Flexible friend: Printable electronics from the Centre for Process Innovation, part of the Catapult network
Dick Elsy has been chief executive of the high-value manufacturing Catapult since 2012. He has extensive experience in innovation management and introducing new technologies to market, and has led both small-scale and large organisations. He holds a silver medal from the Royal Academy of Engineering for his outstanding contribution to British engineering and is a chartered engineer, a fellow of the IMechE and a former director and trustee of Engineering UK. Formerly, Elsy was chief executive of gearless transmission firm Torotrak. Before joining Torotrak in 2003, he was product development director at Jaguar Cars, where he led several car programmes. His earlier roles were also in the automotive industry, including a period spent with BMW in Munich leading a car programme and a long career with Land Rover, where, as a member of the executive board, he played a key role in devising and implementing the Land Rover Freelander vehicle.
What did you think of the Catapult centres idea when it was proposed by the former Labour government?
I thought it was a brilliant idea. I was at Torotrak then, but in my career in the car industry, what I’ve principally done is bring products to market – be they cars or the sort of technology that Torotrak is working on. Whether you’re a big or small company, the challenge in terms of bringing a concept through from early stage to reality is hard work. It’s a difficult, risk-riddled process. Even at Jaguar, when we moved away from steel-based cars to aluminium cars, moving away from an established process that the car industry had been working on for 100 years – spot-welding steel to bonding and riveting aluminium – was an enormously complicated process.
For companies such as Torotrak, which have developed brilliant intellectual property, trying to bridge that gap from prototype to getting scaled up for industry is lonely. You are having to bear the risk, and even big companies shy away from taking risks. If you implement the wrong technology, it could seriously damage the company.
For a small company, attracting investment when you haven’t got a proven product is difficult. It was great to see the government recognise that this so-called ‘valley of death’ exists. We want to help companies bridge it.
To go back to JLR, its resources may be gargantuan, but presumably it would struggle to innovate without small companies?
Absolutely right. To look at the example of the switch to aluminium, it didn’t involve just extruded or pressed parts, it also involved the external companies involved in bonding and riveting, such as those that made rivets. They had to come together with JLR to make it happen. It is difficult to implement a new manufacturing process on that scale.
Productiv and Tata Steel opened the Proving Factory assembly facility in Coventry earlier in the year. They claim it is the only operation of its type in the UK, because it provides a complete supply chain for automotive and aerospace product development and low-volume production. Is that the kind of thing you’d like to see more of?
We are a great supporter of the Proving Factory and of the MTC in Coventry – which is part of the high-value manufacturing Catapult, and is supporting the Proving Factory itself. In the car industry, not only do we need to be able to bridge the valley of death to come up with a demonstrable, manufactured product, but we also have to have a stable process.
The car industry is so exacting about its products and processes that you need to prove that those processes work at a reasonable volume. A lot of great British technologies being developed at the moment are at prototype level. But there is a long journey from that to drumbeat process capability. The industry wants the correct Takt time [average unit production time needed to meet customer demand], and is looking for that rigour and proof. No sane vehicle line chief will take an unproven technology into a car programme.
The question is how you get the technology proven at a sufficient volume so a carmaker will take it on.
To turn more widely to the Catapults, and their level of political and economic support, are you satisfied that they are backed to the degree to which you would hope, and will continue to be following May's general election?
The support that we got in the government’s autumn statement was a huge boost. The funding model is one-third from government, one-third from industry, and, with industry, we chase the final third through collaborative research and development programmes. We will competitively win that. That’s the fuel for
the collaboration.
Government money helps us take the risk in the first place. That model has been so successful that we’ve ended up with the collaborative R&D and commercial element – which should represent 66% of funding for a project – running at 80%. Industry is piling into the offer.
The argument might then be made that if industry is paying for all this, why don’t we just let industry take over? The reality is that government funding is the contribution that enables the risk to be taken in the first place. Without it, we would work to a standard industry agenda of continuous improvement, and we would become a manufacturing engineering services provider. It would mean vanilla-flavoured technology. We wouldn’t tackle the difficult stuff.
But it’s the difficult stuff that will give us productivity improvements. With the growth of labour costs and energy costs, productivity improvements are barely keeping pace. If we think we are going to continuously improve our way to success, we will do well just to keep our heads above the waterline.
What we need in the UK is radically different technologies. The government contribution is critical to that. We have cross-party support for the Catapults, but we have funding for a limited period. Beyond that, there is a job of work to do.
Hermann Hauser’s recent review of their performance indicated that the high-value manufacturing Catapult was an early success story of the Catapult scheme. Why has that been?
The high-value manufacturing Catapult combines seven existing centres, so there was a model already running – although some of those centres are almost as new as the Catapult itself. There was an offer that industry understood. The thing has accelerated, but behind its success is the fact that it is populated by highly credible people who run these things like proper businesses – it is not an academic research institution.
It is like Germany’s Fraunhofer institutes. But I think we have an edge, because the Catapults have more of an industry focus. The centre of gravity of the Fraunhofers is more towards the academic end.
Materials expertise: The National Composites Centre is one of seven centres involved in the Catapult
Manufacturing has moved higher up the agenda of the political elite than it used to be. Do you think its visibility among cabinet ministers and so on is a good thing?
It is a tough job, being a minister. You have a limited amount of time to be a success. But I have been impressed with the quality of the ministers who are engaged with us. They listen carefully, and think about what they are doing. They have been incredibly supportive.
And it is not just about the Catapults. If you look at aerospace and automotive – two of our most important industries – they have attracted government funding for things such as the Advanced Propulsion Centre and the Aerospace Growth Partnership. There’s a billion pounds of government money matched by industry there, fuelling collaborative projects.
It would have been quite easy, in the wake of the financial crisis, to come out with rhetoric about the importance of manufacturing without backing it up with action.
You have to remember that these investments are being made at a time of severe austerity. So these have been difficult decisions.
But we have hard evidence of high value-added manufacturing increasing its footprint in the UK on the back of our work. As an engineer, my mission is to give that evidence to the government. We want to be able to say: “You’ve invested this on faith – here is the result”. I think manufacturing has its moment in the sunshine now. We’re determined not to miss the opportunity. We want to cement its place as a key part of the economy.
Ideologically, is there any reason why governments shouldn’t have adopted a more proactive approach to the sector previously?
Governments were seduced by the success of the City. And let’s face it, year-on-year, financial services were doing great. We had – and continue to have – one of the best centres for financial services in the world. You can forgive people for going along
with the flow.
But the engineer looks at something such as that and wonders how it is sustainable – how all this wealth is being created. We’ve found out, now.
People have talked for decades about increasing the level of automation in factories. There are arguments both ways on the impact on manufacturing employment. In terms of manufacturing processes, where does innovation need to take place?
The thing that jumps off the page is Industry 4.0. If I can switch my central heating on with my phone, I can begin to drive manufacturing processes in a similar way, through interconnectivity. I think there is an opportunity for the UK – which is behind Europe and certainly behind Germany – in terms of automation.
There is a chance, using Industry 4.0, for us to get our act together and leapfrog other countries. Companies such as Siemens and Hewlett-Packard are working closely
with us, and I see promising stuff coming out of that.
The other area is additive layer manufacturing: laser sintering has so much potential – especially in somewhere such as aerospace, where so many processes are subtractive.
Do you view the outlook for manufacturing as favourable (see box below), despite various problems in the global economy?
I do. We are in a great position. We have mechanisms to bring stuff to market, such as the Catapults. We’ve secured funding for aerospace and automotive. We’re
sitting on, by any measure, some of the world’s best research. We have this reservoir of ideas and capability, and now we’ve got the mechanisms to extract them and bring them through. That makes us uniquely positioned.
Aerospace onboard: Another partner in the Catapult is AMRC with Boeing
EEF reports favourable trends across sector
The latest outlook survey from manufacturers’ organisation the EEF “shows a positive picture of trends across the manufacturing sector”, according to its chief economist Lee Hopley. Looking at investment intentions, orders and employment, “everything is positive”, she says.
The EEF has revised its manufacturing growth forecast for the year to 1.7%, and GDP growth up to 2.8%. These figures are higher than the long-term average for the survey, says Hopley. She acknowledges that the global economy is softening, but says that has not translated into a slowdown in UK manufacturing during the first quarter of the year. “The export picture is looking slightly better than it has for some time. Demand in Europe is providing a bit more support as well.” Non-EU markets are also providing solid export opportunities for manufacturers, she says.
Domestically, the picture is more mixed. The recovery in consumer demand and construction has been offset by fewer EEF members reporting a pick-up in domestic orders. “Companies focused on the oil and gas market are suffering,” says Hopley. They have been affected by the collapse in the oil price and its impact on North Sea oil and gas. “That has a positive effect on consumer spending. The flipside is less investment in exploration. That has worked its way down through the supply chain.” Sectors such as basic metals and mechanical equipment have been hit, says the EEF.
Manufacturing growth for 2014 was slightly weaker than expected at the start of the year, with a strong first half offset by a weaker remainder, totalling 2.8% against a forecast of 3%. “Some of that was due to weaker-than-expected global conditions. The oil price impact was more apparent in the first quarter of this year than in 2014,” says Hopley. However, sectors exposed to the consumer market could expect to benefit from this trend.
She adds: “Order expectations and confidence are high. Our members believe growth within their businesses will hold up. That’s confirmed by investment plans by engineering firms. They are back to pre-recession levels. However, there is a way to go before we get a real step change in investment levels.”
According to the survey, manufacturers reported positive order balances for the eighth consecutive quarter, although at +13% the balance fell slightly from +17% in the final quarter of 2014. Orders drifted down to +5% from +10%. In contrast to previous quarters, the balance eased to just +1%, down from +11%, while export growth edged into positive territory at +1%, up from -3%.
Optimism is growing, with the balances on output and orders increasing to +21% and +20% respectively. Domestic demand is also expected to recover to +14%, and export orders to rise by +13%. This positive outlook is reflected in job prospects and investment intentions.
A balance of +16% of manufacturers plan to increase capital expenditure in the next three months, the same as in the previous quarter, which makes this the 19th consecutive quarter of positive intentions, says the EEF.