‘Fix roof while the sun shines’, automation boss tells food producers

Andrew Peters, UK divisional director for Siemens Industry Automation & Drive Technologies told FoodManufacture.co.uk that CBI figures for April pointed to a slowdown in manufacturing market demand and consumer spending.

With weak sterling currently aiding UK exports, he said the real impact of the government’s ‘age of austerity’ had still to feed through, while increasing energy costs for businesses and declining high street footfalls meant that ‘UK plc’ could not ignore potential tough times ahead.

Solid foundations for a sustained manufacturing future lay in continued investment, Peters said, adding that during the recent downturn many manufacturers reduced capacity, and are now struggling to supply customers within reasonable lead times due to capacity constraints.

Strong balance sheets​

However, Peters said that some firms had acquired strong balance sheets and surpluses over the past few years – due to weak sterling aiding competitive exports and a conservative investment approach to new machinery – meaning that many have money to spend.

“We have not seen such sustained growth in UK manufacturing output for many decades as that witnessed over the past couple of years.​

“Given that global GDP growth is set to continue for at least another two years at levels of 3.5% to 4%,​ I believe the UK manufacturing base currently has a once in a lifetime opportunity to take decisive investment steps and fix the roof while the sun is shining.”​

Peters said Siemens was seeing double-digit year-on-year growth in UK sales of Original Equpment Manufacturer (OEM) kit via partners to the food and beverage industry, while its business dealing with line upgrades and operational efficiencies was also thriving.

But asked whether enough UK food manufacturers would indeed invest during this relatively benign business period Peters said: “My honest opinion? Some firms will, and these are those firms explicitly faced with higher costs for energy, raw materials, etc.”​

Long-term investment plan​

He said that payoffs were clear, given that automation investment could reduce line downtime and increase efficiency, as well as the number of products produced per hour.

“Take an old conveyor line that deals with 300 crisp packets per hour. A retrofit could increase its output to 600 packets, and ensure it never breaks down again.”​

While the coalition government had helped firms considering kit investment, Peters said, by lowering corporation tax, providing more attractive capital allowances and a green bank, he said a long-term investment culture was really holding the UK back.

Whereas a standard agreement to supply new machinery to a Chinese company was negotiated on a 25-50 year basis, he said, UK manufacturers worried that even a 5-year plan was too much of a risk, given too many “unknowns or variables”.​

“In the UK we would probably have had 10 different governments and the same number of manufacturing initiatives within this ​[25-50 year] period,”​ Peters added, with regular changes to corporation tax and capital allowances making food manufacturers nervous.

“Unless you promote a mindset and culture, which are centric to the longer term, UK manufacturing plc will always struggle on a global basis with those that take this approach – prime examples being our German counterparts and the emerging BRIC economies.”​

Peters added that there were some benefits to a “command and control”​ economy along Chinese lines, where there was a preparedness to see through a long-term strategic plan; conversely UK businesses are too in thrall to “making money now”​ rather than investing.