Leasing it

The manufacturing and construction industry is switching to a system where instead of selling expensive products such as buildings and military hardware outright, it leases them.


The manufacturing and construction industry is switching to a system where instead of selling expensive products such as buildings and military hardware outright, it effectively leases them for 30 years, taking on the overall responsibility for maintaining, repairing and upgrading them.


This new approach – known as product-service – is already used in private finance initiatives for many new hospitals and schools and is beginning to be used for military aircraft, ships and tanks.


This change means that firms must understand how to deal with important information safely and securely for many years, how their engineers can adapt the product as customers’ needs change, and how best to organise themselves to adapt to the new approach.


These areas will be explored by a new £5.5 million three-year research project beginning in October and led by Mr Chris McMahon of the University of Bath’s Department of Mechanical Engineering. He will work with colleagues in the University’s Mechanical Engineering Innovative Manufacturing Research Centre (IMRC).


Mr McMahon met partners from the other 10 universities recently in London to discuss the project. Later this month, the project team meets industrial partners, which include organisations from the defence, aerospace, construction and healthcare sectors.


The project will bring the equivalent of five and a half new full-time posts to the University of Bath, though current staff will also work on the project, bringing the numbers taking part to nine at the University and 34 in all across the UK.


“This project is very important and challenging,” said Mr McMahon. “Instead of selling expensive items like buildings, planes and military items outright, industry is going to use product-service contracts more and more, and the firms doing this have to understand the complexities of providing customer service for 30 years or more, or they will be at risk.


“In the future, it may be that many more products, including household items, will be commonly supplied under product-service contracts for years rather than sold, so this is a fast-developing area.”


Seven of the other 10 research teams are also IMRCs, part of a national programme of centres of excellence in manufacturing research funded by the Engineering and Physical Sciences Research Council (EPSRC).


The project is funded by the EPSRC and the Economic and Social Research Council (ESRC), which are giving £3.68 million. The rest is made up from block grants from the collaborating IMRCs.