The sector accounts for less than an eighth of the economy, but the SMAS conference will showcase the crucial contribution it can make to our prosperity
A sector that seems doomed to long-term decline; a shrinking contribution to the economy and now worries over Brexit: the outlook for Scotland’s manufacturing sector is daunting.
Yet there is much to be positive about. The sector is bristling with successful companies pushing the frontiers of advanced technology, improving productivity and investing ahead.
Some of the best will be on show at this year’s Scottish Manufacturing Advisory Service (SMAS) conference at the Westerwood Hotel, Cumbernauld, on September 7 and 8.
It will attract some 400 representatives from companies across Scotland. Previous conferences saw outstanding presentations from businesses as diverse as Alexander Dennis and Linn Music Systems, with a particularly inspiring presentation on the uncertain start to success of Brompton Bicycles.
The conference has grown to become a must-attend event and this year’s agenda, focusing on productivity and growth should prove no exception.
Forty years ago manufacturing represented around 40 per cent of the economy and accounted for around 30 per cent of all employment. Today, it accounts for just 12 per cent of the economy and only nine per cent of the workforce – around 190,000 people.
But this is to overlook the huge changes in the composition of manufacturing and changes to the very definition of the sector. As SMAS Director Nick Shields explains, “It’s a broad church accommodating industries from chemicals to food and drink, textiles and shipbuilding – and is at the heart of a high-skills, high-wage economy with earnings 30 per cent higher than average.”
The traditional idea of a standalone engineering business banging out widgets has long gone. Customers are increasingly looking, not only for high value-added product but also continuous servicing and technical and communications updates in an ever more digital world. And it is this high value servicing and supply that has greatly expanded our traditional understanding of a manufacturing business.
Take, for example, the work of the Advanced Forming Research Centre (AFRC) which will feature at the conference. This undertakes projects that could hardly be described as typical manufacturing. It is a collaborative venture between the University of Strathclyde, Scottish Enterprise, the UK government and leading multinational engineering firms.
The £80 million facility focuses on developing forming and forging technologies to support the development of high integrity components. It is one of seven elite centres that help catalyse the future growth and success of manufacturing in the UK.
The AFRC has over £25m worth of equipment at its disposal.
A recent example of its work was in helping a Scottish SME to develop improvements for cranial implants, using digital imagery, that can cut a six to eight-week stay in hospital to a matter of days.
Another example of the advanced work being undertaken is CENSIS, a centre of excellence for Sensor and Imaging Systems (SIS) technologies enabling industry innovators and university researchers to collaborate at the forefront of market-focused innovation. The centre in Glasgow is one of eight funded by the Scottish Innovation Council, helping companies to make best use of data to develop new products and improve productivity.
It has a portfolio of some 40 projects, varying from agritech businesses to industrial manufacturing and food processing. An example of its work is the help given to Scottish Water, looking at the data collected at its pumps and seeing how this could be used for preventative maintenance. As a result it has been able to manage the pumps more effectively with a substantial saving in electricity consumption.
Meanwhile, the sector continually needs a strong flow of investment spending both to compete on the world stage and, as the conference intends to explore, game-changing productivity improvements.
“Investment in Scottish manufacturing has fallen behind the rest of the UK and the UK is behind our European competitors,” says Shields. “To move us towards the first quartile of productivity when compared with OECD countries, we need an additional £6.5 billion of capital spend in our industry. There needs to be a determined and intense focus on further improving our productivity… The best products are often made using technology and automation that reduces cycle time, increases quality and therefore maximises businesses productivity.”
That is the goal at the heart of the Scottish Government’s manufacturing action plan – A Manufacturing Future for Scotland, unveiled by John Swinney in February. It plans to launch an enhanced programme of support to enable companies to capture new opportunities presented by the circular economy – and its impact on product design, manufacturing process and supply chains. This will include a new joint centre for manufacturing excellence and skills.
The immediate challenges faced by manufacturing should not be underestimated. The latest Fraser of Allander commentary on the sector takes a long, hard look at why Scotland’s GDP growth slumped to zero in the first quarter of the year. This period saw sharp falls in production (1.2 per cent) and construction (1.5 per cent) with the downturn in the North Sea continuing to hit the domestic oil and gas supply chain. Overall manufacturing is down nearly 5.5 per cent over the year, with the metals, metal products and machinery subsector down nearly 23 per cent since 2014, in part due to the challenges in oil and gas, but also wider structural weaknesses.
Now come uncertainties over Brexit. But one major plus point for the sector is the fall in sterling which should make Scottish exports that much more competitive in world markets.
It’s easy to be cast down by all the gloom. But the SMAS conference provides an opportunity for the sector to explore and share best practice across many diverse activities. As such, it plays a most positive role in helping to showcase what we are capable of, and by doing so, to help give Scottish manufacturing a fighting chance.