Pre-COVID figures show that manufacturing was worth £12.5bn to the Scottish economy, around 13% of total GVA. The sector employed 170,000 people and generated £30bn in exports.
Like in many parts of the world, Scottish manufacturing has been deeply affected by the pandemic, with output contracting more than 20% over the past 12 months and nearly half of industrial businesses reporting a decrease in turnover as a result.
In response, the Scottish Government, in partnership with its enterprise and skills agencies, industry partners, trades unions and academics, has developed a Recovery Plan for Manufacturing to support the sector over the next 12 months.
It recognises the significant impact COVID-19 has had on the manufacturing sector in Scotland and focuses on four priority areas: collaboration and networks, supply chains and competitiveness, adaptation and transformation, and skills and workforce.
Jonny Williamson sat down with Nick Shields, Director of the Scottish Manufacturing Advisory Service, run by Scottish Enterprise, to learn what the future holds.
How has Scottish manufacturing been performing leading up to 2020?
Nick Shields: Broadly speaking, we’ve been performing in line with the UK as a whole. What’s interesting is we now have a manufacturing landscape that encompasses our strong traditional heritage in areas such oil and gas and food and drink with rapidly growing emerging industries such as life sciences, renewables and space satellites.
Recent success stories include clinical trials starting in the UK in December for a Coronavirus vaccine manufactured by Valneva in Livingston, West Lothian. The French company currently employs around 100 people at the site and could potentially double that should the vaccine enter mass production.
Scotland’s space sector is rising faster than anywhere else in the UK, with Glasgow manufacturing more satellites than any other city in Europe. We’ve also attracted some sizeable inward investments, such as from Spanish train manufacturer, Talgo, who is establishing a multimillion-pound UK manufacturing base in Longannet, Fife.
Obviously, we have a massive infrastructure around oil and gas, and the desire to decarbonise, coupled with the low price of oil and the pandemic, represents an opportunity for Scotland to be among the first to transition to a net zero economy. A transition which is very much supported by the Scottish Government.
What actions have you seen manufacturers take as a result of COVID-19 and what actions have you taken as an organisation to support them?
In any given year, SMAS will actively engage with around 120 business on productivity improvement projects which will generate, on average, £30m pounds of savings per year for those businesses.
Like many organisations, we’ve switched to an online provision and have worked more widely with our colleagues in responding to the COVID outbreak. As part of Scotland’s main Economic Development Agency, Scottish Enterprise, we assisted in the delivery of more than £120m of direct financial support through our Pivotal Enterprise Resilience Fund.
That’s to all businesses, with manufacturers accounting for roughly half of everything we do because they tend to have extended supply chains, are major employers for local, often rural, communities and have substantial export and innovation potential.
We also helped a lot of manufacturers with the national PPE effort to the extent that more than 50% of PPE for use with NHS Scotland will now be manufactured in Scotland – a figure that rises to almost 80% if you exclude gloves.
Forfar-based Don & Low supplied 2.8 million m2 of base material which was then converted into almost 1 million non-sterile gowns by Keela and Redwood TTM, based in Glenrothes and Wigan respectively. Keela and Redwood each ramped up production to a combined output of 40,000 gowns a week, representing more than 50% of NHS Scotland’s weekly requirement of gowns during summer 2020
Have you seen a change in manufacturers’ attitudes to technology over the past 12 months?
Absolutely. Businesses who had already transitioned to cloud-based IT systems and working found 2020 easier than those who were still largely paper-driven.
We have seen businesses operating in similar markets having completely different experiences because some had made strategic investments in automation and others hadn’t. Those who had certainly reaped the reward from those investments because their operation wasn’t as labour intensive and constrained by social distancing rules.
Compared to 12 months ago, we are seeing a lot more discussion about onshoring or reshoring certain aspects of production now. Manufacturers who were always on the cusp of whether they should ‘make or buy’ are looking to conduct some of that work inhouse moving forward in an effort to become more agile and less reliant on overseas supply chains.
That change in thinking meshes perfectly with the messaging around Industry 4.0 and smart manufacturing. The cost of entry for many digital tools and technologies is dropping all the time, so why wouldn’t you consider new technologies that will not only help your business become more productive and efficient, but also unlock new capabilities as well.
Clyde Space specialises in advanced nanosatellite spacecraft, mission services and subsystems, and in June 2020 was awarded a £2.3m R&D grant from Scottish Enterprise to develop the next generation of satellites. IMAGE: Clyde Space
How does the recently released draft Recovery Plan for Manufacturing build on the previously report, A Manufacturing Future for Scotland?
When that report was launched in 2016, that was our devolved government’s first real statement of intent for manufacturing and several major investments have been made off the back of it.
A £75m National Manufacturing Institute Scotland and a £35m Medicines Manufacturing Innovation Centre are currently under construction [which you can read more about here].
There has been a significant emphasis, since that report was published, on supporting businesses, particularly SMEs, to understand the benefits and applications of new technologies and helping de-risk related investment decisions.
To that end, the £15.8m Advanced Manufacturing Challenge Fund (AMCF) has been set up to advance the manufacturing capabilities of SMEs within Scotland and lead to long-term transformational change.
This funding, awarded on a competitive basis, supports the creation of a network of initiatives, both regionally-based and across Scotland, to stimulate the innovation performance of SMEs by providing services focused on improving manufacturing capabilities across Scotland. Crucially, services provided by the projects to SMEs will be free of charge.
Across all this infrastructure investment is a desire to create facilities and opportunities that speak to SMEs, where they can feel at home and see that we are helping solve problems that are important to them and their operation, not just those of global enterprises.
In December, French pharmaceutical firm Valneva started the first clinical trials of its COVID-19 vaccine candidate, VLA2001 at four sites in England. If successful, Valneva will provide the UK government with 60 million doses in the second half of 2021, manufactured at its cutting-edge facility in Livingston, West Lothian IMAGE: Valneva
Regardless of what stage your company is at in terms of its development, there’ll be a solution offered within the infrastructure across Scotland to help you grasp opportunities, overcome challenges, improve productivity and take your business to the next level.
The latest action plan builds on that great work and proposes a series of recommendations for public agencies, industry and academia to take forward by the end of 2021. They are designed to secure a strong, sustainable future for Scotland’s manufacturing sector.
You describe the Scottish Government as being “very supportive” of manufacturing. How confident are you that that level of support will be maintained?
Scotland has three Economic Development Agencies, one in the South, one in the Highlands and one in the central belt. Combined, they provide around £500m of support that’s primarily aimed at businesses. That doesn’t exist in England, as far as I’m aware.
Scotland has always viewed manufacturing as a priority because we need to protect what we’ve got, while at the same time exploiting new technologies and emerging sectors. We know that if we get it right, we’ll create fantastic outcomes for businesses, their employees and the economy as a whole.
I’d like to see the decision by Talgo to invest in a new train manufacturing site in Longannet heralding a new wave of indigenous and foreign investment. Scotland has got a burgeoning infrastructure of world-class support for businesses of all sizes, an incredibly high academic output in terms of both knowledge and graduates, and a strong commitment to transition to a fair and low-carbon economy.
Validation tests on Talgo’s new hydrogen-powered train, Talgo Vittal-One, are due to be conducted in 2021, with manufacturing set to take place between 2021 and 2023. IMAGE: Talgo
What does 2021 hold for manufacturing in Scotland?
The advent of COVID-19 has caused people to reassess their priorities, strategies and investment decisions, particularly around technology and supply chains. Quite suddenly and unexpectedly, certain activities have become more economically viable, such as reshoring production. We could be at a tipping point and it’ll be interesting to see what happens once the vaccine is distributed and society begins to reopen.
We are already receiving enquiries about how businesses can become more vertically integrated and gain greater operational control and agility; I can only see those enquiries increasing moving forward.
I get the feeling that there are marginal decisions sitting on numerous boardroom tables, and if 2021 brings a positive reset, who knows what will be unlocked. There are huge opportunities to do things differently in the future, and Scotland has everything required to be at the forefront of driving that change.
*Header image courtesy of Shutterstock