A ‘disruptive cocktail’ of events has steadily eroded the benefits of globe-spanning supply chains. Consequently, rising numbers of manufacturers are opting to bring their supply base closer to home. Jonny Williamson reports.
Over the past two years, more than 40% of manufacturing companies have increased their use of UK suppliers with a similar number planning to follow suit. As a result, more than 50% of an average manufacturer’s supply chain is now based in the UK. The key drivers behind the shift are predictability, certainty and a desire for greater resilience, according to Make UK, which polled senior decision makers earlier this year.
“We may now be seeing the era of globalisation passing its peak, with disruption and volatility for global trade fast becoming normal. For many companies, this will mean leaving ‘just in time’ behind and embracing ‘just in case’,” said Verity Davidge, Director of Policy at Make UK. However, the trend is far from straightforward, as The Guardian’s Economics Correspondent Richard Partington rightly points out. Growing interest has prompted questions over, “the higher production costs and Britain’s capacity to meet reshoring demand,” and that these added costs could lead to higher prices and less choice. To bring more of the supply chain back to the UK, manufacturers must produce more from their existing factory footprints at a cost that allows them to compete effectively in global markets. Little wonder many are turning to high technology machine tools such as those supplied by the Engineering Technology Group (ETG).
The company has been providing advanced manufacturing technologies across the UK and Ireland for more than 25 years. Its portfolio boasts a wide array of turning and milling machines from leading brands like Chiron, Quaser, Stama, Vulcan and Nakamura-Tome. ETG also designs and manufactures bespoke work holding and machine accessories through its Hyfore division. Sales and enquiries have reached unprecedented levels, said Group Business Development Director, Graeme Thomas, with the “reshoring boom” a leading factor. I sat down with Graeme to hear more.
ETG has seen a healthy surge in demand from companies keen to reshore work back to the UK. Has this demand been building for some time and where is it coming from?
GT: We saw a build-up of inventory ahead of Brexit, something I don’t think we’ve yet felt the true impact of, and then we had the pandemic. Post-COVID, those who were able to invest and did so, came out in a stronger position. We saw the same post-financial crash in 2008/09. We can see an urgency from UK manufacturers to raise throughput and productivity. Many businesses we speak to have very healthy order books, almost too strong. You hear of companies having to turn work away because of a lack of capacity or being unable to source enough raw materials or recruit workers to staff additional shifts.
Their need to increase product flow within the same factory footprint or re-establishing their machine shop has led to a sharp increase in enquires for our Nakamura, Chiron and Quaser products. I’ve engaged with three customers in the past week alone that are all looking at making substantial investments in these advanced machining centres over the next six to 18 months with the explicit aim of bringing work back to the UK. In terms of where we’re seeing strong reshoring activity, the medical sector has been extremely high. Medical goods previously made in Eastern Europe and China are making their way back to the UK and Ireland. For example, we recently installed a large automated system for an Irish medical manufacturer to enable them to make locally again. Several customers have reshored parts destined for the food manufacturing industry, including valves and heat generation steam systems. Automotive product has also come back to the UK in high volumes.
What’s behind this renewed drive of reshoring?
There’s been a definite shift from focusing purely on price to having to balance a range of factors. Global lockdowns and factory closures meant a lot of UK companies couldn’t fulfil orders because they couldn’t source components or materials. I believe that situation helped open people’s eyes. Towards the end of 2021 and into 2022, we saw a lot of our OEM clients gear up to bring parts and volume manufacture back to their UK businesses. The biggest issue with UK businesses wanting to invest in more machine tools isn’t financial or having enough work, it’s skills.
In terms of operators and maintenance technicians?
Partly. But it’s more a shortfall in experience around process application. I want to manufacture a component and I need to create a workflow that achieves that in the most time and cost-efficient method possible. That level of engineering competency looks to be broadly lacking in industry. This is where ETG is helping manufacturers better compete not just at home but in global markets that have become more important as a result of Brexit.
We are applying our deep expertise to not only integrate machine tools into a process but to get that process right in the first place. For obvious reasons, many manufacturers would like to run a lights out night shift with minimal manual intervention. Losing eight hours every day over a year represents a lot of lost time and potential revenue. Manufacturers often have sufficient infrastructure in place but can’t run a particular process unmanned due to their current machine configuration.
They haven’t applied the machine tools or process as well as they could. We enable that by recommending ways to reorder that work area, move certain machines and bring in more of a manufacturing cell approach, for example. Sometimes we recommend investing in a couple of additional machines, possibly some automation, but not always. Those recommendations come via in depth evaluations we conduct to understand a process and produce an efficiency improvement plan covering workflow, labour, energy and other factors.
Is energy efficiency now a larger part of your engagement with manufacturers?
Undeniably. Those types of reports are always a positive thing, and we’re experiencing record requests to conduct them. I was at a manufacturer serving the nuclear industry last week whose set-up was not as cost-efficient as it could be. We identified several areas where this company could make efficiency gains and cost savings using their existing equipment, which then freed capital to be invested in newer, more efficient machines elsewhere.
These will then generate further savings which will be invested in growing the business, and it becomes a virtuous cycle. We’re also happy to produce these reports for non-customers. Part of the drive to reshore is companies seeking ways to reduce their carbon footprint. Have CO2 savings become more of a priority? Yes. Everyone has woken up to the impact of shipping product halfway around the world. Many of our manufacturing customers, especially the larger organisations, have created sustainability departments to ensure their end-to-end impact is environmentally conscious and ultimately climate-neutral.
We’ve worked with our partners to analyse the structure of a machine tool in terms of the controls, motors, drivers, energy consumption, and helped them to bring several green innovations to the market. One of these is ETG’s super-low loss amorphous core transformers, powered by Powerstar, which help manufacturers to reduce CO2 emissions, cut operating costs and meet their environmental responsibilities. Conventional transformers, while slightly cheaper, consume their initial purchase cost in wasted energy every nine months. By comparison, our amorphous core transformers, which are suitable for both old and new machine tools, deliver a superior return on investment.
Over ten years, they can yield an average saving of £25,500 while reducing CO2 emissions by 40,000kg; that’s per machine. Multiply that by how many machine tools are on your shop floor and we’re talking dramatic savings. If the cost of energy continues to climb, those savings will only go up. So, the technologies and solutions ETG provide enable manufacturers to increase output without increasing their carbon footprint. Effectively, decoupling business growth from carbon growth.
A new machine tool is a considerable expense at a time when finances are being squeezed. What support is there for businesses to invest?
Several customers have recently made large investments tied to various tax incentives such as the ‘super-deduction’ capital allowance and the annual investment allowance. I would like to see more companies taking advantage of these initiatives, to be frank, because the tax savings can be considerable. We’re always looking at ways to help customers access new machine tools that also work for us as a business in terms of our cash flow. We’ve trialled something similar to Rolls-Royce’s ‘power by the hour’ but interest was lower than anticipated. We’ve offered ‘buy now, pay later’ deals and buy-backs on various machines to help de-risk purchases. We also see lease-style frameworks, similar to that used for new cars, growing in popularity.
What hopes do you have for a return to UK machine tool manufacturing?
The machines built in Taiwan, unfortunately, would once have been UK-made 20 or 30 years ago. The migration of machine tool manufacturing away from the UK closely followed that of our automotive sector. The size, strength and volume of UK automotive were such that we needed to produce specialist machines domestically to feed those factories. The offshoring of volume auto part manufacture saw machine shops either follow or close down. That had a massive impact on UK machine tool manufacturers. If enough work is reshored and the UK manufacturing base increases, I’d like to believe that people would begin to question why we aren’t making more machine tools here. It’s a potential growth area, for sure, but we would have to be extremely competitive to do that successfully once again.
ONE-HIT MACHINING DELIVERS 500% PRODUCTIVITY BOOST
Dundee-based Quest Precision Engineering has been on a trajectory of continuous growth since Gordon Deuchars joined the business as Managing Director three years ago.
The Scottish subcontract manufacturer supplies a diverse range of industries with simple to complex components from common and exotic materials. A requirement for one-hit machining led to an investment in two Nakamura-Tome twin-spindle twin-turret WT150II turning centres, supplied by Engineering Technology Group’s Scottish distribution partner RAM Engineering & Tooling.
Previously, Quest was machining autonomous valves for the oil and gas industry in five operations on four machine tools. A process that took two to four hours with an additional 25% set-up time across the various machines. Production of the complex two-inch diameter valves was time-consuming and not cost-effective enough for Quest to compete with an existing Chinese supplier.
Gordon knew the business needed to increase productivity and reduce costs. Manufacturing the valves in a single operation on the WT150II reduced cycle times by 50% while freeing capacity and labour requirements throughout the shop floor. “With one staff member running the machines by day and another at night, the two WT150II machines have increased our productivity by 500%, making us cost-competitive with China,” explained Gordan. “Furthermore, the new machines have reduced our tooling costs considerably due to the machine setup and rigidity.
“The challenge [this customer] had with component supply from China was proximity. If our customer wanted to undertake any R&D work, amend or inspect any parts, proximity was an issue. Now, this customer can jump in a car and visit our facility to discuss projects, look at our production methods and equipment and investigate opportunities to enhance and develop their product lines with a local supplier.”
Since investing in the machines, Quest has won more business from this customer and the WT150IIs are 95% dedicated to producing the valves. “The WT150II machines have improved and streamlined productivity, reduced costs and enabled us to better allocate our staff. Additionally, the machines have freed almost 15% of capacity from the rest of our facility,” Gordan concluded. “By investing in high-end technology like the Nakamura-Tome WT150II machines, we will certainly grow our market share of the subcontracting industry in Scotland – and we are confident that we can help UK manufacturers to reshore more work.”
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