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Cashing in: government funding for manufacturers

As the British government tries to re-engage with manufacturing industry, E&T discovers just how much support is available for those seeking advice, training, loans and other forms of financial assistance.

How do you turn a production manager into a 'lean champion'? It's a question that cuts to the heart of the dilemma that faced precision sheet metal engineering company Stevens Rowsell back in 2008.

Lean manufacturing was undoubtedly the way to go, recognised Stuart Small, managing director of the St'Leonards-on-Sea-based business. Lean, he realised, would help to drive a fundamental overhaul of the company's approach to manufacturing management - eliminating non-value-added activity, and ensuring continued process improvement.

But how best to achieve this? Simply put, the most obvious person for delivering the transformation - production manager Andrew James - felt that he lacked the required in-depth understanding of lean manufacturing's tool sets and principles.

Enter Gary Barr, a lean specialist with the Hampshire-based Manufacturing Advisory Service (MAS) South East, a government-funded consultancy and training organisation focusing on practical advice.

Spending eight days at Stevens Rowsell working alongside James, Barr quickly built upon the production manager's existing strengths and capabilities, mentoring him in the latest lean manufacturing tools and techniques, and advising on how best to deploy them throughout the manufacturing operation.

'Gary was excellent,' recalls managing director Small. 'His enthusiastic approach helped to uncover Andrew's true managerial potential, furnishing him with the inner drive and confidence to develop his talents.'

And being heavily government subsidised, it was the relatively low cost of the training that clinched the deal. Not only did government backing provide an assurance of quality, but the price tag compared very favourably with the cost of equivalent training offered by commercial organisations.

'It was the subsidy that made the difference,' says Small. 'Otherwise, we probably wouldn't have considered it.'

Money for manufacturing

Manufacturing businesses may carp about taxation, red tape and excessive regulation, but examples such as Stevens Rowsell highlight another facet of government involvement with manufacturing industry: financial assistance.

That assistance can come in many forms: outright grants, match funding, loans, tax breaks, subsidies and even skilled personnel, via schemes such as the Knowledge Transfer Partnership administered by the Technology Strategy Board.

And while the sums involved in individual cases aren't colossal, the government is increasingly willing to back manufacturing-related policies with significant amounts of cash.

In short, after years of relative neglect, the government has returned to 1960s-style activist industrial policies - a move that can be put squarely at the door of Business Secretary Lord Mandelson. Government, he said, must no longer 'simply stand on the sidelines.'

And it isn't. Take, for instance, the advanced manufacturing initiative that the government announced back in July 2009. Aimed at helping manufacturers to seize the opportunities provided by emerging technologies, the initiative saw investments totalling £152m targeted on ventures in up-and-coming manufacturing technologies, spread across areas such as plastic electronics, aerospace, and silicon design.

Rolls-Royce fared especially well. For spearheading a collaborative programme to accelerate the development of new environmentally-friendly higher-productivity manufacturing technologies, for instance, the aerospace giant received two separate chunks of government finance: £28.5m from the Technology Strategy Board, plus a further £11.5m from the Engineering and Physical Sciences Research Council.

The company also received £45m in funding to create four new advanced manufacturing facilities in the UK, creating and sustaining around 800 jobs - and separately, a further £45m to support research and technology critical to the development of low-carbon aircraft engine technology.

What's more, the advanced manufacturing initiative is just one of a whole raft of similar re-engagements with manufacturing industry. Other recent initiatives have included an advanced manufacturing marketing strategy designed to boost overseas sales of British advanced manufacturing companies, as well as a composites strategy and plastics electronics strategy.

So how can manufacturing companies set about the business of accessing government funding? Talk to those close to the funding decision-making process - including manufacturers that have successfully accessed the many schemes that are available - and some common themes quickly emerge.

One important lesson is to tailor a bid for funding to the objectives of those holding the purse strings.

Flex for success

At Clwyd-based high-tech printed electronics start-up SmartKem, for instance, that meant relocating the entire company 90 miles across the Welsh border from its former site, in order to secure equity funding from Finance Wales and grant aid from the Welsh Assembly.

No stranger to external funding, chief executive Steve Kelly had drawn a complete blank within England, but found his combined jobs-and-innovation message fell on fertile ground when it came to Welsh budget-holders.

'Government schemes tend to reward companies that know how to prepare documents and business cases in the right way,' he stresses. 'If your request for funding is out of the ordinary, you'll often need to be flexible if it is to be successful.'

And that flexibility can involve embracing organisations that manufacturers don't often come into contact with.

'Research-savvy businesses tend to have good government connections with bodies such as the Technology Strategy Board, but that still leaves an awful lot of mainstream manufacturers who don't,' observes Gus Desbarats, chairman of London-based industrial design consultancy TheAlloy.

Yet the Technology Strategy Board is most definitely open for business, insists David Bott, its director of innovation programmes. In addition to administering schemes such as the Knowledge Transfer Partnership and the Knowledge Transfer Network - the latter comprising a facilitated community of practice designed to foster innovation - the Board also provides direct funding through its collaborative research and development scheme, he stresses.

'It's competitive,' explains Bott. 'Companies fill in forms describing what they want to do, and these are then independently assessed and ranked. We then 50 per cent fund the list in rank order, until the money that we have available has been exhausted.'

The government-backed Carbon Trust is another 'out of the ordinary' source of E F funding. Through grants and interest-free loans - as well as direct investments in companies developing green technology - it aims to help companies reduce their energy bills and carbon emissions, says Henrietta Stocks, the Trust's technology acceleration manager. Since its founding in 2001, she adds, the Trust has been instrumental in delivering over £1bn in cost savings.

Liverpool-headquartered animal feed manufacturer Carrs Billington Agriculture, for instance, was able to benefit from an industry-wide Carbon Trust pilot project to identify alternative feed manufacturing processes that would consume less energy.

Feedstuff manufacture consumes 40-50kWh per tonne, explains Carr's technical manager Nigel Hillyer, and the study identified savings of 4-5kWh hours per tonne, achieving by making the pelleting process less energy intensive through changes to formulation and production parameters. With a UK-wide national annual output of 18 million tonnes of feed, that's quite a saving - in both electricity and carbon.

'We had neither the people nor the R&D budget to do it ourselves,' notes Hillyer. 'Electrical energy is our second-largest cost, and a reduction on that scale is significant.'

Another useful piece of advice for would-be seekers of funding is to not overlook the role played by regional development agencies - which exist even in prosperous parts of the country such as the south east.

For while bodies such as the Technology Strategy Board and Carbon Trust offer grants and 'soft' loans targeted on furthering their own specific objectives, regional development agencies have a much broader remit: stimulating economic growth and job creation.

As such, they can fund much more broadly-defined projects, explains Lewis Stringer, the business investment team manager at the East Midlands Development Agency. Take the Grant for Business Investment, which is designed for businesses that are looking to make a capital investment, but need financial help to go ahead.

'The scheme is discretionary, normally takes the form of a grant, and supports businesses by helping to fund new investment projects that lead to long-term improvements in product development, competitiveness, employment, productivity and skills,' he explains.

One happy recipient: Nottingham based Sygnature Chemical Services Limited, which recently received a £75,000 award to enable it to invest in specialised scientific equipment, giving the company the flexibility to expand and attract new customers. Sales are up by 85 per cent, and the workforce has grown by 30 per cent, says Sygnature's chief executive Simon Hirst.

Yet despite such case studies, critics charge that the government's manufacturing initiatives aren't working. For instance, a focus on improving efficiency has led to under-investment in other areas, says Professor Ian Hunt, director of the Institute for Product Design and Manufacture at Edinburgh Napier University.

Streamlined schemes

'Advisory service funding has gone to the operational side of things - but the future lies with new and emerging sectors: greener energy, photonics, medical devices and biosciences,' he charges.

And the proliferation of schemes and strategies is confusing, too.

'There are a myriad of schemes that just aren't cohesive enough,' says Ashford, Kent-based independent consultant and Sainsbury Management Fellow David Falzani. 'Compared to other countries, Britain isn't investing enough, and isn't investing it effectively, either.'

And to judge from an admission in the 2010 Budget announced on 24 March, it seems that the government agrees. A new agency - UK Finance for Growth - is to be established, which will be responsible for overseeing, streamlining and simplifying the government's financial support for business.

The rationale behind having both Business Link and the Manufacturing Advisory Service, for example, might be clear enough for non-manufacturing businesses, but certainly looks like duplication from a manufacturer's perspective. Nor is it clear - to a manufacturer, anyway - why MAS must be regionally organised, with each regional MAS funded and managed separately. Odder still, some MAS and Business Link funding is available in England, but not in Scotland or Northern Ireland.

No wonder, then, that one of the roles played by MAS is simply assisting manufacturers to find their way to the right sources of finance.

'We help companies to negotiate with grant-giving bodies such as regional development agencies, and signpost them to opportunities offered by agencies such as the Carbon Trust,' explains David Caddle, a programme manager with MAS South East.

Going into the forthcoming General Election, the Conservative party is talking about overhauling the whole system - MAS, for instance, has been slated for the chop. The dangers, though, are evident: confusion there may be, but MAS undeniably does good work.

'Whichever government is elected, there must be a recognition of the need for manufacturing to play a leading role in bringing about financial recovery,' warns Geoff Young FIET, chief executive of the Association for Instrumentation, Control, Automation & Laboratory Technology. 'There are no alternative drivers for real growth, given that consumer spending will be restrained, public spending is likely to be severely curtailed and there is a growing deficit in energy.'

Zig-zagging changes of government strategy have left education and the health service in disarray. Manufacturing is too important to go the same way.

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