Talking to the experts - machine building special report

For the manufacturing industry, economic pressures are nothing new. The mass-migration of work to countries with cheap labour saw those still choosing to produce in the UK having to become a lot smarter in the way they manufacture, in order to be able to compete. This led to the wide uptake of highly automated manufacturing systems able to carry out a process cheaper, faster and better than before. But, as energy prices skyrocketed the industry again needed to adapt. The result has been a continued drive towards energy efficiency to reduce the energy consumption of these systems. However, just as energy prices looked as if they were beginning to drop, and energy efficiency technologies began to come online in their droves, the current economic crisis hit. So as 2009 gets underway, its business as usual for UK manufactures, which means having to change to meet the challenges ahead. We talked to leading figures in drives, Ethernet, automation and linear motors to ask them about the year ahead, the impact that a recession will have on the machine building sector and the innovations the industry is working toward. It is no surprise that when we asked our panel of experts if they were worried, the answer was a resounding ‘no’. But, there were words of warning against complacency. “I have learned that keeping a successful business going in the face of changing market conditions isn’t about knee-jerk reactions,” said Ray Hall, managing director of HepcoMotion, manufacturers of linear motion technologies. “It’s only natural that manufacturers focus more attention on housekeeping issues when anticipating difficult times. We’re now making continuous improvements based on quarterly performance and anticipated demand. And continued investment in our processes, our products and our people is very much the priority here, especially now. It’s what brought us safely through the last recession and will continue to underpin our business.” There was a fairly clear consensus that continuing to invest in advanced manufacturing technologies puts businesses in a fairly good position to capitalise on competing with manufacturers abroad. Although facing similar hard times abroad, those there are unable to do much about the increasing wages of their workers, the core of their production cost advantage. Brian Holliday, general manager for Industrial Automation Systems at Siemens says: “Actually, automation systems are better positioned during a downturn as they can be set up to accommodate market demands much better than, for example, manual labour. I don’t believe that throwing lots of people at production processes in lower cost environments is going to address the problems that manufacturers are currently facing.” We asked the experts if they thought the economic downturn would see a shift from energy efficiency to low-cost parts and products, as financial directors tighten the belt on capital expenditure. John Murphy is vice president for strategic planning at Control Techniques, which have the single minded focus of the design and manufacture of variable speed drives. He says: “I expect to see continued focus on cost, but not at the expense of either performance or energy efficiency. To survive, European machine builders must build on their competitive advantages by aggressively adopting new technologies that can deliver cost, performance and energy saving benefits.” This was a sentiment echoed by most of the panel, particularly John Jackson, product application manager at Weidmuller, an electrical connectivity and communication electronics specialist. He explained that while keeping costs down is the primary driver for any business, it is not quite as simple as buying cheaper parts. He says: “You might save a few pence on an electric terminal down the bottom end. But it is more about looking at how something is built, the labour cost and if money could be saved elsewhere. Some customers look at energy efficiency and energy consumption monitoring systems as a way of actually freeing up cash. “It is about showing the true cost of the components within a machine. Not just the cost at the time, but also the lifetime costs that include the time to fit it, the time it takes to diagnose and fix a problem, and the power it uses.” Manufacturers are undoubtedly looking at their operations and assessing costs. Research and development (R&D) expenditure is an obvious area to be squeezed, but do our panel expected this to be reduced during 2009? It was generally agreed that continued investment in R&D was vital. “For us it is the life blood of our business,” says Holliday. “However, other companies may decide to wait and then tap in to certain technologies once they are fully developed. But the pace of change in the automation world in particular is speeding up dramatically. Those that choose to sit back could find themselves quickly dropping behind.” Jackson went a step further and says that companies that do invest in future products and processes during a downturn will end up in a much more competitive position in the upturn. He said: “If you look at the last five years, the manufacturing sector has been in continuous challenging conditions. However, it has still managed to bring in advanced technologies that have improved quality and reliability enormously, all the while reducing costs. That is what has kept it successful. Those companies that invest now will be the ones that will get the greatest growth when we come out the other side.” We then asked if the suddenness of the economic slowdown forced many companies to look at short-term survivability and abandon any medium or long-term growth plans? Murphy says: “There will be many good businesses that out of necessity will be forced to reduce costs and slash development programs to survive. These businesses will be hoping to make up lost ground when the upturn arrives. “But it depends upon the depth and duration of the downturn. The competitive environment may become dramatically different due to industry consolidation and the failure of many marginal businesses. Businesses need to recognise and embrace opportunities for change, looking not only at direct competitors but also changes within supplier and customer industries.” Some of the panel however, talked about potential opportunities such as taking advantage of the amount of highly skilled labour that has become available. Additionally, the weak pound points to an opportunity for greater exports. However, Holliday says: “The weakness of the pound should help in terms of exports, but there hasn’t been too much evidence of that just yet.” So with the panel recommending continued investment in innovation, we asked what developments the machine building we can expect to see in coming months and how it can help weather the economic storm. In general, the focus was on Ethernet and system level integration of software and control systems. Murphy talked about the development of intelligent drive systems. These promise to reduce operating costs and improve machines’ overall performance through integrated machine control. Holliday says: “Another area where that is clearly developing is wireless control. Clearly wireless and Ethernet technology is progressing in the industrial space. We are putting in a lot of effort to make sure wireless communications are safe and secure as a wired connection. And in that sense, we are seeing applications open up not just for machine-to-machine connections, but machine to operator connections. That means operators can now walk with wireless interfaces into machinery and factory processes. That will bring a number of benefits. “In general, there is scope for machine builders to think far more about how their product sits in a more joined up landscape of automation for the manufacturer. Given that they are now increasingly connected, there are automation environments integrated with business systems. This is a clear trend of what will continue to happen at the end user level.”