Automation is big news; have the accountants heard?

Read Wired, TechCrunch and nearly any technology mag online and one would think robots are taking over the world. Such is the craze for automating jobs that I am dusting off the CV, anticipating a robotic magazine editor to appear at my desk any day now (some would say they’re already here).

Here’s another example: http://econfuture.wordpress.com/2013/01/18/paul-krugman-is-wrong-about-the-rise-of-the-robots/?utm_source=dlvr.it&utm_medium=twitter

Robots have replaced humans for years. The growth of the automotive sector last year led to record sales of robots in the UK (see below) and this investment keeps carmaking in Britain competitive.

But many are arguing that Brits need to go much further in our embrace of manufacturing technology. The government has listened.

In 2010 the government launched its Advanced Manufacturing Growth Review. Near the bottom of the bullet points, out of the limelight, was a small pot of money to promote investment in autonomous systems in manufacturing. ‘Automating Manufacturing’ was funded with £600,000, subsidising free consultancy to assess automation needs of manufacturers and administered by BARA, the British Automation and Robot Association and the Process and Packaging Machinery Association.

A bit miserly compared with some government support, but BARA did not complain. For them and for many engineers, it was a sign that the Department for Business, Innovation and Skills (BIS) had finally realised that technology needed a shove. It was as if, after three years of post-2008 rhetoric about the importance of manufacturing on a conceptual and economic level, the penny had dropped that manufacturing firms had to address their technology deficits – case of “tool-up” more than up-skill.

With cash running out, the ‘AutoMan’ programme will wind up in March and it has been successful, with applications from 356 companies across all sectors. “Many are from food and drink, but despite strong interest there is reticence to automate here due to supermarket contracts being short,” says Grant Collier, head of marketing at the PPMA. From this group, 52 companies have opted to take this further to a detailed intervention stage. “BARA and BIS are delighted with the uptake from British industry and we’re in discussions to how to progress this to a second programme,” Mr Collier adds.

While the UK remains massively underinvested in industrial automation compared with some countries – about one tenth the size of the German market – investment in manufacturing automation is rising. The evidence is both plain and more nuanced.

Sales of robots in the UK in 2012 rose to 2,476 units, up a staggering 82% on 1,336 in 2011, a previous record year. Chairman of BARA Mike Wilson acknowledged that the automotive sector had generated most of these sales, adding “we are witnessing only a modest upward trend over the last few years in the uptake of automation and robotics across other sectors. The pharmaceutical industry being the strongest [non-automotive sector] with growth of 115% over last year’s sales.”

Organisations such as BARA, the Manufacturing Technologies Association, industrial automation association Gambica and Intellect have different slants on their messages, but the unified one is this: technology is good. Technology makes you a more competitive business. And, while the industry is clearly growing, there is a big job to do: in 2011 BARA published a league table putting the UK 17^th in the world by use of automation equipment.

A profusion of media and business support has rallied to the cause (desperately resisting the temptation to say ‘jumped on the bandwagon’).

The Manufacturer has a new event, Automate UK, in February, to promote the benefits of automating manufacturing processes. The event, to be held at the Waldorf Hilton in London on February 26, will look at how automation improves efficiency and cost savings, increases quality and efficiency, and enhances health and safety rates.

Technology trade association Intellect had an event on January 30 to explain applications of automation across different sectors and it is planning more theme-based events this year. This year the ‘Total’ show combines three trade exhibitions in this space into one large show, and I believe the IMechE is running automation events this year too.

Two new magazines were launched in this sector in 2012; Controls, Drives and Automation, supervised by engineering guru Andy Pye, and Industrial Automation News, to join the established Drives and Controls and Engineering Design.

And today, the Technology Strategy Board launched a funding competition with £1 million to fund studies to accelerate the development of RAS – Robotics and Autonomous Systems – concepts where robots are able to interact with each other and humans. Everyone loves automation these days.

Here’s the point: Pundits are concerned that all this noise is useful but is missing the target audience.

Engineers are already converted. After working on the skills gap, education (UTCs), access to finance (Funding for Lending) and an industrial strategy, the government now recognises the technology bit. The media get it, the trade associations get it and the events companies see it. The problem is that the bean counters are not seeing it. While robots may have had a record year, sales of other components of this market like variable speed drives have been less spectacular and the UK is coming from a very low base.

Will automation take my job?

Does this matter? Go to SPS Drives exhibition in Nuremberg, or Hannover Messe. The volume and sophistication of technology on display is staggering. It is worth going just to see the scale of a 20-football pitch exhibition. Factories in Germany, the US and 14 other countries (according to BARA’s league table) are using this labour-saving kit more than Britain and are more far productive as a consequence – not in all cases, but many.

British factories do lean really well, we’re good at lean. They don’t do technology so well.

The accountants must start buying better kit. Events like Automate UK are working to increase awareness of the benefits. “I’m detecting a shift,” says Siemens’ Brian Holliday, “that the stakeholders in manufacturing have recognized the technology challenge, both of the underdevelopment of current technology and the need to research and develop the next stage of manufacturing technology.”

Mr Holliday, an expert in industrial automation, was dismayed by business secretary’s Vince Cable words when he announced the Growth Review Framework for Advanced Manufacturing in 2011. Dr Cable said the future for UK manufacturing was in high value goods, and advanced engineering. On the manufacture of high volume, intensely automated medium value goods, that China had become so competitive at, “those days are over,” Cable said. “Why should we accept that?” says Holliday. “China is not a manufacturing colossus because it is paying thousands of people a pittance to work in factories, but because it runs highly automated, efficient factories full of technology. The UK can do this too and it is wrong to write-off high volume manufacturing here on grounds of lost competitive advantage. It doesn’t need to be lost.”

Chocolate makers Thorntons had a tough time recently but the company is hugely more efficient today in producing a high volume, commodity product since it invested in several robot picking lines. “These robots pack around 900 chocolates a minute,” head of operations David Proctor told TM in 2010. “They automatically sense the chocolate, measure it to make sure it’s the right size, pick it up and place it the box at the correct orientation. It’s one of the ways we’ve managed to differentiate ourselves from other manufacturers.”

That automation reduces employment is an interesting argument. You automate a factory and you lose 20 shop floor jobs, multiplier effect = problem for the economy.

But with a strong medium value, high volume manufacturing sector – like food & drink and plastics – these jobs would be replaced by suppliers, logistics, catering and other business support functions for the improved factories.

There is a small irony in a reticent automation market.

Accountants (finance directors and external accountants ) are there to advise companies on where best to spend and not spend their money. If they are resisting investing in automation, on grounds of slow ROI – or in the case of food manufacturers, the risk of supermarkets cancelling contracts – they are simultaneously deciding that, in some cases, their companies should be less productive than competitors.

And since the Treasury – finally – “increased the capital allowance by tenfold, from £25,000 to £250,000, there has never been a better time to invest in this technology,” says BARA’s Collier. The bean counters should know about and take advantage of this change to the tax regime before it changes in six months (an educated guess).

Crucially, accountants and MDs need to be better informed of best practice factory automation in Europe and beyond before they decide whether to invest in automation.

Is it a stubborn British “make do and mend” attitude to buying new technology that is to blame for our low technology base (notwithstanding some big, very high-tech companies such as Airbus and Jaguar Land Rover)? Or are many firms unaware of the range of autonomous equipment on the market, or is it that firms cannot get the access to the finance they need to buy the kit? At least capital allowances can’t still be blamed as the barrier.

“Buy more automation now” sounds a lovely ideaology for equipment vendors and manufacturing efficiency. Accountants and MDs might say “could you give me a little visibility on the eurozone first, please?”

Let us know your view, and come to Automate UK in February to find out about round 2 of the Automating Manufacturing fund for free consultancy.

 

Will Stirling

p.s. I accept that not all companies need to automate, where the subtleties of the assembly process makes a human touch irreplaceable, ref. Vent-Axia, Williams Refrigeration etc.