November’s top 10 engineering business stories

Each month, we pick 10 of the most notable news stories from The Engineer’s Business Briefs archive.

In November, the CBI predicted flat UK growth for the rest of this year, with a modest pick-up in growth during 2013.

According to its latest quarterly economic forecast, GDP growth will be zero per cent in 2012, slightly higher than its previous forecast of -0.3 per cent. This reflects the better-than-expected quarterly rate of growth in the third quarter (+1.0 per cent).

However, without the impact of one-off distortions in the fourth quarter, quarter-on-quarter growth is expected to be only marginally positive (+0.2 per cent).

A separate study, released by McGraw-Hill Construction in partnership with United Technologies, revealed that the ‘green’ building market is accelerating around the world. The study indicates a shift in the global construction market — which is now viewing green as a business opportunity rather than a niche area.

Companies said that their top reasons to do green business were client demand (35 per cent) and market demand (33 per cent) — two key business drivers of strategic planning. The next top reasons were lower operating costs (30 per cent) and branding advantage (30 per cent). In contrast, the number-one motivation in 2008 was a need to ‘do the right thing’ (42 per cent) and market transformation (35 per cent), followed by client and market demand.

In other (not-so-positive) news, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) — also released last month — revealed further deterioration in the overall operating conditions of the UK manufacturing sector in October. Companies continued to face declining export sales, weaker domestic demand and rising cost pressures.

At 47.5 in October, from a revised figure of 48.1 in September, the PMI fell for the second successive month and to its lowest level since July this year. This latest reading was broadly in line with the average for the third quarter of 2012 as a whole.

Production volumes were scaled back for the fourth straight month in October, with the rate of decline the second sharpest during the past three-and-a-half years.

The main factor underlying lower output was a further reduction in new work received. Total new orders fell for the seventh month running and at a faster pace than in September.

Manufacturers linked lower levels of new business to reduced inflows of new export orders and weaker domestic demand. New export business declined at the second-fastest pace in just more than a year, mainly owing to the continuing economic weakness seen in mainland Europe. There were also some reports of lower demand from clients in Asia.

There were, however, some brighter areas in the UK manufacturing sector in October. Although conditions deteriorated in the intermediate and investment-goods sectors, output in the consumer-goods sector bounced back strongly from September’s contraction. Consumer-goods producers also saw improved demand from both domestic and overseas clients.

Meanwhile, an economic study conducted by Bibby Financial Services revealed that manufacturing businesses in the UK experienced the highest level of turnover during the third quarter (Q3) of 2012.

The Business Factors Index, produced each quarter, tracks the turnover performance of Bibby Financial Services’ client base of 4,000 against a base point of 100.

For Q3, the manufacturing sector of the client base was not only at its highest ever level of 129.6 but also saw three consecutive quarters of growth during 2012 — 5.5 per cent up on Q2 and 13.4 per cent higher than Q1.

The index also highlighted that manufacturing clients were out in front of other sectors, including construction, wholesale, transport and business services, despite positive performances being seen across the entire client base. So perhaps it’s not all doom and gloom.

Indeed, in November we reported that two major automotive manufacturers — Renault and Caterham — are teaming up to design, develop and build future sports vehicles. The new venture, Société des Automobiles Alpine Caterham, will be created in January 2013 and will be managed by Renault’s Bernard Ollivier.

In addition, car manufacturer Toyota has begun production of the Auris hatchback at its Burnaston factory in the UK. Dr Vince Cable, secretary of state for business, innovation and skills, welcomed Toyota’s continued investment in its UK operations, which will also see the new Auris Touring Sports estate car built at the plant from next year.

According to Cable, the car maker’s £185m investment is good news for the UK supply chain and will help to improve skills and training. Some 800 workers have already been recruited and offered Toyota production apprenticeships, he added.

In defence news, BAE Systems and the Ministry of Defence (MoD) have signed a three-year research contract worth £32m to explore the next generation of maritime capability for the UK. A team from BAE Systems’ naval ship and submarine businesses will deliver research in the ‘sense to decide’ (S2D) capability — the ability to gather and process information about the environment to aid battlespace command and control.

The Maritime Collaborative Enterprise (MarCE) project will bring together specialists in combat systems from Naval Ships and Submarines, both part of BAE Systems Maritime, with other companies, small and medium-sized enterprises and academia to provide the MoD with expertise and innovation above and below water.

BAE Systems will create and manage this collaborative enterprise to deliver a research programme under the management of the MoD’s Defence Science and Technology Laboratory (Dstl).

In addition, defence and security company Saab revealed last month that it had received an order worth SEK330m (£30.6m) from the Swedish Defence Materiel Administration (FMV) to support and maintain the Gripen fighter and to provide technical support for the Swedish Armed Forces.

The order includes support and maintenance activities, which are said to be essential for the flight and operation of Gripen, as well as technical publications, repairs, logistical services and technical support for air, land, sea and command and control systems.

From defence aircraft to passenger planes, and aircraft manufacturer Boeing has signed an agreement with Guggenheim Aviation Partners to convert three 767-300ERs to freighters.

Boeing will manage and engineer the project, which marks the first time that a 767 with blended winglets from Aviation Partners Boeing will be converted into a freighter. The actual conversion is taking place at ST Aerospace’s subsidiary ST Aviation Services in Paya Lebar, Singapore.

Modifications include the installation of a side cargo door and a surround structure, the strengthening of the main deck floor and the replacement of the wall and ceiling liners. New floor panels and freighter tracks will be added as provisions for a buyer-finished cargo-handling system.

Finally, we reported last month that Taiwan’s TransAsia Airways had placed a firm order with Airbus for a further six A321neo aircraft, which will form part of the airline’s fleet expansion and will reportedly allow it to develop new routes to regional destinations. The aircraft will be powered by Pratt & Whitney PW1100G engines.

This contract takes TransAsia Airways’ total orders for Airbus single-aisle aircraft to 29, of which 11 have already been delivered.