Earnest handwringing surrounds any mention of Scottish manufacturing. Evidence abounds of long term decline – and the future looks hardly more cheerful.
But look under that black cloud of gloom and there is much to be positive about. The sector is bristling with successful companies pushing the frontiers of advanced technology, improving productivity and investing ahead.
Some of the best will be on show at this year’s Scottish Manufacturing Advisory Service (SMAS) conference at the Westerwood Hotel Cumbernauld on Wednesday and Thursday of this week.
It will attract some 400 representatives from manufacturing companies across Scotland. Previous conferences saw outstanding presentations from businesses as diverse as Alexander Dennis and Linn Music Systems.
Key speakers this year include Dr Hamid Mughal of Rolls Royce, Cedrik Platt of Tente International and Jim Lawless of Taming Tigers.
The conference has grown to become a must-attend event for the sector and this year’s agenda, focusing on productivity and growth should prove no exception.
It’s easy to despair at our manufacturing prospects. Forty years ago the sector represented around 40 per cent of the economy and accounted for around 30 per cent of all employment. Today, it accounts for just 12 per cent of the economy and only nine per cent of the workforce – around 190,000 people.
But this is to overlook the huge changes in the composition of manufacturing and changes to the very definition of the sector. As SMAS Director Nick Shields explains, “It’s a broad church accommodating industries from chemicals to food and drink, textiles and shipbuilding – and is at the heart of a high-skills, high-wage economy with earnings in the manufacturing sector 30 per cent higher than average.”
The traditional idea of a standalone engineering business banging out widgets has long gone. Customers are increasingly looking, not only for high value-added product but also continuous servicing and technical and communications updates in an ever more digital world.
And it is this high value servicing and supply that has greatly expanded our traditional understanding of a manufacturing business.
Take, for example, the work of the Advanced Forming Research Centre (AFRC) which will feature at the conference. This undertakes projects that could hardly be described as typical manufacturing. It is a collaborative venture between the University of Strathclyde, Scottish Enterprise, the UK Government and leading multinational engineering firms.
The £80 million facility focuses on developing forming and forging technologies to support the development of high integrity components. It is one of seven elite centres that help catalyse future growth and success of manufacturing in the UK.
The AFRC has over £25 million worth of equipment at its disposal.
A recent example of its work was in helping a Scottish SME to develop improvements for cranial implants. By using 3-D imagery it was able to suggest improvements to the metal plate which had the effect of cutting a six to eight week stay in hospital to a matter of days. This has brought benefits all round – for the company in improved productivity, for the NHS – and not least for the patient.
But the sector continually needs a strong flow of investment spending both to compete on the world stage and, as the conference intends to explore, game-changing productivity improvements.
Says Nick Shields, “investment in Scottish manufacturing has fallen behind the rest of the UK and the UK is behind our European competitors. To move us towards the first quartile of productivity when compared to OECD countries, we need an additional £6.5 billion of capital spend in our industry.
“There needs to be a determined and intense focus on further improving our productivity… The best products are often made using technology and automation that reduces cycle time, increases quality and therefore maximises businesses productivity.”
The immediate challenges facing manufacturing should not be under-estimated. The first quarter saw sharp falls in production (down 1.2 per cent) and construction (1.5 per cent) with the downturn in the North Sea continuing to hit the domestic oil and gas supply chain. Overall manufacturing is down nearly 5.5 per cent over the year with the metals, metal products and machinery subsector down nearly 23 per cent since 2014.
Now come uncertainties over Brexit. But one major plus point for the sector is the fall in sterling which should make Scottish exports that much more competitive in world markets.
It’s easy to be cast down by all the gloom. Recent signals from engineering were downbeat. But latest survey results from the UK manufacturing sector released last week sprang a major and welcome upward surprise. The manufacturing PMI surged back up to a 10-month high of 53.3 in August after nosediving to a 41-month low of 48.3 in July from 52.2 in June.
It is notable that the August manufacturing PMI showed improvement across the board following July’s weakness. And new orders strengthened markedly in August after falling appreciably in July, helped by export orders jumping to a 26-month high.
The SMAS conference provides an opportunity for the sector to explore and share best practice across many diverse activities. As such, it plays a most positive role in helping to showcase what we are capable of, and by doing so to help give Scottish manufacturing a fighting chance.