Looking out of the window as you fly into Glasgow airport, evidence of the city’s industrial heritage is clear. Huge cranes line the banks of the River Clyde and allude to the area’s global reputation for ship-building. Across Glasgow and beyond, Scotland has long been famed for ‘making things’.
However, in the face of a changing manufacturing landscape, Scottish industry is at risk of getting left behind. Competition from the Far East and a subsequent decamping of major manufacturers have seen the sector take a nosedive. The shipyards have now mostly closed, replaced by television studios, and once-bustling factories are now soulless business parks and supermarkets.
Fear not, though. The glory days can return for Scotland’s manufacturers. That was the key message to come out of a Works Management roundtable, in association with the Scottish Manufacturing Advisory Service (SMAS), in Glasgow in April. “Manufacturing currently accounts for 8% of the workforce in Scotland, but drives 52% of its exports,” said Nick Shields, SMAS director, who called the industry a “fantastic value-generator for Scotland.”
Imagine, then, the sheer potential of a sector firing on all cylinders, and leading the world into the fourth industrial revolution.The roundtable heard how the Manufacturing Strategy for Scotland, launched by the government and Scottish industry bodies including SMAS last year, is helping to boost the identity of Scottish manufacturing. “It’s about building the manufacturing brand in this country,” continued Shields. “We currently have a bit of a reputation for being a flat-lining nation, rather than a growing one.”
Embrace technology to get ahead
The first step on the road to becoming a growing manufacturing nation, the delegates agreed, was to become more forward-looking, and embrace technology. With the growth of automation, and the impending arrival of Industry 4.0, are Scotland’s base of smaller, more craft-based manufacturers ready?
“Whisky manufacturing has a very ‘traditional’ stereotype,” conceded Kirsty Wainwright, production manager at Glenmorangie. “We’re lucky, though, to have a very modern site. If anything, I’d say we have too many computerised systems. It’s now gone the other way – we’re losing the human element as we’ve become so reliant on what the computer says. It could be telling us nonsense! We have to be careful not to lose that element of human sense-checking.”
Cue a flurry of stories around the table of companies – big and small – looking at incorporating Industry 4.0 into their operations. Gordon Venters, head of technical engineering at Scottish Enterprise, explained how a jewellery manufacturer in remote Orkney was using technology in an innovative way. “The company have set up an interface online that allows customers worldwide to submit a sketch for a custom piece of jewellery,” he said. “They digitise that sketch to produce a 3D model, which then goes into a 3D printer to make a wax master for casting – which in itself is a 600-year-old method process. The jewellery is then made and can ship it anywhere in the world.”
Scotland, clearly, has no problems in incorporating technology in their manufacturing processes. However, delegates warned, it must be done in the right way. “The issue is, all the companies here are unique, and we all function in our own way,” said Yan Tiefenbrun, operations director of Castle Precision Engineering. “I like that Industry 4.0 is a guide to the direction of travel, but you have to break it down more. It all sounds fantastic in theory, but in reality it’s a bit like eating the elephant.”
“What I’m finding is that the ‘Industry 4.0’ concept isn’t very joined up,” opined Rodney Ayre, senior development manager at Mitsubishi Electric. “Most of the Industry 4.0 solutions I’ve seen are focused on big manufacturing companies. Scotland doesn’t work like that – we’re all about SMEs. I haven’t seen much, if anything, about Industry 4.0 for smaller companies. A big OEM spending £1.5 million on an automated packaging system is completely different to an SME having to spend the same.”
More needs to be done to help smaller companies, agreed Dr Michael Ward, technical director of the Advanced Forming Research Centre (AFRC) at the University of Strathclyde. “For me, if Industry 4.0 is going to become a fully-fledged Fourth Industrial Revolution, we need to see products that are accessible for smaller companies. More importantly, they need to be so obviously beneficial that they pick them up and use them because they want to, not because they have to.”
OEMs may be a poisoned chalice
Scotland has in recent years struggled to attract the ‘big ticket’ OEM manufacturer enjoyed by other areas of the country. To get them back, said Venters of Scottish Enterprise, would mean looking to, and learning from, the past. “The electronics industry famously led the way in this regard,” he explained. “Some of the biggest names in that market came to Scotland and spent a lot of money here. On top of that, the supply chain did very well out of it as well. A lot of jobs were created and all of Scottish manufacturing benefited from their presence.”
That wasn’t to last, though, Venters explained. The electronics companies left for foreign shores, company owners down the supply chain “sold up, and the advantages that those OEMs had on the economy were lost. What was left behind was a bit of an industrial wasteland. The trick is to learn from the electronics industry and not make the same mistakes again.”
However, encouraging OEMs back north of the border may not be all it’s cracked up to be, warned Venters. “When’s the last time anyone can remember an OEM making a big inward investment in employment,” he asked. “McLaren has just announced 200 jobs; Boeing 50. It’s not 2,000-plus. The game has changed completely, and there’s a need to consider if the presence of more OEMs is as attractive as it might seem.”
Let’s be more proactive, agreed the AFRC’s Ward. “Why not be ambitious,” he challenged. “Play the long game and say that you want product developers to emerge in Scotland, not just move here. The government should incentivise companies to make things near where they’re based – in Scotland.”
OEMs also have a damaging relationship on Scottish SMEswhen it comes to skills, explained Tiefenbrun of Castle Precision Engineering. “You need a critical mass of industry to support skills,” he said. “We’re not like the Midlands or the North-East – the number of each companies in each sector is limited. You don’t want to see a large company being able to ramp up very quickly and, like we saw in the oil industry in Aberdeen, go and dredge the SMEs of their skill set and undermine them. It’s then left to the SMEs to back-fill the skills and invest in the future. It’s fundamentally the wrong way round.”
An aging workforce is also contributing to the skills gap, said Chris Hodgson, head of project controls at Doosan Babcock. However, he was convinced that this might be the incentive for the large-scale changes that the industry needs. “We have to see it as an opportunity to shed some of the old habits and behaviours as the current generation moves on,” he said, throwing down a gauntlet to the rest of the room. “Because there is such a gap and shortage of skills, there is an opportunity like never before to come in and re-fashion the way manufacturers do things – utilise more modern and effective processes. I’m of the opinion that if we don’t do that, Scottish manufacturing is finished. We can’t compete with the Far East on cost. We have to have a differentiator: something we do that’s better than anywhere else.”
Finding that differentiator will be hard, though. The recent Industrial Strategy has seen the Westminster government look to identify regional strengths across the whole UK. “It’s forcing us to answer the question, ‘what are we good at?’” said Venters. “I’m not sure how I’d answer that. What we’re being asked to describe is where we fit on a global scale.”
Government support, but where’s the money?
Arguably, the people best-placed to answer the question of ‘what are we good at?’ are the Scottish government. Last year’s Action Plan aimed to put industry front-and-centre on the national and global agenda. Twelve months on, had it had any affect? “It’s clear to me that we have genuine support from government; we just need some genuine money to go along with that,” said Venters, who was part of the Action Plan development team. “We’re moving from simply saying ‘everyone knows about it’ to asking ‘what are people doing about it?’. The real challenge now is to build a viable business case for investment to put in front of Scottish government.”
Nicola Sturgeon and her MSPs came under fire from all angles around the table for her inaction on manufacturing issues. “The problem we have is that the Scottish government isn’t in the game,” said an impassioned Ayre of Mitsubishi Electric. “They have ideas, but they’re not at the table making the decisions.”
Others pointed at the potential insecurity of Brexit and a possible second Scottish independence referendum. “It’s two years until we leave the EU, but the instability of Brexit will continue for years afterwards,” said Ross McCombe, operations director at Newsprinters. “The supposedly ‘great deal’ might be that we pay Brussels for access to the single market and free labour movement – which is sort of what we’ve already got.”
“Brexit is happening regardless,” said David Jones, CEO of the AFRC, who took a more positive approach. “We’re already seeing investment opportunities where companies are looking for security in their supply chains. At the AFRC we work closely with the metals sector, and a lot of metal companies can be re-shored to the UK. Industry just has to be read to take the opportunities that are there from Brexit.”
Getting Scottish manufacturing back up to the levels of its heyday will not be a quick or easy process, the roundtable agreed. But, a strong Scotland is vital for a strong UK, especially as the country heads into Brexit-based uncertainty.
“Scottish manufacturing is a broad church,” concluded Shields. “It’s Harris Tweed, smoked salmon and whisky distilling, but it’s also the state-of-the-art aircraft carriers being built at Rosyth. There’s a lot of amazing things going on in Scotland, so it’s important that we shout about them. We’re the most innovative country in the world, we’re just not the best at commercialising that. I think we just have to rediscover that zeal for making things. We need a vibrant, manufacturing-centric Scotland.”
Scottish manufacturing: in numbers
£70m: value of the Scottish Manufacturing Action Plan, launched last year
195,000: people employed in manufacturing in Scotland – 8% of the workforce
1.5 million: metres of Harris Tweed woven in 2015; up from just 450,000 in 2009
£4.25bn: value of Scottish whisky exports to the UK economy
38: bottles of whisky exported from Scotland every second
30.3%: foreign-owned manufacturing companies in Scotland
99.3%: SME businesses in the Scottish private sector
Scottish manufacturing’s to-do list
-Invest wisely: The industry must spend more to encourage growth, the roundtable agreed. “How do we get not only government and banks, but also businesses themselves, to recognise the challenges and make the ambitious decision to invest?” asked SMAS’ Shields.
-Lobby harder: Keep up the pressure on governments both north and south of the border, urged David Jones of the AFRC. “We need to make sure there isn’t a change in government strategy. They should invest in what’s been proven to work to get the benefit from it.”
-Embrace technology: The roundtable agreed that Industry 4.0 has huge potential for Scotland’s manufacturers, but it’ll be a while in coming. “I’ve been working with my engineering team for the past couple of years on understanding Industry 4.0,” said Ayre of Mitsubishi Electric. “We just keep running into a wall at every turn, though.”
-Be adaptable: Manufacturers today must be ready to adapt to changing technologies and challenges, said Shields. “There’s no silver bullet; it’s all about being flexible enough to recognise the opportunities and maximise their potential when they come along,” he warned.
-Dream big: Scotland has the potential to be a major player in global manufacturing, the roundtable heard. It just has to believe in itself, and look at the success of others. “There was, of course, no ship-building in South Korea in the 1950s, and look at it now,” said Shields. “Scotland can reinvent itself in a similar way.”
