Easier access to capital could help SMEs stay competitive

Posted on 20 Feb 2018 by Jonny Williamson

The managing director of a UK manufacturer of silicon carbide fibre believes that easier access to capital would help manufacturers innovate, expand & explore new markets.

The British company manufactures monofilament and metal matrix composites – image courtesy of TISICS

The silicon carbide fiber market is projected to reach $1.1bn by 2022 from $240m in 2017, at a combined annula growth rate (CAGR) of 35.9% from 2017 to 2022.

Reportedly, the major factor fuelling this growth is the increasing use of silicon carbide fiber for high-temperature applications thanks to its properties of high strength and creep, oxidation, and corrosion resistance, and low density.

British company TISICS is the only company which manufactures silicon carbide fiber outside of North America.

By taking the fiber and incorporating it into aluminium or titanium, the company also makes very strong lightweight components used in the manufacture of aerospace engines, robotics, pressure vessels or energy generation turbines in the oil and gas industry.

Light weight components play decisive role in manufacturing 

Since 2005, TISICS has continued to explore new markets and applications. Its current strategy centres on high performance, high value components for space and is targeting the expansion of its existing capabilities from pilot development to industrial production of high volume aerospace components.

The Manufacturer spoke with Stephen Kyle-Henney, TISICS’ managing director, about the importance of investing in innovative technologies to better compete in the silicon carbide fiber market.

Kyle-Henney said that innovation is either something radically new, like a brand-new product or a process, something which offers high rewards, but can be quite challenging, or adapting existing components or processes based on knowledge of the short comings of the current approach.

Kyle-Henney explained: “We are currently developing fibre reinforced pressure vessels for the space industry using new lighter materials than we manufactured before with conventional technologies.

TISICS operates an 11,500ft of industrial space for metal matrix composite manufacture – image courtesy of TISICS.

“Those are the sorts of things where it is important to invest in new technologies based on existing products. But, you also have to make sure that you have a reliable supply chain behind you which can deliver the new product.”

Kyle-Henney added: “As an SME, business model innovation is probably more common as we can – and indeed, often have to – adopt new approaches to manage the business in light of new customers or changing regulation, finances or resources.”

New money, new opportunities

Asking Kyle-Henney about the biggest opportunity that UK manufacturing faces at the moment, he highlighted the resurgence of the UK as a manufacturing base, alongside the government’s refocused attention on the importance of industry and its recognition that it needs to be nurtured and supported to grow to a self-supporting scale.

Kyle-Henney said that even 15 years ago, there was an opinion that the UK would invest in digital, education and finance, and that manufacturing capability could be bought from anywhere.

“That has changed now, there is that recognition that we can produce in the UK as effectively as anywhere else and we need to create those jobs,” he said.

The country needs to invest money in bringing R&D to an experimental stage and beyond, he continued, both government finance and private capital. Doing so would demonstrate to potential investors that the UK is capable of managing every stage of the process – from initial development and design, through to manufacture and on-going support services.

He explained: “This helps create credibility and ensures more suppliers, customers and employers understand that the UK does high-tech beyond generating ideas in universities to be exploited abroad.”

Steady growth remains to be the biggest challenge

Increasing economic growth in the UK represents a major opportunity and challenge for businesses, according to Kyle-Henney, as scaling up training programmes, product or process development initiatives or capacity all requires investment.

TISICS explores new markets with its strategy centred on the high performance, high value components for space – image courtesy of TISICS.

He explained that UK banks are still nervous about the level of funding they can provide at the growth stage which can stall small companies: “UK venture capital is very conservative when it comes to manufacturing investment as the capital costs can be high ahead of sales revenue and profits. Hence growth often happens outside of the UK.

“Foreign investment in UK companies is encouraged, but can come at a price as large international companies will shift manufacturing around the world to meet cost and market needs.”

The trouble is, according to Kyle-Henney, is that the banks in the UK only mobilise capital when customers have already placed an order.

He lamented the loss of government funding-schemes the likes of the Advanced Manufacturing Supply Chain Initiative (AMSCI) and Manufacturing Advisory Service (MAS) that helped manufacturers to break that cycle.