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[Business > Manufacturing sector]
CBI chief's sustainable vision blows away hot air
Richard Lambert meets manufacturers in the north-east to gain an insight into how the region can reinvent itself
David Teather
The Observer, Sunday 13 September 2009 Article history
In a hangar once used for shipbuilding on the coast at Blyth in the north-east, a large wind turbine blade, looking like the rib of a giant whale, lies flat on a trestle. Another sticking out of a machine at the back of the hangar is being shaken up and down repeatedly. By the end of three weeks, it will have undergone two and a half million cycles in each direction to make sure it doesn't break.
Richard Lambert, the director general of the Confederation of British Industry, in hard hat and sheltering from the rain under a large umbrella, is taking in the scene. "Forgive me for sounding romantic," he says. "But we do have the capacity for a manufacturing renaissance over the next few years, and if we don't grasp it, future generations will curse us one way or another."
The research and testing facility for the wind and marine industries, called Narec, was one visit on a whistle-stop tour of firms in the low carbon industry undertaken by Lambert last week. His aim was to get a better sense of the attempts to reinvent a region scarred by thousands of job losses in its former smokestack industries. The visit also took in Smith Electric Vehicles, which has been manufacturing since the 1920s, and Banks, a coal miner now trying to re-shape itself as an onshore wind firm.
The trip was partly a fact-finding mission. When Nissan in Sunderland secured a £200m investment in July to build batteries for electric-powered cars, it was hailed by Gordon Brown and Business Secretary Peter Mandelson as a key moment. To mark the investment by the company's Japanese parent, they grandly declared the north-east a low carbon economic zone. But was there any substance behind the rhetoric?
Lambert makes trips like these "most weeks". It is on them, he says, that he gets a real idea of business concerns. "It was very marked last year that, through until March or April, the further away from London you got, and from banking and real estate, the more prosperous people felt. I suspect it is now the other way around".
Narec is backed by the regional development agency One North East, although it now makes around half its budget from commercial contracts, stress-testing blades and marine equipment in three docks, and the impact of lightning on blades in a high-voltage facility. The centre also took over a specialist solar-research division from BP. It currently works with US wind farm company, Clipper, and others from Japan and Europe, and aims to be self sufficient by 2011, hopefully attracting manufacturing and jobs to the region.
"No one else is doing this," Narec chairman Alan Rutherford told Lambert. "The development of new technology is a very expensive process and there are not many organisations that can fund the sort of assets we have off balance sheet. We are correcting market failure.
"We are talking to some heavy hitters around the world about moving to Blyth to develop operations in the North Sea, to develop prototypes and then hopefully full-scale manufacturing on the Tyne. But it is highly competitive. We lost out on onshore wind – the Danes, the Germans and the Dutch got all the business. As far as we are concerned, we are a neck ahead in offshore and want to stay that way."
At a round table where the CBI chief faced leading figures in the wind industry, both the potential and the challenges were laid out. David Still, managing director of Clipper, estimated that around £70bn would be invested in offshore wind between now and 2020. He said that his company was looking to make blades on the Tyne if the infrastructure and support were in place, benefiting the supply chain as well. "The key issue is how much we capture in the UK," he said. "If we make 100 turbines here, someone is going to have to build the foundations, and the steel plate that goes into that is about 10% of [nearby] Corus's annual output."
But significant investment is needed to upgrade the National Grid and the ports in particular, to ensure they can cope with the massive equipment and turbines. "Look at Sunderland," said Martin Lawlor from the Port of Blyth. "[It was] once one of the biggest shipbuilders in the world, where all you can see now on the river is flats." Land also needs to be made available for the manufacturing and storage of the huge turbines.
Planning remains a key concern, and this emerged at Banks, which has a target of 250 megawatts of wind power by 2012. "The government has abdicated delivery of energy supply and generation to the private sector and is not helping it," said Mark Dowdall, at Banks. "The country needs to look at speeding up the whole process if it is to hit its renewables target. It is often up to local authorities to consider big contentious projects and elected members get a lot of earache from constituents."
The urgency for investment has not passed Lambert by. "I was in a meeting with a government minister a couple of weeks ago discussing the impending energy gap and he said, 'well the recession is a big help'," Lambert said, banging his head on the table in mock exasperation. The CBI's official stance is to support the need for a mix of energy, including nuclear and clean coal. "We support the government's targets for greenhouse gas mitigation for 2020, but we are anxious about the renewable targets, because frankly we think they are incredible."
Smith Electric Vehicles began life building trolley buses, trams and milk floats, and now re-engineers commercial vehicles for the likes of Sainsbury's and TNT, and collaborates with Ford. But chairman Roy Stanley said Mandelson's designation for the area appears to have been empty words. "There is nothing tangible," he told the CBI chief. "I don't want to come across as jaundiced. But if you are to very graciously declare this a low carbon economic zone, what does it mean? Define it, tell us what it is, don't just give us a label."
The pain is evident at Smith. Its parent company, the Tanfield Group, which also makes access platforms for the construction industry, has slashed staff numbers and executives have taken a 20% pay cut, as orders for electric vehicles faltered and the market for access platforms collapsed. The production facility is eerily empty. There is capacity for 1,500 vehicles a year, but it is currently producing 10% of that. The company is having to keep many of its suppliers afloat with upfront payments, though Stanley said the market has started to improve.
"So, if I am on an aeroplane with Lord Mandelson, just as he is dropping off to sleep, what is the punchline?" asked Lambert. One idea, Stanley said, would be to kick start orders by giving buyers of commercial electric vehicles a capital allowance, as with ordinary cars.
"There is a certain feeling that people want to cluster round and share the pain and find out how everyone else is doing," said Lambert as he headed off to the regional CBI black tie dinner in Gateshead. "It does feel much lighter now than February or March, but then it was really dark. What people worry about is that there are a lot of temporary stimuluses going through – the car scrappage, the end of stock liquidation, huge monetary stimulus, fiscal stimulus – but what will happen when that starts to run out? Where will the engine of demand come from? I think the recovery is going to be pretty protracted."
The next day at Nissan, though, the mood is upbeat. In January the company was forced to let 1,200 people go, taking the factory down from three to two shifts. But the shifts are again running with overtime and 350 temporary workers have been taken back on since March, partly thanks to the cash-for-clunkers scheme.
But the investment in electric batteries, is the real cause for optimism. Trevor Mann, senior vice-president for manufacturing, purchasing and supply chain for Nissan Europe, looks out of the boardroom window at the site for the battery plant. "This is the biggest single investment that this plant has had since 1992," he says. He says he is "optimistic" that electric car production will be heading to Sunderland.
Mann says Sunderland secured the contract as a result of a long period of lowering costs and improving efficiency, as the plant sought to avoid the fate of others that closed in Britain in the 1990s, such as Peugeot in Coventry. "Nothing is owed to us, everything is earned. And everybody recognises that."
[Business > Manufacturing sector]
CBI chief's sustainable vision blows away hot air
Richard Lambert meets manufacturers in the north-east to gain an insight into how the region can reinvent itself
David Teather
The Observer, Sunday 13 September 2009 Article history
In a hangar once used for shipbuilding on the coast at Blyth in the north-east, a large wind turbine blade, looking like the rib of a giant whale, lies flat on a trestle. Another sticking out of a machine at the back of the hangar is being shaken up and down repeatedly. By the end of three weeks, it will have undergone two and a half million cycles in each direction to make sure it doesn't break.
Richard Lambert, the director general of the Confederation of British Industry, in hard hat and sheltering from the rain under a large umbrella, is taking in the scene. "Forgive me for sounding romantic," he says. "But we do have the capacity for a manufacturing renaissance over the next few years, and if we don't grasp it, future generations will curse us one way or another."
The research and testing facility for the wind and marine industries, called Narec, was one visit on a whistle-stop tour of firms in the low carbon industry undertaken by Lambert last week. His aim was to get a better sense of the attempts to reinvent a region scarred by thousands of job losses in its former smokestack industries. The visit also took in Smith Electric Vehicles, which has been manufacturing since the 1920s, and Banks, a coal miner now trying to re-shape itself as an onshore wind firm.
The trip was partly a fact-finding mission. When Nissan in Sunderland secured a £200m investment in July to build batteries for electric-powered cars, it was hailed by Gordon Brown and Business Secretary Peter Mandelson as a key moment. To mark the investment by the company's Japanese parent, they grandly declared the north-east a low carbon economic zone. But was there any substance behind the rhetoric?
Lambert makes trips like these "most weeks". It is on them, he says, that he gets a real idea of business concerns. "It was very marked last year that, through until March or April, the further away from London you got, and from banking and real estate, the more prosperous people felt. I suspect it is now the other way around".
Narec is backed by the regional development agency One North East, although it now makes around half its budget from commercial contracts, stress-testing blades and marine equipment in three docks, and the impact of lightning on blades in a high-voltage facility. The centre also took over a specialist solar-research division from BP. It currently works with US wind farm company, Clipper, and others from Japan and Europe, and aims to be self sufficient by 2011, hopefully attracting manufacturing and jobs to the region.
"No one else is doing this," Narec chairman Alan Rutherford told Lambert. "The development of new technology is a very expensive process and there are not many organisations that can fund the sort of assets we have off balance sheet. We are correcting market failure.
"We are talking to some heavy hitters around the world about moving to Blyth to develop operations in the North Sea, to develop prototypes and then hopefully full-scale manufacturing on the Tyne. But it is highly competitive. We lost out on onshore wind – the Danes, the Germans and the Dutch got all the business. As far as we are concerned, we are a neck ahead in offshore and want to stay that way."
At a round table where the CBI chief faced leading figures in the wind industry, both the potential and the challenges were laid out. David Still, managing director of Clipper, estimated that around £70bn would be invested in offshore wind between now and 2020. He said that his company was looking to make blades on the Tyne if the infrastructure and support were in place, benefiting the supply chain as well. "The key issue is how much we capture in the UK," he said. "If we make 100 turbines here, someone is going to have to build the foundations, and the steel plate that goes into that is about 10% of [nearby] Corus's annual output."
But significant investment is needed to upgrade the National Grid and the ports in particular, to ensure they can cope with the massive equipment and turbines. "Look at Sunderland," said Martin Lawlor from the Port of Blyth. "[It was] once one of the biggest shipbuilders in the world, where all you can see now on the river is flats." Land also needs to be made available for the manufacturing and storage of the huge turbines.
Planning remains a key concern, and this emerged at Banks, which has a target of 250 megawatts of wind power by 2012. "The government has abdicated delivery of energy supply and generation to the private sector and is not helping it," said Mark Dowdall, at Banks. "The country needs to look at speeding up the whole process if it is to hit its renewables target. It is often up to local authorities to consider big contentious projects and elected members get a lot of earache from constituents."
The urgency for investment has not passed Lambert by. "I was in a meeting with a government minister a couple of weeks ago discussing the impending energy gap and he said, 'well the recession is a big help'," Lambert said, banging his head on the table in mock exasperation. The CBI's official stance is to support the need for a mix of energy, including nuclear and clean coal. "We support the government's targets for greenhouse gas mitigation for 2020, but we are anxious about the renewable targets, because frankly we think they are incredible."
Smith Electric Vehicles began life building trolley buses, trams and milk floats, and now re-engineers commercial vehicles for the likes of Sainsbury's and TNT, and collaborates with Ford. But chairman Roy Stanley said Mandelson's designation for the area appears to have been empty words. "There is nothing tangible," he told the CBI chief. "I don't want to come across as jaundiced. But if you are to very graciously declare this a low carbon economic zone, what does it mean? Define it, tell us what it is, don't just give us a label."
The pain is evident at Smith. Its parent company, the Tanfield Group, which also makes access platforms for the construction industry, has slashed staff numbers and executives have taken a 20% pay cut, as orders for electric vehicles faltered and the market for access platforms collapsed. The production facility is eerily empty. There is capacity for 1,500 vehicles a year, but it is currently producing 10% of that. The company is having to keep many of its suppliers afloat with upfront payments, though Stanley said the market has started to improve.
"So, if I am on an aeroplane with Lord Mandelson, just as he is dropping off to sleep, what is the punchline?" asked Lambert. One idea, Stanley said, would be to kick start orders by giving buyers of commercial electric vehicles a capital allowance, as with ordinary cars.
"There is a certain feeling that people want to cluster round and share the pain and find out how everyone else is doing," said Lambert as he headed off to the regional CBI black tie dinner in Gateshead. "It does feel much lighter now than February or March, but then it was really dark. What people worry about is that there are a lot of temporary stimuluses going through – the car scrappage, the end of stock liquidation, huge monetary stimulus, fiscal stimulus – but what will happen when that starts to run out? Where will the engine of demand come from? I think the recovery is going to be pretty protracted."
The next day at Nissan, though, the mood is upbeat. In January the company was forced to let 1,200 people go, taking the factory down from three to two shifts. But the shifts are again running with overtime and 350 temporary workers have been taken back on since March, partly thanks to the cash-for-clunkers scheme.
But the investment in electric batteries, is the real cause for optimism. Trevor Mann, senior vice-president for manufacturing, purchasing and supply chain for Nissan Europe, looks out of the boardroom window at the site for the battery plant. "This is the biggest single investment that this plant has had since 1992," he says. He says he is "optimistic" that electric car production will be heading to Sunderland.
Mann says Sunderland secured the contract as a result of a long period of lowering costs and improving efficiency, as the plant sought to avoid the fate of others that closed in Britain in the 1990s, such as Peugeot in Coventry. "Nothing is owed to us, everything is earned. And everybody recognises that."
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