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|A far from fond farewell||15/08/2023|
WITHOUT FANFARE or seemingly any prior indication, the government has announced an indefinite extension to the use of CE marking, effectively marking the death knell of the much-touted UKCA mark.
Or maybe signs were there all the time. Originally due to become mandatory for industrial products from 1 January 2022, in August 2021 the deadline was postponed until 1 January 2023 and, again in November 2022 until January 2025 – with blame being apportioned to difficult economic conditions following the pandemic and the war in Ukraine. And, although Downing Street distanced itself at the time, at the beginning of last year there were rumours flying around that even Jacob Rees-Mogg was happy to entertain abandoning the UKCA requirement.
The very concept of the UKCA mark has always been somewhat conflicted. On the one hand, Brexit – which is why the UKCA mark even exists, conceived as a solution of last resort in the event of a no-deal situation – was about ’taking back control’, and what better way to achieve that than cutting ties with CE marking? On the other, Brexit was also supposed to reduce ‘red tape’ and bureaucracy - but introducing the UKCA mark had the opposite effect. And while there will always be a tiny but vocal ‘health and safety gone mad’ fraternity, most would agree that certification to help ensure quality and encourage an even playing field is a good thing, as evidenced by UKCA’s lack of divergence from the CE marking it was meant to supersede in the UK.
Unsurprisingly, the ‘indefinite extension’ whereby British firms will be able to continue the use of CE marking alongside UKCA has been widely welcomed. Stephen Phipson, CEO of Make UK, the manufacturers’ organisation said: “This is a pragmatic and common sense decision that manufacturers will very much welcome and support. This announcement will help safeguard the competitiveness of manufacturers and aid the UK as a destination for investment.
“It should bring more confidence about doing business in the UK and recognises the need to work with the reality of doing business. Make UK has worked extensively with UK Government pushing hard for this decision and we are pleased the ongoing engagement has delivered this positive outcome."
But what of all the time, effort and money that has been wasted working towards compliance that, as it turns out, was doomed from the start? Anecdotally, many firms have spent tens of thousands of pounds working towards UKCA, and it is nigh on impossible to calculate the opportunity cost. There must be plenty out there who rue the day they ever even heard of UKCA.
There are upsides though; at least in this case the government can claim to be, in the words of Business Minister Kevin Hollinrake, "tackling red tape, cutting burdens for business, and creating certainty for firms". It's just a shame that the red tape, burdens and uncertainty in question were caused by the government's own supposedly sovereignty-boosting policy in the first place.
|Digital journey to growth||15/08/2023|
At the recent Talking Industry Live event, Dr Megan Ronayne, head of industrial technologies and manufacturing at Innovate UK KTN sat down with Mike Hague-Morgan, executive director at Autocraft Solutions group to explore how he transformed the company using digitalisation. Charlotte Stonestreet reports
THIS IS a journey that started in 2007, at which point Innovate UK had just been formed, Dr Ronayne had just embarked on a ten year research project at Birmingham University on how to define UK manufacturing and Hague-Morgan was headhunted from a multinational where he was commercial director, to join Autocraft.
“It was a very traditional business, making and remanufacturing engines - it wary very hands-on and manual, a very skills-based business,” he says. However as the quality of engines improved and less remanufacturing was required, business for the company was reduced.
“It was a similar story that I’d just been through in the casting forging industry where there was over-capacity, things had moved East and there wasn’t enough on the order books,” says Hague-Morgan. He was taken on to come into the business to consolidate and tasked with turning things around in a two-year timeframe.
However, things did not work out quite as planned. Six weeks after Hague-Morgan joined Autocraft, Leman Brothers collapsed, signalling the start of the worldwide banking crisis, which he had thought would be the end of the company. At the time, the business had a US-based parent company which had the majority of its interests in the mobile phone sector, which according to Hague-Morgan had very little interest in seeing Autocraft succeed. This led to Hague-Morgan putting everything on the line and buying the business himself.
The first five years were spent getting the company on a stable footing, then in 2014 it embarked upon the next part of its journey which is where Innovate UK came onto the scene, at which point the company had already increased turnover from around £7m to £14m. At this time, against a backdrop of Industry 4.0 really taking hold in the UK manufacturing landscape, Hague-Morgan had started going to workshops and finding out what was going on.
Hague-Morgan recalls how he was embroiled in a disagreement with a customer whereby he could not prove that in fact, it was the customer and not Autocraft that was at fault, whilst simultaneously returning an airport rental car. Hague-Morgan was struck that something like the process and equipment used by the staff at the rental company - handheld scanner/tablet with a series of prompts to help the employee complete the returns process, taking photos at appropriate points to record the condition of the car - could be used to prove that parts leaving the factory were in a fit state. As a result, a system was put in place whereby photos were taken of each engine and uploaded to a drive which could be accessed by the customer.
The investment of £2000 on scanners, combined with a prompt script written by one of Autocraft’s graduate employees saved the company £400k per year on warranty claims from dealers incorrectly fitting the engines and then claiming that they were faulty when shipped.
As Hague-Morgan points out, this relatively simple project, which resulted in immediate tangible savings is in contrast to many of the huge, immensely expensive Industry 4.0 projects that were being showcased in Europe at the time.
“So that was the first thing on the journey,” says Hague-Morgan. “ And that got the appetite, and the confidence within the workforce. So some of the people who were a bit doubting started to think that this could actually work.”
Then in 2015, Autocraft implemented a low volume production line for JLR. “This was the first time that we used HMI screens, DC tooling, sensors to make sure the right bolt when in the right order - and it was a massive step forward,” says Hague-Morgan. However this development didn’t come cheap and the company had to find in the region of £2m to fund the solution, which was purchased from a global supplier.
“We adapted the original solution and in effect took something that wasn’t all that flexible and made it flexible, says Hague-Morgan. However, this still wasn’t without its frustrations; whenever the slightest change was needed to the set-up, Automcarft had to wait for and then pay top rates for an engineer from the supplier before any adjustments were made.
Predicting the future
At this point, Hague-Morgan attended an Innovate UK KTN workshop where he got to meet and share ideas with people from other industries. He ended up talking to someone from the gaming industry whose job it was to predict the future computing power available for a typical home gaming console, and then write the code ready for what has been predicted. Central to this is the idea that consoles will no longer have controllers but use cameras which can detect with great accuracy the slightest movement made by the player.
This led Hague-Morgan to the realisation that some of the technology he had recently invested in on the new line would become obsolete in the near future, this is if it wasn't already. As a result, Autocraft employed and worked with an innovative Belgium start-up company developing camera-based production systems and signed up for a five year deal.
Using the system, which both instructs and monitors, if any part of the production is not carried out in the correct sequence, this is flagged resulting in what Hague-Morgan says is a proper no-fault-forward system that is also fully flexible.
"Because the camera is so easily programmable, it could be a V6, a V8, a Ford engine, a Peugeot engine - it doesn't matter!" says Hague-Morgan.
It also means that employees are able to easily work on many different engine types, rather than having to undergo extensive training for each model.
"We don't train people to build an engine, we train them to play a computer game," explains Hague-Morgan. "By following a light system you can build an engine – although there are instructions as a backup. So people join our business and within two weeks they are building high-quality engines for major global brands - none of our competitors can do that."
This has enabled Autocraft to move from a commoditised business model where the deciding factor is the lowest cost, to a working practice that sees the company able to offer a service and a solution. It's no longer about being the cheapest, it's about flexibility, agility, speed and quality.
It has also meant that the company has been able to minimise the impact of the current skills shortage. Training engine builders within two weeks greatly reduces the cost and time conventionally needed to onboard new members of staff, and according to Hague-Morgan people really like the new way of learning, particularly those who are younger.
When it comes to the cultural change required to successfully implement a digital strategy like this, Hague-Morgan believes that this cannot be achieved in a 'normal management' way.
"In any business that you want to change there will be people with really strong opinions," says Hague-Morgan. "Don't be angry with them; they think that for a reason."
While it might be tempting to work slowly with the more enthusiastic people within a workforce, Hague-Morgan advocates making an effort to identify and work closely with those who might be more doubtful, that way any cultural transition will be much faster.
He does have a few words of caution: "Not everyone will be with you, even after that and unfortunately some people haven't made the journey."
However, out of the many hundreds of people employed by Automcraft, Hague-Morgan estimates that fewer than ten people are no longer with the company due to the changes made on the digitalisation journey. This low level of attrition is something that he partly puts down to
"Give them enough confidence and support to try something new, but be close enough to guide them," says Hague-Morgan "Just get a room and talk about it, talk about what you did, what you could have done better and what's the next thing that you can do. Always leave with a positive."
And there is no doubt that this has worked in a spectacular fashion. From a turnover of £7m when Hague-Morgan first joined the company, to £70m with more steep growth forecast for the near future, this is truly a story of digitalisation success.
|Ethical engineering - find your compass||15/06/2023|
WHILE THE mainstream media once again seems to be taking a distinctly glass-half-empty view of technology – this time it’s not robots coming for your jobs; it’s AI coming for the whole human race, apparently – my attention has been caught by a few more positive stories.
I think by now most readers will be familiar with the concept of collaborative robots, or cobots, and the role they play in making the prospect of robotics more attainable in terms of affordability, flexibility and indeed simplicity. And a pilot project between ABB Robotics and US non-profit organization Junglekeepers, which makes use of a robot, is demonstrating the role Cloud technology can play in making reforestation faster, more efficient and scalable.
Junglekeepers’ mission is to protect 55,000 acres of Amazon rainforest and reverse deforestation., and in a first-of-its-kind demonstration, ABB’s cobot YuMi is automating planting tasks in a jungle laboratory, speeding the process. Much as we might see in more industrial applications, this allows Junglekeepers’ volunteers to focus their valuable time and resources on more impactful work.
A particularly notable aspect of this project is that using ABB RobotStudio Cloud technology, ABB experts simulate, refine and deploy the programming required for YuMi’s tasks in the jungle from 7460 miles away in Västerås, Sweden – meaning that this is, according to ABB, the world’s most remote robot!
In another example of where technology seen in the industrial sphere is being put to good use elsewhere, Northern Rangelands Trust (NRT) and Connected Conservation are helping to safeguard Kenya’s most vulnerable species and natural resources with Africa’s largest landscape-wide IoT conservation network.
The project is evolving wildlife and natural resource conservation by leveraging LoRaWAN IoT sensors and networks to collect, monitor and analyse real-time environmental data on a captivating scale. This data is coupled with analytics and conservation tools to help safeguard wildlife populations, promote peace, and empower community-led conservation.
NRT’s IoT conservation network was the first of its kind in Kenya and has been made possible by Connected Conservation Foundation (CCF), bringing together a coalition of private and public sector partners.
Rather than being focussed mainly on profit, which let’s face it many applications still are, these projects demonstrate how technology and engineering can be used for the greater good – which brings me nicely to charity Engineers Without Borders' latest initiative, the Global Competency Compass.
Born out of a need to think critically about the role of engineering in the context of the complex challenges faced by society today, the Compass covers essential competencies identified to align with the four principles of global responsibility – responsible, purposeful, inclusive and regenerative – and provides template action plans for individuals, along with an online learning library of relevant professional development and training.
Designed for engineers of any discipline, the tool has been designed to empower individuals and their wider teams to lead innovation that benefits both people and the planet. To find out more visit https://www.ewb-uk.org/global-responsibility-competency-compass/
|Let's not drive automotive into the ground||18/04/2023|
AS THE editor of a magazine with the word ‘drives’ in its title, my inbox always has more than its fair share of car-related press releases, and while many of them do not have a huge amount of relevance to the core CDA remit, I do enjoy the occasional sojourn into the world of the MG Cyberstar or Everrati’s redefined electric Porsche 911.
While there is still joy to be found here for the diehard petrolhead - Steve McQueen's Ferrari 275 GTB/4, anyone? – the lion's share of news in this sector now appears to be all about electric vehicles, indication that for better or for worse the age of the EV is well and truly upon us. Don't trust the accuracy of the patented editor's in-box barometer? Well, you only have to look at the latest UK figures for new car sales to see that Tesla's Model was March's best selling model, an achievement helped no doubt by price reductions of up to £8k.
Apart from the much-touted environmental advantages of EV, widespread adoption of the technology also has the potential to bring huge economic gains. However, in order to reap the rewards here in the UK, businesses need to be incentivised to invest here - something which decidedly does not seem to be happening. This was gently highlighted by automotive industry veteran, Andy Palmer, who said that it was "probable" car firms would leave the UK without a subsidy package similar to the billions in support already being provided in the US, and proposed by the EU. Palmer, who has had senior jobs at Nissan and Aston Martin, even went so far as to say that the sector is facing the "last throw of the dice".
Establishing battery plants is critical to the survival of the UK automotive sector. Batteries are one of the most expensive components of electric vehicles and a local supply is a key deciding factor when manufacturers are assessing new plants, and the collapse of Britishvolt and its subsequent purchase by investors aiming to move focus away from car batteries has come as an undeniable blow.
Meanwhile, Jaguar Land Rover (JLR)’s Indian conglomerate owner Tata has made construction of a UK gigafactory dependent on a government cash injection worth hundreds of millions of pounds in order to adapt its ageing Port Talbot facility to produce carbon-neutral steel. While this in itself isn't a bad thing – after all, we are trying to save the planet here – there are reasons why this might not happen, not least of which is that rival car and steel makers that have funded green projects independently will likely be more than a bit miffed.
Anyway, chancellor Jeremy Hunt has said that the UK will not go toe-to-toe with the US and EU when it comes to subsidies, preferring a "different - and better" approach. "With the threat of protectionism creeping its way back into the world economy, the long-term solution is not subsidy but security," he said. This does make a good soundbite, but with the likes of Germany approving a €1bn support package for a steelmaker to use hydrogen in its processes to replace coal, is it a line that can be held without detrimental effect on investment in the UK?
|Science and tech superpower on the horizon?||09/03/2023|
THOSE OF you with half an eye on the news may well be aware of the government’s latest scheme to boost UK science and technology - the Science and Technology Framework.
Recently launched to much aplomb by the Prime Minister and Technology Secretary, it is the first major piece of work from the newly created Department for Science, Innovation and Technology and aims to “challenge every part of government to better put the UK at the forefront of global science and technology this decade through ten key actions – creating a coordinated cross-government approach”.
On the face of it this sounds fantastic, but after further consideration I can’t help but be somewhat underwhelmed. I won’t detail each of the actions that the plan includes, but suffice to say, having read through them myself my first thought was: is the UK not already doing everything on the list, and if not, why not? For example, one of the point is “building on the UK’s talent and skills base” - well duh! I'm also not entirely sure what halving inflation has to do with a science and technology framework, but that's one of the things that the Technology Secretary Michelle Donelan chose to talk about in her foreword, so who am I to question?
I know I’m probably being too cynical and of course, the full document outlining the plan does include lots of sensible ambitions that, if fulfilled, could indeed help cement the UK as a science and technology superpower, although whether this will be possible by 2030, which seems to be the aim, it a different matter.
Another notable aspect of the framework is that it fails to even mention association with the €95.5b Horizon Europe reserach programme, which seems odd particularly as the announcement of the Winsor Framework could pave the way for UK involvement, which had previously been blocked by the EU. Indeed Donelan has said a deal for the UK to associate to Horizon Europe would need to be on “acceptable and favourable terms” and has declined to guarantee that the UK will definitely join the programme.
It has also been reported that the Prime Minister is keen on an alternative research programme put together by ministers, known as "Plan B". This would be a UK-led programme involving collaboration with non-EU as well as European nations. This comes on the back of the Department for Business, Energy and Industrial Strategy returning £1.6b of funds to the Treasury, which had originally been set aside for UK involvement Horizon Europe research programme.
While I try to see the potential upsides of the UK forgoing involvement in Horizon Europe in favour of a more worldwide home-grown alternative, I can't help looking at the post-Brexit trade deals that have been made and feeling thoroughly disenchanted about the whole situation. If the government is serious about making the UK a science and technology superpower, I would propose a starting of just two key actions - provide the necessary funding and join Horizon Europe.
|Energy uncertainty continues||12/01/2023|
THE WEEK the government has announced a new Energy Bills Discount Scheme, ahead of the current scheme ending in March. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31 March 2024.
According to the government, this will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.
So far so good, or so it would seem. In reality, this will slash the government support given to companies with their energy bills, with some business groups warning that the flat-rate discount won't provide sufficient protection if energy prices spike again ahead of next winter. Chancellor Jeremy Hunt has described the current scheme as "unsustainably expensive", yet some in business are warning that the increased energy costs will have to be passed onto customers, further driving inflation. There also will undoubtedly be many companies that have to fold because they can no longer afford the price of energy.
This is a view borne out by the latest Make UK/PwC Senior Executive survey, which examines the views of over two hundred senior executives across manufacturing on the outlook for the year ahead. It is reported to show the scale of uncertainty and increased costs that companies continue to face across the board, not just on energy, with ongoing supply chain disruption, access to labour and increased transport costs creating a potent mix of challenges for companies.
According to the survey, almost three quarters of companies (70%) expect their energy costs to increase this year, with two thirds saying they still expect to take actions such as reducing production or cutting jobs despite the Government energy support package.
In addition, 60% of companies are increasingly concerned about blackouts affecting their business, almost two thirds of companies (64.3%) say increased energy costs are the biggest risk to their company, while more than two thirds (68.9%) say uncertainty around energy costs is the biggest risk to confidence.
Of course, any extension to the scheme is welcome, but unless the government provides similar levels of support to that seen in other comparable nations, the UK risks falling even further behind its competitors.
As Cara Haffey, manufacturing leader at PwC UK, says: "Given the scale of the cost challenges, and the backdrop of a long winter, it is imperative that the right balance is struck between keeping our collective eye on the ball in regards to our netzero commitments while ensuring vital support is given to ensure that the sector - as adaptable as it is - can withstand what is likely to be a difficult year ahead.”
|The perennial productivity puzzle||31/10/2022|
As I have recently discovered, one of the great things about being the editor of a bi-monthly magazine, means that one issue cycle can encompass three different UK Prime Ministers.
OK, Boris Johnson didn’t actually do an awful lot towards the end of his tenure, but in just 45 days Liz Truss was appointed PM, announced a ‘mini budget’ that had all sorts of ramifications - and I don’t say that in a good way - and resigned, leaving the door to Number 10 open for the current incumbent and, in the views of many and probably more importantly, the financial markets, the more economically astute candidate, Rishie Sunak.
So, what does this mean for UK industry? Although we never got to the nitty gritty of the Truss plan for “growth, growth, growth" as she was gone, gone, gone before any of the details were revealed, the basic aim to improve productivity is a good one. But an aim without a sound plan of how to achieve the given aim is pretty much useless, and let’s face, it there didn’t seem to be any particular strategy apart from tax cuts funded by borrowing, which would hopefully trickle down to boost the wider economy.
Would this really have helped to boost productivity? Well, unless we can access a parallel universe where Truss is still PM it’s a tough call to make, particularly as productivity in the UK always proves to be such a tricky puzzle to solve. UK productivity has more or less flatlined since 2008, falling behind comparable economies. In theory, we know how to improve productivity – investment in the latest tech, embracing automation and skills training all have a role to play – but the pieces just never seem to fall into place. And maybe that’s the problem. We can’t expect things to ‘fall into place’, there needs to be a comprehensive strategy, it needs to be long-term, and it needs to be driven by the Government.
That's not to say that there aren't already some great things happening in the UK's industrial sector. The latest Make UK/Infor survey shows how Britain’s manufacturing sector is increasingly embracing the digital industrial revolution with aims to boost productivity, improve energy efficiency and overcome supply chain shocks caused by COVID and Brexit.
And, against a background of Sunak apparently planning deep spending cuts, Make UK is urging the Government to protect vital digital support programmes in the coming Spending Round. These include schemes such as Made Smarter and Help to Grow Digital which help SMEs in particular develop digital skills and practices. In addition, to unlock greater innovation and ideas, Make UK is also calling on the Government to accelerate further private investment in R&D by expanding the R&D tax credit to include capital equipment within qualifying expenditure.
Will the Government take heed? Watch this space...
|Bracing for a bleak winter||01/09/2022|
By the time you read this, there will be a new Prime Minister in the UK. No matter if it’s Sunk or Truss who takes the helm, perhaps their biggest challenge will be the energy crisis which, while worldwide, does seem to be affecting the UK, at least in terms of costs, rather more severely than many economically comparable nations.
While there is rightly much concern about how households will manage to pay colossal energy bills, the issue is even more acute for businesses, which do not have the protection - although I'm not sure how much 'protection' is being provided these days - of a price cap. At the sharp end this, the UK's highest heaviest power users, which include businesses from steelmakers and chemical firms to glass and ceramics manufacturers, account for aound 16% of the country's energy usage, behind transport and domestic use. Not only are they facing bills that seemed unimaginable this time last year, but there is also the possibility that energy-intensive businesses will have to close to preserve power for hospitals, emergency services and households if a cold snap combines with gas shortages to trigger blackouts, bringing back dark memories of the 1970s.
While the government has said it is considering plans to subsidise bills for energy-intensive industries, the measure would only help around 300 businesses - and let's face it, every business could do with some help at the moment, particularly as three and five year contracts at significantly lower price points come to an end, leaving a 'cliff-edge' situation. Current and anticipated circumstances make it hard to see how many businesses will avoid having to shut permanently.
There are ways to help mitigate the situation. Many manufacturers already run their facilities during the night to take advantage of cheaper tariffs (this does, however, increase wage bills with employees being paid extra to work unsociable hours), and there is a huge range of energy saving technology that can be employed - but after years of suppressed demand due to the pandemic and rapidly rising interest rates, how many business can afford to invest at the moment? Besides which, the increases in energy costs are so severe, it's hard to imagine that any technology changes are going to offset them.
Whatever happens, it is vitally important that the government comes up with a radical plan to curb energy costs of UK businesses. Industry body, UK Steel, has estimated British producers pay 61% more for electricity than their competitors in Germany and 51% more than in France - underlining the competitive disadvantage to UK companies. Of course, not all the factors can be controlled by government intervention, but at the moment it certainly seems that a whole lot more needs to be done, and done without delay.
|Have you started your net zero journey?||12/05/2022|
IF YOU haven’t already realised, it is becoming increasingly clear that if global warming is to be kept to a point that avoids catastrophic events, drastic and immediate action needs to be taken across all sectors.
The latest Intergovernmental Panel on Climate Change (IPCC) report identifies the industrial sector as accounting for around a quarter of global emissions. Achieving net zero will be challenging and will require new production processes, low and zero emissions electricity, hydrogen, and, where necessary, carbon capture and storage, notes the Panel.
While the stark warnings contained with the IPCC report can make difficult reading – sometimes the challenge can seem so colossal it’s tricky to see how individual businesses can make a difference – the findings do show increasing evidence of climate action. Since 2010, the IPCC notes, there have been sustained decreases of up to 85% in the costs of solar and wind energy, and batteries. An increasing range of policies and laws have enhanced energy efficiency, reduced rates of deforestation and accelerated the deployment of renewable energy.
Here in the UK research from Make UK, the manufacturers’ organisation shows that almost two thirds (65%) of manufacturers have taken positive action towards their net zero target in the past 12 months, while 35% of businesses already have a fully formed net zero strategy in place and have started to implement it. The research - ‘COP26 6 Months On’ – shows 77% of companies working on energy efficiency followed by nearly half (48%) looking to optimise their production processes. A further 32% want to increase their resource efficiency by using or wasting less resources.
This could, says Make UK, be something as simple as moving production lines nearer to the exit, so forklift trucks move only a short distance to load up the final products, to introducing complex energy saving sensors across the whole of the production line and full-scale electrification of processes.
Looking specifically at the role robots and automation can play in flighting climate change, the International Federation of Robotics identified 13 of the 17 sustainable development goals set out by the United Nations SDGs, where the use of robots can help to create a better planet.
“The transformation on the way to a sustainable use of resources is proving robotics and automation to be key technologies,” says Dr Susanne Bieller, general secretary of the International Federation of Robotics. “Intelligent automation reduces production costs: This helps battery technology achieve a breakthrough in e-mobility for example or fuel cells production for hydrogen-power as an alternative to fossil energy. At the same time, highly efficient production technology reduces CO2-emissions.”
Clean energy, industrial innovation and sustainable agriculture are just three examples which show how the use of robots contribute to achieve these UN sustainable development goals.
|...and along comes the next challenge||16/03/2022|
WELL, they say things come in threes and with the pandemic, Brexit and now war in Europe, we certainly seem to have the holy trinity of all challenges, not just for the industrial sector, but for society at a whole.
Off course, it's is easy to just see the downsides, but are are always positives to be found. For example, according to the latest IHS Markit/CIPS UK manufacturing Purchasing Managers’ Index (PMI), the growth rate of UK manufacturing production accelerated to a seven-month high in February, aided by stronger domestic demand, fewer raw material shortages and an easing of global supply chain pressures.
The seasonally adjusted Index rose to a three-month high of 58.0 in February, up from 57.3 in January. The PMI has remained above the neutral 50.0 mark for 21 successive months. Faster growth of output, new orders and stocks of purchases are reported to be behind the February lift, offsetting the impact of slower job creation. Higher new work intakes reflected stronger domestic demand, new customer wins, looser COVID restrictions and improved market conditions.
“Growth was boosted by stronger domestic demand and by firms catching up on delayed work as material shortages and supply chain disruptions started to dissipate. Consumer goods output in particular also benefitted from increased sales due to a further easing of COVID restrictions,” commented Rob Dobson, Director at IHS Markit.
Overall, the Index found that the outlook remained positive, with almost 64% of survey respondents forecasting that production would increase over the coming 12 months, taking the overall degree of optimism to a six-month high.
However, as I’m sure CDA readers will have noticed it’s not all plain sailing at the moment, and the Index also found that new export business decreased for the fifth time in the past six months, amid reports of Brexit-related issues, ongoing pandemic restrictions in trading partners and the loss of business from long lead times.
This is borne out by the UK Export monitor from the Institute of Export & International Trade (IOE&IT) and Coriolis Technologies, which found that the largest businesses appear to have been the most severely affected. There are nearly 9% fewer of them exporting in February compared to a year ago. The equivalent reduction for medium-sized businesses is 3%, for small businesses almost 5% and for micro-businesses 6%, according to the findings.
Large exporters' revenues fell by around 12.4% in January compared to a 0.3% drop in medium-sized businesses’ revenues. Small companies were also severely affected with a decline of over 16% in revenues, which has directly impacted their budgets, but fortunately not their broader operations. This is a direct consequence of disruptions to supply chains in the early part of 2022, asserts the IOE&IT.
The beginning of 2022 saw imports from Europe subject to the same customs declarations as exports. There were 5% fewer exporters compared to 12 months ago, their number of employees has fallen back by nearly 5.5% and their revenues by almost 11% compared to a year ago.
And then, as if the knock-on effects of the pandemic and Brexit weren’t enough, Russia’s invasion of Ukraine has also resulted in increased uncertainty. As well as adding to already soaring energy prices, there are also concerns that the availability of commodities such as wheat, and metals including palladium, platinum, gold and aluminium will be impacted.
So as Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “There were certainly several positives for the UK’s manufacturing sector in February as 64% of manufacturing businesses remained optimistic. However, this success comes with a health warning as the Ukrainian crisis deepens and the potential for higher commodity prices, disruptions to supply and economic pain must be considered by businesses as they try to build resilience into their supply chains in the coming months.”
Charlotte Stonestreet is an experienced b2b editor and has worked across a range of industrial titles including Handling & Storage Solutions, Factory Equipment and Materials Handling News.
She has also contributed to the 'Energy Procurement essential guide to excellence'.
Having gained a degree in English with Media Studies, Charlotte started out her publishing career on a voluntary basis, producing a newsletter for Mencap.