Manufacturing is at the heart of the UK’s economic recovery, but investment and a shift in its image are needed to shore-up its continued growth, according to Juergen Maier, MD for Siemens Industry UK, who delivered an impassioned speech to the Sheffield Metallurgical and Engineering Association in June 2011.
Manufacturing output grew by 3.6% in 2010 compared to 2009 and 2010 to early 2011 was the strongest year for the sector for 16 years. It is with this background that Juergen Maier called upon government and industry to come together and support the ‘much needed investment in R&D, machinery and skills’ that is needed for the manufacturing sector to ensure it continues to play its important role in supporting the overall recovery of the UK’s economy.
He opened the speech by commenting on the recent financial crisis and what it has shown: “The economic challenges the country has faced over the last couple of years has shown how an over-reliance on the financial services, housing and construction and the public sector can have damaging economic consequences. ‘Making things’ is definitely necessary for the nation’s prosperity and to secure a more resilient, broader economy.
”He continued by unveiling some of the myths surrounding manufacturing in the UK: “Most of the country still perpetuates the myth that Britain does not make anything anymore. Those people are wrong. In fact, manufacturing contributes around 11 percent of the Gross Domestic Product and employs around 3 million people, producing 55 per cent of all UK exports. The UK is the seventh largest manufacturer in the world by output, so manufacturing is certainly still critically influential for the UK’s economy.”“The UK now has an opportunity to put high-tech, advanced manufacturing right back at the heart of British life, ensuring more jobs and growth from industries such as aerospace, high-tech engineering and low carbon technology. However, to allow us to do this, we need investment,” Juergen Maier continued.
“We not only need to invest in human capital to tackle the engineering skills challenge, but we also need to invest in R&D, plant, machinery and automation. The figures speak for themselves, of the 300,000 graduates in the UK each year, only 24,000 are from engineering disciplines, and of those, only 13,000 are home students. The industry clearly needs more than this, especially given the age profile of our UK engineering workforce.
“The numbers in engineering vocational training are even more concerning. The manufacturing sector will need 235,000 at apprentice/technician level over the next ten years. It is encouraging that the government has acknowledged this skills gap and has pledged investment in apprenticeships and vocational routes, but unfortunately we have a 20 year gap of investment to fill.
“We need to overcome the often poor perception of engineering and manufacturing though and ease the complexity of routes into apprenticeships as well, by doing so we may be able to encourage more of the new lifeblood of the industry to join us,” he continued.
Looking at the investment also needed in R&D, plant, machinery and automation, Juergen Maier commented: “Investment levels in UK manufacturing capital equipment have been, and according to the forecast, look set to continue well below the levels of 2007, despite the continued rise in manufacturing output. The challenge is starkly presented when we look at the comparisons of UK investment compared with investment in Germany. Investment levels in the UK reduced by 8.8 per cent in 2010, despite output rising by 3.6 per cent while Germany saw manufacturing output grow by 4.5 percent, yet investment rose by 9.4 per cent.
“The government is responding to this challenge by pledging more investment and focus on R&D both for products and manufacturing related services and around high-tech manufacturing related services and processes, specifically the proposed technology innovation centres, however, we are in catch-up mode on this, particularly when compared to Germany, where similar institutes have a combined budget 300 times that of the UK’s.
“Availability of finance is another key challenge, as investment in start-ups is crucial to ensure the future of the industry, especially low carbon technologies. Given these areas have high start-up costs and the risk is quite high, it is unlikely private sector banks will be the only and right vehicle to lend cash. The government’s proposed ‘Green Investment Bank’ is a great idea, but will only offer limited start-up capital.
“The manufacturers also play a part in the investment needed. For growth to be sustainable, the UK must address the levels of investment in plant, machinery and automation. At Siemens, we invest around 1 billion Euros per year in our own R&D for the automation hardware and software we produce and use. We encourage others to do the same across the industry.
“Finally, we do have a real chance of renaissance across manufacturing and engineering, not least because of the opportunities afforded by low carbon technologies such as renewable energy and electric vehicles. With continued partnership between manufacturers and the government to invest in the skills, R&D and manufacturing assets we need, the future of manufacturing looks bright.”
The annual conference for the Sheffield Metallurgical and Engineering Association brings together an enviable technological community, of which Siemens is very much a part. Employing 240 people in the local region at Siemens VAI Metals Technologies – located on the Sheffield Business Park, Siemens enjoys close links with neighbours such as the University of Sheffield Advanced Manufacturing Research Centre (AMRC).
Siemens UK employs 16,000 staff, of which 8,000 work in manufacturing and engineering across its 13 manufacturing sites. It is focussed on delivering solutions for the low carbon economy and is in the process of building a wind turbine factory in Hull.
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