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

The Office of National Statistics (ONS) has recently confirmed the UK has avoided a double-dip recession with GDP increasing by 0.5% in the first quarter. GDP is estimated now to have returned to the level in the third quarter of 2010. And guess what? The largest contribution to the growth in this quarter was from manufacturing. (more…)

Technorati Tags: export, manufacturing, recession, SMEs

Japan’s most expensive disaster in its history – caused by an excruciating cocktail of earthquake, tsunami, nuclear alert and power shortages – has put global supply chains under far greater stress. Assembly firms are finding their supply chain, already affected by endemic component shortages and extended lead-times, now looking even more unpredictable.

Automotive and electronics manufacturers appear to be the hardest hit, where continued aftershocks, and now the fear of radioactive contamination, could extend supply disruptions for some time. For example, Mitsubishi Gas Chemical and Hitachi Chemical, control about 90% of the market for a specialty resin used to bond parts of microchips that go in to various devices. Both firms’ plants were damaged. Manufacturers around the world are now rushing to secure supplies of the scarcest components and materials, pushing up their prices. Numerous carmakers in Japan and North America including General Motors, Ford, Toyota and Honda have closed factories or scheduled downtime for plants, causing the loss of about 13% of worldwide car manufacturing output. (more…)

Technorati Tags: delays, disruptions, earthquake, japan, just in time, manufacturing, supply chain

Market and industry analysts have finally done their number crunching for 2010. It’s no secret the electronics industry across Western Europe rebounded last year, with production of electronic equipment and components increasing by 6.8%, according to figures recently released. The drive for growth has been the export led recovery in Germany, particularly in the area of industrial electronics and the recovery in automobile production. On the other hand, component shortages had a negative impact on equipment growth in 2010 although the situation eased towards the end of the year. Looking forward, the industry will definitely continue to rely on the automotive, industrial, high-end communications and defence segments. Analysts are currently forecasting further growth in 2011, albeit a more modest increase of 1.6% according to some, with downside risks still very much present, particularly due to fragile consumer confidence and the impact of reduced government spending.

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Technorati Tags: electronic equipment, Electronics Manufacturing, growth, Innovation

Last week Intellect hosted its first Plastic Printed Electronics Conference, which has finally shed some light on this emerging technology – but is a stand-alone industry sector going to surface? This new set of materials and processes will most likely complement rather than revolutionise existing electronics. There’s no point in fostering fragmentation when technologies inexorably tend to converge and, as new players seek new markets, regulatory challenges may emerge as a result. Medical and green technologies are typical examples where innovative applications materialising from telecom and plastic printed electronics will require companies to gain a thorough understanding of the legislative landscape in order to influence it. We hence need a strong and unified voice to get the message about technology’s role in the economy across to decision-makers as we did last Friday when business secretary the Rt Hon Vince Cable MP paid us a visit here at Russell Square House.

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Technorati Tags: Electronics Manufacturing, growth, plastic electronics, vince cable

Advocates say plastic/printed electronics will revolutionise the electronics industry, whereas cynics insist this is ‘blue sky’ technology and it will, in any case, move to low cost countries. Intellect’s first Plastic Electronics Conference will be held next month, and attempt to give attendees a realistic feel for timescale and current barriers to growth. Printed circuitry can be used to place electronics on compact, inexpensive and lightweight substrates, reducing costs and size. Displays, batteries, transistors, and interconnects are among the technologies that can be produced on paper, plastics and other thin materials. However, whilst the media and general public is captured by the possibilities of low costs goods that have odd shapes and sizes (even fitting in clothes) technologists realise that the many categories lumped under the broad banner of plastic/printed electronics are still far from production. These designs can include disposable products such as glucose test strips and medical patches but, as Plastic Logic has quickly learned, one of the main challenges facing this fledgling market is pricing. That means product and business developers will have to examine tradeoffs – and that’s exactly one of the issues the event will try to address.

As technology changes are forcing requirements for low cost, low carbon and flexible applications, plastic/printed (or organic and large area) electronics have emerged with some of the most efficient techniques by which to achieve these goals. While development is still in its early stages, the technology may have the potential to dramatically change the electronics industry. The list of devices that rely on plastic/printed electronics technologies is big and getting bigger. Applications include touch screens, RFID antennae, medical sensors, flexible circuits, solar cells and so on. If we include smart packaging, lighting, optical signal processing and various applications available to retailers, the potential is truly enormous. In addition to consumer products, there are also big prospects in the automotive and aerospace industries. American engineers at Boeing, for example, are already experimenting with printed electronics technology to reduce weight, maintenance and cost of aircraft. In fact, the new 747-8 plane incorporates a partly printed bird-strike damage detection sensor.

As one of the most cost-effective production methods, plastic/printed electronics is enabling the high volume, high throughput, low cost paradigm. In fact, integrating several electronic functions (eg. sensors and antennae) which previously had to be applied as separate components, cuts the number of parts required and the amount of logistical and assembly work. This results in compact, ready-to-install ‘all-in-one’ electronic modules that require a minimum of space, thus reflecting the trend toward miniaturisation in electronics. On the other hand, at present the majority of these new applications must interface with traditional electronic components for functionality (eg. it’s not yet possible to print a microchip at present) and, moreover, many predict the UK will need to focus on R&D rather than mass-manufacturing. Incidentally, we’ve heard that a Russian state-backed company has invested GBP400m in Plastic Logic even though the company is planning its first high-volume, state-of-the-art manufacturing facility in… guess where? Dresden, Germany and not some remote Asian location!

The UK has a huge chance to groom R&D IP-drenched fledging indigenous companies to become the next advanced manufacturing global leaders, no matter if the high volume will be sited in bigger and/or cheaper countries. The key is to maintain the leading edge in R&D and design so that ultra-specialised and flexible manufacturing can still be performed in this country. A hybrid of plastic/printed electronics alongside surface mount technology (SMT) will most likely remain as the preferred methodology for the foreseeable future. However, it’s worth investigating the current problems facing many technology start-ups in the field and see whether there’s a market reality beyond speculation. One may conclude that plastic/printed electronics will be complementary to PCBs and the EMS industry rather than competitive but we all know how in technology (and electronics in particular) things change so quickly and the global market always rewards leaders, not followers.

I’d like to conclude this year with few thoughts on the future of UK manufacturing with a global outlook.

A government review into how we can grow advanced manufacturing in the UK has finally started. The Growth Review Framework for Advanced Manufacturing examines how we can remove the barriers that are preventing the UK becoming Europe’s leading exporter of high value goods and stopping people from seeking a career in engineering. The next three months before the Budget 2011 will hence be crucial in influencing long-term policy affecting businesses. The coalition government wants to create the right environment for manufacturing to grow but spend the least amount of cash possible! In these circumstances, I only see two options: tax environment and strategic investment in infrastructure. Intellect will be at the forefront in both spaces. Through our lobbying work, we’ll ensure that R&D tax credits will be re-established and capital allowances will be reviewed and simplified. Through our well-established Concept Viability programme, we’ll explore opportunities for members to engage directly with public procurement officers of the MoD, NHS and other relevant public equipment/infrastructure projects.

The other big driver is export. Over the last decade, in which rising rates of Asian production have gone unmatched by similarly rising rates of Asian consumption, a fundamental imbalance has developed between east and west. Within a decade, a richer Asia – together with other emerging market countries – will witness a middle class revolution that, according to some, will be comparable to the consuming power of two Americas. Delivering value-added, technology-driven, custom-built products (and services) will thus need proper investment to address this new demand. Opportunities are enormous and western governments ought to invest – not cut – in science & technology, education and skills if we want to reap the benefits of this global shift. Going down the route of trade and currency wars, and excessive restrictions on skilled workers could prove counter-productive and might lead to protectionism-isolationism, which is usually bad news for business.

Let’s put geo-political dynamics aside and focus on the biggest of these Asian markets: China. It’s no secret the country wants to transform from being the factory of the world to an advanced economy. The Chinese government thinks that state-owned enterprises (SOEs) have to “absorb, assimilate and re-innovate imported technologies” but private Chinese companies, particularly technology industries, worry about their country lacking an innovative culture. In spite of high educational standards, they are concerned that people don’t think creatively enough. One commentator said “there is a limit to how far you grow when your innovation comes from outside”. The Chinese “art” of reverse engineering is well-known but let’s keep in mind that China exercises procurement control over the world’s second-largest economy, and is the biggest market for new infrastructure. As a result, private companies – especially western ones – ought to be seen as co-operating quietly. GE Aviation, for example, has partnered with Avic, a Chinese SOE, to supply avionics to China’s new C919 commercial aircraft and GE Healthcare is investing $500m in six new research facilities in China. It’s now time that government, manufacturers and academia gain a better understanding of the UK’s export strengths in order to map potential growth opportunities for business to explore.

The Spending and the Defence Reviews have revealed a number of business opportunities (and threats?) for electronics manufacturers, which have been fully analysed at members’ meetings. As one of the areas of biggest growth to many members in recent years has been aerospace and defence, it makes sense to have a look at the historical entente cordiale negotiated earlier this month between Britain and France.

Europe’s two biggest defence spenders have thus decided to get together in the name of cost savings and rationalisation. Defence Secretary Liam Fox said the MoD would be making announcements at ‘regular intervals’ about new areas of work to deliver the commitments set out in the treaties, and said that the changes would mean ‘changes to long-established ways of working.’ What this means in practice for UK defence electronics companies involved in the supply chain is too early to say but it all looks encouraging so far.

Let’s have a closer look at the ‘industrial elements’ of this new deal:

• A shared maintenance contract with Airbus Military to save costs on the new A400M military transport aircraft
• The joint design and development of components for submarines
• A 10-year strategic plan for joint procurement of missiles
• Joint development of a new armed unmanned aerial vehicle, with delivery between 2015 and 2020
• Longer-term research into unmanned fighter aircraft
• Next generation of unmanned air surveillance systems – or drones
• In the longer term, the UK and France will jointly assess requirements for the next generation of unmanned combat air systems from 2030
• A joint technological and industrial roadmap will be developed over the next two years

British and French prime contractors are warmly welcoming this agreement because it gives long-term guidance over how they should work together. However, it is still unclear how contracts will be awarded in the supply chain.

The government is to publish its defence industrial and technology policy green paper by the end of 2010 and a formal public consultation will take place in early 2011 before the policy will be formalised in a white paper in the spring. Intellect will be working closely with OEM and electronics members in order to influence decision-makers as early as possible. The policy should be designed to provide industry with stability, look to develop a healthy skills base (particularly in specialised areas), maximise profit and shareholder dividends and support exports.

In return, the paper will probably ask industry to offer better value to the taxpayer and Intellect will ensure its members are able to communicate that in the most effective way.

Technorati Tags: britain, defence, electronics, france, MoD, spending defence review