Industry Forum

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On 17th November 2011, the Prime Minister announced a new pilot initiative to move towards an employer-led skills system, committing up to £250 million over the next two years to test this new approach. The central aim of the employer ownership pilot is to give businesses the space to step up and develop new and innovative proposals for tackling the current and future skills needs of sectors, supply chains and local areas. The pilot will test the potential for employer ownership to deliver the changes needed to secure a competitive skills base for the UK.

In the pilot, businesses will be asked to work together to develop radical proposals to train and develop the workforce and support their productivity and growth ambitions. Businesses will set out the public investment needed to support their investment in skills, training and Apprenticeships. Public funds will be provided directly to businesses to complement their private investment. Employers will need to show how public investment can leverage business investment aimed at raising skills levels in their sector, supply chain or local area. The pilot will be launched early in 2012 with a prospectus issued by the Government and the UK Commission of Employment and Skills (UKCES)

In December 2011 the UKCES published an explanation of the thinking behind the employer ownership of skills pilot.  Over the past two decades successive governments have driven the reform and expansion of the vocational skills system but during this time the UK has become less competitive globally on skills. Many employers have found the skills system is too complex and have been put off by a system that appeared to them excessively centralised.

UKCES suggest that Government should create the space for employers to step up and take ownership of the skills agenda as part of the growth strategy of their industry. In the past skills policy tried to engage employers in a Government led enterprise. The new approach is to create the conditions where the best employers, working with their employees and training providers, can take charge and develop quality training.  Employers are invited to drive the design and delivery of skills solutions to secure a world class skills base.

UKCES find that the UK currently has two training markets: a publicly funded market providing qualifications built around government priorities, and a private training market delivering skills in response to business need.  What is needed is a single market for skills development, where further education colleges and other training providers respond to genuine  demand rather than state funding incentives. Training should deliver economically valuable skills, which people and businesses are prepared to pay.

UKCES propose that Government funding should follow ownership. If employers are to collectively own the skills agenda, public expenditure should shift from  provider grants to incentives and investments which flow through employers into a single market for skills development.  The current publicly funded skills system is built around a complex funding model that often leaves employers and individuals unaware of government’s contribution which makes it difficult for employers and individuals to make a considered decision based on quality and value for money. Employers and employees should be prepared to contribute more to a system in which they own the training which brings them real benefits and value.

Industry Forum competes globally, offering training and coaching, which is highly valued around the world.  Some of this training is based on international standards such as ISO/TS16949, VDA 6.3 and the JIPM TPM Excellence Award – standards which are often specified by customers for their supply chain. In this way IF already meets the basic idea behind the employer led training pilot of delivering training which has been specified by business and contributes directly towards global competitiveness. IF’s client list includes a number of blue chip companies from the UK, from Europe and from the US who work in this way. Currently Industry Forum is evaluating the employer led pilot and keenly awaits the more detailed specification which should be published shortly by the Government and UKCES.

 

Further Information:

The idea behind High Performance Working (HPW) is central to much current discussion on boosting UK economic competitiveness and growth. The UK Commission on Employment and Skills define HPW as:

‘a general approach to managing organisations that aims to stimulate more effective employee involvement and commitment in order to achieve high levels of performance… designed to enhance the discretionary effort employees put into their work, and to fully utilise the skills that they possess.’

In fact UKCES has concluded that the prevalence of HPW in the UK is both low and static and as a result it is trying to uncover the means by which broader application of HPW might be encouraged in the UK. As part of this research UKCES has recently completed a study of how competitor countries approach HPW and encourage its more widespread use. Sweden, Finland and Germany were selected as acknowledged front runners in organisational innovation activities, along with Ireland, Canada, Australia and New Zealand.

UKCES found that some countries approach this issue via legislation whereas others adopt a voluntary approach. Countries such as New Zealand, Australia and Canada have a preference for a more HR-focused HPW strategy, pursuing a more voluntarist intervention framework, similar to that operated within the UK.  According to BIS the HR practices that support HPW include:

  • Annual appraisal
  • Formal feedback on job performance from superiors/employers and from customers/clients
  • Reviewing vacancies in relation to business strategy plus formal assessment tools for recruitment (e.g. competencies etc.) and structured induction training
  • Annual review of employees’ training needs with training to perform multiple jobs
  • Continuous skills development programmes linked to ‘work-(re)design’ for improved performance.

Business strategies based on quality and innovation are more likely to adopt HPW practices than those emphasising cost control and competition based primarily on price.

It takes time to build a national infrastructure of expertise to promote building awareness, understanding and stakeholder support for HPW.  In Finland a long-duration and coherent approach has been adopted explicitly linking HPW to the national innovation system with top-level political leadership. Similarly in Germany HPW initiatives in the workplace are joined increasingly to those encouraging innovation.  Germany and Finland have both developed networks of research and enterprise promotion partners. They have found that to maintain real momentum with the spread of HPW the underlying philosophy needs to be well understood both at firm level also by employer associations and unions.

The Coalition are currently developing Business Coaching for Growth, which is scheduled to be launched in January 2012, with the aim of helping up to 10,000 high growth businesses a year to address barriers to growth and grow more rapidly. The programme will target established SMEs with the potential to increase employment or turnover by 20 per cent or more each year for three years and new start-ups with the potential to achieve turnover of £1m within three years of starting trading, or to have at least 10 employees within three years. The service will include coaching of senior management teams to develop and implement growth strategies and develop leadership and management skills. It remains to be seen how far this new service will cover the HPW agenda which is clearly relevant to its goals.

As Industry Forum developed it was realised quite early on that successful process management needed to be supported by management and leadership development to sustain global competitiveness and as a result team leadership was brought into our portfolio. For some while this has been supplemented by a coaching approach which is proven to accelerate overall organisational performance improvements. We have found that developing the coaching ability of leaders increases the organisational energy that can be released to achieve business objectives and realise true organisational potential. Our coaching programme is linked to the ILM level certificate for Professional Workplace Coaches.

Other elements of talent management within IF’s offering include:

  • Strategic Workforce Planning
  • Organisation Development
  • Succession Planning

In the recent IF article on inward investment we covered McKinsey’s research on the quality of management globally in medium sized manufacturing firms. The proven model used by McKinsey to assess managers’ capabilities covered three key aspects – shop floor operations, performance management and talent management. Comparing the UK and Sweden this work showed that the UK’s overall rating was pulled down by a long tail of underperforming firms which were mostly UK owned; the two countries’ multinationals scored equally well in management capability. This is linked to UKTI research which shows that foreign owned manufacturers in the UK have increased their output over the long term at the exceptional rate of 5-6% CAGR – much faster than the average for domestically owned firms.

In summary, the IF approach encompasses most of the McKinsey management capabilities model and many of the HR practices that are found within the High Performance Working model.  Rather than worrying about terminology, that key point emerges from the McKinsey work, the UKTI study and UKCES’s examination of High Performance Working is that not enough UK firms are using the right combination of operational and organisational development methods to be truly competitive. The UKCES study also points out that national initiatives need to be linked to related areas of expertise because of the difficulty spreading a high level of organisational performance right the way through an economy in a manner which Sweden, for example, seems to have achieved to a greater extent than the UK.

Further Information:

If you would like to know more about High Performance Working (HPW) and management for manufacturers, why not check out our Leadership Development Programme

UKTI promote UK exports and inward investment. They have funded research into the comparative performance of UK domestic owned and foreign owned manufacturing firms by Richard Harris from Glasgow University which has thrown up some remarkable trends. The study which was published in 2009 finds that between 1984 and 2005 the number of employees in foreign owned manufacturing firms in the UK had remained broadly constant at around 750,000. The substantial decline in manufacturing employment in the UK over that period has been concentrated in UK owned firms. Over the same period foreign owned manufacturing firms in the UK increased their gross output by 200% whereas the UK owned manufacturing firms increased output by only 15%. Harris concluded that  “foreign” owned plants have assumed much greater importance and look set to dominate British manufacturing in the near future.” Harris finds that the manufacturing sector, where foreign ownership was most developed, is automotive manufacturing.

Successive Governments have been committed to an open UK economy and the level outward investment from the UK has usually been more than the level of inward investment to the UK. The trend in UK manufacturing employment and output is a reflection of the more general process of globalisation. Harris’s research is available here

Part of the explanation for the difference in performance between foreign owned and domestic manufacturing in the UK can be found in the 2007 study McKinsey carried out – a quantitative study of 4000 medium sized manufacturing firms in the US, Asia and Europe (including the UK). Managers in these firms were interviewed about 18 topics in three broad areas – shop floor operations, performance management and talent management. Each of the 18 topics was scored from 1 to 5. Analysis revealed that high scores overall for a particular firm correlated with good performance on profitability, productivity and growth. The research is summarised here

If a manager scored well on a particular performance dimension they were more likely to score well overall. McKinsey concluded that the average score across the 18 topics is a reliable indicator of the overall quality of management.

Looking at the management score results by country, McKinsey found that management varied widely within individual countries – to a much greater extent than the variation between countries. McKinsey concluded that the biggest difference between countries with a high overall management score and a low overall management score is in the size of the tail of under performing firms.

Looking at the ownership patterns between high and low management performance, McKinsey found that multinational firms had the best overall scores while organizations owned and run by their founders or members of the founder’s family performed poorly in comparison. McKinsey concluded that the propensity to employ professional managers and promote them on the basis of merit, which typifies multi-nationals, delivers better managed better performing firms.

In the UK the average management score for domestic firms was 2.85 while the score for foreign owned firms was 3.17. Sweden was one of the few countries where domestic management scored almost the same as the management of foreign owned firms – 3.13 against 3.17. In fact the Swedish domestic managers achieved the second highest score for indigenous firms – just behind the US where the domestic management score was 3.16. The gap between the management and performance of UK manufacturing compared to Swedish manufacturing as evidenced by McKinsey is the quality of management in UK domestically owned firms. McKinsey finds that the UK sits in a second tier of companies, with a lower score than the US, Sweden, Japan and Germany, but a (slightly) better one than France, Italy and Poland.

The UK’s scores for operations  management were low suggesting that UK manufacturers  have been slow to adopt many of the modern production techniques that have been applied with great success elsewhere. The details of the operations management metrics are of particular interest to Industry Forum given our service offerings in this area. There are three specific dimensions amongst the 18 – the introduction and rationale for modern manufacturing and process problem documentation. To get the top score on the last dimension a manager/firm should agree that  ‘exposing (process) problems in a structured way is integral to individuals’ responsibilities and resolution occurs as a part of normal business processes rather than by extraordinary effort/teams’. Industry Forum has always sought to help firms achieve this level of capability.

What are the implications of the research for the Coalition’s goal of rebalancing the economy towards manufacturing?  The first point has to be the importance of continuing and indeed upscaling effort to promote manufacturing inward investment. This should involve both attracting new investors and a focus on existing inward investors to expand their operations. The automotive sector is currently a great example of how foreign owned firms with a long relationship with the UK  are increasing their level of investment and employment and taking a larger share of world markets.

The easiest path to boosting UK manufacturing output is to support and reinforce the existing long term trend for foreign owned manufacturers here to increase their output by an average of 5-6% per annum.

Also we need to continue and reinforce the process whereby foreign-owned manufacturing primes encourage the development of the better capabilities in the UK owned firms in their supply chain. The expectations of major customers provide a powerful incentive for supply chain firms to improve their performance. There is a long history of automotive majors developing the UK supply chain and indeed this was the initial rationale for setting up Industry Forum.

The process of supply chain development is a particularly high priority for clean and renewable energy sectors where large scale inward investment is likely to take place. Much of this will involve foreign-owned majors setting up new R&D and manufacturing plants in the UK. It is vital that the UK owned firms who might become suppliers to these new investments are helped and encouraged to raise their management standards so that they can support the major inward investors in a globally competitive manner. Operational excellence is a good area to start with in raising the game of UK firms who could be able to enter inward investors’ supply chains.

Policy makers often like to look for new solutions for policy goals. This research shows that there are existing solutions which have worked well so far – inward investment and supply chain development – which should be maintained and reinforced to achieve the Coalition’s goals for rebalancing the economy.

Further Information:

In November 2010 the UK Commission for Employment and Skills started research on rebalancing the UK economy, sectorally and spatially to identify the possible role of, and implications for, skills and employment policy. The project also covered the rationale for government intervention to build a strong and sustainable economy, balanced geographically and sectorally. The results were published in August 2011 in two volumes available here

‘Rebalancing’ has become a key word in the political and economic goals of the Coalition. It covers a number of different issues – the economy has become unbalanced because there has been too much borrowing for consumption and not enough saving for investment. The balance of trade is out of kilter because the deficit in trade in manufactured goods may not be reliably covered in future by a surplus in services especially if the excessive reliance on financial services is rectified. The balance in growth rates and levels between regions of the UK has not been ameliorated sufficiently by Regional Development Agencies given that the OECD found that the UK had in 2005 the highest level of regional GDP variation in the countries considered. The energy sector must be rebalanced towards low carbon and renewable generation.

The UKCES reviewed a number of international case studies of rebalancing and settled on five in particular –  Korea, Finland, Sweden, Germany and the Netherlands – which they presented in detail in the evidence volume.

For example since the 1990s, Finland has recovered from the global economic downturn with a more ‘balanced’ fiscal position and competitive, high technology economy. In Germany close collaboration between employers and the state (at national and sub-national scales) helps match the supply and demand for skills thanks partly to a vocational training system which integrates theoretical learning in vocational schools and practical workplace training . The Korean government has sustained a strong commitment to regional innovation centres. The Northern Dutch provinces have shown potential for bottom up mobilisation finding partners in other parts of Europe to take advantage of EU programmes. In Sweden sectoral and regional rebalancing led to demand for new occupations and skills and the local education system had a major role to play in increasing the supply of relevant skills through new courses.

The study reviewed the familiar economic objections to state intervention but concluded that recent thinking about economic or functional geographies where spatial differences persist long-term because of agglomeration economies made the case for action. Economic development policy now focuses on the adaptive capacity, productivity and utilisation of resources in specific places. The evidence review found that the rationale for specific government intervention in support of ‘rebalancing’ activity is now based on the need to address the underutilisation of resources and improve the competitiveness of places.

According to this project, success in rebalancing is most likely with:

  • ‘Packages’ of interventions that span policy areas have better chances of success than single silo actions.
  • Interventions that go with the sectoral and cultural grain.
  • Certainty and predictability going forward.
  • Autonomy at the ‘right’ spatial level.
  • Capable and competent governance and oversight.
  • Dialogue between employers, unions, workers and other organisations.

In terms of the role of employment and skills policy in ‘rebalancing’ the key messages emerging from the study are:

  • Interventions supporting the development of the educational infrastructure and hybrid people and skills interventions have provided some of the highest returns of any human capital and skills interventions  in the UK and abroad.
  • The expansion of higher education, including specific targeting of applied sciences in some regions, has provided skills of value for sector ‘rebalancing’.
  • Intermediary organisations can play useful roles in working with employers and education and training providers to ensure employers’ demand for skills are met, particularly as an economy rebalances sectorally.
  • Skills development and investment in training to aid the ‘rebalancing’ process needs to be shared between employers, individuals, and government.
  • Emphasising lifelong learning and the skills for sustaining and progressing in work, can yield positive outcomes for individuals and can assist in the ‘rebalancing’ process between sectors. Anticipating skills change is crucial.

Industry Forum has embraced the skills dimension of building process improvement capability for at least ten years and this year has opened a Learning Centre at its headquarters on the Birmingham Business Park. Its Learning and Development offering is extensive and includes global management systems, study tours, leadership and management, operational excellence and apprenticeships. IF have delivered learning and development programmes in Automotive, Aerospace, Food manufacturing and FMCG.

 

 

Further Information:

The UK Government is committed to increasing the proportion of UK energy from renewable sources since it regards climate change as one of the gravest threats facing us. The drive to increase the proportion of energy obtained from renewable sources will  increase the security of energy supplies in the UK and will also provide opportunities for investment in new industries and new technologies. The Government is committed to helping business develop in this area to put the UK at the forefront of new renewable technologies and skills.

The 2009 Renewable Energy Directive sets a target for the UK to achieve 15% of its energy consumption from renewable sources by 2020 compared to 3% in 2009. A Renewable Energy Roadmap for the UK has been published which sets out a comprehensive programme of actions to tackle the barriers to renewables deployment, enabling the level of renewable energy consumed in the UK to grow in line with the goals for 2020 and beyond.
See http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/re_roadmap/re_roadmap.aspx

The Renewables Roadmap sets its sights on delivering as much as 18GW of energy capacity from wind farms off the UK coast by 2020. The other technologies covered in the roadmap are onshore wind, marine energy, biomass electricity, biomass heat, ground source heat pumps, air source heat pumps and renewable transport.

In terms of tackling carbon emissions and climate change it is important not to forget the potential contribution of nuclear energy. Nuclear power is low-carbon, affordable, dependable, and capable of increasing diversity of energy supply. It has been part of the UK’s energy mix for the past five decades; as a result most of the existing fleet of nuclear power stations will have reached the end of their lives by 2023. The 2008 Nuclear White Paper stated that new nuclear power stations should have a role to play in this country’s future energy mix, alongside other low-carbon sources. The likely level of investment in nuclear energy in the next two decades is in excess of the total probable investment in offshore wind. The replacement of the UK’s existing nuclear capacity alone could represent some £20 billion worth of business for UK companies.

In early October, Dr Mike Weightman, the UK’s chief nuclear inspector, found no fundamental weaknesses in the current licensing regime or safety principles. The Fukushima disaster provides no reason to restrict UK nuclear reactors or stop building new ones, he concluded.  But “continuous improvement” should be sought, he said in his report. The government commissioned the report after the March tsunami damaged Japan’s Fukushima Daiichi plant.

The Coalition Government published a programme in June 2010, which set out its vision that energy companies can build new nuclear power stations provided they are subject to the normal planning process for major projects and receive no public subsidy. The Government has confirmed nuclear would play an important role, alongside renewable energy and Carbon Capture and Storage in the future energy mix.

DECC is taking a number of actions to reduce regulatory and planning risks for investors and ensure owners and operators have robust funding plans for waste management and decommissioning such as assessment of potential new build sites that are suitable on a strategic level.  The aim is to have the first new nuclear power stations generating electricity from around 2018.

The anticipated level of investment in offshore wind has already attracted several major global firms to set up facilities in this country. The Spanish wind turbine manufacturer, Gamesa has said it will invest £133 million in the UK over three years. Siemens have re-affirmed their commitment to invest just under £200 million and General Electric is to build a £99m offshore wind turbine factory in the UK, creating up to 1,900 new jobs by 2020. Hull has been selected as a turbine assembly location by Siemens and Gamesa has selected Dundee. Mitsubishi Power Systems Europe has announced that it will invest up to £100 million in a Scottish offshore wind research and development centre with the goal of commercialising efficient renewable technology.

Concerns have been expressed that  UK firms who might potentially join the wind energy supply chain are not fully equipped to get maximum benefit from this inward investment. A survey of the industry commissioned by The Technology Strategy Board in 2010 revealed a number of concerns:

  • The challenges in identifying potential customers and establishing a supply relationship with Tier 1/2/3 companies. There is a sense of supply chain disconnection from the top tier offshore wind companies and developers.
  • Uncertainties over the scale, timing and commitment of the offshore market segment addressable by UK companies. In particular, UK businesses are seeking enough long-term market assurance that would warrant their capital and skilled training investments.
  • Tough market entry and strong competition faced by the predominantly inexperienced small/medium size UK businesses from more established and bigger overseas companies.
  • The difficulty in accessing the specification and requirements of the top tier suppliers in order to promote or evaluate the existing competencies, or to identify the scale of new manufacturing capabilities needed.
  • Lack of access to any pre-qualification process, procurement opportunities and limited understanding contract placement routes.
  • Difficulty in identifying potential UK or overseas business counterparts to form strategic partnerships or joint ventures.
  • Limited coordinated supply chain development and business diversification support programmes to help UK businesses into the emerging offshore wind industry.

The recently published DECC Renewable Energy Roadmap makes a commitment to establish an industry task force to set out a path for reducing the costs of offshore wind involving industry, the Government and the Crown Estate. The Crown Estate is to play a key role in facilitating the work of the task force through its analysis on cost-reduction pathways. The group will produce an action plan by Spring 2012 as part of efforts to bring the costs of offshore wind down by 33 per cent within a decade to £100/MWh. The government recently said the UK could increase its target for offshore wind capacity from 13GW to 18GW by 2020, but only if costs fall by around a third.

The circumstances which favour offshore wind in the UK energy mix also favour marine energy. The Coalition has established a new UK Marine Energy Programme, that is focusing on enhancing the UK marine energy sector’s ability to develop and deploy wave and tidal energy devices at a commercial scale. The programme involves:

  • Putting in place a coherent programme of policies across Government, led by DECC, to enable the UK Marine Energy sector to move from prototype testing to commercial deployment over the coming 5 years.
  • Providing a direct link between Ministers and sector stakeholders.

This programme is overseen by the Marine Energy Programme Board, which draws together key stakeholders from across the marine energy sector, and will play a central role in advising the Government what actions the Programme should address to advance the industry. The Board has set up Working Groups to take the work of the Programme forward which cover:

  • Support needed for small scale arrays and early commercial deployment. This group will be asked to provide recommendations back to the Board on what level of capital and revenue support is necessary to realise the development and deployment of small scale pre-commercial arrays in the medium term.
  • Planning and consenting issues.
  • Knowledge sharing though a Marine Intelligence Network. Facilitating knowledge sharing that is beneficial to the market as a whole has been cited as one way to reduce risk and encourage investment. The Crown Estate and DECC will lead this group in partnership to explore this idea further and discuss the possible creation of a Marine Intelligence Network.

Industry Forum has a great deal of experience in organising and improving the performance of supply chains – not just in automotive and aerospace but also in the fresh food supply chain. The challenge of getting maximum benefit for firms with the potential to join the offshore wind supply chain have attracted a lot of attention because of the impressive wave of inward investment from global wind turbine manufacturers. There are similar challenges in establishing the supply chains for nuclear replacement and the expansion of the marine sector. Industry Forum is keen to make its expertise available to these various energy sectors and is actively developing its links with the appropriate energy networks. We believe that our knowledge and experience can make a significant contribution to the achievement of the UK’s energy goals in the medium term.

 

Further Information:

Within the European Community, the food and drink industry (excluding primary agriculture) is the largest manufacturing sector with some 300,000 enterprises employing around 4.7m people. Germany has the largest share in terms of total value added with just under 18% of the European Community (EC) total but the UK is not far behind with a 16.5% share. France has the third largest share at just over 15% . None of the other EC Member States have a share in excess of 10%. Within the industry, bread and confectionery is the largest sub-sector contributing a third of the total value added in the EC. It is also the most labour-intensive food sub-sector.

While the majority of enterprises in the sector are SMEs, the sector is dominated by large multi-nationals with Nestle as the largest European firm. Unilever is second in the rankings while Diageo PLC is third. Associated British Foods is the next largest UK firm ranking eighth across Europe. Other important European firms include Danone and Heineken.

In the UK, the food and drink sector has proved remarkably resilient in the recent recession and has maintained its leading position in UK manufacturing in terms of overall employment, turnover and value added. The industry is particularly important in the East of the country, especially the Lincolnshire area. Competition in the industry is increasingly strong both nationally and internationally. Mergers and divestments are quite frequent and private equity firms have been active in the sector – United Biscuits, one of the largest UK food firms was in the FTSE 100 until December 2006 when it was acquired by a consortium of Blackstone Group and PAI Partners.

Productivity in the UK food and drink sector has been below the UK manufacturing average but the challenge posed by the purchasing power of the industry’s main customers provides a powerful incentive to reduce costs and boost added value. Innovation is an increasingly important factor in driving up value added, especially technical innovation. Since its formation in 1996, Industry Forum has undertaken a number of projects in the UK food sector and there is plenty of evidence that our approach yields benefit within the sector. This experience provides a good foundation to expand our customer base in the sector and we have recently begun to work for a global confectionery major with a significant UK footprint. We are also working in the supply chain for two of the UK’s leading and most competitive supermarkets.

The Food and Drink Federation is the industry’s trade association and it recently engaged the Institute for Manufacturing at Cambridge University to explore future scenarios for the industry. Emerging from this work is a major agenda starting with the formation of a clear future vision by stakeholders including the Government and a richer dialogue between industry, Government and society at large.

Increased skills will be important for the industry so that it can produce in more innovative ways in particular innovation linked to sustainability. The Sector Performance Standards in Food Manufacturing Excellence have been developed by the Food and Drink Sector Skills Council, Improve, and were launched in 2009 after consultation with the sector. These standards have been used to develop proficiency qualifications which recognise improvement skills in the context  of the food and drink sector.  Industry Forum  is working with Improve, through the National Skills Academy Food and Drink Manufacturing Lean Manufacturing Network.

 

Further Information:

The current Euro crisis has an important manufacturing competitiveness dimension. Nations with different levels of competitiveness are operating with the same exchange rate which favours the more competitive nations in international markets for manufactured goods; however this poses a serious burden on the less competitive nations. Germany has already become the largest manufacturing exporter in the world – ahead of China, Japan and the US, for example.

Manufacturing competitiveness is being tackled in Europe 2020 – the plan that is being led by the Commission to direct European strategy to the end of the decade. In their view manufacturing competitiveness can only be achieved by tackling the issues on a Europe-wide scale, rather than in individual member states. In addition, global manufacturing competitiveness lies at the heart of overall European economic competitiveness and spills over into other sectors such as services.

For some while the main focus of manufacturing policy in the Community has been the Manufuture platform.  This has been driven by a vision of advanced manufacturing much of which is mostly German in origin. In the past two or three years UK policy has moved noticeably in this direction, first under Peter Mandelson and then with the Coalition and the emphasis on rebalancing the UK economy with advanced manufacturing as a key driver.

The mission of the European Technology Platform Manufuture is to propose, develop and implement a strategy based on research and innovation, capable of speeding up the rate of industrial transformation to high-added-value products, processes and services, securing high-skills employment and winning a major share of world Manufacturing output in the future knowledge-driven economy. For more information about the platform go to http://www.manufuture.org/manufacturing/

In Framework 7 which will operate until 2013 this agenda is carried forward in the  NMP theme  – Nanosciences, Nanotechnologies, Materials and new Production Technologies which covers nanotechnology and nanosciences, knowledge-based multifunctional materials and new production processes and devices. The aim of NMP is  to improve the competitiveness of European industry and generate the knowledge needed to transform it from a resource-intensive to a knowledge-intensive industry. The budget in Framework 7 for NMP is 3.5bn Euros.

Industry Forum have been involved in some consortium discussions in response to a NMP call in 2007 led by a German R&D institute. We are also taking an interest in the current NMP call – particularly the elements which aim at creating conditions for continuous innovation and the development of generic production ‘assets’ (technologies, organisation and production facilities as well as human resources).

Framework 7 will be replaced by Horizon 2020 which will run up to 2020 and promises to be the largest ever R&D programme in history. An important thread in Horizon 2020 will be six manufacturing technologies which have been developed by comparing the technology priorities of Germany, France and the UK. The thinking behind this has been pushed forward by a High Level Group. David Willetts, the UK Science Minister, has been the most senior politician on this group. Their draft report was published in December 2010. It is available at:

http://ec.europa.eu/enterprise/sectors/ict/files/kets/6_advanced_manufacturing_report_en.pdf

According to the report in the Community manufacturing represents 17% of GDP (significantly higher than in the UK) and 22 million jobs (which means that the UK is just over 10% of EC manufacturing employment). The six Key Enabling Technologies (KETs) are advanced manufacturing systems, photonics, nanotechnology, advanced materials, micro/nanoelectronics and biotechnology.

The education and training recommendations of the High Level Group are relevant to UK priorities and include:

  • combine the education of world class scientists with the education of highly skilled engineers to manufacture and handle new materials and technologies at industrial scale
  • promote math and science studies, lifelong learning, opening up our education system, mobility between industry and academia and facilitate the re-skilling of personnel
  • review visa policies to Europe which is currently subsidizing studies of foreign students
  • ensure continuous skills development through life-long learning. Training should also address skills required for exploitation and cooperation along the value chain
  • promote math and science studies, lifelong learning, opening up our education system, mobility between industry and academia and facilitate the re-skilling of personnel
  • send strong positive political signals about the future of European manufacturing to attract people to careers in engineering and sciences

The Commission page on KETs can be found at:

http://ec.europa.eu/enterprise/sectors/ict/key_technologies/index_en.htm

The Commission has also received a 216 page study of  impact of international policy on the KETs by the Danish Technological Institute which can be found at:

http://ec.europa.eu/enterprise/sectors/ict/files/kets/ket-report_en.pdf

A lot of the study is taken up with valuable international case studies covering Japan, the US etc. It concludes that there are four key areas if Europe is to realise its international potential given the rate of Asian progress:

  • create critical mass in knowledge and funding through increased synergy
  • increase market focus on R&D projects
  • large scale demonstrators and pilot test facilities
  • provide post R&D commercialisation support

Some other possible priorities for  Horizon 2020 have been mentioned recently by Commission officials in the UK. For example the high speed rail industry – both manufacturing and operations – is seen as a sector where the EC has potential to be globally competitive. In the next year or so many more priorities are likely to become visible and in due course substantial R&D funds will be directed towards these goals through the Horizon 2020 programme.

 

 

 

Further Information:

The German trade association for the automotive industry is known by the initials VDA (Verband der deutschen Automobilindustrie E.V.) and given the size and importance of the automotive sector within the German economy it enjoys a good reputation and substantial influence. In 1997 the VDA set up a Quality Management Centre (QMC) for the benefit of German automotive OEM’s and their suppliers.  The work of the QMC ranges from developing systems and methods to shaping the future of quality management systems in the automotive industry.

Developed by VDA QMC and the German automotive industry, VDA 6.3 defines a process based audit standard for evaluating and improving controls in a manufacturing organisation’s processes. Revised in 2016, the standard was comprehensively restructured to reflect the changes to ISO9001 and IATF 16949 and customer specific requirements in the automotive industry. SMMT Industry Forum are licensed by VDA QMC Germany to deliver approved VDA 6.3 training and qualification modules. The standard can be used by any organisation, either for internal process audits, or for evaluating potential or existing suppliers. Compliance to VDA 6.3 is mandated by some vehicle makers and encouraged by others.

VDA 6.3 is an excellent tool for process audits within the automotive industry acting as a guideline for performing audits. It provides information on the significance and application scope of a process audit over the entire product realization cycle in both manufacturing and services It defines the audit process, the criteria for evaluation of the process audit results and the requirements of the processes. At the heart of the standard, each step in the process is modelled with six links and is governed by the Deming Loop – Plan Do Check Act. There are three grades that an organisation can reach under VDA 6.3 – A, B & C. This means that an organisation can pass the audit but still have scope for further improvement.

To gain VDA 6.3 qualifications, the best place to start is with the VDA 6.3 Process Auditor Training

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The German automotive industry is recognised on all sides as having successfully followed a premium strategy – developing brands which stand for high performance and high quality and production values. VDA 6.3 provides an opportunity to master some of the tools and approaches that have helped make this success possible. VDA 6.3 is particularly useful to a prime in any sector who wants to follow a premium strategy and wants to ensure that the supply chain is capable of supporting this approach to global competitiveness.

For further information on our VDA 6.3 training, please view the VDA Training Courses.

If you would like to speak to someone about booking a place on one of our open courses or would explore the possibility of arranging a course within your organisation, please contact the Learning Centre on +44(0)121 717 6600 or email [email protected].

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Aerospace is a major engineering, manufacturing and service industry within the UK, significant on both a European and a global scale. It employs over 100,000 people directly, and over 220,000 indirectly, and is one of the UK’s largest exporters adding around £2.8 billion annually to the UK balance of trade. Besides famous name global companies (several of which are UK owned) the sector encompasses around 2600 companies across all regions of the UK many of which are SMEs especially at tiers 2 and 3 in the supply chain.

The industry uses a broad range of skills and disciplines, including engineering and science, production, service, supply chain, training and financial skills at all levels. It is central to high value added advanced manufacturing in the UK which is a national priority under the Coalition’s policy of rebalancing the UK economy. As such a high rate of technical innovation typifies the sector.

Opportunities ahead for the UK aerospace sector, in the medium term include the A320/737 series New Short Range replacement programmes and unmanned aerial systems; whilst in the shorter term, new programmes such as the Airbus A350XWB and A400M, Boeing 787, Bombardier C Series and possible Airbus A320 and Boeing 737re-engining offer a substantial workload.

New regional and business aircraft and emerging platforms from new prime contractors in China, India, Japan, Russia and Brazil are also targets for the UK sector. Next generation rotorcraft will be developed, offering lower noise and operating costs offering much higher speeds. Environmental regulations and considerations are key drivers for the latest technology developments, which the UK is particularly well-placed to exploit.

To make the most of these opportunities, improved supply chain performance and management is critical. This was acknowledged by the sector when it launched SC21 (21st Century Supply Chains) at the Farnborough Airshow in 2006. SC21 is a major change programme designed to accelerate the competitiveness of the aerospace and defence industry by raising the performance of its supply chains.

SC21 has been endorsed by the aerospace prime companies for the benefit of their complete supply chains which include many SMEs and also by the UK Ministry of Defence. To date there are over 500 businesses committed to improving their performance and thereby positively impacting the competitiveness of the UK aerospace & defence supply chain.

From its initial base in the automotive sector, Industry Forum has worked extensively in UK aerospace sector for over a decade and has carried out numerous process improvement and supply chain improvement projects successfully.

Supply chain solutions with Industry Forum begin by assessing and setting improvement strategy and goals. This includes analysis of current and future supply chain impact to the host organisation against a number of key variables, resulting in a comprehensive improvement plan. Industry Forum can help firms deliver every aspect of the improvement plan and as far as the aerospace sector is concerned make decisive progress towards sustainable global competitiveness.

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Total Productive Maintenance (TPM) is best known for its use world-wide by major companies particularly in the food and chemical sectors.  However, as the UK moves more and more into capital intensive advanced manufacturing the TPM approach will pay dividends in many sectors and in firms of all sizes and mark a path to the achievement of true global competitiveness.

TPM started as an approach to maintenance which aimed to integrate equipment maintenance into the manufacturing process. TPM was originated in Japan in 1971 from the Japanese Institute of Plant Maintenance (JIPM) following a couple of decades of development in various major companies.  Since then TPM has expanded substantially to form a structured approach deploying a comprehensive set of tools and techniques in order to eliminate all losses across a whole organisation and throughout the value stream.

TPM has emerged as a credible way to give organisations the structure to make any improvements sustainable through employee ownership. A 12 step structure guides the organisation through the deployment of 8 Pillars (a type of major activity which is deployed to eliminate the losses) combined with a number of more traditional improvement tools. The key to its success is the overlapping group structure deployed and the link to the organisation’s Policy Deployment method.

The word ‘total’ in TPM signifies total organisation or total participation. Everyone in the organisation at all levels and across all functions plays an active role in TPM including contract and part time employees. It also means total life-cycle, pre-empting losses of all types throughout the life cycle of the production system.  Finally it means total effectiveness, judged by maximising the Overall Equipment Effectiveness (OEE) performance measure.

OEE is a metric developed to measure the success of early TPM programmes.  OEE enables organisations to benchmark and monitor their progress with simple, easy to understand metrics and it is one of the seven key measures of Quality, Cost and Delivery (QCD) which underpin all Industry Forum’s offerings.  It is not unknown for the initial measurement of OEE at the start of a project to be less than 40%.  A well-managed TPM programme can, over a period of years raise this to over 90%. This means that the productivity of capital has effectively doubled. However, the philosophy of TPM is that the quest for improvement is unlimited and should never plateau.

The TPM approach incorporates a proactive style of thinking, aiming at a zero condition or zero losses – zero accidents, zero defects and zero breakdowns. The traditional data driven reactive improvement approach will by itself never achieve a zero condition. The reactive data approach should be used to build the experience and understanding of the workforce to allow the adoption of a proactive approach.

TPM incorporates the familiar Demming Cycle – Plan, Do, Check, Act – and maps this onto the process model.

The role of management is critical in TPM – demonstrating and reinforcing the correct behaviour and attitude throughout the entire organisation, providing leadership and showing commitment to achieving and sustaining improvements. Management  must  provide a clear link between the improvement required and the policies that evolve from the long term vision and goals of the organisation.  Priorities must be set and resources allocated with an appropriate level of follow up. Management must allocate time, initially for training in the appropriate tools and then and in the long term for the continual deployment of the tools.

Industry Forum  can offer TPM Assessment, TPM Consultancy and TPM Training services to organisations in all sectors on a global scale. It is one of only six accredited JIPM TPM Assessment Agencies in the world and the only agency with assessors speaking English as their native first language.

 

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