Beating Asia on price

Most process engineers are familiar with the well-worn sales pitches of those selling automation technology; they tend to centre around the idea that “this stuff will make you and your products more competitive”.

Indeed, when I last summer interviewed Rockwell Automation’s Martin Walder, who is also chairman of the Engineering and Machinery Alliance, he told me he believed that significant investment in automation could stem the flow of manufacturing capacity away to countries such as China by making the UK just as competitive.

“If you have good products that you can manufacture in a highly automated way you can do it here as well as you can in China,” says Walder.

“After all, the cost of production in China is going up and up.”

Is this just sales hype, or wishful thinking, hoping for the cost of production to rise and UK automation to lower costs here at some unspecified date in the future?

I used to think so. But this week I met a man who, thanks in part to the automation of his plants, says he is able to produce his products in the UK, export globally, and still be price competitive with rivals in India and China.

We are able to compete on price as well as on delivery and on quality

Aesica chief executive Robert Hardy

Aesica chief executive Robert Hardy set up his company just under 10 years ago when he completed a management buy-out of BASF’s Cramlington site in Northumberland, which produced (and still produces) chemical products for the pharmaceutical industry, known as Active Pharmaceutical Ingredients (APIs).

Thanks to a series of acquisitions, Aesica now produces, in addition to APIs, a wide range of tablets, capsules and anaesthetics across multiple European production facilities for a global market.

Aesica has grown ten-fold in the past ten years and is one of the fastest growing companies in the country, with the aim of being a $1 billion company within the next three years.

Hardy is particularly proud of his firm’s ability to compete with its (mainly) Asian competitors. He cites the example of Cramlington’s sales of an API called flurbiprofen, a non-steroidal anti-inflammatory, which have trebled in the ten years since Aesica took over the site, despite the fact that all of Aesica’s main competitors operate out of India and China.

“We have been able to do that by focussing on the technology that we use and the fact that we are backwardly integrated into some of the key starting materials, so we are able to compete on price as well as on delivery and on quality,” he says.

“The process [to produce flurbiprofen] is a three-stage process and we manufacture all three stages, while most of our competitors only have the last two and have to buy in the starting material. At the same time, most of the plants in India are manually run, so although their labour’s cheaper they use quite a lot more people whereas ours is computer controlled. If you were to walk around our plants you wouldn’t see that many people.”

If ever there were proof that automation can make UK manufacturing competitive, then this is it; any company that successfully sells a product into Pakistan when its main competitors are in India and China (as Aesica does with flurbiprofen) shows the exodus of UK manufacturing eastwards is far from inevitable.

• A full interview with Aesica chief executive Robert Hardy will appear in the February issue of Process Engineering.