GOODBYE EU; HELLO WORLD - A VISION FOR AN ......Goodbye EU; Hello World - A Vision for an Innovation...

Electric Arc Furnace at the Materials Processing Institute

GOODBYE EU; HELLO WORLD - A VISION FORAN INNOVATION CENTRED, INDUSTRIALGROWTH STRATEGY FOR THE UNITEDKINGDOM

WHITE PAPERINNOVATION SERIESPAPER 01 JULY 2016

GOODBYE EU; HELLO WORLD - A VISION FOR ANINNOVATION CENTRED, INDUSTRIAL GROWTHSTRATEGY FOR THE UNITED KINGDOM

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Goodbye EU; Hello World - A Vision for an Innovation Centred, Industrial Growth Strategy for the United Kingdom

THE INNOVATION SERIES

ExECutIvE SummAryIn leaving the European Union, the United Kingdom facesmany challenges but has an opportunity to build on itsstrengths in product design, engineering, materials andmanufacturing, to create trade led, manufacturing growth.The rebalancing to an international trade basedeconomy, will require new investment in infrastructureand more complex supply chains, which together revealthat the materials and Foundation Industries are a crucialaspect of Sovereign Capability.

To ensure that the UK can capitalise on these opportunitiesand protect its global interests, an innovation centredindustrial growth strategy is needed, to deliverinnovations in energy, processing, metals and materials.This will require the UK to take back responsibility forinnovation in the materials and Foundation Industries,support industry led initiatives such as the proposed newinnovation ‘Catapult’ for the metals and materials sector,and free up the small businesses in these supply chainsto innovate, invest and grow.

Creating this solid industrial foundation, throughinnovation and infrastructure, will give the confidencerequired to reliably invest in British manufacturing,creating much needed jobs and growth in communitiesand regions, throughout the United Kingdom.

New trading Opportunity

In the immediate aftermath of the UK’s decision to leavethe EU the conversation has been dominated by whatwill be lost, rather than recognising that this step changein the geo-politics of Britain and Europe will now becomea reality and there will be opportunity for the UK to createthe strong manufacturing led growth that has long beenthe ambition of the nation. For the UK to thrive in thepost-EU world the emphasis must be on policies whichsupport trade and it is the trade in manufactured goodswhich has the greatest potential to create jobs, grow theeconomy and attract inward investment. It follows thatthe only strategy that could achieve this success is onewith innovation at its core. It is innovation that will drivethe improvements in productivity, new products andcustomer services, that will give Britain the edge in thisinternational trading environment.

Innovation Strategy

Fundamentally, innovation is about the commercialisationof research within industry. Britain is recognised as beingstrong at research and has made great improvements ininnovation in the last decade, but to realise theopportunities of this new environment, the status quo isnot acceptable. Britain must move rapidly to adopt anindustrial strategy founded on innovation and thefollowing actions are required:

Continued AccessSecure continued access to the network of innovationpartners in Europe. Continued access to funding is not asimportant as continued access to facilities, capabilities andexpertise. The real value in collaboration lies in theknowledge that others bring to a project and the workthat the project partners undertake, which is effectively‘free’ to the other participants. Norway and Switzerlandare examples of countries that have achieved a settlementof this nature with the EU and it is to be expected that theUK could negotiate a similar arrangement.

New Innovation Strategy A fundamental review of UK innovation strategy isrequired. The purpose of a nation’s innovation strategy isto support industrial strategy. In the UK the basicformation of the industrial strategy was set some yearsago and is based around a set of narrowly defined sectors.This does not include key areas of the manufacturingeconomy, such as the Foundation Industries, for example.Such omissions were less of a concern with Britain in theEU, when the European innovation strategy could berelied upon to fill some of these gaps. Now the UK musttake back responsibility for these important areas of itsown economy and provide the innovation support that itneeds, in addition to the currently defined automotiveand aerospace sector strategies.

Achieve Potential Realise the opportunities presented around internationaltrade and Sovereign Capability. Recognise that differenttrading partners, in different trading regions, will meanthat to be successful the UK will need to make differentchoices about: managing risk, making investments anddealing with the flow of goods, finance, human resourcesand crucially, information.

Materials Processing Institute

Britain is Good at research

UK universities are rightly recognised as world leading,but this does not necessarily lead to improvements inindustrial output. The UK’s public research budget isheavily weighted towards fundamental universityresearch, with ten times as much funding targeted at thispart of the innovation supply chain, as compared with theindustrialisation of the research. This model runs counterto actual experience of commercialising research, wherefunding needs to be weighted towards the riskier andmore expensive final stages. Without this support, theinvestment in early stage research is entirely wasted, asthe results are either never commercialised, or arepublished and used by competing overseas nations.Exporting research results is of little economic value whencompared with the benefits from exporting the goodsand services that are the product of implementing theresearch in industry.

For this to happen the research must be scaled up andcommercialised. A number of key UK sectors, includingmetals and materials, highlight a lack of upscalingfacilities. The steel sector is quite well served with thepiloting facilities at the Materials Processing Institute andthese could quite readily be augmented to create anational multi-metals, multi-materials pilot and upscalingfacility.

Britain is Good at Design

The British brand stands for design and qualitythroughout the world. British designers, architects andengineers are rightly recognised for their creativity andinventiveness. This design expertise reaches across mediaand marketing, into fashion and product design. Byrecognising and including this design expertise inindustrial innovation strategy, the UK can embed acompetitive advantage in its manufacturing companies.Bringing together designers and engineers can yield newapproaches to product design for instance, that combineaesthetics with functionality. It should also be recognisedthat successful and innovative design relies on, and isenabled by, innovative materials. The link between form,function and the properties of materials of constructionis intrinsic and essential, and so it is clear that for the UKto fully exploit its global leadership in design and tointegrate this into successful manufacturing, metals andmaterials must form part of the nation’s industrialinnovation strategy.

What is proposed is a fundamental shift in innovationpolicy, with a clear recognition that the driver forinnovation is to serve the needs of industry and withgreater cultural value attached to commercialisationrather than knowledge development.

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WHAT DOES BRITAIN DO WELL?

SOVEREIGN CAPABILITY: THE CASE FOR COPPER

As an International trade Based Economy, the uK willexperience a fundamental change in the way that goodsare physically landed on these shores. Export growth willdrive infrastructure requirements in air freight, containershipping and bulk carrier, with associated national railinfrastructure. trading in this way will increase the lengthand complexity of supply chains. Inventory and logisticsmanagement will increase in importance, along withworking capital financing and insurance.

Copper sits at the intersection of these factors. Essentialfor infrastructure investment, its importation requireslong supply chains that could be disrupted.

the impact of the loss of a cargo of copper billet couldbe a major disruption to key infrastructure projects. theuK has ample onshore copper resources, from secondarymaterials, but these cannot be exploited as the uK hasno copper smelting capability due to high energy prices.Innovation is the key to re-establishing this vital aspectof Sovereign Capability.


The UK needs to undertake a review of its innovationstrategy and build in those essential items that arecurrently missing and would previously have been dealtwith at a European level. A good example of this is in thearea of raw materials where the British Geological Surveyhas defined a list of critical raw materials. (Table 1).

Managing the long term availability of these raw materialswas previously considered throughout the EU, but theterritorial bounds on which this now needs to be appliedhave been reduced to the level of the nation state. Thiscreates a requirement for the UK to unleash the forces ofinnovation and creativity to understand how theseprecious materials can be conserved, tracked, separated,reused and recycled, within the geography of the UK.

Such an initiative can be part of a much larger drive for acircular economy, with a ‘cradle-to-cradle’ approach tomanufacturing that is not only more environmentallysustainable, but which yields highly efficient andprofitable manufacturing. To achieve thesebreakthroughs, the UK needs, quite specifically, to createa clear focus on innovation across the metals andmaterials sectors. This is a cause that has long beenchampioned by the materials sector in the UK, but has notyet received the full backing of the relevant innovationagencies. In a world with Britain outside the EU, thecountry can no longer rely on the beneficence of othersto undertake its much needed research in materials,processing and energy and so it is more essential that themuch supported and well publicised proposal for aMaterials Catapult, is swiftly implemented.

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WHERE DOES BRITAIN NEED TO DO MORE?

Part of the rationale for Britain leaving the EU is to increasethe capability of the country to trade with non-EU nations.It is to be expected that UK Government policy will bedesigned to support and promote such trade. It is worthconsidering how this shift in trade from Britain’s nearneighbours to a more globalised approach will change thenature of trade itself. In a physical sense, we would expectan increase in the proportion of goods leaving the UK, orbeing landed in the UK through bulk carriers, containerports, or air freight. A reduced portion will arrive by rail,or road transport via continental ferry. Such a shift willrequire Britain to invest in its infrastructure in airport andport capacity, but also in rail to support the collection anddistribution of goods between factories, ports andairports.

1. Investment in the infrastructure to facilitate globaltrade will have an immediate impact on demand forengineered materials. This will affect all materials classesincluding ferrous, non-ferrous, light metals and raremetals; partly used for construction, but also for electronicequipment. Concrete, glass, ceramics and brick, will alsofeature strongly.

2. A lengthening of global supply chains for materials andmanufactured goods will increase inventories,

working capital and vulnerability to supply chaininterruption associated with climatic, commercial, orfinancial interventions.

Despite these clear arising needs, the UK has significantgaps in processing capability for many of these importantmaterials classes. These include copper melting,significant parts of aluminium processing and some steelprocessing capabilities.

The most significant driver in the offshoring of theseindustries is the relatively high energy costs in the UK, with5% of world electricity used for mineral processing anexample of the energy intensiveness of this sector.

It will be important to UK Sovereign Capability, in a post-EU situation, that the issue of energy be addressed, toenable the economic reshoring of parts of the metalssupply chain. Innovation has an important role to play indesigning new and improved processing technologies,improving productivity and yield, reducing energyconsumption, designing new integrated energy systems,delivering industrial integration and creating the materialsof the future.

THE CHANGING NATURE OF TRADE



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SOvErEIGN CAPABIlIty

The combination of:

• Effects of more internationalisation in trade on UK infrastructure and supply chains

• Recognition that greater attention must be given to security of supply of critical raw materials

• A desire to exploit the UK’s competitive advantagein product design

• An understanding of the UK’s leading position in materials research

demonstrates that outside the EU, the Materials andFoundation Industries, form a crucial part of Britain’sSovereign Capability.

This recognition creates an imperative for Britain to takeback responsibility for innovation strategy in materialsand fully integrate this with the other sector strategies.The Materials and Foundation Industries should besupported in the way that the industry has requested, byestablishing a Materials Catapult, to help build onexisting capabilities in the UK innovation sector.

Creating this solid industrial foundation, throughinnovation and infrastructure, will give the confidencerequired to reliably invest in British manufacturing,creating much needed jobs and growth incommunities and regions, throughout the unitedKingdom.

Chris McDonaldChief Executive OfficerMaterials Processing Institute

RAW MATERIALS CONSIDEREDCRITICAL BY BRITISHGEOLOGICAL SURVEY

ANtImONyAntimony Tin Oxide, flame retardant, micro capacitors

COBAltLi-ion batteries, synthetic fuels

GAllIumThin layer photovoltaics, IC, LED

GErmANIumFibre Optic Cable, IR optical technology

INDIumDisplays, thin layer photovoltaics

PlAtINumFuel cells, catalysts

PAllADIumCatalysts, seawater desalination

NIOBIumMicro capacitors, ferroalloys, high strengthlow alloy steel

NEODymIumPermanent magnets, laser technology

Table 1




Chris McDonald is the Chief Executive Officer of theMaterials Processing Institute, a not-for-profitindustrial research institute, which has beensupporting the materials, processing and energysectors for over 70 years. Chris led the divestmentof the Institute from its then parent company, TataSteel, returning the organisation to independentownership in 2014.

Chris’s background is in industrial research andmanufacturing, where he has worked internationally.A graduate of Cambridge University, Chris is a Fellowthe Institute of Chemical Engineers and of theInstitute of Materials, Minerals and Mining. He sits onindustrial advisory boards at a number ofuniversities, including Oxford and Sheffield and is anassociate faculty member at the University ofWarwick.

Chris has an interest in innovation managementand industry dynamics. He provides expert opinionand support to companies, institutes andgovernment organisations on innovation strategy& management to support growth and inwardinvestment. He is a member of the CBI RegionalCouncil for North East Engalnd and has recentlybeen appointed as the Innovation Lead for the UKMetals Council.

Chris is often called to commentate in the mediaon innovation leadership and the steel industry.

Chris McDonaldChief Executive OfficerMaterials Processing Institute

A member of the CBIRegional Council andthe Innovation Leadfor the UK MetalsCouncil

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The Materials ProcessingInstitute is an independent,open access and not-for-profittechnology and innovationcentre working with industry,government and academiaworldwide. Support rangesfrom small scale, site basedinvestigations, through to longterm collaborative researchprogrammes.

The Materials Processing Institute has expertisein materials, materials processing and energy,specialising in challenging processes, particularlythose involving high specification materials, hightemperatures and difficult operating conditions.

The Institute has over 70 years’ experience as aleading UK technology provider. Extensivematerials processing knowledge is supported bystate-of-the-art facilities with a broad range ofequipment, from laboratories through todemonstration, scale-up and production plant.

Scientists and engineers work with industry andapply their expertise to develop and implementrobust solutions to research and developmentand improvements for products and processes.

Expertise is spread across a wide range ofdisciplines, including:

> Materials Characterisation, Research and Development

> Simulation and Design

> Monitoring, Measurement and Control in Hostile Environments

> Process Development and Upscaling

> Specialist Melting and Steel / Alloy Production

> Engineering / Asset Management

> Materials Handling

> Minerals and Ores

Research and project management teamsdeliver support across a wide range ofindustrial and manufacturing sectorsincluding:

> Metals and Metals Manufacture

> Chemicals and Process

> Nuclear

> Oil & Gas

> Energy

> Aerospace and Defence

> Mining and Quarrying



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