Special report, part 2: Vince Cable on manufacturing

IN the second part of his special report into manufacturing in the Midlands, Duncan Tift looks at some of the industry’s success stories and speaks with new Business Secretary Vince Cable about how to create the right conditions for growth.

Halesowen-based KUKA is one of the UK’s leading suppliers of robots and automated production solutions.

It is set for a record sales year after developing new markets in sectors, such as aerospace, entertainment, food and beverage processing and nuclear.

Among the new orders is a contract to supply a so-called Robocoaster, the world’s first passenger-carrying robot, to Weston-Super-Mare’s Grand Pier.

The robot is set to become one of the more unusual tourist attractions at the new pier, which has been rebuilt following a devastating fire two years ago.

However, the leisure utilisation of the robots is just a side show, perhaps in keeping with the seaside location.

The main purpose of the robots is in industrial handling and production.

Replacing skilled labour is a difficult and costly operation but robots can perform the work of men more easily and they never tire.

This is why the firm is busy fitting and servicing the robots at a variety of companies around the country.

The firm has been selected as one of the region’s manufacturing champions for this year’s MACH 2010 exhibition at the NEC and is showcased on the select Made in the Midlands stand, hosted by Manufacturing Advisory Service-West Midlands, regional development agency Advantage West Midlands and skills body Semta.

Jeff Nowill, KUKA’s general sales manager, said he was hoping MACH would prove the ideal platform for raising the firm’s profile.

However, it is not restricting itself to one event. The company will also be exhibiting at next month’s Farnborough Air Show, where it will be bidding to impress a whole new audience.

Tony Hague, managing director of Cheslyn Hay-based PP Electrical Systems is equally optimistic.

His company, which designs and builds a wide range of electrical, electro-mechanical and electronic control systems for a growing global customer base, has recovered from a sharp decline in business during the first part of 2009 to post nearly 50% growth over the last six months.

The company is one of the village’s largest employers with 180 people and it is forecast to turnover £20m this year.

It has seen orders increase from existing customers in CNC machine tools, packaging, food processing and power generation and new markets including low carbon technologies.

“We already serve one area of the machine tool sector, being the exclusive supplier of control systems to Yamazaki Mazak. MACH 2010 will give us a perfect chance to build on this and look at new opportunities within this market,” he said.

Birmingham-based Precision Micro is another firm to feature on the stand. Selected for its strong record in manufacturing innovation, the company has stayed one step ahead of the competition by developing new products and services.

Its components are used in some high profile industries, notably Formula 1, where its lightweight materials can mean the difference between winning and losing races.

Mick Laverty, chief executive of regional development agency Advantage West Midlands, was one of those to run the rule over the firm during a visit to the trade fair.

Another success story comes in the form of KMF, one of North Staffordshire’s fastest growing manufacturers.

The firm, which employs 270 people at its Newcastle-under-Lyme facility, fended off competition from across the West Midlands to earn its place on the stand.

In the last year it has launched a new training centre, invested more than £1.2m in new machinery and taken sales past the £21m barrier for the first time in its history.

The company has won a string of orders to supply advanced metal components to new markets such as aircraft seating, in addition to strengthening existing relationships with Eaton Electric, Fujitsu and Honeywell.

KMF, established in 1971, is seen as one of the largest and most advanced sub-contract manufacturer of sheet metal components in the UK.

From its 80,000 sq ft facility on the High Carr Business Park, the company offers a host of services, including CNC punching, CNC laser cutting, welding, powder coating, mechanical assembly and electrical integration.

Increased demand has seen it introduce 24 hour/7 day working, with the workforce producing more than 825,000 parts a month for in excess of 100 different customers.

Terry Kimberlin, UK Sales Manager, said that like his fellow exhibitors, he was hoping MACH would raise the firm’s profile and create new business opportunities.

“We want to increase business by 17% this year and we think that is a realistic target,” he said.

The company is helped by the diverse nature of its key operations.

In addition to its precision metalworking, the firm is exhibiting its self-service coffee dispenser, Coffee Nation.

The machine has already attracted the interest of retail giant Tesco, while a trial placing of the machines in various universities has also proved a success and could be rolled out across the country.

A major coffee shop chain has also expressed an interest in the machine in a move that would catapult its business in a different direction.

“The self-service coffee bars are a growing area for our business and we are currently in talks to supply a further 250 between now and the end of March 2011,” said Mr Kimberlin.

In addition to the trade bodies, Semta, the employer-led Sector Skills Council for Science, Engineering and Manufacturing Technologies, also has a presence on the stand.

Philip Whiteman, Semta chief executive, said: “The six companies we have selected to exhibit with us are great examples of the rich manufacturing heritage in the Midlands.

“To ensure the on-going success of manufacturing in the region, it is vital that they have the skills they need to make them competitive. At the moment, many manufacturing companies are experiencing a mismatch between the current skillset of their workforce and world-class skills needed to take advantage of emerging technologies and advanced manufacturing.”

A powerful and important message.

Semta’s 2010 UK Skills Report highlights the need for around 10,000 new highly-skilled scientists and engineers a year between now and 2016.

To help achieve this, Semta has launched a new Skills Connector service giving employers either face-to-face or online access to quality advice, training and funding that matches their specific needs.

According to Mr Whiteman, businesses working with Semta’s National Skills Academy for Manufacturing have seen, on average, a 6:1 ratio of return on their investment in skills. This in turn has helped many of them survive the downturn.

But if the recovery is to continue then this initiative needs to continue.

Many firms I spoke to say their development would be held back unless they could find the next generation of skilled workers to sustain the business.

However, while skills agenda is important, one issue more than any other dominated the thoughts of exhibitors – especially those at SME level – access to finance.

Many smaller firms said they would love to grow their business but were handicapped by a lack of funding as the banks refused to loosen the purse strings.

One Black Country components firm said: “We would like to expand – and we know the business is out there – but we cannot exploit the opportunities because we have no investment.

“It’s a terrible situation. We have been forced into a hand-to-mouth existence and at the moment are just taking one day at a time because that’s all we can do.”

So, the future of the sector – and to a large extent, the region – is at a crossroads.

Unless the fund managers and investors of the world are made to realise the potential of this area then all its good work and innovation will be for nothing – and that would be a sad epitaph.

Many will therefore be buoyed by the comments of new Business Secretary Vince Cable, left, who spoke to me after visiting MACH.

He said he had been impressed by the “bullish” spirit demonstrated by manufacturers at the exhibition.

“It was incredibly impressive. Some of the companies were mindblowing and they are exporting most of their products to Japan and China. These are things that go against the stereotype of struggling British industry.

“The key lesson I learned is that Britain is very good at manufacturing and although we have been through two or three decades of continued retraction, what remains is very good,” he said.

He said the coalition Government would be working to create an environment in which the best firms could flourish. Part of this process would be an investment in skills to ensure the companies had the workers they needed to sustain growth.

However, securing access to finance would also be key, he said, laying the blame for much of what had happened during the past 18 months squarely at the door of the banks.

“The banks aren’t lending and there’s a supply problem, everyone knows that. The banks have over-reacted. Some were reckless before, although not all, and they have now retreated and are risk-averse so good British companies are not getting the capital they need.

“It will be one of the jobs of this government to correct this.”

He therefore pledged to create the right conditions for growth.

“It’s my job description,” he said.

Many manufacturers I’m sure, will be pleased to hear that.