Agile, smaller enterprises are leading a revival in the industry
Author: By Lucy Saunders
It is a challenge to the familiar picture of large companies moving
manufacturing out of the UK or reducing their workforces. So could
traditional industry be making a comeback?
For years, the political emphasis has been on service industries, particularly
financial services, as the drivers of the economy. Meanwhile,
manufacturing?s share of gross domestic product has shrunk to 13 per cent
(from more than 20 per cent as recently as 1995) while still accounting for
about half of exports and helping to make Britain the world?s sixth largest
exporting nation.
There are signs, though, of a change in thinking. Partly prompted by the
credit crunch, many are calling for a ?rebalancing? of the economy, with
manufacturing given greater prominence. Dr David Clark of the ERA
Foundation, a think-tank dedicated to encouraging the commercialisation of
industrial and academic research and development, says: ?The financial
crisis of the last 18 months has highlighted the importance of manufacturing
to the UK economy.?
Among the smaller companies leading the way are The Versatile Flooring Company
in Luton, which had a turnover of £3.8m last year, and British Ceramic Tile,
of Devon, with a turnover of £27m. Both have taken advantage of brownfield
sites, making significant investments and taking the time, often years, to
ensure their manufacturing processes are profitable. Both are making quality
products at cost-effective prices. And the common keys to success are
balancing automation and people, reducing energy consumption and
continuously improving quality.
Finding finance for investment has also been crucial to the ability of each of
these companies to develop and achieve the cost reductions and quality
improvements vital to successful UK manufacturing. Tom Lawton, the head of
manufacturing at the accountants BDO, believes access to finance to invest
ahead of growth will be a particularly challenging part of the recovery.
The Versatile Flooring Company is opening a new factory in Luton that will be
fully operational this year. It has developed new and advanced techniques to
produce its ecotile range of interlocking floor tiles ? reducing rejection
rates and energy consumption. Two highly specialised injection moulding
machines have recently arrived from Demag Hamilton in Germany, a purchase
backed by a loan from the Carbon Trust, the Government-supported
organisation that helps business to improve energy efficiency. These will
enable the company to reduce energy consumption by 30 per cent, which helps
to offset the increased labour costs of the UK.
Sales grew by 15 per cent even in 2008-2009, so the company was making enough
products to render manufacturing in the UK a viable proposition. Until
reaching the point where economies of scale were possible in the UK,
ecotiles were manufactured in Belgium and China. ?Manufacturing in China was
probably one of the most stressful, unsatisfactory experiences of my life,?
says James Gedye, owner and chief executive. ?There was a very low level of
automation. Apart from the injection moulding, everything was done by hand
which increased opportunities for errors. The culture was about cutting
costs all the time. We would get reject rates of between 25 and 30 per cent
of production. In Belgium, the reject rates were 2.5 per cent.?
Founded in 1996, The Versatile Flooring Company started making health and
safety flooring in Gedye?s garage, eventually moving to a purpose-built unit
in Potters Bar in 2005. ?Suregrip [a range of anti-slip safety products] has
always been manufactured in the UK. It is a relatively labour-intensive
product produced for bespoke solutions with a short lead time, so ideal for
UK manufacturing.?
But it is not just about automation. Professor Duncan McFarlane, of the
University of Cambridge?s Institute for Manufacturing, notes that
?lights-out? factories have never really made it in the UK, because taking
the human beings out of the manufacturing process removes the opportunities
for continuous improvement.
Dick Sale, the director of manufacturing at British Ceramic Tile, agrees. ?An
over-reliance on automation and computers can sometimes lead to a very
repetitive large mistake. You need human interaction? At the same time, you
have to be automated, be of a size where you can compete internationally on
cost, and build on the fact that you need design and flexibility in factory
to react very quickly to deliver high-end design ideas.?
Energy efficiency matters hugely, too. British Ceramic Tile is using lean
manufacturing principles to remove 25 per cent of energy costs over five
years. It recently opened a plant in Devon, two miles away from its main
source of clay, the fundamental raw material. The facility ? a third of a
mile long, a quarter of a mile wide ? has been designed to reach 100 per
cent recycling targets wherever possible, from the rainwater off the roof to
the rejected tiles.
?When we were designing the factory, energy was a concern. We started to
monitor the kilocalories per kilometre square of tiles produced,? says Sale.
Small, quite practical things, such as double insulation around kilns, have
driven down heat and energy use in the factory. ?When I have owners of big
companies tour the factory, their jaws hit the floor ? they cannot believe
someone has a fully automated factory in Devon ready to do business. Our aim
is to make buyers? choice as simple as possible and for cost not to get in
the way.?
With sterling remaining relatively weak, exports of manufactured goods could
continue to grow and so help to achieve that much talked-about rebalancing.
As Professor Mike Gregory, of the Institute for Manufacturing, says:
?Manufacturing is about turning ideas and opportunities into products and
services. What could be more satisfying than that??
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