Vince Cable has recently written a letter to David Cameron and Nick Clegg urging the coalition government to come up with a plan for the UK’s industrial future and stated “we can’t predict the economic cycles and market-driven competitive forces of the future. But we can think a decade or two ahead”. Mr Cable also wants the government to develop a strategic partnership with the advanced manufacturing sector and to explore issues around finance and skills to ensure that Britain’s digital and creative industries can throw up the next Google or Intel. We couldn’t agree more. (more…)

Technorati Tags: competitiveness, Economy, growth, Innovation, manufacturing, start-ups

 
The idea that UK electronics companies are fighting for higher margins is no longer representing the entire truth (this might still be the case in other areas of UK manufacturing – usually not associated with advanced technology).

Manufacturing of consumer electronics  and mass production in general has moved elsewhere, but industry has adjusted and is adapting to a new world where complex electronics and flexible added-value services have become the norm. With low volumes come high margins if technology and quality of services justify the premium price. It’s no chance that Germany is the world’s second biggest exporter of goods after China. Excellence, complexity, flexibility and creativity make products and processes harder to reverse engineer or copy, hence give early adopters enough room to innovate further through R&D investments and keep ahead of the curve. Germany is known for the quality of its engineering base but the UK is known for its world-class services (second only to the US).

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Technorati Tags: advanced manufacturing, automation, electronics, Mark Prisk MP

It’s never promising to break for Christmas holidays with sad and gloomy news. So, the gist of this blog will be encouraging and forward-looking.

Despite general alarming feelings about the UK and European economies, several measures announced in the chancellor’s recent autumn statement are welcomed such as:

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Technorati Tags: Autumn statement, industrial policy, UK Manufacturing

With Chinese wages rising at about 17% per year and the value of the Yuan continuing to increase, the gap between Western countries and Chinese wages is narrowing rapidly. Some analysts overseas expect net labour costs for manufacturing in China and the US to converge by around 2015. After adjustments are made to account for American workers’ relatively higher productivity, wage rates in Chinese cities such as Shanghai and Tianjin are expected to be about only 30% cheaper than rates in low-cost US states. And since wage rates account for 20-30% of a product’s total cost, manufacturing in China will be only 10-15% cheaper than in the US – even before inventory and shipping costs are considered. After those costs are factored in, the total cost advantage will drop to single digits or be erased entirely. (more…)

Technorati Tags: China, Europe, offshoring, UK Manufacturing

The main idea relevant to businesses stemming out of last week’s Conservative Party conference in Manchester has been the potential to create a market for SME bonds, following Chancellor of the Exchequer George Osborne’s announcement about ‘credit easing’ to help smaller companies. No one seems to know how this is going to pan out and how easy it’ll be for businesses to apply for funding. Though, it was good to see that all three party conferences have debated how we should rebalance the economy and create the right environment for the resurgence of British manufacturing.  (more…)

Technorati Tags: British manufacturing, Chancellor of the Exchequer George Osborne, Conservative Party, Consumer Electronics, Electronics Manufacturing, Eurozone, Freescale, global electronics industry, HP, NXP, OEMs, Philips

According to recent figures put out by the EEF, the electronics sector has seen weaker orders intake over the past three months, with associated concerns about output expansion for the next three months. Companies are indeed tightening the belt due to growing challenges in the global economic environment (the cost of gold has increased dramatically) and are taking their time to make investment and recruitment decisions. However, whereas big and medium size companies are better placed to offset losses, the case is slightly different for single-sited UK SMEs, where the loss of an important customer could be business-critical. The relatively short-term nature of SMEs’ order books in the electronics sector is certainly eroding confidence for some businesses. The UK government should acknowledge that and support smaller manufacturing companies, and allow them to thrive as in Germany where SMEs have been the catalyst for economic growth.

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Technorati Tags: DSEi, electronics, manufacturing, SMEs

There was, once upon a time, a global trend that caused multinational corporations to move towards locations where the cost of human labour was cheaper… Now this trend may cease and even reverse as industrial automation gets smarter, cheaper and cleaner. Who says that a modern, fully automated factory needs to be placed in the Far East indeed? (more…)

Technorati Tags: automation, backshoring, foxconn, Uk electronics, UK Manufacturing

The recent story of Bombardier losing out on the Thameslink train contract to Siemens has triggered talks over whether the UK should act like other European countries and factor ‘socio-economic’ rationales in public procurement policies, or, obstinately continue to be solely market-led. Awarding public contracts based on domestic industrial objectives in addition to a mere ‘value for money to the tax payer’ principle is not just a continental practice. Other western liberal economies have been pursuing similar exercises for many years. The so-called ‘buy America’ policy and offset agreements (especially in aerospace and defence) are good examples of how Americans are making sure their industrial base remains solid. It’s not just a matter of protectionism vs. liberalism – there are many ways policymakers can tackle the issue. Without going into philosophical debates here, the message is clear: It’s now time for the government to think outside the box. With no immediate prospect of new train orders, train manufacturer Bombardier has begun a 90 day consultation with staff at its Derby plant regarding plans to reduce the 3,000 workforce by over 1,400. How many times have we heard stories like this before? (more…)

Technorati Tags: bombardier, buy britain, Innovation, manufacturing, public procurement, siemens, thameslink

Recently I’ve been at the EU’s first Digital Agenda Assembly held in the Brussels’ Autoworld, surrounded by a superlative collection of cars and planes from the past century. Issues discussed included fixed/mobile superfast broadband, green IT, creative content, smart grids, cyber and many other ICT related themes. Rather than discussing about specific policies, I’d like to share some general thoughts on Europe’s ambitions and Britain’s role in technology-driven innovation.

Continental Europeans still chuckle when I say “the UK and Europe” but I’m serious. As a Southern European who has spent enough time in this country, I’ve changed from being a EU enthusiast to being pragmatically critical about this noble but thorny project. Neither cynicism nor tribalism would help here. Political realism should be the answer: too many “Europeans” still don’t grasp how hard is to keep a Union together but – fortunately or unfortunately – the UK knows better… (more…)

Technorati Tags: Digital Agenda, EU, ICT, single market

Against a backdrop of fairly mediocre growth of 0.5% highlighted in my last post, UK manufacturing is witnessing its sixth consecutive quarter of growth. However, one wonders whether the unpredicted fall in output occurred in April was due to one-off factors, or whether there is a true slowdown hitting the UK economy. The Bank of England seems to be betting on the first instance as it sets a monetary policy based on low interest rates for the rest of the year to keep the pound low and boost exports. The larger-than-expected April decline most likely reflects temporary hits to growth arising from the timing of Easter, the extra national holiday – which may have encouraged factories to pull forward their maintenance closures – and supply chain disruptions resulting from the Japanese earthquake. (more…)

Technorati Tags: electronics, growth, manufacturing