ADVANCED MANUFACTURING IN GREATER MANCHESTER: SECTOR PROFILE

NOVEMBER 2013

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1 INTRODUCTION

Greater Manchester (GM) was the world’s first modern industrial city and the birthplace of the industrial revolution. Whilst growth was initially driven by the textiles industry, the city rapidly developed to lead the way in all areas of Britain’s global industrial might, with the label ‘Made in Manchester’ being a byword for quality and innovation. While by the 1980s, Greater Manchester had become synonymous with deindustrialisation, the conurbation still retains strengths in traditional manufacturing and logistics. The sector remains a significant employer across the conurbation, with its 50,000 employees representing 4.5% of total employment in Greater Manchester. It produced £2.4bn in GVA for the conurbation in 2011, and £74.8bn nationally.

Large Greater Manchester sector employers include BOC Ltd, a distribution centre for industrial gases in Manchester; NXP Semiconductors; Robert McBride Ltd, who supply detergents and other household products in Rochdale; Mono Pumps Ltd, a global manufacturer of progressing cavity pumps and pump parts in Manchester; and Whitecroft Lighting, who develop lighting controls and energy saving lighting, among many others.

Defining which of these manufacturing activities are ‘advanced’ is not easy. There is no straightforward way to define advanced manufacturing using statistics, since it is not simply a distinct sector, but rather an approach to manufacturing. For example, a low-tech product could be produced using advanced manufacturing techniques, whilst a hi-tech product might simply be being assembled or localised in Greater Manchester in a low-value way. Previous research published by the OECD has looked at trends in medium and high-tech manufacturing, which aligns closely with how the advanced manufacturing sector is defined. Using this work as a starting point, advanced manufacturing has been defined as follows:

Manufacture of electric motors, generators, transformers and electricity distribution and control apparatus (SIC code 27)

Manufacture of batteries and accumulators (SIC code 27) Manufacture of wiring and wiring devices (SIC code 27) Manufacture of electric lighting equipment (SIC code 27) Manufacture of domestic appliances (SIC code 27) Manufacture of other electrical equipment (SIC code 27) Manufacture of medical and dental instruments and supplies (SIC code 325) Manufacture of chemicals and chemical products (SIC code 20) Manufacture of basic pharmaceutical products and pharmaceutical preparations

(SIC code 21) Manufacture of computer, electronic and optical products (SIC code 26) Manufacture of machinery and equipment not elsewhere classified

(SIC code 28) Manufacture of motor vehicles, trailers and semi-trailers (SIC code 29) Manufacture of other transport equipment (SIC code 30)

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Repair and installation of machinery and equipment (SIC code 33) Engineering activities and related technical consultancy (SIC code 7112)

2 DEMAND FOR SKILLS IN ADVANCED MANUFACTURING

Business Base

The Inter-Departmental Business Register (2012) reports there are nearly 3,200 advanced manufacturing businesses within Greater Manchester, representing 4.5% of Greater Manchester’s total business base

Almost half (42%) of these businesses work in relation to engineering activities and related technical consultancy. The manufacturing of machinery and equipment and the manufacturing of computers, electronics and optical products are also important sub-sectors.

Table 1 – Number of Greater Manchester businesses in advanced manufacturing, 2012

Sub-sector No of businesses % sectorEngineering activities and related technical consultancy 1,350 43Manufacture of machinery and equipment n.e.c. 447 14Manufacture of computer, electronic and optical products 415 13Manufacture of chemicals and chemical products 229 7Repair and installation of machinery and equipment 198 6Manufacture of electrical equipment 190 6Manufacture of motor vehicles, trailers and semi-trailers 148 5Manufacture of medical and dental instruments and supplies 89 3Manufacture of other transport equipment 70 2Manufacture of basic pharmaceutical products and pharmaceutical preparations 26 1

Total businesses 3,162Source: IDBR, 2012

The sector is characterised by full-time employment with 91% of employees working full time, compared to 72% across all sectors in Greater Manchester.

Key Employment Sub-SectorsAdvanced Manufacturing employs 51,600 people in Greater Manchester, representing 4.5% of total employment in Greater Manchester.

Nearly half of those employed in advanced manufacturing companies (44%) work in firms that employ 50-249 people. A further 27% work in companies employing 10-49 people, Only 15% work in companies employing 250+ people and 14% work in companies with 1-9 employees.

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As with numbers of businesses and employees, ‘Engineering activities & related technical consultancy’ is the largest sub-sector in employer terms with 13,400 jobs. Civil, mechanical, electrical, electronic and chemical engineering skills present across the manufacturing, construction and utilities sectors are matched by a complementary concentration of consulting engineering businesses. These support the manufacturing and energy sectors as well as investment in infrastructure – both domestically and from an exports perspective. Greater Manchester is also home to a large concentration of machinery and equipment manufacturing, employing 9,300 people as well as chemicals manufacturing, employing approximately 9,000 individuals.

Table 2 – Advanced Manufacturing employees in Greater Manchester by sub-sector, 2011

Sub sector Employees in GM % SectorEngineering activities and related technical consultancy 13,400 26Manufacture of machinery and equipment n.e.c. 9,300 18Manufacture of chemicals and chemical products 8,600 17Manufacture of computer, electronic and optical products 6,100 12Repair and installation of machinery and equipment 3,800 7Manufacture of electrical equipment 3,700 7Manufacture of other transport equipment 2,600 5Manufacture of basic pharmaceutical products and pharmaceutical preparations 1,300 3

Manufacture of motor vehicles, trailers and semi-trailers 1,900 4Manufacture of medical and dental instruments and supplies 900 2Total employees 51,600

Source: Business Register & Employment Survey, 2012

Geographic Distribution

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Advanced manufacturing activity is focused to the south of the conurbation, with Manchester, Stockport, Trafford, Salford and Tameside accounting for almost two thirds of total advanced manufacturing employment in Greater Manchester.

Figure 1 – Advanced Manufacturing employees across Greater Manchester districts, 2011

MANCHESTER900017%

STOCKPORT7,10014%

TRAFFORD; 6000; 12%

SALFORD; 5100; 10%TAMESIDE; 4600; 9%

OLDHAM; 4500; 9%

BOLTON; 4400; 9%

ROCHDALE; 4100; 8%

WIGAN; 3700; 7%

BURY; 3000; 6%

Source: Business Register & Employment Survey, 2012

Forecasts

Growth forecasts for advanced manufacturing in Greater Manchester are drawn from the Greater Manchester Forecasting Model (GMFM) produced by Oxford Economics. The model gives an overview of the sector’s growth potential over the coming decade. The data shows that the trend for declining employment in all manufacturing is projected to continue over the coming decade, though this trend is less marked for advanced manufacturing. While manufacturing as a whole is projected to decline by 7% in employment terms to 2022, only a 2% decrease applies to advanced manufacturing during the same period. In Greater Manchester as a whole, employment is forecast to rise by 7% (91,900 jobs).

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TOTAL GM ADV. MANU.

EMPLOYEES:51,600

Figure 2 – Manufacturing employment forecasts in Greater Manchester, 2000-2022

ADVANCED MANUFACTURING

FOOD & DRINK MANUFACTURING

OTHER MANUFACTURING

0

40

80

120

160

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

EMPL

OYM

ENT

(thou

sand

s)

EMLOYMENT FORECAST

Source: Greater Manchester Forecasting Model, 2012

However, whilst manufacturing has seen employment decline over the last decade, labour productivity in the sector has grown rapidly. The key reason for this trend is the rise in the shift to less labour intensive processes, as well as the utilisation of more capital intensive techniques and an increasing focus on research, design and after-sales services1. Over the ten years from 2012 – 2022 the Gross Value Added (GVA) contribution of Greater Manchester‘s Advanced Manufacturing sector is forecast to increase by £637m (26%). The GVA of Greater Manchester as a whole is forecast to increase by £14.6bn (31%) over the same period.

GMFM forecasts that the trend towards increased demand for higher level skills looks set to continue over the next decade: forecasts indicate that of the 5,000 jobs due to be created over the next decade in manufacturing (due to retirements and labour market mobility, as well as growth), a fourth (23.6%) will require skills equivalent to NVQ Level 4, and half will require skills equivalent to NVQ 3 and above, though the data also shows that the sector will continue to offer lower level opportunities (NVQ Level 2).

Table 2 – Net requirement per annum in manufacturing by skill level in Greater Manchester, 2012-22

NVQ0 NVQ1 NVQ2 NVQ3 NVQ4 TOTALAviation 84 159 186 178 154 761Automotive 181 207 410 418 285 1,501Manufacturing 338 413 578 721 758 2,808All manufacturing 603 779 1174 1317 1197 5070Total in Greater Manchester Economy 11,307 13,901 22,897 22,641 21,388 92,134Source: Oxford Economics (2011)

1 The Work Foundation (March 2011): More than making things: A new future formanufacturing in a service economyhttp://www.theworkfoundation.com/research/publications/publicationdetail.aspx?oItemId=284

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3 SUPPLY & PROVISION OF SKILLS

This section reviews data on the number of apprentices, further education and higher education students who live in Greater Manchester and who are studying Advanced Manufacturing sector related courses. It aims to give an indication of the potential supply of skilled labour to the sector. However, when reviewing the following data the following caveats should be noted:

1. A person’s subject of study is not necessarily an indicator of their future employment occupation;

2. Many Greater Manchester learners are studying for academic qualifications (e.g. history, geography) which could make them suitable for employment in a range of sectors – these learners are not included in the analysis;

3. Across the relevant datasets up to 10% of learners have their study subject listed as unknown – these learners are not included in the analysis;

4. The latest available data on 16-19 year old and Higher Education students is less current (2011/12) than the latest available data on 19+ and apprenticeship students (2012/13); and

5. There is no official line on which subjects of study are directly relevant to which sectors of the economy, therefore New Economy has had to make a judgement on which subjects and apprenticeship frameworks map to which sectors – detail on this mapping exercise is provided in an appendix to this report.

Thus the figures presented are indicative of the pool of labour from which the sector could recruit.

16-19: Further education (FE) and school sixth forms

During the 2011/2012 academic year, there were a total of 2,527 starts in advanced manufacturing related subjects across FE and sixth form colleges in Greater Manchester. The most popular subject area was ‘engineering’, with the vast majority (81%) of starts in this area. Some 55% of course starts were provided at Level 2 or below, the remainder at Level 3.

Table 3 – Number of relevant courses delivered in FE and sixth form colleges 2011/2012

Entry Level

Level 1

Level 2

Level 3

Level 4

Other Level

TOTAL

Engineering - 422 719 908 - - 2,049

Engineering and Manufacturing Technologies - 3 28 - - 31

Manufacturing Technologies - 52 166 229 - - 447TOTAL - 477 913 1,13

7 - - 2,527

Source: Education Funding Agency, 2012

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Education Funding Agency data show that over three academic years, 2009/10-2011/12, starts in advanced manufacturing-related subjects grew by 1.4%, compared to a much higher rate of growth (13%) in the ‘all subjects’ start number.

The gender split of these starts shows that starts in advanced manufacturing related courses are heavily male-dominated, with all starts over the three-year period constituting 91 % male and 9% female. This balance compares to that of all subjects, which over the same period were 51% male and 49% female. Data for the last three academic years shows no narrowing of the gap between male and female starts.

The ethnic makeup of starts over the period has been largely dominated by white British individuals, at 51% of all starts. Asian or Asian British constitutes 6.8%, with the remainder split relatively equally at low percentages. This is mirrored by the split seen for in the all course averages, with white British constituting 46.0% and Asian or Asian British 8.7%.

Full time, full year courses are the most common mode of study, with 91% of starts in this category (88% for all courses). Next most popular is part-time other, including e-learning at 8% (8% for all courses). Part time, full year courses constitute 1% of starts (4% for all courses).

Across Greater Manchester’s ten local authorities, the starters’ home address has been relatively evenly split over the period, with 14% being the highest proportion across the period (Manchester and Stockport). The next highest proportion was 12% (Rochdale), then 11% (Oldham and Tameside, respectively). For all courses, this split is less even, with 20% of starts resident in Manchester and the next highest being 11% (Wigan) and 10% (Bolton, Oldham and Stockport respectively).

Over the period, the top five Education Funding Agency (EFA) providers delivering advanced manufacturing related courses in descending order were:

Bury College Hopwood Hall College Trafford College The Manchester College Tameside College

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Adult (19+) Skills Funding Agency (SFA)-funded provision (excluding apprenticeships)

In 2012/13 the SFA funded just under 4,400 in advanced manufacturing training starts by Greater Manchester residents aged 19 and over. Three sector subject areas account for the lion’s share of these learner starts:

SFA funded provision to the sector has declined by 35% over the past five years, a larger decrease than that

seen across all sectors (8%).

Looking in more detail at the types of residents on these courses shows that:

SFA funded learners are evenly split between males and females;

A clear majority (82%) are studying at Level 3 and above – this is a lot higher than the all sectors figure of 41%.

Table 4 - Level of study by Greater Manchester residents of SFA funded Advanced Manufacturing courses, 2012/13

LevelAdvanced

Manufacturing All sectors

Level 1 & Entry 0% 10%Level 2 14% 20%Level 3 50% 20%Level 4+ 32% 21%

Source: SFA, 2012/13

The largest providers of advanced manufacturing sector training in Greater Manchester by number of SFA funded starts include:

Tameside College; Manchester College; Bury College; and Wigan & Leigh College.

Apprenticeships

The latest data shows that in 2012/2013, there were 330 apprenticeship starts by Greater Manchester residents within frameworks related to advanced manufacturing. Two thirds (66%) of these starts were made in ‘electrotechnical’ apprenticeships, followed by 27% of starts in ‘rail engineering’.

There has been a 65% decline in apprenticeship starts within the sector from 2008/09, compared to a rise of 124% in apprenticeship starts across all sectors in Greater Manchester during the same period. The twin causes of this decline appear to be

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Engineering – 3,100

Engineering & Manufacturing Technologies - 130

Manufacturing Technologies – 1,100

significant reductions in Greater Manchester’s numbers of engineering and rail transport engineering apprenticeship starts.

The majority (71%) of advanced manufacturing apprenticeship starts are at the advanced level (level 3), with most of these taking place in ‘electro-technical’ apprenticeships. The sector exhibits a huge gender imbalance, with the vast majority (98%) of starts by males, compared to 46% for all apprenticeships as a whole. Apprenticeships are also mainly taken up by young people under 25 years (91% in 2012/13 - with 57% between 16 and 18 years, and 34% 19 to 24 years). This reflects a fairly consistent trend since 2008/09.

With regards to apprenticeship providers, JTL, Wigan & Leigh College, Economic Solutions and Bury College are the largest providers.

Higher Education (HE)

Greater Manchester is home to four universities (the University of Manchester, Manchester Metropolitan University, University of Salford, and the University of Bolton) who collectively have more than 100,000 students and almost 30,000 graduates each year.

There were roughly 9,000 HE students across Greater Manchester studying advanced manufacturing-related subjects during the 2010/2011 academic year. About 40% of these studied engineering & technology subjects, followed by 24% who studied biological sciences.

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Age GroupsApprenticeship

starts 2012 / 2013 (total number)

Under 19 18919-24 11225-30 1231-49 1350-64 465+ 0

Total Number 330

SUBJECT UNIVERSITY OF BOLTON

UNIVERSITY OF MANCHESTER MMU UNIVERSITY OF

SALFORD TOTAL

BIOLOGICAL SCIENCES 195 870 695 330 2,090PHYSICAL SCIENCES 0 935 280 125 1,340MATHEMATICAL SCIENCES 15 455 50 15 535COMPUTER SCIENCE 130 510 320 345 1,305ENGINEERING & TECHNOLOGY 410 1,850 640 580 3,480

TOTAL 750 4620 1985 1395 8750

Table 5 – Number of students studying science & technology-related subjects in Greater Manchester HE institutions, 2010/2011

Source: Higher Education Statistical Agency (2011)

4 SECTOR SKILLS ISSUES

Summary of literature

The UK Commission for Employment and Skills (UKCES)2 has researched the key skills issues facing the advanced manufacturing sector. It found that the speed of change is increasing and forcing supply chains to become more like supply networks requiring higher levels of flexibility, agility and a broader spread of soft skills across the workforce. It is likely that in the future higher levels of employee responsibility, autonomy and managerial delegation will be required at all levels in the organisation. This is driving up the need for higher skill levels in manufacturing.

UKCES found a shift away from skilled trades and process and machine operatives towards managers, professional, and associate and technical occupations resulting in a higher demand for skills from the sector. In particular, the sector has and will continue to have a strong demand for people with Science Technology Engineering and Mathematics (STEM) skills. However, due to retirements, the sector will have a continued demand for people trained to Level 3 (typically via Apprenticeships).

The sector is thought to be well supported by an extensive initial and continuing vocational education and training infrastructure with a substantial increase in the number of people being qualified each year in the subjects and skills upon which the manufacturing sector is dependent.

In the advanced manufacturing sub-sector the supply-side often has to run very fast in order to keep pace with technological developments on the demand side. Accordingly,

2 UKCES (2012) Sector Skills Insights: Advanced Manufacturing, available at: http://www.ukces.org.uk/assets/ukces/docs/publications/evidence-report-48-advanced-manufacturing.pdf

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employers at the cutting-edge may need to look internally to develop the skills they require.

Key skills deficiencies relate to professional and senior managers and their ability to adequately research the drivers of change to enable them to develop effective product market strategies.

Accessing skills and training was identified by the Government’s Growth Review Framework for Advanced Manufacturing (2010)3. The fast-moving nature of manufacturing, and the often cross-cutting skills needed, can make it difficult to identify suitable training and where it can be found. There is a significant skills shortage in sectors such as science, engineering and technology that could partly be addressed by better retention of skilled workers and tackling the gender imbalance.

Future trends, barriers to growth and opportunities

According to UKCES, the principal challenge facing the advanced manufacturing sector is the rapid pace of technological development which is taking place on a global scale. The challenge for the sector is to capture and retain a leading share of the high value added segment of the global market in manufacturing. The evidence points to the high value added segment being in the research and development (R&D) of new products and processes, design for manufacture, and the manufacture of relatively complex products.

Even where manufacturers are engaged in high volume rather than niche production there is a need to ensure that they possess the product market strategies which will allow them to prosper in this segment of the market and make a significant contribution to the overall value-added to the economy4.

The Institute for Manufacturing (IM) and the Technology Strategy Board (TSB)5 have identified several drivers for growth in the advanced manufacturing sector. These include:

Rising Production Costs in Asia: As economic development gathers pace in the major manufacturers in the developing world (particularly China and India), the population of these countries is increasingly demanding better pay and conditions from work. This has resulted in a significant reduction in the cost-savings for UK companies that locate their manufacturing operations in these countries.

Growing demand for products using advanced manufacturing: Complex goods which require high tech manufacturing processes are becoming increasingly popular across a range of markets. From luxury electronic goods to products for the low carbon economy, products that require advanced manufacturing are seeing a growth in sales.

3 Growth Review Framework for Advanced Manufacturing. BIS, December 20104 UKCES, Sector Skills Insights: Advanced Manufacturing. Evidence Report 48, July 20125 Institute for Manufacturing and TSB, A Landscape for the Future of High Value Manufacturing in the UK, 2012

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Increasing resource scarcity: This will require production processes to minimise the use of raw materials and energy, creating an incentive for high tech, efficient manufacturing techniques.

In addition to growth drivers identified by the IM and TSB, the Government has outlined four key trends in the global economy where there are significant opportunities for UK manufacturing6:

Growing global markets: With consumers increasingly looking for high tech, quality products. This is particularly the case in Brazil, Russia, India, China (BRICs), but also in other emerging geographical markets. Demographic changes (including ageing populations) and the rise of the middle class in developing countries are likely to generate new demand for more sophisticated medical devices, instrumentation and delivery of healthcare.

Low Carbon and Environmental Market Opportunities: With opportunities in areas particularly related to low carbon, green technology, environmental and energy efficiency.

The use of new technologies: New approaches to increase productivity, for example through increased use of ICT and digital in manufacturing processes and products, and the exploitation of new industrial technologies is a significant opportunity.

New business models: With the rise of services as a key revenue stream for manufacturing, and the trends towards new business models based around new production processes.

In order to capitalise on growth opportunities such as those outlined above, the Government has identified a number of barriers that must be addressed7. These include:

Accessing skills and training: The costs of training and skills can be high, particularly in specialised areas of manufacturing technologies. The fast-moving nature of manufacturing, and the often cross-cutting skills needed, can make it difficult to identify suitable training and where it can be found. There is a significant skills shortage in sectors such as science, engineering and technology (SET) that could partly be addressed by better retention of skilled workers and tackling the gender imbalance.

Innovation and knowledge transfer: Knowledge of the latest industrial technologies and their application to manufacturing processes is often difficult to access, particularly for SMEs. Information is often contained within a particular sector, and not disseminated widely across sectors where it could also be beneficial.

6 Growth Review Framework for Advanced Manufacturing. BIS, December 20107 Growth Review Framework for Advanced Manufacturing. BIS, December 2010

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Take up of new technologies: The costs of demonstrating and testing the use of new technologies can be very high, particularly for SMEs, and can require access to equipment beyond the affordability of an individual company. Firms often lack knowledge about the range of technologies that are available and their potential benefits.

Access to finance: Some investment projects involving manufacturing can be hampered by difficulties obtaining appropriate and affordable finance, especially at the initial design, development and demonstrator phases of the innovation processes.

Exporting: Businesses looking to export may experience difficulties gaining access to networks and contacts in overseas markets, accessing markets due to trade barriers, navigating unfamiliar business environments, handling intellectual property, and operating in different legal and regulatory frameworks.

Regulatory issues: Modern manufacturing often involves a complex system of operations – from production to end of life disposal – each of which is impacted by legal and regulatory frameworks, both in the UK and in other countries.

Energy costs and security of supply: Many UK advanced manufacturing firms are within or closely related to energy intensive industries that depend on manageable energy costs and security of supply to remain globally competitive. The higher costs of transportation and the need to reduce carbon emissions also create barriers.

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Appendix A: Definitions used to produce this report

SIC Codes Manufacture of chemicals and chemical products (SIC code 20)

Manufacture of basic pharmaceutical products and pharmaceutical preparations (SIC code 21)

Manufacture of computer, electronic and optical products (SIC code 26)

Manufacture of electrical equipment (SIC code 27)

Manufacture of machinery and equipment not elsewhere classified (SIC code 28)

Manufacture of motor vehicles, trailers and semi-trailers (SIC code 29)

Manufacture of other transport equipment (SIC code 30)

Manufacture of medical and dental instruments and supplies (SIC code 325)

Repair and installation of machinery and equipment (SIC code 33)

Engineering activities and related technical consultancy (SIC code 7112)

Tier 2 subject areas Manufacturing Technologies

Engineering

Engineering and Manufacturing Technologies

Apprenticeship Frameworks Automotive Industry

Electrical & Electronic Servicing

Electro-technical

Engineering

Marine Industry

Process Technology

Process Manufacturing

Rail Engineering (Track)

Rail Transport Engineering

Transport Engineering And Maintenance

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