Industry: Nimble, niche and networked
Sitting in her office overlooking a sunlit field occupied by a pair of placid horses, Wendy Chilton holds a small steel object coated with a barely visible layer of ultra-thin copper. “You could call it a black art,” says the 37-year-old engineer of the process that makes possible the production of a component indispensable to the global electronics industry. “No one else seems to be able to do it in the way we do.”
While this small factory staffed by just seven employees might appear an unlikely location for a high-tech company at the cutting edge of its sector, it could in fact represent the future for British industry.
It offers a graphic illustration of the nimble companies, operating on a global basis in niche areas of technology, that seem likely to prosper in the new industrial revolution now beginning. The fact that the UK is replete with such businesses suggests the country could emerge once again as a leading contender in manufacturing – a sector it pioneered in the 18th and 19th centuries but more recently has allowed to slip back in favour of services.
But although Britain may have the knowhow and cultural characteristics required to stage an industrial comeback, it still lags behind far behind the likes of Japan and Germany, where boutique companies making uniquely specialised products form the economic backbone of the nation. If Britain is to resurrect manufacturing as a high-value growth engine, it will almost certainly require some action by government to make the most of the country’s potential.
Ms Chilton’s technology underlines the possibilities. Without it, companies worldwide making everything from smartphones to oven controls would have to rethink parts of their production. The steel component she is proudly displaying in her office is the shaft of an air-bearing spindle, a device that allows high-speed drills to operate reliably when punching tiny holes in items of electronic equipment. Ms Chilton and R.A. Chilton – the company of which she is managing director – have what amounts to a near-monopoly on an esoteric coatings technology vital to making these spindles work.
The impact of these seemingly innocuous objects is amplified by hundreds of connections with companies around the world, which is one fundamental characteristic of the new industrial revolution. Three others involve the application of new technologies, a focus on “niche” areas of industry and an increasing focus on “personalised” products.
Professor Khairy Tourk of the Illinois Institute of Technology in Chicago says Britain has inherent advantages in these areas, with the added boost of the use of English as the main global language. Together these mean it “can put itself on the map” in 21st-century industry.
In 2011, the UK accounted for just 2.4 per cent of global factory output and ranked ninth in the league table of manufacturing countries by output. Many of the proud British names that dominated the sector in the
20th century, such as Lucas Industries, maker of car components, and the General Electric Company, have disappeared. Following the loss of manufacturing prowess in the past
50 years with companies unable to adapt to changing markets and new technologies, there have been worries about why the UK – with its world-class university science departments – has proved unable to sustain more than a handful of big industrial businesses along the lines of Germany’s BASF or Caterpillar of the US.
Today the archetypal UK manufacturer is a small business with perhaps 50 employees that is based in an unremarkable edge-of-town business park and boasts global links as opposed to a highly visible smokestack in a large city. Such companies account for a greater share of industrial activity since the larger enterprises have fallen away.
With the shifts under way in the sector, the relative absence of large British-owned industrial behemoths may not matter any more – and could even turn out to be an advantage. The UK’s prevailing approach to manufacturing – emphasising small, agile businesses with an eye for the unusual that formulate their own rules – could fit in with the requirements for success. To reformulate the phrase used by George Osborne, UK chancellor of the exchequer, in a speech last year extolling the virtues of manufacturing, the new era is likely to feature not so much a “march of the makers” as a “march of the mavericks”.
It is no coincidence that UK engineering history offers few examples of the “quality gurus” that gained prominence in countries such as the US and Japan – such as management expert W. Edwards Deming or Taiichi Ohno, a manager of carmaker Toyota who was prominent in the 1980s. Instead, British industry features technologically gifted chancers such as steelmaker Henry Bessemer and heroic dreamers including computer pioneer Charles Babbage.
While in the past such people often struggled, they could today find themselves psychologically and temperamentally wired to do well. A notable example is Sir David McMurtry, founder and chief executive of Renishaw – a company based in the south-western county of Gloucestershire that is the world’s biggest maker of measurement probes used in the manufacture of metal parts.
Known for his relentless enthusiasm for engineering and his unconventional ways – conducting interviews while reading papers on aerospace technology, for example – he has espoused inventions from robotic lawnmowers to novel tooth implants. He also displays a withering disregard for bankers and financiers.
An individualist in the same mould is Sir James Dyson, a high-octane innovator who has made his eponymous vacuum cleaner business into a global leader. His dividing of the company’s Asia-based production from its UK-centred product development is in line with the blueprint of the new industrial revolution stressing the separation of elements in the manufacturing “value chain”.
Biography of a boutique brand
Air-bearing spindles are an esoteric branch of global industry in which Britain invented the technology and still plays a central role.
The small cylindrical devices are used in machines that bore tiny holes in the printed circuit boards found in gadgets such as mobile phones.
The technology was devised in the late 1950s by Nigel Allen, a Briton who founded WestWind in Dorset to commercialise it. A former colleague established a second company, Air Bearings. WestWind and Air Bearings – now owned respectively by US technology group GSI and Japan’s Hitachi – are now the biggest makers of air-bearing spindles for PCB drilling. According to Andrew Wallace, a UK technology consultant, the two companies account for at least 80 per cent of total global sales, which stand at about $60m.
R.A. Chilton is in a “niche of a niche”. The company – started in 1974 – has invented a specialised coating the air-bearing spindles need.
The company’s technology adds a remarkably “sticky” layer of copper that refuses to come loose even when the component is rotating at close to the speed of sound. Both WestWind and Air Bearings rely on R.A. Chilton for these coatings – as do tens of thousands of electronics businesses, many of them in China.
Wendy Chilton, who runs the business in Cheshire, happily shows visitors the plating baths but refuses to divulge operational details. She
is sanguine about the future. “Of course, there’s a chance the Chinese will work out how to do this,” she says. “But as long as we continually improve what we do, we feel we can keep one step ahead.”
One observer of the UK approach is Abe Reichental, an Israel-born engineer who is the chief executive of US-based 3D Systems, one of the world’s biggest makers of “3D printing” machines for making components on a “one-off” basis. He says a lot of British engineering groups are “flexible, entrepreneurial and pragmatic”. He adds: “The [national] DNA induced by centuries of colonisation has given the British an adaptability when dealing with unfamiliar cultures – which in a globalised world is a useful asset.”
There are further reasons to think the natural leanings of UK manufacturing fit into the framework of the new industrial revolution. One is a tendency to focus on selling into areas with narrow parameters that can to a large degree be invented by the participating companies themselves, and to rely on selling services as well as products. Steve Radley of the EEF manufacturers’ association estimates that “at least half” of UK factory output – covering everything from electronics to food products – is focused on such narrow areas of activity.
The best example is the Formula 1 car racing business. This involves intensive use of engineering resources to design and make high-grade machines that do little apart from playing the lead role in a global spectator sport built on advertising. There is no reason why Britain should have become the leading country for Formula 1 car production – apart from the fact that it fits with the UK leaning towards production based around esoteric technologies and markets.
Another example of the phenomenon is Spirax Sarco, the world’s biggest maker of steam-control equipment. Its range consists of 50,000 assorted items of pressure valves and regulators, sold to 100,000 customers.
British industry also features a facility for working with a range of technical disciplines and finding the common ground between them. Spectris, based just outside London, is a leading producer of a range of instruments for factories and laboratories – for measuring minute amounts of gas, for instance. “We have to keep abreast of a lot of important technologies from electronics to new materials” says John O’Higgins, chief executive.
A third important strength of the UK is the ability to devise solutions to customers’ problems. These are often based on an approach geared to making products as highly customised “one-offs”, and to the needs of one business as opposed to many.
Sigmatex, a company in the northwest English town of Runcorn, is a world leader in making complicated shapes from moulded carbon fibre. The items can be used in anything from washing machines to energy turbines, and come in 1,000 basic varieties that can be tweaked to suit customers’ requirements. “There is an almost limitless group of people out there in the world who require new shapes of component that, while being strong and tough, are also ultralight and can replace plastic or metal. Our job is to meet their needs,” says Scott Tolson, managing director.
The companies that already exist in the UK are unlikely to be sufficient to meet in full the challenges of the new industrial revolution. Businesses will need to be created; those already operating will need to develop and perhaps expand. Calls for new policies – such as a government-backed bank to help finance undercapitalised manufacturers – will not go away.
The characteristics of the new industrial revolution, however, make the task of assisting UK manufacturing a lot simpler as the country already has many of the attributes required. In this new environment it would seem sensible for policy to plug the gaps in the manufacturing framework that already exists. Such initiatives could focus on helping companies to improve their technologies, develop more global strategies and organise more joint development projects with larger businesses in order to learn more about such groups’ technical capabilities.
Given a modest amount of additional government support, the UK’s progression through the new industrial revolution could turn out just as propitious as in the first one.