British Manufacturing Making a Come Back
Growth and Challenges in UK Electronics Manufacturing
This article is an overview to British manufacturing in the electronics industry, with a focus on business growth and challenges faced in the high-volume wireless control and communication markets.
September 2013
Growth for the UK Economy
The summer months have witnessed something of a recovery in the UK economy. Indeed every sector of the economy has seen strengthening growth and manufacturing output has been rising faster than at any time in the past three years, up around 2 per cent year on year according to the Office for National Statistics (ONS). According to the ONS, the UK goods trade deficit has shrunk driven in part by rising exports - up 6 per cent in the three months to June - which according to Rachel Pettigrew, a senior economist at the EEF manufacturers' organisation, “supports our view that the manufacturing sector will gain momentum and will be a source of growth for the UK economy over the coming years.
Admittedly hardly a boom, whatever some in the mainstream press may say, it really is too early to say whether a solid recovery has finally arrived - the UK is still vulnerable to internal or external shocks whether that’s a slowdown in China or a return of the Eurozone debt crisis - but the growth we have seen over the summer months has to be welcomed and is certainly a move in the right direction.
Daniel French the managing director of Transonics believes that manufacturing in the UK is becoming more attractive,
“It is certainly more competitive at a time of higher import costs and rising labour costs and truth be told facilities overseas have little or no superiority over the capabilities that are available in the UK.”
Transonics is a good example of a business that is going through rapid growth at the moment. While primarily known as a supplier of electronic components and logistics solutions the company is also able to provide a full PCB design and manufacture service.
“Recently we moved our logistics business to Leicester and have opened new offices in Hemel Hempstead. It is certainly a statement of growth and I believe a demonstration that we are becoming serious ‘players‘ in the UK.”
Suggests French.
“Not only are do we now hold some major franchises but we’re investing heavily in PCB design and CEM activities and want to be recognised as a full service design and manufacture operation.”
Presence in Emerging Markets
That kind of confidence is the key ingredient to any recovery and companies who were hit hard by the recession, appear to be regaining their ‘mojo‘. According to the EEF almost three quarters of UK manufacturers are planning to launch new products in the next three years with plans to use this to grow significantly their presence in emerging markets.
Research conducted by the EEF found increasingly ambitious strategies in terms of innovation with companies looking to develop new opportunities, with more than 70% of manufacturers planning to move into new markets on the strength of innovation in products and services – a jump from 54% in the past three years.
Internet of Things Market
One company that is following this trend in terms of new products and looking at overseas opportunities is LPRS, a supplier of short range radio devices. In the summer it launched a new RF transceiver (eRIC) intended for embedded high volume applications in the growing market of the Internet of Things. eRIC was launched at the Fortronic Wireless event in June but the company also went over to the US where a preview of eRIC took place following a robotics workshop at a Hack Space event at the NYC Resistor in Brooklyn.
John Sharples, MD of LPRS comments,
“We are seeing real growth at the moment both at home and overseas. eRIC is a product that builds on years of experience we have in supplying easyRadio wireless modules and incorporates a lot of useful customer ideas and we believe it is a significant product introduction into the high-volume wireless control and communication markets. We’re looking to drive growth through innovation, developing new products or new markets and in time we want to see 50 percent of our sales coming from overseas."
The Challenge for Manufacturers
According to Steve Radley, EEF Director of Policy,
“The demands of selling into new markets have increased the ‘need for speed’ when it comes to innovation, something that remains a key challenge for manufacturers. Encouragingly, government schemes are well-targeted to help manufacturers, but in order to deliver the stability companies need, there must be a longer-term commitment to innovation funding.”
Investment in innovation and research is key to keeping on top of the global market and manufacturers need stability and certainty as they look to invest in new products and markets.
While the increasing attention being given towards innovation has been welcomed the EEF survey also highlighted that at 1.1% of GDP, Business Expenditure on R&D (BERD) in the UK is low by international standards. Even after adjustments for structural differences between countries, the UK is 0.4% below the OECD average and well behind the leading countries such as the US, Sweden and Korea.
standards. Even after adjustments for structural differences between countries, the UK is 0.4% below the OECD average and well behind the leading countries such as the US, Sweden and Korea.
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