Advanced Manufacturing, Materials & Engineering Study

MARCH 2016 WORKSHOP

MATRIX NI

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CONTENTS THE AIM OF THE STUDY .................................................................................................................... 2

AGENDA ............................................................................................................................................ 3

AMME DEFINITIONS ......................................................................................................................... 4

AMME 2016 STUDY – WHAT’S IN? ................................................................................................... 5

FORESIGHT ........................................................................................................................................ 6

POLICY REVIEW ................................................................................................................................. 6

IDENTIFYING WITH UK FORESIGHT ‘TRENDS’ ................................................................................... 7

HEADLINE POINTS ............................................................................................................................. 8

NORTHERN IRELAND ECONOMIC OUTPUT SPRING 2016 .............................................................. 10

DATA SETS ...................................................................................................................................... 12

AIM OF THE RESEARCH ................................................................................................................... 12

CATALOGUING CLUSTERS ............................................................................................................... 13

KEY AREAS OF ACTIVITY – CONSULTATION .................................................................................... 14

SURVEY WORD CLOUDS ................................................................................................................. 15

SURVEY: FREQUENT & CONSISTENT THEMES ................................................................................ 16

CHANGES IN GLOBAL TRADE AND INVESTMENT WITH IMPLICATIONS FOR MANUFACTURING ... 17

THE CIRCULAR ECONOMY MODEL DEMONSTRATING HOW MATERIALS CAN BE KEPT WITHIN A PRODUCTIVE LOOP ......................................................................................................................... 18

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THE AIM OF THE STUDY

“For longer term planning on business infrastructure development, government needs

informed, independent advice on future directions in advanced manufacturing. We now

have the opportunity not only to present a picture of advanced manufacturing in Northern Ireland today, but also to create a vision of how

the sector might grow in the next 5-10 years.”

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AGENDA

10:00 OPEN

INTRODUCTIONS & WELCOME Rob Hardeman & Richard Buckley

BACKGROUND SCENE SETTING Rob Hardeman Richard Buckley

10:45 WORKSHOP SESSION 1

Stream (i) - Skills Bryan Keating, Matrix Chair + Apprenticeship Forum Chair

Stream (ii) - Costs Richard Buckley

Stream (iii) – Sectoral Development Ben Walsh, High Value Manufacturing, Innovate UK

12:30 LUNCH

13:15 SESSION 1 SUMMARY Richard Buckley

13:45 SESSION 2 WORKSHOP + CONCLUSIONS Rob Hardeman

15:00 CLOSING REMARKS Andrew McCormick, DETI Permanent Secretary

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AMME DEFINITIONS

Featherstone & Sullivan Materials types are labelled in variety of ways, often overlapping.

Different types of materials can be defined or qualified in terms of: traditional categories (e.g. ceramics, polymers, alloys)

• material properties (e.g. optical, electronic, magnetic) • application (e.g. materials for low energy technologies) • the nature or scale of engineering (e.g. nano-materials, micro-materials) and • sector (e.g. aerospace materials)

These categories are not intrinsically distinct. Some advanced materials could correspond to some or all of these labels.

Furthermore, there a variety of labels used to qualify categories of materials. i.e.

• ‘advanced materials’ • ‘high value materials’ • ‘modern materials’ • ‘future materials’.

(Featherston & O’Sullivan, A review of international public sector roadmaps-advanced materials)

President’s Council of Advisors on Science & Technology Advanced Manufacturing is:

“a family of activities that

a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or

b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example nanotechnology, chemistry, and biology.

This involves both new ways to manufacture existing products, and especially the manufacture of new products emerging from new advanced technologies.”

(President’s Council of Advisors on Science and Technology Report to the President on Ensuring American Leadership in Advanced Manufacturing)

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AMME 2016 STUDY – WHAT’S IN? Included in previous MATRIX study & still In

Out...but worth a re-look? Out & still out

Manufacture of chemicals and chemical products

13 Manufacture of textiles 10 Manufacture of food products

22 Manufacture of rubber and plastic products

14 Manufacture of wearing apparel

11/12 Manufacture of beverages and tobacco products

23 Manufacture of other non-metallic mineral products

15 Manufacture of leather and related products

19 Manufacture of coke and refined petroleum products

25 Manufacture of fabricated metal products, except machinery and equipment

16 Manufacture of wood and of products of wood and cork, except furniture; man. of articles of straw and plaiting materials

24 Manufacture of basic metals

26 Manufacture of computer, electronic and optical products

17 Manufacture of paper and paper products

27 Manufacture of electrical equipment

18 Printing and reproduction of recorded media

28 Manufacture of machinery and equipment n.e.c.

29 Manufacture of motor vehicles, trailers and semi-trailers

30 Manufacture of other transport equipment

20 Other manufacturing

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FORESIGHT

Market opportunity What are the disruptive technologies coming down the line?

Global macro-economic trends What do they mean for Northern Ireland industries?

Challenge and change within manufacturing What evidence is there on the ground?

POLICY REVIEW

UKTI / GO-Science Foresight • Industrie 4.0 – strong digital focus –even stronger if

reviewing now – re-enforced by Innovate UK position in November 2015

• Even wider use of case studies • Workshops • Market opportunities are important – but we must

look to areas where report can make most impact • Technologies 2.1 • Sustainability • New world of metrics

Technology & Innovation Futures report

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IDENTIFYING WITH UK FORESIGHT ‘TRENDS’

Manufacturing in the future

“The future of manufacturing – a new era of opportunity and challenge for the UK.”

Customisation

“Servitisation” Circular Economy

Increasing interaction between firms to give

access to indirect capabilities

Business models like “infinite bandwidth/zero

latency” & general purpose technologies

Value through environmental sustainability &

provenance

“Factory-less goods

producers”

Collaborative consumption

Personalisation of products

Factories of the future

Co-location & “Industrial Commons”

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HEADLINE POINTS

Manufacturing sector – OUTLOOK Spring 2016 (UUEPC) Locally, the high profile job losses announced in the manufacturing sector in 2015 and early 2016 have contrasted with several new investment announcements. This is a reminder of the volatile nature of global investment patterns and looking forward, the UUEPC forecasting model continues to suggest a relatively modest rate of growth.

Sectoral Outlook for Manufacturing The most recent data shows manufacturing employment growing strongly.

Since the trough of the 2012 recession, the NI Manufacturing sector has created

6,300 That’s equivalent to growth of 8%

Compared to

3%

The outlook remains positive but growth will be lower reflecting the difficult international trading environment and the recent announcements at JTI, Michelin and Bombardier (with the impact being most significantly felt in 2017 and 2018).

NEW JOBS

in the UK. 80,170

THE TOTAL NUMBER EMPLOYED IN THE

NORTHERN IRELAND MANUFACTURING

SECTOR IN 2016 IS

TOTAL NUMBER EMPLOYED IN ADVANCED MANUFACTURING IN

NORTHERN IRELAND IN 2016:

THAT’S OVER

55% OF ALL

MANUFACTURING JOBS IN NI 44,350

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R&D Performance

R&D investment by manufacturing companies increased by

£209.1m

£44.8m

£199.3m

Advanced Manufacturing BERD

Other Manufacturing BERD

All Other BERD

Contribution to GVA MANUFACTURING

CONTRIBUTED

OF TOTAL NI GVA IN 2014 COMPARED TO A UK AVERAGE OF

1100%%

1166%% Key source of growth in recent years: Northern Ireland’s manufacturing sector has grown by 19% over the past 5 years compared to a 2.3% decline across all sectors.

through the trough of the downturn 2008-14,

compared to an average of

Advanced Manufacturing companies make up

3322..77%% of the total number of R&D performing companies, but

they undertook

5511..88%% of the TOTAL BERD in 2014

217% 136% across ALL sectors

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NORTHERN IRELAND ECONOMIC OUTPUT SPRING 2016 ULSTER UNIVERSITY ECONOMIC POLICY CENTRE

2016 2017 2018 2019 2020

PRODUCTION & MANUFACTURING

1.6% 0.9% 1.6% 2.4% 2.6%

CONSTRUCTION 2.4% 2.9% 2.7% 2.2% 2.0%

PUBLIC SECTOR SERVICES 0.1% 0.9% 1.7% 0.9% 1.0%

PRIVATE SECTOR SERVICES 2.4% 1.5% 1.9% 1.8% 1.7%

TOTAL 1.6% 1.3% 1.8% 1.7% 1.7%

2015 0.5%

2016 0.6%

2017 2.0%

2018 2.5%

2019 2.5%

2020 2.5%

0.0%

1.0%

2.0%

3.0%

BANK OF ENGLAND BASE RATES

2015 0.1%

2016 0.8%

2017 1.0%

2018 1.7%

2019 1.8%

2020 2.4%

0.0%

1.0%

2.0%

3.0%

UK CONSUMER PRICES INDEX (CPI)

MACRO ECONOMIC FACTORS IMPACTING UK & NI PERFORMANCE

POTENTIAL BREXIT

GROWTH IN CHINA

OIL PRICES

UK INTEREST RATE FORECAST

UK INFLATION RATE FORECAST

NORTHERN IRELAND GVA SECTORAL FORECASTS

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1.6%

3.3%

6.9%

1.3%

3.7%

5.4%

1.8%

4.0%

2.8%

1.7%

4.2%

3.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

GVA Growth Rate Unemployment Rate House Price Growth

2016 2017 2018 2019

Forecast is for approximately 40,000 new jobs over the next 10 years building on approximately 45,000 net new jobs 2012-2025

AGRICULTURE

+200

MANUFACTURING

+4,000

CONSTRUCTION

+4,400

RETAIL +1,900

TRANSPORTATION

+3,300

INFORMATION &

COMMUNICATION +4,400

ACCOMMODATION

+3,300

PROFESSIONAL &

SCIENTIFIC +8,500

ADMIN SERVICES

+8,100

PUBLIC

ADMINISTRATION & DEFENCE

-6,500

EDUCATION

-1,500

HEALTH & SOCIAL

WORK +3,400

ARTS &

ENTERTAINMENT +4,000

NORTHERN IRELAND EMPLOYMENT FORECAST 2015–25 (SELECTED SOURCES)

NORTHERN IRELAND ECONOMIC GROWTH TO BE RELATIVELY MODEST AS OVER RELIANCE ON CONSUMER SPENDING IS UNSUSTAINABLE

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DATA SETS Our research has drawn on a wide range of sources including:

Firm Data Funding Data HE/FE Data

• NISRA • Fame • Bel Tel 100 • Profit 200 • LSE Man & Eng • World R&D Scorecard

• Invest NI – GR&D / PoC • Innovate UK • HMRC – R&D

Reliefs/Patent Box

• Research Pillars

• Industrial

Primary Sources Collaboration

• Survey responses • Firm interviews

We have prioritized businesses/clusters according to high value measures such as:-

• R&D Expenditure • Collaborative R&D Engagement • Export & Sales • Number of Employees

AIM OF THE RESEARCH

“Culmination of these data sets along with consultation feedback

will offer us a strong insight to sector, both in terms of overall

trends and individual company performance.”

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CATALOGUING CLUSTERS

•Well defined •Mature cluster •UK aligned •NI Strategy in place

Aero, Defence, Space & Security

•Well defined •Cluster-ready

Materials Handling

Green resource efficiency/Circular economy

•Well defined •Mature collaborative network

Polymers

• Further definition required

Agri-Engineering

• Further definition required

Construction Products

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KEY AREAS OF ACTIVITY – CONSULTATION

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SURVEY WORD CLOUDS

Weaknesses

Threats

Opportunities

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SURVEY: FREQUENT & CONSISTENT THEMES

•Apprenticeships •‘Green’ graduates •Upskilling existing workforce •Leadership & management skills for SMEs •Commercial exploitation skills •Marketing & sales skills for engineers •FE & HE

Theme 1: Skills

•Overseas trade/Export challenges (FX) •Energy challenges •Industrial rates stability •Corporation Tax implementation

Theme 2: Cost

•Understanding of supply chain needs •R&D Collaboration •Clustering: Celebrate combined strengths / Partners •Diversification •Branding

Theme 3: Sectoral Development

•To be explored at workshop session, but might include: •Celebration of existing strenghts •Ambition around a common theme •New Department for the Economy - DETI (with Invest NI) + DEL •Key themes from earlier Matrix reports - are these still valid?

Theme 4: Future Opportunities

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CHANGES IN GLOBAL TRADE AND INVESTMENT WITH IMPLICATIONS FOR MANUFACTURING

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THE CIRCULAR ECONOMY MODEL DEMONSTRATING HOW MATERIALS CAN BE KEPT WITHIN A PRODUCTIVE LOOP

The shift towards a circular economy, combined with a trend of pricing ecosystem services, could provide manufacturing firms with new revenue streams.

Currently manufacturing can involve the production of by-products which are considered waste and with a zero price value, for example waste heat, and ecosystem services which produce clean water. As these by-products become increasingly valuable, they can be traded between manufacturing firms and more widely in the economy.

Business models that capture value from under-utilised resources include those characterised as ‘industrial ecology’, where industries are generally co-located to utilise what would be waste for one business as resource for another. This has the potential to reduce reliance on virgin raw materials and mitigate against volatility in energy prices.

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