Where the challenges lie for North East manufacturing

Where the challenges lie for North East manufacturing

Britain’s on the cusp of a global fourth industrial revolution, and with companies like GT Group, Barbour, Greggs, Pepsico and Nissan among others on our doorstep, the North East has a huge role to play in shaping the future of the industry. BQ's Brian Nicholls looks at the challenges facing the sector

Britain’s on the cusp of a global fourth industrial revolution, it’s suggested, expected by 2025. The main obstacles to Britain are considered to be levels of investment required, an availability of skills and ability to keep abreast of advances in technology.

There will also have to be more manufacturing leaders with the dynamism of Geoff Turnbull, chairman and founder of GT Group, who has been named in The Manufacturer Top 100 as one of the most inspirational individuals of UK manufacturing.

GT founded more than 30 years ago employs 300, incorporates six business units, and now has forward orders of £400m for the next five years – with a projected growth of 100% in 2016. Its international divisions span automotive products, project engineering and fabrication, composite mouldings, seals, process controls and coatings. A staggering 90%-plus of its products and services are sold in more than 60 countries.

Turnbull’s own energies and enthusiasm drive this private business, yet he still finds time to be a successful racehorse owner and breeder and recently invested in the creation of North of England’s newest racehorse stud at Elwick in County Durham.

With 2025 in mind, an engineering expert has counselled North East firms to speed the closure of their skills gap by collaborating to change public perceptions of their sector. Professor John Perkins, former chief scientific advisor to the Department of Business, Innovation and Skills, has also been president of the Institution of Chemical Engineers and, significantly, is noted for his review of engineering to the Government published two years ago.

Firms are collaborating on a business to business basis, showcasing their goods. County Durham for example suffered heavily from the demise of deep coalmining. But companies there, which contribute greatly towards filling the unemployment void, are driven by a County Durham Engineering and Manufacturing Network now responsible for the annual Oktoberfest held there.

Exhibitions and accompanying networking like this are a cost effective way to create trade opportunities in particular. Around 50 firms exhibiting at the latest Oktoberfest at Newton Aycliffe were Cummins (Darlington, builder of vehicle engines), Nifco (Eaglescliffe, maker of plastic parts for vehicles), and Altec Engineering (Bowburn, provider of electrical and mechanical engineering support).

This event has been running since 2008 and Izumi Products UK for one, which makes, supplies and repairs a variety of machinery from Bishop Auckland, has participated in every one. Similarly enthusiastic, Dyer Engineering the precision engineers of Annfield Plain has certainly secured orders there.

A second like event introduced in 2015 was a Manufacturing and Engineering North East presentation at the Metro Arena in Newcastle, one looking likely to become a regular engagement on the calendar, since more than 10,000 small manufacturing and engineering firms beaver within 100 miles of the city.

Meanwhile many of the long established companies retain their lustre. Barbour the outdoor clothing manufacturer on South Tyneside has been driving sales up 10%. Ringtons the Newcastle beverages and snacks provider is doubling its factory space after piercing the £50m turnover barrier for the first time in its 108-year-old history, thanks partly to gaining new sales ground in the South of England.

Greggs the largest bakery chain in  the country thriving with food on the go, is opening shops at a rate of 50 a year – closing some too, admittedly – but aims to have 2,000 shops around the country. Started as a little family business at Gosforth in 1951, it has become a popular investment on the London Stock Exchange and is the nation’s biggest seller of sandwiches behind Tesco, which has double Greggs’ number of stores.

The Government’s realisation that defence cuts are only feasible briefly in a volatile world is good news for Cook Defence Systems at Stanhope. It’s working on a recently won £70m order for tracks to fit to Challenger tanks and Scimitar and Warrior fighting vehicles. Chairman Andrew Cook says the four years of work will safeguarding more than 100 jobs and perhaps lead to further recruitment.

At Barnard Castle, also on the county’s rural western fringes, GlaxoSmithKline the world’s sixth largest pharmaceutical manufacturer is also Teesdale’s biggest employer with 1,000 staff. Also quoted on the stock exchange, it has rebuked periodic rumours of large staff cutbacks at Barnard Castle and, 70 years into its existence there has the headquarters for its skin division, with a £20m dermatology centre of excellence.

Meanwhile at Peterlee in East Durham, international operations like food and drinks producer Pepsico, Caterpillar and NSK Bearings flourish. Pepsico has its Walkers Crisps manufactured there a front runner among snackfoods. Offroad vehicle builder Caterpillar is turning out thousands of heavy duty vehicles suited to temperature extremes of the Poles and the tropics. And NSK, and one of the North East’s first Japanese inward investors (in Peterlee since 1976) is selling its automotive bearing products to most car makers.

In County Durham’s other ‘new’ town Newton Aycliffe, 3M’s industrial masks protected British army medicals training for deployment to fight the harrowing ebola disease in Sierra Leone. Compound Photonics turns out semi-conductors in the former Fujitsu plant, and speculation that Husqvarna the Swedish garden machine manufacturer might shut shop came to nothing.

North East firms most recently celebrated in the EY Manufacturers’ League for their diverse feats in key areas such as sales, exports and workforce development included:

In Tyne and Wear - Rosewood Packaging, Chirton Engineering and Quick Hydraulics (all of North Shields);  Astley Signs, Express Engineering, Gate 7 and Palintest (all of Gateshead), CMR UK (Wallsend), Unipres (Sunderland) Faltec Europe (Boldon), Ford Aerospace (South Shields), and in Newcastle Royston and Houghton International (Newcastle).

In County Durham - Coveris Rigid and Dyer Engineering (both of Stanley), Quantum Pharmaceutical (Burnopfield) and Altec Engineering (Bowburn). And Altec’s managing director David Steel, like Geoff Turnbull, was recognised in the Manufacturer Top 100, selected from more than 200 nominations.

In Northumberland - Piramal Healthcare (Morpeth) and IHC (Stocksfield).

On Teesside - Wilton Engineering Services (Port Clarence), Darchem (Stillington) and ElringKlinger GB (Redcar).

ElringKlinger, under managing director Ian Malcolm who also chairs the North East Skills Group, is remarkable proof of the region’s capabilities in manufacturing. Fifty-one years in business on Teesside, the company was almost despaired of by the German parent that acquired it. But it has capped a turnaround dating from 2012 with a recent £19.5m contract to supply car parts to Ford over five years. The win over fierce American and European competition makes a £40m turnover by 2020 now look feasible.

We can add another name to Stanley’s companies excelling during 2015, that of Hodgson Sayers. Having gained a title in the North East Business Awards, it has bone on to win a national company of the year honour in British Chamber awards for its continuous staff development.

It was the first construction company in the region – and the second nationally – to become Living Wage accredited. As it bids to raise turnover to £17m (despite weak markets in metal fabrications and fencing), it hopes to get the workforce up to 130-plus with another score or so of hirings.

It’s particularly good that Stanley and other Derwentside firms are making their mark, since massive recovery had to be mounted the area’s steelworks collapsed with a loss of around 4,000 jobs in 1980. Food manufacturing and processing took root but nowhere enough to totally compensate. So it’s good that other activities are now progressing alongside.

To read more insights and views on the year ahead, take a look at the latest BQ Yearbook.