Manufacturing has grown for the past six quarters. As fuel costs spiral and fears about supply-chain risk rise, should companies and consumers push harder for a British renaissance? Three firms explain why they've put their faith in factories closer to home
Any good news these days is often tempered with a note of caution. It has to be: it's a complex and changeable time. UK manufacturing is particularly volatile. In June, manufacturers' organisation EEF and accountancy firm BDO released their quarterly report, Manufacturing Outlook, which was generally upbeat. Official statistics showed six consecutive quarters of expansion in manufacturing output and solid growth through 2011 and 2012 was predicted.
But by September they had scaled back growth forecasts. Still painting a much brighter picture
than some – the EEF said many companies in the sector were busy and orders were holding up – they nevertheless blamed "challenges in the global economic environment" for cutting growth predictions from 3.2 per cent to 2.8 per cent this year, and from 2.8 per cent to 2.2 per cent next year.
But as Tom Lawton, head of manufacturing at BDO explains, UK firms are doing the best they can within the circumstances.
"They do amazingly well in a very difficult economy," he maintains. "I'm always optimistic about UK manufacturing because I think it has an awful lot of strengths. But you have to be realistic and say it's got an awful lot to contend with. It's a perfect storm of negative circumstances."
Lawton insists that UK manufacturing has the potential to remain a vibrant part of the economy. He points to Britain's successful export record as one positive factor. And industry has learnt to focus on service in order to compete. "It's referred to as manuservices," says Lawton citing Rolls-Royce, which has diversified from pure manufacturer to become more customer-focused and achieves its revenue not just from products but also from services such as maintenance, operations and telecoms.
What the sector needs is more commitment from government to help it face its biggest challenges: access to finance, climate change policy, regulation, taxes and skills. "The coalition has been making positive noises about why manufacturing is so important to the economy," says Lawton. And, as he points out, there are some British companies delivering first-class products and ideas across the world that should be celebrated and supported.
What the government must do now is develop the fiscal and regulatory frameworks that will foster the right environment for a progressive manufacturing base. It must offer companies more support by investing in innovation and R&D as well as setting out its stall for the long-term.
But what about convincing more companies to base production here if it's feasible (it makes more commercial sense to locate large-scale, low-value production in cheaper locations abroad). Various well-intentioned campaigns have been launched to boost sales of British-made goods. But it might be the downturn that provides the real impetus.
A combination of high fuel, logistics, insurance and time costs; concerns about the supply chain; governments rewarding and encouraging local and regional growth; rising labour costs abroad; and a growing interest in quality and heritage are convincing enough factors for companies to review their strategy and even bring elements of manufacturing back to the UK.
As Lawton explains: "Quite a few companies are much more considered about what they manufacture overseas. The recession has refocused people. It's coming back to customer service, speed of delivery, and comfort around being located near to the end customers and key suppliers. China may still be slightly cheaper but then you think, 'is it worth it?' Plus you've got quality, service and delivery issues. So the UK is starting to position itself very strongly around innovation and customer service again."
So what do those companies that have decided to make things in Britain have to say about what it's like to manufacture here? Do they think we could be on the cusp of a British manufacturing renaissance? We talked to three businesses that are promising to make British manufacturing great again.
The global player
Company New Balance (UK)
Sector Athletic products
www.newbalance.co.uk
In 1982, US-owned athletic products firm New Balance opened its first factory in Cumbria, taking on the premises that Clarks had closed and employing 40 people. When a larger, more modern factory in Flimby became available in 1991, New Balance relocated and has been designing and manufacturing its sports shoes there ever since.
As factory manager Andy Okolowicz explains, the company makes around a million pairs of performance shoes and 225,000 pairs of lifestyle shoes a year. It employs 250 people, some of whom have been working at the factory for nearly 30 years. "Our staff turnover is extremely low," confirms Okolowicz. "We haven't had to lay anybody off for a long, long time."
As Okolowicz explains, the Flimby factory has provided stable employment for local people, which in turn boosts spending on local businesses. But it's good for Europe, too, because the company's developers typically source their materials from the continent. "We get better-quality leather from their tanneries," he says. "Making and developing the product on site gives us that responsiveness to the client. It's easier to visit a factory in Flimby than it is China. That really pays dividends."
He says the flexibility and co-operation of the loyal workforce is second to none. "They realise its tough out there, that we're in it together, and they feel safe here because we're not in it for the quick win. It's 200-plus people trying to survive." They've worked "incredibly hard as a factory" to compete with overseas manufacturers by introducing new technology including robotics.
roductivity has improved by 35 per cent, and the factory has cut lead times from "about three weeks to three days. Our ultimate aim is to cut, stitch, and make a pair of shoes in less than a day."
Asked why he thinks New Balance maintains its UK factory when so many manufacturers have relocated overseas, Okolowicz singles out the craftsmanship. "You could import some of the products from China but that's not what it's about. We have years of experience.
The buying guys here source the material and help us achieve a unique feel and identity that is Flimby," he says. And that's what consumers want, claims Okolowicz. "Perhaps they don't want to buy everything from Asia. We have a loyal customer who wants New Balance because it's made in the UK."
How can government help? "Supporting manufacturing in terms of investment is key. We need to retain those government agencies that offer free consultancy – we all need help at the end of the day. And the amount of training we have to do to keep our skills up is expensive. We don't get any support for that."
The entrepreneur
Company Cocorose London
Sector Footwear
www.cocoroselondon.com
She describes the process of manufacturing in the UK as "a labour of love" that will take time and test her patience before it pays dividends, but Janan Leo, founder of fold-up ballet pumps business Cocorose London is committed to the venture. "When we started out we manufactured the shoe purses in east London. It became uneconomical so we moved all our manufacturing to China but we retained that passion to bring it back to the UK. We wanted to say, 'we're supporting local businesses; we're doing something in England'."
The business has been established since 2007 and when Leo felt it was ready to move some manufacturing back to the UK, she sought help from the British Footwear Association, which put her in contact with Chancery Footwear in Northampton – "a traditional shoe manufacturer that had concentrated on making niche, specialist footwear".
The result is a "bespoke ballet pump" designed and made in England. Leo confirms that Cocorose London will continue to manufacture overseas as well, explaining that there are pitfalls as well as benefits to making her products in the UK. One particular challenge is the cost.
"A classic [cost] is for cutting knives. It was so low before that you could absorb it into the overall cost of the product," says Leo. "In the UK, you have to make all your cutting tools before you go into production and that was a large cost for us. You have to be committed, to pay for it up front and try and make it work."
Why the persistence? Because exporting the Made in Britain brand will pay back in the long term. "Everyone loves the story of Northampton. We don't have long lead or shipping times. It's a couple of hours rather than a few thousand miles. And people are becoming a lot more aware and passionate about buying British," says Leo.
She believes that consumers expect a choice. "They're ready to decide for themselves whether to spend a bit more money and buy British. There's an understanding from the general public that manufacturing costs in the UK are much more, so you have to pay more." How can consumers help? "The public do need to spend to get us out of recession. The focus should be on supporting local boutiques and stockists. If we want to kickstart a British manufacturing renaissance, we need to talk up the smaller companies as well as the big brands."
The supplier
Company The Cast Iron Air Brick Company
Sector Ironmongery
www.castironairbricks.co.uk
Adrian Budd, owner of The Cast Iron Air Brick Company, is amazed by how much of the ironmongery for sale in the UK is made abroad. As a supplier of new cast iron air bricks, decorative vent grilles and cast iron plates to architects, builders and house restorers, Budd says he receives an email every week from a factory in China, India or eastern Europe claiming to be able to sell products cheaper than what he's paying for British bricks. But for various reasons he has resisted, having turned his back on importing the "fairly cheap" cast iron products made overseas to sell 100 per cent British. In an attempt to maintain the quality and style of products he supplies, Budd says it made sense to use foundries closer to home.
"When you're dealing with people overseas you don't know what the foundry is, what its financial status is, who the people are, whether it will be here in five years' time," he reflects. But using UK factories hasn't been without its own challenges.
"Of the foundries we're using, the best ones are the newer ones. They've bought the new equipment, they're easier to deal with online, they're quick, they understand the need for the products to be the same. With the older foundries, it's like everything has stayed in the 19th century," says Budd. If the UK is going to compete with China, then its manufacturers need to adapt to change, he says.
"I think it's surprising in this climate that there are still manufacturers that say, 'No, we can't do that'. Old-fashioned industries are wary of change – they think they know it all. It doesn't help."
Budd works with around six UK foundries and says the best way to develop a productive relationship with a manufacturer is to communicate. "You have to say what you want. And on their part, you want to deal with experts, not marketers. The Bristol
foundry we use was set up in 2002 but the owners came from foundries in Glasgow and on the Clyde so they have all that experience. We use a semi-retired pattern maker who lives 12 miles away. He's 70 but what he produces is a work of art – it's beautiful. Someone who is 5,000 miles away can't show you that over the phone."
Thinking long-term is key. "So far this year we've said 'yes' to almost everything. Sometimes we haven't made any money because it's taken so long, but we've developed a relationship with companies and it's paid back at a later date. I think some of the older foundries have failed to grasp that. It's a shame because we don't receive many emails from British foundries saying, do you want us to make anything?"
How can manufacturers help? "It's about attitude and training. It's a complete change of mindset to start again with new equipment and thinking. The factories could look for more areas where their products could be used. The amount of foundries where you can still buy coal scuttles… you'd be better off developing something new."
