4IR to drive growth of UK’s £11bn mechanical equipment sector

Encouragingly the healthy performance was broad based across sub sectors, and points to significant momentum being carried over into 2018, according to a new EEF report.

The sector continues to benefit from the global economy upturn, which combined with the weak Sterling is providing a supportive boost to exports.

While exports continue to thrive, the strong global economy is also bringing investment back online, supporting capital equipment manufacturers, and those in their supply chain.

While these factors mean the sector is in fairly rude health, risks do remain, notably from the weakness in the construction sector, as well as of course uncertainty at the terms of the UK’s exit from the EU.

These dynamics should see growth slow over the next two years but given that the strength in the global economy is showing no immediate signs of abating, we do not envisage this slowing to be as great as previously thought.

We are forecasting healthy growth of 2.0% in 2018, and 0.6% in 2019.

Mechanical Equipment

According to the report, the mechanical equipment sector, and the development of machinery, was behind one of the greatest advances in human history, the Industrial Revolution.

While the sector has gone into relative decline since then, especially compared to other, more contemporary sectors such as aerospace and pharmaceuticals, its importance and standing in UK manufacturing remains critical, given that nearly every workplace in every industry uses some form of machinery in production.

Indeed, the mechanical equipment sector encompasses a wide range of products and systems, from multi-million-pound industrial turbines, to the common office printer. Broadly speaking we can split what the sector makes into five segments.

General purpose machinery

This segment refers to machines that transfer one type of work into another. For instance, turbines use the energy from the motion of steam, gas, water or wind, to create mechanical power by turning a drive shaft.

Attached to a generator, turbines also create electricity, which can be used to power assembly lines and industrial machines.

This industry segment also produces diesel and other internal combustion engines and their components (such as gears), as well as air compressors and pumps. GVA: £3.7bn (28.9%)

Metal forming machinery 

The metal forming industry segment makes the machinery and tools that form, cut, and shape metals. The same properties that make metal a desirable component in many goods – strength and durability – also make it a difficult material to form.

Therefore, this segment encompasses drills, moulds, presses, and rollers needed to form metal, as well as the accessories used by these machines. GVA: £0.5bn (4.0%)

Other special purpose machinery 

This segment refers to machines used in specific sectors, including construction, mining, quarrying, rubber and plastics, food and drink, and textiles.

These machines tend to be more bespoke systems, which are differentiated in order to carry out specific tasks related to their sector’s needs.

Examples include bulldozers and levellers, used in the construction of roads and buildings; grinders and borers, used for both surface and underground mining; and oil and gas extraction equipment. GVA: £3.7bn (29.1%)

Other general purpose machinery

This segment refers to the production of machines that are used across many different industries. Captured here include non-domestic cooling and ventilation equipment, ovens and furnaces, office equipment such as printers, and lifting and handling equipment e.g. fork lifts. GVA: £4.3bn (33.5%)

Agricultural and forestry machinery

Here special purpose machinery used in agriculture is classified. This includes the manufacture of agricultural tractors and other forestry machinery. GVA: £0.6bn (4.5%)

What is mechanical equipment manufacturing?

The chief process used through the mechanical equipment sector is assembly. Unlike other manufacturing sectors, such as chemicals, mechanical equipment manufacturers are not involved with the extraction of raw materials.

Instead they take finished metal products, or mechanical equipment component parts, to form machines and equipment, which are then used to produce other goods or services.

As such the sector is a key link between sectors at the source of the value chain e.g. basic metals and those at the consumer facing end e.g. automotive.

Broadly speaking the mechanical equipment sector produces goods for the following three purposes:

• A means of production for businesses in manufacturing, construction, agriculture and mining. They provide the equipment which help make the goods and services these industries provide.
• A means of production for public utility, such as equipment for the production and distribution of water (e.g. pumps).
• A range of supporting equipment for all sectors of the economy, such as equipment for heating, ventilation, and air conditioning of buildings

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