https://cdn.mtdcnc.global/cnc/wp-content/uploads/2021/05/18125738/The-HADES-High-Acceptance-Di-Electron-Spectrometer-detector-is-one-of-the-largest-experimental-setups-at-GSI-Helmoholtz-640x360.jpg
    Manufacturing

    Falling down on levelling up

    • By MTDCNC
    • May 18, 2021
    • 11 minute read

    With the sudden scrapping of the Industrial Strategy just four years after its launch, and news of a freeze in aerospace research funding, it seems the government’s commitment to advanced manufacturing is faltering. Professor Keith Ridgway argues that neglecting the nation’s industrial base is a serious mistake and that we need a vastly expanded R&D and skills network along German lines if we are to be more productive and competitive.

    According to my grandfather, it was a “little known fact” that his hometown of Reddish, was one of the healthiest places in the North of England. This, he explained, was the result of being the direct recipient of refreshing sea breezes from Blackpool. While my grandfather may not have had much idea of geography – he was unaware that any Blackpool breeze would pass through a slew of industrial towns before reaching the good people of Reddish – he had a very clear sense of place. This came from pride in a skilled job well done at Gorton Locomotive Works, proudly known as Gorton Tank, and having everything he wanted within 10 miles of home.

    My grandfather’s “little-known fact” would scarcely have more credibility today. The polluting factories have disappeared, but so too has the regional prosperity that came with being the workshop of the world. Instead, the UK is now one of the most regionally divided economies in the world, following decades of political neglect to the health of its manufacturing base.
    A similar story can be told in other post-industrial regions of the USA and Germany where historically strong manufacturing regions have suffered as traditional industries such as coal, steel and heavy manufacturing went into sharp decline.

    But, in the US and Europe, the response to this decline has been very different. Consider Germany. While the UK has had a heated argument about the North/South divide, Germany’s East/West divide was the frozen frontline of the Cold War guarded by the Berlin Wall. When the wall was pulled down, Germany faced reunification and the decline in heavy industries including coal and steel in the North Rhein-Westphalia region. How it met this challenge offers lessons for UK policymakers post-Covid.

    Back then, the GDP of the newly combined Germany was less than that of the UK: and its regional inequalities were greater. Today, the roles are reversed. Germany is the industrial powerhouse of Europe. The contrast with the UK could not be starker. Instead of renewing its manufacturing base, since the 1980s the UK has pursued a deliberate policy of de-industrialisation, neglecting manufacturing – the sector shrunk by 30% over three decades leaving the country dangerously exposed to breakages in global supply chains.

    So what are the lessons from Germany? First, it had two essential ingredients: unwavering leadership and a clear vision. The decision to level up the two Germanys by raising productivity and prosperity in the East came from the very apex of government. This one-nation policy was driven at scale and pace and over time, with the West investing an average of €70 billion each year in infrastructure, skills and innovation.

    Unlike the UK, Germany had a significant advantage in making this work: it’s extensive, geographically distributed network of independent research organisations that provide two-way connections between the science base and industry. The Helmholtz Association alone – whose mission is to ‘solve the grand challenges of science, society and industry’ – has almost 43,000 employees in 18 research centres and an annual budget of approximately €Euros 5.2bn, while the Fraunhofer Society, which focuses on translational research, employs 23,000 people across a wide geographic spread of 74 institutions, with an annual research budget of €Euros 2.8bn. The big four institutions have an annual budget in excess of €12bn, which is in addition to the R&D expenditure in universities of €18.5bn. The German research landscape figures show that 105bn was invested in R&D in 2018, equating to 3.13% of GDP. The private sector contributed much of this funding with over €72bn invested in 2018. The UK investment was just £37.1bn (43.7bn) representing just 1.71% of GDP.

    These German levels of investment in national R&D infrastructure, sustained over decades are entirely missing in the UK; which reflects the indifference (and outright hostility) that successive governments have shown to manufacturing.

    Greg Clark’s much-vaunted Industrial Strategy to transform our manufacturing base, lasted just four years: one year longer than the Secretary of State himself. But do we need a 250-page Industrial Strategy? Are the components of industrial strategy and the grand challenges – the ageing society, clean growth, the future of mobility and artificial intelligence – now totally ingrained in our psyche? Is an Innovation Strategy perhaps more relevant in the rapidly changing world we live in?

    Without an integrated national R&D infrastructure, the impossible task of filling this void has fallen to the university system, along with the more recent support of the loosely connected Catapult network. The latter was established following the publication of the Hauser Report, and designed to ‘translate’ the ideas of fundamental science into industrial applications, products and processes. But has it delivered?

    UK universities excel at fundamental research – look at our lead in developing the Covid vaccine – but is it right to also task them with solving the national productivity puzzle, or to erase deeply entrenched regional inequalities? Likewise, is it reasonable to ask universities to teach, carry out basic research, knowledge exchange, address the levelling up problem and spur the country to a post Covid-19 economic recovery?

    While some of this burden is being shouldered by the Catapult network, the combined effort is not at the scale of the industry-led German model. The Catapult network competes for funds as much as it collaborates, it has had successes and helps focus on key strategic sectors – such as offshore wind and renewables, digital and semi-conductors – but its government funding falls far short of the German scale.

    Even the High Value Manufacturing Catapult (HVMC), which comes close to disseminating and applying technologies to raise productivity, struggles to provide the demand signals and transfer of technologies between industry and the science base. In the decade since the network was set up, the scale and reach of its activities have not been sufficient to shift the national productivity dial towards 2.4%. With just seven centres across the UK, the government cannot expect it to eradicate regional inequalities and stimulate growth and productivity. Especially as many of the productivity boosting benefits of its R&D are inevitably exported from the regions in which the individual centres are located.

    But the problem is not just of scale, it is also of organisation. Unlike the big four research organisations in Germany, which are independent, many of the HVMC centres are tied to, or fully owned by a university. The benefits in terms of research collaborations between the Catapult and its host institution are modest as the linkages between lower and higher TRL research is not linear; nor are they contained within one university.

    The independence of Germany’s big four R&D institutions gives them the agility to build high performing R&D teams across regions and institutions, which is much more challenging in a university dominated system – where higher education institutions are often fierce rivals fighting for students and income rather than natural collaborators.

    UK universities can also find it difficult to expand into the physical territory of competing institutions – parking tanks on their lawns while those who own a Catapult can find tensions emerging between the growth ambitions of the Catapult and the conservative charitable and educational status of the controlling institution. The independence of Germany’s industry-led network, by contrast, gives its private sector partners the confidence they need to plan and invest for the long-term and promote clarity of purpose and function among the collaborating institutions.
    Few of these traits have taken root in the UK university dominated R&D landscape. As former Universities Minister David Willets noted in his Road to 2.4% report: “Universities change; they have new policies; a new Vice Chancellor comes in and isn’t interested in the same thing as their predecessor. Applied research institutes linked to universities…do not, therefore, enjoy the stability of a Fraunhofer in Germany.“

    And the Catapult network itself is not immune from politically driven change. Formed in 2011, it has been subject to three major reviews. This is rather like planting a seedling and pulling it up every other week to see how well it is doing; only then to wonder why it is wilting. The most recent report by BEIS betrays a lack of consistency and purpose, piling additional responsibilities onto the primary role envisaged by Herman Hauser which is to close the gap between universities and industry through a ‘translational infrastructure’ and ‘provide a business-focused capacity and capability that bridges research and technology commercialisation.’

    Now the Catapults find themselves having to ‘support companies get access to finance,’ look for ‘ways to support local economies and companies’, introduce ‘skills development’, support ‘place based initiatives and the formation of clusters’ and embed ‘EDI in all its activities.’

    In addition, the HVMC is being tasked with delivering the stalled Made Smarter industrial digitalisation programme, which has little to do with R&D and much to do with accelerating the adoption of existing technologies: often using local frameworks whose roots can be traced back to local government programmes such as Business Link and the Manufacturing Advisory Service. This is not the translational role that Hauser had in mind. The Catapult review was a missed opportunity. Here was a chance to reset, boost funding and dramatically extend its reach: either confirming its role as a network of translational research centres bridging the so-called valley of death; or, given the apparent direction of travel, making them much more focused on short, sharp interventions in industry to drive big changes in productivity through digital adoption and the development of the localised skills base.

    The latter could be done in partnership with Further Education institutions, the best of which have close links with the SMEs that form the bedrock of regional economies, and are more suited to this agenda than research intensive universities. This could be a golden opportunity to raise the status of this Cinderella sector, giving it parity of esteem with higher education and making it integral to the wider innovation ecosystem. This could see a vastly expanded ‘accelerated adoption network’ comprising smaller, agile institutions that connect with the left-behind regions and nations of the UK.

    If that were to happen, the missing ingredient would then be the translational link between basic research and commercial opportunities first identified by Hauser in 2010 and which the Commons Science and Technology Committee said: ‘had been a key part of Germany’s success in advanced manufacturing and high-grade engineering.’ As with the German model, the committee recommended that any new R&D institution would need to be “an independent legal entity, constituted on a ‘not for profit’ basis separately from any host organisation or other major partners.” – led by industry, not academia.

    If levelling up and building back better are to be more than empty soundbites, the Government could do worse than revisit the Committee findings that absorbed the lessons on innovation and R&D from Germany. It must put industry and manufacturing –– not academia or banking –– in the driving seat of a vastly expanded and integrated R&D infrastructure, that is independent of the university system. This industry-led network, rather than policy makers and politicians, would be empowered – through direct public and private sector funding – to shape the translational research agenda. It would also have the financial and intellectual muscle to shape the fundamental science research agenda; sharpening the focus on real-world benefits rather than ‘world class’ publications.

    Finally, repurposed Catapults could be the drivers of Made Smarter – accelerating the immediate adoption of proven digital technologies to kick start a surge in the UK’s stalled productivity and global competitiveness. These rebranded Catapults, tasked with transforming and strengthening UK supply chains, would be perfectly positioned to ensure that an enhanced FE network, which has parity of esteem with higher education, nurtures the skills needed for a more innovative and digitally savvy manufacturing sector.

    My grandfather took pride in his work and the skills needed to make a locomotive. Sadly we no longer make trains. Instead, we buy them from Germany, Japan and France. Covid shows this is not sustainable. The UK cannot continue to export manufacturing jobs to the rest of the world. In the US and Germany there is now a live debate about where products are made, the working conditions of those who make them, and the environmental costs of transporting them. Post-Covid, public investment and policy decisions should focus much more sharply on national economic resilience and competitiveness and less on the mistaken idea that cost alone should determine the fate of a nation’s industrial base.

    Keith Ridgway was co-founder of University of Sheffield Advanced Manufacturing Research Centre with Boeing. He is executive chair of the National Manufacturing Institute Scotland. This article was co-written with John Yates, who heads innovation consultancy Britannia Works.

     

    https://cdn.mtdcnc.global/cnc/wp-content/uploads/2021/05/18125738/The-HADES-High-Acceptance-Di-Electron-Spectrometer-detector-is-one-of-the-largest-experimental-setups-at-GSI-Helmoholtz-640x360.jpg

    Falling down on levelling up

    With the sudden scrapping of the Industrial Strategy just four years after its launch, and news of a freeze in aerospace research funding, it seems the government’s commitment to advanced manufacturing is faltering. Professor Keith Ridgway argues that neglecting the nation’s industrial base is a serious mistake and that we need a vastly expanded R&D and skills network along German lines if we are to be more productive and competitive.

    According to my grandfather, it was a “little known fact” that his hometown of Reddish, was one of the healthiest places in the North of England. This, he explained, was the result of being the direct recipient of refreshing sea breezes from Blackpool. While my grandfather may not have had much idea of geography – he was unaware that any Blackpool breeze would pass through a slew of industrial towns before reaching the good people of Reddish – he had a very clear sense of place. This came from pride in a skilled job well done at Gorton Locomotive Works, proudly known as Gorton Tank, and having everything he wanted within 10 miles of home.

    My grandfather’s “little-known fact” would scarcely have more credibility today. The polluting factories have disappeared, but so too has the regional prosperity that came with being the workshop of the world. Instead, the UK is now one of the most regionally divided economies in the world, following decades of political neglect to the health of its manufacturing base.
    A similar story can be told in other post-industrial regions of the USA and Germany where historically strong manufacturing regions have suffered as traditional industries such as coal, steel and heavy manufacturing went into sharp decline.

    But, in the US and Europe, the response to this decline has been very different. Consider Germany. While the UK has had a heated argument about the North/South divide, Germany’s East/West divide was the frozen frontline of the Cold War guarded by the Berlin Wall. When the wall was pulled down, Germany faced reunification and the decline in heavy industries including coal and steel in the North Rhein-Westphalia region. How it met this challenge offers lessons for UK policymakers post-Covid.

    Back then, the GDP of the newly combined Germany was less than that of the UK: and its regional inequalities were greater. Today, the roles are reversed. Germany is the industrial powerhouse of Europe. The contrast with the UK could not be starker. Instead of renewing its manufacturing base, since the 1980s the UK has pursued a deliberate policy of de-industrialisation, neglecting manufacturing – the sector shrunk by 30% over three decades leaving the country dangerously exposed to breakages in global supply chains.

    So what are the lessons from Germany? First, it had two essential ingredients: unwavering leadership and a clear vision. The decision to level up the two Germanys by raising productivity and prosperity in the East came from the very apex of government. This one-nation policy was driven at scale and pace and over time, with the West investing an average of €70 billion each year in infrastructure, skills and innovation.

    Unlike the UK, Germany had a significant advantage in making this work: it’s extensive, geographically distributed network of independent research organisations that provide two-way connections between the science base and industry. The Helmholtz Association alone – whose mission is to ‘solve the grand challenges of science, society and industry’ – has almost 43,000 employees in 18 research centres and an annual budget of approximately €Euros 5.2bn, while the Fraunhofer Society, which focuses on translational research, employs 23,000 people across a wide geographic spread of 74 institutions, with an annual research budget of €Euros 2.8bn. The big four institutions have an annual budget in excess of €12bn, which is in addition to the R&D expenditure in universities of €18.5bn. The German research landscape figures show that 105bn was invested in R&D in 2018, equating to 3.13% of GDP. The private sector contributed much of this funding with over €72bn invested in 2018. The UK investment was just £37.1bn (43.7bn) representing just 1.71% of GDP.

    These German levels of investment in national R&D infrastructure, sustained over decades are entirely missing in the UK; which reflects the indifference (and outright hostility) that successive governments have shown to manufacturing.

    Greg Clark’s much-vaunted Industrial Strategy to transform our manufacturing base, lasted just four years: one year longer than the Secretary of State himself. But do we need a 250-page Industrial Strategy? Are the components of industrial strategy and the grand challenges – the ageing society, clean growth, the future of mobility and artificial intelligence – now totally ingrained in our psyche? Is an Innovation Strategy perhaps more relevant in the rapidly changing world we live in?

    Without an integrated national R&D infrastructure, the impossible task of filling this void has fallen to the university system, along with the more recent support of the loosely connected Catapult network. The latter was established following the publication of the Hauser Report, and designed to ‘translate’ the ideas of fundamental science into industrial applications, products and processes. But has it delivered?

    UK universities excel at fundamental research – look at our lead in developing the Covid vaccine – but is it right to also task them with solving the national productivity puzzle, or to erase deeply entrenched regional inequalities? Likewise, is it reasonable to ask universities to teach, carry out basic research, knowledge exchange, address the levelling up problem and spur the country to a post Covid-19 economic recovery?

    While some of this burden is being shouldered by the Catapult network, the combined effort is not at the scale of the industry-led German model. The Catapult network competes for funds as much as it collaborates, it has had successes and helps focus on key strategic sectors – such as offshore wind and renewables, digital and semi-conductors – but its government funding falls far short of the German scale.

    Even the High Value Manufacturing Catapult (HVMC), which comes close to disseminating and applying technologies to raise productivity, struggles to provide the demand signals and transfer of technologies between industry and the science base. In the decade since the network was set up, the scale and reach of its activities have not been sufficient to shift the national productivity dial towards 2.4%. With just seven centres across the UK, the government cannot expect it to eradicate regional inequalities and stimulate growth and productivity. Especially as many of the productivity boosting benefits of its R&D are inevitably exported from the regions in which the individual centres are located.

    But the problem is not just of scale, it is also of organisation. Unlike the big four research organisations in Germany, which are independent, many of the HVMC centres are tied to, or fully owned by a university. The benefits in terms of research collaborations between the Catapult and its host institution are modest as the linkages between lower and higher TRL research is not linear; nor are they contained within one university.

    The independence of Germany’s big four R&D institutions gives them the agility to build high performing R&D teams across regions and institutions, which is much more challenging in a university dominated system – where higher education institutions are often fierce rivals fighting for students and income rather than natural collaborators.

    UK universities can also find it difficult to expand into the physical territory of competing institutions – parking tanks on their lawns while those who own a Catapult can find tensions emerging between the growth ambitions of the Catapult and the conservative charitable and educational status of the controlling institution. The independence of Germany’s industry-led network, by contrast, gives its private sector partners the confidence they need to plan and invest for the long-term and promote clarity of purpose and function among the collaborating institutions.
    Few of these traits have taken root in the UK university dominated R&D landscape. As former Universities Minister David Willets noted in his Road to 2.4% report: “Universities change; they have new policies; a new Vice Chancellor comes in and isn’t interested in the same thing as their predecessor. Applied research institutes linked to universities…do not, therefore, enjoy the stability of a Fraunhofer in Germany.“

    And the Catapult network itself is not immune from politically driven change. Formed in 2011, it has been subject to three major reviews. This is rather like planting a seedling and pulling it up every other week to see how well it is doing; only then to wonder why it is wilting. The most recent report by BEIS betrays a lack of consistency and purpose, piling additional responsibilities onto the primary role envisaged by Herman Hauser which is to close the gap between universities and industry through a ‘translational infrastructure’ and ‘provide a business-focused capacity and capability that bridges research and technology commercialisation.’

    Now the Catapults find themselves having to ‘support companies get access to finance,’ look for ‘ways to support local economies and companies’, introduce ‘skills development’, support ‘place based initiatives and the formation of clusters’ and embed ‘EDI in all its activities.’

    In addition, the HVMC is being tasked with delivering the stalled Made Smarter industrial digitalisation programme, which has little to do with R&D and much to do with accelerating the adoption of existing technologies: often using local frameworks whose roots can be traced back to local government programmes such as Business Link and the Manufacturing Advisory Service. This is not the translational role that Hauser had in mind. The Catapult review was a missed opportunity. Here was a chance to reset, boost funding and dramatically extend its reach: either confirming its role as a network of translational research centres bridging the so-called valley of death; or, given the apparent direction of travel, making them much more focused on short, sharp interventions in industry to drive big changes in productivity through digital adoption and the development of the localised skills base.

    The latter could be done in partnership with Further Education institutions, the best of which have close links with the SMEs that form the bedrock of regional economies, and are more suited to this agenda than research intensive universities. This could be a golden opportunity to raise the status of this Cinderella sector, giving it parity of esteem with higher education and making it integral to the wider innovation ecosystem. This could see a vastly expanded ‘accelerated adoption network’ comprising smaller, agile institutions that connect with the left-behind regions and nations of the UK.

    If that were to happen, the missing ingredient would then be the translational link between basic research and commercial opportunities first identified by Hauser in 2010 and which the Commons Science and Technology Committee said: ‘had been a key part of Germany’s success in advanced manufacturing and high-grade engineering.’ As with the German model, the committee recommended that any new R&D institution would need to be “an independent legal entity, constituted on a ‘not for profit’ basis separately from any host organisation or other major partners.” – led by industry, not academia.

    If levelling up and building back better are to be more than empty soundbites, the Government could do worse than revisit the Committee findings that absorbed the lessons on innovation and R&D from Germany. It must put industry and manufacturing –– not academia or banking –– in the driving seat of a vastly expanded and integrated R&D infrastructure, that is independent of the university system. This industry-led network, rather than policy makers and politicians, would be empowered – through direct public and private sector funding – to shape the translational research agenda. It would also have the financial and intellectual muscle to shape the fundamental science research agenda; sharpening the focus on real-world benefits rather than ‘world class’ publications.

    Finally, repurposed Catapults could be the drivers of Made Smarter – accelerating the immediate adoption of proven digital technologies to kick start a surge in the UK’s stalled productivity and global competitiveness. These rebranded Catapults, tasked with transforming and strengthening UK supply chains, would be perfectly positioned to ensure that an enhanced FE network, which has parity of esteem with higher education, nurtures the skills needed for a more innovative and digitally savvy manufacturing sector.

    My grandfather took pride in his work and the skills needed to make a locomotive. Sadly we no longer make trains. Instead, we buy them from Germany, Japan and France. Covid shows this is not sustainable. The UK cannot continue to export manufacturing jobs to the rest of the world. In the US and Germany there is now a live debate about where products are made, the working conditions of those who make them, and the environmental costs of transporting them. Post-Covid, public investment and policy decisions should focus much more sharply on national economic resilience and competitiveness and less on the mistaken idea that cost alone should determine the fate of a nation’s industrial base.

    Keith Ridgway was co-founder of University of Sheffield Advanced Manufacturing Research Centre with Boeing. He is executive chair of the National Manufacturing Institute Scotland. This article was co-written with John Yates, who heads innovation consultancy Britannia Works.