There was an air of Robert the Bruce as Scottish manufacturing leaders debated the future of the country’s manufacturing sector at a Works Management roundtable, in association with the Scottish Manufacturing Advisory Service (SMAS), in Glasgow.
A nation famed for its shipyards and heavy industry had not succeeded, in the face of intense low cost international competition. But, with a £70m government-led manufacturing action plan and a gameplan to focus on high-tech, Industry 4.0-led, production – Scotland is determined to try, try and try again.
“We’ve looked across the rest of Europe, not just at Germany, but comparable economies like Austria, Denmark and Finland. In terms of capex and adoption of more progressive manufacturing approaches, we felt we were behind,” opened Nick Shields [speaking before the Brexit vote], director at SMAS, which has worked with Holyrood to deliver the action plan. “There’s an EU goal for manufacturing’s share of the economy to approach around 20%. That’s a stretching goal, but in the long-term – why wouldn’t you want to aim for that kind of figure?”
Success will demand a dramatic reversal of fortune. Scottish manufacturing’s share of GDP has, like its UK brethren, dipped to 12% over the past 20 years. Local geography bears the scars. The gargantuan shipyards of the Clyde have largely gone and once famous factories, like Wrangler in Falkirk, now house a 24-hour Tesco superstore. Scottish manufacturing registers lower levels of investment and R&D spend than European rivals, according to SMAS.
However, this is not a nation familiar with faint hearts. Scotland’s electronics, life sciences and defence sectors have bucked a backdrop of decline in heavy industry. Motherwell is home to Newsprinters Eurocentral the only UK factory to win the global Shingo Award for operational excellence. And Glasgow and Bridge of Weir have been hotspots for WM’s own Manufacturing Champions Awards winners.
March of the Tartan army: building on brand Scotland
“I used to work for a contact lens manufacturer in Scotland with a global footprint,” recalled Bryan Buchan, chief executive of Scottish Engineering. “Japan was a key export market and they absolutely loved product being made here. We used to talk up the fact we used Scottish water because Scotland is a great brand, one that we can build on. I had the Russian consulate general come to see me and talk about getting Scottish companies to exhibit in Moscow. He didn’t talk about whisky or shortbread, but our heritage of engineering and innovation.”
It’s a repute that the action plan is eager to exploit. The land of John Logie Baird and James Watt wants a new generation of engineering entrepreneurs. Point one of the action plan focuses on leadership and calls for individuals with an “adaptable” and “agile” mindset.
There’s a need for those who can combine the latest plant with the nous for bringing the best out of their people. “What always struck me working in Scottish industry was the can do attitude on the shopfloor,” remarked John Degnan, former production director at BAE Systems Naval Ships’ Glasgow shipyard. “The guys could turn things round on a sixpence. They had been bred with a problem solving attitude and strong work ethic.”
However, endeavour is being eroded by ongoing economic upheaval, according to assembled business leaders. “We saw people tighten up the books to ride out the recession,” said Buchan. “Many did that very well and came out in 2011 filled with optimism. But then came the [Scottish] referendum and defence companies and foreign owned businesses saying they were marking time on capital investment. We thought that post referendum we would see the floodgates open, but it didn’t happen.”
The UK’s EU referendum only prolonged that uncertainty into this summer. And even now, with last month’s leave vote and subsequent talk of a second Scottish independence referendum, the situation remains turbulent.
£70m won’t change things overnight
Economic uncertainty is bound to blight the manufacturing action plan, added Buchan. “We’ve got to be realistic that £70m isn’t going to make a change to the landscape of Scottish engineering and manufacturing. It’s a step in the right direction. But a lot of that money is going to have to come largely from private enterprise. Everything is about confidence and security in the future. People won’t just rush in to borrow money because Wally down the road has bought a new CNC machine.”
Despite these reservations, there were plaudits for the action plan’s ambition. A Scotland geared towards making high value products from high tech factories with ultra engaged workforces was something worth aspiring to, according to delegates. Yet, there was a dose of realism amid the patriotic waving of Saltires. “It’s about where you can add a competitive edge, being somewhere with a differentiator in the global market,” said Peter Dillon, manufacturing director of electronics manufacturer, Finmeccanica . “That’s by cost, technology or doing things people can’t do. How do we keep one step ahead?”
Be streetwise for a start, advised Yan Tiefenbrun, director of operations at Castle Precision Engineering. “The incentivisation in other countries is far in advance of what the UK is offering manufacturers to set up and to operate. That’s giving those countries a competitive advantage.”
Scotland could count the cost in the scarcity of flagship OEMs operating in the country, the roundtable heard. The big catch –the Toyota, JLR or Airbus plant – had so far got away. Dillon added: “The action plan talks about strategies, but is it being backed up by the government saying: this is our scorecard on technology, skills and public investment to entice you to invest here?”
That was the goal, assured Gordon Venters, head of engineering at Scottish Enterprise and part of the action plan development team. ”You won’t have seen that just yet. That’s because the manufacturing action plan is a start point, not an end point in itself...through this process we’ve got the Scottish Government absolutely focussed on the relevance of manufacturing.”
Attention was one thing, action quite another replied Dillon. “I don’t see yet that message from the government that says: ‘right, get behind us, we’ll lead the charge’.” A point echoed by Tiefenbrun of Castle Precision Engineering. “It’s about saying we want to be world leaders in the manufacture of x, y or z. Actually, we don’t want to buy our wind turbines from abroad [for example], we want to be the world leader in the design, manufacture and installation of wind turbines or whatever x,y or z is. We’re going to be the world leaders and it’s – we’re going to be.”
The fate of Scotland’s shipyards provided a salutary lesson in the power of a little state-led self belief. Tiefenbrun said: “South Korea said: ‘we’re going to be the world’s best shipyard, end of story.’ And they did. We saw it in Taiwan too. These countries have strong leadership, vision and ambition. There is leadership at a company level and then there’s leadership at a country level and that can achieve even greater things.”
Scotland can count on plenty of the former. The much vaunted leadership qualities of passion and honesty ran high at the roundtable. George Donaldson, continuous improvement manager at API Foils in Livingstone said: “We need to stop sitting on our hands saying how good we are. Scotland is still talking about Archie Gemmill’s golden goal [at the World Cup in 1978]. We haven’t really moved on and the truth is that everybody else has caught up.”
Scotland’s manufacturing action plan won’t restore the advantage overnight. But, the blueprint could yet be the start of a more considered, more collaborative era in government/industry relations.
Deliver that and MSPs and manufacturers alike can reflect on a famous Scottish victory. One that Robert the Bruce himself would have been proud of.
The Scottish manufacturing action plan: at-a-glance
The action plan sets out a joint government/industry ambition to supercharge Scotland’s manufacturing sector and turn the global manufacturing performance table tartan.
Scotland wants its factories to become world leaders in adopting progressive manufacturing technologies and win export business off the back of it. SMAS will lead an enhanced asset review service to spark fresh investment in best-in-class production kit.
Heavy play is also made of adopting circular economy practices. The term describes an industrial economy that is eliminates waste and pollution by design. Scotland will launch a support programme to help companies seize circular economy thinking in product design, production-floor processes and the wider supply chain with wholesale productivity improvements promised as a by-product. Progressive practices will rely on more enlightened business leaders and the action plan will look to close the gap. The action plan calls for “strong leadership” and those with the desire to innovate and grow international order books. All those extra orders won’t process themselves and the action plan also targets increased promotion of manufacturing careers within Scottish schools. Enhanced education programmes are promised to bolster the supply of skilled labour and a new centre for Manufacturing Excellence and Skills Academy is planned. Download the full action plan: http://tinyurl.com/zyhtjhe
5 things we learned about Scottish Manufacturing
1)Instability scuppering investment: Recession and referendum have put the brakes on capital expenditure among Scottish manufacturing operators, the debate heard. Hesitancy began with the 2008 financial crisis and extended through the independence referendum of September 2015 and the EU referendum of last month. The caution means plant upgrades are being paid for out of cash reserves said Paul Nelson, MD at Allied Vehicles. “During the recession we had a tough time from our bank. It made us reluctant to borrow. We’re tending to invest out of own resources.” Uncertainty that’s only set to continue in the aftermath of Brexit.
2)Scotland needs more OEMs
Tempting large numbers of globally renowned OEMs to set up shop in Scotland has so far proved elusive, the roundtable heard. Without them, the wholesale growth of local supply chains was stunted, leaders warned. “We don’t have enough OEMs,” said Venters of Scottish Enterprise. “Those who are here have said: ‘can we please open our doors and get surrounded by capable suppliers so we can compete globally.” Scotland had to get wise to the fact it was courting for business in a global contest. A suite of skilled labour, R&D links to universities, publically funded investment incentives and committed political backing were fundamental to securing foreign direct investment, the debate heard. “If we have that then Scotland is as good as anywhere in the world to manufacture,” said Tiefenbrun.
3)Skills shortages need solving
Old myths about manufacturing being oily rags and satanic mills are as engrained in Scotland as other parts of the UK, the roundtable revealed. Some university courses were only 15% full because they contained the manufacturing term in the title according to local business leaders. The situation must be remedied if Scotland is to find the employee base to sustain its proposed industrial growth. Some operators are already leading the fight. Kirsty Wainwright of Parsons Peebles is one such advocate: “When I go into schools, the children want to be doctors or teachers. Nobody says they want to work in manufacturing.” The action plan promises nationwide promotion with Scottish schools to promote manufacturing degrees, apprenticeships and vocational courses.
4)Strategy, strategy, strategy
The action plan sets a clear direction from the top, but it will only be as good as the gusto with which it is implemented at grassroots level, leaders warned. Strategy deployment and cascading objectives into daily business activities were still unfamiliar activities among local operators said Donaldson of API Foils. “Look at some of the major US corporations they’re leading strategy deployment from the top. It’s non-negotiable. We’re not doing that and we’re behind the market.” Only a fraction of Scottish engineering businesses practise strategy deployment, Buchan said: citing Scottish Engineering research. Hoshin planning wasn’t the only lean manufacturing tool that Scotland could benefit from a refresher in, the debate heard. A value stream mapping exercise could help show MSPs the link between procurement decisions and local supply chain, the roundtable concurred. Politicians failed to appreciate that placing key contracts overseas savings stripped domestic industry of value add opportunities, the debate heard.
5)You can’t plan for everything
Just a few months after the action plan was published and Brexit has cast uncertainty over the future. Key areas of the document are reliant on EU linked funding and collaboration programmes. Scotland may yet retain access to them all if it were to vote for independence from UK and then rejoin the EU. There are endless ifs, buts and maybes. In fact the only certainty is bumper order books for Scottish based manufacturers of Tipp-Ex equivalents over the coming months and years.
