Announcer: You're listening to Manufacturing Ignition Hot Topics, bringing you right up-to-date on the latest trends and discussions within UK manufacturing. Sponsored by Bonfire Recruitment, helping manufacturing leaders across the UK to attract the best talent for their manufacturing company. Ignite your business or career today by visiting www.bonfirerecruitment.com. Here's your hosts, Terry Mallin and Scott Buchanan.
Terry Mallin: In this episode of the Manufacturing Ignition Hot Topic, we're going to discuss what's in store for UK manufacturing in 2018.
Terry Mallin: So Scott obviously when we were going through the last episodes that we've been discussing. UK Manufacturing had a really positive end to 2017. We mentioned that the PMI in November was at its highest level in four years. And the November PMI continues to illustrate the momentum surrounding the UK manufacturing industry.
Terry Mallin: And I think we've been stealing the basis of actual people and business leaders to start working and, if they have not already, opportunities that are out there be smart of technology for the manufacturing site. And I think it's very important to actually during 2018 that people do ... Even having a reads, if you get a chance to make smart or review as part of the government's industrial strategy and actually put that plan in place where you're actually looking at opportunities and how to be far more productive, putting automation and taking advantage of systems that allow the machinery to communicate and actually operate more effectively.
Terry Mallin: And that's all what the challenge is as well as uncertainty over Brexit and recruitment scouting shortages. What's your thoughts on that, Scott?
Scott Buchanan: Yeah, I think you're making sense there. I think one of the things that certainly has come to the fore of pretty much all manufacturing organizations that we've been working with in 2017 is that the ones that have, I guess not embraced the change, do you know that way? Maybe not embraced ... Whether it's continuous improvement or actually reviewing product to bring it to market or against the competition, but get left behind. Do you know that way? And I think that what companies are now realizing is that ... The ones that have certainly done that realize what a massive difference has happened, and they're actually keen to embrace more, you know that way? So they're actually ahead of the [inaudible 00:02:42]. Slightly half up or are at the bottom of it, which is not where you want to be.
Scott Buchanan: If you think of the companies that have been doing things there's been, we hear actually, certainly in Scotland that I know certainly down in Wales actually as well, there's been some major ones where there's been redundancies in certain organizations. But actually, what's happened is they're presenting new jobs created. Because at the center the companies are looking at, it's just adjusted. Do you know that way? So, although the skills may be not be acquired at that point in time, new skills will be required to match to the volume of new skills required is actually greater than what was there previously. And paying better as well. Do you know that way? So I think it's all a bit looking forward.
Terry Mallin: Well, exactly. And looking at companies that invested in 2017 so no one would have manufacturing spaces. Toyota have invested 240 million into develop off site. You've got Aston Martin who are taking ownership of a certain UK production plant in South Wales. So a great investment actually in South Wales. You know that? Because there's great skill sets down there and that's part of 200 million that Aston Martin is investing in new products and facilities. Scott, if you remember rightly I was mentioning about Aston putting out there, I think it's their first electric car. What was it called again? Like the Type X or something like that. The Type R, I can't remember. But yeah, I mean Aston Martin is doing great exit. They're looking to create 750 direct jobs from that 200 million investment and then a further three thousand across the supply chain due to that investment they're making.
Scott Buchanan: And be well. It's a company we know well and certainly the challenge that I guess companies like Aston, McLaren, and maybe like Dyson as well. Whereby because they're leading the technology they're leading the way. They sometimes struggle, constantly to attract ... It's not attract it's trying to identify the skills required to allow these investment programs to happen. Support these companies tend to do is invest heavily in graduate programs and developing and cross-skilling folks so that they can actually do all these things. Which again is fantastic, you know that way? It's so positive.
Terry Mallin: Exactly. And tying into the automation piece. Global industrial robot manufacturer Farouk, they're relocating their new headquarters. So that's going to comprise of design, manufacturing, and a training facility. As well as a show room obviously for the robotics as well. So they're clearly making as investment into-
Scott Buchanan: That's massive. If they're doing that that's incredible because they are absolutely one of the world's leading automation type. I know them from robots and so on but obviously they are the leaders in this area. It seems like a massive site as well, doesn't it? It's massive.
Terry Mallin: It's 107 thousand square feet, I think. Enormous. It gives you an idea.
Terry Mallin: So that kind of gives you an idea. In 2017 very positive back end from manufacturing. A really good growth year with all the uncertainties going along as well. So what is 2018 going to have in store, Scott?
Scott Buchanan: 2018 it's a year of challenge, I guess. I think one of the things that's happening is tying in with last year it's about the continued growth factor. So investment and connectivity and technology is going to increase. And the factors of foreign exchange rates and raw materials are going to kick in as well. So it's making sure that your business is aligned to be on the right side of these things as well. Certainly something to be thinking about.
Terry Mallin: Yeah, of course. I think the thing you mentioned about it being a more challenging year I think that's due to ... As you indicate a touchstone there, what's the exchange rate going to be like? What's the cost of raw materials, as well? That's where the challenge is going to be. And actually managing cash flow as well to be able to invest in connectivity and technology. To allow you to be far more productive. I think that's the core of what the challenge is expected to be. And then that will tie in as well, you know. How friendly investors or banks or funding is going to be available, as well. And then off the back of that as well, who's willing to take the risk? Can they put their neck in line to make that investment to then capitalize on the opportunities that are there. Once the likes of these robotic manufacturers and et cetera , you know?
Scott Buchanan: Yeah. I think one of the things ... You know we touched on the Euro and the Brexit scenario is what it is but I think it's trying to identify the new market opportunities. You know that way? Is it South America, is it Asia [inaudible 00:07:48] products? There'll be no right or wrong answer for across the board that will be depending the market segment, but you know your manufacturing organization is trying to tie into. But I do wonder if it's now more prudent than ever to have a good financial director or someone keeping an eye on cost factors on a global basis. You know that way? So that you're buying your raw material at the right time and you've got the product out to the right markets. And so that's certainly something that should certainly be at the fore.
Terry Mallin: And 100 percent. And I think actually to make sure that 2018 is a strong start to the year which is obviously off the back of last year. Really make sure that manufacturing companies have got that investment intentions all set out and that ties in with having a good FD. It's working out an investment right here that's going to boost a product that remains competitive in a global market. There's no question about that.
Scott Buchanan: Yeah. I think it's so easy on a day to day basis, isn't it? To think about well we did X number last month let's try and beat it this month. Or this time last year, let's try and beat that. But actually I think thinking outside the box especially at the levels that we work at. I think it's so important and it's so easy to forget about as well. To allow the ideas that we'll touch on such as ... You know you were going to talk about the innovation piece and what companies are looking at so-
Terry Mallin: Yeah. And [inaudible 00:09:27] broadest perspective and to what's in store for UK manufacturing in 2018. So a lot of investment and buying, research, and innovation will come from reading articles online, developing skills, [inaudible 00:09:43], as well. Scott we've touched on in a past podcast as well about STEM and just now into schools and encouraging young people to be interested in manufacturing. So with that in mind a lot of these people might not necessarily go to university or college they may just start a career within manufacturing, developing those skills internally and providing the necessary training and support to have these opportunities.
Scott Buchanan: You know what ... I don't know if this ties in with stats but based on what I'm seeing the companies that we were working with last year certainly there was a change where companies were beginning to invest and developing the staff seriously. So supporting through universities to get MBAs and further down the chain as well. So actually it ties in, I guess, with engaging employees, doesn't it? Providing they feel investment and will do you a good job. But certainly now companies are based in that and that is definitely going to help everyone, I would have thought.
Terry Mallin: Yeah, Exactly. I think for anyplace as well. I think from a government perspective it's actually been a complete overhaul and view process of transport networks, utilities, energy, and the speed of internet and all that good stuff. I know there's a lot of incentives and [inaudible 00:11:18] out there. But it's actually for businesses to take advantage of that, as well. Make sure everything is set up for potential future growth to make sure that there's no hold ups or interrupted at all.
Scott Buchanan: Wait, I think we ... And you know my thoughts on the political structure and that we all have to enjoy in this country. When you do travel abroad you see what it can be like, you know that way? And actually we've all experienced that. It's normally, technically a rainy, snowy morning and whereby you can't get from A to B for whatever reason. Or that the cost of gas or electricity is got incredible and I think being able to control that and actually have ... It's all very well, companies coming to the UK to invest in the UK but actually they're going to look at the running costs as well. And actually having something with infrastructure in there to allow that to happen. And don't get me wrong, what HS2 project and the new power station, when that's all going to kick in. But I think it's then tying in with the supply chain and [inaudible 00:12:25] these areas, you know that way? To allow manufacturing to take advantage of it is critical, I would have thought.
Terry Mallin: Focusing and building on where the UK as a nation is very strong and a competitive advantage compared to a global scale. You get industries such as or more of what we've touched on, aerospace, pharmaceutical. You know where the UK is leading [inaudible 00:12:51] battery technology, autonomous vehicles as we discussed in podcast one way back two and a half months ago. And actually promote that and build on that and continue to be a sort of world leader from these sectors as well as holding up in other areas as well.
Scott Buchanan: You know I think the point here is but actually we cannot look at the manufacturing marketplace now as the UK or Europe, can we? It's got to be bigger. Because that is where we're competing. You know that way? We're up against other countries of course, who can transport their goods to the UK cost effectively now. So I think we've got to make sure our manufacturing organizations are in a strong position or a competitive position. That's the point, isn't it? A competitive position to make sure that they can get their goods or services to the market areas and having the staffing capability to allow this to happen.
Terry Mallin: Yeah. And I think some of that of course is 2018 should be a year about driving growth across the entire UK manufacturing market. Make sure that we're bound on protecting our strengths in different places and addressing those factors that are possibly hampering growth and make sure that there's a plan for investment in key infrastructure projects. Increasing local skill levels and backing regional innovation strips.
Scott Buchanan: Totally agree.
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