Opportunity in the UK

Some of the issues faced by Britain’s industrial sector will sound familiar to Australians. It turns out we may be able to help, too, as Dr Mark Priest of Harrogate Partners, and Advanced Manufacturing Adviser to the UK’s Department for International Trade, tells Brent Balinski.

This year the British steel industry’s woes have been the subject of many articles, often with an “is manufacturing dead?” angle included.

Despite certain difficulties common throughout developed economies, the UK’s manufacturing sector is healthy.

This is the opinion of Dr Mark Priest, founder of Harrogate Partners, an advisory firm specialising in engineering, manufacturing and physical sciences strategy and investment, and operating in the Cambridge area.

“The fact is the UK manufactures more today than ever in its past, but it’s different,” he told Manufacturers’ Monthly.

“There are some challenges, and the challenges are around productivity, availability of skills, and other kind of infrastructural stuff like the price of energy. The price of industrial power is pretty high. So it’s a reasonably upbeat picture.”

The situation has similarities with Australia’s: a sector offering significant, generally well-paying employment (2.7 million jobs), contributing more than its fair share of business R&D (68 per cent) and often finding itself the subject of public misunderstanding. (Figures are from employers’ association EEF.)

It’s also adapting or preparing to adapt to some pretty major changes.

Which brings us to the opportunity side of things, according to Priest, with a possible role for Australian investment and smarts in the adjustment to major trends.

The potential is there for those who can step in and help with four significant shifts, believes Priest, who will present on the topic during his keynote address at the new Doing Business In Europe symposium, introduced by Manufacturers’ Monthly and the UK Department for International Trade.

These trends include the worldwide move from human-made to autonomous inputs, going from hydrocarbon to electric-based transportation, the replacement in some areas of metallic with non-metallic structures, and the (worldwide) journey to Industry 4.0.

“We make some of the biggest components in the world in carbon epoxy. But also in automotive – you’re seeing carbon in automotive and other structures,” explained Priest of the advanced composites movement, led by aerospace.

“It’s a different set of manufacturing technologies, different supply chain, different set of skills to design and build, and different set of in-service maintenance, quality and repair themes.”

mark-priest

Of Industry 4.0 – the digitisation of the entire value chain – this is another area where the country’s industry would like to attract more capability.

“I think it’s the biggest challenge to solve for all developed economies,” offered Priest.

“If we want to compete with some of the lower-cost competitors around the world, the answer to that is productivity and the answer to productivity is Industry 4.0.”

“We’ve got guys investing, but just not enough. The big guys like Siemens and SAP and ABB and some of the more well-known firms in that space are starting to operate across Europe, including in the UK, but are just not doing enough and not fast enough.”

Overall foreign direct investment in the UK is very important to its economy. In 2014, this was led by the US (£235 billion), the Netherlands (£176 billion), Luxembourg (£78.9 billion) and Germany (£50.1 billion).

For the last year on record (2014 – 15), there were 1,988 FDI projects in total landed, up 12 per cent from the year before and an all-time record, notes the Office for National Statistics.

According to the Bank of England, the UK is “has consistently been one of the top recipients of foreign capital among advanced economies” since 1993.

The recent Brexit vote has seen renewed interest from Australia in trade and investment with the UK, with a Trade Working Group announced for an FTA (possibly years off from being signed) in September. It will meet biannually from next year.

The organisation behind Priest’s visit, the UK’s Department for International Trade – formerly UKTI – welcomes and will assist Australian exporters if they have a goal of eventually setting up in the UK. Its primary purpose is attracting direct investment.

“But we all understand that the first move is often to sell in,” said Priest.

Assistance from DIT includes advice on how to launch a product (including market intelligence) and getting access to local partners – particularly if there’s an unmet local need for what you’re providing.

“It’s got to be really unique, it’s got to be highly competitive and very differentiated and bringing lots of value,” said Priest.

“And if you can convince us you’ve got something like that in your bag then we will absolutely help you bring it to market in the UK.”

“I guess the basic pitch is we probably have more top-line, big OEM businesses that are hungry for stuff in the UK and Europe than you may have in your part of the world,” he added.

Priest will give the keynote address at the November 8 Doing Business in Europe breakfast event, to be held at Melbourne’s Cargo Hall. For more information, click here.