High Value Manufacturing
Executive Summary
This report looks at the innovative edge of a sector, rather than the sector as a whole. High value manufacturing deliberately suggests a separateness from low value production. This narrowing of focus has consequences for the kinds of skills gap likely to be reported – and the solutions likely to be offered. So this report differs in several important ways from the work undertaken for the construction sector, however it also looks at the full range of skills required by the sector.
Manufacturing Definition
The Institute for Manufacturing offer the following definition of manufacturing:
"The entire process that takes a product from initial concept to its eventual use by customers, including design, production, marketing, distribution, service and disposal. (IfM – Making the Most of Production)"
What is High Value Manufacturing?
High Value Manufacturing might be defined as creating value (revenues over costs, long term profitability, perceived 'social' value) from production and/or services which relate to an original manufacturing process.
Manufacturing and "UK PLC"
The aspiration for UK manufacturers, is “to exercise comparative advantage on the basis of high levels of skills or knowledge” (New Industry New Jobs – April 2009 P10). The challenge is to retain and grow a high value manufacturing base and at the same time accept that in a global marketplace, low value production is likely to (re)locate to low cost regions rather than struggle to compete in countries where labour costs (among other cost factors) are high.
High value manufacturing therefore, needs to be nurtured.
Policy Context
Despite the relative decline of manufacturing in the UK compared to other countries, the Technology Strategy Board stresses that manufacturing is still a vital part of the UK economy and manufacturing output has actually grown over the last 30 years , as has productivity. Employment in the sector however, has shrunk as the industry’s efficiency has improved. Looking at individual sub–sectors a picture of mixed fortunes emerges. The East of England engineering workforce represents about 9% of the UK engineering economy.
Skills Arena
One way of analysing skills needs in the sector is to think of a continuum of needs involving core skills for individuals; process skills for productivity improvements; and strategic skills for leadership and direction. Clearly, there are cross–overs between these categories but it helps to illustrate the range of skills required in high value manufacturing. In terms of strategy, management decision making skills are vital to the future health of the manufacturing industry, and of particular importance to the continued development of a high value manufacturing base in the UK. Universities can play a key role in companies strategic development and fostering innovation especially through Technology Transfer Offices; incubator units, the development of science parks and setting up knowledge transfer partnerships. One of the most important decisions facing management relates to the location of production. There is a danger that without clear strategic thinking, companies won’t take an inclusive view of the importance of production to their performance. Outsourcing production capability therefore has long term implications for the company’s knowledge and asset base.
Further education (FE) has a key role to play in skills development of the workforce. FE can play an important role not simply training up new recruits for the industry but also working with companies to keep up to date with latest processes and technologies and provide support for the development of an in–house company training programme. This has the advantage of building sustainable capacity for the company at the same time ensuring that training content is wholly related to the company’s needs. However, in the post–recession environment where colleges are being encouraged to charge for training services and ’engage with employers’ on a more commercial footing, there is a key requirement for further education, notwithstanding its emphasis on delivering government funded work, to move into this more competitive field. As pointed out in earlier reports, the FE sector has excellent resources and infrastructure which the local business community would be pleased to benefit from. All that is missing is the commitment to keep up to date with industry development and encourage staff to develop ’just in time’ subject specialisms for which there will be industry demand.
The Sector Skills Council for Science, Engineering & Manufacturing Technologies, (SEMTA) reports a range of skills gaps in East of England engineering and manufacturing companies. These can be split into technical and engineering skills and generic skills.
On technical and engineering skills, 64% of companies in the East of England reported skills gaps in the following areas:
- Welding skills – metals sector.
- CNC machine operation and tool setting – mechanical equipment.
- Computer Aided Design (CAD) and general engineering skills – electrical equipment and electronics.
- Materials Requirement Planning (MRP11) – automotive sector.
- Materials Requirement Planning (MRP11), tool setting, mechanical engineering
- Carpentry/woodwork –
- Other transport equipment.
On generic skills, SEMTA found staff lacked core personal skills; management skills; ICT skills and marketing/selling skills.
Interestingly there is no mention here of business improvement techniques, one of the most successful NVQs to be developed for the sector in the last decade. This suggests that there is a more intricate relationship between what a company thinks it needs and what it could benefit from in terms of training programmes.
Greater Cambridge Manufacturing / Engineering Profile
There were around 51,000 people working in the manufacturing sector in the Greater Cambridge area in 2008. The number of VAT registered “Production” businesses in the GCP area is 2,975 which is just under 20% of the total number in the East of England. There are several manufacturing ’hotspots’ in Greater Cambridge, where manufacturing/engineering companies are concentrated in industrial parks. These include St. Neots; Huntingdon; Haverhill; Chatteris; Royston and Cambridge Science Park. Other significant locations include Melbourne to the south–west of Cambridge and Bury St. Edmunds to the east.
There have been several manufacturing clubs emerging in the Greater Cambridge area over the last decade, and some continue to thrive. The St. Neots Manufacturing Club for example continues to grow and attract attention from engineering and manufacturing businesses across the Greater Cambridge area.
In terms of provision, four universities and four FE colleges are considered in the report; in terms of full time programmes, there is a wide range of courses relevant to high value manufacturing and among HE establishments, there is evidence of employer engagement through bespoke and scheduled short course provision, as well as industry activity relating to innovation and knowledge transfer. At further education level, there is also evidence of employer engagement outside of government programmes like Train to Gain; most colleges offer a range of part–time technical courses for industry and some have the capability to deliver NVQs in business improvement techniques. There are several Group Training Associations in the region and one operating in the GCP area (WATA), who have a strong portfolio of technical short courses. Also in the sub–region is the Welding Institute (TWI) at Granta Park, an internationally renowned centre for welding techniques and research into new processes; and the Institution of Engineering and Technology (IET) which is based in Stevenage has an international reputation, and like the Welding Institute it has members all around the world.
The Manufacturing Advisory Service in the East of England (MAS East) is based at the PA Consulting Technology Centre in Melbourne, Cambridgeshire. PA Consulting currently has the contract for delivering the MAS service in the East of England. MAS is a dedicated source of support to engineering, manufacturing and technology businesses within the region.
The High Value Manufacturing Skills Economy
The report suggests a manufacturing skills economy “pyramid”, where different skills considerations for a company, are separated out into: a pure innovation requirement at the top – here we would expect to find universities working alongside a company (perhaps itself a university spinout company), developing innovative solutions for tomorrow’s marketplace. The second segment of the pyramid refers to the kind of knowledge transfer activity which brings about HE and SME collaboration. Often this will be less about pure innovation and more about transferring good practice and advice, solving specific business problems and providing graduate placements to help deliver project based solutions. These skills will usually be provided at higher education level. The third segment of the pyramid is not about pure innovation or even knowledge transfer; rather, it refers to business improvement through process 'innovation' – that is, implementing new processes in a particular way which result in fewer errors, less wastage and greater efficiency. These innovation processes may be new to the company but they are likely to have been tried and tested in other companies. They may even be part of an OEM’s (Original Equipment Manufacturer) service level agreement. These skills can be crucial to business profitability – many colleges now deliver the Business Improvements Techniques courses (Levels 2,3 and 4) but companies can work in partnership with a college to produce a bespoke solution. This is what has happened at Group Lotus, with impressive results for both the company and the college. The final segment of the pyramid houses probably the largest area of skills requirements. It refers to all the individual skills gaps in the workforce. Here we will find gaps in functional skills and management skills as well as technical skills such as welding, CNC (computer numerical control) or CAD (computer aided design).
Company Visits –
We visited three companies to gain an understanding of different examples of High Value Manufacturing. The Herbert Group in Haverhill, specialise in bespoke solutions in the fields of weighing, labelling and in store operations. The company can be categorised as a high value manufacturer operating at the service end of the HVM continuum. As such, the Herbert Group are more involved in redesigning and installing other manufacturers equipment to the specifications of a specific client, rather than high volume manufacturing. Marshall Aerospace (MA), in Cambridge is the largest high value manufacturer in the Greater Cambridge area. MA is an excellent example of a high value manufacturer – with its range of capabilities from original production to lifetime service including: Design Engineering; Manufacturing; Modification & Maintenance; Product Support; Test Services; AeroAcademy; Engineering Consultancy; Continuing Airworthiness Management; and International Design. Through differentiation from competitors (as seen above in its diverse range of capabilities), the company is able to gain market share and profitability – providing a sustainable base for the future. Stainless Metalcraft are based in Chatteris. Their 12 acre site provides capacity for greater development and a new Fenland Engineering Skills Centre will be housed there from Spring 2010. The centre will serve local schools and the local community; apprentices; the existing workforces of Stainless Metalcraft and companies from the surrounding area. Whilst it may not always be able to compete globally on price when it comes to high volume standardised manufacturing, Stainless Metalcraft’s ability to offer precision prototyping; and rapid response make it a valuable partner for OEMs especially at ’pre–production’ and ’pre–outsourcing’ stages of product development. Moreover, Stainless Metalcraft have a track record in producing high quality results.
Conclusions
Skills gaps exist among high value manufacturing companies in the Greater Cambridge area. These can be split into strategic, process and core skills. Skills gaps can be short term or ’endemic’ in a company. In discussing HVM skills needs, it is important that we cover the full range of gaps at strategic, process and core skills levels and covering both pure innovation and process innovation. Once we are clear about this continuum of need, it is possible to offer some tentative solutions:
- The first point to make is that it is vital to look beyond 14–19 year old provision and develop skills initiatives which address the needs of the existing workforce.
- The second point is about collaboration, especially between HE and SMEs but also between FE, the sector skills council(s) and businesses. Equally, more could be done to encourage and develop manufacturing clubs, with a particular emphasis on innovation – sharing good practice, exploring new technologies together, and collaborating on business improvement techniques. As was pointed out at a recent St Neots Manufacturing Club event, even competing businesses have been known to share resources on a ’mutually beneficial’ basis.
- Thirdly, a clear distinction between the needs of medium and small companies needs to be made and a move away from a ’one size fits all’ approach to training. Standardised process innovation initiatives need to be run alongside a more individual approach for smaller companies to ensure that both ends of the SME continuum are nurtured.
- A fourth point is about working with professional institutions based in the region. The Welding Institute, for example offers specialist welding facilities and training which could give companies in the sub–region a competitive advantage because of their proximity to this internationally renowned resource. Equally, the Institution of Engineering and Technology (IET) have local networks all over the world; Cambridge IET has a long history stretching back to World War II. Moreover, the Institute for Manufacturing (IfM) has a portfolio of research centres which are focused on industry. IfM’s Education and Consultancy Services (ECS) is industry focused and works directly with companies to identify problems and create solutions through consultancy services, short courses and industry events. Another example of this outward facing approach is the IfM’s Centre for Technology Management (CTM) which works with start up companies through its “emerging industries programme”.
- Finally the importance of collaboration, partnership and working with the wider community cannot be emphasised enough. Richard Herbert (Herbert Group in Haverhill) speaks of ’knowing the right people’ in university in order to find a solution to a particular problem and John Tadman from Stainless Metalcraft (Chatteris) explains how the new Fenland Engineering Skills Centre will not only train apprentices and the existing workforce of its own and other companies from the surrounding area but will also serve local schools and the local community. At Marshall Aerospace, Dave Hudson emphases the wider training role that MA provides in Cambridge: the company has a commitment not just to its workforce, but to the community in which it is based. MA's investment in training exceeds £3m per annum and it provides ongoing significant contact and support to schools and local colleges.
