-in-one solution, is not only more effective, but will also contribute more to the business than would a series of individual ‘point’ solutions.

“Deal with these issues together, within a single solution, and the overall gain is greater than the sum of the parts,” says Thomson. “Tackle them separately, and you tend to get wasted effort, duplication, and gaps.”

That said, it’s not difficult to see how such attitudes arise. It’s not uncommon, for instance, to see the quality and production functions reporting separately within a manufacturing organisation’s structure. That way, goes the logic, production people aren’t tempted to waive or slacken quality standards in order to meet output targets.

But the flipside of such a structure is that the quality and production functions within a business aren’t necessarily motivated to tackle problems jointly, or to jointly deploy solutions that might be capable of tackling those problems.

Worse, wrangles over budgets, cost-

IT IN MANUFACTURING

wanted one system, and the finance function another, and the production function another, then heads would rightly be banged together. So why should plant floor-level systems, rather than enterpriselevel systems, be any different?”

Opportunity knocks

The company saw they had a manufacturing performance problem, for which they wanted a manufacturing performance solution. And they had a quality problem, for which they wanted a separate quality solution. They told us a single solution would open a whole can of worms Fraser Thomson, Consultant, CimLogic

sharing and priorities can de-rail joint projects, even when the production manager and quality manager are otherwise willing to cooperate.

All of which may sound a little like sour grapes, concedes Thomson, given that Cimlogic is a business specialising in precisely such single solutions, in the shape of the TrakSYS MES. But it’s undeniably an approach that wouldn’t be tolerated elsewhere in an organisation, he asserts.

“We’ve had twenty years of ERP systems putting everyone on the same page, using the same system,” he points out. “These days, if the sales function

Speed Vs Quality (Line 3)

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105.0 95.0

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85.0

For more info visit: www.cimlogic.co.uk or call 01274 599955

05.00

04.00

02.00

12.00

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75.0 08.00

85.0%

Line 1 Speed (Setpoint)

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95.0%

It’s a logic that is certainly difficult to refute. Particularly when one considers that an effective MES will deliver actionable insights into more than just quality and production problems.

Improved energy efficiency is a big opportunity, for example, especially when energy costs are as high as they are now. It’s easy to forget that when an assembly line or filling line is stopped due to a breakdown, or due to materials shortages, it is still consuming energy: electricity for motive power, gas burners, and compressed air.

More than that, an MES solution not only provides insights with which managers can prevent problems from recurring, but also acts to prevent them from arising in the first place.

“Are the correct label and the correct packaging being used? Is the right batch code and ‘best before’ date being applied? Twenty minutes producing a product with the wrong label or batch code can be a very costly waste indeed,” points out Thomson.

In short, he sums up, the arguments for MES as a tool for factory floor improvement are compelling – provided managers can see the logic of a single solution, focused firmly on controlling and capturing plant-level events.

“From an improvement perspective, the advantage of an MES system is that it makes it crystal clear what your number one improvement opportunity is whether it be maintenance, quality, material availability, or faster setups,” concludes Thomson. “You have the information you need in order to focus your resources, delivering targeted improvements to meet the needs of the business.”

September 2013 | Issue 7 | Volume 16 | www.themanufacturer.com 79

Outsourcing IT management

IT IN MANUFACTURING

With the prospect of implementing its first independent ERP system ahead, Tarmac Building Products found it had neither the capability nor desire to host and manage the application. Like an increasing number of manufacturers, it chose to outsource.

Insite was big enough to cope, but small enough to care Mark Skidmore, IT Infrastructure Manager, Tarmac Building Products

T

armac Building Products gained its first independent ERP system following a group restructuring

by Anglo American which saw Tarmac Building Products become a separate entity.

But selecting that system, Microsoft Dynamics AX, was the easy part, says Mark Skidmore, the company’s IT infrastructure manager. Modern ERP systems such as Dynamics AX are sophisticated and complex, calling for specialist IT infrastructure, data centre class IT hardware and procedures, and a ready familiarity with Microsoft technologies such as Windows Server, SQL Server and SharePoint.

All of which posed a problem for Wolverhampton-based Tarmac, one of the UK’s leading manufacturers of concrete blocks, aggregates, and plaster.

“We didn’t have a data centre and nor did we wish to invest in the bricks and mortar, and the people and technology required to build that kind of capability,” explains Mr Skidmore. What Tarmac required was a fully outsourced and

80 www.themanufacturer.com | September2013 | Issue 7| Volume 16

hosted solution – an approach adopted by a growing number of manufacturers.

But the dangers of such an approach were obvious. Around 550 users across the UK, from Scotland to the South coast of England, would be depending on the Dynamics AX system and if it were to go down for more than a few minutes, then operations, customer service and ultimately revenue would be hit.

Selecting Insite

Research identified 15 providers of managed hosting, each with their own data centre and familiarity with Microsoft products. Winnowing the list down to six potential providers, Tarmac embarked on a programme of in-depth assessment and site visits.

“We quickly narrowed it down to just two providers,” says Skidmore.

“Eventually, Insite emerged as our unanimous first choice. They were big enough to cope, but small enough to care, and small enough to enable us to build personal relationships.”

Insite provided a total managed Dynamics

AX service – everything from 24x7x365 monitoring and alerting, to operational support, change management, capacity planning, backup management, remote user access and more.

And more recently, Insite’s remit has expanded thanks to great perfomrce which has exceeded expectations for 99.95% availability. Cost objectives have also been met.

“Since Dynamics AX went live, we have entrusted more and more of our systems and infrastructure to Insite,” says Skidmore. “As well as AX, they host our payroll system, our time and attendance application, our health and safety application, and more. They also provide disaster recovery and professional services.”

Skimore sums up: “Technically, Insite are extremely capable and highly qualified; and their broader Microsoft skills make a big difference. They also have a similar culture and similar values to us, so we feel very comfortable with them.”

FURTHER READING: For more information on this case study go to: bit.ly/TarmacandInsite

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Industry trends

it in manufacturing

organisations to innovate and be able to commercialise successful innovations quickly.”

Portfolios and production lines will focus on profitable products

The top five for the next 10

U

Steve Winder, RVP Manufacturing UK at software company Epicor, outlines five key trends for UK manufacturing in the next decade

K manufacturing is going through a period of profound and irreversible change. The impact of national and global economic, technological and political trends is transforming the way we make things, along with where and how we make them.

In line with other major economies, UK manufacturing has undergone a period of decline. Yet it continues to make a significant contribution to GDP and, according to a 2012 study by McKinsey Manufacturing the future, the next era of global growth and innovation, manufacturing generates up to 70% of exports in major manufacturing economies, and up to 90% of business R&D spending.

Epicor has been working with organisations in and around the UK manufacturing sector to analyse the top trends impacting this vital UK sector over the next decade. The results show similar concerns and ambitions across sub-sectors. Here are the top five:

Globalisation requires a new approach Widespread globalisation is being gradually replaced with targeted international production and distribution. Companies are moving closer to their customers and establishing a presence in regions with high growth potential or influence.

Innovation and speed will be critical Experts and leading industry figures agree that both innovation and speed to market are crucial for the survival of the UK manufacturing industry. PwC’s 2013 report Preparing for Growth said: “survival in today’s global market and investing in the future requires

82 www.themanufacturer.com | September2013 | Issue 7| Volume 16

Increased production costs, changing customer needs and a stricter regulatory environment mean manufacturers will look at reducing product portfolios and producing smaller batch quantities, shifting focus to a limited number of high-value, highfunctionality products – those that generate greatest revenue for the business. Alternative revenue generating options are likely to include licensed products, contracting-out spare production capacity and partnerships.

Some manufacturers will increase service offerings while another prevalent trend will be the shortening of product lifecycles through adoption of new technologies.

IT and intelligence will have an inestimable impact Improved enterprise resource planning software, radio frequency identification (RFID) tags and enhanced production line automation and monitoring have already boosted efficiency The emergence of deep and intelligent connectivity between devices and systems will introduce a new raft of operational and customer benefits and a leaner, more responsive approach to manufacturing.

In addition, cloud-based technologies and software-as-a-service applications will underpin more collaborative, mobile working practices.

Sustainability will be an industry- wide standard Energy costs continue to rise and over the course of the next decade many firms will turn to newer, cleaner technologies to power their operations and support their services around the world. Energy management will become a key part of every manufacturer’s responsibilities.

The world will never stop changing and companies must strive to respond to new demands, more quickly and more effectively than their rivals if they wish to be competitive.

FURTHER READING: To view a longer version of this article go to: http://bit.ly/Epicor5keytrends

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EOS, SOS

EOS, SOS The advent of employer-owned skills and the fate of sector skills councils

A

sk a typical metal-bashing – sorry, precision engineering – company whether they should speak to Semta, the National Skills Academy for Manufacturing, the Manufacturing Advisory Service, EEF, the National Apprenticeship Service, an awarding body, a training agency or local colleges for help with skills, and the chances are they wouldn’t have a clue.

Ask most of those bodies, however, who companies should speak to about skills provision and every one would probably say “us”.

But come April 2014, skills delivery in manufacturing is set to change, drawing a line under this mess of agencies and third party providers.

That’s what employers want, and it’s what government says it supports following advice in the Richard Review of Apprenticeships and the Heseltine Review: No stone unturned in pursuit of growth The former led to the launch of the Employer Ownership of Skills (EOS) pilot which has proved very popular. EOS Round II received 315 bids, from small and large employers, who requested

84 www.themanufacturer.com | September2013 | Issue 7| Volume 16

£1.5bn of applications from an available pot of £250m; a 6-to-1 oversubscription.

The fund has now been extended.

It’s about time employers had power. Many companies have reaped benefits from skills training supplied by Semta, Cogent and the other SSCs, but the agencies have their detractors.

Despite the case studies of success, there has been common reproach over being directed on skills by staff who, in some cases, have no experience of manufacturing and who try to apply standardised training frameworks to niche skills needs, especially in SMEs. Nor do companies want funding to be micromanaged by central agencies.

So will EOS and the models coming out of the current employer-led consultation on apprenticeship funding, spell the end for sector skills councils and other national skills agencies, cutting them out of the skills provision game?

Private sector success measurement will be more exacting than government’s monitoring, and Proskills, the SSC for the process manufacturing industries failed to survive the March 2012 introduction of performance-justified funding.

“No,” says Sarah Sillars, Semta’s CEO. “As the current funds expire, then SSCs are moving much more to become employer skills bodies,” she says.

“Fundamentally the future will be about delivering services that are of value to

LAST WORD

EOS Round II received 315 bids, from small and large employers, who requested £1.5bn of applications from an available pot of £250m

employers and that employers would wish to buy. It moves us to a much more commercial, supplier-demand model with employers.”

Sillars explains that Semta will be a key partner in the management and administration of industry-led skills consortia in the new world of skills provision. “I absolutely support it, 100 per cent,” she adds.

But not all EOS funding will be delivered via consortia. Individual companies able to demonstrate step changes in generating growth can receive funding for training programmes direct. It’s not unreasonable to assume that these firms, with resource to assess, develop and manage their own skills gaps, may be largely midcap and big, leaving Semta focused on encouraging consortia in the SME space – important work, but not a community SSCs have always had strong links into due the distortions of outcome-based funding models in the past.

This history will make Ms Sillars’ optimistic vision for the future harder to realise.

FURTHER READING: View Will Stirling’s blog on EOS and the fate of SSCs online at: bit.ly/Bravenewworld

Breaking through

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