09 October 2012
UK electronics manufacturing puts Pi on the menu as it builds a case against offshoring
Electronics manufacturing in the UK is an interesting subject for debate for a range of reasons. At the top of the list is the perception amongst many people that electronics manufacturing just doesn't take place here. But once you put that somewhat blinkered view aside, there are a range of debate points which inform companies about the benefits or otherwise of so called offshoring.
One man who knows more about manufacturing in the UK than most is Phil Inness. Not only is he managing director of electronics manufacturing services company Axis Electronics, he's also chair of the Electronics Manufacturing Services Association – a group within trade association Intellect.
He believes electronics manufacturing in the UK is 'alive and well'. According to Inness, there are around 250 companies in the sector and times are relatively good, with many manufacturers showing double digit growth in revenues over 2011, despite the sluggish nature of the economy. Overall, he thinks the sector is turning over around £1.5billion a year.
Manufacturing is also a strand in the Embedded Systems: Challenges and Opportunities – or ESCO – report, due for publication later this year. Leading this workstream is Graeme Philp, chief executive of industry association Gambica. He said: "If you want to build a £2000 device – and do it well – the UK has a world class reputation. There is a belief that if it's made in the UK, it's made well."
What does Inness see as the benefits of manufacturing in the UK? "There's a number of elements," he said, "including flexibility, quality, IP protection and clear communications. But the main benefit is that you can build a relationship with a local manufacturer who can provide the expertise needed to improve your product and reduce your costs."
And how has the situation changed in the last few years? Inness continued: "The UK is well along the way of maturing into a world class electronic manufacturing environment with collaborative working across the supply chain and many continuous improvement initiatives in place. This, coupled with variations in exchange rates, increases in the offshore cost base, uncertainties over IP and an increased awareness of counterfeit avoidance, means UK manufacturing is increasingly attractive."
Providing a view from the sidelines, to a certain extent, is Daniel French, managing director of Transonics. While its main business is component supply and device programming, the company has been developing a UK build service for the last couple of years. "In the past, a major defining factor has been the low cost of overseas labour and component costs and the UK simply could not compete, especially for manual and through hole production. Today, most electronics production has turned to surface mount, while higher offshore labour costs and increasing import costs have made the UK more attractive. Transonics has proven that, once we've been given the opportunity to quote for UK builds in the UK, our customers have engaged – we've even brought builds made in China back to these shores."
Nick Jones, sales and marketing director of contract manufacturer Wilson Process Systems, said: "Overall, the relative cost of manufacturing offshore has been increasing for some time. More and more companies are rethinking their supply chain strategies and successfully testing the UK market for competitiveness. Several oems known for their sourcing offshore have made commitments to design, develop and build in the UK – and these products are made in the tens of thousands."
So what has happened to turn things around? Inness believes it's greater awareness of manufacturing in the UK. "Skill levels in the UK have increased and there is more automation being applied. Meanwhile, wages in 'low cost' countries are increasing, which is closing the cost gap for builds in the middle ground of volume, complexity and stability."
French sees world class technical and manufacturing capability in the UK. "Production facilities overseas have little or no superiority over UK capabilities; in fact, I'd argue the UK is more advanced in many areas and disciplines. The UK still has an abundance of design centres and it's criminal that some oems are almost 'automatically' placing production overseas."
Adrian Rawlinson is managing director of Marl Manufacturing, which recently announced a 'concept to manufacturing' service. "We can take a drawing on the back of an envelope and [turn] that idea into a workable design, building a prototype and taking it into production.
"We can offer fast turn around and competitive pricing on small volumes and, with our sourcing and logistics expertise, can match offshore manufactured price levels on much higher volumes. We provide a competitive and professional assembly and manufacturing service."
Inness has a slightly different point of view. "Because the more complex designs tend to start life here in the UK – either as prototypes or initial production runs – we have a good track record in managing technical uncertainties. This has given us first class capabilities. At Axis, we see hundreds of brand new products that all need new product introduction – so we have to be expert at it."
But there's one recent story which highlights the move of manufacturing back to the UK – Premier Farnell's deal to make 300,000 Raspberry Pis in South Wales.
Mike Buffham, global head of electronic design engineering, explained the move. "There are three main benefits," he said. "Firstly, we're closer to the actual production, which means we can work through any potential issue. Secondly, there are reduced shipping costs and transit times. Finally – and perhaps most importantly – it enables us to work with the Raspberry Pi Foundation on improving the device's manufacturability."
Buffham said Premier Farnell wanted to have the device made in the UK. "The general consensus was that it was a sad indictment on the UK that a great invention like the Raspberry Pi couldn't be made in the UK. There was real pride in bringing it home."
Despite its low cost – some versions of the board sell for $22 – the Raspberry Pi features manufacturing complexity. "One part of the process involves mounting the two largest components on top of each other," Buffham noted. "This is a complex process and, for mass production, requires a large investment in hardware. In Sony Technology Centre, we found an organisation that was capable of carrying out the process efficiently. It has invested in the technology and has the expertise to make that production engineering possible."
He noted that price was an important issue. "We have to be competitive on price, otherwise manufacturing in the UK just wouldn't work. So we had to hit the price point first and the solution was the result of close collaboration between the three parties involved – and none would have been able to make it happen on their own.
"Component supply cost is also critical. In moving production to the UK – on a contract to produce 300,000 units – the biggest challenge was getting the volume pricing to the right level. You have to be sure all the elements of the delivered cost are right."
How attractive does Buffham see the UK as a manufacturing location? "We were pleased we could make the move. As long as you're working with the right partner, there's no reason why the UK's manufacturing sector shouldn't be attractive."
Axis Electronics Ltd
Marl International Ltd
Premier Farnell plc
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