UK manufacturing good ... but at the wrong things

London – Amid the coalition government’s drive – or, as its business secretary Vince Cable described it, “piecemeal” effort – to restore the UK as a global manufacturing powerhouse, industry here has at least some ‘strengths’ to build on.

According to Juergen Maier, managing director of Siemens UK’s industry sector, the UK leads the world in squeezing the last bit of productivity out of its plants, and is also very good at keeping them running long past their ‘use-by’ date.

Addressing the Automated Britain conference in London on 6 March, Maier said the UK was excellent at process improvement initiatives, such as lean, six sigma and 5S, which typically deliver gains of 2-3% in efficiency.

By contrast, the engineering culture here, which takes pride in “sweating assets” was clearly undermining competitiveness, the Siemens boss continued. Many customers, he said, continually try to source parts to help them keep machinery running an extra 15 years or more, rather than replace it with more efficient, modern kit.

Both characteristics, however, mask the “real Achilles heal”, Maier told the conference, which was organised jointly by Intellect and GAMBICA to promote the role of automation in growing the UK economy.

Unlike its overseas competitors, UK industry is not good at investment in capital equipment, he said. This includes companies in emerging economies, such as China and India, which are now better at adopting automation and robotics technologies that can deliver 10-30% improvements in efficiency.

These points were backed with figures showing that German manufacturers were investing 2.6 times more in capital equipment than their UK counterparts. And while German investment had picked up sharply since the recession, UK spending was still nowhere near its 2009 levels.

Maier along with other speakers and delegates at Automated Britain linked this core problem to the inability of many UK manufacturers, particularly SMEs, to access finance for investment in equipment, skills and R&D.

This, it was argued, was leaving the UK bereft of the strong and vibrant supply chain needed for it to exploit emerging technologies. It was noted, for instance, that despite massive investment in offshore wind power, only 20% of the value is being generated in the UK.

Maier, though, concluded on a positive note, saying that recent government initiatives on finance, apprenticeships and research – including one to replicate the R&D support provided by the Fraunhofer Institute to German SMEs – had put the UK was on “a good road” to rebalancing the economy back towards manufacturing.

For all the Siemens MD’s optimism, the question remains: How likely are the SMEs, now being identified as key to recovery, to change their spendthrift ways?

After all, ‘make-do’ manufacturing has largely been forced on these companies by bank policies, sharp-order cost-down demands from those at the top of the supply chain, and decades of the UK’s laissez-faire approach to jobs and investment moving overseas.