Industry Forum

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In Russia, India and China some 45 reactors are under construction. Across Europe there are 140 nuclear reactors that are either under construction, in the planning process or under consideration in a total of 23 countries.

If NNB Generation, the joint venture between EDF Energy, Centrica and Areva, decide to build new nuclear reactors at Hinkley, some 25,000 jobs could be created in the nuclear supply chain. EDF, along with their partners, plan to make their final investment decision by the end of 2012.

The cost of a new reactor currently is of the order of £5bn. Competing energy technologies are generally less capital intensive and so discipline in cost estimation and construction performance are key factors in getting the go-ahead on projects. In Japan, time compression has pushed reactor construction time down to 37 months. The scale of these projects is enormous. It has been estimated that constructing a typical nuclear station is three times as complex as building an Olympic park.

A critical element in successful project completion is collaborative and integrated working. This is built around three principles:

  1. vision and leadership
  2. cultures and behaviours
  3. processes and tools

Cultural change is an issue in many organisational fields and in nuclear construction the elements are the same as elsewhere – behaviours that promote trust and fairness, openness, a no-blame approach to problem solving, honesty and transparency. Equally important are the proper use of common processes and tools and an agreed approach to the measurement of performance to achieve mature and effective supply chain relationships.

The creation of an appropriate baseline at the start of the project is also essential. This should cover project governance, reporting and review processes, KPIs and a clear statement of requirements with a comprehensive risk analysis.  All of this has to be underpinned by a single comprehensive information system which enables clear visual management.

An interesting practical case study of developing the nuclear supply chain is to be found in the  Sellafield Supply Chain Coalition (SSCC) which started life in March 2008. The initiative was driven by a desire to achieve global standards set by the World Association of Nuclear Operators. These standards apply throughout the supply chain down to local suppliers at tiers 3 and 4. SSCC adopted an over-arching mission statement: to operate more effectively in order to improve performance through mutual support, exchange of information and emulation of best practices.

Following the precedent set in the automotive and aerospace sectors, SSCC developed the SSCC Improvement Tool. This is based on a continuous improvement workbook that requires self-assessment against a number of standards across 17 modules. Performance against each objective is rated against an eight point scale.

The development phase on the improvement tool started in 2010 and the pilot organisations completed the improvement tool process by April 2012. Their next step was to enter the Verification and Validation phase. This is being done by pairing SSCC members who examine and test the score of their partner. Participants in SSCC regard it as a landmark in supply chain cross-fertilisation within the sector. Currently SSCC is recruiting the next tranche of suppliers to go through the improvement process.

Industry Forum has a depth of experience in supply chain development and has been involved in major projects in the automotive and aerospace sectors which combine global standards with a coherent approach to measurement, improvement and collaboration. It is currently participating in major projects under Advanced Manufacturing Supply Chain Initiative. It also has significant experience in transferring its approach to other sectors such as food and drink and retail. Industry Forum is actively looking for opportunities to collaborate with the UK nuclear sector as it moves into the next phase of its commercial development.

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The CBI has been investigating the UK’s global competitors’ approach to industrial strategy as part of their campaign for the UK to develop a better framework for rebalancing the economy.   As they put it, ‘ most countries have a clear vision that underlies their policy-making, one that highlights where that country sees itself in the global economy.’  This underlying rationale of government action is the basis of a strategy, giving policies a clear direction and providing investor certainty. The CBI wants to learn from other countries’ industrial policies and how they operate in practice and so far they have produced case studies of USA, Israel, France, Germany, South Korea and Singapore.

For example, South Korea has identified 17 future sectors as possible high-growth markets. They have formulated the key capabilities common to these 17 sectors for strategic support and set strategies for 7 of these common capabilities. The strategies include KPI targets and the support mechanisms required to deliver.

The French aim to become a high-tech, innovative economy and are backing several technologies with substantial long-term risk-sharing investment.  They are tackling supply-chain weaknesses to allow pragmatic government investment.

The Israeli strategy is built on a vision that aims to leverage existing national strength in R&D and entrepreneurial start-ups.  They are adopting a trial-and-error approach to the use of policy to overcome identified obstacles, before settling on a number of supporting policies.

The CBI have concluded it is time to fully open up the debate on industrial policy to explore fresh approaches to growth that will make a real difference in the medium to long term. Speaking on the Today programme recently, the Business Secretary, Vince Cable asserted that the Coalition did have an industrial policy that was being pursued energetically, for example via the Catapult Technology Centres.

In the US Presidential campaign, Barak Obama has promised that if he gets a second term he will create a million new manufacturing jobs. The CBI has concluded that currently the US model is built on support for radical innovation, delivered primarily through public procurement.  Public financing of R&D in the US accounts for between 11% and 21% of all R&D undertaken by firm. On top of this, the Small Business Innovation Research Programme and Small Business Technology Transfer programme supports more than 4,500 projects a year, constituting an investment of more than $ 2.5bn on SME research.

Germany is now the country which has the largest share of global trade in manufactures ahead of China, Japan and the US.  Despite this the government claims that it has not got a strategic vision . The CBI finds that for Germany, industrial policy takes the form of a highly embedded cross-government framework to which all parties subscribe. The enduring goal in Germany is to create the right conditions for industrial competitiveness across the board .

It is widely recognised that the Germans make considerable investment in a highly skilled, vocational workforce, which is capable of innovating to create and manufacture advanced products. Close relationships between banks and industry are another positive factor which has been acknowledged by many studies. Collaborative public-private partnerships such as those found in Fraunhofer Institutes have been deliberately modelled by the UK Coalition in launching a series of Catapult Centres.

The CBI plan to assess UK’s current capabilities and comparative advantages, and where could it develop in future and are currently investigating how the UK can maximise growth in existing and new value chains.

On 10th September the Engineering Employers Federation (EEF) added their voice to the industrial strategy debate calling on the Government to provide leadership on growth to get UK economy back on track.  EEF have issued a report, The Route to Growth: a new approach to Industrial Strategy, arguing that progress towards a better-balanced economy has stalled because the government has yet to demonstrate the same relentless and clear-sighted approach to growth that it has done on reducing the deficit.  The EEF believe that the industrial strategy must underpin decisions on how new resources are deployed across government, how existing expenditure is reprioritised to support growth and what activity the government should step back from.

Amidst all this debate, Vince Cable, Business Secretary, drew a number of threads together in a major speech on industrial strategy on 11th September.  SMMT Chief Executive, Paul Everitt, commented that ‘ the Government’s commitment to an industrial strategy is a significant and important development for the recovery and growth of the UK economy. Government’s action and attitude towards the long-term development of our business environment has a significant impact on both private sector investment and the shape and value of our industrial landscape. It is right that the strategy recognises the value of every sector of the economy and works with key industries, through a government-backed ‘business bank’, to increase investment in R&D, skills and capital equipment. The motor industry fully supports the approach outlined by the Secretary of State and will work closely with him and through the Automotive Council to enhance further the UK as a globally competitive location for automotive investment.’

‘While industry has enjoyed recent unprecedented levels of investment from international vehicle manufacturers (more than £6bn in the last two years), the formalisation of an industrial strategy will serve to boost the UK-based supply chain, encouraging further investment and growth. ‘

Industry Forum has been working intensively on the Advanced Manufacturing Supply Chain Initiative which takes a more strategic approach by tackling supply chain development in terms of R&D support, capital expenditure funding and support for training in an integrated fashion. We are working with a number of companies in the automotive and construction equipment sectors to establish integrated plans for developing UK supply chains in line with their global strategies.

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MIT’s Lean Aerospace Initiative has rebranded itself as the Lean Advancement Initiative (LAI), broadening its scope and relevance. Siemens in the US has joined LAI.

Working with the Project Management Institute and the International Council on Systems Engineering, LAI has published a substantial study – The Guide to Lean Enablers for Managing Engineering Programs – edited by Jospef Oehmen of MIT.

Experts from industry, academia and government worked together in 2011 to prioritise the top 10 challenges facing contemporary engineering programs. Using lean thinking they identified 300 best practices in 40 categories to tackle these challenges.  The ten challenges include firefighting, unstable requirements, unclear roles and responsibilities, unsuitable metrics and KPIs and lack of proactive risk management.  The recommended best practices fall under classic lean headings – capture the value defined by key customer stakeholders, map the value stream and eliminate waste, flow the work through planned and streamlined processes and letting the customer stakeholders pull value.

On a related tack, Dan Jones has circulated some reflections on the state of lean practice in firms that he has worked with recently and identified key themes. One theme is that many organisations find it hard to look end-to-end at the horizontal flows of value creating work and to diagnose the systemic causes of waste within them. He recommends starting by mapping the core high-level value streams, observing the biggest delays and the sources and consequences of variability.

Dan’s Lean Enterprise Academy produced an important report last year about introducing lean into the NHS. On the basis of a lot of work in the organisation, LEA concluded that NHS managers are locked in a viscous circle that distracts them from tackling key issues because they are continually responding to new policy initiatives from central government – the “Bermuda Triangle” of management in the NHS. This makes it impossible to support managers in improving patient journeys or to focus efforts on the vital few actions that will make the biggest difference to the performance of the organisation.  What is needed is a period of stability in which hospitals and commissioning bodies can work together to align demand and capacity with the available resources and remove sources of unnecessary variability in the healthcare system.

According to Mark Britnell, head of healthcare, UK and Europe, at KPMG, his recent research has found that… successful healthcare organisations have a strategic and long-term focus on patient value; consciously empower healthcare professionals and give them greater autonomy; systematically apply leading-edge business and care process redesign methods; improve clinical and management information so it is routinely used in day to day activities; and have unambiguous staff performance management and accountability frameworks.

The NHS Institute for Innovation and Improvement is tackling these challenges by developing a special tool set under the ‘productive’ heading. The first unit in the series was The Productive Ward – Releasing Time to Care.  Further units have been developed covering Mental Health Wards, Community Hospitals, Productive Leaders, Operating Theatres, Community Hospitals and General Practices.  The goal for the Productive Ward element of the initiative is to yield savings of £267m by 2014 in 139 acute trusts.

An impact study of the Productive Ward published just over a year ago concluded that for every £1 spent average savings of over £8 should accrue over the four years to March 2014. This is achieved by empowering ward teams to identify areas for improvement by giving them the information, skills and time needed.

The Productive Leader is an important element in this NHS drive – a systematic, evidence-based programme for managers to examine personal, team and organisational activity and instil a culture of improvement at all levels of their organisation.   The program covers individual behavioural change and looking at day-to-day processes to release the time to reinvest in value-adding activities.

The Productive Leader emphasis on both social and technical factors is reflected in some current work by LAI. Research is focusing on the link between systems thinking and socially oriented factors play in high-performing enterprises.  The first steps in this research have emphasised that improvements to the social side of complex systems are still needed. While socially oriented characteristics such as trust, confidence, voice, and loyalty are often perceived as being less important than the technical capabilities, particularly in highly technical environments, studies have found that these capabilities have a significant impact on performance in various complex work systems.

Research about systems competencies at the individual level exists, but there is significantly less understanding about the team, organisational, and system of systems or enterprise levels. As technical experts work in increasingly complex, team-oriented, and cross-functional settings, the role of individual and team interpersonal traits, as well as individual and collaborative systems thinking, becomes more critical. The next steps in the LAI research is to define the critical socially related competencies that influence high performance, develop measures for these capabilities, and explore the role of context in influencing social capabilities and high performance.   Critical areas identified for further inquiry include:

  • Achieving and sustaining alignment between an organisation’s technical systems and collaborative work systems
  • The role of (intra-organisational) social media and meetings in enabling or inhibiting performance
  • The taxonomy of social capabilities, measures and enablers
  • Exploring how social capabilities relate to enterprise performance and profitability
  • Strategies for managing the social dimension in an uncertain environment
  • The balance of incentive and reward structure as related to context and environment

Early in the development of Industry Forum it was realised that social and leadership skills were a key element of successful business improvement initiatives and our portfolio was expanded accordingly. IF has transferred its approach to a number of manufacturing and service sectors. It has worked in complex engineering systems particularly in the aerospace sector.

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Commentators have been calling on the Coalition recently to develop an industrial strategy. In fact the Defence Industrial Strategy and Life Sciences Strategy are already in place. At the end of May the Technology Strategy Board (TSB) launched the UK’s High Value Manufacturing Strategy. This follows the increased priority that the previous government placed on advanced manufacturing. It also links into the industrial strategy that the EU are developing as part of the Europe 2020 project supported by the large Horizon 2020 R&D programme.

The UK’s High Value Manufacturing Strategy is based on work done by the Institute for Manufacturing at Cambridge University. At the heart of the strategy are twenty-two competences grouped under five headings – Resource Efficiency, Manufacturing Systems, Materials Integration, Manufacturing Processes and Business Models.

Resource efficiency is a priority because of the increasing scarcity of natural resources and the need to reduce manufacturing’s carbon footprint. It includes the design and manufacture of lightweight vehicles and also the use of biotechnology in developing new pharmaceutical products. Manufacturing systems include the process engineering capability needed in the food industry. Virtual design and simulation testing are also key elements of the new systems approach.

Materials Integration embraces the creation of innovative products by integrating new materials, coatings and electronics with new manufacturing technologies. This must be supported by new manufacturing processes which are more agile and more cost-effective.  Concurrent engineering is needed to reduce product development time scales.  New Business Models are emerging with complex international value chains. Skills acquisition and retention will be absolutely essential to success.

The Strategy identifies the sectors with most potential for high value manufacturing – food  & drink, marine, aeronautics & automotive, pharmaceuticals, computers electronics & optics, chemicals, machinery & equipment, metals & castings and electrical equipment.

Within the 9 level model of Technological Readiness developed by NASA, the Technology Strategy Board funds the five steps in the middle of the development chain from experimental proof of concept to system prototyping demonstration in an operational environment. The two upstream stages are covered by the UK and EU research system. The research sector in the UK has a related strategy – Manufacturing the Future – which links with this strategy as do several EU programmes such Factories of the Future.

The High Value Manufacturing Catapult has a central role in carrying out the Strategy. Of the £50m a year which TSB expects to invest about half is likely to go the Catapult. In addition the TSB will help UK firms access the relevant EU funding programmes. It would make sense as well to build strong links to the relaunched Manufacturing Advisory Service.

SEMTA has just started offering a Higher Apprenticeship for Advanced Manufacturing paving the way to technical skills crucial for job creation and growth. This apprenticeship is intended to offer an attractive alternative to university. The new framework is available at levels four and six and offers many pathways to meet the needs of different sectors.

Industry Forum has in depth experience of many of the sectors covered by the Strategy – including international work and supply chain development. Throughout IF’s existence the objective has always been to lift value added per person which is one Industry Forum’s key performance measures.  The Strategy documentcan be viewed on the Technology Strategy Board website.

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The pharmaceutical industry is a major UK manufacturing sector with an exemplary export record generating gross value added the same order of magnitude as the aerospace sector. The NHS is a major domestic customer of the sector. UK pharmaceuticals are also important in terms of business funded research and development in the UK. Many European, Japanese and American owned pharmaceutical companies fund major research groups in the UK. About a fifth of the top 100 medicines in use worldwide today originated from research in the UK – a record second only to that of the United States. Regions with a high concentration in the industry are the South East, the North West, and the East of England. Manufacturing and research in the UK are intricately linked and strengthened by the local skills supply, the proximity of a significant supply-chain chemical industry and the national demand from the NHS. Employment has been stable over the past decade.

The progress of globalisation is bringing major challenges to the UK pharmaceutical sector. Large multi-national pharmaceutical companies are restructuring their business models to a significant degree and this has led to a number of site closures and redundancies.  Many multifunction sites are being rationalised into more focused operational units. There is increased outsourcing and collaboration with supply chain companies. There is a shift to ‘generics’ as the patent lifetimes of the ‘blockbuster’ drugs of the twentieth century expire opening up competition from low-cost manufacturers. The competitive response is to invest in assimilating new technology and fast-track knowledge transfer into new products.

The Government reaction has been to develop and publish a national life sciences strategy at the end of 2011. This includes a number of important actions, for example:

  • Increasing the speed and efficiency of routes to market approval for innovative, breakthrough therapies
  • Developing a regulatory environment for the adoption of innovative manufacturing technology
  • Major funding commitments such as £130m for Stratified Medicine and £180m for a Biomedical Catalyst Fund

The broader industry employs approximately 150,000 people, 70,000 in pharmaceuticals, 50,000 in medical technologies and 30,000 in medical biotechnologies. In the pharmaceuticals industry over 70% of the workforce are at the Technical/Process Operator level or above. A large higher skilled workforce is supported by a significant Technical workforce, and manufacture requires significant Process Operator workforce.  The sector currently mainly recruits graduates even for jobs that do not require graduate skills. Many are not motivated long term to work in, for example, laboratories. The sector wants graduates who have the employability skills required for a long-term career with increased collaboration with Academia for research and knowledge transfer. The sector is also moving away from traditional set “job roles” to multi-skilling and a diversification of workforce skills. This move has increased the demand for business skills combined with academic skills to allow the UK life sciences sector to complete globally. The future development of the industry means that skills will change with increasing interdisciplinarity and the change in manufacturing processes will stimulate a requirement for significant workforce development.

The most critical, and hardest-to-fill occupations, are those of the scientific and technical variety. Up to 25% of graduate entrants may be directed to occupations that are lower than the indicative level of their qualification.  The significant numbers of the graduates recruited each year are just a tiny fraction of the supply from Higher Education in a given year. Simply raising the numbers of graduates in shortage or hard-to-fill disciplines would be a poor method of improving supply, given the low gearing of supply to demand. Other interventions are necessary to improve security and quality of supply. In the future, a large proportion of the Technical workforce will be at graduate level and some Process Operators will also be highly skilled. Jobs requiring graduate skills in the workforce of today will become increasingly postgraduate in the industry of tomorrow.

Cogent, the sector skills council that covers the pharmaceutical industry has launched its Skills Action Plan for Growth in UK Life Sciences. The Skills Action Plan sets out four key actions for immediate progression:

ACTION 1:
Resolve actions on skills signals across employers and universities, ensuring that information on skills for the bioeconomy is up-to-date and published periodically.  Use the evidence to drive a two-way communication between employers and universities and colleges to seek skills solutions.

ACTION 2:
Seek new ways to meet urgent highly specialised skills gaps

ACTION 3:
Deliver exemplar vocational pathways to higher education by widening the talent pool and establishing alternative pathways to the degree route via apprenticeships

ACTION 4:
Broker a laboratory placements scheme. There is a lack of opportunities available to encourage the exchange of talent and ideas between academia and industry. To strengthen the science base across the sector, a brokerage solution is needed to facilitate laboratory placements with particular consideration of how to engage SMEs.

A report on progress with these actions has just been published and can be sourced at  www.cogent-ssc.com/general/news/04_04_12_LSAR.php

Further Information:


The Centre for Industry and Government at the Institute for Manufacturing  (IfM) at Cambridge University have just published some important new survey based research on public attitudes to manufacturing in the UK in partnership with YouGov-Cambridge. The research explores public attitudes to ‘rebalancing the UK economy’, an important theme in the Coalition’s economic policy statements. The Coalition is not the first administration to be concerned about public attitudes to manufacturing – New Labour administrations also shared this concern.

The IfM summarise the main findings from the survey as follows:

  • The public have a confused picture of whether  the  UK has a manufacturing base or not, with many saying we don’t make anything anymore but the majority overestimating the share of the economy, in terms of GDP, that is manufacturing related
  • Contrary to the expected narrative, the public have a good sense of manufacturing as being high-tech and requiring high levels of skills
  • However, there is a lack of faith in manufacturing jobs, as they are thought to be the first to leave the country and not to pay as well as other industries
  • Even in that context, the public overwhelmingly agree that we need a strong manufacturing base and that rebalancing can be achieved
  • However, they do not have faith that either the government or industry know what to do to strengthen the manufacturing base
  • Compared to a similar sample in the US, the US public has a significantly more positive impression of manufacturing, in terms of it being high-tech and being well paid
  • Labour, Liberal Democrat and Conservative voters agree that the Coalition is not doing enough to support manufacturing and support the targeting of sectors of national importance

These results are quite surprising e.g. the strength of support for rebalancing the economy towards manufacturing and it is worth speculating how far unbalanced media reporting has helped reinforce the negative perceptions of manufacturing in terms of pay levels and job instability. In fact the UK median gross annual salary in manufacturing in 2009 was approximately £25,000 whereas the median for all service industries was close to £20,000.
In terms of rebalancing the economy, the UK public strongly agree (72%) that there the share of the economy based on manufacturing needs to significantly increase and that such rebalancing needs to include a geographic rebalancing between the South East and the rest of the country (59% agree). There are strong regional differences in whether geographic rebalancing is necessary, with the North having very strong agreement (71%) compared to a much weaker response from the East (47%) and London (48%).

IfM note that given the long standing opposition to industrial policy, and the strategy of ‘picking winners’, across government since the late 1980s, it is surprising that 62% of UK adults agree that the government should target sectors which are of national importance. This may indicate that a reluctance to be more targeted in the support of specific sectors is a Westminster idea that is not reflected in the mind of the public.

IfM also draw some wider recommendations from the research in terms of the Coalition’s objective of rebalancing the economy:

  • Efforts to improve the image of manufacturing should acknowledge that the public has a clear image of manufacturing as being high technology and demanding high levels of skills
  • Future campaigns on manufacturing need to address the current public narrative of low wages and low job security so that careers in manufacturing are represented accurately
  • The public agrees (62%) that sectors of national importance should be targeted
  • Only 29% of the public currently agree that government understands what is needed to strengthen and grow the economy

Over the years Industry Forum has joined in various projects to provide school children with a more realistic and up to date idea about manufacturing such as the Learning Grid. Projects such this need to continue and expand and science and technology teachers in schools need to be helped to provide reliable guidance to their pupils about the interest and rewards of a career in manufacturing.

The full IfM report is available at www.ifm.eng.cam.ac.uk/service/news/default.html#security

Further Information:


The UK Mechanical Engineering industry (UKME) employs some 210,000 people, 6.7% of the total employees in the EU Mechanical Engineering Industry (EUME). UKME contributes €13bn gross value added per annum to UK GDP, 7.4% of the EU27 value added total for the sector. This makes it the fourth largest ME sector in the EU27 in terms of gross value added, just behind France.

Germany and Italy are the largest EUME sectors. Between them, the four largest nations account for nearly 75% of EU27 gross value added in ME. With 36% of the world market, Europe is the world’s largest producer and exporter of machinery, ahead of the US, China and Japan with major export markets currently in Russia, India, Turkey, Brazil and South Korea.

Construction and mining machinery and non-domestic cooling and ventilation are significant subsectors in UKME and between them account for nearly 30% of UK sector output. Lifting and handling equipment, engines and turbines account for a further 20%. UKME has maintained its share of UK manufacturing output over the last two decades.

The structure and value chain in EUME is different from automotive and aerospace in the sense that OEMs do not have the same level of purchasing power. Larger firms can be found throughout the ME value chain. Numerous EUME suppliers possess a strong position in the market, based upon their technical expertise and ability to manufacture components with unique characteristics.

ME is an industry with a sophisticated division of labour. Numerous subsectors are suppliers to other companies within the industry.  Supplier specialization is needed to design and produce high-tech parts and components to deliver outstanding quality and performance in final goods. Upstream linkages to other metal industries, electrical engineering and the electronics industry mean that a rich industrial infrastructure is needed for global competitiveness in ME and helps explain the success of EUME.

Looking at global productivity, Japan is in the lead closely followed by US. The EU-27 comes third but with a much lower level.  None of the EU member states comes close to the US or Japan in terms of productivity. Germany, with the highest EUME labour productivity at €70k per person per annum, is more than 20% below the US ME labour productivity.

Chinese ME’s labour productivity grew at an average rate of more than 10% per annum between 2000 and 2010. In 2010 it reached €26.4k per person – approximately half the EUME average and of the same approximate value as Slovakia, Poland and the Czech Republic. Nonetheless, the EU-27 share of Chinese machinery imports had increased from 28% in 2000 to 37% in 2010.

The competitiveness of EUME is most under threat in terms of labour costs and labour productivity. EUME labour costs are broadly similar to Japan and the US, but productivity is substantially lower. The richness of the EUME industrial structure and the strength of its technical base and continued R&D spend have been able to compensate for the lack of labour competitiveness.

In the period up to 2015 EUME will exhibit a sizeable demand for professionals, technicians and associate professionals.  Technical skills will be in high demand all over Europe, and ME will face competition from other sectors (like the aerospace and the automotive sector) for these skills. SEMTA summarise the UK position in ME as follows:

“Although overall employment is declining, there is still a need for the sector to recruit – particularly managers, skilled craftspeople and operatives. A lack of technical and practical engineering skills is the major cause of skill-related problems. The biggest skills gap is in CNC machining. Strategic management, entrepreneurship and technical skills such as advanced design skills are crucial to improving productivity. There is also a need for the current workforce to have skills that make them more flexible and adaptable. By 2014 skilled craftspeople and operatives are expected to make up a lower proportion of the workforce. High-value work will bring opportunities for more managers, professionals and technicians. Support occupations within the sector such as administration, sales and customer service will also grow.’

If EUME companies are to utilise an even broader range of technologies to remain competitive, they will require technical staff (from skilled workers to engineers), who are able to use and integrate know-how and techniques from a variety of disciplines, and are able to perform in cross-disciplinary teams.  The rapid introduction of new technologies will mean that skills will have to be learnt mainly in the working environment via workplace learning.

 

Employers want to recruit graduates who are not only skilled technically but also exhibit:

  • team working skills
  • communication skills
  • computer skills
  • ability to adapt to and act in new situations
  • analytical and problem-solving skills
  • decision-making skills
  • foreign language skills

Industry Forum has a lot of experience of process improvement and supply chain improvement in the UKME sector, initially with firms in the automotive and aerospace supply chains and subsequently with UKME primes.  IF can also help improve the skills base of UKME in key skills for future competitiveness.

Further Information:

 

The recent announcement at the Geneva Motor Show that Nissan will build a new compact model, the Invitation, at its factory in Sunderland follows a whole series of similar investment announcements by vehicle manufacturers in the UK throughout 2011.

One of the  most important is the decision by Jaguar Land Rover to construct a new 800,000 sq ft engine plant in Wolverhampton on the new i54 Business Park at Pendeford . The new plant will create about 600 new jobs and up to 400 more in the supply chain. It is the biggest single investment in West Midland manufacturing since BMW launched its engine plant at Hams Hall more than a decade ago. This project is part of a wider commitment from Tata Motors who said last month that they will double their investments in their Jaguar Land Rover brands to £ 1.5 billion pounds a year. C.R. Ramakrishnan, Tata’s chief financial officer, said recently, “Over the past 5 to 6 years, JLR has spent around 700 to 800 million pounds annually on capital expenditure and product development. Going forward, we will double that.”

This upbeat mood contrasts with mainland Europe where weaker macroeconomic fundamentals are expected to slow demand for vehicles in 2012.  Most European automotive suppliers are likely to see single-digit declines in revenues in their home markets. IHS Automotive is forecasting that total vehicle production will fall by up to 8% to 18.50 million units in Europe this year. While Eastern Europe was able to offset some of the slowdown in 2011, output in Eastern Europe is expected to contract in 2012 following the end of the Russian incentive program.

Suppliers everywhere are looking for growth opportunities in emerging markets where the outlook is much brighter than for Europe. The largest UK-owned supplier, GKN, already generates less than 40% of its revenues in Europe. GKN is well placed with its global strategy, in comparison with suppliers such as Faurecia and Valeo, which have large exposure to automakers in France.  GKN attributes its 15% year-on-year increase in pre-tax profit to £417m during 2011 to the sustained growth in demand for premium vehicles globally and the strength of Chinese demand.

Massive restructuring efforts in GKN’s autos division during 2009 and 2010, together with new products and acquisitions should help increase overall performance in 2012. GKN has diversified its presence and made strong inroads into the key emerging markets of Brazil, China and India. It is also well-placed to tap growth in Japan and North America, thanks to its increased focus on supplying advanced electric and hybrid drivelines.  In June 2011, GKN acquired a 25.1% stake in EVO Electric and formed a joint venture with the electric drive developer, a move that will help GKN significantly increase its participation in the electric vehicle segment. In October, it acquired the all-wheel-drive (AWD) components businesses of Germany’s Getrag in a deal that made it a global leader in AWD and eDrive Systems.

The BRICS – Brazil, Russia, India, China and South Africa – continue to be the best automotive growth prospect globally. For example, Brazil has the potential to become the world’s third largest automotive market by 2016, by when new vehicle sales could reach 5.65mn units a year. China overtook the United States to become the world’s top auto market in 2009. Growth of the Indian passenger car market hit 31% in 2010, but dropped off sharply in 2011 due to rising interest rates, higher commodity prices and economic uncertainty. Nonetheless the Indian vehicle sales growth rate in 2012 might be 7% or more.

The U.S. auto industry is poised to enjoy its best year since 2007.  J.D. Power have recently revised their 2012 U.S. auto sales and production forecasts to 14 million vehicles, up from 13.8 million vehicles – compared with sales in 2011 of 12.8 million vehicles. They see no signs that the lagging European economy will hold back U.S. sales which are responding to a rebound in leasing, more available credit and long-term financing as well as pent-up demand.  January US auto sales were surprisingly robust, showing a seasonally adjusted annualized rate of 14.1 million vehicles.

Sales of new cars in Japan this year are projected to top 5 million for the first time in 4 years, thanks to planned government subsidies and tax breaks for eco-friendly vehicles. The Japan Automobile Manufacturers Association agree that sales of new vehicles are expected to total over 5 million units, an increase of 19.1 per cent from 2011.

Business Monitor International has been tracking the risk-reward ratios in the automotive sector in different European countries throughout 2011. The UK and Russia have come top of the rankings throughout 2011 which helps explain the continuing high level of vehicle manufacturer investment in the UK.

On the basis of a special study, SMMT have concluded that improving access to finance, aggregating national demand and leveraging down the supply chain are the ways to boost automotive OEMs’ £7.4 billion annual spend on UK sourcing.  There is a real opportunity to boost the £4.8 billion value added from the supply chain to the UK economy. These were some of the findings from SMMT’s recent Supply Chain Group meeting, which brought together more than 50 OEMs and large tier one suppliers, to discuss how to maximise the supply chain business opportunities and keep it an attractive business proposition to global OEMs.

SMMT has announced that the next instalment in the series of Open Forum events will take place on 14 March 2012 at Northampton Saints Rugby Club, Northampton. On the back of the £4 billion investment committed by major OEMs to the UK in 2011, the theme of the Open Forum event is ‘Growth and investment in the UK supply chain’ and will focus on examining the opportunities created for UK suppliers. Free to both members and non-members, the event will include presentations from the Automotive Council Co-Chairman, Richard Parry Jones as well as Jaguar Land Rover and Aisin Europe (UK), followed by a networking lunch. For more information and to book your place, contact Claire Balch, [email protected] or telephone +44(0)20 7344 1636.

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The Coalition Government is moving ahead rapidly this year with its Employer Ownership of Skills Pilot. The UK Commission on Education and Skills has just published a prospectus for the programme which sets out a very tight timetable for the first round of funding.  The deadline for employers to register is 13 April 2012 and full applications must be in by 26 April 2012. Successful projects are expected to start in August 2012.  Nine employer briefings are scheduled around the country between 6 March 2012 and 4 April 2012 to explain the scheme and answer queries and the full application and guidance notes for applicants will be available by the end of February 2012.

The minimum cash investment from Government towards projects will be £250,000 for collaborative projects with SMEs – firms which employ less than 250 employees.  Projects with large employers, either singly or in consortia, will bid for a minimum cash investment of £1 million. The pilot is making £250m available in total – £50m in 2012/13 for this first phase and £200m in 2013/14. Funds will be paid directly to employers.

Employers are invited to develop proposals which:

  • Increase the impact of work readiness, workforce development and Apprenticeships activity
  • Allow employers to secure the training they need by influencing the quality and content of training
  • Encourage collaboration by employers to tackle cross-sector or supply chain skills challenges
  • Increase employer leadership, commitment and investment in skills with the involvement of employers who do not have a track record of investing in skills

Employers are invited to take the lead through new employer designed and delivered training and employment programmes with:

  • Clear articulation of the skills needs within an industry and why public funds are required to complement private investment
  • Employers defining what quality skills and learning programmes should be in their sector
  • More sustainable models of funding training that encourage greater private investment alongside public investment
  • Employer-designed payment and monitoring systems that safeguard public funds, demonstrate value for money and are simple for business to operate

The Government also wants to see collaborative proposals such as:

  • Large primes and small businesses in a supply chain developing a mutually beneficial programme of learning
  • Leading employers investing in a sector by providing up-front funding to support learning opportunities in smaller businesses
  • Employers working together, with the support of their employee representative bodies, to secure greater apprenticeship and sustainable job opportunities
  • Groups of employers, who individually may find it difficult to meet their skills or training requirements, coming together and developing a collective proposal
  • Local employers developing a strategic skills offer through appropriate geographical infrastructure

Proposals will be assessed by an Investment Board chaired by Charlie Mayfield (Chair, UK Commission). The Board will be looking for:

  • The understanding and support of the CEO and/or leadership team
  • How the impact of the programme on business will be measured and reported to the CEO and/or leadership team
  • Commitment to transparency over the costs and level of private and public investment

Industry Forum has a long pedigree of designing and delivering skills programmes which deliver improved competitiveness and benefit employees in supply chains using industry specified standards. We will be actively seeking partners to develop proposals for this important skills pilot. If you would like to discuss the possibilities that this programme offers please contact Industry Forum using the details below.

The main website for this programme is on the UKCES site

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The ADS, which is the premier trade organisation for all companies operating in the Aerospace,Defence, Security and Space sectors, has just launched a major campaign – Flying Forward.  The campaign was launched on 17 January in the Strangers’ Dining Room in the House of Commons. Business Minister, Mark Prisk, delivered the key note speech. Emma Reynolds MP, Chair of the newly established All Party Parliamentary Group Aerospace also spoke in support of the campaign.

Flying Forward stresses that UK’s aerospace industry is a major national asset, crucial to the country’s economic future. It sets a target of retaining the UK’s existing 17% global market share over the next two decades. This would mean that the UK aerospace industry would be worth an estimated £352 billion by 2029. The global aerospace market is predicted to increase significantly in the coming decades and to achieve the targeted growth over that timescale the aerospace industry needs to work in a much closer partnership with the UK Government and work together as an industry to greater effect.

The UK aerospace sector starts from a position of strength.  It is number one in Europe and the largest aerospace industry outside the United States. Turnover in 2010 was £23.1 billion. New orders are worth £29.1 billion with 70% of industry revenues come from exports. The UK’s maintenance, repair and overhaul business has  a 17% market share of a $45 billion per year global industry. The UK is a world leader in the manufacture of aircraft wings and engines with a 35% market share in the engine sector.

One key to securing the future is the emerging markets, particularly India, China, Brazil and the Middle East.  Another is to make further progress in meeting the environmental challenge. Aircraft today already produce 70% less carbon dioxide emissions compared to the equivalent from 50 years ago and 75% less noise nuisance than the equivalent from 30 years ago. The Airbus A380 burns 17% less fuel per seat and produces around 10% less NOx than the previous largest aircraft model. It burns 3 litres of fuel per 100 passenger kilometres – as fuel-efficient as any car currently on the market.

The European aerospace industry has set itself targets to reduce CO2 emissions by 50% per passenger km, oxides of nitrogen by 80% and noise by 50% in new aircraft compared to their 2000 equivalents all by 2020. In 2050 the aims are:

  • To have technologies and procedures available to allow a 75% reduction in CO2 emissions per passenger km and a 90% reduction in NOx emissions. The perceived noise emissions of an aircraft in flight should be reduced by 65%. These are relative to a typical new aircraft in 2000.
  • Aircraft movements should be emission free when taxiing
  • Aircraft should be designed and manufactured to be recyclable
  • Europe should be the centre of excellence on sustainable alternative fuels, including those for aviation, based on a strong European energy policy

ADS have concluded that the UK needs to position itself properly to win a substantial amount of this new business and safeguard the long-term sustainability of the industry. In particular it is important to secure major UK involvement on new aircraft replacement programmes, such as the A320 and 737 replacements, wings, engines and high-value systems. To achieve this there must be:

  • A strong industry-Government partnership
  • A technology plan in place with demonstrators
  • Sustainable infrastructure and facilities

Europe must address three key challenges: increasing the level of technology investment, enhancing its competitiveness in world air transport markets and accelerating the pace of policy integration.

Industry Forum has substantial experience of working with aerospace firms including the analysis of current and future supply chains and the development and delivery of comprehensive improvement plans. We look forward to working with UK aerospace in the future to deliver the goals of the Flying Forward campaign.

(Taken from the ADS publication Flying Forward – http://www.adsgroup.org.uk/articles/27855 )

 

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