Manufacturing a recovery
With the UK economy flatlining and warnings about profits, credit ratings and unemployment a weekly if not daily occurrence, it’s hard to argue that the government’s growth strategy is working.
Widespread public sector cuts, the rise in VAT and a failure to get banks lending again are all contributing to companies’ reluctance and inability to invest in their business and create jobs.
But, while it may not be of much comfort to those desperately seeking work or trying to keep their business afloat today, the coalition’s long-term plans for reinvigorating UK manufacturing are taking shape in a promising form.
Among the cuts of last autumn’s comprehensive spending review, the government allocated £200m to establish a series of Technology and Innovation Centres (TIC) – the first of which was launched this week to support high-value manufacturing – to help Britain commercialise its world-class scientific research.
Last week, George Osborne found a further £50m to support the development of graphene from a Nobel Prize-winning discovery made in Britain to a cutting-edge technology that boosts the UK economy.
And today the Department for Business, Innovation and Skills (BIS) announced a revamped Manufacturing Advisory Service (MAS) that it claims will focus on supporting SMEs’ advanced manufacturing capabilities to create £1.5bn in economic growth and 23,000 jobs, and safeguard a further 50,000 jobs.
These figures – based on the experience of four successful firms applied to the whole manufacturing sector – may be dubious, but there’s a sense that the government is serious about practical ways of seeding a slow but long-lasting rebalancing of the economy.
The TICs, overseen by the Technology Strategy Board, are a major part of this strategy and the high-value manufacturing centre holds particular promise. Incorporating seven existing university research departments under one management structure, it aims to help SMEs develop new manufacturing processes without the financial and technical risk this usually involves and that can inhibit smaller companies from expanding or commercialising their ideas.
Dick Elsy, chief executive of automotive technology firm Torotrak, which has received TSB funding, is a firm supporter of the idea and thinks it could prevent UK firms from taking their manufacturing facilities abroad.
British investors and larger companies are too risk-averse to developing innovation, he argues, and Torotrak moved its manufacturing abroad not because of lower labour costs but because the company had to find foreign partners to expand.
‘The opportunity to pool resources to access manufacturing technologies to try and bridge this gap between prototype and derisking the manufacturing process, would be a fantastic enabler in the UK. If these had existed five or 10 years ago it could have led to a lot more added value and my business being in the UK.’
Similar TICs for cell therapy and offshore renewable energy are due to open next year and a further three will be chosen from a selection of areas including space, sensors, digital media and future cities.
These will build on the already substantial work by the TSB over the last four years to aid companies with good ideas that needed a financial boost. We’re not yet far enough along to judge how successful the organisation really is at turning research into market-leading products and creating jobs and wealth in the process. But the signs are positive, with numerous companies on the cusp of bringing impressively innovative products to market.
It would be great if the government’s strategy produced a manufacturing equivalent of the MP3, the data format that has revolutionised the music industry and that still generates millions of Euros in revenue for the German Fraunhofer Institutes where it was developed.
But more fundamentally, it needs to create an environment where no one says that Britain is good at inventing things but not at commercialising them. If this massive obstacle can be overcome, it could become this government’s most lasting and celebrated legacy.