Can the UK’s electronic systems sector grow 50% by 2020?

According to the research, the electronic systems (ES) sector currently contributes £78billion to the UK's economy and employs 850,000 people directly and indirectly. Growing revenues to £120bn would place ES in the top five industries in the UK. Setting targets is one thing, achieving them is another. The report makes several key recommendations, including improvements to supply chains, better strategic procurement and skills development. It also calls for a strategic 'think tank' to identify future opportunities for the sector. Failure to take action, it believes, will have implications for the competitiveness of every industrial sector in the UK and for the UK economy. The ESCO initiative – with ESCO standing for Electronic Systems: Challenges and Opportunities – was chaired by Jamie Urquhart, a venture capitalist with Pond Ventures and an erstwhile director of ARM. When the initiative was announced in September 2011, Urquhart said it was an 'interesting time to start to stick things together'. Speaking to New Electronics, he said: "The UK has a broad spread of companies which are invisible, but whose technology appears in exciting products. The report gives the opportunity to take a longer term view again." Now, almost two years later, what does Urquhart think about the report? "It isn't about the report," he contended. "The report is an outcome. But if the report is all that happens, that's not what I 'signed up' for." Somewhat dismissive of his role, Urquhart said: "These reports are easy to write if you lock MBA students up in a room. The result will be 90% good and full of relevant words. But if you ask whether this is a result, the answer is 'no'; that will come in a few year's time when we start making a difference." The report was compiled from a number of workstreams (see box). "When I've been involved in developing strategy," Urquhart said, "it wasn't about locking yourself away in a room, then saying 'this is what we do'. At ARM, I involved as many people as possible; people who knew what was going on, where we were and what the markets were. Importantly, they helped us to decide where we wanted to be. "The ESCO process was more about trying to understand from our constituency what is going on – not just because we wanted the information, but also because it will help to make changes with the stakeholders." The report's 'top line' recommendations are the economic and employment targets. But how might these be attained? In his statement in the report, Urquhart says the ESCO team will: • Build recognition of this strategically important key enabling technology sector • Accelerate growth in the UK vertical sectors as a result of the use of UK Electronic Systems, and • Develop and exploit UK Electronic Systems capabilities, nationally and globally. Building recognition "The electronic systems industry is invisible and the electronic systems themselves are invisible," said Urquhart. "So our first challenge is to motivate the various groups and to bring them together. This will make the industry more cohesive. But this is just a first step; there has to be more." The report spells out the way forward, using inward (industry) and outward (government and other bodies) facing approaches. Inward goals will be to develop broad recognition of ESCO and support for its aims and objectives. For the outward flow, the report recommends the development of a well supported and connected UK Electronic Systems Leadership Forum (ESLF). Working in partnership with government, the ESLF will lead the implementation of the Action Plan and promote it across the ES community, engage with the community by working through trade associations and key stakeholders, who will be urged to commit resources to support the Forum and the ESCO Action Plan. It's not the first time that a call has been made for the industry to unite behind a common goal. In 2005, the Electronics Innovation and Growth Team made a similar rallying call, but with little success. Is the ES sector a herd of electronic cats or a supertanker to be turned? "It's not so much a supertanker," said Urquhart, "more a flotilla of small ships. It's like a school of fish: they will act together. It's one of the challenges and one of the reasons the report took longer to produce than anticipated – we needed to get 'buy in' from across the industry." Are there too many trade organisations to get this 'sign up'? "Irrelevant," Urquhart asserted. "They are there for good reasons. We now have to work amongst them, rather than saying we have too many." Accelerating growth The report states 'Leading companies provide the basis for strong ecosystems. Using PowerElectronicsUK as a model, the Electronic Systems community will develop ecosystems around strategic supply chain development opportunities'. The report sets out initial priorities as: • Energy: the intelligence in the smart grid • Healthcare: the heart of smart healthcare • Transport: the hub of smart transport The ESLF plans to build what it calls 'strong relationships' with key vertical sectors – such as aerospace, automotive and defence – in order to ensure strategic alignment at the most senior level. This will be achieved via 'sector focused ambassadors', who will establish a dialogue with their counterparts in the key sectors and identify strategic supply chain development opportunities that could bring ES R&D and manufacturing to the UK. Urquhart noted: "It used to be about vertical companies, such as Plessey, which would do everything. While society and government still think about vertical companies, the world has changed. There are now laminar strips of capability across multiple industries. We need to understand and highlight the fact that some capabilities cross all industries." He pointed out that ES is an enabling technology. "It's not about companies like ARM," he contended, "it's about whether we can build systems of the future. It's a strategic capability. The UK has a knowledge economy, so there has to be strategic underpinning." Developing and exploiting The ESCO report calls for UK industry to develop a global outlook, for the UK to develop companies 'of scale' and for it to develop 'smart skills' and 'smart partnerships'. The goal, says the report, is to ensure that UK industry and academia create 'great' new technology whilst striving for greater UK led exploitation and increasing exports. It calls for a concrete action plan to ensure the ES community and its capabilities is 'properly represented'. It also wants to see more UK companies with globally dominant, consumer facing brands. "The world has changed dramatically," Urquhart said, "but we all take it for granted. That's dangerous and it means we fail to invest. We have an industry with a small number of larger companies, but not by international standards, and that's a problem." He pointed to the benefits of DARPA in the US – 'a significant driver' – and of similar initiatives in Taiwan and Korea. "I'm not arguing for top down control," he explained, "but government involvement is important, because it acts as a catalyst. However, it's important that we shouldn't think only about electronics; it's as much about motivating industry to work with those in other sectors who use electronics and it's about working with government." When it comes to skills, the report notes there is a real need to increase the number of bright young people considering careers in the ES Community and a particular opportunity to address the gender imbalance. The industry needs to increase coordinated activity reviewing ways to 'inform and excite' young people about working in the industry. "We need to make ES an easy career choice," Urquhart asserted, "and we need to make sure we have enough ES engineers to go around as we increase dependence on ES in the future." Will it work? Urquhart says he has seen more engagement over the last couple of years, with more passion from companies and a desire to reach out across industry. "If you have strategic focus, it's easier to get them to work together," he believes. "It's about alignments; about many incremental improvements. That's where we are today, but we need to align a bunch of things and to make people aware of why it matters. We have a strategic direction with goals and we will build a team which will help to deliver them. Together, it will make a difference. "There are statements and predictions in the report; will they all come true? Not all of them," Urquhart concluded. "Will the report put us on a better path? I hope so." For more on the ESCO report, go to www.esco.org.uk. ESCO methodology The ESCO report drew on the findings from a number of Working Groups, commissioned to focus in more detail on specific areas relevant to this community. • Workstream 1: Economic footprint of the UK Electronic Systems community • Workstream 2: Research, development and Intellectual Property creation • Workstream 3: Innovation climate • Workstream 4: Manufacturing • Workstream 5: Skills – supply, demand, provision and gaps Each workstream focused on the collection and processing of relevant information and the direct engagement of representative stakeholders. A series of consultations took place across the UK to validate suggested actions and to gather further information.