Closures, cutbacks and layoffs across the UK economy have scarcely left newspaper headlines over recent months. But have we seen the worst of the recession? Will there be further job losses? Are there ‘green shoots’ of recovery?

Zoe Chiverton and Meagan Ellis approached 18 leading members of the UK engineering and manufacturing industries to get their views.

Construction products, Mining, Automotive, Polymers, Packaging, Light metals, Biomedical, Cast metals, Surface engineering, Composites, Particulate engineering, Fuel cells, Nuclear, Sustainability, Electronics, Steel, Technical ceramics

Construction products

Michael Ankers, Chief Executive, Construction Products Association, London
‘We’ve gone from workload levels that were unprecedently high to [the lowest levels in 60 years]. Housing has been hit badly, so anyone who has products focused on this market has had phenomenal cutbacks. People have reported orders of 50-60% lower than last year. And it is now anticipated that housing starts will be 30% lower in 2009 [than 2008].

‘Construction is always going to be needed. To move forward the industry has to look at what will happen when the recession is over. Try to stick with issues to do with environmentally friendly or innovative construction to bring forward better solutions.

‘Some companies will inevitably go under. We’re predicting a fall in output of nearly nine per cent over the next 12 months. But without Government spending on infrastructure, we would be in much worse pain. The public building sector is still strong, and we want to continue to nurture that.’

Chris Hallas, Owner of Shire Minerals and Machinery, Wakefield, and Chair of the Institute’s Ceramics Society
‘What we need the Government to do now is get local authorities to release funding [for building]. Property needs to be made affordable for people to buy [and build].

‘I’m not sure if the [building] ceramics industry is acting as a global leader. While we have developed a distance learning course, a Level 4 technical certificate in ceramic technology, we aren’t encouraging enough young people to enter the sector. We need to create more education opportunities. We also need to look at technologies in other countries, and not be too conservative about approaching them.’

Mining

John Monhemius, Professor of Mining, Imperial College London, and Chair of the Institute’s International Mining & Minerals Association
‘The major mining companies were riding high on the commodities boom, enjoying record metal prices and record profits. All this has come to a juddering halt since September. Metal prices have dropped like a stone and expansion plans have been put on hold. The major companies are probably big enough to survive without serious damage. The situation for juniors is quite different.’

Michael Forrest, Mining Research, Barnet, and Chair of the Institute’s Applied Earth Science Division
‘The most pressing need for all mining companies is finance. At present it is virtually impossible to raise equity finance for exploration in London and elsewhere. [Some] companies have been unwinding hedges at high metal prices to raise cash. The most obvious [solution] is to increase the amount of money in the financial systems and persuade banks to lend, and investors to buy equities. London is still a major finance capital, however, a good number of AIM-listed [firms] will run out of money in the next two quarters.’

Automotive

Mark Ellis, Manager of Materials Design and Test, Nissan Technical Centre Europe, Cranfield
‘There is a lot of uncertainty with respect to oil prices that impact on materials and fuels, and consumer uncertainty, which means they postpone or cancel purchases.’ On the up side, ‘the downturn has prompted greater interest in fuel efficient and environmentally-friendly vehicles and technologies. The industry is still continuing to research new power source technologies and opportunities for weight reduction through the use of advanced materials. The recent financial difficulties have also given us the opportunity to review logistics and supply chains.’

Polymers

Peter Davis, Director General, British Plastics Federation, London
‘The plastics industry is a good barometer of what’s happening in the economy, because we supply into practically all manufacturing areas. The two worst hit markets are housing, where our members supply pipes, windows and wall coverings, and automotives, where sales of new cars in the UK have dropped by about 50%.

‘The UK polymer industry is a leader in innovation, and we have a world-class design industry. I hope these don’t tail off too much in the current conditions. We have proposed that fuel duties, vehicle excise duties and the climate change levy don’t go up. Doing this will reduce the financial burden on companies.’

Packaging

Keith Barnes, Packaging Advisor to Mintel Group, London, and Board Member of IOP: The Packaging Society
‘Packaging is way down the product chain, so it will take a little longer for the credit crunch to bite. As everywhere, the costs of basics has risen and, inevitably, demand for many products will fall. This will affect packaging. However, some producers are optimistic, and have reasonable order books.

‘The skills of academia should be tapped into to create innovative containers. Environment should be on the agenda. There are a number of initiatives to recycle waste and local authorities need help. We must also move forward and create more energy from waste plants.’

Light metals

Geoff Scamans, Principal Scientist, Innoval Technology Ltd, Banbury, and Board Member of the Institute’s Light Metals Division
‘Although in 2009 there will be effects from the credit crunch for titanium, the medium and long-term prospects are still good. Annual global production is predicted to rise from 130,000 to 300,000t by 2026.’ This growth is due to increased demand from the aerospace and energy sectors.

‘In general, the aluminium and magnesium sectors were already suffering long before the present “perfect storm” of a financial crisis. Their story has been one of successive closures and a loss of both capacity and capability that will continue into 2009. The continued decline in the aluminium price means that most of the world’s smelting capacity is no longer operating profitably, and metal stocks are still increasing at a rapid rate as production capacity is dropping slower than demand. However, the direction of the automotive and aerospace industries is clearly aimed at higher fuel efficiency and lower emissions that should promote a continued and increased interest in vehicle light-weighting, and should offer stimulus for both aluminium and magnesium.’

Biomedical

Summary of a discussion carried out by the Institute’s Biomedical Applications Division
‘Members agreed that [the biomedicals industry] is based on a few large companies but many more that are relatively young and are either spinouts or at the SME stage. These companies may well experience considerable difficulties in the coming months in raising investment capital for their continued operation and growth.’ This could be an issue for the UK, as it ‘probably has more market leadership in SMEs and spin-outs.

‘There are also challenges based around regulatory issues. New materials [often] need a long regulatory route through the US Federal Drug Administration. This is extremely expensive, [especially as] the cost of raw goods, manufacturing and distribution are rising.

‘The current economic climate may have an impact on academia since industry is less likely to invest money to sponsor research.’

Cast metals

John Parker, Chief Executive, Cast Metals Foundation, West Bromwich
‘While the cost of metals and scrap has been widely publicised, the high cost of energy has been of equal, if not more, concern. Energy costs for many companies have doubled, and the disparity with other EU countries has put UK manufacturing at a competitive disadvantage. Notwithstanding, it is interesting to note that competition from low-cost producers such as China and India has been more subdued, as the benefit of low labour costs has been offset by higher metal prices, resulting in some business returning to UK shores. Ferrous and non-ferrous founders have looked closely at the range of castings they produce and sought to add value wherever possible. Others have elected to concentrate on specific markets where complex castings and alloys are specified.

‘It is pleasing that a new Foundation Degree in Casting Technology has just been launched in the form of distant learning modules via Bradford University. Such skills will be critical if the UK industry is to compete globally. [However], there are still concerns over the lack of young recruits.’

Surface engineering

Keith Harrison, Consultant and Chair of the Institute’s Surface Engineering Division
‘Given that surface engineering is intimately linked to all levels of component manufacture, it seems inevitable that the coming months will see reduced levels of demand and activity. The aerospace sector, a major user of surface engineering, is still performing well. But as the global crisis continues and passenger numbers fall, orders for new aircraft may be deferred. The industry needs to enable predictive design of important components and products, with minimum waste, and use more sustainable materials and environmentally-friendly processes.’

Composites

An Airbus wing. Copyright of Airbus S.A.S 2009Paul Hogg and Faye Smith, Chair and Board Member of the Institute’s British Composites Society, respectively
‘Competition from low-cost economies is forcing UK companies to make existing production techniques leaner and/or come up with high-tech production methods that other economies cannot match. There is also a shortage of engineers with composite knowledge and experience. Delays in aircraft production (such as the A380) mean delays all the way down the supply chain, which does not help cash flow. [However], the UK is one of few countries to have the capability to design, test, integrate and manufacture complex aircraft wings, and the current work to integrate composite technology into this puts us in a good position to bid for future work.’

Particulate engineering

John Dunkley, Atomising Systems Ltd, Sheffield, and Chair of the Institute’s Particulate Engineering Committee
‘Sintered parts production has been suffering for years as it is squeezed between four powder suppliers and eight international automakers, and it is too fragmented to fight back. In the UK, it has shrunk to about a quarter of what it was 20 years ago. Now that volumes have collapsed, the situation is poor indeed.

‘Materials like heavy alloys or valve seat materials are still made, but in modest volumes and largely under foreign control. Given the preponderance of PLCs in UK industry, which always seem keen to offshore, it is hard to be optimistic, although the decline of the Sterling must be helpful.’

Fuel cells

John Kilner, Professor of Materials Science at Imperial College London, and Chair of the Institute’s Energy Materials Group
‘There is not enough fiscal encouragement for the enormous task (time and money) needed to invest in new, low carbon technology. These credit limitations will impact on low carbon roll-out plans. The challenges of commercialisation remain uppermost in the minds of fuel cell businesses, and some have had to retrench due to financial pressures, even though they have viable products.’

However, there have been industry high points, led by ‘the approval for the European Joint Technology Initiative for Fuel Cells and Hydrogen. For the first time, there is a ring-fenced fund, 450m euros, for this technology’s development over the next six years. The UK public sector should also provide consistent longer-term support’.

Nuclear

Adrian Bull, UK Stakeholder Relations Manager, Westinghouse Electric Company
‘Energy is one of the things we know we will need in order to sustain an economic recovery. Nuclear energy is looking more attractive, not just because of its low carbon emissions, but also because its economics are not exposed to the variations in fossil fuel prices. UK Government has been encouraging the prospects for new nuclear plants, addressing many of the previous obstacles such as planning and regulatory delays. It has also taken steps to make potential sites available.

‘Although this is not the easiest time for companies to invest, construction of new nuclear plants would not begin until around 2012, so utilities and suppliers are making plans now for major investments to take place some years hence.’

Sustainability

Ian Holmes, Manager, Resource Efficiency Knowledge Transfer Network
European environmental legislation ‘is having a significant effect on industry. There is a need to collect and treat waste electrical equipment, but in a way that does not incur excessive costs. Some have found that the implementation of this has not given them the customer base anticipated. Recent low points [have also been] the drop in value for recycled materials.

‘There are savings to be made in energy and materials use. If process waste is correctly treated and separated, it could provide an income stream and lower-cost materials.’

Electronics

Henry Parker, Programme Manager, technology trade association Intellect, London
‘Electronics has already had a downturn in the UK worse than anything the current recession is throwing at us. From 2000-06, output fell by more than 50%, the largest fall in Western Europe.

‘The average age of the industry’s workforce is higher than that seen in the wider economy, with 38% of those employed aged between 35-44 and 37% aged 45-64. Meanwhile, the number of employees aged 16-24 is half that of the economy, as a whole. This points towards a generation of young people who do not have the skills to sustain electronics in the UK.

‘The industry has to focus on niche, low volume, high quality products. In addition, we have to play to our strengths – start-ups and spinouts need to be effectively supported, and the UK has to get better at commercial exploitation of new technologies. It also needs recognition from Government that focus on high level skills among existing workers [is needed].’

Steel

Image courtesy of Laurence Richardson Dr Graham Honeyman, Chief Executive, Sheffield Forgemasters International
‘The key challenges facing my company include the high cost of production [due to] high-energy use and a large workforce. Large-scale open die forging operators have had to refine their markets while the smaller, bulk steel producing industry has seen a rapid and massive decline across Europe. And at the moment, there aren’t any specific funding streams that a company of our size can access.

‘The key to surviving lies in planning to survive. It is important to implement a dedicated training and recruitment programme that can be taken up by all engineering practices. It is vital in these trying times to share the wealth of knowledge that the UK engineering sector has, and the best way to do this is through a home-grown workforce.

‘It is also prudent to choose your market carefully and maintain strong client relationships. The building global power deficit and a need by all developing nations to adopt sustainable power generation means there is a vast demand for components for nuclear, hydro and wind power projects.’

Technical ceramics

Ceramic hip joints from Morgan Technical CeramicsCharlie Cobb, President of Morgan Technical Ceramics Europe, Stourport-on-Severn
‘I refuse to blindly accept the “doom and gloom” predictions being made. I believe some sectors are more robust than many give them credit for. Diversity in end markets enables us to maintain a “balanced portfolio”. As we experience delays and cutbacks in areas such as automotives and semiconductor production, we see demand continuing in the medical and military sectors.

‘Companies can look at where products can provide benefits in other markets. For example, we have transferred a semiconductor process to the manufacture of solar panels, one of the few burgeoning industries.’

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