With a diverse manufacturing base and few OEMs, the Yorkshire and The Humber region has not only coped well through the recession but is now preparing for very big opportunities in renewable energy manufacture and, hopefully, new nuclear.
Key facts and figures
The Yorkshire and The Humber region covers North, South, West and East Yorkshire, or the East Riding of Yorkshire, which includes Hull and the northern part of what used to be Humberside.
● Regional economy – GVA £87.4bn in 2009, down 2.4% on 2008 (www.yorkshirefutures.com). Gross value added generated from manufacturing – £16.3bn.
● Manufacturing contributed 27% of GVA in East Yorkshire and Northern Lincolnshire in 2008 Manufacturing employment – 270,000, 13% of the regional economy (2008). The figure is 15.4% in East Yorkshire.
● 11,940 manufacturing companies (EEF).
● From 1989 to 2008, total GVA from manufacturing only increased 38%, compared with sectors like real estate and financial intermediation, up by 300% (ONS). Yorkshire Forward claims that operating costs in Yorkshire are 20% lower than the national average
● Yorkshire and The Humber is the UK’s most dominant region for biomass production.
● In 2008, the public sector accounted for 23% of employment in the region, compared with 17% in the South East, for example.
● Big engineering and manufacturing companies in the region include: Allied Bakeries; Arla Foods; BAE Systems; BP Dupont; Coca-Cola Enterprises; Corus; Cranswick; DePuy; Fenner; Firth Rixson; McCain; Nestle; Northern Foods; Rolls-Royce; Reckitt Benckiser; Seven Seas; Siemens VAI; Smith & Nephew; Tata Steel UK; Unilever; Young’s Bluecrest Seafood.
Yorkshire and The Humber contributes about 7.1% to UK GDP and, with below UK average operating costs, a central England location, international airports and good universities, it has become a popular target for inward investment – in the 2009/10 financial year, overseas investors attracted £165m of private sector investment to the region.
Yorkshire has few engineering OEMs. Rolls-Royce’s presence is currently confined to the £25m Nuclear Advanced Manufacturing Park near Rotherham, but there are plans for a civil nuclear manufacturing plant in the region. BAE Systems’ main regional site is in Brough, East Yorkshire, which makes the Hawk training aircraft but operations there are reduced today since it announced 450 redundancies in 2008. The region has no big car makers. Smith & Nephew’s manufacturing facility in Hull makes more than 300 million wound dressings a year and with about 600 employees is one of the region’s biggest process manufacturing employers.
But the absence of big engineering OEMs has helped the region to weather the recession, says EEF’s region director for the North, Andy Tüscher. “The Yorkshire region’s industry is very diverse – the supply chain supplies to many different sectors. The lack of dependence on the big OEMs, such as the North East’s reliance on Nissan for example, means manufacturing hasn’t suffered hugely since 2008,” he says. “This resilience might explain why future inward investment in the region is promising, the best example being Siemens.”
Hull, better known as a commercial and fishing port than a manufacturing hub, is abuzz with optimism about Siemens’ new £80m offshore wind turbine factory. Due for completion in 2013, the factory, along with the associated port development of Alexandra Dock and the maintenance and overhaul of the turbines, will provide up to 10,000 new and long term jobs, according to Regional Development Agency Yorkshire Forward, and will keep jobs in Hull through to at least 2049 (see box). At the end of March, Danish company Vestas indicated that Hull was a front runner location for its own UK-based offshore wind turbine assembly plant, to make 7MW turbines. At 187m, these would be even bigger than those planned by Siemens or rival GE.
The Global Manufacturing Festival in Sheffield last month emphasised that steel and special metals manufacture is synonymous with this region (see p16). South Yorkshire has the largest concentration of steel conversion companies and precision forgers in the UK. The Company of Cutlers of Hallamshire was formed in 1624, but in fact blade making in the Sheffield region dates back to the 12th Century.
(Right) Artist’s impression of the new wind turbine factory and Alexandra port in Hull. Siemens transformed the business outlook in the city when it announced in January that Hull was the preferred location for its £80m turbine facility.
One to Watch – Siemens brings dawn of new era for Hull
In January, Siemens made Hull the preferred location for its £80m offshore wind turbine manufacturing facility. The factory will manufacture wind turbine nacelles, the technical component of the turbine that converts wind energy into electricity which can weigh up to 500 tonnes, and will assemble these in the towers.
The decision’s impact on the Hull region was profound – Yorkshire Forward estimated that that new factory and the associated port development to handle the massive turbine towers would bring up to 10,000 jobs to the region over the project’s lifetime. Local newspaper The Hull Daily Mail reported that, because the facility would also maintain and overhaul the turbines – about 300 are expected to be built per year – the new jobs would be sustained through to 2049, as the turbines have a working life of 25 years.
The news has lifted the mood in a city whose traditional commercial port and industrial activities have waned in recent years. While concerns over noise and visual pollution created by the facility have been aired, chairman of the Victorian Docks Residents Association Gordon Rasen summarised the general feeling: “The city needs something like this – the finance, the prestige and the jobs.” Hull West and Hessle MP Alan Johnson said he had “no doubt” that Siemens would look to employ as many local people as possible.
Providing that it goes ahead, Siemens plans to build 5,000 turbines at the factory, each measuring up to 175m in height. Siemens confirmed its decision to build a factory in the UK following the government’s decision last May to finance a £60m port development fund to adapt an East coast port to manoeuvre the supersized towers and blades. It is believed that the council behind nearby South Humber Gateway was bitterly disappointed to miss out as a bidder for the factory location. However all is not lost for the Gateway, as two other international companies, GE and Vestas, have expressed interest in building turbine assembly plants in the region.
(Right) Andy Tüscher, EEF
Andy Tüscher, Region Director – North, EEF
Andy joined the Army in 1984. After graduating from the Royal Military Academy, Sandhurst, he served in a number of theatres and operational tours, until resigning his commission. On leaving the Army, Andy joined Humberside Training and Enterprise Council in 1995 as an NVQ Development Adviser, and became an Investors in People Adviser and Assessor in 1996, until being appointed as operations manager at Business Link Humber in 2000. He is married with three children.
Richard Morley, Chair of EEF’s Yorkshire and Humberside Regional Council
In 2010 he took a new role as Energy Efficiency Director, Caparo Steel Products. Richard has a long association with the EEF and is also chair of the Corporation at North Lindsey College. He is a Chartered Mechanical and Materials Engineer and has an honours degree in Mechanical Engineering, a Masters Degree in Human Resources Management and a Diploma in Management Studies.
Today, big steel working plants like Sheffield Forgemasters, Firth Rixson and stainless steel specialists Outokumpu (see box) work in the same 20-mile radius as advanced tool makers Dormer Tools, welding technical experts The Welding Institute, or TWI, and the Advanced Manufacturing Research Centre (AMRC) with Boeing, all located at the Advanced Manufacturing Park near Rotherham.
Tata Steel Speciality went through a turbulent time in 2009 and faced closure. But a cash injection of £6 million in January 2010 to buy two vacuum arc remelting furnaces and specialist testing equipment was the catalyst for change. A company restructuring, lean programme and several ‘hearts and minds’ conversations with staff led to a transformation in the company’s fortunes. It is now profitable and exports speciality steel globally.
R&D, with emphasis on the ‘D’
While steel, engineering and tooling technology define the South Yorkshire manufacturing base, it also has strong academic roots. Sheffield University and Sheffield Hallam University have good engineering departments that feed R&D and graduates to local businesses like Sheffield Forgemasters, which works both ways. A director of Forgemasters, Jesus Talamantes-Silva, is now visiting professor for the department of Engineering Materials at Sheffield University. Other local companies like Outokumpu, Tata Steel and AESSEAL recruit from the local academia.
In March, in an exclusive interview with The Manufacturer, Deputy Prime Minister Nick Clegg explained plans for the UK’s first Technology Innovation Centre (TIC), for High Value Manufacturing, in Sheffield. The first of a series of TICs nationwide, this one will complement South Yorkshire’s technology strengths well. The new TIC will link with the AMRC, the new Nuclear Advanced Manufacturing Research Centre, taking shape next door to the AMRC, the local universities, and Boeing, a tier one sponsor of the AMRC. Once completed, the hope is that this body of organisations focused on advanced manufacturing will accelerate new advanced techniques to commercialisation.
The nuclear industry is very important to the region. The Government has committed to 10 new civil nuclear power stations to be constructed over 14 years, and it is hoped this will provide the platform to create a world-leading centre for nuclear technology R&D and component manufacture. Peter Birtles, chairman of the Special Metals Forum and a group director of Forgemasters, told The Manufacturer that “despite the tragedy of Japan’s earthquake and the resultant controversy over nuclear power, to bridge the 43 gigawatt gap in the UK’s energy needs between now and 2030, there was little viable alternative to nuclear, which presents a tremendous business opportunity for this region.
Food, glorious food
While South Yorkshire is characterised by metal industries and engineering, and the Humber by the chemical and healthcare sectors (Reckitt Benckiser, Seven Seas, Smith & Nephew), West and North Yorkshire, as well as East Riding, have a very big food industry. About 60% of manufacturing GDP in these counties is food and drink, says EEF’s Andy Tüscher. Allied Bakeries, Arla Foods, Coca-Cola Enterprises (CCE), Cranswick, McCain, Northern Foods, Unilever, Youngs and a host of breweries and other food and drink companies are located in the region. CCE manufactures and distributes over 80 different soft drinks products across the UK.
Its Wakefield plant is Europe’s largest Coca-Cola bottling plant, operates 10 lines, employs over 500 staff, runs 24-hours a day and makes range of 80 products that extends well beyond the omnipresent “Real Thing”.
With Arla Foods and CCE, Northern Foods is one of the region’s most dominant food companies.
Headquartered in Leeds with subsidiaries all over Yorkshire it is a diverse group, making everything from pies to confectionery, soup and biscuits. Three factories in the region closed between 2009 and 2010 following the decline of some unprofitable own label contracts. In 2009 the company, created by a series of mergers since it was founded in 1937 as a dairy business based on Spalding Moor, recorded revenues over £975m.
John Smith’s, Tetley’s, Theakstons and several other large breweries are in Yorkshire, as is frozen food producer McCain. In 2007 the famous chip maker installed three £80m wind turbines at its Whittlesey site, the largest chip factory in the UK – reducing its electricity costs by about 60%.
One to Watch – Outokumpu:
Outa-what? Finnish manufacturer Outokumpu is a Eu4.3bn turnover company specialising in making and processing stainless steel for just about any end application – construction, medical, power gen, aerospace and more. The company has four business divisions in Sheffield over three sites and employs between 500 and 600 people, including two ancillary sites in Aldridge and Coatbridge, Scotland. The group company had a very weak 2009 but, according to its annual report, ‘demand for stainless steel began recovering from the beginning of 2010 supported by improving consumption, primarily in consumer-driven industries,’ and sales jumped 28% last year.
As well as having the national distribution and service centre, Sheffield’s operations are about processing the material supplied by the company’s Sweden and Finland sites, so the Stainless Melting and Continuous Casting shop converts raw and coiled steel into semi-finished flat and long form (bar) stainless steel.
Outokumpu UK sponsored the Convention at the Sheffield Manufacturing Festival, where managing director Alison Kinna spoke to TM on the company’s view of a recovering economy: “The markets we supply haven’t changed greatly but there’s been a clear change in the order preferences for just-in-time delivery and smaller quantities [which] reflect the tighter times. This really justifies our big sales and service centre in Sheffield, where high volume, small orders are processed that would be more difficult from Finland and take too long to dispatch.” The firm’s most recent big investment was May 2010, when it installed a new bar finishing facility, financed by the Outokumpu Group. Opened by the Duke of Gloucester and involving all the employees, the £15m investment was financed by the parent company. “We’ve also made several smaller investments to take out cost and get the product closer to the end user price point,” says Ms Kinna. “We’ve developed a business service for some products to reproduce the kind of finishing processing that customers often do, which has been a success.” Kinna says the South Yorkshire business community is very joined up and Outokumpu tries to take advantage of business support where possible. It has two people on student placement programmes from Sheffield Uni and the melt shop took on 12 apprentices last year.
(Right) Aussie bottling group Amcor has ordered £2m of Loadhog’s Smartstak renewable packaging system. The design keeps bottles inside the stack during transit, avoiding breakage.
One to Watch – Loadhog: Persistence pays dividends
Loadhog, a spin-off of one of Sheffield’s most famous manufacturing sons, Gripple, designs and makes returnable packaging solutions. The company celebrated in March after Australian customer Amcor made Loadhog’s proprietary Smartstak system its standard system for transporting containers of bottles between its Australian and New Zealand operations. The Queen’s Award-winning Smartstak comprises the Smartpad, an injection moulded, crimp-edged plastic pad, and springloaded Smartframe, which work together to prevent the collapse of bottle packs during transportation or storage. As bottles wiggle in transit, those at the end of a stack often slip out and get crushed – hauliers expect a certain attrition of bottled goods.
The wavy-edges of a Smartpad catch the vibrating bottles and prevent them falling off the pad – saving product and reducing cling wrap. Since 2009, Amcor has taken 650,000 Smartpads from Loadhog, or over £5m in sales, meaning that Smartstak revenue has begun to overtake that of the company’s other main product, the Pally & Lid System. This has helped Loadhog into a stronger financial position after struggling to market the Pally and trading at a loss for the first few years.
Founded in 2004, Loadhog’s principle product was a lockable wheeled, returnable plastic ‘Pally’ base and lid, an alternative material handling system to wooden pallets and shrink wrap.
Pallys have a foot operated brake, and the original concept was to better secure palletised freight in transport, reducing movement and, through the Lid and ratchet straps, allow better use of space in a container lorry. Loadhog won its first contract with the Royal Mail, who trialled the system with downstream operators like TNT and City Post. But the company believed the real prize was big retail like Tesco and Asda. Despite believing they had a superior product, Loadhog has thus far been unable to persuade retailers to take the leap of faith and ditch the ageold pallet.
“We tendered for retail contracts [with the Pally] from January to November 2010, but we’ve found it very difficult to get them to switch to a new system,” says Ed Stubbs, who at 28 became managing director in November “It’s not a huge risk to trial it because they replace just five per cent of their pallets or cages at a time. So we’ve ended up back where we started, supplying to the Royal Mail, and we now supply to several postal services in Denmark, Finland and Norway.” The Pally system is about half the weight of the the roll cage used by the Mail, and is the same or less in capital cost. “The lid secures the load from the top so you can stack to the very top of a lorry, while a metal roll cage can’t do this,” says Stubbs. “One Pally plus Lid has the same capacity as a roll cage and you can fit 64 into a standard 44 foot trailer, but only 40 roll cages, allowing 42 per cent increase in fill per vehicle.” Loadhog invested nearly £500,000 in new injection moulding tools to product 40% larger Smartstak pads for Amcor’s latest contract and its headcount has grown from 20 people in 2007 to 55.
Will rethink on nuclear safety scupper region’s bid to be national new energy hub?
With the Nuclear Advanced Manufacturing Research Centre with Rolls-Royce and several regional companies already supplying parts to the nuclear industry, Yorkshire has legitimate claim to becoming a national, even international, hub for nuclear research and manufacturing knowhow. Despite the loss of the £80m government grant for a 15,000 tonne press to make huge cast components for nuclear power stations, Sheffield Forgesmasters is still one of just a handful of companies worldwide that can make some of the components required in a nuclear power station’s core.
DavyMarkham, ATI Allvac (fuel rods and bracing materials for Advanced Gas-cooled Reactors), Firth Rixson, Independent Forgings and Alloys (manufacturer of parts for the new Westinghouse-designed power reactor) and Newburgh Engineering all have the capability to manufacture for new nuclear. The National Metals Technology Centre (Namtec) and the Special Metals Forum are based near Sheffield and advise companies applying to enter the nuclear and other supply chains, such as carbon capture and storage technologies.
Yorkshire’s strengths in nuclear was endorsed at the Global Manufacturing Festival, where at the manufacturing leader’s dinner on March 15, procurement director for EDF Energy Alan Cumming strongly intimated that EDF would invest in technology from South Yorkshire if the nuclear infrastructure base kept going as it was.
But on March 31, Deputy Prime Minister Nick Clegg cast doubt on the viability of UK new nuclear by acknowledging the crisis at Japan’s Fukushima plant would drive up insurance and compliance costs of new power stations, making it “challenging” for the private sector alone to pick up the bill. This was the preferred model in the UK, but government subsidy now looks unavoidable for the programme to stay on track.
Encouragingly, for the region and the UK energy sector, in February Mr Clegg formally launched a blueprint for opportunities for manufacturers and other supply chain partners in the nascent carbon capture (CCS) sector, ‘Carbon Capture and Storage: Technology, Materials and Key Players’, authored by Namtec technologists. Over 100 manufacturers and stakeholders attended the launch conference, hearing presentations on CCS viability from companies including Doosan Babcock, Alstom and Sulzer Pumps. Copies of the publication are available from Namtec, www.namtec.co.uk.
The Government has designated Yorkshire and Humber as the UK’s Low Carbon Economic Area (LCEA) for carbon capture and storage.
People close to the nuclear industry feel that the world has no alternative to nuclear power.
If nuclear safety fears can be placated, with Yorkshire’s nuclear cluster and investment in wind turbine facilities, the region is well placed to make non-fossil fuel energy its core manufacturing industry.