Sharpening up a future in the making

AS MORE and more factory work moves to cheaper overseas locations it is easy to understand why the obituaries have been written for Scottish manufacturing. Tens of thousands of jobs have been wiped out over the past decade amid dire warnings that the sector is facing oblivion.

So when Gerry Edwards and Steve Graham agreed to take on the task of revitalising the country's manufacturers they knew it was going to be a tough assignment, and there is a lot at stake.

The pair became chairman and director, respectively, of Scotland's latest government-funded attempt to bridge the productivity gap with other advanced economies. There are no separate figures for Scotland but the UK is 16% less productive than each of France and Germany, and 21% less productive than North America.

Almost a year since Edwards and Graham came together to kick-start the cumbersomely named Scottish Manufacturing Advisory Service, it is doing what it says on the tin. A nine-strong squad of "practitioners" - experienced individuals with a variety of talents - have already seen 119 companies, of which 36 have adopted their recommendations and delivered 7.6m of added value. Should all 119 take up the advice given, it is estimated it would add 19.6m of productivity improvement to the economy. A further 46 projects are being discussed that would add 7.9m to the current total. In a sector still worth 11.8bn it is small beer, but it represents a start and a move in the right direction.

"There is an identifiable gap in productivity with other countries and we are focused on addressing that," says Edwards, whose day job is vice-president and managing director of National Semiconductor in Greenock. "Our role is to help companies through problems by providing experienced people who will work with them and set them on the right road."

Among those who approached SMAS for help was Oregon Timber, based in the Borders, and employing 85 staff making timber frames for the construction industry. The SMAS review revealed wastage in both the materials and manufacture of the frames, and after implementing the recommendations Oregon saw improvements of between 5% and 12% in processing time, yielding an annual saving of 25,000 in labour costs. Peter Wade, the company's operations manager, says he's now looking for further improvements by applying the methodology he was shown.

"SMAS advisers showed us how to identify improvements for ourselves, which is a skill in itself," he says.

Oregon's experience is being echoed around the country. Peter Hughes, chief executive of trade body Scottish Engineering, who had warned at the outset that SMAS had to deliver, said he was hearing a positive message about the service. "They are doing brilliantly. The feedback I am getting is very good. One MD I spoke to in Fife was glowing," he said.

The "practitioners" have been recruited for their special skills in the likes of supply chain management, team development and lean manufacture, while the members of the SMAS board are drawn mainly from large and small firms and include, perhaps surprisingly, Hugh Aitken of Sun Microsystems. Four years ago Aitken resigned from the Executive's Scottish Manufacturing Steering Group through frustration at the slow pace of progress, claiming that working with the public sector was like walking through treacle. It was the steering group that established SMAS in November 2005, but it was dogged with further controversy over delays in setting it up and in appointing anyone to run it. Scotland on Sunday revealed that when Nicol Stephen, the enterprise minister, launched the new agency it had no director, chairman or board. Suspicions were raised that it would turn out to be another strategy consigned to gather dust.

But the salary of the director was increased and the search for a chairman stepped up so that early this year the Executive was able to name Edwards and Graham as the double act who would get the show on the road.

Graham, who brings his experiences at ICI, Unilever and Allied Domecq to the job, says the service complements and, to some extent, generates work for professional advisers. If it were not for SMAS, he believes some firms would simply soldier on without any help. "In many cases they just need someone to either confirm what they already know the problem to be, or reassure them that their actions are the right ones," he says.

He refuses to see the "practitioners" as troubleshooters in the mould of Sir John Harvey-Jones, the former ICI boss whose 1990s television series helped popularise subsequent business advice shows such as Dragons' Den and Make Me A Million. Whether troubleshooters or not, Graham accepts that the practitioners perform a similarly diagnostic role. Another five or six will be hired in the new year.

It is left to company managements to decide whether or not to accept the advice which is given free up to the provision of the diagnostic report. After that, there is a fee and so far four out of five have agreed to continue working with their advisers.

Based on the experiences of a similar scheme in England and Wales, SMAS has a target of achieving 25m in added value over three years. To achieve that, SMAS will need to assess 1,000 companies and get 250 to take action. That will mean seeing 10% of the country's entire complement of manufacturing companies.

Edwards says that after three years it will be time to take stock, but so far they are slightly ahead of target and the outlook is promising. The Executive is committed to the initiative and even a change of government at Holyrood is unlikely to see any weakening in that commitment."There have been a lot of talking shops about manufacturing," he says, "but I am confident we can help manufacturing change. We have to adapt to the way we do things."

He does not accept the gloomy prognosis for manufacturing which still accounts for 270,000 jobs in Scotland, or 10% of the workforce. While total numbers employed in the sector will decline, he says the important issue is the level of skills. "There used to be many thousands more employed in manufacturing but the skills levels we see now are much higher. It is not so much about numbers, let's look at productivity and innovation.

"Manufacturing remains a big part of the economy and there are a lot of reasons to be optimistic. Okay, we can't compete with someone paying 70p an hour, but we can compete in other ways, on design, ideas and so on.

"The big question at the end of the day is: how good is the management? That is what makes the difference.

"Are they asking if the world is against them, or are they up for a fight? It comes down to the quality of the management and leadership."

Graham concurs that manufacturing is too often and too easily written off and says that even those sectors that have been buffeted by closures are still big employers who are vital to the economy. Despite some high profile setbacks, Silicon Glen still provides one in five of all manufacturing jobs in Scotland.

A recent CBI survey offered some encouragement by indicating that British manufacturing exports were at their strongest for a decade.

Graham says he has been pleasantly surprised by the "robustness" of the companies that his team has worked alongside. "The biggest surprise is that after taking so many knocks there are still some great companies which have the opportunity to be competitive worldwide, but some just need a little bit of help. What we are hoping to do is make these companies as competitive as possible and give them a brighter future."