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by Charles Orton-Jones - Friday, 13th June 2008

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The Office of National Statistics confirms the good news – manufacturing output is rising, and is now growing at an annualised 1.9 per cent. For every two firms reporting a decrease in orders, there are three reporting an increase.

“There has definitely been a resurgence,” says David Wilkinson, the CBI’s senior policy adviser. “Manufacturing has been through some bad times. Many firms went bust, and low-value production was outsourced to the Far East. But UK businesses are leaner and more competitive as a result. People are talking of a renaissance.”

Cynics might call it a dead cat bounce. British industry couldn’t get too much lower, after all. Fifty years ago, half of Britain’s firms were manufacturers. Now it’s just eight
per cent. And what mighty firms they were!

The Clydesdale docks used to employ 150,000 men and launch half the world’s ships. Now the dockyards are deserted. The few remaining yards cast off two ships a year between them. All our big car brands are gone; Rovers are made in China; the Indians own Jaguar; and Bentley is owned by the Germans.

And yet Aston Martin is back in British hands after a long sojourn with Ford. Our car factories have never been busier – we now make twice as many cars as 25 years ago, and production is growing 18 per cent a year. The Bentley car factory in Crewe is producing ten times as many cars as five years ago. Micro-brands such as Morgan, Noble and Caterham are in rude health.

Our phamaceutical industry is also booming. Two of the world’s top five firms, AstraZeneca and GlaxoSmithKlein, are British, and the ecosystem of small molecule discovery, testing and research firms is formidable. In electronics, we are world class – Edinburgh-based Wolfson Microelectronics, which designs chips for iPods and PlayStations, was the Real Business/CBI Company of the Year in 2006, while Sir Robin Saxby’s Cambridge-based ARM is a global giant. Feisty performers are littered across the UK.

Defence has been a big winner in the War on Terror. Behind behemoths such as BAE Systems and VT are extraordinary stories: blast-proof ceramic maker Aigis is winning contracts across the globe, and Hesco Bastion makes the huge sand-filled fibre glass “Hescos” that are used to make forts in Afghanistan and Iraq. Hesco Bastion founder Jimmy Heselden has made £205m in five years.

And then there’s motorsport. If the rest of British industry performed like these guys, we’d be laughing at the Chinese. “Our motorsport industry turns over £6bn. That’s more than France, Germany and Italy put together,” says Chris Aylett, chief executive of the Motorsport Industry Association. “Every young engineering student – from Seoul to San Francisco – wants to come and work here. We attract the cream of global talent. This is the Hollywood of engineering.”

It’s not just the old guard like Bernie Ecclestone and Frank Williams who are keeping the industry alive. “We’ve got so many world-class start-ups, it’s hard to know where to begin,” says Aylett. “Crompton Technology Group was a spin-out from the Atomic Energy Authority. It produced the first carbon-fibre propshaft. These are now standard on all GT cars. It also produces medical equipment and underwater pressure vessels.

AET, or Advanced Engineering Techniques, was founded by guys from Cosworth. It was approached by a Nascar team from the US to be its UK partner. It’s now got 12 employees and is doing terrific trade with the Americans.”

Even when firms go to the wall in motorsport, the pieces are picked up with the sort of speed you associate with Formula One pit crews. “Reynard went bust. Seven firms sprang up in its place, founded by former employees. As the saying goes, acorns don’t
fall far from the oak.

“The secret to our success is churn. Motorsport engineers are competitors. They say, ‘I think I’ve got a better design’. That theory is tested on the racetrack: if they’re right, they win; if they lose, they can go bust – but they move on to the next idea. That ferocious competition is why we are world class,” says Aylett.

Now the industry is being taken to the next level by a big-money investor: defence. “Paul Drayson was the defence procurement minister; he also races Aston Martins,” continues Aylett. “He couldn’t believe the speed with which motorsport engineers work, and he’s since been introducing defence firms to motorsport companies. BAE says it’s discovered a world-class pool of talent on its doorstep”.

The cross-over is natural. Crompton Technology Group is selling its carbon fittings to aerospace firms and is looking to hook up with another British boom industry: green energy.

Engines of growth
The geographical concentration of motorsport firms is startling. Located mostly in two counties, Oxfordshire and Northamptonshire, the motorsport community is tight-knit – almost like one big family. Other sectors are learning from this example.

“The aerospace cluster is centred on Bristol,” says Mark Swift of the Engineers Employers Federation (EEF). “We have clusters in electronics, as well as in the marine and medical equipment fields. These clusters have big firms with many smaller sub-contractors feeding off them. It’s a very efficient and productive model.”

Scotland is home to the oil and gas cluster. Tim Bailey of Axiom Process, which makes shale shaking kit, says his firm is proof that the UK can be a world-class manufacturing base. “We research, design and make all our products within 40 miles of Aberdeen. We export 80 per cent of our products. The North East of Scotland has led the world
in oil and gas innovation for more than 30 years.

“As these reserves require ever-more innovative solutions in terms of recovery methods and environmental impact, opportunities will exist for innovative UK manufacturing businesses to enter lucrative export markets.”

Clustering is having a measurable impact. Not only is it creating a higher volume of firms, it is boosting the overall quality of these firms, too.

Adrian Grace, managing director of commercial business at Bank of Scotland Corporate, says: “We can clearly see the strength of British manufacturing. Look at the evidence: in the 2007 Bank of Scotland Corporate Entrepreneur Challenge, 11 of the 25 finalists came from the manufacturing sector, with two of the companies crowned regional winners. Initial indication is that the manufacturing sector will be strongly represented again in this year’s Entrepreneur Challenge.”

Swift of the EEF agrees: “We aren’t imagining it. We really do have a story to be proud of. The problem is that the media is still ten years out of date. At the turn of the millennium, things were bleak. We were worried China and India would destroy us. It didn’t happen because we had invested in high-value, highly technical niche sectors. Now you can actually see production returning to the UK.”

Crucially, young people are being lured back into the industry. “Perceptions are changing,” says Swift. “We have come through a generation where parents and teachers thought manufacturing was about oily rags and smoke stacks. Now manufacturing is seen as linked to science. The pay is high. Apprenticeships and vocational courses are highly subscribed.”

So no. It’s not a blip. Not a temporary phenomenon that will vanish next quarter. Says Swift: “We mustn’t delude ourselves that manufacturing can contribute 40 per cent of GDP again overnight. But Britain is on the way back.”

Tags: manufacturing sector, motorsport industry, phamaceutical industry, british manufacturing, office of national statistics, aston martin, glaxosmithklein, david wilkinson, wolfson microelectronics, car factories, chris aylett, robin saxby, mark swift,