Support for the UK manufacturing sector’s ‘forgotten army’

Richard Hill looks at what support manufacturers need to overcome present challenges and take advantage of opportunities in the sector.

Analysis of research presented in our report – Future Fit: the road ahead for UK manufacturing – released earlier this year, shows that working in collaboration is a crucial prerequisite for dynamic growth in the UK’s manufacturing sector.

Richard Hill, head of Manufacturing & Automotive, NatWest.
Richard Hill, head of Manufacturing & Automotive, NatWest.
manufacturingsector@natwest.com

A collaborative approach provides businesses with a greater opportunity for specialisation and to improve productivity. Furthermore, the growth of supportive networks that drives innovation is vital to ensure this sector’s future success.

While support networks within UK manufacturing are powerful tools for giving medium-sized manufacturers the connections and confidence to become global exporters, many UK manufacturers operate in networks and supply chains fragmented by 30 years of rapid globalisation.

Across much of the UK’s mid-sized manufacturing segment, businesses operate in isolation, are vulnerable to economic shocks and many are unaware of the technological changes on the horizon.

Consequently, the ‘forgotten army’ of medium-sized manufacturers often feel a lack of connection to their regional or national sector.

A template for success

According to our research, there are serious consequences from this lack of cohesion.

Four out of 10 manufacturers surveyed feel that poor visibility of customers’ future plans is a major internal challenge, while 30% fear they lack expertise and knowledge, and 28% say they lack innovation.

Natwest PQ - Oct 2016However, what these manufacturing businesses may not know is that templates already exist in the UK for the cross-sector and cross-disciplinary support networks that they need for future fitness.

One example is the Advanced Propulsion Centre (APC), a private limited company formed in 2013 with a £1bn 10-year match-funded commitment between government and the automotive industry.

The APC is designed to be a hub for industry-wide collaboration between innovators and producers of low-carbon propulsion systems. It facilitates partnerships between those who have great ideas and those with the expertise to bring them to market, providing access to funding.

The APC’s stated aim is to position the UK as a centre of excellence for low-carbon propulsion development and production.

This is hugely important for our automotive sector to remain competitive in the future, as Dr Rupert Lewis, head of automotive at the Department for Business, Energy & Industrial Strategy, explains, “The UK’s auto sector is an export market: 80-85% of vehicles made here are exported to more than 140 markets, so what’s made here needs to be compliant with regulations all over the world. The APC helps manufacturers gear up for lower-carbon-emission engines.”

Natwest Best of British - TMMX Awards SponsorMaking the connection

Dr Lewis also points to the work the Automotive Investment Organisation (AIO) has done to help companies of all sizes within the sector to connect.

“The AIO run events called ‘Meet the buyer’, where they get all the buyers from the big companies in a room – it’s like speed dating. Hundreds of people turn up, and SMEs get a chance to meet buyers and pitch to them. It’s creating a human interface.”

The High Value Manufacturing (HVM) Catapult initiative is emerging as another key source of advice and mentoring for UK manufacturers in various sectors.

Established in 2011, and backed with an initial core investment of £107m of public funding, it brings together seven technology and innovation centres around the UK, including Sheffield University’s Advanced Manufacturing Research Centre (AMRC), the Warwick Manufacturing Group (WMG) in Coventry, and the National Composites Centre (NCC) in Bristol.

The network is designed to give companies of all sizes easy access to world-class R&D facilities, plus a pool of expertise and experience within academia, research, industry and government.

These collaborations mean more innovations will be transformed into successful industrial-scale UK manufacturing operations, and a lot faster than they would otherwise.

“We’re helping small companies take those big steps, but also learning from bigger organisations who are doing it already,” says Dick Elsy, CEO of HVM Catapult.

Natwest PQ2 - Oct 2016“I see it as a ‘knowledge cascade’. The normal mantra in manufacturing of daily continuous improvement is no longer enough if we want to compete with economies that have lower labour and energy costs.”

He cites aerospace and automotive as highly innovative UK manufacturing sectors setting an example for others to emulate, “They have achieved significant productivity improvements by introducing new – radically new – technologies. That’s driven by knowledge, not by efficiency through lower labour or energy cost.”

The money is there

Elsy is also adamant that UK manufacturers should not see access to finance as a stumbling block. “It’s often wheeled out as a bit of the excuse,” he says.

“What the Catapult does is help companies radically de-risk new manufacturing technologies. I’m talking to regional directors of banks who’ve got the job of lending to enterprises and they’re hungry to work with innovative, high-growth companies with a solid balance sheet. What we’re trying to do is help companies take more risk but in a controlled, managed way.”

For further insight into the future threats and opportunities facing medium-sized manufacturers, download the full report here.

Initiatives such as the APC and HVM Catapult are encouraging for the future health of UK manufacturing, but more can be done.

As a banking partner to the sector, manufacturing remains a core focus for NatWest. We’re continually working with customers and industry stakeholders to see how we can improve our support for the sector and help bring more businesses together to form a more cohesive support network.