Raise the topic of British manufacturing in an average conversation and you
might expect to hear such words and phrases as “collapse”, “1970s heyday”,
“outsourced”, “cheap foreign labour” and “unprofitable”.
But it seems that, contrary to popular opinion, the outlook is far from bleak.
A CBI report published last month showed that manufacturers are enjoying the
longest run of sustained demand for 12 years, despite the slowdown in other
parts of the economy. Firms are reporting healthy order books and a strong
demand for goods, and most say they expect their output to grow over the
coming months.
Sue Curtis-Davison, marketing manager for the Manufacturing Advisory Service,
part of the Department for Business, Enterprise and Regulatory Reform, says
that the sector is far from the “doom and gloom” of public perception.
“The industry is very positive,” she says. “A recent survey of manufacturers
in the south of England found that 70% of them believed UK manufacturing was
on the up and 80% reported seeing improved or stable sales figures.”
However, manufacturers are concerned about a raft of issues affecting the
industry, she says, including international competition, the global credit
crunch, outsourcing and rising energy costs.
Bob Davis, UK president of the Association for Manufacturing Excellence, says
that while manufacturers are doing their best to absorb rising costs by
reducing overheads, they are suffering from lower margins. “The price of raw
materials has increased a lot in the past few years, as have energy costs,
and companies are having to create savings by reducing waste, streamlining
the supply chain, making the workforce more productive and coming up with
new products.” Simon Coward, chief executive of the Norwich-based Hethel
Engineering Centre, which supports engineering and manufacturing companies,
says: “There is the perception that UK manufacturing is dying, but I think
it’s transforming. There are many opportunities in the UK market to go into
high-margin, high-specification manufacturing, using our skilled people and
our high standards of quality. The latest buzzword in the industry is
innovation.”
While many British companies are considering outsourcing to take advantage of
cheaper labour costs in eastern Europe and Asia, Coward says that some
companies are coming back to production in the UK. “Outsourcing is not
necessarily the answer,” he says. “It could be seen as sensible to have
cheap labour, but you compromise on other things, such as delivery time and
quality control. By the time the products arrive here from China, it is too
late to discover flaws.” Davis agrees: “You may save on labour but you lose
in lead time and flexibility.”
Coward says that British businesses are embracing “lean” manufacturing, making
production as smart and efficient as possible. Led by the car-manufacturing
giants with plants in the UK, such as Nissan, Toyota and Honda, lean
manufacturing means building products on a “just in time” basis, saving on
expensive inventory and warehousing and forming close partnerships with
suppliers to streamline the supply chain.
“The biggest challenge for UK manufacturers is to be globally competitive,”
Coward says. “There are probably three things that world-class UK companies
are doing: increasing their productivity, training their workforce and
reducing costs. Three out of four members of the 2020 workforce are already
working today, so companies should be investing a great deal in training.
Increasing the skills in the workforce is the future of British
manufacturing.
“People are still starting businesses in the manufacturing sector, but the
real opportunities lie in looking at the design side. That’s the future.”
Deepdale
BEING located in Hartlepool in the heart of the Tees Valley means that
Deepdale Solutions, which manufactures and installs aluminium curtain
walling, windows, doors and panel systems for the construction industry, can
draw on a local workforce with a valuable construction tradition.
“There’s a strong demand for our products,” says managing director Derek
Muirhead, left. “And we’re hoping the demand will increase nearer the 2012
Olympics.” The company was founded in 1994 and grew with the fashion for
large curtain-walling projects, such as the Gherkin in London and
Gateshead’s Sage building.
Deepdale’s annual turnover is now £10m, with profits up around 10% per year.
“Our projects are often in the south of England, but being based in the
north means we have low overheads,” says Muirhead.
To cut its costs further, Deepdale plans to construct three wind turbines that
will provide 50% of its electricity, and it is installing solar panels.
