Manufacturing The Future

 

Dr Scott Steedman FREng

Dr Scott Steedman FREng

The announcement by Lord Mandelson in January of three new Manufacturing Research Centres at the universities of Southampton, Loughborough and Brunel was a good start to the year. Turning academic research into advanced engineering products and sustainable businesses is a crucial step towards rebuilding the UK’s capability for wealth creation. As Rolls-Royce chief executive Sir John Rose put it to the CBI in 2008: “There are only three ways of creating wealth – you can dig it up, grow it or convert something in order to add value. Anything else is merely moving it about

”Capturing added value is the key to the future of manufacturing. Britain may be the sixth largest manufacturer in the world, but our manufacturing output is still in large measure dominated by products of low added value. Enthusiasm is hard to muster for an industry perceived to be part of the ‘old economy’ and our national reticence about manufacturing is longstanding. Definitions tend to be variations on the theme ‘producing goods in large numbers, usually in a factory’. The most poignant definition I read recently was, “to produce in a mechanical way without inspiration or originality”.

Nothing could be further from the future of manufacturing. High added value manufacturing is the trajectory we need to move along, and move rapidly. We read of ‘advanced manufacturing’, the ‘factory of the future’ and, most importantly, ‘high added value manufacturing’. Businesses that occupy this space are high technology, knowledge-based companies, small and large. Rolls-Royce is one of the best known proponents of the drive towards manufacturing excellence. Plastic Electronics (printing electronic circuits onto any surface, rigid or flexible) is an oft-quoted example of a new technology that could become a great British industry.

But scaling the outstanding few into a national movement is a major challenge. Adding value is not the same as profit or revenue. Added value is the difference between a company’s sales and the cost of its bought-in goods and services. Value is added to a product by reducing manufacturing costs as well as by increasing its value to the customer. It is a measure of wealth creation, not simply operating profit. The future of manufacturing is not in producing more widgets, or even cleverer widgets, but recognising what the product does for the user and servicing that need throughout its useable life.

Rolls-Royce has for some years generated more revenue from services than from products. Their aerospace customers now buy power, not engines – a change that looks like a paradigm shift from the traditional British view of manufacturing. In reality it is small change in emphasis of where and how the company captures value from its products. Other companies, too, have recognised the importance of integrating research and development, innovation and business. Manufacturing Research Centres are now found at many of our major universities and they are vital to bridging the ever widening gap between academia and industry.

But are these initiatives enough?
Manufacturing Research Centres are found all over the world. High added value manufacturing is a common goal across developing and developed economies. For the UK to get ahead of the curve in the future of industrial wealth creation requires more than the setting up of research centres. We need as a nation to take a fresh look at the whole concept of manufacturing.

Manufacturing is about the delivery of goods and services that provide a capability to bring value to a customer. That capability should be through-life. It should be sustainable in the sense of being effective, resource efficient, and environmentally friendly. Manufacturing is, of course, about products, but the added value may come in many different ways – through services that enhance the product, services that surround the product, more efficient production methods, or integrating a whole system of products.

The UK strategy for Plastic Electronics published by the Department for Business Innovation and Skills last December, follows this theme. Martin Jackson of electronics company Plastic Logic talks about providing a: “complete solution for the consumer: the eReader, an online store and distribution together with the content itself.” The overarching challenge identified in the strategy, though, is to create “effective leadership and coherent communications” for this new industrial sector. In other words: a system-wide approach.

Redefining manufacturing in our national strategy means we should focus less on the factory and more on the system, the whole value chain from raw material to output to outcome. The importance of wealth creation to the balance of trade and to the nation’s future cannot be understated. It’s time to focus on what the user wants to achieve, rather than what producers want to sell, if we are to reinvent British manufacturing for the future.

Dr Scott Steedman FREng
Editor-in-Chief

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