Regional focus – South West

Posted on 7 Oct 2010 by The Manufacturer

The South West of England is not renowned for being an industrial heartland. But by contributing 13% to the region’s economy, the manufacturing sector punches above its weight in the West Country. Will Stirling reports.

SW manufacturing in brief

● Manufacturing contributed about £12.4bn to the South West economy in 2007, 13% of the total (Source: ONS. Regional data is only available as recently as 2007).

● Manufacturing accounts for 10.7% of all employment in the region (10.1% nationally).

● Employment in the sector has declined by 10.7% between 2003 and 2008 (28,700 jobs), less than the national decline of 16.7%.

● Gross value added (GVA) produced by the manufacturing sector has grown year-onyear, suggesting big gains in productivity.

● Biggest sub-sectors in the region are food and beverage (31,500 jobs), transport equipment (30,300 jobs), machinery and equipment (27,000 jobs) and fabricated metal products (25,600 jobs).

● The South West has a greater concentration of employment in advanced engineering sub-sectors, i.e. electrical machinery and apparatus, medical, precision and optical instruments, transport equipment, and radio and communication equipment.

There are 12,000 manufacturing companies employing almost 225,000 people in the South West region, around 20% of which are in Devon and Cornwall. With strong aerospace, marine and defence sectors, and plenty of food companies, South West manufacturing gross value added amounts to £12.4bn, or 13%, of the regional economy. Between 2003 and 2008, manufacturing employment declined by 10.7%, some way short of the national average (whole UK) of 16.7%.

Regional data service South West Observatory says that while the South West economy contracted by around 5.9% in real terms between 2008 and 2009, the region’s gross value-added (GVA) is projected to grow by 1.4% during 2010 and by 2.3% during 2011. Manufacturing showed the strongest recovery of all sectors in the recession-busting Q3 2009, rising 0.8%. Employment in the SW economy as a whole is projected to be stagnant overall during 2010 and 2011.

Compared with locations across the European Union, the South West is a veritable specialist in aerospace and ship building and repair. Where a location quotient of 100 is average, the South West scores 580 in the former and 385 in the latter.

A throng of famous inventors and scientists hail from the West Country, including Sir Humphrey Davy, Sir Isaac Pitman, the weapons inventor Henry Shrapnel, and James Dyson (although born in Norfolk, he lives in Gloucestershire). The region upholds this tradition for innovation well, with world-leading high technology companies like Airbus and EADS, Dyson, GKN, Honda, Moog Controls, Renishaw and Spirax Sarco located in the counties east and south of Bristol. The city is the home of the £25m National Composites Centre (NCC), part of the UK Composites Strategy launched in Nov 2009 at the height of Lord Mandelson’s industrial activism. Partfunded by central government and the South West Regional Development Agency (SWRDA), the 6500m2 centre’s work will benefit sectors including aerospace, shipping and automotive. Airbus is looking at establishing a full-time research presence at the NCC.

Wave project not a hub of manufacturing

The South West RDA’s Wave Hub marine energy project was installed on the seabed 16km off the north Cornwall coast in September. Wave Hub is a grid-connected socket on the seabed to which wave power devices will be connected and their performance assessed. According to the SWRDA, nearly 1,000 of these jobs and £332m could be generated in region by Wave Hub, although there is no manufacturing breakdown.

“Although it is ground breaking technology, it has some way to go before it could be something which would attract sizeable manufacturing interest – the market is just not there yet,” says EEF’s Clive Turner.

“However, the wave hub development project puts SW England at the forefront of marine renewable energy technology and could end up being a world-beater, but only if the government – via further funding in the absence of SWRDA, as it’s not very likely to come from any LEPs – has the commitment to see it through.”

West Country optimism
According to Clive Tucker, EEF’s head of external affairs for the SW Region, optimism among manufacturers in the south west seems to be rising, with improving output and signs of growing future orders. The most recent EEF/BDO survey showed that manufacturers in the region are continuing to enjoy good trading conditions on the back of strong demand in overseas markets.

Public spending cuts from both the Comprehensive and Strategy Defence and Security Reviews will hit key sectors for the region such as defence – helicopter maker AgustaWestland’s UK plant is in Yeovil and defence contractor Babcock has manufacturing facilities in Bristol and Plymouth (Devonport Marine). But there are some very exciting opportunities opening for manufacturers in sectors that are knowledge-intensive and high-value.

Regional commentators say these will help shape a more competitive future regional economy.

Recent research by EEF showed that one in seven firms are bringing production back from overseas, in part reflecting disappointment with the cost savings and quality standards achieved by their investment abroad and concerns over getting products to market fast enough. But it also shows that more manufacturers have found that they can compete from a relatively high wage cost location like Britain.

Bournemouth-based manufacturer of geared motors, Parvalux, has transformed its fortunes since 2006 by buying a rival, quadrupling output and exporting to Germany among other markets.

Exchange rates remain positive for exports, with around 90% of manufacturers involved in exporting, and over 40% deriving more than half their turnover from overseas markets. In the past four years emerging market opportunities in regions such as the Middle East and Asia have grown and 80% of manufacturers say they aim to continue to extend their reach into new export zones. Some of the South West’s key manufacturing strengths are:

Aerospace – this world-leading sector continues to attract international investment.

Low carbon and energy – the South West, and Cornwall in particular, is important to the UK’s energy strategy and is the UK’s first Low Carbon Economic Area. The Wave Hub project was ‘plugged in’ to the national grid in September. Investment is coming into other energy sectors. In May, Exeter company Antech received a £100,000 grant from the SWRDA to develop a new drilling tool to tap into the most difficult to reach pockets of oil and gas.

National Composites Centre – due for completion in summer 2011, the work of this centre in Bristol, the design and manufacture of composite materials, will disseminate through the region and the country.

The Plymouth Science and Innovation Centre – a project to support enterprise in marine renewables, engineering and marine sciences.

SouthWest – SME Nibs

The Barden Corporation in Plymouth was bought by Shaeffler in 2001. It specialises in the design and manufacture of super precision ball bearings in sectors from aerospace bearings to high performance machine tools.

Engineering group J&S Ltd in Barnstaple were winners in the ‘Under £25m turnover’ category, West of England Business of the Year Awards in June.

Takao Europe Manufacturing, a manufacturer of high quality metal pressings and sub-assemblies in Brockworth, Glos, is recruiting toolmakers and machinists for its die maintenance department.

Plymouth-based Rittal-CSM is a subsidiary of the Rittal Group, the largest manufacturer of industrial and data communication enclosures worldwide. Employee Ian Meiklejohn recently designed and made a sign on the Trumpf laser for the Thornbury School.

Aerospace has a deep footprint in the South West.

Airbus employs 4,000 people at its Filton plant, which manufactures wings, engines fuel systems and landing gear systems and integration for the long-delayed A400M military aircraft, plus test rigs for the A380 platform. It also hosts Innovation Works, which is parent company EADS’s research and production facility, headed by Dan Johns. GKN purchased much of Airbus’s manufacturing plant in 2009. The West Country engineering group is going great guns, launching a fourth division, GKN Land Systems, which brings together Off-Highway, GKN Aerostructures and GKN Industrial and Distribution units. Led by managing director Andy Reynolds- Smith, a former member of the Ministerial Advisory Group for Manufacturing who is still involved in advising BIS on the new Manufacturing Framework, its remit is to develop next generation technology that will likely evolve in the future. The company is looking to more than double current annualised divisional sales of £700m within five years. GKN reentered the FTSE 100 in September following a six year absence, ousting fellow engineer Tomkins plc.

GE Aviation (Dowty Propellers), based in Cheltenham, makes aircraft propellers and employs around 1,300 people in Gloucestershire. In July it announced it will build a 30,000 sq ft R&D centre, the electrical power integration centre, which will focus on advanced power generation, distribution and avionic control technologies.

Messier Dowty, part of the French Safran group, conducts R&D, testing, assembly, processing and systems integration of landing gear for a large number of aircraft platforms at a 44,000m2 site near Gloucester. That site employs 945 people. Moog Controls in Tewkesbury is part of US motion controls group Moog. Moog Tewkesbury has driven an internal business improvement strategy for the last three years, using cost identification programme combined with internal strategies like new product introduction and lean (see TM July for a full company profile on Moog UK).

The South West of England has always had strong maritime ties, which is reflected in its vital marine industry. Motor yacht builder Sunseeker remains at the top of the British leisure marine industry. The Poole-based kingpin of the British Marine Federation (BMF) has won several Queen’s Awards for Enterprise, in Exports and Innovation, and co-owner Robert Braithwaite, who stepped down as managing director in December 2009, is a former Ernst & Young Entrepreneur of the Year.

The company has remained in the affluent Dorset town throughout its 36 year history and today employs 2,300 people. It turned over £303m in 2008/09 – an increase of 3.4% on the previous year and the firm’s best ever result. Private equity firm FL Partners bought a majority stake in the company in May. Rival boat builder Princess Yachts in Plymouth has had a positive year, launching the Princess 32M at the Southampton Boat Show in September. In March Princess, owned by the luxury goods group LVMH, announced the three-phase redevelopment of its 15 acre South Yard site, enabling the company to manufacture yachts in the +100 feet market. On September 22, managing director Chris Gates was awarded an Honorary Doctorate in Business from the University of Plymouth in recognition of the company’s contribution to the local economy.

Another important BMF member, Halyard, is Europe’s largest designer and manufacturer of specialist marine exhaust systems. At the Monaco Yacht Show this year it launched PureGen, the world’s first compact soot cleaner for marine generators, a product which helped it to win the Queen’s Award for Enterprise, in the Innovation category, in 2010. In February, luxury yacht builder Pendennis in Falmouth acquired Devonport Yachts, owners of the Devonport superyacht brand, making it the only devoted superyacht builder in the UK.

Food and drink companies feature prominently in the region. From humble beginnings in 1974, family-owned Yeo Valley’s four site operation generates annual turnover approaching £200 million and employs over 1,200 people. The two yogurt dairies at Blagdon and Cannington fill around eight million pots of yogurt a week. Constellation Park in Avonmouth is Europe’s biggest wine bottling operation and a monument to lean manufacturing and processes – the site has been short listed for three Manufacturer of the Year Awards (see profile in TM September). Part of the Samworth Bros group, Ginsters is the biggest selling pasty maker in the UK and has an average output of 3.2m individual items per week from its factory in Cornwall.

Without doubt Malmesbury’s most famous manufacturing son, appliances manufacturer Dyson is seeking to double its engineering staff in the UK to 700, taking its total UK headcount to 1,600. Founder James Dyson published a paper this year, Ingenious Britain, which calls for education reforms and higher R&D tax credits to make the UK Europe’s leading high tech exporter.

Last month Siemens Traffic Solutions in Poole won the Factory of the Year 2010 at the Cranfield Management School/Works Management Best Factory Awards. By using lean manufacturing processes over the past two years, the business has increased its turnover from £15m to £21m, without increasing its workforce of 120.

Ones to Watch – Renishaw

The metrology equipment specialist has had a brisk start to the new financial year (July 2010). “We have had strong demand for our metrology products across our main geographies, particularly in Japan and the rest of Asia,” says group marketing services manager Chris Pockett. “Revenues have been about £20m per month in July and August and the order book at September 9th stood at approximately £25m.” While the Glos-based company had to lay off several hundred staff during the recession, over 250 people have been recruited globally since September 2009 and there are currently 200 vacancies within the Renishaw Group, 108 of which are in the UK.

In July, the company acquired a 29% stake in Measurement Devices Ltd, a manufacturer of eye-safe, laser-based, timeof- flight measurement systems for £2.3m, which includes first options on future share purchase.

Ones to Watch – Spirax Sarco

Steam and condensate engineering firm Spirax Sarco is investing nearly £25m to consolidate and modernise its manufacturing facilities in Cheltenham. The ‘Unity Project’ will bring its existing manufacturing and R&D operations at three sites around Cheltenham onto one site at Runnings Road, ensuring that manufacturing operations are more environmentally-friendly.

New green efficiency measures include upgrading the energy management of the site beyond current regulations with building insulation, daylight lighting and automatic, low energy lighting.

“We are determined to further show our commitment to sustainability within this project, which is why we have put lower environmental impact high on the project’s priorities,” says Marc Eggermont, Director of Spirax Sarco UK and RoI.