Covid-19: An opportunity to make things better

Posted on 18 May 2020 by The Manufacturer

The Covid-19 pandemic is shining a fierce spotlight on the vulnerabilities of manufacturing to disruptions in fragile, global supply chains. Professor Rab Scott says that in the UK, as in other European countries and in the US, the problem has not just been a shortage of ventilators and PPE, but a shortage of the materials and parts to make them.

What we are seeing is the effect of a decade and more of globalisation, where longer and more complex supply chains have spread across the world, lured by the pull of cheap labour and low-cost production, chiefly in China and the Far East.

As John Glenn, the first man to orbit the Earth, famously remarked about the vessel’s reliance on low-cost components: “I felt exactly how you would feel if you were getting ready to launch and knew you were sitting on top of two million parts — all built by the lowest bidder on a government contract.”

Container ship at sea carrying containers with flag of China - import export zero tariffs - supply chain - image courtesy of Depositphotos.

When supply chains are based chiefly on price, lower cost economies will always win out, and yet as the Coronavirus crisis has shown, in all too many cases, when push comes to shove, being dependent on others doesn’t guarantee supply: not even of toilet rolls.

Last year, enterprise technology market researchers Vanson Bourne found that, on average, UK businesses work with 2,598 suppliers, just over half of which are international. Their report found that 84% of businesses were struggling to manage supply chain risk. That was before Covid-19 entered our consciousness and our bloodstreams.

In February 2020, The Manufacturer reported that JCB had been forced to halt its production line and slash the working hours of 4,000 of its UK workforce, owing to a shortage of components being imported from China.

This was perhaps the first UK company to feel the impact of the virus on its operations, but with more than half of UK tool manufacturing currently sourced from China, the virus has rapidly infected much of our manufacturing sector, with the potential to inflict long-term damage.

This has not, however, stopped UK manufacturing from rising to the government’s challenge to produce an additional 30,000 ventilators in time to prevent the NHS being overwhelmed when the numbers of victims of the virus peaked.

Superbugs Hospital corridor Healthcare Innovation

Convened and coordinated by the High Value Manufacturing (HVM) Catapult, Airbus, Ford, GKN, McLaren, Siemens, Renishaw and a host of domestic supply chain component makers have come together to provide this life-saving kit.

The University of Sheffield Advanced Manufacturing Research Centre (AMRC), which is part of the HVM Catapult network, with Airbus, Siemens, Microsoft and PTC, has transformed its newly opened facility, AMRC Cymru, into a makeshift factory producing ventilators that meet stringent regulatory standards.

In mid-April, the first units rolled off a production line that did not exist three weeks previously; not something the Welsh Government imagined when they funded the new build.

Britain is not alone in having to improvise a manufacturing response. In Canada, 77 automotive firms converted capacity to make medical equipment; Canada Goose, which makes outdoor clothing, is making 60,000 disposable gowns a week for isolation patients; while in France, the LVMH factory, that normally makes Christian Dior perfumes, has been retooled to produce hand-sanitisers.

Thinking again

In the post-Coronavirus world, companies, and indeed countries, will have to think again about the cost-benefit analysis of their supply chains and their home-grown, sovereign capabilities.

Indeed, just before this pandemic started, the world was changing economic shape with the ramp up of the trade war between China and the US, with Donald Trump pushing the sovereign capabilities of the US to secure their economy (and, some may cynically say, a second term).

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But is that really a bad thing? Stanley Black & Decker recently announced plans to invest in a new plant in Texas, to reshore manufacturing from China.

Recently, Japan has earmarked 220bn yen (US$2 bn) for companies to shift production back to Japan and 23.5bn yen for those seeking to move production to other countries, all aimed at reducing Japan’s reliance on the Chinese manufacturing supply base.

So, what will change about the supply chain of the post-virus business world?

Two main things will be brought more clearly into focus – the length and the complexity of the supply chain.

Only by mapping and truly understanding the whole supply chain – and the supply chain’s supply chain – can manufacturers fully quantify risk. Industry will need to identify any single point of failure in the extended chain, whereby the closing of a national border, or a natural disaster halfway across the world, could impact on the higher tiers of the supply chain.

Juergen Maier with Dr Rab Scott, Head of Digital at the AMRC

Professor Rab Scott with former Siemens UK CEO Juergen Maier – image courtesy of AMRC.

Here, too, there is a vital role for the AMRC and the HVM Catapult. We are not just supporting the immediate ventilator and PPE effort, we are also looking to the future and how manufacturing in the UK can develop the antibodies to meet the next wave of a virus, and become more resistant to other, potential external threats, whether that is Brexit or a trade war.

It is now a national imperative to ensure the UK has resilience in its critical manufacturing supply chains such as food, healthcare and defence.

Resilience of our national manufacturing base will anchor critical industries and companies in the UK with the ability to scale supply to match demand, even under extreme circumstances.

As the HVM Catapult has shown in its role coordinating the response to Number 10’s Ventilator Challenge, a national network already exists that could lay the foundations for national manufacturing resilience.

HVM Catapult is ideally placed to make manufacturing more agile, provide surety of access to components, accelerate the Made Smarter programme to embed digital technologies and upskill a more adaptable, flexible and loyal workforce.

The new AMRC centre in Broughton, North Wales.

 The new University of Sheffield Advanced Manufacturing Research Centre in Broughton, North Wales (AMRC Cymru) – image courtesy of AMRC.

All this would dovetail neatly into the government’s pledge of a place-based levelling-up strategy, turbocharging organisations like the AMRC in the North to work with devolved administrations and Local Enterprise Partnerships to use its research and development talents to foster a more sustainable and resilient manufacturing sector.

We know our healthcare workers are essential workers. But this crisis has also shown that factory workers are essential too. Britain was once known as the workshop of the world. We made things.

The lesson from Covid-19 is that manufacturing, and R&D institutions like the AMRC, are crucial not just to making things in the UK, but to making things better.

Professor Rab Scott heads up digital activities across the whole University of Sheffield AMRC.

He is currently operational chair of the Digital Strategy Team for the High Value Manufacturing Catapult, Rab also sits on the Steering Committee of Immerse UK (the UK’s body for immersive technologies), the IET’s Digital Panel and their Applied Visualisation Forum and the UK5G Manufacturing working group.

*All uncredited images courtesy of Depositphotos