At the end of March the UK Industrial Strategy took a major step forward with the publication of sector strategies for aerospace, civil nuclear energy and oil and gas. The Life Sciences strategy has already been in place for 15 months. In all there are eleven key sectors, (including automotive manufacturing) and in coming months sector strategies will be published for each one. There are various dimensions to the overall Coalition Industrial Strategy but the key sectors are a direct way in which strategy and action come together.

For example, by 2040 70% of the UK’s energy requirements will still be met by oil and gas. Furthermore, the recent performance of the UK economy has reflected the contraction of oil and gas sector output. Without this the rest of the economy would have grown by 1.6% since the third quarter of 2010. In February 2013 Section B of the Index of Production, which includes Oil and Gas, was 8.4% down on a year ago.

It is not surprising therefore that the new oil and gas strategy aims to maximise the economic production of UK offshore oil and gas  and promote the growth of the UK industry’s supply chain in both domestic and international markets.  Fortunately, the UK supply chain is internationally recognised as a global leader in subsea engineering and a centre of excellence in project management, design engineering, asset and operational management and design and manufacturing of advanced equipment, all underpinned a large R&D spend.

The new strategy warns that amongst the general public, the oil and gas industry is currently perceived as a “sunset industry” making a diminishing contribution to the UK economy. There is a perception that the industry faces an unsustainable future and that it is coming to the end of its life. There is danger that if this perception persists, talented individuals might overlook the industry – compounding the skills shortage. The strategy proposes therefore that the industry, and the contribution it makes to the nation’s prosperity, become much more widely known. The industry and Government should be more visible and confident in championing the industry’s achievements.

Public perception and the impact on talent flow is also important for the civil nuclear strategy which covers expenditure of over £125bn up to 2030 on both building new generation capacity and decommissioning existing sites. The strategy involves a major drive to develop supply chain skills while other parts of the strategy are set to enhance innovation and R&D and to attract domestic and inward investment in nuclear projects.

The detailed skills objectives are:

• The sector must be supported by a workforce with the skills, capability and capacity required to successfully deliver current and future UK nuclear programmes with the highest standards of nuclear professionalism, safety and competitiveness
• The sector must have a supply chain with the skills and expertise to compete on a global basis for contracts
• The UK nuclear industry and its approach to skills and workforce development should be recognised as an example of international best practice

Nuclear industry employers are even now reporting skills deficiencies.  The Nuclear Energy Skills Alliance has identified key skills shortages including project and programme management, construction project management, steel fixing, high integrity welding, safety case authorship, R&D, site/ construction supervisors and apprenticeships and higher level apprenticeships.

The sector priorities for workforce capabilities also include:

• Educating new entrants on the basic requirements for working on nuclear sites in the UK and promoting awareness and understanding of the nuclear industry
• The flexibility and mobility of the workforce and supply chain
• The ability to demonstrate supply chain competence
• Trained and qualified craft and technician personnel

On nuclear build projects construction, site preparation and engineering construction make up around 60% of the workforce. To deliver each build to time and to budget, it is essential that the construction and engineering construction workforce has the right skills and competences.

Oxford Economics and Atkins’ estimate that the UK’s  likely newbuild plans will create 30,000 – 41,000 jobs – 14,000–19,000 direct jobs and 16,000–22,000 indirect jobs. As things stand nearly 70% of current staff with management roles and subject matter expert roles, are due to retire by 2025.

The civil nuclear sector skills needs cannot be seen in isolation. There is likely to be fierce competition between aerospace, automotive manufacturing, oil and gas and nuclear for first class talent, not least because top UK engineering talent is sought by non-engineering sectors and other developed countries.

Professor John Perkins CBE, the Chief Scientific Adviser for BIS, is looking at the issue of engineering skills supply in the UK. Based upon initial analysis of demands/supply constraints, job market trends for rising skill levels, data on skills gaps and structural supply issues, he has concluded that the economy will need a substantial increase in the supply and the quality of engineers entering the labour market with the right mix of skills as sought by employers.  Perkins suggests this will require action on 6 fronts:

1. Changing the perception of engineering making it much more accurate and positive, challenging outdated negative views of the profession
2. Addressing the diversity issues in engineering including the ‘gender gap’ (only 9% of professional engineers in the UK being women), thereby reaching out to the widest possible talent pool
3. Encouraging sponsorships and strengthening industrial links to students, making engineering courses more attractive and increasing students’ employability
4. Helping engineers who have left the profession and wish to rejoin it and others who wish to convert to it
5. Provision of the appropriate education to support engineering careers. Increasing the number of students with the right educational background (i.e. a strong grounding in maths and physics), providing modern educational infrastructure, and giving accurate careers advice
6. Encouraging and supporting the provision of more engineering apprenticeships, particularly higher level apprenticeships

These proposals are equally relevant to the requirements of the aerospace manufacturing sector where the strategy is based on an ambitious long-term partnership between Government and industry with £2 billion investment.  The  goal  is to retain the UK’s position at the forefront of world aerospace manufacturing and to ensure that the UK remains Europe’s number one aerospace manufacturer and that it remains second only to the United States globally.  In the US strategists are considering the business implications of the expected expansion of civil aviation in emerging markets which will be the major growth opportunities in the next two decades.

The UK aerospace sector strategy stresses the importance of further strengthening the supply chain. The sector has for some years been operating the 21st Century Supply Chain programme to strengthen supply chain firms using a global quality standard. Further supply chain development will include collaborative research projects, improved access to finance and the embedding of world-class manufacturing processes and continuous improvement methods throughout the supply chain.

The strategy also suggests that the UK needs to find a means at national level for companies to enhance the management of their own supply chain and to work collaboratively with their suppliers and peers to boost competitiveness.  Capability analysis work is under way to identify those areas of high strategic value and where UK capabilities are at risk.

Industry Forum has experience in depth of supply chain development including integrated skills development programmes. In the last 12 months we have been working closely with a number of blue chip UK primes on the Advanced Manufacturing Supply Chain Initiative. We look forward to further work with the aerospace, civil nuclear and oil and gas sectors on supply chain and skills development as part of their sector strategies.

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The United States and China have recently been neck and neck in the race to be the largest manufacturing sector in the global economy. United Nations Conference on Trade And Development (UNCTAD) reported that in 2012 China had definitely overtaken the US.

At first sight manufacturing does not appear to be a major factor in the US economy accounting for approximately 10% of national output – about the same share as the UK – compared with other advanced diverse countries, such as Switzerland and Singapore, where the share of manufacturing in their economies is up to three times larger. Several recent studies have found that every dollar of extra manufacturing output in the US creates a further $1.40 in other sectors suggesting that manufacturing is the driver behind at least quarter of current economic growth.

This helps explain why within the US a great deal of effort and interest is devoted to US manufacturing and its prospects. President Obama stressed his support and plans for manufacturing in the 2012 Presidential campaign and included a commitment to create a million more manufacturing jobs.  At the start of his second term Obama took up this theme in his 2013 State of the Union speech as follows:

“Our first priority is making America a magnet for new jobs and manufacturing. After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. After locating plants in other countries like China, Intel is opening its most advanced plant right here at home. And this year, Apple will start making Macs in America again.

There are things we can do, right now, to accelerate this trend……so tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Departments of Defense and Energy to turn regions left behind by globalisation into global centres of high-tech jobs. And I ask this Congress to help create a network of fifteen of these hubs and guarantee that the next revolution in manufacturing is Made in America.

If we want to make the best products, we also have to invest in the best ideas. Every dollar we invested to map the human genome returned $140 to our economy. Today, our scientists are mapping the human brain to unlock the answers to Alzheimer’s; developing drugs to regenerate damaged organs; devising new material to make batteries ten times more powerful. Now is not the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research and development not seen since the height of the Space Race. And today, no area holds more promise than our investments in American energy.’

Obama went on to cover the need for better links between schools and technical employment:

‘And four years ago, we started Race to the Top — a competition that convinced almost every state to develop smarter curricula and higher standards, all for about 1 percent of what we spend on education each year.  Tonight, I’m announcing a new challenge to redesign America’s high schools so they better equip graduates for the demands of a high-tech economy.  And we’ll reward schools that develop new partnerships with colleges and employers, and create classes that focus on science, technology, engineering and math — the skills today’s employers are looking for to fill the jobs that are there right now and will be there in the future.”

The governors of Ohio and Pennsylvania, both Republicans, are enthusiastic about Obama’s manufacturing plans. “We are seeing nothing less than the beginnings of a new Industrial Revolution,” Pennsylvania Governor Tom Corbett said in a statement on the National Additive Manufacturing Innovation Institute.  The new technology, Corbett said, “means that manufacturing, something we once gave up for lost, is going to come back.” The head of Ohio’s Department of Development called it “the next generation of manufacturing methods.” Pennsylvania gave $5 million and Ohio gave $2 million to the project.  In Illinois, Democratic Governor Pat Quinn has agreed that his state team up with the University of Illinois and the National Center for Supercomputing Applications to create an advanced manufacturing hub “where companies – big and small – come to learn and use the world’s most sophisticated tools and software,” he said in his State of the State address.

Part of the strength of US manufacturing has been the high level of centrally funded defence R&D. The Obama administration has made it clear that despite the military cutbacks planned, the fundamental defence industrial strategy will remain intact. The national goal is that the US will continue to sustain a rapid rate of military innovation based on a strong manufacturing sector to underpin its position as the most powerful nation in the world.

Another major advantage enjoyed by US manufacturing is its geopolitical position. Amongst developed countries Canada, according to Deloitte’s 2013 Study, ranks as third in manufacturing competitiveness behind the US and Germany. Canada’s manufacturing is located along the US’s northern border and effectively forms a single manufacturing zone with the US. Similarly along the southern border there is a substantial export oriented Mexican manufacturing sector with a high growth rate and lower labour rates. In South America Brazil is already ranked at eighth in global manufacturing competitiveness and in the next five years has been assessed as having the potential to rise to third position globally. In effect there is a continental sized cluster of manufacturing competitiveness in the Americas.

US policy makers are nonetheless very aware of the threats to their competitive position as a manufacturing location in the next five years such as high labour, corporate tax, and unemployment rates and potentially sluggish GDP growth. Like many countries in the battle for global manufacturing competitiveness the US is in a race to expand its advanced manufacturing sector. In particular the US has devoted effort to clarifying the skills dimension.

Working together the Manufacturing Institute, the National Council for Advanced Manufacturing and the Society of Manufacturing Engineers have produced a comprehensive competency model for advanced manufacturing. This starts with personal effectiveness competencies – interpersonal skills, integrity, professionalisation, initiative, dependability & reliability and willingness to learn. The next level is academic competencies which include communication, listening & speaking, critical analysis & thinking and active learning. Above that are workplace competencies such as teamwork, adaptability, problem solving, workplace computer applications and an appreciation of business fundamentals.

At the management level there is an additional formidable set of requirements which include delegation, entrepreneurship, supporting others, motivating and inspiring, developing and mentoring, clarifying roles and objectives, managing conflict and teambuilding plus developing an organisational vision. All of this suggests that in the US vision of advanced manufacturing the full battery of soft skills will be harnessed to the country’s unparalleled technical resources. Leveraging the US’s distinctive culture in this way will undoubtedly be a major asset in the battle for overall global competitiveness with India, China, Brazil and Germany.

How does the situation in the UK compare?  The UK Technology Strategy Board has published an impressive set of High Value Added Manufacturing Competencies. But the US published their model first and so far have done better at publicising and promoting it. The UK’s network of Catapult Centres is probably more developed than the US Manufacturing Innovation Institutes but not as well established as the substantial and successful network of Fraunhofer Institutes in Germany.  At the end of February 2013 the UK announced four new research centres to develop new ways of manufacturing in the fields of electronics, laser use in production processes, medical devices and food production via a £45 million package of investments. The new Centres, which will begin work later in the year, will involve academics from 15 universities across the UK and over 60 project partners from industry.

At Industry Forum we recognise the importance of changing people as well as changing processes. Our current Organisational Development model has four key areas which employ structured approaches to identify the current situation; define the target condition and close the gap between the two.

Effective Organisation Structures
Ensuring all parts of the company are arranged to efficiently manage daily activities and deploy policies to successfully achieve customer, business and employee requirements.

Policy Deployment
A framework for planning, implementing and reviewing the changes required to move an organisation towards its vision.

Operational Leadership Skills
A modular programme tailored to meet individual needs at all levels of the management team across the business. This programme is suitable for Plant Leaders, Functional Managers, Operations Managers, Supervisors and Team Leaders.

Further information on the Organisational Development model can be found on the Industry Forum website

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The UK’s plans to replace its nuclear electricity generation capacity, with estimated expenditure of £60bn up to 2030, are often in the headlines, for example with the decision of Hitachi to join the programme.  There is also a major but less well known programme of nuclear decommissioning. The Nuclear Decommissioning Authority (NDA), formed in April 2005, oversees and manages the decommissioning and clean-up of the UK’s older Magnox power plants, the reprocessing facilities at Sellafield and the former nuclear research and development facilities previously run by the United Kingdom Atomic Energy Authority (UKAEA). The Nuclear Decommissioning Authority is sponsored by the Department of Energy & Climate Change (DECC) and is responsible for 19 civil public sector nuclear sites. It plans to spend some £67.5bn on decommissioning up to 2020.

Day-to-day management and delivery of the 19 NDA site programmes is the responsibility of seven Site Licence Companies contracted to the NDA who directly contract with the supply chain for the necessary goods and services.  Sellafield is the UK’s largest and most hazardous nuclear site and it is managed by Sellafield Limited under a NDA contract.

The NDA’s programme expenditure is public expenditure and has been scrutinised by the House of Commons Public Accounts Committee (PAC) who published a report on it at the start of February. The PAC recommended that the NDA and Sellafield Limited act with real urgency and improve project management to tackle the risks on the site in good time. It concluded that recent performance has not been satisfactory since in 2011-12, only 2 out of the Authority’s portfolio of 14 major projects were being delivered on or ahead of the schedule for that year.

The PAC found that basic project management failings had occurred on major projects which could and should have been avoided and were not excusable by the uniqueness of the projects or the circumstances. Costs on one project had gone up by almost £250 million since 2009 and the project was 18 months behind its original schedule because of Sellafield Limited’s failure to spot deficiencies in a key element of the design, or to adequately check the capability of the supply chain.

There will be an official reply to the PAC and we will have to wait to see what that says. It is likely that the reply will build on the National Nuclear Supply Chain Action Plan which was published in December 2012. This plan includes the objective to boost job creation in the nuclear industry, and to ensure that potential skills shortages do not act as a barrier to the future development of the industry in the UK. The Plan identifies the key skills issues for the programme:

• Defining the Industry skills requirements for the UK Nuclear Programme
• Ensuring robust, unified labour market intelligence for accurate workforce planning
• Ensuring funding is available for key training
• Ensuring availability of specific skills in key workforce groupings:

The DECC Secretary of State co-chairs the Nuclear Industry Council  with Lord Hutton of the Nuclear Industries Association which will oversee how the action plan is taken forward. Day to day management of the implementation of the plan is the responsibility of the Head of Supply Chain and Skills in DECC who will work with the Council and wider industry to ensure that a decent implementation structure is in place. The Plan recognises that the UK supply chain may need assistance in closing gaps in capability and competitiveness.

The Plan also recognises that  the length of time since the last new build project, the high average age of the existing nuclear workforce and the scale of the UK’s nuclear generation plans, make it essential to act now to prevent skills gaps developing over the course of the new nuclear programme. Within the Plan, the development of an overarching skills strategy for the nuclear industry is the responsibility of the National Skills Academy for Nuclear, working in close partnership with Sector Skills Councils and Industry Training Boards.

The co-ordinated delivery of skills action across the sector, including in the key areas of Construction, Engineering Construction and Manufacturing, is to be progressed by the Nuclear Energy Skills Alliance (NESA) which brings together the skills bodies with Government to co-ordinate work on the skills challenges.  NESA members are working with employers to research labour market intelligence for a Nuclear Workforce Tool. This project, led by Cogent with the input of all NESA member skills bodies, will help to define industry-wide skills requirements over the course of the nuclear programme with an evidence base for skills actions and workforce planning.

BIS has established the Nuclear Advanced Manufacturing Research Centre (AMRC) at Sheffield and Manchester Universities as part of the Advanced Manufacturing Catapult. The Nuclear AMRC works with companies to improve capabilities and performance along the nuclear supply chain. It has been awarded £37m by the Regional Growth Fund to support a large-scale programme of supplier development and manufacturing research in partnership with key industrial members.

The AMRC runs the Fit For Nuclear (F4N) programme which helps companies measure their current operations against the standards required to supply the UK’s new generation of nuclear power stations, and take the necessary steps to enter the global market. F4N is delivered by the Nuclear AMRC with the Manufacturing Advisory Service in partnership with top-tier industrial partners. The initial diagnostic covers Strategy and Leadership, Design and Project Management, People Excellence, Process Excellence, Safety and Quality.

In addition £1m is available to establish new Knowledge Transfer Partnerships in the field of nuclear technologies for civil power generation, decommissioning and waste management. The aim is to help businesses improve their competitiveness, productivity and performance in the nuclear sector through better use of the knowledge, technology and skills that are available within the UK knowledge base.

Securing a commercial return on the enormous sums invested in nuclear generation depends partly on making sure that the supply chain operates according to the best project management disciplines during the construction phase. But equally important is world class operation and maintenance over the decades that these assets are in use.  Some form of structured approach such as Total Productive Maintenance (TPM) is the key to securing optimal performance over the whole length of an asset’s life. TPM is a structured approach to deploy a comprehensive set of tools and techniques in order to eliminate all losses across a whole organisation and throughout the value stream. TPM involves the capabilities of the whole workforce to ensure effective and sustainable improvements are implemented. Improvements to the organisation are made by improving the two core elements of people and equipment

Industry Forum has strength in depth in TPM and Paul Hardiman, Global Best Practice & Assessment Services Principal, SMMT Industry Forum, has been invited as the guest of honour at a TPM Excellence conference in Krakow, Poland on the 21st-22nd March 2013.

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