https://cdn.mtdcnc.global/cnc/wp-content/uploads/2020/11/10143829/14-17-s3x5595-640x360.jpg
    Manufacturing

    Don’t look back in anger: 2020 in review

    • By MTDCNC
    • November 22, 2020
    • 7 minute read

    It has been a truly annus horribilis but the manufacturing companies involved in this sector are resilient and innovative, with the Ventilator Challenge showing companies can pivot quickly. Add in a slew of new factory investments and pockets of recovery in the automotive sector and a rising electric vehicle market, it is all certainly proving that ‘Brand Britain’ has a long-term focus. By Will Stirling

    Keep calm and carry on. Despite all the bad news, there are many positives across the landscape of UK manufacturing as we look towards 2021. But it’s important to put this in context by covering the horrendous effect of the Covid-19 crisis. The UK economy shrunk by nearly 20% from April to June, the biggest fall in 65 years. Unemployment in Britain has risen above three million for the first time since the 1930s.

    More recently, manufacturing has rallied a little. The Make UK/BDO Manufacturing Outlook Quarter 3 survey showed large cuts to investment and recruitment intent, and while output and orders improved, they were still way below historic averages. Just under a fifth of companies were operating at full capacity, rising to over a quarter expected by the end of the year. But in Q3 all regions and nations barring Scotland reported positive, albeit marginal, business confidence this quarter.

    When the furlough scheme was due to finish on October 31, Rishi Sunak proposed that employers should pay more via a form or more taxation – similar to Germany’s Kurzarbeit short-time working payments – to avoid making redundancies.

    The Confederation of British Metalforming was one of many business groups to say that the Job Support Scheme will help. President Steve Morley said the CBM’s circa 200 members, representing 40,000 people pre-Covid were expecting to make redundancies, but a replacement to furlough would be a welcome scheme to help prevent further redundancies.

    Now, the UK faces a potential no-deal Brexit as trade talks with the European Union have paused until the EU makes some major concessions in its terms. Multiple business groups told the Financial Times in October their members fear that the option of an arrangement that protects UK jobs and investment is being sacrificed for political motives – let’s wait and see.

    Firms learn to pivot and find new business

    Even though 2020 is an annus horribilis to surpass 2008/9 (the financial crisis and recession) many good news stories in this sector suggests Britain is undertaking more long-term industrial planning than it has for years. A big positive this year in manufacturing was the Ventilator Challenge. The Challenge brought together a consortium of companies – some direct competitors – into a collaborative group to equip a new factory and manufacture more ventilators for the NHS to treat severe Covid-19 cases.

    The pandemic has forced many companies to look elsewhere for orders, from sectors that have hit the brakes like civil aerospace that were hitherto very busy. Some have been surprised at how much demand there has been in other sectors, says Richard Hill, national head of manufacturing at NatWest.

    “Now, as some of their core business has returned, they are almost overwhelmed with the volume of business they are having to absorb – in some cases,” he says. “Many firms are struggling, but if you are agile and can prove your quality and delivery KPIs meet the criteria, there is new business – we see some automotive OEMs looking for UK suppliers to reduce exposure in their long supply chains from Eastern Europe and Asia, for certain parts.” Richard says that firms in the VC had to ‘pivot’ – one of the buzzwords of 2020 – or modify what they do quickly, a key ability now for manufacturing companies to survive.

    Factory investments keep coming

    In October, London-based Arrival raised US$118m from funds managed by BlackRock to support the company’s commercial electric vehicle production through its so-called micro-factories.

    This model builds a modest-sized factory in any location where there is demand, to manufacture up to 10,000 electric vans or 1,000 electric buses a year – i.e. not mass-scale production. In January, Arrival received an order for 10,000 electric vans from parcel firm UPS, with the option for a further 10,000. Also, this high growth UK company recently announced the launch of its first US micro-factory in York County, South Carolina, an investment of US$46m.

    The shift to electric vehicles could boost the UK economy by £24 billion over the next five years, according to The Manufacturer. Battery maker Britishvolt is expected to build a 30 gigawatt-hour battery ‘Gigafactory’ in St Athan, South Wales. It will be powered by a 200MW solar power plant.
    Both Rolls-Royce Motor Cars in Goodwood and Jaguar Land Rover’s engine plant returned to two-shift production in recent weeks. Sales at JLR leapt by 53.3% in August, admittedly from a low base. The British automotive firm sold 113,569 vehicles globally from 1 July to 30 September. Recovering demand in China is one of the reasons cited for better fortunes at both brands.

     

    In July, GKN Aerospace received the keys to its new Global Technology Centre in Bristol, a 110,000 square foot ultra-modern facility. With 25 partners it will research and manufacture next-generation aircraft components. Tools for Airbus and GKN’s ‘Wing of Tomorrow’ wing programme are already in place, to make wings for more sustainable aircraft, and 300 engineers will be on-site when at full capacity by Q2 2021. Now, GKN Aerospace is leading a multi-member smart manufacturing project to increase productivity in aerospace component manufacture, a £9.9m programme jointly funded by the UK government and industry. Eight partners bring together their expertise with 25 engineers committed, based at the GTC. As we head towards a potential no-deal Brexit this wing manufacturing investment is essential to show France and Germany that Britain has a hold on wing manufacture.

    The proportion of steel procured within the UK by the government has nearly doubled since last year, government papers show, increasing to 77% from 40% last year. The value of contracts placed with British suppliers has increased by 20% – from £67m to £81m. There is a palpable ‘Buy British’ and ‘Support British’ feeling today – certainly on social media – and real evidence that more big firms are procuring suppliers here to have more control in the UK.
    RenewableUK, the renewable energy industry’s business group, says that both more offshore and onshore wind farms are being constructed, as ‘nimbyism’ that blocked many onshore turbines from the 1990s to 2010s weakens, as more people are alert to the urgency of a zero-carbon economy.

    And other renewable energy projects are being developed. Vattenfall, the Swedish energy company, is building a large heat network to supply more than 10,000 homes in London, using heat captured from Cory Riverside Energy’s energy-from-waste plant. The company has said it would like to develop UK supplier base for making the components to make the big pumps and plant used in these networks, which work by keeping the ambient temperature of hot water much higher than normal before it is heated in the home.

    And in the logistics sector, delivery giant Hermes will build a £60m distribution hub in Barnsley, which along with its other UK plans has the potential to create 1,300 jobs.

    Business support, and look ahead

    Despite, or indeed partly because of, Covid-19, there is still a great deal of support and direct funding for manufacturers. The problem is it’s not always well signposted. Beyond the specific government support to help companies get through the Covid crisis, there is funding available from Innovate UK, Made Smarter including the Manufacturing Accelerator, the Industrial Strategy Challenge Fund, pockets of Local Enterprise Partnership funding, Horizon 2020 funding for high-end research. NatWest’s Richard Hill says more of their relationship managers are being trained to point firms to these and other sources of help. Some will enter 2021 with white knuckles and eyes shut, but if Britain is going to succeed as an independent country, modern manufacturing will be at the heart of this.

    https://cdn.mtdcnc.global/cnc/wp-content/uploads/2020/11/10143829/14-17-s3x5595-640x360.jpg

    Don’t look back in anger: 2020 in review

    It has been a truly annus horribilis but the manufacturing companies involved in this sector are resilient and innovative, with the Ventilator Challenge showing companies can pivot quickly. Add in a slew of new factory investments and pockets of recovery in the automotive sector and a rising electric vehicle market, it is all certainly proving that ‘Brand Britain’ has a long-term focus. By Will Stirling

    Keep calm and carry on. Despite all the bad news, there are many positives across the landscape of UK manufacturing as we look towards 2021. But it’s important to put this in context by covering the horrendous effect of the Covid-19 crisis. The UK economy shrunk by nearly 20% from April to June, the biggest fall in 65 years. Unemployment in Britain has risen above three million for the first time since the 1930s.

    More recently, manufacturing has rallied a little. The Make UK/BDO Manufacturing Outlook Quarter 3 survey showed large cuts to investment and recruitment intent, and while output and orders improved, they were still way below historic averages. Just under a fifth of companies were operating at full capacity, rising to over a quarter expected by the end of the year. But in Q3 all regions and nations barring Scotland reported positive, albeit marginal, business confidence this quarter.

    When the furlough scheme was due to finish on October 31, Rishi Sunak proposed that employers should pay more via a form or more taxation – similar to Germany’s Kurzarbeit short-time working payments – to avoid making redundancies.

    The Confederation of British Metalforming was one of many business groups to say that the Job Support Scheme will help. President Steve Morley said the CBM’s circa 200 members, representing 40,000 people pre-Covid were expecting to make redundancies, but a replacement to furlough would be a welcome scheme to help prevent further redundancies.

    Now, the UK faces a potential no-deal Brexit as trade talks with the European Union have paused until the EU makes some major concessions in its terms. Multiple business groups told the Financial Times in October their members fear that the option of an arrangement that protects UK jobs and investment is being sacrificed for political motives – let’s wait and see.

    Firms learn to pivot and find new business

    Even though 2020 is an annus horribilis to surpass 2008/9 (the financial crisis and recession) many good news stories in this sector suggests Britain is undertaking more long-term industrial planning than it has for years. A big positive this year in manufacturing was the Ventilator Challenge. The Challenge brought together a consortium of companies – some direct competitors – into a collaborative group to equip a new factory and manufacture more ventilators for the NHS to treat severe Covid-19 cases.

    The pandemic has forced many companies to look elsewhere for orders, from sectors that have hit the brakes like civil aerospace that were hitherto very busy. Some have been surprised at how much demand there has been in other sectors, says Richard Hill, national head of manufacturing at NatWest.

    “Now, as some of their core business has returned, they are almost overwhelmed with the volume of business they are having to absorb – in some cases,” he says. “Many firms are struggling, but if you are agile and can prove your quality and delivery KPIs meet the criteria, there is new business – we see some automotive OEMs looking for UK suppliers to reduce exposure in their long supply chains from Eastern Europe and Asia, for certain parts.” Richard says that firms in the VC had to ‘pivot’ – one of the buzzwords of 2020 – or modify what they do quickly, a key ability now for manufacturing companies to survive.

    Factory investments keep coming

    In October, London-based Arrival raised US$118m from funds managed by BlackRock to support the company’s commercial electric vehicle production through its so-called micro-factories.

    This model builds a modest-sized factory in any location where there is demand, to manufacture up to 10,000 electric vans or 1,000 electric buses a year – i.e. not mass-scale production. In January, Arrival received an order for 10,000 electric vans from parcel firm UPS, with the option for a further 10,000. Also, this high growth UK company recently announced the launch of its first US micro-factory in York County, South Carolina, an investment of US$46m.

    The shift to electric vehicles could boost the UK economy by £24 billion over the next five years, according to The Manufacturer. Battery maker Britishvolt is expected to build a 30 gigawatt-hour battery ‘Gigafactory’ in St Athan, South Wales. It will be powered by a 200MW solar power plant.
    Both Rolls-Royce Motor Cars in Goodwood and Jaguar Land Rover’s engine plant returned to two-shift production in recent weeks. Sales at JLR leapt by 53.3% in August, admittedly from a low base. The British automotive firm sold 113,569 vehicles globally from 1 July to 30 September. Recovering demand in China is one of the reasons cited for better fortunes at both brands.

     

    In July, GKN Aerospace received the keys to its new Global Technology Centre in Bristol, a 110,000 square foot ultra-modern facility. With 25 partners it will research and manufacture next-generation aircraft components. Tools for Airbus and GKN’s ‘Wing of Tomorrow’ wing programme are already in place, to make wings for more sustainable aircraft, and 300 engineers will be on-site when at full capacity by Q2 2021. Now, GKN Aerospace is leading a multi-member smart manufacturing project to increase productivity in aerospace component manufacture, a £9.9m programme jointly funded by the UK government and industry. Eight partners bring together their expertise with 25 engineers committed, based at the GTC. As we head towards a potential no-deal Brexit this wing manufacturing investment is essential to show France and Germany that Britain has a hold on wing manufacture.

    The proportion of steel procured within the UK by the government has nearly doubled since last year, government papers show, increasing to 77% from 40% last year. The value of contracts placed with British suppliers has increased by 20% – from £67m to £81m. There is a palpable ‘Buy British’ and ‘Support British’ feeling today – certainly on social media – and real evidence that more big firms are procuring suppliers here to have more control in the UK.
    RenewableUK, the renewable energy industry’s business group, says that both more offshore and onshore wind farms are being constructed, as ‘nimbyism’ that blocked many onshore turbines from the 1990s to 2010s weakens, as more people are alert to the urgency of a zero-carbon economy.

    And other renewable energy projects are being developed. Vattenfall, the Swedish energy company, is building a large heat network to supply more than 10,000 homes in London, using heat captured from Cory Riverside Energy’s energy-from-waste plant. The company has said it would like to develop UK supplier base for making the components to make the big pumps and plant used in these networks, which work by keeping the ambient temperature of hot water much higher than normal before it is heated in the home.

    And in the logistics sector, delivery giant Hermes will build a £60m distribution hub in Barnsley, which along with its other UK plans has the potential to create 1,300 jobs.

    Business support, and look ahead

    Despite, or indeed partly because of, Covid-19, there is still a great deal of support and direct funding for manufacturers. The problem is it’s not always well signposted. Beyond the specific government support to help companies get through the Covid crisis, there is funding available from Innovate UK, Made Smarter including the Manufacturing Accelerator, the Industrial Strategy Challenge Fund, pockets of Local Enterprise Partnership funding, Horizon 2020 funding for high-end research. NatWest’s Richard Hill says more of their relationship managers are being trained to point firms to these and other sources of help. Some will enter 2021 with white knuckles and eyes shut, but if Britain is going to succeed as an independent country, modern manufacturing will be at the heart of this.