Electronics manufacturing is booming, but there's room for improvement

But that's not the case. In many instances, UK electronics manufacturing is alive and well. According to Phil Inness, managing director of Axis Electronics and chair of Intellect's Electronic Manufacturing Services Association, the sector, which comprises around 250 companies, is currently showing double digit growth in revenues. One of the aims of the ESCO project is to get a better understanding of the UK manufacturing sector. While the most visible part of the sector is fairly well documented, ESCO wants to determine what other kinds of manufacturing go on in the UK and, importantly, how much of it. Leading the manufacturing workstream within the ESCO project is Graeme Philp, chief executive of industry association Gambica. "One of the first things we addressed was ensuring there were no 'orphan' industries," he said, "particularly those areas in which the UK does a good job – such as high end audio and scientific instruments – but which have not been captured in previous reports. We have tried to look in all of the 'dark corners'." When the research is finished, the project should have a good picture of UK electronics manufacturing. "We need to know the key things the UK is good at as a manufacturing location," Philp continued. "But we also need to know what we're not so good at; what we could do better. And we're also looking at the importance people attach to quality." With much of the work complete, Philp said the initial results are 'quite interesting'. "We're still getting results, but there are some helpful trends appearing in the data." One piece of information which Philp says was used as a 'conversation starter' came from the Department for Business, Innovation and Skills. It said imports of electronic products exceed exports by only 30%. "I am concerned about this figure," Philp admitted, "because it says 'electronic products'. I don't think the figure will be the same across the broader spectrum of electronic systems. So it's not a figure we'll be using in the final report." Some of the questions which have been asked are obvious. "If you design, do you manufacture?," said Philp. "But we're also looking to determine perceptions about the link between design and production. How close is this link? What do companies believe would happen if a significant part of production moved out of the UK; would there be a long term future for design or would that end up following manufacture?" Initial results, said Philp, are showing different points of view, depending on which part of the electronic systems sector a company works in. Philp said that some people could be forgiven for believing there was not much electronics manufacturing left in the UK. "They look at it from a traditional electronics manufacturing point of view," he contended, "buying in components, putting them on a pcb and enclosing the product. In some respects, that can be thought of as a dying industry." But he believes there's more to electronics manufacturing than that. "Obviously, manufacturing is about producing physical stuff," he continued, "but how many forms of manufacturing are there in the UK?" Activities which ESCO sees as falling under the manufacturing heading include specialist production, prototyping and preproduction work. Anecdotally, one of the UK's strengths is in high value, low volume manufacture. This was highlighted by the number of companies who initially 'offshored' this kind of manufacture, only to repatriate it fairly quickly when they realised the problems involved. "Offshoring may make sense for commodity items," Philp accepted, "but not for non commodities, where's there's high value. "For example, the UK couldn't make a dvd player for £100. But if you want to build a £2000 device – and do it well – the UK has a world class reputation. There is a belief that if it's made in the UK, it's made well." For those companies which have offshored, Philp wanted to know why. "Again, this reflects the needs of different types of manufacturing." He believes one of the issues that will become evident is the lack of flexibility in the supply chain when companies move manufacture offshore. "This reflects through to the customer," he noted. "There are issues of quality – real and perceived. Many people will buy a product on the basis of perceived quality. When they think they're buying quality, they will be disappointed when let down by poor workmanship." Manufacturers have also offshored because of a perceived benefit from lower labour costs. "But costs in the far east are rising and quality levels are not easy to maintain. There's less flexibility in terms of making design changes and there are also inventory implications." He accepts the semiconductor industry has shown how products can be designed in one country and manufactured in an entirely different location. "Even so," he reflected, "the UK has 17 fabs, all specialists in some way or another." There's also what Philp calls bespoke manufacturing. "Someone making electronic sensors is probably doing so on a bespoke manufacturing process," he said. "Manufacture is probably integrated with the design of the product. If you try to get that sensor made somewhere else, it may well put the yield at risk." The UK still has a lot of what might be termed 'traditional' electronics assembly. "Take Marshall amps, for example. These feature valves and hand wired components. This survives because people are prepared to pay a premium for sound quality." The aircraft industry is another example of where Philp sees 'hidden' electronics manufacturing. "There will always be specialised manufacturing," he continued, "where it adds value. But the fact it's done at all will surprise some people." What does Philp think the report might throw up? "I think we'll find that skills are highlighted as an issue," he said. "One key aspect is overall employability; what is people's work ethic? Will they take instruction? Are they keen to learn? And, of course, there's the problem of getting young people to consider a career in the electronics industry." "There will be some pleasant surprises in the report," he predicted, "and the opportunity for further research. The report is likely to find that electronic systems companies tend to be net exporters," Philp concluded, "and that small companies can become net exporters early in their development. The UK is quietly exporting a lot of electronics based products, such as instrumentation and defence equipment, and it's all happening 'under the radar'."