Riding the storm
The UK machine tool industry enters 2009 against the same background of downturn and uncertainty as every other sector of the economy.
Just before the end of last year the latest set of statistics produced by the Manufacturing Technologies Association (MTA) gave the first indications that the sector was beginning to contract. However, in many other respects the sector is one that looks well-set to cope with the effects of recession.
But whatever the current scale of the UK's machine tool production capacity and domestic market demand, both seem set to shrink as this year progresses.
According to the MTA's quarterly trends survey for the third quarter of 2008, order intake across the organisation's membership was down by 6.1 per cent compared with the previous three months.
Nor was there any confidence that this would be just a temporary blip. No less than 81 per cent of respondents - who comprise manufacturers, importers and suppliers of machine tools and related equipment - reported that they were less confident about their immediate prospects than they had been three months earlier. For companies in the latter two categories, business confidence was at its lowest since 1983.
Now might not seem to be the best of times to become the figurehead for the UK's machine tool sector. But that is the role that has just been taken on by Bob Hunt, managing director of machine tool supplier Star Micronics GB of Melbourne, Derbyshire, which specialises in CNC 'sliding-headstock' lathes. Hunt became president of the MTA the month before the organisation released those apparently dismal statistics.
However, Hunt is anything but downbeat about the industry's prospects. "We will turn this around," he says. His confidence is based on more than just an optimistic disposition. Instead, he points to a number of factors that he believes militate in the industry's favour.
The UK machine tool industry underwent a severe rationalisation 25 years ago whose legacy is a compact but highly efficient industry. In recent times, Hunt says, the manufacturing technologies sector "has outperformed the economy as a whole."
Much of the UK industry is now very much a 'value-added' business based not on primary manufacture but on the enhancement and customisation of imported machines. This is the case with Hunt's own company, for instance, which imports machines from its parent organisation in Japan and then adds various features and capabilities. Hunt mentions tooling, cooling and swarf management as examples of attributes that can be configured exactly to customer demands.
This approach to meeting customer requirements can be scaled up to allow the industry to target particular market segments, and Hunt confirms that the MTA is actively pursuing such initiatives. He says, for example, that the MTA is working with its counterpart organisation for the UK nuclear power sector, the Nuclear Industries Association (NIA), to create a situation where machine tool companies become more firmly integrated within the industry's supply chain.
Hunt says that there is a firm commitment between himself and Keith Parker, chief executive of the NIA, to maintain close contact between their organisations. They also aim to initiate a series of activities that will help UK machine tool suppliers understand the nuclear sector's requirements. Hunt says that these are likely to be seminars and meetings.
But the nuclear industry is not the only customer sector the MTA is eyeing up. Hunt adds that both the aerospace and medical equipment industries are also regarded as sectors that are likely to grow despite the general downturn.
Another issue in which Hunt says the machine tool industry has a chance to develop its own market is training. He explains that, though the industry itself probably has the skilled people it needs, it is a different story in the wider manufacturing sector. There are, he confirms, some acute shortages of individuals with the "craft and technician" capabilities required for machine tool operation. "A lot of customers say 'If only you could sell us an operator as well as the machine'," he reports.
The MTA has an initiative underway, this time in cooperation with the engineering industry training organisation SEMTA. The MTA is looking to get funding from SEMTA to initiate training courses that can use the "world class" levels of skill and knowledge that exist within the MTA's membership to "help customers get the most out of the technology."
Details are still sketchy, though Hunt says that the initiative will focus on skills at NVQ Levels 2, 3 and 4. But the timetable is certainly not laggardly. Hunt confirms that the intention is to have the first courses running "by the end of the first quarter" of 2009.
Hunt has one further, personally-inspired initiative that he hopes to see realised in the near future. This is for a 'blue skies' think-tank to be comprised of "leaders from British industry". The idea is for the MTA to be able to spot very early on the need for developments whether in manufacturing technologies or market demand, so that MTA members will be best-positioned to exploit their potential.
As for the various technologies under the broad heading of the words 'machine tools', Hunt concedes quite candidly that recent years have not seen any radical innovations. Instead, there has been a broad advance in capabilities - increases in speeds, accuracies and ease-of-operation on multi-axis machines. The underlying trend, though, is towards 'one-hit' machining in which companies are able to manufacture complex parts in a single set-up on just one machine.
Hunt's observations are corroborated by other suppliers to the market. Bob Horton is marketing director of C Dugard of Hove, East Sussex, which acts as UK agent for machine tool manufacturers such as Hedelius from Germany and Korean company Hyundai-Kia. He says that UK customers are increasingly looking for a package of supporting services that will allow them to achieve an immediate 'plug-in' machining capability. Many of them, explains Horton, "have lost their production machining base".
The consequence for Dugard is that, as well as providing specialised fixtures such as jaws and clamps, it is having to do a lot more to ensure that the machines work all the time. The flipside of a one-hit machining approach is that reliability becomes an issue of paramount importance: "If you have a machine that does everything, then everything stops if it does."
A similar analysis of the market is also provided by another well-known supplier to the UK machine tool market, NCMT, whose headquarters are in Thames Ditton, Surrey. A spokesman for the company, which acts as the UK representative for Japanese machine tool makers Makino and Okuma, estimates that around 85 per cent of the company's operations are now concerned with "turnkey business", deals that involve a high value-added content and not just the supply of equipment.
In fact, the core machine tool in an installation might well represent as little as 50 per cent of the total deal value. The rest would be accounted for by ancillary equipment such as coordinate measuring machines or robots for materials handling, as well as the costs of services.
The composition of the company probably provides a good indication of the way that machine tool suppliers will be required to configure themselves in the near future. Of the 125 people the company employs in the UK, nearly three-quarters are after sales support engineers. "Service and support is our biggest department," the spokesman confirms.
Arguably, though, NCMT represents an extreme case of a machine tool supplier that has set out to shape its market. The company cooperated closely with Makino, Austrian grinding wheel producer Tyrolit, and aero engine manufacturer Rolls-Royce in the development of a specific machining technique known as VIPER grinding, which can achieve extremely high metal removal rates in the production of critical parts such as turbine blades. The technique, which replaces more conventional broaching and milling operations, is one that seems to have attracted a good deal of attention among UK manufacturers. The NCMT spokesman says that around 50 VIPER-enabled machines have been sold in the UK since the technology was introduced earlier this decade.
The indications are that the UK machine tool industry is one that, having come through a particularly torrid time, has reshaped itself to ensure it is fit to survive another downturn.
It is a business that is increasingly marked not by mere supply of hardware but by an awareness that its survival depends the exploitation of its own intrinsic knowledge-base to provide value-added support and services to its customers.
How those customers will fare in the current economic climate is another matter.